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/raid1/www/Hosts/bankrupt/CAR_Public/041105.mbx C L A S S A C T I O N R E P O R T E R Friday, November 5, 2004, Vol. 6, No. 220 Headlines ADIDAS AMERICA: Recalls 187T Superstar Shoes Due To Injury Risk CALIFORNIA: Proposition 64 Passes in November 2 Vote CANADA: Quebec Superior Court To Consider Anti-Tobacco Lawsuits CANADA: Saskatoon Judge Hears Arguments in Canola Farmer's Suit CHIRON CORPORATION: Stock Suits Filed On Flu Vaccine Suspension CITIGROUP INC.: Plans To Dispute NASD Arbitration Panel's Ruling COLUMBIA NATURAL: Trial in WV Gas Royalties Suit Set July 2005 FLORIDA: Sick Smokers Urge High Court To Restore $145M Verdict GEORGIA: Clinch County Jail Prisoners Lodge Suit V. $18 Jail Fee GETANSWERS INC.: SEC Lodges Injunction V. VP Barrington Schneer HENRY SCHEIN: Individual Claims Remain in TX Consumer Fraud Suit HENRY SCHEIN: Asks NJ Court To Grant Summary Judgment in Lawsuit JUNIPER NETWORKS: Plaintiffs Appeal CA Securities Suit Dismissal LERNOUT & HAUSPIE: Suit Settlement Hearing Set December 20, 2004 MARATHON ASHLAND: WV Residents Lodge Suit Over Chemical Spill MEDCO HEALTH: PA Court Refuses To Dismiss Drug Antitrust Lawsuit MEDCO HEALTH: AL Court Refuses To Dismiss Drug Antitrust Lawsuit MEDCO HEALTH: Asks CA Court To Dismiss Unfair Practices Lawsuit MERCK-MEDCO MANAGED: Appeals Pending V. ERISA Lawsuit Settlement NAVISITE INC.: NY Court Mulls Approval For Stock Suit Settlement PRE-PAID LEGAL: Attains Favorable Rulings in OK Lawsuits SCHNEIDER ELECTRONIC: Recalls 700T AFCIs Due To Fire Hazard TENET HEALTHCARE: Plaintiffs Seek Certification of HMO Lawsuit TENET HEALTHCARE: Asks TN Court To Dismiss Consumer Fraud Suit TENET HEALTHCARE: LA Court Refuses To Dismiss Consumer Lawsuits TENET HEALTHCARE: FL Court Mulls Dismissal of Consumer Lawsuit TENET HEALTHCARE: Plaintiffs Appeal Summary Judgment in SC Suit TENET HEALTHCARE: Asks SC To Dismiss Uninsured Patients' Lawsuit TENET HEALTHCARE: Opposes Amended Unfair Practices Lawsuit in PA TENET HEALTHCARE: Patients Launch TX Unfair Trade Practices Suit TENET HEALTHCARE: CA Court Mulls Securities Suit Certification TEXAS: Houston City Council OKs $79.5M Overtime Suit Settlement TOMMY HILFIGER: Responds to U.S. Attorney's Office Investigation TROY GROUP: Orange County Court Dismisses Suits With Prejudice WILSONART INTERNATIONAL: Remains As Defendant in Laminates Suit Asbestos Alert ASBESTOS LITIGATION: American Financial Faces Injury Claims ASBESTOS LITIGATION: PolyOne Corp Faces Asbestos Injury Lawsuits ASBESTOS LITIGATION: Lone Star, Subsidiaries Named in Lawsuits ASBESTOS LITIGATION: Prosecution Seeks Maximum Penalty for AAR ASBESTOS LITIGATION: Lorillard Wins in Asbestos Cigarette Case ASBESTOS LITIGATION: Wales to Run Out of Landfills Says Study ASBESTOS LITIGATION: EnPro Receives 15,400 New Claims, Down 61% ASBESTOS LITIGATION: Coca-Cola Disputes Aqua-Chem Inc's Demands ASBESTOS LITIGATION: Georgia-Pacific Cites 3Q Asbestos Liability ASBESTOS LITIGATION: Lincoln Electric Faces 38,243 Plaintiffs ASBESTOS LITIGATION: Bucyrus Faces 295 Cases, 1,483 Plaintiffs ASBESTOS LITIGATION: Badger Meter Takes on Multi-party Lawsuits ASBESTOS LITIGATION: Rohm & Haas Reaches Agreement with Insurers ASBESTOS LITIGATION: AK Agency Warns of Possible Health Hazards ASBESTOS LITIGATION: Rise in UK Asbestos Claims to Cost Billions ASBESTOS LITIGATION: Union Carbide Cites $1.7Bln Liability in 3Q ASBESTOS LITIGATION: National Waterworks Inc. Denies Liability ASBESTOS LITIGATION: Cytec Posts $53.1M Asbestos Liability in 3Q ASBESTOS LITIGATION: American Standard Faces 147,836 Claims ASBESTOS LITIGATION: Essex International Named as Defendant ASBESTOS LITIGATION: U.S. Gypsum Named as Defendant in Lawsuits ASBESTOS LITIGATION: CT Court Approves Raytech's Settlement Deal ASBESTOS LITIGATION: PPG Faces 116,000 Asbestos-related Lawsuits ASBESTOS LITIGATION: AU Mesothelioma Victims Seek Drug Subsidy ASBESTOS LITIGATION: Endemol, Foilhope Breach Could Cost GBD45T ASBESTOS LITIGATION: W.R. Grace Target of Investigation ASBESTOS LITIGATION: Concern Raised Over Ireland Plant Proposal ASBESTOS LITIGATION: T&N Fund Trustees Entitled to Block Deal ASBESTOS LITIGATION: CNA Financial Discloses 3Q Expense Reserves ASBESTOS LITIGATION: NSW Seeks Support on Law Aimed at Hardie ASBESTOS ALERT: Coroner Launches Probe of Central Heating System ASBESTOS ALERT: Sisters Sue Canadian Govt for Asbestos Exposure ASBESTOS ALERT: IA County Finds Asbestos Buried in Hotel Rubble ASBESTOS ALERT: ATSDR Warns Omaha Plant Ex-Workers of Exposure ASBESTOS ALERT: Sterling Sugars Inc. Named in 8 Injury Lawsuits ASBESTOS ALERT: Shipyards Deny Claims of Pleural Plaques Victims ASBESTOS ALERT: Markel Corp 3Q Review Recommended No Adjustments New Securities Fraud Cases AMERICAN INTERNATIONAL: Spector Roseman Lodges Stock Suit in NY AON CORPORATION: Abraham Fruchter Lodges Securities Suit in IL CONCORD CAMERA: Vianale & Vianale Sets Lead Plaintiff Deadline INTERACTIVECORP: Schiffrin & Barroway Lodges Stock Lawsuit in NY MARSH & MCLENNAN: Brian M. Felgoise Lodges Securities Suit in NY MERCK & CO.: Scott + Scott Lodges Securities Fraud Suit in NJ ST. PAUL TRAVELERS: Wolf Haldenstein Lodges MN Securities Suit STAR GAS: Wechsler Harwood Lodges Securities Fraud Suit in CT ********* ADIDAS AMERICA: Recalls 187T Superstar Shoes Due To Injury Risk --------------------------------------------------------------- Adidas America Inc., of Portland, Oregon is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling 187,000 Adidas Superstar Ultra and Pro Team Shoes. A portion of the sole of the heel can separate or tear during use, which can result in injuries. Adidas America has received two reports of injuries involving these shoes, including one sprained ankle and one strained Achilles tendon. The adidas Pro Team and Superstar Ultra basketball shoes come in various color combinations. The recalled shoes have a six-digit article number on the inside part of the shoe tongue. A complete list of the article numbers of the shoes involved in the recall can be found at www.adidas.com/recall or by calling the firm's recall hotline. Manufactured in China, the shoes were sold at all adidas stores, major athletic shoe stores, independent shoe stores nationwide, and at thestore.adidas.com. The Superstar Ultra shoes were sold between January 2004 and October 2004 for about $120. The Pro Team shoes were sold between July 2004 and October 2004 for about $80. Consumers should immediately stop using the recalled shoes, and contact adidas America to receive a prepaid mailing label and a refund or gift certificate. Consumer Contact: For more information, call adidas America toll-free at (877) 568-4632 anytime, or visit the adidas America Web site: http://www.adidas.com/recall CALIFORNIA: Proposition 64 Passes in November 2 Vote ---------------------------------------------------- California's Proposition 64, which limits private enforcement of the state's unfair business practices law, won handily in California's election on November 2, garnering 58.8 percent of the "yes" vote, versus 41.2 percent for those opposed, the East Bay Business Times reports. Under present law, lawsuits can be filed against companies for alleged unfair business practices on behalf of the public in general. According to its supporters, Proposition 64 would only allow individual or class action suits if there is actual harm or financial loss claimed by a plaintiff and that only government entities would be able to enforce these laws on the public's behalf. Supporters argued that many litigants demand money from businesses under threat of a lawsuit and that many small businesses pay the alleged damages because it would cost more for them to defend the case in Court. Opponents said the lawsuit restriction would deprive the public of the right to sue companies to enforce the law, such as oil companies for polluting land or water, or credit card companies for violating the public's privacy rights. Supporters of Proposition 64 included car dealers, retailers, financial institutions and oil companies, while opponents of it include the Consumers Union and the League of Conservation Voters. CANADA: Quebec Superior Court To Consider Anti-Tobacco Lawsuits --------------------------------------------------------------- Quebec smokers Jean-Yves Blais of the Quebec Council on Tobacco and Health, and Cecilia Letourneau, both of whom filed class action lawsuits in 1998 against Canada's three largest tobacco companies are attempting to win millions of dollars in damages. Hearings will begin in Quebec Superior Court on behalf of smokers and descendants of deceased smokers who suffered various smoking-related ailments, the Canadian Press reports. The Quebec Council on Tobacco and Health, which backs 17 groups, including the Quebec Medical Association, the Quebec Cancer Foundation and the professional organizations of Quebec pharmacists and nurses, claims to represent some 40,000 Quebecers who "are or have been victims of lung, larynx or throat cancer, or that suffer from emphysema, after inhaling cigarette smoke over a prolonged period in Quebec." Ms. Letourneau, on the other hand, is seeking to represent about two million Quebecers who have been dependent on the nicotine contained in cigarettes, and their heirs. Both plaintiffs argue that Imperial Tobacco, Rothmans, Benson & Hedges and JTI-MacDonald knew about the inherent risks of their product yet sold it to Canadians, causing them to become addicted. In its statement of claim, the council also argued that the tobacco manufacturers underestimated for many years evidence about the harmful effects of tobacco, made false and misleading information about it, and destroyed documents. However, Christina Dona, a spokeswoman for Imperial Tobacco stated in an interview with the Canadian Press that the suits fail to meet the specific requirements under Quebec law. She further states, "We feel it is unfounded and fails to meet the criteria in order to justify it proceeding." The suits are the first proposed class actions against Canadian tobacco manufacturers to reach this stage in Quebec. A total of six tobacco class action suits have been filed in Canada. Five are before the Courts, including a case argued last week in a British Columbia Court. CANADA: Saskatoon Judge Hears Arguments in Canola Farmer's Suit --------------------------------------------------------------- A judge in Saskatoon is hearing arguments in a lawsuit by Saskatchewan organic farmers who have lost access to the European organic canola market, due to decline of organic canola production in the area because of cross-pollination from Monsanto and Bayer Crop Science's genetically modified (GM) canola, CBC Saskatchewan reports. The farmers are pushing to have their lawsuit against the agricultural chemical companies certified as a class action, claiming to represent all organic grain farmers. However, Trish Jordan of Monsanto says the case doesn't meet the criteria for a class action and that the evidence doesn't support the claim of widespread hurt among organic farmers. She adds, "They're trying to put the argument forward that if GM canola hadn't been introduced, we would have grown more. I don't really think the facts support that, either. All you have to do is look at Europe where there were no GM crops under cultivation and the acreage of organic canola is negligible. It's very similar to what's here in Saskatchewan." Legal experts predict arguments will likely wind up Wednesday, but a decision isn't expected for several months. CHIRON CORPORATION: Stock Suits Filed On Flu Vaccine Suspension --------------------------------------------------------------- Chiron Corporation and certain of its officers face several securities class actions alleging that they violated certain provisions of the federal securities laws by making false statements preceding the suspension of its license to distribute Fluvirin, its vaccine against flu. The U.K. regulatory body, the Medicines and Healthcare products Regulatory Agency (the "MHRA"), sent the Company a letter prohibiting it from releasing any Fluvirin doses manufactured at the Company's Liverpool facility since March 2, 2004. In that letter, the MHRA asserted that the Company's manufacturing process did not comply with U.K. good manufacturing practices regulations. In addition to prohibiting release of existing Fluvirin doses, the MHRA letter also suspended its license to manufacture influenza virus vaccine in the Company's Liverpool facility for three months. Following its own investigation, the U.S. Food and Drug Administration, or FDA, announced that it would not permit release of any Fluvirin from the Company's Liverpool facility into the United States. On October 12, 2004, Richard Gregory, on behalf of purchasers of the publicly traded securities of Chiron between January 12, 2004 and October 4, 2004, filed a class action in the United States District Court for the Northern District of California, seeking damages. On October 13, 2004, Raphael Nach, on behalf of purchasers of publicly-traded Chiron securities between July 23, 2004 and October 5, 2004, filed a class action in the United States District Court for the Northern District of California. The suit also seeks damages. On October 14, 2004, Jerome Fisher, on behalf of purchasers of the publicly-traded securities of Chiron between January 12, 2004 and October 13, 2004, filed a class action in the United States District Court for the Eastern District of Pennsylvania, making similar allegations as the above mentioned suits. On October 19, 2004, Gerald Kramer, on behalf of purchasers of the publicly-traded securities of Chiron between July 23, 2003 and October 5, 2004, filed a similar class action in the United States District Court for the Northern District of California. CITIGROUP INC.: Plans To Dispute NASD Arbitration Panel's Ruling ---------------------------------------------------------------- Citigroup Inc. plans to challenge the decision of the arbitration panel of the National Association of Securities Dealers (NASD) that ordered one of its units to restore part of the losses of a former WorldCom employee whose stock options became worthless when the Company declared bankruptcy in 2002, according to a story in the Wall Street Journal, the Associated Press reports. NASD, which is the brokerage industry's self-policing organization, made the ruling last week against Citigroup Global Markets, formerly called Salomon Smith Barney. Although there was no award of punitive damages, the panel did order the Citigroup division to pay the former employee, Linda Naples, $75,000 of her $600,000 claim against it. WorldCom, which had filed the largest corporate bankruptcy in U.S. history on July 2002 amid revelations of accounting irregularities, would later emerged from bankruptcy Court protection in April under the name MCI Inc. According to the Wall Street Journal story, the ruling could have significant implications for thousands of Worldcom employees who sustained similar losses and for future arbitration proceedings involving other big companies embroiled in accounting scandals and bankruptcies. In its decision, the NASD panel stated that Citigroup Global Markets breached its fiduciary duty to the WorldCom employee by virtue of its problematically close ties with WorldCom and top executives of the telecom giant and that in addition, Salomon Smith Barney was the administrator of WorldCom's stock options program. Upon reaching the decision, Citigroup, which in May agreed to pay $2.65 billion to settle a lawsuit by WorldCom investors in one of the biggest class-action settlements to date, said it planned a legal challenge in federal Court since Ms. Naples didn't rely on Salomon Smith Barney for investment advice and her WorldCom stock options were held in an account with Merrill Lynch, not Salomon Smith Barney. The panel though rejected the part of Ms. Naples' claim that was against Merrill Lynch. COLUMBIA NATURAL: Trial in WV Gas Royalties Suit Set July 2005 -------------------------------------------------------------- Trial in the class action filed against Columbia Natural Resources is set for July 5,2005 in West Virginia State Court. The Plaintiffs, who are royalty owners, filed a lawsuit in early 2003 against the Company alleging that the Company underpaid royalties by improperly deducting post-production costs and not paying a fair value for the gas produced from their leases. Plaintiffs seek the alleged royalty underpayment and punitive damages claiming that the Company fraudulently concealed the deduction of post-production charges. In February 2004, the Court certified the case as a class action that includes any person who, after January 1, 1980, received or is due royalties from Columbia Natural Resources (and its predecessors or successors) on lands lying within the boundary of the State of West Virginia. All individuals, corporations, agencies, departments or instrumentalities of the United States of America are excepted from the class. The Company appealed the decision certifying the class and the Supreme Court of West Virginia denied the appeal. Members of the class had until October 15, 2004 to opt out; the list of class members is now being prepared by the Special Master. FLORIDA: Sick Smokers Urge High Court To Restore $145M Verdict -------------------------------------------------------------- Florida's sick smokers, who were given a $145 billion class- action award by an American jury urged the state's highest Court to punish the tobacco industry for "fraud and deceit" by restoring the said award, the Naples Daily News reports. Stanley Rosenblatt, the smokers' lawyers told the Florida Supreme Court that it should reduce the amount if the justices think it is too large, as long as they also reverse an appellate Court decision that overturned the Miami verdict and punitive judgment. Mr. Rosenblatt along with his wife, Susan, shepherded the case, which accused the tobacco industry of misleading people about the dangers of smoking, through the two-year trial and a pair of appeals to the 3rd District Court of Appeal in Miami. The husband-and-wife legal team won the first appeal, which certified the case as a class action on behalf of an estimated 300,000 to 700,000 ill Floridians. However, after the trial, the appellate Court ruled that certification was a mistake and thus tossed the award. In defense of the tobacco industry, attorney Elliott Scherker told the justices, "This case exemplifies the chaos that can result from improperly certified class actions." He further argued that it was improper because every smoker is affected differently and should have to file a separate lawsuit instead of trying one case covering them all. The Rosenblatts, however, pointed out that those differences could be resolved without disturbing the class-action verdict by holding short proceedings to determine medical costs and other compensatory damages instead of retrying issues common to each case thousands of times. During the hearing only six of the seven justices heard the case with Justice Raoul Cantero being the absentee for unknown reasons. Legal experts explain that the high Court typically takes several months to rule on a case so no immediate decision on the case can be reached with in this year. GEORGIA: Clinch County Jail Prisoners Lodge Suit V. $18 Jail Fee ---------------------------------------------------------------- Two former prisoners at the Clinch County Jail in Georgia initiated a federal lawsuit seeking class-action status against the county's practice of charging people $18 a day for room and board while they are incarcerated and awaiting trial, the Associated Press reports. According to the former prisoners, to be released, they must pay the money or sign an agreement to pay over time. If they fail to make the payments, they can be returned to jail. The lawsuit, which was filed in U.S. District Court in Valdosta on behalf of all current and former inmates who have had to pay the jail fees, contends the southeast Georgia county's sheriff has no authority to charge such fees to people who have yet to be convicted of a crime. The suit also stated that most of the inmates are too poor to pay the fees. The suit, which was filed on the inmates' behalf by the Atlanta law firm King & Spalding and the Southern Center for Human Rights is also seeking to have the county return all room-and- board fees it has collected from inmates. Courtland Reichman, one of the inmates' lawyers described the jail as being similar to a debtor's prison. He also stated, "They charge people who have not been convicted of a crime and are presumed innocent and threaten to throw them back in jail if they don't pay. This is simply an abuse of authority and something that needs to be stopped." However, Sheriff Winston Peterson defended the county practice by pointing out that it has been charging jail costs since before he took office 16 years ago and that "It's not illegal, or it shouldn't be. The taxpayer shouldn't have to cover the costs of someone who done wrong. I don't think we're doing anything wrong." The sheriff also said if inmates who had paid jail costs were later acquitted or had the charges dismissed against them, "we'd pay them back if we could find them." The two plaintiffs in the case are Willie Floyd Williams Jr., 41, of Homerville, Georgia, who was arrested in October 2003, on charges of rape and aggravated child molestation and Mickle Jermaine Jackson, 24, who was arrested on February 6 on charges of rape and kidnapping. GETANSWERS INC.: SEC Lodges Injunction V. VP Barrington Schneer --------------------------------------------------------------- The Securities and Exchange Commission initiated a civil injunctive action against Barrington Schneer, the former vice- president of corporate development of GetAnswers, Inc., an Internet Company headquartered in Aventura, Florida. The Commission's complaint alleges that from at least January 2001 through January 2003, Schneer and others raised approximately $7.5 million from hundreds of investors nationwide, primarily physicians, through an in-house boiler room operation. The complaint further alleges that GetAnswers, through its offering and marketing materials and/or sales representatives, made numerous false representations and omissions to investors relating to, among other things, the experience of GetAnswers' president and chief executive officers in starting successful Internet companies, GetAnswers' affiliation with a college, the use of investor proceeds, the safety and profitability of an investment in the Company, and its compliance with all securities laws. The complaint charges Schneer with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Previously, on Jan. 10, 2003, the Commission filed an emergency civil injunctive action against GetAnswers and others (SEC v. GetAnswers, Inc., et al., Case No. 03-20048-KING-O'SULLIVAN. [FL-2888]). [SEC v. Barrington Schneer, Case No. 04-22743-CIV- UNGARO-BENAGES/BROWN (S.D. Fla.] (LR-18955) HENRY SCHEIN: Individual Claims Remain in TX Consumer Fraud Suit ---------------------------------------------------------------- Only individual claims remain in the lawsuit filed against Henry Schein, Inc. and one of its subsidiaries in the District Court in Travis County, Texas, styled "Shelly E. Stromboe and Jeanne Taylor, on Behalf of Themselves and all others Similarly Situated vs. Henry Schein, Inc., Easy Dental Systems, Inc. and Dentisoft, Inc., Case No. 98-00886." The petition alleges, among other things, negligence, breach of contract, fraud, and violations of certain Texas commercial statutes involving the sale of certain practice management software products sold prior to 1998 under the Easy Dental name. In October 1999, the trial Court, on motion, certified both a Windows sub-class and a DOS sub-class to proceed as a class action pursuant to Tex. R. Civ. P. 42. It is estimated that approximately 5,000 Windows customers and approximately 10,000 DOS customers were covered by the class action that was certified by the trial Court. On September 14, 2000, the Court of Appeals affirmed the trial Court's certification order. On January 5, 2001, the Company filed a Petition for Review in the Texas Supreme Court. On October 31, 2002, the Texas Supreme Court issued an opinion in the case finding that the trial Court's certification of the case as a class action was improper. The Texas Supreme Court reversed the Court of Appeals' judgment in its entirety, and remanded the case to the trial Court for further proceedings consistent with its opinion. On August 29, 2003, class counsel filed amended papers seeking certification of an amended Windows class and an amended DOS class. The only claim asserted for class certification by the Windows class was for the alleged breach of the implied warranty of merchantability. The only claims asserted for class certification by the DOS class were for alleged violations of the Texas Unsolicited Goods Statute and the Federal Unordered Merchandise Act. By Order dated December 10, 2003, the trial Court granted Defendants' Motion for Partial Summary Judgment on the DOS Class claims. By granting summary judgment on the claims asserted on behalf of the DOS class, the DOS motion for class certification became moot because certain class claims asserted by the named class representatives for the DOS class were found to be without merit. By Order dated January 13, 2004, the trial Court denied the amended motion for class certification filed by the Windows Class in its entirety. The deadline for the Windows Class to file an interlocutory appeal of the denial of the amended motion for class certification was February 2, 2004. No appeal was filed on or before that date. As a result of the favorable rulings obtained in the trial Court, only certain individual claims asserted on behalf of the named plaintiffs remain pending in this case. The remaining individual claims are currently set for trial on February 28, 2005. HENRY SCHEIN: Asks NJ Court To Grant Summary Judgment in Lawsuit ---------------------------------------------------------------- Henry Schein, Inc. asked the Superior Court of New Jersey, Law Division, Morris County to grant summary judgment in its favor in the class action styled "West Morris Pediatrics, P.A. and Avenel-Iselin Medical Group, P.A. vs. Henry Schein, Inc., doing business as Caligor, Case No. MRS-L-421-02." The plaintiffs complaint purported to be on behalf of a class of all physicians, hospitals and other healthcare providers throughout New Jersey and across the United States who purchased influenza vaccine from Caligor in 2001. This complaint, as amended in August 2002, alleges, among other things: (1) breach of oral contract, (2) breach of implied covenant of good faith and fair dealing, (3) violation of the New Jersey Consumer Fraud Act, (4) unjust enrichment, (5) conversion, and (6) promissory estoppel In September 2004, the Court issued a decision denying certification of a class and striking the class allegations from the complaint. As a result, only the two named plaintiffs' claims, which are de minimis, remain for adjudication. The Company filed motions for summary judgment dismissing those claims, which motions are now pending. It is possible that the plaintiffs will appeal the denial of class certification and any judgment in our favor on the summary judgment motions, the Company said in a disclosure to the Securities and Exchange Commission. JUNIPER NETWORKS: Plaintiffs Appeal CA Securities Suit Dismissal ---------------------------------------------------------------- Plaintiffs appealed the United States District Court for the Northern District of California's dismissal of the consolidated securities class action against Juniper Networks, Inc. and certain of its officers and former officers purportedly on behalf of those stockholders who purchased the Company's publicly traded securities between April 12, 2001 and June 7, 2001. The Court has appointed the lead plaintiffs and approved their selection of lead counsel and a consolidated complaint was filed in August 2002. The plaintiffs allege that the defendants made false and misleading statements, assert claims for violations of the federal securities laws and seek unspecified compensatory damages and other relief. In September 2002, the defendants moved to dismiss the consolidated complaint. In March 2003, the Court granted defendants motion to dismiss with leave to amend. The plaintiffs filed their amended complaint in April 2003 and the defendants moved to dismiss the amended complaint in May 2003. The hearing on defendants' motion to dismiss was held in September 2003. In March 2004, the Court granted defendants motion to dismiss, without leave to amend. In April 2004, the plaintiffs filed a notice of appeal. Plaintiffs' opening appellate brief was filed in August 2004. Defendant's opposition brief is due in November 2004. LERNOUT & HAUSPIE: Suit Settlement Hearing Set December 20, 2004 ---------------------------------------------------------------- The United States District Court for the District of Massachusetts will hold a fairness hearing for the settlement of the securities class action, In re Lernout & Hauspie Securities Litigation, Case No. 00-CV-11589 (PBS) on behalf of all persons or entities who purchased the common stock of Lernout & Hauspie Speech Products N.V. ("L&H") on the NASDAQ Stock Market or purchased L&H call options or sold L&H put options on any United States-based options exchange between April 28, 1998 and November 9, 2000, inclusive (the "Class Period") and who were damaged thereby (the "Class"). The settlement fairness hearing is scheduled for December 20, 2004 at 4:00 p.m., before the Honorable John Joseph Moakley in the United States Courthouse, 1 Courthouse Way, Boston, MA 02210. For more details, contact Jeffrey C. Block, Esq. of BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO by Mail: One Liberty Square, Boston, MA 02109 by Phone: (800) 516-9926 or visit their Web site: http://www.bermanesq.comOR Patrick L. Rocco, Esq. of SHALOV STONE & BONNER LLP by Mail: 485 Seventh Avenue, Suite 1000, New York, NY 10018 by Phone: (212) 239-4340 or visit their Web site: http://www.lawssb.comOR S. Gene Cauley, Esq. of CAULEY BOWMAN CARNEY & WILLIAMS, PLLC by Mail: P.O. Box 25438, Little Rock, AR 72221 by Phone: (501) 312-8505 or visit their Web site: http://www.cauleybowman.comOR visit the Settlement Web site: http://www.lernouthauspiesettlement.com/ MARATHON ASHLAND: WV Residents Lodge Suit Over Chemical Spill ------------------------------------------------------------- Four Huntington residents have initiated a lawsuit seeking class action status in Wayne County Circuit Court against Marathon Ashland Petroleum and TechSol Chemical Co. over last week's chemical leak, which sought to have the two companies create a reimbursement fund to pay for evacuation costs and to fund an independent study to determine if their neighborhood is safe, the Associated Press reports. The lawsuit, which was filed by Charleston lawyers Brian Glasser, H.F. Salsbery and Deirdre Purdy on behalf of Gary Beckett, Ronald Bush, Deborah Gavazzi and Michelle Hardwick, alleges that both Companies have not taken the necessary steps to protect the community from the chemicals that leaked, which included oil, benzene, toluene, xylene, naphthalene, indene, and z-methylnapthalene. The suit, which seeks to represent other families forced to evacuate states that ingestion of the chemicals or inhalation of the vapors can be hazardous to human health. The spill occurred last Thursday at TechSol Chemical, as workers were about to transfer coal tar distillates containing toluene, benzene, xylene and styrene to a railroad tanker for shipment to a Marathon Ashland Petroleum Refinery near Catlettsburg, Kentucky. According to one TechSol employee, an apparently defective valve was the likely cause of the accident. As the leak ensued, people living in about 500 homes were forced to evacuate. The lawsuit also alleges that the TechSol facility avoided effective controls for transferring chemicals to save money, and that Marathon Ashland officials allegedly were "aware of TechSol's shoddy practices or inadequate facilities, but allowed TechSol to continue to operate this way to enrich themselves at the risk of the nearby community." Furthermore, the suit is also asking the Court to force the companies to "pay for independent experts to evaluate alternative technologies that will make this operation safer," and it seeks punitive damages as well as damages to fund medical monitoring. MEDCO HEALTH: PA Court Refuses To Dismiss Drug Antitrust Lawsuit ---------------------------------------------------------------- The United States District Court for the Eastern District of Pennsylvania refused to dismiss the class action filed against Medco Health Solutions, Inc., styled "Brady Enterprises, Inc., et al. v. Medco Health Solutions, Inc., et al." The plaintiffs, which seek to represent a national class of retail pharmacies that have contracted with the Company, allege that the Company has conspired with, acted as the common agent for, and used the combined bargaining power of plan sponsors to restrain competition in the market for the dispensing and sale of prescription drugs. The plaintiffs allege that, through the alleged conspiracy, the Company has engaged in various forms of anticompetitive conduct, including, among other things, setting artificially low reimbursement rates to such pharmacies. The plaintiffs assert claims for violation of the Sherman Act and seek treble damages and injunctive relief. MEDCO HEALTH: AL Court Refuses To Dismiss Drug Antitrust Lawsuit ---------------------------------------------------------------- The United States District Court for the Northern District of Alabama refused to dismiss a class action filed against Medco Health Solutions, Inc. and Merck & Co., styled "North Jackson Pharmacy, Inc., et al. v. Medco Health Solutions, Inc., et al." The plaintiffs seek to represent a national class of independent retail pharmacies that have contracted with the Company. In February 2004, Merck and the Company filed motions to dismiss the plaintiffs' amended complaint. However, prior to ruling on the motions, the Court granted the plaintiffs permission to file a second amended complaint, which the plaintiffs filed on July 23, 2004. In their Second Amended and Consolidated Class Action Complaint, the plaintiffs allege that Merck and the Company have engaged in price fixing and other unlawful concerted actions with others, including other PBMs, to restrain trade in the dispensing and sale of prescription drugs to customers of retail pharmacies who participate in programs or plans that pay for all or part of the drugs dispensed, and have conspired with, acted as the common agent for, and used the combined bargaining power of plan sponsors to restrain competition in the market for the dispensing and sale of prescription drugs. The plaintiffs allege that, through such concerted action, Merck and the Company have engaged in various forms of anticompetitive conduct, including, among other things, setting reimbursement rates to such pharmacies at unreasonably low levels. The plaintiffs assert claims for violation of the Sherman Act and seek treble damages and injunctive relief. MEDCO HEALTH: Asks CA Court To Dismiss Unfair Practices Lawsuit --------------------------------------------------------------- Medco Health Solutions, Inc. and Merck & Co. asked the Superior Court of California to dismiss the class action filed against them, styled "Alameda Drug Company, Inc., et al. v. Medco Health Solutions, Inc., et al." The plaintiffs, which seek to represent a class of all California pharmacies that have contracted with the Company and that have indirectly purchased prescription drugs from Merck, allege, among other things, that since the expiration of a 1995 consent injunction entered by the U.S. District Court for the Northern District of California, if not earlier, the Company has failed to maintain an Open Formulary (as defined in the consent injunction), and that the Company and Merck have failed to prevent nonpublic information received from competitors of Merck and the Company from being disclosed to each other. The plaintiffs further allege that, as a result of these alleged practices, the Company has been able to increase its market share and artificially reduce the level of reimbursement to the retail pharmacy class members, and that the prices of prescription drugs from Merck and other pharmaceutical manufacturers that do business with the Company have been fixed and raised above competitive levels. The plaintiffs assert claims for violation of California antitrust law and California law prohibiting unfair business practices. The plaintiffs demand, among other things, compensatory damages, restitution, disgorgement of unlawfully obtained profits, and injunctive relief. In April 2004, Merck and the Company filed motions to dismiss the complaint. On September 2, 2004, the Court ruled in Merck and the Company's favor, but granted the plaintiff permission to amend its complaint. On September 17, 2004, the plaintiff filed its Amended Complaint. In its Amended Complaint, the plaintiff repeats many of the same allegations made in the original Complaint, and further alleges, among other things, that the Company acts as a purchasing agent for its plan sponsor customers, resulting in a system that serves to suppress competition. On October 22, 2004, Merck and the Company filed motions to dismiss the Amended Complaint. MERCK-MEDCO MANAGED: Appeals Pending V. ERISA Lawsuit Settlement ---------------------------------------------------------------- Two appeals are pending against the settlement of the consolidated shareholder class actions filed against Merck-Medco Managed Care, LLC in the United States District Court for the Southern District of New York. On December 17, 1997, a lawsuit captioned "Gruer v. Merck-Medco Managed Care, L.L.C." was filed, alleging that the Company should be treated as a "fiduciary" under the provisions of Employee Retirement Income Security Act (ERISA) and that the Company has breached fiduciary obligations under ERISA in connection with the Company's development and implementation of formularies, preferred drug listings and intervention programs. After the Gruer case was filed, six other cases were filed in the same Court asserting similar claims; one of these cases was voluntarily dismissed. The plaintiffs in these cases, who are individual plan members and claim to represent the interests of six different pharmaceutical benefit plans for which the Company is the pharmaceutical benefit manager (PBM), contend that, in accepting and retaining certain rebates, the Company has failed to make adequate disclosure and has acted in the Company's own best interest and against the interests of the Company's clients. The plaintiffs also allege the Company was wrongly used to increase the Company's market share, claiming that under ERISA the Company's drug formulary choices and therapeutic interchange programs were "prohibited transactions" that favor its products. The plaintiffs have demanded that the Company turn over any unlawfully obtained profits to a trust to be set up for the benefit plans. In December 2002, the Company agreed to settle the Gruer series of lawsuits on a class action basis to avoid the significant cost and distraction of protracted litigation. The Company and the plaintiffs in five of these six cases filed a proposed class action settlement with the Court. On May 25, 2004, the Court granted final approval to the settlement, ruling, among other things, that the settlement was fair, reasonable, and adequate to members of the settlement class. On June 28, 2004, the Court entered a Final Judgment dismissing the class actions with prejudice. Under the settlement, Merck and the Company have agreed to pay $42.5 million, and the Company has agreed to change or to continue certain specified business practices for a period of five years. In September 2003, the Company paid $38.3 million to an escrow account, representing the Company's portion, or 90%, of the proposed settlement. If the settlement becomes final, it would resolve litigation by pharmaceutical benefit plans against Merck and the Company based on ERISA and similar claims, except with respect to those plans that affirmatively opt out of the settlement. The plaintiff in the sixth case discussed above, Blumenthal v. Merck-Medco Managed Care, L.L.C., et al. has elected to opt out of the settlement. The release of claims under the settlement applies to plans for which the Company has administered a pharmacy benefit at any time between December 17, 1994 and the date of final approval. It does not involve the release of any potential antitrust claims. The settlement becomes final only after all appeals have been exhausted. Similar ERISA-based complaints against the Company and Merck were filed in eight additional actions by ERISA plan participants, purportedly on behalf of their plans, and, in some of the actions, similarly situated self-funded plans. The complaints in these actions relied on many of the same allegations as the Gruer series of lawsuits discussed above. The ERISA plans themselves, which were not parties to these lawsuits, have elected to participate in the settlement discussed above. Under the Final Judgment discussed above, the Court dismissed seven of these actions. On May 21, 2004, however, the Court granted the plaintiff in the other action, Betty Jo Jones v. Merck-Medco Managed Care, L.L.C., et al. permission to file a second amended complaint. In her Second Amended Complaint, the plaintiff in the Jones action seeks to represent a class of all participants and beneficiaries of ERISA plans that required such participants to pay a percentage co-payment on prescription drugs. The effect of the release under the settlement discussed above on the Jones action has not yet been litigated. In addition, a proposed class action complaint against Merck and the Company has been filed by trustees of another benefit plan, the United Food and Commercial Workers Local Union No. 1529 and Employers Health and Welfare Plan Trust, in the U.S. District Court for the Northern District of California. This plan has elected to opt out of the settlement. The United Food action has been transferred and consolidated in the U.S. District Court for the Southern District of New York by order of the Judicial Panel on Multidistrict Litigation. On April 2, 2003, a lawsuit captioned Peabody Energy Corporation v. Medco Health Solutions, Inc., et al. was filed in the U.S. District Court for the Eastern District of Missouri. The complaint, filed by one of the Company's former clients, relies on allegations similar to those in the ERISA cases discussed above, in addition to allegations relating specifically to Peabody, which has elected to opt out of the settlement described above. The complaint asserts that the Company breached fiduciary duties under ERISA, violated a New Jersey consumer protection law, improperly induced the client into contracting with the Company, and breached the resulting agreement. The plaintiff seeks compensatory, punitive and treble damages, as well as rescission and restitution of revenues that were allegedly improperly received by the Company. On October 28, 2003, the Judicial Panel on Multidistrict Litigation transferred this action to the U.S. District Court for the Southern District of New York to be consolidated with the ERISA cases pending against the Company in that Court. On December 23, 2003, Peabody filed a similar action against Merck in the U.S. District Court for the Eastern District of Missouri. The complaint relies on allegations similar to those in the ERISA cases discussed above and in the case filed by Peabody against the Company. The complaint asserts claims that Merck violated federal and state racketeering laws, tortiously interfered with Peabody's contract with the Company, and was unjustly enriched. The plaintiff seeks, among other things, compensatory damages of approximately $35 million, treble damages, and restitution of revenues that were allegedly improperly received by Merck. On August 5, 2004, the Judicial Panel on Multidistrict Litigation transferred this action to the U.S. District Court for the Southern District of New York to be consolidated with the ERISA cases pending against Merck and the Company in that Court. On March 17, 2003, a lawsuit captioned American Federation of State, County and Municipal Employees v. AdvancePCS et al. based on allegations similar to those in the ERISA cases discussed above, was filed against the Company and other major PBMs in the Superior Court of California. The theory of liability in this action is based on a California law prohibiting unfair business practices. The plaintiff, which purports to sue on behalf of itself, California non-ERISA health plans, and all individual participants in such plans, seeks injunctive relief and disgorgement of revenues that were allegedly improperly received by the Company. On June 11, 2002, a lawsuit captioned Miles v. Merck-Medco Managed Care, L.L.C., based on allegations similar to those in the ERISA cases discussed above, was filed against Merck and the Company in the Superior Court of California. The theory of liability in this action is based on a California law prohibiting unfair business practices. The plaintiff, who purports to sue on behalf of the general public of California, seeks injunctive relief and disgorgement of the revenues that were allegedly improperly received by Merck and the Company. The Miles case was removed to the U.S. District Court for the Southern District of California and, pursuant to the Multidistrict Litigation order discussed above, was later transferred to the U.S. District Court for the Southern District of New York and consolidated with the ERISA cases pending against Merck and the Company in that Court. NAVISITE INC.: NY Court Mulls Approval For Stock Suit Settlement ---------------------------------------------------------------- The United States District Court for the Southern District of New York has briefed the motion for preliminary approval of the settlement of the consolidated securities class action filed against Navisite, Inc., certain of its officers and its underwriters, alleging violations of federal securities laws. On June 13, 2001, Stuart Werman and Lynn McFarlane filed a lawsuit against the Company, BancBoston Robertson Stephens, an underwriter of its initial public offering in October 1999, Joel B. Rosen, its then chief executive officer, and Kenneth W. Hale, its then chief financial officer. The suit generally alleged that the defendants violated federal securities laws by not disclosing certain actions allegedly taken by Robertson Stephens in connection with the Company's initial public offering. The suit further alleged specifically that Robertson Stephens, in exchange for the allocation to its customers of shares of the Company's common stock sold in its initial public offering, solicited and received from its customers' agreements to purchase additional shares of the Company's common stock in the aftermarket at pre-determined prices. The suit seeks unspecified monetary damages and certification of a plaintiff class consisting of all persons who acquired shares of the Company's common stock between October 22, 1999 and December 6, 2000. Three other substantially similar lawsuits were filed between June 15, 2001 and July 10, 2001 by Moses Mayer (filed June 15, 2001), Barry Feldman (filed June 19, 2001), and Binh Nguyen (filed July 10, 2001). Robert E. Eisenberg, the Company's president at the time of the initial public offering in 1999, also was named as a defendant in the Nguyen lawsuit. On June 21, 2001, David Federico filed in the United States District Court for the Southern District of New York a lawsuit against the Company, Mr. Rosen, Mr. Hale, Robertson Stephens and other underwriter defendants including J.P. Morgan Chase, First Albany Companies, Inc., Bank of America Securities, LLC, Bear Stearns & Co., Inc., B.T. Alex. Brown, Inc., Chase Securities, Inc., CIBC World Markets, Credit Suisse First Boston Corporation, Dain Rauscher, Inc., Deutsche Bank Securities, Inc., The Goldman Sachs Group, Inc., J.P. Morgan & Co., J.P. Morgan Securities, Lehman Brothers, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley Dean Witter & Co., Robert Fleming, Inc. and Salomon Smith Barney, Inc. The suit generally alleges the defendants violated the anti- trust laws and the federal securities laws by conspiring and agreeing to raise and increase the compensation received by the underwriter defendants by requiring those who received allocation of initial public offering stock to agree to purchase shares of manipulated securities in the after-market of the initial public offering at escalating price levels designed to inflate the price of the manipulated stock, thus artificially creating an appearance of demand and high prices for that stock, and initial public offering stock in general, leading to further stock offerings. The suit also alleges the defendants arranged for the underwriter defendants to receive undisclosed and excessive brokerage commissions and that, as a consequence, the underwriter defendants successfully increased investor interest in the manipulated initial public offering of securities and increased the underwriter defendants' individual and collective underwritings, compensation, and revenue. The suit further alleges that the defendants violated the federal securities laws by issuing and selling securities pursuant to the initial public offering without disclosing to investors that the underwriter defendants in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. The suit seeks unspecified monetary damages and certification of a plaintiff class consisting of all persons who acquired shares of the Company's common stock between October 22, 1999 and June 12, 2001. Those five cases, along with lawsuits naming more than 300 other issuers and over 50 investment banks which have been sued in substantially similar lawsuits, have been assigned to the Honorable Shira A. Scheindlin for all pretrial purposes. On September 6, 2001, the Court entered an order consolidating the five individual cases involving the Company and designating "Werman v. NaviSite, Inc., et al., Civil Action No. 01-CV-5374," as the lead case. A consolidated, amended complaint was filed thereafter on April 19, 2002 on behalf of plaintiffs Arvid Brandstrom and Tony Tse against underwriter defendants Robertson Stephens (as successor-in-interest to BancBoston), BancBoston, J.P. Morgan (as successor-in-interest to Hambrecht & Quist), Hambrecht & Quist and First Albany and against the Company and Mr. Rosen, Mr. Hale and Mr. Eisenberg (collectively, the "NaviSite Defendants"). Plaintiffs uniformly allege that all defendants, including the NaviSite Defendants, violated the federal securities laws (i.e., Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5) by issuing and selling the Company's common stock pursuant to the October 22, 1999, initial public offering, without disclosing to investors that some of the underwriters of the offering, including the lead underwriters, had solicited and received extensive and undisclosed agreements from certain investors to purchase aftermarket shares at pre-arranged, escalating prices and also to receive additional commissions and/or other compensation from those investors. At this time, plaintiffs have not specified the amount of damages they are seeking in the suit. Between July and September 2002, the parties to the IPO Securities Litigation briefed motions to dismiss filed by the underwriter defendants and the issuer defendants, including NaviSite. On November 1, 2002, the Court held oral argument on the motions to dismiss. The plaintiffs have since agreed to dismiss the claims against Mr. Rosen, Mr. Hale and Mr. Eisenberg without prejudice, in return for their agreement to toll any statute of limitations applicable to those claims. By stipulation entered by the Court on November 18, 2002, Mr. Rosen, Mr. Hale and Mr. Eisenberg were dismissed without prejudice from the Class Action Litigation. On February 19, 2003, an opinion and order was issued on defendants' motion to dismiss the IPO Securities Litigation, essentially denying the motions to dismiss of all 55 underwriter defendants and of 185 of the 301 issuer defendants, including NaviSite. On June 30, 2003, the Company's Board of Directors considered and authorized the Company to negotiate a settlement of the pending Class Action Litigation substantially consistent with a memorandum of understanding negotiated among class plaintiffs, the issuer defendants and the insurers for such issuer defendants. Among other contingencies, any such settlement would be subject to approval by the Court. Plaintiffs filed on June 14, 2004, a motion for preliminary approval of the Stipulation And Agreement Of Settlement With Defendant Issuers And Individuals. As of August 13, 2004, the Preliminary Approval Motion has been fully briefed but the Court has not ruled upon or set a date for oral argument, if any, on the Preliminary Approval Motion. PRE-PAID LEGAL: Attains Favorable Rulings in OK Lawsuits -------------------------------------------------------- Pre-Paid Legal Services, Inc. (NYSE: PPD) acquired favorable developments in two lawsuits filed against the Company and certain of its executive officers. On June 29, 2001, an action was filed against Pre-Paid in the District Court of Canadian County, Oklahoma. The action was originally a putative class action brought by former and current sales associates. The amended petition, filed in 2002, seeks injunctive and declaratory relief, with other damages, for alleged violations of the Oklahoma Uniform Consumer Credit Code in connection with Pre-Paid's commission advances, and seeks injunctive and declaratory relief regarding the enforcement of certain contract provisions with sales associates, including a request for the imposition of a constructive trust as to earned commissions applied to the reduction of debit balances and disgorgement of all earned renewal commissions applied to the reduction of debit balances. On September 23, 2003 the trial Court entered an order dismissing the class action allegations upon the motion of the plaintiffs. On December 4, 2003, Pre-Paid filed a motion for summary judgment. On November 2, 2004, the trial Court issued a Memorandum Order finding Pre-Paid's motion for summary judgment to be meritorious and granting judgment in favor of Pre-Paid on all claims. "Subject to plaintiffs' right to pursue an appeal, this order ends this lawsuit," stated Pre-Paid Chairman and CEO Harland C. Stonecipher. Additionally, the United States Court of Appeals for the Tenth Circuit issued a ruling on October 26, 2004 denying an Interlocutory Appeal filed by putative class action plaintiffs, thereby affirming the trial Court's earlier ruling denying class certification. On March 1, 2002, an action was filed in the United States District Court for the Western District of Oklahoma by five individuals against the Company and certain executive officers. This action is a putative class action seeking unspecified damages purportedly filed on behalf of sales associates of the Company and alleges that the marketing plan offered by the Company constitutes a security under the Securities Act of 1933 and seeks remedies for failure to register the marketing plan as a security and for violations of the anti-fraud provisions of the Securities Act of 1933 in connection with representations alleged to have been made in connection with the marketing plan. The complaint also alleges violations of the Oklahoma Securities Act, the Oklahoma Business Opportunities Sales Act, unjust enrichment and violation of the Oklahoma Consumer Protection Act. On September 8, 2004, the trial Court issued its ruling denying class certification on multiple grounds. "Although the case may still proceed in the trial Court on the individual plaintiffs' claims, the appellate Court's denial of the interlocutory appeal indicates the class action case is closed," stated CEO Stonecipher. "Pre-Paid is certainly pleased with these recent developments," stated Pre-Paid Chairman and CEO Harland C. Stonecipher. "These rulings, along with other recent favorable litigation developments in Mississippi, continue to set the tone for Pre- Paid in litigation matters and will continue to push Pre-Paid forward." SCHNEIDER ELECTRONIC: Recalls 700T AFCIs Due To Fire Hazard ----------------------------------------------------------- Schneider Electric North American Division, of Palatine, Illinois is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 700,000 Arc Fault Circuit Interrupters (AFCI). An AFCI is an electrical circuit protection device (circuit breaker) that detects electrical arcs from cracked, broken or damaged electrical insulation and shuts off power to the circuit before the arcing leads to a fire. An electronic component failure inside the AFCIs can cause the devices to not detect an electrical arc. Although the AFCIs will function as regular circuit breakers, they may not detect an arc fault, posing a safety risk to consumers. Schneider Electric is investigating one reported fire during a new home construction that may be related to this problem. No injuries have been reported. The recalled Square D QOr and Homeliner Arc Fault Interrupter circuit breakers are used with 15- and 20-amp branch circuits. They are required to be installed in bedroom circuits in accordance with the 2002 National Electrical Code. The recalled units were manufactured after March 1, 2004, and have a blue test button. The AFCI circuit breakers have one of the following date codes - CN, DN, EN, FN, GN, HN, or JN - stamped in red on the breaker label located just above the wiring terminal. The recalled units also have one of the following catalog numbers printed on a label on the front of the breaker: QO115AFI, QO115AFIC, QO120AFI, QO120AFIC, QOB115AFI, QOB120AFI, HOM115AFI, HOM115AFIC, HOM120AFI, HOM120AFIC, QO115VHAFI, QO120VHAFI, QOB115VHAFI, or QOB120VHAFI. Manufactured in Mexico, the device were sold at all electrical distributors and retailers between March 2004 and September 2004 for between $30 and $130. Installed AFCIs will be replaced free of charge through electrical contractors. Consumers can return uninstalled AFCIs to the retailers or distributor from whom the unit was purchased for a free replacement unit. Consumer Contact: Consumer should call Schneider Electric toll- free at (877) 202-9046 between 7:30 a.m. and 5 p.m. ET Monday through Friday or log on to the Company's Website at http://www.us.squared.com/recall/AFCI TENET HEALTHCARE: Plaintiffs Seek Certification of HMO Lawsuit -------------------------------------------------------------- Plaintiff intends to ask the Los Angeles County Superior Court in California to grant class certification to a coordinated proceeding against Tenet Healthcare Corporation regarding the pricing of pharmaceuticals and other products and services at hospitals owned and operated by the Company's subsidiaries. The proceeding is entitled "Tenet Healthcare Cases II, J.C.C.P. No. 4289." Several suits were initially filed, namely: (1) Bishop v. Tenet Healthcare Corp., Case No. 2002-074408 (Superior Court of California, County of Alameda, filed December 2, 2002); (2) Castro v. Tenet Healthcare Corp., Case No. C03-00460 (Superior Court of California, County of Contra Costa, filed February 24, 2003); (3) Colon v. Tenet Healthcare Corp., Case No. BC 290360 (Superior Court of California, County of Los Angeles, filed February 13, 2003); (4) Congress of California Seniors v. Tenet Healthcare Corp., Case No. BC 287130 (Superior Court of California, County of Los Angeles, filed December 17, 2002); (5) Delgadillo v. Tenet Healthcare Corp., Case No. BC 290056 (Superior Court of California, County of Los Angeles, filed February 7, 2003); (6) Geller v. Tenet Healthcare Corp., Case No. BC 292641 (Superior Court of California, County of Los Angeles, filed March 21, 2003); (7) Jervis v. Tenet Healthcare Corp., Case No. BC 289522 (Superior Court of California, County of Los Angeles, filed January 30, 2003); (8) Moran v. Tenet Healthcare Corp., Case No. CV 030070 (Superior Court of California, County of San Luis Obispo, filed February 5, 2003); (9) Plocher v. Tenet Healthcare Corp., Case No. BC 293236 (Superior Court of California, County of Los Angeles, filed April 2, 2003); (10) Vargas v. Tenet Healthcare Corp., Case No. BC 291303 (Superior Court of California, County of Los Angeles, filed March 3, 2003); (11) Walker v. Tenet Healthcare Corp., Case No. BC 03082281 (Superior Court of California, County of Alameda, filed February 7, 2003); (12) Watson v. Tenet Healthcare Corp., Case No. 147593 (Superior Court of California, County of Shasta, filed December 20, 2002); and (13) Yslas v. Tenet Healthcare Corp., Case No. BC 289356 (Superior Court of California, County of Los Angeles, filed January 28, 2003) On December 24, 2003, after the Court overruled most of the Company's demurrers to plaintiffs' First Amended and Consolidated Complaint, plaintiffs in the coordinated California action filed a Second Amended and Consolidated Class Action and Representative Complaint against the Company and all of its California hospitals on behalf of plaintiffs and a purported class consisting of certain uninsured, self-insured and Medicare patients who allegedly paid excessive or unfair prices for prescription drugs or medical products or procedures at hospitals or other medical facilities owned by the Company or its subsidiaries. The complaint asserts claims for violation of California's unfair competition law, violation of California's Consumers' Legal Remedies Act, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Plaintiffs seek to enjoin the Company from continuing the alleged unfair pricing policies and practices, and to recover all sums wrongfully obtained by those policies and practices, including compensatory damages, punitive damages, restitution, disgorgement of profits, treble damages, and attorneys' fees and costs. On January 20, 2004, the Company answered the Second Amended and Consolidated Complaint and filed counterclaims against the majority of the named plaintiffs for failure to pay the outstanding balances on their respective patient bills. The case is currently in the class discovery phase. TENET HEALTHCARE: Asks TN Court To Dismiss Consumer Fraud Suit -------------------------------------------------------------- Tenet Healthcare Corporation intends to ask the Circuit Court in Memphis Tennessee to dismiss the class action filed against it, styled "Wade v. Tenet Healthcare Corporation, et al., No. Ct- 000250-03." The complaint asserts claims for violation of the Tennessee Consumer Protection Act, unjust enrichment, fraudulent concealment, declaratory relief and breach of contract. These claims are based on allegations that the Company excessively inflated its charges for medical products, medical services and prescription drugs at the Company's hospitals. Plaintiffs seek compensatory and punitive damages, attorneys' fees, and equitable and other relief. On April 28, 2003, the Company filed a motion to dismiss the complaint. On November 13, 2003, the Court accepted the Company's challenges to the sufficiency of the complaint and granted plaintiffs leave to amend to allege certain matters with more specificity. Plaintiffs filed an amended complaint on March 12, 2004. The Company also plans to file a motion for summary judgment for the amended suit. TENET HEALTHCARE: LA Court Refuses To Dismiss Consumer Lawsuits --------------------------------------------------------------- The Civil District Court for Orleans Parish, Louisiana refused to dismiss the consolidated class action filed against Tenet Healthcare Corporation, alleging violations of state consumer protection law. The first suit was styled "Jordan, et al. v. Tenet Healthcare Corp., et al., No 591 374." The suit alleged that the seven Louisiana hospitals owned by the Company's subsidiaries charged excessive amounts for prescription drugs, medical services and medical products. The complaint asserted claims for violation of the Louisiana Unfair Trade Practice and Consumer Protection Law, and sought on behalf of the alleged class an accounting, injunctive relief, restitution, compensatory damages, and attorneys' fees and costs. The Jordan action was dismissed with prejudice by the Court due to statute of limitations grounds. A nearly identical action, styled "Wright v. Tenet Healthcare Corp., et al., No. 2003 6262, Civil District Court, Orleans Parish," was filed on April 22, 2003. The Court granted defendant's exception to the Wright complaint for failure to state a cause of action and gave plaintiff 30 days to amend her petition. On November 14, 2003, plaintiff filed an amended petition, alleging claims against the Company under the Louisiana Unfair Practices Act, as well as claims for unjust enrichment, fraud and misrepresentation. A third class action was filed in Louisiana on May 5, 2003, entitled "Miranda v. Tenet Louisiana, Tenet Healthcare Corp., No. 03 6893," Civil District Court, Orleans Parish. The class action complaint, filed on behalf of all uninsured and partially insured residents of Louisiana who were treated at hospitals affiliated with the Company in Louisiana since February 1, 1999, alleges that the hospitals charged excessive prices for health care and pharmaceuticals. Plaintiff asserts claims for unjust enrichment, negligent misrepresentation, fraud and misrepresentation, and breach of contract, and seeks compensatory and punitive damages, attorneys' fees and equitable, injunctive and other relief. The Company filed exceptions seeking to have the complaint dismissed. Plaintiffs then moved to consolidate the remaining two actions, and the Court granted the unopposed motion. TENET HEALTHCARE: FL Court Mulls Dismissal of Consumer Lawsuit -------------------------------------------------------------- The Broward County Court in Florida has yet to rule on Tenet Healthcare Corporation's motion to dismiss the class action filed against it, styled "Garcia v. Tenet Healthcare Corp., et al., No. 03 008646 CA 18b, Broward County, Florida." Plaintiffs allege, on behalf of themselves and a purported class of uninsured and partially insured patients, that we and/or our affiliated hospitals charged excessive and unlawful prices for medical products, services and pharmaceuticals. The complaint alleges a violation of Florida's Deceptive and Unfair Trade Practices Act and also asserts claims for unfair competition and unjust enrichment, and seeks damages, attorneys' fees, and injunctive and other equitable relief. The Company filed a motion to dismiss the complaint, which was heard on April 29, 2004. TENET HEALTHCARE: Plaintiffs Appeal Summary Judgment in SC Suit --------------------------------------------------------------- Plaintiffs appealed the Court of Common Pleas, Sixth Judicial Circuit, York County, South Carolina's ruling granting summary judgment in favor of Tenet Healthcare Corporation in the class action filed against it styled "Atherton v. Tenet Healthcare Corp. & AMISUB of South Carolina, Case No. 03-CP-46-1688." The amended complaint alleges, on behalf of plaintiffs and all "uninsured or self-pay patients" treated at Piedmont Medical Center in York County, South Carolina since January 1, 1997, that the charges at Piedmont Medical Center are excessive and in breach of a contract between York County and the defendant and trustees of the hospital to limit charges at the hospital. In addition to this breach of contract claim, plaintiffs also have alleged claims for unjust enrichment and implied contract for value of goods and services received and seek compensatory and punitive damages, injunctive and other relief. The Company filed a motion for summary judgment on all claims, which was heard on March 1, 2004. On March 29, 2004, the Court granted the motion for summary judgment in its entirety as to all claims asserted by plaintiff. On May 10, 2004, plaintiffs appealed the trial Court's summary judgment ruling to the Court of Appeals of the State of South Carolina. A decision in the appeal is not expected until 2005. TENET HEALTHCARE: Asks SC To Dismiss Uninsured Patients' Lawsuit ---------------------------------------------------------------- Tenet Healthcare Corporation asked the United States District Court for the District of South Carolina to dismiss the class action filed against it, styled "Grubb v. Tenet South Carolina, Inc. d/b/a Hilton Head Regional Medical Center, East Cooper Regional Medical Center and Piedmont Medical Center, No. 04-CP- 07-1660." The suit was initially filed in the Court of Common Pleas, Fourteenth Judicial Circuit, Beaufort County on behalf of all uninsured patients who received treatment from Tenet South Carolina hospitals and were charged an undiscounted rate during a period of three years prior to the commencement of the action, and "uninsured patients who will receive medical treatment from any of these hospitals in the future." Plaintiff alleges three causes of action for breach of contract, unjust enrichment, and declaratory and injunctive relief, and seeks compensatory and other damages, restitution, an injunction, attorneys' fees, and other relief. The suit was later removed to federal Court, where the Company filed a motion to dismiss. Two additional similar class actions were filed in the Court of Common Pleas, Charleston County, South Carolina on October 7, 2004, entitled "Robert A. Singletary, Sr. v. Tenet HealthSystem Medical, Inc., etc., No. 04-CP-10-4212," and "Allen Singletary, Jr. v. Tenet HealthSystem Medical Inc., etc., No. 04-CP-10- 4211." In each case, the plaintiffs purport to bring the action on behalf of themselves and all other patients of the defendant who did not receive a statutory discount to which plaintiffs and class members were allegedly entitled under S.C. Code Ann. 38- 71-120. More specifically, the "Allen Singletary" action is asserted on behalf of uninsured patients who would be entitled to the discount; the "Robert Singletary" case is asserted on behalf of insured patients allegedly eligible for the discount. These lawsuits are virtually identical to actions that have been filed against various hospitals throughout South Carolina. The construction of the state statute at issue will be a matter of first impression. TENET HEALTHCARE: Opposes Amended Unfair Practices Lawsuit in PA ---------------------------------------------------------------- Tenet Healthcare Corporation filed preliminary objections to the second amended class action filed against it in the Court of Common Pleas, Philadelphia County, styled "Wright v. Tenet Healthcare Corp., No. 002365." The suit was filed on behalf of all Pennsylvania residents who allegedly paid unlawful or unfair prices for prescription drugs or medical products or procedures at hospitals or other medical facilities owned by the Company and/or its subsidiaries. The complaint alleges causes of action for violation of the Pennsylvania Unfair Trade Practices Act, breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment, and seeks damages, restitution, injunctive relief and attorneys' fees. The Company filed a motion to dismiss the action on February 26, 2004. In response, plaintiff filed an amended complaint and, subsequently, filed a motion for leave to amend to add a new plaintiff and several additional defendant entities. Plaintiff's second amended complaint was filed on June 28, 2004. The second amended complaint adds a new representative plaintiff to the putative class and adds as defendants seven Philadelphia hospitals that were affiliated with the Company during the relevant time period and their parent corporation, Tenet HealthSystem Philadelphia, Inc. Plaintiffs voluntarily dismissed from the case Tenet HealthSystem HealthCorp. and Tenet HealthSystem Hospitals. TENET HEALTHCARE: Patients Launch TX Unfair Trade Practices Suit ---------------------------------------------------------------- Tenet Healthcare Corporation faces a class action filed in the District Court of Harris County, Texas, styled "Fernandez v. Park Plaza Hospital and Tenet Healthcare Corporation, No. 2004- 45486." The suit was filed on behalf of a purported class of uninsured patients and alleges causes of action for violation of the Texas Deceptive Trade Practices Act, breach of contract, unjust enrichment, and breach of the duty of good faith and fair dealing. The complaint alleges that the defendants charge uninsured patients unreasonable or unconscionable rates that are significantly higher than those paid by insured patients for the same services. On behalf of the purported class, the plaintiff seeks declaratory and injunctive relief, compensatory and punitive damages, restitution and disgorgement, and attorneys' fees. TENET HEALTHCARE: CA Court Mulls Securities Suit Certification -------------------------------------------------------------- The United States District Court for the Central District of California will hear the motion for class certification of the securities class action filed against Tenet Healthcare Corporation and certain of its officers and directors on November 22, 2004. From November 2002 through January 2003, 20 securities class action lawsuits were filed in the U.S. District Court for the Central District of California and the Southern District of New York on behalf of all persons or entities who purchased the Company's securities during the various class periods specified in the complaints. All of these actions were later consolidated under the above-listed case number in the U.S. District Court for the Central District of California. The procedures of the Private Securities Litigation Reform Act apply to these cases. On February 10, 2003, the State of New Jersey was appointed lead plaintiff in the consolidated actions and its counsel, the law firm of Schiffrin & Barroway, was appointed as lead class counsel. On January 15, 2004, after the Court granted in November 2003 defendants' motion to dismiss plaintiffs' first amended complaint for failure to plead fraud with particularity, plaintiffs filed their second amended complaint. The named defendants are Tenet Healthcare Corporation, Jeffrey Barbakow, David Dennis, Thomas Mackey, Raymond Mathiasen, Barry Schochet and Christi Sulzbach. The claims in the second amended complaint are: (1) securities fraud under Section 10(b) of and Rule 10b-5 under the Securities Exchange Act of 1934, (2) control person liability pursuant to Section 20(a) of the Exchange Act, (3) insider trading under Section 10(b) of and Rule 10b-5 under the Exchange Act, (4) making false statements in registration statements for the Company's debt offerings under Section 11 of the Securities Act of 1933, and (5) control person liability pursuant to Section 15 of the Securities Act. Plaintiffs allege that the Company and the individual defendants made or were responsible for false and misleading statements concerning the Company's receipt of Medicare outlier payments and allegedly medically unnecessary heart surgeries at its hospital in Redding, California, Redding Medical Center. Plaintiffs have not specified an amount of monetary damages. Defendants' motions to dismiss were filed on March 1, 2004. On May 24, 2004, the Court heard, and denied, defendants' motions to dismiss. The matter will proceed with the following claims against the following defendants: (i) securities fraud under Section 10(b) of and Rule 10b-5 under the Exchange Act against the Company and defendants Barbakow, Dennis and Mackey, (ii) control person liability pursuant to Section 20(a) of the Exchange Act against defendants Barbakow, Dennis, Mackey, Mathiasen, Schochet and Sulzbach, (iii) insider trading under Section 10(b) of and Rule 10b-5 under the Exchange Act against defendants Barbakow and Mackey, and (iv) making false statements in registration statements for the Company's debt offerings under Section 11 of the Securities Act and control person liability pursuant to Section 15 of the Securities Act against the Company and defendants Barbakow, Mackey, Dennis and Mathiasen. On July 6, 2004, all defendants filed answers to the second amended complaint denying all allegations of wrongdoing, setting forth various affirmative defenses and denying any liability for any and all of the causes of action set forth. On October 13, 2004, the State of New Jersey filed a motion to certify the class, which motion is scheduled for hearing on November 22, 2004. In the meantime, discovery has commenced, and the Court has set May 2, 2006 as the date the jury trial will begin. TEXAS: Houston City Council OKs $79.5M Overtime Suit Settlement --------------------------------------------------------------- The Houston City Council has formally approved a $79.5 million settlement with the city's 2,600 paramedics, thus ending a nine- year legal battle, the Houston Chronicle reports. Announced in September by Mayor Bill White, who said that the city would settle the lawsuit rather than continue to appeal unfavorable Court decisions, the settlement would be paid within two years, primarily by borrowing money through judgment- obligation bonds. The mayor also stated that the city could have been ordered to pay as much as $116 million if it lost future appeals, thus it decided to reach a settlement with the paramedics. According to the lawyer for the 2,600 paramedics, who are plaintiffs in the class-action suit, his clients would receive sums ranging from $500 to tens of thousands of dollars, depending on how much overtime they worked without proper compensation. The lawsuit had originally challenged the city's formula for determining when paramedics qualified for overtime payments. The city claimed paramedics should earn overtime on the same basis as firefighters, which meant they were not entitled to overtime unless they worked more than 46.7 hours per week. The paramedics and emergency medical technicians claimed they should be paid overtime for any hours beyond 40 per week. U.S. District Judge Lynn Hughes initially agreed with the city's position, and in March 2000 he threw out the paramedics' claims. However, the 5th U.S. Circuit Court of Appeals ruled that the 40-hour-per-week standard applied to paramedics and thus sent the case back to Judge Hughes to determine what the paramedics were owed. TOMMY HILFIGER: Responds to U.S. Attorney's Office Investigation ---------------------------------------------------------------- Tommy Hilfiger Corporation (NYSE: TOM) recently stated that the Company is taking several actions as a result of the previously announced investigation by the U.S. Attorney's Office for the Southern District of New York: (1) The Company is providing documents and other information to the U.S. Attorney's Office in response to the investigation. (2) The Board of Directors of the Company has formed a Special Committee of independent directors, consisting of Clinton Silver, Mario Baeza, and Jerri DeVard, to conduct an independent investigation into matters arising out of the governmental investigation. The Special Committee has retained Debevoise & Plimpton LLP as legal counsel, with a team headed by Mary Jo White, former U.S. Attorney for the Southern District of New York. (3) The Company has retained FTI Consulting, Inc. to review the buying office commission rates paid by the Company's subsidiaries over time, and to report to the Board and the Special Committee its conclusions. (4) Pending these findings, the Company is delaying the release of its after-tax results for its second quarter of its fiscal year ending March 31, 2005 and the filing of its Quarterly Report on Form 10-Q, which is due on November 9, 2004. PricewaterhouseCoopers LLP, the Company's independent public accountants, has advised the Company that its review of the second quarter financial statements cannot be completed until after the Special Committee has substantially completed its review. (5) The Company has issued a separate press release today on its pretax results for the second quarter of fiscal 2005, which includes an update on the Company's guidance with respect to its estimated operating results for fiscal 2005. The delay in filing the financial information required in a Form 10-Q may result in the Company not being in compliance with its financial filing covenants in its public debt indenture. The Company expects to cure any non- compliance in a timely fashion, and consequently expects that these securities will not become due as a result of the filing delay. However, if an acceleration of its public debt were to occur, the Company expects to use its available cash and possible alternative financing sources to satisfy its obligations. As of September 30, 2004, the Company had cash, cash equivalents and short-term investments totaling $428.9 million, and total indebtedness of $343.2 million. In addition, the Company has initiated discussions with the banks for the Tommy Hilfiger U.S.A., Inc. ("THUSA") credit facility to seek to obtain waivers relating to possible breaches or defaults that could otherwise arise under that facility as a result of the delay in furnishing quarterly financial information. As of September 30, 2004, the Company had used $87.6 million of the available borrowings under the THUSA credit facility to open letters of credit, but did not have any direct borrowings outstanding under that facility. In light of the delay in the filing of the Company's 10-Q, the Company is providing an update on certain litigation matters in this release: On September 24, 2004, THUSA announced that it had received a grand jury subpoena issued by the U.S. Attorney's Office for the Southern District of New York seeking documents generally related to domestic and/or international buying office commissions since 1990 and that certain of THUSA's current and former employees had received subpoenas. Several domestic and international subsidiaries of the Company pay buying office commissions to Tommy Hilfiger (Eastern Hemisphere) Limited ("THEH"), a British Virgin Islands corporation which is a wholly-owned and consolidated subsidiary of the Company, pursuant to contracts to provide or otherwise secure through sub-agents certain services, including product development, sourcing, production scheduling and quality control functions. The Company understands that the U.S. Attorney's Office investigation is focused on the appropriateness of the commission rate paid by the Company's subsidiaries to THEH, as well as other related tax matters, although there can be no assurance that the scope of the investigation will not be expanded. At this point, the Company cannot predict the timing or outcome of the investigation, which may include the institution of administrative, civil or criminal proceedings, claims for back taxes and interest, the imposition of fines and penalties, or other remedies and sanctions. The Company also cannot predict what impact the inquiry may have on its business, financial condition, results of operations, cash flow or historical financial statements. Following the Company's September 24th announcement, approximately ten purported shareholder class action lawsuits were filed in the United States District Court for the Southern District of New York against the Company, as well as certain current and former officers and directors of the Company. The complaints allege that the value of the Company's stock was inflated artificially by allegedly understating the Company's tax liability and misrepresenting the Company's true effective tax rate. The complaints further allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The various plaintiffs seek to represent a class of shareholders who purchased Company common stock between November 3, 1999 and September 24, 2004. No substantive action has yet taken place in these cases. The Company intends to defend itself vigorously against these claims. TROY GROUP: Orange County Court Dismisses Suits With Prejudice -------------------------------------------------------------- TROY Group, Inc. (Nasdaq:TROY) revealed that the Orange County Superior Court has dismissed the class action lawsuits by Osmium Partners LLC, Ralph Hamer, Tilson Growth Fund, L.P., and Ray Stanley. The dismissal was with prejudice and there was no payment of money to any of these plaintiffs or their counsel. TROY had previously announced that the lawsuit by Roy Liedtkie had been dismissed with prejudice as well. The dismissed actions against TROY and its directors were seeking to enjoin the proposed merger between TROY and Dirk, Inc. "We have always contended that these lawsuits were without merit, and these dismissals are vindication of that," said Patrick J. Dirk, TROY's Chairman. On May 26, 2004, TROY announced that it had entered into a merger agreement with Dirk, Inc., a Company controlled by Patrick Dirk, the founder of TROY, and his family members, pursuant to which Mr. Dirk and his family will acquire the outstanding shares of TROY common stock that they do not already own at a price of $3.06 per share. The merger is subject to approval by TROY stockholders as required under applicable state law, to completion of financing arrangements necessary to accomplish the merger, and to certain other closing conditions. WILSONART INTERNATIONAL: Remains As Defendant in Laminates Suit --------------------------------------------------------------- Wilsonart International, Inc. is the sole remaining defendant in the consolidated class action lawsuit filed in June 2000 in the United States District Court in White Plains, New York on behalf of purchasers of high-pressure laminates. The complaint initially alleged that the Company and other firms participated in a conspiracy with competitors to fix, raise, maintain or stabilize prices for high-pressure laminates between January 1, 1994 and June 30, 2000, and seeks injunctive relief as well as treble damages and other costs associated with the litigation. Indirect purchasers of high-pressure laminates filed similar purported class action cases under various state antitrust and consumer protection statutes in Arizona, California, the District of Columbia, Florida, Maine, Michigan, Minnesota, New Mexico, North Carolina, North Dakota, South Dakota, Tennessee, West Virginia and Wisconsin. All of the state cases have been stayed, and certain plaintiffs have opted not to participate in the class litigation. These lawsuits were brought following the commencement of a federal grand jury investigation of price-fixing in the high- pressure laminate industry, which investigation was subsequently closed by the Department of Justice with no further proceedings and with all documents returned to the parties involved. On April 30, 2004, the Company presented and argued its motion for summary judgment in the consolidated class action lawsuit. That motion was denied on September 7, 2004. No trial date has been set and discovery is continuing. On April 29, 2004, International Paper Company, one of the defendants in the consolidated class action case, received preliminary approval of a settlement agreement with the plaintiffs. That settlement agreement, dated as of April 23, 2004 received final Court approval on July 14, 2004 and, provides, among other things, for the payment to the class members in the consolidated class actions of $31,000,000. In addition, on July 14, 2004 the plaintiffs sought preliminary approval of a settlement with Panolam International, Inc., another defendant in the case, for $9,500,000, which settlement was approved at a hearing on September 30, 2004. As a result of the International Paper and Panolam settlements and the discharge of Formica Corporation through bankruptcy, Wilsonart is the sole remaining defendant in the consolidated class action lawsuit. Asbestos Alert ASBESTOS LITIGATION: American Financial Faces Injury Claims ----------------------------------------------------------- American Financial Group Inc, including its insurance Company subsidiaries, and American Premier Underwriters Inc are parties to litigation. These companies received claims asserting alleged injuries and damages from asbestos and other hazardous and toxic substances and have established loss accruals for such potential liabilities. AFG, a major insurance and financial services provider, said that the ultimate loss for these claims may vary materially from amounts currently recorded as the conditions surrounding resolution of these claims continue to change. In addition to AFG's potential exposure for asbestos and environmental claims, they are also subject to mass tort claims, which include lead, silica and various chemical exposures. In 2002 and 2001, they increased property and casualty reserves relating to prior year's asbestos and environmental claims by a total of $157 million. As of December 31, 2003, the aggregate net reserves held by their insurance Company subsidiaries for asbestos, environmental and mass tort claims was $423 million. However, the Company acknowledges that legal precedents regarding potential asbestos liabilities continue to evolve, and adverse developments could impact their financial results. ASBESTOS LITIGATION: PolyOne Corp Faces Asbestos Injury Lawsuits ---------------------------------------------------------------- PolyOne Corp, the world's largest polymer services Company, has been named in various lawsuits involving multiple claimants and defendants relating to asbestos exposure of workers, contractors, or their families at the plants and ships of the Company and its predecessors. PolyOne has established reserves of about $2 million as of September 30, 2004 for asbestos-related claims that are probable and estimable. The Company believes the probability is remote that losses in excess of the amounts it has accrued could greatly affect its financial condition, results of operations, or liquidity. This belief is based upon its ongoing assessment of the strengths and weaknesses of the specific claims, its defenses and insurance coverages available, including the probability and magnitude of anticipated future claims. Such assessment includes: (1) Whether the pleadings allege exposure to asbestos, asbestos-containing products or premises exposure; (2) The severity of the plaintiffs' alleged injuries, length and certainty of exposure on its premises, to the extent disclosed in the pleadings or identified through discovery; (3) Whether the named defendant was related to the Company manufactured or sold asbestos-containing products; and (4) The outcomes of cases recently resolved and the historical pattern of the number of claims. If the underlying facts and circumstances change in the future, the Company stated that it would modify its reserves, as appropriate. ASBESTOS LITIGATION: Lone Star, Subsidiaries Named in Lawsuits -------------------------------------------------------------- During the last five years, Steel, one of the principal operating companies of Lone Star Technologies Inc., has been named as one of a number of defendants in 39 lawsuits alleging that certain individuals were exposed to asbestos on the defendants' premises. The plaintiffs are seeking unspecified damages. To date several of these lawsuits have been settled for about $100,000. Of the 39 lawsuits, thirteen have been settled or are pending settlement and ten have been dismissed or are pending dismissal. Steel did not manufacture or distribute any products containing asbestos. Some or all of these claims may not be covered by the Company's insurance. The Company has accrued for the estimated exposure to known claims, but does not know the extent to which future claims may be filed. Therefore, the Company cannot estimate its exposure, if any, to unasserted claims. Beginning in 2003, Lone Star's subsidiary Zinklahoma, Inc., inactive since 1989, has been named as one of a number of defendants in six lawsuits alleging that the plaintiffs had contracted mesothelioma as the result of exposure to asbestos in products manufactured by the defendants and John Zink Company. Two of these lawsuits have been dismissed. Lone Star acquired the stock of Zink in 1987 and, in 1989, sold the assets of the former Zink to Koch Industries, Inc. and renamed the now-inactive subsidiary Zinklahoma, Inc. Lone Star retained, and agreed to indemnify Koch against, certain pre- closing liabilities of Zink. It is Lone Star's understanding that Zink never manufactured asbestos and primarily used it only in certain purchased gaskets that were encapsulated in copper and contained in burners and flares made by Zink prior to 1984, when Zink ceased using asbestos-containing products entirely. Koch continues to operate the business as John Zink Company, LLC. In addition, Zink LLC has been named in nine lawsuits in which the plaintiffs, one of whom has mesothelioma, allege exposure to asbestos in Zink's products and three personal injury lawsuits resulting from a 2001 explosion and flash fire at a flare stack and crude unit atmospheric heater. Koch is seeking indemnification from Lone Star with respect to these twelve lawsuits. The costs of defending and settling the lawsuits alleging exposure to asbestos in Zink's products have been borne by Zink's insurance carrier. Steel's workers' compensation insurance was with one insurance carrier from 1992 through 2001. In March 2002, that carrier was declared insolvent and placed in receivership. Since then, the Texas Property and Casualty Insurance Guaranty Association has been paying the insolvent carrier's obligations under those insurance policies, as required by Texas law. TPCIGA asserted that it was entitled to recover from Steel what it has paid and will pay under those policies. Steel paid TPCIGA $1.9 million on October 4, 2004 in full settlement and release of all past, present, and future claims paid by TPCIGA under those policies. ASBESTOS LITIGATION: Prosecution Seeks Maximum Penalty for AAR -------------------------------------------------------------- In what has been called the largest environmental prosecution in U.S. history, Alex Salvagno, one of the owners of AAR Contractor of Latham, faces 79 years in prison, plus a $3.25 million fine, while his father, Raul, could get up to 35 years and a $750,000 fine. During a sentencing hearing for Alex and Raul Salvagno, who were convicted in March for directing the asbestos cleanup scam, federal attorneys offered expert testimony to convince U.S. District Judge Howard Munson that the pair deserves the maximum sentence. Last week, Dr. Stephen Levin testified that about 100 people, who worked for more than four years for the Salvagnos, are at greatest risk and could die from asbestos exposure suffered in cleanup jobs rushed by the Company. Many of those workers were Korean immigrants, prosecutors said. The doctor, an associate professor at Mt Sinai School of Medicine, said, "Not to find significant asbestos-related injuries among them 15, 20 or 25 years down the road would be a great surprise." AAR employees testified they were ordered to clean up as quickly as possible, often by ripping out the insulating material from ceilings, boiler rooms and around pipes without first wetting it. That sent clouds of the dangerous material floating into the air. These employees also said that they were discouraged from wearing respiratory equipment. To aggravate matters, it became known that Alex Salvagno was said to secretly co-own the laboratory, Analytical Laboratories of Albany, which was responsible to test the job sites but instead faked up to 75,000 air samples. Defense attorneys argued that the doctor's estimation of the risk of working for the Salvagnos is based on speculative science. Dr. Levin carefully had laid out a formula during his testimony to show how he arrived at the conclusion that nearly all of the Company's asbestos workers will get sick. His analysis relied in large part on a single study of 800 workers who toiled for a year or two during World War II at an asbestos factory in New Jersey. That study showed that even workers who were at the factory less than one month had a lung cancer rate twice that of the general population. By extrapolating from that study of short-term exposure, and by coming up with a conservative estimate of how much asbestos the Salvagnos' workers inhaled, he reached his conclusion that the 100 workers will almost certainly get sick. The Salvagnos' attorney, Russell Gioiella hotly disputed that conclusion and pushed Dr. Levin to acknowledge the limitations of the New Jersey factory study. It looked at factory workers, not cleanup employees, and studied men who were exposed 40 years earlier, in a different location, eating different foods; factors that Mr. Gioiella argued made it a bad study to extrapolate from. The defense attorney also attacked the estimate of how much asbestos was inhaled by the Salvagnos workers, which the doctor acknowledged was an educated guess. Dr. Levin replied that he would have preferred actual data about air quality during the cleanups but unfortunately the Salvagnos' lab had faked those tests. The Salvagnos were convicted of racketeering and conspiracy to violate environmental laws for doing rushed cleanup jobs at 1,555 buildings, most of them in the Capital Region, including 14 cleanups at 12 churches, 63 cleanups in 54 area schools and at least 130 cleanups at eight area colleges. Since much of the work was done in boiler rooms, attics and crawl spaces not open to the public, users of those buildings, such as school children, are unlikely to face significant health risks, Dr. Levin testified. Testing at many of those locations, to see if any asbestos remains, are under way. Testimony in the sentencing hearing continues in the coming days. Judge Munson is likely to issue his sentencing ruling in November. ASBESTOS LITIGATION: Lorillard Wins in Asbestos Cigarette Case -------------------------------------------------------------- Loews' Lorillard Inc. won a New York case in which a smoker claimed his lung cancer was caused by asbestos in the filter of an original Kent brand cigarette in the 1950s. In a recent press release, Lorillard said a Manhattan state Court's jury unanimously rejected the claim that Frank Gadaleta's lung cancer was caused by decades of smoking Kent brand cigarettes. The original Kents, which had asbestos in the filter, were only sold for four years in the 1950s, according to the tobacco Company. "The plaintiff failed to prove that tobacco smoke was a factor in causing his injury, because he quit smoking many years before he developed lung cancer," commented Ronald S. Milstein, Lorillard's Vice President and General Counsel. The jury, Lorillard said, found that Mr. Gadaleta's lung cancer was not caused by a lifetime of smoking but of an occupational exposure to asbestos. Mr. Gadaleta, who was diagnosed with lung cancer in 2000, was exposed to asbestos both in the army and in his career in the construction industry. Mr. Gadaleta had previously sued and settled with several asbestos producers, claiming that long-term occupational exposure to asbestos in the military and in the construction industry led to his lung cancer diagnosis in 2000. Lorillard said it has successfully defended itself against 13 lawsuits that claimed injury from the original Kent cigarettes. ASBESTOS LITIGATION: Wales to Run Out of Landfills Says Study ------------------------------------------------------------- The biggest environmental problem faced by Wales is where to dump a rising volume of rubbish, according to a new report from the National Audit Office. It also warns that the nation will run out of places to handle waste by 2010 unless action is taken. The study found that the problem of not having enough capacity to dump rubbish was most acute in southwest Wales. Wales produced nearly 26 million tons of waste last year, up by more than 10% on the figure two years ago. Illegal dumping of rubbish has almost doubled since 2001. "The fines imposed on criminals so far have not been a sufficient deterrent," said James Verity of the NAO. Most of the waste is dumped in landfill sites, but the present capacity will have run out by 2010, recommending that more than 500 new waste management facilities are needed. Full capacity will be reached by August 2005 at one of the largest landfill sites in the area, Pwllfawatkin, near Swansea, which accepts waste from all over south Wales and Bristol. The problem is exacerbated by the fact that the nearby Crymlyn Burrows materials recovery and energy center, which would take some of this waste, is not yet operational. Commenting on cases of illegal dumping highlighted by the report, Mr. Verity, said, "The report makes a number of recommendations aimed at tackling the issue. For example, we recommend that local authorities use 'fly capture,' which is a database designed to capture essential information about fly tipping throughout the country." The report also urges for that the magistrates and judiciary to be more aware of the serious impact of environmental crime. ASBESTOS LITIGATION: EnPro Receives 15,400 New Claims, Down 61% --------------------------------------------------------------- In the first nine months of 2004, EnPro Industries Inc, a leading manufacturer of engineered products, received 15,400 new asbestos claims, down 61 percent from 39,499 filed during the first three quarters of last year. Payments for asbestos claims in 2004, net of insurance proceeds, were about the same as in the first nine months of 2003. EnPro remains in arbitration with certain other London market insurers, who continue to delay their payments. "We are confident our dispute with these insurers will be resolved and anticipate we will collect more than $20 million in payment of past due receivables," said Ernie Schaub, EnPro chief executive. When the Company was spun off from Charlotte-based Goodrich Corp. in 2002, it received almost all of the assets and liabilities, including asbestos claims, of Goodrich's industrial-parts businesses. EnPro Industries Inc. reports third-quarter net income of $10.1 million, or 47 cents per diluted share, up from earnings of $7.3 million, or 35 cents per diluted share, in the same period last year. Sales rose to $192.1 million from $168.8 million. One-time gains increased earnings by $2.7 million, or 12 cents per diluted share, in the latest quarter. Operating income for the latest quarter was $4.2 million, down from $11.5 million in the third quarter of last year. Operating costs increased to $187.9 million from $157.3 million. "The performance of the majority of our operations in the third quarter continued the year-over-year improvement that began in the first half of 2004," says Mr. Schaub. ASBESTOS LITIGATION: Coca-Cola Disputes Aqua-Chem Inc's Demands --------------------------------------------------------------- Coca-Cola Co. is disputing Aqua-Chem Inc.'s demands for reimbursement incurred from litigation expenses related to asbestos-containing products Aqua-Chem manufactured in the past. During the period from 1970 to 1981, Coca-Cola owned Aqua-Chem. A division of Aqua-Chem manufactured certain boilers that contained gaskets that Aqua-Chem purchased from outside suppliers. Several years after the Company sold this entity, Aqua-Chem received its first lawsuit relating to asbestos, a component of some of the gaskets. Aqua-Chem believes that Coca-Cola is obligated to them for certain costs and expenses associated with the litigation. Aqua- Chem has demanded that Coca-Cola reimburse it for about $10 million for out-of-pocket litigation-related expenses incurred over the last 18 years and indemnify Aqua-Chem against any future liabilities and expenses for which there is no insurance. Coca-Cola believes it has no obligation to Aqua-Chem for any of its past, present or future liabilities, costs or expenses. It also believes it has substantial legal and factual defenses to Aqua-Chem's claims. The parties entered into litigation to resolve this dispute and have now agreed to stay that litigation pending resolution of insurance coverage issues. Coca-Cola believes Aqua-Chem has substantial insurance coverage to pay Aqua-Chem's asbestos claimants. In connection with such insurance coverage, however, five plaintiff insurance companies have filed an action against Coca-cola, Aqua-Chem and sixteen insurance companies. Several of the policies that are the subject of this action were issued to the Company during the period when Coca-Cola owned Aqua-Chem. The complaint seeks a determination of the respective rights and obligations under the insurance policies issued by the insurance companies with regard to asbestos-related claims against Aqua- Chem. The five plaintiffs issued insurance policies with aggregate remaining limits of coverage of around $145 million. The action also seeks a monetary judgment reimbursing any amounts paid by the plaintiffs in excess of their obligations. Coca-Cola believes that there are substantial legal and factual arguments supporting the position that the insurance policies at issue provide coverage for the asbestos-related claims against Aqua-Chem, and both Coca-Cola and Aqua-Chem have asserted these arguments in response to the complaint. An estimate of possible losses, if any, related to the Aqua-Chem matters cannot be made at this time. ASBESTOS LITIGATION: Georgia-Pacific Cites 3Q Asbestos Liability ---------------------------------------------------------------- Georgia-Pacific, the paper and building products giant, reported its third quarter results and included a segment on its liabilities. The segment reported third quarter 2004 expenses of $122 million compared with expenses of $13 million for the same period in 2003. Third quarter 2003 results included a pretax credit of $118 million for the increase in asbestos liability insurance receivables, a pretax charge of $21 million for costs to settle a class action antitrust suit involving containerboard, and a pretax charge of $12 million for pension settlement costs. Included in third quarter 2004 results were a $24 million pretax charge for stock-based compensation expenses (versus an $11 million charge a year ago), as well as higher variable compensation expenses related to the Company's improved financial performance and net foreign currency transaction losses associated with foreign borrowings. This quarter's results include a pretax charge of $24 million ($15 million after tax or 6 cents diluted loss per share) for the expensing of stock-based compensation. Third quarter 2003 net income before unusual items was $158 million. Unusual items included a pretax credit of $118 million ($74 million after tax or 29 cents diluted earnings per share) to increase the estimated amount that Georgia-Pacific will recover from its asbestos liability insurance. "Our third quarter results demonstrate the continuing success of our business strategy to focus on profitability and product improvement, especially in our consumer products business," said Pete Correll, Georgia-Pacific chairman and chief executive officer. ASBESTOS LITIGATION: Lincoln Electric Faces 38,243 Plaintiffs ------------------------------------------------------------- As of September 30, 2004, Lincoln Electric Holdings Inc was a co-defendant in cases alleging asbestos induced illness involving claims by about 38,243 plaintiffs, which is a net increase of 691 claims from those previously reported. In each instance, the Company is one of a large number of defendants. The asbestos claimants seek compensatory and punitive damages, in most cases for unspecified sums. Since January 1, 1995, the Company has been a co-defendant in other similar cases that have been resolved as follows: 13,062 of those claims were dismissed, 9 were tried to defense verdicts, 3 were tried to plaintiff verdicts and 270 were decided in favor of the Company following summary judgment motions. The Company has appealed judgments based on verdicts against the Company and believes it will prevail on the merits. Many of the current cases are in preliminary procedural stages and insufficient information exists upon which judgments can be made as to the validity or ultimate disposition of such actions. Therefore, a range of possible losses cannot be made at this time. ASBESTOS LITIGATION: Bucyrus Faces 295 Cases, 1,483 Plaintiffs -------------------------------------------------------------- Wisconsin-based Bucyrus International Inc. has been named as a co-defendant in about 295 personal injury liability cases alleging damages due to exposure to asbestos and other substances, involving around 1,483 plaintiffs. The Company, which offers products and services to the surface mining industry, has pending cases in eleven states. In all of these cases, insurance carriers have accepted or are expected to accept defense. These cases are in various pre-trial stages. The Company does not believe that costs associated with these matters will have a material effect on its financial position, results of operations or cash flows, although no assurance to that effect can be given. ASBESTOS LITIGATION: Badger Meter Takes on Multi-party Lawsuits --------------------------------------------------------------- Badger Meter Inc. is a defendant in several multi-party asbestos lawsuits pending in various state Courts. These lawsuits assert claims alleging that certain industrial products were manufactured by the defendants and were the cause of injury and harm. The Company, a leading marketer and manufacturer of products using flow measurement and control technologies, is vigorously defending itself against these alleged claims. Although it is not possible to predict the ultimate outcome of these matters, the Company does not believe the ultimate resolution of these issues will have a material adverse effect on the Company's financial position or results of operations, either from a cash flow perspective or on the financial statements as a whole. ASBESTOS LITIGATION: Rohm & Haas Reaches Agreement with Insurers ---------------------------------------------------------------- In September 2004, specialty chemicals maker, Rohm & Haas Co. reached an agreement with certain of its insolvent insurance carriers to resolve the Company's environmental and other claims. The Company expects to receive about $11 million in 2004, with smaller, future payments possible depending on the carriers' financial circumstances. Similar to previous settlements reached by the Company with solvent insurance carriers, the payments to the Company are in exchange for the "buy back" of the policies. The Philadelphia-based Company has previously declared that it has reserved amounts for asbestos cases that it believes are probable and estimable. The Company however admits that it cannot reasonably estimate what its future asbestos costs will be if the current situation deteriorates and there is no tort reform. The Company is taking notice of the increased publicity regarding asbestos liabilities faced by manufacturing companies. As a result of the bankruptcy of asbestos producers, plaintiffs' attorneys are increasing their focus on peripheral defendants, including the Company, which had asbestos on its premises. Historically, these premises cases have been dismissed or settled for minimal amounts because of the minimal likelihood of exposure at their facilities. As the asbestos producers are bankrupted, the demands against companies with older manufacturing facilities of any type in the United States, such as the Company, are increasing. There are also pending lawsuits filed against Morton related to employee exposure to asbestos at a manufacturing facility in Weeks Island, Louisiana with additional lawsuits expected. The Company expects that most of these cases will be dismissed because they are barred under worker's compensation laws; however, cases involving asbestos-caused malignancies may not be barred under Louisiana law. Subsequent to the Morton acquisition, the Company commissioned medical studies to estimate possible future claims and recorded accruals based on the results. Morton has also been sued in connection with asbestos related matters in the Friction Division of the former Thiokol Corporation, which merged with Morton in 1982. Settlement amounts to date have been minimal and many cases have closed with no payment. The Company estimates that all costs associated with future claims, including defense costs, will be well below the insurance limits. ASBESTOS LITIGATION: AK Agency Warns of Possible Health Hazards ---------------------------------------------------------------- Several buildings along Wasilla-Fishhook Road have been vacated and boarded up, with bright yellow signs tacked to the windows and doors warning the public of possible asbestos hazards. As part of its acquisition of property to improve and straighten the Wasilla-Fishhook Road, the Alaska Department of Transportation and Public Facilities quartered off around 20 structures, including several homes. DOTPF spokesman Rick Feller said the vacated buildings have not been inspected for asbestos but were quartered off for safety reasons. Whenever the agency acquires property, it secures the area until further investigation. Mr. Feller said the residents of those homes have been relocated to other sites. "Once acquisition is made, it becomes a relocation issue. We are mandated by our own statutes to find equal or superior replacement housing," added Mr. Feller. At this point, it was uncertain whether the buildings would be removed or turned over to be demolished. ASBESTOS LITIGATION: Rise in UK Asbestos Claims to Cost Billions ---------------------------------------------------------------- The number of Britons dying from asbestos-related diseases is set to peak at around 2,000 a year during the next decade and cost the country GBD8-20 billion or $14.7-$36.7 billion over the next 30 years. The UK insurance industry, which has already paid around GBD1.5 billion in UK-based claims for asbestos-related diseases, faces GBD4-10 billion of costs from asbestos claims over the next three decades, according to a report by The Actuarial Profession, which added that cost to the country is double that. The researchers claim there is a risk of Britain mirroring the U.S., which has in recent years seen an explosion in claims from people who are not sick but are worried they could become ill - bankrupting several large American firms in the process. "Asbestos is certainly not yesterday's problem - its effects will continue to affect insurance companies and healthcare providers in the West for decades to come," said Julian Lowe of the Actuarial Profession, the industry body for actuaries in the UK. The use of asbestos, a cancer-causing mineral fiber that was used in a wide variety of products, has declined sharply in Britain since the 1970s. But it takes 30 to 50 years for mesothelioma, a fatal asbestos-related disease, to develop. Industrial expansion in countries like China has proceeded rapidly in recent years and asbestos consumption has increased fivefold in Asia and some parts of Eastern Europe since 1960. More asbestos is being used in Asia today than was ever consumed at its peak in North America 35 years ago. In Britain, the number of claims which related to exposure rather than an asbestos-related illness had doubled in the past three years, a development that may divert resources away from claimants with serious injuries from asbestos. In the United States, around three-quarters of all claims focus on the fear of potentially catching an asbestos-related disease rather than an actual illness. The rising bill will also put pressure on local authorities that have employed staff who worked with asbestos, companies which manufactured and installed the heatproof material, and the state compensation schemes that exist for people whose employers have gone bankrupt or cannot be traced. While the manufacture and use of asbestos has fallen in Western Europe and North America in recent decades, it has continued to expand in Asia and parts of Eastern Europe. The study said urgent action was needed by the international community to help these countries deal with the inevitable "appalling" consequences of this activity. ASBESTOS LITIGATION: Union Carbide Cites $1.7Bln Liability in 3Q ---------------------------------------------------------------- The global chemical producer Union Carbide stated that as of September 30, 2004, the Company's asbestos-related liability reached $1.7 billion as compared to $1.9 billion as of December 31, 2003. Pending claims comprised about 37 percent of the recorded liability while future claims covered 67 percent. Union Carbide Corp. has been involved in a large number of asbestos-related suits filed primarily in state Courts during the past three decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The claims relate to products that the Company sold in the past, exposure to asbestos-containing products located on its premises, and the Company's responsibility for asbestos suits filed against a former subsidiary, Amchem Products, Inc. In many cases, plaintiffs were unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to the corporation's products. Compared to $1.0 billion as of December 31, 2003, the receivable for insurance recoveries related to asbestos liability was $749 million on September 30, 2004; $505 million of the receivable was due from insurers that are not signatories to the Wellington Agreement and do not otherwise have agreements in place regarding their asbestos-related insurance coverage. The pretax impact for defense and resolution costs, net of insurance, was $19 million in the third quarter of 2004 and $92 million in the first nine months of 2004. While it is not possible at this time to determine with certainty the ultimate outcome of any of the legal proceedings and claims referred to in this filing, management believes that adequate provisions have been made for probable losses with respect to pending claims and proceedings. The annual average resolution payment per asbestos claimant and the rate of new claim filings has fluctuated since the beginning of 2001. Union Carbide's management expects such fluctuations to continue in the future based upon the number and type of claims settled in a particular period, the jurisdictions in which such claims arose, and the extent to which any proposed legislative reform related to asbestos litigation is being considered. ASBESTOS LITIGATION: National Waterworks Inc. Denies Liability -------------------------------------------------------------- National Waterworks Inc., based in Texas, believes it has no liability related to asbestos claims as of September 24, 2004. As an acquirer of USFDG, a wholly owned subsidiary of U.S. Filter, the Company said it did not assume any existing or future asbestos-related liabilities relating to U.S. Filter or its predecessors. The Company, which is a major supplier to water facilities, stated that certain of the Company's predecessors distributed cement pipe containing asbestos. The cement pipe was primarily used in water and sewage applications where the pipe was typically buried underground. Management believes that the nature of the asbestos-containing pipe distributed by the predecessors and the uses of such pipe makes it unlikely that a large number of plaintiffs would be exposed to friable asbestos emanating from the pipe. They are not aware of any predecessor manufacturing or fabricating asbestos containing products of any type or assuming any product liability for such products. On November 22, 2002, National Waterworks acquired substantially all of the assets and certain liabilities of USFDG, a wholly owned subsidiary of U.S. Filter, which is an indirect-wholly owned subsidiary of Veolia. Since the November 2002 acquisition was an asset purchase, U.S. Filter and USFDG retained these liabilities and agreed to indemnify and defend National Waterworks from and against these liabilities on an unlimited basis with no termination date. U.S. Filter and USFDG also agreed that, until November 22, 2012, U.S. Filter will cause USFDG to maintain USFDG's corporate existence and ensure that USFDG has sufficient funds to pay any and all of its debts and other obligations, including liabilities retained by USFDG and its indemnification obligations, as and when they become due. In addition, Veolia has guaranteed all obligations of U.S. Filter and USFDG under the asset purchase agreement, including the indemnity, up to an aggregate of $50.0 million through November 22, 2017. Historically, Courts have not held the acquirer of an entity's assets liable for liabilities that are not assumed as part of the transaction unless the asset buyer is found to be a "successor" to the asset seller. Accordingly, the Company could become subject to asbestos liabilities in the future to the extent they are found to be a successor to USFDG and to the extent USFDG, U.S. Filter and Veolia are unable to fulfill their contractual obligations. Since the asbestos claims were retained by USFDG and U.S. Filter, and in view of the indemnity by USFDG and U.S. Filter with respect to retained liabilities and the Veolia guarantee, management believes that it has no liability related to asbestos claims. ASBESTOS LITIGATION: Cytec Posts $53.1M Asbestos Liability in 3Q ---------------------------------------------------------------- Cytec Industries Inc., a technology leader in the specialty chemicals markets, disclosed its third quarter asbestos liabilities, which reached $53.1 million, as of September 30, 2004. The fourth quarter of 2003 got up to as high as $54.0 million. The New Jersey-based Company has been the subject of numerous lawsuits and claims incidental to the conduct of its or certain of its predecessors' businesses, including lawsuits and claims relating to product liability, personal injury including asbestos, environmental, contractual, employment and intellectual property matters. As of September 30, 2004 and December 31, 2003, the aggregate self-insured and insured contingent liability was $70.9 million and $72.5 million, respectively, and the related insurance receivable was $28.7 million at September 30, 2004 and $29.3 million at December 31, 2003. Third quarter's asbestos related insurance receivable was $28.4 million at September 30, 2004 and $29.1 million at December 31, 2003. The Company anticipates receiving a net tax benefit for payment of those claims to which full insurance recovery is not realized. As of September 30, 2004, asbestos claims filed against the Company totaled 3,542 and closed 2,759; which differ in comparison to the last quarter of 2003, consisting of 7,648 claims filed and 7,601 closed. The Company stated that the ultimate liability and related insurance recovery for all pending and anticipated future claims cannot be determined with certainty due to the difficulty of forecasting the numerous variables that can affect these figures. These variables include but are not limited to: (1) Significant changes in the number of future claims; (2) Significant changes in the average cost of resolving claims; (3) Changes in the nature of claims received; (4) Changes in the laws applicable to these claims; and (5) Financial viability of co-defendants, insurers and other indemnifying parties. ASBESTOS LITIGATION: American Standard Faces 147,836 Claims ----------------------------------------------------------- American Standard Companies Inc., leading maker of air- conditioning systems, plumbing products, and automotive braking systems, received 147,836 asbestos claims against the Company as of September 30, 2004. There were 122,989 pending claims, compared with 116,199 at the end of 2003, and 96,638 and 52,169 at the end of 2002 and 2001, respectively, reflecting updated information for all prior periods. Since receipt of its first asbestos claim more than fifteen years ago, the Company has resolved 24,847 claims, and settlements of $49.5 million have been made, for an average payment per claim of $1,992. These settlement payments have substantially been paid or reimbursed or are expected to be substantially reimbursed by insurance. Over the years, the Company has been named as a defendant in numerous lawsuits alleging various asbestos-related personal injury claims arising primarily from sales of low-risk-profile products, such as boilers and railroad brake shoes. The Company believes it has ample insurance and has never had an unfavorable Court judgment. In these asbestos-related lawsuits, the Company is usually named as one of a large group of defendants, often in excess of one hundred companies. Many of these lawsuits involve multiple claimants, do not allege a connection between any Company product and the claimed injury or disease, and do not contain any allegations regarding the type of claimed injury or disease incurred. As a result, numerous lawsuits have been placed and may remain on inactive or deferred dockets, which some jurisdictions have established. The Company has recorded an obligation of $72.9 million, which represents the Company's estimated payments to claimants associated with pending asbestos claims. It also has recorded a related asset of $51 million that represents the probable recoveries from insurance companies for such payments to claimants. On July 15, 2004, the Company agreed to a settlement with a bankruptcy trustee for a small portion of the Company's insurance coverage, of which $29.5 million was received in the third quarter of 2004. In connection with the future liquidation of the bankruptcy trust the Company expects to receive additional payments. Proceeds from this settlement in excess of amounts related to known claims covered by these policies have been deferred until the liability, if any, for unknown claims can be determined. Additional developments may occur that could affect the Company's estimate of asbestos liabilities and recoveries, such as the nature of future claims, the average payment to claimants and the amount of insurance recovery. No liability has been recorded for unknown asbestos claims. However, the Company has substantial insurance coverage for future claims. ASBESTOS LITIGATION: Essex International Named as Defendant ----------------------------------------------------------- Essex International, a global leader in the design, manufacture and supply of a wide range of cable, wire and electrical insulation products, has been named as a defendant since around 1990 in numerous product liability lawsuits brought by electricians and other skilled tradesmen claiming injury from exposure to asbestos found in electrical wire products produced many years ago. Litigation against various past insurers of Essex International who had previously refused to defend and indemnify Essex International against these lawsuits was settled during 1999. Under the settlement, the Atlanta-based Company was reimbursed for substantially all of its costs and expenses incurred in the defense of these lawsuits, and the insurers have undertaken to defend, are currently directly defending and, if it should become necessary, will indemnify the Company against those asbestos lawsuits, subject to the terms and limits of the respective policies. Under the plan of reorganization, certain of the claimants in these actions will be able to assert claims under applicable insurance coverage and other similar arrangements. ASBESTOS LITIGATION: U.S. Gypsum Named as Defendant in Lawsuits --------------------------------------------------------------- One of the USG Corporation's subsidiaries, U.S. Gypsum, is among many defendants in more than 100,000 asbestos lawsuits alleging personal injury or property damage liability. Most of the asbestos lawsuits against U.S. Gypsum seek compensatory and, in many cases, punitive damages for personal injury allegedly resulting from exposure to asbestos-containing products. Certain of the asbestos lawsuits seek to recover compensatory and, in many cases, punitive damages for costs associated with the maintenance or removal and replacement of asbestos- containing products in buildings. U.S. Gypsum's asbestos liability derives from its sale of certain asbestos-containing products beginning in the late 1920s. In most cases, the products were discontinued or asbestos was removed from the formula by 1972, and no asbestos-containing products were produced after 1978. In addition to the personal injury cases pending against U.S. Gypsum, two other Debtors, L&W Supply and Beadex Manufacturing, LLC, have been named as defendants in a small number of asbestos personal injury cases. In addition, the legal representative for future asbestos claimants recently raised the issue of whether the debtors may be liable for certain of the asbestos liabilities of A.P. Green Refractories Co., a former subsidiary of U.S. Gypsum and USG Corporation. The amount of the debtors' present and future asbestos liabilities is the subject of significant dispute in debtors' Chapter 11 Cases. If the amount of the debtors' asbestos liabilities is not resolved through negotiation in the Chapter 11 Cases or addressed by federal legislation, the amount of those liabilities may be determined through litigation proceedings in the Chapter 11 Cases, the outcome of which is extremely speculative. ASBESTOS LITIGATION: CT Court Approves Raytech's Settlement Deal ---------------------------------------------------------------- Last October 27, the U.S. Bankruptcy Court of Connecticut approved a settlement agreement and release by Raytech Corporation as its registrant. Also involved in this agreement are Raytech's Official Committee of Equity Security Holders in the Chapter 11 case, the Raytech Corporation Asbestos Personal Injury Trust, the Official Committee of Unsecured Creditors in the Chapter 11 case, and Robert Carter, in his capacity as the future claimants' representative. According to the settlement, each "Record Date Registered Holder" defined as a holder of record of at least 20 shares of the Registrant's common stock on April 17, 2001, shall be entitled to receive a payment of $0.16 for each share held by such holder on the record date. The total amount of these payments plus other payments required under the settlement is expected to be about $600,000. The PI Trust, the majority shareholder of the registrant, has initially funded the payments to be made under the settlement. The PI Trust and the registrant have agreed informally to negotiate a mutually agreeable allocation of the costs of the settlement; the actual allocation has not been finally determined at this time. The Company makes wet-engineered friction products that are used in an oil-immersed environment for heat resistance, inertia control, energy absorption, and transmissions in trucks, buses, and farm machinery. Its dry friction components include clutch facings used in car and truck manual transmissions. Due to asbestos liabilities, the Company entered Chapter 11 in 1989 and finally emerged from bankruptcy in 2001. ASBESTOS LITIGATION: PPG Faces 116,000 Asbestos-related Lawsuits ---------------------------------------------------------------- For over thirty years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos. As of September 30, 2004, PPG was one of many defendants in numerous asbestos-related lawsuits involving about 116,000 claims. Most of PPG's potential exposure relates to allegations by plaintiffs that PPG should be liable for injuries involving asbestos-containing thermal insulation products manufactured and distributed by Pittsburgh Corning Corporation. PPG and Corning Incorporated are each 50% shareholders of the Pittsburgh Corning Corporation. PPG has denied responsibility for, and has defended, all claims for any injuries caused by PC products. On April 16, 2000, PC filed for Chapter 11 Bankruptcy in the U.S. Bankruptcy Court for the Western District of Pennsylvania located in Pittsburgh, Pa. On March 28, 2003, Corning Incorporated announced that it had separately reached its own arrangement with the representatives of asbestos claimants for the settlement of certain asbestos claims that might arise from PC products or operations. PPG believes that it has adequate insurance for the asbestos claims that would not be covered by any channeling injunction and that any financial exposure resulting from such claims will not have a material effect on PPG's consolidated financial position, liquidity or results of operations. The fair value of the equity forward instrument was $13 million and $15 million as of September 30, 2004 and December 31, 2003, respectively, and is included as another current asset in the accompanying condensed balance sheet. The amounts due June 30, 2003, 2004 and 2005 of $75 million, $98 million and $90 million, respectively, under the fixed payment schedule described above, are included in the current asbestos settlement liability in the accompanying condensed balance sheet, which totaled $394 million and $308 million as of September 30, 2004 and December 31, 2003, respectively. The net present value of the remaining payments is included in the long-term asbestos settlement liability in the accompanying condensed balance sheet, which totaled $433 million and $500 million as of September 30, 2004 and December 31, 2003, respectively. Accretion expense associated with the asbestos liability will continue to be approximately $7 million per quarter through the end of 2005. Because the filing of asbestos claims against the Company has been enjoined since April 2000, a significant number of additional claims may be filed against the Company if the Bankruptcy Court stay were to expire. If the PPG settlement arrangement is not implemented, for any reason, and the Bankruptcy Court stay expires, the Company intends to vigorously defend the pending and any future asbestos claims against it and its subsidiaries. The Company believes that it is not responsible for any injuries caused by PC products, which represent the preponderance of the pending bodily injury claims against it. Prior to 2000, PPG had never been found liable for any such claims, in numerous cases PPG had been dismissed on motions prior to trial, and aggregate settlements by PPG to date have been immaterial. Although PPG has successfully defended asbestos claims brought against it in the past, in view of the number of claims, and the questionable verdicts and awards that other companies have experienced in asbestos litigation, the result of any future litigation of such claims is inherently unpredictable. ASBESTOS LITIGATION: AU Mesothelioma Victims Seek Drug Subsidy -------------------------------------------------------------- A federal committee will decide this week whether to subsidize a drug that extends by up to two years the lives of mesothelioma victims. Eli Lilly's new drug Alimta has been shown to manage symptoms, reduce pain and treat shortness of breath. However, the drug costs $24,000 for a six-week course for people with the asbestos-induced cancer. Asbestos Diseases Foundation president Barry Robson urged the Federal Government to fast-track approval for the drug subsidy. "We know it's an expensive drug, but if the Government can just show a little bit of compassion for these people," he said. It is likely to be March or April before the costly drug, Alimta, is listed on the Pharmaceutical Benefits Scheme. The process takes months because several time-consuming stages, including price negotiation, must be made before any drug is listed. The Pharmaceutical Benefits Advisory Committee will consider drug Company Eli Lilly's application for Alimta to be subsidized. It makes recommendations to the Federal Government which makes the final decision. ASBESTOS LITIGATION: Endemol, Foilhope Breach Could Cost GBD45T ---------------------------------------------------------------- The TV production Company behind Fame Academy has admitted exposing contestants and employees to asbestos while filming the first series in Heathside mansion Witanhurst. The breaches could cost Endemol GBD25,000 and Foilhope might have to pay GBD20,000. Endemol UK and Foilhope, a Highgate-based property management company, both pleaded guilty to health and safety charges at the City of London Magistrates' Court last week. Contractors found exposed asbestos in the basement of the mansion after filming had stopped and the Health and Safety Executive was called in. Following series one of Fame Academy a small area of exposed asbestos was discovered in an area of the basement at Witanhurst - cut off from the working and living areas of the Academy. The area in question was sealed off before being completely cleaned. It is believed the stars of the 2002 show, won by David Sneddon, were unaffected. A spokesman from Endemol UK said, "Endemol UK takes its responsibilities with regard to health and safety extremely seriously." A full hearing will take place on December 1 at the City of London Magistrates' Court. ASBESTOS LITIGATION: W.R. Grace Target of Investigation ------------------------------------------------------- A federal grand jury is investigating W.R. Grace & Co. and several of its senior-level employees for possible violations of environmental laws in Montana. The Columbia, Md.-based Company released a statement saying that it has been named as a target of the grand jury in Montana involving possible obstruction of federal agency proceedings and conspiring with others to violate federal environmental laws. "Grace believes that the investigation is related to its former vermiculite mining and processing activities in Libby, Montana," stated the Company. Vermiculite, which was used to make insulation, is a naturally occurring mineral that expands into accordion-shaped pieces when heated and is lightweight and fire- resistant. The U.S. Environmental Protection Agency arrived in Libby in November 1999, after national news reports linked asbestos contamination from a vermiculite mine just outside town to the deaths of nearly 200 people and illness in hundreds more. Grace bought the mining operation, which once supplied more than 80 percent of the world's vermiculite, in 1963 and shut it down in 1990. The federal government has said ore from the site is contaminated with asbestos fibers, which were spread through the town as it was mined and processed. The EPA filed a lawsuit against Grace in March 2001 to recover cleanup costs in the area, which the agency has declared a Superfund site. EPA is working to remove asbestos from soil and buildings at the mine site and in town. In April, the Company appealed a federal judge's ruling that it must pay the EPA the full $54.5 million for asbestos cleanup in Libby, along with any future costs. Before Judge Molloy's ruling, W.R. Grace and a subsidiary had agreed to pay nearly $33 million for work done from November 1999 through December 2001, but Grace disputed another $21.5 million in costs. Grace is a leading global supplier of catalysts and silica products, specialty construction chemicals, building materials, and sealants and coatings. ASBESTOS LITIGATION: Concern Raised Over Ireland Plant Proposal ---------------------------------------------------------------- A number of public representatives in Co Mayo have expressed concerns about a proposal to build Europe's first asbestos recycling plant in Killala. Killala Fine Gael councilor Jarlath Munnelly said their worries have not been alleviated by a briefing session with the Company concerned, Irish Environmental Processes Ltd. They said the people of Killala and Co Mayo do not want the plant and would fight it every step of the way. Mr. Munnelly added that he did not believe Company assurances that both the transportation and recycling processes would be safe. He expressed concern about potential health effects from the plant itself and from the transportation of asbestos from all over Ireland. Independent TD Dr. Jerry Cowley also expressed concerns about transporting asbestos, which is a cancer-causing substance, from every corner of Ireland to Killala. Despite the Company denying it would process other forms of waste, Dr. Cowley said IEP's website said other waste could be disposed of in Killala. He said the process IEP plans to use in Killala is also used for radioactive and other hazardous waste. The Company has purchased a 25,000 square foot section of the Asahi plant for its thermo-chemical treatment plant and intends to seek planning permission and a license from the EPA to process asbestos waste. The Company will be investing EUR10 million in the project and insists it will be treating only asbestos waste from Ireland and will not be importing waste from the rest of Europe. ASBESTOS LITIGATION: T&N Fund Trustees Entitled to Block Deal ---------------------------------------------------------------- High Court judge Justice Patten ruled earlier this week that Turner & Newall's pensions fund trustees will not breach their fiduciary duty to members by voting against Federal-Mogul's restructuring plan to emerge from Chapter 11 protection. The trustees claim the rescue plan put forward for Federal- Mogul, T&N's parent Company, in the US bankruptcy Courts is structurally unfair in respect of an GBD875 million shortfall in the 40,000-member Turner & Newall pension fund. The trustees rejected the initial offer of a $130 million payment into the fund from Federal-Mogul's creditors. The creditors are now offering $25 million a year for the first three years, plus the promise of ensuring the scheme is fully funded within a decade. Creditors in Federal-Mogul have until Nov. 17 to vote on the plan. The restructuring proceedings were initiated in response to a sharply increasing number of asbestos-related claims and their related demand on the Company's cash flows and liquidity. The plan provides that asbestos personal injury claimants, both present and future, will be permanently channeled to a trust or series of trusts established pursuant to Section 524(g) of the Bankruptcy Code, thereby protecting Federal-Mogul and its affiliates in the Chapter 11 Cases from existing and future asbestos liability. The Company's U.K. subsidiary, T&N Ltd., and two U.S. subsidiaries are among many defendants named in numerous Court actions in the U.S. alleging personal injury resulting from exposure to asbestos or asbestos-containing products. T&N Ltd. is also subject to asbestos-disease litigation, to a lesser extent, in the United Kingdom and France. As of the petition date, T&N Ltd. was a defendant in about 115,000 pending personal injury claims. The two U.S. subsidiaries were defendants in about 199,000 pending personal injury claims. In 2000, the Company increased its estimate of asbestos-related liability for the T&N Companies by $751 million and recorded a related insurance recoverable asset of $577 million. The revision in the estimate of probable asbestos-related liability principally resulted from a study performed by an econometric firm that specializes in these types of matters. The liability, which is about $1.4 billion as of September 30, 2004, represented the Company's estimate prior to the restructuring proceedings for claims currently pending and those reasonably estimated to be asserted and paid through 2012. It is the Company's view that, as a result of the restructuring, there is even greater uncertainty in estimating the future asbestos liability and related insurance recovery for pending and future claims. There are significant differences in the treatment of asbestos claims in a bankruptcy proceeding as compared to the tort litigation system. Federal-Mogul, whose largest creditor is billionaire financier Carl Icahn, sought Chapter 11 Bankruptcy protection in 2001 because of asbestos liabilities and declining revenue. A hearing to approve the plan at U.S. Bankruptcy Court in Wilmington, Del., is set for Dec. 9. ASBESTOS LITIGATION: CNA Financial Discloses 3Q Expense Reserves ---------------------------------------------------------------- CNA Financial Corporation, a leading global insurance organization based in Chicago, discloses in the Company's third quarter results that it carried about $1,707 million and $1,767 million of claim and claim adjustment expense reserves, net of reinsurance recoverables, for reported and unreported asbestos- related claims. The Company recorded $44 million of unfavorable asbestos-related net claim and claim adjustment expense reserve development for the nine months ended September 30, 2004 and $642 million asbestos-related net claim and claim adjustment expense development for the same period in 2003. The 2004 unfavorable net prior year development was primarily related to a commutation loss related to The Trenwick Group Ltd. The Company paid asbestos-related claims, net of reinsurance recoveries, of $104 million and $101 million for the nine months ended September 30, 2004 and 2003. Some asbestos-related defendants have asserted that their policies issued by CNA are not subject to aggregate limits on coverage. CNA has such claims from a number of insureds. Some of these claims involve insureds facing exhaustion of products liability aggregate limits in their policies, who have asserted that their asbestos-related claims fall within so-called "non- products" liability coverage contained within their policies rather than products liability coverage, and that the claimed "non-products" coverage is not subject to any aggregate limit. As a result of bankruptcies and insolvencies, management has observed an increase in the total number of policyholders with current asbestos claims as additional defendants are added to existing lawsuits and are named in new asbestos bodily injury lawsuits. New asbestos bodily injury claims have also increased substantially in 2003, but the rate of increase has moderated in the first nine months of 2004. The Company has resolved a number of its large asbestos accounts by negotiating settlement agreements. Structured settlement agreements provide for payments over multiple years as set forth in each individual agreement. As of September 30, 2004, CNA had eleven structured settlement agreements with a reserve net of reinsurance of $179 million. Payment obligations under those settlement agreements are projected to terminate by 2016. In the same period, CNA carried about $508.0 and $577.0 million of claim and claim adjustment expense reserves, net of reinsurance recoverables, for reported and unreported environmental pollution and mass tort claims. CNA had remaining payment obligations for four accounts. With respect to these four remaining unpaid Wellington obligations, CNA has evaluated its exposure and the expected reinsurance recoveries under these agreements and has a recorded reserve of $19 million, net of reinsurance. The Company has made closing large accounts, those with more than $100,000 of cumulative paid losses, a significant management priority. At the end of the third quarter, the Company had 180 large accounts and had established reserves of $369 million, net of reinsurance. The Company also evaluates its asbestos liabilities arising from its assumed reinsurance business and its participation in various pools. CNA's reserve totaled $156 million in the third quarter, net of reinsurance, related to these liabilities. The unassigned IBNR reserve was $696 million, net of reinsurance whereas it was $684 million as of December 31, 2003. This IBNR reserve relates to potential development on accounts that have not settled and potential future claims from unidentified policyholders. CNA is vigorously defending these and other cases and believes that it has meritorious defenses to the claims asserted. However, there are numerous factual and legal issues to be resolved in connection with these claims, and it is extremely difficult to predict the outcome or ultimate financial exposure represented by these matters. ASBESTOS LITIGATION: NSW Seeks Support on Law Aimed at Hardie ------------------------------------------------------------- The NSW government will ask other states to support laws aimed at compensation for asbestos victims by winding back James Hardie's corporate restructure. This movement is expected to force James Hardie Industries to meet the possible $2 billion shortfall in compensation for thousands of sufferers of asbestos diseases in coming decades. "We will be seeking support for NSW legislation that will seek to unwind the James Hardie corporate restructure that was done in 2001 so that victims of asbestos related disease will be entitled to full and fair compensation," said a spokesman for NSW Attorney-General Bob Debus. NSW Premier Bob Carr last week foreshadowed legislation to enforce James Hardie's obligation to compensate victims of asbestos. Mr. Carr said the new laws would be designed to ensure victims could claim against the former James Hardie parent Company and that their claims would be met by funds from the current parent Company. The James Hardie laws will be discussed at a meeting in New Zealand on Thursday and Friday of the ministerial council at the Standing Committee of Attorneys-General. James Hardie established a Medical Research and Compensation Foundation when it moved to the Netherlands. The foundation expected to receive ongoing funding to cover compensation claims by victims of asbestos-related disease through the $1.9 billion in partly paid shares, but these were later cancelled by James Hardie. The spokesman added that the NSW government needed support from the other states because its legislation would be affected by the Corporations Act, which was administered by the federal government. However, federal Attorney-General Philip Ruddock warned of the "broader implications" of any legal changes towards unwinding the Company's restructure. The head of the inquiry, David Jackson, QC, said such legislation "would probably face constitutional challenges of one kind or another" in Australia. Lawyers for James Hardie argued during the inquiry that legislation affecting companies incorporated and operating in different countries "clearly has the potential to give rise to a myriad of legal complications and conflicts of laws." ASBESTOS ALERT: Coroner Launches Probe of Central Heating System ---------------------------------------------------------------- The East Berkshire coroner has called for an entire street's central heating systems to be examined after a 92-year-old died of an asbestos related lung disease. An inquest last week, heard Ernest Jasper died of mesothelioma, linked to breathing asbestos fibers. As a result, coroner Peter Bedford is now asking London and Quadrant Housing Trust to investigate systems at dozens of homes in The Buffins, Taplow, where Mr. Jasper lived. The inquest had heard the former RAF man could have come into contact with asbestos in a number of jobs he took over the course of his long life. He had been an East End dockworker, steel erector, electrician, and security guard and worked in a coconut matting factory and an insulated cable firm. Mr. Jasper's home was built in 1966 by what was then Beacon Housing Association and he moved in the following year. Mr. Jasper's family noticed he had began losing weight and becoming short of breath shortly after Christmas last year. He died on July 20 at Wexham Park Hospital. An L&Q spokesman said all records on central heating at the Buffins were being checked but it was "most unlikely" to have contributed to Mr. Jasper's illness. Michael Reece, Director of Property Services, said, "We are always sad to hear of the death of one of our tenants but we do not know Mr. Jasper's background and whether his employment earlier in life might have been affected by asbestos. Nevertheless, we will complete our investigations shortly and let his family know the outcome of our findings." ASBESTOS ALERT: Sisters Sue Canadian Govt for Asbestos Exposure --------------------------------------------------------------- Two sisters are suing the federal government and several companies over asbestos-laden insulation in their childhood home that they claim has made them sick. Raven Thundersky, 39, and Rebecca Bruce, 44, said in their statement of claim that the family was exposed to and did inhale asbestos fibers over a period of 17 years. The women grew up on the Popular River First Nation in Manitoba, near Winnipeg. Their home was insulated with Zonolite, the brand name of a type of vermiculite insulation that has been found to contain asbestos, which has been linked to chest and abdominal cancer. The claim alleges that Ms. Thundersky has been diagnosed with asbestosis, which is a thickening and scarring of lung tissue, and that Ms. Bruce has mesothelioma, a cancer linked to exposure to asbestos fibers. The women claim two other sisters have died from cancer that they believe came from the insulation asbestos. Ms. Thundersky says she has obtained documents showing that 597 reserve houses across Canada were constructed with the same insulation, and she hopes to register the lawsuit as a class action. ASBESTOS ALERT: IA County Finds Asbestos Buried in Hotel Rubble ---------------------------------------------------------------- The discovery of asbestos in the Ellis Hotel rubble buried in the Black Hawk County jail parking lot alerted its officials to the potential swelling of cleanup costs to a project that should have been done years ago. Authorities believe the asbestos should have been removed under regulations at the time of the demolitions in the mid-1980s, prompting them to call for an investigation. Gary Wilcox, executive director of the Black Hawk County Solid Waste Management Commission, found the hazardous material when inspecting the site two weeks ago with County Supervisor Barbara Leestamper. Ms. Leestamper said they have already tasked the Iowa Department of Natural Resources to conduct an inspection of the site. Board chairman Robert Smith said debris removal costs now could reach $400,000, especially if hazardous materials are found. A rebidding could delay work to next spring. Subcontractors for Todd Van Dorn Construction of Cedar Falls, originally hired to repair the sinking parking lot for $23,000, found the rubble from the Ellis about 7 feet underground. County building supervisor Louis Cutwright questioned the extent to which asbestos may be present. County officials said it should have been removed during jail construction in 1993. While some supervisors want to find out who was responsible for leaving the rubble, Assistant County Attorney Pete Burk said supervisors may have to hire a private firm to review construction records to determine what if any liability exists on the part of anyone associated with the project. "We're in the process of reviewing any documentation that might be pertinent to it and we're forwarding that to the mayor for his review," Waterloo Community Development Director Rudy Jones said. According to files, the hotel was vacated and city inspectors "red-tagged" the five-story structure's upper levels as unsafe to occupy following a November 1983 arson fire. In February 1986, the Waterloo City Council guaranteed a $27,500 loan from the Waterloo Industrial Development Association to Ellis owner O.J. Keiper to demolish the building. The city took over demolition by agreement with Keiper in September 1986 when work performed by a contractor stalled. The city resumed demolition with a new contractor shortly thereafter. On the subject of liability, Burk told the board that the normal 10-year statute of limitations for bringing civil action may pose a "serious legal hurdle," since the county knew the Ellis rubble was there in 1993. Even if legal action is possible, Mr. Burk and board chairman Smith said the costs of researching and litigating the matter may exceed the potential recoverable damages. ASBESTOS ALERT: ATSDR Warns Omaha Plant Ex-Workers of Exposure -------------------------------------------------------------- A federal health warning has been issued for former workers of Western Minerals Products, a closed Omaha insulation plant that they could have been exposed to a deadly form of asbestos. The Agency for Toxic Substances and Disease Registry is investigating to see if workers at the Omaha plant and 27 other sites around the country were unknowingly exposed to asbestos. Inhalation of asbestos fibers can cause lung diseases including cancer. The plant used vermiculite to manufacture insulation from the 1940s until it closed in 1989. The vermiculite was taken from a mine in Libby, Montana and it was later learned that the mine had a natural deposit of asbestos that contaminated the vermiculite. The Western Mineral Products Company site in Omaha is among 28 Phase I sites in ATSDR's National Asbestos Exposure Review being conducted with other federal, state, and local environmental and public health agencies. It examines more than 200 U.S. sites that received asbestos-contaminated vermiculite ore mined in Libby, Montana, from the early 1920s until 1990. ATSDR is working closely with EPA and state health partners to determine whether a hazard to public health exists at any of the sites. The exposure investigation collects information about specific human exposures through biologic sampling, personal monitoring, related environmental assessment, and exposure-dose reconstruction. It also assesses the presence and nature of health hazards, helps to prevent or reduce further exposure and illnesses resulting from those hazards, and expands the knowledge base about the health effects of exposure to hazardous substances. Company Profile: Western Mineral Products Company 3520 South I Street Omaha, NE 68107 ASBESTOS ALERT: Sterling Sugars Inc. Named in 8 Injury Lawsuits --------------------------------------------------------------- Louisiana-based Sterling Sugars Inc, and in some cases one or more of its executive officers, have been named in eight asbestos complaints filed since November 22, 1997 involving multiple plaintiffs, who are claming personal injury due to exposure to asbestos. Six of the eight cases name multiple other corporate defendants in addition to the Company. The complaints were filed in Louisiana State Court in either St. Mary Parish or East Baton Rouge Parish. The complaints generally do not contain a specific damage demand against the Company and there is not sufficient information in the complaints to fully quantify the allegations set forth in the complaints. The Company settled two of the cases for a total of $18,200. There have been no material developments in the other cases with respect to the Company since the cases were filed and no significant discovery has been exchanged in these cases. While the Company believes that the remaining cases are without merit, given the early stages of these cases the Company cannot predict the outcome nor is it able to predict whether additional cases will be filed. Company Profile: Sterling Sugars, Inc. 611 Irish Bend Rd. Franklin, LA 70538 Phone: 337-828-0620 Fax: 337-828-1757 2004 Sales (mil.) �18.2 1-Year Sales Growth (16.5%) 2004 Net Income (mil.) �0.9 2004 Employees 188 Description: Sterling Sugars grows and processes sugarcane to make raw sugar and blackstrap molasses for sale to sugar refiners and candy manufacturers. It also leases land for oil and natural gas exploration. The Patout and Guarisco families, who own about 60% and 20%, respectively, run the Company. ASBESTOS ALERT: Shipyards Deny Claims of Pleural Plaques Victims ---------------------------------------------------------------- Thousands of retired industrial workers could be denied millions of pounds as British Shipbuilders and Norwich Union have entered separate applications asking for compensation payments of those who suffer from pleural plaques to be scrapped. These companies now claim that because the disease does not have any symptoms they should not have to pay out. The condition, caused by exposure to asbestos spores, leaves scarring on the lining of the lungs and gives sufferers an increased chance of developing life-threatening diseases like mesothelioma and asbestosis. Compensation has been paid out for more than 20 years but now Newcastle-based Thompsons Solicitors is fighting to save the payouts. At present claimants can choose a settlement of up to GBD15,000 or can go for a provisional agreement of up to GBD6,000 and the right to claim for further damages if they go on to develop a disabling or fatal disease. If their cases are upheld against 10 claimants, it will open the floodgates for other firms to follow suit and thousands of victims will lose out. Ian McFall, head of the national asbestos team at Thompsons Solicitors, said, "If the defendants succeed, people with pleural plaques would not be compensated, then thousands of people will be denied a legal remedy for compensation which they have been entitled to for the last 20 years." Mr. McFall added, "One of the things British Shipbuilders seems upset about is the cost of processing pleural plaques claims. In some cases it is equivalent to the amount of compensation paid out to claimants." Every year an estimated 1,000 to 1,800 new pleural plaques claims are made. Many of the sufferers are pensioners and spent their careers in shipyards, factories and engineering. Hundreds of North East men alone worked for asbestos factory the Washington Chemical Company where they were exposed to dangerous spores daily. Recent figures show that up to one in 20 sufferers will go on to develop deadly mesothelioma. In the past three years British Shipbuilders, which is liable for yards including Middle Docks and Brigham and Cowan, both in South Tyneside, has paid out GBD4.5 million in compensation for 691 pleural plaques cases. The cases amount to 73% of the former shipyard employers' total asbestos claims and the payments are 40% of the Company's total compensation payouts. Amicus regional secretary Davey Hall said the union was giving full backing to members. The Department of Trade and Industry is responsible for the liability for British Shipbuilders on a case-by-case basis, if the Court finds it liable for health problems it pays out from the period when shipbuilding was nationalized. DTI is seeking for legal clarification. A DTI spokesman said, "There are many other minor personal injury cases and the sums paid out for pleural plaques are not in line with amounts being paid out in other cases. "We believe it is time for a fresh look at these cases. People who have been exposed to asbestos are more likely to get asbestos-related diseases but because you have pleural plaques does not mean you go on to get asbestosis." Company Profile: Norwich Union PO Box 4 Surrey Street Norwich NR1 3NG Phone: 01603 622200 Fax: 01603 683659 http://www.norwichunion.com/ Description: Norwich Union is one of the UK's most financially strong investment companies. Norwich Union is an Aviva Company. Aviva plc is the world's fifth-largest insurance group and the biggest in the UK. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales of �30 billion, and around �240 billion of assets under management. British Shipbuilders Corp Description: Although most of its assets have been privatized, British Shipbuilders remains a public corporation responsible for commitments and liabilities arising from its former manufacture of ships and marine engines. The function of the residual corporation is limited to these purposes, and it is expected that the Company will be dissolved as soon as is practicable. ASBESTOS ALERT: Markel Corp 3Q Review Recommended No Adjustments ---------------------------------------------------------------- During the third quarter of 2004, Markel Corporation completed a review of asbestos and environmental exposures in both its U.S. and international operations. While the legal environment and process for resolving asbestos and environmental claims continues to be adverse, no adjustments to loss reserves resulted from this review. The third quarter of 2003 included $55.0 million of reserve increases for asbestos and environmental exposures. Company Profile: Markel Corporation 4521 Highwoods Pkwy. Glen Allen, VA 23060-6148 (Map) Phone: 804-747-0136 Fax: 804-965-1600 Toll Free: 800-446-6671 Description: Markel Corporation is an international property and casualty insurance holding Company headquartered in Richmond, VA. The Company markets and underwrites specialty insurance products and programs to a variety of niche markets, which include: wind and earthquake exposed commercial properties, liability coverage for highly specialized professionals, horse mortality and other horse related risks, personal watercrafts, high-valued motorcycles, aviation and energy related activities. New Securities Fraud Cases AMERICAN INTERNATIONAL: Spector Roseman Lodges Stock Suit in NY --------------------------------------------------------------- The law firm of Spector, Roseman & Kodroff, P.C. initiated a securities class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of the common stock of American International Group, Inc. ("AIG" or the "Company") (NYSE: AIG) between October 28, 1999 through October 13, 2004, inclusive (the "Class Period"). The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing false statements contained in SEC filings and press releases during the Class Period, which artificially inflated the price of AIG securities. The complaint specifically alleges that the Company failed to disclose and misrepresented the following material adverse facts: (1) that AIG entered into and concealed illegal contingent commission agreements that it entered into with other insurance companies, including Marsh, Inc., a subsidiary of Marsh & McLennan, Inc.; (2) that AIG engaged in bid-rigging whereby the Company agreed to provide brokers with artificial quotes which were not justified by underwriting analysis; (3) that as a result of the bid-rigging, AIG guaranteed itself material amounts of business; (4) that AIG failed to disclose that it had entered into partnerships with other insurance companies, which was contrary to its previous statements; and (5) that as a result of this illegal scheme, the Company materially overstated and artificially inflated AIG's earnings, income, and earnings per share. On October 14, 2004, New York Attorney General Eliot Spitzer ("Spitzer") filed a suit against Marsh & McLennan Inc., alleging that it steered unsuspecting clients to insurers with whom it had lucrative payoff agreements, and that the firm solicited rigged bids for insurance contracts. Also named was AIG as an alleged participant in steering and bid-rigging. It was also revealed that two AIG executives, Karen Radke, a senior vice president, and Jean-Baptist Tateossian, a manager, had pled guilty to charges related to the probe. As a result of these disclosures, on October 14, 2004, shares of AIG fell $6.99 per share, or 10.43 percent, on unusually high trading volume of more than 48 million shares traded, to close at $60.00 per share. On October 15, 2004, an additional $2.15 per share or 3.58 percent fell, on more than 60 million in volume, to close at $57.85 per share. For more details, contact Robert M. Roseman by Phone: 888-844-5862 by E-mail: classaction@srk-law.com or visit their Web site: http://www.srk-law.com AON CORPORATION: Abraham Fruchter Lodges Securities Suit in IL -------------------------------------------------------------- The law firm of Abraham Fruchter & Twersky LLP ("Abraham Fruchter & Twersky") initiated a class action in the United States District Court for the Northern District of Illinois on behalf of purchasers of Aon Corp. ("AON") (NYSE: AOC) publicly traded securities during the period between October 31, 2002 and October 18, 2004 (the "Class Period"). The complaint charges Aon and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Aon, through its various subsidiaries worldwide, serves its clients through three operating segments: Risk and Insurance Brokerage Services, Consulting and Insurance Underwriting. The complaint alleges that Aon and its top officers violated the federal securities laws by disseminating false and misleading statements concerning the Company's results and operations. The true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (1) that the Company was receiving illegal and concealed "contingent commissions" pursuant to illegal "contingent commission agreements"; (2) that by concealing these "contingent commissions" and such "contingent commission agreements," the defendants violated applicable principles of fiduciary law, subjecting the Company to enormous fines and penalties totaling potentially tens -- if not hundreds -- of millions of dollars; and (3) that as a result, Company's prior reported revenue and income was grossly overstated. Plaintiff seeks to recover damages on behalf of all purchasers of Aon publicly issued securities during the Class Period (the "Class"). For more details, contact Jack G. Fruchter, Esq. or Larry Levit, Esq. of Abraham, Fruchter & Twersky, LLP by Phone: One Penn Plaza, Suite 2805, New York, NY 10119 by Phone: (212) 279-5050 or (800) 440-8986 by Fax: (212) 279-3655 or by E-mail: jfruchter@aftlaw.com or llevit@aftlaw.com CONCORD CAMERA: Vianale & Vianale Sets Lead Plaintiff Deadline -------------------------------------------------------------- The law firm of Vianale & Vianale LLP notifies investors that the deadline to move for lead plaintiff in a securities fraud class action brought by Vianale & Vianale LLP against Concord Camera Corp. ("Concord") (Nasdaq:LENS) and certain of its directors and officers, on behalf of purchasers of the Company's securities between August 14, 2003 and May 10, 2004 is on November 8, 2004. Plaintiff alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Defendants concealed the fact that the Company had a total of $12 million in obsolete inventory that should have been written off as impaired. To avoid this one-time large write off, defendants instead fraudulently wrote off only portions of the impaired inventory over the first three fiscal quarters of 2004, allowing them to capitalize on this delay when they sold their Concord stock before the marketplace learned of the full extent of the needed write downs. The Company's stock dropped from $10.30 at the beginning of the Class Period to under $2 where it currently trades. CFO Richard Finkbeiner resigned on July 27, 2004, and his replacement as CFO resigned one month later, on August 27, 2004. For more details, contact Kenneth J. Vianale, Esq. or Julie Prag Vianale, Esq. by Mail: 5355 Town Center Road, Suite 801, Boca Raton, FL 33486, by Phone: 561-391-4900 or 888-657-9960 or by E- mail: info@vianalelaw.com INTERACTIVECORP: Schiffrin & Barroway Lodges Stock Lawsuit in NY ---------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP initiated a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons who purchased or otherwise acquired the IAC/InterActiveCorp (Nasdaq: IACI) ("IAC" or the "Company") publicly traded securities between July 16, 2001 and August 4, 2004 inclusive (the "Class Period"). The complaint charges IAC, Barry Diller, Dara Khosrowshahi, Julius Genachowski, Richard N. Barton, and Victor A. Kaufman with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company knew or recklessly disregarded the fact that its profits were being adversely impacted by the decreases in available discounted inventory, such as discount hotel rooms and airline tickets; (2) that IAC had to expend additional resources in order to market its products and brands in the maturing Internet industry; (3) that the favorable performance of IAC's Hotels.com division was largely dependent on the improper booking of revenue; and (4) that as a result of the foregoing, the defendants lacked a reasonable basis for their positive statements about the Company's growth and progress. On August 3, 2004, the Company reported its financial results for its second quarter 2004. According to the Company, IAC's net income fell 25 percent to $70 million. Additionally, the Company cut its full year operating profits. The news shocked the market. Shares of IAC fell $4.23 per share, or 15.65 percent, on August 4, 2004 to close at $22.80 per share. For more details, contact Marc A. Topaz, Esq. or Darren J. Check, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 or 1-610-667-7706 or by E-mail: info@sbclasslaw.com MARSH & MCLENNAN: Brian M. Felgoise Lodges Securities Suit in NY ---------------------------------------------------------------- The law offices of Brian M. Felgoise, P.C. initiated a securities class action on behalf of shareholders who acquired Marsh & McLennan Companies, Inc. (NYSE: MMC) securities between October 15, 1999 and October 14, 2004, inclusive (the Class Period). The case is pending in the United States District Court for the Southern District of New York, against the Company and certain key officers and directors. The action charges that defendants violated the federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities. No class has yet been certified in the above action. For more details, contact Brian M. Felgoise, Esquire by Mail: 261 Old York Road, Suite 423, Jenkintown, PA 19046 by Phone: (215) 886-1900 or by E-mail: FelgoiseLaw@aol.com MERCK & CO.: Scott + Scott Lodges Securities Fraud Suit in NJ ------------------------------------------------------------- The law firm of Scott + Scott, LLC initiated a class action lawsuit in the United States District Court for the District of New Jersey on behalf of participants and beneficiaries of the Merck & Co., Inc. (NYSE:MRK) Employee Stock Purchase and Savings Plan and the Merck & Co., Inc. Employee Savings and Security Plan (the "Plans"). The complaint alleges defendants Merck & Co., Inc.; its Employee Benefits Policy Committee, and certain of its officers and directors breached their duties under ERISA by, among other things: (1) failing to properly manage the Plans' assets by imprudently investing a significant amount of the Plans' assets in Merck stock; (2) failing to provide complete and accurate information to participants and beneficiaries; (3) failing to monitor those defendants who were charged with managing the Plans and their assets; and (4) failing to avoid conflicts of interest with respect to the Plans. Specifically, Plaintiff alleges that the Defendants, responsible for the investment of the assets of the Plans, breached their fiduciary duties to Plaintiff in violation of ERISA (Employee Retirement Income Security Act) by failing to prudently and loyally manage the Plans' investment in Merck stock. Next, Plaintiff alleges that Defendants who communicated with participants regarding the Plans' assets, or had a duty to do so, failed to provide participants with complete and accurate information regarding Merck stock sufficient to advise participants of the true risks of investing their retirement savings in Merck stock. Plaintiff also alleges that Defendants, responsible for the selection, removal, and, thus, monitoring of the Plans' fiduciaries, failed to properly monitor the performance of their fiduciary appointees and remove and replace those people whose performance was inadequate. Finally, Plaintiff alleges that Defendants breached their duties and responsibilities to avoid conflicts of interest and serve the interests of the participants in and beneficiaries of the Plans with undivided loyalty. As a result of Defendants' fiduciary breaches the Plans have suffered substantial losses, resulting in the depletion of hundreds of millions of dollars of the retirement savings and anticipated retirement income of the Plans' participants. Under ERISA, the breaching fiduciaries are obligated to restore to the Plans the losses resulting from their fiduciary breaches. According to the Company's 2003 11-Ks, the Plans held $1,197,321,319 in Merck Common Stock as of December 31, 2003, accounting for approximately 39% of the total assets held by the Plans and $1,651,008,624 in Merck Stock as of December 31, 2002, or about 53% of the Plans' total assets. For more details, contact Scott + Scott by Mail: 108 Norwich Avenue, Colchester, CT 06415 by Phone: 800-404-7770 (EDT) or 800-332-2259 (PDT) or 619-233-4565 (California) or 860/537-3818 by Fax: 860/537-4432 or by E-mail: MerckERISALitigation@scott- scott.com and nrothstein@scott-scott.com ST. PAUL TRAVELERS: Wolf Haldenstein Lodges MN Securities Suit -------------------------------------------------------------- The law firm of Wolf Haldenstein Adler Freeman & Herz LLP initiated a class action lawsuit in the United States District Court for the District of Minnesota, on behalf of all persons who purchased the securities of The St. Paul Travelers Companies, Inc. ("St. Paul" or the "Company") (NYSE: STA) between January 27, 2000 and October 22, 2004, inclusive, (the "Class Period") against defendants St. Paul and certain officers and directors of the Company. The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities. The Complaint alleges that during the Class Period defendants made statements that were materially false and misleading because they failed to disclose and misrepresented the following adverse facts: (1) the Company had implemented and executed an unsustainable business practice whereby the Company designed and executed a business plan under which it agreed to pay so- called "contingent commissions" to insurance brokers to have them steer business to St. Paul and shield St. Paul from competition; (2) the Company's illicit scheme exposed the Company to significant regulatory penalties and threatened loss of consumer goodwill jeopardizing the Company's ability to sustain any performance in its legitimate business practices; (3) the Company's revenues and earnings would have been significantly less had the Company not engaged in such unlawful practices; (4) and the Company's prospects were at risk because its business and revenue could and would not be sustained when the public learned of its unlawful practice alleged herein. For more details, contact Fred Taylor Isquith, Esq., Mark C. Rifkin, Esq., Gustavo Bruckner, Esq., Christopher S. Hinton, Esq., or Derek Behnke of Wolf Haldenstein Adler Freeman & Herz LLP by Phone: 270 Madison Avenue, New York, NY 10016 by Phone: (800) 575-0735 by E-mail: classmember@whafh.com or visit their Web site: http://www.whafh.com STAR GAS: Wechsler Harwood Lodges Securities Fraud Suit in CT ------------------------------------------------------------- The law firm of Wechsler Harwood LLP initiated a Federal Securities fraud class action suit on behalf of all purchasers of the common stock of Star Gas Partners, L.P., ("Star Gas" or the "Company") (NYSE:SGU), during the period between July 25, 2000 and October 18, 2004 (the "Class Period"). The action, entitled McCole, et al. v. Star Gas Partners, L.P., et al., Case No. (not yet assigned), is pending in the United States District Court for the District of Connecticut, and names as defendants the Company, its Chairman of the Board, Chief Executive Officer, and a Director of the Company, Irik P. Sevin, and its Chief Financial Officer and Controller, Ami A. Trauber. A copy of the complaint can be obtained from the Court or can be viewed on Wechsler Harwood's website at: www.whesq.com. The complaint alleges that defendants' publicly disseminated Class Period statements, which portrayed the Company's business as robust, even in the face of rising heating oil prices and a significant restructuring, were materially false and misleading for the following reasons: (1) Star Gas was experiencing serious problems as a result of its reorganization, particularly in the area of customer service, which was deteriorating rapidly, resulting in a migration of customers; (2) the purported cost savings from the restructuring in the heating oil division had not materialized and, in fact, had resulted in operating deficiencies that negatively impacted the Company; (3) the Company had not adequately hedged against a sharp rise in heating oil prices during the Class Period; (4) the Company was ill-equipped to handle the surge in heating oil prices during the Class Period and falsely comforted investors with representations that Star Gas would simply pass on high wholesale prices to retail customers; (5) the Company's problems and deteriorating business seriously threatened its ability to pay out its quarterly distribution, a major reason investors purchase the Company's units; and (6) the Company's business had deteriorated so sharply over the Class Period that it was in palpable danger of breaching financial and/or performance covenants in its loan agreements, thereby seriously jeopardizing its liquidity and viability. Defendants engaged in the wrongdoing alleged in the complaint so that the Company's units would trade at artificially inflated prices, paving the way for several securities offerings during the Class Period, totaling $96 million. The truth was revealed on October 18, 2004, before the open of ordinary trading, when Star Gas shocked the market by announcing that the Company's Petro division had suffered a substantial earnings decline in fiscal 2004, which was expected to continue into fiscal 2005, due to an inability to pass on increased oil prices to its customers and to problems with its restructuring, forcing the Company to cut its Minimum Quarterly Distribution. Moreover, the earnings shortfall breached covenants in the Company's credit agreements, jeopardizing its liquidity and raising the possibility of bankruptcy, according to the Company's press release. In response to this announcement, the price of Star Gas common units dropped precipitously, falling 80% in one day, from a closing price of $21.60 per unit on October 15, 2004, to a closing price of $4.32 per share on October 18, 2004 (the next trading day), on trading volume that was many times its average daily trading volume. For more details, contact Craig Lowther, Wechsler Harwood Shareholder Relations by Mail: 488 Madison Avenue, 8th Floor New York, NY 10022 by Phone: (877) 935-7400 or by E-mail: clowther@whesq.com ********* A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to carconf@beard.com are encouraged. Each Friday's edition of the CAR includes a section featuring news on asbestos-related litigation and profiles of target asbestos defendants that, according to independent researches, collectively face billions of dollars in asbestos-related liabilities. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Glenn Ruel Se�orin, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2004. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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