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C L A S S A C T I O N R E P O R T E R
Friday, November 19, 2004, Vol. 6, No. 230
Headlines
ALKERMES INC.: Asks MA Court To Dismiss Securities Fraud Lawsuit
ANADARKO PETROLEUM: Reaches Settlement For Gas Royalty Lawsuits
ARTHUR GALLAGHER: SimmonsCooper Files Suit V. "Contingency Fees"
BEST BUY: IS Employees Commence Age Discrimination Lawsuit in MN
BURLINGTON RESOURCES: Pre-trial Discovery Begins in Royalty Suit
CALIFORNIA: Settlement Reached in CA Youth Authority Lawsuit
CAMBREX CORPORATION: NJ Court Yet To Rule on Lawsuit Dismissal
CINCINNATI GAS: KY Resident Lodges Suit V. Clermont Coal Plant
CINERGY MARKETING: Accepts $3 Mil Fine To Settle Trading Charges
CONSUMER GRANTS: MI A.G. Cox To File Consumer Fraud Suit
CREE INC.: Plaintiffs Lodge Consolidated Amended Securities Suit
CRYOLIFE INC.: Expert Discovery Proceeds in GA Securities Suit
DAIMLERCHRYSLER AG: IL Judge To Hear Motion To Transfer IL Suit
DPL INC.: OH Court Orders Distribution of Stock Suit Settlement
DUANE READE: Former Worker Launches Overtime Wage Lawsuit in NY
F&M BANCORP: Ex-Employees, Relatives Faces SEC Civil Suit in DC
FIRST HEALTH: Shareholders Launch Suit v. Coventry Merger in IL
FONECASH INC.: Civil Penalty Assessed V. Firm, Daniel Charboneau
GEO GROUP: CA Court Approves Employee Wage Lawsuit Settlement
GLOBAL CROSSING: NY Judge Approves $79M 401(k) Plan Settlement
GRANITE STATE: SEC Lodges Insider Trading Suit V. NH Residents
HARMONIC INC.: Plaintiffs Appeal Dismissal of CA Securities Suit
HONEYWELL INTERNATIONAL: NJ Court Approves Stock Suit Settlement
HONEYWELL INTERNATIONAL: Reaches Fiduciary Duty Suit Settlement
MAYTAG CORPORATION: Recalls 1,170 Gas Cooktops Due To Burn Risk
MEDI-HUT CO.: Former Officers Sentenced For Securities Fraud
MICROSOFT CORPORATION: Destroyed E-Mails, Says CA Software Firm
NATIONAL CENTURY: SEC Lodges Suit V. Ex-VP For Role in $1B Fraud
PHILIP MORRIS: Argues $10.1B "Light" Ruling Before IL High Court
PERINI CORPORATION: Discovery Proceeds For Securities Suit in MA
SCIENTIFIC-ATLANTA INC.: Faces Lawsuits Over Adelphia Agreements
SCIENTIFIC-ATLANTA INC.: MO Court Junks Claims V. Firm in Suit
SCIENTIFIC-ATLANTA INC.: Ruling V. GA Suit Dismissal Affirmed
SKY FINANCIAL: Faces Complaint Over National Marine Boat Loans
SONIC AUTOMOTIVE: SC Residents Commences Consumer Fraud Lawsuit
UNITED STATES: Rep. Steve Chabot Sets Hearing On USDA Settlement
VIROPHARMA INC.: PA Court Gives Final Approval To $9M Settlement
WYETH-AYERST: OH Court Grants Class Status For Premarin Lawsuit
XTO ENERGY: Evidentiary Hearing in KS Lawsuit Set For April 2005
XTO ENERGY: Subsidiary Faces Natural Gas Royalties Lawsuit in KS
XL CAPITAL: Asks CT Court To Dismiss Securities Fraud Lawsuit
XL CAPITAL: Reaches Settlement for Consolidated Stock Suit in CT
XTO ENERGY: Lessors, Successors Sue Over Royalty Payments in CO
Asbestos Alert
ASBESTOS LITIGATION: Pleural Plaques Victim Justifies His Claims
ASBESTOS LITIGATION: Union Prescribes Tests for NSW Road Workers
ASBESTOS LITIGATION: CenterPoint Energy TX Gulf Cases Continuing
ASBESTOS LITIGATION: Ingersoll-Rand Posts $12.3M Settlement Cost
ASBESTOS LITIGATION: Ameren, Subsidiaries Battle More Lawsuits
ASBESTOS LITIGATION: Eastman Chemical Co. Mired in 3,000 Claims
ASBESTOS LITIGATION: Hartford Financial Cites Evaluation Results
ASBESTOS LITIGATION: UIC, Detroit Stoker Claims Peaked in 2004
ASBESTOS LITIGATION: Everest Re Group Posts Reserve Adjustments
ASBESTOS LITIGATION: Congoleum Corp Modifies Reorganization Plan
ASBESTOS LITIGATION: Dana Corp Deals with 156,000 Pending Claims
ASBESTOS LITIGATION: Bairnco Obtains Resolutions of 3 Lawsuits
ASBESTOS LITIGATION: AIG Receives More Asbestos Indemnity Claims
ASBESTOS LITIGATION: IPALCO Says IPL to Defend Against 100 Suits
ASBESTOS LITIGATION: After 80 Dismissed Cases, Moen to Face 135
ASBESTOS LITIGATION: Argonaut Reports Adequate Reserves in 3Q
ASBESTOS LITIGATION: Viacom Copes with 112,000 Pending Claims
ASBESTOS LITIGATION: St Paul Travelers Reports Adequate Reserves
ASBESTOS LITIGATION: Allmerica Posts $26.3MM Loss Reserves in 3Q
ASBESTOS LITIGATION: Katy Industries Faces Suits by Ex-workers
ASBESTOS LITIGATION: Hercules Spent $38MM for Settlement, Costs
ASBESTOS LITIGATION: NT to Cancel Asbestos Removalist Licenses
ASBESTOS LITIGATION: U.S. Insurers Pondering Reform Approach
ASBESTOS LITIGATION: FPB Warns of Fines for Failure to Make Plan
ASBESTOS LITIGATION: W.R. Grace Seeks $1.6B Liabilities Cap
ASBESTOS LITIGATION: Railroad Worker Sues for $300T Compensation
ASBESTOS LITIGATION: Oglebay Norton Gets OK to Exit Bankruptcy
ASBESTOS LITIGATION: Sen. Reid Set to Negotiate on Asbestos Fund
ASBESTOS LITIGATION: Jury Trial Averted in Madison County Court
ASBESTOS LITIGATION: Hardie Offers AUD85Mil for Asbestos Fund
ASBESTOS LITIGATION: T&N Pension Trustees Vote Down Rescue Plan
ASBESTOS ALERT: Johnson & Johnson Employees Exposed to Asbestos
ASBESTOS ALERT: Victim's Widow Pursues Claim Against RG Carter
ASBESTOS ALERT: Accountant Files GBD420T Claim Against Seawheel
ASBESTOS ALERT: TODCO, Subsidiaries Face Over 700 Claims in MS
ASBESTOS ALERT: Curtiss-Wright, Subsidiaries Named in 100 Suits
New Securities Fraud Cases
AON CORPORATION: Wechsler Harwood Lodges ERISA Suit in N.D. IL
AUTOBYTEL INC.: Smith & Smith Lodges Securities Fraud Suit in CA
IMPAX LABORATORIES: Charles J. Piven Files Securities Suit in CA
SOURCECORP INC.: Baron & Budd Lodges Securities Fraud Suit in TX
*********
ALKERMES INC.: Asks MA Court To Dismiss Securities Fraud Lawsuit
----------------------------------------------------------------
Alkermes, Inc. asked the United States District Court for the
District of Massachusetts to dismiss the consolidated securities
class action filed against it and certain of its current and
former officers and directors.
Beginning in October 2003, the Company and certain of its
current and former officers and directors were named as
defendants in six purported securities class action lawsuits,
captioned:
(1) Bennett v. Alkermes, Inc., et. al., 1:03-CV-12091;
(2) Ragosta v. Alkermes, Inc., et. al., 1:03-CV-12184;
(3) Barry Family LP v. Alkermes, Inc., et. al., 1:03-CV-
12243;
(4) Waltzer v. Alkermes, Inc., et. al., 1:03-CV-12277;
(5) Folkerts v. Alkermes, Inc., et. al., 1:03-CV-12386 and
(6) Slavas v. Alkermes, Inc., et. al., 1:03-CV-12471
On May 14, 2004, the six actions were consolidated into a single
action captioned: In re Alkermes Securities Litigation, Civil
Action No. 03-CV-12091-RCL (D. Mass.). On July 12, 2004, a
single consolidated amended complaint was filed on behalf of
purchasers of the Company's common stock during the period April
22, 1999 to July 1, 2002.
The consolidated amended complaint generally alleges, among
other things, that, during such period, the defendants made
misstatements to the investing public relating to the
manufacture and FDA approval of the Company's Risperdal Consta
product. The consolidated amended complaint seeks unspecified
damages.
ANADARKO PETROLEUM: Reaches Settlement For Gas Royalty Lawsuits
---------------------------------------------------------------
Anadarko Petroleum reached a settlement for two class actions
filed in Texas state Courts connection with a gas royalty
underpayment case filed against it.
A group of royalty owners purporting to represent the Company's
gas royalty owners in Texas filed the suit, styled "Neinast,
Russell, et al. v. Union Pacific Resources Company, et al.," by
the 21st Judicial District Court of Washington County, Texas.
The suit has been certified as a class action, but this
certification did not constitute a review by the Court of the
merits of the claims being asserted.
The royalty owners' pleadings did not specify the damages being
claimed, although a demand for damages in the amount of $66
million was asserted. The Company appealed the class
certification order. A favorable decision from the Houston
Court of Appeals decertified the class. The royalty owners did
not appeal this matter to the Texas Supreme Court and the
decision from the Houston Court of Appeals became final in the
second quarter of 2002. In the fourth quarter of 2003, the
royalty owners filed a new petition alleging that the class may
properly be brought so long as "sub-class" groups are broken
out.
The same attorneys who filed the Neinast lawsuit as a state-wide
class action also filed a lawsuit, styled "Hankins, Lowell F.,
et al. v. Union Pacific Resources Group Inc., et al.," in the
112th Judicial District Court, Crockett County, Texas. The two
lawsuits are substantially identical, except that the Hankins
lawsuit is limited to royalty owners in Crockett and Sutton
Counties. The Texas Supreme Court has reversed certification of
this class; however, as with the Neinast case, the plaintiffs
indicated that they would seek certification of sub-classes and
continue to prosecute the claims.
The Company has reached an agreement in principle to settle
these cases, subject to judicial approval. The Company expects
the Court to approve the settlement in late 2004 or early 2005.
ARTHUR GALLAGHER: SimmonsCooper Files Suit V. "Contingency Fees"
----------------------------------------------------------------
East Alton plaintiff's firm SimmonsCooper, LLC initiated a class
action lawsuit against Illinois insurance broker Arthur J.
Gallagher in Madison County Circuit Court, a day after it's
announcement that it would no longer collect the now-
controversial 'contingency fees' from insurance companies, the
Madison County Record reports.
Trial lawyer Stephen Tillery, of the Philip Morris $10.1 billion
verdict fame, is representing the firm, which named itself as
the "named plaintiff" in the complaint, as the law firm says it
has purchased health and life insurance through Gallagher.
The complaint charges Gallagher, which is based in the western
Chicago suburb of Itasca and is the world's fourth largest
insurance broker, with violating the Illinois Consumer Fraud and
Deceptive Business Practices Act as well as "breach of fiduciary
duty and disgorgement."
SimmonsCooper's legal action, which was filed on behalf of
itself and purchasers of Gallagher's health and life insurance,
was in response to Democrat New York Attorney General Eliot
Spitzer's suit against Marsh & McLennan, the world's largest
insurance broker, over contingency fees in mid-October. He
claims the brokers have a conflict-of-interest when they accept
the payments. Though the case has been assigned to Circuit
Judge George Moran no hearing has yet been scheduled.
BEST BUY: IS Employees Commence Age Discrimination Lawsuit in MN
----------------------------------------------------------------
Forty-four former information systems (IS) employees filed a
class action age discrimination lawsuit against Best Buy
Company, Inc., in Federal District Court in Minneapolis. The
suit alleges that the consumer electronics retail giant
unlawfully terminated the employment of the plaintiffs and other
older IS employees based on their ages, in violation of state
and federal anti-discrimination laws. The suit alleges that Best
Buy engaged in a pattern or practice of discrimination against
its older employees.
The plaintiffs range in age from 40 to 71; average age at the
time of their terminations was 51. The forty-four named
plaintiffs were terminated in two group reductions, in October
2003 and June 2004. About 68 percent of those terminated from
the IS Department were age 40 or older, even though the IS
employees tended to be younger. The terminations were a part of
Best Buy's announced strategy to outsource its IS work to
Accenture. In June 2004, Best Buy also terminated 13 employees
from its Finance Department, 12 of whom were over the age of 40.
"Of about 150 IS people fired in the two rounds of terminations,
more than 100 were over the age of 40," said Stephen Snyder,
lead attorney for the class of plaintiffs. "And many of them had
received strong performance ratings and bonuses at their most
recent reviews."
"Workers in information technology can be particularly
vulnerable to age bias," Snyder said. "There seems to be a
misperception that only younger workers are able to keep up with
new technologies."
"What makes this case particularly troubling is Best Buy's
history of corporate commendations and professed attitude
towards its employees," Snyder said. "The Company's Web site
hails its workforce as a family and adds that 'You're going to
like Best Buy. It's got a heart and spirit unlike any place
you've ever worked.'"
The plaintiffs seek to hold Best Buy accountable for its
employment practices. The lawsuit seeks lost compensation and
benefits, reinstatement or future pay and benefits, liquidated
damages under federal law, treble damages under state law, and
other relief. The lawsuit also seeks a declaration that releases
of claims signed by other Best Buy employees should be declared
invalid due to its failure to comply with statutory
requirements. Gray Plant Mooty Mooty & Bennett, P.A., a
Minneapolis-based law firm, represents the plaintiffs in this
class action.
For more details, contact Stephen J. Snyder, Esq. of Gray Plant
Mooty Mooty & Bennett, P.A. by Phone: 612-632-3034 or by E-mail:
stephen.snyder@gpmlaw.com OR Rob Litt by Phone: 612-375-8509 or
by E-mail: rlitt@clynch.com.
BURLINGTON RESOURCES: Pre-trial Discovery Begins in Royalty Suit
----------------------------------------------------------------
Pre-trial discovery is proceeding in the consolidated class
action filed against Burlington Resources, Inc. and its former
affiliate, El Paso Natural Gas Company in the District Court of
Washita County, State of Oklahoma.
Two class actions were initially filed, styled "Bank of America,
et al. v. El Paso Natural Gas Company, et al., Case No. CJ-97-
68," and "Deane W. Moore, et al. v. Burlington Northern, Inc.,
et. al., Case No. CJ-97-132."
Plaintiffs contend that defendants underpaid royalties from 1982
to the present on natural gas produced from specified wells in
Oklahoma through the use of below-market prices, improper
deductions and transactions with affiliated companies and in
other instances failed to pay or delayed in the payment of
royalties on certain gas sold from these wells. The plaintiffs
seek an accounting and damages for alleged royalty
underpayments, plus interest from the time such amounts were
allegedly due. Plaintiffs additionally seek the recovery of
punitive damages.
The plaintiffs have not specified in their pleadings the amount
of damages they seek from the Company. However, through pre-
trial discovery, plaintiffs have provided defendants with
alternative theories of recovery claiming monetary damages of up
to $263.6 million in principal, plus interest, punitive damages
and attorney's fees.
The Company and El Paso Natural Gas Company have asserted
contractual claims for indemnity against each other. The Court
has certified the plaintiff classes of royalty and overriding
royalty interest owners, and the parties are proceeding with
pre-trial discovery. It is anticipated that the trial of this
matter will be scheduled during the fourth quarter of 2004 or in
2005.
The suit is styled "Albert, Eugene v. El Paso Natural Gas Co.,
CJ-97-00135," filed in the District Court of Washita County,
Oklahoma under Judge Richard B. Darby. Lawyers for the
plaintiffs are Gregory L. Mahaffey, Richard J. Gore, Arthur W.
Schmidt, Bradley D. Brickell.
CALIFORNIA: Settlement Reached in CA Youth Authority Lawsuit
------------------------------------------------------------
California Governor Arnold Schwarzenegger announced a settlement
in a class action lawsuit alleging inhumane treatment at
California Youth Authority facilities, the San Jose Mercury News
reports.
Overcrowding, inappropriate discipline and other problems were
cited in the lawsuit. The essence of the settlement is that the
state admits the Youth Authority is a disaster and agrees to
clean it up. Special Master Donna Brorby will be watching
closely to make sure the state lives up to its word.
Ms. Brorby, a respected attorney who specializes in inmates'
rights, has a tough assignment. Fixing the Youth Authority will
require changing a culture, launching new programs, and
replacing old facilities with more appropriate ones. It will
take consistent support from the governor, unions and the
Legislature. It will take money -- and no one is sure yet where
the money will come from. However, the potential payoff for
reform is huge: safer neighborhoods across the state and fewer
young lives wasted.
CAMBREX CORPORATION: NJ Court Yet To Rule on Lawsuit Dismissal
--------------------------------------------------------------
The United States District Court for the District of New Jersey
has yet to rule on Cambrex Corporation's motion to dismiss a
securities class action lawsuit filed against it and five of its
former and current Company officers.
The lawsuit has been brought as a class action in the names of
purchasers of the Company's common stock from October 21, 1998
through July 25, 2003. The complaint alleges that the Company
failed to disclose in timely fashion the January 2003 accounting
restatement and subsequent SEC investigation, as well as the
loss of a significant contract at the Baltimore facility.
The Company filed a motion to dismiss in May 2004. Thereafter
the plaintiff filed a reply brief. The Company responded and is
awaiting a decision from the Court.
The suit is styled "Stephen Dodge, Individually and on behalf of
all others similarly situated v. Cambrex Corporation, James A.
Mack, Douglas H. MacMillan, Claes Glasell, Salvatore J. Guccione
and Luke M. Beshar," filed in the United States District Court
in New Jersey.
Plaintiff attorneys are:
(1) Patrick L. Rocco and Jennifer Sullivan of Shalov Stone
& Bonner LLP, 163 Madison Ave. P.O. Box 1277
Morristown, New Jersey 07692-1277, Phone: 973-775-8897;
(2) Steven G. Schulman, Peter Seidman and Sharon M. Lee of
Milberg Weiss Bershad Hynes & Lerach LLP, One
Pennsylvania Plaza, New York, NY 10119-0165, Phone:
212-594-5300, Fax: 212-868-1229;
(3) Marc S. Henzel of the Law Offices of Marc S. Henzel,
273 Montgomery Avenue, Bala Cynwyd PA 19004, Phone:
610-660-8000
CINCINNATI GAS: KY Resident Lodges Suit V. Clermont Coal Plant
--------------------------------------------------------------
Danny Freeman, a Moscow resident initiated a potential class
action lawsuit against Cincinnati Gas & Electric accusing it of
running a dirty coal plant that regularly violates clean-air
regulations, the Cincinnati Post reports.
Mr. Freemna's attorney, Brandon Voelker, who filed the lawsuit
in Federal Court in Cincinnati, said that should a federal judge
approve the suit, it would be expanded into a class action that
would represent residents in Moscow and nearby communities,
including Pendleton County, Kentucky.
The suit charges that the Zimmer plant in Moscow regularly emits
dangerous levels of fine particulates (soot) that can cause
serious health problems. Furthermore, the suit charges that the
smokestack at the plant emits mercury, lead, arsenic and cadmium
onto surrounding properties. "These illegal and wrongful air
emissions result from frequent preventable equipment breakdowns
as well as from day-to-day operations of the facility, including
its coal-fired boiler, air emission control equipment and
materials handling," the suit said.
The suit claims wind patterns have caused smoke to blow down on
Mr. Freeman's property and that the Ohio EPA has failed to cite
the plant for documented opacity violations.
However, Steve Brash, spokesman for CG&E parent Cinergy, said he
had not received a copy of the lawsuit and could not comment on
specific allegations. But he did reiterate that Zimmer is in
compliance with all pollution laws.
CINERGY MARKETING: Accepts $3 Mil Fine To Settle Trading Charges
----------------------------------------------------------------
Cinergy Marketing & Trading, a Cinergy Corporation affiliate
agreed to pay a $3 million fine to settle federal regulatory
charges that two traders in the energy Company's Houston-based
natural gas trading operation falsely reported information on
gas deals, according to the U.S. Commodity Futures Trading
Commission, the Associated Press reports.
According to Cinergy spokesman Steve Brash, two traders with
Cinergy Marketing & Trading knowingly reported inaccurate
information from August 2000 to July 2002 to two McGraw-Hill
publications that compile prices used to settle trades in
natural gas markets. Though admitting no wrongdoing and agreeing
to the fine to end the case, Mr. Brash stated that Cinergy had
fired one of the traders and transferred the other to another
job off the trading floor.
An unspecified number of false trades were submitted via e-mail
and telephone to "Platt's Gas Daily" and "Inside FERC," in
violation of federal exchange law, the Commission said. The
Commission, which regulates trading in futures, said the false
information could affect wholesale natural gas prices, including
future prices traded on the New York Mercantile Exchange.
Gretchen Lowe, associate director of the Commission's
enforcement division, said the federal agency has been
investigating reports that traders at several energy companies
falsely reported trade data after a sharp run-up in natural gas
prices during the California energy crisis in 2000 and 2001. The
investigation, according to Ms. Lowe has resulted in 21 false
reporting claims, 19 of which have been settled for $255 million
in penalties while the other two cases are still pending.
Also pending is a class action lawsuit in New York against
Cincinnati-based Cinergy, which owns utilities that provide gas
and electric service to parts of Ohio, Kentucky and Indiana and
other energy companies seeking unspecified damages for anyone
who bought NYMEX gas futures or options from January 1, 2000, to
December 31, 2002.
CONSUMER GRANTS: MI A.G. Cox To File Consumer Fraud Suit
--------------------------------------------------------
A Florida-based Company that claims to assist consumers in
obtaining government grants faces legal action for misleading
sales tactics in violation of the Michigan Consumer Protection
Act and telemarketing provisions of the Home Solicitation Act,
Michigan Attorney General Mike Cox announced in a statement.
In a Notice of Intended Action (NIA), A.G. Cox alleges that
Consumer Grants USA uses unfair and deceptive business practices
by misleading telemarketing calls that promise government grants
of $8,000 to $25,000 if consumers pay a $239 "processing fee."
Consumers were asked by telemarketers to give their personal
bank account information, permitting payment to be withdrawn
directly from their bank account. After payment was withdrawn,
consumers received an informational guidebook rather than the
promised grant.
"It is disappointing that someone would mislead people about
opportunities involving government funding. Unfortunately,
government grant schemes are nothing new. When a telemarketer,
classified ad, or other offer requires up front payment in
exchange for 'free money' or other promises that seem too good
to be true, don't pay," A.G. Cox said. "Giving bank account
numbers or other personal information over the phone to someone
who calls is an invitation for fraud to occur. Authorizing bank
withdrawals over the phone should only be done when you place
the call, and when the Company is one that you know."
Consumer Grants USA does business under many different names,
including Ultimate Funding, Consumer US Grant Guide, Customer
Care Plus, and Federal Grant Information Center. Currently, the
Better Business Bureau lists the Company as having an
unsatisfactory record because of a pattern of complaints about
selling practices and refund issues.
Michigan consumers who want to file a complaint may go to the
Attorney General's website: http://www.michigan.gov/agor call
1-877-765-8388. The Attorney General's office is particularly
interested in hearing from Michigan residents who, despite being
signed up for the National Do Not Call Registry, received calls
from any Consumer Grants Company. Calls by Consumer Grants USA
to Michigan consumers on the Registry is a violation of State
and federal law. For more information, contact Randall
Thompson, by Phone: 517-373-8060.
CREE INC.: Plaintiffs Lodge Consolidated Amended Securities Suit
----------------------------------------------------------------
Plaintiffs filed an amended consolidated securities class action
against Cree, Inc. and certain of its officers and current and
former directors, alleging violations of federal securities
laws.
A consolidated class action was initially filed, asserting,
among other claims, violations of federal securities laws,
including violations of Section 10(b) of the Securities Exchange
Act of 1934, as amended, and Rule 10b-5, and violations of
Section 20(a) and Section 18 of the Exchange Act against the
individual defendants and also asserts claims against certain of
the Company's officers under Section 304 of the Sarbanes-Oxley
Act of 2002.
The suit alleged that the Company made false and misleading
statements concerning its investments in certain public and
privately held companies, the Company's acquisition of the
UltraRF division of Spectrian, its supply agreement with
Spectrian, its agreements with C&C, and its employment
relationship with Eric Hunter and that the Company's financial
statements did not comply with the requirements of the
securities laws during the class period, an earlier Class Action
Reporter story (August 28,2004) states.
The suit was filed on behalf of a plaintiff class consisting of
purchasers of Cree stock between August 12, 1998 and June 13,
2003 and seeks, among other relief, unspecified damages and
disgorgement of profits by the individual defendants, plus costs
and expenses, including attorneys' accountants' and experts'
fees.
In February 2004, the Company moved that the Court dismiss the
consolidated amended complaint on the grounds that it failed to
state a claim upon which relief can be granted and did not
satisfy the pleading requirements under applicable law. On
August 30, 2004, the Court entered an order granting the motion
to dismiss without prejudice and allotting 45 days for the
plaintiffs to file an amended consolidated complaint.
The plaintiffs filed a First Amended Consolidated Class Action
Complaint on October 14, 2004, asserting essentially the same
claims and seeking the same relief as in their prior complaint.
The Company expects to file a motion to dismiss the Amended
Complaint on or before November 15, 2004.
CRYOLIFE INC.: Expert Discovery Proceeds in GA Securities Suit
--------------------------------------------------------------
Expert discovery is proceeding in the consolidated securities
class action filed against Cryolife, Inc. and certain of its
officers in the United States District Court for the Northern
District of Georgia.
Several putative class action lawsuits were filed in July
through September 2002 against the Company and certain officers
of the Company, alleging violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 based on a series of
purportedly materially false and misleading statements to the
market.
The suits were consolidated, and a consolidated amended
complaint filed, that principally alleges the Company made
misrepresentations and omissions relating to product safety and
the Company did not comply with certain FDA regulations
regarding the handling and processing of certain tissues and
other product safety matters.
The consolidated complaint seeks certification of a class of
purchasers between April 2, 2001 and August 14, 2002,
compensatory damages, and other expenses of litigation. The
Company and the other defendants filed a motion to dismiss the
consolidated complaint on February 28, 2003, which the Court
denied in part and granted in part on May 27, 2003.
The discovery phase of the case commenced on July 16, 2003. On
December 16, 2003, the Court certified a class of individuals
and entities who purchased or otherwise acquired CryoLife stock
from April 2, 2001 through August 14, 2002.
The suit is styled "Robert Murray and Richard A. Pearson,
individually and on behalf of all others similarly situated v.
Cryolife, Inc., Steven G. Anderson, Albert E. Heacox, James C.
Vander Wyk and D. Ashley Lee," and pending in the United States
District Court for the Northern District of Georgia, Atlanta
Division. Attorneys for the plaintiffs are:
(1) Martin D. Chitwood and Nikole Davenport of Chitwood &
Harley, Mail: 2900 Promenade II, 1230 Peachtree Street,
NE Atlanta, Georgia 30309, Phone: 404-873-3900, Fax:
404-876-4476
(2) Sherrie R. Savett, Carole A. Broderick, Barbara A.
Podell, David F. Sorensen of Berger & Montague PC, 1622
Locust Street, Philadelphia, PA 19103, Phone:
215-875-3000, Fax: 215-875-4604
For more information, visit
http://securities.stanford.edu/1024/CRY02-
01/20020827_o01c_022388.pdf
DAIMLERCHRYSLER AG: IL Judge To Hear Motion To Transfer IL Suit
---------------------------------------------------------------
German automaker DaimlerChrysler, which is a defendant in a
Madison County class action filing, will have its motion to
transfer venue heard November 23 by Judge Andy Matoesian, the
Madison County Record reports.
Ralph Kern and Alan Lewis sued the automaker in February,
claiming that it failed to disclose a substantial risk that an
engine defect would develop after 50,000 miles in many of its
vehicles and that the defect might not exhibit itself until
after warranties on those vehicles had expired. Both are
claiming that DaimlerChrysler's conduct constitutes consumer
fraud and common law fraud by omission and thus the are seeking
damages equal to the cost of repairs to the vehicle plus all
related costs. In filings, both men contend that they targeted
Daimler in their suit due to the fact that only the automaker
can prevent design defects that cause engine failure.
On August 18, Judge Matoesian ruled DaimlerChrysler's motion to
transfer venue moot in light of his decision to grant a
plaintiff's motion to amend the complaint. Unfazed by the
judge's opinion, Daimler once again filed another transfer of
venue motion.
In the complaint, Mr. Kern states that he had bought his used
1999 Dodge Intrepid with a 2.7-liter engine from Enterprise
Rent-A-Car, a co-defendant in the suit. In late 2002 and early
2003 the engine allegedly began to fail, with an odometer
reading between 50,000-80,000 miles. Kern's warranty had
expired, leaving him to pay his $5,210.06 in repair bill
himself.
DPL INC.: OH Court Orders Distribution of Stock Suit Settlement
---------------------------------------------------------------
The United States District Court for the Southern District of
Ohio ordered the distribution of the federal class settlement
fund for the class action filed against DPL, Inc. to approved
claimants to proceed immediately.
On July 15, 2002, a class action and derivative complaint (the
Buckeye Action) for damages was filed by The Buckeye Electric
Company Retirement Plan (the Plan) on behalf of itself and other
DPL shareholders, and derivatively on behalf of DPL, in the
Court of Common Pleas for Montgomery County, Ohio. The
defendants included the Company, selected executive officers of
DPL, an officer of a DPL subsidiary, the Board of Directors of
DPL and PricewaterhouseCoopers LLP (PwC), DPL's independent
accountants at that time. Defendants removed the Buckeye Action
to the U. S. District Court for the Southern District of Ohio.
The Second Amended Complaint alleged violations of federal
securities laws, breach of fiduciary duty, breach of the duty of
care, corporate waste, breach of the duty of loyalty and self-
dealing, fraud, negligence and misrepresentations by defendants
in connection with the establishment and management of DPL's
portfolio of financial assets, which the Plan alleged were
inappropriate investments not adequately disclosed to
shareholders.
The Second Amended Complaint also alleged claims related to PwC
and its accounting and auditing of DPL's financial asset
portfolio. The Plan and other class members sought compensatory
and punitive damages of not less than $1.1 billion, compensatory
damages of $200 million on behalf of DPL, and unspecified
punitive damages, attorney's fees and costs.
Additional similar complaints were subsequently filed in the
U.S. District Court for the Southern District of Ohio.
Additional similar complaints were also filed in both the
Montgomery County and Hamilton County, Ohio Courts of Common
Pleas. The cases filed in the Montgomery County Court of Common
Pleas were consolidated with those filed in the Court of Common
Pleas, Hamilton County.
On November 6, 2003, the Company and certain of its present and
former officers and directors reached an agreement in principle
with plaintiffs to settle the DPL Inc. Securities Litigation,
and the shareholder class and derivative actions filed against
them in Federal and Ohio state Courts (the Global Settlement).
The Company agreed to pay $70.0 million and certain of the
Company's liability insurers (the Insurers) agreed to pay $65.5
million to settle the DPL Inc. Securities Litigation and the
state shareholder class actions. The Insurers agreed to pay
$4.5 million to settle the derivative actions. In addition, PwC
agreed to pay $5.5 million to settle all claims against it on a
global basis.
The Global Settlement was subject to approval by the Courts in
which the actions were pending after notice to shareholders and
class members and fairness hearings before the Courts. On
December 22, 2003, the Global Settlement was approved in total
by the Court of Common Pleas, Hamilton County, Ohio. The U.S.
District Court for the Southern District of Ohio approved the
Global Settlement except for the petition for plaintiffs'
attorneys' fees. On March 8, 2004, the U.S. District Court for
the Southern District of Ohio approved in part the plaintiffs'
petition for plaintiffs' attorneys' fees. On May 24, 2004, in
accordance with the terms of the Global Settlement, the amounts
owed by the Company and the amounts owed by the Company's
liability insurers pursuant to Global Settlement were paid for
ultimate distribution to the class. On August 13, 2004, as to
state Court and August 16, 2004, as to federal Court, plaintiffs
filed a motion seeking Court approval of the distribution of the
Global Settlement funds.
On June 7, 2004, the plaintiffs in the action in the Court of
Common Pleas of Hamilton County, Ohio, filed a motion for an
Order of Contempt, Disgorgement and Recission against defendants
Peter H. Forster, Caroline E. Muhlenkamp and Stephen F. Koziar,
Jr. In their motion, plaintiffs claim that defendants Forster,
Muhlenkamp and Koziar breached the Global Settlement and caused
DPL and its board of directors to breach the Global Settlement,
by causing the Company to distribute to defendants Forster,
Muhlenkamp and Koziar approximately $33 million in deferred
compensation in December 2003, to pay them unwarranted bonuses,
and to reinstate certain stock incentive and benefit plans
without proper board approval. Plaintiffs sought, among other
things, disgorgement of monies received by defendants Forster,
Muhlenkamp and Koziar and rescission of the reinstatement of the
stock incentive and benefits plans.
On June 28, 2004, the Company filed a Motion to Strike the
plaintiffs' motion alleging, among other things, that the motion
was procedurally defective. Further, on July 22, 2004, the
Company filed a Motion for Preliminary Injunction in the U.S.
District Court to enjoin the Motion for an Order of Contempt,
Disgorgement and Rescission. On August 2, 2004, plaintiffs
filed their opposition to defendants' Motion to Strike and filed
their opposition to the Motion for a Preliminary Injunction on
August 13, 2004. On October 4, 2004 the U.S. District Court
ruled the distribution of the federal class settlement fund to
approved claimants would proceed immediately and that plaintiffs
would withdraw their Motion for Contempt in state Court. This
withdrawal was completed on October 4, 2004 and the state Court
ordered the distribution of the state class settlement fund to
approved claimants.
The federal class action is styled "In re DPL, Inc., Securities
Litigation," filed in the United States District Court for the
Southern District Of Ohio, Western Division (Dayton) under Judge
Walter H. Rice, under docket number 03-CV-02-355. The state
class action is styled "Austern Trust Dated 7/11/94, Barry M.
Austern and Susan L. Austern v. Peter H. Foster, et. al.," Case
No. A-02-07067, filed in the Court of Common Pleas, Hamilton
County, Ohio under Judge Norbert A. Nadel.
The law firms involved in this litigation are:
(1) Stanley M. Chesley, Esq. or James R. Cummins, Esq. of
WAITE, SCHNEIDER, BAYLESS & CHESLEY CO., L.P.A., 1513
Fourth & Vine Tower, One West Fourth Street,
Cincinnati, Ohio 45202, Phone: (513) 621-0267,
(2) Richard S. Wayne, Esq., of STRAUSS & TROY CO., L.P.A.,
The Federal Reserve Building, 150 E. Fourth Street,
Cincinnati, Ohio 45202, Phone: (513) 621-2120
With respect to the Federal Class Settlement,
also contact Steven G. Schulman, Esq. or Richard H. Weiss, Esq.,
of MILBERG WEISS BERSHAD HYNES & LERACH LLP, One Pennsylvania
Plaza, New York, New York 10119-0165, Phone: (212) 594-5300.
The settlement administrator is Fifth Third Bank, P.O. Box 3210,
Edison, New Jersey 08818-3210.
For more details, visit
http://securities.stanford.edu/1025/DPL02-
01/20030324_r01c_0302355.pdf.
DUANE READE: Former Worker Launches Overtime Wage Lawsuit in NY
---------------------------------------------------------------
Kelvin Damassia of Jamaica, a former employee of Duane Reade has
initiated a lawsuit requesting class action status in U.S.
District Court in Manhattan against the drugstore chain,
alleging that it cheated him out of overtime, the New York
Newsday reports.
According to Mr. Damassia's lawyer, Douglas C. James of Outten &
Golden LLP in Manhattan, the suit could involve more than $15
million in back pay and damages for alleged violations of state
and federal regulations.
The suit maintains that while Damassia was classified as an
assistant night manager, he devoted 90 percent of his time to
non-management duties such as unpacking boxes, stocking shelves
and taking out garbage at an Upper West Side store. Despite
that, Mr. Damassia, who worked from December 2001 until he was
terminated in June 2002, said he was misclassified as an
assistant night manager, according to the complaint. That meant
he was considered ineligible for overtime, despite averaging 60
hours a week, which was in violation of federal labor laws,
since companies are required to pay eligible employees at least
1-and-a-half times their regular hourly rate when they work more
than 40 hours in a week.
However, Duane Reade dismissed Mr. Damassia's allegations as
"baseless" and insinuated that he was taking legal action
because of the nature of his termination, which was due to "poor
performance." The Company further stated, "At no time are any
employees who are entitled to overtime pay denied overtime pay
by Duane Reade."
The lawsuit aims to cover night managers in Duane Reade's 255
metro area stores, including stores in Queens and on Long
Island. The allegations cover a period from Nov. 5, 1998, to
present.
F&M BANCORP: Ex-Employees, Relatives Faces SEC Civil Suit in DC
---------------------------------------------------------------
The Securities and Exchange Commission filed a civil action in
the U.S. District Court for the District of Columbia alleging
that Russell T. Bradlee, Thomas F. Bradlee, Louis P. Stone, IV,
and Angela DelVacchio violated the antifraud provisions of the
federal securities laws by illegally buying, tipping, or
recommending that others buy F&M Bancorp (F&M) common stock
ahead of a March 13, 2003, public announcement that Mercantile
Bankshares Corporation (Mercantile) and F&M had signed a
definitive merger agreement pursuant to which Mercantile would
acquire F&M.
The Commission's Complaint alleges that between Feb. 19, 2003,
and Feb. 24, 2003, during their employment as analysts in the
Affiliate Loan Review Department at Mercantile, Russell T.
Bradlee and Louis P. Stone, IV learned material, nonpublic, and
confidential information regarding the possible acquisition of
F&M by Mercantile. The Complaint alleges that Russell Bradlee
and Louis Stone misappropriated this information from their
employer by using it to purchase common stock of F&M prior to
the public announcement of the possible acquisition and by
disclosing the information to others. Russell Bradlee tipped
his father, Thomas F. Bradlee, about the possible acquisition,
and his father then recommended F&M common stock to a friend.
Thomas Bradlee bought common stock of F&M based on his son's
tip, and his friend bought F&M common stock based on Thomas
Bradlee's recommendation. Louis Stone tipped his sister, Angela
DelVacchio, about the possible acquisition, and his sister
recommended F&M common stock to her husband. Her husband then
bought common stock of F&M based on the recommendation. Russell
Bradlee, Thomas Bradlee, Thomas Bradlee's friend, Louis Stone,
and Angela DelVacchio's husband all sold their F&M common stock
after the public announcement of the possible acquisition.
Without admitting or denying the allegations in the Commission's
Complaint, except for jurisdiction, each of the defendants has
consented to entry of a proposed Final Judgment permanently
enjoining him or her from further violations of the federal
securities laws. Additionally, the proposed Final Judgment
against Russell Bradlee orders him to disgorge his trading
profits of $3,442, together with prejudgment interest thereon,
and to pay a civil penalty of $10,000. The proposed Final
Judgment against Thomas Bradlee orders him to disgorge his
trading profits and the trading profits of his friend, in the
aggregate amount of $112,628, together with prejudgment interest
thereon, and to pay a civil penalty of $112,628. The proposed
Final Judgment against Louis Stone finds him liable for
disgorgement of his trading profits of $3,976, together with
prejudgment interest thereon, but waives payment of those
amounts, and does not order payment of a civil penalty, based on
sworn representations in his Statement of Financial Condition
submitted to the Commission. The proposed Final Judgment against
Angela DelVacchio orders her to disgorge her husband's unlawful
trading profits of $33,901, together with prejudgment interest
thereon, and to pay a civil penalty of $33,901.
The Commission acknowledges the assistance provided by the NASD
in the investigation of this matter. The Commission's
investigation in this matter is continuing. The action is
titled, SEC v. Russell T. Bradlee, Thomas F. Bradlee, Louis P.
Stone, IV, and Angela DelVacchio, Civil Action No. 04CV02011
(JGP) D.D.C. (LR-18974).
FIRST HEALTH: Shareholders Launch Suit v. Coventry Merger in IL
---------------------------------------------------------------
First Health Group Corporation, its board of directors and
Coventry Health Care face a class action filed in the Circuit
Court of Cook County, Illinois following the announcement that
the Company had entered into the Merger Agreement with Coventry.
The plaintiff in this litigation alleges, among other things,
that the Company and its Board of Directors breached their
fiduciary duties by entering into the Merger Agreement with
Coventry and seeks to represent a class consisting of all of the
Company's stockholders who were allegedly harmed by such action.
The plaintiff seeks to enjoin the consummation of the Merger
Agreement, the imposition of a constructive trust in favor of
the plaintiff, and an award of attorneys' and experts' fees.
FONECASH INC.: Civil Penalty Assessed V. Firm, Daniel Charboneau
----------------------------------------------------------------
The Honorable Rosemary M. Collyer, U.S. District Judge for the
District of Columbia, entered an Order against defendant Daniel
E. Charboneau (Charboneau), restraining and enjoining him from
further violations of Section 17(a) of the Securities Act of
1933, Sections 10(b) and 13(a) of the Securities Exchange Act of
1934 and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The
Court also imposed a civil penalty against Charboneau of
$10,470.30.
The Commission's complaint, filed on April 8, 2002, alleged that
a registration statement, filed with the Commission by FoneCash,
Inc. (FoneCash) in December 2001, and subsequent amendments,
signed by Charboneau, the president of FoneCash, contained
material misrepresentations and omissions. The
misrepresentations included, among other things, the claim that
FoneCash manufactured credit card terminals under a specified
patent to which it obtained the exclusive rights in 1997, when
in fact, the patent had lapsed in 1993. The complaint further
alleged that Fonecash maintained a website which grossly
misrepresented the Company's business and, through Charboneau,
had distributed via the internet several misleading press
releases which falsely described various mergers and
acquisitions. The action is titled, SEC v. FoneCash, Inc., and
Daniel E. Charboneau, Civil Action No. 1:02CV00651RJL (D.D.C.)
(LR-18973).
GEO GROUP: CA Court Approves Employee Wage Lawsuit Settlement
-------------------------------------------------------------
The Superior Court of California in Kern County approved the
settlement of a wage and hour class action filed against Geo
Group, Inc. by ten of its current and former employees, styled
"Salas et al v. WCC."
The Court approved the settlement in September 2004. As part of
the settlement, the Company is required to make a cash payment
of approximately $3.1 million and provide certain non-cash
considerations to current California employees who were included
in the lawsuit. The non-cash considerations include a
designated number of paid days off according to longevity of
employment, modifications to the Company's human resources
department, and changes in certain operational procedures at the
Company's correctional facilities in California.
The settlement encompasses all current and former employees in
California through the approval date of the settlement and
constitutes a full and final settlement of all actual and
potential wage and hour claims against the Company in California
for the period preceding July 29, 2004.
GLOBAL CROSSING: NY Judge Approves $79M 401(k) Plan Settlement
--------------------------------------------------------------
A federal district Court in New York City approved a final
settlement of $79 million for the benefit of workers and
retirees of the Global Crossing retirement plan.
"Plan fiduciaries have a responsibility to protect the long-term
pension security of their workers," said U.S. Secretary of Labor
Elaine L. Chao. "The Court's approval of this settlement
restoring millions to pay retirement benefits is a victory for
workers, retirees and their families who are covered by the
Global Crossing 401(k) plan. This year, the Administration
achieved monetary results totaling $3.1 billion for retirement,
401(k), health and other programs."
In addition to the restitution that was recovered in the private
litigation, the settlement prohibits the Company's executives
from acting as fiduciaries to ERISA-covered benefit plans for
five years unless the Department of Labor gives prior approval.
The settlement covers the two former inside directors of Global
Crossing, Thomas Casey (former Chief Executive Officer) and Gary
Winnick (former Chairman of the Board), as well as the three
former members of the Employee Benefits Committee, Dan J. Cohrs,
Joseph Perrone, and John Comparin. The Secretary entered into
settlement with Global Crossing's former officers and directors
in connection with the private class action lawsuit filed on
behalf of the plan participants.
The 401(k) plan lost tens of millions of dollars when its
extensive stock holdings in Global Crossing stock became
virtually worthless after the Company filed for bankruptcy in
2002.
The settlement resolves the Labor Department's investigation of
the Global Crossing Retirement Savings Plan. The department's
EBSA regional office in Los Angeles and the Office of the
Solicitor conducted a comprehensive investigation of Global
Crossing's ERISA plans. The investigation was coordinated
through President Bush's Corporate Fraud Task Force.
For more details, contact Jane Norris by Phone: 202-693-4676 or
Gloria Della by Phone: 202-693-8664, both of the U.S. Department
of Labor.
GRANITE STATE: SEC Lodges Insider Trading Suit V. NH Residents
--------------------------------------------------------------
The Securities and Exchange Commission filed a civil fraud
action against Kevin J. Hobbs of Mont Vernon, New Hampshire, and
Bruce C. Mayhew of Manchester, New Hampshire, alleging that they
engaged in illegal insider trading in the securities of Granite
State Bankshares, Inc., formerly a publicly-traded New Hampshire
bank. The Commission's complaint alleges that Hobbs, then an
administrative vice president and director of internal audit for
Granite State, obtained material, nonpublic information in
late October and early November 2002 concerning the upcoming
acquisition of Granite State by Chittenden Corp., a bank holding
Company based in Vermont. According to the complaint, Hobbs
tipped Mayhew, his friend and partner in an investment club, and
both Hobbs and Mayhew thereafter bought shares of Granite State
prior to the
public announcement of the acquisition. On November 7, 2002,
Granite State and Chittenden announced the acquisition, causing
Granite State's stock price to rise by over $7 per share. The
defendants' illegal insider trading netted profits totaling
approximately $146,000.
The Commission's complaint alleges that, as a result of his
position as an insider at Granite State, beginning in late
October 2002, Hobbs learned certain confidential information
about the acquisition of the Company. Among other things, at
least two Granite State employees who reported to Hobbs
discussed with him unusual document requests they had received
from Granite State executives that suggested due diligence was
being performed on Granite State or that an acquisition
involving Granite State was going to happen. The complaint
further alleges that Hobbs participated in discussions with
other Granite State employees during this time period about the
likelihood of an acquisition involving Granite State and heard
numerous rumors among Granite State employees that an
acquisition was taking place. According to the complaint, the
information that Hobbs obtained was material, nonpublic
information available only to insiders at Granite State, and the
information confirmed for Hobbs that Granite State was engaged
in acquisition-related activity. The complaint alleges that
Hobbs tipped Mayhew, and that Hobbs purchased 10,030 shares of
Granite State and Mayhew purchased 4,700 shares of Granite State
while they were in possession of inside information.
The complaint alleges that Hobbs breached a duty to Granite
State by purchasing shares of Granite State while in possession
of material, nonpublic information and by tipping Mayhew, and
that Mayhew knew that Hobbs worked at Granite State and knew, or
was reckless in not knowing, that Hobbs was providing
confidential information to him in breach of Hobbs' duty to
Granite State. In its complaint, the Commission charged
Hobbs and Mayhew with violating Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission's
complaint seeks injunctive relief, disgorgement plus prejudgment
interest, and civil penalties.
The Commission acknowledges the assistance of the NASD
Regulation, Inc., in connection with this investigation. The
action is titled, SEC v. Kevin Hobbs et al., (United States
District Court for the District of New Hampshire, Civil Action
No. 04-425-JM (LR-18977).
HARMONIC INC.: Plaintiffs Appeal Dismissal of CA Securities Suit
----------------------------------------------------------------
Plaintiffs appealed the United States District Court for the
Northern District of California's refusal to amend its judgment
dismissing the consolidated class action filed against Harmonic,
Inc. and certain of its officers and directors.
The consolidated suit was brought on behalf of a purported class
of persons who purchased the Company's publicly traded
securities between January 19 and June 26, 2000. The complaint
also alleged claims on behalf of a purported subclass of persons
who purchased C-Cube securities between January 19 and May 3,
2000. In addition to Harmonic and certain of its officers and
directors, the complaint also named C-Cube Microsystems Inc. and
several of its officers and directors as defendants.
The complaint alleged that, by making false or misleading
statements regarding Harmonic's prospects and customers and its
acquisition of C-Cube, certain defendants violated sections
10(b) and 20(a) of the Securities Exchange Act of 1934. The
complaint also alleged that certain defendants violated section
14(a) of the Exchange Act and sections 11, 12(a)(2), and 15 of
the Securities Act of 1933 by filing a false or misleading
registration statement, prospectus, and joint proxy in
connection with the C-Cube acquisition.
On July 3, 2001, the Court dismissed the consolidated complaint
with leave to amend. An amended complaint alleging the same
claims against the same defendants was filed on August 13, 2001.
Defendants moved to dismiss the amended complaint on September
24, 2001. On November 13, 2002, the Court issued an opinion
granting the motions to dismiss the amended complaint without
leave to amend. Judgment for defendants was entered on December
2, 2002.
On December 12, 2002, plaintiffs filed a motion to amend the
judgment and for leave to file an amended complaint pursuant to
Rules 59(e) and 15(a) of the Federal Rules of Civil Procedure.
On June 6, 2003, the Court denied plaintiffs' motion to amend
the judgment and for leave to file an amended complaint.
Plaintiffs filed a notice of appeal on July 1, 2003. Plaintiffs
filed their opening brief on December 3, 2003. Defendants filed
their answering briefs on March 2, 2004. Plaintiffs' reply
brief was filed on April 16, 2004. No hearing has been
scheduled yet.
The suit is styled "David S. Smith, on behalf of himself and all
others similarly situated v. Harmonic, Inc., Anthony J. Ley,
Robin N. Dickson, Michael Yost, Case No. 00-CV-2287," filed in
the U.S. District for the Northern District of California, under
Judge Phyllis J. Hamilton. Law firms for the plaintiffs are:
(1) William S. Lerach of Milberg Weiss Bershad Hynes &
Lerach LLP, 600 W Broadway Ste 1800, One America Plaza,
San Diego, CA 92101, Phone: (619) 231-1058
(2) Patrick J. Coughlin of Milberg Weiss Bershad Hynes &
Lerach LLP, Mail: 100 Pine Street, Ste 2600, San
Francisco, CA 94111, Phone: 415-288-4545
(3) Jay P. Saltzman, Christopher Lometti and Samuel P.
Sporn of Schoengold & Sporn, Mail: 233 Broadway, New
York, NY 10279, Phone: (212) 964-0046
(4) Joseph J. Tabacco, Jr., Christopher T. Heffelfinger, of
Berman DeValerio Pease & Tabacco, Mail: 425 California
St, Ste 2025, San Francisco, CA 94104, Phone: (415)
433-3200
HONEYWELL INTERNATIONAL: NJ Court Approves Stock Suit Settlement
----------------------------------------------------------------
The United States District Court for the District of New Jersey
approved the settlement for the securities class action filed
against Honeywell International, Inc., former officers Michael
R. Bonsignore, Giannantonio Ferrari and Richard F. Wallman.
Plaintiffs alleged, among other things, that the defendants
violated federal securities laws by purportedly making false and
misleading statements and by failing to disclose material
information concerning the Company's financial performance,
thereby allegedly causing the value of Company stock to be
artificially inflated.
The Court certified a class consisting of all purchasers of
Honeywell stock between December 20, 1999 and June 19, 2000. On
June 4, 2004, the Company and the lead plaintiffs agreed to a
settlement of this matter, which required a payment to the class
of $100 million.
A small number of class members, including the Florida State
Board of Administration (FSBA), opted out of the settlement.
FSBA has agreed to mediation of its claim.
The suit is styled "In re HONEYWELL INTERNATIONAL, INC.
SECURITIES LITIGATION, Lead Case No. 2:00cv03605(DRD)," and is
pending in the United States District Court in New Jersey, under
Senior Judge Dickinson R. Debevoise and Magistrate Judge Susan
D. Wigenton. Lead plaintiffs for this action are Local 144
Nursing Home Employees Pension Fund, Jefferson State Bank and
the City of Monroe Employees Retirement System.
Lead counsel for the plaintiffs is Lerach, Coughlin Stoia &
Robbins, B Street, Suite 1700, San Diego CA 92101. Plaintiffs'
liaison counsel is Peter S. Pearlman of Cohn Lifland Pearlman
Herrmann & Knopf LLP. Lawyers for the Company are Yosef J.
Riemer & Scott R. Samay of Kirkland Ellis LLP, Citigroup Center,
153 East 53rd Street, New York, NY 10022. The settlement
administrator is Gilardi & Co. LLC, P.O. Box 808003, Petaluma,
CA 94975-8003.
HONEYWELL INTERNATIONAL: Reaches Fiduciary Duty Suit Settlement
---------------------------------------------------------------
Honeywell International, Inc. reached a settlement for the class
action filed against it and several of its current and
former officers and directors in the United States District
Court for the District of New Jersey.
The complaint principally alleges that the defendants breached
their fiduciary duties to participants in the Honeywell Savings
and Ownership Plan (the "Savings Plan") by purportedly making
false and misleading statements, failing to disclose material
information concerning Honeywell's financial performance, and
failing to diversify the Savings Plan's assets and monitor the
prudence of Honeywell stock as a Savings Plan investment.
In September 2004, the Company reached an agreement in principle
to settle this matter for $14 million plus an agreement to
permit Savings Plan participants greater diversification rights.
The settlement will be paid in full by Honeywell's insurers.
The settlement will require Court approval, which is expected in
late 2004 or early 2005.
MAYTAG CORPORATION: Recalls 1,170 Gas Cooktops Due To Burn Risk
---------------------------------------------------------------
Maytag Corporation, of Newton, Iowa is cooperating with the
United States Consumer Product Safety Commission by voluntarily
recalling about 1,170 Jenn-Air Downdraft Gas Cooktops.
The recalled cooktops have switches located too close to the gas
tubing leading to the grill burner. Electrical arcing can cause
the tubing to leak gas and ignite, resulting in a fire hazard to
consumers. Maytag has received four reports of cooktops catching
fire during use as a result of a gas leak. There have been no
reports of injuries.
The recall includes built-in Jenn-Air model JGD8348CDP downdraft
gas cooktops. They have serial numbers xxxxxxxEA through
xxxxxxxER. The cooktops were manufactured by Maytag between
January 1, 2004 and September 17, 2004. The model name and
serial number are printed on a label on the vent fan housing,
which is visible in the cabinet under the cooktop.
Manufactured in the U.S., the cooktops were sold at appliance
stores nationwide from January 2004 through September 2004 for
about $2,000.
Customers who have purchased one of these recalled cooktops
should contact Maytag to schedule a free, in-home repair.
Consumers should stop using the grill or burners activated by
the two left hand controls until the repair is completed. The
center and right hand burners can be used.
Consumer Contact: Contact Maytag Corp. at (888) 330-3810 between
8 a.m. and 5 p.m. ET Monday through Friday, or visit the firm's
Web site: http://www.maytag.com.
MEDI-HUT CO.: Former Officers Sentenced For Securities Fraud
------------------------------------------------------------
The United States District Court for the District of New Jersey
sentenced three top former officers of Medi-Hut Co., Inc. (Medi-
Hut), a drug wholesaler based in New Jersey, to prison for their
participation in a conspiracy to inflate the revenues and
earnings of Medi-Hut and for lying to SEC investigators. Medi-
Hut's former Chief Executive Officer, Joseph A. Sanpietro, was
sentenced to 46 months in prison and a $50,000 fine, former
Chief Financial Officer, Laurence M. Simon was sentenced to 46
months in prison and a $5,000 fine, and former Vice President of
Sales, Lawrence P. Marasco, was sentenced to 42 months in prison
and a $70,000 fine. All three individuals previously settled
parallel civil charges filed by the SEC on Aug. 19, 2003.
On August 19, 2003 the Commission filed a civil action against
Medi-Hut Company, Inc., a publicly-traded drug wholesaler based
in New Jersey, and the Company's top three former officers:
Chief Executive Officer, Joseph A. Sanpietro; Chief Financial
Officer, Laurence M. Simon; and Vice President of Sales,
Lawrence P. Marasco. These three corporate officials also pled
pleaded guilty today to related criminal charges, including
lying during the SEC investigation. The civil and the criminal
cases were both filed, before the United States District Court
for the District of New Jersey.
The SEC's complaint, which was filed in the same Court, alleges
that Sanpietro, Simon and Marasco inflated Medi-Hut's revenues
and earnings through fictitious period-end invoices and other
accounting irregularities. According to the complaint, Sanpietro
and Simon also concealed from the investing public the fact that
Marasco secretly owned and controlled one of Medi-Hut's largest
customers, and that all three defendants lied to Medi-Hut's
independent auditors. These fraudulent accounting and disclosure
violations devices and the lies to Medi-Hut's auditors enabled
the Company to tout "blockbuster" revenue growth and created the
appearance of profitability, when in fact the Company was
operating at a loss. As a result, Medi-Hut's Annual Report on
Form 10-K for the fiscal year ended Oct. 31, 2001, and three
Quarterly Reports on Forms 10-Q for fiscal year ended Oct. 31,
2002, were materially false and misleading. The complaint
further alleged that the market for Medi-Hut common stock
responded to this misinformation, remaining at an artificially
high level. The stock traded between approximately $7 and $13 in
January 2002. After Medi-Hut's fraud was partially disclosed to
the market through news articles and press releases, the stock
price began to spiral downward. According to the complaint,
Sanpietro was unjustly enriched by his sale of Medi-Hut common
stock during the relevant period. The action is titled, SEC v.
Medi-Hut Co., Inc., Joseph A. Sanpietro, Laurence M. Simon and
Lawrence P. Marasco, Civil Action No. 03Civ 3921 (Jose L.
Linares) D.N.J. (LR-182976).
MICROSOFT CORPORATION: Destroyed E-Mails, Says CA Software Firm
---------------------------------------------------------------
In recently unsealed Court papers, Burst.com, a California-based
software company, is accusing Microsoft Corporation of
developing policies stressing the systematic destruction of
internal e-mails and other documents crucial to lawsuits it has
faced in recent years, the Associated Press reports.
Burst is also accusing Microsoft of destroying e-mails crucial
to its lawsuit against the software giant even after the trial
judge ordered it to retain the documents. Burst previously
claimed Microsoft deleted e-mails it needed for evidence. But
the unsealed 50-page motion, filed October 29, provides new
details, Burst says, of "institutional policies" by Microsoft
"to make sure that incriminating documents disappeared."
The Company is suing Microsoft for alleged anti-competitive
behavior, saying Microsoft misappropriated the intellectual
property behind its multimedia software after breaking off talks
with Burst on a joint project. In its motion, Burst wants the
jury in the case to be told that Microsoft failed to retain
important documents, so jurors should infer that the Company did
so because those documents were damaging.
The motion mentions an e-mail on January 23, 2000, in which Jim
Allchin, a Microsoft senior vice president, told the Windows
Division to purge e-mails every 30 days: "This is not something
you get to decide. This is Company policy. ... Do not archive
your mail. Do not be foolish. 30 days."
However, Microsoft spokeswoman Stacy Drake later stated that Mr.
Allchin's e-mail was followed by a broader message, saying that
that policy didn't pertain to workers involved in legal
proceedings. She further added that Microsoft has produced
"millions and millions of documents and e-mails for the various
legal cases we've been involved in, and we've been completely
forthcoming in all document requests in this case as well."
The Burst case and others involving Microsoft have been
consolidated for pretrial matters in Baltimore under U.S.
District Judge J. Frederick Motz, who in August 2003 ordered
Microsoft to search for any deleted e-mails relating to
discussions with Burst.
In May 2000, in a separate consolidation of class action cases
against Microsoft, Judge Motz ordered the Company to preserve
all records that could be relevant to future cases, according to
the motion. "Given this array of litigation, Microsoft had a
concrete duty to preserve relevant documents. But it did not,"
the motion states.
Burst, based in Santa Rosa, Ca., sued Microsoft in June 2002,
alleging Microsoft developed its own multimedia software for
moving audio and video more quickly over the Internet after
discussing the technology for months with Burst.
NATIONAL CENTURY: SEC Lodges Suit V. Ex-VP For Role in $1B Fraud
----------------------------------------------------------------
The Securities and Exchange Commission sued John Allen Snoble, a
former Vice-President and Controller at National Century
Financial Enterprises, Inc. (NCFE), alleging Snoble participated
in a scheme to defraud investors in securities issued by
subsidiaries of NCFE. NCFE, a private corporation located in
Dublin, Ohio, and its subsidiaries collapsed suddenly in October
2002 when investors discovered that the companies had hidden
massive cash and collateral shortfalls from investors and
auditors. The collapse caused investor losses exceeding $1
billion.
Mr. Snoble, a resident of Columbus, Ohio, consented to a
permanent injunction prohibiting him from violating the anti-
fraud provisions of the federal securities laws; an order
barring him from serving as an officer or director of a public
Company; and disgorgement, prejudgment interest, and a civil
penalty, with those amounts to be determined at a later hearing.
The complaint, filed in the United States District Court for the
Southern District of Ohio, alleges that two wholly owned
subsidiaries of NCFE purchased medical accounts receivable from
health-care providers and issued notes that securitized those
receivables. From at least 1999 to 2002, the subsidiaries
offered and sold at least $3.25 billion in total notes through
private placements to investors.
The complaint further alleges that senior NCFE officials
improperly "advanced" to health-care providers $1 billion or
more of the capital raised from investors without receiving
required medical accounts receivable in return. These advances
were essentially unauthorized, unsecured loans to distressed or
defunct health-care providers-some of which were partly or
wholly owned by NCFE or its principals. The unsecured advances
were inconsistent with representations made by senior NCFE
officials in offering documents provided to investors.
According to the complaint, Snoble aided other NCFE officials in
concealing their fraud from trustees, investors, potential
investors, and auditors by executing unsecured advances, by
executing fraudulent fund transfers, and by providing
independent auditors with materially misleading information in
connection with yearly audits of NCFE.
The Commission filed its action at the same time that the U.S.
Attorney's Office for the Southern District of Ohio unsealed a
criminal information against Snoble for the conduct that is the
subject of the Commission's complaint. The Commission thanks the
United States Attorney's Office and the Federal Bureau of
Investigation for their assistance in this investigation. The
Commission is continuing its investigation in this matter as to
other parties. The action is titled, SEC v. John Allen Snoble
Civil Action No. C2:04-1089 (S.D. Ohio) (LR-18975).
PHILIP MORRIS: Argues $10.1B "Light" Ruling Before IL High Court
----------------------------------------------------------------
Philip Morris USA presented oral arguments before the Illinois
Supreme Court last week, attempting to convince the Court to
overturn an unprecedented $10.1 billion consumer fraud judgment.
The "light" smokers class action was styled "Sharon Price and
Michael Furth, individually and on behalf of all others
similarly situated v. Philip Morris, Inc., Cause No. 00-L-112."
The Company argued that federal regulations were not followed
and that its "light" cigarettes performed as advertised, the
NACS Daily reports.
Plaintiff Sharon Price and Michael Fruth filed the suit against
the Company, pursuant to Section5/2-801 et seq of the Illinois
Code of Civil Procedure, on behalf of persons who purchased the
Company's Cambridge Lights and Marlboro Lights cigarettes in
Illinois for personal consumption between the first date the
Company placed these products into the stream of commerce
through February 8,2001.
The suit, initially filed in Madison County Circuit Court, makes
claims under the Illinois Consumer Fraud and Deceptive Business
Practices Act, 815 ILCS 505/1 et seq. The Company allegedly
violated the Consumer Fraud Act and the Uniform Deceptive Trade
Practices Act, by trying to persuade customers that cigarettes
branded "light" contain lower doses of tar and nicotine, a
charge denied by Philip Morris. The plaintiffs alleged that
representations of "lights" and "lowered tar and nicotine" were
material and false. The plaintiffs further alleged that the
representations were false and misleading because the class
members did not receive lower tar and nicotine.
Non-Jury trial in the suit started in early 2003, before Judge
Nicholas Byron. The plaintiffs' lawyers sought $7.1 billion in
compensation for the smokers, and punitive damages. In March
2003, the Madison County Circuit Court issued a landmark $10.1
billion, awarding the plaintiffs $7.1005 billion in actual
damages and $3 billion in punitive damages.
In his 2003 order, Judge Byron stated that "the evidence at
trial demonstrates not only that Marlboro Lights and Cambridge
Lights are just as harmful as their regular counterparts, but
that these products are actually more harmful and more hazardous
than their regular counterparts," according to an earlier Class
Action Reporter story (March 26,2003).
Philip Morris had faced the prospect of having to put up a $12
billion bond to appeal the ruling; but in April 2003, Judge
Byron cut that amount in half, an earlier Class Action Reporter
story (April 21,2004) states. The Company had told Judge Byron
that posting such a bond would send it into bankruptcy, as well
as making it impossible to make the $2.6 billion annual payment
to the 46 states under the Master Settlement Agreement entered
into by the states and the major tobacco companies.
In April 2003, Judge Byron negotiated with the attorneys for
plaintiffs and defendants behind closed doors, as the search
went on, seeking what Judge Byron called a "consensual"
solution, which finally emerged, by which the Company could
secure its appeal by making cash payments over the next year
totaling $800 million, and by pledging an existent $6 billion
note between parent Company Altria Group Inc., and Philip
Morris, plus the interest payments on the note, which amounts to
an additional $420 million a year.
In September 2003, the Company was granted a reprieve as the
Illinois Supreme Court agreed to hear its appeal of the verdict.
The high Court also slashed the Company's appeal bond to $6
billion, plus future payments at hundreds of millions of dollars
a year. The Court assent to hear the Company's appeal also means
the case skips the appellate level and goes directly to the
state high Court, an earlier Class Action Reporter story
(September 18,2003) reports.
In December 2003, the Company filed its initial appellate brief
with the Illinois Supreme Court, seeking the reversal of the
verdict. In its brief, the Company argued against the verdict
primarily on four grounds, an earlier Class Action Reporter
story (December 13,2003) stated. The Company argued that the
trial Court's certification of the case as a class action
violated Illinois state law governing class actions and deprived
the Company of due process under state and federal law. The
Company also asserted that the plaintiffs' claims were barred
under Illinois' law because there are federal regulations that
govern cigarette advertising, labeling and tar and nicotine
disclosures. The Company further argued that the plaintiffs
failed to establish liability for the class representatives or
the class as a whole. The Company reiterated that it believed
the $10.1 billion damage award lacked "any legal or factual
basis."
In oral arguments before the Illinois Supreme Court last week,
the Company argued that federal oversight of the tobacco
industry prevents Illinois smokers from bringing fraud claims
against it. Philip Morris, a unit of Altria Group Inc., told
the justices that a state judge did not adhere to federal
regulations in ruling that smokers were misled by the use of the
terms "light" and lowered tar and nicotine" on cigarette packs,
reports the Chicago Tribune.
Urging the justices to reverse the verdict on several technical
grounds, former Illinois Gov. James Thompson, Philip Morris
attorney noted, "Where there is a deliberate policy of the
federal government, individual states cannot be allowed to
obstruct that policy. Congress mandated what warning should go
on the package and in advertising."
The former Illinois governor also argued that smokers who wanted
lighter flavor got it and smokers who wanted less tar and
nicotine could get that, too. He further told justices that the
Company is not supposed to be responsible, if a smoker ended up
canceling any health benefits by taking deeper draws or smoking
more cigarettes.
However, Joseph Power Jr., one of the lawyers for the class of
1.1 million smokers, contended that state law does not conflict
with Federal Trade Commission (FTC) regulations. The FTC has
oversight over tobacco advertising.
On the second argument by Mr. Thompson, Stephen Swedlow, another
of the plaintiffs' attorneys stated Philip Morris knew when it
introduced light cigarettes in 1971 that they were no healthier.
Furthermore, he argued that the Company hid the information,
including that the cigarettes had a more toxic kind of tar.
Presenting justices with a poster-sized picture of a pack of
cigarettes, Mr. Swedlow pointed out the words "light" and "lower
tar and nicotine" and stated that "what smokers didn't know and
couldn't know is that both of those promises were a lie." He
also pointed out to justices that the reference to lower tar and
nicotine was dropped after this lawsuit.
The suit "Sharon Price and Michael Fruth, et al. v. Philip
Morris Incorporated, No. 00-L-112," is now appealed before the
Illinois Supreme Court, on direct appeal from the Circuit Court
of the Third Judicial Circuit, Madison County, Illinois. Judge
Nicholas Byron is the Presiding Judge in the case.
Class Counsel is Stephen Tillery of Korein Tillery, Mail: #10
Executive Woods Court, Belleville, IL 62226, Phone:
(618) 277-1180, Fax: (618) 222-6939 E-mail:
contact@koreintillery.com.
Lawyers for the Company are:
(1) James R. Thompson, George C. Lombardi, Jeffrey M.
Wagner, Julie A. Bauer and Stuart Altschuler of Winston
& Strawn LLP, 35 West Wacker Drive, Chicago IL 60601-
9703, Phone: 312-558-5600
(2) Michele Odorizzi, Joel D. Bertocchi, Michael K. Forde
of MAYER, BROWN, ROWE & MAW LLP, 190 South LaSalle
Street, Chicago, IL 60603-3441, Phone: 312-782-0600
(3) Larry Hepler, Beth A. Bauer of BURROUGHS, HEPLER,
BROOM, MacDONALD, HEBRANK & TRUE, LLP, 103 West
Vandalia Street, Suite 300, Post Office Box 510,
Edwardsville, IL 62025-0510 Phone: 618-656-0184
(4) Kevin M. Forde, KEVIN M. FORDE, Ltd., 111 West
Washington Street, Suite 1100, Chicago, IL 60602 Phone:
312-641-1441
PERINI CORPORATION: Discovery Proceeds For Securities Suit in MA
----------------------------------------------------------------
Discovery relating to class certifications for the lawsuit filed
against certain of Perini Corporation's current and former
directors, styled "Doppelt, et al. v. Tutor, et al.," is
proceeding in the United States District Court for the District
of Massachusetts.
On October 15, 2002, Frederick Doppelt, Arthur I. Caplan and
Leland D. Zulch filed a lawsuit individually, and as
representatives of a class of holders of the $21.25 Depositary
Convertible Exchangeable Preferred Shares, representing 1/10
Share of $21.25 Convertible Exchangeable Preferred Stock. Mr.
Doppelt is a current director of Perini and Mr. Caplan is a
former director of Perini.
Specifically, the original complaint alleged that the defendants
breached their fiduciary duties owed to the holders of the
Depositary Shares and to Perini. The plaintiffs principally
allege that the defendants improperly authorized the exchange of
Series B Preferred Stock for common stock while simultaneously
refusing to pay accrued dividends due on the Depositary Shares.
In July 2003, the plaintiffs filed an amended Complaint. The
amended complaint added an allegation that the defendants have
further breached their fiduciary duties by authorizing a tender
offer for the purchase of up to 90% of the Depositary Shares and
an allegation that the collective actions of the defendants
constitute unfair and deceptive business practices under the
provisions of the Massachusetts Consumer Protection Act. The
amended complaint withdrew the allegation of a breach of
fiduciary duty owed to Perini, but retained the allegation with
respect to a breach of those duties owed to the holders of the
Depositary Shares.
On April 12, 2004, pursuant to Defendants Motions to Dismiss,
the Court dismissed the claim under the Massachusetts Consumer
Protection Act. The Court did not dismiss the claim for breach
of fiduciary duty, except as such claim relates to the tender
offer for the purchase of the Company's Depositary Shares.
Pursuant to the Court's April 12, 2004 Order, in May 2004 the
plaintiffs filed a third amended complaint and thereafter filed
a motion for class certification. The plaintiffs seek damages
of at least $10 million, plus interest and attorneys' fees.
Defendant's opposition to Plaintiffs' motion for class
certification is due on November 22, 2004.
In 2001, a similar lawsuit was field by some of the same
plaintiffs in the United States District Court for the Southern
District of New York, which claimed that the Company breached
its contract with the holders of Depositary Shares. In 2002,
the case was dismissed and upon appeal by the plaintiffs to the
Untitled States Court of Appeals for the Second Circuit, the
Court of Appeals affirmed the dismissal.
The suit is styled Doppelt, et al v. Tutor, et al., 1:02-cv-
12010-MLW, and is pending in the United States District Court
for the District of Massachusetts, under Judge Mark L. Wolf.
The law firms involved in this litigation are:
(1) Samuel E. Bonderoff of Paul, Weis, Rifkind, Wharton &
Garrison, NY, representing plaintiffs Leland D. Zulch,
Arthur I. Caplan and defendants Arthur J. Fox, Jr.,
Bonnie R. Cohn, Christopher H. Lee, Douglas J.
McCarron, Jane E. Newman, Marshall M. Crider, Nancy
Hawthorne, Peter Arkley, Raymond R. Oneglia, Richard J.
Boushka, Robert A. Band, Robert A. Kennedy, Ronald N.
Tutor and Wayne L. Berman;
(2) Robert T. Cronan of Goodwin Procter LLP Mail: Exchange
Place, 53 State Street, Boston, MA 02109, Phone: 617-
570-1389 or 617-523-1231, E-mail:
tcronan@goodwinproctor.com, representing defendants
Arthur J. Fox, Jr., Bonnie R. Cohn, Christopher H. Lee,
Douglas J. McCarron, Jane E. Newman, Marshall M.
Crider, Nancy Hawthorne, Peter Arkley, Raymond R.
Oneglia, Richard J. Boushka, Robert A. Band, Robert A.
Kennedy, Ronald N. Tutor and Wayne L. Berman and
plaintiff Arthur I. Caplan;
(3) Felicia S. Ennis of Robinson Brog Leinwand Greene
Genovese & Gluck, Mail: 31st Floor, 1345 Avenue of the
Americas New York, NY 10105-0143, Phone: 212-603-6300,
Fax: 212-956-2164 E-mail: fse@robinsonbrog.com
representing plaintiffs Frederick Doppelt and Arthur I.
Caplan and defendant Richard J. Boushka;
(4) Stuart M. Glass of Goodwin Procter, LLP, Mail: Exchange
Place, 53 State Street, Boston, MA 02109, Phone: 617-
570-1920, Fax: 617-523-1231, E-mail:
sglass@goodwinprocter.com, representing defendants
Arthur J. Fox, Jr., Bonnie R. Cohn, Christopher H. Lee,
Douglas J. McCarron, Jane E. Newman, Marshall M.
Crider, Nancy Hawthorne, Peter Arkley, Raymond R.
Oneglia, Richard J. Boushka, Robert A. Band, Robert A.
Kennedy, Ronald N. Tutor, Michael R. Klein and Wayne L.
Berman and plaintiff Arthur I. Caplan;
(5) Daniel J. Kramer of Paul Weiss Rivkind Wharton &
Garrison LLP, Mail: 1285 Avenue of the Americas, New
York, NY 10019 Phone: 212-373-300 Fax: 212-757-3990 E-
mail: dkramer@paulweiss.com, representing plaintiff
Arthur I. Caplan,
(6) Alan M. Pollack of Robinson Brog Leinwand Greene
Genovese & Gluck, Mail: 31st Floor, 1345 Avenue of the
Americas, New York, NY 10105-0143 Phone: 212-603-6316,
Fax: 212-956-2164 or E-mail: amp@robinsonbrog.com
representing plaintiff Frederick Doppelt and defendant
Richard J. Boushka;
(7) Steven L. Schreckinger of Palmer & Dodge, LLP, Mail:
111 Huntington Avenue, Boston, MA 02199, Phone: 617-
239-0167, Fax: 617-227-4420, E-mail:
sschreckinger@palmerdodge.com, representing plaintiffs
Arthur I. Caplan, Frederick Doppelt, Yvonne Weber,
Leland D. Zulch and defendants Richard J. Boushka, and
Martin Ahubik,
(8) Eryn Starun of Paul Weiss Rivkind Wharton & Garrison
LLP, Mail: 1285 Avenue of the Americas, New York, NY
10019, Phone: 212-373-300, Fax: 212-757-3990, E-mail:
estarun@paulweiss.com, representing plaintiff Arthur I.
Caplan
(9) Matthew J. Weiss of Weiss & Associates, 419 Park Avenue
South 2nd Floor New York, NY 10016, Phone: 212-683-7373
Fax: 212-726-0135 E-mail:
mjweiss@weissandassiciatespc.com representing
plaintiffs Arthur I. Caplan, Frederick Doppelt, Leland
D. Zulch, Martin Ahubik and Yvonne Weber
SCIENTIFIC-ATLANTA INC.: Faces Lawsuits Over Adelphia Agreements
----------------------------------------------------------------
Scientific-Atlanta, Inc. is a co-defendant in four individual
actions and one putative class action that relate to, among
other issues, the marketing support agreement between Adelphia
Communications and the Company. Motorola has also been named as
a defendant in these suits.
The suits allege that the Company should be liable to investors
in Adelphia's securities based on the marketing support
agreement and Adelphia's accounting treatment for that
arrangement. These actions do not allege any impropriety as to
the Company's financial statements or statements made to its
investors. The damages sought in these actions are in an
unspecified amount.
There are three suits pending in the U.S. District Court for the
Southern District of New York (03 MD 1529 (LLM)). In the
individual suit brought by W.R. Huff Asset Management Co., LLC.,
the Company was added as a co-defendant in January 2004. The
Huff suit purports to be on behalf of and as an investment
advisor and attorney-in-fact for certain unnamed purchasers of
debt securities issued by Adelphia Communications Corporation
and Arahova Communications Inc. The complaint names certain of
Adelphia's underwriters, banks, auditors, law firms, and
vendors. The Company is alleged to have violated Section 10(b)
of the Securities Exchange Act of 1934. The Company filed a
motion to dismiss the Huff suit on March 8, 2004.
The Company was also added as a co-defendant in December 2003 in
an individual action brought by Joseph and Evelyn Stocke who
purportedly are purchasers of Adelphia Communications
Corporation common stock. The complaint names certain of
Adelphia's former officers and directors, underwriters, banks,
auditors, and vendors. The Company is alleged to have violated
Section 10(b) of the 1934 Act and/or "aided and abetted" the
common law fraud of Adelphia and its former management. The
Company filed a motion to dismiss the Stocke suit on April 12,
2004.
In July 2004, a putative securities class action was filed by
Argent Classic Convertible Arbitrage Fund L.P., et al.
purportedly on behalf of investors in securities of Adelphia
Communications Corporation. The suit names the Company and two
of its officers, and alleges that the Company violated Section
10(b) of the 1934 Act and that the officers violated Section
20(a) of the 1934 Act. The Company filed a motion to dismiss
the Argent suit on October 12, 2004.
In September 2004, a fourth suit was filed in the Los Angeles
County Superior Court by the Los Angeles County Employees
Retirement Association (LACERA) and several other Adelphia
investors alleging that Scientific-Atlanta and two of its
officers aided and abetted and conspired with Adelphia and its
former management to commit common law fraud.
The Company removed the LACERA case to the U.S. District Court
for the Central District of California on October 6, 2004. The
Company is seeking to have the suit transferred to the multi-
district proceedings in New York.
On October 25, 2004, a fifth suit was filed in Fulton County,
Georgia Superior Court by AIG DKR Soundshore Holdings, Ltd and
several other Adelphia investors alleging that Scientific-
Atlanta and two of its officers committed common law fraud as to
investors in Adelphia securities and conspired with Adelphia and
its former management to defraud Adelphia investors.
SCIENTIFIC-ATLANTA INC.: MO Court Junks Claims V. Firm in Suit
--------------------------------------------------------------
The United States District Court for the Eastern District of
Missouri dismissed the claims against Scientific-Atlanta, Inc.
in the consolidated class action filed against it, Charter
Communications and certain of Charter's present/former officers
and directors.
Plaintiffs in these cases seek to represent a putative class of
investors in Charter stock from November 8, 1999 to July 17,
2002, and allege various securities law violations by Charter
and its management. The consolidated complaint commercial
transactions between Charter and the Company relating to
Charter's purchase of digital set-top boxes and a marketing
support arrangement resulted in violations of the federal
securities laws as to investors in Charter's securities. The
consolidated complaint does not allege any impropriety as to the
Company's financial statements or statements made to its
investors. Plaintiffs are seeking to recover damages in an
unspecified amount.
The Company filed a motion to dismiss on September 9, 2003. On
August 5, 2004, Charter announced that it had reached a
tentative settlement agreement with the plaintiffs in these
cases, which must be approved by the Court. On October 12,
2004, the Court dismissed the claims against the Company. The
plaintiffs have filed a motion for reconsideration and are
seeking to amend the complaint.
SCIENTIFIC-ATLANTA INC.: Ruling V. GA Suit Dismissal Affirmed
-------------------------------------------------------------
The United States Eleventh Circuit Court of Appeals upheld a
lower Court ruling denying Scientific-Atlanta, Inc.'s motion to
dismiss the consolidated securities class action filed against
the Company and certain of its officers was filed.
The consolidated suit was filed in the U.S. District Court for
the Northern District of Georgia, alleging violations of federal
securities laws. In December 2002, the Court denied the
Company's motion to dismiss the consolidated complaint. The
Court then certified for appeal to the Eleventh Circuit Court of
Appeals an issue related to its decision on the motion to
dismiss. On June 22, 2004, the Eleventh Circuit affirmed the
Court's order denying our motion to dismiss and the case will
now proceed in the District Court. Plaintiffs are seeking to
recover damages in an unspecified amount.
SKY FINANCIAL: Faces Complaint Over National Marine Boat Loans
--------------------------------------------------------------
Sky Financial Group, Inc. was one of the named defendant lenders
in a purported class action complaint seeking remedies related
to the financing of watercraft by Second National Bank of
Warren, a predecessor of Sky Bank. In the acquisition, Sky
Financial assumed a portfolio of indirect boat loans originated
through National Marine, Inc.
The complaint alleges that defendants engaged in fraudulent
activities in connection with the purchase, sale and financing
of watercraft, and that defendant lenders failed to follow
prudent banking practices in the purchase of commercial paper
from National Marine. The complaint seeks injunctive and
equitable relief, compensatory and punitive damages, and other
ll anaremedies on behalf of a class of borrowers.
SONIC AUTOMOTIVE: SC Residents Commences Consumer Fraud Lawsuit
---------------------------------------------------------------
A lawsuit seeking class action status has been filed against
Charlotte-based Sonic Automotive Inc., one of the nation's
largest car retailers, accusing the dealerships of selling bogus
anti-theft and illicit insurance products at inflated and hidden
prices in South Carolina, the Charlotte Observer reports.
Filed in state civil Court in York County, the suit accuses
Sonic dealerships across South Carolina of selling the ETCH
anti-theft product through Automobile Protection Corp. or APCO,
a subsidiary of Ford Motor Co., without informing buyers of the
true cost. The suit also says that Sonic "packed" the cost for
this service into the invoice price of the vehicle, and it was
not itemized.
APCO, based near Atlanta, also is named in the complaint, as are
Fort Mill Ford, Sonic-Fort Mill Chrysler Jeep and Sonic-Fort
Mill Dodge, among others.
ETCH is a form of supplemental theft insurance that promises to
pay consumers $2,500 in the event their vehicle is stolen and
not recovered. The product is called ETCH because an identifying
number is etched on the car's windshield. The complaint notes
the number can be concealed easily with a sticker.
"The product is substantially worthless as a theft deterrent,"
the complaint says, adding that "The small etched number on the
windshield essentially duplicates the function" of the
identification number found on all vehicles sold to the public.
Moreover, ETCH duplicates existing insurance policies, which
most consumers carry with the purchase of a new vehicle. "The
coverage provided by ETCH is duplicative of conventional auto
insurance ... reflecting the illusory value of the product," the
complaint says.
The complaint estimates it costs Sonic less than $40 to etch a
number into a vehicle. The complaint also says that Sonic set
profit goals of $800 above the sale price of the vehicle, much
of that to be generated from veiled sales of add-ons such at
ETCH.
Another insurance product Sonic allegedly sold without buyer
consent was APCO's EasyCare Vehicle Service Contract, which the
complaint characterizes as an illegal, unregistered form of
insurance. EasyCare vehicle service contracts typically cover
the cost to repair or replace components that suffer mechanical
and electrical failure, after the manufacturers' warranty
expires.
An official at APCO said she received a copy of the complaint
just recently, but stated that she could not comment until the
Company had time to read the 52-page document.
There are four named plaintiffs in the complaint, and all are
represented by Mona Lisa Wallace, an attorney with Wallace and
Graham in Salisbury.
UNITED STATES: Rep. Steve Chabot Sets Hearing On USDA Settlement
----------------------------------------------------------------
Rep. Steve Chabot (R-Ohio), chairman of the House Judiciary
Constitution Subcommittee has scheduled an oversight hearing
that will be looking into the notice provision of the 1999
Pigford v. Glickman Consent Decree.
The hearing will be held at 2141 Rayburn Building on November
18, 2004 at 10:00am. The hearing is set to focus on 1999
settlement of a class action lawsuit by black farmers the U.S.
Department of Agriculture (USDA) alleging discrimination against
them by the Department in offering loans. The settlement
required a black farmer wishing to join the class settlement to
file a claim application. The consent decree contains specific
instructions regarding the notice to be sent to potential class
members. The Poorman-Douglas Corporation is the facilitator of
the consent decree, with the responsibility for publishing the
Notice of Class Settlement.
The problem to be tackled in during the hearing will be
regarding the approximately 22,000 potential class members, who
submitted claims before the deadline and the over 66,000
potential class members, who filed their claims late and thus
are shut out from the settlement. Many of these 66,000
individuals assert their claim was late because they did not
have notice of the claims process.
The hearing is set to investigate whether the class action
notice was defective and did not adequately reach its target
audience.
Tom Burrell, a black farmer representative, Jeanne Finegan,
consultant to Poorman-Douglas, J.L. Chestnut, Jr., Class Counsel
and Bernice Atchison, a Black farmer claimant denied access to
the Pigford vs. Glickman class have all been tapped by the House
as witnesses.
For more details, contact Jeff Lungren or Terry Shawn of the
U.S. House of Representatives Committee on the Judiciary by
Phone: 202-225-2492 or visit http://www.house.gov/judiciary.
VIROPHARMA INC.: PA Court Gives Final Approval To $9M Settlement
----------------------------------------------------------------
ViroPharma Inc. (Nasdaq:VPHM) recently revealed that the United
States District Court for the Eastern District of Pennsylvania
has issued an order granting final approval of a settlement of
the In Re ViroPharma Incorporated Securities Litigation. The
order will become final upon the expiration of 30-day appeal
period. In July 2004, the Company announced that it had received
the Court's preliminary approval of the settlement of this
litigation.
"This episode is now behind us, and we can now fully focus our
attention on the future of ViroPharma and executing on our
business plan," commented Michel de Rosen, ViroPharma's chief
executive officer. "Given the cost and uncertainties associated
with litigation, we believe that this settlement is in the best
interest of our Company's overall business and our
shareholders."
The settlement calls for payment of $9.0 million by the
Company's insurance carriers to the class, without any payment
by ViroPharma or the other defendants, and for dismissal of the
action with prejudice. ViroPharma has denied and continues to
deny any and all allegations of wrongdoing in connection with
this matter.
WYETH-AYERST: OH Court Grants Class Status For Premarin Lawsuit
---------------------------------------------------------------
The United States District Court for the Southern District of
Ohio - Western Division granted class action status to antitrust
claims brought by the J.B.D.L. Corporation ("J.B.D.L.") against
Wyeth-Ayerst Laboratories, Inc. ("Wyeth") and its parent
Company, American Home Products Corporation.
Under Sections 1 and 2 of the Sherman Act and Sections 4 and 16
of the Clayton Act, the plaintiffs had brought antitrust claims
against Wyeth in relation to sales of its hormone replacement
therapy drug, Premarin, a conjugated estrogen indicated for use
to alleviate vasomotor symptoms associated with female
menopause. Premarin, whose name is derived from its primary
ingredient, pregnant mare's urine has also been approved for use
to combat osteopororis.
The complaint states that there was no direct competitor of
Premarin, which Wyeth has been manufacturing and selling since
1943 up until March 1999, when Duramed Pharmaceuticals, Inc.
received FDA approval to market Cenestin. Cenestin is a plant-
based conjugated estrogen, which also alleviates vasomotor
symptoms. The complaint further states that although Cenestin
has been priced 14-26% less than Premarin, it has maintained a
97% share of the conjugated estrogen market.
The complaint alleges that Wyeth has been able to maintain this
extraordinary share through the anticompetitive method of
wielding market power over benefits managers ("PBM's"), managed
care organizations ("MCO's"), employers, and other providers of
health care plans, to enter into contracts which prohibit or
severely restrict these entities from offering Cenestin to
covered members. PBM's establish lists of drugs, or formularies,
which will be offered to persons covered by a health plan and
then enter into contracts with drug manufacturers to offer their
drugs to covered members at substantially reduced prices. The
complaint contends that Wyeth has entered into exclusive dealing
contracts with PBM's, which offer rebates, discounts, and other
incentives if Premarin is the only conjugated estrogen listed on
the formulary. The effect of these contracts, says the
complaint, has been to artificially restrict access to the
lower-priced Cenestin and to artificially maintain Premarin
above the competitive price.
Plaintiff J.B.D.L. Corporation ("J.B.D.L.") is a retail pharmacy
located in Sharon Hill, Pennsylvania, which purchases Premarin
directly from Wyeth. As a "direct purchaser" of Premarin,
J.B.D.L. is not able to participate in the rebate and discount
programs offered by Wyeth. Thus, the complaint alleges, J.B.D.L.
has been forced to purchase its conjugated estrogen at prices
higher than it would have had to pay in a competitive market.
On March 6, 2002, J.B.D.L. filed a motion to certify a class
consisting of all persons and entities who purchased or purchase
Premarin in the United States directly from Wyeth-Ayerst
Laboratories, Inc. at any time during the period from March 24,
1999 through the present, excluding Wyeth-Ayerst Laboratories,
Inc. and its officers, directors, management, corporate parents,
subsidiaries, and/or affiliates, federal governmental entities,
pharmacy benefits managers, and/or managed care organizations
who purchased Premarin directly from Wyeth-Ayerst Laboratories,
Inc.
In its motion, J.B.D.L. argues that the class meets the
requisites for certification under Rules 23(a) and 23(b)(3) of
the Federal Rules of Civil Procedure. Briefing was completed on
Plaintiff's motion on September 11, 2002, although the parties
have since filed supplemental briefs and authorities. In its
brief in response, Wyeth opposes class certification on a number
of grounds, including:
(1) individual issues will predominate over class wide
issues;
(2) Plaintiffs will be unable to show class wide impact of
the alleged anti-competitive conduct;
(3) a class action is not a superior method to resolve the
issues presented;
(4) this case fails to satisfy the adequacy of
representation and typicality requirements of Rule
23(a); and
(5) J.B.D.L. does not present a workable definition for the
proposed class.
The action, which was consolidated with McHugh Pharmacy
Wynnewood, Inc. v. Wyeth-Ayerst Laboratories, Inc., C-1-01-745
(S.D.Ohio), is entitled, J.B.D.L. Corporation, d/b/a Beckett
Apothecary v. Wyeth-Ayerst Laboratories, Inc. (No. 1:01-CV-00704
SSBTSH), with J.B.D.L. being referred to by the Court as the
named plaintiff.
XTO ENERGY: Evidentiary Hearing in KS Lawsuit Set For April 2005
----------------------------------------------------------------
Evidentiary hearing for the class certification of a lawsuit
filed against XTO Energy, Inc., one of its subsidiaries and over
200 natural gas transmission companies, producers, gatherers and
processors of natural gas, is set for April 2005 in the District
Court of Stevens County, Kansas.
The suit, styled "Price, et al. v. Gas Pipelines, et al."
(formerly "Quinque" case), was filed on behalf of a class of
plaintiffs consisting of all similarly situated gas working
interest owners, overriding royalty owners and royalty owners
either from whom the defendants had purchased natural gas or who
received economic benefit from the sale of such gas since
January 1, 1974.
The complaint alleges that the defendants have mismeasured both
the volume and heating content of natural gas delivered into
their pipelines resulting in underpayments to the plaintiffs.
The plaintiffs assert a breach of contract claim, negligent or
intentional misrepresentation, civil conspiracy, common carrier
liability, conversion, violation of a variety of Kansas statutes
and other common law causes of action. The amount of damages
was not specified in the complaint.
In February 2002, the Company, along with one of its
subsidiaries, was dismissed from the suit and another subsidiary
of the Company was added. A hearing was held in January 2003,
and the Court held that a class should not be certified. The
plaintiffs' counsel has filed an amended class action petition,
which reduces the proposed class to only royalty owners, reduces
the claims to mismeasurement of volume only, conspiracy, unjust
enrichment and accounting, and only applies to gas measured in
Kansas, Colorado and Wyoming.
XTO ENERGY: Subsidiary Faces Natural Gas Royalties Lawsuit in KS
----------------------------------------------------------------
One of XTO Energy, Inc.'s subsidiaries faces a class action
filed in the District Court of Stevens County, Kansas, on behalf
of plaintiffs consisting of all similarly situated gas royalty
owners either from whom the defendants had purchased natural gas
or measured natural gas since January 1, 1974 to the present.
The suit also names as defendants other natural gas pipeline
owners and operators.
The new petition alleges the same improper analysis of gas
heating content, which had previously been alleged in
the Price case above until it was removed from the case by the
filing of the amended class action petition. In all other
respects, the new petition appears to be identical to the
amended class action petition in that it has a proposed class of
only royalty owners, alleges conspiracy, unjust enrichment and
accounting, and only applies to gas measured in Kansas, Colorado
and Wyoming.
The Court has set an evidentiary hearing in April 2005 to
determine whether the amended class should be certified. The
amount of damages was not specified in the complaint.
XL CAPITAL: Asks CT Court To Dismiss Securities Fraud Lawsuit
-------------------------------------------------------------
XL Capital, Ltd. asked the United States District Court for the
District of Connecticut to dismiss the consolidated securities
class action filed against it and certain of its present and
former directors and officers, styled "Malin et al. v. XL
Capital Ltd et al."
The Malin Action purports to be on behalf of purchasers of the
Company's common stock between November 1, 2001 and October 16,
2003, and alleges claims under Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder.
The Amended Complaint alleges that the defendants violated the
Securities Laws by, among other things, failing to disclose in
various public and shareholder and investor reports and other
communications the alleged inadequacy of the Company's loss
reserves for its NAC Re subsidiary (now known as XL Reinsurance
America, Inc.) and that, as a consequence, the Company's
earnings and assets were materially overstated.
XL CAPITAL: Reaches Settlement for Consolidated Stock Suit in CT
----------------------------------------------------------------
XL Capital, Ltd. reached an agreement to settle the consolidated
amended class action filed against it, Mr. Michael P. Esposito
and Mr. Brian O'Hara in the United States District Court for the
District of Connecticut. The suit was filed by certain
shareholders of Annuity and Life Re (Holdings), Ltd. (ANR) and
also names ANR and certain present and former officers and
directors of ANR as defendants, seeking unspecified money
damages on behalf of purchasers of ANR stock.
The suit, styled "SHERRY SCHNALL, Individually and On Behalf of
All Others Similarly Situated v. ANNUITY AND LIFE RE (HOLDINGS),
LTD., XL CAPITAL, LTD., LAWRENCE S. DOYLE, FREDERICK S. HAMMER,
JOHN F. BURKE, WILLIAM W. ATKIN, BRIAN O'HARA, AND MICHAEL P.
ESPOSITO, JR. (Civil Action No. 02 CV 2133 (EBB))," alleges that
the defendants violated certain provisions of the United States
securities laws by making (or being responsible as alleged
controlling persons for) various alleged material misstatements
and omissions in public filings and press releases of ANR.
On July 19, 2004, an agreement in principle was reached with
plaintiffs to settle the Schnall Action. The settlement is
without any admission of liability or wrongdoing and would
include a nominal cash payment by the Company. The settlement
is subject to certain approvals, full documentation, notice to
the class, Court approval and certain other steps required to
consummate a class action settlement.
For more details, contact David R. Scott, Esq. of SCOTT + SCOTT,
LLC by Mail: 108 Norwich Avenue, P.O. Box 192 Colchester, CT
06415 or by Phone: (860) 537-5537 OR Beth Kaswan, Esq. of
MILBERG WEISS BERSHAD & SCHULMAN LLP by Mail: One Pennsylvania
Plaza, New York, NY 10119-0165 by Phone: (212) 594-5300 OR
Annuity and Life Re (Holdings), Ltd. Securities Litigation
c/o The Garden City Group, Inc. - Claims Administrator by Mail:
P.O. Box 9000 #6254, Merrick, NY 11566-9000 or by Phone:
(800) 298-3208.
XTO ENERGY: Lessors, Successors Sue Over Royalty Payments in CO
---------------------------------------------------------------
XTO Energy, Inc. and J.M. Huber Corporation face a class action
filed in the District Court of La Plata County, Colorado, styled
"Burkett, et al. v. J.M. Huber Corp. and XTO Energy Inc."
The plaintiffs allege the defendants have deducted in their
calculation of royalty payments, expenses of compression,
gathering, treatment, dehydration, or other costs to place the
natural gas produced in a marketable condition at a marketable
location. The plaintiffs ask to represent a class consisting of
all lessors and their successors in interest who own, or have
owned, mineral interests located in La Plata County, Colorado
and that are leased to or operated by Huber or the Company,
except to the extent that the lessors or their successors have
expressly authorized deduction of post-production expenses from
royalties.
The Company acquired the interests of Huber in producing
properties in La Plata County effective October 1, 2002, and
have assumed the responsibility for certain liabilities of Huber
prior to the effective date, which may include liability for
post-production deductions made by Huber. The Company has filed
its response and intends to file a response for Huber.
Asbestos Alert
ASBESTOS LITIGATION: Pleural Plaques Victim Justifies His Claims
----------------------------------------------------------------
A man seeking compensation for an asbestos-related disease
explained his fear of contracting terminal cancer in a landmark
case at the High Court in Manchester last week.
Kenneth Johnston is one of 10 men claiming compensation in a
test case after contracting pleural plaques, which are scars in
the lining of the lungs caused by asbestos exposure. Mr.
Johnston, 58, told the Court that although the plaques caused
little pain, they caused anxiety and were "an indication that
something more serious could occur."
If the judge, Justice Holland, rules in favor of the insurance
Company, compensation payments to people with pleural plaques,
thought to be worth GBD25 million a year, could be stopped.
Mr. Johnston, from Ryton, Tyne and Wear, worked as a maintenance
engineer for Newcastle-based NEI International Consortium
between 1975 and 1979 and 1980 and 1985. The Court heard that he
was exposed to asbestos and in 2001 was diagnosed as suffering
from pleural plaques. He told the Court, "I know that I have
asbestos in the lungs, and it makes me a candidate to getting
something more serious."
Frank Burton QC, for the claimants, said that pleural plaques
were "a marker of asbestos exposure" and "set time running" for
sufferers. He said, "A claimant, told that he has a plaque,
feels worried and feels anxious. The concern is an obvious one.
It is a deterioration of health and a fear of death." Mr. Burton
added that anxiety caused by the plaques can lead to depression
and breathlessness.
Meanwhile, the insurance industry is challenging this legal
action that it fears will have far-reaching consequences.
Insurers Norwich Union and Zurich are challenging compensation
payments, arguing that the plaques are not injuries and the
anxiety stems from exposure to asbestos and not the plaques
themselves. If their cases are upheld against the 10 claimants,
it will open the floodgates for other firms to follow suit and
thousands of victims will lose out.
Claimant lawyers regard this latest challenge as yet another
cynical attempt by the insurance industry to strike out a
legitimate class action. Anthony Coombs, the partner at the
Manchester firm John Pickering & Partners, whose clients' cases
are being challenged, says, "The big issue here is that if
someone is diagnosed with plaques, time starts running against
them for limitation purposes. You then have three years to bring
an action for any type of asbestos-related disease. The clock
starts ticking."
Mr. Coombs added that patients who have plaques diagnosed
usually begin to worry about the risk of cancer and sometimes
develop psychiatric illness.
ASBESTOS LITIGATION: Union Prescribes Tests for NSW Road Workers
----------------------------------------------------------------
Union leaders say about 50 council workers in central west NSW,
exposed to gravel containing asbestos fibers, are worried about
their health. They said the fibers can be naturally occurring in
rock but they do not routinely test for asbestos before road
works. The white fibers known as chrysotile were discovered in a
stockpile the workers had excavated and crushed. Presently, it
remains unclear how serious the exposure has been.
The United Services Union said workers are shocked at the
prospect of chest X-rays and lung function tests. It will likely
be five years before any disease showed up and union delegate
Tom Hanley says it will be a long wait.
Orange City Council said it did not know the asbestos was there
and the Department of Primary Industries has confirmed naturally
occurring asbestos is very rare.
Earlier this week, preliminary testing undertaken by an Adelaide
laboratory confirmed the stockpile contained white asbestos but
the levels of contamination are not yet known.
Sydney firm, Noel Arnold and Associates installed sensors around
the stockpile to determine the fiber content in the air. Company
representative Bernard Day said there were fibers in the air and
the monitors would determine if they were white asbestos. He
said further testing would determine the levels of asbestos in
the stockpile.
ASBESTOS LITIGATION: CenterPoint Energy TX Gulf Cases Continuing
----------------------------------------------------------------
CenterPoint Energy, Inc. has been named, along with numerous
others, as a defendant in lawsuits filed by a large number of
individuals who claim injury due to exposure to asbestos while
working at sites along the Texas Gulf Coast. Most of these
claimants have been workers who participated in construction of
various industrial facilities, including power plants, and some
of the claimants have worked at locations owned by the Company.
As a result of their age, many of the Company's facilities
contain significant amounts of asbestos insulation, other
asbestos-containing materials and lead-based paint. Existing
state and federal rules require the proper management and
disposal of these potentially toxic materials. The Company has
developed a management plan that includes proper maintenance of
existing non-friable asbestos installations, and removal and
abatement of asbestos containing materials where necessary
because of maintenance, repairs, replacement or damage to the
asbestos itself. It has also planned for the proper management,
abatement and disposal of asbestos and lead-based paint at its
facilities.
Although most existing claims relate to facilities owned by
Texas Genco, the Company anticipates that additional claims like
those received may be asserted in the future and intends to
continue contesting what it considers unmerited claims.
ASBESTOS LITIGATION: Ingersoll-Rand Posts $12.3M Settlement Cost
----------------------------------------------------------------
Known to most as a construction and mining machinery maker,
Ingersoll-Rand Company (IR-New Jersey), a Company subsidiary, is
a defendant in numerous asbestos-related lawsuits in state and
federal Courts. In virtually all of the suits a large number of
other companies have also been named as defendants. The claims
against IR-New Jersey generally allege injury caused by exposure
to asbestos contained in certain of IR-New Jersey's products.
Although IR-New Jersey was neither a producer nor a manufacturer
of asbestos, some of its formerly manufactured products utilized
asbestos-containing components, such as gaskets, purchased from
third-party suppliers.
In assessing its potential asbestos liability, the Company bases
its estimates on current laws, an assessment of the nature of
current claims, its claims settlement experience and insurance
coverage. All claims resolved to date have been dismissed or
settled, and IR-New Jersey's average settlement amount per claim
has been nominal. For the nine months ended September 30, 2004,
total costs for settlement and defense of asbestos claims after
insurance recoveries and net of tax were about US$12.3 million
as compared to US$13.1 million for the nine months ended
September 30, 2003. The Company believes that its reserves and
insurance are adequate to cover its asbestos liabilities and the
costs of defending against them.
Today's Ingersoll-Rand is a global innovation and solutions
provider with powerful brands and leading positions within its
markets. It employs about 45,000 employees throughout the world,
and operates more than 100 manufacturing facilities, half of
which are located outside the United States.
ASBESTOS LITIGATION: Ameren, Subsidiaries Battle More Lawsuits
--------------------------------------------------------------
Among the U.S.'s largest investor-owned electric and gas
utilities, St. Louis-based Ameren Corp., Union Electric Co.,
Central Illinois Public Service Co., Ameren Energy Generating
Company (Genco), Central Illinois Light Company and Illinois
Power Co. have been named, along with numerous other parties, in
a number of lawsuits which have been filed by certain plaintiffs
claiming varying degrees of injury from asbestos exposure. Most
have been filed in the Circuit Court of Madison County,
Illinois. Each lawsuit seeks unspecified damages in excess of
US$50,000, which, if proved, typically would be shared among the
named defendants.
The number of total defendants named in each case is significant
with as many as 235 parties named in a case to as few as five.
However, the average number of parties is 65 in the cases that
were pending as of September 30, 2004.
The claims filed against the named companies allege injury from
asbestos exposure during the plaintiffs' activities at their
present or former electric generating plants. In the case of
CIPS, its former plants are now owned by Genco, and in the case
of CILCO, most of its former plants are now owned by AERG. Most
of IP's plants were transferred to a Dynegy subsidiary prior to
Ameren's acquisition of IP. As a part of the transfer of
ownership of the generating plants, the transferor (CIPS or
CILCO) has contractually agreed to indemnify the transferee
(Genco or AERG) for liabilities associated with asbestos-related
claims arising from activities prior to the transfer.
From July 1, 2004 through September 30, 2004, 12 additional
asbestos-related lawsuits were filed against UE, CIPS, CILCO and
IP, mostly in the Circuit Court of Madison County, Illinois, 13
lawsuits were dismissed and six were settled.
Ameren Corporation, the holding Company, which has been focused
on growing its core energy operations, distributes electricity
to 2.3 million customers and natural gas to more than 900,000 in
Missouri and Illinois through utility subsidiaries AmerenUE,
AmerenCIPS, AmerenCILCO, and AmerenIP. Ameren has a generating
capacity of nearly 15,000 MW, most of which is controlled by
utility AmerenUE and nonregulated subsidiary AmerenEnergy
Resources.
ASBESTOS LITIGATION: Eastman Chemical Co. Mired in 3,000 Claims
---------------------------------------------------------------
Eastman Chemical Co., the largest producer of polyester plastics
for packaging and the leading supplier of raw materials for
formulated products, reports in its latest filing submitted to
the Securities and Exchange Commission that it intends to defend
itself vigorously from around 3,000 pending claims or to settle
them on acceptable terms. Over the years, the Company has been
named as a defendant, along with numerous other defendants, in
lawsuits in various state Courts in which plaintiffs alleged
injury due to exposure to asbestos at Eastman's manufacturing
sites and sought unspecified monetary damages and other relief.
Historically, these cases were dismissed or settled without a
material effect on Eastman's financial condition, results of
operations, or cash flows.
In recently filed cases, plaintiffs allege exposure to asbestos-
containing products allegedly made by Eastman. Based on its
investigation to date, the Company has information that it
manufactured limited amounts of an asbestos-containing plastic
product between the mid-1960s and the early 1970s. The Company's
investigation has found no evidence that any of the plaintiffs
worked with or around any such product alleged to have been
manufactured by the Company.
The Kingsport, Tennessee-based Company continues to evaluate the
allegations and claims made in recent asbestos-related lawsuits
and its insurance coverages. To date, costs incurred by the
Company related to the recent asbestos-related lawsuits have not
been material.
ASBESTOS LITIGATION: Hartford Financial Cites Evaluation Results
----------------------------------------------------------------
One of the nation's largest international insurance and
financial services operations, the Hartford Financial Services
Group, Inc., has disclosed that during the second quarter of
2004, the Company completed an evaluation of the reinsurance
recoverable asset associated with older, long-term casualty
liabilities reported in the other operations segment, including
asbestos liabilities. As a result of this evaluation, the
quarter ended June 30, 2004 and nine months ended September 30,
2004 includes a reduction in the net reinsurance recoverable by
US$181 million, before tax, and US$118 million after-tax. The
quarter ended September 30, 2004 includes environmental reserve
strengthening of US$75 million, before tax, and US$49 million,
after-tax.
Liabilities include asbestos and environmental reserves reported
in ongoing operations of US$13 million and US$9 million,
respectively as of September 30, 2004 and June 30, 2004, and
US$11 million and US$8 million, respectively, as of December 31,
2003. The total net claim and claim adjustment expenses incurred
for the quarter and nine months ended September 30, 2004 of
US$98 million and US$385 million, respectively, includes US$2
million and US$8 million, respectively, related to asbestos and
environmental claims reported in ongoing operations.
Gross of reinsurance, asbestos and environmental reserves were
US$4.476 billion and US$530 million, respectively, as of
September 30, 2004, US$4.583 billion and US$499 million,
respectively, as of June 30, 2004, and US$5.884 billion and
US$542 million, respectively, as of December 31, 2003.
The one year and average three year net paid amounts for
asbestos claims are US$1.207 billion and US$493 million,
respectively, resulting in a one year net survival ratio of 2.1
(13.6 excluding the MacArthur payments) and a three year net
survival ratio of 5.0 (16.3 excluding MacArthur payments).
In its earnings report, The Hartford reported that the increase
in third-quarter profits, to US$494 million or US$1.66 a share,
came despite a string of hurricanes that hit Florida in late
summer. The results compared with profits of US$343 million, or
US$1.20 a share, in the third quarter of 2003.
Excluding an asbestos reserve addition, litigation and tax-
related items, the Company would have earned 85 cents a share in
the third quarter. The Hartford said revenue rose to US$5.4
billion in the July-September period, up 9 percent from US$4.9
billion in last year's third quarter.
"Our underlying property casualty and life businesses each
executed well during a quarter that included both significant
catastrophe losses and tax benefits," said chairman and chief
executive Ramani Ayer.
For the nine months that ended Sept. 30, income was US$1.5
billion, or US$5.04 a share, compared with a loss of US$545
million in the same period last year, or a loss of US$2.03 a
share.
ASBESTOS LITIGATION: UIC, Detroit Stoker Claims Peaked in 2004
--------------------------------------------------------------
United Industrial (NYSE: UIC) and Detroit Stoker Company, a
wholly owned subsidiary of United Industrial, have been named as
defendants in asbestos-related personal injury litigation.
Neither United Industrial nor Detroit Stoker fabricated, milled,
mined, manufactured or marketed asbestos; neither made or sold
insulation products or other construction materials that have
been identified as the primary cause of asbestos-related disease
in the vast majority of claimants. Rather, United Industrial and
Detroit Stoker made several products, some of the parts and
components of which used asbestos-containing material fabricated
and provided by third parties. The use of asbestos-containing
materials ceased in about 1981.
Cases involving the Hunt Valley, MD-based Company typically name
80 to 120 defendants, although some cases have as few as 6 and
as many as 250 defendants. As of this date, United Industrial
and Detroit Stoker have not gone to trial with respect to any
asbestos-related personal injury claims. In addition, some
previously pending claims have been settled or dismissed.
Management continues to believe that a majority of the claimants
in pending cases will not be able to demonstrate that they have
been exposed to United Industrial's and Detroit Stoker's
asbestos-containing products or suffered any compensable loss as
a result of such exposure. However, the insurance coverage
potentially available to United Industrial and Detroit Stoker is
substantial. Following the institution of asbestos litigation,
an effort was made to identify all of United Industrial's and
Detroit Stoker's primary and excess insurance carriers from 1940
through 1990. There were about 40 such carriers, all of which
were put on notice of the litigation.
United Industrial retained a consulting firm with expertise in
the field of evaluating insurance coverage and the likelihood of
recovery for claims, such as costs incurred in connection with
asbestos-related injury claims. In 2002, that firm worked with
United Industrial to project the insurance coverage of the
Company and its subsidiary for asbestos-related claims. Based on
the assumptions employed by and the report prepared by the
insurance consultant, other variables, and the report prepared
by the asbestos consultant, the Company recorded an estimated
insurance recovery as of December 31, 2002, of US$20,343,000
reflecting the estimate determined to be probable of being
available to mitigate their potential asbestos liability through
2012.
As of September 30, 2004, United Industrial and Detroit Stoker
were named in asbestos litigation pending in Arkansas, Illinois,
Michigan, Minnesota, Mississippi and North Dakota. As of
September 30, 2004, there were about 21,098 pending claims,
compared to about 19,161 pending claims as of December 31, 2003,
and about 18,911 pending claims as of September 30, 2003.
Detroit Stoker was recently named as a defendant in two Arkansas
cases alleging personal injuries to one and about 199
plaintiffs, respectively, as a result of asbestos, silica and/or
refractory ceramic fiber exposure. The pleadings name about 32
and 68 defendants, respectively, and include no allegations
specific to Detroit Stoker.
A significant increase in the volume of asbestos-related bodily
injury cases arose in Mississippi beginning in 2002 and extended
through mid-year 2003. This peak in the volume of claims in
Mississippi was apparently due to the passage of tort reform
legislation, applicable to asbestos-related injuries, that
became effective at the end of 2002 and which resulted in a
large number of claims being filed in Mississippi by plaintiffs
seeking to ensure their claims would be governed by the law in
effect prior to the passage of tort reform. The increase in
pending claims during the first three quarters of 2004 was due
primarily to the joinder of the United Industrial and Detroit
Stoker into 14 existing 2002 cases naming 1,194 new claimants.
As of September 30, 2004, all but about 1,850 of the about
20,314 claims pending in Mississippi were associated with cases
filed before January 1, 2003.
Based on the assumptions employed by and the report prepared by
the asbestos consultant and other variables, the Company
recorded an undiscounted liability for its best estimate of
bodily injury liabilities for asbestos-related matters in the
amount of US$31,852,000 as of December 31, 2002, including
damages and defense costs. The Company's liability of
US$31,334,000 at September 30, 2004 represents its best estimate
of liabilities for asbestos-related matters at this time. The
asbestos liability for the twelve months ended December 31, 2003
decreased by US$257,000 to US$31,595,000 and decreased by
US$261,000 to US$31,334,000 for the nine months ended September
30, 2004 due to the payment of claim-related expenses.
The outlook for federal legislation to provide national asbestos
litigation reform continues to be uncertain. Also uncertain is
whether, and to what extent, United Industrial and Detroit
Stoker would be required to make contributions to a prospective
national asbestos trust pursuant to such legislation.
ASBESTOS LITIGATION: Everest Re Group Posts Reserve Adjustments
---------------------------------------------------------------
Everest Reinsurance Group Ltd. (NYSE: RE) reports that net
adverse prior period reserve adjustments for the three months
ended September 30, 2004 were US$8.3 million compared to US$61.2
million for the three months ended September 30, 2003. The
adverse reserve adjustments for the three months ended September
30, 2004 included asbestos and environmental adjustments of
US$18.0 million, partially offset by net favorable non-asbestos
& environmental adjustments of US$9.7 million. For the three
months ended September 30, 2003, adverse reserve adjustments
included A&E adjustments of US$15.0 million, and net non-A&E
adjustments, primarily on casualty business, of US$46.2 million.
The U.S. Reinsurance segment accounted for US$24.7 million of
favorable net prior period reserve adjustments for the three
months ended September 30, 2004 and US$31.9 million of net
adverse prior period reserve adjustments for the three months
ended September 30, 2003. Asbestos exposures accounted for
US$1.2 million and US$5.2 million for the three months ended
September 30, 2004 and 2003, respectively. The favorable
development for the three months ended September 30, 2004 was
principally due to a US$34.3 million in reserve reduction
related to the catastrophe losses from the World Trade Center
events. The non-A&E adverse development for the three months
ended September 30, 2003 principally reflected adjustments to
the professional liability and casualty business classes.
The Bermuda segment reflected US$28.6 million and US$13.0
million of net adverse prior period reserve adjustments for the
three months ended September 30, 2004 and 2003, respectively.
The adverse development in the three months ended September 30,
2004 is primarily due to US$16.8 million of asbestos reserve
development, with most of this development related to exposures
assumed through the September 19, 2000 loss portfolio transfer
from Mt. McKinley Insurance Company. Non-asbestos reserves
assumed through this portfolio transfer were US$13.6 million.
Asbestos exposures accounted for US$9.8 million in adverse
reserve adjustments for the three months ended September 30,
2003.
Asbestos exposures accounted for US$8.4 million and US$13.6
million of adverse reserve adjustments for the nine months ended
September 30, 2004 and 2003, respectively, with the remainder
principally attributable to professional liability and casualty
business classes.
The development in the nine months ended September 30, 2004 is
primarily the result of US$121.0 million of asbestos reserve
development. For the nine months ended September 30, 2003,
reserve adjustments included US$12.7 million related to A&E
exposures. All of the development related to asbestos exposures
that were assumed through the September 19, 2000 loss portfolio
transfer from Mt. McKinley. The Company continues to receive
claims under expired contracts, both insurance and reinsurance,
asserting alleged injuries and/or damages relating to or
resulting from environmental pollution and hazardous substances,
including asbestos. The Company's asbestos claims typically
involve potential liability for bodily injury from exposure to
asbestos or for property damage resulting from asbestos or
products containing asbestos.
With respect to Mt. McKinley, where the Company has a direct
relationship with policyholders, the Company's aggressive
litigation posture and the uncertainties inherent in the
asbestos coverage and bankruptcy litigation have provided an
opportunity to actively engage in settlement negotiations with a
number of those policyholders who have potentially significant
asbestos liabilities. Thus far in 2004, the Company has
concluded such settlements or reached agreement in principle
with several of its high profile policyholders.
The Company has currently identified 21 policyholders based on
their past claim activity and potential future liabilities as
"High Profile Policyholders" and its settlement efforts are
generally directed at such policyholders, in part because their
exposures have developed to the point where both the
policyholder and the Company have sufficient information to be
motivated to settle. The Company believes that this active
approach will ultimately result in a more cost-effective
liquidation of Mt. McKinley's liabilities than a passive
approach, although it may also introduce additional variability
in Mt. McKinley's losses and cash flows as reserves are adjusted
to reflect the development of negotiations and, ultimately,
potentially accelerated settlements.
The Company's net three-year survival ratio on its asbestos
exposures only was 9.4 years for the period ended September 30,
2004. This three year survival ratio, when adjusted for the
effect of the reinsurance ceded under the stop loss cover from
Prupac, was 12.5 years and, when adjusted for coverage in place
and structured settlements, which are either fully funded by
reserves or subject to financial terms that substantially limit
the potential variability in the liability, and the stop loss
protection from Prupac, was 25.7 years.
ASBESTOS LITIGATION: Congoleum Corp Modifies Reorganization Plan
----------------------------------------------------------------
On November 8, 2004, Congoleum Corporation (AMEX: CGM) issued a
press release announcing that it has filed a modified plan of
reorganization and related documents with the Bankruptcy Court.
The modifications were negotiated with representatives of the
Asbestos Creditors' Committee, the Future Claimants
representative, and other asbestos claimant representatives. A
hearing to consider approval of the proposed disclosure
statement and plan voting procedures has been scheduled for
December 9, 2004.
Roger S. Marcus, Chairman of the Board, commented, "As we have
worked towards resolving our asbestos situation, certain parties
raised concerns with our existing reorganization plan. We
decided to spearhead negotiations in response to those concerns
and are pleased to have reached consensus, which will result in
an even more solid plan.
"With this new plan, we are all the more positive about
regaining momentum toward confirmation. As did our initial plan,
the modified plan leaves non-asbestos creditors and shareholders
unimpaired. We hope to distribute voting materials for the new
plan before the end of this year, and are confident that the
modified plan should enjoy widespread acceptance.
"After allowing ample time for the plan voting and tabulation
process, we are optimistic that our plan can be confirmed in the
second quarter of 2005."
Copies of the modified plan and disclosure statement are
available as exhibits to a Form 8-K as filed with the Securities
and Exchange Commission. They can also be obtained by visiting
the investor relations section of Congoleum's website at
www.congoleum.com.
Congoleum Corporation is a leading manufacturer of resilient
flooring, serving both residential and commercial markets. Its
sheet, tile and plank products are available in a wide variety
of designs and colors, and are used in remodeling, manufactured
housing, new construction and commercial applications. Congoleum
is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL).
ASBESTOS LITIGATION: Dana Corp Deals with 156,000 Pending Claims
----------------------------------------------------------------
Since the mid-1980s, Dana Corporation, a global leader in the
design, engineering, and manufacture of value-added products and
systems for automotive, commercial, and off-highway vehicles,
has been a defendant in asbestos bodily injury litigation. For
most of this period, its asbestos-related claims were
administered by the Center for Claims Resolution, which settled
claims for its member companies on a shared settlement cost
basis. Since the CCR was reorganized in February 2001, the
Company has independently controlled its legal strategy and
settlements.
At September 30, 2004, the Company had about 156,000 pending
asbestos-related product liability claims, consisting of about
145,000 unresolved claims and about 11,000 claims settled
pending payment (including 7,000 claims remaining from when the
Company was a member of the CCR and 4,000 claims that the
Company have settled subsequently). This compares to about
149,000 pending claims that the Company reported at December 31,
2003, consisting of about 139,000 unresolved claims and about
10,000 claims settled pending payment (including 7,000 claims
remaining from when the Company were a member of the CCR and
3,000 claims that the Company has settled subsequently).
At September 30, 2004, the Company had accrued US$139 million
for indemnity and defense costs for contingent asbestos-related
product liability claims and recorded US$118 million as an asset
for probable recoveries from insurers for such claims, compared
to US$133 million accrued for such liabilities and US$113
million recorded as an asset at December 31, 2003.
At September 30, 2004, the Company had a net amount recoverable
from insurers and others of US$54 million representing payments
made in connection with settled claims and related defense
costs, compared to US$33 million at December 31, 2003. The
amount recoverable includes billings in progress and amounts
subject to alternate dispute resolution proceedings with certain
of its insurers. Progress has been made in those proceedings and
the Company expects the outcome to be favorable. However, the
amount recoverable may increase until the proceedings are
ultimately concluded.
Some former CCR members have defaulted on the payment of their
shares of some of the CCR-negotiated settlements in connection
with asbestos-related product liability claims and some of the
settling claimants are seeking payment of the unpaid shares from
Dana and the other companies that were members of the CCR at the
time of the settlements. The Company has been working with the
CCR, other former CCR member companies, the insurers and the
claimants to resolve these issues.
At September 30, 2004, the Company estimated its total liability
related to these matters to be about US$49 million and the
amount recoverable to be US$30 million. To date, the Company has
paid US$46 million in connection with these claims. These
amounts compare to a total estimated liability of US$48 million,
a recoverable of US$30 million and actual payments of US$24
million recorded at December 31, 2003. These amounts take into
account the current status of negotiations with our insurers,
including the status of alternate dispute resolution proceedings
and consultations with outside counsel.
ASBESTOS LITIGATION: Bairnco Obtains Resolutions of 3 Lawsuits
--------------------------------------------------------------
In the third quarter of 2004, Bairnco Corporation (NYSE: BZ), a
diversified multinational Company that operates two distinct
businesses under the names Arlon (engineered materials and
components segment) and Kasco (replacement products and services
segment), obtained final resolutions of three long-pending
lawsuits.
In one of these lawsuits (the "Transactions Lawsuit"), trustees
representing asbestos claimants brought claims of over US$700
million against Bairnco, its subsidiaries, and other defendants.
The U.S. Court of Appeals affirmed a judgment in favor of the
defendants in May 2004 for the Second Circuit. Plaintiffs' time
to seek review by the United States Supreme Court of the Court
of Appeals' decision expired in August 2004.
A second lawsuit by these trustees against Bairnco (the "NOL
Lawsuit"), involving a dispute over federal income tax refunds
that had been held in escrow since the 1990s, was settled in
September 2004. Pursuant to a settlement agreement dated
September 10, 2004, Bairnco received US$24,695,000 (about 70
percent of the escrowed funds), and the NOL Lawsuit was
dismissed with prejudice.
The final resolution of the Transactions Lawsuit in favor of
Bairnco resulted in the final resolution of a third lawsuit
brought by these trustees (the "Properties Lawsuit"), involving
a dispute over the title to certain real and personal property.
In 2001, when the Properties Lawsuit was dismissed, without
prejudice, against Bairnco and its Arlon subsidiary, the parties
agreed that this dispute would be determined in accordance with
the final resolution of the Transactions Lawsuit.
ASBESTOS LITIGATION: AIG Receives More Asbestos Indemnity Claims
----------------------------------------------------------------
One of the world's largest insurance firms, American
International Group, continues to receive claims asserting
injuries from toxic waste, hazardous substances, and other
environmental pollutants and alleged damages to cover the
cleanup costs of hazardous waste dump sites, referred to
collectively as environmental claims, and indemnity claims
asserting injuries from asbestos.
Best known domestically as a leading provider of property &
casualty and specialty insurance, AIG also provides leadership
on issues of concern to the global and local economies as well
as the insurance and financial services industries. In recent
years, tort reform and legislation to deal with the asbestos
problem have been key issues, while in prior years trade
legislation and Superfund have been issues of concern.
The vast majority of these asbestos and environmental claims
emanate from policies written in 1984 and prior years.
Commencing in 1985, standard policies contained an absolute
exclusion for pollution related damage and an absolute asbestos
exclusion was also implemented. However, AIG currently
underwrites environmental impairment liability insurance on a
claims made basis and has excluded such claims from the analysis
herein.
The majority of AIG's exposures for asbestos and environmental
claims are excess casualty coverages, not primary coverages.
Thus, the litigation costs are treated in the same manner as
indemnity reserves. That is, litigation expenses are included
within the limits of the liability AIG incurs. Individual
significant claim liabilities, where future litigation costs are
reasonably determinable, are established on a case basis.
Although the estimated liabilities with respect to asbestos and
environmental reserves are subject to a significantly greater
margin of error than for other loss reserves, the asbestos and
environmental reserves carried at the balance sheet date are
believed to be adequate as these reserves are based on the known
facts and current law. Furthermore, as AIG's net exposure
retained relative to the gross exposure written was lower in
1984 and prior years, the potential impact of these claims is
much smaller on the net loss reserves than on the gross loss
reserves. However, if the asbestos and environmental reserves
develop deficiently, such deficiency would have an adverse
impact on future results of operations.
With respect to known asbestos and environmental claims, AIG
established over a decade ago specialized toxic tort and
environmental claims units, which investigate and adjust all
such asbestos and environmental claims. These units evaluate
these asbestos and environmental claims utilizing a
comprehensive ground up approach on a claim-by-claim basis. The
asbestos and environmental claims are reserved to ultimate
probable loss based upon known facts, current law, jurisdiction,
policy language and other factors. Each claim is reviewed at
least semi-annually utilizing the aforementioned approach and
adjusted as necessary to reflect the current information.
With respect to asbestos claims reserves, AIG has resolved all
claims with respect to miners and major manufacturers (Tier1),
and payments have been completed or reserves are established to
cover future payment obligations. Asbestos claims with respect
to products containing asbestos (Tier2), are generally very
mature losses, and have been appropriately recognized and
reserved by AIG's asbestos claims operation. AIG believes that
the vast majority of the incoming claims with respect to
products containing small amounts of asbestos, companies in the
distribution chain and parties with remote, ill-defined
involvement with asbestos (Tier3 and 4), should not impact its
coverage. This is due to a combination of factors, including
peripheral companies increasingly being named in asbestos
litigation, smaller limits issued to peripheral defendants,
tenuous liability cases against peripheral defendants,
attachment points of the excess policies, and the manner in
which resolution of these weaker cases would be allocated among
all insurers, including non-AIG companies, over a long period of
time.
ASBESTOS LITIGATION: IPALCO Says IPL to Defend Against 100 Suits
----------------------------------------------------------------
As of September 30, 2004, IPALCO'S regulated utility unit,
Indianapolis Power & Light, is a defendant in about 100 pending
lawsuits alleging personal injury or wrongful death stemming
from exposure to asbestos and asbestos containing products
formerly located in IPL power plants. IPL, which generates,
transmits, and distributes electricity to nearly 460,000
customers in central Indiana, has been named as a "premises
defendant" in that the Company did not mine, manufacture,
distribute or install asbestos or asbestos containing products.
These suits have been brought on behalf of persons who worked
for contractors or subcontractors hired by IPL. The Company has
insurance coverage for many of these claims; currently, these
cases are being defended by counsel retained by various insurers
who wrote policies applicable to the period of time during which
much of the exposure has been alleged.
Although the Company does not believe that any of the pending
asbestos suits in which IPL is a named defendant will have a
material adverse effect on IPALCO's business or operations, it
is unable to predict the number or effect any additional suits
may have.
ASBESTOS LITIGATION: After 80 Dismissed Cases, Moen to Face 135
---------------------------------------------------------------
While there is a reported surge of asbestos-related personal
injury litigation in the United States, a Fortune Brands
subsidiary, Moen Incorporated, continues to defend itself
against around 135 cases claiming personal injury from asbestos,
and has been dismissed as a defendant in about 80 cases. All of
these suits name multiple defendants. One of the world's largest
manufacturers of plumbing products, the Company, which is based
in North Olmsted, Ohio, believes it is not possible to predict
the outcome of the pending litigation, and, as with any
litigation, it is possible that some of these actions could be
decided unfavorably.
The Company believes that it possesses meritorious defenses to
these actions and that these actions will not have a material
adverse effect upon its results of operations, cash flows or
financial condition. These actions are being vigorously
contested.
ASBESTOS LITIGATION: Argonaut Reports Adequate Reserves in 3Q
-------------------------------------------------------------
Based on the Company's 2004 reserve analysis during the three
months ended September 30, 2004, Argonaut Group Inc. reports
that its reserves for losses and loss adjustment expenses are
adequate based on current facts and circumstances. The Reserve
analysis indicated that no adjustments to carried reserves were
required.
The Company regularly monitors the activity of claims within the
run-off lines, particularly those claims related to asbestos and
environmental liabilities. It also performs an extensive
actuarial analysis of the asbestos and environmental reserves on
an annual basis. The loss and loss adjustment expense reserves
at September 30, 2003 included an increase to the loss and loss
adjustment reserves of US$10.2 million. This increase to the
reserves was as a result of the Company changing its estimate of
reserves to be ceded to its reinsurance carriers.
In April 2004, Argonaut Insurance Company contributed US$29.8
million into the bankruptcy trust established to administer all
future asbestos-related claims filed against the MacArthur
Companies. The Company then received a release from the
MacArthur Companies as to any and all existing or future
asbestos-related claims. The Company ceded the majority of the
US$29.8 million contribution to reinsurers.
Meanwhile, Standard & Poor's Ratings Services, the world's
foremost provider of independent credit ratings, affirmed its
'BB+' counterparty credit rating on holding Company Argonaut
Group Inc. (Nasdaq:AGII). S&P expects underwriting results to
continue improving in 2004 and 2005, driven by strong results in
excess and surplus lines and a decrease in the earnings drag
from legacy issues related to Argonaut's runoff workers'
compensation book.
S&P added that Company's operating performance has improved,
though the recovery has not been as robust as for many other
insurers because of reserve increases for asbestos exposure and
losses from the Company's workers' compensation business. In
2003, the group strengthened reserves by US$41.4 million.
Despite these legacy issues, Argonaut's 2003 reported GAAP
pretax income of US$135 million was a major improvement over
2002, when the Company recorded a net loss of US$21 million.
Better pricing in Argonaut's core markets and a narrower focus
in its risk-management segment (predominantly workers'
compensation) drove the higher results. Underwriting performance
has improved further in the first half of 2004.
ASBESTOS LITIGATION: Viacom Copes with 112,000 Pending Claims
----------------------------------------------------------------
A leading global media Company, Viacom Inc. is a defendant in
lawsuits claiming various personal injuries related to asbestos
and other materials, which allegedly occurred as a result of
exposure caused by various products manufactured by
Westinghouse, a predecessor, prior to the early 1970s.
Westinghouse was neither a producer nor a manufacturer of
asbestos.
The Company is typically named as one of a large number of
defendants in both state and federal cases. In the majority of
asbestos lawsuits, the plaintiffs have not identified which of
the Company's products is the basis of a claim. Claims against
the Company in which a product has been identified relate to
exposures allegedly caused by asbestos-containing insulating
material in turbines sold for power-generation, industrial and
marine use, or by asbestos-containing grades of decorative
micarta, a laminate used in commercial ships.
As of September 30, 2004, the Company had pending about 112,200
asbestos claims, as compared with about 112,280 as of December
31, 2003 and about 124,300 as of September 30, 2003. Of the
claims pending as of September 30, 2004, about 82,430 were
pending in state Courts, 27,210 in federal Courts and about
2,560 were third party claims. During the third quarter of 2004,
the Company received about 3,470 new claims and closed or moved
to an inactive docket about 7,450 claims.
To date, the Company has not been liable for any third party
claims. The Company's total costs (recovery) for the years 2003
and 2002 for settlement and defense of asbestos claims after
insurance recoveries and net of tax benefits were about US$(8.7)
million and US$28.0 million, respectively. A portion of such
costs relates to claims settled in prior years. If proceeds
received in 2003 from commuted insurance policies were excluded
from the Company's total costs in 2003, the Company's total
costs after insurance recoveries and net of tax benefits would
have been US$56.6 million.
Filings include claims for individuals suffering from
mesothelioma, a rare cancer, the risk of which is allegedly
increased primarily by exposure to asbestos; lung cancer, a
cancer which may be caused by various factors, one of which is
alleged to be asbestos exposure; other cancers; and conditions
that are substantially less serious, including claims brought on
behalf of individuals who are asymptomatic as to an allegedly
asbestos-related disease. Claims identified as cancer remain a
small percentage of asbestos claims pending at September 30,
2004.
In a substantial number of the pending claims, the plaintiff has
not yet identified the claimed injury. The Company believes that
its reserves and insurance are adequate to cover its asbestos
liabilities and that these asbestos liabilities are not likely
to have a material adverse effect on its results of operations,
financial position or cash flows.
ASBESTOS LITIGATION: St Paul Travelers Reports Adequate Reserves
----------------------------------------------------------------
St. Paul Travelers Companies Inc. (NYSE:STA), headquartered in
Saint Paul, Minn., reported in its latest filing submitted to
the Securities and Exchange Commission that it continues to be
subject to aggressive asbestos-related litigation. In the
ordinary course of its insurance business, the nation's second
largest property-casualty insurer receives claims arising under
policies issued by the Company asserting alleged injuries and
damages from asbestos and other hazardous waste and toxic
substances which are the subject of related coverage litigation.
The Company is defending its asbestos and environmental-related
litigation vigorously and believes that it has meritorious
defenses; however, the outcome of these disputes remains
uncertain. In this regard, the Company employs dedicated
specialists and aggressive resolution strategies to manage
asbestos and environmental loss exposure, including settling
litigation under appropriate circumstances.
About 15% in the first nine months of 2004 and 55% in the first
nine months of 2003 of total paid losses relate to policyholders
with whom the Company previously entered into settlement
agreements that would limit the Company's liability. In the
first nine months of 2004, gross payments associated with
policyholders with settlement agreements totaled US$135 million,
compared with US$228 million in the same 2003 period. The
decrease in the percentage of net paid settlements to total paid
losses in 2004 reflected an increase in reinsurance billings in
2004, which related to gross payments made in prior quarters.
Management believes that the reserves carried for asbestos and
environmental claims at September 30, 2004 are appropriately
established based upon known facts, current law and management's
judgment. The Company sees, as an emerging trend, an increase in
the Company's asbestos-related loss and loss expense experience
as a result of the exhaustion or unavailability due to
insolvency of other insurance potentially available to
policyholders along with the insolvency or bankruptcy of other
defendants.
As part of its continuing analysis of asbestos reserves, which
includes an annual ground-up review of asbestos policyholders,
the Company continues to study the implications of these and
other developments. The Company expects to complete the current
annual ground-up review, which will include the asbestos
liabilities acquired in the merger, during the fourth quarter of
2004. Some of the Company's loss reserves are for asbestos and
environmental claims and related litigation, which aggregated
US$4.68 billion on a gross basis at September 30, 2004.
On August 17, 2004, the bankruptcy Court entered an order
approving the settlements and clarifying its prior orders that
all of the pending Statutory and Hawaii Actions and
substantially all Common Law Claims pending against TPC are
barred. The order also applies to similar direct action claims
that may be filed in the future. Several notices of appeal from
that order have been taken and are currently pending. The
Company has no obligation to pay any of the settlement amounts
unless and until the orders and relief become final and are not
subject to any further appellate review. It is not possible to
predict how appellate Courts will rule on the pending appeals.
In connection with SPC's Western MacArthur asbestos litigation,
which was recently settled, several purported class action
lawsuits were filed in the fourth quarter of 2002 against SPC
and its chief executive officer and chief financial officer. In
the first quarter of 2003, the lawsuits were consolidated into a
single action, which made various allegations relating to the
adequacy of SPC's previous public disclosures and reserves
relating to the Western MacArthur asbestos litigation, and
sought unspecified damages and other relief. In the second
quarter of 2004, SPC executed a definitive settlement agreement
and the Court granted final approval of the settlement in the
third quarter of 2004.
The Company also compares its historical direct and net loss and
expense paid experience, year-by-year, to assess any emerging
trends, fluctuations, or characteristics suggested by the
aggregate paid activity. Net asbestos losses paid for the first
nine months of 2004 were US$199 million, compared with US$357
million in the same 2003 period.
ASBESTOS LITIGATION: Allmerica Posts $26.3MM Loss Reserves in 3Q
----------------------------------------------------------------
As Allmerica Financial Corp believes that it may be required to
defend claims related to policies that include asbestos and
environmental damage and toxic tort liability, the Company
reports in its SEC filing that it put up ending loss and LAE
reserves for all direct business written by its property and
casualty companies. Included in the reserve for losses and LAE,
were US$26.3 million at September 30, 2004 and US$24.9 million
at December 31, 2003, net of reinsurance of US$16.6 million and
US$15.0 million at September 30, 2004 and December 31, 2003,
respectively.
As a result of the Company's historical direct underwriting mix
of commercial lines policies toward smaller and middle market
risks, past asbestos, environmental damage and toxic tort
liability loss experience has remained minimal in relation to
its total loss and LAE incurred experience. The Company, which
boasts of providing quality underwriting, innovative products,
and responsive service, believes that, notwithstanding the
evolution of case law expanding liability in asbestos and
environmental claims, recorded reserves related to these claims
are adequate. In addition, the Company is not aware of any
litigation or pending claims that it believes will result in
additional material liabilities in excess of recorded reserves.
The environmental liability could be revised in the near term if
the estimates used in determining the liability are revised.
The Company has established loss and LAE reserves for assumed
reinsurance and pool business with asbestos, environmental
damage and toxic tort liability of US$45.6 million at both
September 30, 2004 and December 31, 2003. These reserves relate
to pools in which it has terminated its participation; however,
it continues to be subject to claims related to years in which
the Company was a participant.
ASBESTOS LITIGATION: Katy Industries Faces Suits by Ex-workers
----------------------------------------------------------------
Headquartered in Middlebury, Connecticut, Katy Industries Inc.
has recently been named as a defendant in three lawsuits filed
in state Court in Alabama by a total of about 16 individual
plaintiffs. There are over 100 defendants named in each case. In
all three cases, the Plaintiffs claim that they were exposed to
asbestos in the course of their employment at a former U.S.
Steel plant in Alabama and, as a result, contracted
mesothelioma, asbestosis, lung cancer or other illness. They
claim that they were exposed to asbestos in products, which were
manufactured by each defendant. In two of the cases, plaintiffs
also assert wrongful death claims. The Company will vigorously
defend the claims against it in these matters. The liability of
the Company cannot be determined at this time.
Sterling Fluid Systems (USA) has tendered more than 1,000 cases
pending in Michigan, New Jersey, Illinois, Nevada, Mississippi,
Wyoming and California to the Company for defense and
indemnification. Sterling bases its tender of the complaints on
the provisions contained in a 1993 Purchase Agreement between
the parties whereby Sterling purchased the LaBour Pump business
and other assets from the Company. Sterling has not filed a
lawsuit against Katy in connection with these matters.
The tendered complaints all purport to state claims against
Sterling and its subsidiaries. The Company and its current
subsidiaries are not named as defendants. The plaintiffs in the
cases also allege that they were exposed to asbestos and
products containing asbestos in the course of their employment.
Each complaint names as defendants many manufacturers of
products containing asbestos, apparently because plaintiffs came
into contact with a variety of different products in the course
of their employment. Plaintiffs claim that LaBour Pump and/or
Sterling may have manufactured some of those products.
With respect to about half of the tendered complaints, the
Company has taken the position that Sterling has waived its
right to indemnity by failing to timely request it as required
under the 1993 Purchase Agreement. With respect to the balance
of the tendered complaints, the Company has elected not to
assume the defense of Sterling in these matters.
LaBour Pump Company, a former subsidiary of the Company, has
been named as a defendant in about 233 similar cases in New
Jersey. These cases have also been tendered by Sterling. The
Company has elected to defend these cases where neither the
Company nor Sterling, or their affiliates, have been named as
defendants. Many of these cases have been dismissed or settled
for nominal sums.
Katy Industries, Inc. (NYSE: KT) is a diversified manufacturing
Company with operations that serve the needs of commercial
customers, consumer retail outlets and original equipment
manufacturers.
ASBESTOS LITIGATION: Hercules Spent $38MM for Settlement, Costs
----------------------------------------------------------------
According to Hercules Inc.'s report in its filing to the
Securities and Exchange Commission, the Company has reached
agreement with all of its insurers relative to its asbestos-
related matters. The Company, a global manufacturer of chemical
specialties, is providing the following information as of
September 30, 2004 to provide investors and the credit markets
current information on its asbestos-related obligations.
The Company is a defendant in numerous asbestos-related personal
injury lawsuits and claims, which typically arise from alleged
exposure to asbestos fibers from resin, encapsulated pipe and
tank products which were sold by one of the Company's former
subsidiaries to a limited industrial market. The Company is also
a defendant in lawsuits alleging exposure to asbestos at
facilities formerly or presently owned or operated by the
Company.
Between January 1, 2004 and September 30, 2004, the Company
received about 6,370 new claims, of which about 2,730 were in
"consolidated" complaints. With respect to total claims pending,
as of September 30, 2004, there were about 34,000 unresolved
claims, of which about 890 were premises claims and the rest
were products claims. There were also about 1,425 unpaid claims
which have been settled or are subject to the terms of a
settlement agreement. There were about 11,912 claims which have
either been dismissed without payment or are in the process of
being dismissed without payment, but with plaintiffs retaining
the right to re-file should they be able to establish exposure
to an asbestos-containing product for which the Company bears
liability.
From January 1, 2004 through September 30, 2004, the Company
spent about US$38 million on these matters, including about
US$32 million in settlement payments and about US$6 million for
defense costs.
Both prior to and following the exhaustion of the products
limits of the Company's primary and first level excess insurance
policies, the Company undertook efforts to negotiate with
certain of its other excess insurance carriers for reimbursement
of defense costs and indemnity payments relating to these
asbestos-related liabilities. Those efforts, however, did not
progress at a rate satisfactory to the Company. As a result, on
November 27, 2002, the Company initiated litigation against the
solvent excess insurance carriers that provided insurance
coverage for asbestos-related liabilities in a matter captioned
Hercules Incorporated v. OneBeacon, et al., Civil Action No.
02C-11-237 (SCD), Superior Court of Delaware, New Castle County.
Beginning in August 2004 and continuing through October 2004,
the Company entered into settlements with all of the insurers
named in that lawsuit. As a result, the lawsuit was dismissed in
early November 2004.
Specifically, effective August 23, 2004, the Company entered
into a comprehensive settlement agreement with respect to those
insurance policies issued by certain underwriters at Lloyd's,
London, and reinsured by Equitas Limited and related entities.
As part of that settlement, during the third quarter of 2004,
Equitas paid US$30 million to the Company and placed US$67
million into a trust. While many of the specific terms of that
First Settlement Agreement are confidential, the First
Settlement Agreement generally provides for the payment of money
to the Company in exchange for the release by the Company of
past, present and future claims under those policies and the
cancellation of those policies; the agreement by the Company to
indemnify the underwriters from any such claims asserted under
those policies; and the impact on the settlement should federal
asbestos reform legislation be enacted on or before January 3,
2007.
In addition, effective October 8, 2004, the Company entered into
a comprehensive settlement agreement with respect to certain
insurance policies issued by various insurance companies
operating in the London insurance market, and by one insurance
Company located in the United States. Under the terms of the
Second Settlement Agreement, the Company will receive payments
from the participating insurers totaling about US$102 million
over a four-year period beginning in 2005. The payments will be
placed by the insurance companies into a trust. The trust funds
may be used to reimburse the Company for costs it incurs in the
future to resolve asbestos claims. Any funds remaining in trust
subsequent to 2008 may be used by the Company to pay both
asbestos-related claims and non-asbestos related claims.
The Second Settlement Agreement provides an alternative payment
option for the insurer located in the United States. If the
alternative payment option is chosen by such insurer, then in
lieu of the payments, the Company will be entitled to receive a
payment of about US$23 million in January 2005 and the settling
insurers will be obligated to pay an additional amount of about
US$98 million into trust in installments commencing in 2005 and
ending in 2008, of which up to about US$50 million could be
excused or refunded to the insurer located in the United States
in the event federal asbestos reform legislation is passed prior
to January 3, 2007.
In addition, effective October 13, 2004, the Company reached a
confidential settlement agreement with the balance of its
solvent excess insurers whereby a significant portion of the
costs incurred by the Company with respect to future asbestos
product liability claims will be reimbursed, subject to those
claims meeting certain qualifying criteria. That agreement is
not expected to result in reimbursement to the Company, however,
unless and until defense costs and settlement payments for
qualifying asbestos products claims paid by the Company
aggregate to about US$330 million to US$370 million.
Based on the current number of claims pending, the amounts the
Company anticipates paying to resolve those claims which are not
dismissed or otherwise resolved without payment, and anticipated
future claims, the Company believes that the total monetary
recovery under the settlements noted above will cover the
majority of the Company's monetary exposure for its current and
estimated future asbestos-related liabilities.
ASBESTOS LITIGATION: NT to Cancel Asbestos Removalist Licenses
----------------------------------------------------------------
Northern Territory Worksafe has revealed all asbestos
removalists will have their licenses cancelled next year as part
of a proposed new national asbestos standard and code of
practice.
Worksafe Director Mark Crossin says the cancellations are
expected to come into effect by the middle of next year. He said
the Territory's 50 licensed asbestos removalists would then have
to reapply under the new tougher guidelines.
"It'll be not just for those that currently hold asbestos
removalist licenses, it'll be for all applicants from the middle
of next year onwards," he said.
Northern Territory Worksafe said a licensed asbestos removalist
in Darwin has admitted he breached legislation. Worksafe
suspended the license of this removalist for three months. Mr.
Crossin said it is the first time such a suspension has been
invoked in the Territory. He said the suspension affects the
owner of the asbestos removalist business, who has held a
license for about 10 years, but not his Company.
ASBESTOS LITIGATION: U.S. Insurers Pondering Reform Approach
------------------------------------------------------------
Large commercial insurers are evaluating whether a no-fault
trust fund for U.S. asbestos victims can work or whether they
favor another legislative approach as a new, more Republican
Congress convenes next year, a spokeswoman said last week.
Insurers distanced themselves months ago from a failed Senate
proposal to set up an asbestos compensation fund, but also said
they were willing to work with Senate leaders who were trying to
negotiate a bipartisan compromise.
Senate Republican Leader Bill Frist of Tennessee and Democratic
Leader Tom Daschle of South Dakota agreed in September to US$140
billion for the proposed trust fund, to be financed by asbestos
defendant companies and insurers. But they never came to an
agreement regarding key details including one point insurers
considered critical - whether pending asbestos claims would stay
in Court or shift to the fund. Insurers argued any fund had to
be a universal solution providing equity and finality. They were
also unwilling to contribute more than US$46 billion.
"A well-designed trust fund is the best solution," said Julie
Rochman, spokeswoman for the American Insurance Association. "A
poorly designed trust fund is the worst solution, because if you
are paying into the trust fund and still end up paying in Court,
it's untenable."
At the AIA's meeting, the insurers said they needed to do more
analysis. Another option previously considered would be for
Congress to establish medical criteria for asbestos claims.
Insurers also had to reassess the political environment, Ms.
Rochman said. The new Senate will have four more Republicans
than before, since Mr. Daschle lost his reelection race.
Asbestos stocks shot up after the election as traders
anticipated a new push for reform. It is uncertain who will
chair the Judiciary Committee, which oversees legal issues and
could resume work on asbestos reform.
"I think the major focus is still whether a deal can be made
along the guidelines that were set up by the Frist and Daschle
dialogue of a couple of months ago," said Stanton Anderson,
chief legal officer at the U.S. Chamber of Commerce's Institute
for Legal Reform.
ASBESTOS LITIGATION: FPB Warns of Fines for Failure to Make Plan
----------------------------------------------------------------
The UK group, Forum of Private Business is warning that the
nation's businesses run the risk of being heavily fined if they
fail to properly implement an "Asbestos Management Plan."
The FPB's Chief Executive Nick Goulding said critical changes
have been made to Health and Safety law this year, including
tough new regulations on asbestos management, which carry heavy
fines. He said that as it is now six months since the law came
into force, it is expected that the Health and Safety Executive
will begin to crack down on businesses that have failed to
adequately comply with the law.
Mr. Goulding estimated that about half a million commercial,
industrial and public buildings are likely to contain asbestos
materials. He said that the Health and Safety Executive expects
businesses to have checked for the presence of asbestos and if
so, assessed the risk and made a plan to manage that risk. The
asbestos regulations cover all non-domestic buildings whatever
type of business is carried out in them. The regulations also
cover the common areas of residential rented properties
including halls, stairwells, lift shafts and roofs. "It is
crucial to point out that if your business occupies a building,
whether you own it or not, you are responsible for maintaining
and repairing the property," said Mr. Goulding.
FPB has produced a fact sheet that provides businesses with the
information that they need to comply with the new law. The fact
sheet is available on the FPB website at www.fpb.org and is free
to members. Non-members should contact FPB's Member Information
Services on 01565 626001 for further information.
Information about the management of asbestos and a host of other
subjects is contained within FPB's recently updated Health &
Safety Guide, which is designed as an entirely practical and
easy to use tool for small businesses. It offers advice and
assistance enabling business owners to take it around their
business premises to ensure that they are complying with Health
and Safety legislation.
The FPB Health & Safety Guide is co-badged by the TUC and
endorsed by the Small Firms Enterprise Development Initiative,
which said, "FPB's Health & Safety Guide is a valuable tool
which would be useful for all small businesses. It is easy to
work through - providing an opportunity to 'learn as you go' -
and results in the business having an up-to-date record which
complies with Health and Safety Regulations.'"
ASBESTOS LITIGATION: W.R. Grace Seeks $1.6B Liabilities Cap
-----------------------------------------------------------
W.R. Grace & Co. recently unveiled a new bankruptcy plan that
detailed plans for handling asbestos claims. Included in the
reorganization plan filed by the Company in its Chapter 11
bankruptcy case is a proposal to establish a trust to handle a
variety of asbestos claims against the chemical manufacturer.
A Company spokesman refused to discuss the reorganization plan,
but Grace, which filed for bankruptcy protection in April 2001
after it was overwhelmed by asbestos-related lawsuits, said in a
news release that it is proposing a maximum aggregate payment
for all asbestos-related liabilities and related expenses of
US$1.6 billion. The Company believes that amount would fund over
US$2 billion in claims, costs and expenses over time.
The trust would be authorized to handle all pending and future
asbestos-related claims, including personal injury and property
damage claims, as well as administrative costs and legal
expenses. Asbestos personal injury claimants would have the
option to litigate their claims against the trust or accept
settlements if they meet eligibility criteria. Asbestos property
damage claimants would be required to litigate their claims
through the trust.
The reorganization plan would take effect only upon approval by
the Court and eligible creditors. The Company has requested a
Dec. 20 hearing regarding its disclosure statement, which must
be approved by the Court before votes on the plan can be
solicited.
While the Company's common stock would remain outstanding under
the reorganization plan, the interests of existing shareholders
would be subject to dilution for additional shares of stock
issued under the plan. In addition, the reorganization plan
would prohibit a person or entity from acquiring more than 4.75
percent of the outstanding common stock or increasing holdings
that already exceed that amount, for three years. The Court has
issued an interim order imposing such restrictions pending the
Dec. 20 hearing.
The Court had allowed the Company to push its date for filing
the restructuring plan to Nov. 15 from Oct 15 to allow for
additional negotiations with lenders and shareholders. W.R.
Grace said its negotiations with creditors and stakeholders have
been "constructive, and are expected to continue following the
filing of the plan, [but] agreement among all parties has not
been achieved. Accordingly, Grace believes it should move
forward to file its plan with the bankruptcy Court in compliance
with this extended deadline," the Company added.
In addition to handling the asbestos claims, the Company said it
would pay all allowed non-asbestos claims either in cash or in a
combination of 85 percent cash and 15 percent common stock.
Grace estimates that about US$1.2 billion in claims would be
satisfied in that manner. Other non-asbestos related
liabilities, estimated at about US$508 million, would be
satisfied as they become due over time, the Company said.
ASBESTOS LITIGATION: Railroad Worker Sues for $300T Compensation
----------------------------------------------------------------
Railroad worker Larry O. Arnold sued his former employers for
more than US$300,000, claiming he contracted an asbestos-related
disease while working around toxic substances. Mr. Arnold claims
his exposure occurred from 1969 to 2000 while working as a
carman, welder and inspector for Norfolk and Union Pacific.
The Illinois resident filed a Federal Employers' Liability Act
lawsuit in Madison County Nov. 12 against Norfolk & Western
Railway, Union Pacific Railroad and Southern Pacific Railroad.
Arnold claims that as a result of his disease diagnosed last
July 24, he has suffered severe and permanent injuries, great
pain, extreme nervousness and mental anguish.
According to the complaint, asbestos fibers got into Mr.
Arnold's lungs while working with or around asbestos-containing
products and while working with or around members of other trade
unions. He worked with pipe and block insulation, gaskets,
packing, cements, brake shoes, and brake linings, which
contained asbestos. Mr. Arnold claims he was unaware of the
dangerous propensities of asbestos and was unaware of the cause
of his latent abnormal medical condition.
Norfolk and Union Pacific failed to provide him with a
reasonably safe place to work, failed to provide him with safe
and suitable tools and equipment - including protective
inhalation devices, failed to warn him of the true hazards of
asbestos, and failed to exercise reasonable care in publishing a
safety plan and method of handling and installing asbestos-
related insulation and other products, according to the
complaint.
The suit was also filed under the Locomotive Boiler Inspection
Act and Safety Appliance Act.
Mr. Arnold is represented by Robert D. Rowland of Goldenberg,
Miller, Heller, & Antognoli of Edwardsville. The case has been
assigned to Circuit Judge George Moran.
ASBESTOS LITIGATION: Oglebay Norton Gets OK to Exit Bankruptcy
----------------------------------------------------------------
Oglebay Norton Co. finally received approval to emerge from
bankruptcy protection by early January.
U.S. Bankruptcy Judge Joel B. Rosenthal, of the U.S. Bankruptcy
Court for the District of Delaware, confirmed the Company's
reorganization plan, nine months after the minerals and shipping
Company and its wholly owned subsidiaries filed for bankruptcy
protection.
"The confirmation of our plan signals a new beginning for
Oglebay Norton," said Michael D. Lundin, president and chief
executive.
Oglebay Norton will focus on its limestone, industrial sands,
lime and marine units. Management is trying to sell all or
portions of the Company's mica operations. Holders of stock that
is being canceled will receive warrants to purchase new common
stock of the Company that will be good after it has emerged from
Chapter 11, a spokesman said.
An earlier reorganization plan was rejected last month, when the
judge said the proposal lacked information about how the Company
would make settlement payments to thousands of people who claim
to have been sickened by asbestos, which was sometimes used in
ship building. The Company has said any asbestos claims could be
handled by insurance.
The Cleveland Company, which took over John D. Rockefeller's
iron ore properties in Minnesota in 1890, was created as an iron
ore business in 1854 and entered lake shipping in the 1920s.
When Oglebay purchased mineral properties to reduce reliance on
a then-sputtering steel industry in 1998, the debt from the
rapid diversification swamped the Company after the economy
turned sharply worse.
ASBESTOS LITIGATION: Sen. Reid Set to Negotiate on Asbestos Fund
----------------------------------------------------------------
Talks to create a national fund to compensate asbestos victims
will continue, the new leader of the Democrats in the U.S.
Senate said.
"I will continue to negotiate," Sen. Harry Reid of Nevada told
reporters after his election by other Democrats in the Senate.
"I think it's something we need to do."
Sen. Reid's predecessor as minority leader, Sen. Tom Daschle of
South Dakota, swapped proposals for an asbestos compensation
fund for months with Senate Majority Leader Bill Frist, a
Tennessee Republican. The idea was to set up a fund to pay
claims while ending victims' right to sue. Sen. Daschle and Sen.
Frist agreed on US$140 billion as the overall size of the
privately-financed fund, but remained at odds on many details,
including how many existing asbestos cases could stay in Court
once the fund was set up.
Sen. Daschle's defeat means he will no longer be a roadblock to
a US$140 billion asbestos bill that is crucial to the fortunes
of WR Grace and dozens of other companies faced with enormous
claims for compensation.
Some trial lawyers have reaped huge fees from asbestos cases and
have been blamed by business interests for a flood of asbestos
claims crowding U.S. Courts. U.S. companies have paid out tens
of billions of dollars on hundreds of thousands of asbestos
injury claims.
Company executives and insurers are weighing whether a no-fault
trust fund for U.S. asbestos victims can work - some thought the
US$140 billion plan was too expensive - or whether they favor
another legislative approach.
An asbestos victims' group that had criticized Sen. Daschle for
being too concessionary in his negotiations with Sen. Frist said
it was hopeful that Reid would be a strong voice for victims. "I
feel like Senator Reid is not going to give the companies facing
liability an out, over the victims," said Douglas Larkin, a co-
founder of the Asbestos Disease Awareness Organization.
Many advocates of legal reform, especially in the business
world, saw Sen. Daschle as an obstacle to an asbestos deal. His
defeat caused stocks in companies with asbestos liabilities to
rise on speculation a trust fund bill will finally be
established.
ASBESTOS LITIGATION: Jury Trial Averted in Madison County Court
----------------------------------------------------------------
Earlier this week, a rare opportunity for an asbestos jury trial
passed the 78-year-old Arlington Heights man by when Circuit
Judge Daniel Stack dismissed 60 potential jurors in an asbestos
lawsuit filed in Madison County Circuit Court. The last time an
asbestos case went to a jury trial here, retired U.S. Steel
worker Roby Whittington of Gary, Ind. was awarded US$250 million
in March 2003.
Trial was averted because the 5th Judicial Appellate Court is
mulling over Stack's ruling Nov. 8 that denied transferring the
case to Cook County, a jurisdiction closer to where the
plaintiff Luke Lindau resides. Jeff Hebrank, who represents
defendants Bondex and Georgia Pacific, said the trial will be
stayed until the appeals Court weighs in on Judge Stack's
ruling.
"The big issue is where the case should be brought," said Mr.
Hebrank, who has claimed the case being filed in Madison County
is an example of forum shopping. He stated that the suit was
originally filed in Austin, Texas, with a trial date in
February. But the plaintiff wanted to move his case to Madison
County even though he was never exposed in Madison County.
Tort reform groups have complained publicly that Madison County
judges lean toward plaintiffs' attorneys in deciding issues in
asbestos cases, as well as other cases, such as consumer fraud
class action cases and medical malpractice cases.
Scott Hendler, Mr. Lindau's attorney, argued that Madison County
Circuit Court was the best venue for his client because of its
"sophisticated case management system."
"State law allows us to file here because Mr. Lindau was exposed
to asbestos when he worked at SIU (Edwardsville)," Mr. Hendler
added.
When Judge Stack denied defendant's motion to transfer the case
to Cook County, Mr. Hebrank filed to have the case removed to
federal Court. Within 42 hours of the filing, the federal Court
of the Southern District of Illinois remanded the case back to
the state level claiming the defendants had no basis for
removing the case.
Mr. Lindau, a former union painter, was diagnosed with
mesothelioma, the deadliest form of asbestos-related cancer, in
October 2002. He alleges that during the course of his
employment and during home remodeling work, he was exposed to,
ingested or otherwise absorbed large amounts of asbestos fibers
emanating from certain products he worked around and that they
were manufactured or sold by the defendants.
"The defendants hope Mr. Lindau dies before they have to face
trial," said Mr. Hendler. "Mr. Lindau has already exceeded
expectation of life after being diagnosed with mesothelioma."
He added that the defendants are trying to stall the case, and
that it will take an additional year to get the case to trial in
Cook County.
ASBESTOS LITIGATION: Hardie Offers AUD85Mil for Asbestos Fund
-------------------------------------------------------------
James Hardie Industries NV, an Australian building products
Company, said that it has offered an indemnity to ABN 60
Foundation directors that will allow AUD85 million in cash to be
immediately provided for asbestos compensation claims.
The Company has faced intense public scrutiny in recent months
over the level of funding it has provided for people made sick
by asbestos from James Hardie products. The funds were being
offered to James Hardie subsidiary ABN 60 for the Medical
Research and Compensation Foundation, formed by James Hardie in
2001 with AUD293 million to distance the Company from asbestos-
related liabilities. James Hardie has since moved its
headquarters to the Netherlands.
James Hardie also said it would provide additional interim
funding on a month-to-month basis if MRCF's funds proved
insufficient to meet legitimate claims.
A study commissioned by the MRCF estimates there could be as
many as 15,000 cases of mesothelioma, caused by asbestos, over
the next 40 years. Australia has the world's highest death rate
from mesothelioma.
"We believe the MRCF now has the security of interim funding to
maintain its role in providing financial support to the victims
and families affected by asbestos-related diseases," James
Hardie Chairman Meredith Hellicar said in a statement.
"By proposing this arrangement, James Hardie is seeking to
ensure that no one who is entitled to receive compensation from
the MRCF will go without funding while a long term solution to
the asbestos compensation issue is being finalized," Hellicar
said.
The Australian government said it would consider legislation to
recover funds from James Hardie if the Company failed to meet
compensation demands from asbestos victims. A government inquiry
earlier found the fund could need up to an additional AUD1.9
billion. In late October, the fund warned it was running out of
money to pay future claims and needed an immediate cash
injection.
A spokesman for the MRCF said the offer "was being approached
cautiously until the check was on the table."
"We've been down this road before," the spokesman said Hardie
earns around three-quarters of its revenue in the United States,
where sales of its fiber cement cladding have soared.
Meanwhile, the NSW Government, at the request of the victims
group and the ACTU, vowed to participate in the lagging
negotiations between asbestos victims, unions and James Hardie
Industries in an effort to expedite a settlement.
ASBESTOS LITIGATION: T&N Pension Trustees Vote Down Rescue Plan
----------------------------------------------------------------
The trustees of the UK pension fund of bankrupt U.S. auto parts
firm Federal-Mogul, with 37,000 members, said they have been
forced to vote against a rescue plan for the scheme as they
consider new proposals from the U.S.
The proposed plan by Federal-Mogul Corp for the fund of UK
subsidiary Turner & Newall, had not been adjusted to include a
new offer led by U.S. financier Carl Icahn, the largest holder
of the Company's debt, in October, to plug their pension fund
deficit.
The trustees had rejected an offer from Federal Mogul creditors
to make a one-off US$130 million payment into the pension fund
because it was "too low." They also claimed that the rescue plan
was structurally unfair.
"The plan of reorganization has not yet been amended to reflect
the new proposal. The position therefore is that, as at the
voting deadline, the only plan on which the trustees can vote is
the current plan, which the Court has directed the trustees not
to accept," they said in a statement late Tuesday.
Under the U.S. reorganization plan, both Turner & Newall and
Federal-Mogul could emerge from UK administration and U.S.
Chapter 11 bankruptcy protection, which they entered in 2001 to
be shielded from huge asbestos liability claims, largely derived
from the takeover of T&N in 1988.
From 1920 to 1976 T&N was the largest employer in the British
asbestos industry and Federal-Mogul has since been hit by US$11
billion in claims stemming mainly from its UK operations.
The fund has an estimated shortfall of 875 million pounds
(US$1.58 billion) and the trustees said "let it run" would have
given T&N a substantial release from its obligations under
pension law to make regular contributions to make good the
scheme deficit. It could have also meant members contributing to
the scheme for payments to existing pensioners would have no
guarantee of future payments from the fund at their retirement.
But the trustees said they wished to continue discussions with
Federal-Mogul and creditor groups over the latest offer. Federal
Mogul creditors have come back with a revised offer - to pay
US$25 million a year into the fund for the first three years,
plus the promise of ensuring the scheme is fully funded within a
decade.
"The trustees believe that, in view of the effort being made on
both sides to reach a satisfactory conclusion and the discussion
with the Company, the passing of the deadline will not prevent a
solution to the issues confronting the pension scheme if
agreement can be reached on the outstanding points of concern,"
the statement said.
A source close to the negotiations said the trustees are
concerned there is no commitment under the new offer to make the
future funding of the pension scheme binding under U.S. law.
Leading UK independent pension consultant John Ralfe said that
the trustees face the task of negotiating the "least worst
alternative" with Federal-Mogul and its creditors. With a
deficit of 875 million pounds, 20,400 pensioners would lose 20
percent of their pension promise and the 16,800 non-pensioners
would lose around 80 percent of their pensions promise on a
wind-up of T&N, he said.
The new plan involved recovering only 7.2 percent of the deficit
or 63 million pounds for the pension fund, and alternatively a
controlled sale of the UK assets could raise between 83 million
and 124 million pounds more than this, but either would leave a
massive pension deficit, he added.
Mr. Ralfe said Britain's new Pension Protection Fund, which the
government recently announced would be retrospective, could be
faced with covering a T&N pension deficit of 500 million pounds
under PPF rules immediately it opens its doors in 2005.
ASBESTOS ALERT: Johnson & Johnson Employees Exposed to Asbestos
----------------------------------------------------------------
Workers at a medical and pharmaceutical plant in Sydney's north
could face serious health problems in the future after the
Company confirmed they had been exposed to asbestos.
Johnson & Johnson Medical Pty Ltd, a subsidiary of one of the
world's largest, most diversified health care product makers,
Johnson and Johnson, confirmed about 25 employees had been
exposed to trace elements of asbestos after weekend renovations
to a building at its North Ryde headquarters.
Company spokesman Nick Campbell said the Company, which sells
medical devices and diagnostic tools, had known the tiles in a
section of roof contained bonded asbestos cement and had taken
appropriate precautions.
A WorkCover-approved contractor had previously given the
Company's 200 employees the all-clear to return to work, but
staff returning to their desks last Monday noticed dust
particles on their workstations, he said. The entire workforce
was sent home as a safety measure.
The Construction Forestry Mining and Energy Union said its
investigations had revealed "extensive" and "serious" exposure
to asbestos.
But Mr. Campbell said independent test results had since shown
the union's claims about "very serious exposure" were
"absolutely not true." "The air testings of the area have come
back with zero readings for asbestos, and trace elements (of
asbestos) on the surface of the workstations," he said. "All the
tests have come back as showing a very low exposure and very low
risk," he said.
Mr. Campbell said Johnson and Johnson would pay for staff to be
examined, and was recommending workers have the tests. He said
that the Company was doing everything it possibly can for the
well-being and safety of its staff.
A CFMEU spokesman warned that workers could face long-term
health problems as a result of the exposure. "It's more probable
than not that some of those workers will end up suffering from
asbestosis or mesothelioma," the spokesman said.
As a result, the workers are now on the Dust Diseases Board
register, which means that if, in the future, they suffer from
asbestos-related diseases, they'll be able to link it back to
this occurrence and claim compensation.
Company Profile:
Johnson & Johnson (NYSE: JNJ)
1 Johnson & Johnson Plaza
New Brunswick, NJ 08933
Phone: 732-524-0400
Fax: 732-524-3300
http://www.jnj.com/
Fiscal Year-End December
2003 Sales (mil.) GBD23,539.0
1-Year Sales Growth 15.3%
2003 Net Income (mil.) GBD4,046.9
1-Year Net Income Growth 9.1%
2003 Employees 110,600
Description:
Johnson & Johnson is the world's most comprehensive and broadly-
based manufacturer of health care products, as well as a
provider of related services, for the consumer, pharmaceutical
and medical devices and diagnostic markets. It has more than 200
operating companies in 57 countries. Its medical device
subsidiary develops, markets and sells more than any other
Company in the world.
ASBESTOS ALERT: Victim's Widow Pursues Claim Against RG Carter
----------------------------------------------------------------
A widow is seeking compensation for the premature death of her
husband following his exposure to deadly asbestos in the
workplace.
Joiner Robin Wiseman, 63 years old, died last month after
succumbing to asbestos-related cancer mesothelioma. Now his wife
Pamela plans to sue local building Company RG Carter, which she
holds responsible for her husband's death.
Mrs. Wiseman, 61 years old, from The Paddocks, Old Catton, said
she was angry that her husband was taken so young and that she
thought the firm should pay its dues. "I want compensation and
recognition of the fact that they indirectly caused Robin's
premature death. It's not bitterness that I feel; it's anger and
frustration. He would have wanted to see justice served," she
said.
Norwich coroner William Armstrong recorded a verdict of death as
a result of industrial disease. "It is clear on the balance of
probabilities that the mesothelioma from which Mr. Wiseman died
was related to exposure to asbestos during his working life," he
said.
Tim Cary, of Leathes Prior Solicitors, who is representing Mrs.
Wiseman, said, "We are vigorously pursuing a claim for
compensation against the insurers of RG Carter, which we
anticipate will be successful." The claim was started while Mr.
Wiseman was still alive, but unfortunately no interim payments
had been made, he added.
Mr. Wiseman worked for RG Carter as an apprentice in the late
1950s and early 1960s where he was made to saw up pieces of
asbestos. He first became ill in May last year and diagnosed
with the disease following a chest x-ray in December. During his
pain-stricken illness, he spent many nights in the Norfolk and
Norwich University Hospital being treated for panic attacks. He
died at the hospital on October 9.
Company Profile:
R G Carter Construction Ltd.
50 St Nicholas Street
Ipswich
IP1 1TP Suffolk
Phone: 01473 233655
Fax: 01473 211097
http://www.rgcarter-construction.co.uk/
Description:
RG Carter Construction Ltd. is one of the leading family owned
construction businesses in Great Britain with a turnover in
excess of GBD175 million of which some GBD50 million is Design &
Construct. With more than 2000 employees, the services of RG
Carter Construction Ltd include maintenance, facilities
management and insurance and offers comprehensive after care for
buildings around the clock.
ASBESTOS ALERT: Accountant Files GBD420T Claim Against Seawheel
----------------------------------------------------------------
An accountant who is dying from an asbestos-related cancer has
launched a GBD420,000 damages claim against his former employer.
Michael Jones, 58 years old, from Ipswich, faces a lifetime of
deteriorating health before his premature death, and blames the
negligence of Seawheel Ltd for this in a writ issued at the High
Court and just made publicly available.
Mr. Jones, who worked as chief accountant and finance director
at its premises in Harold Wood, Romford, Essex, between 1971 and
1985, is suing the Company for damages.
The writ said he was exposed to deadly asbestos dust and fibers
when he visited the warehouse each day, and says the roof beams
and vertical stanchions were coated in asbestos, which was
regularly damaged by fork lift trucks. The writ adds that the
warehouse floor was swept each day, and this too produced clouds
of asbestos dust and fibers, which he inhaled.
Company Profile:
Seawheel Ltd. (Head Office)
Western House, Hadleigh Road
Ipswich, Suffolk, IP2 0HP, United Kingdom
Phone: +44 1179 381444
Fax: +44 1179 381641
http://www.seawheel.com/
Description:
Seawheel operates comprehensive European multimodal transport
and shipping services. With 15 offices strategically located
throughout Europe, the Company provides wide-ranging, reliable
and cost-effective solutions to international transport
requirements. The Seawheel Group has an annual turnover of 200
million euros, employs more than 200 people across Europe and is
accredited with ISO9002.
ASBESTOS ALERT: TODCO, Subsidiaries Face Over 700 Claims in MS
--------------------------------------------------------------
A leading provider of contract oil and gas drilling services,
TODCO has recently learned that certain of its subsidiaries have
been named, along with other defendants, in several complaints
that have been filed in the Circuit Courts of the State of
Mississippi involving over 700 persons that allege personal
injury arising out of asbestos exposure in the course of their
employment by some of these defendants between 1965 and 1986.
The complaints also name as defendants certain of Transocean's
subsidiaries to whom the Company may owe indemnity and other
unaffiliated defendant companies, including companies that
allegedly manufactured drilling related products containing
asbestos that are the subject of the complaints. The number of
unaffiliated defendant companies involved in each complaint
4ranges from about 20 to 70.
The complaints allege that the defendant drilling contractors
used those asbestos-containing products in offshore drilling
operations, land based drilling operations and in drilling
structures, drilling rigs, vessels and other equipment and
assert claims based on, among other things, negligence and
strict liability, and claims authorized under the Jones Act. The
plaintiffs seek, among other things, awards of unspecified
compensatory and punitive damages.
Based on a recent decision of the Mississippi Supreme Court, the
Company anticipates that the trial Courts may grant motions
requiring each plaintiff to name the specific defendant or
defendants against whom such plaintiff makes a claim and the
time period and location of asbestos exposure so that the cases
may be properly severed. These complaints were only recently
filed and the Company has not yet had an opportunity to conduct
any discovery nor has it been able to determine the number of
plaintiffs, if any, that were employed by it's subsidiaries or
Transocean's subsidiaries or otherwise have any connection with
the Company's or Transocean's drilling operations.
Due to the limited information available to the Company at this
time, the Company has not yet made a determination whether it or
Transocean is financially responsible under the terms of the
master separation agreement for any losses the Company or
Transocean may incur as a result of the legal proceedings
described in the foregoing paragraph.
Company Profile:
TODCO (NYSE: THE)
2000 W. Sam Houston Pkwy. South, Ste. 800
Houston, TX 77042-3615
Phone: 713-278-6000
Fax: 713-278-6101
http://www.theoffshoredrillingCompany.com/
Fiscal Year-End December
2003 Sales (mil.) GBD128.0
1-Year Sales Growth 21.2%
2003 Net Income (mil.) (GBD160.9)
Description:
TODCO provides services to exploration and production businesses
operating in the shallow waters of the Gulf of Mexico, and in
the Gulf Coast inland marine region. TODCO, which was a part of
the R&B Falcon business Transocean acquired, operates a fleet of
about 70 drilling rigs consisting of jackups, barges,
submersibles, a platform rig and land rigs. Transocean controls
94% of the voting stock of the Company, but intends to sells its
shareholding.
ASBESTOS ALERT: Curtiss-Wright, Subsidiaries Named in 100 Suits
---------------------------------------------------------------
Curtiss-Wright Corporation or its subsidiaries have been named
in about 100 lawsuits that allege injury from exposure to
asbestos. The Company believes that in the ordinary course of
business, the Corporation and its subsidiaries are subject to
various pending claims, lawsuits and contingent liabilities. The
Corporation does not believe that disposition of any of these
matters will have a material adverse effect on the Corporation's
consolidated financial position or results of operations.
To date, Curtiss-Wright has secured its dismissal without
prejudice in about 15 lawsuits, and is currently in discussions
for similar dismissal in several others, and has not been found
liable or paid any material sum of money in settlement in any
case. Curtiss-Wright believes that the minimal use of asbestos
in its operations and the relatively non-friable condition of
asbestos in its products makes it unlikely that it will face
material liability in any asbestos litigation, whether
individually or in the aggregate. Curtiss-Wright does maintain
insurance coverage for these lawsuits and it believes adequate
coverage exists to cover any unanticipated asbestos liability.
Company Profile:
Curtiss-Wright Corporation (NYSE: CW)
4 Becker Farm Rd., 3rd Fl.
Roseland, NJ 07068
Phone: 973-597-4700
Fax: 973-597-4799
http://www.curtisswright.com/
Fiscal Year-End December
2003 Sales (mil.) GBD419.5
1-Year Sales Growth 45.4%
2003 Net Income (mil.) GBD29.4
1-Year Net Income Growth 16.0%
2003 Employees 4,655
Description:
Curtiss-Wright Corporation is a diversified global provider of
highly engineered products and services to the Motion Control,
Flow Control and Metal Treatment industries. Curtiss-Wright's
newly acquired Synergy Microsystems unit makes and integrates
processors used in aerospace, military, and industrial
applications.
New Securities Fraud Cases
AON CORPORATION: Wechsler Harwood Lodges ERISA Suit in N.D. IL
--------------------------------------------------------------
The law firm of Wechsler Harwood LLP initiated a class action
lawsuit for violations of the Employee Retirement Income
Security Act of 1974 ("ERISA") on behalf of participants in the
Aon Corporation ("Aon" or the "Company") 401 (k) Savings Plan
(the "Plan") in connection with the revelations concerning
improper "contingent commissions" and resultant loss of value in
Aon stock (NYSE:AOC) held by current and former employees of Aon
and its subsidiaries through the Plan. The lawsuit seeks to
restore losses in Aon stock to the accounts of Plan
participants.
The action, entitled Young v. Aon Corp., et al., Case No. (not
yet assigned), is pending in the United States District Court
for the Northern District of Illinois, and names as defendants,
the Company and certain other named and de facto Plan
fiduciaries.
The lawsuit alleges that the fiduciaries of the Plan violated
their fiduciary duties by investing Plan assets in Aon stock
from November 1, 1998 to the present, during which time Aon
failed to disclose certain harmful business practices. In
particular, Aon had a system of steering unsuspecting clients to
insurers with whom it had lucrative payoff agreements, and
soliciting rigged bids for insurance contracts. As a result,
Aon's stock traded at artificially inflated prices, as
demonstrated by the decline in the stock price following the
disclosure of these practices.
For more details, contact Jeffrey M. Norton, Esq. of Wechsler
Harwood LLP by Mail: 488 Madison Avenue, 8th Floor, New York, NY
10022 by Phone: 877-935-7400 (ext. 286) or by E-mail:
jmn@whesq.com or visit their Web site: http://www.whesq.com.
AUTOBYTEL INC.: Smith & Smith Lodges Securities Fraud Suit in CA
----------------------------------------------------------------
The law firm of Smith & Smith LLP initiated a securities class
action lawsuit in the United States District Court for the
Central District of California on behalf of shareholders who
purchased securities of Autobytel, Inc. ("Autobytel" or the
"Company') (Nasdaq:ABTL), between July 24, 2003 and October 21,
2004, inclusive (the "Class Period').
The Complaint alleges that defendants violated federal
securities laws by issuing a series of material
misrepresentations to the market during the Class Period
concerning the Company's operations and performance, thereby
artificially inflating the price of Autobytel securities. No
class has yet been certified in the above action.
For more details, contact Howard Smith, Esq. of Smith & Smith
LLP by Mail: 3070 Bristol Pike, Suite 112, Bensalem, PA 19020 by
Phone: 866-759-2275 or by E-mail: howardsmithlaw@hotmail.com.
IMPAX LABORATORIES: Charles J. Piven Files Securities Suit in CA
----------------------------------------------------------------
The law offices of Charles J. Piven, P.A. initiated a securities
class action on behalf of shareholders who purchased, converted,
exchanged or otherwise acquired the common stock of IMPAX
Laboratories, Inc. (Nasdaq:IPXL) between May 5, 2004 and
November 3, 2004, inclusive (the "Class Period").
The case is pending in the United States District Court for the
Northern District of California against defendant IMPAX and one
or more of its officers and/or directors. The action charges
that defendants violated federal securities laws by issuing a
series of materially false and misleading statements to the
market throughout the Class Period, which statements had the
effect of artificially inflating the market price of the
Company's securities. No class has yet been certified in the
above action.
For more details, contact the law Offices Of Charles J. Piven,
P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt
Street, Suite 2525, Baltimore, MD 21202 by Phone: 410/986-0036
or by E-mail: hoffman@pivenlaw.com.
SOURCECORP INC.: Baron & Budd Lodges Securities Fraud Suit in TX
----------------------------------------------------------------
The law firm of Baron & Budd, P.C. announces that it has filed a
class action lawsuit in the United States District Court for the
Northern District of Texas on behalf of purchasers of
Sourcecorp, Inc. (Nasdaq: SRCP) ("Sourcecorp" or the "Company")
securities during the period between May 7, 2003 and October 27,
2004, inclusive (the "Class Period"). Additional defendants are
Company President and CEO Ed. H. Bowman, Jr. and Company
Executive VP and CFO Barry Edwards.
The complaint alleges that throughout the Class Period,
Sourcecorp, Bowman and Edwards violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. More specifically, the Complaint alleges
that the Defendants failed to disclose and misrepresented the
following material adverse facts, which were known to them or
recklessly disregarded by them:
(1) that the Company had materially overstated its net
income and earnings per share;
(2) that defendants prematurely recognized revenue in its
Information Management and Distribution Division;
(3) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles ("GAAP");
(4) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(5) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On October 27, 2004, the Company announced its need to restate
its previously certified financial results. As a result of the
restatement, the Company will have to adjust its revenues and
diluted EPS for 2003 by at least $5.4 million or $0.19 per
share. For the six months ending June 30, 2004, the adjustment
may amount to $2.8 million or $0.10 per share. Immediately
following this announcement, Sourcecorp's stock fell $5.95 per
share, or almost 30%, on unusually high trading volume of
833,200 shares, from its closing price of $22.21 on October 26,
2004, to a closing price of $16.25 on October 27, 2004.
For more details, contact Randall K. Pulliam, Esq. or Max Jodry
of BARON & BUDD, P.C. by Phone: 1-800-222-2766 by E-mail:
info@baronbudd.com or visit their Web site:
http://www.baronandbudd.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
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