C L A S S A C T I O N R E P O R T E R
Friday, January 21, 2005, Vol. 7, No. 15
ALYON TECHNOLOGIES: Iowa Joins Improper Billing Settlement AMERICAN EXPRESS: Pays $75M To Settle Fee Disclosure Lawsuit ARTHUR ANDERSEN: NY Judge Denies Motion For Summary Judgment AUSTRALIA: AAGM Says Tabcorp Found in Breach of Fair Trading Act BERINGER CORPORATION: FTC Nets Favorable Judgment in Fraud Suit
CONSOLIDATED FREIGHTWAYS: EEOC Settles Race Discrimination Suit DUPONT DOW: To Pay $84M To Settle Justice Dept Antitrust Probe FANNIE MAE: MI Fund Lodges Suit Over Ex-Executives Severance Pay FIRSTWORLD COMMUNICATIONS: Judge Approves $25.9 Suit Settlement HAMILTON BANK: Reaches $8.5M Shareholders' Suit Settlement in FL
ILLINOIS: Court Committee Planning Certification Rules Hearing ILLINOIS: AG Launches Consumer Fraud, False Advertising Lawsuits IMCLONE SYSTEMS: CEO Waksal Settles SEC Insider Trading Charges KIDS STATION: Recalls 10.5T Musical Sets Due To Choking Hazard MUTUAL FUNDS: Investors Sue Over Failure To Claim Settlements
NATIONAL RESEARCH: Iowa Joins Settlement of Student Privacy Suit NORTEL NETWORKS: Parties Make Concessions For Suit To Move Ahead NUTRAQUEST INC.: Creditors File Lawsuit V. President, Insiders SAFEWAY INC.: Reaches Settlement On Sale Of Tobacco To Minors SIDLEY AUSTIN: EEOC Commences Age Discrimination Lawsuit in IL
SOUTH KOREA: Government, Uri Party Push For Securities Exemption TAMPA ELECTRIC: Judge Schedules Trial Date For Power Pole Suit UNITED STATES: Class Action Fairness Act Expected in Senate UNITED STATES: Insurers Call On Senate To Pass Tort Reform Bill WAFFLE HOUSE: Patrons Lodge Race-Bias Suit Against Restaurants
WAL-MART STORES: Hourly Workers Lodge Overtime Wage Suit in CA WORLDCOM INC.: Ex-Officer Ebbers To Face Criminal Trial in NY
ASBESTOS LITIGATION: 9/11 Fund Head Urges Asbestos Legal Reform ASBESTOS LITIGATION: Union Electric Files US$8M Suit V. Insurers ASBESTOS LITIGATION: Ohio Takes Lead on Impeding Asbestos Suits ASBESTOS LITIGATION: DE Landfill Cited for Accepting Asbestos ASBESTOS LITIGATION: St. Louis City, Lambert Airport Facing Suit
ASBESTOS LITIGATION: UK School Council Refuses to Show Findings ASBESTOS LITIGATION: W. R. Grace Files Amended Bankruptcy Plan ASBESTOS LITIGATION: EPA Sets Up Emission Standards for Taconite ASBESTOS LITIGATION: UK Inquest Reveals Joiner Died of Exposure ASBESTOS LITIGATION: Public Urged to Test for Indoor Asbestos
ASBESTOS LITIGATION: Owens Corning Liability Hearing Under Way ASBESTOS LITIGATION: UK Agency Asks Help in Snagging Fly-tippers ASBESTOS ALERT: Asbestos Find Closes Melbourne Childcare Center ASBESTOS LITIGATION: RPM Willing to Put in $400M for Trust Fund ASBESTOS LITIGATION: Tort Costs Are Edging Up, Tillinghast Study
ASBESTOS LITIGATION: AU Campsite Reopens Amid Persisting Threats ASBESTOS LITIGATION: Protesters Seek Proof of Site Contamination ASBESTOS LITIGATION: Derbyshire District Council Accepts Tip Bid ASBESTOS LITIGATION: All But 10 Suits V Longview Fibre Dismissed ASBESTOS LITIGATION: Georgia-Pacific Sees 4Q Marred by Charges
ASBESTOS LITIGATION: Residents to Hold Meeting Over GA Landfill ASBESTOS LITIGATION: HSE Urges Full Compliance with Regulations ASBESTOS LITIGATION: Jones County Judge Demands Proof of MS Ties ASBESTOS LITIGATION: Fears Arise Over Planned Razing of NY Bank ASBESTOS LITIGATION: MI County Implements Building Inspections
ASBESTOS LITIGATION: Specter Moves Ahead on Asbestos Fund Bill ASBESTOS ALERT: AU Local Sounds Alarm on Improper Removal Acts ASBESTOS ALERT: District Court Dismisses Case V. NY Prison Heads ASBESTOS ALERT: Canadian University Troubled by Asbestos Hazards ASBESTOS ALERT: Homeless Man Tears Down WA Shop, Bares Asbestos
ASBESTOS ALERT: Asbestos Find Closes Melbourne Childcare Center ASBESTOS ALERT: Pittsburgh Laborer Files Suit V. 80 Defendants ASBESTOS ALERT: Salons Alerted to Old-Style Hairdryer Danger ASBESTOS ALERT: City Officials Halt New York Demolition Project ASBESTOS ALERT: MA Officials Probe M.J. Murphy for Violations
New Securities Fraud Cases
TASER INTERNATIONAL: Berger & Montague Lodges Stock Suit in AZ TASER INTERNATIONAL: Mager White Lodges Securities Lawsuit in AZ TASER INTERNATIONAL: Milberg Weiss Lodges Securities Suit in AZ
ALYON TECHNOLOGIES: Iowa Joins Improper Billing Settlement ---------------------------------------------------------- Iowa is among 23 states resolving consumer fraud allegations that two companies billed consumers $4.99 per minute for access to adult Web sites that some consumers say they did not access or agree to access. Consumers will be eligible for various refunds and credits.
Attorney General Tom Miller said his office received 78 complaints about the practices of Alyon Technologies, Inc., with headquarters in Secaucus, NJ, and Telcollect, Inc., with headquarters in Norcross, GA. The Consumer Protection Division of Miller's office said consumers complained about being billed by the companies for accessing adult-content Web sites, even though some did not own a computer, some were not home or were not using their computers when the supposed access occurred, and some had minor children who accessed the adult Web content.
"Iowans complained about collection notices and bills ranging from about $15 to over $800," Miller said. "Many deny accessing the adult Web content or agreeing to purchase it." Background and details:
The States alleged the defendants would start billing consumers after unsuspecting adults or minors without permission opened pop-up windows or spam that automatically downloaded modem dialer software onto their computers. That software could then be used to dial up the Alyon billing gateway to access adult material. The states alleged Alyon captured the phone number, matched it with a name and address and then billed the consumers $4.99 per minute, allegedly without the consumers' knowledge or consent. Alyon allegedly told consumers they owed the charges even when consumers denied having accessed or agreed to purchase the adult materials.
The service also allegedly was set up to allow children to easily access the adult sites. No credit card number was required, and 900-number blocks were ineffective because people were unknowingly connected to a number with a New Jersey area code.
In most circumstances, contracts with minors are not enforceable. States alleged the defendants had no basis to demand parents pay charges when parents did not agree beforehand to pay them. This case underscores the need for adult supervision when kids are on computers.
Iowa filed both a lawsuit and a consent judgment yesterday. Iowa's suit was filed in Polk County District Court, and District Court Judge Richard G. Blane II entered the "Final Agreed Judgment and Consent Decree." The defendants denied all allegations of wrongdoing.
Provisions of the multi-state settlement include:
(1) Alyon has improved its process for ensuring that adults authorized to incur charges are "on the other end" of the modem before connecting them to the adult material or starting per-minute charges.
(2) Alyon will provide consumers with a free utility program they can download to remove all modem dialer software deposited by their clients, the adult Web site operators.
(3) Alyon will require the adult Web site operators to refrain from using potentially deceptive methods to download modem dialer software onto consumers' computers. Prohibited methods include impairing a computer user's ability to read the terms and conditions of the software download; disabling a computer user's ability to close out a pop-up box; depositing spyware on consumers' computers; and impairing the add/remove controls within computers' operating systems, which would make it difficult for consumers to detect and remove the modem dialer software.
(4) The defendants automatically will credit certain eligible consumers' bills and provide cash refunds available to a group of eligible consumers who previously had paid disputed charges.
(5) Consumers billed for charges allegedly incurred before June 15, 2003, but who do not qualify for an automatic bill credit or cash refund will have an opportunity to request a credit of disputed charges. However, they must follow a procedure for making such a request, which includes completing and returning an affidavit to the defendants within 45 days of the defendants' collection attempt.
Many consumers who complained will receive automatic refunds or credits. For more information, consumers may call 515-281-5926 or 888-777-4590 (toll-free), or write to the Attorney General's Consumer Protection Division, Hoover Building, Des Moines, Iowa 50319, E-mail: firstname.lastname@example.org or visit the Web site: http://www.IowaAttorneyGeneral.org.
AMERICAN EXPRESS: Pays $75M To Settle Fee Disclosure Lawsuit ------------------------------------------------------------ American Express agreed to pay up to $75 million to U.S. cardholders who made purchases in a foreign currency from March 28, 1997 to October 15, 2004, according to a preliminary class action settlement, which covers both charges made abroad and online in a foreign currency, the Newsday.com reports. The lawsuit had alleged that Amex did not adequately disclose its 2 percent fee levied on foreign currency conversions.
As part of the settlement, the credit card company agreed to include information about the fees on its monthly statements and other mailings to cardholders. According to plaintiffs' attorneys, Amex's settlement follows a California court ruling last April that Visa and MasterCard also hid their currency conversion fees. The refunds in that case, which is being appealed, could total $800 million.
Amex spokeswoman Judy Tenzer told Newsday.com, the Company decided to settle "to avoid the cost and risk of prolonged litigation," adding that Amex believes its existing practices are appropriate.
Consumers advocate Ken McEldowney, executive director of Consumer Action, a San Francisco advocacy group, told Newsday Amex as well as other credit card companies did not properly inform cardholders about these fees. He adds, "Disclosure shouldn't be buried in customer agreements or folded into charges."
As for the refund, cardholders shouldn't expect a windfall, experts said, since Amex has about 29 million U.S. cardholders. David Robertson, publisher of The Nilson Report, an industry newsletter even said, the issue isn't likely to tarnish Amex's reputation and he doubts anyone will stop using the card because of the issue.
The company is now sending cardholders information about the settlement, which received preliminary approval from the U.S. District Court in Miami in October with a final settlement hearing set to take place on March 14. To receive the refund, cardholders must file a claim form by April 13.
ARTHUR ANDERSEN: NY Judge Denies Motion For Summary Judgment ------------------------------------------------------------ United States District Court for the Southern District of New York Judge Denise Cote denied Arthur Andersen's motion for summary judgment in the litigation filed over WorldCom, Inc.'s July 2002 bankruptcy, the Associated Press reports.
The recent ruling sets the stage for a trial next month of WorldCom's former auditors and about a dozen underwriters. In December, the court also refused the underwriters' summary judgment motion.
WorldCom fell into bankruptcy in 2002 amidst an $11 billion accounting fraud and emerged last April under its former name, MCI. Arthur Andersen was implicated in the ensuing litigation against the company for allegedly resorting to questionable accounting strategies in the late 1990s to boost WorldCom's earnings.
Citigroup, one of the largest defendants in the securities class action settled with plaintiffs last year, paying $2.5 billion, while ten former WorldCom directors recently agreed to pay some of the claims from their own assets. Judge Cote though has yet to approve the settlement.
Meanwhile, questionnaires are expected to be distributed to potential jurors in the trial of former WorldCom CEO Bernard Ebbers, who is accused of orchestrating an $11 billion accounting fraud. Southern District Judge Barbara Jones had ruled that his lawyers would be allowed to question the star prosecution witness about marital infidelity. The decision was a boost for the defense, which will try to raise questions about the credibility of the witness, former CFO Scott Sullivan.
AUSTRALIA: AAGM Says Tabcorp Found in Breach of Fair Trading Act ---------------------------------------------------------------- The Compliance and Enforcement Branch of CAV issued a strong warning to Tabcorp Holdings, over its poker machine practices. Consumer advocate Action Against Gaming Machines (AAGM) earlier alleged that Tabcorp Holdings' poker machine practices have been found to be in breach of the Fair Trading Act by Consumer Affairs Victoria (CAV).
Tabcorp breach the act by not providing receipts to consumers for purchases of gaming machine credits. The CAV decision emphasises the fact that gaming machine operators in every state of Australia are operating illegally by not providing receipts to consumers, and are now open to prosecution.
CAV clearly worded statement said ".while it may be logistically difficult for Tabcorp (along with analogous service providers like public telephones and confectionary vending machines) to provide receipts on request, it's the law and we expect them to comply."
Lana O'Shanassy, leader of the Action Against Gaming Machines (AAGM) class action said "We now have the consumer protection authority in one state of Australia who agree that gaming machine operators are bound by Consumer Protection Laws. These same laws apply right throughout Australia, not just in Victoria, and this is a clear breach of our rights as a consumer."
"This issue also highlights the fact that Australians who receive government benefits along with the average tax payer do not (and have been unable to) declare their actual level of spending on gaming machines and their cash profits as a form of income which would have major implications to government revenue and benefit entitlements."
"Gaming machine operators spend millions marketing their products to the consumer, now they are finally being forced to abide by Consumer Protection Laws like any other provider of a consumer product in this country."
"I urge consumer protection authorities in all other states of Australia to follow the action taken by Consumer Affairs Victoria and to prosecute gaming machine operators who take advantage of Australian consumers without regard to the harmful effects this breach and all of their other breaches of our Laws of Australia have had on our communities."
"I anticipate that these breaches will be fully investigated by our courts in due course, however Consumer Protection Laws are in place for a reason and it is the duty of our government to investigate those who are known to have acted illegally as and when allegations are made. It is in their best interest to do so at this time."
The CAV found that TABCORP breached section 161a of the Fair Trading Act.
Section 161a of the Fair Trading Act, Victoria states that all consumers of a product or service must receive a receipt for spending over $50.00. Consumers who spend less than $50.00 must be provided with a written receipt for purchase if the consumer asks for this receipt.
When commenting on whether the class action group believe that action will be taken by other consumer protection authorities, Lana O'Shanassy said "we believe the government will attempt to make this Consumer Protection Law exempt to gaming machine operators through a change in legislation, even though systems are currently available and have been for many years that enable operators to abide by these laws."
"The anticipated reaction by our government is evidenced by the fact that they are attempting to change gaming machine legislation to make manufacturers, operators, clubs, hotels, casinos and the Crown themselves exempt from providing a minimum dollar return to players - as legislation is currently written and was intended."
A discussion paper issued by the NSW Department of Gaming and Racing in November 2004 proposes that legislation be changed so that machines must be programmed to return a theoretical percentage of money to players, instead of what is actually returned to players, the practical return.
Lana O'Shanassy comments "the change is proposed because again, the gaming machine industry are in breach of Consumer and Fair Trading Laws, they are operating illegally as gaming machines have never achieved the required minimum return to players."
"We are confident that regardless of whether or not legislation is changed, we have a cause of action and strong legal arguments to make the gaming machine industry responsible for their actions over the many devastating years to the consumer since the introduction of gaming machines."
BERINGER CORPORATION: FTC Nets Favorable Judgment in Fraud Suit --------------------------------------------------------------- A U.S. District Court Judge has found that the Federal Trade Commission (FTC) has "demonstrated a likelihood of success on the merits" against two of the defendants named in the FTC's action against two companies and two individuals selling an investment business opportunity.
The FTC alleged in its complaint that defendants John Stefanchik and the Beringer Corporation deceptively marketed and sold a business opportunity for buying and selling privately-held mortgage notes, commonly referred to as mortgage "paper," through defendant Atlas Marketing, Inc., a telemarketing company, and its principal, defendant Scott B. Christensen.
On January 3, 2005, United States District Judge Ricardo S. Martinez, of the Western District of Washington in Seattle, issued a preliminary injunction against John Stefanchik and the Beringer Corporation that prohibits them from making false and unsubstantiated earnings claims about their program and from making false claims that their program coaches have substantial experience in the paper business and are readily available to assist consumers. The preliminary injunction - which prohibits the challenged claims and requires reporting of the defendants' financial transactions - will remain in effect pending the outcome of a trial on the FTC's allegations.
In August 2004, the FTC filed charges against Stefanchik and the Beringer Corporation, based in Seattle, Washington, and Christensen and Atlas Marketing, Inc., based in Salt Lake City, Utah. According to the FTC's complaint, the defendants charged consumers as much as $5,000 to $8,000 for a program that purports to teach consumers how to make large amounts of money quickly by buying and selling mortgage paper. The defendants advertised and sold the program - which includes course materials, in-person seminars, videos, audio tapes, and other educational products and services - through direct mail, telemarketing, and the Internet. The complaint charged that the defendants made false and unsubstantiated earnings claims and that they would provide consumers with the services of a personal coach experienced in mortgage paper transactions who would be readily available to assist them.
At the time it filed its complaint, the FTC sought preliminary and permanent injunctive relief and consumer redress. The January 3 preliminary injunction applies to John Stefanchik and the Beringer Corporation. Scott Christensen and Atlas Marketing earlier agreed to a preliminary injunction.
For more details, contact the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, or visit the Website: http://www.ftc.gov. Also contact, Brenda Mack, Office of Public Affairs by Phone: 202-326-2182 or Nadine Samter, FTC's Northwest Region - Seattle by Phone: 206-220-6350.
CONSOLIDATED FREIGHTWAYS: EEOC Settles Race Discrimination Suit --------------------------------------------------------------- The U.S. Equal Employment Opportunity Commission (EEOC) reached a settlement for an employment discrimination lawsuit under Title VII of the 1964 Civil Rights Act filed against Consolidated Freightways Corporation of Delaware for $2,750,000 on behalf of 12 African American dockworkers who were subjected to a racially hostile work environment at the Kansas City, Missouri, facility.
The Commission alleged in the lawsuit that co-workers subjected the African American employees to racial intimidation which included hanging nooses in the workplace, assaults, threats of physical harm, displaying racially offensive graffiti, damaging property and other harassment. Consolidated, which filed a petition for relief under the Bankruptcy Code on September 3, 2002, and is now in the process of liquidation, was one of the largest freight transportation companies in North America.
In EEOC's suit, filed on May 31, 2002, in the United States District Court for the Western District of Missouri, Western Division (No. 4:02-CV-00519-DW), the Commission alleged that Consolidated knew about but did nothing to stop the racial harassment, and that it disciplined one of the employees for complaining about the harassment. The litigation was filed by EEOC after the agency investigated charges of discrimination, found merit, and exhausted its conciliation efforts to reach a voluntary pre-litigation settlement.
The settlement, in the form of a Consent Decree, provides monetary relief to former dockworkers at Consolidated's Kansas City, Mo.-based facility. It calls for Consolidated to pay $2,750,000 to the former employees and their private attorneys. The amount of the actual recovery will be determined by the Bankruptcy Court based on the company's remaining assets.
Lynn Bruner, Director of the EEOC's St. Louis District Office, said, "No employee should be subjected to graphic racial symbols, racial graffiti or threats of physical violence, and no company should tolerate such behavior in their workplace. By continuing to pursue this case even after the company filed for bankruptcy, EEOC hopes to alert employers everywhere that it considers this issue to be extremely serious and will act accordingly."
Consolidated denies the EEOC's allegations of race discrimination and asserts that it is entering into the Consent Decree because it believes that it is in the best interests of its bankruptcy estate and its creditors.
Robert Johnson, the EEOC's Regional Attorney in St. Louis, said, "The company's bankruptcy keeps us from obtaining full relief for these victims of gross racial harassment, but we expect that they will soon receive substantial compensation from the bankruptcy proceedings."
DUPONT DOW: To Pay $84M To Settle Justice Dept Antitrust Probe -------------------------------------------------------------- DuPont Dow Elastomers LLC agreed to pay an $84 million criminal fine to settle the United States Department of Justice's (DoJ) investigation over its alleged conspiracy to fix prices in the synthetic rubber market, Dow Jones Newswires reports.
The Company, a joint venture between DuPont Co. and Dow Chemical Co. (DOW), was charged with a price-fixing scheme involving the rubber polychoroprene, which is used in products such as tires, adhesives, furniture and shoes.
The settlement brings total fines resulting from the DOJ's rubber price-fixing investigation to more than $200 million, the agency said. "Today's plea agreement represents the Department's ongoing efforts to protect consumers from international price-fixing cartels," R. Hewitt Pate, DOJ's assistant attorney general for antitrust told Dow Jones. "These types of cartels harm millions of American consumers, and companies that participate in them face great risks of being caught and punished."
DuPont has agreed to fund 100% of antitrust liabilities for DuPont Dow Elastomers up to $150 million and 75% of any costs above that amount, DuPont said in a statement Wednesday. Dupont Dow Elastomers has also agreed to settle a federal class action antitrust suit involving another synthetic rubber, EPDM, for $25.4 million.
"These are significant steps in resolving these matters and moving forward to serve customers with a commitment to the highest standards of ethical and legal compliance," Cathleen Branciaroli, communications director at DuPont Dow Elastomers, told Dow Jones Newswires, adding that the company "has cooperated fully with governmental authorities throughout the investigations."
The plea agreement and $84 million fine "resolves all criminal charges" against DuPont Dow Elastomers, DuPont said. Representatives for Dow Chemical weren't immediately available for comment, according to Dow Jones.
FANNIE MAE: MI Fund Lodges Suit Over Ex-Executives Severance Pay ---------------------------------------------------------------- A Michigan pension fund initiated a lawsuit against Fannie Mae asking that the courts stop the Company's former executives from receiving millions of dollars in severance payments, FT.com reports.
The suit adds to class action lawsuits pending against the company alleging it manipulated earnings and deceived investors after its regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), found it had misapplied accounting rules.
Wayne County, a shareholder of Fannie, filed a request for a temporary restraining order stopping Mr. Raines's and Mr. Howard's severance payments. The fund alleges that Fannie Mae's board made an "unconscionable decision" to accept the executives' resignations rather than firing them, and that the company's financial position is suffering as a result of the executives' generous severance payments.
The lawsuit asserts that payment of the benefits will exacerbate Fannie Mae's financial difficulties as it looks for ways to raise additional cash to meet new capital requirements. The lawsuit also alleges that Fannie Mae's Congressional critics, potentially undermining the Company's special status as a government-sponsored enterprise, will seize on the payments.
Richard Baker, chairman of the House subcommittee on capital markets, released a letter from the OFHEO dated January 14 concerning the payment of bonuses and compensation to Fannie's executives. The regulator told Mr. Baker it would take "appropriate enforcement actions" if the Securities and Exchange Commission found that Fannie Mae's executives should forfeit compensation under the terms of section 304 of the Sarbanes- Oxley Act, which was passed in 2002. The Act prevents executives at companies that restate their financial results from receiving bonuses if they are found to have knowingly misled investors about the financial health of the company. The SEC directed Fannie to restate its earnings late last year after concurring with OFHEO that it had broken accounting rules related to the treatment of derivatives.
It remains unclear whether Mr. Raines and Mr. Howard are personally culpable for the accounting mistakes. Investigations into the Company's accounting practices by the Securities and Exchange Commission and OFHEO are ongoing.
FIRSTWORLD COMMUNICATIONS: Judge Approves $25.9 Suit Settlement --------------------------------------------------------------- U.S. District Court Judge John Kane approved a $25.9 million settlement between FirstWorld Communications, a defunct data- center operator later known as Verado Holdings, and investors who bought shares when the Denver-based company went public in 2000, the Denver Post reports.
Ending a nearly five-year class-action battle that almost went to trial before a tentative agreement was reached in November, the settlement is set to allot about $14.9 million of the proceeds to shareholders, with the remainder going to attorneys who handled the class action against FirstWorld.
The federal judge approved the settlement and called the attorney compensation composed of $8.6 million in fees and $2.4 million in expenses "fair and reasonable."
Plaintiffs' attorneys include San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins, Denver-based Dyer & Shuman Philadelphia-based Barrack, Rodos & Bacine, and Finklestein & Krinsk of San Diego.
FirstWorld went public March 8, 2000, raising $181.8 million. Its shares soared to as high as $38.75 within weeks but then tumbled as the technology sector collapsed. In July of that year, the company's chief executive, Sheldon Ohringer, resigned as the company announced that earnings would fall below estimates. Shares fell 57 percent.
Shareholder suits soon followed, claiming the company misled investors in documents filed with its initial public offering.
FirstWorld, which was backed by Denver businessman Donald Sturm, changed its name to Verado in 2001 and filed for bankruptcy in 2002 it has since been liquidated. Insurers will pay $22.1 million of the settlement costs, and the investment banks that underwrote the public offering will pay $3.8 million.
HAMILTON BANK: Reaches $8.5M Shareholders' Suit Settlement in FL ---------------------------------------------------------------- Hamilton Bank reached an $8.5 million settlement for the class action suit filed against it, its auditors and two Wall Street underwriters, alleging they misled investors about future profits, the Miami Herald reports.
Under the terms of the settlement, shareholders of common stock and preferred shares would be awarded about 37 cents per share, with legal fees and costs taking up to 14 cents of the total, for an average payout of 23 cents per share. Just weeks before the January 2002 seizure of the bank shares had traded for almost $3 apiece.
Though still seeking approval from the federal court, the settlement is considered to be the latest sequel to the closure of the local trade finance bank by federal regulators. Already, the bank seizure has led to a federal indictment of three former top executives and a London-based banker, as well as a series of settlements with U.S. banking and securities regulators.
The shareholders had sued before the bank was closed, alleging that top officers, the auditors and underwriters made public announcements and filed misleading financial statements that overstated profits. After months of discovery and without going to trial, both sides agreed to settle, under that agreement, the defendants do not admit to any wrongdoing.
The settlement fund of $8,477,500 was established by Twin City Fire Insurance, which insured five former bank executives and officers, Deloitte & Touche, the bank's auditors and the underwriters for common stock and preferred shares, Raymond James & Associates and CIBC World Markets, which formerly went by the name of CIBC Oppenheimer Corp.
According to Kenneth J. Vianale of Vianale & Vianale in Boca Raton, holders of common stock, purchased between April 21, 1998, and January 11, 2002, or of preferred stock have until May 26 to make a claim or can object to the settlement in federal court. He told the Herald, "In total dollars, I would say that it is a medium-sized settlement. In terms of this case, it is a good settlement since the only asset they had was an insurance company."
Mr. Vianale also said Twin City Fire Insurance had insisted that the company was not liable for the collapse of share prices because the bankers had committed fraud, which was "very, very hotly contested" by the shareholders who filed suit.
The former Hamilton Bank officers included: former Chairman Eduardo A. Masferrer, former President Juan Carlos Bernac‚, former Chief Financial Officer John Jacobs, another former chief financial officer, Lucious Harris and Maria Ferrer-Diaz, former senior vice president of finance.
ILLINOIS: Court Committee Planning Certification Rules Hearing -------------------------------------------------------------- An Illinois Supreme Court committee is planning a public hearing on a proposal to tighten rules governing class-action lawsuits, the Associated Press reports.
The code that covers certification of class-action lawsuits hasn't been revised in more than 25 years. And several business interests want to change it to require that a class-action be found "superior" to other methods of settling the dispute before certification is granted.
The change is getting support from several businesses and groups including the Illinois Manufacturers' Association and the Illinois State Chamber of Commerce. The public hearing will be held Monday in Chicago at ten 1-m at 160 N LaSalle.
ILLINOIS: AG Launches Consumer Fraud, False Advertising Lawsuits ---------------------------------------------------------------- Illinois Attorney General Lisa Madigan filed lawsuits against two Florida-based corporations and their owners for deceptive advertising campaigns. The Companies allegedly preyed on Illinois Latinos who have had a difficult time obtaining traditional credit cards or sending money to relatives in Mexico
AG Madigan's lawsuits, filed on January 12, charge the two companies with multiple violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Credit Services Organization Act. The first lawsuit identifies seven consumers from Chicago, Cicero and Waukegan that were allegedly defrauded by Latin Card. The second lawsuit names an additional seven victims from Blue Island, Chicago, Des Plaines, Hoffman Estates, Joliet, Peoria and Wheeling that reported fraudulent activity by Pro Line.
AG Madigan's lawsuit, filed in Cook County Circuit Court, names as defendants Latin Card Plus, LLC, a Florida corporation not registered to do business in Illinois, and its manager Carlos Felipe Mendez, of Doral, Florida. The second lawsuit, also filed in Cook County Circuit Court, names Pro Line Card, LLC, a separate Florida corporation also not registered to do business in Illinois, and its manager Julio Cesar Sandoval, of Miami, Florida.
In recent months, the two companies have bought time on Illinois Latino television and radio stations to air advertisements trumpeting that the providers of Latin Card and Pro Line Card are ". here to help out our fellow Hispanics." Additionally, among other claims, the advertisements say that to obtain a card, "You do not need to have a Social Security number or the need to have a good credit history. All that is in the past..."
However, what the upbeat advertisements don't reveal is that consumers must pay advance fees of up to $399 for credit cards that only can be used to purchase products from the Companies' own catalogs. Despite the Companies' verbal claims that the cards are like traditional credit cards, they cannot be used to make retail purchases outside of the catalogs, be used at an ATM or be used to send money to Mexico.
"These two credit card companies have preyed upon Illinois' Latino populations by taking advantage of people's desire for credit and fraudulently turning it into profit for themselves," AG Madigan said. "This is pure exploitation of people working to establish credit histories, turn their credit around or help relatives back home."
The two Florida Companies allegedly operated similar schemes in which they advertised credit cards with high limits for consumers who have poor or no credit history. According to AG Madigan's lawsuits, Pro Line has been advertising credit cards in Cook County since at least April 2004 and Latin Card since at least August 2004.
Consumers called toll-free numbers provided in the advertisements to learn more about the credit card offers. Phone salespersons allegedly represented to the consumers that the credit cards could be used for retail purchases, at ATM machines and to send money to family and friends in Mexico. The Companies charged consumers up to $399 for credit cards with limits ranging from $2,000 to $7,500. However, AG Madigan's lawsuit alleges that only after the credit cards arrived did the consumers realize the cards could only be used to purchase products from the Companies' own catalogs and Web sites.
Additionally, AG Madigan's lawsuits allege that when consumers attempted to contact the defendants for refunds, the consumers were either refused a refund, were instructed to return all materials for a refund which never arrived, found telephone numbers disconnected or operators hung up on the consumers when they managed to get through.
In addition, the defendants failed to register as Credit Services Organizations with the Secretary of State's office, failed to obtain the $100,000 surety bonds legally required if credit services companies are paid a fee in advance of full performance or services, and failed to provide consumers with written disclosure statements or contracts.
AG Madigan's two lawsuits ask the court to prohibit the defendants from offering for sale and selling credit cards or credit card services in Illinois. In addition, the lawsuits ask the court to assess civil penalties of $50,000 and additional penalties of $50,000 per violation found to be committed with the intent to defraud. Finally, AG Madigan's lawsuits ask the court to order the defendants to pay restitution to the consumers as well as the costs of the investigations and litigation.
To obtain more information about fraudulent credit card schemes, or to file a complaint, consumers may visit AG Madigan's Web site at www.IllinoisAttorneyGeneral.gov/consumers or call the Attorney General's Consumer Fraud Hotline in Chicago at 1-800- 386-5438 and 1-800-964-3013 (TTY). AG Madigan's office also provides a Spanish telephone hotline at 1-866-310-8398.
Assistant Attorney General Sarah Alipourian is handling the cases for Attorney General Madigan's Consumer Fraud Division.
IMCLONE SYSTEMS: CEO Waksal Settles SEC Insider Trading Charges --------------------------------------------------------------- Samuel D. Waksal and Jack Waksal have consented to a final resolution of the Commission's insider trading case against them. Pursuant to this settlement, which is subject to the Court's approval, Sam Waksal and Jack Waksal will be held jointly and severally liable for disgorgement of over $2 million in illegal loss avoidance, including prejudgment interest, and Sam Waksal will be liable for a civil penalty of over $3 million. In March 2003, Sam Waksal consented to a partial resolution of this case in which he disgorged over $800,000 in illegal insider trading loss avoidance and profits, including prejudgment interest on those amounts and to be permanently barred from acting as an officer or director of any public company.
The Commission originally filed insider trading charges against Sam Waksal on June 12, 2002 in the United States District Court for the Southern District of New York and added Jack Waksal as a defendant on October 10, 2003. In its complaint, the Commission charged that in late December 2001, Sam Waksal received disappointing news about ImClone, that the United States Food and Drug Administration was expected to soon issue a decision rejecting for review ImClone's pending application to market its cancer treatment, Erbitux. Before this news became public:
(1) Sam Waksal tried to sell a substantial amount of his own ImClone stock;
(2) Sam Waksal caused his daughter Aliza Waksal to sell all of her ImClone stock;
(3) Sam Waksal purchased ImClone put option contracts; and
(4) Sam Waksal told this negative information to Jack Waksal, who in turn sold ImClone stock in his own brokerage accounts and in the brokerage account of his daughter, Patti Waksal.
The Commission's complaint alleged that based on this conduct, both Sam Waksal and Jack Waksal violated Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Sam Waksal also violated Section 16(a) of the Exchange Act and Rule 16a-3 thereunder.
Sam Waksal and Jack Waksal have agreed to a final resolution, subject to the Court's approval, of all of the charges in the complaint. Without admitting or denying the allegations, Sam Waksal has consented to the entry of a final judgment against him, holding him jointly and severally liable with Jack Waksal for disgorgement of over $2 million and ordering him to pay a civil penalty of $3,017,464 million. Sam Waksal previously paid over $800,000 in disgorgement and prejudgment interest for illegal insider trading loss avoidance and profits in connection with the March 2003 partial settlement. Also in connection with the partial settlement, Sam Waksal consented to be: (a) permanently barred from acting as an officer or director of any public company; and (b) permanently enjoined from future violations of Section 17(a) of the Securities Act, Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3 thereunder. Jack Waksal has consented to the entry of a final judgment in the Commission's action for his sales of ImClone stock on December 27 and 28, 2001 while in possession of the material non-public information that the FDA would soon issue a Refusal to File Letter on ImClone's Erbitux application. Jack Waksal has consented to: (a) disgorge $2,019,030 representing the losses he avoided by his sales of ImClone stock in his brokerage accounts and in the brokerage account of his daughter, Patti Waksal, plus prejudgment interest; and (b) a permanent injunction from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter. The action is titled, SEC v. Samuel D. Waksal and Jack Waksal, Defendants, and Patti Waksal, Relief Defendant, 02 Civ. 4407 (RJH) SDNY.
KIDS STATION: Recalls 10.5T Musical Sets Due To Choking Hazard -------------------------------------------------------------- Kids Station Inc., of Miami, Florida, for Toys "R" Us, of Wayne, New Jersey is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 10,500 Fun Years Music Big Drum Musical Sets.
Small parts can break off during use, posing a choking hazard to young children.
The recalled music set includes a yellow and green drum with a clear plastic lid and a red one-piece carrying strap that doubles as a storage and carrying case for additional instruments. The drum measures 12 inches in diameter and about 7.5 inches in height. The instruments stored in the drum include: purple drumsticks, yellow and red dumb-bell-shaped maracas, purple wrist bells, an orange recorder, a yellow harmonica, a red-rimmed tambourine and a yellow whistle. Only this musical set is part of this recall. A similar drum set sold at Toys "R" Us with a two piece strap and different musical toys is manufactured by a different company and is not being recalled.
Manufactured in China, the sets were sold at all Toys "R" Us stores nationwide exclusively from August 2004 through December 9, 2004 for about $20.
Return the recalled Big Drum Musical Set to your nearest Toys "R" Us store for a refund.
MUTUAL FUNDS: Investors Sue Over Failure To Claim Settlements ------------------------------------------------------------- In a series of lawsuits recently filed nationwide, a group of investors says the nation's top mutual fund companies failed to collect or even make a claim on behalf of their funds' shareholders on billions of dollars in securities class-action settlements.
The lawsuits, filed by Dallas-based Baron & Budd, PC, and Little Rock, AR-based Cauley Bowman Carney & Williams, LLP, say the mutual funds breached their fiduciary duty to investor clients by not collecting the settlement money.
"These mutual funds owned stock in hundreds of companies that reached settlements in securities class-action lawsuits," says Randall K. Pulliam, lead counsel for the investor plaintiffs and attorney at Baron & Budd. "As stockholders, the mutual funds became class members themselves, but they were also the only ones who could claim this money on behalf of their investor customers. Although the process for collecting this money was simple, the mutual funds simply didn't follow through."
More than 90 million Americans entrust their savings to mutual fund directors and advisors. A majority of mutual funds invest in publicly traded companies. In the mid to late 90s, the number of investor securities class- action lawsuits against publicly traded companies skyrocketed, and many of those claims were resolved through class-action settlements intended for investors.
According to plaintiffs, 1,517 federal class actions were brought between 1996 and 2003 under the Securities Acts of 1933 and 1934.
"The mutual fund industry has faced many scandals in recent years, but possibly nothing of this magnitude," says plaintiff co-counsel J. Allen Carney, a name partner in the Cauley Bowman firm. "By failing to claim their fair share of these settlements, these mutual fund companies have violated the trust given to them by millions of investors."
Investor plaintiffs have filed lawsuits in 11 states, including New York, Illinois and Texas. Named among the 44 defendants are several giants of the mutual fund industry, including Merrill Lynch, American Funds and Van Kampen.
For more details, contact Randall Pulliam by Phone: 214-521-3605 OR Bruce Vincent by Phone: 800-559-4534 by Cellular: 214-728-6747 or by E-mail: email@example.com.
NATIONAL RESEARCH: Iowa Joins Settlement of Student Privacy Suit ---------------------------------------------------------------- The state of Iowa is joining 41 other states in a a consumer protection settlement with National Research Center for College and University Admissions, Inc. (NRCCUA) concerning the company's past collection of personal information through high school student surveys, Attorney General Tom Miller announced in a statement.
The states alleged that NRCCUA represented or implied that the information it collected from high school students was shared only with colleges, universities and other entities for recruitment and other education-related services when, in fact, NRCCUA also shared the information with commercial entities that used the information to solicit the students for the sale of educational and non-educational commercial products or services.
NRCCUA did not admit any violations in settling the matter but agreed to change its practices as required by the AVC. In the AVC, NRCCUA stated that it had ceased permitting use of the student data for non-educational-related marketing purposes in 2002.
National Research Center for College and University Admissions, Inc., a Missouri not-for-profit corporation headquartered in Lee's Summit, Missouri, surveys and collects information from millions of high school students each year. In 2001, it collected personal information from more than 2 million high school students who completed its surveys. In the settlement with the states, NRCCUA says its "annual Surveys enable more than 5 million high students to indicate their unique college and career preferences to over 1200 colleges and universities."
NRCCUA and similar organizations provide surveys to U.S. high school teachers and guidance counselors and request that they be given to students to complete. Students may also complete the survey on-line via the Internet.
The NRCCUA surveys ask students for personal information, such as their name, address, gender, grade point average, date of birth, academic and occupational interests, racial or ethnic background, and, in the event the student is interested in attending a college with a religious affiliation, the denomination of their choice. Some of the entities, but not NRCCUA, also provide surveys to be given to junior high school students.
The settlement, through an Assurance of Voluntary Compliance ("AVC") requires NRCCUA:
(1) Not to misrepresent how personally-identifiable information will be collected, used or disclosed, or how the collection of the information is funded.
(2) To disclose clearly and conspicuously why it collects personal information of students and the types of entities to which information is disclosed.
(3) To make such disclosures in all of its privacy statements and in all questionnaires, survey instruments, and other documents.
To cease all use of survey data collected from a student if a parent or an adult high school student requests that the student be opted-out of completing the survey, or asks NRCCUA not to use previously-collected information.
If NRCCUA changes its current practice and, once again, chooses to use or permits others to use its survey data for non- educational-related marketing purposes, then NRCCUA must supply schools with a notice form to be given to parents at least 30 days in advance, telling them the survey may be administered and how to "opt-out" their student-children from completing the survey.
The Iowa Attorney General's Office led the group of states that negotiated the agreement. Attorney General Tom Miller said: "This agreement is all about requiring a company to respect the privacy interests of students and parents. It clarifies the company's obligation to disclose how information will be used, and to give students and parents a clear right to keep student information private."
Miller said that parents of high school and junior high school students should be aware that their children may be asked to complete surveys like those of NRCCUA and others. "Federal law allows parents to tell schools not to give certain surveys to their children," he said. He said the same right to opt out of completing the surveys is given to high school students aged 18 and older.
As part of the settlement, NRCCUA will make a payment of $300,000 to the states to be used for attorneys' fees and investigative costs, consumer education, litigation, or for public protection or local consumer aid funds.
NORTEL NETWORKS: Parties Make Concessions For Suit To Move Ahead ---------------------------------------------------------------- Both parties in a class action lawsuit filed in the U.S. against Nortel Networks Corporation have made concessions to allow the case to move forward, the Ottawa Business Journal reports.
The plaintiffs co-led by the Ontario Teachers' Pension Plan, have agreed to drop from its list of defendants Nortel directors who sat on the audit committee during the period in question, the company itself as well as former CFO and CEO Frank Dunn and former controller Michael Gollogly.
Mr. Dunn, Mr. Gollogly and former CFO Doug Beatty were fired for cause last spring for their alleged role in the company's accounting problems. Though regulatory and criminal investigations continue on both sides of the border, no formal charges have been laid. Mr. Beatty is also named as a defendant in the suit, but there was no word on his status as a defendant in the case.
The claims against Mr. Dunn, Mr. Gollogly, the audit committee members and Nortel were dropped after those individuals and the company agreed to withdraw a motion to dismiss the lawsuit. The withdrawals allowed for a scheduled hearing in New York to be cancelled and will now permit the case to proceed to the fact finding stage.
Nortel spokeswoman Tina Warren told the Business Journal the company continues to defend itself from any charges of wrongdoing. For their part, the defendants believe the way is now clear to determine who warrants the blame for the problems on Nortel's books. Teachers' spokeswoman Lee Fullerton said, "That will allow the case to proceed with a full investigation. When we find out all the facts, then we'll find where the blame lies and we can then assert a claim against the audit committee if we find it necessary."
NUTRAQUEST INC.: Creditors File Lawsuit V. President, Insiders -------------------------------------------------------------- Creditors of bankrupt Nutraquest, Inc. (formerly Cytodyne Technologies, Inc.) are filing a lawsuit against founder, President and sole owner Robert Chinery, Jr. for allegedly devising a fraud scheme to shield the Company's assets from judgments and for bilking the Company for their personal gain, TheDeal.com reports.
From 1997 to 2002, the Company reached sales of $442 million and profits of $175 million for its Xenadrine RFA-1 diet pill, which had the controversial ingredient ephedra as its main ingredient. Ephedra has been banned from the market, after supplements containing it were connected to injury and death.
The Company was named in several personal injury and wrongful death cases in the U.S. and Canada by the end of 2001, filings show. One of the wrongful death suits was filed on behalf of the family of former Baltimore Orioles pitcher Steve Bechler after his February 2003 death from heatstroke was allegedly tied to Xenadrine RFA-1.
Management changed the name of Cytodyne Technologies to Nutraquest, which then filed for Chapter 11 protection on March 3, 2004, with the U.S. Bankruptcy Court for the District of New Jersey in Trenton.
Creditors within the bankruptcy petition filed the lawsuit on January 12. Judge Raymond Lyons, Jr. is presiding over the case. The suit alleges Mr. Chinery defrauded the Company by transferring assets to other firms that they owned and then sought to conceal the transfers from creditors.
"The Chinery defendants created and executed a fraudulent scheme to remove and relocate substantially all the cash and other assets of the debtor," the suit said, TheDeal.com reports. "They took those valuable assets, in particular [diet pill] EFX, from Nutraquest to the prejudice of creditors who would assert claims and/or judgments against Nutraquest."
Debtor counsel Simon Kimmelman in Trenton, N.J., at Sterns & Weinroth PC, didn't return calls, according to TheDeal.com. John Gough, creditors counsel in Cherry Hill, N.J., declined comment on the suit but did say that the bankruptcy petition is proceeding along two tracks.
"Everything is calm within the bankruptcy filing while the real activity is taking place in federal district court where at least 50 personal injury or wrongful death suits have been filed against the debtor," Gough said, according to TheDeal.com reports.
SAFEWAY INC.: Reaches Settlement On Sale Of Tobacco To Minors ------------------------------------------------------------- California Attorney General Bill Lockyer reached a settlement with Safeway, Inc. (Safeway) which requires California's second- largest grocery chain to implement policies to reduce tobacco- product sales to minors at its 538 Safeway, Vons, Pavilions and Pak N' Save stores in the state.
"This settlement is a victory for California's children," said AG Lockyer. "Every day in this country, hundreds of our kids start down a road to addiction and death. I'm pleased Safeway has agreed to take the path of corporate responsibility and help address this serious public health problem."
AG Lockyer filed the settlement in Los Angeles County Superior Court, and Judge John P. Shook approved it. The settlement takes effect immediately and resolves a lawsuit filed jointly on June 16, 2004 by AG Lockyer and Los Angeles City Attorney Rocky Delgadillo.
The lawsuit alleged Safeway violated state law by selling tobacco products to minors (under 18) and failing to take proper steps to prevent such sales. Additionally, Safeway violated a city ordinance by failing to prominently display tobacco retail permits, according to the complaint.
Under the settlement Safeway will implement the following policies to prevent tobacco-product sales to minors at its Safeway, Vons, Pavilions and Pak N' Save stores in California:
(1) Check the ID of any person purchasing tobacco products when the person appears to be under the age of 27, and accept only valid government-issued photo ID as proof of age.
(2) Use cash registers programmed to prompt ID checks on all tobacco sales.
(3) Prohibit self-service displays of tobacco products, the use of vending machines to sell tobacco products and distribution of free samples.
(4) Prohibit the sale of smoking paraphernalia to minors.
(5) Prohibit the sale of candy, chewing gum or similar items designed to look like cigarettes.
(6) Restrict tobacco product advertising to the area where tobacco products are displayed.
(7) Hire an independent entity to conduct random, unannounced compliance checks at 90 stores every year.
(8) Train employees on state and local laws and company policies regarding tobacco sales to minors, including explaining the health-related reasons for laws that restrict youth access to tobacco.
Additionally, the settlement requires Safeway to pay $145,000 in civil penalties, to be divided equally between the state and city. Safeway also will pay the state and city $50,000 each to cover their costs. AG Lockyer's office will allocate its $50,000 to enforcement of tobacco control and consumer protection laws.
Californians who suspect violations of state tobacco laws or the MSA can file complaints by calling 916-565-6486 at any time, or by writing to the Tobacco Litigation and Enforcement Section at P.O. Box 944255, Sacramento, CA 94244-2550. Additional information is available on the Attorney General's web site at http://www.ag.ca.gov/tobacco.
SIDLEY AUSTIN: EEOC Commences Age Discrimination Lawsuit in IL -------------------------------------------------------------- The U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit in the United States District Court in Chicago, Illinois, alleging that Sidley Austin Brown & Wood, the giant Chicago-based international law firm, violated the Age Discrimination in Employment Act (ADEA) when it selected "partners" for expulsion from the firm on account of their age or forced them to retire. Sidley Austin Brown & Wood is the law firm which resulted from the merger of Sidley & Austin and New York- based Brown & Wood in May 2001.
The EEOC case is a "class" age discrimination case brought, first, with respect to 31 former Sidley & Austin partners who were involuntarily downgraded and expelled from the partnership in October of 1999 on account of their age, and, second, with respect to other partners who were involuntarily retired from Sidley & Austin since 1978 on account of their age pursuant to a mandatory retirement policy. The ADEA prohibits employers with 20 or more employees from making employment decisions, including decisions regarding the termination of employment, on the basis of age (over 40). The ADEA also prohibits such employers from utilizing policies or rules which require employees to retire when they reach a particular age (over 40).
Eric Dreiband, General Counsel of the EEOC, said, "The Age Discrimination in Employment Act makes it unlawful for employers to discriminate against any individual with respect to employment because of such individual's age. The United States Equal Employment Opportunity Commission determined that Sidley, Austin, Brown & Wood violated the Age Discrimination in Employment Act, and the Commission looks forward to proving its case to a jury."
Today's lawsuit grew out of an EEOC administrative investigation managed by John P. Rowe, Director of EEOC's Chicago District Office. Sidley & Austin was given notice of the investigation in July 2000. Although there was media coverage of the October 1999 changes at Sidley & Austin, the EEOC matter did not come into public view until Sidley & Austin refused to honor an EEOC subpoena, and the agency took the firm to court to enforce the subpoena.
EEOC's position was upheld by the District Court in Chicago in February 2002. (Case citation: EEOC v. Sidley & Austin, N.D. Illinois No. 01 C 9635 (2/11/2002; District Judge Joan Humphrey Lefkow), 2002 WL 206485, 88 Fair Empl. Prac. Cas. (BNA) 64.) Thereafter, Sidley & Austin elected to appeal, but the District Court decision was upheld in respects material to the EEOC. In an October 24, 2002, opinion written by U.S. Seventh Circuit Court of Appeals Judge Richard A. Posner, Sidley was ordered to comply in significant part with the EEOC subpoena. (Case citation: EEOC v. Sidley & Austin, 315 F.3d 696 (7th Cir. 2002).)
In July 2004, Chicago District Director Rowe made an administrative determination that there was reasonable cause to believe that Sidley & Austin has violated the ADEA in connection with the October 1999 expulsions and downgrades and in implementing its mandatory retirement policy since 1978. Thereafter, the EEOC and Sidley engaged months of discussions in an attempt to resolve the case through conciliation without litigation. However, those negotiations proved futile.
EEOC's Regional Attorney in Chicago, John C. Hendrickson, said that in resisting the EEOC investigation and in forcing the EEOC to obtain judicial enforcement of its subpoena, "Sidley's unwavering position has been that the matters involving how the law firm dealt with those it referred to as 'partners' and whether it engaged in discrimination were simply way beyond the reach of the ADEA and EEOC." However, according to Hendrickson, the EEOC administrative investigation revealed that, "except for a very few controlling partners at the very top, Sidley's lawyers appeared to be ordinary employees not unlike their colleagues at parallel levels in the business community and, therefore, covered by the ADEA."
Hendrickson said, "Whatever titles Sidley had decided to give these lawyers partner, counsel, or otherwise our investigation indicated that they had no voice or control in governance of the firm and that they could be and were fired just like any other employees without notice and without the vote or consent of their fellow attorneys. A small self-perpetuating group of managers at the top ran everything, and that was it end of story."
"Of course," added EEOC Trial Attorney Deborah Hamilton, "having the power to fire an employee does not mean that a law firm or any other covered employer can do so because of the employee's age, if the employee is over 40. That is a violation of the ADEA and that the making of unlawful age-based selections for termination is precisely what EEOC is targeting in this lawsuit."
The lawsuit filed was filed today in the U.S. District Court for the Northern District of Illinois, Eastern Division, located in Chicago. It is captioned EEOC v. Sidley Austin Brown & Wood, and is Civil Action No. 05 C 0208. The case has been initially assigned to U.S. District Judge James B. Zagel.
On its Internet web site (www.sidley.com), Sidley & Austin describes itself as "a significant legal power in the international arena," with "about 1500 lawyers practicing on three continents." The firm has offices in Chicago, Dallas, Los Angeles, New York, San Francisco, Washington, D.C., Beijing, Brussels, Geneva, Hong Kong, London, Shanghai, Singapore and Tokyo.
SOUTH KOREA: Government, Uri Party Push For Securities Exemption ---------------------------------------------------------------- Under the condition that past fraudulent cases are clearly distinguished from the current ones, the government and the ruling Uri Party decided to push forward a plan to exempt companies involved in past window dressing settlement from a securities class-action suit for the next two years, Donga.com reports.
In accordance with the proposed exemption, the government and the ruling party are poised to revise a supplementary supervision of the law on securities-related class action suits to pardon past false accountings in the extraordinary national assembly's special session this February.
According to Choi Jae-cheon of the Uri party and the executive secretary at the Legislation and Judiciary Committee, "The party is reviewing a plan to clear the concepts of both past and current window-dressing settlements in supplementary provision, and to pardon companies that cooked the books before January 30, 2004 when the bill was promulgated." Furthermore, he added, "The existing law is ambiguous in describing its subjects. The law holds new official announcements responsible while pardoning `past false accountings,' which is a broad and ambiguous concept. I expect that the bill will be passed this coming February as relative institutions including the Financial Supervisory Commission (FSC) are positive that the law's subjects can be more specifically stated."
The FSC is planning to draw a clear line between the concept of past false accountings and current ones in the detailed law of securities-related class action suits.
For their part, the senior government and party officials, decided to give priority to the bill in an extraordinary national assembly in February. The ruling party lawmakers of the Judiciary Committee of the National Assembly had originally opposed the idea last December, arguing that drawing a clear line between past irregularities and current ones was not possible.
TAMPA ELECTRIC: Judge Schedules Trial Date For Power Pole Suit -------------------------------------------------------------- After nearly two years of meetings, hearings and legal maneuvering, about 200 Egypt Lake residents are scheduled to have their day in court over giant power poles installed in their neighborhood, the Tampa Bay Online reports.
At a hearing, Hillsborough County Circuit Judge Claudia Isom set a trial date of September 12 to 23 at the request of attorneys representing the residents in their legal battle against Tampa Electric Co.
Paul Antinori, a lawyer for one of the two homeowners groups, told Tampa Bay Judge Isom's decision was a major victory because the homeowners finally can have a jury decide the case.
TECO attorney Mark Buell has argued that the case should be delayed and also wanted the judge to rule against class-action status for the case, since there were about 200 homeowners affected in different ways, according to Mr. Buell, each one should bring their own case against TECO. However, Judge Isom rejected both requests, Tampa Bay reports. Mr. Buell, after the hearing, said he expects TECO will prevail in court. "We don't think the poles constitute a nuisance," he said.
John Dill, one of the plaintiffs' attorneys, told Tampa Bay they would first seek injunctive relief, forcing TECO to move the poles to a business corridor such as Waters Avenue or Busch Boulevard. If Judge Isom decides against an injunction, they will hold a second trial to determine financial compensation for the plaintiffs.
In July 2003, TECO installed the power poles, which measure as much as 125 feet tall and 3 feet wide, along residential streets in north Tampa's Egypt Lake community without any public notice. Due to the public outcry, the Tampa City Council and the Hillsborough County Commission passed ordinances requiring utilities to hold public meetings before beginning such projects.
For more than a year, attorneys for two groups of homeowners wrangled with TECO in court. Early last year, the two lawsuits were consolidated into one.
UNITED STATES: Class Action Fairness Act Expected in Senate ----------------------------------------------------------- A spokeswoman for Sen. Charles Grassley, R-Iowa, confirmed that a new version of the Class Action Fairness Act could be brought before the Senate as early as next week, the BI Daily News reports.
A previous version of the bill, which had the support of 62 senators in the last Congress failed to move to the floor because of differences between Senate Majority Leader Bill Frist, R-Tenn., and Democratic backers of the measure over the number and nature of amendments that could be added to the bill. According to Sen. Grassley's spokeswoman, the new bill would follow the previous bill closely.
Among other things, the Class Action Fairness Act that languished in the last Senate would have allowed the removal of certain suits with defendants and plaintiffs from multiple states from state court to federal court. The measure also would have required that judges subject proposed class action settlements to greater oversight.
UNITED STATES: Insurers Call On Senate To Pass Tort Reform Bill --------------------------------------------------------------- In a short letter addressed to Senate Majority Leader Bill Frist, R-Tennessee by the Financial Services Roundtable, a consortium of companies and trade associations representing the spectrum of financial industries, insurance and other financial services industry leaders have called on the senator to pass class action reform legislation early next month, the NU Online News Service reports.
According to industry leaders, "Class action reforms will end abuses of the class action system, increase the rights of class members and lower the cost of doing business in America and will lead to new job creation."
Among those signing the letter were AEGON USA President and CEO Patrick Baird, Chubb Corp. Chairman and CEO John Finnegan, Frederick Geissinger, Chairman and CEO of AIG's American General Financial Services, MassMutual Chairman and CEO Robert O'Connell and Edward Rust, chairman and CEO of State Farm Insurance Companies.
The class action reform bill was crafted to ensure what supporters claim will be a greater degree of fairness in the civil litigation system. Under such legislation, the majority of class actions would be moved to the federal court system to prevent attorneys from picking jurisdictions to file their claims in that have a reputation as plaintiff friendly. In addition, the letter noted, class members would also be given new rights, such as the right to receive case information in plain English rather than legal language.
In the letter, the industry leaders further stated, "We urge you to act in February to bring up and pass class action reforms and end abuse of large, multi-state class action lawsuits, increase the rights of class members, and help strengthen the job market."
The Republican-controlled House has already approved the bill, but the measure has failed several times to win passage in the more evenly divided Senate. On one occasion, Republican supporters were forced to shelve the bill after coming up one vote short of the 60 needed to obtain Senate cloture, which would have limited debate on the bill and effectively removed the threat of a filibuster.
Afterwards, several Democrats, including Sens. Mary Landrieu, D- La., and Charles Schumer, D-N.Y., came forward with offers to become the 60th vote if some of their concerns could be addressed. Discussions continued after that, with several changes being made to the bill. Those revisions and the reelection of President Bush, a strong advocate of litigation reform, have increased expectations that the bill will receive Senate approval.
WAFFLE HOUSE: Patrons Lodge Race-Bias Suit Against Restaurants -------------------------------------------------------------- A dozen black patrons have filed a class action suit against three Waffle House restaurants in North Alabama, including Cullman, Athens and one near I-565 in Madison, the WAFF, AL reports.
Reverend R.L. Shanklin heads up the Huntsville chapter of the National Association for the Advancement of Colored People (NAACP) along with other national leaders filed the class action lawsuit, claiming that they were refused service, given unsanitary food and ignored. Reverend Shanklin says similar cases were also filed in Virginia, Georgia, and North Carolina.
In August 2003, a Valley woman claims a white worker at this Waffle House off Interstate 565 began talking about monkeys after she walked in. According to Monical Thrasher, "companies, especially places where you eat, I think they should have employees to go through some diversity training. It's black and white, everywhere it's black and white. It's a black and white community, nobody should be discriminated against."
Waffle House denied the allegations, saying that the Company has no tolerance for discrimination in their restaurants. They also point to two previous discrimination lawsuits in which juries ruled in favor of the Waffle House.
WAL-MART STORES: Hourly Workers Lodge Overtime Wage Suit in CA -------------------------------------------------------------- Three Wal-Mart Stores hourly workers in California initiated a lawsuit against the Company for failing to pay them for all the time they worked, the Stuff.co.nz reports.
Filed last in Alameda County Superior Court, the lawsuit seeks class action status and damages, penalties, and restitution for Wal-Mart hourly employees in California after January 1, 1997. It estimates there are more than 200,000 potential class members.
The suit alleges that the Bentonville, Arkansas-based company "deleted thousands of hours of time worked from employees' payroll records" by erasing overtime hours and by penalizing employees who forgot to punch in after their meal breaks by denying them pay for the remainder of those days, according to court documents.
The suit further alleges that the plaintiffs Jerrilyn Newland, Charlotte Johnson, and James Davis, became aware of such practices, known as "time shaving," after a New York Times newspaper report last April said companies including Wal-Mart had engaged in them. In that report, a Wal-Mart spokeswoman said Company policy was to pay hourly workers for all their time, but that there were "inevitably instances of managers doing the wrong thing."
Sought for comment regarding the latest legal action, a Wal-Mart spokeswoman said the company had not yet seen the suit, which is the latest in a string of legal actions against the world's largest retailer, stuff.co.nz reports.
WORLDCOM INC.: Ex-Officer Ebbers To Face Criminal Trial in NY ------------------------------------------------------------- Former Worldcom boss Bernard Ebbers is set to face criminal charges in New York court, over the $11 billion accounting scandal that rocked the corporate world in July 2002, The Register reports.
In July 2002, MCI (MCIP: news, chart, profile) then known as WorldCom, filed the largest bankruptcy in U.S. history. The Company was left facing $41 billion in debt and an $11 billion accounting scandal. The bankruptcy spurred dozens of shareholder lawsuits against the Company and its officers, filed by investors who took losses after the stock price of the Company took a dive.
When details of the accounting scandal first emerged in the summer of 2002, the Securities Exchange Commission (SEC) described the WorldCom disclosures as "improprieties of unprecedented magnitude," according to the Register.
U.S. President George W. Bush said at the time: "We will fully investigate and hold people accountable for misleading not only shareholders but employees as well." Where "egregious practices, such as the one today" are uncovered, said Bush, "we'll go after them."
Now, Mr. Ebbers will face the court for charges of fraud and conspiracy over the collapse of the telecommunications giant. His trial was set to begin last November, but was delayed to give his defense team more time to prepare its case. According to The Guardian, Mr. Ebbers is expected to blame former WorldCom chief financial officer Scott Sullivan for the accounting black hole. In March 2004 ex-CFO Scott Sullivan pleaded guilty to similar charges and is co-operating with investigators. His evidence is expected to form part of the prosecution against Mr. Ebbers.
Earlier this month, ten former outside directors agreed in principle to pay $54 million, including $18 million personally, according to an earlier Class Action Reporter story (January 8,2005), to settle a class action lawsuit following the collapse of the telecom Company.
ASBESTOS LITIGATION: 9/11 Fund Head Urges Asbestos Legal Reform --------------------------------------------------------------- The official who handled a major September 11 compensation fund said last week a similar effort should be made to limit asbestos liability lawsuits. The support for the move to consider this a legislative priority from a personality who is considered a national leader on such issues came at a forum hosted by the conservative Manhattan Institute think tank.
Kenneth Feinberg, widely praised for the US$7 billion government compensation program for the victims of the Sept. 11 attacks, scolded Congress for not taking action on the large number of asbestos claims working through the court system. He commented, "It's a scandal that they haven't passed an asbestos statute yet," he said.
Among the many complaints about lawsuits sapping business strength, Mr. Feinberg said asbestos cases are unique because there are so many claims and the companies facing the lawsuits simply don't have enough money to pay them all.
He had faced strong criticism at the outset of the Sept. 11 compensation fund process over the program's rules, but he generally was praised by the time it shut down last summer. He has done similar work on more conventional mass litigation claims.
Advocates for limiting liability lawsuits against businesses said they believe that the response to the worst terror attack in the nation's history may be one of the best ways of resolving massive class action lawsuits over products like asbestos or prescription drugs.
Daniel Troy, the former chief counsel for the U.S. Food and Drug Administration, said the tort system is "sufficiently broken" to require curbs on liability lawsuits. "I think the 9/11 compensation fund may be a model for tort reform," he said.
Senate Judiciary Chairman Arlen Specter, R-Pa., is pushing legislation to ban asbestos liability lawsuits in exchange for a multibillion-dollar compensation fund.
In urging congressional action on the asbestos issue, Mr. Feinberg also warned lawyers and lawmakers there would be many pitfalls in any compensation fund. The biggest challenge may be deciding whether every victim receives the same amount, and what that amount would be, he said. Giving varying amounts to different types of victims would create a great deal of frustration and division among them.
Mr. Feinberg also recommended that any fund be optional, as the Sept. 11 program was, allowing people to choose between the fund's guidelines and filing their own lawsuits.
The September 11th Victim Compensation Fund of 2001 paid out an average award of US$2.1 million to the families of those killed, though the 2,880 individual payouts ranged from US$250,000 to US$7.1 million.
The fund also paid an average of US$400,000 for the 2,680 accepted claims of injuries stemming from the Sept. 11 attacks. The smallest injury award was US$500, the largest US$8.6 million.
ASBESTOS LITIGATION: Union Electric Files US$8M Suit V. Insurers ---------------------------------------------------------------- Headquartered in St. Louis, MO, Union Electric is suing four of its insurance companies for more than US$2 million each claiming the insurers breached contractual duties by only reimbursing small percentages of asbestos-related claims.
Defendants include American Automobile Insurance Co., Pacific Insurance Co., Royal Globe Insurance Co. and Royal Indemnity Co.
Karen Baudendistel of Armstrong Teasdale in St. Louis and Jill Berkeley of Schiff Hardin of Chicago are representing UE. The case has been assigned to Circuit Judge Daniel Stack.
Union Electric, which operates as AmerenUE, claims it has received more than 120 separate claims by plaintiffs seeking damages for asbestos exposure in UE's power plants in Missouri and Illinois, most of which were filed in Madison County.
The majority of plaintiffs are current and former employees of contractors who allege that they developed asbestos-related diseases from exposure to asbestos fibers at places they were sent to work, including locations in Madison County. Exposure dates to asbestos range from 1946 to present in the various lawsuits, which allege negligence and failure to provide a safe workplace.
From Sept. 30, 1947, through Sep. 30, 1975, UE claims it procured Owners Contractors Protective coverage from the defendants, to protect against lawsuits by independent contractors.
In the complaint, UE illustrates the extent of the problem by revealing various correspondences.
In a letter dated Mar. 12, 2002, UE provides notice of 12 of the 120 lawsuits brought against UE within the time frame AAIC provided insurance coverage for them, from Sept. 30, 1947, through Sept. 30, 1952.
A letter from AAIC dated May 9, 2002, agrees to participate in the defense of UE, subject to a reservation of rights, for all asbestos lawsuits brought against UE within the coverage period.
After requesting a clarification AAIC's terms, UE claims AAIC replied, "by participate, we mean American Automobile Insurance Co. will defend UE in the cases alleging exposure between Sept. 30, 1947, and Sept. 30, 1952, along with other insurance carriers."
On Jan. 15, 2003, UE forwarded its post-tender defense and investigation cost invoices to AAIC with a detailed explanation of the invoices, requesting payment within 30 days. UE claims it has not been fully reimbursed.
Allegations against Royal and Pacific are similar according to the complaint filed.
The suit also seeks statutory damages and attorneys' fees for the companies, alleging vexatious and unreasonable failure to pay UE's defense and investigation costs in asbestos litigation.
ASBESTOS LITIGATION: Ohio Takes Lead on Impeding Asbestos Suits --------------------------------------------------------------- Ohio's passing of two proposals last year has put the state ahead in trying to slow down the growing number of lawsuits filed against companies that had manufactured asbestos in the past.
Potentially ending more than half of the 40,000 asbestos cases pending in courts, Ohio first set medical standards intending to exclude people who haven't developed cancer or lost a considerable amount of lung function.
And last month, the legislature approved a provision in a bill limiting personal injury lawsuits that will protect at least two companies from additional asbestos-related litigation.
"States are beginning to improvise their own solutions," said Rep. Bill Seitz, a Cincinnati Republican who pushed for the changes.
According to some estimates, asbestos lawsuits could eventually cost American companies US$200 billion in payouts to people exposed to asbestos, a carcinogenic substance widely used in building material during the 1950s and 1960s.
The lawsuits have pushed at least 76 companies nationwide into bankruptcy, including five in Ohio - most notably Toledo-based Owens Corning, a building supplies maker.
Owens Illinois, a glass container maker, which stopped making insulation with asbestos in 1958, saw the number of lawsuits against it in 2003 grow to 29,000 pending cases compared to 24,000 cases a year earlier. Companies such as Owens-Illinois have looked to lawmakers for help in states such as Ohio, Mississippi and Alabama where there have been a large number of lawsuits filed, said Dan Steen, a lobbyist for Owens-Illinois Inc.
There's no organized plan on the part of companies to persuade the states to pass asbestos-related laws, he said.
Supporters of the law setting medical standards for asbestos lawsuits said there were so many claims that those who were truly sick had to wait longer to get compensated.
"Our objective is to make sure that those who are truly injured can get their cases heard and be compensated," Rep. Seitz said.
On the other hand, lawyers representing asbestos victims have vowed to overturn Ohio's medical standards law in court. They say the new standards would shut out people who are deserving of compensation, including those diagnosed with an asbestos-related lung disease.
One of the companies those laws sought to protect was Crown Cork & Seal Co., a Philadelphia-based packaging maker. It never operated the company it bought that made asbestos. But Crown Cork & Seal now has paid out US$500 million in asbestos claims, said Rep. Seitz.
The other company protected by the bill is RPM International Inc., a Medina-based holding company whose businesses make specialty coatings and sealants. RPM recently made the news when it posted a 74 percent decline in net income for its second quarter ended Nov. 30, hurt by a US$47 million charge to boost reserves for covering settlements from asbestos litigation. But a company official said the charge against its earnings is tied to a strategy to more aggressively defend itself in asbestos lawsuits.
The company's asbestos liability is relatively light compared with other businesses, said P. Kelly Tompkins, a senior vice president at RPM. Still, he said the changes in state law should help RPM and the victims by ensuring that those who are sick will receive compensation.
ASBESTOS LITIGATION: DE Landfill Cited for Accepting Asbestos ------------------------------------------------------------- State regulators handed down a notice of violation to the Delaware Solid Waste Authority's facility at Jones Crossroads for having improperly accepted asbestos-containing material.
But Pat Canzano, the chief operating officer of Delaware Solid Waste Authority said the landfill is still trying to find out if the facility actually accepted the dangerous substance.
He said, "The material, as it was presented to us, was construction and demolition waste. We do inspections on the material that comes in, but we can't possibly inspect every single load of material that comes in. It's a random screening process."
However, Robert Hartman, an environmental engineer with the Solid and Hazardous Waste Division of Delaware Department of Natural Resources and Environmental Control (DNREC), said if the asbestos is in the landfill, it poses no health risk.
"The landfill is constructed adequately to contain a load of asbestos. The more you disturb it, the more chance it can get into the air," said Mr. Hartman. For now, DNREC recommends that the landfill leave the asbestos alone.
A notice of violation is similar to a warning; it carries no fine or penalty. The facility is given 30 days to inform the regulators of their actions for compliance.
Mr. Hartman said that an asbestos contractor located in Milford counts every load of asbestos transported in the state.
"The contractor didn't receive a manifest back saying the load was properly disposed of. The contractor then called the hauler and found out the load had been taken to the southern landfill," said Mr. Hartman.
ASBESTOS LITIGATION: St. Louis City, Lambert Airport Facing Suit ---------------------------------------------------------------- The city of St. Louis and Lambert airport officials have been notified that they are being sued for hundreds of violations of federal environmental laws by using an illegal asbestos removal technique to demolish homes and businesses in the path of a new runway.
If the city and airport are found to have violated the Clean Air Act and federal hazardous waste laws, they could be fined more than US$8 million. Any fines would be turned over to the federal treasury or placed in a special EPA fund.
The Trial Lawyers for Public Justice, a public interest law firm based in Washington, last week announced plans to sue on behalf of the Families for Asbestos Compliance, Testing and Safety, which largely includes 50 to 60 members living or working near the demolished buildings. The residents say they are concerned about health danger from exposure to asbestos fibers released by the demolitions.
At issue is the asbestos removal technique known as the "wet method," which involves spraying a building with water as it is leveled to prevent the asbestos fibers from being released into air or soil. Contractors on the airport expansion project have used the wet method in demolishing roughly 300 homes and businesses since 1999.
However, the technique is permitted only on buildings that are too dangerous for workers to enter. Few of the homes being leveled, if any, met that description.
Airport officials have said they used the wet method to save time and money. The airport has repeatedly said that that there was no risk to the public and that testing by its contractors confirmed that. But the EPA's asbestos experts have denounced the technique, saying that once the asbestos dries, the wind can carry fibers long distances, exposing people near and far from the removal site.
The legal group said the "imminent" lawsuit would seek testing to pinpoint the extent of any soil contamination by asbestos, and how much asbestos may be released into the air again when ground around the airport is disturbed.
"The city and the airport authority conducted an illegal and immoral human experiment on our community without our knowledge or consent," said Sean Donnelly, a Bridgeton resident who heads the grassroots group.
Jim Hecker, the legal group's environmental enforcement director, said it remained unclear when a lawsuit might come, as he awaits a response from the city and airport to the written notice to sue.
Lambert's deputy director, Gerard Slay, called the claims without merit, adding that the airport last month submitted to the Environmental Protection Agency test results showing "non- detectable and negligible asbestos levels" in air, soil and water runoff near the runway project.
Given the dangers, asbestos handling is rigidly controlled by the EPA. The federal Clean Air Act requires carefully removing asbestos by hand and disposing of it in hazardous waste sites. Lambert officials have said the airport was committed to ensuring public health and safety, and that its practices reflected that.
In issuing an order last August barring the wet method, the EPA concluded that while the technique was "generally effective in controlling the release of large fibers and dust," the agency lacked data to say with certainty that it was completely safe in keeping individual asbestos fibers from becoming airborne.
As a result, the EPA rescinded an administrative order allowing the wet method. Use of the method at the project was halted in June, pending the EPA study.
Trial Lawyers for Public Justice and its 3,000 member lawyers have filed scores of suits against government and industry on behalf of citizens groups. They have successfully brought actions under the Clean Air Act in Texas, Ohio, New Jersey, Kentucky and New York.
ASBESTOS LITIGATION: UK School Council Refuses to Show Findings --------------------------------------------------------------- Despite growing pressure, only the nine city councilors will be allowed to view a report into the circumstances surrounding the asbestos contamination of Silverhill Primary School.
A previous edition of the Class Action Reporter that came out last Jan. 7 stated that the National Association of Schoolmasters: Union of Women Teachers demanded the Derby City Council to make the results of the internal investigation public. The union said the new Freedom of Information Act, which came into force on New Year's Day, means the local authority has to grant that request.
Derby City Council carried out an investigation into the contamination last spring that exposed 400 pupils and staff to harmful asbestos at the Mickleover School during the summer. The school was shut for eight weeks after asbestos was discovered during routine work.
So far, the report has not been made public, because of fears that the release could prejudice any disciplinary hearing against suspended head teacher Phil Robinson.
However, Councilor Chris Wynn, opposition Labor group spokesman for education, revealed the council had agreed to his motion that the document should be released to be read confidentially by three councilors from each of the Labor, Liberal Democrat and Conservative groups.
ASBESTOS LITIGATION: W. R. Grace Files Amended Bankruptcy Plan -------------------------------------------------------------- Bankrupt specialty chemicals company W. R. Grace and Co. (NYSE: GRA) has filed an amended bankruptcy reorganization plan, according to last week's filing with the Securities and Exchange Commission.
The Columbia, MD-based Company said two groups of creditors, the unsecured creditors committee and the official committee of shareholders, have agreed to support a contested reorganization plan but asbestos claimants still do not. According to the filing, its amended plan addresses many of the objections raised by creditors and other interested parties to an earlier plan it filed Nov. 13.
The two committees have agreed to be joint proponents of an amended plan, which the company filed Jan. 13 in Delaware Bankruptcy Court.
W. R. Grace filed for bankruptcy protection in April 2001 to resolve the vast number of asbestos lawsuits. At the time of its Chapter 11 filing, W. R. Grace faced more than 325,000 asbestos personal injury claims and had paid out US$1.9 billion to resolve and manage the litigation.
A hearing to consider approval of the amended disclosure statement is scheduled for Jan. 21 in the U.S. Bankruptcy Court in Wilmington, Del. The filing had been delayed from October to permit Grace, representatives of three creditors committees and equity holders, and the representative of future asbestos claimants, to continue negotiations.
ASBESTOS LITIGATION: EPA Sets Up Emission Standards for Taconite ---------------------------------------------------------------- The U.S. Environmental Protection Agency has agreed to develop proposed regulations for mercury and asbestos emissions from taconite plants.
The EPA made the decision after the National Wildlife Federation filed a federal lawsuit in December 2003 against the agency in the U.S. Court of Appeals for the District of Columbia for failing to set emissions standards for the pollutants.
In the lawsuit complaint, four plaintiffs -- the National Wildlife Federation, Minnesota Conservation Federation, Lake Superior Alliance and Save Lake Superior Association -- contended there's a lack of standards for the two substances in new air pollution regulations.
"Under the Clean Air Act, there are no exemptions when it comes to protecting the health of people and the environment," said Jane Reyer, senior counsel for the National Wildlife Federation's Lake Superior Project.
"The standards of the Clean Air Act have been clear, yet they have been ignored. We hope the EPA will now act quickly to fulfill its obligations under the law," said Ms. Reyer.
The taconite industry is Lake Superior Basin's largest source of mercury, a neurotoxin that can cause severe neurological and developmental damage, the groups argued. Airborne asbestos fibers can lead to serious respiratory ailments.
EPA asked that it be allowed to voluntarily draft the regulations on mercury emissions. A federal judge granted that request last Thursday. The court issued a similar order Nov. 3 concerning asbestos.
The agency previously set standards for other taconite plant emissions. In October 2003, it released standards to regulate manganese, arsenic and lead from Minnesota's six taconite plants and two in Michigan. EPA said the standards will reduce toxic air emissions by about 225 tons or 42 percent annually. But the standards didn't set limits for mercury and asbestos.
The taconite industry has until late 2006 to comply with the standards.
In its lawsuit response, the EPA said that it now has suggestions on control options and information on current research that were not available when the other rules were adopted.
Minnesota's Iron Range is home to six taconite plants, while Michigan's Upper Peninsula is home to two of the plants. Taconite is a variety of processed iron ore containing magnetite and hematite that has been concentrated into higher-grade iron pellets.
ASBESTOS LITIGATION: UK Inquest Reveals Joiner Died of Exposure --------------------------------------------------------------- A joiner from Ossett died from asbestos-related cancer following exposure to the material when he worked for the building firm, Harlow and Miner Ltd., in the mid-1960s and 1970s.
Ian Lunn became ill in January 2003 when he developed an "annoying and unproductive cough." A biopsy revealed he had cancer and he later had to have his right lug removed. Chemotherapy and radiotherapy failed to have any effect. His condition deteriorated, the cancer spreading to his heart, liver and lymph nodes.
He eventually succumbed to the disease and died at his home on Wilman Post on Aug. 7 last year. A post-mortem examination showed unusually high levels of asbestos fibers in his lungs.
Wakefield coroner David Hinchliffe heard how Mr. Lunn had begun work as a teenage apprentice at the age of 15 at the Milner Street Company, originally based in Wakefield. He was often exposed to asbestos dust when cutting and handling sheets of material to be fitted underneath the guttering of houses.
After leaving Milner and Harlow in 1971, Mr. Lunn was employed as a technical officer for Wakefield Council and worked for a care and repair company doing alterations for the elderly and the disabled after taking early retirement in 1998.
Mr. Hinchcliffe said Mr. Lunn received compensation from the company in the form of an out-of-court settlement.
The inquest revealed Mr. Lunn died as a result of disseminate malignant mesothelioma and asbestosis and recorded a verdict of death by industrial disease.
Speaking after the inquest, Mr. Lunn's wife Josephine said, "We were happily married for 40 years. He was a loving husband and a great father. We miss him very much -- we still can't believe he's gone."
ASBESTOS LITIGATION: Public Urged to Test for Indoor Asbestos ---------------------------------------------------------------- Asbestos Analysis Laboratories is advising homeowners and business owners alike to undergo testing for interior sources of asbestos as weather or renovation-related disturbances may release dangerous asbestos fibers within the home.
The potential for serious indoor air quality problems is created due to water damage that comes with heavy rainfall. The Company is asking the owners to particularly watch out for sprayed acoustic material or "popcorn" ceiling, which is commonly found on the ceilings of most homes and apartments. These ceilings often contain asbestos and may potentially release minute fibers of asbestos as it deteriorates or if it is disturbed.
According to the Environmental Protection Agency, interior sources of asbestos include deteriorating, damaged, or disturbed acoustical ceiling materials, insulation, fireproofing, acoustical materials, and floor tiles. Prolonged exposure to asbestos released by these materials often causes no immediate symptoms, but carries long-term risk of chest and abdominal cancers and lung diseases. Smokers are said to have a higher risk of developing asbestos-induced lung cancer.
ASBESTOS LITIGATION: Owens Corning Liability Hearing Under Way -------------------------------------------------------------- One of the largest asbestos-related cases of all time has come to court in the US with claimants demanding US$16 billion or GBP8.7 billion in settlement from building products firm Owens Corning (OTC: OWENQ) as it struggles to emerge from bankruptcy protection.
The highly anticipated hearing last week to determine how much the Company and its Fibreboard subsidiary owe asbestos victims took place in a packed federal courtroom in the US District Court in Philadelphia. The Toledo, OH-based building products manufacturer listened as lawyers and witnesses described the circumstances surrounding the injuries of installers and construction workers exposed to an asbestos-containing insulation named Kaylo.
Judge John Fullam, a veteran jurist who began practicing law in 1948, will be deciding how much is owed to the asbestos victims. Competing estimates range from US$2 billion to US$16 billion. However, it is unclear when the judge will issue a ruling.
The hearing has garnered interest because it is taking place against the backdrop of a national debate over whether to stop asbestos lawsuits and establish a national claims payment fund financed by former producers of asbestos products.
The case is also being closely watched in London, where asbestos-related insurance claims came close to sinking the Lloyd's insurance market a decade ago and led to the establishment of Equitas to handle pre-1993 claims. Although part of Owens' payout could yet come back to the London market, contrary to earlier reports Equitas settled its direct exposure with Owens Corning in 1999 for an undisclosed sum.
The firm's banks and other lenders stand to recover less of their failed investment if a large percentage of Owens Corning's assets are reserved to pay claims.
Referring to recent comments from President Bush calling for asbestos-liability reform, the judge, in a light tone, told a lawyer who defended the current system, "You weren't listening to President Bush's speech... I assumed you were going to call him as a witness."
"I would question his expertise," replied New York lawyer Elihu Inselbuch, who represents the asbestos claimants committee.
That committee supports OC's bankruptcy-exit proposal, known as a plan of reorganization. But Mr. Inselbuch rejected suggestions that OC is bearing too big a burden in what has become a national problem.
Company lawyers testified that the first health warning -- a vague warning rubber-stamped on cartons but not on the product itself -- weren't made until 1966, years after evidence emerged of the dangers of asbestos.
Kaylo was used to insulate steam pipes in shipyards, steel mills, refineries, and even the World Trade Center, witnesses said. OC sold the product from 1953 to 1972.
Even casual exposure to asbestos fibers can cause a fatal lung cancer known as mesothelioma. Yet construction workers routinely shaped and sawed Kaylo without knowing the dangers. "It showered asbestos fibers all over the place," Mr. Inselbuch said.
By the late 1980s, OC became the primary target of asbestos lawsuits, witnesses testified.
Clyde Leff, OC's manager of asbestos litigation from 1996 to 1998, testified that the firm faced 200,000 claims when he came on board and that an average of 40,000 new cases were arriving yearly.
With settlements and litigation costs of US$300 million annually, OC in the mid-1990s was close to violating agreements with its lenders, which could have triggered an involuntary bankruptcy. Lost cases and large jury awards put increasing demand on the firm's cash flow, he said.
"We were facing an increasing number of trial settings," he explained. "OC was quite typically the target defendant...It was an environment of increasing risk to the company."
Making the argument for a claims valuation on the lower end of the estimate range are the firm's banks and dissident bondholders. If the banks can persuade Judge Fullam to accept a lower figure, they stand to recoup substantially more than the 38.5 percent of the US$1.5 billion owed them that is allotted under the current bankruptcy-exit plan.
In arguing for a lower figure, bank lawyer Richard Rothman argued that higher estimates are based on the size of settlements made by OC before bankruptcy. But, he noted, punitive damages, which influenced those settlements, won't be permitted by the independent trust fund OC plans to set up to pay claims after it emerges from bankruptcy.
Meanwhile, the idea of a national fund has won support from both Republicans and Democrats, but the proposal has been hung up over details, especially over how much money would be available to victims.
If the legislation passes before Owens Corning emerges from bankruptcy, it would supersede any ruling in the court case, and render moot the discussions of the Company's liability.
ASBESTOS LITIGATION: UK Agency Asks Help in Snagging Fly-tippers ---------------------------------------------------------------- Amid an alarming rise in the incidence of illegal fly-tipping, the Environment Agency is asking for the public's help in targeting the rogue traders dumping the potentially lethal asbestos.
Asbestos is classified as a hazardous waste and anyone transporting it or accepting it for disposal must have a license from the Environment Agency.
At least ten fly-tips of the material have been found in the Colchester area since the start of December 2004. The guilty parties may be penalized fines of up to GBP20,000 including jail sentences.
Environment Officer John Parish called for people with information about the fly-tipping to contact them. He said, "We greatly appreciate the help of the public in trying to catch the people doing this and hope that this fly-tipping will soon be stopped."
Colchester MP Bob Russell said he was appalled by the situation. He said, "We need a prosecution and an exemplary punishment handed down because these people are putting lives at risk. We have seen court cases where the people removing the asbestos from a building have been negligent but whether they did it deliberately is debatable, but this is just blatant."
The fly-tips found contained various types and quantities of asbestos that are likely to have originated from a refurbishment project.
Anyone with information about the fly-tipping, which has so far cost GBP4,000 to clear, should contact the agency on 08708 506506.
ASBESTOS ALERT: Asbestos Find Closes Melbourne Childcare Center ---------------------------------------------------------------- Children enrolled in a Melbourne kindergarten will be relocated after asbestos, arsenic, copper and lead were found in the center's grounds.
Parents are demanding answers after soil tests, which were conducted in October, found the playground and garden beds of Victoria's Armadale Early Learning Center kindergarten contained dangerous fragments forcing it to close indefinitely.
The childcare center is owned by the city of Stonnington, which discovered the potentially lethal contaminants during routine testing. The Council sent a letter to parents last week advising them the kindergarten would be closed at least until Easter while further tests were conducted.
A parent of a child at the community managed and council-owned kindergarten said he was outraged the council had not provided enough information. He demanded access to the report and more information about the health risks associated with the contaminated soil.
Nicola Smith said she was angry that parents whose children were previously enrolled at the kindergarten had not been alerted to the test results. Ms. Smith, whose three sons attended the kindergarten from 1998 to 2003, said she found out about the soil test results via the bush telegraph. She added, "I'm not an alarmist but exposure is an issue and I am concerned."
But Stonnington City Mayor Sarah Davies said the risk levels to children were extremely low.
Cr Davies said the kindergarten had been closed as a precaution and the council's decision to notify parents was timely.
"Council has arranged for an occupation hygiene and environmental consultancy firm to undertake further testing to better understand the extent of the issues, what materials are in the soil and what rehabilitation works may be required," said the Stonnington Council in a statement.
ASBESTOS LITIGATION: RPM Willing to Put in $400M for Trust Fund --------------------------------------------------------------- Commenting on the proposal of a national trust fund to compensate asbestos victims, RPM International Inc. (NYSE: RPM) stated that it is backing up its creation and that it would willingly pay US$15 million a year into the fund for the next 27 years, amounting to US$400 million, to meet thousands of claims.
RPM local business executive Frank Sullivan says this fund could fix the "broken asbestos litigation system."
So far, manufacturers such as RPM and their insurance firms have paid out US$70 billion to settle asbestos cases, but much of the money has gone not to victims but for lawyer fees and other legal costs, Mr. Sullivan says. Some experts predict asbestos costs could total another US$200 billion in the next 30 years.
He adds that many of the 8,400 asbestos defendants are small or medium-sized manufacturers with only slight historic business links to asbestos. Most of the original asbestos producers are now out of business or have gone through bankruptcy.
RPM, of Brunswick Hills Township, encountered its first asbestos lawsuit in 1985, and in the next 15 years paid out about US$2 million in settlements and legal costs. That translates to roughly US$130,000 a year. But its costs have soared to more than US$200 million in the last four years, exhausting the firm's insurance coverage. Last year, RPM on its own paid US$63 million, and it recently took a US$47 million pretax charge against earnings to bolster its asbestos defense fund.
Ironically, all these originated from a small business that RPM bought for US$2 million in 1966 -- a maker of patch and repair products sold in hardware stores and whose sales never exceeded US$500,000 a year. The company stopped making the product in 1977.
A couple of weeks ago, Mr. Sullivan related RPM's story to President Bush while in a forum on asbestos litigation reform in Michigan.
Another speaker, Lester Brickman, who is a law professor at the Benjamin N. Cardoza School of Law at Yeshiva University, said 105,000 new claimants came into the asbestos litigation system in 2003. Of this total, about 10,000 are seriously ill due to asbestos exposure, he said.
"But more than 90,000 of these claimants have no illness related to asbestos exposure as recognized by medical science," Mr. Brickman said.
In place of current litigation, Mr. Sullivan and others favor a trust fund that would pay compensation based on medical criteria, sort of like a workers' compensation system, in exchange for removing all asbestos lawsuits from state courts.
While business groups such as the National Association of Manufacturers favor the creation of a trust fund, some companies oppose it. However, supporters of the trust concept warn that the situation is so volatile that even companies who currently have insurance coverage could face big risks down the road.
These companies "are somewhere on the curve that we are on -- US$200,000 a year for 15 years and then up from that," Mr. Sullivan said. "Firms that truly appreciate how broken the system is realize that their US$10 million-a-year problem could turn into a US$50-million-a-year problem overnight."
With its asbestos cost under control, RPM could better plan for the future and focus on investing in its business. Mr. Sullivan said, "Our Company can absorb US$15 million a year. Our investors can assess the impact of that, and that allows us to get back to growing our business."
Elliott Schlang, managing director of the LJR Great Lakes Review in Shaker Heights, said RPM still has a lot of positives, including many years of dividends to shareholders, a good position in its various markets and able management.
Saul Ludwig, an analyst with KeyBanc Capital Markets in Cleveland, who has a buy recommendation on RPM, says the company is still able to generate strong earnings, make acquisitions and increase dividends. "But the ultimate solution is a national trust fund that can compensate legitimate victims who are indeed ill," he said.
ASBESTOS LITIGATION: Tort Costs Are Edging Up, Tillinghast Study ---------------------------------------------------------------- The annual growth in U.S. tort costs saw a "dramatic reduction" in 2003 but tort expenses could still approach US$1,000 per U.S. citizen by 2006, according to a new study made by one of the leading management consulting firms in the world.
The report from Stamford, Conn.-based Towers Perrin's Tillinghast consulting unit credits this development in part to a slowing trend in commercial lines and asbestos costs.
It also found that U.S. tort costs grew by 5.4 percent in 2003 to US$245.7 billion. On a per-U.S. citizen basis, that translates into US$845 per person.
In its study, Tillinghast defines U.S. tort costs as incorporating three components: benefits paid or expected to be paid to third parties, defense costs and administrative expenses.
Indicating a slowing trend, the 5.4 percent increase in tort costs in 2003 is significantly lower than in 2002 when costs were US$233.2 billion, a 13.5 percent rise from the previous year. In 2001, tort expenses were US$205.5 billion, up 14.7 percent from the year before.
The reduction in 2003, according to the Tillinghast report, is reflective of more moderate tort cost trends in commercial lines of insurance, where asbestos-related costs accounted for large increases in tort costs during 2001 and 2002.
Insured asbestos losses made up US$8.6 billion of the overall 2003 tort costs, showing a slowing trend from 2002, when asbestos losses were US$10.2 billion. But despite this slowing down, Tillinghast noted that recent asbestos losses are still far higher than those in 2000 (US$2.2 billion) and 2001 (US$5.5 billion).
The study also noted that medical malpractice tort costs continue to outpace increases in overall U.S. tort costs. In 2003, medical malpractice tort costs were US$26.5 billion, up from US$24.4 billion in 2002. This escalation in medical malpractice costs has contributed to the increase in U.S. health care expenses, the report said.
ASBESTOS LITIGATION: AU Campsite Reopens Amid Persisting Threats ---------------------------------------------------------------- An asbestos-contaminated campsite near Jurien Bay has been reopened while a hazardous waste clean-up in the area continues. Volunteers wearing masks and gloves have been picking up pieces of the building material since the Sandy Cape camping ground reopened on Christmas Eve.
The area was closed in early December after it was revealed that schoolchildren had been playing and helping shire workers with landscaping amid the potentially lethal substance. Families had been seen camping at the site, where pieces of the banned building material were lying in the sand.
After a series of tests, asbestos was found around one of two unmarked shire tips where it was buried in sandhills on a park reserve. The material was also detected on several tracks in the area, about 250 kms. north of Perth.
The asbestos fragments were reported to be remnants of shacks built by holidaying farmers and others from the 1920s onwards. Dandaragan Shire ordered these shacks demolished in 2001. The Departments of Environment and Health have confirmed that during the demolition, asbestos had been dumped in the tips without their approval.
The Health Department, which ordered the clean-up, said in a report to the shire before the campsite reopened that the asbestos presented a small but immediate risk. "Fragments pose an ongoing hazard to campsite users and the local community because of the potential for release of airborne asbestos fibers," the report said.
It also said the amount of asbestos in the area could not be calculated and buried material was likely to be uncovered and scattered around in the future. Although vegetation would limit potential erosion of the material, movement by vehicles, vandalism and coastal winds were also likely to help release airborne fibers.
Health Department environmental health toxicologist Mark Feldwick said much of the asbestos was bound in cement, which would have to be damaged to release airborne fibers. He said the shire was told the campsite and beaches could be reopened as long as people were informed about the risks and there was an ongoing management plan.
Meanwhile, shire officers have erected warning signs at the campsite and tips, and fenced off the tips.
But Asbestos Diseases Society president Robert Vojakovic said many properly supervised workers wearing protective clothing and respirators would be needed to safely pick up all asbestos at Sandy Cape.
Jurien Bay pensioner Barry Mainwaring, who blew the whistle on the asbestos scare, and Mr. Vojakovic said the shire should be prosecuted for the way the asbestos was handled and disposed.
To this recommendation, the shire responded by saying shack owners and contractors tore down the shacks and disposed of the asbestos, and it had been buried properly.
ASBESTOS LITIGATION: Protesters Seek Proof of Site Contamination ---------------------------------------------------------------- Doubting environmental reports of the soil's asbestos content, protesters fighting the development of the old Turner's site are compiling their own records on the contamination.
Save Spodden Valley is collecting information from former workers, who claim to know where asbestos was dumped at the Rooley Moor Road complex. The action group will then pass on the data to a councilors' working party, set up specifically to listen to concerns over the bid to build 650 homes and an enterprise park.
MMC Developments, Rathbone Jersey Ltd and Countryside Properties Ltd, have reported that small traces of asbestos were found in the soil.
At a packed protest meeting, council leader, Councilor Paul Rowen reassured 300 residents that Rochdale Council would carry out independent soil tests.
Save Spodden Valley spokesman Jason Addy praised Councilor Rowen for his support and said he was delighted with the high turnout at the meeting.
Mr. Addy said, "There were a lot of personal accounts about what the site used to be like -- This is a life and death issue for us. So we are putting all these accounts together and will present it as our own environmental statement."
Ian Kelley, managing director of Countryside Properties, said the firm has an excellent track record in transforming industrial land into sustainable communities. He said the firms would work with specialist remediation consultants Encia, the council and the Environment Agency to satisfy the statutory requirements.
"In partnership with MMC Estates we are committed to the regeneration of the site, creating a safe and notably improved environment for existing residents," added Mr. Kelley.
Councilor Rowen says it is crucial to call independent experts to deal with the issue of contamination before any development begins. He concluded, "I am sure once these tests have been done people will be much more satisfied about any development."
ASBESTOS LITIGATION: Derbyshire District Council Accepts Tip Bid ---------------------------------------------------------------- A plan to dump 30,000 tons of asbestos at a former power station has been accepted by South Derbyshire councilors.
Protesters of the proposal, which has been raised by civil engineering firm Roger Bullivant, last week said they were "very disappointed" with the move to bury asbestos waste in a huge landfill tip at Drakelow Power Station in Walton Road.
The District Council voted not to oppose the application after a debate at a meeting of the district council. The district council is a consultee only in the process, with the final decision whether to grant planning permission to be made by the county council in a few weeks' time.
Drakelow resident John Dolman is leading the objections with a petition signed by all 85 homeowners. Protests have also been made from residents across the border in East Staffordshire, who also overlook the site.
Mr. Dolman, who has already begun planning an appeal if the proposal is approved, said, "We have forwarded the petition and a three-page report outlining our objections to the county council.
"There has been no consultation whatsoever with us, the members of the public, and I would say that should have been essential to properly represent the people they are supposed to speak for. The fight is continuing."
Councilors said they weighed two options: to bury the asbestos on site or risk it being transported to the nearest landfill site, which is 160 miles away in Tyneside. If the waste remains at Drakelow, the 30,000 tons -- 5,000 tons of which is the fibrous type more likely to give off the deadly dust, which can cause cancer -- will be stored permanently in an airtight vault. If not, it will be carried along public highways to Tyneside.
Councilor Bob Southern said, "The report met all the criteria so there was not a lot we could do about it. We have no grounds to refuse it."
Councilor Heather Wheeler said, "South Derbyshire residents need to know that the professionals who will be regulating this application and the consequences for the future are on top of the huge risk that this process could bring. The matter must be dealt with in public to give every confidence for the future."
The Environment Agency is acting as a consultee for the county council on the issue, but has yet to decide whether to give the proposal its support.
ASBESTOS LITIGATION: All But 10 Suits V Longview Fibre Dismissed ---------------------------------------------------------------- Longview Fibre Co. (NYSE: LFB), major manufacturer of forest and paper products, reported in its latest filing to the Securities and Exchange Commission that as of Dec. 31, 2004, the Madison County and St. Louis plaintiffs have agreed to dismiss the Company from all but ten of the lawsuits in those jurisdictions.
In each instance, the case against the Company was dismissed without any payment or liability to the plaintiffs. However, each of the dismissals was without prejudice, meaning that the plaintiffs could re-institute those cases.
The Company also stated that previous SEC filings have been submitted relating its involvement since 2002 with numerous asbestos-related cases in Madison County, Illinois and St. Louis, Missouri, along with numerous other defendants.
In each of the ten remaining lawsuits, the plaintiff alleges asbestos-related injuries from exposure to the defendants' products, as well as exposure to asbestos while working at certain of the defendants' premises.
One lawsuit, Weber v. A.W. Chesterton, Inc. et al., alleges that the plaintiff worked at the premises in Milwaukee, Wisconsin for unidentified contractors at unidentified times from 1967 to 1984. In all other respects the claims are not specific as to what, if any, contacts the plaintiffs had with the Company or any of its manufacturing plants or products. None of the claims specifies damages sought from the Company individually, but each plaintiff alleges a general jurisdictional amount against all defendants. In the past, Longview has been routinely dismissed from these types of actions.
The Company believes that the process by which the plaintiffs in these actions file claims may lead to additional similar lawsuits, but that these will likely again be dismissed as a defendant, without prejudice.
In January 2003, Longview was served with a complaint filed in King County, Washington Superior Court and entitled Gerald Shellenbarger. v. Longview Fibre Company, et al. In the complaint, plaintiffs alleged that one of Longview's former employees was exposed to asbestos when he worked at the Longview paper mill from 1959 to 1964 and from 1976 to 1996.
Plaintiffs further alleged that Longview is subject to civil tort liability because it had actual knowledge of certain injuries arising out of asbestos exposure and willfully disregarded that knowledge. In October 2003, the motion for summary judgment was granted on the basis that the Company was immune from a civil lawsuit under Washington's worker's compensation law.
Shortly thereafter, plaintiffs filed a notice of appeal of the order of dismissal. In November 2004, the Washington Court of Appeals (Division I) affirmed the dismissal. The plaintiffs are seeking discretionary review of the Court of Appeals decision with the Washington Supreme Court.
In April 2004, Longview was served with a complaint filed in King County, Washington Superior Court and entitled Crawford v. Longview Fibre Company, et al. In the complaint, plaintiffs alleged that one of its former employees was exposed to asbestos when he worked at the Longview mill from 1946 to 1987. The plaintiffs' claims in this case are substantially the same as those claimed in the Shellenbarger case.
In February 2004, the Company was named as one of eight defendants in a case filed in Cowlitz County, Washington Superior Court and entitled Brent v. Weyerhaeuser Corp., et al. According to the complaint, plaintiff alleges that he suffered from lung disease as a result of exposure to asbestos during his work at the Longview mill as a carpenter's apprentice for a third-party contractor between 1957 and 1963. He also alleges exposure to asbestos at facilities owned by others during his work as a carpenter apprentice and as a longshoreman. The plaintiff alleges that the Company deviated from the standard of care expected of owners or occupiers of premises and seeks damages in an unspecified amount.
The Company operates one of the largest pulp-paper mills in the world at Longview, WA. It owns 17 converting plants in 12 states, a lumber plant, and over 584,000 acres of timberlands managed for Sustainable Forestry in the Pacific Northwest.
ASBESTOS LITIGATION: Georgia-Pacific Sees 4Q Marred by Charges -------------------------------------------------------------- Georgia-Pacific Corp., paper and building materials producer, said last Tuesday that it expects to report fourth-quarter results between a loss of 1 cent to profit of 4 cents per share, due to asbestos-related and other charges of 46 cents per share.
In the same period a year ago, the Company earned 12 cents a share including charges and gains and 52 cents a share excluding items.
The Atlanta-based Company forecasts fourth-quarter earnings, excluding items, of 45 cents to 50 cents per share -- below Thomson First Call's average of analyst projections at 57 cents a share. Georgia-Pacific shares fell US$2.64, or 7.4 percent, to US$32.90 in morning trading on the New York Stock Exchange.
Georgia-Pacific said it will record pretax asbestos-related charges of US$159 million, or 38 cents a share, during the quarter, consisting of an increase of US$48 million for the tenth year of the company's asbestos reserves, a US$109 million increase in reserves for its asbestos defense spending through 2014 and a US$2 million drop in asbestos insurance receivables.
It also will incur a pretax charge of US$32 million, or 8 cents a share, for a combination of other unusual items. In addition, Georgia-Pacific expects the fourth quarter to include a pretax charge of US$27 million, or 6 cents a share, in net stock-based compensation expense.
Georgia-Pacific said that during 2004, new asbestos claims fell 32 percent from 2003, with about 9,700 claims pending at year- end. Total payments to resolve claims in 2004 were US$200 million, up slightly from US$189 million in the prior year.
The Company added that National Economic Research Associates Inc. has concluded that no changes to its forecast of Georgia- Pacific's asbestos indemnity payments are necessary for the nine years remaining through 2013.
The Company expects its North American and international consumer products businesses, and the paper business, to report strong quarterly results at or above expectations. However, Georgia-Pacific's packaging and building products segments expect to report performance below prior forecasts, due to maintenance downtime and a larger than usual drop off in seasonal demand.
The building products segment results were hurt by maintenance downtime, which was postponed to the fourth quarter due to strong demand in the first three quarters, as well as limited wood supply due to seasonal weather conditions.
Georgia-Pacific will release fourth-quarter and year-end 2004 earnings reports on Feb. 1.
ASBESTOS LITIGATION: Residents to Hold Meeting Over GA Landfill --------------------------------------------------------------- Although plans for a Riverdale landfill are only months from completion, the community will be holding discussions to clarify the safety of such a landfill considering that asbestos could be dumped there.
Dexter Matthews, the president of the Clayton County Branch of the National Association for the Advancement of Colored People, scheduled a town hall meeting to talk about the planned landfill that will use the hole left from the blasting done for the construction of the fifth runway at Hartsfield-Jackson Atlanta International Airport. The landfill is located north of Flat Shoals Road and west of Ga. Highway 85.
"I think the county is washing its hands of it, but we haven't given up yet," Mr. Matthews said.
The "construction and demolition" landfill would be limited to waste from any construction, demolition or renovation, said Timothy Earl, a program manager with the Georgia Environmental Protection Division. Since it is privately owned, the landfill can accept waste from any source. Legally, waste cannot be prevented from crossing city or county lines.
Although the landfill wouldn't include anything classified as "hazardous," the possibility of asbestos is enough of a concern to warrant a consultation with professionals about the consequences.
John Stephens, the president of MDS, the company that owns the landfill, said Mr. Matthews has not contacted him. He has not heard comments from the public either in favor or against the project. He said the Company would be initiating some public meetings soon.
So far, MDS has moved smoothly through the channels of Georgia's EPD. The project has already gotten the "stamp" of approval from a professional geologist and received a site suitability report.
Clayton College & State University professor Jacqueline Jordan, who holds a doctorate in toxicology, said any asbestos stored in the landfill "shouldn't have much affect" on people unless it becomes airborne. An unlikely situation would be if asbestos leaks into the water supply.
Asbestos consists of small fibers that can be inhaled and cause lung cancer and mesothelioma, which may not appear for 30 years, Ms. Jordan said. Problems occur with exposure over time, particularly with older people, who are "more susceptible" because of weaker immune systems.
Clayton County Long Range Planner Theresa Crow said the Clayton County Board of Commissioners approved the landfill in January 2001 and approved an expansion of the landfill in April 2003. The landfill will be required to have a 200-foot buffer from the landfill itself to the property line and a 500-foot buffer from residences and residential drinking wells.
Aside from using the 160-acre site as a blasting site, other suggestions had included transforming it into a parking area or a green space.
Mr. Matthews said, "We think the best thing to do is to not have any landfill."
ASBESTOS LITIGATION: HSE Urges Full Compliance with Regulations --------------------------------------------------------------- Aiming primarily to protect workers and others from asbestos, the Health and Safety Executive reiterates its commitment to enforce the Control of Asbestos at Work Regulations 2002 rigorously. Failure to comply with the duty could lead to fines of up to GBP20,000 in the magistrates court and unlimited fines if the matter is dealt with in a crown court.
Asbestos-related diseases are the biggest occupational killers in the UK. According to government figures, there are some 3,000 deaths per year from asbestosis and mesothelioma, an asbestos- related lung cancer. This is expected to rise to 10,000 by 2010. Both diseases can occur anytime from 15 to 60 years after exposure.
Since 1987, work that involved the handling of asbestos such as refurbishing has been highly regulated. However, those regulations did not contain any express duty to undertake asbestos surveys of buildings, so property owners and occupiers often did not actually know whether or not asbestos was present and where. This led to many cases of workers who unknowingly took on tasks considered highly risky since there is no safe level for asbestos exposure.
The Asbestos Regulations introduced in 2004 tightened the general safety requirements for anyone doing maintenance work. These imposed a new duty to manage asbestos on those considered to be "duty holders."
A duty holder is anyone responsible for maintaining and repairing all or part of a property, or having control of a building. Generally, a duty holder is the owner or occupier of a building, but could even be a managing agent.
All non-domestic buildings are affected by the regulations, although they also cover the common areas of residential rented properties including halls, stairwells, lift shafts and roof spaces. Anyone having control or information about a building must cooperate with a duty holder. Landlords must pass on relevant information to new tenants, and leaseholders must allow access for inspection by managing agents.
The regulations impose an express duty to have an up-to-date asbestos survey and management plan for all non-domestic buildings. Certain asbestos products were used until 1999 and so there are few buildings in existence for which the presence of asbestos can be ruled out purely on the grounds of age.
A plan must be put in place to manage the risk and to ensure that any materials containing asbestos are kept in a good state of repair or, if necessary, removed. Such materials do not always have to be removed because asbestos is only dangerous if it is disturbed.
Also, to avoid potentially harmful exposure, information on the location and condition of any asbestos-containing materials must be given to those who could be at risk, such as the emergency services and building contractors.
If these regulations are to be effective, the HSE is urging those responsible to concentrate on the practical steps of managing asbestos.
ASBESTOS LITIGATION: Jones County Judge Demands Proof of MS Ties ---------------------------------------------------------------- Jones County Circuit Judge Billy Joe Landrum has given nearly 16,000 asbestos plaintiffs 30 days to show that they live in the county or were exposed to the harmful fiber there, court documents reveal.
Marcy Croft, an attorney with Foreman, Perry, Watkins, Krutz and Tardy, said that if the case is found to have arisen from other counties within the state, the suit will be transferred to the appropriate venue. However, the case will be dismissed without prejudice if the plaintiff is not able to prove residence in Mississippi or that the exposure occurred within the state.
Ms. Croft, whose firm represents at least 75 defendants in the asbestos case, said, "It's a great victory for all Mississippi's. The application of recent Supreme Court rulings will allow the [court] dockets to be cleared."
Ms. Croft estimated that half of the plaintiffs are from other states.
Mike Cunningham, an attorney for the law offices of Alwyn Luckey, said the ruling was the same as "closing the door on the plaintiffs" who are suffering from asbestos-related illnesses. He would not admit to the number of clients he represents in Jones County Circuit Court but he did say the number is "substantial." He said about 20 percent of his clients are from other states.
When asked why there are 16,000 asbestos lawsuits filed in Jones County, which has a population of about 65,000 people, Mr. Cunningham said lawyers have a duty to take cases "to a jurisdiction where you can present your cases in a better light."
Judges for Jefferson, Holmes, Humphreys, Yazoo and Hinds counties have made similar rulings in class-action cases since the Mississippi Supreme Court took up the issue in August.
The justices ruled that plaintiffs have to provide defendants with information on who the plaintiff is suing and why. Plaintiffs are also told to include when and where the exposure occurred. The Supreme Court said cases should be dismissed if the information is not provided.
Defendant companies have asked Mississippi judges to dismiss the asbestos lawsuits, citing recent court cases that have thrown out "shotgun" complaints. A shotgun complaint often involves hundreds of plaintiffs and is so vague in describing circumstances and injuries that defendants find the allegations difficult or impossible to respond to.
Asbestos is a white, flaky substance routinely used a half century ago for insulation and in shipbuilding. It has been known to cause lung cancer and a lung-scarring disease called asbestosis.
ASBESTOS LITIGATION: Fears Arise Over Planned Razing of NY Bank --------------------------------------------------------------- Fueling fears of toxic chemical exposure, redevelopment officials are planning to demolish the Deutsche Bank building, which had its side severely damaged by the collapse of the twin towers.
The Sept. 11 incident filled the building with dust and debris that included asbestos, lead, dioxins, polychlorinated biphenyls and other hazards. More recent tests have now also detected the presence of mold in the building.
"A combination of contaminants known to be hazardous to human health, in quantities and concentrations unparalleled in any other building designed for office uses, permeates the entire structure at levels which exceed by up to thousands of times the levels considered appropriate," said a report prepared for Deutsche Bank during a legal battle over the building.
The Lower Manhattan Development Corporation, which bought the building from Deutsche Bank on August 31, is preparing for demolition of the tower to make room for redevelopment at ground zero.
The LMDC now has the challenging task of taking apart one of the world's most contaminated buildings in a densely populated neighborhood. And the demolition, which includes two nearby buildings, will take place over a busy subway station with grates that open to the street.
Frank Goldsmith, director of occupational health for Local 100 Transport Workers Union, complained that there is no plan yet to ensure the safety of subway workers.
David Newman, an industrial hygienist for the New York Committee for Occupational Safety and Health, called the demolition plan "deficient." For example, he said it relies on methods to contain asbestos, which may not work for other contaminants.
Amy Peterson, LMDC's senior vice president in charge of the demolition, said she was confident that the plan, which will be modified as environmental agencies and others review it, will work.
She said the LMDC plans to seal off the building with two layers of plastic and use vacuums to contain contaminants. Workers will then dismantle the building piece by piece. The contaminants and crowded neighborhood ruled out implosion.
The LMDC said the deconstruction will start this year, last a year and cost US$45 million, with the money coming from a federal grant and other sources.
Skepticism has hounded officials since several environmental controversies erupted after the 9/11 tragedy. A few days after the attacks, the U.S. Environmental Protection Agency declared the air in downtown Manhattan safe, a decision since criticized by the Agency's own inspector general as rash. Some Lower Manhattan residents also called the EPA's cleaning of apartments near ground zero inadequate. Several government agencies are reviewing the LMDC plan with the EPA.
Joel Kupferman, a lawyer who was among the first to question the EPA's Sept. 11 air quality statements, said, "With the track record since 9/11, we don't trust them."
The Sept. 24, 2004 edition of the Class Action Reporter revealed that trace amounts of asbestos were found in the dust that settled on a variety of surfaces in the building after the attack. Though the dust was less than 1% asbestos, smaller amounts can still create elevated levels of asbestos in the air when disturbed. The dust also contained detectable levels of dioxins, lead, PCBs and heavy metals.
The Louis Berger Group, the engineering and environmental consulting firm hired by LMDC to conduct the test, had recommended that the LMDC maintain health and safety and air monitoring programs, create an emergency plan for the building, and conduct additional testing.
ASBESTOS LITIGATION: MI County Implements Building Inspections -------------------------------------------------------------- Houghton County officials have ordered that all their county- owned buildings be inspected for asbestos.
This directive comes after a worker discovered some asbestos in the Family Independence building back in September.
The Michigan Occupational Safety and Health Administration then told county commissioners they had to make a precise record of all the asbestos in the their buildings. Those include the county jail, the courthouse, the marina, and the Houghton County Arena. The airport has already been checked.
Houghton County Commissioner Eric Forsberg says there has been no reported danger to employees in any of the five buildings.
ASBESTOS LITIGATION: Specter Moves Ahead on Asbestos Fund Bill -------------------------------------------------------------- Senate Judiciary Committee Chairman Arlen Specter said he would push ahead next week with legislation that would set up a US$140 billion trust fund to compensate people afflicted with asbestos- related illnesses. The bill would give companies permanent protection against injury lawsuits.
A similar proposal collapsed last year when lawmakers, businesses and advocates could not agree on a final figure. The committee's former chairman, Sen. Orrin Hatch, R-Utah, had initially set the fund at US$108 billion during negotiations in 2003.
Sen. Specter said he believes the bill is now structured to accomplish the objectives of all the parties. He went with US$140 billion because that was where former Senate Democratic leader Tom Daschle of South Dakota ended his negotiations last year with Senate Majority Leader Bill Frist, R-Tenn. He told a business meeting of his committee he thought US$140 billion was "within the parameters of what is realistic to ask the manufacturers and the insurers to pay."
Business groups, including the National Association of Manufacturers, said last week that US$140 billion was appropriate. Victims groups have said they want a higher total.
Another point of contention is the issue of a "safety valve" that allows claimants to go for a jury trial if the funds become insufficient.
Julie Rochman, a spokeswoman for the American Insurers Association, said the group would have to see the fine print on the "safety valve" and other parts of the legislation before commenting. The group is concerned companies would be forced to pay damages twice -- first to the fund and then later in court.
The proposed trust would have US$40 billion in "startup" money, Sen. Specter added, referring to funding needed in the first few years when the crush of claims is expected to be greatest. But it would also have another US$20 billion in borrowing authority to raise more startup money if needed.
Asbestos, a fibrous mineral that was commonly used until the mid-1970s in insulation and fireproofing material, has been proven to cause cancer and other respiratory ailments. Increasing asbestos liability claims have driven companies to bankruptcy leaving victims with little or no money for medical bills.
Sen. Specter and Sen. Patrick Leahy of Vermont, the Judiciary Committee's top Democrat, both favor ending asbestos liability and paying victims through a trust fund.
Stocks in companies with asbestos liabilities were mostly up after Sen. Specter's comments. Shares of bankrupt auto parts maker Federal-Mogul were up 10.8 percent, while packaging maker Owens-Illinois saw its stock rise 2.8 percent.
ASBESTOS ALERT: AU Local Sounds Alarm on Improper Removal Acts -------------------------------------------------------------- Concerned resident John Malcolm, from Moora, a town in Western Australia, has taken it upon himself to stop improper asbestos removal practices that he says contractors employ in Homeswest houses when these come up for sale.
He claimed that in the past 12 months, he has observed two houses stripped of asbestos, where none of the asbestos was wrapped in plastic or wet down as laid down in the guidelines. Sheets were simply thrown into an open skip bin. No fencing or scaffolding was put up to keep people away from the site.
"On one site there were a number of workmen all wearing full face masks and suits while children wandered around on the street just meters from where they were working." said Mr. Malcolm.
Conveniently, both jobs were carried out over the weekend and on both occasions the Moora Shire Health Inspector was out of town at the time. "It may just be coincidence, but it would certainly be a good time to do the work if you weren't going to do it the right way."
One time, after being told by a person on the site that it was fibro they were handling and not asbestos, he took some samples and got them tested. The results came back positive for asbestos.
Mr. Malcom said that despite calls to the Shire and Ministry of Housing, nothing had been done to ensure that correct practices were being used to dispose of asbestos in public housing properties.
Moora Shire Health Inspector, Peter Haas, is on leave and was unavailable for comment on the matter.
ASBESTOS ALERT: District Court Dismisses Case V. NY Prison Heads ---------------------------------------------------------------- In Case No. 99 CIV. 4604(VM), New York District Judge Victor Marrero on Sept. 27, 2004 granted a summary judgment ruling in favor of the employees of the Green Haven Correctional Facility of the New York State Department of Correctional Services in the case brought up by Charles Pack, one of its former prisoners.
Mr. Pack alleged that DOCS officials subjected him to dangerous levels of asbestos exposure during his seven-year stay at the facility. He claimed that this action constituted violations of the First and Eighth Amendments of the United States Constitution.
The DOCS officials named were Christopher Artuz, Green Haven superintendent, Gayle Haponick, deputy superintendent of administration, Jeff Richards, plant superintendent, and Dan Gastin, asbestos control supervisor.
Mr. Pack alleged that the exposure occurred during his incarceration at the Green Haven facility from Aug. 8, 1991 to Nov. 24, 1998. He specified four areas: the prison mosque known as Sankore at Taubah-Masjid, the J-School Counseling Unit, the Law Library, and Blocks A, E, F, and H of the inmate housing units.
He claimed that due to the exposure, he suffered pulmonary problems, consisting of sharp pains in his chest, shortness of breath, wheezing, reduced lung capacity and gastroenteritis. He stated that all four defendants had knowledge of the exposure but had failed to exercise regard for his safety and health.
Mr. Pack sought US$3 million in compensatory damages and an equal amount in punitive damages.
Defendants did not deny the presence of asbestos in the challenged areas of Green Haven but they contended that Mr. Pack was not exposed to unreasonably high levels of friable asbestos for any significant period while incarcerated there.
During the trial, the Judge noted that while some of Mr. Pack's reported physical complaints are not inconsistent with asbestos- related diseases, his medical records failed to prove that his symptoms were related to any asbestos-related illness.
Magistrate Judge Michael H. Dolinger, to whom this Court referred the matter, issued a report dated Sept. 2, 2004, recommending that DOCS' motion be granted and Mr. Pack's claim be dismissed entirely.
It was ruled that the evidence that Mr. Pack offered to support his first and eighth amendment claims do not lean in his favor with respect to either the subjective or objective components. The judge found that the circumstances mentioned could not have interfered in his ability to pursue his religion.
The Court found the report's findings and principles compelling enough to support the report and has dismissed the claim accordingly.
ASBESTOS ALERT: Canadian University Troubled by Asbestos Hazards ---------------------------------------------------------------- Professors and students at the Brock University in Canada are expressing apprehensions over a potential health hazard stemming from ongoing construction at its Mackenzie Chown complex.
At the Dec. 14, 2004 faculty meeting, Brock University Faculty Association president David Hughes confirmed that asbestos was being churned up by construction.
Mr. Hughes said that various committees have brought up the issue with President Atkinson, however the University has not prepared a plan to deal with it. The University stated that it would "develop some kind of asbestos management plan." But BUFA did not say when the policy might be developed or when it could be implemented.
John Sorenson, a professor of sociology at the university, calls the approach taken by the administration and the BUFA as "alarming." He said, "It is outrageous for Brock to only start talking about developing a policy on how to deal with asbestos after construction has started."
Asbestos, an insulation material that was widely used in the construction of Canadian buildings up until the mid-1970s, is banned in more than 30 countries because of its carcinogenic properties. So far, two professors from the University of Manitoba have died of mesothelioma, which is a rare form of lung cancer caused by exposure to asbestos.
In November 2004, the Canadian Association of University Teachers organized a campaign publicizing the dangers asbestos posed to students and staff at universities across Canada. The campaign intended to put a long-overdue permanent ban on asbestos in the country.
James Turk, the executive director of the group said, "The situation with asbestos on our campuses is potentially serious because asbestos breaks down over time and can become airborne as a result of construction and renovations."
Meanwhile, the University's environmental manager confirmed that ceilings in Mackenzie Chown are covered with chrysotile or white asbestos, characterized by the school's occupational safety web site as a "mild" form of asbestos. Since the asbestos is encapsulated, the University argues that there is no measurable risk to the occupants of the building.
A previous edition of the Class Action Reporter on Sept. 24, 2004 disclosed that during the Prior Informed Consent treaty in Geneva, a controversy arose when Canada and Russia blocked the chrysotile form of asbestos from being added to the list.
Canada is known to be one of the world's top producers of chrysotile asbestos, or "white asbestos" and exports nearly all of its production. Canada continues to "defend the principle of controlled use."
According to Richard Leman, retired assistant surgeon general of the United States, chrysotile is just as dangerous as any other form of asbestos, it can cause mesothelioma and according to him, there is no such thing as a "mild" form of asbestos.
Murray Smith, chair and professor of sociology the University, said, "A few individuals have approached me to support their efforts to minimize the amount of time that they spend [in Mackenzie Chown]." Mr. Sorenson actually took it upon himself to move all of his seminars out of Mackenzie Chown. He said that other faculty members have followed suit.
Despite repeated requests for a meeting, Mr. Hughes still has not given in to the faculty's demands. Mr. Sorenson continues to call for support in forcing the BUFA and the administration to take a more responsible approach to the problem and establish an active program to deal with the problem.
ASBESTOS ALERT: Homeless Man Tears Down WA Shop, Bares Asbestos --------------------------------------------------------------- Seattle police have arrested a 42-year-old homeless man who they say took over giant construction machinery and demolished a former barbershop in downtown Woodinville. The man's crude demolition also broke a waterline, left asbestos exposed and cost the city an extra US$3,500 to clear away hazardous material.
The New Year's Day demolition reduced the abandoned building to a pile of broken wood. The former barbershop was scheduled to be demolished by a professional contractor to make way for a civic center, with sports fields and parkland.
Police said the man hot-wired a trackhoe in the early morning and that he stopped the demolition only after he realized he had ruptured a gas line. The man then ran to a gas station to tell a clerk about the gas leak.
The man was arrested last week on suspicion of reckless endangerment and malicious mischief after King County sheriff's deputies spotted him near the Woodinville Park & Ride, said sheriff's spokesman John Urquhart. But deputies still don't know why he tore down the building.
The man has been living in the Woodinville area, police said. Court documents reveal that he has a local criminal record dating to at least 1990, including convictions for drunken driving and disorderly conduct.
The suspect was held in the King County Jail. Charges had not yet been filed.
ASBESTOS ALERT: Asbestos Find Closes Melbourne Childcare Center --------------------------------------------------------------- Children enrolled in a Melbourne kindergarten will be relocated after asbestos, arsenic, copper and lead were found in the center's grounds.
Parents are demanding answers after soil tests, which were conducted in October, found the playground and garden beds of Victoria's Armadale Early Learning Center kindergarten contained dangerous fragments forcing it to close indefinitely.
The childcare center is owned by the city of Stonnington, which discovered the potentially lethal contaminants during routine testing. The Council sent a letter to parents last week advising them the kindergarten would be closed at least until Easter while further tests were conducted.
A parent of a child at the community managed and council-owned kindergarten said he was outraged the council had not provided enough information. He demanded access to the report and more information about the health risks associated with the contaminated soil.
Nicola Smith said she was angry that parents whose children were previously enrolled at the kindergarten had not been alerted to the test results. Ms. Smith, whose three sons attended the kindergarten from 1998 to 2003, said she found out about the soil test results via the bush telegraph. She added, "I'm not an alarmist but exposure is an issue and I am concerned."
But Stonnington City Mayor Sarah Davies said the risk levels to children were extremely low.
Cr Davies said the kindergarten had been closed as a precaution and the council's decision to notify parents was timely.
"Council has arranged for an occupation hygiene and environmental consultancy firm to undertake further testing to better understand the extent of the issues, what materials are in the soil and what rehabilitation works may be required," said the Stonnington Council in a statement.
ASBESTOS ALERT: Pittsburgh Laborer Files Suit V. 80 Defendants -------------------------------------------------------------- Michael Hudac, a laborer employed at Pittsburgh Purifying Metals in 1973, filed a lawsuit on Jan. 11 seeking more than US$100,000 in compensatory and punitive damages from 80 defendants. His wife Sarah is also seeking US$50,000 for loss of consortium since she says mesothelioma, the disease afflicting her husband, caused her to be deprived of his companionship.
Mr. Hudac said that during his employment at PPM, he was exposed to and inhaled, ingested, or otherwise absorbed large amounts of asbestos fibers emanating from certain products he was working with and around which were manufactured, sold, distributed or installed by the defendants. He claims that he was diagnosed on Sept. 2, 2004 with the life-limiting disease primarily due to exposure to asbestos at his workplace.
The case has been assigned to Circuit Judge Daniel Stack, who handles all asbestos litigation in Madison County. Mr. Hudac is represented by Randy Gori of Goldenberg, Miller, Heller & Antognoli of Edwardsville.
Mr. Hudac alleges that the defendants failed to exercise ordinary care and caution for his safety by including asbestos in their products, even though it was completely foreseeable and should have been anticipated that people working with or around them would inhale, ingest, or otherwise absorb elevated amounts of asbestos.
Defendants included asbestos in their products even though adequate substitutes for asbestos were available, and they failed to provide warnings of the dangers of working around asbestos, according to the suit.
Mr. Hudac claims that the defendants engaged in the following deliberate, intentional and wanton omissions or commissions:
(1) Furnished asbestos-containing products for use in his duties at the facility;
(2) Failed to inform about the known dangers of asbestos exposure at the facility;
(3) Failed to inform of the potentially hazardous workplace as a result of asbestos exposure;
(4) Failed to replace asbestos products even while substitutes were available by 1930; and
(5) Made Mr. Hudac work in dangerous areas of the facility knowing that it posed a significant health hazard to people because of the friable and deteriorating condition of asbestos products.
ASBESTOS ALERT: Salons Alerted to Old-Style Hairdryer Danger ------------------------------------------------------------ Hair salons are being warned about the potential danger of asbestos in old-style hairdryers after the cause of death of a Keighley woman was revealed in an inquest.
Bradford environmental health authorities are spreading words of caution to hairdressers after former hairdresser, Janet Watson, aged 59, died of mesothelioma, an asbestos-related cancer, after years of inhaling the dust from old-fashioned hairdryers.
Janet Watson's fianc‚ Neil Holdsworth said she was exposed to the deadly dust from the lining of hood hairdryers for more than 12 hours a day for almost 10 years. These hairdryers were used to warm up the salon where she worked.
Mr. Holdsworth said, "Janet started work as an apprentice in a hairdresser's in 1960 when she was just 15. It's upsetting to know that for nine years she was operating in a time bomb environment."
Mr. Holdsworth said Mrs. Watson, a hairdresser for 30 years, left the salon in 1969 to set up her own business. Although she continued to use similar old-style hairdryers for some years after, it is believed her constant exposure to asbestos from 1960 to 1969 was the main cause of her death.
The inquest last week heard that asbestos fibers found in her lungs were over and above the normal levels, and that she had died of mesothelioma. A verdict of industrial disease was returned. The inquest also heard that the asbestos lining in the hoods had disintegrated over time, resulting in the release of asbestos fibers into the air.
Salon owners are now being warned not use equipment they have doubts about and to get it checked by an expert. Environmental health manager Geoff Twentyman said, "We will be writing to all hairdressing businesses. We would, of course, dissuade hairdressers from using these old-style drying hoods now."
Ray Seymour, general secretary of the National Hairdressers' Federation, said asbestos had not been used in hood dryers for many years. He said, "There should not be such equipment in use -- it should have been replaced by now. I'm shocked to hear of this case. I've never known of another."
Nelson-based REM is the UK's only manufacturer of hood dryers. Sales director Bill Eccles said asbestos was not used. He was aware of hoods being used to warm salons and to dry towels, but not in recent years. He said the hoods were commonplace 25 years ago, but not so much now.
However, the general secretary of the National Hairdressers Federation said hairdressers and customers should not panic. He said that asbestos is not used in modern hairdryers and has not been used in any European models since the end of the Second World War. Any hairdryers after that point containing asbestos will have been imported from the Far East, although the British Government disallowed the import of these since the 1960s.
He said, "I do not want hairdressers or any customers to be alarmed by this as any normal risk would be very minimal."
Asbestos is banned as an insulator. Under the Control of Asbestos Regulations all business proprietors have a duty to check their premises for asbestos and take measures to have it removed or make it safe.
ASBESTOS ALERT: City Officials Halt New York Demolition Project --------------------------------------------------------------- City officials ordered Ikea to halt the demolition of a Civil War-era building after failing to protect workers and residents from airborne asbestos and finding more asbestos in the Red Hook site than had been disclosed.
The demolition company, Red Hook-based Breeze Demolition, failed to take basic steps the project warranted, including proper worker decontamination, waste removal, sealing off the site, monitoring air quality and placing warning signs, said Department of Environmental Protection spokesman Charles Sturken.
DEP officials ordered the Swedish housewares retailer to halt the demolition last week after inspectors found asbestos in roof shingles at the Beard St. structure that was being dismantled by workers.
Breeze Demolition may face violations that carry heavy penalties for filing the report as a non-asbestos project. He added, "Our tests came back positive for asbestos materials outside of what they originally filed for. We're still looking at the extent of what they knew and what they need to do."
It is unclear whether workers from the company were aware of the presence of asbestos.
United States Dredging Corp., which owns the 22-acre site was slapped with 10 violations, Mr. Sturken said. Ikea will own the Beard St. site as of next month and is paying for the demolition, company officials confirmed.
The DEP acted after it was revealed two weeks ago that Ikea officials knew there was a significant amount of asbestos in the building even while filing a permit with DEP identifying the demolition job as "not an asbestos project."
The Beard St. building, along with four other historic structures, will be razed to make way for a parking lot for the Swedish housewares megastore, which is slated to open in 2007.
A report dating to November 2002 commissioned by Ikea found there was asbestos in the roof, wrapping electrical wires and scattered in debris in the building. However, the permit filed with the DEP on Nov. 18, 2004, said there was asbestos only in the window caulking.
Preservationists charged Ikea was trying to skirt laws to speed up the demolition work.
"They had to be aware that [asbestos] was there, because they hired the people that found it in the first place," said Amanda Hiller, lawyer for the Municipal Art Society, a preservationist group that opposes the demolition.
Mr. Sturken said Ikea now has hired a licensed asbestos specialist, Pal Environmental Safety Corp., to remove asbestos at the site.
United States Dredging Corp. One Beard Street Brooklyn, NY 11231
Breeze Demolition Inc 2620 W 13th St Brooklyn, NY 11223 718-266-7336
ASBESTOS ALERT: MA Officials Probe M.J. Murphy for Violations ------------------------------------------------------------- State and local environmental officials continue to investigate the old town landfill owned by M.J. Murphy, Inc. of Westerly, Rhode Island that had been discovered to violate several environmental laws. The officials are currently negotiating what penalties should be handed down to either the landowner or the site operator.
The landfill located on Rte. 140, right beside the Milford Wastewater Treatment Plant, was home to the town's landfill until 1978.
Last September, police and Hopedale Health Agent Leonard Izzo found the site littered with dozens of abandoned vehicles -- some of them stolen -- and three dumpsters containing household trash, discarded appliances and piping with asbestos.
Although the Hopedale Board of Health is satisfied with the cleanup efforts of Mendon resident Randy Beck, who runs an auto repair business on the property, Mr. Izzo said state investigators are still on the case.
According to state Department of Environmental Protection spokesman Ed Coletta, state investigators have inspected the landfill several times since fall and have found no current hazardous condition on the property. He said DEP officials were in Hopedale to negotiate an appropriate punishment for the violations.
"There is an ongoing investigation relative to violations of solid waste and asbestos regulations. At this point there is a possible enforcement action pending," Mr. Coletta said. "It could eventually lead, not only to remedy the site, but also maybe some financial penalty."
According to Mr. Izzo, M.J. Murphy has not complied with the order in 1989 to cap the 11-acre landfill. He added, "It has to be capped. Dig down a few inches and you can find rubbish from 1978."
Mr. Izzo also said the town is seeking to take the property from M.J. Murphy in Massachusetts Land Court to collect on back taxes.
M.J. Murphy, Inc. 71 Buttonwoods Rd Wyoming, RI Phone: (401) 539-7372
Description: M.J. Murphy, Inc. is a Rhode Island corporation organized and existing under the laws of the State of Rhode Island. Maurice J. Murphy is the sole officer of that corporation and shareholder of that corporate entity.
New Securities Fraud Cases
TASER INTERNATIONAL: Berger & Montague Lodges Stock Suit in AZ -------------------------------------------------------------- The law firm of Berger & Montague, P.C. initiated a securities fraud class action complaint in the United States District Court for the District of Arizona against TASER International, Inc. ("TASER" or the "Company") (NASDAQ: TASR) and certain of its senior officers and directors on behalf of purchasers of TASER's securities during the period between November 4, 2004 and January 6, 2005 inclusive (the "Class Period").
The complaint charges TASER and certain of its officers and directors with violations of the Securities Exchange Act of 1934. TASER purports to provide advanced non-lethal devices for use in the law enforcement, military, private security and personal defense markets.
More specifically, the complaint alleges, that throughout the Class Period, defendants issued numerous statements concerning the increasing demand for the Company's TASER devices and the positive results of studies that were conducted regarding the safety of the Company's products. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose:
(1) that, contrary to defendants' representations, the studies conducted on the Company's TASER devices were inconclusive as to the safety of the devices;
(2) that the Company's revenues and earnings would be negatively impacted once the truth of these studies became known;
(3) that the end of year order of TASER devices the Company had received from one of its distributors was done to help the Company meet its sales goals for the quarter and was not indicative of the true demand for the Company's products; and
(4) based on the foregoing, defendants had no reasonable basis for their positive statements regarding the safety of, and demand for, the Company's products.
During the Class Period, while defendants allegedly made false statements to the market, they engaged in insider sales of their personal holdings in TASER stock, whereby they collectively reaped about $50 million in proceeds.
On January 6, 2005, after the close of the market, defendants disclosed that they were in receipt of an informal inquiry letter from the Securities and Exchange Commission regarding the Company's statements about the safety of its products and a recent order received from one of its distributors. Market reaction to this announcement was swift and severe. On January 7, 2005, shares of TASER common stock closed at $22.72 per share, a decline of $4.90 per share, or 18%, from the previous day's close.
For more details, contact Berger & Montague, P.C. by E-mail: firstname.lastname@example.org.
TASER INTERNATIONAL: Mager White Lodges Securities Lawsuit in AZ ---------------------------------------------------------------- The law firm of Mager White & Goldstein, LLP initiated a class action lawsuit in the United States District Court for the District of Arizona on behalf of all persons who purchased securities of Taser International, Inc.("TASER" or the "Company") (Nasdaq:TASR) between November 4, 2004 and January 6, 2005 (the "Class Period").
The Complaint charges that TASER and certain of its officers and directors issued false and misleading statements regarding the safety of the Company's Taser guns and the increasing demand for the products. The Complaint further alleges that defendants failed to disclose that:
(1) the research conducted on the safety of the Tasers was inconclusive and that if this information was revealed, the Company's earnings would be negatively affected; and
(2) a last-minute order for Tasers that was received from one of its distributors was done to help the Company meet its quarterly sales goals and therefore did not reflect the true demand for the Tasers.
On January 6, 2005, at market close, TASER announced that they had received an informal inquiry letter from the Securities and Exchange Commission concerning the safety of its products and a recent $1.5 million order received from one of its distributors. The market reacted quickly to the announcement, and on January 7, 2005, shares of TASER common stock fell $4.90 per share, to close at $22.72, down 18% from the previous day's close.
For more details, contact Jayne Arnold Goldstein by Mail: 2825 University Drive, Suite 350, Coral Springs, FL 33065 by Phone: 954-341-0844 or 866-274-8258 or by E-mail: email@example.com.
TASER INTERNATIONAL: Milberg Weiss Lodges Securities Suit in AZ --------------------------------------------------------------- The law firm of Milberg Weiss Bershad & Schulman LLP initiated a class action lawsuit, on behalf of purchasers of the securities of TASER International, Inc. ("TASER" or the "Company") (Nasdaq: TASR) between October 18, 2004 and January 6, 2005, inclusive (the "Class Period") seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act").
The action is pending in the United States District Court for the District of Arizona against defendants TASER, Patrick W. Smith (CEO), Thomas P. Smith (President), Philip W. Smith (director).
The Complaint alleges that, throughout the Class Period, TASER has aggressively fostered the perception that its products are non-lethal, generally safe and, therefore, ideal for temporarily incapacitating suspects without killing them or causing permanent injuries. This perception was crucial to the marketability of TASER products and the success of the Company. When this perception was challenged, as it repeatedly was during the Class Period, the Company aggressively defended it. On October 18, 2004, defendants issued a press release announcing that a U.S. Department of Defense study by the Human Effects Center of Excellence ("HECOE") "conclude(ed) that TASER technology is generally effective without significant risk of unintended results." In the press release, defendant Patrick Smith touted the study as the "latest chapter in a series of comprehensive medical and scientific studies which conclude that TASER technology is safe and effective." During the week following defendants' announcement affirming the safety of the Company's products, TASER insiders, including the Individual Defendants, sold a total of $67 million worth of TASER stock. During the Class Period, TASER insiders, including the individual defendants, sold a total of 3,317,212 shares of TASER common stock for gross proceeds of $96,261,155. The Company's characterization of the HECOE study, and other Class Period statements particularized in the Complaint, was materially false and misleading because, in marked contrast to the Company's unequivocally positive characterization of the study's conclusions, the study in fact found that TASER technology could be dangerous and that more information was needed to evaluate its risks.
On January 6, 2004, after the close of ordinary trading, TASER issued a press release announcing that the SEC had commenced an inquiry into the Company's statements concerning the safety of its products. In addition, the SEC sought information concerning a suspicious, large end-of-quarter (4Q) sale to one of the Company's distributors. In reaction to this announcement, the price of TASER common stock plummeted, falling from $27.62 per share on January 6, 2005, to $21.29 per share on January 7, 2005, a one-day drop of 23% on unusually heavy trading volume of over 35 million shares.
For more details, contact Steven G. Schulman, Peter E. Seidman or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New York, NY 10119-0165 by Phone: (800) 320-5081 by E-mail: firstname.lastname@example.org or visit their Web site: http://www.milbergweiss.com.
A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to email@example.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 2005. All rights reserved. ISSN 1525-2272.
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