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C L A S S A C T I O N R E P O R T E R
Friday, April 29, 2005, Vol. 7, No. 84
Headlines
724 SOLUTIONS: NY Court Preliminarily OKs Stock Suit Settlement
AFG ASIT: DE Court OKs Settlement of Shareholder Derivative Suit
AMEDISYS INC.: Appeals Court Vacates Stock Lawsuit Certification
BRISTOL-MYERS: Settles Six Shareholder "Derivative" Suits in NY
BUELL MOTORCYCLE: Recalls 149 Motorcycles Due To Crash Hazard
CALIFORNIA: Judge Rules Ex-Convicts Exempt From Proposition 69
CALIFORNIA: Mother Plans Suit V. School District Over Band Dues
CERES GROUP: Reaches Settlement For CA Consumer Fraud Lawsuit
DHB INDUSTRIES: Reaches Settlement For FL Zylon Body Armor Suit
DRUGSTORE.COM: NY Court Preliminarily Approves Suit Settlement
DRUGSTORE.COM: To Seek Dismissal of WA Securities Fraud Lawsuit
FEDEX CORPORATION: CA Court Grants Certification To Wage Lawsuit
HARLEY-DAVIDSON: Recalls 110,000 Incorrectly Labeled Motorcycles
HEAT & GLO: Recalls 7.8T Gas Fireplaces Due To Injury Hazard
HOLLYWOOD ENTERTAINMENT: Fairness Hearing Set June 24, 2005
HOLLYWOOD ENTERTAINMENT: Plaintiffs File Amended Suit V. Merger
HOLLYWOOD ENTERTAINMENT: Reaches Settlement For CA Wage Lawsuits
LERNOUT & HAUSPIE: Lawsuit Settlement Hearing Set May 24, 2005
LOUISIANA: Judge Signs Distribution Orders For Gaylord Agreement
PEC SOLUTIONS: Appeals Court Affirms VA Stock Lawsuit Dismissal
POINT BLANK: FL Court Issues Final Approval Order For Settlement
PRIME DELI: Recalls Meat Sandwiches For Listeria Contamination
PROTECTION ONE: CA Court Mulls Consumer Fraud Suit Certification
REDBACK NETWORKS: CA Court Dismisses Securities Fraud Lawsuit
REDBACK NETWORKS: NY Court Preliminarily OKs Lawsuit Settlement
SODEXHO INC.: Reaches $80M Racial Discrimination Suit Settlement
UAL CORPORATION: IL Court Grants Certification To Investor Suit
UNITED AIRLINES: Continues To Face Litigation Over 9/11 Attacks
UNITED AIRLINES: Plaintiffs Seek Antitrust Suit Dismissal Review
VOLKSWAGEN OF AMERICA: Recalls 30,000 Cars Due To Fire Hazard
WARNACO GROUP: Securities Settlement Hearing Set June 30, 2005
WASHINGTON: Court Ruling Favors Plaintiffs in Equal Pay Lawsuit
WILD OATS: Canada Court Refuses Summary Trial in Hep A Lawsuit
WILD OATS: Trial in CA Overtime Wage Suit Set On October 2005
Asbestos Alert
ASBESTOS LITIGATION: Cyprus to Start Removal in Gov't Buildings
ASBESTOS LITIGATION: Tokyo, U.S. Navy Pay 35M Yen to 2 Workers
ASBESTOS LITIGATION: James Hardie's Ex-chief Adds to Huge Payout
ASBESTOS LITIGATION: PPG Industries 1Q05 Profit Drops 20%
ASBESTOS LITIGATION: ACT MP Calls for Taskforce to Handle Risks
ASBESTOS LITIGATION: Lloyd's Battles Congoleum's Bankruptcy Bid
ASBESTOS LITIGATION: Electrolux Faces 931 Asbestos-related Suits
ASBESTOS LITIGATION: IL Case Seeks Removal From Deferred Docket
ASBESTOS LITIGATION: House Passes FL Compensation Act or HB1019
ASBESTOS LITIGATION: OR Rep. Solicits Federal Aid for Relocation
ASBESTOS LITIGATION: Asbestos Charge Turns ABB Profit Into Loss
ASBESTOS LITIGATION: Exposure Raises Risk of Autoimmune Disease
ASBESTOS LITIGATION: FM Administrators Say T&N Asset Sale Likely
ASBESTOS LITIGATION: Crane Co. Reveals 2,807 New Claims, 1Q Data
ASBESTOS LITIGATION: Find Halts Construction of Housing Estate
ASBESTOS LITIGATION: ADAO Discusses FAIR Act with Sen. Specter
ASBESTOS LITIGATION: CA Residents Worry Over Asbestos in Rubble
ASBESTOS LITIGATION: Saint Gobain Gets 6,000 New US claims in 1Q
ASBESTOS LITIGATION: Trust Fund Bill Picks Up Another Sponsor
ASBESTOS LITIGATION: Manitoba Head Speaks Against Federal Action
ASBESTOS LITIGATION: Congoleum to Modify Plan of Reorganization
ASBESTOS LITIGATION: Legislation to Ban Asbestos Use Neglected
ASBESTOS LITIGATION: TX Senate Passes Bill to Reduce Lawsuits
ASBESTOS LITIGATION: EPA Honors 8 for Probe into Asbestos Fraud
ASBESTOS LITIGATION: PA School Heads to Dispel Fears of Exposure
ASBESTOS ALERT: DEQ Expert Fears MT School's Health Risk Remains
ASBESTOS ALERT: Widow Sues Harry Taylor of Ashton for GBP200T
ASBESTOS ALERT: MA Town to Pay US$100T Fine for Illegal Dumping
ASBESTOS ALERT: VA Regulators Probe City-ordered Demolition
ASBESTOS ALERT: Fear Strikes Residents Near Burning Mill in CT
New Securities Fraud Cases
BEARINGPOINT INC.: Finkelstein Thompson Lodges Stock Suit in VA
BEARINGPOINT INC.: Goodkind Labaton Lodges Securities Suit in VA
BEARINGPOINT INC.: Marc S. Henzel Lodges Securities Suit in VA
DORAL FINANCIAL: Marc S. Henzel Lodges Securities Lawsuit in NY
PETCO ANIMAL: Schiffrin & Barroway Lodges Securities Suit in CA
R&G FINANCIAL: Brodsky & Smith Files Securities Suit in S.D. NY
R&G FINANCIAL: Charles J. Piven Files Securities Suit in S.D. NY
R&G FINANCIAL: Schatz & Nobel Lodges Securities Fraud Suit in NY
R&G FINANCIAL: Schiffrin & Barroway Lodges Securities Suit in NY
R&G FINANCIAL: Scott + Scott Lodges Securities Fraud Suit in NY
XYBERNAUT CORPORATION: Schatz & Nobel Lodges Stock Lawsuit in DE
*********
724 SOLUTIONS: NY Court Preliminarily OKs Stock Suit Settlement
---------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval of the consolidated
securities class action filed against 724 Solutions, Inc.,
certain of its officers and directors and the underwriters of
the Company's initial public offering.
Several class actions were filed between approximately June 13,
2001 and June 28, 2001 on behalf of purported classes of
plaintiffs who acquired the Company's common shares during
certain periods. These lawsuits have since been consolidated
into a single action and an amended complaint was filed on or
about April 19, 2002. Similar actions have since been filed
against over 300 other issuers that have had initial public
offerings since 1998 and all are included in a single
coordinated proceeding in the Southern District of New York.
The amended complaint in the IPO Allocation Litigation names as
defendants, in addition to the Company, some former directors
and officers of the Company and certain underwriters of the
Company's initial public offering of securities. In general,
the amended complaint alleges that the Underwriter Defendants:
(1) allocated shares of the Company's offering of equity
securities to certain of their customers, in exchange
for which these customers agreed to pay the Underwriter
Defendants extra commissions on transactions in other
securities; and
(2) allocated shares of the Company's initial public
offering to certain of the Underwriter Defendants'
customers, in exchange for which the customers agreed
to purchase additional common shares of the Company in
the after-market at certain pre-determined prices.
The amended complaint also alleges that the Company and the
Individual Defendants failed to disclose these facts and that
the Company and the Individual Defendants were aware of, or
disregarded, the Underwriter Defendants' conduct. In October
2002, the Individual Defendants were dismissed from the IPO
Allocation Litigation without prejudice.
In July 2003, a committee of the Company's Board of Directors
conditionally approved a proposed partial settlement with the
plaintiffs in this matter. The settlement would provide, among
other things, a release of the Company and of the Individual
Defendants for the conduct alleged in the action to be wrongful
in the amended complaint. The Company would agree to undertake
other responsibilities under the partial settlement, including
agreeing to assign away, not assert, or release certain
potential claims the Company may have against its underwriters.
Any direct financial impact of the proposed settlement is
expected to be borne by the Company's insurers.
In June 2004, an agreement of settlement was submitted to the
Court for preliminary approval. The Court granted the
preliminary approval motion on February 15, 2005, subject to
certain modifications. The parties are directed to report back
to the Court regarding the modifications. If the parties are
able to agree upon the required modifications, and those
modifications are acceptable to the Court, notice will be given
to all class members of the settlement, a "fairness" hearing
will be held and if the Court determines that the settlement is
fair to the class members, the settlement will be approved.
There can be no assurance that this proposed settlement would be
approved and implemented in its current form, or at all.
The suit is styled "In Re 724 Solutions, Inc. Initial Public
Offering Securities Litigation," filed in relation to "IN RE
INITIAL PUBLIC OFFERING SECURITIES LITIGATION, Master File No.
21 MC 92 (SAS)," both pending in the United States District
Court for the Southern District of New York, under Judge Shira
N. Scheindlin. The plaintiff firms in this litigation are:
(i) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(ii) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300
(iii) Schiffrin & Barroway, LLP, Mail: 3 Bala Plaza E, Bala
Cynwyd, PA, 19004, Phone: 610.667.7706, Fax:
610.667.7056, E-mail: info@sbclasslaw.com
(iv) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(v) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(vi) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
AFG ASIT: DE Court OKs Settlement of Shareholder Derivative Suit
----------------------------------------------------------------
The Court of Chancery of the State of Delaware In and For New
Castle County approved the settlement for the class action filed
against AFG ASIT Corporation, styled "Robert Lewis v. Gary D.
Engle, James A. Coyne, et al., case no. No. CA497-N."
On June 9, 2004, Robert Lewis filed the class and derivative
action against the Company, Semele Group, Inc., Equis II, PLM
MILPI Holdings LLC (PLM), Gary D. Engle and James A. Coyne. The
AFG Investment Trust C Liquidating Trust was named as nominal
defendant in the derivative action.
On December 31, 2004 the Trust entered into the Plan and
completed its liquidation and dissolution in furtherance of the
Plan by entering into a Liquidating Trust Agreement dated as of
December 31, 2004 pursuant to which all of the assets of the
Trust, subject to all of the Trust's liabilities (including
contingent liabilities such as the action described herein),
were transferred to the Liquidating Trust, with Wilmington Trust
Company as Liquidating Trustee.
As of December 31, 2004, each holder of units of beneficial
interest in the Trust was deemed to have received a beneficial
interest in the Liquidating Trust equal to such holder's Trust
interest. The Company was the Managing Trustee of the Trust and
is the Manager. Semele is the direct corporate parent of Equis
II, which is the direct corporate parent of the Manager. Mr.
Engle is the Chairman and Chief Executive Officer of Semele. Mr.
Coyne is the President and Chief Operating Officer of Semele.
Mr. Engle and Mr. Coyne together own a majority of the shares of
Semele, which in turn owns a majority of the beneficial
interests in the Liquidating Trust. PLM is a limited liability
company ultimately controlled by Mr. Engle and Mr. Coyne.
The Lewis action was brought on behalf of a purported class
consisting of the beneficiaries of the Liquidating Trust. The
Complaint alleged breaches of fiduciary duty and self-dealing in
connection with the liquidation of the Trust, amendments to the
governing Trust Agreement of the Trust and the sale of certain
of the Trust's assets to PLM. The Complaint was in two counts,
one alleging a lack of entire fairness in connection with
certain asset sales and the amendments and the second alleging a
breach of the duty of disclosure with regard to the Consent
Solicitation Statement issued in connection with the
solicitation of votes on the proposed sale and amendments. The
Complaint sought:
(1) class certification;
(2) preliminary and permanent injunctions against the
consent solicitation and the proposed sale and
amendments; and
(3) damages in an unspecified amount payable to the
purported class and the Liquidating Trust.
The Defendants denied all allegations of liability or wrongdoing
in the Complaint. After the Defendants answered the Complaint
on September 15, 2004, the parties entered into negotiations
that resulted in a settlement. The Stipulation of Settlement
was signed by counsel for the parties on November 3, 2004 and
provided, for:
(i) A payment of $1.3 million, net of transaction costs, by
the Defendants (other than the Liquidating Trust) to
the Liquidating Trust;
(ii) Retention of an independent financial expert to provide
an opinion as to the financial fairness of the purchase
price for the sale by the Trust of its interest in
MILPI Holdings LLC to an affiliate of the other
Defendants; and
(iii) Appointment of a Liquidating Trustee to manage and
wind-up the business and affairs of the Trust
The Stipulation of Settlement stated that the Defendants do not
admit any liability or wrongdoing. Following a hearing on
December 29, 2004, the Chancery Court entered an Order approving
the Settlement.
AMEDISYS INC.: Appeals Court Vacates Stock Lawsuit Certification
----------------------------------------------------------------
The United States Fifth Circuit Court of Appeals vacated the
class certification for the consolidated securities class action
filed against Amedisys, Inc. and three of its executive
officers.
On August 23 and October 4, 2001, two suits were filed in the
United States District Court for the Middle District of
Louisiana on behalf of all purchasers of Company stock between
November 15, 2000 and June 13, 2001. The suits, which have now
been consolidated, seek damages based on the decline in the
Company's stock price following an announced restatement of
earnings for the fourth quarter of 2000 and first quarter of
2001, claiming that the defendants knew or were reckless in not
knowing the facts giving rise to the restatement.
In February 2005, the United States Fifth Circuit Court of
Appeals vacated the trial court's certification of the suit as a
class action, and remanded the case to the trial court for
further proceedings.
The lead suit is styled "Unger, et al v. Amedisys, Inc., et al.,
case no. 3:01-cv-00703-JJB-SCR," filed in the United States
District Court for the Middle District of Louisiana under Judge
James J. Brady. The lead attorney for the plaintiffs is Jody E.
Anderman of LeBlanc & Waddell, LLP, 5141 Bluebonnet Blvd. Baton
Rouge, LA 70809-5000 Phone: 225-768-7222. Representing the
Company are James R. Swanson and Loretta G. Mince, Correro
Fishman Haygood Phelps Weiss Walmsley & Casteix, 201 St. Charles
Avenue 46th Floor New Orleans, LA 70170-4600 Phone: 504-586-5252
Email: jswanson@cfhlaw.com or lmince@cfhlaw.com.
BRISTOL-MYERS: Settles Six Shareholder "Derivative" Suits in NY
---------------------------------------------------------------
Bristol-Myers Squibb Co. settled a group of shareholder lawsuits
by agreeing to improve corporate governance following charges of
revenue inflation, anticompetitive behavior and accounting
fraud, The Associated Press reports.
According to Bristol-Myers spokesman Brian Henry, the
"derivative" suits were filed by holders against current and
former directors of Bristol-Myers and did not seek any financial
damages beyond legal fees. He told AP that a federal court in
New York gave the settlement preliminary approval with a final
hearing scheduled for May 13.
The settlement covers six suits filed beginning in October 2002,
which alleged that executives failed to properly oversee
business and operations regarding Bristol-Myers' experimental
Vanlev heart drug, which was associated with serious side-
effects and showed little benefit over other treatments, the use
of sales incentives to prompt inventory buildup and inflate
revenue, its investment in ImClone Systems Inc. and the Erbitux
cancer drug and alleged anticompetitive behavior concerning its
BuSpar and Taxol drugs.
As previous reports in the Class Action Reporter show, Bristol-
Myers paid out millions of dollars in regulatory fines and
settlements with shareholders over many of these charges in
other cases.
Mr. Henry also told AP that the settlement would include a
number of corporate governance improvements, including regularly
scheduled meetings between the audit committee and the chief
compliance officer, as well as the general counsel, required
shareholder approval for certain board changes and limitations
on the board's ability to raise the mandatory retirement age for
members. He also added that under the settlement, the
plaintiff's attorneys may request up to $4.75 million in fees,
which will be paid out of directors' and officers' liability
insurance.
BUELL MOTORCYCLE: Recalls 149 Motorcycles Due To Crash Hazard
-------------------------------------------------------------
Buell Motorcycle Co. is cooperating with the National Highway
Traffic Safety Administration (NHTSA) by voluntarily recalling
149 motorcycles, namely:
(1) BUELL / XB12R, model 2005
(2) BUELL / XB12S, model 2005
(3) BUELL / XB9SX, model 2005
On the motorcycles, the sidestand may not retract as designed if
contact is made with the ground when the vehicle is in motion.
This could, in turn, disrupt the stability of the motorcycle,
leading to a crash, causing death or injury to the rider.
Dealers will replace the sidestand pivot bolt with a similar
bolt that is .100 inch longer. This change will allow the
sidestand to operate as designed. The recall is expected to
begin during April 2005. For more details, contact the Company
by Phone: 1-414-343-8400 or contact NHTSA's auto safety hotline:
1-888-327-4236.
CALIFORNIA: Judge Rules Ex-Convicts Exempt From Proposition 69
--------------------------------------------------------------
Federal Judge Fern Smith ruled that a voter-approved measure
that expands California's DNA database to all felons and felony
suspects even those who are not charged does not apply to ex-
convicts, The Associated Press reports.
The judge's decision, Judge Fern Smith's decision, reinforces an
opinion by the state attorney general's office that Proposition
69 does not apply to the thousands of convicts who served time
and completed post-incarceration supervision before voters
passed Proposition 69 last November 2.
American Civil Liberties Union (ACLU) attorney Julia Harumi Mass
told AP, "It's a very important decision clarifying for
thousands of people that they won't be subject to testing under
Proposition 69."
As previously reported in January 11, 2005 edition of the Class
Action Reporter, under Proposition 69, which was approved in
November by California voters, convicted felons and those
arrested for certain felonies are now required to give DNA by
having the inside of their cheeks swabbed. Since its approval,
several police agencies in Los Angeles, Alameda, Orange and San
Francisco counties have already turned in to the state DNA
samples they collected. The California Department of Corrections
started taking samples from parolees and inmates about to leave
state prison.
However, the ACLU opposed the it and promptly filed a class-
action lawsuit, claiming the new law is unconstitutional because
it violates a person's Fourth Amendment rights as well as rights
to due process and privacy. They are asking the court to block
the collection of DNA from people arrested on felony charges and
those who already completed probation or parole.
Voters passed Proposition 69 on November 2, which in effect
broadened the list of those who must give DNA. Before
Proposition 69, California already collected DNA from certain
convicted felons like murderers, rapists and child molesters.
What the new law does is require all convicted felons and anyone
arrested on a felony charge to give a DNA sample. Proposition
69 took effect immediately for felons and for suspects in
murder, rape, sodomy, forcible oral copulation and forcible
child molestation cases. But most felony suspects won't be
required to give a sample until 2009.
One of the ACLU's arguments is that the law calls for taking DNA
from people arrested but not yet convicted of a crime. Ricardo
Garcia, criminal justice director for the ACLU of Southern
California, told AP "People can be arrested for a number of
reasons. We live in a society still (where) you are presumed
innocent until proven guilty." The courts have found that
collecting DNA from convicted felons is OK and that isn't a
battle the ACLU is taking on, he adds.
However, Harriet Salarno, president of the Sacramento-based
Crime Victims United of California, argues the ACLU's contention
and said that the people of California sent a clear message by
passing Proposition 69. She told AP that, she doesn't buy the
ACLU's argument that DNA shouldn't be taken from felony
suspects, according to her, "If you're innocent, who cares? If
you haven't committed anything ... If you're innocent, it
doesn't matter."
In his ruling though, the judge did not decide the larger
constitutional question of whether it was OK to demand DNA
samples from anybody arrested for investigation of a felony,
whether or not they are charged.
CALIFORNIA: Mother Plans Suit V. School District Over Band Dues
---------------------------------------------------------------
A mother of three plans to file a lawsuit against a Sacramento-
area school district claiming that she was pressured to pay for
her child to perform in a school's band, The KCRA-TV reports.
Mrs. Donna Kinsella told KCRA-TV, "My attorney has now sent them
a letter, advising them the district is, in fact, responsible."
Mrs. is fighting the Folsom-Cordova School District over
invoices she has received for years that assessed dues for all
three of her children to participate in the school bands.
Mrs. Kinsella's oldest son, Kevin, who graduated from Folsom
High School, told KCRA-TV that he remembers the pressure on
students and their parents to come up with the money. "The band
director was always asking people to pay, making sure they get
in the money. So, it was like, if you couldn't pay, I guess it
would kind of be embarrassing," Mr. Kinsella said.
California Education Department pointed out to KCRA-TV that the
law is very clear about protecting students from being charged
for a public education. Department of Education spokeswoman
Hilary McLean told KCRA-TV, "The student cannot be charged to
participate in things that are part of school activities."
However, the invoices sent to Mrs. Kinsella are from the
school's booster group, not directly from the school. The
boosters say the dues are voluntary, but Mrs. Kinsella contends
that it is not made clear in the invoices. "Any reasonable
person who looks at the invoices and newsletters that come out
is going to clearly see that these are dues and not donations,"
she adds. Because the Folsom-Cordova School District has been
put on legal notice it will be sued, it referred KCRA-TV to the
boosters' organization, a nonprofit that is separate from the
school.
Some legal experts believe that the district may not be
shielded. Pacific Justice Institute spokesman Matthew McReynolds
told KCRA-TV, "If the school is trying to get around the
Constitutional requirements and the Supreme Court requirements
for providing free schools and free extracurricular activities
by delegating that to another entity so they can do what the
school couldn't do, then certainly that can pose some problems."
Ultimately, Mrs. Kinsella is hoping that her suit might become a
class action lawsuit, so parents can sue for many years' worth
of dues.
KCRA-TV talked with the head of the boosters' organization
lately, who stated only that they would not be able to continue
the nationally recognized music program without the student
dues.
CERES GROUP: Reaches Settlement For CA Consumer Fraud Lawsuit
-------------------------------------------------------------
Ceres Group, Inc. reached a settlement for a class action filed
against it in the Superior Court for San Luis Obispo County,
California, styled "Annelie and Joseph Purdy v. United Benefit
Life, et al., case no. CV 020275." The suit also names as
defendants United Benefit Life, Central Reserve, the American
Association for Consumer Benefits (AACB), and Does 1 through 100
Inclusive.
The suit was filed on behalf of individuals in California who
purchased group health insurance from United Benefit Life
through the AACB. Plaintiffs alleged causes of action for
breach of contract, bad faith, violations of California's Unfair
Competition Law and fraud in the inception. Plaintiffs sought
unspecified damages, including the return of premium rate
increases during the relevant period of time.
Plaintiffs' motion for statewide class certification was granted
in November 2003 and the case was scheduled to go to trial in
January 2005. The plaintiffs also filed an action against
Provident American Life containing somewhat similar allegations.
On September 15, 2004, the Company announced that it had agreed
to settle these lawsuits. The settlements contemplated payments
to class members and others, as well as certain attorneys' fees
and costs.
DHB INDUSTRIES: Reaches Settlement For FL Zylon Body Armor Suit
---------------------------------------------------------------
DHB Industries, Inc. reached a settlement for the class action
filed against it in the Circuit Court of the Seventeenth
Judicial Circuit in Broward County, Florida by a police
organization and individual police officers, because of concerns
regarding the effectiveness and durability of body armor with
high concentrations of Zylon in the Company's bullet-resistant
soft body armor (vests). The bests containing Zylone fail to
meet the warranty provided with the vests.
In February 2005, the Company reached a preliminary settlement
with respect to the class action lawsuit filed, subject to final
court approval. Under the settlement, the warranty on the ABA
Xtreme ZX vest will be changed from 5 years to two and one-half
years. Class members who purchased the vests have to options.
The first is to receive a new ABA ZX model vest in either
National Institute of Justice (NIJ) threat level II or Level
IIIA, which new vest will have a two and one-half years
warranty. Class members selecting this option will receive an
extra carrier and a fully transferable manufacturer's mail in
rebate for $100 applicable toward the purchase of any ballistic,
resistant soft body armor manufactured by the defendants or any
of their subsidiaries and related entities. The second option
is to receive in exchange for the vest, a new ballistic
resistant soft body armor manufactured by the defendants, their
subsidiaries or affiliated entities, which new vest will be the
same NIJ threat level as their old vest.
Under the settlement, the defendants will make available to
class members, plaintiffs' counsel, the court and NIJ testing
data, protocols or results related to the performance
characteristic of Zylon vests manufactured by the defendants,
their subsidiaries and their affiliates. Defendants also agreed
to continue to test and evaluate all of their vest models,
pursuant to a testing methodology designed to ensure that the
vests perform as warranted by the defendants, such methodology
to be presented to the court for approval at the final approval
hearing.
The suit is styled "Southern States Police Benevolent
Association Inc., et al, on behalf of themselves and others
similarly situated v. Armor Holdings, Inc., Armor Holdings
Products, LLC, Pro-Tech Armored Products of Massachusetts, Inc.
and Safari Land Ltd., Inc., case no. 2004-2942CA," filed in the
Circuit Court of the Fourth Judicial Circuit, in and for Duval
County, Florida under Judge Bernard Nachman. Representing the
plaintiffs is W. Pitts Carr of Carr, Tabb, Pope and Freeman LLP,
10 North Parkway Square, 4200 Northside Parkway, NW Atlanta
Georgia 30327. Representing the defendants is Richard W.
Hosking of Kirkpatrick & Lockhart LLP 535 Smithfield St.,
Pittsburgh, Pennsylvania 15222-2312. For more details, visit
the Website:
http://www.americanbodyarmor.com/zx/notice-claimform.pdf.
DRUGSTORE.COM: NY Court Preliminarily Approves Suit Settlement
--------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
consolidated securities class action filed against
drugstore.com, Inc., its underwriters and certain of its present
and former officers and directors.
On and after July 6, 2001, eight stockholder class action
lawsuits were filed in connection with our July 27, 1999 initial
public offering and March 15, 2000 secondary offering (together,
the Offerings). The complaints against the Company have been
consolidated into a single action and a Consolidated Amended
Complaint, which is now the operative complaint, was filed on
April 19, 2002. The suit purports to be a class action filed on
behalf of purchasers of the Company's common stock during the
period July 28, 1999 to December 6, 2000. In general, the
complaint alleges that the prospectuses through which the
Company conducted the Offerings were materially false and
misleading for failure to disclose, among other things, that:
(1) the underwriters of the Offerings allegedly had
solicited and received excessive and undisclosed
commissions from certain investors in exchange for
which the underwriters allocated to those investors
material portions of the restricted number of shares
issued in connection with the Offerings and
(2) the underwriters allegedly entered into agreements with
customers whereby the underwriters agreed to allocate
drugstore.com shares to customers in the Offerings in
exchange for which customers agreed to purchase
additional drugstore.com shares in the after-market at
predetermined prices.
The complaint asserts violations of various sections of the
Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended. The action seeks damages in an
unspecified amount and other relief. The action is being
coordinated with approximately 300 other nearly identical
actions filed against other companies or their former officers
and directors.
On July 15, 2002, the Company moved to dismiss all claims
against it and the Individual Defendants. On October 9, 2002,
the Court dismissed the Individual Defendants from the case
without prejudice based on stipulations of dismissal filed by
the plaintiffs and the Individual Defendants. On February 19,
2003, the Court denied the motion to dismiss the complaint
against the Company.
The Company has approved a settlement agreement and related
agreements, which set forth the terms of a settlement between
the Company, the plaintiff class and the vast majority of the
other issuer defendants or, in the case of bankrupt issuers,
their directors and officers. Among other provisions, the
settlement agreement provides for a release of the Company and
the Individual Defendants for the conduct alleged in the action
to be wrongful. The Company would agree to undertake certain
responsibilities, including agreeing to assign away, not assert,
or release certain potential claims it may have against its
underwriters. The settlement agreement also provides a
guaranteed recovery of $1 billion to the plaintiffs for the
cases relating to all of the approximately 300 issuers. To the
extent that the underwriter defendants settle all of the cases
for at least $1 billion, no payment will be required under the
issuers' settlement agreement. To the extent that the
underwriter defendants settle for less than $1 billion, the
issuers are required to make up the difference.
On February 15, 2005, the court granted preliminary approval of
the settlement agreement, subject to certain modifications
consistent with its opinion. The court ruled that the issuer
defendants and the plaintiffs must submit a revised settlement
agreement that provides for a mutual bar of all contribution
claims by the settling and non-settling parties and does not bar
the parties from pursuing other claims
The suit is styled "In Re drugstore.com, Inc. Initial Public
Offering Securities Litigation," filed in relation to "IN RE
INITIAL PUBLIC OFFERING SECURITIES LITIGATION, Master File No.
21 MC 92 (SAS)," both pending in the United States District
Court for the Southern District of New York, under Judge Shira
N. Scheindlin. The plaintiff firms in this litigation are:
(i) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(ii) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300
(iii) Schiffrin & Barroway, LLP, Mail: 3 Bala Plaza E, Bala
Cynwyd, PA, 19004, Phone: 610.667.7706, Fax:
610.667.7056, E-mail: info@sbclasslaw.com
(iv) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(v) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(vi) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
DRUGSTORE.COM: To Seek Dismissal of WA Securities Fraud Lawsuit
---------------------------------------------------------------
drugstore.com, Inc. intends to ask the United States District
Court for the Western District of Washington to dismiss the
consolidated securities class action filed against it and
certain of its present and former officers.
On and after June 25, 2004, several putative class actions were
filed for alleged violations of the federal securities laws.
The suits purport to have been filed on behalf of purchasers of
the Company's common stock between January 14, 2004 and June 10,
2004. The complaints generally allege that the defendants made
false and misleading statements about prospects for fiscal year
2004 and failed to disclose, among other things a negative
impact on the Company's gross margins from the integration of an
acquisition of Vision Direct and from the Company's free 3-day
shipping promotion, and a negative impact on its sales growth
arising from cancellations of certain expired prescriptions.
On October 8, 2004, the Court issued an order consolidating the
individual actions. On November 1, 2004, the court appointed
lead plaintiffs and lead plaintiffs' counsel. On January 11,
2005, the Consolidated Amended Complaint was filed by the lead
plaintiffs. The defendants intend to move to dismiss the
complaint.
The suits are consolidated under "Frederick J. Elliot v.
Drugstore.com, Inc., et al.," Case No. CO$-1474RSM, pending
under Judge Ricardo Martinez.
FEDEX CORPORATION: CA Court Grants Certification To Wage Lawsuit
----------------------------------------------------------------
California state court granted class certification to a class
action filed against Fedex Corporation, styled "Foster v. FedEx
Express."
The suit makes claims under California's wage-and-hour laws.
The plaintiffs represent a class of hourly FedEx Express
employees in California from October 14, 1998 to present. The
plaintiffs allege that hourly employees are routinely required
to work "off the clock" and are not paid for this additional
work. The court issued a ruling on December 13, 2004 granting
class certification on all issues. The ruling, however, does
not address whether the Company will ultimately be held liable.
HARLEY-DAVIDSON: Recalls 110,000 Incorrectly Labeled Motorcycles
----------------------------------------------------------------
The Harley-Davidson Motor Company is cooperating with the
National Highway Traffic Safety Administration (NHTSA) by
voluntarily recalling 110,000 motorcycles, namely:
(1) H-D / FLSTC, model 2003-2005
(2) H-D / FLSTCI, model 2003-2005
(3) H-D / FLSTF, model 2003-2005
(4) H-D / FLSTFI, model 2003-2005
(5) H-D / FLSTN, model 2005
(6) H-D / FLSTNI, model 2005
These motorcycles fail to comply with the requirements of part
567, "certification." The VIN/Certification Label contains the
incorrect tire size and inflation pressures for the front wheel.
The label states the tire size is MT90B21 and the inflation
pressure as 30 PSI, whereas the correct tire size is MT90B16 and
the correct inflation pressure is 36 PSI. The certification
label is incorrect, giving improper information.
The Company will mail instructions along with the corrected
federal certification label. If an owner so desires, a dealer
can install the label for them. The recall is expected to begin
on April 28,2005. For more information, contact the Company by
Phone: 1-414-343-4056 or contact the NHTSA's auto safety
hotline: 1-888-327-4236.
HEAT & GLO: Recalls 7.8T Gas Fireplaces Due To Injury Hazard
------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission
(CPSC), Heat & Glo, of Lakeville, Minnesota is voluntarily
recalling about 7,800 HEAT-N-GLOr Gem 36 and Gem 42 gas
fireplaces.
Gas in the fireplace can accumulate prior to burner ignition.
When ignition takes place, it can cause the glass window to
shatter and create a risk of burns or lacerations from broken
glass. Heat & Glo has received 21 reports of shattered glass,
including four minor injuries.
The recall involves all HEAT-N-GLOr Gem 36 and Gem 42 direct
vent gas fireplaces. The model number is located on the rating
plate inside the unit on the base pan in front of the gas
control. The rating plate can be accessed by removing the lower
grille on the fireplace. This recall also includes Gem 36
fireplaces that recently received a replacement burner assembly.
Manufactured in the United States, the fireplaces were sold at
all dealers and distributors of Hearth products nationwide sold
the fireplace from July 2002 through April 2005 for between
$2,380 and $2,700.
Consumers should stop using the fireplaces immediately and
contact Heat & Glo to make arrangements for a free repair. To be
sure that no one uses the fireplace by mistake, consumers should
shut off the gas supply to the fireplace by removing the lower
grille on the fireplace and turning off the ball valve (red
lever) on the gas supply line.
Consumer Contact: For assistance in turning off the gas and
arranging for a free repair, contact Heat & Glo at
(800) 215-5152 between 8 a.m. and 10 p.m. CT Monday through
Friday or log on to firm's online registration page at
http://www.gem3642.comor http://www.heatnglo.com.
HOLLYWOOD ENTERTAINMENT: Fairness Hearing Set June 24, 2005
-----------------------------------------------------------
Fairness hearing for the final approval of the settlement of the
class actions filed against Hollywood Entertainment Corporation
is set for June 24, 2005.
One suit, styled "George Curtis v. Hollywood Entertainment
Corp., dba Hollywood Video, Defendant, No. 01-2-36007-8 SEA,"
was certified on June 14, 2002 in the Superior Court of King
County, Washington. On May 20, 2003, a nationwide class action
entitled "George DeFrates v. Hollywood Entertainment
Corporation, No. 02 L 707" was certified in the Circuit Court of
St. Clair County, Twentieth Judicial Circuit, State of Illinois.
The Company reached a nationwide settlement with the plaintiffs.
This settlement encompasses all of the claims asserted in each
of the related actions. Preliminary approval of settlement was
granted on August 10, 2004. The Company has agreed to pay
plaintiffs' legal counsel $2.7 million and to give class members
a rent-one-get-one coupons on a claims made basis with a
guaranteed total redemption of $9 million along with other
remedial relief. A hearing to obtain final court approval of the
settlement is set for June 24, 2005. Notice to class members
began on October 10, 2004 and will last for six months. Coupons
will likely be distributed to the class beginning in the fall of
2005 and payment will be made to plaintiffs' legal counsel
following final court approval in June 2005.
HOLLYWOOD ENTERTAINMENT: Plaintiffs File Amended Suit V. Merger
---------------------------------------------------------------
Plaintiffs filed an amended consolidated securities class action
against Hollywood Entertainment Corporation and its directors in
Clackamas Circuit Court in Oregon related to the proposed merger
of the Company with an affiliate of Leonard Green & Partners,
L.P. (LGP) pursuant to the initial Agreement and Plan of Merger,
dated as of March 28, 2004, among the Company and affiliates of
LGP.
Eight lawsuits were initially filed in the circuit courts of
Oregon for the counties of Clackamas and Multnomah. These
purported class action and derivative suits each seek a court
order enjoining completion of the Merger, and costs and
attorneys' fees to the plaintiffs' lawyers. Some of the suits
additionally request damages in an unstated amount allegedly
suffered by the Company's shareholders by reason of the March 28
Merger Agreement. The Clackamas County suits were consolidated
and, on July 28, 2004, the parties to the Clackamas and
Multnomah County suits entered into a memorandum of
understanding regarding a potential settlement of claims.
The proposed settlement included additional disclosure in the
Company's proxy statement regarding the merger, modifications to
the termination fee and shareholder approval requirements in the
March 28 Merger Agreement, covenants from an affiliate of LGP
regarding the future sale of the Company, and payment of
$995,000 of the plaintiff's attorney fees. An amended and
restated merger agreement was entered into on October 13, 2004.
Plaintiffs in the consolidated cases previously informed the
Company of their intent to file a consolidated complaint that
includes allegations regarding the amended and restated merger
agreement.
On December 22, 2004, JDL Partners filed a purported class
action lawsuit naming the Company and its directors, claiming
that the directors breached fiduciary duties to the Company's
shareholders in the way they conducted negotiations with
Blockbuster, Inc. and Movie Gallery, Inc. for an acquisition of
Hollywood following its entering into the amended and restated
merger agreement with LGP.
On January 9, 2005, the Company terminated the amended and
restated merger agreement and entered into a merger agreement
with Movie Gallery, Inc. and its wholly owned subsidiary. It is
not clear what effect the new merger agreement will have on the
settlement negotiations regarding the old merger agreement, and
there is no assurance that a settlement will be effected or that
current reserves for this litigation will be adequate. It is
also unclear what effect the new merger agreement will have on
the complaint filed by JDL Partners.
On February 18, 2005, co-lead counsel in the consolidated
Clackamas County actions filed a First Amended Consolidated
Shareholder Class Action And Derivative Complaint (the "First
Amended Consolidated Complaint") against the Company, the
members of the Board of Directors of the Company, the members of
the Special Committee of the Board of Directors, LGP and UBS.
The First Amended Consolidated Complaint seeks an injunction
preventing the Company from completing its merger with Movie
Gallery, unspecified compensatory damages, punitive damages and
attorneys' fees and costs.
HOLLYWOOD ENTERTAINMENT: Reaches Settlement For CA Wage Lawsuits
----------------------------------------------------------------
Hollywood Entertainment Corporation reached a settlement for the
three wage and hour class actions filed in California State
Court, alleging that certain California employees were denied
meal and rest periods. There were several additional related
claims for unpaid overtime, unpaid off-the-clock work, and
penalties for late payment of wages and record keeping
violations.
Mediation took place on September 9, 2004 and the parties
reached a settlement of all claims alleged in each of the
actions. Pursuant to the settlement, two of the actions were
dismissed and all claims asserted by plaintiffs were alleged in
a single action. The Company received preliminary approval of
the settlement on January 10, 2005. Notice was sent directly to
class members on February 4, 2005. Final approval was held on
April 21, 2005.
LERNOUT & HAUSPIE: Lawsuit Settlement Hearing Set May 24, 2005
--------------------------------------------------------------
The United States District Court for the District of
Massachusetts will hold a fairness hearing for the proposed
$5.27 million settlement, plus interest, of the securities class
action, In re Lernout & Hauspie Securities Litigation, Case No.
00-CV-11589 (PBS) on behalf of all persons or entities who
purchased the common stock of Lernout & Hauspie Speech Products
N.V. ("L&H") on the NASDAQ Stock Market or purchased L&H call
options or sold L&H put options on any United States-based
options exchange between April 28, 1998 and November 9, 2000,
inclusive (the "Class Period") and who were damaged thereby (the
"Class").
The settlement fairness hearing is scheduled for May 24, 2005 at
3:00 p.m., before the Honorable Patti B. Sarris in the Joseph
Moakley United States Courthouse, 1 Courthouse Way, Boston, MA
02210.
For more details, contact Jeffrey C. Block, Esq. of BERMAN
DEVALERIO PEASE TABACCO BURT & PUCILLO by Mail: One Liberty
Square, Boston, MA 02109 by Phone: (800) 516-9926 or visit their
Web site: http://www.bermanesq.comOR Patrick L. Rocco, Esq. of
SHALOV STONE & BONNER LLP by Mail: 485 Seventh Avenue, Suite
1000, New York, NY 10018 by Phone: (212) 239-4340 or visit their
Web site: http://www.lawssb.comOR S. Gene Cauley, Esq. of
CAULEY BOWMAN CARNEY & WILLIAMS, PLLC by Mail: P.O. Box 25438,
Little Rock, AR 72221 by Phone: (501) 312-8505 or visit their
Web site: http://www.cauleybowman.comOR visit the Settlement
Web site: http://www.lernouthauspiesettlement.com/.
LOUISIANA: Judge Signs Distribution Orders For Gaylord Agreement
----------------------------------------------------------------
Approximately 16,000 Louisiana class action claimants in the
1995 Gaylord Chemical release case will receive letters the next
few weeks informing them where to pick up their first settlement
checks after Judge Robert Burns signed four distribution orders,
The Bogalusa Daily News reports.
The distribution pertains to settlements with Vicksburg Chemical
Company and its related entities, Westchester Insurance Company
and ACE American Insurance Company, Illinois Central Railroad
and Kansas City Southern Railway, which were approved during a
Fairness Hearing in August 2003.
As previously reported in the April 13, 2005 edition of The
Class Action Reporter, James "Pete" Farmer, liaison counsel for
the plaintiffs in the Louisiana class action suit, attended a
meeting of the Community Action Organization to give an update
on the case. During that meeting, Mr. Farmer was quoted by
Bogalusa Daily News as saying, "The bottom line is that when
they see in the newspaper that the judge has signed the
distribution order, they can add about 30 days from the date the
judge signed the distribution order, and there will be a
distribution. And it will take place in Bogalusa."
According to Mr. Farmer, the two to three week wait for the
letters is because orders still need to be signed by a
Mississippi judge regarding the Mississippi aspect of the case.
However, he told the Daily News that attorneys for the
Mississippi Litigation Group are "proceeding at this time."
The letters will tell claimants what identification they will
need to bring to receive their allocation checks. It will also
spell out specific requirements for parents of minor or
survivors of deceased claimants. Additionally, the letters will
also tell claimants where and when to pick up their allocation
payments. Mr. Farmer told the Bogalusa Daily News that the
distribution would take place in Bogalusa. He also expressed
his delight that the long-awaited first distribution seems near
saying, "I'm pleased after this long period of time that it now
appears that everything is falling into place for a distribution
of this first settlement."
PEC SOLUTIONS: Appeals Court Affirms VA Stock Lawsuit Dismissal
---------------------------------------------------------------
The United States Fourth Circuit Court of Appeals affirmed the
dismissal of the consolidated securities class action filed
against PEC Solutions, Inc. and certain of its officers,
alleging violations of federal securities laws.
On and after March 18, 2003, several purported class action
complaints were filed in the United States District Court for
the Eastern District of Virginia, alleging that between October
22, 2002 and March 14, 2003, the defendants made, or were aware
of, false and misleading statements which had the effect of
inflating the market price of the Company's common stock, in
violation of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934. The complaints were consolidated into a single
class action on September 13, 2003.
The class action was dismissed by the District Court on January
28, 2004. The plaintiffs filed an appeal with the U.S. Court of
Appeals for the Fourth Circuit on September 30, 2004. Oral
arguments on the appeal were held on December 2, 2004, and on
March 18, 2005, the Fourth Circuit affirmed the decision of the
District Court.
POINT BLANK: FL Court Issues Final Approval Order For Settlement
----------------------------------------------------------------
The law firm of Carr, Tabb & Pope, LLP, along with the Southern
States Police Benevolent Association, Inc. and the Ohio Troopers
Coalition reports that the Circuit Court of Broward County,
Florida issued a final approval order approving a settlement
against Point Blank Body Armor, Inc. on behalf of approximately
two thousand purchasers of the Point Blank Legacy Premier and
Galls Platinum brand ballistic vests containing high
concentrations of Zylon(R). The vests are more specifically
described by model numbers LEG-1, LEG2-4, LEG3A-6, LEG1F and
LEG2F-3.
Point Blank discontinued these vests and is offering a free
exchange program for any past purchasers concerned about the
reliability of the vests. Point Blank is also making
contributions to the Ohio Troopers Coalition Scholarship Fund,
to the Concerns of Police Survivors, Inc. and will conduct
testing on certain models of its used body armor; making the
testing data, protocols and other information publicly
available. More details are available at http://www.sspba.org
and http://www.OhioTroopers.org.
Jack Roberts, President of the Southern States Police Benevolent
Association (a named Plaintiff in the lawsuit) commented, "The
settlement addresses the fundamental issue we raised regarding
the effectiveness and durability of body armor with high
concentrations of Zylon(R). We are very pleased that Point Blank
has agreed to this exchange program."
The Ohio Troopers Coalition, of which seven of the named
Plaintiffs are members, provided significant assistance and was
a fundamental participant in the settlement process.
For more details, contact W. Pitts Carr by Mail: 10 North
Parkway Square, 4200 Northside Parkway, N.W., Atlanta, Georgia
30327 by Phone: 1-888-755-1649 or visit their Web site:
http://www.ctpflaw.com.
PRIME DELI: Recalls Meat Sandwiches For Listeria Contamination
--------------------------------------------------------------
Prime Deli Corporation, a Lewisville, Texas, establishment, is
voluntarily recalling approximately 191 pounds of meat wrap
sandwiches that may be contaminated with Listeria monocytogenes,
the U.S. Department of Agriculture's Food Safety and Inspection
Service (FSIS) announced.
Products subject to recall include 8.5 oz. packages of "7
Eleven, BIG EATS, Deluxe, TURKEY & COOKED HAM CAPICOLLA CLUB
WRAP, Handmade On Wednesday 0420, Freshest Before Friday 11:59
p.m. 0422." Each unit bears product code "4 71101 74972 1" and
the establishment code "P-13553" inside the USDA mark of
inspection.
The products were produced on April 20 and were distributed to
retail establishments in the Dallas- Fort Worth and Austin
regions of Texas. The problem was discovered through routine
FSIS regulatory sampling. FSIS has received no reports of
illnesses associated with consumption of these products.
Consumption of food contaminated with Listeria monocytogenes can
cause listeriosis, an uncommon but potentially fatal disease.
Healthy people rarely contract listeriosis. However, listeriosis
can cause high fever, severe headache, neck stiffness and
nausea. Listeriosis can also cause miscarriages and stillbirths,
as well as serious and sometimes fatal infections in those with
weakened immune systems including infants, the elderly and
persons with chronic disease, such as HIV infection or
undergoing chemotherapy.
Consumers and media with questions about the recall should
contact 7 Eleven, Inc. Director of Marketing and Communications
Kevin Gardner at (214) 828-7694. Consumers with food safety
questions can phone the toll-free USDA Meat and Poultry Hotline
at 1-888-MPHotline (1-888-674-6854). The hotline is available in
English and Spanish and can be reached from l0 a.m. to 4 p.m.
(Eastern Time) Monday through Friday. Recorded food safety
messages are available 24 hours a day.
PROTECTION ONE: CA Court Mulls Consumer Fraud Suit Certification
----------------------------------------------------------------
The Los Angeles Superior Court in California heard motions for
class certification of the lawsuit filed against Protection One
Alarm Monitoring, Inc., styled "Milstein v. Protection One Alarm
Services, Inc., John Does 1-100, including Protection One Alarm
Monitoring, Inc., Case No. BC296025."
On May 20, 2003, Joseph G. Milstein filed the suit, alleging
that Mr. Milstein and similarly situated customers in California
should not be required to continue to pay for alarm services
during the term of their contracts if the customer moves from
the monitored premises. The complaint seeks money damages and
disgorgement of profits based on several purported causes of
action.
On May 29, 2003, the plaintiff added the Company as a defendant
in the lawsuit. On October 28, 2003, the Court granted the
Company's motion to compel arbitration of the dispute pursuant
to the terms of the customer contract. A Clause Construction
hearing was conducted August 10, 2004, and on October 27, 2004,
the arbitrator ruled that the arbitration clause permits the
plaintiff to seek to proceed on behalf of a class. On February
24, 2005, a class certification hearing was conducted and the
parties are awaiting the arbitrator's ruling on whether the
matter may proceed as a class action. Discovery has commenced
in the matter.
REDBACK NETWORKS: CA Court Dismisses Securities Fraud Lawsuit
-------------------------------------------------------------
The United States District Court for the Northern District of
California dismissed the consolidated securities class action
filed against Redback Networks, Inc.'s current and former
officers and directors.
On December 15, 2003, the first of several putative class action
complaints, styled "Robert W. Baker, Jr., et al. v. Joel M.
Arnold, et al., No. C-03-5642 JF," was filed. At least ten
nearly identical complaints have been filed in the same court.
Several of the Company's current and former officers and
directors are named as defendants in these complaints, but the
Company is not named as a defendant. The complaints are filed
on behalf of purchasers of the Company's common stock from April
12, 2000 through October 10, 2003 and purport to allege
violations of the federal securities laws in connection with the
alleged failure to timely disclose information allegedly
relating to certain transactions between the Company and Qwest
Communications International, Inc. The complaints seek damages
in an unspecified amount.
The court has appointed a lead plaintiff. The lead plaintiff
filed its amended complaint on August 24, 2004. The Company's
motion to dismiss was filed on November 8, 2004. The court
heard arguments on January 7, 2005, and on January 21, 2005, the
court entered an order dismissing the complaint without leave to
amend with regard to five of the defendants and with leave to
amend with regard to the remaining 11 defendants. The plaintiffs
have 60 days in which to amend their complaint.
The suit is styled "In re Redback Networks, Inc. Securities
Litigation, docket number 03-05642," filed in the United States
District Court for the Northern District of California, under
Judge Jeremy Fogel. Lead counsel for the plaintiffs are:
(1) Grant & Eisenhofer, P.A., 1201 N. Market Street, Suite
2100, Wilmington, DE, 19801, Phone: 302.622.7000, Fax:
302.622.7100, E-mail: info@gelaw.com
(2) Anderlini, Finkelstein, Emerick & Smoot, 400 S. El
Camino Real, San Mateo, CA, 94402, Phone: 650-348-010,
Fax: 650-348-096, E-mail: Info@Afelaw.com
REDBACK NETWORKS: NY Court Preliminarily OKs Lawsuit Settlement
---------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
consolidated securities class action filed against Redback
Networks, Inc. and certain of its former officers and directors.
The lawsuit asserts, among other claims, violations of the
federal securities laws relating to how the Company's
underwriters of its initial public offering allegedly allocated
IPO shares to the underwriters' customers.
In March 2002, the court entered an order approving the joint
request of the plaintiffs and Company to dismiss the claims
without prejudice. On April 20, 2002, plaintiffs filed a
consolidated amended class action complaint against the Company
and certain of its former officers and directors, as well as
certain underwriters involved in the Company's initial public
offering.
Similar complaints were filed concerning more than 300 other
IPOs. All of these cases have been consolidated as "In re
Public Offering Securities Litigation, 21 MC 92." On July 15,
2002, the issuers filed an omnibus motion to dismiss for failure
to comply with applicable pleading standards. On October 8,
2002, the court entered an Order of Dismissal as to the
individual defendants in the Company's IPO litigation, without
prejudice, subject to a tolling agreement. On February 19,
2003, the court denied the motion to dismiss the claims against
the Company.
Settlement discussions on behalf of the named defendants
resulted in a final settlement memorandum of understanding with
the plaintiffs in the case and Company's insurance carriers,
which has been submitted to the court. The underwriters are not
parties to the proposed settlement. As of June 30, 2003, the
Company has tentatively agreed to this settlement, provided that
substantially all of the other defendants agree to the
memorandum of understanding. As of July 31, 2003, over 250
issuers, constituting a majority of the issuer defendants, had
tentatively approved the settlement. The settlement is still
subject to a number of conditions, including approval of the
court.
The suit is styled "In Re Redback Networks, Inc. Initial Public
Offering Securities Litigation, 01 Civ. 6090," filed in relation
to "IN RE INITIAL PUBLIC OFFERING SECURITIES LITIGATION, Master
File No. 21 MC 92 (SAS)," both pending in the United States
District Court for the Southern District of New York, under
Judge Shira N. Scheindlin. The plaintiff firms in this
litigation are:
(1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300
(3) Schiffrin & Barroway, LLP, Mail: 3 Bala Plaza E, Bala
Cynwyd, PA, 19004, Phone: 610.667.7706, Fax:
610.667.7056, E-mail: info@sbclasslaw.com
(4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(5) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
SODEXHO INC.: Reaches $80M Racial Discrimination Suit Settlement
----------------------------------------------------------------
Sodexho Inc., a provider of food and hospitality management
services to companies, agreed to pay $80 million to settle a
lawsuit brought by black employees who charged that they were
routinely barred from promotions and segregated within the
company, The Associated Press reports.
Considered to be one of the biggest race-related job bias
settlements in recent years, the settlement also includes
detailed provisions for increasing diversity at the Maryland-
based company, including promotion incentives, monitoring and
training.
As previously reported in the December 27, 2004 edition of the
Class Action Reporter, U.S. District Judge Ellen Segal Huvelle
ruled that Sodexho would go on trial in the spring on
allegations that the company discriminated against African
American managers and employees.
According to Kerry Alan Scanlon, a lawyer for the plaintiffs,
court records would show that the federal judge rejected
Sodexho's motion for summary judgment and promptly set a
tentative trial date of April 25.
The case was filed in March 2001 against the Company's corporate
predecessor, Sodexho Marriott Services, Inc., after midlevel
black managers said they realized nearly all had been denied
promotions into upper management, while less-qualified
counterparts rose through the company. It was filed on behalf of
2,600 employees.
Even with the decision to go to trial, Sodexho stated that they
are confident that a jury will rule in their favor when the
class-action lawsuit goes to trial. To enforce their confidence
in a trail going their way, Leslie Aun, a Sodexho spokeswoman,
said, "Obviously, we're disappointed the judge ruled against us.
The judge has not issued a ruling that Sodexho is right or wrong
in terms of the central charges of the case, but we are still
confident that when all the facts are heard that it will be made
load and clear that Sodexho does not discriminate."
In her decision, Judge Huvelle wrote that the Company failed to
overcome "the mountain of evidence" that Sodexho's decision-
makers chose managers arbitrarily.
Sodexho, which is headquartered in Gaithersburg, Maryland and is
the North American subsidiary of the France-based Sodexho
Alliance, has been in viciously battling to keep the lawsuit out
of court since 13 black managers filed it in 2001. After Judge
Huvelle granted the plaintiffs class-action status in 2002,
Sodexho fruitlessly appealed the certification to the Supreme
Court, which declined to hear the case in October 2003.
In a press statement, the Company, which admitted no wrongdoing,
reiterated that it opted to resolve the litigation in order to
avoid protracting the case, which was set for jury selection
this April in federal district court in Washington. It.
Kerry Scanlon, the lead attorney for the employees told AP,
"This is an extremely positive result, both for the plaintiffs
and for the company. The opportunities that this settlement
provides both for African-American employees and for the company
are the best possible outcome."
The settlement will mean payouts to 10 lead plaintiffs and as
many as 3,000 other black salaried workers who worked at the
company between 1998 and 2004, according to the settlement
decree. It further stated that the compensation amounts would
depend on each person's tenure with the company with those hired
after 2001 receiving $2,000 each and those hired before that
getting $492 for each month of employment at Sodexho up to a
maximum of 120 months. The lead plaintiffs will also receive
$120,000 each.
Leslie Aun, a Company spokeswoman told AP that the cash payouts
will come in addition to money spent to set up monitoring,
training and other diversity initiatives.
UAL CORPORATION: IL Court Grants Certification To Investor Suit
---------------------------------------------------------------
The United States District Court for the Northern District of
Illinois granted class certification to the lawsuit filed
against The UAL Corporation Employee Stock Ownership Plan (ESOP)
and the ESOP Committee, styled "Summers v. UAL Corporation ESOP,
et. al."
Certain ESOP participants filed the suit, seeking monetary
damages and alleging that the ESOP Committee breached its
fiduciary duty by not selling Company stock held by the ESOP
commencing as of July 19, 2001. The complaint cites numerous
events and disclosures that allegedly should have alerted the
ESOP Committee to the need to sell the shares. The ESOP
Committee appointed State Street Bank and Trust Company
("State Street") in September 2002 to act as fiduciary, and
State Street started selling the shares in September 2002 when
the stock was trading between $1 and $5 per share.
Members of the purported class have also filed claims against
the Company in the Chapter 11 proceeding asserting that the
Company also is liable for the failure to sell the ESOP shares.
The Company has $10 million in fiduciary insurance in place to
cover some portion of any liability and has a pre-petition
obligation to indemnify the ESOP Committee members beyond that
coverage, which indemnification obligation may or may not be
assumed as part of the Company's plan of reorganization.
The parties have entered into a stipulation under which the
plaintiffs have agreed to proceed only against the insurance
proceeds. The plaintiffs have also added State Street as a
defendant. State Street has a pre-petition indemnification claim
against the Company under its Investment Manager Agreement as
Trustee of the ESOP and has filed a contingent indemnity claim
in the Bankruptcy Court. On February 17, 2005, the District
Court certified this matter to proceed as a class action on
behalf of all participants in the ESOP.
The suit is styled "Summers, et al v. UAL Corp Empl Stock, et
al, case no. 1:03-cv-01537," filed in the United States District
Court for the Northern District of Illinois, under Judge Samuel
Der-Yeghiayan. Lead counsel for the plaintiffs is Steve W.
Berman of Hagens & Berman, 1301 Fifth Avenue Suite 2900 Seattle,
WA 98101 Phone: (206)623-7292. Lead counsel for the defendant
is Max G. Brittain, Jr. Schiff Hardin LLP 233 South Wacker Drive
6600 Sears Tower Chicago, IL 60606 Phone: (312) 258-5500.
UNITED AIRLINES: Continues To Face Litigation Over 9/11 Attacks
---------------------------------------------------------------
United Airlines, Inc. continues to face approximately 125
lawsuits pending in the U.S. District Court for the Southern
District of New York related to the September 11, 2001 terrorist
attacks. The suits allege a variety of liabilities, including
wrongful death, injury or property damage, and claim that United
and others breached their duty of care to the passengers and to
the ground victims.
Identical actions have also been filed against American Airlines
and other defendants. Under the Air Transportation Safety and
System Stabilization Act of 2001 ("the Act"), the Company's
liability on such claims will be limited to the amount
of United's insurance coverage in place as of the day of the
attacks.
In addition, approximately 98% of families of the victims of the
September 11 terrorist attacks have opted to seek relief from a
fund created under federal law to provide an alternative to
litigation and as a consequence will not be seeking compensation
from United. United has stipulated that the automatic stay under
the U.S. Bankruptcy Code applicable to the lawsuits filed
against United, and covered up to the amount of United's
insurance coverage, can be modified so that these claims may
proceed.
UNITED AIRLINES: Plaintiffs Seek Antitrust Suit Dismissal Review
----------------------------------------------------------------
Plaintiffs are seeking review of an appellate court decision
affirming the United States District Court for the District of
North Carolina's dismissal of a class action filed against
United Airlines, Inc. and other air carriers, styled "Hall
d.b.a. Travel Specialists v. United, et al."
Six travel agencies filed the antitrust class action suit
following the reduction by the air carrier defendants of
commission rates payable to travel agents in 1997, 1998, 2001
and 2002 in alleged violation of the Sherman Act. The agencies
asked for the matter to be treated as a class action and sought
treble damages for lost commissions and other injunctive relief.
The total amount claimed, assuming liability, is approximately
$13 billion.
The Company's share of this amount was not separately alleged by
plaintiffs. Upon the Company's Chapter 11 filing, this case was
stayed as against United. On October 30, 2003, the trial court
entered judgment on behalf of the carrier defendants and
dismissed all of the plaintiffs' claims. On December 9, 2004, an
appellate court affirmed the trial court's ruling dismissing all
claims. Plaintiffs have asked the appellate court to reconsider
its decision.
The Company was also named in several similar lawsuits filed in
the U.S. and Canada, involving commission rates payable to
travel agencies. Most of these cases have either been stayed or
dismissed.
The suit is styled "Hall et al. v. United Airlines, et al., case
no. 00-CV-123," filed in the U.S. District Court Eastern
District of North Carolina (Wilmington) under Judge W. Earl
Britt. The plaintiffs are represented by A.L. Butler Daniel of
Anderson, Daniel & Coxe, P. O. Box 1309 Wrightsville Beach, NC
28480 Phone: 910-256-6896. United Airlines is represented by
Douglas W. Kenyon and Laurie J. Bremer, Hunton & Williams, P. O.
Box 109 Raleigh, NC 27602 Phone: 919-899-3000, E-mail:
jbremer609@earthlink.net.
VOLKSWAGEN OF AMERICA: Recalls 30,000 Cars Due To Fire Hazard
-------------------------------------------------------------
Volkswagen of America, Inc. is cooperating with the National
Highway Traffic Safety Administration (NHTSA) by voluntarily
recalling 30,000 passenger cars, namely:
(1) VOLKSWAGEN / GOLF, model 1999-2000
(2) VOLKSWAGEN / GTI, model 1999-2000
On certain passenger vehicles equipped with gasoline engines and
double layer fuel tanks, tension on the fuel supply line may
cause the fuel pump supply nipple to crack which could result in
a leak. Leaking fuel, in the presence of an ignition source,
may cause a fire.
Dealers will inspect the fuel supply line for tension and
inspect the fuel pump supply nipple for cracking. If necessary,
the fuel line and the fuel pump will be replaced. The recall is
expected to begin on July 15,2005. For more details, contact
the Company by Phone: 1-800-822-8987 or contact the NHTSA's auto
safety hotline: 1-888-327-4236.
WARNACO GROUP: Securities Settlement Hearing Set June 30, 2005
--------------------------------------------------------------
The United States District Court for the Southern District of
New York will hold a fairness hearing for the settlement in the
matter: In re The Warnaco Group, Inc. Securities Litigation (II)
(Case No. 01-CIV-3346 (MGC)) on behalf of all person and
entities who purchased the common stock of the Warnaco Group,
Inc. during the time period between August 15, 200 through June
8, 2001.
The hearing will be held before the Honorable Miriam Goldman
Cedarbaum in the Daniel Patrick Moynihan United States Court
House, 500 Pearl Street, New York, NY 10007, at 10:00 a.m., on
June 30, 2005.
For more details, contact In re The Warnaco Group, Inc.
Securities Litigation c/o Berdon Claims Administration, LLC by
Mail: P.O. Box 9014, Jericho, NY 11753-8914 by Phone:
800-766-3330 by Fax: 516-931-0810 or visit their Web site:
http://www.berdonllp.com/claims.
WASHINGTON: Court Ruling Favors Plaintiffs in Equal Pay Lawsuit
---------------------------------------------------------------
Under a decision by the state Court of Appeals in an equal-pay-
for-equal-work case, the state of Washington may owe state
workers up to $90 million or more in back wages, The Associated
Press reports.
In its unanimous ruling, the three-judge panel stated that
workers in general government must be paid at the same rates as
those who do similar work at state colleges and universities.
The decision, according to legal experts could also affect
pensions and other benefits.
Two custodial workers at Western State Hospital and a medical
transcriptionist at Eastern State Hospital filed the class-
action lawsuit, which was later consolidated with a lawsuit
filed by the Washington Public Employees Association. As of the
moment, the suit now covers more than 4,000 employees who have
worked for the state since 1996.
Written by Division II appeals Judge David H. Armstrong, the
decision virtually overturned a summary judgment by Thurston
County Superior Court Judge Daniel J. Berschauer, who ruled in
favor of the state without a trial in October 2003. He wrote on
behalf of the panel, "We conclude that the State's failure to
equalize basic salary levels bears no rational relationship to
the purposes of Washington's civil service laws."
Back in 2001, a settlement was negotiated, wherein state
officials promised to equalize wages over three years in 172 job
classifications, and both sides estimated at the time that the
cost would be $11 million in the first year. That deal, however,
collapsed with the Legislature failing to approve the required
funding.
Then, two years later Judge Berschauer ruled in favor of the
state, but the the appellate ruling sends the case back to his
courtroom in Olympia to determine how much the workers are owed.
According to assistant attorney general Spencer W. Daniels, who
estimated the potential liability at $10 million to $11 million
a year, or $90 million to $99 million, he and other lawyers for
the state have not decided whether to appeal to the state
Supreme Court.
Mr. Daniels told AP, "Obviously, we're disappointed. We're also
somewhat perplexed by the analysis of the court on the equal
protection claim." The state claimed that higher education
employees and general government workers were separate classes,
but the appeals panel ruled that they were part of a single
class.
Additionally, the panel's ruling also noted that there were pay
disparities in 76 general government job classifications and 65
higher education groups.
WILD OATS: Canada Court Refuses Summary Trial in Hep A Lawsuit
--------------------------------------------------------------
The Supreme Court of British Columbia, Canada denied a motion
for summary trial in the class action filed against Wild Oats
Markets Canada, Inc., as successor to Alfalfa's Canada, Inc.,
styled "Helen Fakhri and Ady Aylon, as Representative Plaintiffs
v. Alfalfa's Canada, Inc."
The suit seeks monetary damages on behalf of two groups of
claimants - those who claim to have contracted Hepatitis A
allegedly through the consumption of food purchased at a Capers
Community Market in the spring of 2002, and those who were
inoculated against Hepatitis A in March and April, 2002, after
handling and/or consuming food products from Capers that were or
might have been contaminated with Hepatitis A.
In the fourth quarter of 2003, the action was certified as a
class action by the court. The Company filed an appeal and a
hearing was held in September 2004. The appeal was denied in
October 2004. In December 2004, the plaintiffs brought a motion
for a summary trial of certain issues, and such motion was
denied in January 2005.
WILD OATS: Trial in CA Overtime Wage Suit Set On October 2005
-------------------------------------------------------------
Trial in the class action filed against Wild Oats Markets, Inc.,
styled "Auchterlonie, individually and on behalf of all others
similarly situated and the general public, and Roes 1 to 1000
vs. Wild Oats Markets, Inc. and Does 1 through 100," is set for
October 2005 in the Superior Court of the County of Los Angeles,
California.
The suit makes claims for payment of overtime and damages
relating to alleged violations of the California Business and
Professions Code by a former managerial employee, on behalf of
himself and all other similarly situated California employees,
claiming that store directors at our California stores should
have been classified as non-exempt employees and paid on an
hourly basis. Plaintiff also alleges that the Company's
incentive bonus program is illegal based upon deductions for
items outside of the employee's control.
The Company believes that the employee, a former store director,
was properly classified as an exempt employee based upon his job
duties, and intends to vigorously defend the suit, the Company
said in a disclosure to the Securities and Exchange Commission.
Asbestos Alert
ASBESTOS LITIGATION: Cyprus to Start Removal in Gov't Buildings
---------------------------------------------------------------
After a study on the use of hazardous asbestos is completed, its
remediation is set to begin in government buildings, according
to a technical committee set up by the ministries of Labor and
the Environment.
As previously reported in the March 4, 2005 edition of the Class
Action Reporter, Cyprus Electricity Authority denied accusations
made by the Green Party that it was using untrained staff to
undertake removal of asbestos material from a substation without
a disposal permit. Spokesman Costas Gavrielides dismissed the
claims, saying that the contractor hired to do the job had been
approved by the Labor Ministry.
Nevertheless, the issue prompted an investigation by the
Ministry of Agriculture and the Environment into the quantity
and quality of asbestos used as part of construction materials
in government buildings.
Heaviest exposures to asbestos occur in the construction
industry, particularly during the removal of asbestos during
renovation or demolition. Asbestos workers face the heightened
risk of getting cancer and various respiratory illnesses.
However, these diseases exhibit only after a number of years.
Speaking after the technical committee's session, Minister of
Agriculture Timis Efthymiou said that experts would also work on
how to put out proposals for companies specializing in asbestos
removal and burial.
According to Mr. Efthymiou, while EU laws do not specify or
impose the removal of materials containing asbestos, they do
determine standard procedures for safe removal and burial. He
pledged that by the end of April, the government should have an
initial assessment of the extent of asbestos use in buildings. A
month later, an updated report would designate a priority list
of buildings from which asbestos needs to be removed
immediately.
ASBESTOS LITIGATION: Tokyo, U.S. Navy Pay 35M Yen to 2 Workers
--------------------------------------------------------------
The Defense Facilities Administration Agency and the U.S. Navy
paid compensation for lung ailments suffered by two Japanese
former workers exposed to asbestos at the U.S. Navy's Yokosuka
base in Kanagawa Prefecture, the Associated Press reports.
A relative of a worker who died two years ago at the age of 88
received 22 million yen or US$206,000 and 13 million yen or
US$122,000 went to a 70-year-old man suffering from serious lung
problems as a result of asbestos exposure at the base.
Takashige Ishida, director of the Kanagawa Labor Hazard and
Occupational Illness Center, which is representing the victims,
did not disclose the names of the claimants. The group helps
people with occupational diseases and work-related injuries.
The two men, who worked on U.S. warships at the base starting in
the 1950s, developed pneumoconiosis, a lung disease that causes
breathing difficulties and fatigue. Asbestos was used mainly to
insulate steam pipes on the vessels. In the late 1990s, the
government labor standards office certified that the two had
been sickened by long exposure to asbestos -- 20 years in the
case of the man who died and 37 years for the 70-year-old.
More than 30 former workers at the Yokosuka base have filed
suits against the central government and the U.S. Navy in
asbestos-related cases, and several have reached out-of-court
settlements. The central government pays the salaries of
Japanese workers at U.S. bases in Japan under a bilateral
security pact.
Yokosuka Naval Base completed the removal of asbestos from all
of its ships more than a decade ago, U.S. Navy officials said.
Yokosuka is 45 kilometers southwest of Tokyo.
ASBESTOS LITIGATION: James Hardie's Ex-chief Adds to Huge Payout
----------------------------------------------------------------
Former chief executive of James Hardie Industries, Peter
Macdonald, has added to his controversial US$8.8 million
resignation payout by completing the conversion of 1.2 million
options into shares in the building products firm. That brings
his payout to more than US$11 million since the issue relating
to the underfunding of compensation for sufferers of asbestos-
related illnesses exploded last year.
The 2002 options will remain in force until July 2012. These
1.95 million options, with an exercise price of US$5.71, will
first become available in July 2005, again subject to
performance hurdles.
His severance pay of US$6.5 million or AUD8.5 million included
two years' salary US$1.7 million, double his most recent annual
bonus (US$3.452 million), and a payment from the bonus bank
(US$1.379 million).
Politicians, union leaders and asbestos support groups have
fiercely criticized the sum as indefensible at a time when the
community faced a potential US$1.5 billion shortfall in
compensation for asbestos-related diseases.
The Company and the NSW Government are expected to sign a
legally binding agreement in June.
One of the terms attached to the options when they were issued
in 1999 was that they would lapse if Mr. Macdonald did not
exercise them within six months of leaving the Company, a
deadline that passed last week.
A second parcel of 640,000 options granted in 2001 has been
canceled because, unlike the earlier grant, there was a
performance hurdle attached which was not met by the deadline. A
third parcel granted in 2002 can be exercised later this year,
but they will be canceled in October if James Hardie shares do
not perform better than the median of a peer group of Australian
industrial stocks.
After his resignation, Mr. MacDonald remained on the payroll as
a consultant and has since earned AUD270,000. His termination
contract stands for him to earn at a rate of AUD13,000 a month
until January 2007.
ASBESTOS LITIGATION: PPG Industries 1Q05 Profit Drops 20%
----------------------------------------------------------
First-quarter profits for PPG Industries, Inc. (NYSE: PPG) fell
20%, as the company reflected a charge for a legal settlement in
connection with an adverse ruling last month and to reflect the
net increase in the current value of the company's obligation
under its asbestos agreement initially reported in May 2002.
Sales were US$2.5 billion.
In a press release, the Pittsburgh, PA-based Company said it
reported a net income of US$95 million, or 55 cents a share, for
the latest quarter. The Company, which manufactures coatings,
sealants, glass and other chemicals, reported a charge of US$5
million, or 3 cents a share, in the latest period to reflect an
increase in company's asbestos obligation.
Net income adjusted for the nonrecurring legal settlement was
US$186 million for the first quarter 2005, an increase of 56
percent over net income in the first quarter 2004 on a
comparable basis.
In the first quarter 2004, PPG reported net income of US$119
million, or 69 cents a share, including US$3 million, or 2 cents
a share, to reflect the net increase in the value of the
company's obligation under its asbestos agreement. First quarter
2004 sales were US$2.3 billion.
Net income for the latest quarter also includes a charge of
US$91 million, or 52 cents a share, to settle a lawsuit filed by
Marvin Windows & Door. The Warroad, Minn., company alleged a
wood preservative from PPG failed to prevent rotting during the
late 1980s. The settlement was reached after an appeals court
ruled against PPG last month.
PPG's first-quarter sales climbed 10% to US$2.49 billion from
US$2.26 billion, with growth reflecting improvement in the
company's coatings, glass and chemicals segments. PPG also
raised its quarterly dividend to 47 cents from 45 cents, payable
June 10 to shareholders of record May 10. The company said it
has increased its payout every year since 1972.
"Our sales in the first quarter were an all-time record for any
quarter, reflecting the continued growth in all segments of our
balanced business portfolio," said Raymond W. LeBoeuf, chairman.
The record for sales in a quarter had been US$2.4 billion in the
second quarter of 2004.
Coatings sales increased US$58 million, or 5 percent, as a
result of strengthening foreign currencies and improved selling
prices. Operating earnings were down US$177 million due largely
to the impact of the nonrecurring legal settlement, amounting to
US$150 million pretax. In addition, inflation, primarily raw
materials, exceeded the benefits of higher selling prices, the
favorable effect of currency translation and improved
manufacturing efficiencies. Price increases were implemented
throughout the quarter.
Glass sales increased US$17 million, or 3 percent, as higher
volumes in automotive replacement glass and flat glass
businesses and the strengthening of foreign currencies more than
offset lower selling prices. Operating earnings were up US$16
million reflecting improved manufacturing efficiencies,
increased volumes, higher equity earnings and lower overhead
expenses. These increases exceeded the impact of higher energy
and freight costs.
Chemicals sales increased US$154 million, or 34 percent, on
higher selling prices for chlor-alkali products, higher volumes
and the strengthening of foreign currencies. Operating earnings
were up US$114 million primarily because of higher selling
prices and improved volumes, which more than offset higher
energy costs and inflation.
ASBESTOS LITIGATION: ACT MP Calls for Taskforce to Handle Risks
----------------------------------------------------------------
The Member for the New South Wales state seat of Bega has called
on the State Government to establish a South East Asbestos
Taskforce to address the public health risk associated with
asbestos that was installed into roof cavities in homes
throughout the ACT region in the 1960s and 70s. He recommended
that this taskforce be spearheaded by the public health unit and
involve the local government, the Environment Protection
Authority and Workcover.
Concerns have been raised that at least three homes in Bega had
asbestos supplied by former Canberra business Mr. Fluffy in the
1960s. This contractor reportedly pumped pure asbestos into the
roof cavities of a thousand homes in Canberra during this
period.
Mr. Constance is advising householders who suspect that they
have Mr. Fluffy insulation in their roof cavities to contact the
public health unit of Greater Southern Area Health Service, or
Jeff Tipping at the Bega Valley Shire Council.
Mr. Constance stressed that no one in state or local government
knows how extensive the problem of loose asbestos used in
domestic insulation is in the ACT region. And as a result, he
believes, a process must be established involving the government
and the public health unit. Initially, he suggested that the
State Government issue a public health warning to the region and
put in place a hotline for the people to contact. Then a
qualified person must be put in place to inspect and test for
the asbestos installation.
Local government needed to play a pivotal role in the process
because more often than not councils were the first point of
call for residents and their concerns, explained Mr. Constance.
During the 1980s the Federal Government funded the removal of
the Mr. Fluffy asbestos from Canberra homes.
Meanwhile, a large number of Queanbeyan houses also carry the
insulation in their roof cavities and the NSW Government is
resisting calls that it should pay for its removal.
ASBESTOS LITIGATION: Lloyd's Battles Congoleum's Bankruptcy Bid
---------------------------------------------------------------
Amid concerns that the case could destabilize the whole
insurance market, a US$1 billion or GBP524 million asbestos-
related lawsuit involving Lloyd's of London underwriters and
Equitas, the Lloyd's losses run-off vehicle, is due to begin
this week, reports the Evening Standard.
Five Lloyd's underwriters, Equitas and 20 other insurance groups
are opposing floor-tile Company Congoleum's intention to file
for Chapter 11 bankruptcy protection. If Congoleum pushes
through with this option, the insurers would then have to pay
out on its asbestos cover. A victory could prompt other firms
facing asbestos-related claims to opt for bankruptcy, forcing
bigger insurance payouts.
The insurance industry is opposing the Congoleum plan, which
will be considered by a New York court. The case is expected to
last until June.
As reported in the April 8, 2005 edition of the Class Action
Reporter, the insurers have asked the bankruptcy judge to reject
the company's reorganization plan, saying that it closely
resembles that of now defunct Combustion Engineering Inc. Last
November, the 3rd Circuit Court of Appeals in Philadelphia
overturned the previous plan. The insurers complained that the
plan requires inadequate contributions from Congoleum and its
parent company, American Biltrite Inc., which owns 55% of the
bankrupt company.
Equitas and the Lloyd's insurers have hired the New York office
of law firm Linklaters to represent them. Their exposure in the
case is understood to run into tens of millions of dollars.
Mary Warren, a partner at Linklaters, said, "Congoleum asserts
that close to US$1 billion in potential insurance proceeds are
at stake, of which the London market underwrote a significant
amount."
ASBESTOS LITIGATION: Electrolux Faces 931 Asbestos-related Suits
----------------------------------------------------------------
As of March 31, 2005, Electrolux, the leading producer of
household appliances, had a total of 931 pending cases,
representing about 11,650 plaintiffs. A total of 229 new cases
with about 300 plaintiffs were filed and 140 pending cases with
about 4,800 plaintiffs were resolved during the first quarter of
2005. About 10,400 of the plaintiffs relate to cases pending in
the state of Mississippi.
The filing submitted to the Securities and Exchange Commission
stated that almost all of the cases refer to externally supplied
components used in industrial products manufactured by
discontinued operations prior to the early 1970s. Many of the
cases involve multiple plaintiffs who have made identical
allegations against many other defendants who are not part of
the Electrolux Group.
Additional lawsuits may be filed against Electrolux in the
future. It is not possible to predict either the number of
future claims or the number of plaintiffs that any future claims
may represent. In addition, the outcome of asbestos claims is
inherently uncertain and always difficult to predict and
Electrolux cannot provide any assurances that the resolution of
these types of claims will not have a material adverse effect on
its business or on results of operations in the future.
ASBESTOS LITIGATION: IL Case Seeks Removal From Deferred Docket
----------------------------------------------------------------
After having developed pleural thickening, a Madison County
plaintiff has asked that his pending asbestos case be removed
from the court's asbestos deferred registry and transferred to
the active asbestos docket.
Mirroring what's already developed in Connecticut, Massachusetts
and other counties in Illinois, Madison County has created a
registry for non-mesothelioma cases. Cases on this registry
would only be heard later, when they meet criteria, based on the
American Bar Association's Standard for Non-Malignant Asbestos-
Related Disease Claims, adopted in 2003.
Ronald Akridge, an Illinois resident, claimed he has developed
an asbestos-induced disease, which was diagnosed on May 7, 2004.
He is seeking at least US$200,000 in actual damages plus
punitive damages in his suit against 54 defendants, including AW
Chesterton, General Electric, and Glidden Paints.
Mr. Akridge said that from 1966 through 1986 he worked for
several employers and was exposed to and inhaled large amounts
of asbestos fibers released from the products he worked with. He
alleged that the defendants failed to exercise ordinary care and
caution for his safety. He is accusing the defendants of willful
and wanton misconduct as they intentionally and with a reckless
disregard for his safety included asbestos in their products. He
added that the health hazard was foreseeable and that the
companies should have anticipated that people working around
asbestos products would be exposed to fibers leading to
respiratory illnesses.
As a result of one or more of the omissions on part of the
defendants, Mr. Akridge claimed he has had to undergo costly
medical treatment and that he suffers great physical pain and
mental anguish as a result of his asbestos exposure.
The case has been assigned to Circuit Judge Daniel Stack.
Michael Bilbrey of Edwardsville is representing Mr. Akridge.
ASBESTOS LITIGATION: House Passes FL Compensation Act or HB1019
----------------------------------------------------------------
The Florida House has passed HB1019 or the Asbestos and Silica
Compensation Act, which requires that plaintiffs meet a minimum
level of specific medical criteria before they can pursue an
asbestos or silica claim in the court system, reports The
Insurance Journal. The bill is part of a broader national effort
to limit asbestos litigation, and a larger business-led fight to
put limits on lawsuits in general.
As previously reported in the April 8, 2005 edition of the Class
Action Reporter, the bill also eliminates the statute of
limitations, preserving the ability of individuals who do not
yet show signs of impairment to file a claim when and if they
ever do become sick. The bill requires that those who file
asbestos-related claims in Florida courts are residents or are
able to document that their exposure occurred in Florida.
The Property Casualty Insurers Association of America applauded
the development, citing that the bill contains important
components of the group's tort reform agenda, asbestos and
premises liability reform.
"These bills are part of a comprehensive effort to restore
balance and fairness to the civil justice system in Florida,"
William Stander, PCI regional manager said.
"This bill is a very fair approach that efficiently handles the
glut of asbestos cases. It will ensure that those who are truly
sick receive just compensation. Under this bill, the right to
bring suit is also preserved by those who have been exposed to
asbestos or silica, but are unimpaired. If and when they develop
an asbestos-related or silica-related disease or injury, the
person then may bring suit," added Mr. Stander.
"The legislature has been considering a broad range of worthy
civil justice reforms this session, and we applaud [Florida]
House members for keeping the focus on the current abuses in
asbestos legislation," said Cecil Pearce, vice president of the
Washington D.C.-based American Insurance Association.
ASBESTOS LITIGATION: OR Rep. Solicits Federal Aid for Relocation
----------------------------------------------------------------
U.S. Rep. Greg Walden, R-Ore., has asked the federal government
to aid in temporarily relocating occupants of the asbestos-
contaminated North Ridge Estates subdivision while the health
risk is assessed. This request echoes the homeowners' pleas for
relocation targeted to gain the support of federal officials and
representatives of the Environmental Protection Agency.
The 52-acre subdivision was built on the site of World War II
Marine barracks. Debris from the barracks, which contains
asbestos, was mixed with dirt in the subdivision, while
asbestos-containing steam pipes run through the ground.
Homeowners discovered in 2001 the buried debris from razed
buildings, raising concerns about their exposure to asbestos
fibers.
MBK Partnership, a Klamath Falls development firm, bought the
property from private owners in 1977 to build a residential
subdivision.
In 1979, the EPA ordered that deed restrictions be put on any
parcels of the land sold. The order wasn't followed, but the
Oregon Department of Environmental Quality and the EPA took no
action, said state and federal officials.
If inhaled, the fine airborne asbestos fibers can cause scarring
of the lungs and even cancer. The Oregon Department of Human
Services has concluded that North Ridge Estates is a "past and
present public health hazard."
Relocation is under consideration by the EPA with a decision
expected soon, said Alan Goodman, senior project manager for the
EPA.
On the Jan. 8, 2005 edition of the Class Action Reporter, it was
revealed that the developer of the estates, MBK Partnership, has
filed for Chapter 11 protection in December of last year. The
move by MBK Partnership and its principal, Mel Stewart,
effectively halts a federal lawsuit brought by 13 families in
North Ridge Estates that claim the partnership knew of the
buried waste but failed to tell buyers. The lawsuit seeks US$6
million in property losses and more than US$14 million in other
losses. In its bankruptcy filing, MBK Partnership says it has
US$1 million to US$10 million in assets and faces about the same
amount of debts.
MBK Partnership has denied any wrongdoing in the development.
The partnership has claimed in court that the federal government
and the state of Oregon share in the liability for the cleanup
costs as former owners of the site.
ASBESTOS LITIGATION: Asbestos Charge Turns ABB Profit Into Loss
----------------------------------------------------------------
Swiss-based engineering group ABB Ltd. revised its fourth-
quarter and full-year 2004 results, posting losses for both
periods as a result of a US$232 million charge related to
asbestos claims filed against it.
Including the asbestos charge, ABB's fourth-quarter net loss is
US$223 million compared to a profit of US$13 million, which the
company reported earlier this year.
The Company revised its 2004 annual report to show a loss of
US$35 million instead of the previously stated profit of US$201
million. It said the change in the annual report would have no
impact on net debt or total cash from operations.
As reported in the April 1, 2005 edition of the Class Action
Reporter, the Company in a deal to settle all outstanding
asbestos-related claims agreed to pay an additional US$232
million into a trust fund under an amended plan to reorganize
its subsidiaries, Combustion Engineering and Lummus. But it
warned that it would have to restate its 2004 results to take
account of the additional costs.
The asbestos issue has been seen as one of the last remaining
hurdles to the completion of ABB's financial turnaround
following a restructuring bid. It should also put a stop on its
exposure to asbestos-related health claims from former workers
in the US.
The problems started in 1990 when the company acquired its
Combustion Engineering subsidiary, which made industrial boilers
lined with asbestos. Two other divisions in the US also made
products containing asbestos.
The amended reorganization plan should fully address issues
raised in a December 2004 judgment by the 3rd U.S. Circuit Court
of Appeals in Philadelphia, as well as objections raised by some
asbestos claimants, the company has said. The appellate court
had rejected ABB's petition to include its Lummus and Basic
Industries units in the company's overall US$1.2 billion
asbestos-claims settlement plan, which centers on its subsidiary
Combustion Engineering. All three are based in the United
States.
ASBESTOS LITIGATION: Exposure Raises Risk of Autoimmune Disease
----------------------------------------------------------------
People exposed to high levels of asbestos may face a higher risk
in the future of contracting autoimmune diseases like rheumatoid
arthritis and multiple sclerosis, according to a study from the
University of Montana. The researchers found a higher link
between asbestos and autoantibody activity in a group of people,
suggesting that this could serve as a basis for future disease.
Jean Pfau, PhD, a research assistant professor with the Center
for Environmental Health Sciences at the university and her
colleagues studied the risk in Libby, Montana, a town plagued by
the asbestos exposures that resulted from W.R. Grace & Co.'s
mining of vermiculite near the community.
The researchers found that the level of antinuclear antibodies
in the blood samples from the Libby residents were nearly 29%
higher than those in the adjoining town with no asbestos
exposure. Those who had been exposed to asbestos for more than
five years also tended to have higher concentrations in their
blood than those with less exposure.
Significantly higher levels of immunoglobulin A, which is a type
of protein produced by plasma cells that makes up part of the
immune system, were found in the individuals exposed to
asbestos. Of the Libby residents tested, more than three-
quarters also had asbestos-related lung problems, and those with
more severe lung problems had higher levels of these
autoantibodies.
Pfau's group concluded that the study supports evidence that
asbestos is an agent of systemic autoimmunity. Awareness of the
link between asbestos and autoimmunity could have a significant
effect on monitoring, testing, and treatment for exposed
individuals, the group added.
ASBESTOS LITIGATION: FM Administrators Say T&N Asset Sale Likely
----------------------------------------------------------------
Federal-Mogul Corp.'s administrators are set to begin the sale
process for assets involved in the Company's bankruptcy case
within a week if no progress is made, The Deal reports. The auto
parts maker's administrators have been consistent in saying that
if an agreement can't be reached, they would begin "controlled
realization" efforts since they believe a sale would generate
more cash for asbestos creditors.
In a British insolvency proceeding, controlled realization is
the process where an administrator sells assets over time to
maximize value.
The dispute stems from asbestos claims filed against Federal-
Mogul's British unit, Turner & Newell. The asbestos claimants'
committee puts the total amount of asbestos claims against the
U.K. debtors at US$10.97 billion. Kroll Inc., T&N's U.K.
administrator, estimates the total at US$5.3 billion. The T&N
trustee put liabilities between US$2.1 billion and US$5.5
billion. The final number would determine the recovery of T&N's
asbestos claimants and what 40,000 T&N retirees should get from
any sale proceeds.
Federal-Mogul withdrew an offer to continue pensions for workers
at T&N in December. The pensioners had earlier rejected another
settlement offer.
Under the U.S. Bankruptcy Code, a debtor could enter a
relatively quick Section 363 sale, with the buyer walking away
with few liabilities. But in the U.K., such a sale, or multiple
ones that are related, could take years. Meanwhile, T&N would
continue as a going concern until the assets are sold.
Beginning a controlled realization process takes time, but it
gives clear indication that a company has switched from
reorganization to liquidation. In the U.K., administration is
akin to Chapter 11 reorganization in the U.S.
Federal-Mogul has maintained throughout the case that if the
administrator pushes for a sale, it would result in loss of
value and would damage creditors' recovery.
Federal-Mogul filed for Chapter 11 protection Oct. 1, 2001, with
the U.S. Bankruptcy Court for the District of Delaware in
Wilmington. From 1920 to 1976, T&N was the largest employer in
the British asbestos industry and Federal-Mogul has since been
hit by US$11 billion in claims stemming mainly from its takeover
of the UK operations in 1988.
Under Fed-Mogul's proposed reorganization plan, notes would be
converted into 49.9% of the reorganized company, while
individuals who claim asbestos-related personal injuries would
get the rest.
ASBESTOS LITIGATION: Crane Co. Reveals 2,807 New Claims, 1Q Data
----------------------------------------------------------------
Crane Co. (NYSE: CR), a diversified manufacturer of engineered
industrial products, received 2,807 new asbestos-related claims
at March 31, 2005, bringing the total claims to 86,923. The
Stamford, CT-based Company also had 413 settlements and 448
dismissals. These cases were filed in various state and federal
courts alleging injury or death as a result of exposure to
asbestos.
Of the 86,923 pending claims as of March 31, 2005, about 25,000
claims were pending in New York, about 33,000 claims were
pending in Mississippi, and around 4,000 claims were pending in
Ohio, jurisdictions in which recent legislation or judicial
orders restrict the types of claims that can proceed to trial on
the merits.
As reported in the Jan. 28, 2005 edition of the Class Action
Reporter, the Company decided to terminate the comprehensive
master settlement agreement settling its asbestos-related
litigation on January 24, 2005, boosting its fourth-quarter
results. Since then, the Company has been resolving claims filed
against it in the tort system.
The gross settlement and defense costs (before insurance
recoveries and tax effects) for the Company in the three-month
periods ended March 31, 2005 and 2004 totaled US$7.2 million and
US$9.6 million, respectively. As the Company transitioned back
to the tort system during the first quarter of 2005, settlement
and defense costs increased from levels in January that were
well below the average monthly cost in 2004 to levels in March
that were generally consistent with experience in 2004. As a
result, costs for the first quarter of 2005 may not be
indicative of the costs to be incurred in subsequent quarters of
2005.
The Company reported that first quarter 2005 net income
increased to US$25.0 million, or US$.42 per share, compared with
net income of US$22.2 million, or US$0.37 per share, reported in
the first quarter 2004.
Crane Co. matched consensus expectations, according to Thomson
First Call, and topped year-earlier earnings of US$22.2 million,
or 37 cents a share. Sales rose to US$507.1 million from
US$448.3 million.
For the current second quarter, Crane expects to earn between 53
cents and 63 cents a share, up from year-earlier earnings of 52
cents a share, and within analysts' estimates of 55 cents a
share. For the year, Crane reiterated it expects to earn between
US$2.10 and US$2.25 a share, bracketing Wall Street's outlook of
US$2.15 a share. In 2004, Crane earned 78 cents a share, which
included a gain.
Crane also said that aggressive efforts to implement corrective
actions in the Electronics Group are continuing beyond the first
quarter 2005. The company also maintained its full-year free
cash flow guidance of US$150 million with operating activities
expected to generate US$175 million, before asbestos and capital
expenditures.
Cash payments related to asbestos settlement and defense costs,
and certain related fees and expenses, are estimated to be
between US$50 million to US$70 million during 2005, which will
be offset to some degree by reimbursements from insurers and tax
benefits.
During the first quarter of 2005, the Company's operating
activities used cash flow of US$4.9 million before asbestos-
related payments, compared with US$3.3 million cash flow that
was generated in the first quarter of 2004, reflecting higher
working capital needs to support stronger business levels in the
current period. The Company paid US$10.8 million of asbestos-
related fees and costs (net of insurance recoveries), but
received a US$9.9 million refund associated with the termination
of its master settlement agreement.
ASBESTOS LITIGATION: Find Halts Construction of Housing Estate
--------------------------------------------------------------
After asbestos was detected in the 12 stockpiles of landfill at
the construction site, work on a multimillion-dollar housing
estate in Sydney's west has been temporarily stopped. Warning
signs have been posted at the 104-hectare Permulway development,
which is near a shopping complex and a playground.
After investigations conducted by WorkCover confirmed the
presence of asbestos, it immediately issued an improvement
notice to the developers.
Work on the 1600-home estate, which is a joint venture between
Boral and Delfin Lend Lease, started in 2002. It includes a
Woolworths supermarket, park and children's playgrounds. About
250 blocks of land have been sold. Six homes have been built and
occupied.
Construction Forestry Mining and Energy Union organizer Greg
Cummings said the group fears the asbestos could be more
widespread and want a full investigation.
Delfin project director Paul O'Brien said the site had been
cleared by the Environment Protection Authority as fit for
residential development.
He told The Sunday Telegraph, "We are now working with the land
owner to ensure the small fragments of material found are being
managed in accordance with EPA, Workcover and local authority
guidelines. Safety of residents and workers is our number one
priority."
ASBESTOS LITIGATION: ADAO Discusses FAIR Act with Sen. Specter
--------------------------------------------------------------
In a landmark meeting with Senate Judiciary Chairman Arlen
Specter, the Asbestos Disease Awareness Organization discussed
its opposition to Senate Bill 852, the Fairness in Asbestos
Injury Resolution Act. In a press conference after the meeting,
the group released a statement explaining why the bill does not
adequately address the rights of asbestos victims.
ADAO Co-Founder and Executive Director Linda Reinstein, whose
husband suffers from asbestos-related pleural mesothelioma,
stated, "For too long, our voice -- the voice of the hundreds of
thousands of victims throughout America -- has gone unheard...We
believe it [the FAIR Act] is anything but fair."
Mrs. Reinstein outlined the asbestos victims' top opposition
points to the bill, which include:
(1) The elimination of a person's basic right to have their
grievances heard in court;
(2) Vast under-funding, unwarranted ineligibility and exclusion
of claims;
(3) Faulty medical criteria, burdensome claims processes,
insufficient up front funding, lack of equitable transition for
current cases;
(4) Under funding for research into potential treatments and a
cure;
(5) Lack of proper definition for financial awards; and
(6) Too much power in the hands of the Administrator.
According to Mrs. Reinstein, "The bottom line is that Senate
Bill 852 was written without the voice of the victims. Asbestos
companies are not victims. Congress should only pass legislation
that properly protects and supports those who are."
ADAO is an independent organization funded through voluntary
contributions and staffed by volunteers. For more information
visit www.asbestosdiseaseawareness.org or contact Doug Larkin,
Co-founder and Communications Director at 703-250-3590 Ext.
1245.
ASBESTOS LITIGATION: CA Residents Worry Over Asbestos in Rubble
---------------------------------------------------------------
Months after the popular bar and grill, Bananaz, burned down,
fears that airborne asbestos within the commercial property is
creating a health hazard are growing among the residents.
Property owner Denise Roberge said a contractor was supposed to
remove asbestos from the site, but so far no one has shown up.
The city of Palm Desert said the asbestos has to be removed
before crews can demolish the building. The city requires the
inspectors to go back in to make sure that asbestos has been
cleared. When they're satisfied, the demolition can begin. But
that could take several more months.
Because the burned out building is an open structure, state law
requires the asbestos remediation team to put up a large plastic
tent over the area before they remove anything. That keeps the
particles from floating out to the nearby businesses.
The issue becomes more troubling since there are several
commercial establishments in the shopping center. Most occupants
are also concerned about the effect the asbestos risk will have
on their businesses since they believe a further delay in the
cleanup would repel their customers.
Meantime, the City of Palm Desert said they've given Ms. Roberge
reasonable time and now are pushing her to tear Bananaz down in
the next 30 days. If Bananaz is still up after a few more
months, the city can begin to fine the property owner to speed
up the demolition.
ASBESTOS LITIGATION: Saint Gobain Gets 6,000 New US claims in 1Q
----------------------------------------------------------------
Manufacturer of industrial materials, Compagnie de Saint-Gobain
SA, revealed an increase of new asbestos claims filed in the
United States in the first quarter, from 5,000 in the same
period last year to this year's record of 6,000 new claims.
The La Defense Cedex, France-based Company said the surge
reflects the addition of about 3,000 mass claims "not supported
by any medical proof in the State of Kentucky." A total of 7,000
new claims were resolved, compared with 5,000 in the first
quarter of 2004. A total of 3,000 claims were categorized as
"inactive dockets."
As a result, the number of outstanding claims at March 31, 2005
continued to plunge, to around 102,000, compared with 106,000 at
December 31, 2004.
Furthermore, the average cost of settlement over the past 12
months stands at US$3,000 per claim, on a par with previous
levels, it said.
Saint-Gobain operates in 49 countries worldwide and fields a
workforce of over 180,000. It is listed on the stock markets in
Paris, London, Frankfort, Zurich, Brussels, and Amsterdam.
ASBESTOS LITIGATION: Trust Fund Bill Picks Up Another Sponsor
-------------------------------------------------------------
Legislation to create a US$140 billion asbestos compensation
fund drew an additional Republican sponsor and opposition from
two Democrats on the U.S. Senate panel considering the bill,
Reuters reports.
At the end of the latest hearing, Wisconsin Senator Russell
Feingold and Massachusetts Senator Edward M. Kennedy said they
would vote against the bill. Senate Judiciary Chairman Arlen
Specter also announced that Sen. Lindsey Graham of South
Carolina had signed on as a co-sponsor.
That means five of the ten Republicans and two of the eight
Democrats on the Judiciary Committee are now co-sponsors. At
least three more votes are needed to get the proposal approved
by the committee.
Meanwhile, supporters insisted the bill could withstand a
constitutional challenge after a group of companies and insurers
called the Coalition for Asbestos Reform said during the hearing
that the plan to make companies and insurers finance the fund
amounted to an "unconstitutional taking of private property."
But Edward Becker, a federal appeals judge, was confident the
plan could prevail and told the committee that he believes the
constitutional challenge would fail. Sen. Specter also dismissed
the constitutional concern.
The proposed fund would cap the liability of companies and their
insurers facing asbestos litigation. Victims would no longer be
able to sue, but would go to the fund for payment.
Manufacturers testified in favor of the fund, while insurers
said they could not support the bill in its current form, and
labor representatives who testified were divided.
But a member of the House of Representatives has decided to
pursue a different approach to curbing asbestos lawsuits. Rep.
Chris Cannon, Republican of Utah, is introducing a bill that
establishes medical criteria for filing asbestos claims in
court, his office said.
The National Association of Manufacturers praised the bill,
saying that setting up the trust fund to pay asbestos claims
would mean tens of billions of dollars more in compensation.
Since legal costs would be less, president John Engler, believes
the plaintiffs could get US$65 billion more in total
compensation than with the present system.
Although the bill garnered criticism from both sides, Sen.
Specter said, "It's not possible to satisfy everybody on
everything." However, he conceded, "We're prepared to consider
other modifications [to the bill]."
ASBESTOS LITIGATION: Manitoba Head Speaks Against Federal Action
----------------------------------------------------------------
Dennis Whitebird, grand chief of the Assembly of Manitoba
Chiefs, is angered that Ottawa is spending more than $360,000 to
remove asbestos from military homes in Manitoba but it refuses
to pay to remove asbestos from First Nations' homes in the
province.
The Department of Indian and Northern Affairs has denied
assistance to about a dozen First Nations families in Manitoba
who have the contaminated insulation in their homes.
Before renovating military homes, the Department of National
Defense tests them for hazardous materials. As a result of those
tests, the military has just awarded a contract to remove
asbestos-contaminated Zonolite insulation from 17 homes at
Canadian Forces Base Shilo, 35 km east of Brandon.
Col. Stewart Moore, an assistant deputy minister with Defense,
said that the removal is part of a major renovation project to
extend the life of the homes for about 20 to 25 years. Removal
is necessary since the renovations would disturb the insulation,
possibly presenting a health hazard to contractors. He admits
the cost of the cleanup is substantial, reaching a sum of
$360,000 or more than $20,000 for each home.
Mr. Whitebird acknowledges that the military's approach could
help in the lawsuit launched by Manitoba First Nations residents
against the federal government.
As reported in the November 5, 2005 edition of the Class Action
Reporter, Raven Thundersky and her sister, Rebecca Bruce, filed
a suit against Indian and Northern Affairs alleging that she and
several of her family members contracted asbestos-related
diseases after 17 years of living in a home with Zonolite
insulation at the Poplar River First Nation.
On the April 22, 2005 edition, Mrs. Thundersky identified seven
similar cases and said that she is hoping a judge will certify
the case as a class-action suit, allowing others to join.
"I think they're acknowledging that is a major concern. It's a
health risk and they're doing something about it," Mr. Whitebird
said. "But on the other token, if it deals with First Nations,
it's not a priority."
An estimated 300,000 homes across Canada contain Zonolite
vermiculite insulation.
ASBESTOS LITIGATION: Congoleum to Modify Plan of Reorganization
---------------------------------------------------------------
Congoleum Corporation (AMEX: CGM) has reached an agreement in
principle with representatives of the Asbestos Claimants'
Committee and the Future Claimants' Representative to make
certain modifications to its proposed plan of reorganization and
related documents governing the settlement and payment of
asbestos related claims against Congoleum.
According to the press release, under the agreed-upon
modifications, asbestos claimants with claims settled under
Congoleum's pre-petition settlement agreement would agree to
forego the security interest they were granted and share on a
pari passu basis with all other present and future asbestos
claimants in insurance proceeds and other assets of the trust to
be formed to pay asbestos claims against Congoleum.
As a result of these changes, Congoleum will be preparing an
amended plan and disclosure statement and soliciting acceptances
from certain claimant creditors affected by these modifications.
There can be no assurance that the amended plan will receive the
affirmative vote of the requisite majorities. Congoleum has
requested an adjournment of the hearing presently underway to
consider confirmation of its existing plan of reorganization.
The amended plan and disclosure statement modifications and
solicitation procedures will be subject to court approval.
Roger S. Marcus, Chairman of the Board, commented, "We consider
this another positive step forward. We have renegotiated certain
important aspects of our plan of reorganization and related
documents in light of developments in other asbestos bankruptcy
proceedings as well as objections raised concerning our current
proposed plan.
"Our hope is that by addressing these concerns and following
judicial guidance from other asbestos reorganization cases, the
process of obtaining and sustaining the confirmation of our
amended plan will ultimately take less time and cost less money,
and the risk of an unfavorable outcome will be reduced. While
these changes will delay the start of our confirmation process,
we believe they will ultimately shorten the time it will take to
get the asbestos problem completely behind us. We are hopeful
that we can accomplish that by the end of 2005."
Interested parties should refer to the documents that will be
filed for a complete description of the modified plan. Copies of
the modified plan and disclosure statement will be filed by
Congoleum with the Securities and Exchange Commission as
exhibits to a Form 8-K when they are available. They will also
be available on the investor relations section of Congoleum's
website at www.congoleum.com.
On December 31, 2003, Congoleum Corporation filed a voluntary
petition with the United States Bankruptcy Court for the
District of New Jersey (Case No. 03-51524) seeking relief under
Chapter 11 of the United States Bankruptcy Code as a means to
resolve claims asserted against it related to the use of
asbestos in its products decades ago.
Congoleum Corporation is a leading manufacturer of resilient
flooring, serving both residential and commercial markets. It is
a 55% owned subsidiary of American Biltrite Inc. (AMEX:ABL).
ASBESTOS LITIGATION: Legislation to Ban Asbestos Use Neglected
--------------------------------------------------------------
Enthusiasm for setting up a bill to set up a US$140 billion
trust fund to compensate asbestos victims has diverted attention
from legislative efforts to ban most future uses of asbestos,
according to The Occupational Hazards.
Asbestos, a dangerous material leading to serious respiratory
illnesses, is illegal in most industrialized countries. Since
reaching a peak of 803,000 metric tons in 1973, asbestos
consumption in the U.S. has fallen steadily, but it continues to
be used. Last year, U.S. companies utilized a little less than
3,500 tons of asbestos.
For several years, Sen. Patty Murray, D-Wash., has attempted to
pass legislation banning its use in the United States. If it
became law, the bill would, within 2 years, prohibit "persons
from manufacturing, processing or distributing in commerce
asbestos-containing products," with the following specific
exceptions:
(1) Asbestos diaphragms for use in the manufacture of "chlor-
alkali" (chlorine) and its derivatives;
(2) Roofing cements, coatings, and mastics utilizing asbestos
that is totally encapsulated with asphalt; and
(3) If the Secretary of Defense or the administrator of the
National Aeronautics and Space Administration cannot find
alternatives, they could use asbestos for purposes they deem
"critical to the functions" of their respective agencies.
The Asbestos Information Association of North America, the group
representing less than 20 asbestos manufacturers left in the US,
opposes the bill. Its president Bob Pigg said, "The bill would
put our association out of business."
The industry group National Association of Manufacturers
however, has expressed its full support of the ban, saying that
the exceptions listed are appropriate. Jan Amundson, general
counsel of NAM, said the provision for penalties to be imposed
on employers who violate asbestos regulations is sufficient to
deter illegal activity. The money collected would be added to
the trust to compensate victims.
ASBESTOS LITIGATION: TX Senate Passes Bill to Reduce Lawsuits
-------------------------------------------------------------
After the Texas Senate Affairs Committee voted unanimously to
approve a bill that would require asbestos and silica exposure
claims to pass strict medical criteria before they can proceed,
the bill now moves for approval to the House. A decision is
expected before the session ends May 30.
Supporters of Senate Bill 15 aim to limit the flood of lawsuits
bogging down the Texas judicial system. Under the plan, only
those who have serious illnesses caused by inhaling asbestos and
silica would be allowed to sue companies that made products
containing those materials.
The bill also expands time limits for filing such lawsuits so
people who have been exposed to asbestos or silica fibers can
sue should they exhibit symptoms of the disease in the future.
Opponents have said the measure would limit the ability of those
who've been injured by asbestos exposure to hold those companies
accountable.
The number of new asbestos lawsuits filed has increased
dramatically. Since 1988, more lawsuits alleging asbestos-
related disease have been filed in Texas than in any other
state. It is estimated that up to 90 percent of the cases are
filed by people who are not impaired.
ASBESTOS LITIGATION: EPA Honors 8 for Probe into Asbestos Fraud
---------------------------------------------------------------
The U.S. Environmental Protection Agency granted the highest
award to a prosecutor and seven federal investigators from
Syracuse, NY, for the investigation of what was considered one
of the most serious environmental crimes in US history.
At a ceremony in Washington, D.C., the investigators received a
Gold Medal for their work that led to the conviction of 16
people and a corporation, AAR Contractor of Latham, for an
asbestos-removal scam that lasted 10 years. The owners of the
company, Alexander and Raul Salvagno, were sentenced to 25 years
and 19 years in prison last year, the longest sentences for an
environmental crime ever, said EPA spokesman, David Deegan.
Raul and Alexander Salvagno were convicted in March 2004 for
directing a cleanup scam in their asbestos removal business that
put people at more than 1,500 locations at risk. During the
five-month trial, former employees testified that the company
did "rip and run" cleanups and falsified as many as 75,000
tests.
They were convicted of racketeering and conspiracy to violate
environmental laws for doing rushed cleanup jobs at 1,555
buildings, most of them in the Capital Region, including 14
cleanups at 12 churches, 63 cleanups in 54 area schools and at
least 130 cleanups at eight area colleges.
The award was given to the assistant U.S. attorney who
prosecuted the case, Craig Benedict; EPA special agents Justus
Derx, Michael Dwyer and Patrick Fracolla; Internal Revenue
Service special agents Michael Kinahan and Kelly Ewald and tax
fraud investigative assistant Renee Beam; and Peter Seguin, a
special agent with the Army's criminal investigative command.
ASBESTOS LITIGATION: PA School Heads to Dispel Fears of Exposure
----------------------------------------------------------------
After asbestos-removal work in the school auditorium was done
over the weekend, Washington Elementary School officials assert
that the cleanup was successful and that the air is now
asbestos-free, reports the Pittsburgh Tribune.
The administrators of the Mt. Lebanon school wish to allay fears
of parents who kept their children from attending classes until
the school can guarantee their safety. School officials said 74
of the 330 students were absent reflecting a 22.4 percent
absentee rate that was triple the district-wide rate of 7
percent. Parents had asked the district earlier to postpone the
project until summer, but officials said it would unnecessarily
delay a US$7 million renovation.
Parents became concerned after reading e-mails circulated among
members of the Parent Teacher Association. The district used
terms such as "relative safety" to explain the work, which the
parents found alarming.
In a letter sent home with students, Principal Christine Heisler
said five air samples taken in the auditorium and several more
from around the building found no asbestos in the air. SE
Technologies oversaw the removal in compliance with Allegheny
County Health Department guidelines.
Health Department spokesman Guillermo Cole, who monitored the
removal, said the work area was properly sealed off. He said
that he considers it unnecessary to keep the students home.
As an extra precaution, the school moved classes from the ground
floor to the upper two floors of the building and they will
remain there until further notice, district spokeswoman Cissy
Bowman said.
State Department of Environmental Protection spokeswoman Betsy
Mallison said it's common for schools to remove asbestos during
the school year and that as long as precautions were set in
place, there should be nothing to worry about.
ASBESTOS ALERT: DEQ Expert Fears MT School's Health Risk Remains
----------------------------------------------------------------
A specialist for the Montana Department of Environmental Quality
is worried that Thompson Falls school administrators might have
reopened an asbestos-contaminated building while it still poses
a hazard, the Associated Press reports.
Pierre Amicucci said the school should have been cleaned to
regulatory specifications after witnessing violations of
required practices at the site. However, School Superintendent
Jerry Pauli said cleaning was adequate and there is no evidence
the building puts occupants at risk for exposure to airborne
asbestos.
Earlier this spring, testing of the attic insulation for
asbestos was done as preliminary work for replacement of the
roof of the two-story building that now houses kindergarten,
sixth grade, a computer laboratory and administrative offices.
One of the nine samples exceeded the acceptable asbestos level
at which the federal government requires abatement. An abatement
contractor began removing insulation during the school
district's March 25 to 29 Easter break.
Mr. Amicucci said that he saw workers use a "dry" rather than a
"wet" process necessary to control dust. There were also no
airtight barriers between the attic and the building's second
floor. Even after some cleaning, he still found dust evident on
horizontal surfaces. DEQ required the building remain closed for
fear of asbestos contamination, action that extended the school
break until April 4.
In a March 31 letter to Mr. Pauli, the Environmental Protection
Agency warned that it might be possible for the asbestos fibers
to spread to various areas of the school building. The agency
called for the entire building to be cleaned.
Further testing of the insulation found an asbestos level below
the federal threshold for abatement. Mr. Amicucci doesn't
dispute the results of the second test, but believes that since
there is no safe level of asbestos, hazards could persist.
The EPA reinforced that point in an April 11 letter to Mr.
Pauli, saying, "it is not to be assumed that the 1 percent
regulatory threshold [triggering abatement] is a health
standard." Regulatory authority by the DEQ and EPA ceased when
the new test results came in.
As is customary, cleaning that is more extensive will occur when
use of the building decreases during the summer break, Mr. Pauli
insisted.
ASBESTOS ALERT: Widow Sues Harry Taylor of Ashton for GBP200T
-------------------------------------------------------------
Seeking compensation of up to GBP200,000, a widow has taken the
first steps in the lawsuit against her husband's employer, Harry
Taylor of Ashton Ltd., maker and distributor of heating
products.
Sophia Baines, aged 59, is claiming that her husband, David,
contracted the asbestos-related cancer mesothelioma from working
for the company between 1960 and 1969. His job involved removing
asbestos lagging from pipes.
A writ issued at London's High Court said that Mr. Baines first
experienced breathlessness, severe pain and weight loss in
December 2000. These symptoms, highly typical of mesothelioma,
caused his inability to carry out normal activities of daily
life. As a result, he also suffered from anxiety and distress.
He underwent chemotherapy but on Sept. 6, 2002, Mrs. Baines'
husband of almost 38 years died at the age of 57.
Mrs. Baines accuses the company of negligence claiming it
exposed her husband to asbestos dust, failed to warn him of the
risks he took and failed to provide a safe place or system of
work.
Company Profile:
Harry Taylor of Ashton Ltd.
Kitson's Works
Aylesbury Road
Bromley, Kent
BR2 OQZ, England
Phone: 020-8464-0915
http://www.harrytaylor.co.uk/
Description:
Harry Taylor was founded in September 1925 and became Harry
Taylor of Ashton Ltd in 1962. The Company caters to the demand
for heating systems in industrial, commercial and community
buildings.
ASBESTOS ALERT: MA Town to Pay US$100T Fine for Illegal Dumping
---------------------------------------------------------------
Under the terms of a settlement signed last week, the town of
Longmeadow has agreed to pay a fine of US$100,000 for illegally
dumping asbestos behind its public works building and raw sewage
into the Connecticut River, the Associated Press reports.
The amount is part of a US$250,000 pollution fine initially
imposed on the town. However, the state Department of
Environmental Protection said Longmeadow would have to pay the
entire amount if it commits a violation of any of the various
state pollution laws within the next five years.
One of the most affluent residential communities in Western
Massachusetts, the posh Springfield suburb has already spent
more than US$150,000 in cleaning up the pollution that was
discovered in 2002.
After state inspectors found that the town was dumping asbestos
behind its public works building, they discovered that a sewer
pipe led from the building directly to the Connecticut River.
ASBESTOS ALERT: VA Regulators Probe City-ordered Demolition
-----------------------------------------------------------
Waynesboro City building officials are possibly facing US$2.5
million in fines after razing a dilapidated building without
notifying state asbestos inspectors, the News Virginian reports.
They said that they undertook the demolition against the
property owner's wishes for the sake of public safety.
Building Official Joe Honbarrier tore down the "Odd Fellows
Building" in January, giving the owner Will Rothacker a one-day
notice instead of the required 30 days according to city
building guidelines. Mr. Honbarrier denied any awareness of that
requirement. He reasoned that the owner allowed the building to
fall into disrepair over a two-year period. An engineer's report
request by the city however, stated that the building was not in
immediate danger of falling.
Commercial buildings built before 1985 must be inspected for
asbestos before demolition, and notification must be sent 10
days prior to the demolition to the Labor and Industry
Department, which controls asbestos abatement. Buildings
containing possible asbestos also must be doused to prevent the
spread of the flaky, carcinogenic material during demolition.
Records show that Mr. Honbarrier did not order an asbestos
inspection, douse the building or file with the Labor and
Industry. Documents obtained from the department show that Mr.
Honbarrier filled out the notification form about 100 days late.
The daily maximum penalty is US$25,000, according to state
officials, and depends on what is discovered in the
investigation.
Mr. Rothacker would now have to bear the cost of razing the
building, which is more than US$8,000. He would also have to
remove the rubble. He said he wanted due process: 30 days under
the city building guidelines. And he wants city officials to
follow the law before applying it against him.
Richard Wiggins, a Labor and Industry occupational health
compliance officer, launched the investigation earlier this
week. He is tasked with taking samples to determine the presence
and type of asbestos present. Based on those tests, a decision
will be made on how to remove the debris.
ASBESTOS ALERT: Fear Strikes Residents Near Burning Mill in CT
--------------------------------------------------------------
After an abandoned mill caught fire, Plainfield officials
urgently warned residents to shut their windows and remain
indoors for fear that asbestos fibers would be inhaled and harm
their health.
Donald Gladding, Plainfield First Selectman, said that the
InterRoyal Mill on Reservoir Street caught fire around 7 p.m.
and almost immediately, flames were seen shooting hundreds of
feet into the air and smoke can be seen for miles. Power went
out in the area and phone service was also affected. Up to 30
fire departments from around the region responded to the scene.
As the smoldering debris was falling, brush fires also broke out
in the area. The cause was not immediately evident.
The mill closed after the office furniture manufacturing
business went bankrupt in 1985. Part of the site was used for
plastic recycling in the early 1990s, but the complex has been
vacant since 1992.
Chemicals from years of manufacturing have seeped into the
building and surrounding land. The EPA halted demolition in 2000
after finding asbestos.
Mr. Gladding said the only hazardous material that might be
released is the asbestos, which is in the roofing material and
in the piping. The Environmental Protection Agency and the
Department of Environmental Protection were on the scene to
check the air quality to determine the extent of the health
risk.
Residents who find any debris from the fire in their yards are
urged not to handle the material and to call the fire department
immediately at (860) 564-5541.
New Securities Fraud Cases
BEARINGPOINT INC.: Finkelstein Thompson Lodges Stock Suit in VA
---------------------------------------------------------------
The law firm of Finkelstein, Thompson & Loughran initiated a
class action lawsuit in the United States District Court for the
Eastern District of Virginia on behalf of all purchasers of
BearingPoint, Inc. securities between August 14, 2003 and April
20, 2005, inclusive (the "Class Period").
The lawsuit was filed against BearingPoint, Inc. ("BearingPoint"
or "the Company") (NYSE: BE), certain former officers, and
BearingPoint's outside auditor, PricewaterhouseCoopers, LLP. The
Complaint asserts claims for violations of the federal
securities laws, as described below.
The Complaint alleges that defendants violated the federal
securities laws by issuing quarterly and yearly financial
statements for BearingPoint which materially misrepresented the
Company's financial performance and profitability in violation
of Generally Accepted Accounting Principles ("GAAP"). Plaintiff
specifically alleges that defendants violated GAAP by:
(1) materially overstating the value of (and failing to
write down the value of) the goodwill associated with
certain foreign acquisitions long after it had become
apparent that the value of such assets was impaired;
and
(2) materially overstating earnings as a result of its
failure to properly write down the value of these
impaired assets.
On April 20, 2005, it was revealed that the Company's previously
filed annual financial statements for 2003 and quarterly
financial statements for 2004 were materially false, should not
be relied upon, and would have to be restated to accurately
reflect the Company's true performance. It was also revealed
that BearingPoint's prior earnings reports were false, that
earnings would be materially reduced upon the restatement, and
that the Company would be forced to write-down between $250
million and $400 million in assets.
In reaction to these revelations, BearingPoint's share price
fell $2.49 on April 21, 2005, down 32 percent from its prior
closing price, thereby damaging plaintiff and the Class.
For more details, contact Donald J. Enright or Benjamin J. Weir
by Phone: (866) 592-1960 or by E-mail: dje@ftllaw.com or
bjw@ftllaw.com.
BEARINGPOINT INC.: Goodkind Labaton Lodges Securities Suit in VA
----------------------------------------------------------------
The law firm of Goodkind Labaton Rudoff & Sucharow LLP initiated
a class action lawsuit in the United States District Court for
the Eastern District of Virginia, on behalf of persons who
purchased or otherwise acquired publicly traded securities of
BearingPoint, Inc. ("BearingPoint" or the "Company") (NYSE:BE)
between August 14, 2003 and April 21, 2005, inclusive, (the
"Class Period"). The lawsuit was filed against BearingPoint,
Randolph C. Blazer, Robert S. Falcone and
PricewaterhouseCoopers, LLP ("Defendants").
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing materially false and
misleading statements throughout the Class Period regarding the
Company's financial performance. Specifically, Defendants failed
to disclose that
(1) BearingPoint's reported financial results were
inaccurate and could not be relied upon;
(2) BearingPoint's internal controls were inadequate to
ensure the reliability of its publicly reported
financial results;
(3) BearingPoint had materially overstated (and failed to
write down) the value of the goodwill associated with
certain of its foreign acquisitions in its publicly
reported financial statements long after it had become
apparent that the value of such assets was impaired;
and
(4) as a result of failing to timely write down the value
of BearingPoint's goodwill, BearingPoint had reported
artificially high earnings in its publicly reported
financial results.
On April 20, 2005, BearingPoint announced that it had determined
that it would have to take a mammoth write down of its goodwill
in a sum that is estimated at $250 to $400 million. BearingPoint
also stated that its previously issued 10-Q's for each of the
first three quarters of fiscal year 2004, its Form 10-K for the
six-month transition period ended December 31, 2003, and Form
10-K for the fiscal year ended June 30, 2003 should not be
relied upon because of errors in those financial statements and
would have to be restated. Additionally, it would miss the
deadline for filing its 2004 annual report. On this news, shares
of BearingPoint plummeted from a close of $7.77 per share on
April 20 to close at $5.28 on April 21, constituting a drop of
over 32% in a single day.
For more details, contact Christopher Keller, Esq. of Goodkind
Labaton Rudoff & Sucharow LLP by Phone: 800-321-0476 or visit
their Web site: http://www.glrslaw.com/get/?case=BearingPoint.
BEARINGPOINT INC.: Marc S. Henzel Lodges Securities Suit in VA
--------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit was filed in the United States District Court for the
Eastern District of Virginia on behalf of purchasers of the
publicly traded securities of BearingPoint, Inc. (NYSE: BE)
between August 14, 2003 and April 20, 2005, inclusive (the
"Class Period").
The complaint alleges that BearingPoint, Roderick C. McGeary,
Randolph C. Blazer, and Robert S. Falcone violated Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule
10b-5 promulgated thereunder, by issuing numerous positive
statements throughout the Class Period regarding the Company's
financial performance. As alleged in the complaint, these
statements were each materially false and misleading when made
as they failed to disclose and misrepresented the following
material adverse facts which were then known to defendants or
recklessly disregarded by them:
(1) that the Company had materially overstated its net
income and earnings per share and undervalued its
identifiable intangibles (goodwill) by approximately
$250-400 million;
(2) that the Company had inflated its earnings by
improperly accounting for restructuring charges
relating to acquisitions;
(3) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles ("GAAP");
(4) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(5) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On March 17, 2005, BearingPoint announced that it was delaying
the filing of its annual report on Form 10-K. According to
BearingPoint, it had experienced significant delays in
completing its consolidated financial statements. The delays are
due, in part, to:
(i) Additional substantive procedures necessary to validate
financial information due to control deficiencies;
(ii) The need to confirm the financial information generated
by the Company's new financial accounting system,
particularly in the area of revenue recognition; and
(iii) The Company's simultaneous, ongoing efforts to complete
management's assessment of its internal controls over
financial reporting in accordance with Section 404 of
the Sarbanes-Oxley Act.
Then on April 20, 2005, BearingPoint filed a current report on
Form 8-K. Therein, the Company disclosed that it found errors in
its financial statements spanning the past two years, that the
SEC had begun an investigation into its accounting, and that it
had fired nine executives. More specifically, the Company
stated: During the fourth quarter of the fiscal year ended
December 31, 2004 ("FY04"), BearingPoint determined that a
triggering event had occurred, which caused the Company to
perform a goodwill impairment test. The triggering event
resulted from a combination of various factors, including
downgrades in the Company's credit rating in December 2004,
significant changes in senior management and underperforming
foreign legal entities. As a result of an initial impairment
analysis, on March 17, 2005 the Company determined that a
material, non-cash charge will be taken during the fourth
quarter of FY04 as a result of the impairment of its goodwill
with respect to the operations in its Europe, the Middle East
and Africa ("EMEA") segment. The Company currently estimated
that the amount of the impairment charge will be $250 million to
$400 million.
BearingPoint also stated that the following previously issued
reports should not be relied upon because of errors in those
financial statements Form 10-Q's for each of the first three
quarters of FY04, Form 10-K for the six-month transition period
ended December 31, 2003 and Form 10-K for the fiscal year ended
June 30, 2003.
On news of this, shares of BearingPoint tumbled more than $2.25
per share on unusually high trading volume.
For more details, contact The Law Offices of Marc S. Henzel by
Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by
Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by
E-Mail: mhenzel182@aol.com.
DORAL FINANCIAL: Marc S. Henzel Lodges Securities Lawsuit in NY
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit was filed in the United States District Court for the
Southern District of New York on behalf of all securities
purchasers of Doral Financial Corporation (NYSE: DRL) between
January 15, 2003 and April 18, 2005 inclusive (the "Class
Period").
The complaint charges Doral, Salomon Levis, Richard F. Bonini,
and Ricardo Melendez with violations of the Securities Exchange
Act of 1934. More specifically, the Complaint alleges that the
Company failed to disclose and misrepresented the following
material adverse facts, which were known to defendants or
recklessly disregarded by them:
(1) that Doral Financial's earnings quality had been
significantly weakened by the Company's use of more
aggressive assumptions to generate gain on sale income,
as well as to value its retained interests in mortgage
loan sales;
(2) that Doral Financial's methodology used to calculate
the fair value of its portfolio of floating rate
interest only strips ("IOs") was incorrect and caused
the Company to overstate its financial results by $400-
$600 million in fiscal year 2004 alone;
(3) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles ("GAAP");
(4) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(5) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On April 19, 2005, Doral Financial announced that after
consulting with various financial institutions and other firms
with experience in valuation issues, the Company has determined
that it is appropriate to correct the methodology used to
calculate the fair value of its portfolio of floating rate
interest only strips ("IOs"). On news of this, shares of Doral
fell $0.77 per share, or 4.55 percent, to close at $16.15 per
share on unusually heavy trading volume. Then on April 20, 2005,
Doral Financial announced that on April 19, 2005, the Company
was informed by letter by the SEC that it was conducting an
informal investigation. On news of this, shares of Doral fell an
additional $0.41 per share to close at $15.74 per share, a $33
decrease from January 18, 2005.
For more details, contact The Law Offices of Marc S. Henzel by
Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by
Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by
E-Mail: mhenzel182@aol.com.
PETCO ANIMAL: Schiffrin & Barroway Lodges Securities Suit in CA
---------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
Southern District of California on behalf of purchasers of the
publicly traded securities of PETCO Animal Supplies, Inc.
(NASDAQ: PETC) ("PETCO" or the Company) between November 18,
2004, and April 14, 2005, inclusive (the "Class Period").
The complaint charges PETCO, Brian Devine, James Myers, and
Rodney Carter with violations of the Securities Exchange Act of
1934. More specifically, the Complaint alleges that the Company
failed to disclose and misrepresented the following material
adverse facts, which were known to defendants or recklessly
disregarded by them:
(1) PETCO overstated its fiscal fourth-quarter 2004
earnings by at least $3.0 million to $4.5 million;
(2) that as a result, PETCO's financial results were
materially overstated;
(3) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles ("GAAP");
(4) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(5) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On April 15, 2005, PETCO issued a press release with the
headline "PETCO to Delay Filing of Form 10-K." The release
stated that PETCO would delay the filing of its Form 10-K with
the Securities and Exchange Commission and that it had requested
a 15-day extension after it discovered accounting errors related
to certain under-accrued expenses in its distribution
operations. The Company anticipated its Q4 2004 earnings would
be reduced by 4.5 million and that FY 2005 earnings would be
reduced by a similar amount, as it took into consideration the
nature of the under-accrual of expenses. News of this shocked
the market. Shares of PETCO fell to $30.40, down 13.4%, or
$4.72, after tapping an intraday low of $27.06. It was the
biggest one-day drop in more than three years and wiped out all
gains made since August 2004.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Mail: 280 King of
Prussia Road, Radnor, PA 19087 by Phone: 1-888-299-7706 or
1-610-667-7706 or by E-mail: info@sbclasslaw.com.
R&G FINANCIAL: Brodsky & Smith Files Securities Suit in S.D. NY
---------------------------------------------------------------
The Law offices of Brodsky & Smith, LLC initiated securities
class action lawsuit in the United States District Court for the
Southern District of New York on behalf of shareholders who
purchased the common stock and other securities of R & G
Financial, Corp. ("R & G" or the "Company") (NYSE:RGF), between
April 21, 2003 and April 25, 2005, inclusive (the "Class
Period").
The Complaint alleges that defendants violated federal
securities laws by issuing a series of material
misrepresentations to the market, thereby artificially inflating
the price of the Company's securities. No class has yet been
certified in the above action.
For more details, contact Evan J. Smith, Esq. or Marc L.
Ackerman, Esq. of Brodsky & Smith, LLC by Mail: Two Bala Plaza,
Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 by E-
mail: clients@brodsky-smith.com.
R&G FINANCIAL: Charles J. Piven Files Securities Suit in S.D. NY
----------------------------------------------------------------
The Law Offices Of Charles J. Piven, P.A. initiated a securities
class action on behalf of shareholders who purchased, converted,
exchanged or otherwise acquired the common stock of R&G
Financial Corporation (NYSE: RGF) between April 21, 2003 and
April 25, 2005, inclusive (the "Class Period").
The case is pending in the United States District Court for the
Southern District of New York against defendant R&G Financial,
Victor J. Galan and Joseph R. Sandoval. The action charges that
defendants violated federal securities laws by issuing a series
of materially false and misleading statements to the market
throughout the Class Period, which statements had the effect of
artificially inflating the market price of the Company's
securities. No class has yet been certified in the above action.
For more details, contact the Law Offices Of Charles J. Piven,
P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt
Street, Suite 2525, Baltimore, Maryland 21202 by Phone:
410/986-0036 or by E-mail: hoffman@pivenlaw.com.
R&G FINANCIAL: Schatz & Nobel Lodges Securities Fraud Suit in NY
----------------------------------------------------------------
The law firm of Schatz & Nobel, P.C. initiated a lawsuit seeking
class action status has been filed in the United States District
Court for the Southern of District of New York on behalf of all
persons who purchased the publicly traded securities of R&G
Financial Corporation (NYSE: RGF) ("R&G," or the "Company")
between April 21, 2003 and April 25, 2005 (the "Class Period").
The Complaint alleges that R&G violated federal securities laws
by issuing false or misleading public statements. Specifically,
the Complaint alleges that R&G used improper accounting
assumptions to value its interest only ("IO") residuals used in
securitization transactions. On March 25, 2005, R&G announced
that it would restate its financial results for fiscal years
2003 and 2004. Then on April 26, 2005, R&G announced that it was
subject to an informal SEC probe relating to its restatement
announcement. On this news, shares of R&G fell from a close of
$23.18 per share on April 25, 2005, to close at $15.10 on April
26, 2005.
For more details, contact Wayne T. Boulton or Nancy Kulesa by
Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their
Web site: http://www.snlaw.net.
R&G FINANCIAL: Schiffrin & Barroway Lodges Securities Suit in NY
----------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
Southern District of New York on behalf of purchasers of the
publicly traded securities of R&G Financial Corporation (NYSE:
RGF) ("R&G Financial" or the "Company") between April 21, 2003
and April 25, 2005, inclusive (the "Class Period").
The complaint charges R&G Financial, Victor J. Galan, and Joseph
R. Sandoval with violations of the Securities Exchange Act of
1934. R&G Financial is a Puerto Rico-chartered, financial
holding company that operates R-G Premier Bank of Puerto Rico
(Premier Bank) a Puerto Rico commercial bank, and R-G Crown Bank
(Crown Bank), a Florida domiciled federal savings bank. The
Company also operates R&G Mortgage Corp (R&G Mortgage) in Puerto
Rico, The Mortgage Store of Puerto Rico, Inc. (Mortgage Store),
a subsidiary of R&G Mortgage and Continental Capital Corp.
(Continental), a mortgage-banking subsidiary of Crown Bank,
which does business in the continental United States.
According to the complaint, the Company failed to disclose and
misrepresented the following material adverse facts which were
known to defendants or recklessly disregarded by them:
(1) that R&G Financial's earnings quality had been
significantly weakened by the Company's use of more
aggressive assumptions to generate gain on sale income,
as well as to the value it retained in its interest
only ("IO") residuals in securitization transactions;
(2) that R&G Financial's methodology used to calculate the
fair value of its IO residual interests retained in
securitization transactions was incorrect and caused
the Company to overstate its financial results by at
least $50 million;
(3) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles ("GAAP");
(4) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(5) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On March 25, 2005, after the market had closed, R&G Financial
announced that it would restate its financial results for fiscal
years 2003 and 2004. News of this shocked the market. Shares of
R&G Financial, on April 26, 2005, fell $8.14 per share, or 35.12
percent, to close at $15.04, on unusually heaving trading
volume. After the market closed on April 26, 2005, R&G Financial
issued a press release wherein it announced that it was subject
to an informal SEC probe relating to its restatement
announcement.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Mail: 280 King of
Prussia Road, Radnor, PA 19087 by Phone: 1-888-299-7706 or
1-610-667-7706 or by E-mail: info@sbclasslaw.com.
R&G FINANCIAL: Scott + Scott Lodges Securities Fraud Suit in NY
---------------------------------------------------------------
The law firm of Scott + Scott, LLC initiated a shareholder class
action lawsuit in the United States District Court for the
Southern District of New York on behalf of purchasers of R & G
Financial Corp (NYSE:RNG) securities between January 1, 2003 and
April 26, 2005 (this is the present class period; any purchaser
of R & G securities in the past five years may contact the
firm).
R&G Financial Corporation, a diversified financial services
company, announced on April 26, 2005, that R&G Financial was
informed by a letter from the U.S. Securities and Exchange
Commission (the "Commission") that the Commission was conducting
an informal investigation regarding the Company's April 25 2005,
announcement that it would restate its financial statements, and
the underlying issues addressed in that press release.
R&G Financial is a diversified financial holding company with
operations in Puerto Rico and the United States, providing
banking, mortgage banking, investments, consumer finance and
insurance through its wholly owned subsidiaries: R-G Premier
Bank of Puerto Rico, a Puerto Rico-chartered commercial bank; R-
G Crown Bank, its Florida-based savings bank; R&G Mortgage
Corp., Puerto Rico's second largest mortgage banker; Mortgage
Store of Puerto Rico, Inc., a subsidiary of R&G Mortgage;
Continental Capital Corp., R-G Crown's New York and North
Carolina-based mortgage banking subsidiary; R-G Investments
Corporation, a Puerto Rico broker-dealer; and Home and Property
Insurance Corporation, a Puerto Rico insurance agency. As of
December 31, 2004, R&G Financial had previously reported
consolidated assets of $10.2 billion and consolidated
stockholder equity of $855.6 million.
This case is not unlike the one recently brought on behalf of
securities purchasers of Doral Financial Corp (NYSE:DRL). In
that case, among other things, it is alleged that during the
restatement period Doral improperly valued its I/Os strips
("I/Os") using flawed loss assumption, artificially high
prepayment assumptions and artificially low discount rates. As a
result of such conduct, Doral's stock price traded at
artificially inflated levels. It is further alleged that during
the restatement period Doral falsely reported its results
through its failure to accurately account for its I/O assets,
thereby overstating its net income and revenue and understating
the Company's net liabilities in violation U.S. GAAP. This
enabled certain insiders to reap more than $10 million in
insider-trading profits, as well as cash incentive bonuses.
It is further alleged in the Doral action that in the 4Q:04, the
impact of the flattening yield curve caught up to Doral. In
their quarterly filing, Doral recorded a $97.5 million pretax
impairment charge on its I/O strips as the result of an increase
in interest rates, specifically a rise in LIBOR -- the London
interbank offered rate. Rather than come clean and disclose that
they had been misleading investors, it is alleged that Doral
attempted to further this false story. In its quarterly filing
for 4Q:04, Doral noted its bottom line had been increased, with
a $77 million tax benefit stemming from a temporary 50%
reduction in Puerto Rico's long-term capital gains rate. This
tax benefit applied to transactions between July 1, 2004, and
June 30, 2005. Doral claimed that the tax reduction offset a $95
million trading loss it incurred on some of its I/Os that were
used to hedge against interest rate fluctuations. Doral stated
that the new law prompted it to "accelerate" the time frame for
recording an impairment charge on the value of its I/O.
Scott + Scott essentially pleads similar facts against R & G as
it did against Doral Financial.
For more details, contact Neil Rothstein of Scott + Scott, LLC
by Phone: (619) 233-4565 or (619) 233-0508 or visit
http://www.scott-scott.com.
XYBERNAUT CORPORATION: Schatz & Nobel Lodges Stock Lawsuit in DE
----------------------------------------------------------------
The law firm of Schatz & Nobel, P.C. initiated a lawsuit seeking
class action status in the United States District Court for the
District of Delaware on behalf of all persons who purchased the
publicly traded securities of Xybernaut Corporation (Nasdaq:
XYBRE) ("Xybernaut," or the "Company") between March 27, 2003
and April 8, 2005 (the "Class Period").
The Complaint charges Xybernaut, Edward G. Newman, Steven A.
Newman, M.D. and Thomas D. Davis with violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. The Complaint alleges that
Xybernaut omitted or misrepresented material facts about its
financial condition, business prospects, revenue expectations
and internal controls during the Class Period.
On March 14, 2005, Xybernaut announced that it was seeking an
extension of time within which to file its annual report with
the Securities and Exchange Commission ("SEC"). On March 31,
2005, Xybernaut issued a press release which stated, in part:
"Xybernaut Corporation (Nasdaq: XYBR) announced today that the
filing of its Form 10-K and other related reports for the year
ended December 31, 2004, anticipated to occur today, will be
further delayed, pending completion of an internal investigation
undertaken by its Audit Committee." The press release stated
that independent counsel had been engaged to assist in an
internal investigation of, "among other things, concerns brought
to the Audit Committee's attention relating to the internal
control environment of the Company, the propriety of certain
expenditures and the documentation of certain expenses of the
Chairman and CEO of the Company, the Company's transparency and
public disclosure process, the accuracy of certain public
disclosures, management's conduct in response to the
investigation, and the propriety of certain major transactions."
The press release further stated that Xybernaut had received a
subpoena from the Northeast Regional Office of the SEC seeking
"documents and other information relating to the sale of Company
securities by any person identified as a selling shareholder in
any Company registration statement or other public filing." On
this news, Xybernaut's share price, which at one time had traded
as high as $2.23 per share, fell to a close of $0.42 per share
on March 31, 2005, and then dropped further to close at $0.24
per share on April 1, 2005.
For more details, contact Wayne T. Boulton or Nancy Kulesa by
Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their
Web site: http://www.snlaw.net.
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Copyright 2005. All rights reserved. ISSN 1525-2272.
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