/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/050513.mbx C L A S S A C T I O N R E P O R T E R Friday, May 13, 2005, Vol. 7, No. 94 Headlines AMERICAN SKANDIA: High Court Refuses To Review NY Suit Dismissal AMERICAN SKANDIA: Shareholders Launch Fraud Lawsuits in S.D. NY ARVIDA/JMB PARTNERS: Reaches Settlement For FL Homeowners Suit ARVIDA/JMB PARTNERS: FL Court Dismisses Homeowner Fraud Lawsuit ASAP MEDS: Forges Settlement With FL AG Crist Over Price-Gouging AUDIOVOX CORPORATION: Asks DE Court To Dismiss Derivative Suit AUDIOVOX CORPORATION: Faces Consolidated IL Suit Over 911 Calls BIOGEN IDEC: Shareholders Launch Securities Fraud Lawsuits in MA BIOGEN INC.: Continues To Face Average Wholesale Pricing Suits BLUE BIRD: Recalls 2108 MY 2004-06 Buses For Brake System Defect COMMUNITY BANCSHARES: Settles With 2 Plaintiffs in AL Fraud Suit CONNECTICUT: Suit Launched To Halt New England's First Execution CONSUMER PORTFOLIO: Forges Settlement For Cross-Claim in CA Suit CONSUMER PORTFOLIO: Appeals Remand of Consumer Suit To AL Court CONSUMER PORTFOLIO: Faces Consumer Fraud Suit in CA State Court CORPORATE COMPLIANCE: FL AG Launches Consumer Fraud Complaint D&G AUTO: IL Attorney General Commences Consumer Fraud Complaint DEL WEBB: Sun-City Summerlin Homeowners Launch Mold Suit in NV EDWARD D. JONES: Asks MO Court To Dismiss Securities Fraud Suit EDWARD D. JONES: MO Court Refuses To Dismiss Investor Fraud Suit EDWARD D. JONES: Asks CA Court To Dismiss Unfair Trade Lawsuit GEXA CORPORATION: TX Court Dismisses Suit For Securities Fraud GLAXOSMITHKLINE INC.: Signs Consent Decree On Facility Problems IBIS TECHNOLOGY: MA Court Yet To Rule on Stock Lawsuit Dismissal ILLINOIS: County Judge Enters Default Judgment V. Diamond Giants INTERSTATE BAKERIES: MO Judge OKs $18M Suit Settlement Proposal KEYSTONE RV: Recalls 174 Cambridge Motorhomes For Crash Hazard MRL INC.: Recalls 597 AED20 Defibrillators Due To Malfunction NEBRASKA: Judge Grants Certification To Suit V. Mental Hospitals NEW YORK: SEC Obtains Order Imposing Penalty V. Cole Bartiromo QUIGLEY CORPORATION: Trial Continues in PA Consumer Fraud Suit RADIOSHACK CORPORATION: Recalls 1M Cleaners Due To Toxic Hazard SILICON STORAGE: Shareholders Lodge Stock Fraud Suits in N.D. CA SINO BESTFOOD: Recalls Apricots Due To Undeclared Sulfites SKYTERRA COMMUNICATIONS: Reaches Settlement For CA Overtime Suit STRACQ INC.: NY Court Enters Consent Judgment in SEC Fraud Case UNITED LIBERTY: Working on Settlement Of Ohio Policyholder Suit UNITED STATES: Firm Has Highest Average Settlement Total in 2004 Asbestos Alert ASBESTOS LITIGATION: Cleco Named as Defendant by LA Site Workers ASBESTOS LITIGATION: Allstate Corp. Lowers Reserves to US$1.39B ASBESTOS LITIGATION: MO Residents Sue City Over Removal Method ASBESTOS LITIGATION: Goodyear Had 129,100 Pending Claims at 1Q05 ASBESTOS LITIGATION: NJ Appeals Panel Reinstates Asbestos Suit ASBESTOS LITIGATION: Texas Tort Reform Prompts Surge in Filing ASBESTOS LITIGATION: Everest Re Posts US$18M Reserve Adjustments ASBESTOS LITIGATION: ArvinMeritor, Maremont Meets Injury Claims ASBESTOS LITIGATION: Crown Cork & Seal Receives 3,000 New Claims ASBESTOS LITIGATION: Entergy Faces 480 Lawsuits, 10,000 Claims ASBESTOS LITIGATION: AXA Pays US$35M of Claims and Costs in 2004 ASBESTOS LITIGATION: Washington Group Int'l. Faces Injury Suits ASBESTOS LITIGATION: IL EPA Probes Demolition Firm for Breaches ASBESTOS LITIGATION: MeadWestvaco Corp. Faces 550 Asbestos Suits ASBESTOS LITIGATION: Ingersoll-Rand Posts US$3.3M Costs in 1Q05 ASBESTOS LITIGATION: TODCO Named in Suits in MS Circuit Courts ASBESTOS LITIGATION: TRW Disputes Claims Against Subsidiaries ASBESTOS LITIGATION: Harsco Corp. Battles 31,784 Pending Claims ASBESTOS LITIGATION: Honeywell Deals With NARCO, Bendix Claims ASBESTOS LITIGATION: Albany Int'l. Handles 25,679 Injury Claims ASBESTOS LITIGATION: Allmerica Posts US$25.6M Reserves in 1Q05 ASBESTOS LITIGATION: Ex-worker Pursues Claim in Madison Court ASBESTOS LITIGATION: Fairchild Named in 19 Personal Injury Cases ASBESTOS LITIGATION: Eastman Chemical Defends Against 3T Claims ASBESTOS LITIGATION: CA Coastal, RESCO Pays US$1.33M Settlement ASBESTOS LITIGATION: IDEX, Subsidiaries Face Suits in 22 States ASBESTOS LITIGATION: Navigators Group Deals with Liabilities ASBESTOS LITIGATION: MSA Faces Potential Rise of Liability Suits ASBESTOS LITIGATION: 3M Co. Accrues $232M Liability from Claims ASBESTOS LITIGATION: Hercules Reveals 32,088 Unresolved Claims ASBESTOS LITIGATION: Dana Corp. Battles 120,000 Active Claims ASBESTOS LITIGATION: Union Pacific Gets 338 Claims, Settles 216 ASBESTOS LITIGATION: CIRCOR Int'l. Faces Claims in 20 States ASBESTOS LITIGATION: Senate Panel Resumes Work on Asbestos Bill ASBESTOS LITIGATION: RAND Study Says Claims Cost Industry US$70B ASBESTOS LITIGATION: ASIC Gets Funds to Investigate James Hardie ASBESTOS LITIGATION: Bill Saves Asbestos Firms Billions, Report ASBESTOS LITIGATION: Tyco Int'l. Battles 16,000 Pending Cases ASBESTOS LITIGATION: Midwest Generation Records US$68M Liability ASBESTOS ALERT: UK Magistrates Court Imposes Fine on Lemec Ltd. New Securities Fraud Cases FRIEDMAN BILLINGS: Lerach Coughlin Lodges Securities Suit in NY FRIEDMAN BILLINGS: Schatz & Nobel Files Securities Lawsuit in NY FRIEDMAN BILLINGS: Scott + Scott Lodges Securities Lawsuit in NY MARTEK BIOSCIENCES: Lasky & Rifkind Lodges Securities Suit in MD MARTEK BIOSCIENCES: Squitieri & Fearon Files Stock Lawsuit in MD MBNA COPRORATION: Schatz & Nobel Lodges Securities Lawsuit in DE PETCO ANIMAL: Brain M. Felgoise Files Securities Suit in S.D. CA R&G FINANCIAL: Klafter & Olsen Files Securities Fraud Suit in NY R&G FINANCIAL: Marc S. Henzel Lodges Securities Fraud Suit in NY TRIBUNE CO.: Brodsky & Smith Lodges Securities Fraud Suit in IL TRIBUNE CO.: Marc S. Henzel Files Securities Fraud Lawsuit in IL ********* AMERICAN SKANDIA: High Court Refuses To Review NY Suit Dismissal ---------------------------------------------------------------- The United States Supreme Court refused to review an appeals court ruling denying plaintiffs' petition to appeal the dismissal of a nationwide class action filed against American Skandia Life Assurance Corporation. The suit, filed in the United States District Court for the Southern District of New York in December 2002 and designated as "Donovan v. American Skandia Life Ass. Corp. et al.," alleged that the Company and certain of its affiliates violated federal securities laws in marketing variable annuities. The suit seeks injunctive relief and compensatory damages in unspecified amounts. In July 2003, the court granted the Company's motion to dismiss the complaint with prejudice. The United States Court of Appeals for the Second Circuit upheld the dismissal in May 2004. The United States Court of Appeals for the Second Circuit denied plaintiffs petition for the appeal to be reheard en banc and plaintiffs sought review by the United States Supreme Court, which request was denied. AMERICAN SKANDIA: Shareholders Launch Fraud Lawsuits in S.D. NY --------------------------------------------------------------- American Skandia, Inc. faces six purported nationwide class action lawsuits. Each of these lawsuits alleged that the Company and others violated federal securities laws in connection with late trading and market timing activities and seeks remedies, including compensatory and punitive damages in unspecified amounts. The cases are as follows: (1) Lowinger v. Invesco Advantage Health Sciences Fund, et al., filed in the United States District Court for the Southern District of New York in December 2003 and served on the Company in February 2004; (2) Russo, et al. v. Invesco Advantage Health Sciences Fund, et al., filed in the United States District Court for the Southern District of New York in December 2003, this suit has not been served on the Company; (3) Lori Weinrib v. Invesco Advantage Health Sciences Fund, et al., filed in the United States District Court for the Southern District of New York in January 2004, this suit has not been served on ASI; (4) Erhlich v. Invesco Advantage Health Sciences Fund et al., filed in the United States District Court for the District of Colorado in December 2003, this suit was served on ASI in February 2004; (5) Fattah v. Invesco Advantage Health Sciences Fund, et al., filed in the United States District Court for the District of Colorado in December 2003, this suit has not been served on ASI. The Company is also aware that it may be a defendant designated as one of "Does 1-500" in a suit filed in October 2003 in the United States District Court for the Central District of California entitled "Mike Sayegh v. Janus Capital Corporation, et al." This suit alleges that various defendants engaged in improper late trading and market timing activities in various funds also named as defendants. The complaint further alleges that such activities were in violation of California Business and Professional Code Section 17200. This suit has not been served on ASI. ARVIDA/JMB PARTNERS: Reaches Settlement For FL Homeowners Suit -------------------------------------------------------------- Arvida/JMB Partners, L.P. reached a settlement for the class action filed against it and Walt Disney World Company in the Circuit Court of the Eleventh Judicial Circuit in and for Miami- Dade County, Florida. The suit is styled "Lakes of the Meadow Village Homes Condominium Nos. One, Two, Three, Four, Five, Six, Seven, Eight and Nine Maintenance Associations, Inc., v. Arvida/JMB Partners, L.P. and Walt Disney World Company, Case No. 95-23003-CA-08." In the lawsuit, plaintiffs sought unspecified damages, attorneys' fees and costs, recission of specified releases, and all other relief that plaintiffs might be entitled to at equity or at law on behalf of the 460 building units they allegedly represented for, among other things, alleged damages discovered in the course of making Hurricane Andrew repairs. Plaintiffs alleged that Walt Disney World Company was responsible for liabilities that might arise in connection with approximately 80% of the buildings at the Lakes of the Meadow Village Homes and that the Partnership was potentially liable for the approximately 20% remaining amount of the buildings. In the three count amended complaint, plaintiffs alleged breach of building codes and breach of implied warranties. The Partnership tendered this matter to The Walt Disney Company (n/k/a Disney Enterprises, Inc., "Disney") pursuant to the Partnership's indemnification rights and filed a third-party complaint against it pursuant to the Partnership's rights of contractual indemnity. The Partnership also answered the amended complaint and filed a cross-claim against Disney's affiliate, Walt Disney World Company, for common law indemnity and contribution. The Partnership completed settlements in this case with the condominium associations and their members during the second quarter of 2004. ARVIDA/JMB PARTNERS: FL Court Dismisses Homeowner Fraud Lawsuit --------------------------------------------------------------- The Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida dismissed the class action filed against Arvida/JMB Partners, L.P., its General Partner Arvida/JMB Managers, Inc., and certain related and unrelated parties, styled "Rothal v. Arvida/JMB Partners Ltd. et al., Case No. 03- 10709 CACE 12." In this suit that was originally filed on June 20, 2003, plaintiffs purport to bring a class action allegedly arising out of construction defects occurring during the development of Camellia Island in Weston, which has approximately 150 homes. On September 20, 2004, plaintiffs filed a twelve count amended complaint seeking unspecified general damages, special damages, statutory damages, prejudgment and post-judgment interest, costs, attorneys' fees, and such other relief as the court may deem just and proper. Plaintiffs complain, among other things, that: (1) the homes were not built of high quality and adequate construction, (2) the homes were not built in conformity with the South Florida Building Code and plans on file with Broward County, Florida, (3) the roofs were not properly attached or were inadequate, (4) the truss systems and installation thereof were improper, and (5) the homes suffer from improper shutter storm protection systems. The amended complaint was dismissed pursuant to the Partnership's motion to dismiss and the plaintiffs were given the right to file a further amended complaint. The Partnership will file an appropriate response to the further amended complaint, when filed. ASAP MEDS: Forges Settlement With FL AG Crist Over Price-Gouging ---------------------------------------------------------------- Florida Attorney General Charlie Crist's office reached an agreement with Broward County-based ASAP Meds, Inc., doing business as Meds-Stat, relating to allegations that the company committed price gouging on flu vaccinations during last year's vaccination shortage. Under the agreement, the company will refrain from further flu vaccine sales and will provide more than $220,000 in reparation for its activities. In October 2004, the Attorney General's Office sued Meds-Stat for deceptive and unfair trade practices over the pricing of flu vaccines. The company was selling vials of flu vaccine, which contained 10 doses per vial, for $900 when the normal price range was $63-$85 per vial. This amounted to a markup of more than 900 percent per vial. The suit included both a request for an injunction that would prevent Meds-Stat from selling vaccines at unconscionable prices and a request for damages and penalties as allowed by law. A court order was entered against Meds-Stat shortly after the lawsuit was filed preventing the company from buying or selling any more flu vaccines. The company was also required to surrender the remaining vaccines, which were made available to the public free of charge. "Price gouging is the worst example of taking advantage of those in situations of great need," said Attorney General Crist. "There is no excuse for anyone to capitalize on the unfortunate situation caused by the vaccine shortage, and this agreement will prevent the company from participating in such activities in the future." Under the agreement, Meds-Stat must permanently refrain from selling flu vaccine. Meds-Stat also agreed that it will refrain from intentionally making false statements to consumers relating to how much of a given drug is in stock, how quickly it is being sold and how long the current supply will last. In addition, the company will provide $150,000 for the Teen Empowerment Program, affiliated with the University Area Community Development Corporation, Inc. This program provides job training, employability skills, cultural, recreational and educational activities to at-risk youth in the Tampa-Hillsborough area. Meds-Stat will also submit more than $71,000 to be used to assist pharmacies that were affected by Meds-Stat's activities. AUDIOVOX CORPORATION: Asks DE Court To Dismiss Derivative Suit -------------------------------------------------------------- Audiovox Corporation asked the Court of Chancery of the State of Delaware, New Castle County to dismiss the consolidated derivative and class action filed against it, Audiovox Communications Corporation (ACC) and the Company's directors, styled "In re Audiovox Corporation Derivative Litigation." During the fourth quarter of 2004, several purported derivative and class actions were filed. On January 10, 2005, Vice Chancellor Steven Lamb of the Court of Chancery granted an order permitting the filing of a Consolidated Complaint by several shareholders of Audiovox Corporation derivatively on behalf of the Company. The complaint seeks rescission of agreements; amendments to long-term incentive awards; and severance payments pursuant to which the Company and ACC executives were paid from the net proceeds of the sale of certain assets of ACC to UTStarcom, Inc. The suit also seeks disgorgement to ACC of $16 million paid to Philip Christopher pursuant to a Personally Held Intangibles Purchase Agreement in connection with the UTStarcom Transaction and disgorgement to the Company of $4 million paid to Philip Christopher as compensation for termination of his Employment Agreement and Award Agreement with ACC. The suit also seeks disgorgement to ACC of $1,916,477 paid to John Shalam pursuant to an Award Agreement with ACC, and recovery by ACC of $5 million in severance payments distributed by Philip Christopher to ACC's former employees. ACC is sued as a nominal defendant only. AUDIOVOX CORPORATION: Faces Consolidated IL Suit Over 911 Calls --------------------------------------------------------------- Plaintiffs filed a consolidated amended class action against Audiovox Corporation, other manufacturers of wireless phones and cellular service providers in the United States District Court for the Northern District of Illinois. Two class action lawsuits were initially filed, alleging non- compliance with Federal Communications Commission ("FCC") ordered emergency 911 call processing capabilities. These lawsuits were consolidated and transferred to the United States District Court for the Northern District of Illinois, which in turn referred the cases to the FCC to determine if the manufacturers and service providers are in compliance with the FCC's order on emergency 911 call processing capabilities. During the third quarter of 2004, the FCC confirmed that plaintiffs' interpretation of the FCC's second order on emergency 911 call processing capabilities was incorrect and as a result, plaintiffs have filed a consolidated amended complaint. Defendants have moved to dismiss the consolidated amended complaint, but to date, the motion has not been heard. The suit is styled "Becker, et al v. Toshiba Corp, et al, case no. 1:03-cv-02605," filed in the United States District Court for the Northern District of Illinois, under Judge John F. Grady. Representing the plaintiffs is Roger F. Claxton, Claxton & Hill Mail: 3131 McKinney Avenue, Suite 700 LB103 Dallas, TX 75204-2471 Phone: (214)-969-9029 BIOGEN IDEC: Shareholders Launch Securities Fraud Lawsuits in MA ---------------------------------------------------------------- Biogen Idec, Inc., its Executive Chairman William H. Rastetter, and its Chief Executive Officer James C. Mullen faces two securities class actions filed in the United States District Court for the District of Massachusetts. On March 2, 2005, a purported class action, captioned "Brown v. Biogen Idec Inc., et al.," was filed, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The action is purportedly brought on behalf of all purchasers of the Company's publicly- traded securities between February 18, 2004 and February 25, 2005. The plaintiff alleges that the defendants made materially false and misleading statements regarding potentially serious side effects of TYSABRI in order to gain accelerated approval from the FDA for the product's distribution and sale. The plaintiff alleges that these materially false and misleading statements harmed the purported class by artificially inflating the Company's stock price during the purported class period and that company insiders benefited personally from the inflated price by selling the stock. The plaintiff seeks unspecified damages, as well as interest, cost and attorneys' fees. A substantially similar action, captioned "Grill v. Biogen Idec Inc., et al.," was filed on March 10, 2005 in the same court by another purported class representative. BIOGEN INC.: Continues To Face Average Wholesale Pricing Suits -------------------------------------------------------------- Biogen, Inc. (now Biogen Idec MA, Inc., one of Biogen Idec, Inc.'s wholly-owned subsidiaries) Biogen Idec, Inc., and several other major pharmaceutical and biotechnology companies face several class actions related to Medicaid Average Wholesale Pricing (AWP). The suits were filed by the County of Suffolk, New York, the County of Westchester, New York, the County of Rockland, New York, the County of Nassau, New York, the County of Onondaga, New York, the County of Chenango, New York, the County of Erie, New York, the City of New York and the County of Chautauqua, New York. All of the cases are pending in the U.S. District Court for the District of Massachusetts, with the exception of the Onondaga, Chenango and Chautauqua lawsuits, which are expected to be transferred to the U.S. District Court for the District of Massachusetts, and the Erie lawsuit, which is pending in the Supreme Court of the State of New York for the County of Erie. The complaints allege that the defendants: (1) fraudulently reported the Average Wholesale Price for certain drugs for which Medicaid provides reimbursement, also referred to as Covered Drugs; (2) marketed and promoted the sale of Covered Drugs to providers based on the providers' ability to collect inflated payments from the government and Medicaid beneficiaries that exceeded payments possible for competing drugs; (3) provided financing incentives to providers to over- prescribe Covered Drugs or to prescribe Covered Drugs in place of competing drugs; and (4) overcharged Medicaid for illegally inflated Covered Drugs reimbursements. The complaints allege violations of New York state law and advance common law claims for unfair trade practices, fraud, and unjust enrichment. In addition, all of the complaints, with the exception of the County of Erie, allege that the defendants failed to accurately report the "best price" on the Covered Drugs to the Secretary of Health and Human Services pursuant to rebate agreements entered into with the Secretary of Health and Human Services, and excluded from their reporting certain drugs offered at discounts and other rebates that would have reduced the "best price." The Suffolk, Westchester, Rockland, and Nassau County complaints also claim that the Company violated the Racketeering Influence and Corrupt Organizations Act (RICO) 18 U.S.C. 1962(c). In September 2003, the Company joined other named defendants in filing a motion to dismiss the Suffolk County complaint. The Company also separately filed a motion on its own behalf arguing that the plaintiffs made no specific factual allegations against it to connect it with the alleged scheme. In September 2004, the court, in ruling on defendants' joint motion to dismiss, allowed the motion, in part, and dismissed the RICO claim, the Medicaid best price claim, the breach of contract claim, and the common law fraud claim. The court did not dismiss the claims brought under the New York State Medicaid and Social Services statutes, the unfair trade practices claim, or the claim for unjust enrichment. In October 2004, the court issued a partial decision on the Company's individual motion to dismiss. The court dismissed all of the state law claims against the Company based on the alleged failure to report best price, but deferred ruling on the fraud- based claims and ordered Suffolk County to produce all documents in support of its fraud-based claims. Suffolk County subsequently produced documents in response to the court's request and the Company renewed its motion to dismiss. Neither Biogen nor the other defendants have answered or responded to the other complaints, as all of the plaintiffs except Erie County have agreed to stay the time to respond until the resolution of the pending motion to dismiss the Suffolk County complaint. BLUE BIRD: Recalls 2108 MY 2004-06 Buses For Brake System Defect ---------------------------------------------------------------- Blue Bird Body Company in cooperation with the National Highway Traffic Safety Administration's Office of Defects Investigation is voluntarily recalling about 2108 units of 2004-2006 Blue Bird/Vision Buses. According to ODI, on certain Blue Bird MY 2004-2006 Vision school buses equipped with hydraulic brakes manufactured between March 24, 2003 and April 25, 2005. The hydraulic brake dash warning light was incorrectly labeled with the Canadian version, which uses symbols rather than words as required by the Federal Motor Vehicle Safety Standard No. 105, hydraulic and electric brake systems. As a consequence, the original dash warning light displays an international symbol on the brake warning light indicator whereas FMVSS 105 requires the word "brake" to be displayed. The operator may not recognize the international symbol as a warning indicating a problem in the hydraulic brake system, which could result in a vehicle crash should the warning not be heeded. To remedy this Blue Bird will mail replacement decals with correct nomenclature for the brake dash-warning indicator light. For more details, contact Blue Bird by Phone: 478-822-2242 or the NHTSA Auto Safety Hotline: 1-888-327-4236. COMMUNITY BANCSHARES: Settles With 2 Plaintiffs in AL Fraud Suit ---------------------------------------------------------------- Community Bancshares, Inc. settled the claims of two plaintiffs in the class action filed against it and Community Bank in Alabama State Court, styled "William Alston, Murphy Howard, and Jason Tittle v. Community Bancshares, Community Bank, Holsombeck Motors, Inc., Lee Brown d/b/a Alabama Bond & Investigation a/k/a ABI Recovery, Chris Holmes d/b/a Alabama Bond & Investigation a/k/a ABI Recovery, Regina Holsombeck, Kennon "Ken" Patterson, Sr., Hodge Patterson, James Timothy "Tim" Hodge, Ernie Stephens, and the State of Alabama Department of Revenue." On October 11, 2002, the plaintiffs filed a class action against the defendants alleging that the Company and others conspired or used extortionate methods to effect a lending scheme of "churning phantom loans," and that profits from the scheme were used to secure an interest in and/or to invest in an enterprise that affects interstate commerce. The plaintiffs specifically allege that Community Bank used various methods to get uneducated customers with fair to poor credit to sign numerous "phantom loans" when the customers only intended to sign for one loan. Claims include racketeering activity within the meaning of the Racketeer Influenced and Corrupt Organizations Act of 1970, conspiracy, spoliation, conversion, negligence, wantonness, outrage, and civil conspiracy. On February 17, 2004, an amended complaint was filed in this lending acts litigation. The amended complaint, which completely replaces the original complaint, omits class action and racketeering claims and alleges violations of the Truth in Lending Act and Regulation Z of the Federal Reserve Board in addition to conversion, negligence, outrage, suppression, fraud and misrepresentation, trespass, conspiracy and failure to provide notice before disposition of collateral for loans. On April 2, 2004, eighty-one individuals, most of whom were formerly members of the purported class in the lending acts litigation filed by Mr. Alston, filed suit against Community Bancshares, Community Bank and a former Community Bank employee in the Circuit Court of Jefferson County, Alabama. This suit claims that the defendants injured the plaintiffs, primarily in connection with lending at Community Bank's office in Double Springs, Alabama, by wrongfully taking property, committing fraud, furnishing inaccurate information to credit reporting agencies, negligently hiring, training and supervising employees, negligently handling customer accounts, altering loan documents and failing to honor oral and written contracts with the plaintiffs. On February 2, 2005, the Company and Community Bank settled the claims of Mr. Alston and Mr. Howard for amounts not material to the financial statements of Community Bancshares. CONNECTICUT: Suit Launched To Halt New England's First Execution ---------------------------------------------------------------- The planned execution of serial killer Michael Ross would cause a wave of suicide attempts among troubled Connecticut prisoners, according to a federal lawsuit that is attempting as to stop New England's first execution in 45 years, The Associated Press reports. Mr. Ross has decided to forgo further appeals and accept his death sentence, which is to be carried out by lethal injection early Friday, but those trying to stop his execution say the move amounts to state assisted suicide. According to the suit, "If the voluntary execution of Michael Ross is not enjoined, suicidal and suicide-prone prisoners will be profoundly negatively influenced by it, suicide contagion will result, these prisoners will try to kill themselves in the hours, days and weeks following Michael's death, the Department of Correction will be impotent to prevent or respond to many of these suicides, and one or more of these desperate inmates will suffer profound injuries and others will succeed in taking their own lives." Filed in U.S. District Court in Bridgeport but was scheduled to be heard by U.S. District Judge Christopher Droney in Hartford, the suit was one of several legal maneuvers filed to stop the lethal injection, including a hearing before the state Supreme Court brought by Mr. Ross' sister. During that hearing, Mr. Ross, through an affidavit read by his attorney T.R. Paulding, made it clear he wants no outside interference. That affidavit read, "I wish to make it clear that I do not authorize, endorse concur in or approve of any legal pleadings or petitions filed in any court anywhere in the time remaining between the execution of this affidavit and the moment of my execution unless they are filed by me or attorney T.R. Paulding, Jr." Attorneys who have represented Mr. Ross' father Dan Ross, who has also tried unsuccessfully to stop his son's execution, filed the class action lawsuit on behalf of a mentally ill inmate. The suit states that at least 11 suicides have occurred in Connecticut prisoners in the past year, the worst rate in the department's history. It also points out, "This is the catastrophic state of affairs at the Connecticut Department of Correction even without the epidemic of contagion suicides that will follow in the wake of Michael's execution on May 13." Suicide contagion is well recognized by prison officials, according to the lawsuit, which quotes Connecticut's former corrections commissioner warning about the phenomenon in another case. CONSUMER PORTFOLIO: Forges Settlement For Cross-Claim in CA Suit ---------------------------------------------------------------- Consumer Portfolio Services, Inc. reached a settlement for the cross-claim in a class action filed in the California Superior Court, Los Angeles County. The original plaintiffs in that case were persons entitled to receive regular payments (the "Settlement Payments") under out- of-court settlements reached with third party defendants. Stanwich Financial Services Corporation, an affiliate of the former Chairman of the Board of Directors of the Company, is the entity that was obligated to pay the Settlement Payments. Stanwich has defaulted on its payment obligations to the plaintiffs and in June 2001 filed for reorganization under the Bankruptcy Code, in the federal Bankruptcy Court of Connecticut. At year-end, the Company was a defendant only in a cross-claim brought by one of the other defendants in the case, Bankers Trust Company, which asserted a claim of contractual indemnity against it. Subsequent to year-end, the Company settled the cross-claim of Bankers Trust by payment of $3.24 million, on or about February 8, 2005. Pursuant to that settlement, the court has dismissed the cross-claim, with prejudice. CONSUMER PORTFOLIO: Appeals Remand of Consumer Suit To AL Court --------------------------------------------------------------- Consumer Portfolio Services, Inc. appealed the remand of a consumer class action filed against it to The Circuit Court of Tuscaloosa, Alabama. On November 15, 2000, Denice and Gary Lang filed a lawsuit against the Company in South Carolina Common Pleas Court, Beaufort County, alleging that they, and a purported nationwide class, were harmed by an alleged failure to refer, in the notice given after repossession of their vehicle, to the right to purchase the vehicle by tender of the full amount owed under the retail installment contract. They sought damages in an unspecified amount. The Company filed a counterclaim to recover any delinquent amounts owed by the members of the putative class in the event that the class became certified. In February 2004, the Company reached an agreement to settle that case on a class basis for payment of attorneys' fees and other immaterial consideration. On June 2, 2004, Delmar Coleman filed a lawsuit in the Circuit Court of Tuscaloosa, Alabama, making allegations similar to those that were asserted in the Lang case, and seeking damages in an unspecified amount, on behalf of a purported nationwide class. The Company removed the case to federal bankruptcy court, and filed a motion for summary judgment as part of its adversary proceeding against the plaintiff in the bankruptcy court. The federal bankruptcy court granted the plaintiff's motion to send the matter back to Alabama state court. The Company has appealed the ruling. Although the Company believes that it has one or more defenses to each of the claims made in this lawsuit, no discovery has yet been conducted and the case is in its earliest stages. CONSUMER PORTFOLIO: Faces Consumer Fraud Suit in CA State Court --------------------------------------------------------------- Consumer Portfolio Services, Inc. faces a class action filed in the California Superior Court, San Diego County, alleging improper practices related to the notice given after repossession of a vehicle that he purchased. Plaintiff Jeremy Henry filed the suit in June 2004, styled a class action, though no motion for class certification has yet been filed. The Company and its subsidiary have a number of defenses that may be asserted with respect to the claims of Mr. Henry, the Court said in a disclosure to the Securities and Exchange Commission. CORPORATE COMPLIANCE: FL AG Launches Consumer Fraud Complaint ------------------------------------------------------------- Attorney General Charlie Crist filed a civil lawsuit against a California company and its owner under Florida's Deceptive and Unfair Trade Practices Act for attempting to defraud thousands of Floridians in early May 2005. The Corporate Compliance Center (CCC) solicited Florida corporations across the state implying the business had to submit a $100 fee and file their corporate minutes with the state, and that directors and owners could be personally liable for sums in excess of their stock if they failed to keep these minutes. An investigation launched by the Attorney General's office in March, revealed that CCC mailed out an "Annual Minutes Compliance Notice" to businesses throughout the United States, including Florida. The solicitation looks similar to the Florida Department of State's For Profit Corporation Uniform Business Report form but requested a fraudulent $100 fee. The solicitation's official appearance conveyed the false impression that businesses were required to pay the fee to create minutes of corporate meetings in order to avoid official late fees. "Those behind this outfit claimed they were from the government and here to help -- they were lying on both accounts," said the Attorney General. "Florida's business owners can be assured we will prosecute companies or individuals who defraud Florida businesses." The investigation was in response to a request from the Secretary of State's office after that office received numerous telephone calls about the notice. According to complaints received, several recipients of CCC's solicitation believed it was a legitimate requirement. In this case, the address provided for the Corporate Compliance Center was 400 Capital Circle, Suite 18-403, Tallahassee, FL 32301. That location proved to be a local United Parcel Service (UPS) Store, from which mail was forwarded unopened to an address in California. The investigation revealed that similar acts occurred in Arizona and California in 2002. The Attorney General is seeking restitution in the amount of $100 for each victim, plus $10,000 for each violation by CCC. The total number of victims in unknown. Any business owner who believes he has been a victim should call the Attorney General's Fraud Hotline toll free at 1-866-9-NO-SCAM (866-966-7226). A copy of the complaint is available at http://myfloridalegal.com/RenewalComplaint.pdf. D&G AUTO: IL Attorney General Commences Consumer Fraud Complaint ---------------------------------------------------------------- Illinois Attorney General Lisa Madigan filed a lawsuit against a DuPage County used car dealership for allegedly accepting trade- ins but failing to pay off the remaining car loan balances. The complaint also alleges the dealership resold cars to unsuspecting consumers without providing proper titles or informing customers of outstanding liens against the cars. The lawsuit, filed on May 2, 2005 in DuPage County Circuit Court, names as defendants D&G Auto Sales, Inc., formerly located on North Avenue in Lombard, and its owner, David Goldby. Mr Goldby closed D&G Auto in the late summer or early fall of 2004. The defendants are charged with violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Motor Vehicle Retail Installment Sales Act. Since September 2002, seven consumers have filed complaints with Attorney General Madigan's Consumer Protection Division against D&G Auto. Some of the complainants allege D&G Auto took possession of trade-in vehicles and accepted responsibility for paying off the consumers' trade-in liens, transferring the titles and registrations and paying additional fees. However, the lawsuit contends that D&G Auto failed to pay the loan balances due on the trade-in vehicles and on some occasions wrote "pay off" checks that were returned as unpaid due to insufficient funds. These unpaid loans negatively affected the sellers' credit histories. Other complainants reported to the Attorney General's office that D&G Auto resold cars without informing customers about the remaining unpaid loan balances. On at least one occasion when D&G Auto failed to pay the loan to release the lien against a car it already had resold, the car was repossessed and the used car purchaser was left without a car and without the money paid to D&G Auto during the original transaction. "The fraudulent practices of D&G Auto hurt both the used car sellers and purchasers, leaving them either with outstanding loans for cars they no longer possessed or expensive liens against used cars they had purchased," Attorney General Madigan said. "When consumers engage in financially responsible transactions, it is unacceptable -- and illegal -- for a third party to ruin consumers' credit with irresponsibility and deceptive practices." The lawsuit asks the court to prohibit the defendants from engaging in the business of selling motor vehicles in Illinois. The lawsuit also seeks a civil penalty of $50,000 and additional penalties of $50,000 per violation found to be committed with the intent to defraud. Finally, the lawsuit asks the court to order the defendants to pay restitution to consumers. The Attorney General's office provides fact sheets for consumers regarding the purchase of new and used vehicles on its Web site at the Website: http://www.illinoisattorneygeneral.gov/consumers/new_vehicle.pdf and http://www.illinoisattorneygeneral.gov/consumers/used_vehicle.pd f. Consumers who believe they have been victims of D&G Auto or another consumer fraud scam can download a complaint form at the Website: http://www.IllinoisAttorneyGeneral.gov/consumersor call the Attorney General's Consumer Fraud Hotline at the following numbers: Chicago: 1-800-386-5438 and 1-800-964-3013 (TTY) Springfield: 1-800-243-0618 and 1-877-844-5461 (TTY) Carbondale: 1-800-243-0607 and 1-877-675-9339 (TTY) Spanish-language hotline: 1-866-310-8398 Assistant Attorney General Sarah Alipourian is handling the case for Attorney General Madigan's Chicago Consumer Fraud Bureau. DEL WEBB: Sun-City Summerlin Homeowners Launch Mold Suit in NV -------------------------------------------------------------- Homeowners in Sun-City Summerlin initiated a class action lawsuit in Nevada alleging that there are stucco-related defects in more than 1400 homes, defects, which according to them could allow mold to grow inside the walls, creating a health hazard for the senior citizens who live in this community, The KVBC reports. Glenn Hayward, who has a beautiful golf course home in Sun-City initiated the class-action lawsuit accusing homebuilder Del Webb of knowingly deviating from standard building practices by eliminating a stucco feature known as a "weep screed," a metal barrier that allows moisture to escape from behind the stucco. Without that feature, Mr. Hayward claims his stucco cracked and crumbled and allowed large patches of mold to grow inside the walls. The lawsuit, which alleges that each home may have already sustained 50-thousand dollars worth of damage as a result of the way they were built, is demanding that Del Webb pay for repairs to all of the affected homes. Though attorneys for Del Webb are still reviewing the allegations, the company did give KVBC a brief statement saying that they stand behind their homes and will work diligently with homeowners to resolve any issues. EDWARD D. JONES: Asks MO Court To Dismiss Securities Fraud Suit --------------------------------------------------------------- Edward D. Jones & Co., L.P. asked the United States District Court for the Eastern District of Missouri to dismiss the consolidated securities class action filed against it, styled "Spahn IRA, et al. v. Edward D. Jones & Co., L.P., et al." The Amended and Consolidated Complaint alleges that the Partnership violated Section 10(b), 12(2), and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, by failing to adequately disclose its revenue sharing arrangements to customers. Plaintiffs seek to represent a class of all persons who purchased shares of the Preferred Family mutual funds from January 25, 1999 through December 2004. The Partnership has filed a Motion to Dismiss the Amended and Consolidated Complaint, which motion is in the process of being briefed. No class has been certified in these cases. EDWARD D. JONES: MO Court Refuses To Dismiss Investor Fraud Suit ---------------------------------------------------------------- The Circuit Court for the City of St. Louis, Missouri refused to dismiss the class action filed against Edward D. Jones & Co., L.P., styled "Enriquez, et al. v. Edward D. Jones & Co., L.P., et al." Plaintiffs allege that the Partnership breached fiduciary duties to its customers by receiving revenue sharing payments in exchange for the mere holding of mutual fund shares under management without making a disclosure to those customers. In addition, Plaintiffs allege that the Partnership was unjustly enriched by the receipt of revenue sharing associated with those customers mutual fund shares held under management. Plaintiffs seek to represent a class of all Partnership customers who held Preferred Family mutual fund shares during the period of January 1999 through December 2004. The Partnership filed a Motion to Dismiss the Petition, which was denied in January 2005. The Partnership is seeking a discretionary appellate review of the dismissal order. No class has been certified in this case, although a request for class certification has been filed. EDWARD D. JONES: Asks CA Court To Dismiss Unfair Trade Lawsuit -------------------------------------------------------------- Edward D. Jones & Co., L.P. asked the Superior Court for Los Angeles, California to dismiss the class action filed against it, styled "Bressler, et al. v. Edward D. Jones & Co., L.P." This case was filed in February 2004. Plaintiffs, in their Amended and Consolidated Complaint, allege that the Partnership violated Section 17200 of the California Business and Professions Code by failing to disclose the receipt of revenue sharing associated with customers holding of mutual fund shares under management at the partnership. In addition, Plaintiffs allege that the Partnership breached fiduciary duties by accepting account fees and revenue sharing incident to the holding of mutual fund shares without adequate disclosures, as well as alleging unjust enrichment. The Plaintiffs only seek to represent California resident customers of the Partnership who held Preferred Family mutual fund shares from January 1999 through 2004. It is estimated that California residents account for approximately 5% to 5.5% of the Partnership's business. The Partnership has filed a Motion to Dismiss the Amended and Consolidated Complaint, which has yet to be heard by the Court. No class has yet been certified. GEXA CORPORATION: TX Court Dismisses Suit For Securities Fraud -------------------------------------------------------------- The United States District Court for the Southern District of Texas, Houston Division dismissed without prejudice the securities class action filed against Gexa Corporation, styled "Frederick T. Pappey, et al. vs. Gexa Corp., Neil Leibman, Marcie Zlotnik and Sarah Veach, Civil Action No. H-04-2869." The complaint alleges, among other things, that the Company's publicly filed reports and public statements contained false and misleading information, which resulted in damages to the plaintiff and members of the proposed class when they purchased Company securities. Specifically, the complaint alleges that the Company overstated revenue during the second and third quarters of 2003 by $2.07 million and $2.05 million, respectively, by utilizing an improper accounting method for calculating sales of electric power. The complaint alleges that the Company's conduct and the conduct of the other defendants violated Sections 10(b) and 10b-5 and that the individual defendants violated Section 20(a) of the Securities Exchange Act of 1934. The complaint seeks unspecified damages. GLAXOSMITHKLINE INC.: Signs Consent Decree On Facility Problems --------------------------------------------------------------- GlaxoSmithKline, Inc. (GSK), (through its U.S. subsidiaries SB Pharmco Puerto Rico, Inc., GlaxoSmithKline Puerto Rico Inc., and SmithKline Beecham Corporation), signed a consent decree with the United States Food and Drug Administration (FDA) to correct manufacturing deficiencies at its Cidra, Puerto Rico facility, The U.S. Food and Drug Administration (FDA) announced in an April 28,2005 statement. FDA is concerned that the Company's violation of manufacturing standards may have resulted in the production of drug products that could potentially pose risks to consumers. The Decree requires GSK to post a penal bond of $650,000,000 contingent upon GSK's either successfully reconditioning drugs seized in March 2005 or destroying them and paying costs to the government. "The consent decree shows that FDA is serious about enforcing the manufacturing standards essential for safe and effective prescription drugs," said John Taylor, FDA Associate Commissioner for Regulatory Affairs. "It should also reassure the American people that we are doing everything we can to preserve the integrity of the American drug supply." FDA's last inspection found Paxil CR tablets, approved to treat depression and panic disorder, could split apart. This deficiency could cause patients to receive a portion of the tablets that lacks any active ingredient, or alternatively a portion that contains an active ingredient and does not have the intended controlled-release effect. Additionally, FDA found that some Avandamet tablets, used to treat Type II diabetes, did not have an accurate dose of rosiglitazone, an active ingredient in this product. The FDA urges patients who use these two drugs to continue taking their medication and to talk with their health care provider about possible alternative products until the manufacturing issues have been resolved. Under the terms of this decree the company has agreed to take measures to ensure that its Cidra facility and the two drugs, Paxil CR and Avandamet, fully comply with current Good Manufacturing Practice ( cGMP) requirements and to ensure that ongoing shipments have the quality attributes they are required to possess. The decree also requires that all corrections and the firm's compliance with cGMP requirements be certified by a third-party expert. Additionally, FDA will continue to monitor these activities through its inspections. The Decree was presented on April 27,2005 for consideration by the United States District Court for the Eastern District of North Carolina. The Decree will take effect after it has been signed and entered by the Court. IBIS TECHNOLOGY: MA Court Yet To Rule on Stock Lawsuit Dismissal ---------------------------------------------------------------- The United States District Court for the District of Massachusetts has yet to rule on the motion to dismiss the consolidated securities class action filed against Ibis Technology Corporation, styled "In re Ibis Technology Securities Litigation, C.A. 04-10446 RCL." Five class action securities lawsuits were initially filed, namely: (1) Martin Smolowitz v. Ibis Technology Corporation., et al., Civ. No. 03-12613 (RCL) (2) Fred Den v. Ibis Technology Corporation., et al., Civ. No. 04-10060 (RCL) (3) Weinstein v. Ibis Technology Corporation., et al., Civ. No. 04-10088 (RCL) (4) George Harrison v. Ibis Technology Corporation., et al., Civ. No. 04-10286 (RCL) (5) Eleanor Pitzer v. Ibis Technology Corporation, et al, Civ. No. 04-10446 (RCL) On July 6, 2004, a consolidated amended class action complaint was filed which alleges, among other things, that the Company violated federal securities laws by allegedly making misstatements to the investing public relating to demand for certain Ibis products and intellectual property issues relating to the sale of the i2000 oxygen implanter. The plaintiffs are seeking unspecified damages. On August 5, 2004, the Company filed a motion to dismiss the consolidated amended complaint on the grounds, among others, that it failed to state a claim on which the relief could be granted. That motion now has been fully briefed, and the Company is awaiting ruling on it from the Court. ILLINOIS: County Judge Enters Default Judgment V. Diamond Giants ---------------------------------------------------------------- After the failing to respond to a class action lawsuit filed against diamond giants De Beers Centenary A.G. and DB Investments by Madison County couple Emert and Katie Null, Madison County Circuit Judge George Moran Jr. entered a default judgment order against the duo, The Madison County Record reports. Court documents show that attorneys Stephen Tillery, Donald Flack and Eugene Barash of Korein Tillery of St. Louis filed suit against them the day before President George W. Bush signed the Class Action Fairness Act into law on February 17. The suit alleges DeBeers has a monopoly on the diamond market and in addition accuses the Swiss company of restraining trade, increasing prices, controlling inventory, limiting supply, restricting purchase and falsely advertising the scarceness of diamonds. According to the complaint, "These actions have caused both the price and demand for diamonds to remain artificially high and thus have caused diamond purchasers actual damages." Barring any filing by De Beers to set aside the default judgment, which it has however not yet filed, Judge Moran stated in his order that he will set hearings on class certifications and damages, but has yet to set a date. The class action names DB Investments of Luxembourg, which owns De Beers S.A., De Beers S.A. of Luxembourg, which owns Consolidated Mines, Consolidated Mines of South Africa, De Beers Centenary A.G. of Switzerland, and Diamond Trading Company, the marketing arm of the De Beers Group of the United Kingdom. Additionally, the Null's are claiming in their suit that in October of 1999, De Beers Chairman Nicky Oppenheimer, speaking at a gathering of Harvard alumni, went so far as to boast about De Beers illegal monopolistic behavior, stating that De Beers "likes to think of itself as the world's longest running monopoly.and seeks to manage the diamond market, to control supply, to manage prices and to act collusively with our partners in the business." The class action is brought on behalf of diamond purchasers to recover damages for violations of the Illinois Consumer Fraud and Deceptive Business Practice Act and for unjust enrichment. The suit also claims, "The Court has jurisdiction over the defendants as they either maintain their principal place of business within Illinois, are registered to do business in Illinois, or conduct substantial business within Illinois. In addition, the acts giving rise to the causes of action stated occurred in the State of Illinois." It goes on to state, "Venue is proper in this Court pursuant to 735 ILCS 5/2-101 as defendants' liability arose, in part, in this county, and they may be found here." It also reiterates that the action is not based on federal law and the Nulls do not seek and will not accept recovery in excess of $75,000 exclusive of costs and interest. The Nulls claim that for more than a century the De Beers "cartel" has dominated the market for rough diamonds in the United States and worldwide controlling as much as 80 percent of the world diamond supply. Currently, De Beers controls 50 percent of the world's diamond supply, and an even greater percentage of the world's supply of two-carat and larger rough diamonds, according to the suit. In 2003 alone, the Nulls claim De Beers sold $5.52 billion worth of rough diamonds, and used its market dominance to raise the price of rough diamonds three times during the year, allegedly creating a 10 percent hike in rough diamond prices. "Over the years including presently, De Beers has used its monopolistic power to illegally and artificially restrain trade and increase the price of diamonds by controlling inventory," the complaint states. INTERSTATE BAKERIES: MO Judge OKs $18M Suit Settlement Proposal --------------------------------------------------------------- Federal Judge Fernando Gaitan Jr. gave preliminary approval to an $18 million settlement proposed by Interstate Bakeries Corp., the bankrupt maker of Wonder Bread and Twinkies, to end a class- action lawsuit brought against it by shareholders, The Associated Press reports. In a ruling filed in U.S. District Court of Western Missouri, the judge stated that he accepted the settlement and thus summarily scheduled an August 26 hearing of arguments from shareholders opposed to the agreement and to determine attorneys' fees. The class covers all shareholders who owned Interstate Bakeries stock between April 2, 2002, and April 8, 2003. As previously reported in the September 30, 2004 edition of the Class Action Reporter, the shareholders' class action suit claims that company officials intentionally misled investors during a September 2002 conference call by saying snack cake sales were rebounding. Several officials sold $16 million worth of stock after the conference call, and when the company reported in December that sales continued to fall, the stock lost 35 percent of its value. The nation's largest wholesale baker disclosed the settlement in securities filings last year and signed the agreement on September 21, a day before filing for Chapter 11 bankruptcy protection from creditors, blaming a continued decline in sales and fixed or increasing operational and employee costs. Under the settlement, Interstate Bakeries would pay $3 million and its insurers would pay the rest. The settlement though has been on hold while both sides waited for U.S. Bankruptcy Judge Jerry Venters, who is overseeing the bankruptcy case in Kansas City, to allow the settlement to go forward. In his ruling, Judge Gaitan said class members would be treated as unsecured claims against the company. He also ordered the plaintiff's attorneys to mail notices to all known class members and publish notices in national newspapers and on the Web sites of the law firms and Interstate Bakeries. KEYSTONE RV: Recalls 174 Cambridge Motorhomes For Crash Hazard -------------------------------------------------------------- Keystone RV Company is cooperating with the National Highway Traffic Safety Administration (NHTSA) by voluntarily recalling 174 Keystone Cambridge motor homes, model 2006. On certain motor homes equipped with tredit wheels, the wheels may develop a separation at the weld between the center portion of the wheel and the outer rim. This could result in a wheel separation increasing the risk of a crash. Dealers will replace the steel wheels with aluminum wheels. The recall is expected to begin on May 9,2005. For more details, contact the Company by Phone: 574-537-3925 or contact the NHTSA's auto safety hotline: 1-888-327-4236. MRL INC.: Recalls 597 AED20 Defibrillators Due To Malfunction ------------------------------------------------------------- MRL, Inc., a Welch Allyn Company, is initiating a voluntary worldwide recall of 597 AED20 Automatic External Defibrillators manufactured in Buffalo Grove, IL between February and July of 2004. The AED20 may display a "Defib Comm" error message on the device display during use resulting in a failure of the device to analyze the patient's ECG and deliver the appropriate therapy, which prevents the defibrillator from resuscitating a patient. This problem occurs when an impact to the exterior of the AED20 causes a circuit board connector to perforate an insulation shield enabling an electrical short between the connector and the external housing of the AED20. The company has received 12 related complaints with this specific group of AED20's, including one instance in which the short may have prevented patient resuscitation. This corresponds to 2 percent of the 597 recalled devices. The company has taken corrective action and no other devices besides those manufactured between the above dates are subject to this voluntary recall. MRL, Inc initiated notification via certified mail on May 5, 2005 to its customers who purchased AED20's in this group of devices (296 of which were sold within the US and 301 outside of the US). The company is providing customers with a loaner AED20 at no cost while their unit is being serviced and will pay all costs associated with shipping, handling and corrective service. This recall is being conducted with the full knowledge of the U.S. Food and Drug Administration (FDA). FDA has determined that this action is a Class 1 recall. The FDA defines Class 1 as a situation in which there is reasonable probability that the use of or exposure to the product will cause serious adverse health consequences or death. Customers with questions may contact the company at 1-800-462-0777 for more information. NEBRASKA: Judge Grants Certification To Suit V. Mental Hospitals ---------------------------------------------------------------- After a judge ruled that a lawsuit filed on behalf 16 female patients should be a class action lawsuit that alleges state officials did nothing to stop sexual assaults and other abuse of female patients at Nebraska's three mental health hospitals, more than 1,000 women will be allowed to join the legal action, The Associated Press reports. By making the suit a class action, U.S. District Judge Lyle Strom made it applicable to more than 1,000 women who have lived or now live at the centers in Lincoln, Hastings and Norfolk. The suit, filed in 2002 by the Nebraska Advocacy Services Inc., the suit alleges that male hospital workers and patients sexually assaulted women patients. Bruce Mason, litigation director for Nebraska Advocacy Services said the request to expand the lawsuit was made after taking statements and depositions from scores of female patients who were subjected to "rape, sexual assault, sexual harassment, sexual exploitation and physical assault," AP reports. In court documents, Mr. Mason stated, "In one instance, a male staff member who raped, sexually assaulted, and sexually abused numerous plaintiffs had a felony criminal record and an employment record involving sexually inappropriate behavior resulting in termination from that employment prior to his hiring at one of the ... facilities." Additionally, Mr. Mason told AP that he has compiled a list of alleged assaults at the hospitals during a period from 2001 through part of 2004. He adds though that he has yet to review records for the rest of 2004 and 2005. The state had argued that past female patients could not be certified as class members because they would "no longer be subject to an ongoing violation of federal law." However, Judge Strom cited a 1908 U.S. Supreme Court ruling in rejecting that argument. He pointed out, "The Supreme Court carved out a narrow exception to this rule. When the claim on the merits is 'capable of repetition, yet evading review,' the ... plaintiff may litigate the class certification issue despite loss of his personal stake in the outcome of the litigation." He also noted that many of the women have been residents of the facilities on more than one occasion, "And it is possible that they could become residents again in the future, due to their continuing mental illnesses." Judge Strom also said the result of the lawsuit would apply to future residents at the facilities and thus set a trial date of October 31. The lawsuit stems from settlement of a 1995 federal action filed by four women at the Hastings Regional Center that required the state to provide better supervision of patients. NEW YORK: SEC Obtains Order Imposing Penalty V. Cole Bartiromo -------------------------------------------------------------- The Securities and Exchange Commission reports that U.S. District Judge Barbara S. Jones of the Southern District of New York entered an Order granting the Commission's motion for a preclusion order and summary judgment against Defendant Cole A. Bartiromo, 17, and Defendant Invest Better 2001 (IB2001), Mr. Bartiromo's Internet alias. The Order precludes Mr. Bartiromo from introducing certain evidence based on his refusal to answer deposition questions and invocation of his Fifth Amendment privilege, finds that Mr. Bartiromo and IB2001 violated Sections 5(a), 5(c) and 17 (a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, finds Mr. Bartiromo liable for ill-gotten gains of $47,216 in addition to the more than $1 million of gains the defendants previously disgorged to the Court and imposes a civil penalty against Mr. Bartiromo in the amount of $1,273,371. The Court found the civil penalty to be appropriate because, among other things, "the boldness of the fraud conclusively demonstrates the Defendant's high level of scienter, and because the risk of loss and the actual loss was substantial. The scheme ensnared approximately 5,000 victims, and would have continued to mushroom had Mr. Bartiromo not been caught." Previously, on May 29, 2002, the District Court issued an Amended Partial Final Judgment and Order, on consent, which permanently enjoined Mr. Bartiromo and IB2001 from violating the above registration and antifraud provisions of the federal securities laws, directed Mr. Bartiromo and IB2001 to repatriate all assets outside the United States and deposit such assets into the Court's account, froze Mr. Bartiromo's and IB20001's assets and granted other relief. In its first amended complaint, filed Jan. 7, 2002, the Commission alleged that Mr. Bartiromo raised more than $1 million from more than 1,000 investors through a scheme known as "Invest Better 2001," which, from at least Nov. 1, 2001, purportedly offered "guaranteed" and "risk-free" investment programs in which IB2001 pooled investors' funds to bet on sporting events, and promised to repay investors between 125% and 2500% of their principal within specified periods ranging from three days to several weeks. In its second amended complaint, filed April 29, 2002, the Commission alleged that Mr. Bartiromo conducted an Internet pump-and-dump scheme in which he manipulated the stock price of fifteen publicly traded companies from approximately May 14, 2001, to July 5, 2001. More specifically, Mr. Bartiromo disseminated numerous false and misleading messages concerning publicly traded companies on the Internet. The complaint alleges that for each manipulation Mr. Bartiromo purchased large blocks of stock, consisting in some cases of nearly 50% of the volume on that day, then posted thousands of identical false messages on Internet message boards, and subsequently sold his entire position. According to the second amended complaint, Mr. Bartiromo posted over 6,000 messages and traded several million shares of the fifteen companies in this manner, and, as a result, generated a net profit of over $91,000. The action is titled, SEC v. Invest Better 2001, Cole A. Bartiromo, and John/Jane Does 1-10, 01 Civ. 11427 (BSJ) SDNY (LR-19221). QUIGLEY CORPORATION: Trial Continues in PA Consumer Fraud Suit -------------------------------------------------------------- Trial in the nationwide class action filed against the Quigley Corporation is proceeding in the Court of Common Pleas of Philadelphia County, Pennsylvania. In September 2000, two individuals, namely Jason Tesauro and Elizabeth Eley, both residents of Georgia, filed the suit on behalf of a "nationwide class" of "similarly situated individuals," alleging that the Plaintiffs purchased certain Cold-Eeze(R) products between August 1996, and November 1999, based upon cable television, radio and internet advertisements which allegedly misrepresented the qualities and benefits of the Company's products. The Complaint requests an unspecified amount of damages for violations of Pennsylvania's consumer protection law, breach of warranty and unjust enrichment, as well as a judicial determination that the action be maintained as a class action. In October 2000, the Company filed Preliminary Objections to the Complaint seeking dismissal of the action. The Court sustained certain objections thereby narrowing Plaintiffs' Complaint. In May 2001, Plaintiffs filed a Motion to Certify the Alleged Class. The Company opposed the Motion. In November 2001, the Court held a hearing on Plaintiffs' Motion for Class Certification. In January 2002, the Court denied in part and granted in part the Plaintiffs' Motion. The Court denied Plaintiffs' Motion to Certify a Class based on Plaintiffs' claim under the Pennsylvania Consumer Protection Law; however, the Court certified the class based on Plaintiffs' breach of warranty and unjust enrichment claims. Discovery has been completed and trial that was originally scheduled for May 2004 has been continued pending determination of certain dispositive pre-trial motions filed by the Company. RADIOSHACK CORPORATION: Recalls 1M Cleaners Due To Toxic Hazard --------------------------------------------------------------- In cooperation with the U.S. Consumer Product Safety Commission (CPSC), RadioShack Corp., of Fort Worth, Texas is voluntarily recalling about 1,000,000 Wet System Video Head Cleaners. The cleaning solution bottle, which is labeled as containing isopropanol, actually contains methanol. Methanol can be fatal or cause blindness if swallowed. It is much more toxic than isopropanol. Also, the cleaning solution bottle does not have special cautionary labeling and child-resistant packaging, as required by Federal regulation for methanol. RadioShack has received 39 reports from their poison center of children accessing this product. No injuries or illnesses have been reported. The recalled non-abrasive "Wet System" Video Head Cleaner was sold in a box labeled "Video Head Cleaner," "RadioShack" and "44-1230" or "44-1213." The box contains a cleaning video cassette and a bottle of cleaning solution. The 4-inch-high white plastic cleaning solution bottle is labeled "Video Head Cleaning Fluid" or "Cleaning Liquid for HEAD CLEANER." Other writing on the bottle includes "Contents: Isopropanol," and the item number "44-1230" or "44-1213." Manufactured in Chian, the cleaners were sold at all RadioShack stores nationwide and http://www.radioshack.comfrom December 1995 through January 2005 for about $13. Consumers should immediately place this product out of reach of children and return the product to the nearest RadioShack store for a refund, or dispose of the bottle of cleaning fluid in accordance with all state and local requirements. Consumer Contact: Call RadioShack at (800) 843-7422 anytime, or go to the firm's Web sites: http://www.radioshack.comand http://www.radioshackcorporation.com. SILICON STORAGE: Shareholders Lodge Stock Fraud Suits in N.D. CA ---------------------------------------------------------------- Silicon Storage Technology, Inc. and certain of its directors and officers face a securities class action filed in the United States District Court for the Northern District of California, following the Company's announcement of anticipated financial results for the fourth quarter of 2004. The complaints are captioned: (1) Hunt v. Silicon Storage Technology, Inc., et al., Case No. C 05 00408 WHA (N.D. Cal.); (2) Baker v. Silicon Storage Technology, Inc., et al., Case No. C 05 00295 PJH (N.D. Cal.); (3) Grobler v. Silicon Storage Technology, Inc., et al., Case No. C 05 00376 MHP (N.D. Cal.); (4) Talmo v. Silicon Storage Technology, Inc., et al., Case No. C 05 00390 MMC (N.D. Cal.); and (5) DiCintio v. Silicon Storage Technology, Inc., et al., Case No. C 05 0708 MMC (N.D. Cal.) The complaints seek unspecified damages on alleged violations of federal securities laws during the period from March 22, 2004 to December 20, 2004. Consolidation and the appointment of lead plaintiff are currently pending in these purported class actions. SINO BESTFOOD: Recalls Apricots Due To Undeclared Sulfites ---------------------------------------------------------- State Agriculture Commissioner Nathan L. Rudgers alerted consumers that Sino Bestfood, Inc., 7 Koster Blvd., Suite 3B, Edison, New Jersey 08837 is recalling 9.88 oz. packages of preserved fruit (apricot) because they may contain undeclared sulfites. People who have severe sensitivity to sulfites may run the risk of serious or life-threatening reactions if they consume this product. The recalled preserved fruit (apricot), a product of China, comes in a 9.88 oz. plastic tray package coded 20-12-2005. It was sold in metropolitan New Jersey and New York. The recall was initiated after routine sampling by New York State Department of Agriculture and Markets Food Inspectors and subsequent analysis by the Department's Food Laboratory personnel revealed the presence of sulfites in product packages which did not declare sulfites on the label. The consumption of 10 milligrams of sulfites per serving has been reported to elicit severe reactions in some asthmatics. Anaphylactic shock could occur in certain sulfite sensitive individuals upon ingesting 10 milligrams or more of sulfites. No illnesses have been reported to date to this Department in connection with the problem. Consumers who have purchased preserved fruit (apricot) should return it to the place of purchase. SKYTERRA COMMUNICATIONS: Reaches Settlement For CA Overtime Suit ---------------------------------------------------------------- Skyterra Communications, Inc. reached a settlement of a class action filed against it, its discontinued services subsidiary Rare Medium, Inc. and certain other former subsidiaries merged into Rare Medium, Inc., styled "Joe Robuck, individually and on behalf of all similarly situated individuals v. Rare Medium Group, Inc., Rare Medium L.A., Inc., Rare Medium, Inc., and Rare Medium Dallas, Inc., Los Angeles County Superior Court Case No. BC300310." In August 2003, a former California employee of Rare Medium filed the putative class action and putative representative action asserting that: (i) certain payments were purportedly due and went unpaid for overtime for employees with five job titles; (ii) certain related violations of California's overtime statute were committed when these employees were not paid such allegedly due and unpaid overtime at the time of their termination; and (iii) certain related alleged violations of California's unfair competition statute were committed. Plaintiff seeks to recover for himself and all of the putative class, alleged unpaid overtime, waiting time penalties (which can be up to 30 days' pay for each person not paid all wages due at the time of termination), interest, attorneys' fees, costs and disgorgement of profits garnered as a result of the alleged failure to pay overtime. In February 2005, the Company reached an agreement in principle with the plaintiff's counsel pursuant to which the class action will be dismissed without prejudice. As part of the agreement, the Company will receive releases from certain individuals in exchange for an immaterial settlement payment to each of the individuals. The effectiveness of a settlement agreement will be subject to court approval. STRACQ INC.: NY Court Enters Consent Judgment in SEC Fraud Case --------------------------------------------------------------- The U.S. District Court for the Southern District of New York entered a Final Consent Judgment against Stracq, Inc. The Commission's complaint, filed on July 24, 2003, alleges that, beginning in June 2000, the defendants engaged in a fraud arising out of the unregistered offer and sale of securities in Tecumseh, a purported financial services company with offices in New Jersey and California, and Tecumseh's subsidiary, Tradevest. Tecumseh and Tradevest conducted the fraud largely through the efforts of Milling, a securities lawyer and Tecumseh's senior official. According to the complaint, Tecumseh, Tradevest and Milling acted with the assistance of defendants Cantor, a registered broker-dealer; Gerard A. McCallion, Cantor's President; Anthony M. Palovchik, Tecumseh's Vice President; and Dale Carone, manager of Tecumseh's California office; and others. Through the unregistered fraudulent offerings, the defendants together raised approximately $10 million from about 500 investors nationwide. The complaint also names as relief defendants three Tecumseh affiliates: Alpha Fund, Alpha LLC, and Stracq, Inc. The complaint alleges that Tecumseh, Tradevest and Milling induced investors to acquire securities of Tecumseh and Tradevest by means of a host of material misrepresentations. Through offering memoranda and other materials, these defendants touted false and misleading profit projections, promised some investors "returns on investment" or "dividends" without disclosing that Tecumseh and Cantor had no earnings to distribute and that any such payments necessarily would come from capital, including funds raised from other investors and made materially misleading statements concerning NASD approval for Tecumseh's acquisition of Cantor. Tecumseh, Tradevest and Milling knew or acted in reckless disregard of the fact that their representations to investors concerning these matters were materially false and misleading. The complaint also alleges that relief defendant Stracq, Inc., in which Tecumseh held a controlling interest, was a recipient, without consideration, of proceeds of the fraud. Without admitting or denying the allegations of the complaint, Stracq, Inc. consented to the Final Consent Judgment ordering it to disgorge $660,000. The judgment provides that it will be deemed satisfied by payment of $500,000 in cash to the court- appointed receiver for Tecumseh and the delivery to the receiver of a secured note payable to the receiver in the original principal amount of $160,000 in connection with the receiver's sale of Tecumseh's controlling interest in Stracq to Stracq's current management. The Court entered an Order approving the sale on March 29, 2005. The litigation is pending. The action is titled, SEC v. Tecumseh Holdings Corp., et al., Civil Action No. 03 Civ. 5490 (SAS), SDNY (LR-19222). UNITED LIBERTY: Working on Settlement Of Ohio Policyholder Suit --------------------------------------------------------------- The United Liberty Life Insurance Company is working on the settlement of a class action filed in an Ohio state court by two policyholders. The Complaint referred to a class of life insurance policies, including related certificates of participation, that the Company issued over a period of years ending around 1971 (known as "Five Star Policies"). The suit alleged that the Company's dividend payments on these policies from 1993 through 1999 were less than the amounts required by the certificates of participation. It did not specify the amount of the alleged underpayment but implied a maximum of about $850,000. The plaintiffs also alleged that the Company is liable to pay punitive damages, also in an unspecified amount, for breach of an implied covenant of good faith and fair dealing to the plaintiffs in relation to the dividends. The action has been certified as a class action on behalf of all policyholders who were Ohio residents and whose policies were still in force in 1993. As a result of a provisional settlement agreement dated October 8, 2004 that would apply to all holders of the Five Star policies wherever they reside, the Company has recognized as of December 31, 2004 an obligation for future payments to the policyholders and their attorneys totaling $825,000. The terms of the settlement agreement are subject to the approval of the court in which the action is pending. The court will schedule a hearing on the issue of approval, following notice to members of the class, who will be afforded the opportunity to argue in support of or opposition to the settlement agreement. Accordingly, this description is subject to change depending upon the outcome of the hearing. The $825,000 obligation for future payments consist of: (1) up to $500,000 payable to all persons who owned Five Star Policies that were still in force in 1993, (2) $315,000 in attorneys' fees payable to counsel for the class and (3) a $10,000 incentive award payable to the lead plaintiffs for the class The $500,000 portion is payable in respect of dividend obligations on the Five Star Policies from 1993 through 2000 and is to be paid in three annual installments beginning within 60 days after expiration of the time within which any appeal may be taken from the trial court's approval of the settlement agreement. The Company currently projects the first payment date to be after June 30, 2005. The attorneys' fees and incentive award are also payable by the Initial Payment Date. UNITED STATES: Firm Has Highest Average Settlement Total in 2004 ---------------------------------------------------------------- The law firm of Barrack, Rodos & Bacine won $2.888 billion for its clients in 2004, and according to a survey by the Securities Class Action Services (SCAS), the firm ranked second in total client recoveries nationwide. With an average settlement of $722 million per case, Barrack, Rodos & Bacine had the highest average settlement of any law firm in the SCAS survey, besting its closest competitor by $232 million per suit. "We take great pride in the results of this critical survey," Leonard Barrack, senior and founding partner for the firm said, "especially as it underscores our commitment to our client's long-term interests. Ensuring that the millions of Americans who invest their retirement and other savings in public pension plans are kept safe from fraud is our top priority. And when that trust is violated by those who seek to make a fast buck, we will not hesitate to bring the full weight of the nation's securities laws to bear on behalf of our clients." With a proven history of winning record-breaking settlements for its clients, such as the New York Common Retirement Fund, Barrack, Rodos & Bacine has been instrumental in helping to make fundamental changes to the ways in which investors are protected on Wall Street and around the country. Recent key victories and recoveries orchestrated by the firm include: (1) WorldCom - $6.1 billion recovered in the civil trial. (2) Cendant - $3.18 billion in the class action case. (3) McKesson - $960 million in a securities case. (4) DaimlerChrysler - $300 million in a securities case. "The expertise we have developed in representing public funds enables us to perfectly understand their fiduciary obligations," Mr. Barrack said. "And, as a result, enables us to recommend only the highest quality cases to our clients, and ones in which we are confident we can achieve a positive financial impact for all investors." The firm has also gained the respect of the judicial community over this course of its many complex cases. During settlement negotiations in the WorldCom securities case, for example, Judge Denise L. Cote said, "The quality of the representation given by Lead Counsel (Barrack, Rodos & Bacine) is unsurpassed in this Court's experience with plaintiffs' council in Securities Litigation." Asbestos Alert ASBESTOS LITIGATION: Cleco Named as Defendant by LA Site Workers ---------------------------------------------------------------- In several lawsuits, Cleco Corporation (NYSE: CNL) has been named as a defendant by individuals who claim injury due to exposure to asbestos while working at sites in central Louisiana. Most of the claimants were workers who participated in the construction of various industrial facilities, including power plants, and some of the claimants have worked at locations owned by the Pineville, LA-based Company. Cleco's management regularly analyzes current information and, as necessary, provides accruals for probable liabilities on the eventual disposition of these matters. The Company's management believes that the disposition of these matters will not have a material adverse effect on the registrants' financial condition, results of operations, or cash flows. The holding company's utility unit, Cleco Power, generates, transmits, and distributes electricity to more than 260,000 residential and business customers in more than 100 communities in Louisiana. Cleco Power has a generating capacity of nearly 1,400 MW from its interests in fossil-fueled power plants. ASBESTOS LITIGATION: Allstate Corp. Lowers Reserves to US$1.39B --------------------------------------------------------------- The Allstate Corporation (NYSE: ALL), the second largest US personal lines insurer, divulged in its latest filing to the Securities and Exchange Commission that its reserves for asbestos claims were US$1.39 billion and US$1.46 billion, net of reinsurance recoverables of US$885 million and US$963 million at March 31, 2005 and December 31, 2004, respectively. Reserves for environmental claims were US$227 million and US$232 million, net of reinsurance recoverables of US$48 million and US$49 million at March 31, 2005 and December 31, 2004, respectively. About 62% of the total net asbestos and environmental reserves at both March 31, 2005 and December 31, 2004 were for incurred but not reported estimated losses. Headquartered in Northbrook, IL, the Company's exposure to asbestos, environmental and other discontinued lines claims arises principally from assumed reinsurance coverage written during the 1960s through the mid-1980s, including reinsurance on primary insurance written on large US companies, and from direct excess insurance written from 1972 through 1985, including substantial excess general liability coverages on Fortune 500 companies. Additional exposure stems from direct primary commercial insurance written during the 1960s through the mid- 1980s. Management believes its net loss reserves for environmental, asbestos and other discontinued lines exposures are appropriately established based on available facts, technology, laws and regulations. However, the ultimate cost of these claims may vary materially from the amounts currently recorded, resulting in an increase in loss reserves. In addition, while the Company believes that improved actuarial techniques and databases have assisted in its ability to estimate asbestos, environmental, and other discontinued lines net loss reserves, these refinements may subsequently prove to be inadequate indicators of the extent of probable losses. Allstate Financial sells life insurance, retirement and investment products to individual and institutional customers. Individual retail products include traditional life, interest- sensitive life, supplemental accident and health insurance, variable life, long-term care insurance, variable and fixed annuities and funding agreements. ASBESTOS LITIGATION: MO Residents Sue City Over Removal Method -------------------------------------------------------------- Bridgeton residents filed a federal lawsuit last week seeking to stop the city of St. Louis and its airport authority from continuing to use a controversial asbestos-removal technique to make way for a new airport runway. The group also seeks soil and air testing, a remediation plan and civil penalties, reports The Columbia Daily Tribune. The suit accuses the city of St. Louis and Lambert Field of violating the federal Clean Air Act in using the so-called "wet method" of asbestos removal on more than 300 buildings in the past six years. The citizens' suit alleges that "significant quantities" of asbestos were released during the test and that no level of asbestos exposure is considered safe. The Trial Lawyers for Public Justice in Washington sued on behalf of the residents, who call themselves Families for Asbestos Compliance, Testing and Safety, or FACTS. Deputy Airport Director Gerard Slay said he was disappointed in the lawsuit and that the city is confident its work practices and techniques "were protective of public health, the environment and workers at the site." He suggested that the expense of defending the suit might delay moving residents from the buyout area. Asbestos is a hazardous material that can cause cancer and other diseases decades after the exposure occurs. The Centers for Disease Control and Prevention said 1,493 people died from asbestos exposure in 2000. The airport used this "wet method" on hundreds of buildings that were structurally sound, sometimes while neighbors were still living nearby. Airport expansion spokesman Chuck Reitter said that the method had been approved in advance by the St. Louis County Health Department. The U.S. Environmental Protection Agency twice ordered the airport to halt using the method. It is permitted under certain exceptions, but the city didn't apply for any exceptions, said one of the group's attorneys, Richard Miller of Kansas City. Given the dangers, asbestos handling is rigidly controlled by the EPA. Federal law requires contractors to remove asbestos by hand, bag it and take it to a hazardous waste disposal site. Mr. Miller said the city used the wet demolition method without notifying the state or EPA, then later sought and got a year's waiver he maintains was inappropriately granted and extended for another year. Plaintiffs' attorney, Bruce Morrison, with the Great Rivers Environmental Law Center of St. Louis, said, at this point, the residents are "very afraid of what they're being exposed to." Mr. Slay said the wet method was used on 255 of the 1,488 homes demolished since the project began in 1999. More than 400 homes remain, but since July, the wet method has not been used and won't be until the issue is resolved. He said the airport had prior approval from St. Louis County and state and federal authorities to use the wet method. ASBESTOS LITIGATION: Goodyear Had 129,100 Pending Claims at 1Q05 ---------------------------------------------------------------- Goodyear Tire & Rubber Company (NYSE: GT) disclosed that it had about 129,100 asbestos-related claims pending against the company as of March 31, 2005. The plaintiffs are seeking unspecified actual and punitive damages and other relief. The Company said in its quarterly report filed with the Securities and Exchange Commission that the plaintiffs in the claims allege asbestos-related diseases resulting from exposure to asbestos in products that it manufactures or in materials containing asbestos present in its facilities. During the first quarter, Goodyear said about 2,600 new claims were filed against the company and roughly 800 were settled or dismissed. The amount spent on asbestos defense and claim resolution by Goodyear and its insurance carriers during the first quarter totaled US$8 million, according to the filing. As previously reported in the April 22, 2005 edition of the Class Action Reporter, the Company reached an agreement effective April 13, 2005 to settle its claims for insurance coverage for asbestos and pollution-related liabilities with respect to insurance policies before 1993 that were issued by underwriters at insurer Lloyd's, London, and reinsured by Equitas Ltd. Under the agreement, Equitas will pay US$22 million to Goodyear in the second quarter and will place US$39 million into a trust. The insurance company will make the payment in exchange for "a complete termination" of its obligation. From 1914 to 1973, Goodyear manufactured rubber-coated asbestos sheets used to manufacture gaskets, and before 1987 produced aircraft brake systems that contained asbestos, the filing notes. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs more than 80,000 people worldwide. ASBESTOS LITIGATION: NJ Appeals Panel Reinstates Asbestos Suit -------------------------------------------------------------- New Jersey's Appellate Division last week ruled that a local refiner company had an obligation to inform the plaintiff that the dangers of asbestos brought home with him on his clothes could cause his wife to contract a fatal illness, reports The Courier-Post. The case will now be remanded to Superior Court for trial or settlement negotiations. This is the third case nationally, in which state appellate courts have tackled this issue, said Joshua Spielberg, a Cherry Hill attorney, who represented 84-year-old Anthony Olivo of Deptford. Mr. Olivo's wife of 58 years, Eleanor, aged 82, died in 2001 from mesothelioma, a cancer of the lining of the lungs caused only by asbestos inhalation. She washed the clothing that her husband wore to work. Anthony Olivo worked as a steamfitter at a number of companies in the area between 1947 and 1984, including the then-Mobil Paulsboro refinery in Greenwich. Mr. Olivo filed a wrongful-death suit in Superior Court in Gloucester County against 32 companies that manufactured, supplied and installed asbestos products or owned properties where asbestos was used. All settled except Exxon Mobil. A Superior Court judge in Gloucester County ruled that Exxon Mobil had no liability. The Appellate Division disagreed, writing, "Exxon Mobil owed a duty to decedent because it was in the best position to prevent the harm." The court noted that the company knew as early as 1937 exposure to asbestos created a threat. It also noted that a Mobil hygienist wrote a report in 1954 that identified asbestos as a toxic material commonly found in refineries that required monitoring. "Moreover, it was generally known as early as 1916, that to avoid contaminating employees' homes, employees laboring around industrial chemicals should be provided with changing rooms, washing facilities, and encouraged not to wear work clothing home," the court wrote. James C. Orr represented Exxon Mobil. The company has 20 days to file an appeal with the state Supreme Court. ASBESTOS LITIGATION: Texas Tort Reform Prompts Surge in Filing -------------------------------------------------------------- Faced with impending tort reform, the Jefferson County District Clerk's Office experienced a sudden rush of lawsuit filings. The office, which normally receives about 300 civil lawsuits a month, got 400 asbestos lawsuits in less than a week, said District Clerk Lolita Ramos. The Texas Legislature set the May 1 deadline to fall before the asbestos bill is passed in order to prevent lawyers from recruiting new claims before the law takes effect, Beaumont attorney Bryan Blevins said. The counsels for these cases hurriedly filed before a law limiting asbestos and silica litigation takes effect. If it is signed into law, Senate Bill 15, which is expected to be signed by the governor within the month, will make it more difficult to file asbestos and silica lawsuits. Cases filed after May 1 will face slightly stricter medical criteria and will be subject to dismissal. The rush appears to be over for now, but large, multi-party lawsuits still are stacked on desks, awaiting service. Mr. Blevins said the interruption should be over for now, adding that the surge of lawsuits left about US$100,000 in revenue from filing fees. He expects the House will pass the bill this week with minor modifications. Then it will then go back to the Senate and then to the governor's desk next week. He expressed little doubt that it will be passed. Mr. Blevins commented that while it could have been worse, the bill is not what he would have it be. "We appreciated the opportunity to represent our clients in an attempt to improve the bill. We avoided the worst-case scenario, but make no mistake about it: It is an industry-friendly, victim-unfriendly bill." ASBESTOS LITIGATION: Everest Re Posts US$18M Reserve Adjustments ---------------------------------------------------------------- Everest Re Group, Ltd. (NYSE: RE) revealed that for the three months ended March 31, 2005, the net adverse reserve adjustments included net adverse asbestos and environmental adjustments of US$18.0 million and net catastrophe development of US$13.7 million partially offset by pre-1995 non-asbestos and environmental favorable development. The reserve adjustments for the three months ended March 31, 2004 included asbestos and environmental adjustments of US$63.2 million, which were partially offset by US$9.0 million of favorable loss adjustments. The Company continues to receive claims under expired contracts, both insurance and reinsurance, asserting alleged injuries and damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. The Company's asbestos claims typically involve potential liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos. The U.S. Reinsurance segment accounted for US$11.3 million of net adverse prior period reserve adjustments for the three months ended March 31, 2005, which included US$10.6 million of unfavorable non-asbestos and environmental prior period reserve adjustments as compared to net adverse prior period reserve adjustments of US$13.2 million for the three months ended March 31, 2004. Asbestos exposures accounted for US$0.7 million and US$4.2 million of adverse reserve adjustments for the three months ended March 31, 2005 and 2004, respectively. The U.S. Insurance segment reflected US$3.6 million of net favorable prior period reserve adjustments for the three months ended March 31, 2005 and US$11.6 million of net adverse prior period reserve adjustment for the three months ended March 31, 2004. The March 31, 2004 prior period reserve adjustments were principally due to non-workers' compensation programs and related to accident years 2000 through 2002. The Bermuda segment reflected US$3.3 million and US$27.3 million of net adverse prior period reserve adjustments for the three months ended March 31, 2005 and 2004, respectively. The adverse development in the three months ended March 31, 2005 was primarily due to US$17.3 million of asbestos and environmental reserve development, with most of this development related to exposures assumed through the September 19, 2000 loss portfolio transfer from Mt. McKinley Insurance Company. Non-asbestos reserves assumed through this portfolio transfer experienced favorable development of US$13.5 million. The development in the first quarter of 2004 was the result of US$59.0 million of asbestos reserve development, partially offset by US$37.7 million of favorable development on other pre-1995 exposures. At March 31, 2005 the Company had asbestos loss reserves of US$630.0 million, of which US$304.7 million was for assumed business and US$325.3 million was for direct business. Everest Re was formed in 1973 but was not fully engaged in underwriting casualty business, under which asbestos and environmental exposures generally arise, until 1974, and it effectively eliminated exposures through contract exclusions effected in 1984. ASBESTOS LITIGATION: ArvinMeritor, Maremont Meets Injury Claims --------------------------------------------------------------- ArvinMeritor Inc. (NYSE: ARM), recently submitted a filing to the Securities and Exchange Commission, stating that Maremont Corporation, its subsidiary, is a co-defendant with many other companies in suits brought by individuals claiming personal injuries as a result of exposure to asbestos-containing products. The Company manufactured friction products containing asbestos from 1953 through 1977, when it sold its friction product business. Arvin acquired Maremont in 1986. Maremont's potential liabilities for asbestos-related claims can be grouped into three categories. The first group includes unbilled committed settlements entered into by the Center for Claims Resolution. The liability for unbilled committed settlements relates to committed settlements that Maremont agreed to pay when it participated in the Center for Claims Resolution. The Company shared in the payments of defense and indemnity costs of asbestos-related claims with other CCR members. The CCR handled the resolution and processing of asbestos claims on behalf of its members until February 1, 2001, when it was reorganized and discontinued negotiating shared settlements. There were no significant billings to insurance companies related to committed settlements in the six months ended March 31, 2005. There were US$1 million in billings to insurance companies related to committed settlements in the six months ended March 31, 2004. Pending claims compose the second group. Upon dissolution of the CCR in February 2001, Maremont began handling asbestos-related claims through its own defense counsel and is committed to examining the merits of each asbestos-related claim. Maremont had about 68,600 and 74,000 pending asbestos-related claims at March 31, 2005 and September 30, 2004, respectively. Although Maremont has been named in these cases, in the cases where actual injury has been alleged, very few claimants have established that a Maremont product caused their injuries. Although the company expects legal defense costs to continue at higher levels than when it participated in the CCR, the company believes its litigation strategy has reduced the average indemnity cost per claim. The decline in pending claims and related liability since September 30, 2004 reflects the settlement of 8,500 claims in one jurisdiction and lower defense costs. Billings to insurance companies for indemnity and defense costs of resolved cases were US$4 million and US$6 million in the six months ended March 31, 2005 and 2004, respectively. The third group constitutes the shortfall. Several former members of the CCR have filed for bankruptcy protection, and these members have failed to pay certain financial obligations with respect to settlements that were reached while they were CCR members. Maremont is subject to claims for payment of a portion of these defaulted member shares. In an effort to resolve the affected settlements, the Company has entered into negotiations with plaintiffs' attorneys, and an estimate of its obligation for the shortfall is included in the total asbestos- related reserves. In addition, Maremont and its insurers are engaged in legal proceedings to determine whether existing insurance coverage should reimburse any potential liability related to this issue. There were no payments by the company related to shortfall and other in the six months ended March 31, 2005 and 2004. Maremont has insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The coverage also reimburses Maremont for any indemnity paid on those claims. The coverage is provided by several insurance carriers based on the insurance agreements in place. Based on its assessment of the history and nature of filed claims to date, and of its insurance carriers, management believes that existing insurance coverage is adequate to cover substantially all costs relating to pending asbestos-related claims. Maremont is a division of ArvinMeritor Light Vehicle Aftermarket, a global automotive aftermarket Company providing exhaust, filter, and ride control products to its customers. ArvinMeritor Light Vehicle Aftermarket is headquartered in Brentwood, TN and is a division of ArvinMeritor Inc. ASBESTOS LITIGATION: Crown Cork & Seal Receives 3,000 New Claims ---------------------------------------------------------------- Crown Holdings, Inc. (NYSE: CCK) stated that its operating subsidiary, still known as Crown Cork & Seal Company, a worldwide producer of consumer packaging, is one of many defendants in a substantial number of lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose stock Crown Cork purchased in 1963. About ninety days after the stock purchase, this U.S. Company sold its insulation assets and was later merged into Crown Cork. During the three months ended March 31, 2005, Crown Cork received about 3,000 new claims, settled or dismissed about 1,000 claims and had about 76,000 claims outstanding at the end of the period. As of March 31, 2005, the Company's accrual for pending and future asbestos-related claims was US$231 million. The Company estimates that its probable and estimable liability for pending and future asbestos-related claims would range between US$231 million and US$349 million. The accrual balance of US$231 million includes US$110 million for unasserted claims and US$11 million for committed settlements that will be paid over time. Prior to 1998, the amounts paid to asbestos claimants were covered by a fund made available to Crown Cork under a 1985 settlement with carriers insuring Crown Cork through 1976, when Crown Cork became self-insured. The fund was depleted in 1998 and the Company has no remaining coverage for asbestos-related costs. In January 2005 and April 2004, the States of Ohio and Mississippi, respectively, enacted legislation that limits the asbestos-related liabilities under state law of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The new legislation, which applies to pending and future claims, caps asbestos-related liabilities at the fair market value of the predecessor's total gross assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the total adjusted value of its predecessor's assets. Crown Cork has integrated the legislation into its claims defense strategy. The Company cautions, however, that the legislation may be challenged and there can be no assurance regarding the ultimate effect of the legislation on Crown Cork. In June 2003, the State of Texas enacted legislation that limits the asbestos-related liabilities in Texas courts of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The Texas legislation, which applies to future claims and pending claims, caps asbestos-related liabilities at the total gross value of the predecessor's assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the total adjusted value of its predecessor's assets. Historically, Crown Cork estimates that about one-quarter of all asbestos-related claims made against it have been asserted by claimants who claim first exposure to asbestos after 1964. However, because of Crown Cork's settlement experience to date and the increased difficulty of establishing identification of the subsidiary's insulation products as the cause of injury by persons alleging first exposure to asbestos after 1964, the Company has not included in its accrual and range of potential liability any amounts for settlements by persons alleging first exposure to asbestos after 1964. ASBESTOS LITIGATION: Entergy Faces 480 Lawsuits, 10,000 Claims -------------------------------------------------------------- Numerous lawsuits have been filed in federal and state courts in Texas, Louisiana, and Mississippi primarily by contractor employees in the 1950-1980 timeframe against Entergy Gulf States, Entergy Louisiana, Entergy New Orleans, and Entergy Mississippi as premises owners of power plants, for damages caused by alleged exposure to asbestos or other hazardous material. Many other defendants are named in these lawsuits as well. Presently, there are about 480 lawsuits involving about 10,000 claims. Management believes that adequate provisions have been established to cover any exposure. Additionally, negotiations continue with insurers to recover more reimbursement, while new coverage is being secured to minimize anticipated future potential exposures. Management believes that loss exposure has been and will continue to be handled successfully so that the ultimate resolution of these matters will not be material, in the aggregate, to the financial position or results of operation of the domestic utility companies involved in these lawsuits. Entergy Corporation is an integrated energy company engaged primarily in electric power production, retail distribution operations, energy marketing and trading, and gas transportation. ASBESTOS LITIGATION: AXA Pays US$35M of Claims and Costs in 2004 ---------------------------------------------------------------- AXA, one of the world's largest insurers, in its filing submitted to the Securities and Exchange Commission, revealed that under insurance and reinsurance contracts, it paid claims and legal costs of US$51 million related to environmental pollution in 2004 of which US$35 million related to asbestos and US$16 million related to environmental pollution (2003: US$53 million and 2002: US$45 million). At December 31, 2004, the Paris, France-based Company had made cumulative payments relating to such contracts of US$571 million of which US$422 million related to asbestos and US$149 million related to environmental pollution (2003: US$536 million). In prior years, AXA issued insurance policies and assumed reinsurance for cover related to environmental pollution and asbestos exposure. Its insurance companies have been and continue to be involved in disputes regarding policy coverage and judicial interpretation of legal liability for potential environmental and asbestos claims. AXA has received and continues to receive notices of potential claims asserting environmental and asbestos losses under insurance policies issued or reinsured by AXA. Such claim notices are frequently merely precautionary in nature. There are significant uncertainties that affect the insurance companies' ability to estimate future losses for these types of claims. However, AXA still carries out regular actuarial reviews to ensure that loss provisions relating to these risks are adequate. At December 31, 2004, AXA had insurance claim reserves (gross of reinsurance) of US$1,021 million (of which US$875 million related to asbestos and US$146 million related to environmental pollution) or US$914 million net of reinsurance of which US$793 million related to asbestos and US$121 million related to environmental pollution (2003: US$944 million gross of reinsurance or US$858 million net of reinsurance), including: (1) US$380 million for reported claims of which US$298 million related to asbestos and US$82 million related to environmental pollution (2003: US$365 million); and (2) US$641 million for IBNR (incurred but not reported) claims of which US$576 million related to asbestos and US$64 million related to environmental pollution (2003: US$579 million). The IBNR liabilities are estimated and evaluated regularly based on information received by management. ASBESTOS LITIGATION: Washington Group Int'l. Faces Injury Suits --------------------------------------------------------------- Construction and engineering firm, Washington Group International, Inc. (NASDAQ: WGII), disclosed in its regulatory filing submitted to the Securities and Exchange Commission that it is a defendant in various lawsuits resulting from allegations that third parties sustained injuries and damage from the inhalation of asbestos fibers contained in materials used in construction projects. In addition, the Company stated that it is aware of other potential asbestos claims against it based on proofs of claims filed with the court during the bankruptcy proceedings. However, the Company asserted that it was never a manufacturer of asbestos or asbestos-containing products. Asbestos-related lawsuits against the Boise, ID-based Company result from allegations that third parties sustained injuries and damage from the inhalation of asbestos fibers contained in materials used in construction projects. The suits claim that the Company was allegedly negligent, the typical negligence claim being that it had a duty but failed to warn the plaintiff or claimant of, or failed to protect the plaintiff or claimant from, the dangers of asbestos. In 1996, Washington Construction Group, Inc. acquired a major interest in publicly traded Morrison Knudsen Corporation (MK). Merging the financially powerful Washington Construction Group with MK revitalized this historic and respected company. In 1998, MK acquired Westinghouse engineering and construction operations. In 2000 MK also acquired Raytheon Engineers & Constructors (RE&C). Recognizing the synthesis of what had essentially become a new company and a major force in the industry, MK changed its name to Washington Group International, Inc. Previously, the Company had determined that all of the asbestos claims relating to old MK are fully insured and most, but potentially not all, of the asbestos claims relating to RE&C are fully insured. The potentially uninsured asbestos claims relate to a company acquired by RE&C in 1986. The Company recently reviewed the 1986 stock purchase agreement, pursuant to which RE&C had acquired that company, and has recently obtained and reviewed the insurance policies obtained by the prior owners of the company. Based on these reviews, Washington Group believes it is entitled to the benefit of the insurance coverage obtained by the prior owners. The Company has tendered the claims related to the acquired company to such insurance carriers, but it is undetermined yet if the carriers will accept the claims. The outcome of these claims, including the adequacy of insurance coverage, cannot be predicted with certainty. Prior to receiving and reviewing the insurance policies, the Company believed that the annual range of reasonably possible additional loss, including related legal costs, was zero to US$1.2 million. ASBESTOS LITIGATION: IL EPA Probes Demolition Firm for Breaches --------------------------------------------------------------- The Illinois Environmental Protection Agency is investigating a complaint against Champion Environmental Services Inc., the demolition firm contracted by CNH Global to tear down its plant in East Moline, for alleged asbestos handling violations. Acting on a tip from a watchdog organization, inspectors went to the site and found that workers were not following proper asbestos removal procedures. Some siding and roofing material containing asbestos had broken apart, possibly releasing asbestos fibers. The inspector then went ahead and instructed the demolition contractors on the proper handling of asbestos. Asbestos is usually found in old buildings like the Case plant, which was built in 1927. As long as asbestos is contained or covered properly, the risk of inhaling it is limited, said IEPA spokeswoman Maggie Carson. Asbestos was widely used for insulation in many building materials. If inhaled, asbestos can cause severe lung damage and cause cancer in the chest and stomach, according to Occupational Safety & Health Administration. However, a CNH Global representative said the investigation would not slow down demolition of the plant. Rich Nelson, senior director of external communications at CNH, said the demolition is going well. He said Champion Environmental Services has not received a citation from the Illinois EPA and is certified in asbestos removal. Ms. Carson said the IEPA would issue a report on the matter in the next few weeks. CNH contracted Champion Environmental Services in February to demolish the 150-acre site. Once cleared, the site has the potential to be the biggest single piece of riverfront property in the Quad-Cities, East Moline officials said. ASBESTOS LITIGATION: MeadWestvaco Corp. Faces 550 Asbestos Suits ---------------------------------------------------------------- As with numerous other large industrial companies, MeadWestvaco Corporation (NYSE: MWV), a manufacturer of packaging and paper products, has been named a defendant in asbestos-related personal injury litigation. As of May 4, 2005, there were about 550 lawsuits. Typically, these suits also name many other corporate defendants. All of the claims against the Stamford, CT-based Company resolved to date have been concluded before trial, either through dismissal or through settlement with payments to the plaintiff that are not material to the company. To date, the costs resulting from the litigation, including settlement costs, have not been significant. At March 31, 2005, the company has litigation liabilities of about US$28 million, a significant portion of which relates to asbestos. Should the volume of litigation grow substantially, it is possible that the company could incur significant costs resolving these cases. After consulting with legal counsel and after considering established liabilities, it is the company's judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company's consolidated financial condition or liquidity. Management believes that the company has substantial indemnification protection and insurance coverage, subject to applicable deductibles and policy limits, with respect to asbestos claims. The company has valid defenses to these claims and intends to continue to defend them vigorously. Additionally, based on its historical experience in asbestos cases and an analysis of the current cases, the company believes that it has adequate amounts accrued for potential settlements and judgments in asbestos-related litigation. ASBESTOS LITIGATION: Ingersoll-Rand Posts US$3.3M Costs in 1Q05 --------------------------------------------------------------- Ingersoll-Rand Company Limited (NYSE: IR) stated in its latest filing to the Securities and Exchange Commission that a subsidiary, Ingersoll-Rand Company (IR-New Jersey), is a defendant in numerous asbestos-related lawsuits in state and federal courts. In virtually all of the suits a large number of other companies have also been named as defendants. The claims against IR-New Jersey generally allege injury caused by exposure to asbestos contained in certain of IR-New Jersey's products. Although IR-New Jersey was neither a producer nor a manufacturer of asbestos, some of its formerly manufactured products utilized asbestos-containing components, such as gaskets, purchased from third-party suppliers. All claims resolved to date have been dismissed or settled. For the quarter ended March 31, 2005, total costs for settlement and defense of asbestos claims after insurance recoveries and net of tax were about US$3.3 million as compared to US$3.2 million for the quarter ended March 31, 2004. The Company performs a thorough analysis, updated periodically, of its actual and potential asbestos liabilities projected seven years into the future. Based upon such analysis, the Company believes that its reserves and insurance are adequate to cover its asbestos liabilities, and that these liabilities are not likely to have a material adverse effect on its financial position, results of operations, liquidity or cash flows. Discontinued operations, net of tax, for the first quarter of 2005 amounted to expense of US$9.2 million compared to US$16.7 million of income for the first quarter of 2004. The first quarter of 2004 included US$19.4 million (after tax) recorded for claims filed under the Continued Dumping and Subsidy Offset Act of 2000, and the results of operations for divested businesses for the period owned by the Company. In addition, retained costs, mainly related to asbestos liability claims and employee benefit costs, were higher in the first quarter of 2005. The Company is a party to environmental lawsuits and claims, and has received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state authorities. It is identified as a potentially responsible party for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. For all sites there are other parties and, in most instances, the Company's site involvement is minimal. ASBESTOS LITIGATION: TODCO Named in Suits in MS Circuit Courts -------------------------------------------------------------- Certain subsidiaries of TODCO (NYSE: THE), a provider of contract oil and gas drilling services, have been named, along with other defendants, in several complaints that have been filed in the Circuit Courts of the State of Mississippi involving over 700 persons that allege personal injury arising out of asbestos exposure in the course of their employment by some of these defendants between 1965 and 1986. The complaints also name as defendants certain of Transocean's subsidiaries to whom the Company may owe indemnity and other unaffiliated defendant companies, including companies that allegedly manufactured drilling related products containing asbestos that are the subject of the complaints. The number of unaffiliated defendant companies involved in each complaint ranges from about 20 to 70. The complaints allege that the defendant drilling contractors used those asbestos- containing products in offshore drilling operations, land based drilling operations and in drilling structures, drilling rigs, vessels and other equipment and assert claims based on, among other things, negligence and strict liability, and claims authorized under the Jones Act. The plaintiffs seek, among other things, awards of unspecified compensatory and punitive damages. Based on a recent decision of the Mississippi Supreme Court, the Company anticipates that the trial courts may grant motions requiring each plaintiff to name the specific defendant or defendants against whom such plaintiff makes a claim and the time period and location of asbestos exposure so that the cases may be properly severed. The Company has not yet had an opportunity to conduct any discovery nor has it been able to determine the number of plaintiffs, if any, that were employed by its subsidiaries or Transocean's subsidiaries or otherwise have any connection with the Company's or Transocean's drilling operations. The Company intends to defend itself vigorously and, based on the limited information available to it at this time, the Company does not expect the ultimate outcome of these lawsuits to have a material adverse effect on its consolidated results of operations, financial position or cash flows. TODCO provides services to exploration and production businesses operating in the shallow waters of the Gulf of Mexico, and in the Gulf Coast inland marine region. TODCO, which was a part of the R&B Falcon business Transocean acquired, operates a fleet of about 70 drilling rigs. Transocean controls 22% of the Company, but intends to sells its shareholding. ASBESTOS LITIGATION: TRW Disputes Claims Against Subsidiaries ------------------------------------------------------------- TRW Automotive Holdings Corp. (NYSE: TRW) disclosed that certain of the Livonia, MI-based Company's subsidiaries have been subject in recent years to asbestos-related claims. In general, these claims seek damages for illnesses alleged to have resulted from exposure to asbestos used in certain components sold by the subsidiaries. Management believes that the majority of the claimants were assembly workers at the major U.S. automobile manufacturers. According further to the filing submitted to the Securities and Exchange Commission, the vast majority of these claims name as defendants numerous manufacturers and suppliers of a wide variety of products allegedly containing asbestos. Management believes that, to the extent any of the products sold by these subsidiaries and at issue in these cases contained asbestos, the asbestos was encapsulated. Based upon several years of experience with such claims, management believes that only a small proportion of the claimants has or will ever develop any asbestos-related impairment. Neither settlement costs in connection with asbestos claims nor average annual legal fees to defend these claims have been material in the past. These claims are strongly disputed by the Company and its subsidiaries and it has been the policy to defend against them aggressively. Many of these cases have been dismissed without any payment whatsoever. Moreover, there is significant insurance coverage with solvent carriers with respect to these claims. ASBESTOS LITIGATION: Harsco Corp. Battles 31,784 Pending Claims --------------------------------------------------------------- Harsco Corporation (NYSE: HSC), a global provider of high-value industrial services and engineered products, disclosed that as of March 31, 2005, there were 31,784 pending asbestos personal injury claims filed against the Camp Hill, PA-based Company. Of these cases, 26,510 were pending in the New York Supreme Court for New York County in New York State and 4,988 of the cases were pending in state courts of various counties in Mississippi. The other claims totaling about 286 are filed in various counties in a number of state courts, and in certain Federal District Courts, and those complaints assert lesser amounts of damages than the New York cases or do not state any amount claimed. The plaintiffs brought up legal actions against the Company, alleging personal injury from exposure to airborne asbestos over the past several decades. In their suits, they named as defendants many manufacturers, distributors and installers of numerous types of equipment or products that allegedly contained asbestos. The Company believes that the claims against it are without merit. The Company has never been a producer, manufacturer or processor of asbestos fibers. Any component within a Company product that may have contained asbestos would have been purchased from a supplier. Based on scientific and medical evidence, the Company believes that any asbestos exposure arising from normal use of any Company product never presented any harmful airborne asbestos exposure, and moreover, the type of asbestos contained in any component that was used in those products is protectively encapsulated in other materials and is not associated with the types of injuries alleged. Finally, in most of the depositions taken of plaintiffs to date in the litigation against the Company, plaintiffs have failed to identify any Company products as the source of their asbestos exposure. The majority of the asbestos complaints have been filed in either New York or Mississippi. Almost all of the New York complaints contain a standard claim for damages of US$20 million or US$25 million against the about 90 defendants, regardless of the individual's alleged medical condition, and without identifying any Company product as the source of plaintiff's asbestos exposure. With respect to the Mississippi complaints, most contain a standard claim for an unstated amount of damages against the numerous defendants, typically 240 to 270, without identifying any Company product as the source of plaintiff's asbestos exposure. The Company has not paid any amounts in settlement of these cases, with the exception of two settlements totaling less than US$10,000 paid in 1998 from insurance proceeds. The Company's insurance carrier has paid all legal costs and expenses to date. The Company has liability insurance coverage available under various primary and excess policies that the Company believes will be available if necessary to substantially cover any liability that might ultimately be incurred on these claims. As of March 31, 2005, the Company has obtained dismissal by stipulation, or summary judgment prior to trial, in all cases that have proceeded to trial. To date, the Company has been dismissed from 9,677 cases. In the same period, the Company was listed as a defendant in about 163 pending cases in the New York Supreme Court for New York County that have been designated as Active or "In Extremis" and assigned to trial groups. To date, the Company has been dismissed as a defendant prior to trial in all New York cases that have proceeded to trial. The number of these dismissals is currently about 1,231. During the first quarter of 2005, the Company obtained a significant number of case dismissals in Mississippi. These dismissals were in the wake of the Mississippi Supreme Court's decision in the Mangialardi case (in which the court held that consolidation of personal injury claims is impermissible and that restricted out of state residents from bringing asbestos suits in Mississippi). Based on these dismissals, the total number of pending Mississippi cases as of March 31, 2005 is now 4,988. Significantly, however, 2,879 of those cases were filed in, or removed to, the Mississippi federal district court, which is in the process of transferring them to the federal Multidistrict Asbestos Docket in Philadelphia. In accordance with an order of the MDL court entered several years ago, the transferred cases are deemed "administratively dismissed," subject to being reinstated only when each individual plaintiff can demonstrate both a present physical injury and that asbestos exposure resulted from the products or activities of identifiable defendants. ASBESTOS LITIGATION: Honeywell Deals With NARCO, Bendix Claims --------------------------------------------------------------- Honeywell International Inc. (NYSE: HON), a diversified technology and manufacturing leader mostly known for its aerospace products and services, is a defendant in personal injury actions related to asbestos. The company claims that it did not mine or produce asbestos, nor did it make or sell insulation products or other construction materials that have been identified as the primary cause of asbestos related disease in the vast majority of claimants. Products containing asbestos previously manufactured by Honeywell or by previously owned subsidiaries fall into two general categories: refractory products and friction products. Honeywell owned North American Refractories Company (NARCO) from 1979 to 1986. NARCO produced refractory products that were sold largely to the steel industry in the East and Midwest. Less than 2 percent of NARCO's products contained asbestos. When the Company sold the NARCO business in 1986, it agreed to indemnify NARCO with respect to personal injury claims for products that had been discontinued prior to the sale. NARCO retained all liability for all other claims. NARCO had resolved about 176,000 claims through January 4, 2002, the date NARCO filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, at an average cost per claim of US$2,200. Of those claims, 43 percent were dismissed on the ground that there was insufficient evidence that NARCO was responsible for the claimant's asbestos exposure. As of the date of NARCO's bankruptcy filing, there were about 116,000 remaining claims pending against NARCO, including about 7 percent in which Honeywell was also named as a defendant. Since 1983, Honeywell and our insurers have contributed to the defense and settlement costs associated with NARCO claims. As a result of the NARCO bankruptcy filing, all of the claims are automatically stayed pending the reorganization of NARCO. The bankruptcy court has also temporarily enjoined any claims against Honeywell, current or future, related to NARCO, except one claim which is not material as to which the stay was lifted in August 2003. As a result of negotiations with counsel representing NARCO related asbestos claimants regarding settlement of all pending and potential NARCO related asbestos claims against Honeywell, the company has reached definitive agreements with about 260,000 claimants, which represents an excess of 90 percent of the anticipated current claimants who are expected to file a claim as part of the NARCO reorganization process. The company believes that a trust will be established pursuant to these Trust Distribution Procedures for the benefit of all asbestos claimants, current and future. The Company now expects the NARCO plan of reorganization and the NARCO trust to be approved by the Court in 2005. As part of its ongoing settlement negotiations, Honeywell has reached agreement in principle with the representative for future NARCO claimants to cap its annual contributions to the trust with respect to future claims at a level that would not have a material impact on Honeywell's operating cash flows. During the three months ended March 31, 2005, the Company recognized a charge of about US$52 million to reflect a settlement of certain pending asbestos claims during the quarter. Substantially all settlement payments with respect to current claims are expected to be made by the end of 2007. Bendix Friction Materials business manufactured automotive brake pads that contained chrysotile asbestos in an encapsulated form. There is a group of existing and potential claimants consisting largely of individuals that allege to have performed brake replacements. From 1981 through March 31, 2005, the Company has resolved about 72,000 Bendix related asbestos claims including trials covering 120 plaintiffs, which resulted in 115 favorable verdicts. Trials covering five individuals resulted in adverse verdicts; however, two of these verdicts were reversed on appeal and the remaining three claims were settled. In the first quarter of 2005, the Company recognized a charge of US$34 million for Bendix related asbestos claims filed, net of probable insurance recoveries. The asbestos related charge also included the net effect of a settlement of certain NARCO related pending asbestos claims, a Bendix related structured insurance settlement and write-offs of certain Bendix related insurance receivables. Honeywell currently has about US$1.9 billion of insurance coverage remaining with respect to pending and potential future Bendix related asbestos claims. This coverage is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Insurance receivables are recorded in the financial statements simultaneous with the recording of the liability for the estimated value of the underlying asbestos claims. During the three months ended March 31, 2005, the Company entered into a structured insurance settlement, which converted policies into future fixed, non-contingent payment streams, resulting in a gain of about US$160 million. Additionally, during the first quarter of 2005, the Company recognized a charge of about US$108 million for write-offs of certain amounts due from insurance carriers. It had amounts receivable from its insurers of about US$400 million representing probable reimbursements associated with its liability for pending claims and previously settled and paid claims, and for amounts due under negotiated fixed payment streams. On a cumulative historical basis, Honeywell has recorded insurance receivables equal to about 50 percent of the value of the underlying asbestos claims recorded. During the three months ended March 31, 2005, the Company paid US$92 million in indemnity and defense costs related to NARCO and Bendix claims and received US$9 million of asbestos related insurance recoveries. It also recognized a charge of US$34 million for Bendix related asbestos claims filed and defense costs incurred during the first quarter of 2005, net of probable insurance recoveries. The asbestos related charge included the net effect of a settlement of certain NARCO related pending asbestos claims, a Bendix related structured insurance settlement and write-offs of certain Bendix related insurance receivables. ASBESTOS LITIGATION: Albany Int'l. Handles 25,679 Injury Claims --------------------------------------------------------------- In the latest regulatory filing submitted by Albany International Corp. (NYSE: AIN), maker of paper machine clothing, the Company stated that it is defending against 25,679 asbestos-related claims as of April 22, 2005. This compares with 29,138 such claims as of February 11, 2005 and 29,411 claims as of December 31, 2004. These suits allege a variety of lung and other diseases based on alleged exposure to products previously manufactured by Albany. Headquartered in Albany, NY, the Company's production of asbestos-containing paper machine clothing products was limited to certain synthetic dryer fabrics marketed during the period from 1967 to 1976 and used in certain paper mills. Such fabrics generally had a useful life of three to 12 months. These suits typically involve claims against from 20 to over 200 defendants, and the complaints usually fail to identify the plaintiffs' work history or the nature of the plaintiffs' alleged exposure to Albany's products. In cases in which work histories have been provided, about one-third of the claimants have alleged time spent in a paper mill, and only a portion of those claimants have alleged time spent in a paper mill to which Albany is believed to have supplied asbestos-containing products. About 20,763 of the claims pending against Albany are filed in various counties in Mississippi. A total of 11,900 such claims are included in only 6 proceedings. As the result of a 2004 ruling of the Mississippi Supreme Court, courts in counties throughout the State began to issue orders severing the individual claims of plaintiffs in mass joinder asbestos cases. Once severed, the courts are requiring the plaintiffs to file amended complaints which include more detailed information regarding their allegations of asbestos exposure, and have begun to dismiss or transfer improperly filed cases. As a consequence, a number of plaintiffs have voluntarily dismissed their claims. As to the plaintiffs filing amended complaints, these cases are being transferred to the proper counties within Mississippi, or, in limited instances, are being removed to federal court. The Company expects more of the remaining claims pending in Mississippi to be dismissed, amended or transferred; and that the only claimants remaining in Mississippi at the conclusion of this process will be those who are residents of, or who allege exposure to asbestos in, that State, and whose amended complaints satisfy the requirement for specific information regarding their exposure claims. The Company expects that only a portion of these remaining claimants will be able to demonstrate time spent in a paper mill to which Albany supplied asbestos-containing products during a period in which Albany's asbestos-containing products were in use. The Company expects the percentage of claimants with paper mill exposure in the Mississippi proceedings to be considerably lower than the total number of claims previously asserted. It is the position of Albany and the other paper machine clothing defendants that there was insufficient exposure to asbestos from any paper machine clothing products to cause asbestos-related injury to any plaintiff. Furthermore, asbestos contained in Albany's synthetic products was encapsulated in a resin-coated yarn woven into the interior of the fabric, further reducing the likelihood of fiber release. While the Company believes it has meritorious defenses to these claims, it has settled certain of these cases for amounts it considers reasonable given the facts and circumstances of each case. The Company's insurer, Liberty Mutual, has defended each case under a standard reservation of rights. As of April 22, 2005, the Company had resolved, by means of settlement or dismissal, 11,760 claims, and had reached tentative agreement to resolve an additional 4,563 claims reported above as pending. The total cost of resolving all 16,323 such claims was US$6,081,000. Of this amount, US$6,046,000, or 99%, was paid by the Company's insurance carrier. The Company has more than US$130 million in confirmed insurance coverage that should be available with respect to current and future asbestos claims, as well as additional insurance coverage that it should be able to access. Brandon Drying Fabrics, Inc., a subsidiary of Geschmay Corp., is also a separate defendant in most of these cases. Brandon was defending against 9,670 claims as of April 22, 2005. This compares with 9,599 such claims as of February 11, 2005 and 9,985 claims as of December 31, 2004. The Company acquired Geschmay Corp., formerly known as Wangner Systems Corporation, in 1999. Brandon is a wholly-owned subsidiary of Geschmay Corp. In 1978, Brandon acquired certain assets from Abney Mills, a South Carolina textile manufacturer. Among the assets acquired by Brandon from Abney were assets of Abney's wholly-owned subsidiary, Brandon Sales, Inc. which, among other things, had sold dryer fabrics containing asbestos made by its parent, Abney. It is believed that Abney ceased production of asbestos- containing fabrics prior to the 1978 transaction. Although Brandon manufactured and sold dryer fabrics under its own name subsequent to the asset purchase, none of such fabrics contained asbestos. Under the terms of the Assets Purchase Agreement between Brandon and Abney, Abney agreed to indemnify, defend, and hold Brandon harmless from any actions or claims on account of products manufactured by Abney and its related corporations prior to the date of the sale, whether or not the product was sold subsequent to the date of the sale. It appears that Abney has since been dissolved. Nevertheless, a representative of Abney has been notified of the pendency of these actions and demand has been made that it assume the defense of these actions. As of April 22, 2005, Brandon has resolved, by means of settlement or dismissal, 6,944 claims for a total of US$152,499. Brandon's insurance carriers initially agreed to pay 88.2% of the total indemnification and defense costs related to these proceedings, subject to the standard reservation of rights. The remaining 11.8% of the costs had been borne directly by Brandon. During 2004, Brandon's insurance carriers agreed to cover 100% of indemnification and defense costs, subject to policy limits and the standard reservation of rights, and to reimburse Brandon for all indemnity and defense costs paid directly by Brandon related to these proceedings. In some of these cases, Albany is named both as a direct defendant and as the successor in interest to Mount Vernon Mills. The Company acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege injury caused by asbestos- containing products alleged to have been sold by Mount Vernon many years prior to this acquisition. Mount Vernon is contractually obligated to indemnify the Company against any liability arising out of such products. The Company denies any liability for products sold by Mount Vernon prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual indemnification obligations, Mount Vernon has assumed the defense of these claims. On this basis, the Company has successfully moved for dismissal in a number of actions. ASBESTOS LITIGATION: Allmerica Posts US$25.6M Reserves in 1Q05 -------------------------------------------------------------- Although Allmerica Financial Corporation (NYSE: AFC) does not specifically underwrite policies that include asbestos, environmental damage and toxic tort liability, the Company revealed that it may be required to defend such claims. Ending loss and loss adjustment expense reserves for all direct business written by property and casualty companies related to asbestos, environmental damage and toxic tort liability, included in the reserve for losses and loss adjustment expense, were US$25.6 million and US$24.7 million at March 31, 2005 and December 31, 2004, respectively, net of reinsurance of US$15.5 million and US$16.3 million at March 31, 2005 and December 31, 2004, respectively. The outstanding reserves for direct business asbestos and environmental damage have remained relatively consistent for the last three years. As a result of the Worcester, MA-based Company's historical direct underwriting mix of commercial lines policies toward smaller and middle market risks, past asbestos, environmental damage and toxic tort liability loss experience has remained minimal in relation to its total loss and loss adjustment expense incurred experience. In addition, the Company has established loss and loss adjustment expense reserves for assumed reinsurance and pool business with asbestos, environmental damage and toxic tort liability of US$48.2 million at March 31, 2005 and December 31, 2004. These reserves relate to pools in which it has terminated its participation; however, it continues to be subject to claims related to years in which it participated. As part of its pool reserves, it participated in Excess and Casualty Reinsurance Association voluntary pool from 1950 to 1982. In 1982, the pool was dissolved and since that time, the business has been in runoff. The Company's percentage of the total pool liabilities varied from 1.15% to 6.00% during these years. Its participation in this pool has resulted in average paid losses of US$2.0 million annually over the past ten years. Because of the inherent uncertainty regarding the types of claims in these pools, the Company cannot provide assurance that its reserves will be sufficient. Although these outstanding claims are not significant, their existence gives rise to uncertainty and are discussed because of the possibility that they may become significant. The Company believes that, notwithstanding the evolution of case law expanding liability in asbestos and environmental claims, recorded reserves related to these claims are adequate. In addition, it is not aware of any litigation or pending claims that are expected to result in additional material liabilities in excess of recorded reserves. The asbestos and environmental liability reserves could be revised in the near term if the estimates used in determining the liability are revised. ASBESTOS LITIGATION: Ex-worker Pursues Claim in Madison Court ------------------------------------------------------------- Marking Madison County's first asbestos trial in nearly two years, Judge Daniel J. Stack listened to opening arguments in a case filed by a worker with mesothelioma, a fatal cancer of the lung linings. This also stands as the Judge Stack's first trial since taking over the asbestos docket from Circuit Judge Nicholas Byron last fall. Willard King, aged 77, of Fenton, Mo., is accusing Bondex, Georgia Pacific, John Crane, RPM Inc. and Lynn Tractor and Equipment Company for causing his illness. He claims he was contaminated from working on farm equipment and cars from 1950 through 1987. Mr. King, who is represented by Barry Julian of Alton and Troyce Wolff of Texas, was diagnosed with mesothelioma on May 5, 2004. A trial was originally scheduled to begin last February 14 but it was delayed when Jeff Hebrank, attorney for Georgia-Pacific and Bondex, asked for a continuance because plaintiff attorney Julian asked the court to deny admission of asbestos-related rulings from other jurisdictions. In light of Mr. Julian's motion, Mr. Hebrank asked for more time to prepare his case. In the first day of testimony, Mr. King's daughter, Kathy McClelland, aged 55, attested to the brands that she claims her father asked her to buy from a store in the old Central Hardware chain 35 years ago. On cross-examination, defense attorneys grilled her on why she came to remember the brand, which was manufactured by Georgia-Pacific, when she failed to recall the names of the other materials that were bought together with the joint compound. Mr. Hebrank also took occasion to charge plaintiff's counsel with sitting on documents and stalling the discovery process. Judge Stack warned the jurors not to discuss the case, to avoid any independent research regarding asbestos litigation or litigation in general and any related newspaper articles during the three-month recess. The Madison County Circuit Court has a national reputation for asbestos litigation, but trials are rare. Hundreds of mesothelioma suits are settled annually; most settlements are in the US$3 million to US$5 million range. ASBESTOS LITIGATION: Fairchild Named in 19 Personal Injury Cases ---------------------------------------------------------------- On January 21, 2003, distributor of aircraft parts Fairchild Corporation (NYSE: FA) and one of its subsidiaries were served with a third-party complaint in an action brought in New York by a non-employee worker and his spouse alleging personal injury as a result of exposure to asbestos-containing products. The defendant, which is one of many defendants in the action, had purchased a pump business from Fairchild, and asserts the right to be indemnified by Fairchild under its purchase agreement. This case was discontinued as to all defendants, extinguishing the indemnity claim against the Company in the instant case. The purchaser has also notified Fairchild of its intention to claim its right to indemnify from the Company for the other asbestos-related claims filed against it. The Company has not received enough information to assess the impact, if any, of the other claims. During the last 18 months, the Dulles, VA-based Company has been served directly by plaintiffs' counsel in 19 cases related to the same pump business. Two of the 19 cases were dismissed as to all defendants, based upon forum objections. The Company, in coordination with its insurance carriers, intends to aggressively defend itself against these claims. During the same period, the Company reports that it has resolved ten similar (non-pump business) asbestos-related lawsuits that were previously served upon the Company. In eight cases, Fairchild was voluntarily dismissed, without payment of consideration to plaintiffs. The remaining two cases were settled for nominal amounts. The Company further states that its insurance carriers have participated fully in the defense of both its pump and non-pump related asbestos claims. It believes that its insurance coverage levels are adequate, and that asbestos claims will not have a material adverse effect on its financial condition, future results of operation, or net cash flow. ASBESTOS LITIGATION: Eastman Chemical Defends Against 3T Claims --------------------------------------------------------------- Over the years, Eastman Chemical Company (NYSE: EMN) has been named as a defendant, along with numerous other defendants, in lawsuits in various state courts in which plaintiffs alleged injury due to exposure to asbestos at its manufacturing sites and sought unspecified monetary damages and other relief. The Kingsport, TN-based Company intends to defend vigorously the about 3,000 pending claims or to settle them on acceptable terms. Eastman is the largest producer of polyester plastics for packaging and the leading supplier of raw materials for formulated products in the global market. In recently filed cases, plaintiffs allege exposure to asbestos- containing products allegedly made by Eastman. Based on its investigation to date, the Company has information that it manufactured limited amounts of an asbestos-containing plastic product between the mid-1960s and the early 1970s. The Company's investigation has found no evidence that any of the plaintiffs worked with or around any such product alleged to have been manufactured by the Company. The Company has finalized an agreement with an insurer that issued primary general liability insurance to certain predecessors of the Company prior to the mid-1970s, pursuant to which that insurer will provide coverage for a portion of certain of the Company's defense costs and payments of, settlements or judgments in connection with asbestos-related lawsuits. Evaluation of the allegations and claims made in recent asbestos-related lawsuits continue to be reviewed by the Company. Based on such evaluation to date, the Company continues to believe that the ultimate resolution of asbestos cases will not have a material impact on the Company's financial condition, results of operations, or cash flows, although these matters could result in the Company being subject to monetary damages, costs or expenses, and charges against earnings in particular periods. To date, costs incurred by the Company related to the recent asbestos-related lawsuits have not been material. ASBESTOS LITIGATION: CA Coastal, RESCO Pays US$1.33M Settlement --------------------------------------------------------------- On April 6, 2005, RESCO and California Coastal Communities, Inc. settled asbestos-related litigation with Dresser Industries Inc., according to a filing submitted to the Securities and Exchange Commission. California Coastal paid US$1.33 million, its share of the settlement, which is the amount of the Company's litigation accrual as of March 31, 2005 and December 31, 2004. The Company and RESCO did not admit fault or liability with respect to Dresser's claims, but settled the matter in order to avoid the continued cost and uncertainty of litigation. In May 2002, Dresser Industries, Inc. filed litigation, captioned Dresser Industries, Inc. vs. California Coastal Communities, Inc. and RESCO Holdings, Inc. (a former affiliate), in the 58th Judicial District Court of Jefferson County, Texas. Dresser sought a declaratory judgment regarding the rights and obligations of the parties under a January 1988 purchase agreement. Dresser's indemnity claims related to several hundred lawsuits encompassing about 5,900 contested asbestos claims made by third parties in connection with work in facilities in which the Dresser-acquired engineering and construction business was allegedly connected. The Company denied Dresser's allegations and vigorously defended itself in this case and related matters. California Coastal Communities, Inc. and its consolidated subsidiaries is a residential land development and homebuilding company with properties located primarily in southern California. ASBESTOS LITIGATION: IDEX, Subsidiaries Face Suits in 22 States --------------------------------------------------------------- Engineered products manufacturer, IDEX Corporation (NYSE: IEX), and nine of its subsidiaries have been named as defendants in a number of lawsuits claiming various asbestos-related personal injuries, allegedly as a result of exposure to products manufactured with components that contained asbestos. Such components were acquired from third party suppliers, and were not manufactured by any of the subsidiaries. To date, all of the Northbrook, IL-based Company's settlements and legal costs, except for costs of coordination, administration, insurance investigation and a portion of defense costs, have been covered in full by insurance subject to applicable deductibles. However, the company cannot predict whether and to what extent insurance will be available to continue to cover such settlements and legal costs, or how insurers may respond to claims that are tendered to them. Claims have been filed in Alabama, California, Connecticut, Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Utah, Washington and Wyoming. Most of the claims resolved to date have been dismissed without payment. The balance has been settled for reasonable amounts. Only one case has been tried, resulting in a verdict for the Company's business unit. No provision has been made in the financial statements of the Company, other than for insurance deductibles in the ordinary course, and IDEX does not currently believe the asbestos-related claims will have a material adverse effect on the Company's business or financial position. ASBESTOS LITIGATION: Navigators Group Deals with Liabilities ------------------------------------------------------------ The Navigators Group, Inc. (NASDAQ: NAVG) disclosed in its latest regulatory filing that its exposure to asbestos and environmental liability principally stems from marine liability insurance written on an occurrence basis during the mid-1980s. In general, its participation on such risks is in the excess layers, which requires the underlying coverage to be exhausted prior to coverage being triggered in its layer. In many instances the Company is one of many insurers who participate in the defense and ultimate settlement of these claims, and it is generally a minor participant in the overall insurance coverage and settlement. The reserves the New York, NY-based insurance company established for asbestos exposures are for: (1) Estimated losses for excess insurance policy limits exposed to class actions suits against two insureds involved in the manufacturing or distribution of asbestos products; (2) Other insureds not directly involved in the manufacturing or distribution of asbestos products, but that have more than incidental asbestos exposure for their purchase or use of products that contained asbestos; (3) Attritional asbestos claims that could be expected to occur over time; and (4) The 2004 settlement of a large claim exposed to a class action suit which settlement will be paid over seven years starting in June 2005. At March 31, 2005 and December 31, 2004, the Company had allowances for uncollectible reinsurance of US$33.4 million and US$32.4 million, respectively. The allowances include US$25.7 million for uncollectible reinsurance as a result of loss reserves established in 2003 for asbestos exposures on marine and aviation business written mostly prior to 1986. Charges or recoveries for uncollectible reinsurance amounts, all of which were recorded to incurred losses, were US$1.0 million and US$117,000 for the three months ended March 31, 2005 and 2004, respectively ASBESTOS LITIGATION: MSA Faces Potential Rise of Liability Suits ---------------------------------------------------------------- Various lawsuits and claims are pending against Mine Safety Appliances Company (NYSE: MSA), a manufacturer of safety equipment and systems. These lawsuits, primarily involving product liability claims, represent a total of about 2,400 cases brought by plaintiffs who allege that they suffered injuries as a result of faulty respiratory protection products supposedly manufactured by the Company. According further to the filing submitted by the Pittsburgh, PA- based Company, these lawsuits represent a total of about 32,000 plaintiffs. About 90% of these lawsuits involve plaintiffs alleging they suffer from silicosis, with the remainder alleging they suffer from other or combined injuries, including asbestosis. These lawsuits typically allege that these conditions resulted in part from respirators that were negligently designed or manufactured by us. Consistent with the experience of other companies involved in silica and asbestos-related litigation, there has been an increase in the number of asserted claims that could potentially involve the Company. The potential maximum liability for such claims cannot be determined, in part because the defendants in these lawsuits are often numerous, and the claims generally do not specify the amount of damages sought. With some limited exceptions, the Company maintains insurance against product liability claims. It also maintains a reserve for uninsured product liability based on expected settlement charges for pending claims and an estimate of unreported claims derived from experience, sales volumes, and other relevant information. ASBESTOS LITIGATION: 3M Co. Accrues $232M Liability from Claims --------------------------------------------------------------- Headquartered in St. Paul, MN, 3M Company (NYSE: MMM) disclosed that as of March 31, 2005, the Company is a named defendant, typically with multiple co-defendants, in numerous lawsuits in various courts that purport to assert claims by about 58,000 individual claimants and has accrued liabilities of US$232 million and receivables for the likely amount of insurance recoveries of US$437 million related to this litigation. For more than 25 years, the Company has defended and resolved the claims of over 350,000 individual claimants alleging injuries from occupational dust exposures. The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of some of the Company's mask and respirator products and seek damages from the Company and other defendants for alleged personal injury from workplace exposures to asbestos, silica, coal or other occupational dusts, found in products manufactured by other defendants or generally in the workplace. The remaining claimants generally allege personal injury from occupational exposure to asbestos from products previously manufactured by the Company, which are often unspecified, and by other defendants, or occasionally at Company premises. As a result of the caseload and the costs of aggressively defending itself, the Company made payments of US$81 million in 2004 and increased its reserves in the fourth quarter of 2004 for the respirator mask/asbestos liabilities by US$40 million to US$248 million. Because of the time delay between payment of claims and receipt of insurance reimbursements, the March 31, 2005 and December 31, 2004 amounts for respirator mask/asbestos liabilities are less than expected insurance recoveries. Thus, the expected net inflow of cash will increase future cash flows from operating activities. ASBESTOS LITIGATION: Hercules Reveals 32,088 Unresolved Claims -------------------------------------------------------------- Hercules Incorporated (NYSE: HPC) revealed that as of March 31, 2005, there were about 32,088 unresolved asbestos-related personal injury claims. About 950 were premises claims, which represent suits alleging exposure to asbestos at facilities formerly or presently owned or operated by the Company. The rest are comprised of products claims, or those that arose from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products sold by one of the Company's former subsidiaries to a limited industrial market. There were also about 1,425 unpaid claims that have been settled or are subject to the terms of a settlement agreement. In addition, as of March 31, 2005, there were about 3,728 claims which have either been dismissed without payment or are in the process of being dismissed without payment, but with plaintiffs retaining the right to re-file should they be able to establish exposure to an asbestos-containing product for which the Company bears liability. In 2004, the Company received about 8,305 new claims, about one third of which were included in "consolidated" complaints naming one hundred or more plaintiffs and a large number of defendants, but providing little information connecting any specific plaintiff's alleged injuries to any specific defendant's products or premises. It is the Company's belief that a significant majority of these "consolidated" claims will be dismissed for no payment. Since the beginning of 2005 until March 31, 2005, the Company received about 795 new claims, none of which were in consolidated complaints. The Company's primary and first level excess insurance policies that provided coverage for these asbestos-related matters exhausted their products limits at or before the end of July 2003. Since that time, the Company has fully funded the costs associated with the defense and settlement of its asbestos- related liabilities. From January 1, 2005 through March 31, 2005, the Company spent about US$10.6 million on these matters, including about US$8.1 million in settlement payments and about US$2.5 million for defense costs. Both prior to and following the exhaustion of the products limits of the Company's primary and first level excess insurance policies, the Company undertook efforts to negotiate with certain of its other excess insurance carriers for reimbursement of defense costs and indemnity payments relating to these asbestos-related liabilities. Those efforts, however, did not progress at a rate satisfactory to the Company. As a result, on November 27, 2002, the Company initiated litigation against the solvent excess insurance carriers that provided insurance coverage for asbestos-related liabilities in a matter captioned Hercules Incorporated v. OneBeacon, et al., Civil Action No. 02C-11-237 (SCD), Superior Court of Delaware, New Castle County. Beginning in August 2004 and continuing through October 2004, the Company entered into settlements with all of the insurers named in that lawsuit. As a result, the lawsuit was dismissed in early November 2004. Specifically, effective August 23, 2004, the Company entered into a comprehensive settlement agreement with respect to those insurance policies issued by certain underwriters at Lloyd's, London, and reinsured by Equitas Limited and related entities. As part of that settlement, during the third quarter of 2004, Equitas paid US$30.0 million to the Company and placed US$67.0 million into a trust. The First Settlement Agreement generally provides for the payment of money to the Company in exchange for the release by the Company of claims under those policies and the cancellation of those policies; the agreement by the Company to indemnify the underwriters from any such claims asserted under those policies; and the impact on the settlement should federal asbestos reform legislation be enacted on or before January 3, 2007. The trust funds have been and are continuing to be used to reimburse the Company for a portion of costs it incurs to resolve certain asbestos claims from and after August 2004. In addition, effective October 8, 2004, the Company entered into a comprehensive settlement agreement with respect to certain insurance policies issued by various insurance companies operating in the London insurance market, and by one insurance company located in the United States. Under this Second Settlement Agreement, the Company will receive payments from the participating insurers totaling about US$102.2 million over a four-year period beginning in 2005. The trust funds may be used to reimburse the Company for costs it incurs to resolve asbestos claims from and after October 8, 2004. Any funds remaining in trust subsequent to 2008 may be used by the Company to pay both asbestos-related claims and non-asbestos related claims. As of March 31, 2005, and for the three-month period then ended, US$35.2 million of the US$102.2 million has been placed into the trust. In addition, the agreement provided the United States insurer until December 28, 2004 to elect an alternative payment option that would have modified that insurer's payment obligations but the United States insurer did not elect to exercise that option. In addition, effective October 13, 2004, the Company reached a confidential settlement agreement with the balance of its solvent excess insurers whereby a significant portion of the costs incurred by the Company with respect to future asbestos product liability claims will be reimbursed, subject to those claims meeting certain qualifying criteria. That agreement is not expected to result in reimbursement to the Company, however, unless and until defense costs and settlement payments for qualifying asbestos products claims paid by the Company aggregate to about US$330 million to US$370 million. ASBESTOS LITIGATION: Dana Corp. Battles 120,000 Active Claims ------------------------------------------------------------- Auto parts manufacturer Dana Corporation (NYSE: DCN) revealed that as of March 31, 2005, the Company had about 120,000 active pending asbestos-related product liability claims, compared to 116,000 at December 31, 2004. Included at both figures were 10,000 claims that were settled but awaiting final documentation and payment. The Toledo, OH-based Company accrued US$143 million for indemnity and defense costs for these claims at March 31, 2005, compared to US$139 million at December 31, 2004. The amounts accrued are based on the Company's assumptions and estimates about the values of the claims and the likelihood of recoveries derived from historical experience and current information. The Company has agreements with insurance carriers providing for the payment of a significant majority of the defense and indemnity costs for the pending claims, as well as claims which may be filed against it in the future. It had recorded US$122 million as an asset for probable recovery from the insurers for these claims at March 31, 2005, compared to US$118 million at December 31, 2004. In addition to amounts related to pending claims, the Company had a net amount recoverable from its insurers and others of US$28 million at March 31, 2005, compared to US$26 million at December 31, 2004. This recoverable represents reimbursements for settled asbestos-related product liability claims and related defense costs, including billings in progress and amounts subject to alternate dispute resolution proceedings with some of the insurers. ASBESTOS LITIGATION: Union Pacific Gets 338 Claims, Settles 216 --------------------------------------------------------------- Union Pacific Corporation (NYSE: UNP) received 338 asbestos- related claims during the first quarter of 2005 and 158 claims in the first quarter of 2004. The Company settled or dismissed 216 claims during the first quarter of 2005 and 198 claims in the first quarter of 2004. Payments for asbestos-related claims were US$1.5 million and US$3.5 million during the first three months of 2005 and 2004, respectively. These lawsuits represent claims in which current and former employees allege exposure to asbestos. Additionally, it has received claims for asbestos exposure that have not been litigated. The claims and lawsuits allege occupational illness resulting from exposure to asbestos-containing products. In most cases, the claimants do not have credible medical evidence of physical impairment resulting from the alleged exposures. Additionally, most claims filed against Union Pacific do not specify an amount of alleged damages. The greatest potential for asbestos exposure in the railroad industry existed while steam locomotives were used. The railroad industry, including UPRR and its predecessors, phased out steam locomotives between 1955 and 1960. The use of asbestos- containing products in the railroad industry was substantially reduced after steam locomotives were discontinued, although it was not completely eliminated. Some asbestos-containing products were still manufactured in the building trade industry and were used in isolated component parts on locomotives and railroad cars during the 1960s and 1970s. By the early 1980s, manufacturers of building materials and locomotive component parts developed non-asbestos alternatives for their products and ceased manufacturing asbestos-containing materials. The Omaha, NE-based Company's liability for asbestos-related claims is not discounted to present value and was US$324 million at both March 31, 2005 and December 31, 2004. At the same periods, US$17 million was classified as current liabilities, while the remainder was classified as long-term accrued casualty costs. About 14% of the recorded liability related to asserted claims, and about 86% related to unasserted claims. These claims are expected to be paid out over the next 30 years. During the first quarter of 2005, the Company evaluated actual experience compared to forecasted future claims and claim payments and determined that no adjustment to its estimate was necessary. Based on its average claims experience over a multi-year period, the Company increased its liability for asbestos-related claims to US$326 million in the fourth quarter of 2004. ASBESTOS LITIGATION: CIRCOR Int'l. Faces Claims in 20 States ------------------------------------------------------------ Like many other manufacturers of fluid control products, CIRCOR International, Inc. (NYSE: CIR) has been named as a defendant in a growing number of product liability actions brought on behalf of individuals who seek compensation for their alleged exposure to airborne asbestos fibers. In particular, the Burlington, MA-based Company's subsidiaries, Leslie, Spence, and Hoke, collectively have been named as defendants or third-party defendants in asbestos related claims brought on behalf of about 22,000 plaintiffs typically against anywhere from 50 to 400 defendants. In some instances, the Company has also been named individually and as successor in interest to one or more of these subsidiaries. These cases have been brought in state courts in Alabama, California, Connecticut, Georgia, Illinois, Maryland, Michigan, Mississippi, Montana, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia, Washington and Wyoming with the vast majority of claimants having brought their claims in Mississippi. The cases brought on behalf of the vast majority of claimants seek unspecified compensatory and punitive damages against all defendants in the aggregate. However, the complaints filed on behalf of claimants who do seek specified compensatory and punitive damages typically seek millions or tens of millions of dollars in damages against the aggregate of defendants. Any components containing asbestos formerly used in Leslie, Spence and Hoke products were entirely internal to the product and would not give rise to ambient asbestos dust during normal operation or during normal inspection and repair procedures. To date, the Company's insurers have been paying the vast majority of the costs associated with the defense of these actions, particular with respect to Spence and Hoke for which insurance has paid all defense costs to date. Due to certain gaps in historical insurance coverage, Leslie had been responsible for in excess of 40% of the defense costs associated with asbestos actions. However, during 2003 the Company discovered evidence of additional policy coverage. As a result, during the first quarter of 2004 it negotiated a revised cost sharing understanding with Leslie's insurers, which results in a lowering of Leslie's responsibility to 29% of defense costs. Circor International Inc. designs, manufactures, and supplies valves, related products and services to OEMs, processors, manufacturers, and the military. Circor was spun off from Watts Industries (now Watts Water Technologies) in 1999. ASBESTOS LITIGATION: Senate Panel Resumes Work on Asbestos Bill --------------------------------------------------------------- After a nearly two-week lull, the Senate Judiciary Committee continued work on legislation to create a new US$140 billion trust fund to compensate victims of asbestos-related disease. Procedural wrangling by a democratic senator had forced the delay. The panel only completed work on 12 amendments before an opponent invoked a Senate rule that committees cannot work more than two hours after the full Senate has gone into session. Judiciary Committee Chairman Arlen Specter, R-Pa., and his chief ally on the bill, Sen. Patrick Leahy, D-VT, adopted a number of proposed changes to the bill, through a 14-amendment managers' package. The committee approved the package, which contained new language relating to how insurers would discount their payments to the fund, on a voice vote. At the urging of California Democrat Sen. Dianne Feinstein, the Committee voted to include deadlines in the legislation for payments to the most seriously ill victims. This would ensure that sufferers of mesothelioma, a lethal cancer of the lung lining and who are entitled to US$1.1 million from the fund, would be paid within 30 days from the time their claims are approved by the fund's administrator or within six months from the date the claims are filed, whichever comes first. The committee also voted to allow the Department of Defense to seek an exemption from the bill's ban on the manufacture, processing or distribution of asbestos-containing products. Another amendment that was accepted included giving a break to small companies that have complained they may be asked to pay a disproportionate amount to the fund. It would give a reduction to companies that would otherwise pay more to the fund each year than their average annual expenditures on asbestos suits in the past 10 years. The two senators delayed consideration of two of the package's amendments that dealt with the use of specific medical technologies in assessing impairment. Other committee members have already prepared another 80 of the amendments and whether the bill has enough votes to pass when debate ends is still in question. The bill will need 10 of 18 votes to pass the committee. As of Wednesday, the bill appeared to have eight sure votes, while seven others in the committee have gone against it. That leaves the votes of three committee members in question. Dow Jones reports that U.S. asbestos stocks have shown volatility in the last month, trading down on the slightest hint of bad news, while spiking on positive indicators. Generally, though, they have traded up since early April when the draft of the bill was completed. ASBESTOS LITIGATION: RAND Study Says Claims Cost Industry US$70B ---------------------------------------------------------------- Asbestos-related claims filed by more than 730,000 people in the U.S. from the early 1970s through 2002 have cost businesses and insurance companies more than US$70 billion, the RAND Corp. reported. The RAND report found that the vast majority of asbestos claims were made by those who had been injured by asbestos, but had little or no current functional impairment from the injury. Alarmingly, 90% of all new claims, which the study says escalated sharply through the 1990s and into 2002, came from people who have non-malignant injuries. The study also found at least 8,400 entities had been named as defendants in asbestos claims through 2002. At least 73 companies named in a substantial number of asbestos claims filed for bankruptcy through mid-2004. Of that US$70 billion, only US$29 billion or 42 cents of every dollar went to claimants, the study by the RAND Institute for Civil Justice added. Another 31 cents has gone to defense costs, and 27 cents has gone to plaintiffs' attorneys and other related costs. The report also found that where asbestos-related claims had largely been limited to workers from asbestos manufacturers, RAND found more and more such claims are being made by workers in places where asbestos wasn't manufactured, but happened to be in their workplace. The report made no estimate of possible future claims, but noted that there is consensus among other estimates that "at most, only about three-quarters of the final number of claimants have come forward." Asbestos is a mineral used in many industrial processes because of fire-retardant properties. Asbestos fibers are easily inhaled, and can cause various respiratory illnesses including a fatal, incurable cancer called mesothelioma. RAND is a nonprofit research organization. RAND's Institute for Civil Justice, which produced the report, has been studying asbestos litigation since 1983. ASBESTOS LITIGATION: ASIC Gets Funds to Investigate James Hardie ---------------------------------------------------------------- In the 2005-06 budget released in Canberra, the Australian Securities & Investment Commission will receive extra funds to pursue its investigation of James Hardie Industries Ltd. after a New South Wales state government inquiry found the company misled investors about the cost of compensating asbestos victims. Treasurer Peter Costello said that the securities regulator would receive AUD13.4 million or US$10 million in over four years. Building materials giant Hardie signed an AUD1.5 billion landmark compensation deal for thousands of Australian victims. It relocated to the Netherlands in 2001, leaving an earlier compensation fund seriously underfunded and eventually forcing it to file for liquidation last year. Hardie began phasing out asbestos production in Australia in 1974 and ceased all asbestos manufacturing in 1987. "Well-resourced defendants have initiated costly appeals and challenges to ASIC," Mr. Costello said. "These tactics may have been adopted with a view to `pricing out' the regulator. Failure to proceed with these matters could lead to a perception that wealthy defendants may avoid sanctions and have an adverse impact on community confidence," he said. ASBESTOS LITIGATION: Bill Saves Asbestos Firms Billions, Report --------------------------------------------------------------- U.S. asbestos companies would see a huge cut in their future liabilities under legislation being considered by the Senate Judiciary Committee, according to a report released by Public Citizens Congress Watch. Ten asbestos manufacturing or producing companies forced into bankruptcy under a mountain of asbestos-related liabilities would see their future liabilities fall from an estimated US$25.9 billion to US$5.6 billion under the legislation, Public Citizen said. On an individual basis, asbestos companies would effectively see their total payments over the life of the fund on behalf of asbestos victims decline by margins ranging from 40.5 percent to 100 percent. These Tier I companies include Armstrong World Industries, Babcock & Wilcox, NARCO, Owens Corning, Pittsburgh Corning, USG Corp. (USG), and W.R. Grace & Co. (GRA). Another eight companies - Fortune 500 businesses who used asbestos in their production - would be "huge winners" under the bill, the report said. Those so-called Tier II companies' annual payments to a proposed asbestos trust fund would be capped at US$27.5 million a year for 30 years, the report found. The current value of those payments over 30 years for any company would be capped at about US$378.5 million. By comparison, Dow Chemical Co. (DOW) projects future asbestos liabilities of between US$1.6 billion and US$2.2 billion over the next 15 years. Other likely winners under the bill include General Electric Co. (GE), Ford Motor Co. (F), General Motors Corp. (GM), Georgia- Pacific Corp. (GP), Honeywell International Inc. (HON), Pfizer Inc. (PFE) and Viacom Inc. (VIAB), the report said. Most of those companies have said their future asbestos liability couldn't be estimated, or have refused to give an estimate, according to Public Citizen. Meanwhile, some of the nation's largest financial investment firms have spent millions of dollars in lobbying and campaign contributions to position themselves to score big rewards should the legislation pass. A relatively unknown entity called the Asbestos Study Group, which refuses to make its full membership list public, is spearheading this campaign, said to have already spent US$27.9 million to pass the asbestos legislation, Public Citizen found. Under the bill, asbestos companies with large existing liabilities that are in Chapter 11 bankruptcy would have those liabilities erased, in favor of contributions to the proposed national asbestos trust fund. But the value of contributions to the trust fund would be substantially less than the existing liabilities, providing significant windfalls to the companies involved. "The Senate should not allow this legislation to become a feeding frenzy for companies that from all indications care more about their bottom lines than for the lives of the Americans their products harmed and for whom this legislation was intended," said Frank Clemente, director of Public Citizen's Congress Watch. A copy of the report can be found at Public Citizens' Web site, www.citizen.org. ASBESTOS LITIGATION: Tyco Int'l. Battles 16,000 Pending Cases ------------------------------------------------------------- Tyco International Ltd. (NYSE: TYC), manufacturer of electronics and medical supplies, had roughly 16,000 asbestos liability cases pending against it and its units as of April 1, 2005, according to a regulatory filing submitted to the Securities and Exchange Commission. The majority of these cases have been filed against subsidiaries in health-care and engineered products and services. Each case typically names dozens to hundreds of corporate defendants. A limited number of the cases allege premises liability, based on claims that individuals were exposed to asbestos while on a subsidiary's property. A majority of the cases involve product liability claims, based principally on allegations of past distribution of heat-resistant industrial products that contained asbestos. Tyco said its involvement in asbestos cases has been limited because its units didn't mine or produce asbestos. The company also said a large percentage of the claims never were substantiated and have been dismissed by the courts. During the first half of fiscal 2005, Tyco undertook a detailed study of its pending asbestos claims and determined the impact of the study wasn't material to the company's financial position, results of operations or cash flows. Tyco, which has about 250,000 employees and US$40 billion in annual revenue, has its headquarters in Bermuda, but now operates out of West Windsor, NJ. ASBESTOS LITIGATION: Midwest Generation Records US$68M Liability ---------------------------------------------------------------- Mission Energy Holding Co. said that a subsidiary, Midwest Generation, an independent power producer, was potentially liable for between 130 and 170 cases that had not been settled and dismissed at March 31, 2005. Midwest Generation recorded a US$68 million liability related to this matter. Midwest Generation entered into a supplemental agreement with Commonwealth Edison and Exelon Generation Company on February 20, 2003 to resolve a dispute regarding interpretation of its reimbursement obligation for asbestos claims under the environmental indemnities set forth in the Asset Sale Agreement. Under this supplemental agreement, Midwest Generation agreed to reimburse Commonwealth Edison and Exelon Generation for 50% of specific existing asbestos claims and expenses less recovery of insurance costs, and agreed to a sharing arrangement for liabilities and expenses associated with future asbestos-related claims as specified in the agreement. As a general matter, Commonwealth Edison and Midwest Generation apportion responsibility for future asbestos-related claims based upon the number of exposure sites that are Commonwealth Edison locations or Midwest Generation locations. The obligations under this agreement are not subject to a maximum liability. The supplemental agreement has a five-year term with an automatic renewal provision. Payments are made under this indemnity upon tender by Commonwealth Edison of appropriate proof of liability for an asbestos-related settlement, judgment, verdict, or expense. ASBESTOS ALERT: UK Magistrates Court Imposes Fine on Lemec Ltd. --------------------------------------------------------------- The London Magistrates Court heard how employees of Lemec Ltd. broke down two asbestos-riddled water tanks, exposing around ten people to the released carcinogenic fibers. Former company director Chris Jones admitted contravening health and safety regulations during the hearing. The electricians of the Company, which has now been dissolved, used a sledgehammer and an angle grinder to smash the water tanks during work on Philip and Andrea Robinson's home in Anzio Walk, off Burton Road, Lincoln, last August. On each tank, there was a label warning that the cement, branded Asbestolux, contained the dreaded material, asbestos. They were installing a new heating system. Lemec charged around GBP3,600 for the work, which took four days. Despite voiced concerns from Mr. Robinson, Mr. Jones insisted that it was not dangerous to break up the tanks. But Mr. Robinson and his pregnant wife did not believe him and went to stay with relatives. Mr. Robinson then took his own sample of the white dust to an independent analyst and paid GBP40 to have it tested, confirming it contained asbestos. A report by the Health and Safety Executive revealed that the dust particles taken from the house contained up to 50 percent asbestos. The house was so covered in dust that the clean-up operation cost more than GBP3,000. Graham Hills, prosecuting for the Health and Safety Executive, told the court that Mr. Jones should have employed a licensed asbestos removal firm. He failed to heed the warnings and take proper precautions. As a result, Mr. Jones, now a self-employed electrician was fined GBP1,500 and must pay GBP1,000 costs. Lemec was based just yards away from the couple's home in Dunkirk Road and employed 16 people before it was dissolved. Every year 3,500 people across the country die from asbestos- related diseases such as lung cancer because of past exposure. New Securities Fraud Cases FRIEDMAN BILLINGS: Lerach Coughlin Lodges Securities Suit in NY --------------------------------------------------------------- The law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP initiated a class action in the United States District Court for the Southern District of New York on behalf of purchasers of Friedman, Billings, Ramsey Group, Inc. ("FBR") (NYSE:FBR) common stock during the period between January 29, 2003 and April 25, 2005 (the "Class Period"). The complaint charges FBR and certain of its officers and directors with violations of the Securities Exchange Act of 1934. FBR is an investment bank that provides investment banking, institutional brokerage and asset management services, and invests as principal in mortgage-backed securities and merchant banking investments. The complaint alleges that during the Class Period, defendants made false and misleading statements regarding FBR's business and prospects. On November 9, 2004, FBR filed its third quarter 2004 Form 10-Q in which it disclosed an SEC and NASD investigation concerning its role in 2001 as a placement agent for an issuer in a PIPE (private investment in public equity) transaction. On this news, FBR's stock dropped to $16.93 per share, some 40% lower than the Class Period high of $28.70 per share. However, according to the complaint, the market was not apprised as to the seriousness of the investigation, nor that FBR's earnings were not sustainable. On April 4, 2005, Emanuel J. Friedman, the CEO, resigned. Then, on April 25, 2005, after the market closed, FBR announced disappointing preliminary results for the first quarter 2005, including a charge for its liability in the PIPE transaction. On this news, FBR's stock dropped to $12.52 on volume of 7.5 million shares. The complaint alleges that the true facts, which were known to each of the defendants during the Class Period but were concealed from FBR's shareholders, include: (1) the 2001 PIPE transaction manipulation was extremely serious and reached the highest level of the Company; (2) FBR's earnings would be adversely affected by charges related to the investigation into the PIPE transaction and due to the problems the bad publicity would cause FBR; and (3) FBR's 2005 EPS would be much worse than market expectations due to the PIPE transaction as well as due to interest rate increases which would have a much more severe impact on FBR's business than defendants had represented to the market. For William Lerach or Darren Robbins of Lerach Coughlin by Phone: 800/449-4900 or 619/231-1058 by E-mail: wsl@lerachlaw.com or visit their Web site: http://www.lerachlaw.com/cases/fbr/. FRIEDMAN BILLINGS: Schatz & Nobel Files Securities Lawsuit 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 District of New York on behalf of all persons who purchased the publicly traded securities of Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) ("FBR") between January 29, 2003 and April 25, 2005 (the "Class Period"). The Complaint alleges that FBR violated federal securities laws by making materially false or misleading public statements. Specifically, the Complaint alleges that FBR did not properly disclose the adverse effect of an SEC and NASD investigation into FBR's 2001 role as a placement agent for an issuer in a PIPE (private investment in public equity) transaction. On November 9, 2004, FBR filed its third quarter 2004 Form 10-Q in which it disclosed this SEC and NASD investigation. On this news, FBR's stock dropped to $16.93 per share. On April 4, 2005, Emanuel J. Friedman, FBR's CEO, resigned. Then, on April 25, 2005, FBR announced disappointing preliminary results for the first quarter 2005, including a charge for its liability in the PIPE transaction. On this news, FBR's stock dropped to $12.52 on volume of 7.5 million shares For more details, contact Wayne T. Boulton or Nancy A. Kulesa of Schatz & Nobel, P.C. by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their Web site: http://www.snlaw.net. FRIEDMAN BILLINGS: Scott + Scott Lodges Securities Lawsuit in NY ---------------------------------------------------------------- The law firm of Scott + Scott, LLC initiated a shareholder class action lawsuit by request and on behalf of purchasers of Friedman, Billings, Ramsay Group, Inc. (NYSE:FBR) securities from January 29, 2003 and April 25, 2005 in the United States District Court for the Southern District of New York, which had been assigned the case number 05-cv-4617. This is a class action on behalf of purchasers of the common stock (other securities investors may contact the firm as well) of Friedman, Billings, Ramsey Group, Inc. ("FBR" or the "Company") between January 29, 2003 and April 25, 2005, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). FBR is an investment bank that provides investment banking, institutional brokerage and asset management services, and invests as principal in mortgage-backed securities ("MBS") and merchant banking investments. In March 2003, the Company was formed through the merger of two existing companies, both engaged in related business and both managed by the FBR management team. The complaint alleges that the true facts, which were known to each of the defendants during the Class Period but were concealed from FBR's shareholders, include: (1) the 2001 PIPE transaction manipulation was extremely serious and reached the highest level of the Company; (2) FBR's earnings would be adversely affected by charges related to the investigation into the PIPE transaction and due to the problems the bad publicity would cause FBR; and (3) FBR's 2005 EPS would be much worse than market expectations due to the PIPE transaction as well as due to interest rate increases which would have a much more severe impact on FBR's business than defendants had represented to the market. Defendants include FBR, an investment bank with its investment banking business based in New York, New York, that provides institutional brokerage, investment banking and asset management services, and invests as principal in MBS and merchant banking investments; Defendant Eric F. Billings ("Billings") who was, at all relevant times, Co-Chief Executive Officer and Co-Chairman of FBR; Defendant Emanuel J. Friedman ("Friedman") who was, at all relevant times, Co-Chairman and Co-Chief Executive Officer of FBR; and Defendant Kurt R. Harrington ("Harrington") who was, at all relevant times, CFO of FBR. For more details, contact Neil Rothstein or Amy K. Saba of Scott + Scott, LLC by Mail: 108 Norwich Avenue, Colchester, CT 06415 by Phone: 860/537-3818 by Fax: 860/537-4432 by E-mail: nrothstein@scott-scott.com or asaba@scott-scott.com or visit their Web site: http://www.scott-scott.com. MARTEK BIOSCIENCES: Lasky & Rifkind Lodges Securities Suit in MD ---------------------------------------------------------------- The law firm of Lasky & Rifkind, Ltd., initiated a lawsuit in the United States District Court for the District of Maryland, on behalf of persons who purchased or otherwise acquired publicly traded securities of Martek Biosciences Corporation ("Martek" or the "Company") (NASDAQ:MATK) between December 9, 2004 and April 27, 2005, inclusive, (the "Class Period"). The lawsuit was filed against Martek, Henry Linsert, Jr., and Peter L. Buzy ("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. Specifically, the complaint alleges that the Company failed to disclose or misrepresented that Defendants had put into place a system which allowed customers to build a moderate safety level of inventory, and that Defendants manipulated its channels of distribution, flooding the Company's few customers with excess inventory in order for the Company to make its financial projections and complete a stock offering. On April 27, 2005, after the market closed, Martek provided an earnings update and revealed that it now anticipated a decrease in third quarter sales, after having reported rapidly increasing sales and product supply shortages. Shares of Martek reacted dramatically to the whipsaw by the Company, shedding $32.49 per share, or nearly 46% on very heavy volume. For more details, contact Lasky & Rifkind, Ltd. by Phone: (800) 495-1868 or by E-mail: investorrelations@laskyrifkind.com. MARTEK BIOSCIENCES: Squitieri & Fearon Files Stock Lawsuit in MD ---------------------------------------------------------------- The law firm of Squitieri & Fearon, LLP initiated class action in the United States District Court for the District of Maryland on behalf of investors who purchased the securities of Martek Biosciences Corporation (NYSE:MATK) ("Martek" or the "Company") during the period from December 9, 2004 through April 27, 2005 (the "Class Period"). This lawsuit claims that Martek and its officers misrepresented the Company's financial performance and failed to disclose significant problems with the Company's business in order to complete an $81 million stock offering. The claims are brought pursuant to the federal securities laws and allege that Martek and the officers who are named in the lawsuit violated the Securities Act of 1933 and the Securities Exchange Act of 1934. The lawsuit seeks to recover for investors who bought the Company's securities, including those investors who bought the Company's common stock in the January 2005 secondary offering. On April 27, 2005 investors began to learn the truth when Martek issued a press release that revealed the significant shortfall in its sales and earnings. In response to this news Martek's shares fell from $60.08 per share to close at $32.49 on April 28, 2005. For more details, contact Sara Mirsky or Stephen J. Fearon of Squitieri & Fearon, LLP by Phone: (212) 421-6492 or by E-mail: smirsky@sfclasslaw.com or Stephen@sfclasslaw.com. MBNA COPRORATION: Schatz & Nobel Lodges Securities Lawsuit in DE ---------------------------------------------------------------- The law firm of Schatz & Nobel, P.C., which has significant experience representing investors in prosecuting claims of securities fraud, announces that a lawsuit seeking class action status has been filed in the United States District Court for the District of Delaware on behalf of all persons who purchased the publicly traded securities of MBNA Corp. (NYSE: KRB) ("MBNA") between January 20, 2005 and April 20, 2005 (the "Class Period"). The Complaint alleges that MBNA violated federal securities laws by making materially false or misleading public statements. Specifically, the Complaint alleges that MBNA's projection of 10% annual income was improper. On April 21, 2005, MBNA announced that its first-quarter income was down 93% percent year-over-year, including a one-time restructuring charge, making it highly unlikely that MBNA would be able to achieve 10% annual income growth. The reduced earnings included a $207 million write-down of MBNA's "interest-only strip receivable," which is a measure of anticipated credit-card interest payments that is supposed to be adjusted on an ongoing basis. On this news, shares of MBNA fell from a close of $23.11 on April 20, 2005, to close at $19.28 on April 21, 2005. For more details, contact Wayne T. Boulton or Nancy A. Kulesa of Schatz & Nobel, P.C. by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their Web site: http://www.snlaw.net. PETCO ANIMAL: Brain M. Felgoise Files Securities Suit in S.D. CA ---------------------------------------------------------------- The Law Offices of Brian M. Felgoise, P.C. filed a securities class action on behalf of shareholders who acquired PETCO Animal Supplies, Inc. (NASDAQ: PETC) securities between November 18, 2004 and April 14, 2005, inclusive (the Class Period). The case is pending in the United States District Court for the Southern District of California, against the company and certain key officers and directors. The action charges that defendants violated the federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities. No class has yet been certified in the above action. For more details, contact Brian M. Felgoise, Esq. by Mail: 261 Old York Road, Suite 423, Jenkintown, Pennsylvania, 19046 by Phone: (215) 886-1900 or by E-mail: FelgoiseLaw@aol.com. R&G FINANCIAL: Klafter & Olsen Files Securities Fraud Suit in NY ---------------------------------------------------------------- The law firm of Klafter & Olsen LLP initiated a securities fraud class action complaint against R&G Financial Corporation ("R&G") (NYSE: RGF) in the U.S. District Court for the Southern District of New York, the complaint asserts claims on behalf of investors who purchased the publicly traded securities of R&G during the period from April 21, 2003 through and including April 25, 2005 (the "Class Period"). The complaint alleges that R&G and certain of its officers and directors violated the Securities Exchange Act of 1934. R&G 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. Plaintiff seeks to recover damages on behalf of all purchasers of R&G publicly traded securities during the Class Period (the "Class"). The plaintiff is represented by Klafter & Olsen LLP which has extensive expertise in prosecuting investor class actions involving financial fraud. The complaint alleges that during the Class Period, defendants made materially false and misleading statements regarding the Company's business and prospects. On April 25, 2005, the Company announced that after consultation with its independent accountants and firms with experience in valuation issues, it had "determined to review the independent market valuations used in valuing residual interests retained in securitization transactions of the Company. As a result of that review, the Company stated that it is revising its valuation methodology used in valuing these interests that are presented in the Company's audited consolidated financial statements.... and considering alternative valuation methodologies. Depending on the valuation methodology used, the Company has preliminarily estimated that the fair value of its residual interests would be reduced as of December 31, 2004 by an amount equal to between approximately $90 million to $150 million ($55 million and $90 million after taxes, respectively)." According to the complaint, the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (1) the Company was using manipulative accounting practices that materially overstated the value of the Company's residual interests in these securitized transactions its net income, net gain on mortgage loan sales and net capital; and (2) the Company was using ineffective risk management and hedging strategies against the increasing risk of rising interest rates. As a result of these false statements, R&G's stock price traded at inflated levels during the Class Period, increasing to as high as $40 per share. However, after the truth began to be revealed in R&G's press release on April 25, 2005, the Company's shares fell to below $15 per share. For more details, contact Kurt B. Olsen of Klafter & Olsen LLP by Phone: +1-202-261-3553 or visit their Web site: http://www.klafterolsen.com. R&G FINANCIAL: Marc S. Henzel Lodges Securities Fraud Suit in NY ---------------------------------------------------------------- The Law Offices of Marc S. Henzel 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) 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 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 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. TRIBUNE CO.: Brodsky & Smith Lodges Securities Fraud Suit in IL --------------------------------------------------------------- The Law offices of Brodsky & Smith, LLC initiated a securities class action lawsuit on behalf of shareholders who purchased the common stock and other securities of Tribune Company (NYSE:TRB) ("Tribune" or the "Company") between January 24, 2002 to July 15, 2004 inclusive (the "Class Period"). The class action lawsuit was filed in the United States District Court for the Northern District of Illinois. The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of TRB 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 or visit their Web site: http://www.brodsky-smith.com. TRIBUNE CO.: Marc S. Henzel Files Securities Fraud Lawsuit in IL ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a class action lawsuit in the United States District Court for the Northern District of Illinois on behalf of purchasers of Tribune Company (NYSE: TRB) publicly traded securities during the period between January 24, 2002 and July 15, 2004 (the "Class Period"). The complaint charges Tribune and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Tribune is a media and entertainment company. Through its subsidiaries, the Company is engaged in newspaper publishing, television and radio broadcasting and entertainment. The complaint alleges that defendants intentionally overstated the circulation of several of Tribune's publications, including Hoy and Newsday, in order to fraudulently extract higher incentive payments from the papers' advertisers. These inflated circulation numbers were reported to investors and the market on a regular basis and artificially inflated Tribune's financial results. In June 2004, Tribune reported that two of its papers, Newsday and Spanish-language publication Hoy, had inflated circulation figures since 2001. As alleged in the complaint, this announcement set off a wave of increased scrutiny throughout the publishing industry, with advertisers keen to ensure that they were not being similarly duped. Tribune also came under increased scrutiny with the Audit Bureau of Circulations, a non- profit, private entity charged with monitoring the accuracy of circulation numbers for publications nationwide. As a result of this increasing pressure, Tribune admitted on July 15, 2004 that its reported circulation numbers for Hoy and Newsday were overstated. Tribune eventually announced it was conducting an internal investigation and that it may refund to advertisers all amounts that they had been overcharged. In response to this announcement, Tribune's stock price fell to $41 at the close of business on July 15, 2004, and has never recovered. According to the complaint, the facts, known by defendants but concealed from the investing public during the Class Period, were as follows: (1) since at least FY 2001, defendants were inflating the circulation of Tribune's Hoy and Newsday publications; (2) as a result of said inflation, the Company's financial results during the Class Period were artificially inflated (including revenue, earnings per share ("EPS") and accounts receivables) and the Company's liabilities were understated; (3) the Company's revenue and income was grossly overstated by millions of dollars; (4) defendants had knowingly established extremely weak, if not purposeless, circulation controls which allowed for the circulation overstatements and did not require that circulation managers certify the claimed circulation; and (5) as a result, defendants' ability to continue to achieve future EPS and revenue growth would be severely threatened and would and did result in $95 million in costs, fines, refunds and investigation expenditures. 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. ********* A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to carconf@beard.com are encouraged. Each Friday's edition of the CAR includes a section featuring news on asbestos-related litigation and profiles of target asbestos defendants that, according to independent researches, collectively face billions of dollars in asbestos-related liabilities. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Glenn Ruel Senorin, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2005. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *