/raid1/www/Hosts/bankrupt/CAR_Public/060106.mbx
C L A S S A C T I O N R E P O R T E R
Friday, January 6, 2006, Vol. 8, No. 5
Headlines
ABBOTT LABORATORIES: IL Judge Grants Certification to ERISA Suit
ASHFORD.COM: NY Court Affirms Preliminary Approval of Settlement
AT CROSS: RI Court Grants Final Approval To Lawsuit Settlement
CAP ROCK: Former Cooperative Members Launch Suit V. Conversion
CINCINNATI INSURANCE: Bemis Lawsuit Removed to IL Federal Court
DYNACQ HEALTHCARE: TX Court Considers Securities Suit Dismissal
EPL INTERMEDIATE: Employees Lodge Overtime Wage Suit in CA Court
EV3 INC.: Shareholders Commence Fraud Lawsuit V. MTI Acquisition
EVERCOM HOLDINGS: CA Court Certifies Class in Inmate Phone Suit
FLORIDA: Resident Sues Condo Association Due To Hurricane Repair
GILMAN & CIOCIA: DE Court Mulls Investor Fraud Lawsuit Dismissal
HAVENS STEEL: Former Officers Move to Dismiss ESOP Suit in MO
HOME PRODUCTS: IL Court Dismisses Lawsuit, Fees Ruling Appealed
JDS UNIPHASE: Enters Mediation For CA Securities Fraud Lawsuit
JDS UNIPHASE: Discovery Begins in CA ERISA Fraud Litigation
KPMG LLP: Obstacles Encountered in Resolving Tax Shelters Case
MATRIXONE INC.: NY Court Preliminarily OKs Stock Suit Settlement
MICRO THERAPEUTICS: Shareholders Launch Suit v. ev3 Acquisition
MORTON'S RESTAURANT: Asks MA Court To Dismiss Employee FLSA Suit
NORTHWEST AIRLINES: Passenger Plans to File Discrimination Suit
OSCEOLA FARMS: Federal Trail Set For Cane Cutters' Wage Lawsuit
REGENCY AFFILIATES: DE Court Dismisses Remaining Claim in Suit
SMART & FINAL: CA Court Preliminarily OKs Wage Suit Settlement
SEMPRA ENERGY: Settles Antitrust Lawsuits in NV, CA For $377 Mil
SONY BMG: Settles Consumer Lawsuits, Offers Money, Free Music
SOUTH CAROLINA: Myrtle Beach Residents Receive Tax Case Payouts
STAPLES INC.: CA Court Yet To Rule on Wage Lawsuit Certification
STATE FARM: Faces MS Lawsuit V. "All Risk" Homeowner Policies
T-NETIX INC.: Plaintiffs Appeal WA Suit Summary Judgment Ruling
TENNESSEE: Woman Sues Sumner County Jail, Alleges Racketeering
TOYOTA MOTOR: Recalls 3,567 2006 LEXUS / IS250 Due to Crash Risk
TRUMP ENTERTAINMENT: Parties Enter Mediation For NJ ERISA Suit
VIRGINIA: New Roanoke Sheriff To Deal W/ Sexual Harassment Suit
WINNEBAGO INDUSTRIES: Recalls 193 Motor Homes Due to Crash Risk
Asbestos Alert
ASBESTOS LITIGATION: Owens Corning in Negotiations to Amend Plan
ASBESTOS LITIGATION: Owens Corning to Approve Allianz Settlement
ASBESTOS LITIGATION: RPM Tags Lower 2Q06 Earnings to Hurricanes
ASBESTOS LITIGATION: Fairchild Deals with Indemnification Claims
ASBESTOS LITIGATION: KY Court Junks Suit v. Contractor, Designer
ASBESTOS LITIGATION: Bankruptcy Court OKs Babcock & Wilcox Plan
ASBESTOS LITIGATION: NY Appeals Court Denies Benefits to Retiree
ASBESTOS LITIGATION: Claimants Want Grace Exclusivity Terminated
ASBESTOS LITIGATION: Parties Support Objection to Grace Request
ASBESTOS LITIGATION: Grace Responds to PD Committee Objections
ASBESTOS LITIGATION: WR Grace Seeks Full Disclosure of Witnesses
ASBESTOS LITIGATION: DE Court Denies Grace Discovery Request
ASBESTOS LITIGATION: Court Extends Non-Expert Prelim Designation
ASBESTOS LITIGATION: Firms Oppose Grace's Litigation Order Date
ASBESTOS LITIGATION: Kaiser's Debtors to Approve Westport Deal
ASBESTOS LITIGATION: Kaiser's Objections to 5 Claims Withdrawn
ASBESTOS LITIGATION: McDermott Shares Rise on B&W Reorganization
ASBESTOS LITIGATION: Dana Corp. Recaps Claims Incurred in 2Q05
ASBESTOS LITIGATION: OC Asks Court to Extend Exclusivity Period
ASBESTOS LITIGATION: Owens Corning to Wipe Out $10B Liabilities
ASBESTOS LITIGATION: Appeals Court Denies Armstrong World's Plan
ASBESTOS LITIGATION: Court Asked to Resolve Owens Corning Issue
ASBESTOS LITIGATION: Supreme Court Upholds Award in Gomez Suit
ASBESTOS LITIGATION: Ireland Schools Revealed to Carry Asbestos
ASBESTOS LITIGATION: MT Expert Says State's Cancer Study Skewed
ASBESTOS LITIGATION: Plaques Victim Awaits Compensation Decision
ASBESTOS LITIGATION: UK Ex-Auto Workers Face High Risk of Cancer
ASBESTOS ALERT: FL Contractors Slapped With US$38,750 Penalty
ASBESTOS ALERT: Illinois AG Sues 2 Firms for Removal Violations
ASBESTOS ALERT: OSHA Imposes US$90T Fine on NY Firm for Hazards
New Securities Fraud Cases
BLOCKBUSTER INC.: Murray Frank Sets Lead Plaintiff Deadline
FARO TECHNOLOGIES: Murray Frank Commences Securities Suit in FL
NASH FINCH: Schiffrin & Barroway Lodges Securities Suit in MN
SERACARE LIFE: Kaplan Fox Files Securities Fraud Suit in S.D. CA
WELLS FARGO: Stull Stull Lodges Securities Fraud Suit in N.D. CA
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ABBOTT LABORATORIES: IL Judge Grants Certification to ERISA Suit
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U.S. District Judge Robert W. Gettleman granted class action
status to a lawsuit accusing Abbott Laboratories Inc. of
cheating older workers out of retirement benefits when it spun
off its hospital equipment business in 2004, The Associated
Press reports.
The ruling allows the suit to cover all Abbott employees shifted
to newly created Hospira Inc., between August 22, 2003, which is
the date the spinoff was announced and April 30, 2004. Under the
same ruling Hospira employees who were eligible to retire from
Abbott when their jobs were eliminated are also included.
The suit, filed on November 8, 2004, claims that North Chicago-
based Company, a manufacturer of pharmaceutical and medical
products, spun off the unit containing many of its older workers
because they were near to claiming rich retirement benefits from
Abbott. Three former Abbott employees, who sued both Abbott and
Hospira, initially filed the lawsuit. Sprenger & Lang PLLC and
Meites, Mulder, Burger & Mollica, who announced the ruling in a
recent press release, represents them. With the ruling, attorney
Steven Sprenger estimated that the number of former employees
now eligible to participate in the suit might exceed 10,000.
The plaintiffs are former Company employees who allege their
transfer to Hospira, Inc., as part of the spin-off of Hospira,
adversely affected their employee benefits in violation of the
Employee Retirement Income Security Act (ERISA). Plaintiffs
generally seek reinstatement as Company employees, or
reinstatement as participants in the Company's employee benefit
plans, or an award for the employee benefits they have allegedly
lost, an earlier Class Action Reporter story (August 11, 2005)
reports.
Despite the ruling, the Company maintains that the spinoff
resulted solely from its desire to let the two units focus
separately on their distinct markets. Spokesman Jonathon
Hamilton told The Associated Press, "This is a procedural ruling
and has no bearing on the merits of the case. We are confident
when the evidence is reviewed, we will prevail in the case."
The suit is styled, "Nauman, et al. v. Abbott Labs, et al.,"
filed in the United States District Court for the Northern
District of Illinois, under Judge Robert W. Gettleman with
referral to Judge Geraldine Soat Brown. Representing the
Plaintiff/s is Paul William Mollica of Meites, Mulder, Burger &
Mollica, 208 South LaSalle St., Suite 1410, Chicago, IL 60604,
Phone: (312) 263-0272, E-mail: pwmollica@mmbmlaw.com.
Representing the Defendant/s are, William Denby Heinz of Jenner
& Block, LLC, One IBM Plaza, 330 North Wabash Ave., 40th Floor,
Chicago, IL 60611, Phone: (312) 222-9350, E-mail:
wheinz@jenner.com; and James F. Hurst of Winston & Strawn, 35
West Wacker Drive, 41st Floor, Chicago, IL 60601, Phone:
(312) 558-5600, E-mail: jhurst@winston.com.
ASHFORD.COM: NY Court Affirms Preliminary Approval of Settlement
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The United States District Court for the Southern District of
New York affirmed its ruling granting preliminary approval to
the settlement of the consolidated securities class action filed
against Ashford.com, Inc., several of its officers and
directors, and various underwriters of its initial public
offering.
Since July 11, 2001, several stockholder class action complaints
have been filed on behalf of purchasers of Ashford.com common
stock during various periods beginning on September 22, 1999,
the date of the Company's initial public offering. The
plaintiffs allege that the Company's prospectus, included in the
Company's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission, was materially false and
misleading because it failed to disclose, among other things,
certain fees and commissions collected by the underwriters or
arrangements designed to inflate the price of the common stock.
The plaintiffs further allege that because of these purchases,
the Company's post-initial public offering stock price was
artificially inflated. As a result of the alleged omissions in
the prospectus and the purported inflation of the stock price,
the plaintiffs claim violations of Sections 11 and 15 of the
Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934.
The complaints have been consolidated into a single action, and
the consolidated cases against the Company have been
consolidated with similarly consolidated cases filed against 308
other issuer defendants for the purposes of pretrial
proceedings. The claims against Ashford.com's officers and
directors were dismissed in exchange for tolling agreements
which permit the refilling of claims against officers and
directors at a later date. A motion to dismiss filed on behalf
of all issuer defendants, including the Company, was denied in
all aspects relevant to the Company on February 19, 2003. The
Company and its insurers have entered into a memorandum of
understanding regarding terms for settlement of this suit. Under
the settlement, plaintiffs' claims against Ashford.com and other
issuers will be dismissed in exchange for certain consideration
from the issuers' insurers and for the issuers' assignment to
plaintiffs of certain potential claims against the underwriters
of the relevant initial public offerings. Formal documentation
of the settlement contemplated by the memorandum of
understanding is complete and the Judge presiding over this
matter has preliminarily approved the settlement. On August
31,2005, the court affirmed its preliminary approval of the
settlement.
The suit is styled "In Re Ashford.com, Inc. Initial Public
Offering Securities Litigation," filed in relation to "IN re IPO
Securities Litigation, 21-MC-92 (Sas)," in the United States
District Court for the Southern District of New York, under
Judge Shira A. Scheindlin. The plaintiff firms in this
litigation are:
(1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300,
(3) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd,
PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E-
mail: info@sbclasslaw.com
(4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(5) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
AT CROSS: RI Court Grants Final Approval To Lawsuit Settlement
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The United States District Court for the District of Rhode
Island granted final approval to the settlement of the
securities class action filed against AT Cross Company, certain
of its officers and directors and others.
On April 21, 2000, the Company, certain officers and directors
of the Company and others were named as defendants in an action
filed in the United States District Court for the District of
Rhode Island. The suit, which is brought by a purchaser of the
Company's Class A common stock, alleges that the defendants
violated Federal securities laws by making material
misstatements and omissions in the Company's public filings and
statements relating to the Company's former Pen Computing Group
business. The suit seeks class action status including all
purchasers of the Company's Class A common stock between
September 17, 1997 and April 22, 1999. The damages sought are
unspecified.
On June 30, 2000, the Company filed a Motion to Dismiss the
action in the United States District Court in Rhode Island. The
United States District Court for the District of Rhode Island
granted the Company's Motion to Dismiss in June 2001. In July
2001, the Plaintiff filed an appeal with the First Circuit Court
of Appeals. The appeal was before the First Circuit Court of
Appeals. An oral argument was held February 8, 2002.
On March 20, 2002, the Court of Appeals for the First Circuit
issued a judgment affirming the dismissal of all claims asserted
against the W. Russell Boss Jr. Trust A, W. Russell Boss Jr.
Trust B and W. Russell Boss Jr. Trust C and reversing the
District Court's dismissal of the Section 10(b) and 20(a) claims
asserted against the Company and the named individual
defendants. The Court of Appeals' ruling was limited to a
finding that the plaintiff's complaint had satisfied the
pleading requirements of the Private Securities Litigation
Reform Act of 1995; the Court did not opine on the merits of
plaintiff's claims.
On January 8, 2004, the District Court heard oral argument on
defendants' motion for summary judgment. On July 21, 2004, the
Court issued its Memorandum and Order partially granting
defendants' motion for summary judgment and narrowing the class
period to encompass only purchases made between July 16, 1998
and April 22, 1999. Due to the revised class period, the
plaintiff's two proposed class representatives no longer had
standing to assert claims on behalf of the proposed class. The
Court, however, allowed the plaintiff class an opportunity to
recruit new class representatives and new class representatives
have been allowed.
The parties have since reached settlement in this case, and in
July 2005 the court granted preliminary approval of the
agreement to settle the securities class action litigation.
Under the terms of the proposed settlement, the class action
litigation will be dismissed in exchange for an aggregate cash
payment of $1.5 million. The settlement payment will be funded
entirely by the Company's insurance carriers and will therefore
have no impact to the Company's consolidated financial position
or results of operations. In September 2005 the United States
District Court for the District of Rhode Island granted final
approval of the agreement to settle the securities class action
litigation.
CAP ROCK: Former Cooperative Members Launch Suit V. Conversion
--------------------------------------------------------------
Cap Rock Energy Corporation and its affiliate, NewCorp Resources
Electric Cooperative, Inc. faces a class action filed by three
former members of Cap Rock Electric Cooperative, the Company's
predecessor.
The Plaintiffs allege fraud, conversion and other claims
associated with the Company's conversion from an electric
cooperative. It seeks damages related to, among other matters,
the alleged failure to pay members for their ownership interest
in NewCorp Resources Electric Cooperative, Inc. at the time of
the conversion. The Plaintiffs seek to certify the suit as a
class action.
CINCINNATI INSURANCE: Bemis Lawsuit Removed to IL Federal Court
---------------------------------------------------------------
Cincinnati Insurance Company removed a Madison County class
action case to Illinois federal court on December 29, 2005,
arguing that the amended complaint adds new claims that do not
relate to the original suit, The Madison County Record reports.
Chiropractor Frank Bemis sued Cincinnati Insurance on February
15, 2005, claiming that the insurer improperly discounted bills
for his treatment. Richard Burke, Jeffrey Millar and Brad Lakin
of the Lakin Law Firm in Wood River represent Mr. Bemis in the
case.
The Company argues though that the case is removable under the
Class Action Fairness Act of 2005 (CAFA), because of its nature
and size, and claims that the amended complaint commences a new
action because the original complaint was dismissed. Todd Lubben
of Brown & James in St. Louis, which is representing Cincinnati
Insurance, claims that Mr. Bemis accepted these payments without
objection, complaint or notice that any payment was deficient or
that additional monies were due to him or his practice.
Mr. Lubben writes, "Mr. Bemis, individually and on behalf of
each member of the proposed class, disclaims any potential award
to any class member that is in excess of $75,000. Through this
allegation, Mr. Bemis apparently seeks to avoid CAFA. However,
CAFA provides that the minimum amount in controversy is
satisfied if the aggregate stake exceeds $5,000,000, as it does
here."
In addition, Mr. Lubben states that the 7th Circuit Court of
Appeals confirmed that the addition of a new claim to a
previously existing matter may "commence" a removable action
under CAFA, provided that the new claim does not relate back to
the original complaint under state law. He also pointed out,
"The Third Judicial Circuit Court of Illinois, Madison County,
dismissed the original complaint in its entirety on November 2,
2005. By dismissing the original complaint, the court
specifically found that the complaint was legally and/or
factually insufficient. Mr. Bemis now attempts to revive those
same claims previously dismissed as well as assert new causes of
action."
He goes on to state, "Mr. Bemis raced to an Illinois state court
with his purported class action claims in order to avoid federal
jurisdiction over those claims that would shortly be afforded
Cincinnati under CAFA. Fair enough. However, the Madison County
trial court dismissed each claim Mr. Bemis asserted against
Cincinnati. In fact, that court adopted all of Cincinnati's
arguments and dismissed the entire original complaint.
Mr. Lubben also states, "Although Mr. Bemis attempts to bring
the same causes of action as previously asserted in the original
complaint, as well as several new causes of action, the problem
for him is CAFA now applies. Mr. Bemis should not be allowed to
circumvent CAFA by attempting to raise new causes of action,
with a newly proposed definition of class members, in a state
court action that was previously dismissed in its entirety."
Court records show that Mr. Bemis filed six suits in Madison
County Circuit Court prior to the enactment of the CAFA on
February 18, 2005.
The suit is styled, "Frank C. Bemis & Associates v. Cincinnati
Insurance Company et al., Case No. 3:05-cv-00919-MJR-DGW,"
pending in the United States District for the Southern District
of Illinois, under Judge Michael J. Reagan with referral to
Judge Donald G. Wilkerson. Representing the Plaintiff/s are,
Richard J. Burke, Jr., Bradley M. Lakin and Jeffrey A.J. Millar
of Lakin Law Firm, Generally Admitted, 300 Evans Ave., P.O. Box
229, Wood River, IL 62095-0027, Phone: 618-254-1127, E-mail:
richardb@lakinlaw.com, bradl@lakinlaw.com and
jeffm@lakinlaw.com; and Tod A. Lewis, Jonathan B. Piper, William
Sweetnam and Paul M. Weiss of Freed & Weiss, LLC, Cook County,
111 West Washington St., Suite 1331, Chicago, IL 60602, Phone:
312-220-0000. Representing the Defendant/s are, Todd A. Lubben
and Steven H. Schwartz of Brown & James - St. Louis, Generally
Admitted, 1010 Market St., 20th Floor, St. Louis, MO 63101,
Phone: 314-421-3400 and 314-242-5280, Fax: 314-421-3128 or
314-242-5480, E-mail: tlubben@bjpc.com and sschwartz@bjpc.com;
and Daniel G. Litchfield and Renee H. Wiszowaty of Litchfield
Cavo, Cook County, 303 West Madison St., Suite 200, Chicago, IL
60606, Phone: 312-781-6614 and 312-781-6677, Fax: 312-781-6630.
DYNACQ HEALTHCARE: TX Court Considers Securities Suit Dismissal
---------------------------------------------------------------
The United States District Court for the Southern District of
Texas has yet to rule on Dynacq Healthcare, Inc.'s motion to
dismiss the consolidated securities class action filed against
it and certain of its current and former officers and directors.
In the second quarter of 2004, eight lawsuits were filed in the
between December 24, 2003 and January 26, 2004, alleging federal
securities law causes of action against the Company and various
current and former officers and directors. The cases were filed
as class actions brought on behalf of persons who purchased
shares of Company common stock in the open market generally
during the period of January 14, 2003 through December 18, 2003.
Under the procedures of the Private Securities Litigation Reform
Act, the court consolidated the actions and appointed a lead
plaintiff in the matter. An amended complaint was filed on June
30, 2004, asserting a class period of November 27, 2002 to
December 19, 2003 and naming additional defendants, including
Ernst & Young LLP, the Company's prior auditors.
The amended complaint seeks certification as a class action and
alleges that the defendants violated Sections 10(b), 20(a),
20(A) and Rule 10b-5 under the Exchange Act by publishing
materially misleading financial statements that did not comply
with generally accepted accounting principles, making materially
false or misleading statements or omissions regarding revenues
and receivables, operations and financial results and engaging
in an intentional fraudulent scheme aimed at inflating the value
of Company stock. After the Company filed its Form 10-K for
fiscal 2003 on July 30, 2004, the procedural schedule was
amended so that plaintiffs had until 30 days after the Company
was current in its filings to file an amended complaint. The
plaintiffs filed an amended complaint in September 2004.
The Company filed a motion to dismiss all or some of the claims
in October 2004. The non-evidentiary oral argument was held on
May 13, 2005. The plaintiffs voluntarily dismissed two of the
former officers from the case. The Court dismissed the claims
against one former officer and Ernst & Young, LLP, but denied
the motions to dismiss of the Company and two current officers
who were defendants. The Company and those two officers have
filed a motion to reconsider the order and/or motion for leave
to conduct an interlocutory appeal from the denial of their
motions to dismiss. The Court has not ruled on this motion. In
the meantime, the Company and the two current officers/directors
filed an answer on September 30, 2005.
EPL INTERMEDIATE: Employees Lodge Overtime Wage Suit in CA Court
----------------------------------------------------------------
EPL Intermediate, Inc. faces a class action filed in the
Superior Court of the State of California, County of Los
Angeles, alleging certain violations of California labor laws
and the California Business and Professions Code.
Plaintiff Salvador Amezcua filed the suit on October 18, 2005,
on behalf of himself and all others similarly situated, based
on, among other things, failure to pay overtime compensation,
unlawful deductions from earnings and unfair competition.
Plaintiffs' requested remedies include compensatory damages,
injunctive relief, disgorgement of profits and reasonable
attorneys' fees and costs.
EV3 INC.: Shareholders Commence Fraud Lawsuit V. MTI Acquisition
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ev3, inc. faces a purported stockholder class action lawsuit
filed in the Court of Chancery for the state of Delaware,
related to its proposal to acquire all of the outstanding shares
of common stock of its majority-owned subsidiary, Micro
Therapeutics, Inc. (MTI), that it does not already own. The
suit also names as defendants MTI and each of its directors.
The complaint alleges that the defendants have and are breaching
their fiduciary duties to the detriment of MTI's stockholders
by, among other things, denying MTI's public stockholders the
opportunity to obtain fair value for their equity interests by
proposing a transaction at an inadequate premium. The complaint
seeks the following relief:
(1) certification of the lawsuit as a class action;
(2) an injunction preventing the completion of the proposed
transaction;
(3) rescission of the proposed transaction or rescissory
damages to the extent the proposed transaction is
already implemented prior to final judgment;
(4) compensation for the plaintiff and other members of the
class for all damages sustained as a result of the
defendants' conduct;
(5) directing that the defendants account to the plaintiff
and other members of the class for all profits and any
special benefits obtained as a result of their conduct;
(6) costs and disbursements of the lawsuit, including
attorneys' fees and expenses; and
(7) such other relief as the court may find just and proper
EVERCOM HOLDINGS: CA Court Certifies Class in Inmate Phone Suit
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The Superior Court for the State of California in and for the
County of Alameda certified a class as to Evercom Holdings, Inc.
in the lawsuit styled "Elena Condes, et al. v. Evercom Systems,
Inc., SBC Communications, Inc., Pacific Bell Telephone Company,
et al."
The suit also names as defendants T-Netix, Inc. and other inmate
telephone service providers. Plaintiffs have alleged that they
were charged for collect calls from a number of correctional
facilities as a result of systematic defects in the inmate
calling platforms of all the telecommunications provider
defendants. The plaintiffs in such judicial proceedings,
including the "Condes" litigation, generally seek class action
certification against all named inmate telecommunications
providers, as defendants, with all recipients of calls from
inmate facilities, as members of the plaintiff class. Although
class certification was recently denied in the "Condes"
litigation as to all defendants, the plaintiffs were successful
in their motion for reconsideration as to Evercom.
FLORIDA: Resident Sues Condo Association Due To Hurricane Repair
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Ali M. Kas, a resident of the hurricane-wracked Tiara high-rise
on Singer Island, Florida files a lawsuit against his condo
association, alleging that the board mismanaged the
reconstruction project, The Sun-Sentinel.com reports.
In his suit, Mr. Kas contends that the board wasted
reconstruction money in numerous areas, including approving $100
million in no-bid contracts to Southern Construction Services,
Inc., and paying $30 million to dry out the 42-story, 320-unit
tower for about nine months after it was pummeled by hurricanes
Frances and Jeanne in 2004. The storms made the building
uninhabitable, forcing residents to flee and costing many their
furniture, clothes, mementos and savings. Reconstruction costs
were estimated at $120 million before Hurricane Wilma hit the
dilapidated tower in October 2005.
Mr. Kas, 64, who has criticized the board's policies for months
also contends, "The board has exhausted or pledged all of its
financial resources," including $50 million in insurance
proceeds. The suit was filed in Palm Beach County Circuit Court
and also names Southern Construction Services. It alleges that
the condo association is about $25 million in debt to the
construction company, yet there is no fixed cost on repairs or a
firm completion date.
Because there was no completion date, some residents were unable
to obtain financing and were forced to sell their units at a
loss, according to the suit. Mr. Kas is seeking to have the
lawsuit against the Tiara Condominium Association Inc. certified
as a class action, which would allow other residents to join in
a group lawsuit.
Southern Construction Services President Domingo Castro told The
Sun-Sentinel.com that he had not reviewed the suit and couldn't
address details of the allegations. He adds, "Everything we've
done up to date has been done by a legal contract under the
association." He goes on to say, "As far as the completion date
is concerned, no one really had a grasp of the magnitude of the
rebuilding. It's been a moving target from day one. ... Wilma
just threw a bunch of unknown factors into the whole mix."
GILMAN & CIOCIA: DE Court Mulls Investor Fraud Lawsuit Dismissal
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The Court of Chancery for the State of Delaware has yet to rule
on the dismissal of the shareholder class action and derivative
complaint filed against Gilman & Ciocia, Inc., and certain of
its officers and directors, styled "Gary Kosseff,
Plaintiff, against James Ciocia, Thomas Povinelli, Michael P.
Ryan, Kathryn Travis, Seth A. Akabas, Louis P. Karol, Edward H.
Cohen, Steven Gilbert and Doreen Biebusch, Defendants and Gilman
& Ciocia, Inc., Nominal Defendant, Civil Action No. 188-N."
The nature of the action is that the Company, its Board of
Directors and its management, breached their fiduciary duty of
loyalty in connection with the sale of the offices to Pinnacle
Taxx Advisors LLC. The action alleges that the sale to Pinnacle
was for inadequate consideration and without a fairness opinion
by independent financial advisors, without independent legal
advice and without a thorough evaluation and vote by an
independent committee of the Board of Directors. The action
prays for the following relief: a declaration that the Company,
its Board of Directors and its management breached their
fiduciary duty and other duties to the plaintiff and to the
other members of the purported class; a rescission of the Asset
Purchase Agreement; unspecified monetary damages; and an award
to the plaintiff of costs and disbursements, including
reasonable legal, expert and accountants fees.
On March 15, 2004, counsel for the Company and for all
defendants filed a motion to dismiss the lawsuit. On June 18,
2004, counsel for the plaintiff filed an Amended Complaint.
On July 12, 2004, counsel for the Company and for all defendants
filed a motion to dismiss the Amended Complaint. On October 27,
2004, counsel for the plaintiff filed a memorandum of law in
opposition to defendant's motion to dismiss the Amended
Complaint. On March 8, 2005, oral argument was heard on the
motion to dismiss, and the Court is currently considering the
motion.
HAVENS STEEL: Former Officers Move to Dismiss ESOP Suit in MO
-------------------------------------------------------------
Attorneys for five former corporate officials at bankrupt Havens
Steel Co. argued in a recent legal filing that they were not
required to diversify the holdings of an employee stock-
ownership plan (ESOP) that lost all its value when the company
filed for bankruptcy, The Kansas City Business Journal reports.
Arguing in a memorandum supporting their motion to dismiss a
class action lawsuit brought by former employees, the attorneys
said the suit wrongly blames the officials' corporate decisions
for damaging the employee stock-ownership plan. They pointed
out, "Because the conduct plaintiffs complain of in this case
involved decisions the defendants made in their corporate
capacities, plaintiffs' claims fail."
The filing stated that the five defendants in the lawsuit were
corporate directors as well as members of the ESOP's
administrative committee or served the ESOP's trustee, but not
all committee and board members were sued. According to the
memorandum, "The defendants, like the plaintiffs, were also all
ESOP participants and also collectively lost millions of dollars
when their accounts became valueless."
Originally, U.S. District Judge Scott Wright certified a class
of former employees on December 5, 2005 in the suit, which was
filed back in November 2004 with eight former Havens employees
as plaintiffs. The suit sought class action status on behalf of
some 500 current and former Havens employees who participated in
the employee stock-ownership plan, or ESOP, which two years ago
was worth nearly $40 million as well as unspecified damages.
Named as defendants are Havens' former president and chief
executive officer, Kenneth McCullough, and three other former
Havens executives: Jesse Bechtold, Don Price, Thomas Collins and
Steven Cowan. All were members of Havens' ESOP Committee and
served on the company's board, an earlier Class Action Reporter
story (December 2, 2004) reports.
The suit alleges that the defendants breached their fiduciary
duties by paying themselves large bonuses and by concentrating
the ESOP's investments in Havens stock "even after they knew
that it was not a prudent investment." The suit contends that
shortly after Mr. McCullough informed plan participants of the
company's record $228 million in revenue in 2001, he and other
company executives awarded themselves bonuses of more than $2.3
million, including $513,060 for Mr. McCullough, an earlier Class
Action Reporter story (December 2, 2004) reports.
After that, the suit says, the defendants directed that the
$2.67 million the company contributed to the ESOP in early 2002
be used to buy company stock. This was done, the plaintiffs
allege, even though the defendants knew the company's 2002
performance "was going to be in stark contrast with the results
they had announced in 2001," an earlier Class Action Reporter
story (December 2, 2004) reports.
Some members of the ESOP Committee suggested finding a buyer for
the company's stock, "but this idea was discouraged by the
defendants, who were more interested in preserving their
positions than in protecting the interests of Plan
participants," according to the suit. Instead, the plaintiffs
allege, Mr. McCullough authorized "substantial personal loans"
to company executives and approved executive account spending,
"including thousands of dollars in ATM cash withdrawals and
payments for expensive meals and strip clubs," an earlier Class
Action Reporter story (December 2, 2004) reports.
The suit also says the defendants borrowed money from Commerce
Bank to make "phantom stock" payments to themselves. Phantom
stock is a form of bonus based on the market appreciation of a
company's stock over time, an earlier Class Action Reporter
story (December 2, 2004) reports.
Only in January 2004 did the defendants consider naming an
independent trustee for the ESOP and only in March 2004 did they
consider allowing non-executive ESOP Committee members to
participate in talks about selling Havens' stock, the suit
alleges, an earlier Class Action Reporter story (December 2,
2004) reports.
Even after Havens filed for bankruptcy and Mr. McCullough
stepped down as chief executive, he continued to draw a six-
figure salary, according to the suit. Meanwhile, it says, other
executives continued their lavish spending, sought forgiveness
of their debts to the company and did nothing to protect the
interests of the stock plan. "The Plan was left without a
trustee, without direction, and without funds," the suit
contends, an earlier Class Action Reporter story (December 2,
2004) reports.
The Company filed for bankruptcy in March 2004, allegedly
rendering the employees' stock "valueless," according to the
suit. The complaint alleges that the officers breached their
fiduciary duties to the plan from December 21, 2001, through
July 22, 2004, an earlier Class Action Reporter story (January
3, 2006) reports.
Despite the allegations, the memorandum arguing for summary
judgment said:
(1) None of the defendants received bonuses in 2002.
(2) Federal law doesn't require ESOPs to diversify.
(3) Plaintiffs can't prove that the ESOP's continued
investment in Havens stock was unreasonable.
(4) Selling Havens stock to buy other companies' stock
would have been difficult because no prospective buyers
for Havens Steel Co. stock were known to the company.
The memorandum also contends that the Company's demise was
caused by events the defendants couldn't control, including high
steel prices, a slowdown in construction in 2002 and a lender
foreclosing on the Company's operating credit. Defense attorneys
pointed out, "Plaintiffs are looking for someone to blame for
HSC's misfortune and have zeroed in on the defendants as targets
for their disappointment and frustration."
The case hasn't been restricted by the bankruptcy court's
automatic stay on suits against companies undergoing
reorganization because the company isn't named as a defendant.
The company filed for bankruptcy in March 2004, rendering the
employees' stock worthless, according to the suit.
Eugene Balloum of Shook Hardy & Bacon LLP represents Mr.
McCullough. Blackwell Sanders Peper Martin LLP represents the
other Defendant/s. Judge Wright designated Neil Sader and Greg
Garvin of Kansas City-based Sader & Garvin LLC as class counsel,
along with Andrew Rainer of McRoberts Roberts & Rainer, LLP in
Boston. Together the attorneys are representing: Jack and Janet
Kirse of Lee's Summit; Betty Jean Pitchford of Kansas City,
Kansas; Lori Michaels, James Hall and Glenna Grafton of Kansas
City; Ronald Berr of Quenemo, Kansas; and Keith Feuerborn of
Ottawa, Kansas. The case is scheduled for trial on April 3, 2006
in U.S. District Court in Kansas City, an earlier Class Action
Reporter story (January 3, 2006) reports.
The suit is styled, "Kirse et al. v. McCullough et al., Case No.
4:04-cv-01067-SOW," filed in the United States District Court
for the Western District of Missouri, under Judge Scott O.
Wright. Representing the Plaintiff/s are:
(1) Neil S. Sader of Sader & Garvin, LLC, 4739 Belleview
Ave., Suite 300, Kansas City, MO 64112-1364, Phone:
(816) 561-1818, Fax: (816) 561-0818, E-mail:
nsader@sadergarvin.com;
(2) Andrew Rainer of McRoberts, Roberts & Rainer, LLP, 53
State Ave., Boston, MA 02109, Phone: 617-722-8222; and
(3) Gregory M. Garvin of Sader & Garvin, LLC, 4739
Belleview Ave., Ste. 300, Kansas City, MO 64112-1364,
Phone: 816-561-1818, Fax: 816-561-0818, E-mail:
ggarvin@sadergarvin.com.
Representing the Defendant/s are, Timothy M O'Brien and J.
Eugene Balloun of Shook, Hardy & Bacon, Phone: (913) 451-6060,
Fax: 913-451-8879, E-mail: tobrien@shb.com and eballoun@shb.com;
and Shelley A. Runion and Robert J. Tomaso of Blackwell,
Sanders, Peper, Martin, LLP, Phone: (816) 983-8221 and
(314) 345-6433, Fax: (816) 983-8080 and (314) 345-6543, E-mail:
srunion@blackwellsanders.com and rtomaso@blackwellsanders.com.
HOME PRODUCTS: IL Court Dismisses Lawsuit, Fees Ruling Appealed
---------------------------------------------------------------
The Illinois Apellate Court for the first District dismissed
plaintiffs' appeal of a lower court ruling denying their
petition for attorneys' fees in the suit filed against Home
Products International, Inc. The Court also dismissed the suit,
which the plaintiffs did not appeal.
On June 2, 2004, the Company executed an Agreement and Plan of
Merger, by and between the Company and JRT Acquisition, as
amended by that certain First Amendment to the Agreement and
Plan of Merger, dated October 11, 2004. Pursuant to the terms
of the JRT Agreement, JRT, an entity formed by James R. Tennant,
who at the time was the Company's Chairman and Chief Executive
Officer, to merge with and into the Company, and each
outstanding share of the Company's common stock was to be
exchanged for the right to receive $1.50 in cash.
The complaint, filed in the Chancery Division of the Circuit
Court of Cook County, Illinois, purports to be filed by a
stockholder and alleges that in entering into the JRT Agreement,
the Company's board of directors breached their fiduciary duties
of loyalty, due care, independence, good faith and fair dealing.
The complaint, which includes a request for a declaration that
the action be maintained as a class action, seeks, among other
relief, injunctive relief enjoining the transaction from being
consummated.
On May 5, 2005, the Illinois Circuit Court dismissed the suit,
declaring it moot. The Circuit Court's May 5, 2005 Order also
denied plaintiffs petition for attorneys' fees. On June 2, 2005,
plaintiffs filed an appeal from the Circuit Court's denial of
their petition for attorneys' fees only. Plaintiffs did not
appeal the portion of the May 5, 2005 Order that dismissed the
complaint. The appeal was dismissed by the Illinois Appellate
Court for the First District on October 12, 2005.
The suit is styled "Daniel Slattery v. Home Products
International, Inc., case no. 2004-CH-09064," filed in the
Circuit Court of Cook County, Illinois under Judge David R.
Donnersberger. Representing the plaintiffs is LASKY & RIFKIND
P.C., Mail: 351 W. Hubbard #406, Chicago IL 60610, Phone:
(312) 634-0057. Representing the Company is KATTEN MUCHIN ZAVIS
ROSEN, Mail: 525 W. Monroe # 1600, Chicago IL, 60661 Phone:
(312) 902-5200.
JDS UNIPHASE: Enters Mediation For CA Securities Fraud Lawsuit
--------------------------------------------------------------
Case management conference for the consolidated securities class
action filed against JDS Uniphase Corporation and certain of its
former and current officers and directors in the United States
District Court for the Northern District of California, styled
"In re JDS Uniphase Corporation Securities Litigation, C-02-
1486," is set for April 29,2005.
The suit purports to be brought on behalf of a class consisting
of those who acquired the Company's securities from October 28,
1999, through July 26, 2001, as well as on behalf of subclasses
consisting of those who acquired the Company's common stock
pursuant to its acquisitions of OCLI, E-TEK, and SDL. The
complaint seeks unspecified damages and alleges various
violations of the federal securities laws, specifically Sections
10(b), 14(a), 20(a), and 20A of the Securities Exchange Act of
1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of
1933, an earlier Class Action Reporter story (February 23,2004)
states.
The Company asked the court to dismiss the suit, but on January
6,2005, the court denied the motion to dismiss claims against
the Company, Jozef Straus, Anthony R. Muller, and Charles Abbe
and granted in part and denied in part the motion to dismiss
claims against Kevin Kalkhoven. On July 15, 2005, the Court
denied Lead Plaintiff's motion to strike parts of the Company's
answer to the complaint and also denied the Company's motion for
partial judgment on the pleadings. The Court also held a case
management conference on July 15, 2005. At that conference, the
Court ordered the parties to mediate, but declined to set a
discovery cut-off or trial date. Pursuant to the Court's order,
the parties have agreed to appear at a mediation session before
the Hon. Daniel Weinstein (Ret.) on November 29, 2005.
On July 22, 2005, the Oklahoma Firefighters Pension and
Retirement System moved to intervene, seeking to represent the
purported subclass of plaintiffs who exchanged shares of OCLI
stock for shares of Company stock in connection with the merger.
On October 12, 2005, the Court granted that motion. On August
12, 2005, Lead Plaintiff moved for class certification. That
motion was heard on November 18, 2005. Document discovery is
ongoing. Each party has noticed depositions of both party and
non-party witnesses.
A related securities case, Zelman v. JDS Uniphase Corp., No. C-
02-4656 (N.D. Cal.), is purportedly brought on behalf of a class
of purchasers of debt securities that were allegedly linked to
the price of the Company's common stock. The Zelman complaint
alleges that the debt securities were issued by an investment
bank during the period from March 6, 2001 through July 26, 2001.
The complaint names the Company and several of its former
officers and directors as defendants, alleges violations of the
federal securities laws, specifically Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5, and
seeks unspecified damages. At a case management conference held
on July 15, 2005, Judge Wilken advised the parties that the
Zelman matter should be mediated at the same time as In re JDS
Uniphase Corporation Securities Litigation. On August 11, 2005,
Plaintiff moved for class certification in the Zelman matter.
Subject to certain conditions, JDSU later agreed to
certification of the purported class.
JDS UNIPHASE: Discovery Begins in CA ERISA Fraud Litigation
-----------------------------------------------------------
The United States District Court for the Northern District of
California is set to hear JDS Uniphase Corporation's motion to
dismiss the consolidated class action filed against it, styled
"In re JDS Uniphase Corporation ERISA Litigation, Master File
No. C-03-4743 CW," on April 29,2005.
The suit charges the Company and certain of its former and
current officers and directors with violations of the Employee
Retirement Income Security Act (ERISA) on behalf of a purported
class of participants in the Company's 401(k) Plan, an earlier
Class Action Reporter story (September 21,2004) reports.
On April 6, 2005, the court referred Defendants' motion to
dismiss the complaint to Judge Schwarzer. On July 14, 2005,
Judge Schwarzer granted the motion in part with leave to amend
and denied the motion in part. On July 20, 2005, Judge Wilken
issued an order transferring the case for all purposes to Judge
Schwarzer. Pursuant to Judge Schwarzer's order on August 1,
2005, Plaintiffs' deadline to file a second amended complaint
was October 21, 2005. Plaintiffs have begun taking discovery. No
trial date has been set.
KPMG LLP: Obstacles Encountered in Resolving Tax Shelters Case
--------------------------------------------------------------
The accounting firm KPMG, LLP, is encountering a number of
obstacles in its attempts to push through a $195 million
settlement with wealthy investors who bought certain
questionable tax shelters, The New York times reports.
The Internal Revenue Service found the tax shelters, which
helped taxpayers who bought them elude $2.5 billion in taxes, to
be "abusive." A grand jury in New York has indicted 19 people,
including KPMG's former chief financial officers, former KPMG
tax professionals and a former lawyer at Sidley, Austin, Brown &
Wood LLP, which worked with KPMG, in connection with the shelter
sales, an earlier Class Action Reporter story (November 2, 2005)
reports.
The proposed class action settlement, which was given
preliminary approval in November 2005, is crucial to the firm's
efforts to limit its exposure to potentially billions of dollars
in legal claims from investors. The deal, which was reached
after both parties agreed to a year of mediation with former
U.S. District Judges Nicholas Politan of New Jersey and Daniel
Weinstein of California, would end litigation lodged by KPMG
clients who, in the late 1990s, bought tax shelters that R.J.
Ruble, a partner for Sidley Austin's predecessor firm, Brown &
Wood, helped develop. Court records show that R.J. Ruble wrote
more than 600 letters to clients declaring that the shelters
would withstand Internal Revenue Service scrutiny. But,
plaintiffs claim that even while the shelters were being sold,
KPMG officials wrote memos expressing doubts about their
validity. Eventually, sale of the shelters was discontinued
after the IRS disallowed them, an earlier Class Action Reporter
story (October 6, 2005) reports.
According to three people involved in the proceedings though, at
least several dozen, and perhaps hundreds, of investors,
representing 30 percent of the roughly 275 claims covered under
the settlement, elected by a late December deadline not to
participate in the deal.
The Company has the right to call off the settlement if a
certain number of investors opt out, according to a side letter
among parties, a lawyer who represents a former KPMG client not
participating in the settlement told The New York Times. Though
that threshold has not been disclosed, 30 percent is a
relatively high opt-out rate. Both the Company and Milberg,
Weiss Bershad & Schulman, the plaintiffs' law firm that brokered
the deal, declined to comment on whether the settlement had
enough participants to go forward.
The proposed settlement covers four tax shelters known as Flip,
Opis, Blips and S.O.S., as well as some former clients who
participated in a shelter called Short Option Strategy. The
settlement was reached on September 27, one month after KPMG
entered into a $456 million deferred-prosecution agreement with
federal prosecutors over some questionable shelters. The
settlement is intended to return to investors fees that they
paid to KPMG and the law firm of Sidley Austin Brown & Wood,
which wrote opinion letters blessing the shelters, and not the
money that was improperly sheltered from taxes and that the
Internal Revenue Service has claimed it is owed.
There are also other challenges to the proposed deal. HVB, a big
German bank, recently filed papers objecting to a clause in the
settlement as unfairly "stripping HVB of any legal claims or
causes of action it may have against KPMG or Sidley Austin" in
connection with the four tax shelters covered under the
settlement. HVB indicates in the filing that it is not seeking
to derail the accord but rather to reword parts of it to limit
its exposure to claims it faces in separate lawsuits over KPMG
tax shelters on which it worked. Helen Duncan, a Los Angeles
lawyer is representing HVB.
HVB carried out financial transactions underpinning one of the
shelters covered in the KPMG settlement. In August, Domenick
DeGiorgio, a former executive at HVB, pleaded guilty to criminal
charges related to questionable tax shelters, including one
created and sold by KPMG.
The class action settlement, if it gains final approval at a
hearing before Judge Dennis M. Cavanaugh of United States
District Court in Newark on February 24, will earn Milberg Weiss
$30 million in fees, on top of the $195 million for class
members. Sidley Austin will pay about 20 percent of the total
settlement.
Among those who have opted out, according to court papers filed
recently, is J. Paul Reddam, who founded Ditech.com, a mortgage
lending company now owned by General Motors. Mr. Reddam is
seeking a larger, individual settlement from the Company through
his own civil case against the firm, filed in a California state
court in 2004. Mr. Reddam bought three questionable tax shelters
from the Company in 1999.
The suit is styled, "SIMON et al v. KPMG LLP et al, Case No.
2:05-cv-03189-DMC-MF," filed in the United States District Court
for the District of New Jersey, under Judge Dennis M. Cavanaugh.
Representing the Plaintiff/s are James E. Cecchi and Melissa E.
Flax of CARELLA BYRNE BAIN GILFILLAN CECCHI STEWART & OLSTEIN,
PC, 5 Becker Farm Road, Roseland, NJ 07068, Phone:
(973) 994-1700, Fax: (973) 994-1744, E-mail:
jcecchi@carellabyrne.com and mflax@carellabyrne.com.
Representing the Defendant/s are, Dennis J. Drasco of LUM,
DANZIS, DRASCO & POSITAN, LLC, 103 Eisenhower Parkway, Roseland,
NJ 07068-1049, Phone: (973) 403-9000, E-mail:
ddrasco@lumlaw.com; and Anthony J. Marchetta of Pitney Hardin,
200 Campus Drive, Florham Park, NJ 07932, Phone: 973-966-8032,
E-mail: amarchetta@pitneyhardin.com.
MATRIXONE INC.: NY Court Preliminarily OKs Stock Suit Settlement
----------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
consolidated amended class action filed against MatrixOne, Inc.,
two of its officers, and certain underwriters involved in the
Company's initial public offering of common stock (IPO).
The complaint is allegedly brought on behalf of purchasers of
the Company's common stock during the period from February 29,
2000 to December 6, 2000 and asserts, among other things, that
the Company's IPO prospectus and registration statement violated
federal securities laws because they contained material
misrepresentations and/or omissions regarding the conduct of the
Company's IPO underwriters in allocating shares in the Company's
IPO to the underwriters' customers, and that the Company and the
two named officers engaged in fraudulent practices with respect
to the underwriters' conduct. The action seeks damages, fees
and costs associated with the litigation, and interest.
Pursuant to a stipulation between the parties, the Company's two
named officers were dismissed from the lawsuit, without
prejudice, on October 9, 2002. On February 19, 2003, the Court
ruled on a motion to dismiss the complaint that had been filed
by the Company, along with the three hundred plus other
publicly-traded companies that have been named by various
plaintiffs in substantially similar lawsuits. The Court granted
the Company's motion to dismiss the claim filed against it under
Section 10(b) of the Securities Exchange Act of 1934, but denied
the Company's motion to dismiss the claim filed against it under
Section 11 of the Securities Act of 1933, as it denied the
motions under this statute for virtually every other company
sued in the substantially similar lawsuits.
In June 2003, the Company, implementing the determination made
by a special independent committee of the Board of Directors,
elected to participate in a proposed settlement agreement with
the plaintiffs in this litigation. If ultimately approved by
the Court, this proposed settlement would result in a dismissal,
with prejudice, of all claims in the litigation against the
Company and against any of the other issuer defendants who elect
to participate in the proposed settlement, together with the
current or former officers and directors of participating
issuers who were named as individual defendants. The proposed
settlement does not provide for the resolution of any claims
against the underwriter defendants, and the litigation as
against those defendants is continuing. The proposed settlement
provides that the class members in the class action cases
brought against the participating issuer defendants will be
guaranteed a recovery of $1.0 billion by insurers of the
participating issuer defendants. If recoveries totaling $1.0
billion or more are obtained by the class members from the
underwriter defendants, however, the monetary obligations to the
class members under the proposed settlement will be satisfied.
In addition, the Company and any other participating issuer
defendants will be required to assign to the class members
certain claims that they may have against the underwriters of
their IPOs.
The proposed settlement contemplates that any amounts necessary
to fund the settlement or settlement-related expenses would come
from participating issuers' directors and officers liability
insurance policy proceeds, as opposed to funds of the
participating issuer defendants themselves. A participating
issuer defendant could be required to contribute to the costs of
the settlement if that issuer's insurance coverage were
insufficient to pay that issuer's allocable share of the
settlement costs. The Company expects that its insurance
proceeds will be sufficient for these purposes and that it will
not otherwise be required to contribute to the proposed
settlement. Formal settlement documents, including a
stipulation of settlement and related documents, have now been
filed with the Court. The plaintiffs in the case against the
Company, along with the plaintiffs in the other related cases in
which issuer defendants have agreed to the proposed settlement,
have requested preliminary approval by the Court of the proposed
settlement, including the form of the notice of the proposed
settlement that will be sent to members of the proposed classes
in each settling case. Certain underwriters who were named as
defendants in the settling cases, and who are not parties to the
proposed settlement, have filed an opposition to preliminary
approval of the proposed settlement of those cases.
In mid-September, the Court asked lead counsel for the
plaintiffs and for the issuer defendants for additional
information concerning the adequacy of the settlement amount and
how plaintiffs intend to allocate any consideration paid under
the settlement among the more than 300 separate class actions
that are included in the settlement. Counsel for the plaintiffs
and for the issuer defendants are in the process of providing to
the Court the information that it has requested.
Consummation of the proposed settlement is conditioned upon,
among other things, receipt of both preliminary and final Court
approval. If the Court preliminarily approves the proposed
settlement, it will direct that notice of the terms of the
proposed settlement be published in a newspaper and mailed to
all proposed class members and schedule a fairness hearing, at
which objections to the proposed settlement will be heard.
Thereafter, the Court will determine whether to grant final
approval to the proposed settlement.
Consummation of the proposed settlement is conditioned upon
obtaining final approval by the Court. On September 1, 2005, the
Court preliminarily approved the proposed settlement, directed
that notice of the terms of the proposed settlement be provided
to class members, and scheduled a fairness hearing, at which
objections to the proposed settlement will be heard. Thereafter,
the Court will determine whether to grant final approval to the
proposed settlement.
The suit is styled "In Re MATRIXONE INC. Initial Public Offering
Securities Litigation," filed in relation to "IN RE INITIAL
PUBLIC OFFERING SECURITIES LITIGATION, Master File No. 21 MC 92
(SAS)," both pending in the United States District Court for the
Southern District of New York, under Judge Shira N. Scheindlin.
The plaintiff firms in this litigation are:
(1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300
(3) Schiffrin & Barroway, LLP, Mail: 3 Bala Plaza E, Bala
Cynwyd, PA, 19004, Phone: 610.667.7706, Fax:
610.667.7056, E-mail: info@sbclasslaw.com
(4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(5) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
MICRO THERAPEUTICS: Shareholders Launch Suit v. ev3 Acquisition
---------------------------------------------------------------
Micro Therapeutics, Inc. faces a purported stockholder class
action lawsuit filed in the Court of Chancery for the state of
Delaware, related to its parent ev3, inc.'s proposal to acquire
all of the Company's outstanding shares of common stock, that it
does not already own. The suit also names as defendants ev3,
inc. and each of its directors.
The complaint alleges that the defendants have and are breaching
their fiduciary duties to the detriment of the Company's
stockholders by, among other things, denying the Company's
public stockholders the opportunity to obtain fair value for
their equity interests by proposing a transaction at an
inadequate premium. The complaint seeks the following relief:
(1) certification of the lawsuit as a class action;
(2) an injunction preventing the completion of the proposed
transaction;
(3) rescission of the proposed transaction or rescissory
damages to the extent the proposed transaction is
already implemented prior to final judgment;
(4) compensation for the plaintiff and other members of the
class for all damages sustained as a result of the
defendants' conduct;
(5) directing that the defendants account to the plaintiff
and other members of the class for all profits and any
special benefits obtained as a result of their conduct;
(6) costs and disbursements of the lawsuit, including
attorneys' fees and expenses; and
(7) such other relief as the court may find just and proper
MORTON'S RESTAURANT: Asks MA Court To Dismiss Employee FLSA Suit
----------------------------------------------------------------
Morton's Restaurant Group, Inc. asked the United States District
Court for the District of Massachusetts to dismiss the
nationwide class action filed against it, alleging violations of
the Fair Labor Standards Act (FLSA).
In May 2005, a former employee of the Boston restaurant filed
the suit, alleging that the tip out violates the Fair Labor
Standards Act. The Company moved to dismiss the complaint and
compel arbitration. While the motion was pending, the plaintiff
filed a nationwide collective action demand for arbitration with
the American Arbitration Association. The demand for
arbitration alleges the same facts as the lawsuit filed in
federal court. The motion to dismiss is still pending in
federal court.
NORTHWEST AIRLINES: Passenger Plans to File Discrimination Suit
---------------------------------------------------------------
A former Philippine lawmaker plans to lead the filing of a $500
million class action suit against an American airline for
allegedly discriminating against Filipino passengers during a
recent trip from the United States, The Gulf Times.
Former congressman Mark Jimenez told The Gulf Times that he
would be suing Northwest Airlines for failing to provide
accommodation for him and 164 other Filipino passengers during a
delayed stopover in Japan from the U.S. on their way to Manila,
the country's capital city. According to him, on December 18,
2005, the Northwest flight he was on was delayed for more than
10 hours in Narita airport in Japan due to inclement weather.
Mr. Jimenez noted that while the airline staff was able to find
hotel rooms for other passengers of different races, the
Filipinos were left in the cold. He added that they reasoned
that there were no more rooms available for the Filipino
passengers, but a quick check on the Internet showed there were
plenty of vacancies in nearby hotels to accommodate everyone. He
told The Gulf Times, "I was able to prove that there were
available rooms. They (airline staff) told us there weren't
any."
The Company's Manila office has issued an apology to Mr.
Jimenez. However, he was not satisfied with the apology. He told
The Gulf Times, "They apologized to us but it wasn't enough
because they did not admit what they did. They didn't admit that
they helped the Japanese passengers but not the Filipinos."
OSCEOLA FARMS: Federal Trail Set For Cane Cutters' Wage Lawsuit
---------------------------------------------------------------
A protracted lawsuit filed on behalf of 1,048 former migrant
sugar-cane cutters against Florida Crystals Corporation's
Osceola Farms Co. is headed for a trial in federal court, The
Palm Beach Post reports.
In a recent order U.S. District Judge James Cohn of Fort
Lauderdale rejected the West Palm Beach-based company's bid to
dismiss the complaint, which allowed the case to proceed to a
long awaited trail. The lawsuit, which stems from pay disputes
going back to 1987, seeks to recover more than $5 million in
back wages.
Commenting on the legal setback, Gaston Cantens, vice president
of Florida Crystals told The Palm Beach Post, "We are ready,
willing and able to go forward and defend ourselves once again.
We are confident they will not be able to prove what they are
alleging. You can't prove something that didn't happen." The
Company has no intention of settling the case, he adds.
In the same order though Judge Cohn denied the workers' attempts
to make the case a class action, agreeing with a previous ruling
in state court. Additionally, he also struck down their wage
claims for the 1991-92 and 1992-93 harvests because the
allegations were not included in the original litigation.
The judge, however, did rule that the case could be heard in
federal court. "The federal interest in regulating immigration
is unquestionably substantial," Judge Cohn wrote, adding that
federal courts have long provided a forum for migrant workers to
enforce their rights.
The workers were brought from Caribbean nations such as Jamaica
under the federal H2-A designation, which is for temporary
labor. Florida's sugar cane crop is now cut by machine instead
of workers wielding machetes.
Greg Schell, an attorney with Florida Legal Services Inc.'s
Migrant Farmworker Justice Project in Lake Worth, told The Palm
Beach Post that the case is precedent setting. He explains, "We
don't want to be in state court... this is a special kind of
contract. All the terms of it were dictated by federal law." The
case is scheduled to proceed to trial in July 2006, according to
Mr. Schell. The workers claim the Company falsified its payroll
records to avoid paying millions of dollars in wages.
Osceola Farms is a subsidiary of Florida Crystals parent Flo-Sun
Inc., owned by the Fanjul family of Palm Beach, and is one of
three Palm Beach County sugar mills the company owns with the
others being Okeelanta and Atlantic.
In past years, attorneys for the cane cutters have lost three
lawsuits, two against Okeelanta and Atlantic, and in 2003, one
against the Sugar Cane Growers Cooperative of Florida in Belle
Glade. All three verdicts were upheld on appeal. A fourth case,
brought against U.S. Sugar Corporation of Clewiston, was
settled.
REGENCY AFFILIATES: DE Court Dismisses Remaining Claim in Suit
--------------------------------------------------------------
The New Castle County Court of Chancery in Delaware dismissed
the remaining claim in the purported derivative and class action
lawsuit filed against Regency Affiliates, Inc.'s current and
former directors, styled "Gatz et al. v. Ponsoldt, Sr., et al,
(C.A. No. 174-N)." The Company was named as a nominal
defendants. The suit also names as defendants Royalty Holdings,
LLC and certain of its affiliates, and Statesman Group, Inc.
The complaint alleges, among other things, breaches of fiduciary
duties by the former director defendants and Statesman in
connection with:
(1) the exercise by Statesman in 2001 of an option to
acquire shares of the Company's common stock,
(2) the 2001 sale of Aggregate by NRDC to Iron Mountain and
(3) the October 2002 Restructuring Transactions
The complaint also alleges breaches of fiduciary duties by the
current director defendants in connection with the payment by
the Company in 2003 of accrued compensation owed to William R.
Ponsoldt, Sr. for periods prior to the October 2002
Restructuring Transactions. The complaint also alleges that
Royalty and its affiliates knowingly participated in the
breaches of fiduciary duties by the former director defendants
relating to the October 2002 Restructuring Transactions. In
addition to other damages, plaintiffs seek unspecified
compensatory and/or rescissory damages against all defendants, a
declaration that all Company stock issued to Statesman, William
R. Ponsoldt, Sr., Royalty and any person affiliated with the
foregoing is void, an order rescinding any payments in any form
made by the Company to William R. Ponsoldt, Sr. or any of his
affiliates or family members, an order rescinding the October
2002 Restructuring Transactions, and an order rescinding
Statesman's 2001 option exercise and rescinding the option
itself.
In November 2004 the Court dismissed all but one claim alleged
in the complaint. The Company is not a defendant in the sole
surviving claim, which relates to the December 2001 sale of
assets from one Regency subsidiary to another Regency
subsidiary. In dismissing the claims, the Court determined that
all of the claims (other than the claim related to the 2001
asset sale) were derivative in nature and that the claims could
therefore not be maintained. In October 2005, the Court
dismissed the one remaining claim without prejudice.
SMART & FINAL: CA Court Preliminarily OKs Wage Suit Settlement
--------------------------------------------------------------
The Orange County Superior Court of the States of California
granted preliminary approval to the settlement of the class
action filed against Smart & Final, Inc. to undergo further
mediation to reach a resolution for the suit.
In May 2001, the Company was named as a defendant in the suit,
styled "Olivas vs. Smart & Final Inc." The plaintiff and
another former hourly store employee filed the suit, on their
behalf and on behalf of all hourly store employees in
California, alleging that the Company failed to pay proper
overtime, failed to pay for all hours worked, failed to pay for
certain meal and rest periods, and failed to pay for other
compensation. The action seeks to be classified as a "class
action" and seeks unspecified monetary damages and statutory
penalties thereon.
On August 9, 2001, the Company filed a general denial to these
claims and asserted numerous defenses. A hearing on plaintiff's
motion for class certification was heard and certification as to
nine sub-classes was granted on January 22, 2004. The class
consists of approximately 13,200 current and former hourly store
employees in California and the suit covers the period May 1997
through January 2004. Discovery is now underway in the case.
In February 2005, the court ordered the parties to commence
mediation. In March 2005, the court set a trial date of March 6,
2006. Mediations have been held on April 27, 2005, June 6, 2005
and July 14, 2005 with no resolution to the matter reached. The
court ordered the parties to engage in further settlement
discussions. In September 2005, the Company reached an agreement
in principle to settle the lawsuit. On November 4, 2005, the
court granted preliminary approval of the settlement and set a
date for a fairness hearing and final court approval of the
settlement on February 16, 2006.
SEMPRA ENERGY: Settles Antitrust Lawsuits in NV, CA For $377 Mil
----------------------------------------------------------------
Sempra Energy agreed to pay $377 million and change its business
practices to settle class action lawsuits accusing the company
of conspiring to limit supplies and drive up prices during
California's energy crisis in 2000 and 2001, The Associated
Press reports.
Under the settlement in which Sempra admitted no wrongdoing, the
San Diego, California-based Company agreed to reduce by $300
million the amount it charges the state under long-term power
contracts reached during the height of the energy crisis. In
addition, according to a statement by plaintiffs' attorneys, the
Company also agreed to changes in its utility and natural gas
operations that will ultimately yield a total of more than $1.8
billion in cost benefits.
The settlement came during a jury trial in San Diego Superior
Court that threatened to bankrupt the company with potential
damages as high as $23 billion. That class action suit was filed
against the Company and its two utilities, Southern California
Gas Co. and San Diego Gas & Electric Co., the company's chairman
and chief executive officer.
The suit, which was originally filed in December 2000 against
Sempra and its utilities and later consolidated in San Diego
Superior Court, alleged that they conspired with El Paso Natural
Gas Corporation to prevent competition for cheaper and more
plentiful Canadian natural gas. Additionally, the suit alleges
that Sempra and its companies conspired to protect their
respective market dominance over the supply and transportation
of natural gas into and within California, reaping enormous
profits at the expense of California consumers and businesses.
The plaintiffs stated that the alleged agreement happened in a
clandestine meeting at a Phoenix hotel involving 11 senior
SoCalGas, SDG&E and El Paso executives in September 1996, an
earlier Class Action Reporter story (November 2, 2005) reports.
Plaintiffs in that case included Continental Forge Co., a
Compton company that makes precision aluminum parts, the city
and county of Los Angeles and the city of Long Beach.
Additionally, Sempra also settled a separate lawsuit brought by
the state of Nevada. Previously, the Company asked the United
States District Court for the District of Nevada to dismiss the
remaining antitrust lawsuits filed against it and one or more of
its affiliates, alleging they unlawfully manipulated energy
prices in California, an earlier Class Action Reporter story
(November 7, 2005) reports.
Between May 2003 and December 2004, 20 antitrust actions were
filed against the Company, one or more of its affiliates, and
various, unrelated energy companies, alleging that energy prices
were unlawfully manipulated by defendants' reporting
artificially inflated natural gas prices to trade publications
and by entering into wash trades. Several of those lawsuits seek
class action certification, an earlier Class Action Reporter
story (November 7, 2005) reports.
On April 8, 2005, one of those lawsuits, filed in the Nevada
U.S. District Court, was dismissed on the merits, on the grounds
that federal law and the Filed Rate Doctrine preempted the
claims asserted. In June 2005, the three remaining lawsuits were
amended to name several of the Company's affiliates as
defendants. Motions to dismiss those lawsuits have been filed
and are awaiting resolution by the District Court, an earlier
Class Action Reporter story (November 7, 2005) reports.
In explaining the Company's decision to settle, Stephen L. Baum,
Sempra's chairman told The Associated Press, "An adverse jury
verdict upheld on appeal would have been fatal to the company.
We're not in the business of betting the Company."
Despite the settlement, some cases in particular the ones
brought by California Attorney General Bill Lockyer, who accused
a Company affiliate of using illegal tactics to generate
hundreds of millions of dollars in higher electricity prices,
were not resolved. Mr. Baum called the remaining litigation
against the Company "manageable" and said he expected Mr.
Lockyer's lawsuits would be dismissed.
However, Mr. Lockyer's spokesman Nathan Barankin insisted that
the state has a strong case. He told The Associated Press, "What
the state of California expects to recover as a result of our
lawsuits goes well above and beyond the resolution that was
reached today."
The Company revealed that it would take a $100 million after-tax
charge in the fourth quarter of 2005. Total costs of the
settlement will be $350 million after taxes, it said.
The settlement with Sempra followed eight months of
negotiations. In November, talks collapsed when Mr. Lockyer
objected to the terms, according to Pierce O'Donnell, the lead
counsel for plaintiffs. Mr. O'Donnell told The Associated Press,
"We set out to accomplish two objectives five years ago: One,
secure a measure of economic justice for California consumers
and two, prevent another California energy crisis." He
concludes, "We accomplished both objectives." He adds that with
the settlement California ratepayers would see lower bills,
although he did not know how much.
The settlement though is still subject to approval by the court,
Clark County, Nevada, district court and the cities of Los
Angeles and Long Beach. The settlement calls for a payment of
more than $170 million in attorney fees and court costs, which
is also subject to court approval.
SONY BMG: Settles Consumer Lawsuits, Offers Money, Free Music
-------------------------------------------------------------
Consumers who bought Sony BMG CD's that contain embedded anti-
piracy software will get $7.50 and free music under a tentative
settlement in 15 class action suits that goes before a judge for
approval on January 6, 2006, MTV.com reports.
In a prepared statement, a Sony spokesperson said that the
Company is pleased to have reached this agreement with the class
action plaintiffs and we look forward to the court approval
process. Under the proposed settlement, the Company will be
offering $7.50 cash and a free album download to consumers
affected by the "XCP" software, or three free downloads for
those who do not want the cash. In addition, the Comapny will
also stop making its CDs with XCP and MediaMax software and
agreed to clearly label any future anti-piracy measures. The
deal though does not include the suit filed by Texas' attorney
general.
One of the suits affected by the settlement was filed back in
November against Sony BMG and First4Internet, the British
Company that produced the anti-piracy software. The suit, which
could potentially include consumers in all 50 states, was filed
in the U.S. District Court for the Southern District of New
York. The suit's two named plaintiffs are, James Michaelson from
Illinois and an Ori Edelstein from New Jersey, who are both
represented by New York attorney Scott Kamber. The suit claims,
"To date, over 3 million copies of XCP encoded disks have been
sold. It is probable that millions of consumers have played
these discs on their PC's and thus compromised their systems
without knowing it," an earlier Class Action Reporter story
(November 16, 2005) reports.
Although billed by the Company as common digital rights
management (DRM) software that is just for copy protection, it
seems that it is really much more. The "XCP" software utilizes
"rootkit" technology that hides the software from users. The
software creates a security risk for personal computers that
allows hackers to hide damaging programs in computers that have
The Company's software in them. The software also secretly
communicates with Sony's servers and can be used to send
information back to the users' media player programs. The
Sunncomm MediaMax software used on some CDs actually installs
itself before the user is asked to agree to the terms of
installation. For both XCP and MediaMax software, the terms of
the End User License Agreement (EULA) are asserted to be
improper and without the proper disclosures for what is actually
occurring when a user clicks on the button to "Agree" to its
terms, an earlier Class Action Reporter story (November 16,
2005) reports.
The suit is styled, "Michaelson et al v. Sony BMG Music, Inc. et
al, Case No. 1:05-cv-09575-NRB," filed in the United States
District Court for the Southern District of New York. Under
Judge Naomi Reice Buchwald. Representing the Plaintiff/s are,
Scott Adam Kamber of Kamber & Associates, LLC, 19 Fulton St.,
Suite 400, New York, NY 10038, Phone: (646)-441-7100, Fax:
(212)-202-6364, E-mail: skamber@kolaw.com.
SOUTH CAROLINA: Myrtle Beach Residents Receive Tax Case Payouts
---------------------------------------------------------------
Myrtle Beach residents are receiving settlements from a class
action lawsuit that changed the way the city calculates taxes,
The Sun News reports.
The city began sending the first of three vouchers, averaging
$23 each and totaling $356,254, in December to people, who paid
taxes in the city in 1999. The city, which settled the suit by
former Horry County Administrator Linda Angus in October, agreed
to $2.76 million in cash and voucher payments to approximately
12,000 people.
The settlements arriving in city residents' mailboxes aren't for
cashing, essentially they're property-tax vouchers written to
the Horry County treasurer. The voucher is part of the city's
settlement with Ms. Angus, who sued the city over the way it set
the tax rate after 1999's reassessment.
The million-dollar settlement for the six-year-old class action
lawsuit ends a case that went all the way to the state Supreme
Court. It has implications for how South Carolina's city and
county governments set property tax rates in reassessment years,
an earlier Class Action Reporter story (October 13, 2005)
reports.
In January 2005, the high court ruled that the city failed to
follow state law in determining how much to charge in property
taxes after reassessing values in 1999. According to court
records, instead of rolling back tax rates using the formula
determined by the General Assembly, the city hired auditors who
determined a rate to collect about the same amount in property
taxes they had received the previous year, an earlier Class
Action Reporter story (October 13, 2005) reports.
With the high court's ruling, the case was eventually sent back
to Circuit Judge G. Thomas Cooper to determine how taxpayers
should be compensated for the overcharge. The Myrtle Beach City
Council signed off on the proposed settlement in September 2005,
an earlier Class Action Reporter story (October 13, 2005)
reports.
Under the proposed settlement, about $1.5 million would go to
current taxpayers in three yearly installments as vouchers,
which can be used as a tax credit or cashed in for property
owners who already have paid their taxes. In addition, the
agreement adds interest onto the 2006 and 2007 installments.
Attorney Charles B. Jordan, representing the city of Myrtle
Beach, previously told The Associated Press that the installment
plan was intended to reduce the financial burden of the
settlement on city finances, an earlier Class Action Reporter
story (October 13, 2005) reports.
About 3,000 taxpayers from the 1999-2000 tax year, representing
about one-fourth of the tax accounts to be refunded, no longer
live in the city, according to Nate Fata, an attorney
representing the plaintiffs. The settlement stipulates that
those nonresidents would receive a check for the refund amount
that would be sent to their last known address with any refunds
that could not be paid out because the former residents could
not be located would be returned to current taxpayers with their
2006 installment, an earlier Class Action Reporter story
(October 13, 2005) reports.
Linda Angus, a former Horry County administrator, filed the suit
on behalf of herself as a city taxpayer in 1999 and earned class
action status for the lawsuit later. Under the settlement, she
would receive $10,000 as "class representative," while
plaintiffs' attorneys, Mr. Fata and L. Sidney Conner, would
receive $920,623 in fees plus $33,184 in costs, an earlier Class
Action Reporter story (October 13, 2005) reports.
Mr. Conner told Judge Cooper at a recent hearing for the
proposed settlement that the fees they are seeking might sound
high, but they had taken on the case in 1999 with considerable
risk. In addition, he noted that taxpayers would receive 100
percent of the overpayment with interest under the settlement
agreement. "It's been a very hard-fought battle," according to
him, an earlier Class Action Reporter story (October 13, 2005)
reports.
STAPLES INC.: CA Court Yet To Rule on Wage Lawsuit Certification
----------------------------------------------------------------
California Superior Court has yet to rule on motions for class
certification of a lawsuit filed against Staples, Inc., for
alleged violations of what is known as California's "wage and
hour" law.
The plaintiffs alleged that the Company improperly classified
both general and assistant store managers as exempt under the
California wage and hour law, making such managers ineligible
for overtime wages. The plaintiffs are seeking to require the
Company to pay overtime wages to the putative class for the
period from October 21, 1995 to the present. The motion for
class certification was heard by the court on July 15, 2005, and
the matter was taken under advisement.
STATE FARM: Faces MS Lawsuit V. "All Risk" Homeowner Policies
-------------------------------------------------------------
State Farm Fire and Casualty Co. faces a class action lawsuit
that was filed on behalf of a Biloxi attorney as well as other
Mississippi Gulf Coast residents who had "all risk" homeowner
policies, but are being denied coverage for Hurricane Katrina
damages, The Associated Press reports.
Attorney Richard T. Phillips of Batesville, an experienced
litigator against insurance companies, filed the suit in the
U.S. District Court for the Southern District of Mississippi.
The suit contends that the Company is obligated to fully cover
the loss of Biloxi attorney Judy Guice's home in Ocean Springs
during the August 29 storm. It also contends that hurricane
losses of other Coast homeowners with all perils policies from
State Farm also should be covered.
According to the suit, the Company denied Ms. Guice coverage
under her homeowner's policy. It cited an exclusion for water
damage that includes tidal surge.
Ms. Guice though contends in her suit that the Company should
pay up because, the way the policy is worded, all damage is
covered unless it would have occurred only as a result of the
tidal surge. She pointed out in her suit, wind damage is a
covered peril and, since it contributed to the damage, the
policy should be paid in full.
The suit asks that a federal judge to interpret the policy and
order the Company to follow the ruling. Before that happens
though, the court must first decide whether the case should be
classified as a class action lawsuit, which would include other
Coast homeowners with the same policy.
T-NETIX INC.: Plaintiffs Appeal WA Suit Summary Judgment Ruling
---------------------------------------------------------------
Plaintiffs appealed the Superior Court of Washington for King
County's ruling granting summary judgment in favor of T-Netix
Inc. and AT&T Co. (AT&T) in the class action filed against them,
styled `Sandy Judd, et al. v. American Telephone and Telegraph
Company,et al.' The suit also names several other inmate
telecommunications service providers.
The complaint includes a request for certification by the court
of a plaintiffs' class action consisting of all persons who have
been billed for and paid for telephone calls initiated by an
inmate confined in a jail, prison, detention center or other
Washington correctional facility. The complaint alleges
violations of the Washington Consumer Protection Act and
requests an injunction under the Washington Consumer Protection
Act and common law to enjoin further violations. The trial court
dismissed all claims with prejudice against all defendants
except the Company and AT&T. The T-Netix and AT&T claims have
been referred to the Washington Utilities and Transportation
Commission while the trial court proceeding is in abeyance. The
complaint alleges violations of the Washington Consumer
Protection Act (CPA) and requests monetary damages, regulatory
fines, and an injunction under the CPA and common law to prevent
further violations.
The trial court has entered summary judgment for both the
Company and AT&T. Plaintiffs have appealed that decision to the
State Court of Appeals, which has set the matter for argument in
approximately June 2006.
TENNESSEE: Woman Sues Sumner County Jail, Alleges Racketeering
--------------------------------------------------------------
A former pretrial detainee held in the Tennessee's Sumner County
Jail launched a lawsuit, seeking class action certification
against the county, the sheriff and the jail administrator,
alleging that the county engaged in racketeering activity by
charging inmates $10 booking fees, The Gallatin News Examiner
reports.
Filed in United States District Court for the Middle District of
Tennessee, Nashville Division, on January 3, 2006, the suit also
claims that the county overcharged inmates for clothing and
hygiene items and its system of setting bail amounts is contrary
to state law. The suit's lead plaintiff is Tracy Hensley, who is
represented by Jerry Gonzalez of Nashville.
The suit is seeking restitution of about $100,000. The amount,
according to the suit, is the exact total of booking fees
collected since 2002.
The suit is styled, "Hensley v. Sumner County et al, Case No.
3:06-cv-00002," filed in the United States District Court for
the Middle District of Tennessee, Nashville Division, under
Judge John T. Nixon with referral to Judge Joe Brown.
Representing the Plaintiff/s is Jerry Gonzalez of Jerry
Gonzalez, P.C., Two International Plaza Drive, Suite 705,
Nashville, TN 37217, Phone: (615) 360-6060, Fax: (615) 360-3333,
E-mail: jgonzalez@edge.net.
TOYOTA MOTOR: Recalls 3,567 2006 LEXUS / IS250 Due to Crash Risk
----------------------------------------------------------------
Toyota Motor North America, Inc. in cooperation with the
National Highway Traffic Safety Administration's Office of
Defects Investigation (ODI) is voluntarily recalling about 3,567
units of 2006 LEXUS / IS250 passenger vehicles due to injury
hazard. NHTSA CAMPAIGN ID Number: 05V565000.
According to the ODI, on certain passenger vehicle, there is a
possibility that the accelerator pedal may temporarily become
stuck in the partially depressed position due to inadequate
clearance between the accelerator pedal linkage and a plastic
pad embedded into the vehicle's carpet. This condition may
interfere with the accelerator pedal returning to the idle
position, increasing the risk of a crash.
As a remedy, dealers will inspect the clearance of the
acceleration pedal and carpet, replace the pedal assembly with a
revised assembly and modify the carpet free of charge. The
recall is expected to begin in late December 2005.
For more details, contact LEXUS, Phone: 1-800-255-3987 OR the
NHTSA Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153, Web
site: http://www.safecar.gov.
TRUMP ENTERTAINMENT: Parties Enter Mediation For NJ ERISA Suit
--------------------------------------------------------------
Parties entered mediation for the class action filed against
certain persons and organizations that included members of The
Trump Entertainment Resorts, Inc.'s Capital Accumulation Plan
Administrative Committee filed in the United States District
Court for the District of New Jersey, Camden Division, alleging
violations of the Employee Retirement Income Security Act
(ERISA).
In their complaint, the plaintiffs alleged, among other things,
that such persons and organizations, who were responsible for
managing the Trump Capital Accumulation Plan, breached their
fiduciary duties owed to the plan participants when Old Common
Stock held in employee accounts was allegedly sold without
participant authorization if the participant did not willingly
sell such shares by a specified date in accordance with the
plan. The plaintiffs brought this suit under the Employee
Retirement Income Security Act of 1974, as amended, on behalf of
themselves and certain other plan participants and beneficiaries
and sought to have the court certify their claims as a class
action. In their complaint, the plaintiffs also sought, among
other things, damages for losses suffered by certain accounts of
affected plan participants as a result of such allegedly
improper sale of Old Common Stock and reasonable costs and
attorneys' fees. The parties have conducted limited discovery
and scheduled mediation hearings for early December 2005. If
the parties are unable to resolve the matter through mediation,
full discovery is anticipated to commence in January 2006.
The suit is styled "NOA et al v. KEYSER et al., case no. 1:05-
cv-00776-FLW-AMD," filed in the United States District Court for
the District of New Jersey, under Judge Freda L. Wolfson.
Representing the plaintiffs is Eric M. Wood, FOX ROTHSCHILD LLP,
Midtown Building, 1301 Atlantic Avenue, Suite 400, Atlantic
City, NJ 08401-7278 Phone: (609)-348-4515, E-mail:
ewood@foxrothschild.com. Representing the Company is Florina A.
Moldovan, MCELROY, DEUTSCH, MULVANEY AND CARPENTER, LLP, 1300
Mount Kemble Avenue, Morristown NJ 07962-2075, Phone:
(973) 993-8100, E-mail: fmoldovan@mdmc-law.com.
VIRGINIA: New Roanoke Sheriff To Deal W/ Sexual Harassment Suit
---------------------------------------------------------------
Octavia Johnson, who defeated Sheriff George McMillan in
November's election, is likely to assume the headache of a
sexual harassment lawsuit against the former Sheriff and Roanoke
City Sheriff's Office, The Roanoke Times reports.
In a recent motions hearing, U.S. District Judge Samuel Wilson
raised the question of whether Ms. Johnson should be added as a
party in the lawsuit filed by former deputy Lespia King against
Sheriff McMillan and the Sheriff's Office. Judge Wilson asked
Sheriff McMillan's attorney, Elizabeth Dillon, and counsel for
Ms. King, Terry Grimes, to review a similar case in which a
sheriff was sued under civil rights law. Neither attorney though
was certain on whether the issue applies to their case.
The case the judge wanted reviewed involved Sherry Wiatt, who
sued former Montgomery County Sheriff Doug Marrs and the
Montgomery County Sheriff's Office in 2004, alleging gender
discrimination. Sheriff Wiatt later filed a motion to amend the
complaint and have new sheriff Tommy Whitt's name added. In that
case, Judge Wilson ruled in favor of the motion, but the
complaint was never amended because the case was settled.
Under Title VII of the Civil Rights Act of 1964, an employer is
the entity that is liable in sexual harassment cases. Judge
Wilson's opinion in Wiatt v. Marrs ruled that the sheriff, in
his official capacity, is the employer and is therefore subject
to suit under the law. Once he has left office, the former
sheriff is no longer the employer.
In addition to Title VII claims, Ms. King's lawsuit also accuses
Sheriff McMillan of assault and battery. That claim is against
Sheriff McMillan as an individual and would proceed in that
manner.
Mr. Grimes told The Roanoke Times that he did not believe the
change was necessary, but said if it is, "it changes nothing as
far as I'm concerned as far as the substance of the lawsuit
goes." For her part, Ms. Dillon told The Roanoke Times that she
planned to research the case law further.
In that same hearing the judge considered Mr. Grimes' motion to
allow other women to join the case as defendants. That motion
comes after Judge Wilson denied a motion to grant class action
status to the case. Ms. Dillon has argued that the sexual
harassment claims of seven other women are too old, so they
should not be able to intervene. Judge Wilson will issue a
written opinion on the motion.
Previously, Judge Wilson denied class action certification to
the case. However, since the judge also denied the sheriff's
motion to dismiss the original lawsuit, citing that Ms. King
"has stated a hostile work environment claim related to her own
alleged experiences," the ruling was not considered a major
legal victory for the sheriff, an earlier Class Action Reporter
story (October 24, 2005) reports.
Court records show that Ms. King had claimed in an August
lawsuit that Sheriff McMillan hugged her inappropriately while
on the job and once pulled her into his lap and asked for a
kiss. Since then, at least six women have come forward with
similar allegations against the sheriff. In requesting that her
lawsuit be expanded to include all victims of the sheriff's
alleged sexual harassment, Ms. King's attorney estimated that
there could be up to 30 women across the country with similar
experiences. "However, she has forecasted no evidence to support
the existence of these hypothetical women," Judge Wilson wrote
in the decision, an earlier Class Action Reporter story (October
24, 2005) reports.
Ms. King filed the suit against Sheriff McMillan and his office
on August 16, alleging gender discrimination, sexual harassment,
and assault and battery. She began working for the department in
August 2000, but the complaint covers a period of time between
January 2003 and her resignation in March 2004, according to
court records, an earlier Class Action Reporter story (September
21, 2005) reports.
About a month after filing the suit, Ms. King filed a motion to
certify the case as a class action, and since that time, seven
more women have come forward with declarations to support the
motion. The women who supported the motion were Jennifer
Donovan, Malinda Bland, Kristen Darnell, Rhonda G. Johnson, Erin
M. Bachinsky and Tamara D. Speight. The seventh additional
woman, a former health care contractor with the Roanoke City
Jail named Angela Linkous, filed a declaration supporting the
motion recently, an earlier Class Action Reporter story (October
13, 2005) reports.
The suit is styled, "King v. McMillan, Case No. 7:05-cv-00521-
sgw," filed in the United States District Court for the Western
District of Virginia, under Judge Samuel G. Wilson. Representing
the Plaintiff/s is Terry Neill Grimes of TERRY N. GRIMES, PC,
320 ELM AVE., SW ROANOKE, VA 24016, Phone: 540-982-3711, Fax:
345-6572, E-mail: tgrimes@terryngrimes.com. Representing the
Defendant is Elizabeth Kay Dillon of GUYNN MEMMER & DILLON, PC,
P.O. BOX 20788, ROANOKE, VA 24018, Phone: 540-387-2320, Fax:
540-389-2350, E-mail: elizabeth.dillon@g-mpc.com.
WINNEBAGO INDUSTRIES: Recalls 193 Motor Homes Due to Crash Risk
---------------------------------------------------------------
Winnebago Industries, Inc. in cooperation with the National
Highway Traffic Safety Administration's Office of Defects
Investigation (ODI) is voluntarily recalling about 193 units of
2006 ITASCA / CAMBRIA, 2006 ITASCA / ELLIPSE, 2006 ITASCA /
HORIZON, 2006 ITASCA / MERIDIAN, 2006 ITASCA / NAVION, 2006
ITASCA / SPIRIT, 2006 ITASCA / SUNDANCER, 2006 ITASCA / SUNOVA,
2006 ITASCA / SUNRISE, 2006 WINNEBAGO / ASPECT, 2006 WINNEBAGO /
JOURNEY, 2006 WINNEBAGO / MINNIE WINNIE, 2006 WINNEBAGO /
OUTLOOK, 2006 WINNEBAGO / SIGHTSEER, 2006 WINNEBAGO / TOUR, 2006
WINNEBAGO / VECTRA, 2006 WINNEBAGO / VIEW, and 2006 WINNEBAGO /
VOYAGE motor homes due to injury hazard. NHTSA CAMPAIGN ID
Number: 05V573000.
According to the ODI, on certain motor homes equipped with
Kwikee brand electric steps, the steps may have been
manufactured with defective step control units. The defective
control units could develop an electrical short allowing for the
potential of the plastic case to ignite, possibly resulting in
personal injury and/or vehicle and property damage.
As a remedy, dealers will inspect the Kwikee step and replace
the step control unit, if necessary, free of charge. The recall
is expected to begin on January or February 2006.
For more details, contact WINNEBAGO, Phone: 1-800-537-1885 OR
the NHTSA Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153,
Web site: http://www.safecar.gov.
Asbestos Alert
ASBESTOS LITIGATION: Owens Corning in Negotiations to Amend Plan
----------------------------------------------------------------
An Ad Hoc Committee of Preferred and Equity Securities Holders
tells Judge Judith Fitzgerald that Owens Corning is now
"frantically" engaged in negotiating with certain selected
constituents to formulate an amended reorganization plan.
In their negotiations, Christina M. Thompson, Esq., at Connolly
Bove Lodge & Hutz LLP, in Wilmington Delaware, says Owens
Corning has consistently sided with the asbestos claimants. She
points out that OC conditioned their previous plan on a
US$16,000,000,000 valuation of asbestos tort claims, which was
several times higher than OC's own earlier estimates and about
US$6,000,000,000 more than the aggregate of the District Court's
March 31, 2005 asbestos claims estimation order and OC's reserve
for Fibreboard's asbestos-related liabilities.
Furthermore, Ms. Thompson notes that OC also in a "mad rush" to
exit Chapter 11 in the face of the Fairness in Asbestos Injury
Resolution Act of 2005, now pending before Congress, which is
intended to establish a national trust to satisfy fully
asbestos-related claims and, at the same time, greatly reduce
OC's financial obligation to satisfy claims. The FAIR Act has
already passed the Senate Judiciary Committee and is scheduled
to hit the Senate floor as early as January 2006.
Ms. Thompson notes that Owens Corning is pressing a plan on
parties-in-interest that, the Ad Hoc Committee presumes,
contemplates windfall value allocation to asbestos-related
claimants. She adds that the Ad Hoc Committee understands that
OC is aggressively pushing the plan on parties-in-interest so
that it can be confirmed and consummated in advance of the FAIR
Act's passage and, as a result, ensure that asbestos-related
claimants keep the windfall.
In Owens Corning's rush, the preferred and equity security
holders have no representation. In addition, Ms. Thompson says
Owens Corning's Board and management have consistently ignored
their obligations to these holders from the start of these
cases. As an example, she notes that Owens Corning has failed to
hold annual shareholder elections for over five years in clear
violation of its obligations under state law and its bylaws,
even though its purported directors' terms expired years ago.
The Ad Hoc says there is an immediate need to appoint an
Official Security Holders Committee because:
(a) The need for representation of the preferred and equity
security holders by an Official Security Holders Committee
significantly outweighs the costs of representation because OC
will likely seek to confirm a plan that will improperly wipe out
their interests and the fees and expenses to be incurred by an
Official Security Holders Committee and its professionals will
likely not be high given that the Official Security Holders
Committee's service will be of limited duration;
(b) The cases are large and complex, as evidenced by the complex
and difficult litigation and appeals. Owens Corning has reported
that it has complex capital structure consisting of about
US$1,600,000,000 in unsecured bank debt guaranteed by certain
subsidiaries, about US$1,300,000,000 in unsecured bond debt,
about US$200,000,000 in trade debt, about 4 million outstanding
shares of the Preferred Securities and about 55.4 million
outstanding shares of Owens Corning common stock. Moreover,
Owens Corning and 17 of its affiliates are Debtors;
(c) Shares of Owens Corning common stock are widely held and
actively traded. Owens Corning has estimated that 6,900 holders
own about 55.4 million shares of the common stock. The common
stock's average daily trading volume over the last seven weeks
is about 350,000 shares. There are also about 4 million shares
of the preferred securities outstanding, which shares are
actively traded; and
(d) The Owens Corning common stock and preferred securities have
substantial value when properly evaluated in accordance with the
established legal standards, which require that contingent
future events, including the likely approval of the FAIR Act, be
taken into account.
In this regard, the Ad Hoc Committee asks the Court to direct
the United States Trustee to appoint immediately an Official
Security Holders Committee.
On January 30, 2006, Judge Fitzgerald will convene a hearing to
consider the Ad Hoc Committee's request.
(Owens Corning Bankruptcy News, Issue No. 122; Bankruptcy
Creditors' Service, Inc. 215-945-7000)
ASBESTOS LITIGATION: Owens Corning to Approve Allianz Settlement
----------------------------------------------------------------
Over the past 20 years, Owens Corning's liability insurers have
paid more than US$2,000,000,000 toward the settlement and
defense of asbestos claims. Owens Corning previously exhausted
the available "products" limits of their policies that had been
issued by solvent insurers without asbestos-related exclusions.
For several years, Owens Corning has been seeking confirmation
from insurers that they will pay asbestos claims that are not
subject to the "products" limits of their policies. The non-
products claims include those involving alleged injury during
the course of Owens Corning's installation of asbestos-
containing materials.
In 1991, Owens Corning and Allianz entered into two settlement
agreements pursuant to which Allianz asserts that it paid in
full its products limits under excess liability policies
available to Owens Corning for payment of asbestos claims.
Allianz asserts that as a result of those prior payments, all
applicable limits of those excess liability policies have been
fully exhausted.
Owens Corning and Allianz disagree on whether, and the extent to
which, Allianz has further coverage obligations to OC. Owens
Corning argues that Allianz continues to have coverage
obligations with respect to asbestos-related non-products claims
notwithstanding of the policies' products limits. Allianz
insists that the alleged non-products claims are subject to the
products limits and therefore are subject to the 1991
Settlement.
On October 25, 2001, Owens Corning commenced a lawsuit against
Allianz and other insurance companies seeking coverage for non-
products claims. On October 19, 2005, Owens Corning and Allianz
reached an agreement to settle their dispute concerning coverage
for non-products claims. Both parties have finalized terms of
their settlement.
The principal terms of the Settlement Agreement are:
(a) Allianz will pay an undisclosed amount into an escrow
account;
(b) Owens Corning and Allianz will mutually release each other
from all claims relating to the excess liability policies
Allianz issued to Owens Corning in the 1991 Settlement;
(c) Key terms of the Settlement Agreement are contingent upon
the entry of a final order confirming a plan of reorganization
that includes an injunction protecting, inter alia, Allianz;
(d) Owens Corning will use its reasonable best efforts to obtain
other injunctive protections for Allianz as part of Owens
Corning's Plan; and
(e) In the event the Settlement Agreement becomes null and void,
Allianz will not be obligated to make any further payments of
the Settlement Amount and will be entitled to the prompt release
and return of any payment previously made to the escrow account,
and the parties will have restored all rights, defenses,
obligations relating to the excess liability policies issued by
Allianz to Owens Corning and the 1991 Settlement.
Anna P. Engh, Esq., at Covington & Burling, in Washington, D.C.,
tells the Court that the Agreement enables the Debtors to avoid
the expense, delay and risk associated with litigation
proceedings. The Settlement Amount and timing of payment are
reasonable in light of the expenses, delays, and risks of
ongoing coverage litigation and will allow Owens Corning to
continue to pursue, with fewer distractions, other insurance
carriers for coverage of asbestos non-products claims.
Accordingly, Owens Corning asks the Court to approve the
Settlement Agreement.
In accordance with the confidentiality provisions of the
Settlement Agreement, Owens Corning also asks the Court for
authority to file the Agreement under seal. OC proposes to
disclose certain information to the counsel for the U.S.
Trustee, the Creditors' Committee, the Asbestos Committee, and
the Futures Representative.
Owens Corning asserts that safeguarding the confidentiality
advances the interests of Owens Corning and Allianz considerably
by providing them with greater flexibility in future
negotiations and settlements with third parties.
(Owens Corning Bankruptcy News, Issue No. 122; Bankruptcy
Creditors' Service, Inc. 215-945-7000)
ASBESTOS LITIGATION: RPM Tags Lower 2Q06 Earnings to Hurricanes
---------------------------------------------------------------
RPM International Inc. (NYSE: RPM) states that its earnings for
fiscal year 2006-2nd quarter, ended November 30, 2005, excluding
asbestos charges, will be below the prior year as a result of
effects associated with the Gulf coast hurricanes, including
slower sales growth and higher raw material costs.
The Company expects 2006-2nd quarter diluted earnings per share
of US$0.22 - US$0.24 versus year-ago EPS of US$0.31, both prior
to charges related to asbestos liabilities. Reconciliations of
the prior year results and current results, excluding the impact
of asbestos charges, will be provided when the Company announces
quarterly earnings on January 5, 2006.
RPM President and CEO Frank C. Sullivan states, "The unusual
costs affecting this quarter will not recur and we remain
positive in our outlook for the year. Before acquisitions, our
sales grew 9% in the quarter and 10% in the first half, with
operating margins improving toward the end of the quarter.
"As raw material costs level off and higher selling prices take
effect, our margins should show further strength through the
balance of this fiscal year. For the second half of our fiscal
year, earnings growth before asbestos charges will better match
our continuing strong revenue growth, resulting in record
results for the full fiscal year ending May 31, 2006."
Medina, OH-based RPM International Inc owns subsidiaries that
manufactures specialty coatings and sealants serving both
industrial and consumer markets. The Company's industrial
products include roofing systems, sealants, corrosion control
coatings, flooring coatings and specialty chemicals.
ASBESTOS LITIGATION: Fairchild Deals with Indemnification Claims
----------------------------------------------------------------
In the past 26 months, Fairchild Corporation received 25
asbestos-related indemnification claims stemming from the
purchase of a pump business from the Company. Two of the 19
cases related to the same pump business were dismissed as to all
defendants.
On January 21, 2003, Fairchild and a subsidiary were served with
a third-party complaint filed in New York by a non-employee
worker and his spouse alleging personal injury from exposure to
asbestos-containing products.
The defendant, who purchased the pump business, asserted the
right to be indemnified by Fairchild under its purchase
agreement. This case was discontinued as to all defendants, thus
abolishing the indemnity claim against the Company in the
instant case. The purchaser had notified Fairchild and claimed a
right to indemnity from the Company in relation to many
thousands of other asbestos-related claims filed against it.
The Company has been served with a total of 28 separate
complaints in actions filed in various venues by non-employee
workers, alleging personal injury or wrongful death resulting
from exposure to asbestos-containing products other than those
related to the pump business. The complaints do not specify
which products are at issue, making it difficult to assess the
merit and value of the asserted claims.
Fairchild has resolved 11 similar (non-pump business) asbestos-
related lawsuits that were previously served upon it. In nine
cases, the Company was voluntarily dismissed, without payment of
consideration to plaintiffs. The remaining two cases were
settled for nominal amounts.
McLean, VA-based Fairchild Corporation used to operate an
aerospace fasteners business, which it sold to concentrate on
its Banner Aerospace subsidiary. The Company then bought three
companies that make and distribute motorcycle clothing, helmets,
and accessories. That segment, Fairchild Sports, now accounts
for most of the company's sales.
ASBESTOS LITIGATION: KY Court Junks Suit v. Contractor, Designer
----------------------------------------------------------------
Experts failed to prove professional negligence by the
architects and engineers of an appliance facility in the
asbestos-related wrongful death action suit filed by a widow,
held the Kentucky Court of Appeals on December 22, 2005 in
affirming the summary judgment handed down by the Jefferson
Circuit Court.
Judges David A. Barber, John D. Minton, Jr., and Jeff S. Taylor
heard Case No. 2004-CA-002204-MR.
On August 28, 2002, Jewell L. Strange sued Albert Kahn
Associates Inc and Turner Construction Co in the Circuit Court.
She asserted that Kahn, the designing firm of the General
Electric Appliance Park in Louisville, Kentucky, was negligent
in its use of asbestos. She asserted that Turner, the general
contractor for the Park's construction, was also negligent in
installing asbestos during construction.
The Appliance Park construction began in the early 1950s. Kahn
allegedly did 52 projects for Appliance Park from 1951 through
1970.
Mrs. Strange alleged that her husband, John B. Strange,
contracted lung cancer from asbestos exposure while employed at
the Appliance Park. He died from lung cancer on December 9,
2001.
Kahn and Turner moved for summary judgment. Mrs. Strange
responded to Kahn's motion but failed to respond to Turner's
motion. On October 6, 2004, she appealed the Circuit Court's
summary judgment dismissing the claims against Kahn and Turner.
As pointed out by the Circuit Court, Mrs. Strange's experts,
Barry I. Castleman and Steven Berger, did not testify concerning
the standard of care applicable to an architect or engineer in
the 1950s.
The Appeal Court concluded that the Circuit Court properly
entered summary judgment dismissing Mrs. Strange's claims
against Kahn.
Joseph D. Satterley, John R. Shelton, and Kenneth L. Sales of
Sales Tillman Wallbaum Catlett & Satterley, PLLC of Louisville,
Kentucky represented Jewell L. Strange.
James M. Gary, Russell H. Saunders, and Patrick W. Gault of
Weber & Rose, P.S.C. in Louisville, Kentucky represented Albert
Kahn Associates Inc.
Rebecca F. Schupbach and Rania M. Basha of Wyatt, Tarrant &
Combs, LLP in Louisville, Kentucky represented Turner
Construction Co.
ASBESTOS LITIGATION: Bankruptcy Court OKs Babcock & Wilcox Plan
---------------------------------------------------------------
On December 28, 2005, McDermott International Inc announced that
Judge Jerry A. Brown of the US Bankruptcy Court for the Eastern
District of Louisiana confirmed the Babcock & Wilcox Co Chapter
11 Joint Plan of Reorganization and the proposed settlement
agreement.
Plan objectors, including those who had objected to the previous
B&W plan, reached agreements. One of the settlements includes
McDermott, B&W, Citgo Petroleum Corp, PDV Midwest Refining LLC,
and some insurers as parties.
Under the Citgo Settlement, B&W will pay the plaintiffs US$7.5
million when the Plan takes effect. The parties agreed to limit
B&W's maximum uninsured exposure to US$50 million, in aggregate,
and all claims against McDermott will be released. The
plaintiffs must obtain a judgment against B&W in excess of
US$250 million, and that excess amount must be completely
uncollectible against B&W's insurers or its insurance broker.
Should such a judgment be obtained but amounts are collected
from B&W's insurers or brokers in excess of US$250 million, B&W
will have the opportunity to obtain reimbursement of up to US$5
million of its first payment.
The Citgo Settlement creates a range on the plaintiffs' claims
against B&W, with a minimum cost to B&W of US$2.5 million, while
limiting the maximum total uninsured exposure to US$50 million.
The Plan will now proceed to Judge Sarah S. Vance of the US
District Court for the Eastern District of Louisiana. Judge
Vance is expected to review Judge Brown's findings, conclusions
and recommendation to confirm the Plan and, after completing her
review, issue an order granting or denying confirmation of the
Plan.
On February 22, 2000, B&W, a McDermott subsidiary, filed for
Chapter 11 bankruptcy as a result of asbestos-related claims.
On August 29, 2005, B&W, McDermott, the Asbestos Claimants
Committee and the Future Asbestos-Related Claimants'
Representative reached in agreement in principle on the terms of
the currently proposed Plan and associated settlement.
New Orleans, LA-based McDermott International Inc (NYSE: MDR) is
an energy services Company, which provides engineering,
procurement, and project management for customers involved in
the production of energy.
ASBESTOS LITIGATION: NY Appeals Court Denies Benefits to Retiree
----------------------------------------------------------------
The Appellate Division of the New York Supreme Court affirmed
the Workers' Compensation Board decision not to grant benefits
to a claimant based on evidence that retirement decision was not
due to disability.
Decided on December 22, 2005, the case was heard by Justices D.
Bruce Crew III, Anthony J. Carpinello, Robert S. Rose, and
Anthony T. Kane.
In 1961, Thomas Stagnitta began working for Consolidated Edison
Company of New York. In 1998, he contracted lung conditions that
allegedly resulted from working with asbestos in the Company and
filed for workers' compensation benefits. In 1999, he retired
from Consolidated Edison.
A Workers' Compensation Law Judge ruled that Mr. Stagnitta had a
work-related permanent partial disability but that Mr. Stagnitta
voluntarily retired and was not entitled to disability payments.
The Board affirmed and on January 21, 2005, Mr. Stagnitta
appealed.
Despite Mr. Stagnitta's testimony that he had difficulty
working, he worked at full capacity up until his retirement. He
did not lose time as a result of his work-related health
conditions and did not apply for disability retirement.
Mr. Stagnitta was never advised to retire and was able to do
sedentary work.
Glenn J. Wurzel, Hempstead, represented Thomas Stagnitta.
Cherry, Edson & Kelly, Hempstead (David W. Faber of counsel),
represented Consolidated Edison Company of New York.
ASBESTOS LITIGATION: Claimants Want Grace Exclusivity Terminated
----------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants
asks the Court to deny W.R. Grace & Co.'s request because their
argument supporting the extension of the Exclusive Periods until
after the rulings in respect of the claims estimation
proceedings cannot meet their burden of establishing "cause" of
the Bankruptcy Code.
Lisa L. Coggins, Esq., at Ferry, Joseph & Pearce, P.A., in
Wilmington, Delaware, notes that after the Estimations are
concluded and regardless of their outcome, the parties will
still be faced with Grace's Plan of Reorganization, which cannot
be confirmed as a matter of law. Even if Grace is successful,
through the Estimations, in achieving a ruling that the
aggregate amount of asbestos claims does not exceed the
US$1,483,000,000 proposed cap in the Plan, the Plan's defects
will still remain, as indicated by the PD Committee's objection
to Grace's Disclosure Statement.
Ms. Coggins explains that if the Estimation results produce an
aggregate amount of asbestos claims exceeding the proposed cap,
the PD Committee will then be required to wait to see if Grace
wishes to modify its Plan, which to date they have not seen fit
to do.
Furthermore, Ms. Coggins contends that the size and complexity
of Grace's cases alone do not constitute sufficient "cause,"
because they are not holding up the confirmation process.
"What is holding up the case is the Debtors' continued failure
to comply with applicable bankruptcy law related to the [Plan
confirmation]," Ms. Coggins points out.
The PD Committee also believes that Grace will not suffer any
prejudice if their exclusivity ends. Grace may continue on its
path or propose another plan of reorganization, the PD Committee
says.
Ms. Coggins asserts that if the Exclusive Periods are extended
for the ninth time, the PD Claimholders will continue to be
powerless to a plan process specifically engineered to deny any
voice to them and to other asbestos creditors.
"Only by eliminating the Exclusive Periods will the [PD
Claimholders] and other creditors of the Debtors be placed on an
equal footing in the plan process, a condition precedent to
exiting those long-standing cases," Ms. Coggins maintains.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Parties Support Objection to Grace Request
---------------------------------------------------------------
In separate filings, the Official Committee of Asbestos Personal
Injury Claimants and the Future Claimants Representative, David
T. Austern, echo the same sentiments expressed by the PD
Committee and, therefore, ask Judge Fitzgerald to deny W.R.
Grace & Co.'s extension request.
Several law entities, consisting of: Baron & Budd, P.C.;
Environmental Litigation Group, P.C.; The Law Office of Peter G.
Angelos, P.C.; Provost & Umphrey, LLP; Reaud, Morgan & Quinn,
Inc.; Silber Pearlman, LLP; and SimmonsCooper, LLC maintain that
Grace's request is not warranted and in fact will only serve to
widen the gap among the parties and delay cooperative efforts
toward a consensual plan of reorganization.
Daniel K. Hogan, Esq., at The Hogan Firm, in Wilmington,
Delaware, asserts, "The Debtors and their asbestos creditors are
at loggerheads." He believes that Grace wants to litigate its
way through Chapter 11 and seems uninterested in formulating a
consensual Plan.
Mr. Hogan avers, "The purpose of Chapter 11 is reorganization,
not the establishment of a semi-permanent refuge of protection
from creditors."
Moreover, Mr. Hogan contends that the Plan is not confirmable in
its present form because it denies asbestos claimants the right
of the vote required of the Bankruptcy Code.
"Unless something is done to set this case back on a
constructive course, several more years will pass without any
real progress made toward a plan of reorganization," Mr. Hogan
tells Judge Judith Fitzgerald.
Therefore, the Objecting Law Firms ask Judge Fitzgerald to deny
the request, or, in the alternative, limit any extension of
exclusivity to 60 days.
The Law Firms also seek for Court appointment of a neutral
individual as plan trustee or examiner to oversee negotiations
towards a consensual plan.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Grace Responds to PD Committee Objections
--------------------------------------------------------------
James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub P.C., in Wilmington, Delaware, tells Judge Judith
Fitzgerald that the objections filed are parochial and posturing
rather than being candid with the Court at a critical juncture
in W.R. Grace & Co.'s Chapter 11 cases.
Accordingly, Grace intends to set out the state of play in
detail and focus on what is needed to complete the challenges
still ahead.
Mr. O'Neill relates that there are still significant obstacles
that have to be addressed before a plan can be confirmed, even
with consensus among the asbestos constituencies. However,
progress tends to be made only when the pressure is there.
Mr. O'Neill adds that the asbestos constituencies complain about
Grace's aggressive litigation path. Yet, Mr. O'Neill explains,
it is that aggressive litigation path that has been critical to
progress in Grace's cases and is exactly what is required for
Grace to continue progress toward completion.
Grace, therefore, insists that the Court should stay the present
course of their cases by extending the Exclusive Periods and by
setting the plan process for a status report at the next omnibus
hearing scheduled for March 27, 2006.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: WR Grace Seeks Full Disclosure of Witnesses
----------------------------------------------------------------
In accordance with the Court's case management order for the
estimation of pre-petition claims relating to traditional
asbestos property damage, dated August 29, 2005, the Official
Committee of Asbestos Property Damage Claimants delivers to the
Court initial disclosure of fact and expert witnesses
anticipated to be called in Phase I of the asbestos claims
estimation, which phase deals with addressing the methodology
issue.
Subsequently, W.R. Grace & Co. asks Judge Judith Fitzgerald to
strike the fact witness portion of the PD Committee's Initial
Witness Disclosure, or, in the alternative, to compel full and
complete disclosure of the PD Committee's Phase I fact witnesses
and the subjects of their testimony.
Grace asserts that the Phase I trial is a Daubert hearing that
calls exclusively for expert testimony on the relevance and
scientific reliability of the dust sampling methodology.
According to James E. O'Neill, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, P.C., in Wilmington, Delaware, the
Witness Disclosure does not identify any fact witnesses by name,
but instead lists several extremely broad categories of fact
witnesses testimony:
(1) "[E]ach asbestos property damage claimant that filed a proof
of claim;"
(2) "Professionals employed or contracted by such PD claimant;"
(3) The RJ Lee Group employees "most knowledgeable with regard
to work performed at One Liberty Center, N.Y. for Deutsch;" and
(4) The "Debtors, their employees, agents and independent
contractors concerning the use of dust sampling, air sampling,
and other methods to determine the release of asbestos fibers
from the Debtors' asbestos-containing products."
Mr. O'Neill avers that taken at face value, this type of
disclosure is so broad that it could encompass thousands of fact
witnesses.
Under Daubert and its progeny, Mr. O'Neill explains, opinion
testimony based on scientific, technical, or other specialized
knowledge is subject to the trial court's "gatekeeping"
obligation. If the opinion testimony overcomes the hurdles of
the Federal Rules of Evidence, "a witness qualified as an
expert" may offer it. However, it cannot come in through a lay
witness.
Indeed, Mr. O'Neill attests, the PD Committee's own experts
confirm that there is no reason for fact witnesses to testify at
the Daubert hearing. None of the PD Committee's four expert
reports discloses reliance on fact witness testimony, even
though an expert's report must contain a complete statement of
the "basis and reasons" for the opinions to be expressed and all
"data or other information considered by the witness in forming
the opinions."
"To the extent that the PD Committee's anticipated fact witness
testimony is outside the scope of its experts' reports, [that]
testimony is irrelevant to the issues at hand and inadmissible
for that reason," Mr. O'Neill says.
Although the PD CMO contemplates Phase I fact witnesses, it was
entered before the Court ruled that the constructive notice
issue would not be heard as part of Phase I, Mr. O'Neill notes.
He adds that "[u]nlike the dust sampling issue, the constructive
notice issue lends itself to fact witness testimony."
Moreover, the Federal Rules of Civil Procedure explicitly
recognize that "an evasive or incomplete disclosure, answer, or
response is to be treated as a failure to disclose, answer, or
respond."
The PD Committee's Witness Disclosure falls within the ambit of
this rule; it is so evasive and incomplete that it handicaps
Debtors' ability to prepare for the Phase I Daubert hearing, Mr.
O'Neill relates.
Mr. O'Neill contends that the PD Committee's Disclosure does not
provide Grace with any real information, let alone enough
information to initiate the discovery or factual investigation
that must precede the Daubert hearing.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: DE Court Denies Grace Discovery Request
------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
denies W.R. Grace & Co.'s request for leave to conduct immediate
discovery of attorneys who represent claimants with personal
injury asbestos claims against W.R. Grace & Co.
However, Judge Judith Fitzgerald rules that the denial is
without prejudice to Grace's right to seek discovery from
individual firms in accordance with the applicable Federal Rules
of Civil Procedure and subject to the Federal Rules of Evidence.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Court Extends Non-Expert Prelim Designation
----------------------------------------------------------------
Pursuant to the case management order for the estimation of
asbestos personal injury liabilities, Judge Judith Fitzgerald
extends the time for PI claimants to complete and serve the
questionnaires to March 13, 2006.
In addition, Judge Fitzgerald extends the time for the exchange
of preliminary designations of non-expert witnesses to January
10, 2006.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Firms Oppose Grace's Litigation Order Date
---------------------------------------------------------------
Six firms oppose W.R. Grace & Co.'s request for an order
establishing a proof of claim bar date for asbestos personal
injury litigation claims.
The six law firms are: Baron & Budd, P.C., Environmental
Litigation Group, P.C., The Law Office of Peter G. Angelos, A
Professional Corporation, Reaud, Morgan & Quinn, Inc., and
Silber Pearlman, LLP.
The Objecting Firms assert that the record is clear that the
parties and the Court intended for Grace's questionnaire to
asbestos claimants to be in furtherance of discovery, and not a
proof of claim. Moreover, the Objecting Firms note that in the
Grace's request, Grace understatedly acknowledges their previous
statements to the effect that they did not originally intend for
the questionnaire "to serve as a proof of claim form and
effectuate a bar date."
Although the relevant circumstances are unchanged since the
Court denied its previous request for a bar date, W.R. Grace &
Co. has revived its plea that such a deadline be imposed on pre-
petition asbestos personal injury creditors. The Objecting
Firms note that in support of its request, "Grace offers a
hodgepodge of contrived and misleading justifications."
The Objecting Firms also assert that in its request, Grace says
next to nothing about its real agenda, "the claims objection
pandemic it hopes to foment via the eleventh-hour imposition of
a bar date and an irregular, deceptively straightforward proof
of claim procedure."
Thus, the Objecting Firms contend that Grace's "second-bite-at-
the-apple request for a bar date" and "the attendant prospect of
litigating claims objections ad infinitum which Grace has sought
with eagerness all along" should be denied.
The Objecting Firms further observe that Grace repeatedly
emphasizes its view that a bar date is called for because "it
now appears that a significant number of firms have failed to
file statements, contrary to the expectation of the Court."
However, despite Grace's assertion to the contrary, the
Objecting Firms insist that there has been widespread compliance
with Rule 2019 of the Federal Rules of Bankruptcy Procedure in
this case. According to the Firms, the Court acknowledged 10
months ago that numerous 2019 Statements had been docketed,
which is hardly indicative of widespread 2019 dereliction on the
part of the plaintiffs' bar. Moreover, Grace has offered no
evidentiary support for its contention, citing in its request
only its own counsel's comments at the omnibus hearing on
September 26, 2005.
The Objecting Firms remind the Court that its 2019 Order was
entered a year ago and was not appealed. The 2019 Order provides
that compliance with its terms "shall be deemed to be complete
compliance with Bankruptcy Rule 2019 for all purposes in this
case." Thus, the Objecting Firms maintain that only firms that
have already entered an appearance or taken other affirmative
action to participate in Grace's reorganization case are obliged
to file 2019 Statements.
"Undoubtedly, some counsel representing multiple asbestos
claimants with claims against Grace have not, thus far, entered
an appearance in Grace's chapter 11 case or otherwise taken
affirmative action to participate," the Objecting Firms note.
They state that some of these firms may choose to cast master
ballots on their clients' behalves when the time for plan
balloting rolls around, and if they do, they will have 10 days
from that point forward, under the 2019 Order, to file 2019
statements.
"In the meantime," the Objecting Firms aver, "they are in full
compliance with the 2019 Order. Any suggestion to the contrary
is wrong and undoubtedly intended by Grace to besmirch their
professional reputations."
The Objecting Firms believe that in approving the claimant
questionnaire, the Court relied on Grace's representations that
it would not seek a bar date. "Grace's swift and sudden
disavowal of its prior assurances implicates the doctrine of
judicial estoppel, which precludes a party from taking
inconsistent positions to gain an unfair advantage, precisely
what is occurring here with Grace's bar date flip-flop," the
Firms argue.
Bar dates are not essential to the finality of a bankruptcy
case, the Objecting Firms assert. The Bankruptcy Code does not
require the imposition of a bar date as threshold requirements
for the consideration of creditors' claims. As the Court is
aware, asbestos claims bar dates have not been imposed in quite
a number of recent mass tort cases, with no deleterious effect
on the administration of those cases.
The Objecting Firms contend that as a general matter, resort to
proofs of claim and bar dates is appropriate only when a
legitimate purpose will be served. The primary purpose of a
proof of claim or a bar date procedure is ordinarily expressed
as the achievement of finality in bankruptcy proceedings. Yet,
in Grace's reorganization case, the Firms say, asbestos personal
injury claims will be finally resolved only after the effective
date of a plan and the commencement of operations by a trust.
In addition, the Objecting Firms believe that bar dates for mass
tort victims are problematic both in their application and
implementation. Future claimants slated to participate in the
distribution of estate assets remain unidentified after any bar
date has passed.
Moreover, constitutionally sufficient notice must be given to
all claimants to whom the bar date will apply, and the notice
must be tailored to that universe of claimants. An evidentiary
hearing may be called for, and a court may wish to hear
testimony from a communications expert and make appropriate
findings based on the evidence. The Objecting Firms points out
that time and expense of a public notice program is considerable
where the universe of claimants is large, which is to say
nothing of the inevitable future disputes and attendant judicial
proceedings over the enforcement of the bar date.
However, the Objecting Firms note, Grace proposes a January 12,
2006, bar date, which is less than two months after its request
is set to be heard. The Objecting Firms relate that Grace's
timetable and their proposed manner of notice is "appalling" in
light of the fact that appropriate respect for the due process
rights of tort claimants demands a comprehensive effort to
provide actual notice to affected claimants, including media and
publication regimes calculated to target Grace's tort victims.
Grace had also pointed out that asbestos PI pre-petition
litigation claimants and their counsel of record are believed to
be known and, indeed, have already been served with the PI
Questionnaire. The Objecting Firms argue that Grace's
complacency in this assumption, even as it concedes
irregularities in the service of the questionnaires, highlights
Grace's "lackadaisical commitment to honoring the due process
rights of its tort victims." Sufficient notice is, after all,
the most indispensable attribute of due process, the Firms
contend.
The Objecting Firms believe that Grace hopes its claimants do
not timely apprehend the true significance of the bar date.
(W.R. Grace Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Kaiser's Debtors to Approve Westport Deal
--------------------------------------------------------------
In May 2000, Kaiser Aluminum & Chemical Corporation instituted
an insurance coverage action against certain insurers, including
Westport Insurance Company, in the Superior Court of California
for the County of San Francisco. KACC seeks a declaratory
judgment that the Insurers under more than 300 insurance
policies issued from 1959 to 1985 are obligated to cover the
asbestos-related bodily injury products liability claims that
have been asserted against KACC. The Products Coverage Action
also seeks damages for breach of contract and breach of the
covenant of good faith and fair dealing against several of the
Insurers.
The Products Coverage Action, if successful, would establish
KACC's rights, and the Insurers' obligations, with respect to
the Asbestos Products Claims and would allow KACC to recover its
costs from the Insurers in connection with the defense and
settlement of the Asbestos Products Claims.
Westport provided excess insurance coverage to KACC from 1976 to
1983.
KACC and Westport have reached a settlement that resolves all
claims against the Westport Parties with respect to the Westport
Policies, including coverage for Channeled Personal Injury
Claims, as well as other present and future liabilities. The
Settlement Agreement also resolves all Tort Claims against the
Westport Parties with respect to additional policies.
The principal terms of the Settlement Agreement are:
(1) Westport will pay a total of US$12,900,000, according to a
payment schedule, to a Settlement Account Agent, unless the
trigger date has occurred, in which case to the Insurance Escrow
Agent for distribution to the Funding Vehicle Trust. After the
Trigger Date has occurred, payments to the Settlement Account
Agent will be disbursed to the Insurance Escrow Agent for
distribution to the Funding Vehicle Trust, or as otherwise
directed by the Court. Upon the payment of the Settlement Amount
to the Insurance Escrow Account, legal and equitable title to
the Settlement Amount will pass irrevocably to the Insurance
Escrow Agent to be distributed pursuant to Kaiser's Plan of
Reorganization;
(2) Westport has specifically contracted, for itself and for the
Westport Parties, to receive all of the benefits of being
designated as a Settling Insurance Company in the Plan of
Reorganization, including, but not limited to, the PI Channeling
Injunctions;
(3) The Settlement Agreement covers all claims that might be
covered by the Policies. Accordingly, KACC will sell the
Policies back to Westport, and Westport will buy back the
Policies pursuant to the Bankruptcy Code free and clear of all
liens on, claims against, or interests in the Policies.
Westport's payment of the Settlement Amount will constitute
consideration for the buy-back; and
(4) The Settlement Agreement covers all claims that might be
covered by the Policies.
A full-text copy of KACC's Settlement Agreement with
Westport is available for free at:
http://bankrupt.com/misc/Westport_Settlement_Agreement.pdf
Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, tells the Court that the Settlement
Agreement will:
-- Eliminate KACC's continuing costs of prosecuting the Products
Coverage Action against Westport;
-- Eliminate uncertainty regarding future payments by Westport;
and
-- Secure the payment of a total fixed amount from Westport
without further delay and cost to KACC.
Ms. Newmarch notes that the US$12,900,000 purchase price is fair
and reasonable consideration for the Policies given the
available limits of the Policies and uncertainty regarding
future payments. It also brings immediate value to KACC's estate
to cover present and future asbestos-related liability.
Hence, KACC asks the Court to approve the Settlement
Agreement and authorize the sale of the Policies to Westport
free and clear of all liens, claims, encumbrances or other
interests.
(Kaiser Bankruptcy News, Issue No. 87; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Kaiser's Objections to 5 Claims Withdrawn
--------------------------------------------------------------
Kaiser Aluminum and Chemical Corp.'s objections to five claims
are deemed withdrawn without prejudice to KACC's right to file a
subsequent objection on any ground to any or all of the
Withdrawn Claims.
Judge Judith Fitzgerald notes that the disallowance of the
claims for Retiree Benefits will not affect the Claimants'
rights to receive benefits under the applicable Legacy Liability
Agreement.
Further, Judge Fitzgerald notes that to the extent that a
claimant whose claim is expunged has an asbestos-related
personal injury claim, the expunging of claims will not effect
the rights of that claimant to later file an asbestos-related
personal injury proof of claim, without the necessity to seek
leave of the Court, and with the asbestos-related personal
injury proof of claim being subject to applicable defenses of
the Debtors, any bar date that may be established by the Court
relating to the assertion of asbestos-related personal injury
claims, and any other future Court orders regarding the
assertion of asbestos-related personal injury claims.
(Kaiser Bankruptcy News, Issue No. 87; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: McDermott Shares Rise on B&W Reorganization
----------------------------------------------------------------
McDermott International Inc.'s shares rose to a new year high as
an investment bank lifted its earnings estimates and price
target on the stock based on news that a US bankruptcy judge
approved a revised Chapter 11 reorganization plan and for a
recent US Government contract, The Associated Press reports.
Shares of the New Orleans, LA-based Company rose US$2.09, or 5%,
to US$44.39 on the New York Stock Exchange.
Martin W. Malloy, an analyst with Hibernia Southcoast Capital,
noted that that a US bankruptcy court in Louisiana approved a
revised reorganization plan for the Company's Babcock and Wilcox
Co. unit, which makes industrial boilers and power generation
systems.
McDermott, which builds deepwater and subsea oil and gas
production facilities and makes electric power generation
systems and equipment, said that the Department of Energy
selected its BWX Technologies Inc. unit as part of a group to
manage and operate the Los Alamos National Laboratory, a
nuclear-weapons lab in New Mexico.
The Company did not reveal the deal's monetary value, but The
Wall Street Journal pegged it at US$512 million over the next
seven years.
Mr. Malloy raised his fiscal 2006 earnings estimate to US$1.88
per share from US$1.85 per share to reflect the contract. He
also set an earnings target of US$2.20 per share for 2007 and
increased the stock's target price to US$56 from US$50.
ASBESTOS LITIGATION: Dana Corp. Recaps Claims Incurred in 2Q05
--------------------------------------------------------------
Dana Corporation (NYSE: DCN) declared that it had about 115,000
active pending asbestos-related product liability claims at June
30, 2005, compared to 120,000 at March 31, 2005, and 116,000 at
December 31, 2004. Included in the active claims were claims
that had been settled but awaiting final documentation and
payment of 11,000 at both dates.
The Company had accrued US$143 million for indemnity and defense
costs for these claims at June 30, 2005 and March 31, 2005,
compared to US$139 million at December 31, 2004.
At June 30, 2005, the Company had recorded US$41 million as an
asset for probable recovery from its insurers for these pending
claims compared to US$122 million at March 31, 2005 and 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 June 30, 2005 and 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 Company's insurers.
Toledo, OH-based Dana Corporation's products include axles,
brakes, and driveshafts, as well as engine, filtration, fluid-
system, sealing, and structural products. Dana operates
manufacturing, assembly, and distribution facilities in more
than 30 countries.
ASBESTOS LITIGATION: OC Asks Court to Extend Exclusivity Period
---------------------------------------------------------------
Owens Corning asks the Court to further extend the time within
which they retain the exclusive right to file a plan of
reorganization and solicit acceptances of that plan to July 31,
2006, without prejudice to their right to seek further
extensions.
Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, relates that recent decisions on two key issues, the
rejection of substantive consolidation proposal and estimation
of Owens Corning's current and future asbestos liabilities at
US$7,000,000,000, have narrowed the outstanding issues in the
OC's Chapter 11 cases. Accordingly, at the September 26, 2005
omnibus hearing, the Court directed that an amended disclosure
statement and an amended plan be filed by the end of 2005.
Owens Corning has complied with this instruction by filing a
Fifth Amended Plan of Reorganization and Disclosure Statement.
The Official Committee of Asbestos Claimants and the Futures
Representative are co-proponents of the Plan, and the steering
committee of the Bank Holders supports the Plan, demonstrating
the continued benefits of continued exclusivity in the cases.
Despite the Court's conditional approval of the Disclosure
Statement in December 2003, other events occurred which impacted
the timing of OC's reorganization efforts, Mr. Pernick tells the
Court. Because of these events, OC continues to negotiate with
the creditor constituencies and, in accordance with the Court's
directive, circulated a proposed term sheet in an effort to
reach a consensual plan. OC has filed the Plan and Disclosure
Statement on time.
Under these circumstances, Mr. Pernick asserts that an extension
is not unreasonable given the notice and other procedural
requirements that must be satisfied to obtain approval of the
Disclosure Statement, and the necessity to solicit acceptances
of an amended Plan.
Mr. Pernick points out the steps OC has taken towards
confirmation:
(1) OC negotiated a settlement in principle of two purported
nationwide class actions on behalf of purchasers of its
MiraVista roofing tile products. The aggregate amount of these
claims was US$275,000,000;
(2) OC has reached settlements with FM Insurance Co., AIG
Companies, and Allianz resolving insurance coverage disputes
related to asbestos non-property claims and filed motions for
Court approval of the settlements;
(3) OC has obtained approval to implement a foreign fund
repatriation program for tax purposes, plan of reorganization
and post-confirmation tax planning; and
(4) OC's management continues to operate the businesses
successfully, thereby significantly improving during the
pendency of the cases the distributable value to creditors.
During the last four years, OC's income from operations has
risen from US$300,000,000 in 2002 to US$381,000,000 in 2003, to
US$452,000,000 in 2004 and is expected to be nearly
US$550,000,000 in 2005. In addition, OC's return on net assets
has increased from 9.1% in 2002, to 12.9% in 2003, to 15% in
2004 and is expected to be nearly 20% in 2005.
Mr. Pernick says an extension of the Exclusive Periods will be
beneficial to the creditors and other parties-in-interest
because OC and the creditor constituencies will have more time
to focus on reaching a consensus on disputes during the process
leading to confirmation.
Judge Judith Fitzgerald will convene a hearing January 30, 2006,
to consider OC's request.
(Owens Corning Bankruptcy News, Issue No. 123; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ASBESTOS LITIGATION: Owens Corning to Wipe Out $10B Liabilities
---------------------------------------------------------------
Owens Corning filed its fifth Plan of Reorganization intended to
wipe out the Company's estimated US$10.2 billion in asbestos
liabilities, Bloomberg reports.
Filed in the US Bankruptcy Court in Wilmington, Delaware, the
Plan offers Owens Corning's asbestos claimants with cash and
stock in the reorganized Company in exchange for their claims.
If creditors back the Plan, some debt holders would get 150% of
their claims paid, according to court papers. That figure
includes interest on the claims since the 2000 bankruptcy
filing. If creditors reject the Plan, then US Bankruptcy Judge
Judith Fitzgerald would decide how much debt holders receive.
Those senior debt holders have US$1.5 billion in claims separate
from the asbestos claimants.
Toledo, OH-based Owens Corning sought Chapter 11 protection in
October 2000 after being mired by asbestos lawsuits. The Company
is one of more than 70 US public companies that have sought
bankruptcy protection since the early 1980s to deal with
asbestos suits.
Along with Owens Corning, companies like W.R. Grace & Co.,
Federal-Mogul Corporation, USG Corporation, and Armstrong World
Industries Inc. filed for Chapter 11 protection in Delaware
since 2000 to set up plans to wipe out their asbestos burden.
The progress of the Companies' reorganizations has been slowed
by battles between asbestos claimants and other creditors over
how much of their claims will be paid and who will control the
firms once they emerge from bankruptcy.
Owens Corning officials noted in court papers that the Company
is doing well under bankruptcy protection, with income from
operations rising from US$300 million in 2002 to US$452 million
in 2004. Officials added that the Company's income from
operations is expected to be almost US$550 million for 2005.
ASBESTOS LITIGATION: Appeals Court Denies Armstrong World's Plan
----------------------------------------------------------------
On December 29, 2005, Armstrong Holdings, Inc. (OTC: ACKHQ)
announced that the United States Court of Appeals for the Third
Circuit upheld the US District Court's denial of Armstrong World
Industries' Plan of Reorganization.
Under the facts of the case, AWI had appealed the District
Court's decision that the distribution of warrants to current
Armstrong stockholders under the POR was not permissible.
AWI has been mulling other options to resolve this Chapter 11
case with the representatives of its creditor groups. AWI is
unable to predict when it will emerge from Chapter 11, what
payouts its major classes of creditors will receive, or whether
Armstrong's existing shareholders will receive any recovery from
the case.
AWI continues to monitor proposed Congress legislation
addressing asbestos personal injury claims, which could
substantially effect AWI's liabilities if enacted.
Lancaster, PA-based Armstrong Holdings, Inc. is the parent
company of Armstrong World Industries Inc., which designs and
manufactures floors, ceilings and cabinets. In 2004, Armstrong's
net sales totaled more than US$3 billion. Armstrong operates 41
plants in 12 countries and has about 14,900 employees worldwide.
ASBESTOS LITIGATION: Court Asked to Resolve Owens Corning Issue
---------------------------------------------------------------
Cleveland, OH-based lawyer James McMonagle, who represents the
interests of future asbestos claimants, asked the US Supreme
Court to hear his appeal of a lower court ruling that determined
Owens Corning and its subsidiaries must be considered as
separate entities and not as a single unit, The Toledo Blade
reports.
The lower court ruling affected the value of loan repayment
guarantees made to banks by the Company's subsidiaries in the
late 1990s. It is significant because it will greatly increase
the size of the banks' recovery on the nearly US$2 billion they
loaned to Owens Corning before Chapter 11.
Other creditors objected to the ruling, partly because it will
greatly trim their recovery.
ASBESTOS LITIGATION: Supreme Court Upholds Award in Gomez Suit
--------------------------------------------------------------
On December 29, 2005, the Appellate Division of the New York
Supreme Court affirmed two previous NY Supreme Court judgments
awarding plaintiffs damages for asbestos-related litigation
against A C & S, Inc. and The Lincoln Electric Company.
Presiding Judge Peter Tom with Judges George D. Marlow, Betty
Weinberg Ellerin, John W. Sweeny, Jr., and James M. Catterson
heard the case.
On June 15, 2004, New York County Supreme Court Judge Louis B.
York entered judgment on Angel Gomez' case. On August 26, 2004,
Judge York revised judgment on the case of Christine Wiegman,
who administered the estate of Daniel Tucker.
The Court ruled that the remaining contentions of A C & S and
Lincoln are without merit.
Andrew J. Pincus of Mayer, Brown, Rowe & Maw LLP, Washington, DC
represented A C and S, Inc and The Lincoln Electric Co.
Lizabeth L. Burrell of Levy Phillips & Konigsberg, LLP, New York
represented Christine Wiegman and Angel Gomez.
ASBESTOS LITIGATION: Ireland Schools Revealed to Carry Asbestos
---------------------------------------------------------------
The Belfast Telegraph reports that almost 1,000 schools around
Northern Ireland carry potentially dangerous asbestos, which is
currently being "safely managed" in 775 primary schools and 190
post-primary or special schools, according to the province's
Department of Education.
The schools represent 75% of the total number of schools in
Northern Ireland. Steps have been taken in some schools where it
was necessary to remove asbestos found during surveys across the
entire schools' sector.
A Department spokeswoman said that all of the 965 schools have
an "asbestos management plan" in place to safely manage the
asbestos until it can be removed, so that it does not pose
health and safety risks.
Linked to 3,000 deaths annually in the United Kingdom, asbestos
is only hazardous when damaged, disturbed or dismantled.
ASBESTOS LITIGATION: MT Expert Says State's Cancer Study Skewed
---------------------------------------------------------------
Dr. Brad Black, a doctor who specializes in treating asbestos
disease in Libby, Montana believes that the Department of Health
and Human Services' study of mesothelioma, a rare asbestos-
linked cancer, is skewed, the Daily Inter Lake reports.
Dr. Black, medical director of the Center for Asbestos Related
Disease in Libby, told the audience at a Community Advisory
Group meeting that the study "poorly reflects" the strong link
between the disease and exposure from the former W.R. Grace &
Co. vermiculite mine near Libby.
The study merged data from the state Central Tumor Registry and
the Death Registry to track 200 Montanans who were either
diagnosed with or died of mesothelioma between 1979 and 2002.
However, the study stated that neither source recorded the time
or place of exposure, so it's unknown whether these people were
exposed to asbestos before they developed the disease.
Dr. Black said he still believes Libby's mesothelioma rate is 80
to 100 times higher than the norm. The study does not take
population into account, he maintained.
Dr. Black pointed out that investigators have studied or
observed the health effects of Libby asbestos in depth. Dr. Alan
Whitehouse, a pulmonary expert, and Dr. J. Corbett McDonald have
probed asbestos exposure in Libby.
Dr. McDonald studied a group of Zonolite workers in 1986. He has
done a follow-up of this group and noted "these vermiculite
workers suffered severely from malignant and nonmalignant
respiratory disease."
The McDonald study indicated that death from mesothelioma was 10
times higher than asbestos miners in Quebec who were exposed to
asbestos with less toxic chrysotile fibers.
The Surveillance, Epidemiology and End Results registry was used
as a national baseline in measuring Montana's mesothelioma
statistics. SEER is a group of selected tumor registries around
the country supported by the National Cancer Institute. Those
registries reported about one person with the cancer for every
100,000 people during the study period.
ASBESTOS LITIGATION: Plaques Victim Awaits Compensation Decision
----------------------------------------------------------------
William Scarlett, a Newport pensioner diagnosed with pleural
plaques, expects later in January 2006 a decision on whether he
can claim compensation for his condition, This Is Gwent reports.
The 66-year-old Mr. Scarlett was diagnosed two years ago of
pleural plaques, which is an irreversible damage to the lungs'
lining caused by asbestos exposure. He came into contact with
asbestos while he worked at a Belfast shipyard, as well as other
building jobs.
Mr. Scarlett is seeking compensation because he claims he was
not protected against asbestos exposure while he worked. He will
not know, however, if he can make a compensation bid until he
receives an appeal court ruling later in January 2006.
The pensioner now dreads the possibility of the condition
developing into the malignant cancer mesothelioma.
In 2005, Thompsons solicitors, who represent asbestos claimants,
began their fight against Norwich Union for continued right to
compensation. The insurer launched an appeal after failing in
its attempt to end claims for pleural plaques.
Insurance industry estimates state that asbestos-related claims
are expected to cost UK insurers up to GBP10 billion over the
next 40 years, with pleural plaques claims accounting for over
GBP1 billion.
ASBESTOS LITIGATION: UK Ex-Auto Workers Face High Risk of Cancer
----------------------------------------------------------------
Experts warn that thousands of former automobile workers in the
UK Midlands may fall victim to asbestos-related cancer,
icBirmingham reports. Since 1999, the region has witnessed a
huge increase of deaths by mesothelioma, a condition linked to
asbestos exposure.
Kim Atherton, spokeswoman for the Nottingham-based Asbestos
Disease Association, said that the toll will rise in 2006 and
predicted that former Midland assembly-line workers from Rover,
Jaguar, Land Rover and Peugeot, could be among a huge number of
victims.
The number of people dying from asbestos disease in the region
has risen steadily since 1999 when 12 people died from
mesothelioma. That figure had risen to 69 in 2003, which was the
last year in which the Department of Work provided statistics.
According to the Health and Safety Executive, asbestos-related
deaths will peak by 2015, as a result of workers' past exposure
to the substance. It can take between 15 and 60 years for
mesothelioma to take effect, which means that thousands of
Midlanders could already be infected without knowing it.
An HSE spokeswoman said, "We are dealing with the biggest
occupational health problem encountered in the UK. Currently
over 3,500 people die annually from asbestos-related diseases,
and around 1,800 of those are from mesothelioma. All these
deaths relate to exposure between 15 and 60 years ago when poor
controls were in place.
"Many of those now dying worked in the asbestos manufacturing
industry or installed asbestos insulation in ships, railway
carriages, industrial plant and buildings. The annual number of
deaths is expected to peak somewhere in the range of 4,000 to
5,000, although the peak figure could be even higher, between
the years 2011 and 2015. This timing corresponds with the peak
of asbestos use in the 1970s."
ASBESTOS ALERT: FL Contractors Slapped With US$38,750 Penalty
-------------------------------------------------------------
The US Labor Department's Occupational Safety and Health
Administration issued 27 citations with penalties of US$38,750
to three Clearwater, FL-based contractors for allegedly exposing
workers to asbestos in Tampa.
OSHA issued Gannaway Builders Inc., the project's general
contractor, with 15 serious citations and proposed penalties of
US$32,000. OSHA also issued nine serious citations with proposed
penalties of US$4,500 to Aarlice Skilled Labor Inc. for exposing
workers to asbestos hazards at the site. K & W Electric received
three citations and a US$2,250 fine for safety hazards denoted
as serious.
The contractors have 15 working days to contest the citations
and proposed penalties before the independent Occupational
Safety and Health Review Commission.
The contractors were doing the demolition, renovation and
condominium conversion of apartments at an Indian Shores
demolition site in Tampa.
In OSHA's investigation, Gannaway failed to assure that an able
person assessed and controlled employee exposure to airborne
fibers during the removal of asbestos-containing decorative
ceilings. Gannaway also did not conduct regular site checks, did
not provide employees with personal protective equipment and
safety training, and did not assign and maintain decontamination
and change areas.
"These employers were aware of the health standards but failed
to protect employees from airborne asbestos," said Les Grove,
OSHA's Tampa area director. "Such exposure can lead to
asbestosis, a scarring of the lung tissue, and several types of
cancer."
ASBESTOS ALERT: Illinois AG Sues 2 Firms for Removal Violations
---------------------------------------------------------------
Illinois Attorney General Lisa Madigan charged two firms for
improperly handling and disposing of asbestos-containing
materials without taking the required environmental precautions
at the former Acme Steel Company site, located at 10730 S.
Burley Ave., Chicago.
AG Madigan's lawsuit, filed in Cook County Circuit Court on
December 27, 2005, names as defendants Calumet Transload
Railroad, LLC (formerly known as Calumet Transfer, LLC) and
Salrecon, LLC.
AG Madigan's suit seeks to order the defendants to undertake all
actions to abate the violations. The suit also seeks to stop the
defendants from any further violations of Illinois'
environmental laws and asks the Court to order Calumet and
Salrecon to pay civil penalties of US$50,000 and an additional
US$10,000 per day for each violation.
Assistant Attorney General Vanessa Vail is handling the case for
AG Madigan's Environmental Enforcement Division.
The suit alleges that Calumet and Salrecon failed to control the
asbestos release by wetting down materials containing asbestos,
sealing them in leak-tight containers, and did not dispose of
the materials at an approved site. It also alleges that the two
firms did not have the building inspected for the presence of
asbestos before starting renovation and demolition activities.
The firms also failed to notify the Illinois Environmental
Protection Agency prior to beginning activities that may disturb
asbestos and failed to have an on-site representative trained in
the requirements for proper asbestos removal, as required by
state law.
The Acme Steel site was the location for various structures
related to steel making, including cranes, pipes, pipe racks, a
boiler house, a coke processing building and two blast furnaces.
Some structures were insulated by or covered with asbestos-
containing materials.
The IEPA referred the case to AG Madigan's office after a
February 19, 2004, inspection found suspected asbestos-
containing materials falling off pipes and a pipe rack, and in
numerous piles on the ground and in dumpsters. An analysis of
the materials confirmed the presence of asbestos.
COMPANY PROFILE
Salrecon, LLC
5517 Midland Dr
Charleston, WV 25306-6138
Kanawha County
Phone: (304) 345-7400
ASBESTOS ALERT: OSHA Imposes US$90T Fine on NY Firm for Hazards
---------------------------------------------------------------
A news release from the United States Labor Department's
Occupational Safety and Health Administration states that OSHA
fined NOCO Energy Corporation US$90,500 for allegedly failing to
protect employees against asbestos hazards.
OSHA cited NOCO for 18 serious violations of OSHA standards,
which govern work with asbestos and the proper selection and use
of respirators.
The citations and fines resulted from an OSHA inspection of a
site at Huxley Drive in Cheektowaga, New York, where workers had
dismantled and removed a furnace with asbestos-containing
materials without adequate respiratory and asbestos protection.
The OSHA inspection further disclosed that a competent person,
one with both the knowledge to identify asbestos hazards and the
authority to correct them, did not oversee the work.
NOCO also failed to ensure proper selection and use of
respirators by workers. NOCO failed to do fit testing or
required medical evaluations to determine if workers could wear
respirators.
The Company also did not train employees in respirator use, and
failed to implement a respiratory protection program.
NOCO has 15 working days to contest the citations and proposed
penalties before the independent Occupational Safety and Health
Review Commission.
COMPANY PROFILE
NOCO Energy Corp.
2440 Sheridan Dr.
Tonawanda, NY 14150
Phone: 716-614-6626
Fax: 716-874-7032
Toll Free: 800-500-6626
http://www.noco.com
Description:
NOCO Energy Corporation distributes residential heating oil,
industrial lubricants, gasoline, and diesel fuel to customers
located throughout the Eastern US. The Company also operates 33
gasoline and convenience stores in Buffalo and Rochester.
New Securities Fraud Cases
BLOCKBUSTER INC.: Murray Frank Sets Lead Plaintiff Deadline
-----------------------------------------------------------
The law firm of Murray, Frank & Sailer, LLP, which filed a class
action lawsuit in the United States District Court for the
Northern District of Texas on behalf of shareholders who
purchased or otherwise acquired the securities of Blockbuster,
Inc. ("Blockbuster" or the "Company") (NYSE:BBI) between
September 8, 2004 and August 9, 2005, inclusive (the "Class
Period") reminds all interested parties that they have until
January 9, 2006, to move the Court to serve as lead plaintiff.
Blockbuster engages in the operation and franchise of retail
stores that offer prerecorded videos and video games for in-
store rental, sale and trade, and also sells other
entertainment-related merchandise. Blockbuster also operates an
online service offering rental of movies delivered by mail. The
complaint charges Blockbuster and certain of its officers and
directors with violations of the Securities Exchange Act of
1934, and alleges that throughout the Class Period defendants
made materially false and misleading statements to the investing
public regarding its financial performance and prospects in
violation of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder.
On February 10, 2004, Viacom announced that it intended to
divest itself of its majority interest in Blockbuster (the
"Splitoff"). In connection with the Splitoff, Viacom declared a
dividend of $5 per share, payable September 3, 2004, to
Blockbuster shareholders of record at the close of business on
August 27, 2004. The Complaint alleges that in connection with
the Splitoff, the defendants failed to disclose and
misrepresented that the Splitoff and payment of the special
dividend left Blockbuster without the financial resources
required to implement its ambitious strategic plan; that the
Company was unable to integrate its in-store and online
operations due to outdated equipment and inventory tracking
issues, that the Company was experiencing difficulties launching
its in-store DVD trading program, and that the Splitoff was
engineered not to benefit Blockbuster but rather, to allow
Viacom to reap hundreds of millions of dollars in proceeds from
the pre-Exchange Offer Special Dividend and to reduce the public
float of Viacom.
Murray, Frank & Sailer LLP and its predecessor firms have
devoted its practice to shareholder class actions and complex
commercial litigation for more than fifteen years and have
recovered hundreds of millions of dollars for shareholders in
class actions throughout the United States.
For more details, contact Eric J. Belfi or Christopher S. Hinton
of Murray, Frank & Sailer, LLP, Phone: (800) 497-8076 or
(212) 682-1818, Fax: (212) 682-1892, E-mail:
info@murrayfrank.com, Web site:
http://www.murrayfrank.com/CM/NewCases/NewCases.asp.
FARO TECHNOLOGIES: Murray Frank Commences Securities Suit in FL
---------------------------------------------------------------
The law firm of Murray, Frank & Sailer, LLP, filed a class
action lawsuit in the United States District Court for the
Middle District of Florida on behalf of shareholders who
purchased or otherwise acquired the securities of FARO
Technologies, Inc. ("FARO" or the "Company") (Nasdaq:FARO)
between May 6, 2004 and November 3, 2005, inclusive (the "Class
Period"). FARO, Simon Raab, Gregory A. Fraser, and Barbara R.
Smith are named as defendants.
FARO and its subsidiaries develop, manufacture, market and
support software-based three-dimensional measurement devices for
manufacturing, industrial, building construction and forensic
applications. The complaint charges FARO and certain of its
officers and directors with violations of the Securities
Exchange Act of 1934, and alleges that throughout the Class
Period defendants directly participated in accounting fraud
which materially misrepresented the Company's financial results
in violation of Generally Accepted Accounting Principles
("GAAP").
At or about the beginning of the Class Period, the Company
represented that it had implemented principles that purportedly
increased the Company's production capacity, among other
improvements, by eliminating overproduction, wait time,
inefficient processes, and product defects, among others. During
the Class Period, defendants issued strong results and positive
guidance which they attributed to, in material part, the
Company's purported implementation of adequate controls and
efficient practices. However, the complaint alleges that
defendants' Class Period representations regarding its financial
performance and prospects were materially false and misleading
when made because the Company's internal inventory and
accounting controls and procedures were wholly defective and
inadequate during the Class Period.
On November 3, 2005, after the market closed, the Company
announced that it had incurred $1.6 million in "inventory
costing and consumption variances" related to the implementation
of a new accounting and inventory management system. Defendant
Simon Raab later admitted that the Company had not been able to
keep up with customer orders which resulted in "substantially
more complex inventory management situations, and . . .
substantial inventory increases." In reaction to this news, the
price of FARO stock plummeted $4.39, or 19.6%, from its closing
price of $22.38 on November 3, 2005, to finally close on
November 4, 2005, at $17.99, on unusually heavy volume.
For more details, contact Eric J. Belfi or Christopher S. Hinton
of Murray, Frank & Sailer, LLP, Phone: (800) 497-8076 or
(212) 682-1818, Fax: (212) 682-1892, E-mail:
info@murrayfrank.com, Web site:
http://www.murrayfrank.com/CM/NewCases/NewCases.asp.
NASH FINCH: Schiffrin & Barroway Lodges Securities Suit in MN
-------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP, initiated a class
action lawsuit in the United States District Court for the
District of Minnesota on behalf of all securities purchasers of
Nash Finch Company ("Nash Finch" or the "Company") (Nasdaq:
NAFC), between February 24, 2005 and October 20, 2005, inclusive
(the "Class Period").
The complaint charges Nash Finch, Ron Marshall, and Le Anne M.
Stewart with violations of the Securities Exchange Act of 1934.
More specifically, the Complaint alleges that the Company failed
to disclose and misrepresented the following material adverse
facts, which were known to defendants or recklessly disregarded
by them:
(1) that the merger between Nash Finch and Roundy's
Distribution Center was plagued by integration
problems;
(2) that the Company's net sales growth rate and earnings
growth rate could not be sustained due to the
integration issues with the Roundy's Distribution
Center;
(3) that the Company's core business was under-performing;
(4) that the Company failed to maintain adequate internal
controls; and
(5) that as a result of the above, the defendants' fiscal
projections were lacking in any reasonable basis when
made.
On October 20, 2005, the Company issued a press release
announcing significantly lower fiscal 2005 earnings guidance of
$3.00 to $3.25 per share, from its previous guidance of $3.70
and $3.89. The Company attributed the lowered guidance to "a
decline in retail gross profit margins, primarily reflecting
inadequate execution in pricing across the Company's retail
operations; depressed wholesale gross profit margins principally
relating to manufacturer promotional spending; and higher than
expected acquisition integration costs." In reaction to this
news, the price of Nash Finch stock fell $12.11 per share, or
28.6 percent, from its closing price of $42.34 on October 20,
2005, to close at $30.23 on October 21, 2005.
Additionally, the complaint alleges that defendants were
motivated to engage in the fraudulent and wrongful conduct to
sell more than $300 million in notes in a private placement and
in order for Company insiders, including defendant Marshall, to
sell more than $17 million of their privately held Nash Finch
shares while in possession of material adverse non-public
information about the Company.
For more details, contact Darren J. Check, Esq. and Richard A.
Maniskas, Esq. of Schiffrin & Barroway, LLP, 280 King of Prussia
Road, Radnor, PA 19087, Phone: 1-888-299-7706 or 1-610-667-7706,
E-mail: info@sbclasslaw.com, Web site:
http://www.sbclasslaw.com.
SERACARE LIFE: Kaplan Fox Files Securities Fraud Suit in S.D. CA
----------------------------------------------------------------
The law firm of Kaplan Fox & Kilsheimer, LLP, filed a class
action suit in the United States District Court for the Southern
District of California against SeraCare Life Sciences, Inc.
("SeraCare" or the "Company") (NASDAQ: SRLS) or (NASDAQ: SRLSE)
and certain of its officers and directors, on behalf of all
persons or entities who purchased the publicly traded common
stock of SeraCare between February 9, 2005 and December 19, 2005
(the "Class Period").
The complaint alleges that during the Class Period, defendants
violated Sections 10(b) and 20(a) of the Securities and Exchange
Act of 1934 by publicly issuing a series of false and misleading
statements regarding the Company's financial condition, and
omitted material facts about the Company, thus causing
SeraCare's shares to trade at artificially inflated prices.
On December 20, 2005, before the market opened, SeraCare issued
a press release in which it disclosed, among other things, that
"the Chairman of the Company's Audit Committee has received a
letter from Mayer Hoffman McCann P.C. ("MHM"), the Company's
independent auditors, in which MHM raised concerns with respect
to the Company's financial statements, accounting documentation
and the ability of MHM to rely on representations of the
Company's management."
The Complaint alleges that during the Class Period, defendants
misrepresented and/or omitted material adverse facts including
that the Company was not complying with generally accepted
accounting principles, certain board members were exerting undue
influence on the Company's reporting and audit processes and
that the Company maintained inadequate internal controls over
financial reporting. Moreover, the Complaint alleges that
Company insiders sold hundreds of thousands of shares of
SeraCare stock during the Class Period at artificially inflated
prices thereby reaping millions of dollars in proceeds.
It is alleged that on December 20, 2005, as a result of the
Company's disclosures of earlier that day, that the price of
SeraCare common stock declined from a prior day close of $19.30
to close at $10.04 per share, a decline of approximately 47%, on
unusually heavy volume.
For more details, contact Frederic S. Fox, Joel B. Strauss,
Donald R. Hall and Jeffrey P. Campisi of KAPLAN FOX &
KILSHEIMER, LLP, 805 Third Ave., 22nd Floor, New York, NY 10022,
Phone: (800) 290-1952 or (212) 687-1980, Fax: (212) 687-7714;
and Laurence D. King of KAPLAN FOX & KILSHEIMER, LLP, 555
Montgomery St., Suite 1501, San Francisco, CA 94111, Phone:
(415) 772-4700, Fax: 415-772-4707.
WELLS FARGO: Stull Stull Lodges Securities Fraud Suit in N.D. CA
----------------------------------------------------------------
The law firm of Stull, Stull & Brody initiated a class action
lawsuit in the United States District Court for the Northern
District of California against Wells Fargo & Company and certain
of its affiliates, on behalf of those who purchased
AllianceBernstein mutual funds from Wells Fargo Investments, LLC
("Wells Fargo Investments") during the period between June 30,
2000 and June 8, 2005, inclusive (the "Class Period").
The AllianceBernstein mutual funds and their respective symbols
are as follows:
AllianceBernstein All-Asia Investment Fund (NASDAQ: AALAX)
(NASDAQ: AAABX)
(NASDAQ: AAACX)
AllianceBernstein Americas Government Income Trust (NASDAQ:
ANAGX) (NASDAQ: ANABX) (NASDAQ: ANACX)
AllianceBernstein Balanced Shares (NASDAQ: CABNX) (NASDAQ:
CABBX) (NASDAQ: CBACX)
AllianceBernstein Blended Style Series - U.S. Large Cap
Portfolio (NASDAQ: ABBAX) (NASDAQ: ABBAX) (NASDAQ: ABBCX)
AllianceBernstein Bond Fund Corporate Bond Portfolio (NASDAQ:
CBFAX)
(NASDAQ: CBFBX) (NASDAQ: CBFCX)
AllianceBernstein Bond Fund Quality Bond Portfolio (NASDAQ:
ABQUX) (NASDAQ: ABQBX) (NASDAQ: ABQCX)
AllianceBernstein Bond Fund U.S. Government Portfolio (NASDAQ:
ABUSX)
(NASDAQ: ABUBX) (NASDAQ: ABUCX)
AllianceBernstein Disciplined Value Fund (NASDAQ: ADGAX)
(NASDAQ: ADGBX)
(NASDAQ: ADGCX)
AllianceBernstein Emerging Market Debt Fund (NASDAQ: AGDAX)
(NASDAQ: AGDBX)
(NASDAQ: AGDCX)
AllianceBernstein Global Small Cap Fund (NASDAQ: GSCAX) (NASDAQ:
AGCBX)
(NASDAQ: GSCCX)
AllianceBernstein Global Strategic Income Trust (NASDAQ: AGSAX)
(NASDAQ: AGSBX) (NASDAQ: AGCCX)
AllianceBernstein Global Value Fund (NASDAQ: ABAGX) (NASDAQ:
ABBGX)
(NASDAQ: ABCGX)
AllianceBernstein Greater China '97 Fund (NASDAQ: GCHAX)
(NASDAQ: GCHBX)
(NASDAQ: GCHCX)
AllianceBernstein Growth & Income Fund (NASDAQ: CABDX) (NASDAQ:
CBBDX)
(NASDAQ: CBBCX)
AllianceBernstein Growth Fund (NASDAQ: AGRFX) (NASDAQ: AGBBX)
(NASDAQ: AGRCX)
AllianceBernstein Health Care Fund (NASDAQ: AHLAX) (NASDAQ:
CBBDX) (NASDAQ: CBBCX)
AllianceBernstein High Yield Fund (NASDAQ: AHYAX) (NASDAQ:
AHHBX) (NASDAQ: AHHCX)
AllianceBernstein Intermediate California Muni Portfolio
(NASDAQ: AICBX)
(NASDAQ: ACLBX) (NASDAQ: ACMCX)
AllianceBernstein Intermediate Diversified Muni Portfolio
(NASDAQ: AIDAX)
(NASDAQ: AIDBX) (NASDAQ: AIMCX)
AllianceBernstein Intermediate New York Muni Portfolio:(NASDAQ:
ANIAX)
(NASDAQ: ANYBX) (NASDAQ: ANMCX)
AllianceBernstein International Premier Growth Fund (NASDAQ:
AIPAX)
(NASDAQ: AIPBX) (NASDAQ: AIPCX)
AllianceBernstein International Value Fund (NASDAQ: ABIAX)
(NASDAQ: ABIBX)
(NASDAQ: ABICX)
AllianceBernstein Mid-Cap Growth (NASDAQ: CHCAX) (NASDAQ: CHCBX)
(NASDAQ: CHCCX)
AllianceBernstein Multi-Market Strategy Trust (NASDAQ: AMMSX)
(NASDAQ: AMMBX) (NASDAQ: AMMCX)
AllianceBernstein Muni Income Fund Arizona Portfolio (NASDAQ:
AAZAX)
(NASDAQ: AAZBX) (NASDAQ: AAZCX)
AllianceBernstein Muni Income Fund California Portfolio (NASDAQ:
ALCAX)
(NASDAQ: ALCBX) (NASDAQ: ACACX)
AllianceBernstein Muni Income Fund Florida Portfolio (NASDAQ:
AFLAX)
(NASDAQ: AFLBX) (NASDAQ: AFLCX)
AllianceBernstein Muni Income Fund Insured California Portfolio
(NASDAQ: BUICX) (NASDAQ: BUIBX) (NASDAQ: BUCCX)
AllianceBernstein Muni Income Fund Insured National Portfolio
(NASDAQ: CABTX) (NASDAQ: CBBBX) (NASDAQ: CACCX)
AllianceBernstein Muni Income Fund Massachusetts Portfolio
(NASDAQ: AMAAX)
(NASDAQ: AMABX)
AllianceBernstein Muni Income Fund Michigan Portfolio (NASDAQ:
AMIAX)
(NASDAQ: AMIBX) (NASDAQ: AMICX)
AllianceBernstein Muni Income Fund Minnesota Portfolio (NASDAQ:
AMNAX)
(NASDAQ: AMNBX) (NASDAQ: AMNCX)
AllianceBernstein Muni Income Fund National Portfolio (NASDAQ:
ALTHX)
(NASDAQ: ALTBX) (NASDAQ: ALNCX)
AllianceBernstein Muni Income Fund New Jersey Portfolio (NASDAQ:
ANJAX)
(NASDAQ: ANJBX) (NASDAQ: ANJCX)
AllianceBernstein Muni Income Fund New York Portfolio (NASDAQ:
ALNYX)
(NASDAQ: ALNBX) (NASDAQ: ANYCX)
AllianceBernstein Muni Income Fund Ohio Portfolio (NASDAQ:
AOHAX) (NASDAQ: AOHBX) (NASDAQ: AOHCX)
AllianceBernstein Muni Income Fund Pennsylvania Portfolio
(NASDAQ: APAAX)
(NASDAQ: APABX) (NASDAQ: APACX)
AllianceBernstein Muni Income Fund Virginia Portfolio (NASDAQ:
AVAAX)
(NASDAQ: AVABX) (NASDAQ: AVACX)
AllianceBernstein New Europe Fund (NASDAQ: ANEAX) (NASDAQ:
ANEBX) (NASDAQ: ANECX)
AllianceBernstein Premier Growth Fund (NASDAQ: APGAX) (NASDAQ:
APGBX)
(NASDAQ: APGCX)
AllianceBernstein Quasar Fund (NASDAQ: QUASX) (NASDAQ: QUABX)
(NASDAQ: QUACX)
AllianceBernstein Real Estate Investment Fund (NASDAQ: AREAX)
(NASDAQ: AREBX) (NASDAQ: ARECX)
AllianceBernstein Select Investor Series Biotechnology Portfolio
(NASDAQ: ASBAX) (NASDAQ: AIBBX) (NASDAQ: ASBCX)
AllianceBernstein Select Investor Series Premier Portfolio
(NASDAQ: ASPAX)
(NASDAQ: ASPBX) (NASDAQ: ASPCX)
AllianceBernstein Select Investor Series Technology Portfolio
(NASDAQ: AITAX) (NASDAQ: AITBX) (NASDAQ: AITCX)
AllianceBernstein Short Duration (NASDAQ: ADPAX) (NASDAQ: ADPBX)
(NASDAQ: ADPCX)
AllianceBernstein Small Cap Value Fund (NASDAQ: ABASX) (NASDAQ:
ABBSX)
(NASDAQ: ABCSX)
AllianceBernstein Technology Fund (NASDAQ: ALTFX) (NASDAQ:
ATEBX) (NASDAQ: ATECX)
AllianceBernstein Utility Income Fund (NASDAQ: AUIAX) (NASDAQ:
AUIBX)
(NASDAQ: AUICX)
AllianceBernstein Value Fund (NASDAQ: ABVAX) (NASDAQ: ABVBX)
(NASDAQ: ABVCX)
AllianceBernstein Worldwide Privatization Fund (NASDAQ: AWPAX)
(NASDAQ: AWPBX) (NASDAQ: AWPCX)
The Wells Fargo Preferred Funds include mutual funds in the
following mutual fund families: Franklin Templeton Investments,
Putnam Investments, MFS Investment Management, Fidelity
Investments, Evergreen Investments, Alliance Bernstein
Investment Research and Management, Van Kampen Investments, AIM
Distributors, Inc., Oppenheimer Funds, Inc., Eaton Vance Managed
Investments, ING Funds Distributors, LLC, Allianz Global
Investors Distributors, LLC, Federated, The Hartford Mutual
Funds, Dreyfus Service Corporation, Delaware Investments,
Pioneer Investment Management, Inc., Scudder Investments, and
Wells Fargo Mutual Funds.
The H.D. Vest Preferred Funds include mutual funds in the
following mutual fund families: Oppenheimer Funds, Putnam
Investments, Scudder Investments, MFS Investment Management, Van
Kampen Investments, Lincoln Financial Distributors, AIM
Investments, Phoenix Investment Partners, John Hancock Funds,
Wells Fargo Funds, American Funds, and Franklin Templeton
Investments.
The action is pending in the United States District Court for
the Northern District of California against defendant Wells
Fargo & Company and certain of its affiliated entities. The
complaint alleges that during the Class Period, defendants
served as financial advisors who purportedly provided unbiased
and honest investment advice to their clients. Unbeknownst to
investors, defendants, in clear contravention of their
disclosure obligations and fiduciary responsibilities, failed to
properly disclose that they had engaged in a scheme to
aggressively push Wells Fargo Investments and H.D. Vest sales
personnel to steer clients into purchasing certain Wells Fargo
Funds and Wells Fargo and H.D. Vest Preferred Funds
(collectively, "Shelf Space Funds") that provided financial
incentives and rewards to Wells Fargo and H.D. Vest and their
personnel based on sales. The complaint alleges that defendants'
undisclosed sales practices created an insurmountable conflict
of interest by providing substantial monetary incentives to sell
Shelf-Space Funds to their clients, even though such investments
were not in the clients' best interest. Wells Fargo Investments
and H.D. Vest's failure to disclose the incentives constituted
violations of federal securities laws.
The action also includes a subclass of persons who held any
shares of Wells Fargo Mutual Funds. The complaint additionally
alleges that the investment advisor subsidiary of Wells Fargo,
Wells Fargo Funds Management, created further undisclosed
material conflicts of interest by entering into revenue sharing
agreements with brokers at Wells Fargo Investments and H.D. Vest
to push investors into Wells Fargo Funds, regardless of whether
such investments were in the investors' best interests. The
investment advisors financed these arrangements by illegally
charging excessive and improper fees to the fund that should
have been invested in the underlying portfolio. In doing so they
breached their fiduciary duties to investors under the
Investment Company Act and state law and decreased shareholders'
investment returns.
The action includes a second subclass of persons who purchased a
Wells Fargo Financial Plan that held Wells Fargo Funds. The
Wells Fargo Financial Plans include, but are not limited to Full
Service Brokerage Accounts, Wells Asset Management accounts,
WellsChoice account, and WellsSelect account.
For more details, contact Tzivia Brody of Stull, Stull & Brody,
6 East 45th Street, New York, NY 10017, Phone: 1-800-337-4983,
Fax: 212/490-2022, E-mail: SSBNY@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 2006. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without
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