C L A S S A C T I O N R E P O R T E R Friday, March 14, 2008, Vol. 10, No. 53 Headlines ADOLOR CORP: Penn. Court Mulls Motion to Dismiss Securities Suit ADVANCE AMERICA: Faces Mo. Lawsuit Over Lending Laws Violations AMCOR LTD: Visy-Amcor Product Users May Opt-Out of Cartel Suit CALIFORNIA: Suit Accuses Teacher of Abusing Disabled Children CHOICEPOINT INC: Reaches Tentative Settlement in Ga. ERISA Case CHOICEPOINT INC: Reaches $10M Settlement in CA Securities Suit CHOICEPOINT INC: "Taylor" Matter Still Enjoined From Proceeding CHOICEPOINT INC: Fla. Court Considers DPPA Suit Settlement COMMUNITY HEALTH: Appeals Class Certification Order in Ala. Suit COMMUNITY HEALTH: Ill. Appellate Court Considers Appeal in "Rix" COMMUNITY HEALTH: Discovery Still Ongoing in "Chronister" Matter COMPUCREDIT CORP: Continues to Face N.C. Consumer Fraud Lawsuit CORINTHIAN COLLEGES: Ca. Suit Alleges Unfair Business Practices DVI INC: Settles "Merrill Lynch" Securities Lawsuit in Penna. GENERAL REINSURANCE: No Trial Date Set for AIG Securities Suit GENERAL REINSURANCE: Still Faces Litigation Over ROA Insurance HIH INSURANCE: Ex-Director Settles Misleading Conduct Claim IKANOS COMMS: Court Dismisses Securities Lawsuit MOBILE OPERATORS: Customers' $2.5B Suit in Jerusalem Dismissed OANDO PLC: May Face Lawsuit Over Adulterated Imported Petrol OMAHA MEATPACKERS: Face Lawsuits Over Employee Payments PENNSYLVANIA: Delinquent Tax Communications Suit Settled RC2 CORP: Sued Over Lead Content in Paint Used on Toys SUNBEAM PRODUCTS: Heating Pads Catch Fire, Fla. Lawsuit Claims SUNOPTA INC: Federman Reminds Investors of Mar. 28 Deadline TOYS R US: Faces N.Y. Lawsuit Over Deceptive Business Practices U.S. HOUSING DEPT: To Pay Employees $24MM in Settlement of Suit W.R. GRACE: Plaintiffs Appeal Dismissal of ERISA Suits in Mass. W.R. GRACE: Faces Mass. Litigation Alleging ERISA Violations WATCHGUARD TECH: Court Dismisses Suit vs. 2 Private Equity Firms * Milberg Weiss Tops U.S. Class-Action Ranks, Study Says New Securities Fraud Cases ENERNOC INC: Faces Securities Fraud Lawsuit in Massachusetts MF GLOBAL: Federman & Sherwood Announces Securities Suit Filing MF GLOBAL: Faces Securities Fraud Lawsuit in S.D. New York PMI GROUP: Abraham Fruchter Files Securities Fraud Suit in CA PMI GROUP: Coughlin Stoia Commences Securities Fraud Suit in CA SOCIETE GENERALE: Cohen Milstein Files NY Securities Fraud Suit Asbestos Alerts ASBESTOS LITIGATION: XL Capital Records 1,716 Claims at Dec. 31 ASBESTOS LITIGATION: Watts Water Faces 100 Cases in Miss., N.J. ASBESTOS LITIGATION: W.R. Grace Still Has Damage, Injury Actions ASBESTOS LITIGATION: 460 Damage Claims at Dec. Remain v. Grace ASBESTOS LITIGATION: Personal Injury Cases Pending v. W.R. Grace ASBESTOS LITIGATION: Grace Records $917M of Coverage at Dec. 31 ASBESTOS LITIGATION: W.R. Grace's Libby Liability Totals $270.8M ASBESTOS LITIGATION: Grace to Appeal 9th Circuit Ruling in Suit ASBESTOS LITIGATION: NJDEP Action v. Grace, 2 Ex-Workers Ongoing ASBESTOS LITIGATION: Supreme Court Favors CNA in Lautenschuetz ASBESTOS LITIGATION: Transatlantic Records $124M for A&E Claims ASBESTOS LITIGATION: Union Pacific Cites $265M Liability at Dec. ASBESTOS LITIGATION: Selective Insurance Records 2,177 Claims ASBESTOS LITIGATION: Safeco Reserves $227.8M for Claims at Dec. ASBESTOS LITIGATION: Exposure Suits Pending v. Olin Corporation ASBESTOS LITIGATION: Suits v. MeadWestvaco Drop to 350 at Dec. ASBESTOS LITIGATION: Lawsuits Still Pending v. Lockheed Martin ASBESTOS LITIGATION: 103T Open Claims Pending v. ITT at Dec. 31 ASBESTOS LITIGATION: Illinois Tool, Units Face Welding Lawsuits ASBESTOS LITIGATION: Injury Lawsuit Ongoing v. California Water ASBESTOS LITIGATION: Summary Judgment Decision Reversed in Horak ASBESTOS LITIGATION: Third-Party Actions Pending v. Badger Meter ASBESTOS LITIGATION: Hercules Incurs $5.7M for Legal Fees in '07 ASBESTOS LITIGATION: Hercules Records $227M Liability at Dec. 31 ASBESTOS LITIGATION: Claims v. Hercules Drop to 25,562 at Dec. ASBESTOS LITIGATION: Exposure Suits Still Pending v. CenterPoint ASBESTOS LITIGATION: Chicago Bridge Faces 1,900 Suits at Dec. 31 ASBESTOS LITIGATION: CBS Faces 72,120 Pending Claims at Dec. 31 ASBESTOS LITIGATION: General Motors Corp. Facing Exposure Claims ASBESTOS LITIGATION: Coca-Cola Suits Involving Aqua-Chem Ongoing ASBESTOS LITIGATION: La. Court Issues Split Ruling in Glaxo Case ASBESTOS LITIGATION: 2nd Circuit Reverses Ruling in Rainey Suit ASBESTOS LITIGATION: Crown Cork Records 79,000 Claims at Dec. 31 ASBESTOS LITIGATION: Appeal on Crown Cork Action Heard in Texas ASBESTOS LITIGATION: Plaintiffs' Appeals v. Crown Cork Pending ASBESTOS LITIGATION: Deere Still Subject to Liability Lawsuits ASBESTOS LITIGATION: Delphi Fin'l. Cites $9M Losses, LAE in '07 ASBESTOS LITIGATION: Cytec Ind. Records $53.9M Liability at Dec. ASBESTOS LITIGATION: 8,200 Claims Still Pending v. Cytec at Dec. ASBESTOS LITIGATION: Suit v. CSX Transportation Filed on Jan. 29 ASBESTOS LITIGATION: W.R. Grace to Pay $250M for Montana Cleanup ASBESTOS LITIGATION: Commission Refers Equitable Case to Iowa AG ASBESTOS LITIGATION: Gosse Seeks End to Canadian Housing Inquiry ASBESTOS LITIGATION: Leigh Day Recovers Over GBP170T in Damages ASBESTOS LITIGATION: U.K. Group Seeks to Widen Drug Eligibility ASBESTOS LITIGATION: Sen. Baucus Pushes for Libby, Mont. Cleanup ASBESTOS LITIGATION: Whisnat Lawsuit v. DuPont Ongoing in Texas ASBESTOS LITIGATION: N.Y. Carpenter to Serve 15 Months in Prison ASBESTOS LITIGATION: Calif. Couple Gets $20M in Georgia-Pacific ASBESTOS LITIGATION: Suit v. 42 Firms Filed Last Feb. 1 in W.Va. ASBESTOS LITIGATION: French Court Upholds EUR75T Fine v. Alstom ASBESTOS LITIGATION: Ford Lodges Appeal to AUD840T Compensation ASBESTOS LITIGATION: Aon Corporation Has $71M Liability at Dec. ASBESTOS LITIGATION: Dalmine Faces 57 Pending Claims at Dec. 31 ASBESTOS LITIGATION: Texas Eastern Faces James Case in La. Court ASBESTOS LITIGATION: Entergy Units Face 600 Actions w/ 8T Claims ASBESTOS LITIGATION: Essex Int'l. Still Facing Liability Suits ASBESTOS LITIGATION: SCC Affiliates Involved in ASARCO Matters ASBESTOS LITIGATION: Exposure Claims Pending v. Roper Industries ASBESTOS LITIGATION: ASARCO Seeing $242M to $447M in Liabilities ASBESTOS ALERT: Appeals Court Favors Butlers in Case v. Domco ********* ADOLOR CORP: Penn. Court Mulls Motion to Dismiss Securities Suit ---------------------------------------------------------------- The U.S. District Court for the Eastern District of Pennsylvania has yet to rule on a motion by Adolor Corp. to dismiss a consolidated securities class action filed against it, its director and certain officers. The lawsuit was filed on April 21, 2004, with the U.S. District Court for the Eastern District of Pennsylvania against the company, one of its directors and certain of its officers, seeking unspecified damages on behalf of a putative class of persons who purchased common stock between Sept. 23, 2003, and Jan. 14, 2004. The complaint alleges violations of Section 10(b) and section 20(a) of the U.S. Securities Exchange Act of 1934, in connection with the announcement of the results of certain studies in the company's Phase III clinical trials for Entereg(R), which allegedly had the effect of artificially inflating the price of the company's common stock. The suit has been consolidated with three subsequent actions asserting similar claims under the caption, "In re Adolor Corporation Securities Litigation, No. 2:04-cv-01728." On Dec. 29, 2004, the district court issued an order appointing the Greater Pennsylvania Carpenters' Pension Fund as lead plaintiff. The appointed lead plaintiff filed a consolidated amended complaint on Feb. 28, 2005. The complaint purported to extend the class period, so as to bring claims on behalf of a putative class of Adolor shareholders who purchased stock between Sept. 23, 2003, and Dec. 22, 2004. The complaint also adds as defendants the board of directors, asserting claims against them and the other defendants for violation of Section 11 and Section 15 of the Securities Act of 1933 in connection with the company's public offering of stock in November 2003. The company and its management and director defendants moved to dismiss the complaint on April 29, 2005. The plaintiffs responded to the motion to dismiss on June 28, 2005, and the defendants' reply was filed on Aug. 12, 2005. Adolor Corp. reported no development in the matter in its Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. The suit is "In re Adolor Corp. Securities Litigation, No. 2:04- cv-01728," filed with U.S. District Court for the Eastern District of Pennsylvania Representing the plaintiffs are: Ramzi Abadou, Esq. (ramzia@lcsr.com) Lerach Coughlin Stoia & Robbins LLP 401 B St., Ste. 1700 San Diego CA, 92101 Phone: 619-231-1058 - and - Marc S. Henzel, Esq. (mhenzel182@aol.com) Law Offices of Marc S. Henzel 273 Montgomery Ave., Suite 202 Bala Cynwyd PA 19004 Phone: 610-660-8000 Representing the defendants are: Michael S. Doluisio, Esq. (michael.doluisio@dechert.com) Jeffrey G. Weil, Esq. Dechert, Price & Rhoads 1717 Arch Street, 4000 Bell Atlantic Tower Philadelphia, PA 19103-2793 Phone: 215-994-2749 Fax: 215-994-2222 - and - Laurie B. Smilan, Esq. (laurie.smilan@lw.com) Latham & Watkins LLP Two Freedom Square 11955 Freedom Drive, Suite 500 Reston VA 20190-5651 Phone: 1-703-456-5220 Fax: 1-703-456-1001 ADVANCE AMERICA: Faces Mo. Lawsuit Over Lending Laws Violations --------------------------------------------------------------- Advance America and Cash Advance Centers of Missouri are facing a class-action complaint filed with the U.S. District Court for the Western District of Missouri for violating a slew of lending laws, starting with charging 277% interest on a $500 loan, CourtHouse News Service reports. Named plaintiffs Patricia Hooper and Josephine Vaughan brings the action against the defendants: -- Advance America, -- Cash Advance Centers of Missouri, Inc., d/b/a Advance America, as a result of the defendant's violations of the Missouri Merchandising Practices Act (Mo.Rev.Stat. 407.010) and the laws governing payday lenders (Mo.Rev.Stat. 408.500 et seq.). With regards to the plaintiffs and the class, Advance America violated Missouri law in each of the following ways: * Advance America renewed the plaintiffs' loans without reducing the principal. * Advance America never evaluated the plaintiffs' ability to repay their loans. * Advance America limited the number of renewals that the plaintiffs could obtain to less than six despite the fact that Missouri law provides consumer six renewals. * Advance America charged an interest rate that made obtaining six legal renewals, in which the principal was reduced by the minimum required amount of 5%, impossible without the plaintiffs and the class paying more than 75% of the original loan amount in interest and fees. This policy reinforced Advance America's stated policy of allowing no more than four renewals. This allowed Advance America to collect far larger sums of money than Missouri law would allow and encouraged the plaintiffs and class to remain in loans longer than the legislature intended. The plaintiffs bring the action on behalf of themselves and all others similarly situated pursuant to Missouri Revised Statute 407.025.3, Federal Rule of Civil Procedure 23 on behalf of all Missouri citizens who obtained any payday loan from Advance America, where Advance America: A) limited the number of principal reduction renewals to fewer than six; B) set the interest rate on the loan at a level that would not allow six renewals without requiring the customer's payment of total interest and fees paid by the consumer to exceed 75% of the original amount borrowed; C) failed to consider the financial ability of the borrower to reasonably repay the loan in the time and manner specified in the loan contract; D) charged a total amount of accumulated interest and fees exceeding 75% of the initial loan amount of that loan for the entire term of that loan and all renewals of that loan; E) flipped consumer loans by encouraging the consumer to "pay off" one loan and immediately borrow back the money that was paid. The plaintiffs want the court to rule on: i. whether the defendant illegally limited the number of renewals available to the plaintiffs and the class; ii. whether the defendant illegally renewed the loans of the plaintiffs and the class by failing to reduce the principal by at least 5%; iii. whether the defendant set interest rates at a level that would not allow the six renewals permitted by law without causing the total amount of interest and fees paid on the loan to exceed 75% of the original loan amount; iv. whether the defendant failed to evaluate the ability of the plaintiffs and the class to repay loans in the manner and time specified; v. whether the defendant charged over 75% of the original loan amount in interest and fees; vi. whether the defendant's practice of renewing loans without lowering the principal was an unfair practice; vii. whether the defendant willfully violated Missouri law; viii. whether the defendant's arbitration clause is unconscionable and against Missouri public policy; ix. whether the defendant's arbitration clause serves as a de facto immunity clause against claims by the plaintiffs and the class. The plaintiffs and the class request that the Court enter an order: -- maintaining the suit as a class action pursuant to Missouri Supreme Court Rule 52.08 and Missouri Revised Statute 407.025.3, and certifying classes; -- certifying the plaintiffs as class representative and appointing their counsel as counsel for the class; -- awarding the plaintiffs and class compensatory damages, to include any fees and interest illegally charged and further awarding any damages caused by such payments; -- awarding the plaintiffs and the class their consequential and incidental damages; -- awarding total damages in excess of $25,000; -- awarding the plaintiffs and class pre-judgment and post- judgment interest as provided by law; -- awarding the plaintiffs and class punitive damages as provided by law; -- imposing a constructive trust and equitable lien against all money paid by the class to and wrongfully withheld by Advance America; -- awarding the plaintiffs and the class attorneys' fees and costs as provided by law; -- entering a preliminary and permanent injunction prohibiting Advance America from engaging in unfair or deceptive trade practices including the limiting renewals to four, the setting of an interest rate that exceeds the permissible rate, the renewal of loans without the reduction of principal by at least 5%, the collection of interest and fees exceeding 75% of the original loan amount, encouraging and allowing customers to pay off one loan with the proceeds of another and the issuing of loans to customers without an evaluation of their ability to repay the loan in the time and manner prescribed; -- entering an order that the defendant abide by the terms of the spoliation letter; -- issuing a declaratory judgment that the defendant's arbitration clause is unconscionable, against Missouri public policy, and unenforceable against the plaintiffs and the class; and -- awarding the plaintiffs and the class such other and further relief as may be just and proper. The suit is "Patricia Hooper et al v. Advance America et al., Case No. 08-4045-cv-c-NKL," filed with the U.S. District Court for the Western District of Missouri. Representing the plaintiffs are: John Campbell, Esq. Erich Vieth, Esq. Simon Passanante, PC 701 Market St., Suite 1150 St. Louis, Missouri 63101 Telephone: (314) 241-2929 Facsimile: (314) 241-2029 Debra K. Lumpkins, Esq. Gateway Legal Services, Inc. 200 N. Broadway, Ste. 950 St. Louis, MO 63102 Phone: (314)534-0404 Fax: 652-8308 - and - Noel (Neal) Bisges Bisges Law Office 529 East High Street Jefferson City, MO 65101 Phone: (573) 635-6850 AMCOR LTD: Visy-Amcor Product Users May Opt-Out of Cartel Suit -------------------------------------------------------------- Retailers, manufacturers and transporters who used products by Amcor Ltd. and Visy Industries while the two companies maintained a price-fixing cartel will be given the choice to opt out of a class action lawsuit, Inside Retailing Online reports. According to the Australian Financial Review, law firm Maurice Blackburn Cashman received court approval to issue the opt-out notices. Inside Retailing recounts that the class action suit was filed in April 2006 against Amcor, Visy, Amcor Packaging (Australia) Ltd., and Fibre Containers (Queensland) Pty Ltd., by the firm and seeks damages for the victims of the cartel conduct that spanned four years from 2000. As reported in the Class Action Reporter on Oct. 6, 2006, the plaintiffs in the lawsuit claim to have been damaged by price fixing and market sharing in the cardboard box industry between 2000 and 2005. Maurice Blackburn estimated that businesses incurred damages of between $2 million and $3 million as a result of anti-competitive practices in the industry. The class action alleges that customers of Amcor and Visy were overcharged between 8% and 15% for their cardboard packaging after the companies allegedly entered into a deal to artificially inflate prices. On November 2, 2007, Inside Retailing further recalls, the Federal Court accepted a plea deal between the Australian Competition and Consumer Commission and Visy and fined the Visy Board of Directors and its owner, Richard Pratt, $36 million. Visy Board executives Harry Debney and Rod Carroll were fined $1.5 million and $500,000 respectively. The ACCC had earlier granted Amcor and its former senior executives immunity from prosecution for blowing the whistle on the cartel and cooperating with the ACCC's extensive investigation. CALIFORNIA: Suit Accuses Teacher of Abusing Disabled Children ------------------------------------------------------------- Benicia High School special education teacher Karla Buckley is facing a class-action complaint filed with the U.S. District Court for the Northern District of California accusing her of abusing disabled children, CourtHouse News Service reports. The plaintiffs bring the lawsuit on behalf of all children with disabilities attending Benicia High School who have been denied their right to full and equal access to, and use of enjoyment of, the facilities, programs, services and activities of Benicia High School because of past abusive conduct concerning the discipline of children with disabilities. The complaint alleges that the special ed teacher and her aide tied a disabled student to his wheelchair, and left him "upside down with his injured foot in the air" for a long time, to punish the child "and for the amusement of Defendants." The child's parents claim the teacher and aide subjected their child, and others, to other "unhealthy, sub-human and humiliating conditions on several occasions." The plaintiffs accuse Ms. Buckley of supervising the abuses, which allegedly occurred from 2004 through 2007. They claim the school nurse documented the abuse and reported it to Benicia Police, which "concluded the abuse had occurred, and referred the case to the Solano County District's Office for criminal prosecution," but the DA refused to prosecute. All of the children involved are severely disabled. The parents claim that Ms. Buckley's aide covered one child's hands with glue as punishment, and then watched his distress "in amusement." The plaintiffs also content that Ms. Buckley or her aide forced one child to walk after foot surgery "despite knowledge that his foot was injured and despite explicit instructions from his doctor that he was not to walk during recovery. Defendant's actions were motivated by personal animus toward DK for his disability related behaviors and for personal entertainment." The parents claim that the school principal and district superintendent refused to stop the abuses, or negligently permitted them. The plaintiffs ask for: -- an order and judgment enjoining defendants from violating the Americans with Disability Act; Section 504 of the Rehabilitation Act of 1973; California Civil Code sections 51, et seq., and California Code Sections 54, et seq; and California Government Code Section 11135 et seq.; -- a declaration that the Benicia Unified School District's and Solano County Office of Education's policies, practices or procedures concerning the improper discipline/behavior management of children with disabilities denied their right to full and equal access to, and use and enjoyment of, the facilities, programs, services and activities of Benecia Unified School District's and SCOE's policies as required by law; -- payment of costs incurred; -- payment of damages according to proof; -- payment of plaintiffs' reasonable attorney fees and costs; and -- payment of punitive damages. The suit is "D.K. et al. v. Solano County Office of Education et al.," filed with the U.S. District Court for the Northern District of California. Representing the plaintiffs are: Tamara Loughrey, Esq. Robert L. Woelfel, Esq. Loughrey & Woelfel, LLP 31 Panoramic Way, Suite 200 Walnut Creek, CA 94597 CHOICEPOINT INC: Reaches Tentative Settlement in Ga. ERISA Case --------------------------------------------------------------- ChoicePoint, Inc. reached a tentative settlement in a purported class action that accuses it of violating the Employee Retirement Income Security Act, according to its Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. The class action was filed May 20, 2005, with the U.S. District Court for the Northern District of Georgia against the company and certain individuals who are alleged to be fiduciaries under the ChoicePoint, Inc. 401 (K) Profit Sharing Plan. The suit alleged violations of ERISA fiduciary rules through the acquisition and retention of ChoicePoint stock by the Plan on and after Nov. 24, 2004. The plaintiffs sought compensatory damages, injunctive and equitable relief, attorneys' fees and costs. On Nov. 21, 2007, a Settlement Agreement was signed by all parties to the litigation and filed with the District Court. Pursuant to the Settlement Agreement, the parties agreed to the following equitable relief: -- Plan participants will retain the right through Dec. 31, 2010, to diversify freely out of the Company's matching contribution made in the Company's common stock; -- the Company's matching contribution will be at least 25% for three years; -- the Company will continue its current investment education program for three years; and -- the Company will post language on its intranet site for three years that will advise participants to give careful consideration of the benefits of a well- balanced and diversified investment portfolio. In addition, the Company agreed to pay $10,000 to the named plaintiff, attorneys' fees and costs in the amount of $100,000, costs of settlement notices to the class as well as costs of settlement administration, and costs to retain an independent fiduciary for settlement review and approval on behalf of Plan participants. On Dec. 6, 2007, the Company filed a Joint Motion for Preliminary Approval of the Class Action Settlement with the District Court, and on Dec. 11, 2007, the Company filed its Joint Motion to Stay Appeal Pending Review and Approval of Settlement with the District Court. The suit is "Curtis R. Mellot v. ChoicePoint Inc., et al., Case No. 1:05-cv-01340-JTC," filed with the U.S. District Court for the Northern District of Georgia, Judge Jack T. Camp presiding. Representing the plaintiffs are: Thomas McKenna, Esq. (tjmckenna@gaineyandmckenna.com) Gainey & McKenna, 4th Floor, 295 Madison Avenue New York, NY 10017 Phone: 212-983-1300 Fax: 212-983-0383 Lisa T. Millican, Esq. (lisa.millican@lawofficepc.com) Greenfield Millican, P.C. 800 The Grant Building, 44 Broad Street NW Atlanta, GA 30303 Phone: 404-522-1122 Ronen Sarraf, Esq. (ronen@sarrafgentile.com) Sarraf Gentile, LLP 485 Seventh Avenue, Suite 1005, Suite 1005 New York, NY 10018 Phone: 212-868-3610 - and - Kenneth J. Vianale, Esq. (kvianale@vianalelaw.com) Vianale & Vianale 2499 Glades Road, Suite 112 Boca Raton, FL 33431 Phone: 561-392-4750 Fax: 561-392-4775 CHOICEPOINT INC: Reaches $10M Settlement in CA Securities Suit -------------------------------------------------------------- ChoicePoint, Inc. reached tentative $10-million settlement in a consolidated securities fraud class action filed against it with the U.S. District Court for the Central District of California, according to the company's Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. On March 4, 2005, a purchaser of the company's securities filed a lawsuit against the company and certain of its officers with the U.S. District Court for the Central District of California. The complaint alleged that the defendants violated federal securities laws by issuing false or misleading information in connection with the fraudulent data access. Additional similar complaints were filed by other purchasers of the company's securities with the U.S. District Court for the Central District of California on March 10, 2005, and in the Northern District of Georgia on March 11, 2005, March 22, 2005 and March 24, 2005. By court order, the cases pending in the California were transferred to the U.S. District Court for the Northern District of Georgia. By order dated Aug. 5, 2005, the court consolidated the pending cases into a single consolidated action, "In re ChoicePoint Inc. Securities Litigation, 1:05-CV-00686." On Nov. 14, 2005, the court entered an order appointing the Alaska Laborers Employers Retirement Fund as lead plaintiff for the proposed plaintiff class. A consolidated amended complaint was filed on Jan. 13, 2006, seeking certification as a class action and unspecified compensatory damages, attorneys' fees, costs, and other relief. On March 14, 2006, the defendants filed a motion to dismiss the consolidated amended complaint. The motion was dismissed by the court. Thus, on Jan. 25, 2007, the defendants filed a petition asking the U.S. Circuit Court of Appeals for the Eleventh Circuit to allow them to appeal on an interlocutory basis. On May 3, 2007, the defendants' petition was denied. As a result, the District Court re-opened the case. Based on the subsequent U.S. Supreme Court decision in "Tellabs, Inc. v. Makor Issues & Rights, Ltd.," which requires District Courts to consider competing inferences of scienter rather than just those most favorable to a plaintiff, the Company filed a renewed motion to dismiss which is currently pending before the District Court. On Jan. 15, 2008, the Company entered into a Letter of Understanding pursuant to which the parties to the litigation would, subject to notice to the class, court approval and certain other conditions, settle all claims. Under the terms of the Letter of Understanding, the Company will pay $10 million to the plaintiffs, subject to court approval. The Company anticipates filing a definitive settlement agreement with the U.S. District Court for the Northern District of Georgia by March 31, 2008. The suit is "In re ChoicePoint Inc. Securities Litigation, 1:05- CV-00686," filed with the U.S. District Court for the Northern District of Georgia, Judge Jack T. Camp presiding. Representing the plaintiffs are: Martin D. Chitwood, Esq. (mdc@classlaw.com) Chitwood & Harley, Esq. 1230 Peachtree Street, N.E. 2300 Promenade II Atlanta, GA 30309 Phone: 404-873-3900 Edward P. Dietrich, Esq. (edd@lerachlaw.com) Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, LLP Suite 1900, 655 West Broadway San Diego, CA 92101 Phone: 619-231-1058 Fax: 619-231-7423 - and - Christopher Kim, Esq. Lim, Ruger & Kim, LLP 1055 West 7th Street, 28th Floor Los Angeles, California, 90017-2554 Phone: (213) 955-9500 Fax: (213) 955-9511 e-mail: info@lrklawyers.com Representing the defendants is: Tracy Cobb Braintwain, Esq. (tbraintwain@kslaw.com) King & Spalding, LLP 1180 Peachtree Street, NE Atlanta, GA 30309-3521 Phone: 404-572-2714 Fax: 404-572-5139 CHOICEPOINT INC: "Taylor" Matter Still Enjoined From Proceeding --------------------------------------------------------------- The class action, "Taylor v. Acxiom Corp.," which is pending against ChoicePoint, Inc., with the U.S. District Court for the Eastern District of Texas remains enjoined from proceeding. The suit was filed on Jan. 5, 2007, against the company and certain of its competitors on behalf of each and every individual in the State of Texas whose name, address, driver identification number, and certain other identifiers are contained in motor vehicle records obtained by the defendants from the Texas Department of Public Safety without the express consent of the individual during the period from June 1, 2000, through the date of judgment. The plaintiff also filed pleadings seeking to intervene in "Richard Fresco, et al. v. Automotive Directions, Inc., et al., Case No. CIV-03-61063- Martinez/Klein." The plaintiff is objecting to a proposed settlement agreement for the case, which is pending in the U.S. District Court for the Southern District of Florida. Such plaintiff also filed a Motion to Stay Proceedings in the "Fresco" litigation pending the outcome of the Texas Court's class certification determination in "Taylor." On Feb. 8, 2007, the company filed a motion to dismiss the Taylor litigation based on the fact that Fresco was first-filed, the nationwide class in "Fresco" encompasses the Texas class, and reasons of judicial economy and fundamental fairness dictate against duplicative class actions in federal courts. The Taylor litigation is currently enjoined from proceeding pursuant to the District Court's order issued in the Fresco litigation. The company reported no development in the matter in its Feb. 29, 2008 Form 10-K Filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. The suit is "Taylor et al. v. Acxiom Corp. et al., Case No. 2:07-cv-00001-TJW," filed with the U.S. District Court for the Eastern District of Texas, Judge Judge T. John Ward presiding. Representing the plaintiffs is: Jeremy Reade Wilson, Esq. (jwilson@corealaw.com) The Corea Firm, PLLC The Republic Center, 325 North St. Paul St., Ste. 4150 Dallas, TX 75201 Phone: 214-953-3900 Fax: 214-953-3901 Representing the defendants are: David J. Beck, Esq. (dbeck@brsfirm.com) Beck Redden & Secrest 1221 McKinney St., Suite 4500, One Houston Center Houston, TX 77010-2020 Phone: 713/951-3700 Fax: 713/951-3720 George Barton Butts, Esq. (george.butts@dlapiper.coml) DLA Piper Rudnick Gray Cary US LLP 12221 S. MoPac Expressway, Suite 400 Austin, TX 78746 Phone: 512/457-7068 Fax: 512/457-7001 - and - James Patrick Kelley, Esq. (patkelley@icklaw.com) Ireland Carroll & Kelley 6101 S. Broadway Ste. 500 Tyler, TX 75703 Phone: 903-561-1600 Fax: 903-581-1071 CHOICEPOINT INC: Fla. Court Considers DPPA Suit Settlement ---------------------------------------------------------- The U.S. District Court for the Southern District of Florida has yet to grant final approval to a proposed settlement in the class action, "Fresco, et al. v. Automotive Directions Inc., et al.," which alleges violation of the Driver's Privacy Protection Act and names ChoicePoint, Inc., as a defendant. The class action was filed on Aug. 11, 2003, with the U.S. District Court for the Southern District of Florida. It alleges that the company obtained, disclosed and used information obtained from the Florida Department of Highway Safety and Motor Vehicles in violation of DPPA. The plaintiffs seek to represent classes of individuals whose personal information from Florida DHSMV records has been obtained, disclosed and used for marketing purposes or other allegedly impermissible uses by the company without the express written consent of the individual. A number of the company's competitors have also been sued in the same or similar litigation in Florida. This complaint seeks certification as a class action, compensatory damages, attorneys' fees and costs, and injunctive and other relief. The company has joined with the other defendants in a motion for judgment on the pleadings as to the plaintiffs' "obtaining" claim. To date, the court has not ruled on the pending motion. After vigorously defending against the action, the defendants engaged in court ordered mediation beginning in February 2006. A proposed settlement agreement was filed with the court on Dec. 20, 2006, on behalf of the plaintiffs and all but two of the named defendants. On May 11, 2007, the District Court entered orders which, among other things: -- granted preliminary approval of the proposed class action settlement; -- certified the conditional nationwide class; -- denied the motion of the Texas plaintiffs (referenced below) to intervene in Fresco; -- and granted an injunction to maintain the status quo, which prohibits the Texas action (referenced below) from moving forward. On May 11, 2007, the Texas intervenors and the putative class members in the Texas case filed a notice of appeal with respect to the denial of the motion for limited intervention and the granting of the temporary injunction. The U.S. Court of Appeals for the Eleventh Circuit, then issued an order dated June 6, 2007, questioning whether it has jurisdiction over the appeal. The interested parties have submitted briefs to the Court of Appeals responding to this question. To date, the Court of Appeals has not ruled on the issue. On June 13, 2007, the Texas intervenors filed a motion to stay asking that the District Court stay implementation of the settlement approval process until the Court of Appeals has had time to evaluate the appeal. On July 26, 2007, the District Court denied the Texas intervenors' motion. On Oct. 24, 2007, the District Court held the final approval hearing on the proposed class action settlement. The Court has not yet issued a ruling. The company reported no development in the matter in its Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. The suit is "Richard Fresco, et al. v. Automotive Directions, Inc., et al., Case No. CIV-03-61063-Martinez/Klein," filed with the U.S. District Court for the Southern District of Florida, Judge Jose E. Martinez presiding. Representing the plaintiffs are: Tod N. Aronovitz, Esq. (ta@aronovitzlaw.com) Aronovitz Trial Lawyers 150 W Flagler Street, Suite 2700 Museum Tower Miami, FL 33130 Phone: 305-372-2772 Fax: 305-375-0243 - and - Lawrence Dean Goodman, Esq. (lgoodman@devinegoodman.com) Devine Goodman Pallot & Wells 777 Brickell Avenue, Suite 850 Miami, FL 33131 Phone: 305-374-8200 Fax: 374-8208 Representing the defendants are: Alan Graham Greer, Esq. (agreer@richmangreer.com) Richman Greer Weil Brumbaug Mirabito & Christensen 201 S. Biscayne Boulevard Suite 1000 Miami, FL 33131 Phone: 305-373-4000 Fax: 305-373-4099 - and - Deanna Kendall Shullman, Esq. (deanna.shullman@tlolawfirm.com) Holland & Knight 1 E. Broward Boulevard, Suite 1300 Fort Lauderdale, FL 33301-4811 Phone: 954-525-1000 Fax: 463-2030 COMMUNITY HEALTH: Appeals Class Certification Order in Ala. Suit ---------------------------------------------------------------- Community Health Systems, Inc., is appealing to the Alabama Supreme Court a decision by the Circuit Court of Barbour County, Alabama, Eufaula Division, granting class action status to a lawsuit filed by uninsured individuals against the company. The suit was filed by Arleana Lawrence and Lisa Nichols against Eufaula Community Hospital, Community Health Systems, Inc., South Baldwin Regional Medical Center and Community Health Systems Professional Services Corp. The class action, captioned, "Arleana Lawrence and Robert Hollins v. Lakeview Community Hospital and Community Health Systems, Inc.," was brought by the plaintiffs on behalf of themselves and as the representatives of similarly situated uninsured individuals who were treated at the company's Lakeview Hospital or any of the company's other Alabama hospitals. The plaintiffs allege that uninsured patients who do not qualify for Medicaid, Medicare or charity care are charged unreasonably high rates for services and materials and that the company use unconscionable methods to collect bills. They seek restitution of overpayment, compensatory and other allowable damages and injunctive relief. In October 2005, the complaint was amended to eliminate one of the named plaintiffs and to add Community Health's management company subsidiary as a defendant. The complaint was again amended in November 2005 to add another plaintiff, Lisa Nichols and another defendant, a hospital in Foley, Alabama, South Baldwin Regional Medical Center. After a hearing, the Circuit Court, on Oct. 29, 2007, ruled in favor of the plaintiffs' class action certification request. The company disagree with that ruling and have pursued its automatic right of appeal to the Alabama Supreme Court, according to its Feb. 28, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. Community Health Systems, Inc. -- http://www.chs.net-� through its subsidiaries, owns, leases and operates acute care hospitals that are the principal providers of primary healthcare services in non-urban communities. COMMUNITY HEALTH: Ill. Appellate Court Considers Appeal in "Rix" ---------------------------------------------------------------- The District Appellate Court has yet to rule on a plaintiff's appeal of a decision by the Circuit Court of Williamson County, Illinois that dismissed the purported class action, "Sheri Rix v. Heartland Regional Medical Center and Health Care Systems, Inc." The litigation names Community Health Systems, Inc. and certain of its subsidiaries as defendants. It was served against the company on March 3, 2005, and was brought by the plaintiff on behalf of herself and as the representative of similarly situated uninsured individuals who were treated at the company's Heartland Regional Medical Center. The plaintiff alleges that uninsured patients who do not qualify for Medicaid, Medicare or charity care are charged unreasonably high rates for services and materials and that the company uses unconscionable methods to collect bills. The plaintiff seeks recovery for breach of contract and the covenant of good faith and fair dealing, violation of the Illinois Consumer Fraud and Deceptive Practices Act, restitution of overpayment, and for unjust enrichment. The complaint also seeks compensatory and other damages and equitable relief. The Circuit Court Judge recently granted the company's motion to dismiss this case, but allowed the plaintiff to re-plead her case. The plaintiff elected to appeal the Circuit Court's decision in lieu of amending her case. Oral argument was heard on this case on Jan. 9, 2008, and the company awaits the ruling of the District Appellate Court, according to the company's Feb. 28, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. Community Health Systems, Inc. -- http://www.chs.net�- through its subsidiaries, owns, leases and operates acute care hospitals that are the principal providers of primary healthcare services in non-urban communities. COMMUNITY HEALTH: Discovery Still Ongoing in "Chronister" Matter ---------------------------------------------------------------- Discovery is still ongoing in the purported class action, "Chronister, et al. v. Granite City Illinois Hospital Company, LLC d/b/aGateway Regional Medical Center," which was filed with the Circuit Court of Madison County, Illinois, and names Community Health Systems, Inc., as a defendant. The complaint, which was served against the company on April 8, 2005, seeks class-action status on behalf of the uninsured patients treated at Gateway Regional Medical Center and alleges statutory, common law, and consumer fraud in the manner in which the hospital bills and collects for the services rendered to uninsured patients. The plaintiff seeks compensatory and punitive damages and declaratory and injunctive relief. The company's motion to dismiss has been granted in part and denied in part and discovery has commenced. The company reported no development in the matter in its Feb. 28, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. Community Health Systems, Inc., -- http://www.chs.net-� through its subsidiaries, owns, leases and operates acute care hospitals that are the principal providers of primary healthcare services in non-urban communities. COMPUCREDIT CORP: Continues to Face N.C. Consumer Fraud Lawsuit --------------------------------------------------------------- CompuCredit Corp. and five of its subsidiaries continue to face a purported class action filed with the Superior Court of New Hanover County, North Carolina, entitled, "Knox, et al. vs. First Southern Cash Advance, et al., No. 5 CV 0445." The plaintiffs allege that in conducting a so-called "payday lending" business, certain of the Company's Retail Micro-Lending and Servicing segment subsidiaries violated various laws governing consumer finance, lending, check cashing, trade practices and loan brokering. The plaintiffs further allege that the Company is the alter ego of its subsidiaries and is liable for their actions. The plaintiffs are seeking damages of up to $75,000 per class member. CompuCredit Corp. reported no development in the matter in its Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. CompuCredit Corp. -- http://www.compucredit.com/-- is a provider of various credit and related financial services and products to or associated with the underserved (or sub-prime) consumer credit market, as well as to un-banked consumers. CORINTHIAN COLLEGES: Ca. Suit Alleges Unfair Business Practices --------------------------------------------------------------- A class action suit against Corinthian Colleges, Inc., and its wholly owned subsidiary Corinthian Schools, Inc., was filed with the Santa Clara Superior Court on behalf of graduates of the Medical Assistant vocational programs offered by Bryman College, which was renamed Everest College. Corinthian offers vocational programs at approximately 14 schools located throughout California, including Santa Clara County. The programs, which typically last from six to 13 months, are offered primarily to people who have graduated from or otherwise left high school. The lawsuit, which seeks unspecified monetary damages, alleges the defendants made and continue to make untrue or misleading statements related to the success of its graduates in obtaining employment, including their prospects for starting salaries, in order to induce members of the public to enroll in their vocational training programs and purchase other goods and services. The suit also alleges Corinthian's statements that their schools or programs are approved by the California Department of Education are untrue. Corinthian reached a class action settlement with California Attorney General Edmund G. Brown, Jr., last July over similar allegations regarding other programs by agreeing to pay $5,800,000 in restitution to students. John L. Fallat, Esq., filed the lawsuit on behalf of the plaintiffs Kathryn Leask, a graduate of the Everest College medical assistant program, and her mother Judith Leask, who co- signed Ms. Leask's student loans. "The treatment of high school graduates such as Kathryn Leask by these vocational schools is unconscionable," says Mr. Fallat. "They charge an arm and a leg for tuition and mislead students about employability. Upon graduation, many students simply cannot find a job for which they have been trained, and are left with the burden of tuition loans they cannot pay." He noted that California law has strict requirements for these schools, including but not limited to establishing at least a 60% placement rate after graduation. "Defendant statements indicate a very high percentage of their students obtain employment, which they have no basis to believe is true," Mr. Fallat continues. "The fact is, Corinthian's own statistics show the low percentage of former students who obtained such employment." According to Mr. Fallat, the vast majority of students enrolled must finance the high cost of these courses. Charges for these vocational programs typically range between $7,000 and $15,000. Some longer courses cost as much as $27,000. The suit alleges Corinthian offers or arranges financing through lenders via a combination of government grants, government subsidized loans, high-cost private loans and Corinthian's own credit programs. Carnegie Student Loans and Sallie Mae, Inc. are also named as defendants in the lawsuit. For more information, contact: Law Offices of John L. Fallat Suite 100, 907 Sir Francis Drake Blvd. Kentfield, CA 94904 Phone: (415) 457-3773 DVI INC: Settles "Merrill Lynch" Securities Lawsuit in Penna. ------------------------------------------------------------- Lead plaintiffs in the class action, "In Re DVI, Inc. Securities Litigation, Case No. 2:03-CV-5336," pending with the U.S. District Court for the Eastern District of Pennsylvania, entered into a partial settlement with Merrill Lynch & Co., Inc., one of the named defendants. The settlement terms include releases of the Settlement Class' claims asserted against Merrill Lynch, brought pursuant to Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission. The Lead Plaintiffs have settled their claims against Merrill Lynch, which was a former lender to DVI and underwriter in certain "securitization" transactions, for cash payment of $4,500,000. The final amount distributed to Settlement Class Members will depend upon the amount of interest earned on these funds and the amount of Court-approved attorneys' fees, costs and expenses, and Notice and Administration Costs. The parties to this litigation do not agree on the amount of damages per Common Share and per Senior Note that would be recoverable if the Settlement Class were to prevail on each claim alleged. The parties also do not agree as to whether the Settlement Class suffered damages, the amount thereof and how to measure damages. The Lead Plaintiffs are proposing the Settlement because, upon consideration of, among other things, the record, the potential damages, the strength of the Settlement Class' claims and the risks and cost of continued litigation, the Settlement provides substantial recovery to the Settlement Class, is fair, reasonable and adequate, and is preferable to continued litigation. Merrill Lynch denies any liability or wrongdoing, but desires to resolve the claims asserted under the terms set forth herein and, in more detail, in the Stipulation. Case Background In 2003, DVI, Inc. was named defendant in a lawsuit filed with the U.S. District Court for the Eastern District of Pennsylvania alleging violations of Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The suit alleged that the company issued a series of material misrepresentations to the market between Nov. 7, 2001, and June 27, 2003, thereby artificially inflating the price of DVI's publicly traded securities. The complaint alleged that these statements were materially false and misleading because they failed to disclose and misrepresented these adverse facts, among others: -- that the company had failed to timely write down the value of certain assets which had become impaired; -- that the company's accounting and financial reporting policies and procedures for non-systematic (non- recurring) transactions were inadequate; -- that the company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the company; and -- that as a result, the values of the company's assets, net income and earnings per share were materially overstated at all relevant times. The class period ended June 27, 2003. On that date, DVI shocked the investing public when it announced that the U.S. Securities and Exchange Commission had rejected its March 30, 2003 quarterly report because an independent auditor had not reviewed it. The company also disclosed that it was continuing to consider the need for the accounting change, and, if adopted, its net income for the third quarter of fiscal 2003, its earnings per share for the first nine months of fiscal 2003 and its net income for the fiscal year 2002 would all be drastically reduced. Specifically, $1.4 million, or 44.47%, its earnings per share for the nine months ended March 31, 2003, was reduced by $0.10, or 44.45% and its net income for fiscal year ended June 30, 2002, was reduced by $1.395 million or 34.12%, reduced the company's net income for the third quarter of fiscal 2003. Investor reaction was swift and negative, with DVI stock falling from a close of $5.84 on June 26, 2003 to a close of $4.30 on June 27, 2003, or a single-day decline of more than 26% on very high trading volume. The class consists of all persons or entities that purchased or otherwise acquired the securities of DVI (its common stock and 9 7/8% Senior Notes), between Aug. 10, 1999, and Aug. 13, 2003, both dates inclusive. Deadline to file for exclusions and objections is on April 10, 2008. Deadline to file claims is on July 7, 2008. A fairness hearing will be held before the Honorable Legrome D. Davis in the U.S. District Court for the Eastern District of Pennsylvania on April 30, 2008 at 2:00 p.m. The suit is "In Re DVI, Inc. Securities Litigation, Case No. 2:03-CV-5336," filed with the U.S. District Court for the Eastern District of Pennsylvania under Judge Legrome D. Davis. Representing the defendants are: Antonia M. Apps, Esq. Kellogg, Huber, Hansen, Todd and Evans, PLLC 1615 M. Street, North West, Suite 400 Washington, DC 20005 Phone: 202-326-7900 Thomas V. Ayala, Esq. (tayala@morganlewis.com) Morgan Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 Phone: 215-963-5719 - and - Gregory Ballard, Esq. (gregory.ballard@cwt.com) Cadwalader Wickersham & Taft LLP One World, Financial Center New York, NY 10281 Phone: 212-504-6701 Representing the plaintiffs is: M. Reas Bowman, Esq. Krislov & Associates Ltd 20 N. Wacker Dr., Suite 1350 Chicago, IL 60606 Phone: 312-506-0500 GENERAL REINSURANCE: No Trial Date Set for AIG Securities Suit -------------------------------------------------------------- No trial date was scheduled for the consolidated securities class action, "In re American International Group Securities Litigation, Case No. 04-CV-8141," which names General Reinsurance Corp., an indirect wholly owned subsidiary of Berkshire Hathaway, Inc., as one of the defendants. The putative class action is brought on behalf of investors who purchased publicly traded securities of AIG between October 1999 and March 2005. The complaint, originally filed in April 2005, asserts various claims against AIG and certain of its officers, directors, investment banks and other parties, including Messrs. Ferguson, Napier and Houldsworth. The complaint alleges that the General Re Defendants violated Section 10(b) of the U.S. Securities Exchange Act and Rule 10b-5 in connection with the AIG Transaction. It seeks damages and other relief in unspecified amounts. General Reinsurance has answered the complaint, denying liability and asserting various affirmative defenses. Document production has begun, but no other discovery has taken place. No trial date has been scheduled. Berkshire Hathaway, Inc. reported no development in the matter in its Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. The suit is "In Re American International Group, Inc. Securities Litigation, Case No. 1:04-cv-08141-JES," filed with the U.S. District Court for the Southern District of New York, Judge John E. Sprizzo presiding. Representing the plaintiffs are: Thomas A. Dubbs, Esq. (tdubbs@glrslaw.com) Goodkind Labaton Rudoff & Sucharow LLP 100 Park Avenue New York, NY 10017 Phone: 212-907-0700 Fax: 212-818-0477 - and - Louis Gottlieb, Esq. (lgottlieb@glrslaw.com) Goldman Gruder & Wood 200 Connecticut Avenue Norwalk, CT 06854 Phone: (212) 907-0872 Fax: (212) 883-7072 Representing the defendants are: Steven Ian Froot, Esq. (sfroot@bsfllp.com) Boies, Schiller & Flexner, LLP 570 Lexington Avenue New York, NY 10022 Phone: (212)-446-2300 Fax: (212)-446-2350 - and - George Abraham Zimmerman, Esq. (gzimmerm@skadden.com) Skaddden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Phone: (212) 735-2000 x2047 Fax: (212) 735-2000 GENERAL REINSURANCE: Still Faces Litigation Over ROA Insurance -------------------------------------------------------------- General Reinsurance Corp., an indirect wholly owned subsidiary of Berkshire Hathaway, Inc., still faces several lawsuits over insurance purchased through Reciprocal of America. The company and several current and former employees, along with numerous other defendants, have been sued in 13 federal lawsuits involving ROA and related entities. Nine are putative class actions initiated by doctors, hospitals and lawyers that purchased insurance through ROA or certain of its Tennessee- based risk retention groups. ROA was a Virginia-based reciprocal insurer and reinsurer of physician, hospital and lawyer professional liability risks. The complaints seek compensatory, treble, and punitive damages in an amount plaintiffs contend is just and reasonable. Berkshire Hathaway, Inc. reported no development in the matters in its Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. Berkshire Hathaway Inc. -- http://www.berkshirehathaway.com/-- is a holding company owning subsidiaries engaged in a number of diverse business activities with the most important being insurance businesses conducted on both a primary basis and a reinsurance basis. HIH INSURANCE: Ex-Director Settles Misleading Conduct Claim ----------------------------------------------------------- Rodney Adler has settled a misleading and deceptive conduct claim relating to a class-action lawsuit brought on behalf of shareholders of HIH Insurance Ltd., The Australian reports. Mr. Adler was the head of FAI Insurances, which HIH purchased in 1998. He was also a director of HIH. The class-action suit, brought by HIH shareholder Brian Johnston in 2007, is based on comments that Mr. Adler made to the press about buying shares in HIH. Mr. Johnston, who bought 40,000 shares in HIH in January 2001, claimed that he was induced to buy the shares following Mr. Adler's comments. Mr. Adler's words were said to be misleading and deceptive conduct because Mr. Johnston and other investors would not have bought the shares "had the true and correct information and circumstances relating to the purchase of the shares by the respondent been divulged and made available to them." Mr. Johnston had sought a court declaration that Mr. Adler had engaged in misleading and deceptive conduct, damages, interest and for his legal costs to be paid. Mr. Adler was jailed and released in December last year after pleading guilty in 2005 to four charges arising from his conduct as an HIH director. As noted in the Troubled Company Reporter-Asia Pacific, the HIH Group failed in March 2001, with a deficiency reaching billions of AU dollars. Provisional liquidators were appointed to HIH Insurance and many of its subsidiaries. Other insolvency practitioners were appointed to various group companies incorporated in other parts of the world. In August 2001, the major Australian companies in the HIH Group were placed into liquidation. In latest developments, The Australian says that federal court judge Steven Rares was told that the parties to the lawsuit had settled the claim. However, Lawyer Bruce Dennis, who was running the case, told The Australian that he could not disclose the terms of the settlement as they were confidential. IKANOS COMMS: Court Dismisses Securities Lawsuit ------------------------------------------------ The U.S. District Court for the Southern District of New York has dismissed the securities class action suit filed against Ikanos Communications, Inc., certain of its directors and officers and two investment banks. In November 2006, three putative class actions were filed against the company, its directors, an executive officer and a former executive officer. These lawsuits allege certain misrepresentations by the company in connection with its initial public offering in September 2005, the follow-on offering in March 2006, and thereafter concerning its business and prospects. The lawsuits seek unspecified damages. The lawsuits were consolidated and an amended complaint was filed on April 24, 2007. The amended complaint alleges certain material misrepresentations and omissions by the Company in connection with its initial public offering in September 2005 and the follow-on offering in March 2006 concerning its business and prospects, and seeks unspecified damages. On June 25, 2007, the defendants filed motions to dismiss the amended complaint (Class Action Reporter, Nov. 30, 2007). The recent 21-page order of dismissal reviewed all of the plaintiffs' allegations in detail, and determined that there was no basis to proceed further against the defendants. Pointing to the actual statements contained in the Company's offering documents, the court noted that Ikanos' disclosures "were more than adequate. They are of sufficient precision and clarity to alert prudent investors to the nature of the offerings and the risks entailed." "We are very pleased with the court's ruling," said Noah D. Mesel, vice president and general counsel of Ikanos. "With this ruling, we are able to focus all of our efforts on managing our business." The plaintiffs have 30 days from entry of judgment to appeal the decision. The suit is "Panther Partners Inc., et al. v. Ikanos Communications, Inc., et al., Case No. 1:06-cv-12967-PAC," filed with the U.S. District Court for the Southern District of New York under Judge Paul A. Crotty. Representing the plaintiffs is: David Avi Rosenfeld, Esq. (drosenfeld@lerachlaw.com) Lerach Coughlin Stoia Geller Rudman & Robbins LLP 58 South Service Road, Suite 200 Melville, NY 11747 Phone: (631) 367-7100 Fax: (631) 367-1173 Representing the defendant is: James N. Kramer, Esq. (jkramer@orrick.com) Orrick, Herrington & Sutcliffe LLP The Orrick Building, 405 Howard Street San Francisco, CA 94105 Phone: (415)-773-5700 Fax: (415)-773-5759 MOBILE OPERATORS: Customers' $2.5B Suit in Jerusalem Dismissed -------------------------------------------------------------- Partner Communications Company Ltd. (TASE:PTNR), a leading Israeli mobile communications operator, announced that on March 5, 2008, following the plaintiffs' request, a claim that was filed with the Jerusalem District Court in January 2007 against the Company, two other cellular operators and two land- line operators, was dismissed with prejudice, and a request for the certification of the claim as a class action was dismissed without prejudice. In January 2007, Israeli mobile communications operators were faced with a ILS10.61 billion ($2.5 billion) suit seeking certification of a purported class of customers allegedly harmed by the company's alleged violation of the country's Communication Law (Class Action Reporter, Feb. 6, 2007) The suit was filed by three plaintiffs in Jerusalem District Court against: -- Partner Communications Co. Ltd., -- Israel Telecommunications Corp. Ltd., -- Hot Cable Systems Media Ltd., -- Cellcom Israel Ltd., and -- Pelephone Communications Ltd. The defendants allegedly have not implemented number portability and are in violation of the Communication Law, mandating the implementation of telephone number portability starting Sept. 1, 2006. The defendants, thus, are allegedly harming the claimants and consumers of telephone services in general. The claimants are demanding about ILS1,000 ($235) for each customer. The suit affects Partner Communications' 2,626,000 customers, according to the company. Partner Communications -- http://www.investors.partner.co.il-- is a subsidiary of Hutchison Telecommunications. OANDO PLC: May Face Lawsuit Over Adulterated Imported Petrol ------------------------------------------------------------ Motorists and other fuel users affected by the adulterated petrol imported by Oando Plc have commenced moves to institute a class action lawsuit against the company for damage to their vehicles, Vanguard reports. Investigations by Vanguard at various car repair garages, including Coscharis Motors, Germaine Autos, Volkswagen, Globe Motors and Bras Motors, revealed that legal practitioners contracted by owners of affected vehicles were busy gathering details to harmonize their positions. According to the report, Kashiet Issah, Service Manager of Bras Motors, confirmed that there have been inquiries from legal practitioners representing owners of affected vehicles. He said that up to 30 cases had been recorded in his outlet alone and that all the vehicles affected had to be towed in for repair work. "In most cases, we had to carry out fuel injector nozzles, fuel pump and plugs replacement, while also dropping the fuel tank for thorough cleaning and blowing of the fuel line," Mr. Issah told Vanguard. He also said that similar cases had been reported at other vehicle repair garages and that what had been retrieved from dropped fuel tanks was anything but petrol. John Iyene, legal counsel to three of the affected motorists, confirmed to Vanguard that he was in touch with some legal representatives of others who were largely dissatisfied with the caveat imposed by Oando about verifiable claims. Mr. Iyene said that as soon as he and other legal representatives were able to harmonize their positions, a class action suit would be instituted against Oando. According to Vanguard, Lola Amao, Chairperson of Organisation of Design Engineers of Nigeria, lamented the role of the Department of Petroleum Resources in the importation and distribution of the product. She said there should be a procedure in place to guarantee quality assurance and quality control, adding "Who were the people who approved the importation of the product?" Dr. Amao noted that sometimes the DPR is not aware of those who have been given the go ahead to bring in petroleum products and asked the oil industry reform implementation committee, headed by Dr. Emmanuel Ebogah, "to come up with a clear cut position on who is responsible for allocation." "This is the only way to determine easily who is to be held responsible in the event of any lapses," Dr. Amao shared to Vanguard. The DPR fingered Oando Plc for importing ethanol as petrol and distributing it to motorists and causing damage to vehicles, generating sets and other engines, the report adds. OMAHA MEATPACKERS: Face Lawsuits Over Employee Payments ------------------------------------------------------- Two meatpacking plants in Omaha face almost identical federal lawsuits accusing them of not paying thousands of workers for all their work, the Associated Press reports. According to AP, lawyers for the workers are seeking class- action status for the lawsuits filed last week against Greater Omaha Packing Co. and Nebraska Beef Ltd. A total of 16 people -- seven former employees and one current employee at each plant -- are listed as plaintiffs. Both companies have allegdely violated state and federal wage and labor laws for years, the lawsuits said. The lawsuits also stated that the plants have policies that production workers are paid "only during the time that they are present on the actual production assembly line under a system known as 'gang time' or 'line time.'" AP writes that the workers are seeking unpaid wages and overtime for time before and after assembly line work, as well as time spent putting on uniforms and safety gear, sanitizing equipment, retrieving, sharpening and putting away knives, walking between work sites and other duties. That work outside production assembly line work amounts to between 30 and 40 minutes each day per worker, according to the lawsuits. The workers' lawyers estimate that about 1,500 former and current workers at Greater Omaha workers and 1,800 at Nebraska Beef have been affected over the past four years. Workers at the plants before that time are not covered under Nebraska's statute of limitations. PENNSYLVANIA: Delinquent Tax Communications Suit Settled -------------------------------------------------------- The law firm of Donovan Searles, LLC, obtained a $5,213,670 class action verdict in the case titled "Roethlein v. Portnoff Law Associates, Ltd., November Term 2002, No. 3888," filed with the Philadelphia Court of Common Pleas. The case was filed on behalf of Pennsylvania real property owners who received delinquent tax communications from the law firm of Portnoff Law Associates and were charged unauthorized fees, interest, penalties or attorney fees by that law firm. The case was tried before the Honorable Mark I. Bernstein over ten days in September, 2007. In a detailed Order, Memorandum Opinion and Findings of Fact issued on March 12, 2008, the Court found that the defendants had "refused to obey the law" by continuing to charge and collect fees, interest, penalties and attorney fees that the Pennsylvania courts had forbidden. The Court wrote: "The defendants refused to obey the law, and failed to even notify their clients that significant decisions forbidding their collection practices had been handed down. A penalty for continuing to charge add-on attorney fees in disregard of clear appellate court decisions and retaining those add-on attorney fees previously mistakenly charged must be imposed." The Court entered a verdict against defendants awarding the Class $2,654,972 for unlawfully received attorney's fees, $510,855 for unlawfully collected administrative fees, and $18,493 for interest on the unlawfully collected administrative fees. Under the Pennsylvania law known as Act 6, the Court doubled the award relating to the administrative fees for a total of $1,058,697 and assessed a $500,000 statutory penalty. The Court also awarded $1,000,000 in punitive damages due to the defendants' "intentional disregard of the rule of law as stated by the Appellate Courts of Pennsylvania." Donovan Searles partner David A. Searles was one of the lead trial counsel for the class in the case. He says, "We are gratified by the detailed and careful decision of the trial court, which makes clear that debt collection lawyers must follow the law and cannot collect add-on attorney fees when the appellate courts have held those fees to be unauthorized." The Roethlein case is the third class action successfully tried to verdict by Donovan Searles lawyers in the last three years. For more information, contact: David A. Searles, Esq. (dsearles@donovansearles.com) Donovan Searles, LLC 1845 Walnut Street, Suite 1100 Philadelphia, PA 19103 Phone: (800) 619-1677 (215) 732-6067 Web site: http://www.donovansearles.com RC2 CORP: Sued Over Lead Content in Paint Used on Toys ------------------------------------------------------ Boca Raton residents Mindy and Daniel McGuire have filed a class action lawsuit against Learning Curve Brands -- also known as RC2 Corporation -- alleging that lead-based paint on the toy maker's Thomas and Friends Wooden Railway toys caused their now five-year-old son, Jared, to suffer a developmental disorder, Sun-Sentinel reports. The MacGuires accuse RC2 of negligence and product liability. They contend that Jared was exposed to "substantial and dangerous levels" of lead when he placed the Thomas and Friends toys in his mouth, the lawsuit states. Learning Curve and RC2 should have known that adequate safeguards and oversight would not be present when the company opted to have its toys manufactured in China, the McGuires' allege. Sun-Sentinel recounts that in June 2007, RC2 announced a recall of some wooden railway vehicles and set components from the Thomas & Friends Wooden Railway product line due to lead in the paint. The affected toys were made between January 2005 and April 2007. The company recalled additional Thomas and Friends toys in September. According to Sun-Sentinel, the McGuires are seeking in excess of $15,000, which is the threshold necessary for the case to be heard in circuit court. SUNBEAM PRODUCTS: Heating Pads Catch Fire, Fla. Lawsuit Claims -------------------------------------------------------------- Sunbeam Products, Inc. -- d/b/a Jarden Consumer Solutions -- is facing a class-action complaint filed on Mar. 11, 2008, with the U.S. District Court for the Southern District of Florida claiming that Sunbeam's Soft Touch Heating Pad's defective design causes it to overheat, burning the user, burning the pad, and sometimes setting the pad on fire, CourtHouse News Service reports. According to the complaint, Sunbeam makes the pads with outmoded resistive wire technology. The plaintiffs bring the action pursuant to rule 23 of the Federal Rules of Civil Procedure on behalf of all persons in the United States who purchased a Sunbeam Soft Touch Heating Pad or other Sunbeam heating pad utilizing "resistive wire" technology as its heating element. The plaintiffs want the court to rule on: (a) whether the Sunbeam Soft Touch Heating Pads, and other Sunbeam heating pads using a "resistive wire" technology for their heating element are defective; (b) whether Sunbeam violated FDUTPA by selling defective heating pads and by continuing to do so with knowledge that the products were defective; (c) whether Sunbeam violated FDUTPA by failing to warn its customers in a timely and effective manner that the subject heating pads were defective; (d) whether Sunbeam violated FDUTPA by failing to take appropriate remedial measures to fix the defective heating pads; (e) whether plaintiffs and the members of the class are entitled to compensatory damages and, if, so, what the proper measure of such damages should be; and (f) whether injunctive relief requiring Sunbeam either to recall the affected heating pads or to warn its customers of the defects in the subject heating pads is appropriate. The plaintiffs demand judgment against Sunbeam requiring it to disgorge and return the purchase price of the subject heating pads, together with costs and interest, and any further relief the court deems appropriate. The suit is "Carol Belle et al. v. Sunbeam Products, Inc., Case No. 08-80257-CIV-HUrley/Hopkins," filed with the U.S. District Court for the Southern District of Florida. Representing the plaintiffs are: Lewis S. Eidson, Esq. Curtis B. Miner, Esq. (curt@colson.com) Colson Hicks Edison 255 Aragon Avenue, Second Floor Coral Gables, Florida 33134 Phone: (305) 476-7400 Fax: (305) 476-7444 SUNOPTA INC: Federman Reminds Investors of Mar. 28 Deadline ----------------------------------------------------------- Federman & Sherwood reminds shareholders of the March 28, 2008 deadline to file lead plaintiff applications for the class action lawsuit against SunOpta, Inc. (NasdaqGS:STKL) with the United States District Court for the Southern District of New York. The suit was filed on Jan. 28 on behalf of a class consisting of all persons or entities who purchased or otherwise acquired the common stock of SunOpta Inc. between Aug. 8, 2007, and Jan. 25, 2008, inclusive (Class Action Reporter, Feb. 12, 2008). The complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material misrepresentations to the market which had the effect of artificially inflating the market price. In Feb., Federman & Sherwood expanded the class period in the securities class action to include those investors who bought or sold between May 8, 2007, to January 25, 2008 (Class Action Reporter, Feb. 18, 2008). The plaintiff seeks to recover damages on behalf of the Class. For more information, contact: William B. Federman, Esq. (wfederman@aol.com) Federman & Sherwood 10205 North Pennsylvania Avenue Oklahoma City, OK 73120 Web site: http://www.federmanlaw.com TOYS R US: Faces N.Y. Lawsuit Over Deceptive Business Practices --------------------------------------------------------------- Toys "R" Us, Inc. is facing a class-action complaint filed with the New York State Supreme Court, Kings County alleging it deceptively fails to warn customers that it does not allow refunds or credit for products returned opened but unused, CourtHouse News Service reports. The action seeks redress for a deceptive and otherwise improper business practice that defendant engages in with respect to is return policy and refusal to give its customers refunds or store credit for certain merchandise returned opened but unused. Named plaintiff Aaron Goldring alleges that upon returning a select item purchased at Toys "R" Us -- still in its original condition and containing all original packaging and accessories -- have been refused a refund or store credit if the merchandise was returned in an opened box. Toys "R" Us imposes this no refund and no exchange return policy unilaterally and without adequate notice to its customers. In violation of applicable New York statutes, Toys "R" Us does not provide conspicuous notice, and does not fully disclose, the terms of its return and refund policy. As a result, customers have been deprived of the benefit of their bargain (i.e., a full refund or store credit of the purchase price if the select product is returned in its original condition and containing all accessories), resulting in defendant's improper and unlawful monetary gain and benefit. This suit is brought, pursuant to the New York General Business Law Sections 349 and 218-a, and the common law of New York, on behalf of a statewide class of all persons in the State of New York who have been denied a cash refund or a credit upon returning select merchandise purchased from defendant during the period from March 1, 2002, to the present. The plaintiff asks the court to enter an order: -- certifying this action as a class action; -- awarding against defendant the damages that plaintiff and the other members of the class have suffered as a result of defendant's actions, the amount of such damages to be determined at trial, plus attorneys' fees; -- awarding against defendant the damages that plaintiff and the other members of the class have suffered as a result of defendant's actions, the amount of such damages to be determined at trial, plus attorneys' fees; -- awarding against defendant the damages that plaintiff and the other members of the class have suffered as a result of defendant's actions, the amount of such damages to be determined at trial, plus attorneys' fees; -- (a)declaring that defendant's no refund/no credit return policy is misleading, deceptive and improper (b) preliminarily and permanently enjoining defendant from continuing its decetive practice and policies relating to the imposition of a no refund/no credit retunr policy; (c) ordering defendant to compensate customers denied refunds or credit upon returning certain select merchandise; and (d) ordering defendant to take immediately all steps reasonable necessary to inform current customers of defendant's return policy; and -- awarding plaintiff interest, costs and attorneys' fees. The suit is "Aaron Goldring et al. v. Toys "R" Us, Inc.," filed with the New York State Supreme Court, Kings County. Representing the plaintiffs is: Jerome Noll, Esq. 1311 Mamaroneck Avenue, Suite 220 White Plains, New York 10605 Phone: (914) 517-5000 U.S. HOUSING DEPT: To Pay Employees $24MM in Settlement of Suit --------------------------------------------------------------- The federal Department of Housing and Urban Development has agreed to pay $24 million to current and former employees who were not compensated properly under the Fair Labor Standards Act, the Associated Press reports. According to AP, the payment to an estimated 7,000 people is part of a settlement that the department has agreed to in an effort to settle a class-action and grievance related to overtime exemptions and pay filed by trade unions. Michael Snider, Esq., who represents the unions, said that arbitrator Sean Rogers approved and signed the agreement on Monday. AP recounts that the grievance was filed in 2003 by Carolyn Federoff who leads the American Federation of Government Employees Council 222 in Boston. She alleged that employees were misclassified as exempt under the Fair Labor Standards Act. This denied them pay for overtime hours that were worked, a choice of compensatory time off and pay for travel time and "off the clock" work. W.R. GRACE: Plaintiffs Appeal Dismissal of ERISA Suits in Mass. --------------------------------------------------------------- The plaintiffs in two purported class actions against W.R. Grace & Co., alleging violations of the Employee Retirement Income Security Act of 1974, are appealing the dismissal of their respective cases to the U.S. Court of Appeals for the First Circuit, according to Grace's Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. Evans Litigation In June 2004, a purported class action-complaint, "Evans v. Akers et al., Case No. 1:04-cv-11380-WGY," was filed with U.S. District Court for the District of Massachusetts against the Board of Directors, certain current and former Grace officers and employees, and others, relating to the Grace 401(k) Savings and Investment Plan, also known as the S&I Plan. The complaint alleges that the decline in the price of Grace common stock from July 1999 through February 2004 resulted in significant losses to S&I Plan participants. It further alleges that the defendants breached their fiduciary duties under ERISA, by failing to sell or take other appropriate action with regard to Grace common stock held by the S&I Plan during that period, and by failing to disclose to S&I Plan participants the risk of investing in Grace common stock. The complaint seeks compensatory damages for the S&I Plan from the defendants. Bunch Litigation On Oct. 26, 2004, a purported class-action complaint, "Bunch et al. v. W. R. Grace & Co. et al.," also related to the S&I Plan was filed with the U.S. District Court for the Eastern District of Kentucky against Grace, the Investment and Benefits Committee, the Board of Directors, certain current and former Grace officers and employees, and others. The complaint alleges that Grace and its investment advisors breached fiduciary duties under ERISA by selling Grace common stock from the S&I Plan at a distressed price. It further alleges that Grace breached fiduciary duties under ERISA by hiring State Street Bank and Trust Company, the investment manager for the S&I Plan that Grace retained in December 2003, to rapidly liquidate all of the employees' Grace common stock investment at an artificially low sales price. Recent Developments On July 21, 2005, the U.S. District Court for the Eastern District of Kentucky granted the defendants' motion to transfer the Bunch action to the U.S. District Court for the District of Massachusetts, under Case No. 1:05-cv-11602-WGY. On Aug. 23, 2005, the Massachusetts District Court consolidated into one case both the Bunch action and the Evans action. Grace expects that it would have an obligation to indemnify the other defendants for any liability arising out of the consolidated lawsuit. In December 2006, the Massachusetts District Court dismissed the Evans claims, on grounds that the Evans plaintiffs lacked standing to bring suit. The Evans plaintiffs' petitioned the U.S. Court of Appeals for the First Circuit to reverse the District Court's dismissal of their claims and on Feb. 7, 2008, the First Circuit heard oral argument regarding their appeal. On Jan. 30, 2008, the court ruled in favor of the defendants on the Bunch action, holding that State Street and Grace did not breach their fiduciary duties under ERISA. On Feb. 13, 2008, the Bunch plaintiffs appealed the Massachusetts District Court's decision to the First Circuit. That appeal is pending. W.R. Grace & Co. -- http://www.grace.com/-- through its subsidiaries, is engaged in specialty chemicals and specialty materials businesses on a worldwide basis. W.R. GRACE: Faces Mass. Litigation Alleging ERISA Violations ------------------------------------------------------------ W.R. Grace & Co. faces a purported class action that was filed with the U.S. District Court for the District of Massachusetts, alleging violations of the Employee Retirement Income Security Act of 1974, according to Grace's Feb. 29, 2008 form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2007. The suit, "Siamis v. Akers et al., Case No. 1:2008cv10193," was filed on Feb. 6, 2008, by Mark Siamis. It names as defendants: -- John F. Akers, -- Ronald C. Cambre, -- Marye Anne Fox, -- John J. Murphy, -- Paul J. Norris, -- Thomas A. Vanderslice, -- H. Furlong Baldwin, Investments and Benefits Committee, -- Administrative Committee, -- Brenda Gottleib, -- W. Brian McGowan, -- Michael Piergrossi, -- Robert M. Tarola, -- Eileen Walsh, -- David Nakashige, -- Elyse Napoli, Martin Hunter, and -- Ren Lapadario. In general, the suit alleges that the decline in the price of Grace common stock 2004 resulted in significant losses to Grace 401(k) Savings and Investment Plan participants. The suit, "Siamis v. Akers et al., Case No. 08-10193," was filed with the U.S. District Court for the District of Massachusetts, Judge William G. Young presiding. Representing the plaintiffs are: David Pastor, Esq. (dpastor@gilmanpastor.com) Gilman and Pastor, LLP 225 Franklin Street, 16th Floor Boston, MA 02110 Phone: 617-742-9700 Fax: 617-742-9701 WATCHGUARD TECH: Court Dismisses Suit vs. 2 Private Equity Firms ---------------------------------------------------------------- A federal district court judge in the Western District of Washington recently dismissed an antitrust class action suit alleging that two private equity funds had unlawfully conspired in their bid to acquire WatchGuard Technologies, Mondaq News reports. The lawsuit, "Pennsylvania Avenue Funds v. Borey, No. C06- 1737RAJ" was filed with U.S. District Court for the Western District of Washington, on Feb. 21, 2008. According to Mondaq, the opinion is particularly noteworthy as it holds that allegations of coordination among bidders in the acquisition of a public company cannot be treated as per se unlawful under the antitrust laws. Under Pennsylvania Ave., such joint bidding arrangements must be evaluated under the rule of reason. The court further held that the plaintiff's allegations did not withstand a rule of reason analysis because there was no allegation from which the court could reasonably infer that defendants had market power even in a narrowly defined market for corporate control over WatchGuard. Mondaq says that although there have been other suits alleging antitrust violations in connection with joint bidding activities by private equity firms, this is the first decision addressing the substantive antitrust issues concerning such arrangements. The Pennsylvania Ave. decision is a significant development for private equity firms involved in joint bidding activities. The report recounts that the Pennsylvania Ave. case arose out of the acquisition of WatchGuard by Francisco Partners L.P. and Vector Capital Corporation. As part of the auction process for WatchGuard, as many 50 firms, including 18 other private equity firms, expressed interest in acquiring the company. Defendants FP and Vector submitted bids and were the only remaining bidders at the conclusion of the bidding process. Ultimately, however, Vector dropped out of the auction and reached an agreement with FP to finance half of the acquisition of WatchGuard in exchange for a 50% interest in the company. The final accepted offer was lower than the initial bids of both FP and Vector. The plaintiff alleged that the lower bid was the result of an illegal agreement between FP and Vector to refrain from bidding against each other and to fix the price for the acquisition. First, in its opinion, the court rejected the plaintiff's claim that the alleged conspiracy should be treated as per se unlawful. Per se unlawful treatment under the antitrust laws is reserved for a narrow class of agreements (e.g., bid rigging, horizontal price fixing, customer or market allocation) that are inherently anticompetitive and may be condemned without any inquiry into their actual anticompetitive effect. Except for these limited categories, all other alleged unlawful agreements are evaluated under the rule of reason, which requires the plaintiff to prove anticompetitive effects. The court in Pennsylvania Ave. recognized that per se treatment is appropriate only after courts have had considerable experience with the type of restraint at issue. According to the court, "no court has applied the [per se] rule to a price-fixing agreement in a contest for corporate control." Further, unlike other agreements that have been treated as per se unlawful, the agreements involved here were not "uncommon". In its finding that per se treatment of such joint bidding arrangements was inappropriate, the court acknowledged that "price fixing among rival bidders in a contest for corporate control is not, in general, anticompetitive" and, indeed, "bidders who join forces can promote rather than suppress competition." The court noted that joint bidding can be procompetitive because, among other benefits, it (i) allows firms -- "poorer contestants" -- that otherwise might not bid to participate in the auction, thus increasing competition, and (ii) allows bidders to spread the risk, thus promoting competition. The court then undertook a rule of reason analysis which, among other things, requires the plaintiff to prove anticompetitive effects. Applying the rule of reason analysis, the court concluded that the plaintiff had not sufficiently alleged defendants' market power (e.g., the ability to dictate an anticompetitive price) within a relevant market, an essential element under the rule of reason. Even within a narrowly defined market for corporate control of WatchGuard -- a questionable finding from the court's perspective -- defendants had no ability to exercise market power. Two factors were critical to the court's reasoning. Notwithstanding that FP and Vector may have been the final two bidders, no inference could be made that the dozens of other bidders would not have made a topping bid if they believed that the company was worth more than the purchase price. In addition, to the extent shareholders believed that Vector's bid was too low, they could have rejected it. As the court reasoned, "[t]he illusion of market power arose not from the Defendants' anticompetitive conduct, but from the lack of market interest in Watchguard." Finally, the court declined to adopt the defendants' argument that the plaintiff's antitrust claims should be dismissed on the grounds that their alleged conduct is impliedly immune from the antitrust laws because such conduct is subject to the securities laws. According to Mondaq, Pennsylvania Ave. is the first decision weighing in on an area that has received much public attention. The case is instructive in that it recognizes that joint bidding arrangements may be procompetitive and, therefore, should be evaluated based on their actual competitive effects. Nevertheless, while the decision is helpful to other courts, it is not controlling in other districts and may be appealed. There are legitimate and strong procompetitive justifications for joint bidding arrangements; however, such conduct may still raise antitrust sensitivities. * Milberg Weiss Tops U.S. Class-Action Ranks, Study Says -------------------------------------------------------- Law firm Milberg Weiss was the top-ranked U.S. class-action firm for 2007, with $3.8 billion in settlement winnings for plaintiffs, Reuters notes, citing a new rankings report by shareholder advisory firm RiskMetrics Group. Reuters points out that in the RiskMetrics rankings, Milberg Weiss was first in terms of total dollars won on behalf of investors based on class-action securities settlements finalized in 2007. Of the $3.8 billion in pacts the firm negotiated, about $3.2 billion was from settlements for investors who sued Tyco International Ltd following an accounting scandal several years ago that led to the imprisonment of ex-chief Dennis Kozlowski. According to Reuters, Milberg Weiss, a specialist in bringing securities fraud lawsuits against large corporations, had a good year in terms of settlements despite legal travails of its own that have hurt its ability to bring in new business. Reuters relates that Milberg Weiss is set to go on trial in August this year in the U.S. District Court in Los Angeles on charges of paying illegal kickbacks to clients. Both the firm and its co-founder, Melvyn Weiss, have pleaded not guilty to criminal charges stemming from allegations that they secretly paid clients illegal kickbacks to plaintiffs in securities fraud lawsuits. Law firm Grant & Eisenhofer ranked second in the RiskMetrics study with $3.45 billion in settlements while Schiffrin Barroway Topaz & Kessler was third, with $3.33 billion. Reuters explains that the rankings are based on the firms with the largest total dollar amount of settlements in which they served as lead or co-lead counsel. Milberg Weiss, along with Grant & Eisenhofer and Schiffrin Barroway all represented the plaintiffs in the Tyco case, according to the report. Thus, each of the three firms was credited with the $3.2-billion settlement, under the rankings, because they were all lead lawyers in the Tyco case. In fourth place was Coughlin Stoia Geller Rudman & Robbins with $1.85 billion. One of Coughlin Stoia's founders, William Lerach, was sentenced to two years in prison in February after pleading guilty to a conspiracy charge related to paying kickbacks at Milberg, his former firm. Mr. Lerach retired from Coughlin Stoia last year and the firm no longer bears his name. Reuters recounts that Coughlin Stoia was at the top of the RiskMetrics rankings for 2006, when it collected more than $7.3 billion for investors. About $6.6 billion of that was tied to Enron-related settlements with several corporate defendants. Bernstein Litowitz Berger & Grossmann, with $1.34 billion in total settlements, came in fifth place. Grant & Eisenhofer had the highest average settlement amount among the plaintiffs' firms in 2007, averaging $690.3 million in its five settlements finalized during the year, RiskMetrics said. New Securities Fraud Cases ENERNOC INC: Faces Securities Fraud Lawsuit in Massachusetts ------------------------------------------------------------ Law offices of Brodsky & Smith, LLC announced that a class action lawsuit has been filed with the United States District Court for the District of Massachusetts on behalf of all persons who purchased the common stock of EnerNoc, Inc., between Nov. 1, 2007, and Feb. 27, 2008. The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of EnerNoc. For more information, contact: Evan J. Smith, Esq. Marc L. Ackerman, Esquire Brodsky & Smith, LLC Two Bala Plaza, Suite 602 Bala Cynwyd, PA 19004 Toll free: 877-LEGAL-90 MF GLOBAL: Federman & Sherwood Announces Securities Suit Filing -----------------------------------