C L A S S A C T I O N R E P O R T E R Friday, May 9, 2008, Vol. 10, No. 92 Headlines AMCOR LTD: Lawyers Told to Correct Cartel Suit Allegations ARISTOCRAT LEISURE: Poised to Settle AUD396MM Shareholders' Suit AVON PRODUCTS: Recalls Tables for Lead Paint Standard Violation AVON PRODUCTS: Recalls Santa Outfits Due to Choking Hazard BIG 5 SPORTING: Faces California Suit Over Invasion of Privacy BRINKER INT'L: California Court Decertifies Class in Labor Suit BRITISH COLUMBIA CMBC: Church Floor Collapse Prompts Lawsuit BROOKLINE BANK: Discovery Ensues in Collateral Sale Notices Suit CAREER EDUCATION: Settlement in Illinois Suit Yet to be Approved CAREER EDUCATION: Faces CCA Students' Litigation in California CAREER EDUCATION: "Benoit" Cannot Move Forward, Arbitrator Rules CAREER EDUCATION: Reaches Tentative Deal in SBI Students' Suit CAREER EDUCATION: Faces Georgia Suit Over AIU Admissions Process CAREER EDUCATION: Faces Oregon Suit Over ACI Misrepresentations COUNTRYWIDE HOME: Faces Lawsuit Over Legal Fees Charged Twice ELI LILLY: Judge Says Zyprexa Securities Lawsuit is Time-Barred FEDEX CORP: Drivers' Lawyers File Summary Judgment Motions INSURANCE COS: R. Citron Settles Five Flood-Related Lawsuits MORTGAGE LENDERS: Suit Claims Attorneys Stiffed in Katrina Cases NORTHERN STATES: Sup. Ct. Grants Petition for "Hoffman" Review PARTNER COMMUNICATIONS: Faces Lawsuit Over Charged Repair Fees SOURCEFIRE: May 2008 Scheduling Conference Set in Maryland Suit TJ MAXX: Security Breach Settlement Means Money for Shoppers UNITED STATES: Forest Service Sued Over $5 Unconstitutional Fees WAL-MART: 9th Circuit Favors Assistant Managers in Overtime Suit WAXCESSORIES INC: Recalls Simmer Pots for Shock and Fire Risk XCEL ENERGY: Plaintiffs Appeal Dismissal of Katrina-Related Suit New Securities Fraud Cases CBEYOND INC: Gardy & Notis Files Georgia Securities Fraud Suit MERCK & CO: Labaton Sucharow Files Securities Fraud Suit in NJ Asbestos Alerts ASBESTOS LITIGATION: Union Carbide Has 90,814 Claims at March 31 ASBESTOS LITIGATION: Union Carbide Has $695M Receivable at March ASBESTOS LITIGATION: UCC Records $56M Defense, Resolution Costs ASBESTOS LITIGATION: TPC Still Involved in ACandS, Inc. Lawsuits ASBESTOS LITIGATION: Travelers Reserves Total $3.67B at March 31 ASBESTOS LITIGATION: ATSDR OKs Oak Street Beach Asbestos Study ASBESTOS LITIGATION: Corning Still Faces 10,300 Injury Lawsuits ASBESTOS LITIGATION: Corning Has $327M Settlement Credit at 1Q08 ASBESTOS LITIGATION: Diamond Offshore Still Faces Miss. Lawsuits ASBESTOS LITIGATION: Exposure Lawsuits Still Pending v. Eastman ASBESTOS LITIGATION: Enbridge Has $4.1M Liabilities at March 31 ASBESTOS LITIGATION: Allianz Has EUR23M for Workers Compensation ASBESTOS LITIGATION: Allianz Has EUR2.764 Net Loss, LAE Reserves ASBESTOS LITIGATION: CenterPoint Still Named in Exposure Actions ASBESTOS LITIGATION: ArvinMeritor Has $39M Liabilities at March ASBESTOS LITIGATION: 37T Actions Pending v. Maremont at March 31 ASBESTOS LITIGATION: ArvinMeritor Cites $12M Rockwell Receivable ASBESTOS LITIGATION: Navigators Has $16.79M Reserves at March 31 ASBESTOS LITIGATION: Inactive Quaker Unit Faces Exposure Actions ASBESTOS LITIGATION: Fairmont Facing 25,000 Claims in 6 States ASBESTOS LITIGATION: Exposure Claims Still Pending v. TRW Units ASBESTOS LITIGATION: Owens-Illinois Cites $40.2M Payments in 1Q ASBESTOS LITIGATION: Rogers' Liability Stays at $19.34M at March ASBESTOS LITIGATION: Sealed Air Cites $680.1M Liability at March ASBESTOS LITIGATION: AXA Reserves EUR1.172B for Claims in 2007 ASBESTOS LITIGATION: AXA Units Face Actions in U.S., Netherlands ASBESTOS LITIGATION: EnPro Records $424.3M Long-Term Liabilities ASBESTOS LITIGATION: EnPro Facing 105,900 Open Cases at March 31 ASBESTOS LITIGATION: Garlock Wins Defense Verdict in 2008 Action ASBESTOS LITIGATION: Garlock Records $8.2M Settlement at March ASBESTOS LITIGATION: Garlock Records $368.5M Insurance at March ASBESTOS LITIGATION: EnPro Estimates Units' Liability at $509.6M ASBESTOS LITIGATION: EnPro's Liability Totals $516M at March 31 ASBESTOS LITIGATION: Sunoco Inc. Faces Potential 3rd-Party Suits ASBESTOS LITIGATION: Hercules Offshore Still Faces TODCO Lawsuit ASBESTOS LITIGATION: Chicago Bridge Facing 1,500 Claims at March ASBESTOS LITIGATION: Cytec Ind. Facing 8,200 Claims at March 31 ASBESTOS LITIGATION: Mine Safety Still Facing Liability Lawsuits ASBESTOS LITIGATION: Dismissal of "Century v. MSA" Suit Upheld ASBESTOS LITIGATION: Mine Safety Action v. Century in Discovery ASBESTOS LITIGATION: CIRCOR Int'l. Cites $10M March 30 Liability ASBESTOS LITIGATION: Leslie Controls Has 756 Claims at March 30 ASBESTOS LITIGATION: Leslie Incurs $1.28M March Settlement Costs ASBESTOS LITIGATION: Claims Pending v. Spence Engineering, Hoke ASBESTOS LITIGATION: Dalmine S.p.A. Faces 13 Civil Proceedings ASBESTOS LITIGATION: Central Hudson Has 1,183 Cases at April 15 ASBESTOS LITIGATION: NL Industries Still Facing 470 Injury Cases ASBESTOS LITIGATION: 5,800 Lawsuits Pending v. Tyco at March 28 ASBESTOS LITIGATION: Performance Abatement Fined $24,000 in Ore. ASBESTOS LITIGATION: Grupo Mexico Bares Dubious Asarco Claims ASBESTOS LITIGATION: Bowen's Estate Sues 73 Firms in Ill. Court ASBESTOS LITIGATION: Welsh Widow Reaches GBP120,000 Deal w/ AEI ASBESTOS LITIGATION: Coon Reaches 5 Settlements in Texas Lawsuit ASBESTOS LITIGATION: Crum & Forster Losses, ALAE Total $351.02M ASBESTOS LITIGATION: Crum & Forster Reserves Strengthen by $25M ASBESTOS LITIGATION: Parsons Suit v. Reynolds Units Still Stayed ASBESTOS LITIGATION: Claims v. BorgWarner Drop to 37T at March ASBESTOS LITIGATION: BorgWarner Facing CNA Suit in Cook County ********* AMCOR LTD: Lawyers Told to Correct Cartel Suit Allegations ---------------------------------------------------------- Lawyers running the class action against Amcor Ltd. and Visy Industries have been ordered to publish corrective statements relating to the case, and a Federal Court judge has ordered the period during which businesses can opt out of the litigation to be extended by a month, The Australian reports. According to The Australian's Susannah Moran, the directive from the court is likely to cost law firm Maurice Blackburn Cashman about AUD60,000. The report relates that Visy brought the recent court action, accusing Maurice Blackburn lawyer Ben Slade of spreading misleading information relating to the potential amount of damages in the class action, after he was quoted in two media publications. The Australian recounts that Maurice Blackburn is running the case, which was filed over alleged price fixing in the cardboard box market, on behalf of lead applicant Jarra Creek and other businesses involved that choose to continue with the suit. Specifically, 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. Mr. Slade did not deny making the comments attributed to him and agreed one comment was inaccurate and said he would not repeat comments that referred to the Australian Competition and Consumer Commission alleging an overcharging of between 8% and 23%. "In considering this application, I am conscious of the uncertainty which must surround any quantification of damages at such an early stage in the proceeding, before the settlement of pleadings, return of subpoenas, full discovery and filing of evidence," Justice Brian Tamberlin said. "However, it is necessary to ensure that the appraisal by an applicant (or any group member in a representative proceeding) of its position is not artificially inflated as to the likely monetary rewards which will flow from the litigation." The judge said Mr. Slade's statements "are capable, on one reading, of misleading group members". The Class Action Reporter reported on Oct. 6, 2006, that Maurice Blackburn estimated that businesses incurred damages of between AUD2 million and AUD3 million as a result of anti-competitive practices in the industry. A subsequent CAR report on March 14, 2008, stated that retailers, manufacturers and transporters who used products by Amcor and Visy while the two companies maintained a price-fixing cartel will be given the choice to opt out of the $300-million class action lawsuit. According to the Australian Financial Review, Maurice Blackburn received court approval to issue the opt-out notices. On November 2, 2007, a previous Inside Retailing report recounted, the Federal Court accepted a plea deal between the ACCC 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. ARISTOCRAT LEISURE: Poised to Settle AUD396MM Shareholders' Suit ---------------------------------------------------------------- Australian gaming machine maker Aristocrat Leisure Ltd said that it has yet to settle a AUD396-million class action suit filed by shareholders, Reuters reports. Reuters cites The Australian Financial Review as having reported earlier that Aristocrat was poised to settle the lawsuit alleging that the company did not accurately update the market on its earnings outlook. Aristocrat said it did not expect any settlement to affect its financial strength, Reuters notes. Case Background The Class Action Reporter reported on Nov. 1, 2007, that the shareholder class action finished on Oct. 31 last year with the company conceding if any compensation is owed, it could peak at $1.10 a share, more than three times the figure it used when the case opened on Oct. 4, 2007. The CAR report recounted that the suit was filed in 2003 by Maurice Blackburn Cashman Lawyers and litigation company IMF Australia, alleging that the company's market forecasts were false and misleading and that it failed to disclose all material information in a timely manner. The case was transferred to the Federal Court in Sydney. The lawsuit further alleged that the company misled shareholders by not keeping them fully informed before announcing earnings downgrades that wiped $1.5 billion (AUD2 billion) from the company's value in 2003. The lawsuit claims the non-disclosure caused them losses. The Statement of Claim has been amended to claim losses incurred by shareholders who purchased shares between Feb. 18, 2002 (previously Sept. 20, 2002) and May 26, 2003. The case is before Justice Margaret Stone. Dorajay Pty Limited is representing shareholders. Aristocrat said only Dorajay and four other shareholders had filed details of their claims. Proceedings began on Oct. 4, 2007, which proceedings were dominated by procedural issues. Maurice Blackburn submitted a supplementary two-page letter by forensic accountant Greg Meredith. Three expert reports by Mr. Meredith, who is partner and head of forensic accounting at Ferrier Hodgson, were tendered as evidence on behalf of Dorajay. All four reports were uncontested by Aristocrat. Later on, Brad Cornell, from the California Institute of Technology, testified for Aristocrat. The New York econometrician Fred Dunbar testified for the shareholders. Mr. Cornell said that only part of a 57% fall in Aristocrat's share price in February 2003 could be attributed to previously undisclosed bad news. Mr. Dunbar, on the other hand, argued that almost all the share price fall could be attributed to the effect on earnings of the new information, according to the report. Mr. Dunbar said the share price would have fallen by the same 57%, albeit in stages, if Aristocrat had announced lower -- correct -- profits in February and August 2002 and if it had righted an inflated profit forecast in December 2002. Mr. Cornell countered that the delay contributed to the size of the fall. Aristocrat said the lawsuit could cost the company AUD10 million to AUD20 million in damages -- not the AUD190 million to AUD396 million previously reported by the media. Aristocrat changed its loss figure to take account of opinions expressed during the case by expert witness, Mr. Cornell. It now suggests a range between 35c and $1.10 a share. Both sides agree the Aristocrat share price was inflated above its true value because Aristocrat overstated its profits from South American contracts in February and August 2002, and should have warned the market from December 2002 that the next result would be below analysts' forecasts. Justice Stone is expected to hand down her decision early next year. The ruling could set a precedent for other class actions over failure to disclose material information. Representing shareholders is: Stephen Gageler, S.C. Phone: + 612 9233 1209 Fax: + 612 9232 7626 e-mail: stephengageler@wentworthchambers.com.au AVON PRODUCTS: Recalls Tables for Lead Paint Standard Violation --------------------------------------------------------------- Avon Products Inc., of New York, N.Y., in cooperation with the U.S. Consumer Product Safety Commission, is recalling about 1,000 Basketball and Flower Tables. The company said surface paint on the tables contains excessive levels of lead, violating the federal lead paint standard. No injuries have been reported. The Basketball Table is about 16 inches tall with white legs and a 19-inch diameter top. The Flower Table is about 30 inches tall with a green petal stand and a 15-inch diameter purple and yellow top. These recalled basketball and flower tables, imported by Sencillamaente Art Corp., of Dorado, Puerto Rico and manufactured in Peru, were sold through Avon Independent Sales Representatives in Puerto Rico and the U.S. Virgin Islands from June 2007 through August 2007. The Basketball Table sold for about $32 and the Flower Table sold for about $37. Pictures of the recalled basketball and flower tables are found at: http://www.cpsc.gov/cpscpub/prerel/prhtml08/08562a.jpg http://www.cpsc.gov/cpscpub/prerel/prhtml08/08562b.jpg Consumers are advised to take the tables away from children immediately and contact Avon for a full refund. Known purchasers are being directly notified of this recall. For additional information, contact Avon toll-free at 888-993- 9903 between 9:00 a.m. and 6:00 p.m. ET Monday through Friday or visit the firm's Web site: http://www.avon.com/ AVON PRODUCTS: Recalls Santa Outfits Due to Choking Hazard ---------------------------------------------------------- Avon Products Inc., of New York, N.Y., in cooperation with the U.S. Consumer Product Safety Commission, is recalling about 17,000 Infant Santa Outfits. The company said the pom poms on the 2006 and 2007 outfit and the snaps on the 2007 outfit can detach, posing a choking hazard to young children. No injuries have been reported. This recall involves the 2006 and 2007 Santa Outfits with RN# 120273. The 2006 Santa Outfit includes a red hat decorated with a white pom pom and a red one-piece suit with white collar and cuffs, and stitched black belt and boots. The 2007 Santa Outfit includes a red hat decorated with a white pom pom, a red and white-striped bodysuit with a Santa Claus face on the chest, red overall pants with suspenders, and a red bib with Santa Claus face on top. Two snaps fasten the bodysuit at the shoulder and three snaps fasten the suit between the legs. The outfits were sold in sizes 3-18 months. "RN# 120273" is printed on the care label. These recalled Santa outfits, imported by MacSwed Inc., of New York, N.Y., were manufactured in China and were being sold through Avon Independent Sales Representatives in Puerto Rico and the U.S. Virgin Islands from August 2006 through November 2007 for about $15 for the 2006 outfit and about $20 for the 2007 outfit. Pictures of the recalled Santa outfits are found at: http://www.cpsc.gov/cpscpub/prerel/prhtml08/08563a.jpg http://www.cpsc.gov/cpscpub/prerel/prhtml08/08563b.jpg Consumers are advised to immediately take the 2007 outfit away from children and contact Avon for a refund. Consumers with the 2006 outfit should immediately remove the pom-pom from the hat. For additional information, contact Avon at 888-993-9903 between 9:00 a.m. and 6:00 p.m. ET Monday through Friday, or visit the firm's Web site at: http://www.avon.com/ BIG 5 SPORTING: Faces California Suit Over Invasion of Privacy -------------------------------------------------------------- Big 5 Sporting Goods is facing a class-action complaint filed in the Superior Court of California, County of San Diego, alleging the company invades customers' privacy by demanding too much personal information at point-of-sale credit-card purchases, CourtHouse News Service reports. This action arises from the defendant's violations of California Civil Code section 1747.08, Business and Professions Code Section 17200 and invasion of privacy, by and through the defendant's requesting and recording of the plaintiff's and the class members' credit card numbers and zip codes during the point of sale process at the defendant's retail establishments. According to the complaint, California Civil Code Section 1747.08 generally states that when a merchant is engaged in a retail transaction with a customer, the merchant may neither: (1) request personal identification information from a customer paying for goods with a credit card, and then record that personal identification information from a customer paying for goods with a credit card, and then record that personal identification information upon the credit card transaction form or otherwise; nor (2) require as condition to accepting the credit card as payment the cardholder to provide the customer's personal identification information which the retailer causes to be written, or otherwise records upon the credit card transaction form or otherwise. Named plaintiff Michelle Gonzalez brings this lawsuit on behalf of all persons in California from whom defendant requested and recorded personal identification information in conjunction with a credit card transaction. The plaintiff wants the court to rule on: (a) whether each class member engaged in a credit card transaction with the defendant; (b) whether the defendant requested the cardholder to provide personal identification information and recorded the personal identification of the cardholder, during credit card transactions with class members; (c) whether the defendant's conduct of requesting the cardholder to provide personal identification information during credit card transactions and recording the personal identification information of the cardholder constitutes violations of California Civil Code Section 1747.08; (d) whether the plaintiff and the class are entitled to injunctive relief; and (e) whether the plaintiff and the class have sustained damages, and the proper measure of damages. The plaintiff asks the court: -- for an award to the plaintiff and each class member of the civil penalty to which he or she is entitled under California Civil Code Section 1747.08(e); -- to preliminarily and permanently enjoin the defendant from utilizing an "Information Capture Policy" wherein the defendant's cashiers both request and record personal identification information and credit card numbers from customers using credit cards at the point- of-sale in the defendant's retail establishments; -- to disgorge any ill-gotten profits from the defendant's use or sale of the plaintiff's and the class' personal information; -- for general damages according to proof; -- for special damages according to proof; -- for exemplary or punitive damages; -- to certify this action as a class action; -- for distribution of any amount recovered on behalf of the class of similarly situated consumers via fluid recovery or cy pres recovery where necessary to prevent defendant from retaining the benefits of its wrongful conduct; -- for an award of attorneys' fees as authorized by statute including, but not limited to, the provisions of California Code of Civil Procedure Section 1021.5, and as authorized under the "common fund" doctrine, and as authorized by the "substantial benefit" doctrine; -- for costs of the suit; and -- for prejudgment interest at the legal rate. The suit is "Michelle Gonzalez et al. v. Big Sporting Goods Corp., Case No. 37-2008-0008337-CU-BT-CTL, filed in the Superior Court of California, County of San Diego. Representing the plaintiff are: James R. Patterson, Esq. Harry W. Harrison, Esq. Cary A. Kinkead, Esq. Harrison Patterson & O'Connor LLP 402 West Broadway, 29th Floor San Diego, CA 92101 Phone: 619-756-6990 Fax: 619-756-6991 BRINKER INT'L: California Court Decertifies Class in Labor Suit --------------------------------------------------------------- The California Court of Appeals decertified a class action filed against restaurant operator Brinker International, Inc., in San Diego County Superior Court. Certain current and former hourly restaurant employees filed the suit, alleging violations of California labor laws with respect to meal and rest breaks. The suit seeks penalties and attorney's fees. Judge Patricia A.Y. Cowett certified it as a class action in July 2006. The class consists of 63,000 current and former employees of the company who are alleging violations of California law mandating workers' meal and rest breaks (Class Action Reporter, July 19, 2006). The California Court of Appeals stayed all trial court activity in December 2006 and is currently reviewing the certification of the class. In October 2007, the California Court of Appeal decertified the class action on all claims, but has been asked to reconsider that decision, according to the company's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 26, 2008. Brinker International, Inc. -- http://www.brinker.com-� is principally engaged in the ownership, operation, development, and franchising of restaurant concepts. BRITISH COLUMBIA CMBC: Church Floor Collapse Prompts Lawsuit ------------------------------------------------------------ The British Columbia Conference of the Mennonite Brethren Churches and Unite Productions are facing a class-action complaint filed in the Supreme Court of British Columbia less than a month after a floor collapsed during a Christian rock show at an Abbotsford church, CourtHouse News Service reports. Named plaintiffs Sarah and Jennifer Williams claim that the church was not meant to host concerts, and may have been in disrepair. Sarah Williams suffered a traumatic brain injury, and Jennifer Williams walked away with cuts, bruises and an injured left arm, the complaint states. About 40 people were injured in the collapse, according to media reports. Most were minor injuries. The plaintiffs ask the court for: -- an order certifying this action as a class action and appointing named plaintiffs as class representatives, and other appropriate orders under the provisions of the Class Proceedings Act RSBC 1996, c. 50 as amended; -- general damages; -- special damages; -- "in trust" damages; -- the damages to be an aggregate award on behalf of all members of the class under Part 4, Division 2 of the Class Proceedings Act, RSBC 1996, c. 50; -- interest pursuant to the Court Order Interest Act, RSBC 1996, c. 79, as amended; and -- other costs. The suit is "Sarah Williams et al. v. The British Columbia Conference of the Mennonite Brethren Churches, et al., Case No. S-083195," filed in the Supreme Court of British Columbia. BROOKLINE BANK: Discovery Ensues in Collateral Sale Notices Suit ---------------------------------------------------------------- Discovery related to the issue of class certification in a purported class action suit against Brookline Bank, a wholly owned subsidiary of Brookline Bancorp, Inc., over missing information on its notice of sale of collateral for delinquent loans is ongoing. On Feb. 28, 2007, the company received a complaint that was filed against it in the Superior Court for the Commonwealth of Massachusetts by Carrie E. Mosca, Esq. (Class Action Reporter, Dec. 31, 2007). Ms. Mosca defaulted on a loan obligation on an automobile that she co-owned. She alleges that the form of notice of sale of collateral that the bank sent to her after she and the co-owner became delinquent on the loan obligation did not contain information required to be provided to a consumer under the Massachusetts Uniform Commercial Code. The action purports to be brought on behalf of a class of individuals to whom the bank sent the same form of notice in connection with transactions documented as consumer transactions during the four-year period prior to the filing of the action. It seeks statutory damages, an order restraining the bank from future use of the form of notice sent to Ms. Mosca, an order barring the bank from recovering any deficiency from other individuals to whom it sent the same form of notice and attorneys' fees and costs. The parties have engaged in discovery related to the issue of class certification, according Brookline Bank's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. Brookline Bancorp, Inc. -- https://www.brooklinebank.com/ -- is a state-chartered savings and loan holding company and the parent of Brookline Bank. CAREER EDUCATION: Settlement in Illinois Suit Yet to be Approved ---------------------------------------------------------------- A tentative settlement in the consolidated class action, "In re: Career Education Corp. Securities Litigation, Case No. 1:03-cv- 08884," has yet to receive court approval. The case, which was filed in the U.S. District Court for the Northern District of Illinois, represents the consolidation into one suit of six purported class action complaints filed between Dec. 9, 2003, and Feb. 5, 2004, by and on behalf of certain purchasers of the company's common stock, against the company; John M. Larson, a former officer of CEC; and Patrick K. Pesch, a current officer of the company. The lawsuit alleged that, in violation of Section 10(b) of the U.S. Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, the defendants made certain material misrepresentations and failed to disclose certain material facts about the condition of the company's business and prospects during the putative class period, causing the respective plaintiffs to purchase shares of the company's common stock at artificially inflated prices. The plaintiffs further claimed that Messrs. Larson and Pesch were liable as control persons under Section 20(a) of the Exchange Act. On March 29, 2007, the court granted the defendants' motion to dismiss the suit for failure to state a claim and dismissed with prejudice the plaintiffs' third amended consolidated complaint. The plaintiffs appealed the District Court's dismissal of their third amended consolidated complaint to the U.S. Court of Appeals for the Seventh Circuit on April 24, 2007. The parties have subsequently reached an agreement to settle the plaintiffs' claims on appeal. This settlement is subject to the case being remanded by the Court of Appeals to the District Court and the approval by the District Court after notice to potential class members. The company reported no further development in the matter in its May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. The suit is "In re: Career Education Corp. Securities Litigation, Case No. 1:03-cv-08884," filed with the U.S. District Court for the Northern District of Illinois, Judge Joan Humphrey Lefkow presiding. Representing the company are: Karl Richard Barnickol, Esq. Mary Ellen Hennessy, Esq. Joni S. Jacobsen, Esq. David H. Kistenbroker, Esq. Katten Muchin Zavis Rosenman 525 West Monroe Street, Suite 1600 Chicago, Il 60661-3693 Phone: 312-902-5200 CAREER EDUCATION: Faces CCA Students' Litigation in California -------------------------------------------------------------- Career Education Corp. is facing two purported class action suits in California that were filed by certain students of CEC's California Culinary Academy, according to the company's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. Amador Litigation On Sept. 27, 2007, a complaint, entitled, "Amador et al. v. California Culinary Academy and Career Education Corp.," was filed in the California Superior Court in San Francisco on behalf of 37 current and former students of the California Culinary Academy. The plaintiffs brought their complaint as a putative class action and alleged four putative causes of action: 1. fraud; 2. constructive fraud; 3. violation of the California Unfair Competition Law; and 4. violation of the California Consumer Legal Remedies Act. They contend that CCA made a variety of misrepresentations to them, primarily oral, during the admissions process. The alleged misrepresentations relate generally to the school's reputation, the value of the education, the competitiveness of the admissions process, the students' employment prospects upon graduation from CCA and CCA's ability to arrange beneficial student loans. CCA filed a motion to compel arbitration of certain of the claims by certain of the purported class representatives, but the Court denied that request on Feb. 28, 2008. Adams Litigation On April 3, 2008, the same counsel representing the plaintiffs in the Amador action filed another suit on behalf of Jennifer Adams and several other unnamed members of the Amador putative class. The Adams action also is styled as a class action, is based on the same allegations underlying the Amador action, and attempts to plead the same four causes of action as in the Amador action. Although the Adams complaint is virtually identical to the Amador complaint, it makes adjustments to the manner in which the plaintiffs' counsel pleads plaintiffs' claim under the California Consumer Legal Remedies Act in an effort to avoid certain defects that may lead to dismissal of the claim in the Amador action. The date by which CCA and CEC must respond to the complaint has not yet been set. The defendants intend to move to coordinate this case with the Amador action and also to file demurrers to the plaintiffs' claims on various grounds when the response date is established. Career Education Corp. -- http://www.careered.com-- is an educational services company. The Company's schools and universities prepare students for professional careers through the operation of more than 75 on-ground campuses located throughout the U.S., France, Canada, Italy and the United Kingdom and three online academic programs. During the year ended December 31, 2007, the Company had approximately 89,500 students. The schools and universities offer doctoral degree, master's degree, bachelor's degree, associate degree, and non- egree certificate and diploma programs in Culinary Arts, Visual Communication and Design Technologies, Health Education, Business Studies and Information Technology. The segments of the Company include Academy, Colleges, Culinary Arts, Health Education, International and University. CAREER EDUCATION: "Benoit" Cannot Move Forward, Arbitrator Rules ---------------------------------------------------------------- The American Arbitration Association has issued a ruling in the matter, "Benoit, et al., v. Career Education Corp., et al.," stating that the case could not go forward as a class action, according to CEC's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. The suit was originally filed in the Hillsborough County Superior Court in Florida. Aside from CEC, the suit also names as defendants one of the company's subsidiaries, Ultrasound Technical Services, Inc. The action is purportedly brought on behalf of all persons who have been enrolled in the Medical Billing and Coding Program at the Tampa campus of Ultrasound Technical in the last four years. The complaint alleges that the defendants breached enrollment contracts with the plaintiffs and other class members and violated the Florida Deceptive and Unfair Trade Practices Act by: -- failing to properly train students; -- failing to offer and require sufficient hours of course work, provide properly trained instructors, provide appropriate curriculum consistent with the represented degree, award the represented degree, and provide adequate career placement services; and -- misrepresenting that they would provide such services. The complaint also alleges that the defendants "padded" the MBC program curriculum to charge greater tuition, purportedly in violation of the FDUTPA. The plaintiffs seek actual damages, attorneys' fees and costs, and other relief. In response, on July 20, 2005, the company filed a Motion to Stay Proceedings Pending Arbitration, which the court granted on Oct. 11, 2005, pursuant to the arbitration provision contained in each plaintiffs' enrollment agreement. On Oct. 30, 2007, the court granted the plaintiffs' request to compel the defendants to initiate arbitration, and ordered that they initiate arbitration proceedings as to only the first named plaintiff, Aimee Benoit, and that they will be responsible for paying all fees associated with initiating the arbitration proceedings. In accordance with the Court's order, on Nov. 30, 2007, the company filed with the American Arbitration Association a demand for arbitration as to Ms. Benoit. On Jan. 24, 2008, the arbitrator conducted a preliminary hearing and established a briefing schedule on the issue of whether the arbitration can proceed as a class-action. On Jan. 30, 2008, the arbitrator issued an interim ruling stating that the action could not go forward as a class action, and that briefing on the issue was thus not needed. On Feb. 14, 2008, the arbitrator conducted a scheduling conference, reiterated his ruling that the arbitration would not proceed as a class action, and scheduled a final hearing in Ms. Benoit's individual arbitration action for the first week of April 2008. Ms. Benoit's final hearing has been continued and a new date has not been set yet, according to CEC's latest update on the case. Career Education Corp. -- http://www.careered.com-- is an educational services company. The Company's schools and universities prepare students for professional careers through the operation of more than 75 on-ground campuses located throughout the U.S., France, Canada, Italy and the United Kingdom and three online academic programs. During the year ended December 31, 2007, the Company had approximately 89,500 students. The schools and universities offer doctoral degree, master's degree, bachelor's degree, associate degree, and non- egree certificate and diploma programs in Culinary Arts, Visual Communication and Design Technologies, Health Education, Business Studies and Information Technology. The segments of the Company include Academy, Colleges, Culinary Arts, Health Education, International and University. CAREER EDUCATION: Reaches Tentative Deal in SBI Students' Suit -------------------------------------------------------------- Career Education Corp. reached a tentative settlement in the purported class action, "Laronda Sanders, et al. v. Ultrasound Technical Services, Inc. et al.," which was filed in the U.S. District Court for the District of Maryland, according to the company's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. On March 15, 2006, 12 former students of the Landover, Maryland campus of Sanford-Brown Institute, one of Career Education's schools, filed a class-action complaint, on behalf of themselves and all others similarly situated, against Career Education and Ultrasound Technical Services, Inc., one of the company's subsidiaries. The suit was filed in the Circuit Court for Prince George's County, Maryland. The complaint alleges that the defendants made fraudulent misrepresentations and violated the Maryland consumer fraud act by misrepresenting or failing to disclose, among other things, details regarding instructors' experience or preparedness, availability of clinical externship assignments, and estimates for the dates upon which the plaintiffs would receive their certificates and be able to enter the work force. The plaintiffs further allege that the defendants failed to maintain accurate attendance records, and that the defendants negligently or deliberately dropped students without justification. The complaint also alleges that the defendants breached the enrollment contract with the plaintiffs by failing to provide the promised instruction, training, externships, and placement services. The plaintiffs seek actual damages, punitive damages, and costs. The defendants removed the action to the U.S. District Court for the District of Maryland, and filed a motion to dismiss significant portions of the complaint. The plaintiffs requested to remand the action to state court. On Sept. 18, 2006, the court denied the plaintiffs' motion to remand. The Court also granted the defendants' motion to dismiss the common law and statutory fraud counts of the complaint, with leave to amend. On Oct. 17, 2006, the plaintiffs filed an amended complaint. The case was later consolidated with a separate action brought in the same court by another former student. On March 12, 2007, the plaintiffs filed a second amended complaint. On March 7, 2008, the court granted the plaintiffs leave to file a third amended complaint adding four additional former students as plaintiffs based on similar allegations. The parties are in the process of finalizing the terms of a proposed settlement, which would only be effective upon approval of the court. Career Education Corp. -- http://www.careered.com/-- is an educational services company. The Company's schools and universities prepare students for professional careers through the operation of more than 75 on-ground campuses located throughout the U.S., France, Canada, Italy and the United Kingdom and three online academic programs. During the year ended December 31, 2007, the Company had approximately 89,500 students. The schools and universities offer doctoral degree, master's degree, bachelor's degree, associate degree, and non- egree certificate and diploma programs in Culinary Arts, Visual Communication and Design Technologies, Health Education, Business Studies and Information Technology. The segments of the Company include Academy, Colleges, Culinary Arts, Health Education, International and University. CAREER EDUCATION: Faces Georgia Suit Over AIU Admissions Process ---------------------------------------------------------------- Career Education Corp. and American InterContinental University, Inc., are facing a purported class action suit in Georgia over AIU's admissions process, according to CEC's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. On March 19, 2008, a complaint, entitled, "Diallo v. American Intercontinental University, Inc., and Career Education Corporation," was filed in the Superior Court of the State of Georgia of Fulton County, on behalf of Tajuansar Diallo. The plaintiff filed the complaint individually and as a putative class action and purports to allege causes of action for fraud; constructive fraud; negligent misrepresentation; and violations of the Georgia Deceptive and Unfair Trade Practices Act. Plaintiff contends that AIU made a variety of oral and written misrepresentations to her during the admissions process. The alleged misrepresentations relate generally to the school's reputation, the value of the education, the competitiveness of the admissions process, the students' employment prospects upon graduation from AIU and AIU's ability to arrange beneficial student loans. Career Education Corp. -- http://www.careered.com-- is an educational services company. The Company's schools and universities prepare students for professional careers through the operation of more than 75 on-ground campuses located throughout the U.S., France, Canada, Italy and the United Kingdom and three online academic programs. During the year ended December 31, 2007, the Company had approximately 89,500 students. The schools and universities offer doctoral degree, master's degree, bachelor's degree, associate degree, and non- egree certificate and diploma programs in Culinary Arts, Visual Communication and Design Technologies, Health Education, Business Studies and Information Technology. The segments of the Company include Academy, Colleges, Culinary Arts, Health Education, International and University. CAREER EDUCATION: Faces Oregon Suit Over ACI Misrepresentations --------------------------------------------------------------- Career Education Corp. is facing a purported class action suit in Oregon entitled, "Gozzi, et al. v. Western Culinary Institute, Ltd. and Career Education Corporation," according to CEC's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. On March 5, 2008, Shannon Gozzi and Megan Koehnen filed the complaint in Portland, Oregon, in the Circuit Court of the State of Oregon in and for Multnomah County. The plaintiffs filed the complaint individually and as a putative class action and alleged two claims for equitable relief: violation of Oregon's Unlawful Trade Practices Act and unjust enrichment. They filed an amended complaint on April 10, 2008, adding two claims for money damages: fraud and breach of contract. The plaintiffs allege that Western Culinary Institute made a variety of misrepresentations to them, relating generally to WCI's placement statistics, students' employment prospects upon graduation from WCI, the value and quality of an education at WCI, and the amount of tuition students could expect to pay as compared to salaries they may earn after graduation. Career Education Corp. -- http://www.careered.com-- is an educational services company. The Company's schools and universities prepare students for professional careers through the operation of more than 75 on-ground campuses located throughout the U.S., France, Canada, Italy and the United Kingdom and three online academic programs. During the year ended December 31, 2007, the Company had approximately 89,500 students. The schools and universities offer doctoral degree, master's degree, bachelor's degree, associate degree, and non- egree certificate and diploma programs in Culinary Arts, Visual Communication and Design Technologies, Health Education, Business Studies and Information Technology. The segments of the Company include Academy, Colleges, Culinary Arts, Health Education, International and University. COUNTRYWIDE HOME: Faces Lawsuit Over Legal Fees Charged Twice ------------------------------------------------------------- Countrywide Home Loans is facing a class-action complaint filed in the Superior Court of the State of California, County of Contra Costa alleging the company of charging twice the legal fee in a "payoff demand statement" when homebuyers refinance their homes, CourtHouse News Service reports. Named plaintiff Michael D. Feldman brings this action on behalf of all persons who were charged by, and paid a fee to Countrywide for supplying a payoff demand statement that was in excess of the amount established by contract or California law. The plaintiff wants the court to rule on: (a) whether defendants breached any portion of its lending instruments with the plaintiff and members of the class; (b) whether defendants engaged in fraudulent and deceptive acts and practices of business administration at the time of the reconveyance of its mortgages/deeds of trust; (c) whether defendants breached its obligation of good faith and fair dealing owed to plaintiffs and members of the plaintiff class; (d) whether defendants committed acts of unfair competition as defined by B&P Code Section 17200 et seq.; (e) whether defendants violated the Consumer Fraud laws of the State of California; and (f) whether the plaintiffs and members of the class are entitled to receive incidental monetary relief, or alternatively, damages as a result of the unlawful conduct by defendants alleged. The plaintiff asks the court for: -- an award of attorneys' fees and costs, on all causes of action where provided for by contract or statute or otherwise provided by law, including but not limited to, California Code of Civil Procedure Section 1021.5; -- prejudgment and post-judgment interest in a sum according to proof; and -- as such other and further relief as the court deems just and proper. The suit is "Michael D. Feldman et al. v. Countrywide Home Loans, et al., Case No. C08 01127," filed with the Superior Court of the State of California, County of Contra Costa. Representing the plaintiff are: Harold M. Jaffe, Esq. 3521 Grand Avenue Oakland, CA 94610 Phone: 510-452-2610 Fax: 510-452-9125 - and - Brian W. Newcomb, Esq. 770 Menlo Avenue, Suite 101 Menlo Park, CA 94025 Phone: 650-322-7780 Fax: 650-322-7740 ELI LILLY: Judge Says Zyprexa Securities Lawsuit is Time-Barred --------------------------------------------------------------- Judge Jack B. Weinstein of the U.S. District Court for the Eastern District of New York has thrown out a securities class action case against Eli Lilly and Co. that challenged the drug manufacturer's alleged misrepresentations about the anti- psychotic drug Zyprexa, Mark Fass writes for the New York Law Journal. Judge Weinstein held that the plaintiffs failed to file their suit within the two-year statute of limitations. According to N.Y. Law Journal, the judge's decision turned on the standard for determining when the plaintiffs "reasonably should have known" that they sustained damages because of Eli Lilly's purported fraud. The report notes that attorneys for the plaintiff class have argued that the statute began to run with the publication of three investigative articles about the drug in The New York Times in December 2006. Judge Weinstein, however, ruled that the clock began to tick years earlier, when documentation supporting these potential claims first became available to attorneys and institutional investors. "Under ruling law, what is referred to as 'storm warnings' from information available to the stock market, place every hypothesized reasonably astute and well informed investor on notice of the need for further inquiry, beginning the running of the applicable two-year statute of limitations," Judge Weinstein wrote in "In re Zyprexa Products Liability Litigation, 07-cv- 1310." "The individual unsophisticated investor's lack of awareness is ignored; the law tilts the substantive-procedural balance against such a consumer. It applies the much-debated caveat emptor principle favoring greater and freer commerce by limiting litigation, and requiring dismissal of this case," the ruling stated. The Class Action Reported reported on April 18, 2008, that Judge Weinstein already indicated earlier that he probably won't give class-action status to patients and insurers who paid for Zyprexa for FDA-approved uses. The CAR report, citing FiercePharma, cited Judge Weinstein as saying earlier that he does not expect the plaintiffs to be able to claim punitive damages and that the case "ought to be settled." He said he thinks "that we're not dealing with very much money." N.Y. Law Journal recounts that Zyprexa was approved by the Food and Drug Administration for the treatment of schizophrenia in 1996. The FDA extended its approval to certain bipolar-disorder uses in 2000 and for additional bipolar uses in 2004. The drug became one of the company's top sellers, with more than 12 million users and billions of dollars in annual sales, according to the decision. The drug also became the center of a wave of litigation over Eli Lilly's reported long-term efforts to downplay its health risks. According to the internal company documents that served as the basis for the Times articles, Eli Lilly and its officers misrepresented or failed to disclose Zyprexa's link to diabetes, obesity and heightened blood sugar. Thousands of plaintiffs filed the suit, the vast majority of which were removed to federal court and transferred to Judge Weinstein's jurisdiction. The most substantial actions, in terms of damages or criminal penalties, include the 30,000 individual-plaintiff personal injury cases, a few hundred of which remain ongoing; the civil and criminal cases filed by attorneys general of states that allegedly overpaid for Zyprexa; a class action initiated by tens of thousands of insurers and unions who also claim overpayment; and the present securities class action. According to N.Y. Law Journal, the plaintiffs filed the present action on March 28, 2007, claiming that Eli Lilly and numerous named employees either misrepresented or failed to disclose the link between Zyprexa and its health risks, as well as the company's illegal practice of marketing the drug for so-called "off-label" uses. Under federal securities laws, the plaintiffs must initiate their claims within two years of when they reasonably should have known of the existence of such claims. The present claims would therefore be barred if there was public information sufficient to place the plaintiffs on notice before March 28, 2005. The plaintiffs cited the December 2006 articles as the first public notice of their claims. Judge Weinstein disagreed that the statute began to run with the Times series, citing the "storm warning" metaphor set forth by the 2nd U.S. Circuit Court of Appeals in Lentell v. Merrill Lynch & Co., 396 F.3d 161. Over the course of 30 pages in his 82-page decision, the judge outlined the extended "public debate" over Zyprexa, including numerous publications in medical literature, reports by investment analysts and presentations at medical conferences that dated back to within a year of the drug's release. "To determine whether an investor was on notice to inquire, the circumstances as a whole will be evaluated . . . Even a single news article can provide sufficiently strong omens to place a plaintiff on notice of the need for investigation," Judge Weinstein wrote. "Considering the vast number of alarms, plaintiffs were placed on notice of investment dangers long before March 2005. Their late-filed federal securities claims alleging securities fraud are time-barred." Philadelphia-based Pepper Hamilton represented Eli Lilly. Partner Robert L. Hickok, Esq., did not return a call by N.Y. Law Journal seeking comment. Grant & Eisenhofer; Radnor, Pa.-based Schiffrin, Barroway, Topaz & Kessler; and Portland, Maine-based Bernstein Shur represented the plaintiffs. N.Y. Law Journal says that calls to various attorneys handling the case were not returned. Eli Lilly and Co. -- http://www.lilly.com/-- discovers, develops, manufactures and sells products in one business segment, pharmaceutical products. The Company also has an animal health business segment. It manufactures and distributes its products through owned or leased facilities in the U.S., Puerto Rico and 25 other countries. Eli Lilly and Company's products are sold in approximately 135 countries. The Company also conducts research to find products to treat diseases in animals and to increase the efficiency of animal food production. FEDEX CORP: Drivers' Lawyers File Summary Judgment Motions ---------------------------------------------------------- Lawyers for approximately 25,000 FedEx Ground/Home Delivery drivers filed motions, supported by a massive record containing 10,616 pages, for summary judgment in the pivotal class-action challenge to the company's embattled independent contractor model. In a related development, the court directed that notice of the litigation be sent to all class members without injecting any corporate spin. The motions, which follow two years of discovery and more than 300 depositions, including that of former FedEx Ground/Home Delivery Founder and CEO Daniel Sullivan, assert that there is incontrovertible evidence showing that the drivers are clearly company employees, not independent contractors, according to Lynn Rossman Faris, co-lead counsel from the California-based firm of Leonard Carder. In summarizing the filing, Ms. Farris said that FedEx cannot re- litigate the employment status of its drivers after losing the issue in the landmark California Estrada trial, and that the company clearly treated its drivers like employees. "FedEx controls what the drivers drive, what they wear, how they deliver packages, how they act with customers, how much work they perform in a day and when and where they perform it," explains Ms. Faris. "The factual record is extraordinary in this case because FedEx's actions are so blatant." The plaintiffs filed for summary judgment regarding employment status in the nationwide ERISA class and in the certified-class- action states of: -- Alabama, -- Arkansas, -- California, -- Kansas, -- Florida, -- Indiana, -- Kentucky, -- Maryland, -- Minnesota, -- New Hampshire, -- New Jersey, -- New York, -- Oregon, -- Pennsylvania, -- Rhode Island, -- South Carolina, -- Tennessee, -- Texas, -- West Virginia and -- Wisconsin. The Class Notice Order was entered April 25, 2007, by U.S. Magistrate Christopher A. Nuechterlein of the Northern District of Indiana, South Bend Division. He rejected the company's arguments to change the Notice and reminded them that the notice is "not meant to protect the rights of the defendants." The Notice prohibits FedEx from "asking or telling you (the drivers) to exclude yourself from this action, or even from expressing an opinion as to whether it is or is not in your best interest to remain a class member or exclude yourself from this action," and further bars "retaliation" for participating in the case. "We can now ensure that every member of the class is notified of this crucial litigation and that they can freely make up their own minds about their participation," said Ms. Faris. The lawsuits allege that by misclassifying the drivers, FedEx deprived them collectively of hundreds of millions of dollars in lost wages, benefits and expenses. FedEx Corp. provides a portfolio of transportation, e-commerce and business services through companies that compete collectively, operate independently and manage collaboratively, under the respected FedEx brand. The Company is based in Memphis, Tenn. INSURANCE COS: R. Citron Settles Five Flood-Related Lawsuits ------------------------------------------------------------ Key West attorney Robert Cintron, Esq., has settled five federal lawsuits filed against different flood insurance companies -- one recent settlement allowing Key West City Commissioner Clayton Lopez to begin moving back into his home after more than two years of living in a temporary trailer. Hurricane Wilma in 2005 left many Key West homes in shambles or in desperate need of repair, including the six clients represented by Mr. Cintron. Those clients say they have not gotten adequate insurance compensation. Mr. Lopez said his insurance providers, after assessing his home, bickered over which natural force caused damage -- wind or flood -- and who was held liable. As a result, he and his wife spent the past two years in a trailer provided by the Federal Emergency Management Agency. Two companies at odds in his case were Citizens Property Insurance Corp., which covers wind damage, and Fidelity National Property and Casualty Insurance Co., which covers flooding. Both have provided money for the restoration. Citizens offered $4,000 after a $5,000 deductible and Fidelity's estimate on repairs it would cover was about $45,000. Mr. Lopez said, however, that it would take more than $200,000 to fully repair his home. That's when he sued. Mr. Cintron explored the possibility of trying to get a class- action lawsuit against FEMA and flood insurance providers Sunshine State, Fidelity and USAA, but said he couldn't garner enough plaintiffs to proceed on class-action status. One lawsuit he filed against Sunshine State in still pending, Mr. Cintron said. Those insurance companies must adhere to policies set by the National Flood Insurance Program, a component of FEMA created by Congress in 1968. Premiums paid to insurance carriers end up in FEMA's bank accounts, he explained, adding that adjusters decide the claim. FEMA caps its allowable flood claim at $250,000, which can be less than damages experienced by some Keys residents, FEMA spokesman Butch Kinerney said. "I'm almost convinced that it's not as much the insurance company as it is the federal government regulations," Mr. Cintron said. "The flood insurance is just a cloak for FEMA," Mr. Lopez said. While the settlement "wasn't really what we needed or had hoped for, at this point it's been two and a half years and we need something to move forward," Mr. Lopez said. Due to FEMA deadlines for trailer move-out, Mr. Lopez and his wife Pam had to purchase the FEMA trailer for $600. After their home is fully repaired, he said they plan to donate it to a church and move back to their Amelia Street house. Mr. Lopez said he filed his lawsuit after trying to resolve the situation without litigation. "Once we got into the lawsuit mode, it didn't take long at all to resolve it under federal court guidelines," Mr. Cintron said. "I still think the industry continues to be somewhat overwhelmed by flood claims. I don't think there was any evil motive on behalf of the insurance company." MORTGAGE LENDERS: Suit Claims Attorneys Stiffed in Katrina Cases ---------------------------------------------------------------- A federal class action filed in the U.S. District Court for the Eastern District of Louisiana accuses mortgage lenders of illegally snatching payments from the Louisiana Road Home program, intended for victims of Hurricane Katrina, CourtHouse News Service reports. The defendants named in the complaint are: -- ABN Amro Mortgage Group, -- Accredited Home Lenders, -- Advance Mortgage Corp., -- Aegis Mortgage Corp., -- Altegra Credit Co., -- AMC Mortgage Services, -- American Acceptance Mortgage, -- American General Finance, -- American Home Mortgage Corp., -- American Home Mortgage Corp. of New York, -- American Home Mortgage Servicing, -- American Thrift & Finance Plan, -- American Thrift & Finance Plan LLC, -- Ameriquest Mortgage Co., -- AmSouth Bank, -- Argent Mortgage Company, -- Associates Financial Services of America, -- Associates Financial Services Company, -- Citifinancial Mortgage Co. of New York, -- City Financial Services, Citywide Mortgage Co., -- Colonial Mortgage & Loan Corp., -- Corestar Financial Group, -- Countrywide Home Loans, -- Decision One Mortgage Co., -- Dryades Savings Bank, -- Louisiana State Division of Administration Office of Community Development, and -- its Executive Director, Suzie Elkins. The defendant-mortgage lenders and the Road Home Program each claim ownership of home insurance loss payments, before homeowner receive the payments. The Road Home Program claims it is entitled to homeowners' insurance checks, but acknowledges responsibility for payment of attorneys' fees from the insurance money, the 35-page complaint states. The defendant mortgage and lending companies deny an obligation to pay attorneys' fees for the homeowners. They say the homeowners should pay the fees themselves. The mortgage lenders claim that if Road Home wants reimbursement for its homeowner grants, the homeowners are solely responsible for the grant repayments. The plaintiffs claim that lenders are refusing to endorse insurance settlement checks, claiming that as the mortgagee and under the mortgage contract, they are an additional loss payee, and, as a result, they allege that they have ownership of the insurance settlement money. This has a direct effect on homeowners, as without their insurance money, they are unable to repair their homes. Also, since the insurance claim checks have short payout periods, several million dollars in checks sitting in mortgage lending offices, waiting to be endorsed, already have expired. The plaintiffs, led by the Law Offices of Joseph Bruno, seek declaratory relief in the disputes between various parties concerning the ranking of their alleged interests in Hurricane Katrina loss settlements. The suit is "The Law Offices of Joseph M. Bruno et al. v. ABN Amro Mortgage Group Inc., et al., Case No. 08-2762," filed with the U.S. District Court for the Eastern of Louisiana. NORTHERN STATES: Sup. Ct. Grants Petition for "Hoffman" Review -------------------------------------------------------------- The Minnesota Supreme Court granted a petition by plaintiffs in the purported consumer class action, "Hoffman vs. Northern States Power Co.," which seeks discretionary review of the case filed against Northern States Power Co., a wholly owned subsidiary of Xcel Energy, Inc. Filed on March 15, 2006, the complaint was brought on behalf of NSP-Minnesota's residential customers in Minnesota, North Dakota, and South Dakota for alleged breach of a contractual obligation to maintain and inspect the points of connection between NSP-Minnesota's wires and customers' homes within the meter box. The plaintiffs assert that NSP-Minnesota's breach results in an increased risk of fire and that it is in violation of tariffs on file with the Minnesota Power Utilities Commission. Thus, they seek injunctive relief and damages in an amount equal to the value of inspections plaintiffs claim NSP-Minnesota was required to perform over the past six years. NSP-Minnesota filed a motion to dismiss the pleadings. In November 2006, the court issued an order denying NSP-Minnesota's dismissal request. On Nov. 28, 2006, pursuant to a motion by NSP-Minnesota, the court certified the issues raised in NSP-Minnesota's original motion as important and doubtful. The certification permits NSP-Minnesota to file an appeal, and it has done so. Briefs have been filed, and oral arguments were heard Oct. 24, 2007. On Jan. 22, 2008, the Minnesota Court of Appeals determined that the plaintiffs' claims are barred by the filed rate doctrine and remanded the case to the district court for dismissal. The plaintiffs have petitioned the Minnesota Supreme Court for discretionary review, and on April 15, 2008, the supreme court granted the petition, according to the company's May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. Minnesota-based Xcel Energy, Inc. -- http://www.xcelenergy.com -- is a holding company engaged in the utility business in the U.S. PARTNER COMMUNICATIONS: Faces Lawsuit Over Charged Repair Fees -------------------------------------------------------------- Partner Communications Company Ltd. (TASE:PTNR), a leading Israeli mobile communications operator, disclosed that it was served on May 6, 2008, with a lawsuit requesting certification as a class action, filed in the District Court of Jerusalem, by plaintiffs claiming to be subscribers of the company. The plaintiffs claim that Partner should not have charged them for repairing their mobile handset. The total amount to be claimed under the class action is estimated by the plaintiffs at approximately ILS46 million. Partner said it will contest this lawsuit vigorously. At this preliminary stage, Partner is considering the merits of the claim and is unable to assess the extent of the validity of the claim against it. For more information contact: Emanuel Avner, Chief Financial Officer (emanuel.avner@orange.co.il) Oded Degany - Carrier, Investor and Int'l Relations (oded.degany@orange.co.il) Partner Communications Company Ltd. Phone: +972-54-7814951 +972-54-7814151 Fax: +972-54-7815961 +972-54 -7814161 Website: http://www.orange.co.il/investor_site/ SOURCEFIRE: May 2008 Scheduling Conference Set in Maryland Suit --------------------------------------------------------------- A May 2008 scheduling conference was set for a consolidated securities fraud class action pending with the U.S. District Court for the District of Maryland against Sourcefire, Inc. On May 8, 2007, a putative class action lawsuit was filed in the U.S. District Court for the District of Maryland against the company and certain of its officers and directors, captioned, "Howard Katz v. Sourcefire, Inc., et al., Case No. 1:07-cv- 01210-WMN." Since then, two other putative class actions were filed in the U.S. District Court of Maryland against the company and certain of its officers and directors and other parties making similar allegations, captioned: 1. "Mark Reaves v. Sourcefire, Inc. et al, Case No. 1:07- cv-01351-JFM," and 2. "Joan Raveill v. Sourcefire, Inc. et al, Case No. 1:07-cv-01425-WMN." In addition, a fourth putative class action was filed in the U.S. District Court for the Southern District of New York against the company and certain of its officers and directors and other parties making similar allegations, captioned, "Barry Pincus v. Sourcefire, Inc., et al., Case No. 1:07-cv-04720-RJH." Pursuant to a stipulation of the parties and in an order entered on June 29, 2007, by the U.S,. District Court of the Southern District of New York, the Pincus case was transferred to the U.S. District Court for the District of Maryland. The actions claim to be filed on behalf of all persons or entities who purchased our common stock pursuant to the registration statement and prospectus issued in connection with the Company's initial public offering. The lawsuits allege violations of Section 11, Section 12 and Section 15 of the Securities Act of 1933, as amended, in connection with allegedly material misleading statements and omissions contained in the registration statement and prospectus. The plaintiffs seek, among other things, a determination of class action status, compensatory and rescission damages, a rescission of the initial public offering, as well as fees and costs on behalf of a putative class. On July 13, 2007, Sandra Amrhein filed a motion to consolidate the four cases, to appoint her lead plaintiff and to approve her choice of lead and liaison counsel. On Sept. 4, 2007, the Court granted a motion to consolidate the four putative class action lawsuits into a single civil action. In that same Order, the Court also appointed Ms. Amrheim as lead plaintiff, the law firm of Kaplan Fox & Kilsheimer LLP as lead counsel, and Tydings & Rosenberg LLP as liaison counsel. On Oct. 4, 2007, Ms. Amrheim filed an Amended Consolidated Class Action Complaint asserting legal claims that previously had been asserted in one or more of the four original actions. On Nov. 20, 2007, the defendants moved to dismiss the Amended Consolidated Class Action Complaint. On April 23, 2008, the motion to dismiss was granted in part and denied in part. A scheduling conference with the Court is expected to occur in May 2008, according to the company's May 2, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. The suit is "Howard Katz, et al. v. Sourcefire, Inc., et al.," filed in the U.S. District Court for the District of Maryland. Representing the plaintiffs are: Kaplan Fox & Kilsheimer, LLP 805 Third Avenue, 22nd Floor New York, NY, 10022 Phone: 212-687-1980 Fax: 212-687-7714 e-mail: info@kaplanfox.com - and - Tydings & Rosenberg LLP 100 East Pratt Street Baltimore, MD, 21202 Phone: 410-752-9700 Fax: 410-757-5460 e-mail: webmaster@tydingslaw.com TJ MAXX: Security Breach Settlement Means Money for Shoppers ------------------------------------------------------------ The Class Action Reporter reported on April 2, 2008, that customers affected by a credit and debit-card security breach at TJ Maxx or Marshalls are urged to look into a class-action settlement announced earlier this year. CAR recalled that a hacker stole data from more than 47 million credit and debit cards in 2007. In a more detailed report regarding the settlement terms, Gene Hartley of KY3 Springfield writes that TJ Maxx agreed there was a security breach to confidential data and people may have been exposed to identity theft. Thus, the company agreed to a multi- million dollar class action settlement. The report informs those who made a return without a receipt and received a notification letter from TJ Maxx saying personal information may have been compromised that they are eligible for three years of credit monitoring and identity theft insurance. People who made a purchase with their credit or debit cards in 2003 or 2006 could be eligible for additional benefits including $60 in vouchers or a cash benefit of up to $30. Regular shoppers 'could get some benefits on word alone.' Shoppers do not need proof, but have to be willing to sign an affidavit saying they incurred some type of out-of-pocket expense as a result of the breach. A payment for credit report is an example of an out-of-pocket expense, the report notes. If you made a return without a receipt or a purchase with your debit or credit card at Marshalls or TJ Maxx, you could be part of this class action settlement. For more information, visit http://www.tjxsettlement.com/ UNITED STATES: Forest Service Sued Over $5 Unconstitutional Fees ---------------------------------------------------------------- The U.S. Forest Service is facing a class-action complaint filed in the U.S. District Court for the District of Arizona alleging it unconstitutionally charges hikers $5 to enter undeveloped campgrounds and back-country trails at Mt. Lemmon, a popular mountain escape outside Tucson, CourtHouse News Service reports. The plaintiffs say that the fee, originally implemented through the 1996 fee demonstration program, was repealed by the Recreation Enhancement Act passed as an appropriations rider in 2004. They claim that the Coronado National Forest designation of a "high impact recreation area" -- a mile-wide swath of land running the entire length of the 28-mile road, the only paved route leading from the desert valley to the alpine haven -- is merely administrative, and was never authorized by Congress. The winding, scenic road begins 15 miles from downtown Tucson and climbs to Mt. Lemmon, a 9,000-foot-high pine forest and winter ski area. The highway provides access to hundreds of thousands of acres of public lands, including wilderness areas. The class action, on behalf anyone who has paid the Mt. Lemmon fee, states that its current application -- which applies to the entire route, with the exception of scenic overlooks and private property -- violates the Recreation Enhancement Act, which prohibits charging for parking alone or for use of undeveloped areas. The plaintiffs claim that the fee has a "chilling effect" on use of forest lands, in violation of the First Amendment, and that the assumption of guilt for vehicle owners violates Fifth Amendment due-process rights. The plaintiffs include environmental activists and Christine Wallace, a hiker and camper who was prosecuted for refusing to pay the fee. The class action seeks to enjoin the Forest Service from enforcing of its fee policy, and demands new signs along the Mt. Lemmon highway specifying that a fee is required only for use of developed picnic and camping areas. The suit is "Gaye Adams et al. v. United States Forest Service et al.," filed in the U.S. District Court for the District of Arizona. WAL-MART: 9th Circuit Favors Assistant Managers in Overtime Suit ---------------------------------------------------------------- In an unpublished opinion, the 9th U.S. Circuit Court of Appeals says that the trial court -- U.S. District Court for the Central District of California -- erred when it refused to allow assistant managers at Wal-Mart to present their case as a class action suit, Digg Newsvine reports. "The district court must focus on the intent of the plaintiffs in bringing suit. We therefore hold that the district court abused its discretion in denying class certification," 9th Circuit ruling said. "On remand the district court shall reconsider class certification," the 9th Circuit says. The Class Action Reported on Oct. 16, 2007, that the U.S. District Court for the Central District of California stayed the purported class action, captioned "Sepulveda v. Wal-Mart Stores, Inc.," pending a decision on plaintiff's appeal in the matter. Generally, the suit -- involving more than 2,750 assistant managers -- is alleging violations of California's meal break and overtime laws. It seeks certification of a class of salaried managers who challenge their exempt status under state and federal laws. The CAR recounted that in May 2006, the federal court denied a motion for class certification. In refusing to certify the class action, Judge Dale S. Fischer found that the claims of the assistant managers were too individualized and that injunctive relief would fail to address the concerns of the majority of potential class members since they are no longer with the company. The plaintiffs then appealed the ruling to the U.S. Court of Appeals for the Ninth Circuit. On Aug. 11, 2006, the 9th Circuit granted the plaintiffs permission to appeal the order denying class certification. In their appeal, the plaintiffs argued that the District Court's decision denying class certification was manifestly erroneous. The District Court found that the stay of the suit was appropriate because the class certification decision involves an unsettled, fundamental issue of law. The suit is "Daniel Sepulveda, et al. v. Wal-Mart Stores Inc., et al., Case No. 2:04-cv-01003-DSF-E," on appeal from the U.S. District Court for the Central District of California under Judge Dale Fischer. Representing the plaintiffs are: Robert J. Drexler, Jr., Esq. (rdrexler@quislaw.com) Quisenberry Law Firm 2049 Century Park East, Suite 2200 Los Angeles, CA 90067-2909 Phone: 310-785-7966 - and - Steven G. Pearl, Esq. (sgpearl@sgpearl.com) Pearl Law Offices 16133 Ventura Boulevard, Suite 625 Encino, CA 91436-2412 Phone: 818-995-8300 Representing the defendants is: Lawrence C. DiNardo, Esq. Jones Day 77 West Wacker Drive, Suite 35 Chicago, IL 60601-1692 Phone: 312-782-3939 WAXCESSORIES INC: Recalls Simmer Pots for Shock and Fire Risk ------------------------------------------------------------- Waxcessories, Inc., of Dracut, Massachusetts, in cooperation with the U.S. Consumer Product Safety Commission, is recalling about 830,000 Electric Simmer Pots. The company said the simmer pots have wire connections that can become loose, posing a risk of fire and electric shock to consumers. There have been 161 reports of discolored cords, loose wires, and wires separating from the pot. No injuries have been reported. The electric simmer pots were sold in a variety of styles and were designed to melt scented wax in a ceramic cup. The cup sits on a ceramic base that contains a 40-watt bulb, socket and electric cord. The recall includes all designs of the electric simmer pots and all item numbers. The words "ELECTRIC SIMMER POT" and the design name are printed on the bar code label, which is located on the bottom of the base. For a complete list of individual item numbers and photos, visit the firm's recall Web site: http://www.simmerpotrecall.com Pictures of the recalled electric simmer pots are found at: http://www.cpsc.gov/cpscpub/prerel/prhtml08/08255a.jpg http://www.cpsc.gov/cpscpub/prerel/prhtml08/08255b.jpg These recalled electric simmer pots were manufactured in China and were sold at gift and novelty shops nationwide from April 2002 through April 2008 for between $17 and $25. Consumers are advised to stop using the simmer pots immediately and contact Waxcessories for instructions on receiving a free replacement product. For further information, call 800- 899-5884 between 8:00 a.m. and 7:00 p.m. ET Monday through Friday, or visit the recall Web site: http://www.simmerpotrecall.com/ XCEL ENERGY: Plaintiffs Appeal Dismissal of Katrina-Related Suit ---------------------------------------------------------------- The plaintiffs in the purported class action, "Comer, et al. v. Nationwide Mutual Insurance Co.," are appealing to the U.S. Court of Appeals for the Fifth Circuit the dismissal of the case, which names Xcel Energy, Inc., the parent of Minnesota- based Northern States Power Co., as a defendant. The Court of Appeals has taken the matter under advisement and is expected to issue an opinion in due course, according to Northern States' May 5, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2008. To recall, in April 2006, Xcel Energy received notice of a purported class action lawsuit filed in U.S. District Court in the Southern District of Mississippi. The lawsuit names more than 45 oil, chemical and utility companies, including Xcel Energy, as defendants and alleges that defendants' CO2 emissions "were a proximate and direct cause of the increase in the destructive capacity of Hurricane Katrina." The plaintiffs allege, in support of their claim, several legal theories, including negligence and public and private nuisance and seek damages related to the loss resulting from the hurricane. In August 2007, the court dismissed the lawsuit in its entirety against all the defendants on constitutional grounds. In September 2007, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit. The suit is "Comer, et al. v. Nationwide Mutual Insurance Co., Case No. 1:05-cv-00436-LTS-RHW," filed with the U.S. District Court for the Southern District of Mississippi, Judge L. T. Senter, Jr., presiding. Representing the plaintiffs are: F. Gerald Maples, Esq. (federal@geraldmaples.com) Meredith A. Mayberry, Esq. (mmayberry@geraldmaples.com) F. Gerald Maples, PA 902 Julia Street New Orleans, LA 70113 Phone: 504-569-8732 - and - Randall Allan Smith, Esq. (rasmith3@bellsouth.net) Stephen M. Wiles, Esq. (smwiles@smithfawer.com) Smith & Fawer 201 St. Charles Ave., Suite 3702 New Orleans, LA 70170 Phone: 504-525-2200 Fax: 504-525-2205 New Securities Fraud Cases CBEYOND INC: Gardy & Notis Files Georgia Securities Fraud Suit -------------------------------------------------------------- Gardy & Notis, LLP has commenced a class action lawsuit in the United States District Court for the Northern District of Georgia on behalf of a class of all purchasers of Cbeyond, Inc.'s securities during a class period of November 1, 2007, to February 21, 2008. The lawsuit charges Cbeyond and its founder, chairman, president and CEO, James Geiger, of violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and certain rules thereunder. The case alleges that beginning on November 1, 2007, the defendants made specific misstatements designed to hide the fact that Cbeyond was recording a higher churn rate for its services, which permitted certain of Cbeyond's officers and directors to engage in insider sales of $39 million of Cbeyond stock at artificially inflated prices. Shortly thereafter, Cbeyond was forced to admit on February 21, 2007, that it elected to make certain operational changes that caused its churn rate to climb even higher, contrary to its prior representations. Cbeyond's stock price dropped 20% on this shocking news. The plaintiff seeks to recover damages on behalf of himself and all other individual and institutional investors who purchased or otherwise acquired Cbeyond securities between November 1, 2007, and February 21, 2008, excluding defendants and their affiliates. For more information, contact: Mark C. Gardy, Esq. (mgardy@gardylaw.com) Dustin P. Mansoor, Esq. (dmansoor@gardylaw.com) Gardy & Notis, LLP 440 Sylvan Avenue, Suite 110 Englewood Cliffs, New Jersey 07632 Phone: 201-567-7377 Fax: 201-567-7337 Web site: http://www.gardylaw.com/ MERCK & CO: Labaton Sucharow Files Securities Fraud Suit in NJ -------------------------------------------------------------- Labaton Sucharow LLP filed a class action lawsuit on May 5, 2008, in the United States District Court for the District of New Jersey, on behalf of purchasers of the securities of Merck & Co., Inc. between July 24, 2006, and March 28, 2008, inclusive. This action expands the class period in the previously filed Merck action. The complaint names Merck and Richard T. Clark as defendants. The complaint alleges that during the Class Period, Defendants violated the Securities Exchange Act of 1934 by issuing materially false and misleading statements about the results of a study that showed that Vytorin, an expensive cholesterol drug, offered no benefits over generic drugs selling for a fraction of Vytorin's price, which had the effect of artificially inflating the market price of Merck's securities. More specifically, the complaint alleges, inter alia, that Defendants failed to release the results of a study of Vytorin for nearly two years because they knew the results were unfavorable, and only after articles questioned the unusually long delay and U.S. Congressmen wrote to Merck questioning whether the delay was legitimate. Vytorin is a cholesterol-lowering medication that is a combination of two other drugs, Zetia and Zocor, and is co- marketed by Merck and Schering. The clinical trial (called ENHANCE) was conducted to test whether Vytorin was more effective than much cheaper "statin" drugs in preventing progression of atherosclerosis (plaque buildup) in the carotid artery, a major risk factor for heart attacks and strokes. The study was designed to test the effectiveness of Vytorin against simvastatin, the generic form of Zocor. On Sunday, March 30, 2008, the full negative ENHANCE trial results were finally disclosed to the market. The results were negative, and showed that Vytorin was not more effective than much cheaper generic drugs in slowing the progression of atherosclerosis. The New England Journal of Medicine took the unusual step of printing two editorials which recommended doctors only turn to Zetia and Vytorin after they had exhausted all other options. Additionally, a panel of experts issued a unanimous statement calling on cardiologists to rein in the use of Zetia and Vytorin, and urged doctors to turn back to statins. In reaction to the release of the full study results on March 30, 2008, Merck's stock price fell from $44.51 on March 28, to a close on March 31 (the next trading day) of $37.95 on extremely heavy volume, a one-day decline of approximately 15%. The complaint alleges that the unusually long delay in the release of the study results was undertaken to avoid releasing bad results that would harm sales of Vytorin, which were touted during the Class Period. For more information, contact: Andrei V. Rado, Esq. Labaton Sucharow LLP 140 Broadway New York, NY 10005 Phone: 800-321-0476 Asbestos Alerts ASBESTOS LITIGATION: Union Carbide Has 90,814 Claims at March 31 ---------------------------------------------------------------- Union Carbide Corporation recorded 90,184 unresolved asbestos claims filed against it at March 31, 2008, compared with 112,747 claims at March 31, 2007, according to the Company's quarterly report filed with the Securities and Exchange Commission on April 29, 2008. The Company recorded 90,322 unresolved asbestos-related claims at Dec. 31, 2007, compared with 111,887 claims at Dec. 31, 2006. (Class Action Reporter, Feb. 29, 2008) The Company is and has been involved in asbestos-related suits filed primarily in state courts during the past three decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that the Company sold in the past, alleged exposure to asbestos-containing products located on Company premises, and the Company's responsibility for asbestos suits filed against a former subsidiary, Amchem Products, Inc. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to the Corporation's products. At March 31, 2008, the Company noted 2,716 claims filed and 2,854 claims settled, dismissed, or otherwise resolved. Claimants with claims against both the Company and Amchem totaled 28,893 and individual claimants totaled 61,291. At March 31, 2008, the Company noted 3,085 claims filed and 2,225 claims settled, dismissed, or otherwise resolved. Claimants with claims against both the Company and Amchem totaled 38,901 and individual claimants totaled 73,846. Houston-based Union Carbide Corporation, a subsidiary of The Dow Chemical Company, produces chemicals like ethylene and propylene, which are converted into plastics resins: polyethylene and polypropylene. The Company also produces ethylene oxide and ethylene glycol used to make polyester fibers and antifreeze. ASBESTOS LITIGATION: Union Carbide Has $695M Receivable at March ---------------------------------------------------------------- Union Carbide Corporation's non-current asbestos-related insurance receivables were US$695 million at March 31, 2008, compared with US$696 million at Dec. 31, 2007, according to the Company's quarterly report filed with the U.S. Securities and Exchange Commission on April 29, 2008. The Company's current asbestos-related liabilities were US$123 million at March 31, 2008, compared with US$141 million at Dec. 31, 2007. The Company's non-current asbestos-related liabilities were US$959 million at March 31, 2008, compared with US$1.001 billion at Dec. 31, 2007. At Dec. 31, 2007, the Company's asbestos-related liability for pending and future claims was US$1.1 billion. At Dec. 31, 2007, about 31 percent of the recorded liability related to pending claims and about 69 percent related to future claims. The Corporation determined that no adjustment to the accrual was required at March 31, 2008. The Company's asbestos-related liability for pending and future claims was US$1.1 billion at March 31, 2008. About 30 percent of the recorded liability related to pending claims and about 70 percent related to future claims. Houston-based Union Carbide Corporation, a subsidiary of The Dow Chemical Company, produces chemicals like ethylene and propylene, which are converted into plastics resins: polyethylene and polypropylene. The Company also produces ethylene oxide and ethylene glycol used to make polyester fibers and antifreeze. ASBESTOS LITIGATION: UCC Records $56M Defense, Resolution Costs --------------------------------------------------------------- Union Carbide Corporation, for the three months ended March 31, 2008, recorded US$56 million as asbestos-related defense and resolution costs, in which US$14 million were for defense and US$42 million were for resolution. For the three months ended March 31, 2007, the Company recorded US$33 million as asbestos-related defense and resolution costs, in which US$17 million were for defense and US$16 million were for resolution. At Dec. 31, 2002, the Company increased the receivable for insurance recoveries related to its asbestos liability to US$1.35 billion, substantially exhausting its asbestos product liability coverage. The insurance receivable related to the asbestos liability was determined after a thorough review of applicable insurance policies and the 1985 Wellington Agreement, to which the Company and many of its liability insurers are signatory parties, as well as other insurance settlements, with due consideration given to applicable deductibles, retentions and policy limits, and taking into account the solvency and historical payment experience of various insurance carriers. The Wellington Agreement and other agreements with insurers are designed to facilitate an orderly resolution and collection of the Corporation's insurance policies and to resolve issues that the insurance carriers may raise. In September 2003, the Company filed a comprehensive insurance coverage case, now proceeding in the Supreme Court of the State of New York, County of New York, seeking to confirm its rights to insurance for various asbestos claims and to facilitate an orderly and timely collection of insurance proceeds. This lawsuit was filed against insurers that are not signatories to the Wellington Agreement and do not otherwise have agreements in place with the Company regarding their asbestos-related insurance coverage, in order to facilitate an orderly resolution and collection of those insurance policies and to resolve issues that the insurance carriers may raise. Although the lawsuit is continuing, through the end of the first quarter of 2008, the Company had reached settlements with several of the carriers involved in this litigation. The Company's receivable for insurance recoveries related to its asbestos liability was US$465 million at March 31, 2008 and US$467 million at Dec. 31, 2007. At March 31, 2008 and Dec. 31, 2007, all of the receivable for insurance recoveries was related to insurers that are not signatories to the Wellington Agreement and do not otherwise have agreements in place regarding their asbestos-related insurance coverage. At March 31, 2008, the Company recorded a total of US$270 million in receivables, in which US$22 million were for defense costs and US$248 million were for resolution costs. At March 31, 2007, the Company recorded a total of US$271 million in receivables, in which US$18 million were for defense costs and US$253 million were for resolution costs. Houston-based Union Carbide Corporation, a subsidiary of The Dow Chemical Company, produces chemicals like ethylene and propylene, which are converted into plastics resins: polyethylene and polypropylene. The Company also produces ethylene oxide and ethylene glycol used to make polyester fibers and antifreeze. ASBESTOS LITIGATION: TPC Still Involved in ACandS, Inc. Lawsuits ---------------------------------------------------------------- Travelers Property Casualty Corp. (TPC), a wholly-owned subsidiary of The Travelers Companies, Inc., continues to be involved in three significant proceedings relating to ACandS, Inc., formerly a national distributor and installer of products containing asbestos. The proceedings, which are pending in the U.S. Bankruptcy Court for the District of Delaware (In re: ACandS, Inc.) and the U.S. District Court for the District of Pennsylvania (ACandS, Inc. v. Travelers Casualty and Surety Co., No. 03-MC-222 and ACandS, Inc. v. Travelers Casualty and Surety Co., 00-CV-4633), involve disputes as to whether and to what extent any of ACandS' potential liabilities for current or future bodily injury asbestos claims are covered by insurance policies issued by TPC. On July 6, 2007, the Company announced that it entered into a settlement to resolve fully all current and future asbestos- related coverage claims relating to ACandS, including the three proceedings. Under the settlement agreement, the Company will contribute US$449 million to a trust to be established under ACandS' plan of reorganization. In exchange, the Company will be released from any obligations it has to ACandS for asbestos-related claims and will be protected from any such claims by injunctions to be issued in the Company's favor by the federal court overseeing ACandS' bankruptcy case. Under the settlement agreement, ACandS and the Company have agreed to stay the claims against each other in the three proceedings. Once all of the contingencies of the settlement are satisfied, these claims will be dismissed with prejudice. On Aug. 27, 2007, the bankruptcy court overseeing ACandS' bankruptcy approved the settlement and no appeals from that approval were taken. As a result, the Company has placed US$449 million into escrow. Upon fulfillment of all remaining contingencies, including final court approval of a plan of reorganization for ACandS and the issuance of the injunctions, those funds will be released from escrow to the trust created under ACandS' plan of reorganization. Objections to ACandS' plan of reorganization were due on March 24, 2008. Several parties filed objections. A hearing to consider the confirmation of ACandS' plan of reorganization is scheduled for May 6, 2008. The Company expects to seek to recover about US$84 million of the US$449 million from reinsurers. In October 2001 and April 2002, two purported class action suits (Wise v. Travelers and Meninger v. Travelers) were filed against TPC and other insurers (not including The St. Paul Companies, Inc.) in state court in West Virginia. These cases were subsequently consolidated into a single proceeding in the Circuit Court of Kanawha County, W.Va. The plaintiffs allege that the insurer defendants engaged in unfair trade practices by inappropriately handling and settling asbestos claims. The plaintiffs seek to reopen large numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers. Similar lawsuits were filed in West Virginia, Massachusetts and Hawaii state courts (these suits are collectively referred to as the Statutory and Hawaii Actions). In March 2002, the plaintiffs in consolidated asbestos actions pending before a mass tort panel of judges in West Virginia state court amended their complaint to include TPC as a defendant, alleging that TPC and other insurers breached alleged duties to certain users of asbestos products. Lawsuits seeking similar relief and raising similar allegations, primarily violations of purported common law duties to third parties, are also pending in Texas state court against TPC and SPC, and in Louisiana state court against TPC (the claims asserted in these suits, together with the West Virginia suit, are collectively referred to as the Common Law Claims). In November 2003, the parties reached a settlement of the Statutory and Hawaii Actions. This settlement includes a lump- sum payment of up to US$412 million by TPC, subject to a number of significant contingencies. In May 2004, the parties reached a settlement resolving substantially all pending and similar future Common Law Claims against TPC. This settlement requires a payment of up to US$90 million by TPC. On Aug. 17, 2004, the bankruptcy court entered an order approving the settlements and clarifying its prior orders that all of the pending Statutory and Hawaii Actions and substantially all Common Law Claims pending against TPC are barred. The order also applies to similar direct action claims that may be filed in the future. On March 29, 2006, the U.S. District Court for the Southern District of New York substantially affirmed the bankruptcy court's orders while vacating that portion of the bankruptcy court's orders that required all future direct actions against TPC to first be approved by the bankruptcy court before proceeding in state or federal court. Various parties appealed the district court's March 29, 2006 ruling to the U.S. Court of Appeals for the 2nd Circuit. On Feb. 15, 2008, the 2nd Circuit issued an opinion vacating on jurisdictional grounds the District Court's approval of an order issued by the bankruptcy court prohibiting the prosecution of the Statutory and Hawaii Actions and the Common Law Claims, as well as future similar direct action litigation, against TPC. On Feb. 29, 2008, TPC and certain other parties to the appeals filed a petition for rehearing and rehearing en banc, requesting reinstatement of the district court's judgment. The petition is presently pending. Based in St. Paul, Minn., The Travelers Companies, Inc. operates as a business insurer and provides commercial auto, property, workers' compensation, marine, and general and financial liability coverage to companies in North America and the U.K. The Company offers surety and fidelity bonds as well as professional and management liability coverage for commercial operations. ASBESTOS LITIGATION: Travelers Reserves Total $3.67B at March 31 ---------------------------------------------------------------- The Travelers Companies, Inc.'s net asbestos-related reserves were US$3.672 billion at and for the three months ended March 31, 2008, compared with US$3.926 billion at and for the three months ended March 31, 2007. Net asbestos losses and expenses paid in the first three months of 2008 were US$62 million, compared with US$125 million in the same period of 2007. Net paid losses in the first quarter of 2008 decreased from the same 2007 period primarily because installment payments on settlements reached in prior years were completed during the first quarter of 2007. Based in St. Paul, Minn., The Travelers Companies, Inc. operates as a business insurer and provides commercial auto, property, workers' compensation, marine, and general and financial liability coverage to companies in North America and the U.K. The Company offers surety and fidelity bonds as well as professional and management liability coverage for commercial operations. ASBESTOS LITIGATION: ATSDR OKs Oak Street Beach Asbestos Study -------------------------------------------------------------- The U.S. Environmental Protection Agency Region 5's public health agency partner, the Agency for Toxic Substances and Disease Registry (ATSDR), has issued a formal consultation letter to EPA that validates the technical approaches used in a study to assess potential exposures to low levels of asbestos found at Chicago's Oak Street Beach, according to an EPA press release dated May 2, 2008. Regional Superfund Director Richard Kahl said, "ATSDR's review of the data collected by the Chicago Park District in 2005 provides an extra level of assurance that the Oak Street Beach testing was appropriate and sufficient to reach a public health conclusion. Going forward, EPA and its federal partners will continue to be available to the park district for consultation as requested." The study was conducted in September 2005 by LFR Inc., an Elgin, Ill.-based contractor retained by the Chicago Park District. The study evaluated whether people could be exposed to asbestos while engaging in typical beach activities, such as playing catch, building sandcastles and sunbathing. EPA provided limited technical consultation regarding the "activity-based testing" protocols used by LFR. The final report from this study, entitled "Report on Activity- Based Air Sampling - Oak Street Beach, Chicago, Illinois," was released in April 2006. EPA recently requested that its public health agency partner, the ATSDR (part of the Centers for Disease Control and Prevention) review this report. The ATSDR consultation letter to EPA concludes: * The air samples collected contained asbestos concentrations consistent with levels that would be expected in urban areas and that recreational activity at Oak Street Beach does not pose a public health hazard. * The sampling methods and analytical protocols used in the study were consistent with methods recommended by both EPA and ATSDR for assessing asbestos exposure. * Based on the data collected in 2005, ATSDR did not recommend additional sampling at Oak Street Beach. However, if additional sampling efforts are conducted, ATSDR is willing to review sampling protocols and results. ASBESTOS LITIGATION: Corning Still Faces 10,300 Injury Lawsuits ---------------------------------------------------------------- Corning Incorporated is named in about 10,300 cases (about 41,700 claims) alleging injuries from asbestos, in which those cases have been covered by insurance without material impact to the Company to date, according to the Company's quarterly report filed with the Securities and Exchange Commission on April 29, 2008. The Company and PPG Industries, Inc. each own 50 percent of the capital stock of Pittsburgh Corning Corporation. Over a period of more than two decades, PCC and several other defendants have been named in numerous lawsuits involving claims alleging personal injury from exposure to asbestos. On April 16, 2000, PCC filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Western District of Pennsylvania. At the time PCC filed for bankruptcy protection, there were about 12,400 claims pending against the Company in state court lawsuits alleging various theories of liability based on exposure to PCC's asbestos products and typically requesting monetary damages in excess of US$1 million per claim. The Company has defended those claims on the basis of the separate corporate status of PCC and the absence of any facts supporting claims of direct liability arising from the Company's asbestos products. Several of the Company's insurance carriers have filed a legal proceeding concerning the extent of any insurance coverage for these claims. On March 28, 2003, the Company announced that it had reached agreement with the representatives of asbestos claimants for the settlement of all current and future asbestos claims against it and PCC, which might arise from PCC products or operations (the 2003 Plan). The 2003 Plan would have required the Company to relinquish its equity interest in PCC, contribute its equity interest in Pittsburgh Corning Europe N.V. (PCE), a Belgian corporation, contribute 25 million shares of Corning common stock, and pay a total of US$140 million in six annual installments (present value US$131 million at March 2003), beginning one year after the plan's effective date, with 5.5 percent interest from June 2004. In addition, the 2003 Plan provided that the Company would assign certain insurance policy proceeds from its primary insurance and a portion of its excess insurance. On Dec. 21, 2006, the Bankruptcy Court issued an order denying confirmation of the 2003 Plan for reasons it set out in a memorandum opinion. Several parties, including the Company, filed motions for reconsideration. These motions were argued on March 5, 2007, and the Bankruptcy Court reserved decision. On Jan. 10, 2008, some of the parties in the proceeding advised the Bankruptcy Court that they had made substantial progress on an amended plan of reorganization (the Amended PCC Plan) that resolved issues raised by the Court in denying the confirmation of the 2003 Plan and that would therefore make it unnecessary for the Bankruptcy Court to decide the motion for reconsideration. On March 27, 2008, the parties further informed the Bankruptcy Court on the progress toward the Amended PCC Plan and the Bankruptcy Court ordered the parties to submit the Amended PCC Plan to the Court on May 9, 2008 and for objectors to the Amended PCC Plan to appear on May 22, 2008. The liability for the Amended PCC Plan and the non-PCC asbestos claims was estimated to be US$675 million at March 31, 2008, compared with an estimate of liability under the original 2003 Plan of US$1.002 billion at Dec. 31, 2007.