/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990217.MBX C L A S S A C T I O N R E P O R T E R Wednesday, February 17, 1999, Vol. 1, No. 9 Headlines AMAGASKI POLLUTION: Japanese Suit to be Settled Out of Court CITIZENS UTILITY: Offers Nogales Residents $500,000 for Outages DATASTREAM SYSTEMS: Berger & Montague File Suit in South Carolina EXXON CORP.: Deadline for Spill Claims Extended GENCOR INDUSTRIES: Bashian Firm Files Complaint in Florida GUN MANUFACTURERS: City of Akron Explores Gun Violence Costs GUNTHER INTERNATIONAL: Posts Positive Third Quarter Earnings HOLOCAUST VICTIMS: Germany Discusses Slave Labor Fund HOLOCAUST VICTIMS: Efforts to Make Victims' Recoveries Tax Free HOLOCAUST VICTIMS: 12 German Firms Agree to Establish $1.7B Fund LERNOUT & HAUSPIE: Lowey Dannenberg File Complaint in New York LLOYDS OF LONDON: Names Widen Litigation Net, Suing US Attorneys PAN AM 103: Libya Agrees to Bring Bombing Suspects to Trial SAIPAN LABORERS: Milberg Weiss Prepares Three Class-Action Suits TOBACCO LITIGATION: UK Suits Adjourned at Plaintiffs' Request TOBACCO LITIGATION: Union Health & Welfare Funds Going to Trial ********* AMAGASKI POLLUTION: Japanese Suit to be Settled Out of Court ------------------------------------------------------------ Nine companies in an air pollution suit lasting more than a decade have decided to pay at least 2 billion yen in compensation to patients and families of deceased victims in a court-brokered compromise, judiciary sources said Monday, according to a Kyodo News release from Kobe. It will be the first settlement of a suit over air pollution in Japan that has been settled before a district court ruling. The settlement will be made at the Kobe District Court on Wednesday. In the dispute, 379 officially recognized patients of diseases caused by air pollution and families of dead victims in Amagasaki, Hyogo Prefecture, demanded the government, Hanshin Expressway Public Corp. and nine companies pay a total 9.2 billion yen in damages. The plaintiffs will negotiate with the central government and the public corporation later to settle the case, Kyodo sources said. As plaintiffs have grown old and some of the original plaintiffs have died during the long-running trial, they hoped for early settlement of the case, the sources said. Although the district court was scheduled to conclude the hearing March 26, the nine companies may have decided to settle since they were expected to lose the suit as many other companies facing air pollution suits have, Kyodo's sources explained. Four hundred and seventy-two officially recognized patients of diseases caused by air pollution and 11 bereaved families filed a suit with the court in December 1988. Seven years later, another 14 patients and one bereaved family also filed a suit with the court. About 120 of the plaintiffs have since died. Kansai Electric Power Co., one of the nine companies, intends to dispute its responsibility, arguing that it has taken steps to clean plant smoke. The other companies are Sumitomo Metal Industries Ltd., Kobe Steel Ltd., Asahi Glass Co., Kubota Corp., Kansai Coke and Chemical Co., Furukawa Co., Godo Steel Ltd. and Nakayama Steel Products Co. CITIZENS UTILITY: Offers Nogales Residents $500,000 for Outages --------------------------------------------------------------- A proposal ending Nogales' complaint over spotty electric service would gain the city and its residents nearly $500,000 in rebates and programs, but no written guarantee of improved service. This week, Nogales City Council will consider the proposed settlement with Citizens Utilities, which left Santa Cruz County customers without power nine times in a four-month period late last year, according a report appearing in the Arizona Daily Star. The utility would give one-time $15 rebates to each of its approximately 12,500 customers in the county. It also would donate about $300,000 to social programs, including the mayor's anti-poverty committee, a new economic development group and college scholarships. Citizens also would distribute claim forms for damage that customers suffered during outages last year. Customers could take any claims that Citizens denies to a compulsory arbitration session. In return, the city would rescind the complaint it filed in October with the Arizona Corporation Commission and agree not to join a class-action lawsuit filed by a local hotel over the outages. City administrators finalized the proposed settlement last week, said Ignacio Barraza, the assistant city administrator. The City Council will consider the deal at noon today at City Hall. Citizens Utilities officials say they are making improvements to better ensure Santa Cruz County's power supply and plan to add a sought-after second transmission line with an estimated $12 million price tag. But none of that is in the proposed agreement. The promise of a solution to the county's electric service problems lies not in the proposed settlement but in the utility's aggressive actions, Barraza said. "The infrastructure problems are being taken care of as we speak," Barraza said. Citizens is "concentrating a major force of people down here in hopes of dealing with the immediate needs." DATASTREAM SYSTEMS: Berger & Montague File Suit in South Carolina ----------------------------------------------------------------- Berger & Montague, P.C. announced that Datastream Systems Inc. (NASDAQ:DSTM) and certain of its officers and directors engaged in securities fraud, according to a class action complaint filed in the United States District Court for the District of South Carolina, Greenville Division, on Jan. 11, 1999, on behalf of all persons who purchased Datastream common stock between April 1 and Oct. 20, 1998. Neely v. Datastream, D.S.C., No. 699-008813. The Complaint alleges that defendants improperly inflated earnings from operations by utilizing accounting treatments not in conformity with generally accepted accounting practices. Specifically, the Complaint alleges that defendants (1) improperly accounted for operating expenses as one-time charges connected to acquisitions; and (2) beginning in the second quarter of 1998, capitalized marketing expenses that had previously been expenses without disclosing a material change in its accounting practices. The Complaint further alleges that defendants' misleading positive statements artificially inflated the price of Datastream's common stock during the Class Period. On Oct. 20, 1998, Datastream surprised investors by issuing a press release announcing disappointing earnings for the third quarter of 1998. The market reacted sharply to the announcement with Datastream stock falling $4-1/8 or 29%, to $10 per share. Datastream common stock had traded above $20 per share for much of the Class Period. EXXON CORP.: Deadline for Spill Claims Extended ----------------------------------------------- The deadline for some fishermen and Natives to file claims under the Exxon Supplemental Claims Program has been extended by a federal judge. U.S. District Judge Russel Holland extended the deadline from February 1, 1999, to April 30, 1999. The judge ruled that because of logistical problems, such as locating some claimants and postal service delays in rural Alaska, the extension will help ensure that potential claimants can meet the deadline, according to the Anchorage Daily News. The claim categories subject to the extension are: * Prince William Sound and Cook Inlet salmon seine, driftnet and setnet fishermen; * Kodiak salmon purse seine, beach seine and setnet fishermen; * Chignik salmon seiners; and * Alaska Native subsistence users. Claim forms for other plaintiffs in the massive lawsuit against Exxon for the 1989 oil spill will be sent out at a later date and have a different filing deadline. To request a claim form or for questions call 1-800-397-7455. GENCOR INDUSTRIES: Bashian Firm Files Complaint in Florida ---------------------------------------------------------- James V. Bashian, P.C. announced that a class action lawsuit was filed in the United States District Court for the Middle District of Florida on behalf of purchasers of Gencor Industries, Inc. (Amex:GX) common stock between February 5, 1998 and January 28, 1999. The complaint charges Gencor and certain of its officers and directors with violations of Sections 10(b), 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. Among other things, plaintiff claims that the defendants issued materially false and misleading statements regarding the company's true financial condition and operating performance. On January 29, 1999, it was reported that Gencor's "fiscal 1998 earnings per share of $1.52 may be reduced by as much as $0.35 to $0.50 per share" as a result of "accounting irregularities and other improprieties(.)" GUN MANUFACTURERS: City of Akron Explores Gun Violence Costs ------------------------------------------------------------ Akron, Ohio, officials, United Press International reports, will study gun violence in their city and its impact before deciding whether to join other U.S. cities suing gun makers. Cleveland, Chicago, New Orleans, Miami and Cleveland already are asking a court to force manufacturers to put locks on guns and to pay the costs of law enforcement and medical treatment. Akron Law Director Max Rothal will look into joining other cities in a class-action suit or filing a separate suit, UPI indicates. GUNTHER INTERNATIONAL: Posts Positive Third Quarter Earnings ------------------------------------------------------------ Norwich, Connecticut-based Gunther International, Ltd., the defendant in a pending class action litigation relating to financial and accounting problems previously announced by the Company, announced that net income for the quarter ended December 31, 1998 was $167,424 on sales for the quarter of $5,682,042. For the nine months ended December 31, 1998, Gunther reported a loss from operations of $777,290 and a loss from the cumulative effect of an accounting change of $622,953 for a net loss of $1,400,243 on sales of $14,376,018 for the nine-month period. All financial results, the Company notes, reflect the restatement of the Company's financial statements, which was previously announced on January 14, 1999. HOLOCAUST VICTIMS: Germany Discusses Slave Labor Fund ----------------------------------------------------- >From Berlin, the Associated Press reports that German Chancellor Gerhard Schroeder's chief of staff met with industry leaders over the weekend to discuss details of a fund to compensate Nazi-era slave laborers. The five-hour closed negotiations in Bonn came ahead of a planned Tuesday meeting between Schroeder and leaders of Germany's biggest industries. Creation of the fund was expected to be announced after the meeting. After taking office in October, Schroeder's government pledged to administer the fund at the request of industries, banks and insurance companies that have fallen under increasing pressure from lawsuits seeking restitution for Holocaust victims. Previous German administrations had excluded slave laborers from the $60 billion in reparations paid to Nazi victims, arguing that they were technically working for private companies, such as Siemens or Volkswagen. In setting up the new fund, Germany has sought assistance from the United States, Israel and Jewish groups, with U.S. and Israeli ambassadors to Germany acting as advisers. Schroeder's chief of staff, Bodo Hombach, has also traveled to the United States and Israel to discuss the fund. Participants in weekend talks, however, sought to reassure eastern European victims that they were not being left out of the fund, according to a Die Welt newspaper report yesterday. Die Welt also quoted sources as saying that slave labor victims would be compensated regardless of nationality or religion. According to the AP, Poland in particular has pressed for a role in determining the shape of the fund similar to that of the United States and Israel. More than 20,000 Poles who were forced to work as slave laborers by the Nazis plan to file suit against Germany for more than $1 billion in compensation. They also plan to seek millions of dollars from the Austrian government and hundreds of Austrian companies that forced prisoners into labor. The issue of compensation has become increasingly urgent in the former Eastern bloc nations, where individuals were barred by the former communist regimes from seeking restitution. There are about 800,000 former slave laborers living in eastern Europe, according to the newspaper Sueddeutsche Zeitung. HOLOCAUST VICTIMS: Efforts to Make Victims' Recoveries Tax Free --------------------------------------------------------------- The Illinois General Assembly will be asked this spring to considering tax exemptions for survivors of the Nazi Germany Holocaust who receive financial settlements. State Representative Jeffrey Schoenberg, United Press International reports, yesterday said he is sponsoring the bill because he does not think it right for the Illinois Department of Revenue to claim a portion of the settlement for tax purposes. The bill, which is pending before an Illinois House committee, would exempt Holocaust victims and their heirs from paying state taxes on any awards received because of Nazi persecution. If approved, UPI opines, the measure would be the most dramatic gesture given by the General Assembly to Holocaust survivors. The Illinois government has provided some assistance in the past, with the Illinois Department of Insurance providing legal help free-of-charge to Holocaust survivors in filing claims for an award. HOLOCAUST VICTIMS: 12 German Firms Agree to Establish $1.7B Fund ---------------------------------------------------------------- Twelve leading German companies -- Allianz AG, BASF AG, Bayer AG, BMW AG, DaimlerChrysler AG, Degussa AG, Dresdner Bank AG, Fried Krupp AG Hoesch Krupp, Hoechst AG, Siemens AG and Volkswagen AG -- said on Tuesday they had received the backing of Chancellor Gerhard Schroeder to establish a fund to compensate victims of the Nazi Holocaust. News reports have estimated that the fund could be around three billion marks ($1.7 billion). Schroeder said at a news conference with industry leaders that the fund, whose total value has not yet been determined, was designed to pre-empt future lawsuits against German companies over their involvement in Nazi era injustices. "Its function is to counter lawsuits, particularly class action suits, and to remove the basis of the campaign being led against German industry and our country," Schroeder said. Rolf Breuer, chief executive of Germany's largest bank Deutsche Bank AG, described the fund as a milestone. "It is a large step in the right direction," he told the news conference. "There are still a lot of details to sort out." A joint statement from the companies involved said the step had been welcomed by the U.S. and Israeli governments as "positive and brave". LERNOUT & HAUSPIE: Lowey Dannenberg File Complaint in New York -------------------------------------------------------------- On February 9, 1999, a class action lawsuit was filed in the United States District Court for the Eastern District of New York, on behalf of a class of purchasers of common stock and call options of Lernout & Hauspie Speech Products N.V. (NYSE:LHSPF) from February 3, 1998 through and including December 1, 1998. The suit names as defendants Lernout, its President and CEO Gaston Bastiaens, and CFO Carl Dammekens for violations of the federal securities laws. On December 1, 1998, Lernout admitted that the Securities and Exchange Commission had challenged write-offs for in-process research and development made in connection with Lernout's acquisitions of Kurzweil Education Systems, Inc. and Tiksoft LLC in September and October, 1998, respectively, and several other acquisitions dating back to November 1996. Plaintiff alleges that during the Class Period Lernout inflated earnings by taking excessive write-offs for in-process research and development of the companies acquired, thereby reducing the adverse impact of acquisitions of earnings in subsequent quarters by improperly failing to properly amortize goodwill of its acquisitions. Plaintiff alleges that during the Class Period Lernout officers and directors reaped more than $23 million in insider trading proceeds by trading while in possession of material adverse non- public information about Lernout's improper accounting practices. Between December 2-4, 1998, Lernout stock fell $7 to $33, losing 17.5% of its value in reaction to the news. LLOYDS OF LONDON: Names Widen Litigation Net, Suing US Attorneys ---------------------------------------------------------------- The law firms of Lord, Bissell & Brook and Mendes & Mount have been served with a complaint, filed on February 8, 1999, in the Supreme Court of the State of New York. The complaint has been filed and served on behalf of 13 plaintiffs who were investors in the loss-ridden Lloyd's of London insurance market. Investors in Lloyd's syndicates are commonly referred to as "Underwriters" and/or "Names." Plaintiffs in Anthoine vs. Lord, Bissell & Brook and Mendes & Mount allege in their complaint that the defendant law firms, long-time U.S. attorneys for Underwriters/Names at Lloyd's of London, have: (1) committed legal malpractice; (2) breached fiduciary duties owed to plaintiffs; (3) aided and participated in breaches of fiduciary duties owed to plaintiffs by others; (4) violated New York General Business Law (deceptive acts and practices); (5) committed common law fraud; and (6) engaged in an unlawful conspiracy. Jonah Orlofsky, plaintiff's attorney from the firm of Plotkin, Jacobs & Orlofsky, describes Anthoine vs. Lord, Bissell & Brook, et al. as "a case that targets the U.S. attorneys who have represented Names in numerous insurance claim defense cases over many years." "Exhibits filed in Anthoine vs. Lord, Bissell & Brook, et al. reveal long-suppressed documentary evidence of fraud and conspiracy, including more than 20 years of fraudulent syndicate accounting and reserving at Lloyd's," commented Jeffrey C. Peterson, Executive Director of the American Names Association (ANA). The ANA is a non-profit association dedicated to serving the interests of defrauded U.S. Names. Four U.S. lawsuits now pend against third-party professional firms that allegedly aided and abetted Lloyd's in perpetrating fraud on Lloyd's U.S. Names: (1) Anthoine vs. Lord, Bissell & Brook, et al.; Supreme Court of the State of New York, County of New York; Index #99/102420, filed February 8, 1999; (2) In Re Lloyd's American Trust Fund Litigation; United States District Court, Southern District of New York; 96 civ.1262, (RWS); (3) Richard D. Rosenblatt vs. Ernst & Young, a general partnership, et al.; Superior Court of California, County of San Diego, Vista Division; Case #N80207; and (4) Abeles, et al., vs. LeBoeuf, Lamb, Greene & MacRae, a partnership, et al.; Los Angeles Superior Court; Case #BC146083, filed March 12, 1996. The 310-year-old Lloyd's of London insurance market is not an insurance company. Rather, it is a constellation of syndicates that independently insure risks and operate worldwide under a common trade name and broker network. Syndicates operate as annual ventures backed by Names. Between 1991 and 1995 the Lloyd's market as a whole reported devastating losses. Lloyd's own (unaudited!) figures showed the losses to be in excess of $14 billion. However, the May 13, 1995 New York Department of Insurance (NYID) audit of Lloyd's U.S. situs trust funds revealed a reserve deficiency of more than $18 billion. The NYID audit only covered the reserves for Lloyd's U.S. dollar denominated business, which is about 40% of its worldwide business, according to Lloyd's. In recent years, numerous legal actions have been filed in U.S. courts against the Corporation of Lloyd's. Nearly all of these cases against the Corporation of Lloyd's have been dismissed and sent to the U.K. courts to be heard. The cases were dismissed based on forum selection clauses that stipulated to U.K. jurisdiction for resolving disputes between Names and Lloyd's. The forum clauses were first inserted into Names' investment contracts in 1987. U.S. Names argue they are at a severe disadvantage in U.K. courts for two reasons: (1) England has much weaker investor protection laws; and (2) Lloyd's secured self-regulatory status and almost complete immunity from lawsuits under a Private Act of Parliament in 1982. PAN AM 103: Libya Agrees to Bring Bombing Suspects to Trial ----------------------------------------------------------- As widely reported, Saudi Arabian diplomats told UN officials that Libya has agreed to a deal to bring to trial two Libyan suspects in the 1988 bombing of a Pan Am jet over Lockerbie, Scotland, a UN spokesman said Saturday. Saudi officials told UN Secretary-General Kofi Annan that the Libyans have accepted a U.S.-British offer, which will include the transfer of the suspects from Libya to the Netherlands, UN spokesman Fred Eckhard said. The suspects will be tried in the Netherlands by Scottish judges under Scottish law, Eckhard said. If convicted, they would be imprisoned in Scotland. SAIPAN LABORERS: Milberg Weiss Prepares Three Class-Action Suits ---------------------------------------------------------------- This week's edition of Insight Magazine reports that the law firm of Milberg Weiss Bershad Hynes & Lerach is filing three class- action lawsuits in New York, Los Angeles and the Marianas capital of Saipan of behalf of some 40,000 current and former garment workers. The plaintiffs seek more than $1 billion in unpaid wages and damages, charging the Red Chinese enterprises with perpetrating physical abuse, indentured servitude, forced abortions and unsafe working conditions. Fainting from the sweatshop heat is alleged, as is serving employees spoiled and bug-infested food dragging workers from rest-room stalls if they exceed a four-minute time limit. The legal actions are targeting not only the manufacturers in the Northern Marianas but also a list of leading U.S. companies that import the products, including Ralph Lauren, The Gap Inc., J.C. Penney, Sears, Nordstrom and others. Most of the companies either have declined to comment or have said that they are not responsible for the actions of contract suppliers. Not long ago, Insight relates, a U.S. corrections expert visited Saipan as a consultant to help the government with the location and construction of a new prison. As he rode with a local official, he said, "Oh, yes, I see the old prison over there." The local man replied, "No, we haven't reached the prison yet. That's a garment factory." TOBACCO LITIGATION: UK Suits Adjourned at Plaintiffs' Request ------------------------------------------------------------- Imperial Tobacco and Gallaher Group said they agreed to an adjournment of a UK smoking-claim court case in response to a request by the plaintiffs. Monday, Reuters reported, the British government said that possible legal action by the National Health Service against the tobacco industry for the cost of treating smoking related illnesses would be illegal. TOBACCO LITIGATION: Union Health & Welfare Funds Going to Trial --------------------------------------------------------------- On February 22, 1999, a class action suit filed against the biggest tobacco companies in the United States will begin. Over 100 Union Health and Welfare Funds will be the plaintiffs in the case against RJR Nabisco, Brown and Williamson Tobacco Company, Philip Morris, Lorilard, and the British American Tobacco Company. The case concerns trust funds that are jointly managed by unions and employers to provide health care for union workers and their families. The Trust Funds filed suit seeking to recover costs paid out for smoking related injuries. This will be the first trial for any such Trust Fund in the country. The Plaintiff Trust Funds claim the Tobacco Industry engaged in a decades-long conspiracy to cover up the health effects of smoking, manipulate nicotine levels to keep smokers addicted and target children, blue collar workers and African Americans. The suit also alleges the Tobacco Industry had the means of manufacturing safer and less addictive tobacco products but conspired not to do so. The Trust Funds say these actions constitute violations of federal and state racketeering laws (RICO) and a civil conspiracy. The Court issued a forty-five page scholarly opinion in September, citing to authorities not previously noted by other courts, allowing this case to go forward, "If (the claims) are proven, one can scarcely imagine conduct more harmful." "The fact that this case is going to trial and will be heard by a jury is a big victory for working men and women of Ohio. We have spent decades contributing our hard-earned dollars into a medical fund that is intended to protect us. It should not be the responsibility of these funds to pay for the medical burden that the tobacco industry has created," said Michael Murphy, a Union Trustee for Local 47 Welfare Fund. "A victory in this case could force tobacco companies to disgorge their profits and compensate the trust funds for illnesses attributable to smoking. The tobacco industry has spent a lot of time and money to thwart our efforts and the efforts of other funds around the country -- this is the first step towards making things right," said John Porada, Management Trustee for the Iron Workers Local 17. Similar cases have been filed by Union Trust Funds around the country. The trial in the Northern District of Ohio will give impetus to other cases brought by employer/union health and welfare trust funds that are now pending in major states including Washington, New York, Tennessee, Kentucky, West Virginia, Michigan, New Jersey, and California. The plaintiffs include Iron Workers Local Union No. 17 Insurance Fund, IBEW Local No.38 Health and Welfare Fund, Ohio Laborers' District Council-Ohio Contractors' Association Insurance Fund, Dealers-Unions Insurance Fund, Local 47 Welfare Fund No.1, Toledo Electrical Welfare Fund, as well as over 100 additional funds that are also part of the class of plaintiffs. ********* ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Peter A. Chapman, Editor. Copyright 1999. All rights reserved. ISSN XXXX-XXXX. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *