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/raid1/www/Hosts/bankrupt/CAR_Public/990219.MBX C L A S S A C T I O N R E P O R T E R Friday, February 19, 1999, Vol. 1, No. 11 Headlines AMERICAN BANKNOTE: Wolf Popper Files Complaint in New York AMERITECH: Illinois Customer Suit Expanded to Class Action AVIATION DISTRIBUTORS: Fairness Hearing on Shareholder Litigation BOSTON HOUSING: HUD Secretary Files Discrimination Charges DNA PLANT: Milberg Weiss Files Complaint in California GULF WAR: U.N. Fund Pays $814 Million to Gulf War Victims HONG KONG: Tokyo Court to Rule on War Reparation Claim in June INSO CORP.: Pomerantz Haudek Filed Complaint in Massachusetts JONES COMMUNICATIONS: Limited Partners Challenge Littlerock Sale LERNOUT & HAUSPIE: Rabin & Peckel Files Complaint in New York PAN AM 103: Annan Letter to Libya Aims to Speed Lockerbie Trial PEDIATRIX: Milberg Weiss Files Complaint in Florida PEOPLESOFT: Schoengold & Sporn File Complaint in California PEOPLESOFT: SEC Acquisition Review Yields No Earnings Restatement THERAGENICS CORP.: Rabin & Peckel File Complaint in Georgia TOBACCO LITIGATION: Avalanche of Paper Buries Florida Trial TOBACCO LITIGATION: RJR Chairman Says Sales Growth Top Priority TOBACCO LITIGATION: Liggett Settles Ohio Labor Union Litigation VIBRATOR BAN: Women Sue State of Alabama Over Vibrator Ban ********* AMERICAN BANKNOTE: Wolf Popper Files Complaint in New York ---------------------------------------------------------- Wolf Popper LLP filed a class action complaint has been filed in the United States District Court for the Southern District of New York on behalf of a Class of persons who purchased securities issued by American Banknote Holographics, Inc. (NYSE: ABH) in the Company's initial public offering, or in the open market at artificially inflated prices during the period July 15, 1998 through January 15, 1999 and who were damaged thereby. The Complaint charges that throughout the Class Period, ABH, Joshua C. Cantor, and Richard P. Macchiarulo, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing materially false and misleading statements concerning the Company's reported sales and net income for the second and third quarters of 1998. At the time defendants issued these statements, they were aware that the strong growth and positive results reported for those periods were due to the defendants' improper recognition of revenue in violation of generally accepted accounting principles (FASB Statement of Concepts No. 5, Paragraph 83) and ABH's stated revenue recognition policy. On January 19, 1999, the Company announced that its financial results for the second and third quarters of fiscal 1998 will be restated. The Company also announced that, "its Audit Committee had retained Kramer Levin Naftalis & Frankel, LP as special legal counsel, and Deloitte & Touche LP, its auditors, to investigate certain transactions during the second and third quarters of 1998 which resulted in the inappropriate recognition of revenue during such quarters." The release further stated, "based upon currently available information resulting from the in-progress 1998 audit of the Company's financial statements, sales and net income of the Company have been over-stated for the second and third quarters of 1998. These overstatements may be material and will require re-statements of the Company's financial statements for such periods." When trading in ABH shares resumed on January 20, 1999, the market price of ABH plunged nearly 70% to $4-9/16 per share, evidencing the extent of defendants' fraud. AMERITECH: Illinois Customer Suit Expanded to Class Action ---------------------------------------------------------- A lawsuit that claims Ameritech Mobile Communications Inc.'s cellular phone customers are paying too much has been granted class-action status. The lawsuit, filed by attorney Steve Tillery in Edwardsville, Illinois, challenges Ameritech's practice of rounding the per-minute charge up to the nearest minute. Tillery says that costs the average customer $12 to $15 monthly. This month, Circuit Judge Randall Bono granted class- action status to the lawsuit, which could affect 2 million people. AVIATION DISTRIBUTORS: Fairness Hearing on Shareholder Litigation ----------------------------------------------------------------- Pursuant to an Order of the United States District Court for the Central District of California, dated January 29, 1998, a hearing will be held on January 11, 1999, at 10:00 a.m., before the Honorable Gary L. Taylor in Santa Ana for the purpose of determining: (1) whether the proposed settlement of the Litigation in the amount of $740,000 plus 210,000 shares of Aviation Distributors, Inc.'s common stock, plus interest, should be approved by the Court as fair, reasonable and adequate; (2) whether this Litigation should be dismissed on the merits with prejudice as set forth in the Stipulation of Settlement dated as of August 1, 1998, on file with the Court; (3) whether the proposed Plan of Allocation of settlement proceeds should be approved; (4) the reasonableness of the application of plaintiffs' counsel for the payment of attorneys' fees and reimbursement of costs and expenses incurred in connection with this Litigation; and (5) whether the class should be finally certified. This affects purchasers of the common stock of Aviation Distributors, Inc. during the Class Period between March 3, 1997, and September 3, 1997, inclusive. BOSTON HOUSING: HUD Secretary Files Discrimination Charges ---------------------------------------------------------- Housing and Urban Development Secretary Andrew Cuomo announced housing discrimination charges against the Boston Housing Authority dealing with racial and ethnic harassment from 1992 to 1996. HUD charges the Boston Housing Authority with failing to take action to protect nine minority families in the Bunker Hill and Old Colony public housing developments from racial and ethnic harassment, failing to stop the harassment, and failing to transfer the victims of the harassment to safe housing environments between 1992 and 1996. Both public housing developments were virtually all white as recently as the late 1980s, but many minorities have moved in since then as a result of desegregation efforts. The discrimination charges HUD brought on behalf of the nine families will be heard by a HUD Administrative Law Judge unless any of the parties involved choose to have the case heard by a U.S. District Court Judge. Those involved in the case could also reach a negotiated settlement. The Boston Lawyers Committee is representing the women and their families and is seeking damages and other relief on their behalf. The nine families, including 25 children, complained to the BHA that they were repeatedly harassed by white people who did not want minorities living in the two public housing developments. The complaints by the women accused the BHA of failing to take action on their behalf to address a broad range of actions against the minority families, including: beatings of minority children; firing a BB gun into a 7-year-old boy's bedroom in one case; breaking car windows and slashing tires; setting fires outside a woman's apartment; writing racial and ethnic slurs (including "nigger," "spic" and swastikas) on apartment doors and other areas in the developments; repeatedly confronting minorities with verbal racial and ethnic slurs; and depositing human waste outside the front doors of minority apartments. Some of the women said they were forced to abandon their apartments and some said they feared letting their children play outside. Six of the women filing the complaints are black and three are Hispanic. Seven lived in Old Colony and two lived in Bunker Hill. All moved out of the developments where the harassment took place by 1997. The charges filed against the Boston Housing Authority are the first HUD has ever filed involving "systemic discrimination" -- discrimination that is not limited to isolated or individual families, but represents a failure of an institution to implement policies and practices against housing discrimination. DNA PLANT: Milberg Weiss Files Complaint in California ------------------------------------------------------ Milberg Weiss announced that a class action suit has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of DNA Plant Technology Corp. (Nasdaq: DNAP) $2.25 Convertible Exchangeable Preferred Stock, whose stock was converted pursuant to a September 1996 merger, into common stock of DNAP Holding Corporation. The complaint charges DNAP, DHC, Empresas La Moderna, SA de C.V. and certain of their officers and directors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaint alleges that the August 13, 1996 Proxy Statement/Prospectus that DNAP and DHC disseminated to DNAP shareholders, recommending approval of the merger, improperly failed to disclose that the real reasons for the merger were (1) to realize value for a strain of high-nicotine tobacco that DNAP had illegally developed for tobacco company Brown & Williamson, and (2) to increase the indemnity coverage of DNAP's officers and directors to insulate them from financial liability for those illegal acts. The complaint further alleges that the conversion of the DNAP Preferred Stock into DHC Common Stock eliminated the rights and preferences of the DNAP Preferred Stockholders. After the DNAP- DHC merger was consummated, DNAP pleaded guilty in January 1998 to conspiracy to violate the Tobacco Seed Export Law. GULF WAR: U.N. Fund Pays $814 Million to Gulf War Victims ---------------------------------------------------------------- >From Geneva, Reuters reports that the United Nations Gulf War reparations body said on Thursday it had paid out another $814 million to individuals in 62 countries forced to leave Kuwait or Iraq during the conflict or who had proven property losses. In a statement, the U.N. Compensation Commission (UNCC) said the sum included $84.39 million to be shared by 223,817 Egyptian workers in Iraq who lost remittances at the start of the war. It brought the total amount of compensation paid out by the Geneva-based body, funded from a 30 percent share of revenue derived from an "oil-for-food" deal with Iraq, to $2.7 billion. "Payments are made when income from the sale of oil has accumulated to a level sufficient to pay the amounts due," the statement said. The Governing Council of the UNCC, composed of the same 15 member countries as the Security Council, had already approved the latest awards, but funds were lacking until this week, Reuters said. Egypt, Reuters related, had filed a claim against Iraq with an asserted value of $491 million on behalf of 1.24 million Egyptian workers, but independent legal experts who reviewed it recommended far lower payment of $84 million. The award was announced in October 1997. Some $542.7 million was paid on Thursday to 217,102 claimants in 59 countries, or $2,500 each, who were forced to pack up after Iraqi troops invaded Kuwait in August 1990. Bangladeshis, Egyptians, Indians, Sri Lankans and Sudanese were the largest groups in the latest batch of forced departure claims, with more than 10,000 people each, the UNCC said. The remaining $187 million went to 76,720 people in 42 countries who proved property losses of up to $100,000. They are each to receive an initial $2,500 in compensation. The largest group, 25,487 people, were Kuwaitis, followed by Egyptians (13,274), Syrians (10,062), Jordanians (9,988) and Indians (9,753), according to the statement. The UNCC has received claims from individuals, companies and governments with an asserted value of more than $250 billion, Reuters indicated, adding that, in all, $7 billion in awards have been approved for payment. HONG KONG: Tokyo Court to Rule on War Reparation Claim in June -------------------------------------------------------------- The Tokyo District Court ended hearings yesterday on a suit filed by Hong Kong residents against the Japanese government seeking 760 million yen in compensation for damages incurred by the use of notes issued during World War II. The court is scheduled to make a ruling June 17. The issue of the six-year trial has been whether the use of war currency was forced on residents by Japanese military authorities during Japan's occupation of Hong Kong from December 1941 to August 1945. Ng Yat-hing, leader of the 17 plaintiffs, reiterated his appeal at the final hearing for the Japanese government to reconvert the war notes into Hong Kong currency at legal rates. He described how Hong Kong residents were forced to exchange their Hong Kong dollars, gold and other valuables into Japanese war currency during Japan's occupation of the former British territory. "People who concealed their money were killed by the Japanese army," the 62-year-old Ng said, adding that many residents became bankrupt overnight after the Imperial Japanese Army's withdrawal. The Japanese government has refused to reconvert the war notes on the basis that the supreme commander of the Allied forces occupying Japan after the war and the Finance Ministry declared the notes worthless and invalid in September 1945. The plaintiffs' lawyers argued that declarations applied only to war notes circulated within Japan. Japanese forces issued some 1.9 billion yen worth of military coupons to support transportation of goods and management of the areas that the Japanese occupied during the war. Japan, as a practice, refuses all individual compensation claims, saying all war reparation issues were settled under the 1952 San Francisco peace treaty, according to Kyodo News. INSO CORP.: Pomerantz Haudek Filed Complaint in Massachusetts ------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP has filed suit against Inso Corp. (Nasdaq: INSO) and certain corporate insiders in the United States District Court for the District of Massachusetts on behalf of all purchasers of Inso securities during the period February 3, 1998 through and including January 29, 1999. The price of Inso's common stock fell dramatically after the Company announced on February 1, 1999 that it would have to restate its financial results for the first three quarters of 1998, to reverse approximately $7 million in improperly recognized revenues. The complaint alleges that, by issuing false and misleading statements to the public, Inso and certain corporate executives violated the federal securities laws and thereby artificially inflated the value of the Company's securities. In addition, the complaint alleges that certain insiders sold more than 1.5 million shares of Inso common stock during the Class Period at the artificially inflated prices, yielding proceeds of nearly $4 million. JONES COMMUNICATIONS: Limited Partners Challenge Littlerock Sale ---------------------------------------------------------------- On January 29, 1999, Cable TV Fund 14-B, Ltd. (the "Partnership"), a Colorado limited partnership, sold the cable television system serving areas in and around the community of Littlerock, California (the "Littlerock System") to Jones Communications of California, Inc., an indirect subsidiary of Jones Intercable, Inc., the general partner of the Partnership (the "General Partner"), for a sales price of $10,720,400, subject to customary closing adjustments. The sales price represents the average of three separate independent appraisals of the fair market value of the Littlerock System. The sale was approved by the holders of a majority of the limited partnership interests of the Partnership. In January 1999, City Partnership Co. ("Plaintiff"), a limited partner of the Partnership, filed a class action complaint in the District Court, Arapahoe County, State of Colorado (Case No. 99CV0150) naming the General Partner as defendant. Plaintiff, on its behalf and on behalf of all other persons who are limited partners of the Partnership, is challenging the terms of sale of the Littlerock System to an affiliate of the General Partner. This case is in a very preliminary stage, but the General Partner believes that the terms of the sale were in accordance with the requirements of relevant limited partnership agreement provisions. The General Partner intends to defend this lawsuit vigorously. LERNOUT & HAUSPIE: Rabin & Peckel Files Complaint in New York ------------------------------------------------------------- A putative class action suit has been filed in the United States District Court for the Eastern District of New York, on behalf of all those who purchased Lernout & Hauspie Speech Products, N.V. common stock between Feb. 3, 1998 and Dec. 4, 1998, inclusive. The Complaint alleges that Lernout and certain of its officers violated the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning Lernout's reported financial results. In particular, it is alleged that in connection with a number of acquisitions during the Class Period, the Company improperly wrote-off certain acquisition costs as "in process research and development" charges in violation of generally accepted accounting principles. The Complaint alleges that as a result of these false and misleading statements the price of Lernout common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. PAN AM 103: Annan Letter to Libya Aims to Speed Lockerbie Trial --------------------------------------------------------------- Secretary-General Kofi Annan sent a letter to Libya on Wednesday with clarifications about arrangements for the trial of two suspects in the 1988 bombing of a Pan Am jet over Lockerbie, Scotland. His spokesman Fred Eckhard told Reuters yesterday that the letter had been "signed by him and picked up" by Libya's U.N. ambassador Abuzed Dorda. Annan, in answer to queries earlier said, "We have offered clarifications and answered some of their (the Libyans') questions and I hope that the understandings contained in the letter will be sufficient for us to move forward." At issue, Reuters explains, is the handing over by Libya for trial before a Scottish court sitting at Camp Zeist, a former military base in the Netherlands, of two suspects in the December 1988 bombing of Pan Am flight 103 over the Scottish village of Lockerbie in which 270 people were killed, including 11 on the ground. Libya confirmed over the weekend that it was willing to extradite the two alleged intelligence agents for trial but it first requested certain written assurances. Diplomats told Reuters on Tuesday Annan was proposing, with U.S. and British agreement, that Scottish prosecutors should not attempt to undermine the Libyan government. "The prosecution team cannot have as its objective to get at the Libyan regime," said one envoy close to the talks, but added the trial would still need to delve into the motives behind the bombing. Annan was also expected to tell Libya U.N. monitors could ensure the suspects -- Abdel Basset Ali Mohamed al-Megrahi and Lamen Khalifa Fhimah -- would not be interrogated by British or American security services. If convicted, they would have the right to appeal to a similar Scottish court sitting in the Netherlands and, if they lost their appeal, would have regular access to Libyan consular services while serving their sentence at Barlinnie jail, near Glasgow. Asked whether the United States would agree to any solution that would ensure the Libyan government was not investigated, Foley replied: "We want to see a trial of the two suspects . . . I cannot predict how such a trial might unfold. It's impossible to predict. That is a matter for the Scottish court." It was "up to the prosecutors to determine how they proceed in the trial, and we'll let the chips fall where they may," he added. PEDIATRIX: Milberg Weiss Files Complaint in Florida --------------------------------------------------- Milberg Weiss commenced a class action lawsuit on February 17, 1999, in the United States District Court for the Southern District of Florida, West Palm Beach Division, on behalf of all persons who purchased the common stock of Pediatrix Medical Group Inc. (NYSE: PDX), between April 28, 1998 and February 12, 1999, inclusive. The complaint charges Pediatrix and certain officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series false statements concerning the Company's financial condition and results of operations. Because of the issuance of a series of false and misleading statements, the price of Pediatrix common stock was artificially inflated during the Class Period. PEOPLESOFT: Schoengold & Sporn File Complaint in California ----------------------------------------------------------- Schoengold & Sporn, P.C. announced that a class action lawsuit has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of PeopleSoft, Inc. (Nasdaq: PSFT) common stock during the period between February 5, 1997 and January 28, 1999. The complaint alleges that PeopleSoft and certain of its key officers and directors violated federal securities laws. During the Class Period, defendants represented, by way of company announcements and press releases, that PeopleSoft was still enjoying strong growth in orders and was on track to continue 45%-65% revenue growth through 1999. As a result, PeopleSoft's common stock price was artificially inflated to a Class Period high of $55.9375 per share. When PeopleSoft ultimately admitted that its revenue growth had slowed and that it might restate its 1996-1998 financial statements, its stock declined to as low as $18.125 on volume of 20.5 million shares. While some defrauded investors were paying in excess of $55 per share for PeopleSoft common stock, the top officers and directors of PeopleSoft were in the process of selling 8.2 million shares for proceeds of $232 million before the bad news was disclosed. PEOPLESOFT: SEC Acquisition Review Yields No Earnings Restatement ----------------------------------------------------------------- PeopleSoft, Inc. announced that the Securities and Exchange Commission (SEC) has completed its review of PeopleSoft's accounting for the In-Process Research & Development charges taken in connection with the acquisitions of PeopleSoft Manufacturing, Inc in 1996 and Intrepid Systems, Inc. in 1998. As a result, PeopleSoft will not be required to, and will not restate any financial statements for the 1996, 1997 and 1998 reporting periods related to these acquisitions. "PeopleSoft received good news this week. The SEC's review is complete, and PeopleSoft will not have to restate any financial results," said Al Castino, senior vice president and chief financial officer for PeopleSoft. "The conclusion of this process highlights our continued belief that allegations in recently filed class action shareholder lawsuits relating to our accounting treatment for these acquisitions are meritless. PeopleSoft believes the balance of the lawsuit allegations are equally groundless and will vigorously defend itself against them." THERAGENICS CORP.: Rabin & Peckel File Complaint in Georgia ----------------------------------------------------------- A putative class action has been filed in the United States District Court for the Northern District of Georgia by Rabin & Peckel LLP on behalf of all those who purchased or otherwise acquired Theragenics Corp. (NYSE: TGX) common stock between January 29, 1998 and January 11, 1999, inclusive, and who were damaged thereby. The Complaint alleges that Theragenics and certain of its officers and directors violated the Securities Exchange Act of 1934 (Sections 10(b) and 20(a)) by intentionally or recklessly making a series of materially false and misleading statements concerning Theragenics' financial results and business. In particular, it is alleged that defendants misrepresented Theragenics' declining sales and the failure of its sales and marketing contract with Indigo Medical, a subsidiary of Johnson & Johnson. As a result of these material misstatements, the price of Theragenics common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. Moreover, the Complaint further alleges that while defendants were issuing false and misleading statements concerning the Company, certain defendants sold significant amounts of their own stock of the Company for proceeds of over $2,70,000 [sic.]. TOBACCO LITIGATION: Avalanche of Paper Buries Florida Trial ----------------------------------------------------------- Tracy Fields, writing for the Associated Press, relates her observations from the on-going suit against tobacco companies: First, there were the witnesses, dramatic cross-examinations and depositions. Now, an avalanche of paperwork has stalled the nation's first class-action lawsuit by smokers to reach trial. Stanley Rosenblatt, along with his wife and law partner, Susan, want thousands of documents admitted into evidence to show what they say is a pattern of deception by cigarette makers. The Rosenblatts represent an estimated half-million Florida residents who blame smoking for their illnesses and want at least $200 billion in damages. Lawyers for tobacco companies and industry groups who say smokers knew the habit was risky when they started and could quit if they tried don't want to start their presentation until they know exactly what evidence the plaintiffs will make available to jurors. But the process of examining and arguing about each memo, letter, report or speech, some dating back to the 1940s, seems to be taking a toll. "I look at these documents and say why so many?" Circuit Judge Robert Kaye said Wednesday, the fifth day devoted to reviewing documents. "Nobody's going to read all this stuff. I don't even think an appellate court would read it. "You say, well, the evidence is overwhelming," he said to the Rosenblatts. "There's three tons of paper here. That's overwhelming." The jury has not been in the courtroom for more than a week. Rosenblatt told the judge that jurors in other tobacco cases consistently said the documents were crucial to their decisions in favor of plaintiffs. In addition to Philip Morris and R.J. Reynolds Tobacco Co., the Florida defendants are Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Liggett Group Inc., and Miami's Dosal Tobacco Corp., as well as the Council for Tobacco Research and the Tobacco Institute. Years of tobacco litigation have revealed millions of pages of industry documents being made public. Many came from a Minnesota case, which went to closing arguments before the industry settled for $6.6 billion last May. "There are literally millions of documents in the Minnesota case," said Dick Daynard, a Northeastern University law professor and anti-tobacco activist. "They cover what the industry knew and when it knew it," he said. Last week, Mrs. Rosenblatt introduced a memo in which a tobacco company attorney reported asking a scientist whose rats had developed emphysema during a tobacco experiment to interpret his data differently. "They wanted to do that?" Kaye asked. "They did it," replied Mrs. Rosenblatt. "And they did not succeed." "It's in," said the judge. TOBACCO LITIGATION: RJR Chairman Says Sales Growth Top Priority --------------------------------------------------------------- Skip Wollenberg, writing for the Associated Press reports that that Steven Goldstone, the chairman and chief executive of the No. 2 U.S. tobacco company, RJR Nabisco Holdings Corp., says finding a way to make its international tobacco business bigger and more competitive is the company's top priority for the first half of this year. But Goldstone declined in a private meeting with analysts on Wednesday to say whether a joint venture, selling the business or some other transaction was the most likely course. Jason Wright, a spokesman for the New York-based conglomerate that makes Winston and Camel cigarettes, added that Goldstone also indicated no spinoff was imminent of RJR's 80.6% stake in Nabisco Holdings Corp., maker of Oreo cookies and Planters nuts. Goldstone's appearance before a securities analysts' group in Naples, Fla., came, the AP reported, as financier Carl Icahn is again pressing RJR to proceed with spinning off the remaining Nabisco stake to RJR shareholders. Icahn disclosed in a filing this week with the Securities and Exchange Commission that he boosted his stake in RJR to 7.7 percent from 5.6 percent late last year, buying 3.6 million shares between Jan. 26 and Feb. 12. He is considering filing a slate of nominees for the board and has until March 12 to do so. Icahn failed three years ago in a similar proxy fight, the AP recalls. Wright said Goldstone told the analysts he was not managing the company based on the possibility of a proxy fight for control from Icahn or anyone else. Goldstone has previously indicated that RJR's international tobacco business isn't big enough to compete on its own and is looking for a transaction that would "enhance the scale" of the operation. Wright said Goldstone told the analysts he has been talking with a number of companies and interested parties about the international tobacco business and that the discussions have given him "a sense of comfort" that something can be done within six months. Goldstone also told the analysts that last fall's agreement, under which the major tobacco makers agreed to pay $206 billion over 25 years to settle 46 states' claims for the costs of treating sick smokers, gave him more flexibility to pursue ways to enhance the value of RJR. Wright said Goldstone indicated he didn't think a spinoff of the food business stake was imminent. The company has said the legal environment isn't right for a spinoff. A spinoff could draw suits by people who feel it would improperly diminish the remaining company's ability to pay health claims involving smoking. TOBACCO LITIGATION: Liggett Settles Ohio Labor Union Litigation --------------------------------------------------------------- Liggett Group Inc., a subsidiary of Brooke Group Ltd. (NYSE: BGL), disclosed that it has become the first company to settle a smoking-related lawsuit brought against the tobacco industry by labor union health and welfare insurance trust funds. Liggett and the Union-plaintiffs have agreed to settle the class action entitled Iron Workers Local Union No. 17 Insurance Fund, et al. v. Philip Morris Inc., et al. This case has been brought on behalf of all health & welfare union funds in Ohio in order to recover monies allegedly expended to treat members' smoking related illnesses. The trial in the Iron Workers case is scheduled to begin on February 22 in the United States District Court in Akron, Ohio. The Iron Workers agreement was reached in mid-January and was preliminarily approved by District Judge James S. Gwin on February 8, 1999. Under the terms of the Iron Workers agreement, Liggett will release internal industry documents and make available its employees and other witnesses to testify at the upcoming trial. The Iron Workers settlement comes as Liggett continues to notify smokers and other allegedly injured by cigarettes of a national class action settlement agreement. That settlement, in Fletcher, et al. v. Brooke Group Ltd., et al., has gained preliminary approval from the Circuit Court of Mobile County, Alabama. The Fletcher settlement provides for, among other things, cooperation of the same type that Liggett is providing in the Iron Workers case. Brooke Group CEO Bennett S. LeBow, who is expected to testify in the Iron Workers case, says the Iron Workers settlement continues the company's pledge to resolve smoking-related claims. "Liggett will continue to help smokers and others in their fight against the tobacco industry," LeBow said. "Upon final approval of the Fletcher settlement, Liggett has agreed to contribute a portion of its profits for the next 25 years into a settlement fund, to provide internal documents and cooperation in lawsuits against the tobacco industry, and to comply with significant youth advertising marketing restrictions." The Fletcher settlement agreement and the court-approved notice can be accessed at http://www.liggett.net/html/1799fletcher.html via the Internet. Comments from Brooke Group CEO Bennett S. LeBow and Jim Pearson, the attorney for the plaintiffs are available at http://www.newstream.com/r99-40.shtmlin streaming audio format. VIBRATOR BAN: Women Sue State of Alabama Over Vibrator Ban ---------------------------------------------------------- In Huntsville, Alabama, Reuters reports that a lawyer asked a federal judge on Wednesday to strike down an Alabama law banning the sale of vibrators, saying the statute was a government invasion into the bedrooms of people pursuing "perfectly normal" activities. "We just think this demonstrates a bias toward conduct that is perfectly normal," lawyer Mark Lopez, of the American Civil Liberties Union, told U.S. District Judge Lynwood Smith. Smith heard arguments in a lawsuit filed by a group of women who oppose a law enacted last year that bans the sale of vibrators and other sex toys. He took the case under advisement but did not indicate when he would rule on the matter, Reuters said. The suit names several women as plaintiffs, including B.J. Bailey, who sells sexual aids and novelties at parties, and Sherri Williams, who owns romance boutiques in Huntsville and Decatur, Alabama. "It's a $10,000 fine and a year of hard labor if you get caught selling vibrators," Williams told Reuters. "This is not a stereotypical sex shop," Williams said of her business, Loving Enterprises Inc. "We do candles and chocolates and lingerie, all the ingredients for a romantic evening. It just so happens that sex toys are one of those ingredients." Last year, the Alabama Legislature passed an anti-obscenity statute that outlawed strip clubs and barred the sale of items to enhance sex, including vibrators and certain kinds of condoms. "They set out to eliminate strip clubs, but along the way they snuck in sex toys," Williams said. "Not only did they take away your entertainment, but when they were done they also took away your right to entertain yourself." Courtney Tarver, representing the state, pointed out that the law banned only the sale -- not the use -- of vibrators. "We see the legislature acting within its powers," he said. ********* ********* 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 * * *