/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990315.MBX C L A S S A C T I O N R E P O R T E R Monday, March 15, 1999, Vol. 1, No. 27 Headlines ABBOTT LABORATORIES: Will Deny Terazosin HCl Antitrust Suit ALLIED PILOTS: Fourth Passenger Complaint Filed in Texas BAUSCH & LOMB: No Appeal from Rewetting Drop Suit Dismissal DREYFUS AGGRESSIVE: Shareholders Sue over Conflicts on Interest FRESENIUS NATIONAL: 1995 & 1996 W.R. Grace Shareholder Litigation GENERAL CIGAR: Florida Suits Stall; May Prevail in California LIFE TECHNOLOGIES: Injunction re Dexter Merger Denied in Delaware LOUISIANA STATE: Hospital Sued Over Anti-Abortion Policy MDC HOLDINGS: Continues to Honor Expansive Soil Warranty Program PG&E CORP.: Texas Franchise Fee Litigation Effect May be Material TOBACCO LITIGATION: Plaintiffs' Lawyer Unfazed by RJR Break-Up TRAVELERS BANK: Customers Sue For Credit Card Rate Bait & Switch ********* ABBOTT LABORATORIES: Will Deny Terazosin HCl Antitrust Suit ----------------------------------------------------------- On December 18, 1998, Louisiana Wholesale Drug Co. sued Abbott Laboratories, Geneva Pharmaceuticals, Inc., and Zenith Laboratories, Inc., in the United States District Court for the Southern District of Florida alleging that Abbott's agreements with Geneva and Zenith regarding terazosin hydrochloride violate the federal antitrust laws. The case purports to be a class action and seeks actual damages, treble damages, civil penalties, and other relief. Abbott intends to file a response denying all substantive allegations. ALLIED PILOTS: Fourth Passenger Complaint Filed in Texas -------------------------------------------------------- Four travelers inconvenienced during last month's pilots' sickout at American Airlines filed suit yesterday in U.S. District Court in Dallas against the Allied Pilots Association, which represents American's 9,300 pilots. The plaintiffs are seeking at least $50 million in compensatory damages, plus unspecified punitive damages from the Fort Worth-based union. The lawsuit is the fourth filed by consumers against the union as a result of the job action that forced the cancellation of nearly 6,700 American flights Feb. 6-16. However, it is the first filed in a federal court. Two suits seeking class action status -- and at least $100 million and at least $50 million in damages, respectively - were filed previously in state district court in Fort Worth. Another suit seeking class action status and at least $80 million in damages, has been filed in a California state court in San Francisco. The suit filed yesterday names four plaintiffs, Richard Kaufman of New York who claims he lost $1,900 in hotel reservation fees because he could not travel on Feb. 10; New York resident Jack Marut who claims he lost $2,000 in commissions when he couldn't travel on Feb. 7; Florida resident Anthony Wainwright, who claims he lost $5,000 in travel fees; and Jeffrey Krasnoff who claims he lost $1,600 in travel fees. BAUSCH & LOMB: No Appeal from Rewetting Drop Suit Dismissal ----------------------------------------------------------- In its 1997 Annual Report on Form 10-K, BAUSCH & LOMB, INC., discussed a class action pending before a New York Supreme Court alleging that the company misled consumers in its marketing and sale of Sensitive Eyes Rewetting Drops, Boston Rewetting Drops, Renu Rewetting Drops and Bausch & Lomb Eye Wash. On April 21, 1998, the court dismissed all of the plaintiffs' claims. "It is not known whether the plaintiffs will appeal this ruling," BAUSCH & LOMB says in its latest quarterly report on Form 10-Q filed last week with the Securities and Exchange Commission. DREYFUS AGGRESSIVE: Shareholders Sue over Conflicts on Interest --------------------------------------------------------------- The April 1999 edition of Kiplinger's Personal Finance Magazine relates that Michael Schonberg, one of a fresh crew of managers brought in during 1995 to revive Dreyfus's sleepy stock funds, started with a bang. In his first eight months on the job, he piloted Dreyfus Aggressive Growth to a 119% gain--enough to place it at the top of many lists of aggressive-growth funds. Money poured in, Kiplinger's observes; assets had reached $92 million by the end of 1996. But then returns dropped almost as fast as they had gone up. The fund now sits in the bottom 1% of all funds over the past three years, with an annualized return of -16.6%. Not surprisingly, it has almost twice the volatility of Standard & Poor's 500-stock index. We're not sure just what Schonberg did to sink his fund so thoroughly because right now lips are buttoned, Kiplinger's comments. Last July, Dreyfus placed Schonberg on administrative leave with pay while the SEC and the New York State attorney general scrutinize his actions. Additionally, a class-action suit by shareholders contends Schonberg loaded the fund with a few tiny stocks that he already owned in his personal portfolio. It maintains he bought the stocks partly "on the basis of Schonberg's personal financial interests," a conflict of interest that would violate SEC rules. FRESENIUS NATIONAL: 1995 & 1996 W.R. Grace Shareholder Litigation ----------------------------------------------------------------- In 1995, nine purported class action lawsuits were brought against FRESENIUS NATIONAL MEDICAL CARE HOLDINGS, INC. (prior to the Merger, when it was Grace), and certain of its then officers and directors in various federal courts. These lawsuits were consolidated in a case entitled Murphy, et al. v. W.R. Grace & Co., et al. No. 95-CV-9003 (JFK) (the "Murphy Action"), which is pending in the U.S. District Court for the Southern District of New York. The first amended class action complaint in this lawsuit, which purports to be a class action on behalf of all persons and entities who purchased publicly traded securities of the Company during the period from March 13, 1995 through October 17, 1995, generally allege that the defendants violated federal securities laws by concealing information and issuing misleading public statements and reports concerning NMC's financial position and business prospects, a proposed spin-off of NMC, and the matters that are the subject of the OIG Investigation and the investigation by the federal grand jury in the District of New Jersey. The Murphy Action sought unspecified damages, attorneys' and experts' fees and costs and such other relief as the court deems proper. In October 1995, a purported derivative lawsuit was filed in the U.S. District Court for the Southern District of Florida, Northern Division against the Company (prior to the Merger, when it was known as Grace), certain of its then directors and its former President and Chief Executive Officer, alleging, inter alia, that such individuals breached their fiduciary duties by failing to properly supervise the activities of NMC in the conduct of its business (Bennett v. Bolduc, et al. 95-8638-CIV- MORENO). In December 1995, the plaintiff in this action filed a new action, based on similar allegations, in the U.S. District Court for the Southern District of New York (Bennett v. Bolduc, et al. 95-CV-10737 (AGS)) (the "Bennett Action"). The action in Florida was dismissed in favor of the Bennett Action. A second action making similar allegations was filed in October 1995 in New York State Supreme Court, New York County (Bauer v. Bolduc, et al. 95-125751). This action was stayed in favor of the Bennett Action, which was consolidated, for discovery purposes only, with the Murphy Action described above. The complaint in the Bennett Action sought unspecified damages, attorneys' and experts' fees and costs and such other relief as the court deems proper. In February 1996, a purported class action was filed in New York State Supreme Court, New York County, against the Company (prior to the Merger, when it was known as Grace) and certain of Grace's then current and former directors, alleging that the defendants breached their fiduciary duties, principally by failing to provide internal financial data concerning NMC and by failing to negotiate with certain other companies that had made proposals for business combinations involving NMC (Rosman v. W. R. Grace, et al. 96-102347). The lawsuit sought injunctive relief ordering defendants to carry out their fiduciary duties and preventing or rescinding the Merger or any related transactions with Fresenius AG, unspecified monetary damages, an award of plaintiff's attorneys' and experts' fees and costs, and such other relief as the court may deem just and proper. Grace Chemicals indemnified the Company and its affiliates for any losses related to these lawsuits, which were settled in January 1998 without the contribution of any payment in connection with the settlements by the Company or any of its affiliates. GENERAL CIGAR: Florida Suits Stall; May Prevail in California ------------------------------------------------------------- General Cigar Holdings, Inc., together with a variety of tobacco product manufacturers and retailers, is named as a defendant in Florida suits based on tort theories including strict liability, negligence, fraud and civil conspiracy, with plaintiffs alleging adverse health effects from the use of such tobacco products. (A) RAYMOND NICHOLAS AND JUDITH L. NICHOLAS V. PHILIP MORRIS INCORPORATED, ET AL., Seventeenth Judicial Circuit Court, Broward County, Florida. This action was filed on February 3, 1997 and served on February 4, 1997. The Complaint names the Company together with several other tobacco product manufacturers and a retailer. Plaintiffs allege personal injuries and loss of consortium based on strict liability, negligence and civil conspiracy theories. The Company is not included in the list of alleged coconspirators in the civil conspiracy count. The court denied defendants' motion to dismiss the Complaint. A second amended complaint was served on June 29, 1998, and the Company filed an answer denying the allegations contained therein. Discovery has been proceeding. Plaintiff's counsel, however, has recently filed a motion to withdraw as counsel of record which has not yet been decided. (B) IN RE CONSOLIDATED TOBACCO CASES V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET AL., Fourth Judicial Circuit Court, Duval County, Florida. Two complaints, which name the Company among other defendants, were filed in late August 1996; each contains allegations of strict liability, negligence and civil conspiracy. The Company is not named in the complaints as a co- conspirator. As of December 31, 1998, the Company had not been served with either complaint. (C) FLORENCE WALTERS, ET AL. V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET AL., Fourth Judicial Circuit Court, Duval County, Florida. This class action complaint was filed in late August 1996 and specifically lists 291 class members. The Company has been named together with the other defendants in this case but has not been served with a complaint. The underlying claims include strict liability, negligence and civil conspiracy claims under which the Company is absent from the list of alleged conspirators. On July 28, 1998, THE PEOPLE OF THE STATE OF CALIFORNIA, ET AL. V. GENERAL CIGAR CO., INC. ET AL. was filed in Superior Court of the State of California for the County of San Francisco against the Company and nine other manufacturers of cigars and pipe tobacco. The plaintiffs in the action, the San Jose City Attorney on behalf of the People of California and Lexington Law Group, allege that the defendants violated California Proposition 65 and the California Unfair Competition Act by (a) selling products that expose California non-smokers to environmental tobacco smoke (resulting in exposure without warning 'to chemicals known to the State of California to cause cancer and/or reproductive toxicity'), and (b) thereby engaging in fraudulent and unfair business practices. Plaintiffs claim uncalculated penalties under Proposition 65 and seek disgorgement of an unspecified amount of revenues obtained through allegedly wrongful sales. On October 5, 1998, the defendants filed a demurrer based on res judicata and collateral estoppel and the court overruled the demurrer. The Company believes that it has meritorious defenses and is vigorously defending the action. A similar action was filed in Los Angeles where the court sustained the demurrer. These two decisions will be appealed and the actions may be consolidated. LIFE TECHNOLOGIES: Injunction re Dexter Merger Denied in Delaware ----------------------------------------------------------------- >From July 8 to July 10, 1998, several lawsuits purporting to be brought as class actions on behalf of public stockholders were filed against LIFE TECHNOLOGIES, INC., Dexter Corporation and the Company's directors (with whom the Company has indemnification agreements) in the Court of Chancery of the State of Delaware. In September 1998 these lawsuits were consolidated into a single action, titled In re Life Technologies, Inc. Shareholders Litigation (Consolidated Civil Action No. 16513). On November 6, 1998, an Amended Consolidated Class Action Complaint, a motion for preliminary injunction and a motion for expedited proceedings were filed in the Court of Chancery of the State of Delaware. The amended consolidated complaint alleges, among other things, that Dexter and the defendant directors of the Company who are affiliated with Dexter or are officers of the Company have breached their respective fiduciary duties to the Company's public stockholders. The amended consolidated complaint seeks to enjoin defendants, preliminarily and permanently, from consummating a tender offer by Dexter, to require Dexter to supplement its Offer to Purchase and to recover monetary damages and fees and expenses of litigation. On November 9, 1998, the Delaware Chancery Court scheduled a hearing to be held on November 24, 1998, with respect to the motion for preliminary injunction filed on November 6, 1998. At the November 24, 1998 hearing, the Court of Chancery of the State of Delaware denied the plaintiffs' motion for preliminary injunction. LOUISIANA STATE: Hospital Sued Over Anti-Abortion Policy -------------------------------------------------------- A reproductive rights organization filed a federal suit claiming that a Louisiana hospital's policy to not perform an abortion unless the woman has a greater than 50% chance of dying from the pregnancy is unconstitutional, reports USA Today. The class- action suit names Michelle Lee, 27, as the primary plaintiff. Lee, who suffers from cardiomyopathy, a life-threatening heart condition, had to travel 250 miles to a Texas hospital last October after the Louisiana State University Medical Center refused her an abortion. Lee had been told by her doctors that another pregnancy could kill her. But physicians at the Louisiana hospital determined that Lee had a less than 50% chance of dying from the pregnancy and thus did not meet the hospital's threshold for an abortion. The Center For Reproductive Law and Policy say the hospital's policy in effect "condemns women to die." MDC HOLDINGS: Continues to Honor Expansive Soil Warranty Program ---------------------------------------------------------------- During 1994 and 1995, class action litigation was filed against several subsidiaries of MDC HOLDINGS, INC., alleging claims relating to the construction of homes on lots with expansive soils. On November 26, 1996 the settlement of the Expansive Soils Cases became final. As a result, the Company recorded additional warranty reserves. The impact in the consolidated statements of income of these additional warranty reserves was offset by indemnity payments received from insurance and deposited directly into a qualified settlement fund. The settlement provided for the creation of a warranty program for eligible owners of homes constructed by the Company's Colorado homebuilding subsidiaries and closed between June 1986 and June 1996. Management believes the settlement will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. PG&E CORP.: Texas Franchise Fee Litigation Effect May be Material ----------------------------------------------------------------- On July 31, 1997, PG&E Corporation acquired Valero Energy Corporation (Valero), now known as PG&E Gas Transmission, Texas Corporation or PG&E GTT. PG&E GTT succeeded to the eight cases described below which were pending at the time of the acquisition against Valero and its affiliates (collectively referred to as the "Texas Franchise Fees Litigation"). These actions were brought by various cities in Texas arising out of several Texas statutes and city ordinances involving the following: (a) what rights, if any, Texas cities may have to require companies engaged in the gathering, production, distribution, transmission, and/or sale of natural gas (gas business) to obtain consent from, and pay fees to, the cities within which such activities are being conducted, (b) what form any such consent, if required, must take, (c) what constitutes "use" of city property, and (d) what types of charges, if any, a Texas city properly can assess against gas pipeline and marketing companies for use of that city's property. These seven cases pending against Valero entities at the time of the acquisition are: (1) City of Edinburg v. Rio Grande Valley Gas Co. (RGVG), Valero Energy Corporation (now known as PG&E GTT), Valero Transmission Company (now known as PG&E Texas Pipeline Company), Valero Natural Gas Company (now known as PG&E Texas Natural Gas Company), Reata Industrial Gas Company (now known as PG&E Energy Trading Holdings Corporation), Valero Transmission, L.P. (now known as PG&E Texas Pipeline, L.P.), and Reata Industrial Gas, L.P. (now known as PG&E Reata Energy, L.P.), Southern Union Gas Co., and Mercado Gas Services, Inc., filed August 31, 1995, in the 92nd State District Court, Hidalgo County, Texas; (2) Cities of San Benito, Primera, and Port Isabel v. RGG, Valero Energy Corporation (now known as PG&E GTT), Southern Union Company, et al., filed December 31, 1996, in the 107th State District Court, Cameron County, Texas; (3) City of Mercedes v. Reata Industrial Gas L.P. (now known as PG&E Reata Energy, L.P.), and Reata Industrial Gas Company (now known as PG&E Energy Trading Holdings Corporation), filed April 16, 1997, in the 92nd State District Court in Hidalgo County, Texas; (4) Cities of Alton and Dana v. Rio Grande Valley Gas Co., Valero Energy Corporation (now known as PG&E GTT), Valero Transmission Company (now known as PG&E Texas Pipeline Company), Valero Natural Gas Company (now known as PG&E Texas Natural Gas Company), Reata Industrial Gas Company (now known as PG&E Energy Trading Holdings Corporation), Valero Transmission, L.P. (now known as PG&E Texas Pipeline, L.P.), and Reata Industrial Gas, L.P. (now known as PG&E Reata Energy, L.P.), Southern Union Gas Co., and Mercado Gas Services, Inc., filed July 18, 1996, in the 92nd State District Court, Hidalgo County, Texas; (5) City of La Joya v. Rio Grande Valley Gas Company, Valero Energy Corporation (now known as PG&E GTT), Southern Union Company, et al., filed December 27, 1996, in the 92nd State District Court, Hidalgo County, Texas; (6) City of San Juan, City of La Villa, City of Penitas, City of Edcouch, and City of Palmview v. Rio Grande Valley Gas Company, Valero Energy Corporation (now known as PG&E GTT), Southern Union Company, et al., filed December 27, 1996, in the 93rd State District Court, Hidalgo County, Texas; and (7) City of Weslaco v. Valero Natural Gas Company (now known as PG&E Texas Natural Gas Company), Reata Industrial Gas Company (now known as PG&E Energy Trading Holdings Corporation) and Reata Industrial Gas, L.P. (now known as PG&E Reata Energy L.P.) filed April 17, 1997, in the 92nd State District Court, Hidalgo County, Texas. The trial in the City of Edinburg case began on June 15, 1998. On August 14, 1998, a jury returned a verdict in favor of the City of Edinburg, and awarded damages in the approximate aggregate amount of $9.8 million, plus attorneys' fees of approximately $3.5 million, against PG&E GTT, Southern Union Gas Company and various affiliates of PG&E GTT. The jury refused to award punitive damages against the PG&E GTT defendants. On December 1, 1998, based on the jury verdict, the court entered a judgment in the City's favor, and awarded damages of $5.3 million, attorneys' fees of up to $3.5 million (to the extent that the City is successful on appeal), prejudgment interest of $1.6 million and post-judgment interest at the rate of 10 percent per year, compounded annually, from December 1, 1998. The court found that various PG&E GTT and Southern Union defendants were jointly and severally liable for $3.3 million of the damages, prejudgment interest in the amount of $1.1 million, and all the attorneys' fees. Certain PG&E GTT subsidiaries were found solely liable for $1.4 million of the damages and prejudgment interest of $440,000. The court did not clearly indicate the extent to which the PG&E GTT defendants could be found liable for the remaining damages. The judgment also decreed that (1) certain pipelines owned by PG&E GTT subsidiaries encroached on the City's property without the City's consent and (2) based on certain jury findings, PG&E GTT was vicariously liable for certain conduct of the local distribution company, RGVG, from October 1, 1985, to September 30, 1993 (the date Valero, PG&E GTT's predecessor, sold RGVG to Southern Union). The PG&E GTT defendants are appealing the judgment. On November 4, 1997, the lawsuit filed in Cameron County, Texas, by the cities of San Benito, Primera, and Port Isabel was amended to name as defendants PG&E GTT and all of its subsidiaries (excluding its Canadian gas trading and power trading company), PG&E Gas Transmission Teco, Inc. and its subsidiaries, and PG&E Energy Trading Corporation (now known as PG&E Energy Trading--Gas Corporation), and to dismiss the Southern Union defendants. In connection with the certification of a class in this case, the court ordered notice to be sent to all potential class members and setting an opt-out deadline of December 31, 1997. Notices were mailed to approximately 159 Texas cities. Fewer than 20 cities opted out by the deadline. Some of the cities opting out include Austin, Brownsville, Houston, Pharr, and San Antonio. Defendants' motion to transfer venue of this case to Bexar County, Texas, is currently pending. The factual allegations and claims asserted in the lawsuit filed by the city of La Joya, and in the lawsuit filed by the cities of San Juan, Lavilla, Penitas, Edcouch, and Palmview, are similar to the claims made in the lawsuit filed by the cities of San Benito, Primera, and Port Isabel. Defendants' motion to transfer venue of both cases to Bexar County, Texas, also is currently pending. In July 1996, the lawsuits brought by the cities of Alton and Dana were originally brought as intervening actions in the City of Edinburg case, but were severed from the Edinburg lawsuit. The claims asserted by the cities of Alton and Dana are substantially similar to the Edinburg litigation claims. Damages are not quantified. Defendants' motion to transfer venue of both cases to Bexar County, Texas, also is currently pending. On September 4, 1997, the City of Mercedes amended its petition to include class action claims and requested to be named as class representative for a statewide class consisting of all Texas municipal corporations, municipalities, towns, and villages, excluding the cities of Edinburg and Weslaco (both of which filed separate actions), in which any of the defendants have sold or supplied gas, or used public rights-of-way to transport gas. The City of Mercedes has requested a damage award, but has not specified an amount. On November 26, 1997, defendants' motion to recuse the presiding judge was granted. Plaintiffs' request for class certification is still pending. If a class is certified, defendants anticipate that they will challenge such certification. Defendants' motion to transfer venue to Bexar County, Texas, also is still pending. The causes of action alleged in the case brought by the city of Weslaco are identical to those alleged in the City of Mercedes case. Defendants' motion to transfer venue to Bexar County, Texas, is currently pending. Defendants also have filed a motion to disqualify or recuse the presiding judge (the same judge that was recused in the Mercedes case) which is also pending. In addition to the seven cases described above, a lawsuit was filed on April 3, 1996, in the 92nd State District Court, Hidalgo County, Texas, by the City of Pharr against Southern Union Company, et al., and RGVG. On June 24, 1996, the court certified the case as a class action and named Pharr as the class representative for the class consisting of those Texas cities, excluding Edinburg and McAllen, that have, or had natural gas franchises with RGVG. The Pharr class was certified as to two claims: breach of contract and declaratory relief dealing with the rights, status, and legal relationship between plaintiff, the class members, and the local distribution company regarding payment of franchise fees and use of granted easements. Plaintiffs' original petition also sought injunctive relief, but the class order does not include injunctive relief. Plaintiffs seek actual damages, exemplary damages, attorneys' fees, costs, and pre- and post-judgment interest, but have not specified any amounts. The court records show that a pleading was allegedly filed on December 12, 1997, but not docketed until mid-February 1998, that purports to add as defendants the same 29 PG&E Corporation entities that are parties in the San Benito class action. These PG&E Corporation entities have not been served in this litigation. On December 30, 1997, in affirming the Pharr class certification, the appellate court specifically found that the PG&E Corporation-related entities were not parties to the class action. PG&E Corporation and Pacific Gas & Electric Co. indicate in regulatory filings with the SEC last week that it believes the ultimate outcome of the Texas Franchise Fee Litigation could have a material adverse impact on their financial position or results of operation. TOBACCO LITIGATION: Plaintiffs' Lawyer Unfazed by RJR Break-Up -------------------------------------------------------------- John Coale, a Washington lawyer pushing a class-action lawsuit against several tobacco companies, isn't concerned about how RJR Nabisco is broken up. "It wouldn't get them off the hook" for any judgment, he told USA Today Friday. TRAVELERS BANK: Customers Sue For Credit Card Rate Bait & Switch ---------------------------------------------------------------- A lawsuit accuses Citigroup Inc.'s Travelers Bank subsidiaries of luring thousands of customers into paying higher-than-promised interest rates on their Visa credit cards. The suit filed last week in Delaware Superior Court says Travelers Bank & Trust FSB and the Travelers Bank USA offered customers a 6.9 percent interest rate for six months on debts transferred onto their Platinum Visa cards, but charged them 15.4 percent on the balances, according to a Bloomberg News report. The suit, which seeks class-action status, asks for unspecified damages and a rate cut. ********* 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 * * *