/raid1/www/Hosts/bankrupt/CAR_Public/990924.MBX
C L A S S A C T I O N R E P O R T E R
Friday, September 24, 1999, Vol. 1, No. 163
Headlines
ANNTAYLOR INC: Intends To Defend Vigorously Stockholders Suit In N.Y.
ASBESTOS: Workers On Complex Sue Forest City And Red Line In LA
CHICAGO HOUSING: Illinois Fd Ct Dismisses Tenants' Lead Suit
CHILDRENS PLACE: Contests Partners Suit Over IPO Filed In Super. Ct. NJ
CHILDRENS PLACE: Discovery Goes On For Stockholders Suit In NJ Over IPO
DELGRATIA MINING: Proposes Settlement For Stockholders Suit
DOE RUN: Intends To Defend Vigorously Suits Over Smelter In Missouri
DOEHLER-JARVIS: ERISA Case Sent To Ohio Ct To Avoid Forum Shopping
ELRON ELECTRONIC: Announces & Will Defend Vigorously Shareholders Suit
FORD MOTOR: Board Chairman Testifies As Key Technical Witness
NAPATA CORP: Fd Ct Dismisses Securities Suit In Texas
NORWEST MORTGAGE: Fax Fee Not A Prepayment Penalty, Minnesota Ct Rules
PAYDAY LENDERS: Americash Sued In Chicago For Issuing A.G. Letters
PUBLISHERS CLEARING: Fl. A.G. Will Sue; Sweepstakes Witnesses Stack Up
PUBLISHERS CLEARING: AGs Will Sue - Settlement As Deceptive As Mailings
RANDALLS FOOD: Sued Over Acquired Cullum's Terminated Mgt Security Plan
REMEC INC: Decries Merit Of Securities Suit Filed By Milberg In CA
RENT-A-CENTER: Hit With Suit In LA Over OT Pay For Managers In Name
TOBACCO LITIGATION: Cable News Network Coverage On Federal Mega Suit
UNISYS CORP: Union May Be Liable In NY Suit Over Employer's Age Bias
*********
ANNTAYLOR INC: Intends To Defend Vigorously Stockholders Suit In N.Y.
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The Company, certain current and former officers and directors of ATSC
and the Company, and Merrill Lynch & Co. and certain of its affiliates,
are defendants in a purported class action lawsuit, originally filed on
April 26, 1996, by certain alleged stockholders of ATSC in the United
States District Court for the Southern District of New York. (Novak v.
Kasaks, et al., No. 96 CIV 3073 (S.D.N.Y. 1996)).
On or about December 15, 1998, the plaintiffs filed a notice of appeal
to the United States Court of Appeals for the Second Circuit, seeking
review of the District Court's November 9, 1998 order granting the
defendants' motions to dismiss the amended complaint with prejudice for
its failure to state a claim upon which relief may be granted and its
failure to plead fraud with particularity.
It is the Company's understanding that Merrill Lynch, its affiliates and
the two directors who previously served on the Company's Board of
Directors as representatives of certain affiliates of Merrill Lynch,
have reached a settlement with the plaintiffs, and the action as against
these defendants has been remanded by the Court of Appeals to the
District Court for proceedings in connection with that settlement. The
appeal as against the remaining defendants, including ATSC and the
Company, has been fully briefed and is scheduled for oral argument
before the Court of Appeals on September 15, 1999. Because this appeal
is presently pending, any liability that may arise from this action
cannot be predicted at this time. The Company believes that the amended
complaint is without merit and intends to continue to defend the action
vigorously.
ASBESTOS: Workers On Complex Sue Forest City And Red Line In LA
---------------------------------------------------------------
At least 75 workers have sued the owner of an Orange apartment complex,
alleging that they were forced to remove asbestos-laden flooring without
proper safety equipment and were not alerted to the presence of toxic
mold and lead paint during a renovation project.
The class-action lawsuit, which seeks $ 100 million in damages, was
filed Tuesday in Los Angeles County Superior Court against
Cleveland-based Forest City Enterprises and its affiliates. In it, the
plaintiffs estimate that, by hiring untrained manual laborers to work on
the Knolls complex in Orange and apartments near Seattle, the company
was able to save nearly $ 3 million.
The lawsuit also alleges that supervisors with Forest City Enterprises
and Red Line Construction instructed the workers to dispose of the
hazardous materials illegally, in a municipal landfill.
"Their actions are inexcusable," Kevin Senn, an attorney representing
the workers, said Tuesday. "The conditions under which our clients were
forced to work are outrageous. And now we have a bunch of people scared
to death that they're going to die of cancer."
The workers, who "made their living moving from job to job and paycheck
to paycheck, . . . could not afford to lose a job prematurely,"
according to the lawsuit, and were forced to comply with their
supervisors' orders or be terminated. In exchange for lower wages, the
employees were also encouraged to live on site, further exposing them to
asbestos fibers and mold spores that infested the buildings, the lawsuit
states. "This proved to be hazardous to their health and well-being,"
Senn said. "They weren't given even the simplest breathing masks to
wear."
The employees were assured that protective equipment was not needed for
the work they were doing in Orange, Senn said.
According to the lawsuit, the workers on the 18-month-long project were
instructed to "sweep the fine, white dust that resulted from this work
and covered the interiors of the units into piles, creating clouds of
asbestos dust in the units where they were working."
The workers have an increased risk of cancer, Senn said, and may have
incurred damages that will exceed $ 1 million each over the course of
their lifetimes, including medical expenses and lost income and earning
capacity. Several of the workers have already suffered rashes and
experienced seizures since completing the job, he said.
The 260-room Orange complex was renovated in 1995. (Los Angeles Times
9-22-1999)
CHICAGO HOUSING: Illinois Fd Ct Dismisses Tenants' Lead Suit
------------------------------------------------------------
Tenants' lead paint claim under federal civil rights law was dismissed
without prejudice July 14 by an Illinois federal court which held there
were no allegations that the Chicago Housing Authority intentionally
deprived plaintiffs of the right to live in lead-free homes.
The court agreed to dismiss other claims in a suit brought by Section 8
tenants seeking class status and a medical monitoring fund (Faye Marie
Elliott, et al. v. Chicago Housing Authority, et. al., No. 98-C-6307,
N.D. Ill., Eastern Div.).
Text of Opinion in Section D. Mealey's Document # 14-990813-105.)
A proposed class action was filed by Faye Marie Elliott and two others
on behalf of their children against the Chicago Housing Authority (CHA),
CHAC Inc. and Quadel Consulting Corp. The Elliott plaintiffs are in the
federal Section 8 subsidized housing program. They alleged pursuant to
the federal Civil Rights Act, 42 U.S. Code Section 1983, that the
defendants violated their rights under the Lead-Based Paint Poisoning
Prevention Act (LBPPPA) and the United States Housing Act (USHA).
The defendants, argued the Elliott plaintiffs, violated their federal
rights to live in lead-free Section 8 housing, failed to inform the
tenants of the hazards of lead-based paint and that the housing was
pre-1978, and how to avoid and treat lead poisoning. Also, the
defendants were accused of failing to compel the landlords to remove
lead paint, maintain proper inspection and maintenance records.
The Elliott plaintiffs sought a declaratory judgment that the defendants
violated federal statutes and Department of Housing and Urban
Development (HUD) regulations, and a permanent injunction compelling
defendants to comply with LBPPPA and establish a medical monitoring fund
for children exposed to lead paint.
The defendants moved separately to dismiss the claims. The CHA argued
that there is no private cause of action under LBPPPA or HUD regulations
and that the Section 1983 claim must be dismissed because the CHA cannot
be held vicariously liable for CHAC and Quadel's actions.
CHAC and Quadel argued that they are not liable under Section 1983
because their actions did not occur under color of state law and that
the injuries asserted were not alleged to be caused by a policy
attributed to the defendants. Also, the LBPPPA and HUD regulations do
not create a substantive right that serves as the basis for a Section
1983 claim, they add.
Section 1983 Claim
A Section 1983 claim must allege a violation of a constitutional or
federal statutory right that occurred under color of state law.
According to the complaint, CHAC and Quadel were under the CHA's control
in a contract to administer the CHA's Section 8 housing, noted Judge
Blanche M. Manning of the U.S. District Court for the Northern District
of Illinois.
At this stage, there are sufficient facts demonstrating a nexus between
CHA and CHAC and Quadel to permit a @ 1983 claim against private
corporations," wrote Judge Manning.
Private entities and municipalities cannot be held vicariously liable
under Section 1983 for agents or employees' negligence or omissions.
But, as the Elliott plaintiffs noted, in Monell v. New York City Dep't
of Social Services (436 U.S. 658, 56, L. Ed. 2d 611 98, S. Ct. 2018
[1978]), the U.S. Supreme Court held that municipalities are liable for
intentional acts attributable to municipal policies, practices and
customs.
However, the complaint fails to allege that any of the defendants
"intentionally engaged in a pattern or practice pursuant to a policy,
practice or custom to intentionally deprive the plaintiffs of their
rights to live in lead-free residences," Judge Manning said.
CHAC and Quadel argued that the LBPPPA is too vague "to confer a
freestanding cause of action upon the plaintiffs." If no implied right
of action can be interpreted from the LBPPPA, the Section 1983 claim
must fail because one cannot exist without the other, they maintained.
Section 1983 does not create substantive federal rights but "establishes
a federal cause of action to remedy the deprivation of rights created by
federal law," wrote Judge Banning.
A three-factor test determines whether Congress intended a federal
statute to be enforceable under Section 1983. Plaintiffs must be
intended beneficiaries of the statute, plaintiffs' interests asserted
under the right must be clear enough to allow enforcement, and the
statute imposes a binding obligation on the state, the judge noted.
Judge Manning said there is no dispute that the Elliott plaintiffs fall
within the scope of the LBPPPA and held that Congress intended to create
an enforceable right based on the LBPPPA's language. She also cited
decisions supporting the finding, including German v. Federal Home Loan
Mortgage Corp. (885 F. Sup. 537 [S.D. N.Y. 1995]; See 9/20/95, Page 5).
Although the judge agreed to dismiss the Section 1983 claim, she allowed
the plaintiffs time to amend their complaint to correct the defect.
Other Claims Upheld
Rejected were arguments that HUD regulation 24 Code of Federal
Regulations Section 982.406 expressly forecloses Section 1983 under the
aforementioned three-factor test. Only congressional intent, not the
agency responsible for enforcement, "is dispositive of foreclosure,"
said the judge.
Denied was the motion to dismiss the Elliott plaintiffs' claim of
implied right of action based on the LBPPPA under Cort v. Ash (422 U.S.
66, 45 L. Ed. 2d 26, 95 S. Ct. 2080 [1975]). Congress neither explicitly
nor implicitly indicated an intent to bar a probate cause of action,
Judge Banning noted. Also upheld was the implied right of action claim
based on USHA. In Knapp v. Eagle Property Management Corp. (54 F 3d
1272, 1276 [7th Cir. 1995]), the court held that a private cause of
action on behalf of Section 8 tenants can be implied from Section 1437f
of USHA, she said.
In addition, Judge Banning refused to dismiss the third-party
beneficiary and negligence claims.
The Elliott plaintiffs are represented by Alan F. Block and Laurence M.
Landsman of Block & Landsman and Patrick J. Sherlock, all of Chicago.
Representing the CHA are in-house counsel Sheila Ann Genson and Kathleen
Sophie Wengel-Loos. CHAC and Quadel are represented by Charles
Christopher Hoppe Jr., Bryon Doyle Knight, Elizabeth Ann Knight, John A.
Pearson, Kathryn M. Keegan, Kathryn M. Reidy and Paul V. Regelbrugee of
Knight, Hoppe Fanning & Knight in Des Plains, Ill., and Allen Price
Walker of Greene & Letts in Chicago. (Mealey's Litigation Report
8-13-1999)
CHILDRENS PLACE: Contests Partners Suit Over IPO Filed In Super. Ct. NJ
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On October 27, 1997, Bulldog Capital Management, L.P., a limited
partnership that serves as a general partner for a series of investment
funds which allegedly purchased shares of the Company's common stock
issued in connection with the IPO, also filed a lawsuit against the
Company and several of the Company's directors and officers in the
Superior Court of New Jersey, Essex County Division. The complaint also
alleges that by making materially false or misleading statements and/or
omissions in connection with the IPO, the Company and several of the
Company's directors and officers violated provisions of federal and
state law. The plaintiff seeks monetary damages of an unspecified
amount, rescission or rescissory damages and fees and costs. This action
and the federal action described above have been coordinated for
purposes of discovery.
The Company believes that the allegations made in the complaints
described above are untrue and totally without merit and intends to
defend them vigorously.
CHILDRENS PLACE: Discovery Goes On For Stockholders Suit In NJ Over IPO
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On October 16, 1997, Stephen Brosious and Rudy Pallastrone, who
allegedly purchased shares of the Company's common stock in an initial
public offering in September, 1997 (the "IPO"), filed a lawsuit against
Childrens Place Retail Stores Inc., several of the Company's directors
and officers, and the underwriters of the IPO in the United States
District Court of the District of New Jersey. The named plaintiffs
purport to maintain a class action on behalf of all persons, other than
the Defendants, who purchased the Company's common stock issued in
connection with the IPO on or about September 19, 1997 through October
13, 1997.
The complaint alleges that the Defendants violated federal securities
laws by making materially false or misleading statements and/or
omissions in connection with the IPO. The plaintiffs seek monetary
damages of an unspecified amount, rescission or rescissory damages and
fees and costs. Since October 16, 1997, 15 additional putative class
actions making substantially similar allegations and seeking
substantially similar relief have been filed against some or all of the
Defendants. On or about January 13, 1998, the 16 putative class actions
were consolidated in the Court and on February 26, 1998, the plaintiffs
served and filed their amended consolidated complaint.
On April 16, 1998, the Defendants moved to dismiss the complaint. On
September 4, 1998, the Court entered an Order granting the motion to
dismiss in part and denying it in part. The Court also dismissed the
case against the underwriters without prejudice. On October 5, 1998, the
plaintiffs filed an amended complaint against all defendants including
the underwriters. The Company filed its answer to the amended complaint
on October 26, 1998. On August 23, 1999, the Court entered an Order
granting in part and denying in part plaintiffs' motion for class
certification. Defendants have filed a motion for reconsideration of
that portion of the Order granting plaintiffs' motion. Discovery is
ongoing.
DELGRATIA MINING: Proposes Settlement For Stockholders Suit
-----------------------------------------------------------
Summary Notice of Proposed Settlement to All Persons Who Purchased the
Common Stock of Delgratia Mining Corp. During the Period From November
18, 1996 Through and Including May 19, 1997
The following was issued by Cohen, Milstein, Hausfeld & Toll, P.L.L.C.:
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
__________________________________
)
IN RE: DELGRATIA MINING ) MDL 1201
CORPORATION SECURITIES ) SUMMARY NOTICE OF
LITIGATION, ) PROPOSED SETTLEMENT
__________________________________)
)
AND ALL RELATED CASES. )
__________________________________)
AND
No. C974521
Vancouver Registry
IN THE SUPREME COURT OF BRITISH COLUMBIA
Between:
ANNE FISCHER, BETTY LAU, PETER PANOS
and TWANA HARPER,
Plaintiffs
And:
DELGRATIA MINING CORPORATION, J. TERRENCE ALEXANDER,
CHARLES A. AGER, ERIC X. LAVARACK, DAVID R. MANNING,
GEOFF COURTNALL, and PATRICK J. FURLONG,
Defendants
Brought under the Class Proceedings Act, R.S.B.C. 1996, c.50
TO: ALL PERSONS WHO PURCHASED THE COMMON STOCK OF DELGRATIA MINING
CORP. DURING THE PERIOD FROM NOVEMBER 18, 1996 THROUGH AND
INCLUDING MAY 19, 1997
Consolidated Class action litigation is pending in the United States
District Court for the District of Nevada against Central Minera Corp.,
formerly Delgratia Mining Corp., certain of its past and present
officers and directors, and other persons and entities. Similar
litigation is pending in the Supreme Court of British Columbia.
Previously, a partial settlement was reached with some of the
defendants. The parties have now reached a total settlement of the case,
including all defendants. The settlement referred to herein is not in
addition to the earlier partial settlement, but rather will supersede
that settlement.
With respect to the U.S. Litigation, you are hereby notified, pursuant
to Court order, that a hearing (the "U.S. Settlement Hearing") will be
held on November 15, 1999, at 3:00 p.m., before the Honorable Philip M.
Pro, United States District Judge, at the United States Courthouse, 300
Las Vegas Boulevard S., Las Vegas, Nevada, 89101.
With respect to the Canadian Litigation, you are hereby notified,
pursuant to Court order, that a hearing (the "Canadian Settlement
Hearing") will be held on December 2, 1999, at 9:00 a.m. before the
Honourable Mr. Justice Harvey at the courthouse at 850 Burdett Avenue,
Victoria, British Columbia, V8W 1B4. The purpose of the settlement
hearings will be to determine: (1) whether the settlement of all claims
in the litigation in the amount of 3 million shares of Delgratia common
stock ("Settlement Fund") plus payment by Delgratia of litigation and
settlement costs and expenses not to exceed U.S. $500,000, should be
approved as fair, just, reasonable and adequate to all the Settling
Parties; (2) whether the proposed Plan of Allocation is fair, just,
reasonable, and adequate; (3) whether the application of Plaintiffs'
Counsel for an award of attorneys' fees and expenses should be approved;
and (4) whether the Litigation should be dismissed with prejudice as to
the Defendants as set forth in the Stipulation of Settlement filed with
the Court and dated as of August 25, 1999.
If you purchased or otherwise acquired Delgratia common stock during the
period from November 18, 1996 through and including May 19, 1997, your
rights may be affected by the settlement of this Litigation. To share in
the distribution of the Settlement Fund, you must establish your rights
by filing a Proof of Claim and Release form on or before December 13,
1999. If you already timely submitted a valid Proof of Claim form in
connection with the earlier partial settlement of the case, you do not
need to submit another Proof of Claim form to participate in the
recovery referred to here. If you have not previously submitted a timely
and valid Proof of Claim form in connection with that earlier partial
settlement, however, you will need to timely submit a valid Proof of
Claim form now to participate in this recovery. If you desire to be
excluded from the Class, you must file a request for exclusion by
October 25, 1999, in the manner and form explained in the detailed
Notice referred to below. All members of the Class who have not
requested exclusion from the Class will be bound by any judgment entered
in the Litigation pursuant to the settlement agreement. Any objection to
the settlement must be filed no later than October 25, 1999 and must be
served on each of the following:
With respect to the U.S. Litigation:
CLERK OF THE COURT United States District Court District of Nevada 300
Las Vegas Blvd. S., Suite 4425 Las Vegas, NV 89101
COHEN, MILSTEIN, HAUSFELD & TOLL, P.L.L.C. Steven J. Toll Matthew J. Ide
999 Third Avenue, Suite 3600 Seattle, Washington 98104-4001
Chair, Plaintiffs' Counsel Executive Committee for the U.S. Class
AIETA & GRECO Mario Aieta 73 Spring Street, Suite 601 New York, New York
10012-5802
Counsel for the Defendants Central Minera Corporation, Eric X. Lavarack,
David R. Manning J. Terrence Alexander, and Kyle Washington
MCDONALD CARANO WILSON MCCUNE BERGIN FRANKOVICH & HICKS LLP Bryan R.
Clark 2300 W. Sahara Ave., Ste. 1000 Las Vegas, Nevada 89102
Counsel for the Defendant Nevada Gold Corporation
GARTENBERG JAFFE GELFAND & STEIN LLP Edward Gartenberg 11755 Wilshire
Boulevard, Suite 1230 Los Angeles, California 90025-1518
Counsel for the Defendants Charles A. Ager, and Cactus Mining
Corporation
Mark H. Gunderson, Esq. Nevada Bar # 002134 6121 Lakeside Drive, Suite
230 Reno, Nevada 89511
Counsel for the Defendant Valley Gold Corporation
WILSON SONSINI GOODRICH & ROSATI Lloyd Winawer 650 Page Mill Road Palo
Alto, California 94304-1050
Counsel for the Defendant Patrick J. Furlong
LEWIS, RICE & FINGERSH, L.C. Richard B. Walsh 500 North Broadway, Suite
2000 St. Louis, Missouri 63102
Counsel for the Defendant Geoff Courtnall
With respect to the Canadian Litigation:
THE REGISTRAR The Supreme Court of British Columbia 800 Smithe Street
Vancouver, British Columbia V6Z 2E1
KLEIN, LYONS David A. Klein 500 - 805 West Broadway Vancouver, British
Columbia V5Z 1K1
Counsel for the Canadian Class
LAW OFFICES OF JOHN H. FRANK John H. Frank, Esq. Stock Exchange Tower
Suite 1600, 609 Granville St. Vancouver, British Columbia V7Y 1C3
Canadian Counsel for the Defendants Central Minera Corporation, J.
Terrence Alexander, Geoff Courtnall, and Patrick J. Furlong
Thomas J. Deutsch, Esq. Devlin Jensen Suite 2550 555 West Hastings
Street Vancouver, B.C. V6B 4NS
Canadian Counsel for the Defendants Charles Ager and Cactus Mining Corp.
If you are a Member of the Class and have not received a detailed
printed Notice of Pendency and Proposed Settlement of Class Action and a
Proof of Claim and Release form, you may obtain copies by writing to:
Delgratia Mining Corp. Securities Litigation, Poorman-Douglas Corp.,
P.O. Box 4390, Portland, Oregon, 97208-4390. Please do not contact the
Court, the Clerk's office or Delgratia for information. Any inquiries
about this Litigation can be made in writing to the following
Plaintiffs' Counsel: in the United States: Cohen, Milstein, Hausfeld &
Toll, P.L.L.C., 999 Third Avenue, Suite 3600, Seattle, Washington,
98104; in Canada: Klein, Lyons, 500 - 805 West Broadway, Vancouver,
British Columbia, V5Z 1K1.
DO NOT TELEPHONE THE COURT OR DELGRATIA REGARDING THIS NOTICE.
DATED: August 31, 1999 BY ORDER OF THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF NEVADA
AND BY ORDER OF THE SUPREME COURT OF BRITISH COLUMBIA
Contact Cohen, Milstein, Hausfeld, & Toll P.L.L.C., 206-521-0080
DOE RUN: Intends To Defend Vigorously Suits Over Smelter In Missouri
--------------------------------------------------------------------
Doe Run Resources Corp., a company in the mining industry, is a
defendant in six lawsuits alleging certain damages stemming from the
operations at the Herculaneum smelter. Two of these cases are class
action lawsuits. In one case, the plaintiffs seek to have certified two
separate classes. The first class would consist of property owners in a
certain section of Herculaneum, alleging that property values have been
damaged due to the operations of the smelter. The second class would be
composed of children who lived in Herculaneum during a period of time
when they were nine months to six years old, and the remedy sought is
medical monitoring for the class. The second class action similarly is
seeking certification of a class of property owners allegedly damaged by
operations from the smelter, but the purported size of the class is
every home in Herculaneum, Missouri.
The other four cases are personal injury actions by sixteen individuals
who allege damages from the effects of lead poisoning due to operations
at the smelter. Punitive damages also are being sought in each case. The
Company is vigorously defending all of these claims.
Preliminary investigation and research by the Company indicates property
values in Herculaneum are consistent with those of surrounding
communities and have not been affected by the smelter. Finally, based on
rules for class certification, the Company believes class certification
is not appropriate. Because the cases are in discovery, the Company is
unable at this time to state with certainty the expected outcome of and
the final costs of any of these cases. Therefore, there can be no
assurance that these cases would not have a material adverse effect,
both individually and in the aggregate, on the results of operations,
financial condition and liquidity of the Company.
On May 21, 1999, a lawsuit was filed against the Company alleging
certain damages from discontinued mine facilities in St. Francois
County. The plaintiffs seek to have certified two separate classes. The
first class would consist of property owners, alleging that property
values have been damaged due to the tailings from the discontinued
operations. The second class would be composed of children, and the
remedy sought is medical monitoring for the class. The Company intends
to vigorously defend itself against this claim. The Company is unable at
this time to state with certainty the expected outcome of and the final
costs of this suit. Therefore, there can be no assurance the suit will
not have a material adverse effect on the results of operations,
financial condition and liquidity of the Company.
Lori Govreau Vs. The Doe Run Resources Corporation was filed in
February, 1999, in the Circuit Court, 23rd Judicial Circuit at
Hillsboro, Jefferson County, Missouri alleging certain damages stemming
from the operations at the Herculaneum smelter damages from the effects
of lead poisoning due to operations at the smelter. Punitive damages
also are being sought.
On May 21, 1999, Charles Mullins, Ii, Et Al., Vs. The Doe Run Resources
Corporation was filed in the Circuit Court, 23rd Judicial Circuit at
Hillsboro, Jefferson County, Missouri. The case alleges certain damages
from discontinued mine facilities in St. Francois County. The plaintiffs
seek to have certified two separate classes. The first class would
consist of property owners, alleging that property values have been
damaged due to the tailings from the discontinued operations. The second
class would be composed of children, and the remedy sought is medical
monitoring for the class.
The Company intends to vigorously defend itself against this claim.
DOEHLER-JARVIS: ERISA Case Sent To Ohio Ct To Avoid Forum Shopping
------------------------------------------------------------------
Winning the race to court doesn't always translate into getting first
dibs on where to litigate. Under the "first-to-file" rule, the race
winner ordinarily gets priority. But the rule should not be applied if
the plaintiff in the first case filed a declaratory judgment action
merely as a "preemptive strike" to take advantage of more favorable law
in a certain circuit, a federal judge has ruled.
In his 33-page opinion in Doehler-Jarvis Inc. v. Kopystecki et al., U.S.
District Judge Franklin S. Van Antwerpen found there was "ample reason"
to believe that the plaintiff company chose to file in the Eastern
District of Pennsylvania because it knew that a group of retired workers
was poised to sue in the Northern District of Ohio. By filing first in
one of the courts of the 3rd Circuit, the company intended to dodge the
more worker-friendly ERISA law of the 6th Circuit, Van Antwerpen found.
But Van Antwerpen found that such a plaintiff is not entitled to any
advantage under the first-to-file rule since allowing such declaratory
judgment actions to gain priority would lead to inequities and
successful "forum shopping."
In the suit, DJI sought a declaratory judgment that its decision to cut
off benefits to retired workers did not violate the Employee Retirement
Income Security Act. Attorneys Alan M. Dubrow and Steven R. Williams of
Mesirov Gelman Jaffe Cramer & Jamieson filed the suit against a class of
retired workers demanding a court declaration that the company had the
right to terminate life and health insurance benefits to retirees, their
spouses and eligible dependents as of Oct. 31, 1999. The suit was filed
just one day after DJI announced that it intended to terminate the
benefits to retirees as soon as the collective bargaining agreement
expired.
Less than two weeks later, a group of retired workers filed a proposed
class-action suit in the Northern District of Ohio on behalf of up to
480 retired workers at DJI's plants in Toledo, Ohio and Pottstown, Pa.
The workers then moved to have the Pennsylvania suit dismissed. Their
lawyer, Regina C. Hertzig, argued that DJI's use of the declaratory
judgment procedure was improper since it was intended as a preemptive
strike designed to secure a more favorable forum. Hertzig urged Van
Antwerpen to exercise his discretion to hear the case so that the
parallel suit in Ohio could be adjudicated. Van Antwerpen agreed, saying
the Declaratory Judgment Act was designed to provide an early
adjudication of an actual controversy to a party threatened with
liability and otherwise lacking a sufficient remedy. But the law is "no
panacea," Van Antwerpen said, and "there are inherent risks against
which the courts must guard in choosing whether or not to exercise the
declaratory judgment procedure, rather than allow a traditional coercive
lawsuit to run its course.
"Looking to the U.S. Supreme Court for guidance, Van Antwerpen found a
pair of cases in which the justices underscored the "wide latitude" that
federal trial judges enjoy in deciding whether to proceed with a
declaratory judgment action. In Wilton v. Seven Falls Co., Van Antwerpen
said the justices pointed to the language of the Declaratory Judgment
Act which provides that a court "may declare the rights and other legal
relations of any interested party" in holding that the law's wording was
intended to give judges discretion and flexibility. Van Antwerpen found
that DJI's suit should be dismissed because it was filed as a preemptive
strike to secure a more favorable forum than the one the workers were
likely to choose.
In its brief, DJI's lawyers insisted that forum shopping had nothing to
do with the company's choice of the Eastern District of Pennsylvania
since there is no "significant difference" between the law of the 3rd
and 6th circuits. But Van Antwerpen said he found it "difficult to
imagine" that the company had missed the major distinction between the
two circuits' ERISA law holdings in the area of retirement benefits. The
6th Circuit, he said, employs what has come to be known as the "Yard-Man
inference," under which courts presume that retirement benefits were
intended to continue for life notwithstanding the expiration date of a
collective bargaining agreement. But the 3rd Circuit has flatly rejected
the Yard-Man inference, Van Antwerpen found. As a result, Van Antwerpen
said, DJI's decision to file a declaratory judgment suit in the 3rd
Circuit "was motivated by a desire to affect the outcome of the
litigation. "The company also knew that the workers planned to file
their suit in Ohio, he found. "Given the significant differences in law
between the two fora, we believe that inequities would likely result
from [DJI's] choice of forum," Van Antwerpen wrote.
As for the first-to-file rule, Van Antwerpen found there were classic
"red flags" that courts have warned about and suggested he should
decline to follow it. The first red flag, he said, was that DJI knew the
workers were considering filing their own suit. The second red flag, he
said, was that DJI's suit was a declaratory judgment action which is
more likely to be a preemptive strike than a suit for damages or
equitable relief would be. "We are of the opinion that [DJI] acted
swiftly in bringing suit just one day after announcing its plans to
terminate benefits not for the primary purpose of clarifying and
settling the disputed legal relationships brought about by plaintiffs'
proposed actions ... but instead for the purpose of gaining a procedural
advantage," Van Antwerpen wrote. (The Legal Intelligencer 9-21-1999)
ELRON ELECTRONIC: Announces & Will Defend Vigorously Shareholders Suit
----------------------------------------------------------------------
Elron Electronic Industries Ltd. (NASDAQ:ELRNF), a multinational high
technology holding company based in Israel, announced that the Company
received a copy of a claim and a motion to approve the Claim as a class
action submitted by Mr.David Gesser, a shareholder of Elscint. The
motion submitted by the applicant requests that his claim will be
approved as class action instead of the previous claim submitted by Mr.
Yonatan Aderet, as previously announced by the Company on September 7,
1999. The total amount of the claim is approximately $ 148 million.
The Claim names as defendants Elscint Ltd., Elbit Medical Imaging Ltd.,
Elbit Medical Holdings Ltd., Elron Electronic Industries Ltd. and
Messrs. Emmanuel Gill, Uzia Galil, Dov Tadmor, Micha Angel and Yigal
Baruchi, former directors of Elscint, and Mr. Yonatan Aderet, the former
President and Director of Elscint.
The motion was submitted by the applicant on behalf of all existing
shareholders of Elscint who held Elscint's shares February 18, 1999.
(The "represented group") The merits of the Claim is the plaintiff's
allegation that the defendants by their decisions, regarding the sale of
Elscint's assets, caused damage to be suffered by Elscint and the
discrimination of the minority shareholders of Elscint. In terms of the
claims the applicant has requested that Elscint or the other defendants
be ordered to purchase from each of the members of the represented group
all shares held by them at a price of US$ 27.46 per share.
The Company denies the allegations set forth in the Claim and will
vigorously defend the Claim.
Through affiliates, Elron is engaged with a group of high technology
operating companies in the fields of advanced defense electronics,
communication, semiconductors, networking, software and information
technology.
FORD MOTOR: Board Chairman Testifies As Key Technical Witness
-------------------------------------------------------------
Defending itself in the largest class action against an automaker in 20
years, Ford Motor Co. put a key technical witness on the stand Monday
who already has cost the company $9 million.
Roger McCarthy, chairman of the board and an engineer with Menlo
Park-based Exponent Failure Analysis Associates, offered testimony that
countered allegations that between 1983 and 1995 Ford built cars with a
safety defect that caused the vehicles to stall. Howard v. Ford Motor
Co., 763785-2, filed in Alameda County Superior Court, also alleges that
company executives tried to conceal information about the faulty part.
McCarthy is just one of about a dozen expert witnesses running up the
bill for Ford in what has proved to be an extremely expensive case for
both sides. But now the fate of the multimillion-dollar case could hinge
on whether the court can hold on to the remaining jurors. "Now we're
down to one alternate," said plaintiffs' attorney Jeffrey Fazio, of
counsel with Hancock Rothert & Bunshoft. "It's scary, especially with
all these breaks we're taking."
The trial took a summer recess in July, and this month it took a
two-week break to accommodate Judge Michael Ballachey's Labor Day
vacation and the alternate juror's vacation plans.
Since opening arguments in mid-May, three jurors have jumped ship to
return to or take jobs that wouldn't wait and deal with personal issues.
In an unusual move to try to save one of the jurors, counsel tried to
work out a deal to repay a juror's employer for wages paid but not
earned while the employee was serving jury duty. That deal collapsed,
however, because Ford attorneys thought the offer might have been
construed as unfair by the other jurors.
Ford committed again on Monday to taking half as long to make its
presentation. Prior to McCarthy taking the stand, Ford attorney Warren
Platt, a partner in Phoenix's Snell & Wilmer, told Ballachey that he
hopes to wrap up the Ford defense by Oct. 12. The plaintiffs' rebuttal
is expected to last another week.
But both sides are starting to sweat that the whole case could be
jeopardized if more jurors drop out. "It certainly poses a bigger risk
of mistrial," said Donald Lough, in-house counsel and spokesman for
Ford. "This jury has been in open rebellion about the length of the
testimony but they've also been very committed to the case."
Both sides already have spent big bucks on the litigation. McCarthy said
his firm has been paid $7 million for the more than 50,000 hours it
spent conducting research and analysis. Another $2 million was paid to
cover the cost of the firm's expenses, including the purchase of Ford
cars for testing. Plaintiffs' attorneys spent $1 million on a mailer
that went out to about 3 million class members in the state (including
to this reporter). Pretrial preparations cost about $4 million, and
since opening arguments in May they've paid up to $250 an hour for their
experts.
On Monday, the jurors filed into the courtroom by 9:30 a.m., their steno
pads and pens in hand. Already, the seven men and six women, including
one alternate, have struggled to keep up with the volume of taxing
technical testimony.
The plaintiffs' attorneys put on a two-month show that included the
testimony of 46 people and more than 60 hours of videotaped deposition.
Ford's attorneys are planning to put about a dozen more people on the
stand.
Throughout, attorneys and experts have walked the jury step-by-step
through explanations of the inner workings of Ford's ignition systems --
the part of its cars in question. With Ballachey's encouragement, the
jurors have taken copious notes and even asked pointed questions of the
expert witnesses. At one point, when the court was at a loss for an
exhibit number, a juror piped up with the information, which she had
jotted down in her notes.
With much of the prior months' testimony on videotape or requiring the
lights dimmed for presentations, one of the greatest challenges for the
jurors at times appears to be keeping their eyes open. "There were times
the jurors looked like they were about to mutiny if they heard anything
more about copper slugs and soldered joints," Fazio said in an interview
last week.
But the group also has been very demanding, and not only in the
questions they ask. They requested that a few of the Ford cars whose
ignition design is in question be driven to a nearby parking lot so they
can take a look under the hood.
The suit alleges that the cars in which Ford mounted Thick Film
Ignition, or TFI, modules onto the distributors were more likely to
stall. The greater issue, which the jury will have to decide, is whether
Ford withheld information crucial to consumers.
Plaintiffs' attorneys are asking the jury to order Ford to pay $1,000
per class member for statutory damages and $250 per car to move the
ignition modules to a cooler location. That could amount to billions of
dollars.
The case is the first of six identical suits to go to trial. The others
have been filed in Alabama, Illinois, Maryland, Tennessee and
Washington. The suits claim as many as 20 million cars should have been
recalled across the country.
Clarence Ditlow, executive director of the Center for Auto Safety, among
the four dozen expert witnesses included in the plaintiffs' case, is the
only one who was not paid.
For Ford, McCarthy's testimony hits right at the core of the issue:
whether vehicles with distributor-mounted ignition modules are safe and
whether such vehicles have any more incidence of stalling than do those
with modules mounted elsewhere. McCarthy testified that Ford's use of
distributor-mounted ignition modules was consistent with the technology
used throughout the entire industry -- by Ford and other automakers --
during the period in question. He testified that the rate of
distributor-mounted TFI module replacements was no higher in some years
than those of TFIs that had been mounted elsewhere in cars.
Plaintiffs' attorneys objected repeatedly to McCarthy's ability to offer
expert testimony on statistical analysis and electrical engineering.
Despite McCarthy's multiple engineering degrees from the Massachusetts
Institute of Technology and his decades of experience in risk analysis,
plaintiffs' attorneys initially asked for voir dire to establish his
limitations in testifying.
Ford's attorneys had been expected to put additional technical experts
on the stand but recently indicated they intended to scrap the testimony
in the interest of moving their defense along.
"The jury has a daunting task in front of it. Our position has been that
there's really too much here to try in one case," Lough said, noting
that the product safety of more than 300 lines of Ford vehicles
manufactured between 1983 and 1995 have to be assessed.
As for defending themselves against allegations that they hid documents
from the National Highway Traffic Safety Administration when the agency
was conducting its investigations into Ford stalling problems, Lough
noted that the federal agency already ruled in June 1998 that while a
couple of documents should have been turned over, it was not Ford's duty
to provide other documents. NHTSA said it was not going to reopen its
investigations.
Ballachey will ultimately rule on whether Ford concealed critical
information from government agencies, including the Environmental
Protection Agency. (The Recorder 9-21-1999)
NAPATA CORP: Fd Ct Dismisses Securities Suit In Texas
-----------------------------------------------------
Zapata Corporation (NYSE: ZAP) announced that the consolidated
securities action suit brought by certain shareholders against Zapata
and certain of its current and former officers was dismissed by the US
District Court for the Southern District of Texas, Houston Division. The
putative class action suit, which was commenced in October 1998, alleged
securities fraud by the defendants in connection with Zapata's Internet
initiative.
Avram Glazer, president and chief executive officer of Zapata, said, "We
are pleased that the Court agreed with Zapata that the class action suit
was baseless and totally without merit. Zapata is currently considering
the appropriate response to this groundless claim."
NORWEST MORTGAGE: Fax Fee Not A Prepayment Penalty, Minnesota Ct Rules
----------------------------------------------------------------------
Fees that can be incurred at any time and that are unrelated to
the prepayment of a mortgage are not prohibited prepayment charges. The
fact that a cost for a facsimile transmission is imposed at the time a
loan is prepaid does not render the cost a penalty. Colangelo, et al. v.
Norwest Mortgage Inc., No. 96-15128 (Minn. Ct. App. 8/3/99).
Three separate consumers each decided to refinance their mortgages with
Norwest Mortgage Inc. Each mortgagor instructed his refinancer to obtain
a copy of his payoff statement from Norwest. Norwest complied by faxing
copies of the mortgagors' payoff statements to the proper parties;
however, Norwest charged each mortgagor a 10 fax fee, which was listed
in the payoff statement. In each transaction, Norwest did not provide
the satisfaction of the mortgage until after the consumer tendered
payment.
Each consumer filed an action against Norwest claiming that Norwest made
payment of the 10 fax fee a condition of satisfying their mortgage
although the fee was barred by the terms of their loan agreements.
Additionally, they contended that the fax fee was an unauthorized
prepayment penalty.
The cases were consolidated and an amended class action complaint was
filed. The plaintiffs' motion for class certification was stayed pending
a hearing on Norwest's motion for summary judgment.
The trial court granted Norwest's motion for summary judgment. It
concluded that the fax fee was not a prepayment penalty as defined in
the mortgage agreement but rather a charge for a special service
unrelated to satisfaction of the mortgage. The court also found the
satisfaction of the mortgage was not conditioned on the payment of the
fax fee.
The plaintiffs appealed the court's decision to the Minnesota Court of
Appeals. The appellate court compared the plaintiffs' argument with that
raised in Cappellinni v. Mellon Mortgage Co., 991 F. Supp. 31 (D. Mass.
1997).
In Cappellinni, the bank charged mortgagors a 25 fee for duplicate
payoff statements and a 15 fax fee. However, the U.S. District Court for
the District of Massachusetts held that the charges were not prepayment
penalties because they could be incurred in situations unrelated to
prepayment. The court explained that prepayment charges are fees
"peculiarly associated with prepayment alone." Furthermore, the District
Court held the mortgagors could have avoided the controversial fees by
obtaining the payoff statements by mail or prepaying their mortgages
without obtaining a payoff statement.
The Minnesota court found the reasoning in Cappellinni compelling
especially because the language in the mortgage agreements at issue was
identical to that in Cappellinni. Also like Cappellinni, the court held
that borrowers could incur a fax fee when engaged in activity with the
mortgagee that was unrelated to the prepayment of a mortgage. The court
identified another similarity between Cappellinni and the Norwest
mortgagors - the mortgagors could have prepaid their loans without using
a payoff statement or obtained a payoff statement free of charge through
the mail.
In conclusion, the court ruled that because the fax fee was not
contingent on prepayment, the 10 charge was not a prepayment penalty
barred by the plaintiffs' loan agreements.
Next, the plaintiffs contended that the fax fee was not permitted
because the mortgage instruments failed to list the charge as a
serving-related fee. The court, however, interpreted the omission
differently. It held that fees not specifically prohibited by the
mortgage instruments are, by implication, authorized. Therefore, Norwest
was not hindered by the mortgage documents from imposing the fax fee.
The court affirmed the lower court's decision.
Charles H. Johnson and Neal A. Eisenbraun of Charles H. Johnson &
Associates P.C. in New Brighton, Minn.; Hart L. Robinovitch of Zimmerman
Reed PLLP in Minneapolis; and Peter A. Pease of Berman, Devalerio &
Pease LLP in Boston represented the plaintiffs. Alan H. Maclin, Brent R.
Lindahl and Mark G. Schroeder of Briggs & Morgan PA in St. Paul, Minn.,
represented Norwest. (Consumer Financial Services Law Report 8-24-1999)
PAYDAY LENDERS: Americash Sued In Chicago For Issuing A.G. Letters
------------------------------------------------------------------
The Chicago law firm of Edelman, Combs & Latturner has filed a class
action lawsuit alleging that a 365% "payday loan" firm, Americash Loans
LLC, violated the Fair Debt Collection Practices Act by sending Illinois
consumers a letter bearing the emblem of the Attorney General of
Illinois and listing the criminal and civil penalties for issuing bad
checks. The lawsuit was filed in federal district court in Chicago,
Coleman v. Americash Loans LLC.
"Payday loans" are short term, very high interest rate loans.
Americash's loans are typically two weeks in duration and carry annual
percentage rates of over 365%. Americash routinely obtains a post-dated
check. The loans are typically "rolled over" on multiple occasions.
"Payday loans" are generally made to consumers facing financial
emergencies. Once a consumer obtains a "payday loan," he or she will
often be unable to pay it off except from the proceeds of additional
"payday loans." Often, the "payday loans" force the borrowers into
unnecessary bankruptcies.
Daniel A. Edelman stated that, "The only reason payday lenders obtain
postdated checks is to threaten use of the bad check statutes for
failure to repay a loan. Threatening criminal prosecution for failure to
repay a 365% loan is outrageous. The threats are generally not intended
to be carried out. In Illinois, the bad check statute does not even
apply to a postdated check which the lender obviously knows is worthless
when issued." Contact Daniel A. Edelman of Edelman, Combs & Latturner,
312-739-4200, or fax, 312-419-0379
PUBLISHERS CLEARING: Fl. A.G. Will Sue; Sweepstakes Witnesses Stack Up
----------------------------------------------------------------------
George Chalhub still gets emotional when he remembers how he tried to
convince his 92-year-old father that buying magazine subscriptions and
junk gifts would not improve his chances to win Publishers Clearing
House sweepstakes. "He would tell me, 'I'm doing it for you and the
family and the grandchildren,'" the younger Chalhub said.
Still holding the bitter memory, and stung by the $ 5,000 his father
lost, Chalhub said on Tuesday that he was willing to be a witness in the
state attorney general's case against the sweepstakes company.
The Florida Attorney General's Office will file suit this week, Deputy
Assistant Attorney General Les Garringer confirmed on Tuesday. Garringer
said the 37-page Florida lawsuit against Publishers Clearing House
charges deceptive and unfair trade practices over a period of years,
unlawful game promotions, violation of Florida's free gift law, and
violation of an agreement signed by the company and several states in
settlement of complaints made in 1994. The suit, to be filed in Pinellas
County, was planned for a filing on September 22, but could be delayed
because of Tropical Storm Harvey, Garringer said. Garringer said the
deception affected millions of seniors in the state.
Chalhub said he tried to persuade his father not to keep buying
magazines and junk gifts "that weren't worth a nickel," but had little
success. "Sometimes you can't do much with old-timers," he said. "I
finally told him 'no more' checks for the orders and he said, 'Now I
surely won't win anything,'" Chalhub said. "I told him he wasn't going
to win anything anyway."
The attorney general's lawsuit does not ask for a specific amount of
damages, but Garringer noted that according to the statutes, Publishers
Clearing House could be fined as much as $ 10,000 per violation, with
civil penalties of up to $ 15,000 per violation. He said his office
interprets each mailing sent out as a violation and each senior citizen
affected as being entitled to penalties. "If we were to get everything
we were able to seek under the law, including attorneys' fees and
penalties, there wouldn't be a calculator in our office with enough
zeros to figure it out," he said.
Publishers Clearing House could not be reached for comment on Tuesday,
but previously a spokesman said the company was disappointed that talks
with Florida's attorney general had not been successful in avoiding
litigation.
The suit charges that Publishers Clearing House sent out 400 million
mailings nationwide in 1999, or 143 mailings each year for every person
on its mailing list, or roughly three a week, Garringer said.
State Attorney General Bob Butterworth has previously urged Florida
consumers who may be included in a national class action suit filed in
1998 in Illinois to opt out of that case and wait for his suit because
the proposed $ 10 million settlement reached in the other case is too
small for the class.
About 42 million notices were sent out to potential class members in the
earlier class action suit, but attorneys for that case disputed
Butterworth's criticism of their proposed settlement, saying nowhere
near that many are expected to file claims.
Helen Sherman, of Davie, is one former customer who is anxious to have
her day in court against the sweepstakes company, which she said led her
to believe she was a winner for years. She will say only that she is
"past 70," but admits she spent about $ 1,000 a year for six years
trying to cash in on big winnings. "I kept getting letters from their
spokesman saying 'Put in another order so I can bring it to you when I
bring you your winnings,'" she said on Tuesday. At one point, she was
sure she was a guaranteed winner of $ 31 million; another time she
contacted the bank about when her $ 7 million in tax-free winnings would
arrive. "I bought mostly junk instead of magazine subscriptions," she
said. "One time I spent $ 75 on it." Sherman said all she ever won was $
1. She said she, too, is anxious to testify in Butterworth's suit. "I
once wrote the people at Publishers Clearing House and asked them 'Do
you sleep well at night?'" she said.
Steven A. Katz, lead attorney for the national class action suit, filed
by a Belleville, Ill., law firm, thinks that Florida residents are
making a "huge mistake" if they opt out. He sent a letter to Butterworth
calling his opt-out campaign "a disservice" to his constituency and
claiming the attorney general "misconstrued" the proposed settlement. So
far, although data are not available, he said there has been no "en
masse opt outs" since Butterworth and several other state attorneys
general called for their citizens to quit the class.
Florida consumers don't need to do anything to be included in the
attorney general's lawsuit, but can get more information by calling the
Attorney General's Office at 954-712-6400. Those who want to opt out of
the national suit need to contact Class Counsel, P.O. Box 4310, Fairview
Heights, Ill. 62208. Those who want to remain in that suit and share in
the settlement need to file a claim at this time and can get information
by calling 800-521-4724.
Anyone who received a notice about the national class action suit is
part of it, unless they opt out, but they must file claims to collect.
Those who may have moved and not gotten the notice, which includes a
control number that is required for filing a claim, can get more
information by calling the 800 number.
Florida and three other states have already won a $ 4 million settlement
against another sweepstakes company, American Family Publishers, which
was filed in 1998. (Sun-Sentinel (Fort Lauderdale, FL) 9-22-1999)
PUBLISHERS CLEARING: AGs Will Sue - Settlement As Deceptive As Mailings
-----------------------------------------------------------------------
A $ 10 million class action settlement with Publishers Clearing House is
as deceptive for consumers as the company's million-dollar sweepstakes
pitch, according to state attorneys general who also are suing the
company.
"This settlement is as much of a sham as the sweepstakes mailings," says
Connecticut Attorney General Richard Blumenthal. "This proposed
settlement is a mere drop in the bucket of the tens of millions of
dollars consumers have spent in response to Publishers Clearing House's
promotions. We're going to formally object to the settlement and to the
mailing soliciting members to this agreement."
The attorneys general of Wisconsin and Washington, who also have suits
pending against Publishers Clearing House, joined Mr. Blumenthal in his
criticism of the settlement. They, along with Indiana, a fourth state to
sue, claim that the mail-order giant intentionally deceives consumers in
its direct mail sweepstakes when offering merchandise and magazine
subscriptions.
On Aug. 26, two months after consolidating 10 name plaintiffs, U.S.
District Judge G. Patrick Murphy, of East St. Louis, Ill., gave his
initial acceptance of a settlement in the class action. Vollmer v.
Publishers Clearing House L.P., No. 99-434-GPM.
That same day, Publishers Clearing House sent a mailing to 48 million
customers saying that it agreed to reimburse anyone who bought
merchandise or magazine subscriptions in the belief that the purchases
would increase their chances of winning jackpots.
The Vollmer plaintiffs and the four state AGs allege that Publishers
Clearing House, of Port Washington, N.Y., mailed letters so deceptive
that some consumers believed they were on the verge of winning
phenomenal amounts of cash. Actually, the letters -- which sometimes
looked like official government documents and sometimes flatly stated,
"You have won $ 1,000,000" -- were but artfully worded solicitations to
buy products, according to the plaintiffs in all the suits.
The class includes anyone who purchased subscriptions or merchandise
from Publishers Clearing House from 1992 to 1999. About $ 1 billion in
merchandise was purchased during that period, according to the attorneys
general.
One Billion A Year
Sweepstakes companies, of which Publishers Clearing House is the
largest, mail more than 1 billion sales solicitations a year, according
to reports from recent hearings by the U.S. Senate Permanent
Subcommittee on Investigations. On Aug. 2, the Senate passed the
Deceptive Mailings Elimination Act. The House has yet to consider the
legislation. It would require prominent messages giving the odds of
winning and saying that no purchase is necessary, among other things.
The millions of affected individuals must file a claim or officially opt
out of the settlement before Oct. 18. Otherwise, they will not be able
to sue in the future. A final fairness hearing is scheduled for Dec. 20.
The settlement sets aside $ 10 million to pay attorney fees and
administrative costs and to pay anyone who files a claim. Therein lies
the rub, says Wisconsin AG James E. Doyle.
Under the terms of the settlement, Publishers Clearing House was
authorized to spend up to $ 1.5 million to solicit claims via the mass
mailing. Another $ 1.5 million could be set aside for administrative
costs. Class attorneys likely will receive about $ 3 million in fees,
thereby leaving as little as $ 4 million for plaintiffs, Mr. Doyle and
his fellow AGs say. "The only sure winners in this class action
settlement are the private attorneys and Publishers Clearing House," Mr.
Doyle insists. Wisconsin alone seeks more in restitution and punitive
damages than the Vollmer settlement affords. Trial is scheduled for
November 2000.
In January, Wisconsin became the first state to sue Publishers Clearing
House for deceptive advertising. During discovery, prosecutors learned
that Robert H. Treller, whose supposed signature as a company official
appeared on letters to customers, does not exist. The Treller letters
used personal tidbits about consumers, such as comments about the
recipient's wife and grandchildren, as a ploy to create a bond with the
consumer and thereby get them to buy more merchandise and subscriptions,
according to the Wisconsin attorney general.
Lead class counsel Steven A. Katz, of the Belleville, Ill., office of
East St. Louis' Carr, Korein, Tillery, Kunin, Montroy, Cates & Glass,
says the AGs' criticism is unwarranted. Although the settlement is set
at $ 10 million, Mr. Katz says the actual value could be as much as $ 25
million, depending on how many people file claims and how much Judge
Murphy sets aside for attorney fees and administrative costs.
Mr. Katz says that even at the $ 10 million level, more than $ 5.5
million will be available for refunds. The settlement covers only
reparations for actual expenses for buying merchandise or magazine
subscriptions, which are not more than $ 20 or $ 30 each. Subjective
damages, such as for mental anguish or punitive fines, are not covered.
Company Admits No Wrongdoing
Despite the settlement, Publishers Clearing House does not admit to any
wrongdoing. The company says, in fact, that the vast majority of
customers understand that no purchase is necessary.
Publishers Clearing House General Counsel William Low says, "We
routinely receive two, three, even four times as many entries without
orders as with. In fact, 23 out of 30 winners of $ 1 million or more did
not buy anything on their winning entries."
The company's director of consumer affairs, Christopher L. Irving, says
that for those confused by the mailings, Publishers Clearing House has
instituted a screening program to identify high activity customers to
assess their understanding of the terms of participation.
In the nearly two years since the program was implemented, according to
company press releases, the firm has sent 125,000 letters reminding
active customers that no purchase is necessary and has removed more than
6,000 names from active mailing lists.
"Frankly, we were surprised to learn of the criticism" by the attorneys
general, Mr. Irving says. "This settlement is comprehensive in nature
and was preliminarily approved by a federal district judge."
Although individuals can forfeit their right of recovery by not
officially opting out of the Vollmer settlement, the state suits are not
affected.
"Private parties have no authority over an enforcement action brought by
a state," explains Mr. Blumenthal. "We have a duty to protect our
citizens from these modern day snake-oil salesmen."
He says Connecticut will file a formal objection to the settlement in
federal court in East St. Louis by Sept. 10.
Wisconsin and Washington officials say their states are considering
similar objections.
RANDALLS FOOD: Sued Over Acquired Cullum's Terminated Mgt Security Plan
-----------------------------------------------------------------------
Following the Company's acquisition of Cullum Companies, Inc. in August
1992, Randalls Food Markets Inc. terminated the Cullum's Management
Security Plan for Cullum Companies, Inc. ("the MSP"). In respect of such
termination, the Company paid MSP participants the greater of (i) the
amount of such participant's deferral or (ii) the net present value of
the participant's accrued benefit, based upon the participant's current
salary, age and years of service. Thirty-five of the former MSP
participants have instituted a claim against the Company on behalf of
all persons who were participants in the MSP on its date of termination
(which is alleged by plaintiffs to be approximately 250 persons).
On June 16, 1998, the Court certified the case as a class action for the
limited issue of determining if the MSP was an exempt "top hat plan" (a
plan which is unfunded and maintained by an employer primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees). The Court defined the class
as all persons who, on the date of the termination of the MSP, were
participants in the MSP and were employed by Randall's Food Markets,
Inc. The trial of the limited class action issue was conducted before
the Court, sitting without a jury, on October 26, 1998. On February 18,
1999, the Court ruled on the limited class action issue finding that the
MSP was not an exempt top hat plan.
On April 8, 1999, the plaintiffs filed a new Motion for Class
Certification, seeking class action treatment on all remaining issues.
In addition, the plaintiffs have provided to the Company schedules
indicating that they may claim damages on behalf of the class ranging
from $65.1 million to $67.7 million, prejudgement interest ranging from
$28.1 million to $29.3 million and attorneys' fees. In addition, they
have calculated that if their damages in these amounts had been invested
to earn a rate of return achieved by the Standards & Poors 500 Index
since December 31, 1992, they would be entitled to an additional amount
of approximately $100 million. On July 13, 1999, the Court announced its
decision to certify the same class for the purpose of trying all
remaining issues in the case, principally damages. The Court ordered
that no class member would be permitted to opt out and directed
plaintiffs' counsel to mail written notice of the pendency of the case
to all class members within 30 days. On July 14, 1999, the Court issued
a scheduling order setting the case for trial on November 22, 1999.
Based upon current facts, the Company is unable to estimate any
meaningful range of possible loss that could result from an unfavorable
outcome of the MSP litigation. It is possible that the Company's results
of operations or cash flows in a particular quarterly or annual period
or its financial position could be materially affected by an ultimate
unfavorable outcome of the MSP litigation.
REMEC INC: Decries Merit Of Securities Suit Filed By Milberg In CA
------------------------------------------------------------------
On April 19, 1999, a class action lawsuit was filed against REMEC,
certain of its officers and directors and the investment bankers who
served as co-lead underwriters in REMEC's February 1998 public offering.
The lawsuit was filed by the law firm Milberg Weiss Bershad Hynes and
Lerach and two of its co-counsel in the United States District Court for
the Southern District of California as counsel for Charles Vezzetti and
all others similarly situated. The lawsuit alleges violations of the
Securities Exchange Act of 1934 by REMEC and the other defendants
between December 1, 1997 and June 12, 1998. The complaints in the
lawsuit do not specify an amount of claimed damages. REMEC believes that
the lawsuit is without merit and intends to defend against it
vigorously. In addition, REMEC believes the ultimate resolution will not
have a material adverse effect on REMEC's financial condition, results
of operations or liquidity. However, there can be no assurance that an
adverse result would not have a material adverse effect on REMEC.
RENT-A-CENTER: Hit With Suit In LA Over OT Pay For Managers In Name
-------------------------------------------------------------------
Rent-A-Center, Inc., a Texas-based national rent-to-own retail chain,
has been hit with another class action lawsuit.
At the end of 1998, it settled three consumer class actions in New
Jersey for a total of $ 60 million.
A race discrimination case, filed as a class action, is also currently
pending against Rent-A-Center in federal court in Missouri. The new
Complaint, filed in Superior Court in Los Angeles, alleges that
Rent-A-Center has violated California state labor law by failing to pay
required overtime wages to an estimated 200 or more current and former
employees in 119 stores throughout California. Rent-A-Center is the
largest operator in the U.S. rent-to-own industry with over 2,000 stores
nationwide.
In 1998, Rent-A-Center reported total revenue of $ 809.7 million and
operating profit of $ 90.8 million. The three named plaintiffs worked as
Assistant Managers or In/Out Managers at Rent-A-Center stores in Los
Angeles and San Diego counties. According to plaintiffs, Assistant
Managers and In/Out Managers throughout California typically worked 50
to 70 hours per week but received no overtime pay. The majority of their
duties included routine tasks such as sales, delivering or picking up
rented goods to/from customers, cleaning the office and bathroom, and
taking payments at the cash register. They did not hire, fire or
discipline other employees. Just giving these workers the title of
manager, does not make them exempt from the overtime laws. They clearly
fall outside the legal definition of exempt executive employees and
should be compensated for their overtime work, said Laura L. Ho,
plaintiffs' attorney with Saperstein, Goldstein, Demchak & Baller in
Oakland, Calif.
The plaintiffs will ask the court to certify a class of all current and
former Assistant Managers, In/Out Managers, and other equivalent
positions in California. Rent-A-Center employees from outside of
California currently are not part of the lawsuit. The Complaint does not
state a specific dollar value for the class claims. Plaintiffs also seek
an injunction to compel Rent-A-Center to start paying overtime
compensation.
Persons who have information about Rent-A-Center's failure to pay
overtime compensation to its employees, can call the attorneys'
toll-free number, 1-800-989-0058. Contact Saperstein, Goldstein, Demchak
and Baller Leni Doyle, 510-763-9800
TOBACCO LITIGATION: Cable News Network Coverage On Federal Mega Suit
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Broadcast September 22, 1999 on Cable News Network
LOU WATERS, CNN ANCHOR: The latest mega-lawsuit against big tobacco
comes from the same folks who require warning labels on cigarettes. For
that reason, the tobacco industry is calling the federal government's
multi-billion-dollar action "hypocritical," but the Clinton
administration says taxpayers should not suffer just because smoking is
dangerous.
(BEGIN VIDEO CLIP, JANUARY 19, 1999)
WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: Taxpayers shouldn't
pay for the cost of lung cancer, emphysema and other smoking-related
illnesses; the tobacco companies should. So tonight I announce that the
Justice Department is preparing a litigation plan to take the tobacco
companies to court and, with the funds we recover, to strengthen
medicare.
(END VIDEO CLIP)
WATERS (voice-over): It appears the Clinton administration is making
good on its promise.
JANET RENO, ATTORNEY GENERAL: Today we filed a lawsuit that seeks to
recover from the tobacco companies the billions of dollars that American
taxpayers spend each year on smoke-related illnesses.
WATERS: The lawsuit charges smoking-related diseases cost American
taxpayers some 25 billion dollars a year, costs stemming from medical
claims filed by federal workers and from Medicare payments.
The government hopes the suit will allow it to get some of that money
back. Tobacco companies say they'd rather fight than settle. An R.J.
Reynolds executive says the government does not have a valid case and
that, to quote him, "we are going to vigorously defend this lawsuit. We
are not going to settle."
The suit comes after tobacco companies did agree last November to pay 46
states more than 200 billion dollars. And, after a Florida jury found,
in a class-action suit, that tobacco companies produced a defective
product that caused a variety of illnesses from heart disease to
cancers. That case, which could also cost tobacco companies billions, is
under appeal. Analysts say the federal lawsuit could prove an uphill
battle for tobacco companies, pitting its massive legal might and deep
pockets against an opponent with equal, if not greater, might and
resources.
(END VIDEOTAPE)
WATERS: The lawsuit follows a five-year criminal investigation, now
abandoned, into whether tobacco industry executives lied to Congress
about the addictive nature of nicotine.
JANET RENO, ATTORNEY GENERAL: The consequences have been staggering.
Each year, 400,000 Americans die from smoking cigarettes. And as a
result, each year the federal government alone spends more than $20
billion in taxpayer money just to treat diseases caused by cigarettes.
Last December, after an extensive review by Justice Department lawyers,
I concluded there was a sufficient basis to prepare a litigation plan
against the major tobacco companies. And for the last months, lawyers on
the Justice Department's tobacco litigation team have worked to develop
the facts and the law to make a final decision on whether to proceed.
Today, we are moving forward.
(END VIDEO CLIP)
VAN SUSTEREN: Roger, this is the third assault on the tobacco
industry. We've had all the state attorney generals go after the tobacco
industry, we've had the people. And as an aside -- and what I always
mention to the viewers -- my husband's been one of the lawyers
representing a class-action against the tobacco industry.
Today, now the federal government goes after the tobacco industry. What
does this mean?
COSSACK: Well, two things I think of right off the top: One, what
took them so long, because, as you point out, the states have been doing
it and class-actions have been doing it, and the federal government
should have learned that the states have been successful in getting the
tobacco companies to settle.
And second of all was we talked about -- they came in -- they're going
to, apparently, sue under what's called RICO, which means if they do
collect, they'll get -- they're eligible, at least, to collect triple
damages, which is three times the amount that the jury says that they're
entitled to.
VAN SUSTEREN: Steve, Roger says RICO. What does RICO mean -- a civil
RICO?
STEVE BERK, FORMER FEDERAL PROSECUTOR: Well, RICO stands for a
racketeering case, and the RICO statute, basically, came out of
Congress' efforts to go after organized crime, to go after mobsters. And
what it's been used for more recently is in civil cases against
corporations and entities that you wouldn't think of as mobsters or
organized crime.
And what they'll need to show in a RICO case is some fraud or some --
what they call predicate acts, and it's a very heavy, heavy hammer that
the federal government will use in this case if they do use the RICO
statute.
VAN SUSTEREN: And, of course, the case has just begun. Tobacco
industry will have a chance to answer and to fight the allegations and
the complaint. But let's shift our attention to Colorado, to the
JonBenet Ramsey case.
UNISYS CORP: Union May Be Liable In NY Suit Over Employer's Age Bias
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A labor union is facing an age discrimination class action by some of
its own members over a 1993 round of layoffs at the headquarters of
Unisys Corp. In a case of first impression in the U.S. Court of Appeals
for the 2d Circuit, U.S. District Judge Arthur D. Spatt, of New York's
Eastern District, said that a labor union may be responsible for age
bias when the employer carries out a discriminatory policy included in a
negotiated contract. Rodolico v. Unisys Corp., CV 95-3653. (The National
Law Journal 9-13-1999)
*********
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