Friday, October 25, 2002, Vol. 4, No. 212
BEAR STEARNS: NY Court Allows Securities Lawsuit To Proceed To Trial
CANADA: Residents To Sue Ottawa Govt Over Skyrocketing Water Bills
CITIGROUP INC.: CEO Weill Agrees To Meet With Attorney General Spitzer
COMPUTER ASSOCIATES: NY Court Grants Certification To Securities Suit
COMPUTER ASSOCIATES: NY Court Consolidates Several Securities Suits
FLORIDA: Berkeley Landlord Faces Suit For Operating Sex Slavery Scheme
FORD MOTOR: Crown Victoria Police Car Suit Ordered Centralized in Ohio
GREAT ATLANTIC: NJ Court Orders Consolidated Securities Fraud Lawsuits
GREAT ATLANTIC: Parties in Derivative Suit Ask For Stay of Proceedings
HAWAII: Judge Asks Child Support Agency To Account For Un-cashed Checks
IDAHO: NIFA Asks For Dismissal From Lawsuit V. Field Burning Practices
METRIS COMPANIES: Settling Suit Over Credit Card Fees For $5.6 Million
PREPAID LEGAL: Plaintiffs Seek Voluntary Dismissal of Derivative Suit
PREPAID LEGAL: Certification For Employees Suit Set March 2003 in OK
PREPAID LEGAL: Asks OK Court To Dismiss Lawsuit Over Marketing Plan
PSYCHIC HOTLINES: Two Companies Settle Deceptive Trade Claims For $1.9M
PURDUE PHARMA: Court Refuses To Grant Certification To Oxycontin Suit
SILICON LABORATORIES: Officers Dismissed From Securities Suit in NY
SUPERVALU INC.: MN Court Consolidates Lawsuit For Securities Violations
SWIFT TRANSPORTATION: AZ Court Rejects Dismissal of OOIDA Fraud Lawsuit
ASBESTOS ALERT: ABB US Unit's Asbestos Claims May Exceed Total Assets
ASBESTOS ALERT: Gencor Suit Pegs Asbestos Liabilities at $144 Million
ASBESTOS ALERT: Georgia-Pacific Reveals Increasing Asbestos Claims
ASBESTOS ALERT: Nebraska Group Seeks Change in Law For Asbestos Claims
ASBESTOS ALERT: Weyerhaeuser Co. Faces 2,416 Asbestos Related Claims
3M CORPORATION: Will Receive $223 Million More from Asbestos Insurance
ALBANY INTERNATIONAL: Faces Over Nine Thousand Asbestos Related Claims
CENTERPOINT ENERGY: Workers on TX Gulf Coast File Asbestos Lawsuits
FORD MOTOR: Says Mechanics' Asbestos Lawsuit A Sign Of The Times
MILLENIUM CHEMICALS: Firm, Subsidiaries Face Asbestos Related Lawsuits
REINHOLD INDUSTRIES: Sets Up Trust To Administer Asbestos Liabilities
ST. PAUL: Maintains $740 Million in Reserves For Asbestos Litigation
UNITED STATES: Mounting Vigorous Opposition to 18T Asbestos Claimants
AES CORPORATION: Milberg Weiss Commences Securities Suit in E.D. VA
ATLAS AIR: Cauley Geller Commences Securities Fraud Suit in S.D. NY
ATLAS AIR: Milberg Weiss Commences Securities Fraud Suit in S.D. NY
ATLAS AIR: Schiffrin & Barroway Lodges Securities Fraud Suit in S.D. NY
COMERICA INC.: Milberg Weiss Lodges Securities Fraud Suit in E.D. MI
CONSECO INC.: Bernstein Liebhard Commences Securities Suit in S.D. IN
FIRST HORIZON: Mark McNair Commences Securities Fraud Suit in S.D. NY
GOLDMAN SACHS: Schiffrin & Barroway Commences Securities Suit in NY
LIBERATE TECHNOLOGIES: Wechsler Harwood Commences Securities Suit in CA
SALOMON SMITH: Schiffrin & Barroway Commences Securities Suit in NY
ST. PAUL: Glancy & Binkow Commences Securities Fraud Suit in Minnesota
TXU CORPORATION: Wechsler Harwood Commences Securities Suit in N.D. TX
A New York federal court rejected Bear Stearns & Co.'s motions for
summary judgment in a securities class action, alleging the Company
violated securities laws when it cleared trades for David Blech, a
stock trader and financier, who allegedly manipulated biotechnology
shares, law.com reports.
United States District Court for the Southern District of New York
Judge Robert W. Sweet ruled that the suit must go to trial, and that a
jury should decide whether the Company and a second firm, Baird Patrick
& Co., should be found liable for securities violations.
Investors commenced a $77 million class action, after they invested
their money with Mr. Blech. Five years after civil actions were filed
in the case, Mr. Blech pleaded guilty to fraud charges in 1999,
admitting to cheating investors through a series of manipulations that
included "parking" shares in accounts and trading between accounts to
help support the price of shares that were not being traded in the open
market, law.com states.
The suits additionally allege that the Company knew that Mr. Blech was
involved in these activities, but continued to push him to make the
trades to meet a series of margin calls with the brokerage house.
The judge, however, ruled that there were genuine issues of material
fact as to whether Bear Stearns actually participated in the fraud
conducted by Mr. Blech beginning in 1993, or whether the brokerage
house merely processed trades. Judge Sweet said the U.S. Supreme Court
has held that "secondary actors cannot be held liable for aiding and
abetting a securities fraud under Section 10(b)" of the 1934 Securities
Act."
However, the Supreme Court, he said, has also made it clear that such
"secondary actors" are not always immune from liability. If it can be
proven that Bear Stearns employed a manipulative device, he said, the
company could be found to have crossed the line from aiding and
abetting to "primary liability."
A Vankleek Hill citizens group is considering the launch of a legal
action against the Ottawa government over skyrocketing Hydro bills, the
Ottawa Sun News reports. Vankleek Hill resident Lyndon Pinkham has
already approached their local MPP to broach the idea of launching a
Jean-Marc Lalonde, Liberal MPP for Glengarry-Prescott-Russell,
supported the move and has even agreed to pay the group's legal bills.
"I'm ready to spend thousands of dollars to support them," he told the
Ottawa Sun News.
Mr. Lalonde said his office receives up to eight calls a day from
constituents upset over skyrocketing hydro bills. "All winter long,
we'll have young, poor families and seniors that will not be able to
keep their electricity connected," he said.
Mr. Pinkham was reluctant to discuss the group's plans. "We're in such
an early stage that I really don't want to comment at this time," he
told the Sun News. "I don't know enough about it and there's so many
questions that need to be answered . We're really at the point where
were saying 'what if.' We're saying 'can we do this. Is it legal to do
this?"
Before turning to judicial avenues, Mr. Lalonde will first apply
political pressure. He has already solicited more than 1,000 signatures
on a petition he'll present at Queen's Park.
New York Attorney General Eliot Spitzer will meet with Citigroup,
Inc.'s chief executive Sanford I. Weill to question him about the
Company's research practices, and its relationship with Salomon Smith
Barney, the Associated Press reports.
According to the Wall Street Journal, it's unclear what new information
investigators have found, except that it falls under Mr. Weill's
actions regarding Salomon Smith Barney's rating of AT&T Corp., where he
is a board member. Earlier this month, Mr. Weill announced his
resignation from AT&T's board and said he won't stand for re-election
next year to the board of United Technologies Corp. Salomon is
Citigroup's brokerage unit.
The Wall Street Journal further stated that Mr. Spitzer's office has
told Citigroup attorneys that the company's interests may have diverged
from those of Mr. Weill. The move signals that Mr. Spitzer's office
could be considering legal action against Mr. Weill personally, besides
Citigroup, the newspaper's sources said.
"Sandy Weill has offered to meet with our office and we've accepted his
offer of cooperation," Spitzer spokeswoman Juanita Scarlett told AP.
She said Weill isn't a target of the investigation and no meeting has
been scheduled.
Ms. Scarlett wouldn't discuss any new information developed in the
investigation. "We'll go where the evidence leads us," she said.
In a statement issued Wednesday, Mr. Weill said that he never told any
analysts what they should write. "My conduct has been entirely
appropriate and proper," he said. Weill recently hired two lawyers to
represent him from the firm Wachtell, Lipton, Rosen & Katz. The
lawyers, Lawrence B. Pedowitz and John F. Savarese, are both former
assistant US attorneys.
"The notion that there could be any charge against Sandy Weill is
inconceivable," Wachtell's founding partner and longtime Weill adviser
Marty Lipton said in the same statement. "There is no divergence
between the interests of Sandy and Citigroup."
Mr. Weill also has offered to talk to federal prosecutors in Manhattan
and the Securities and Exchange Commission, which also are pursuing
investigations into Salomon's activities, a person familiar with the
matter told the Wall Street Journal.
Spitzer's office is investigating what role Weill had in Salomon's AT&T
rating, including an upgrade made by telecom analyst Jack Grubman right
before the telephone giant was planning a massive stock sale to finance
its wireless unit, according to the AP report. AT&T chief executive C.
Michael Armstrong is a longtime Citigroup board member.
The United States District Court for the Eastern District of New York
certified as a class action the consolidated securities suit pending
against Computer Associates, Inc. and:
(1) Charles B. Wang,
(2) Sanjay Kumar and
(3) Russell M. Artzt
The suit alleges that a class consisting of all persons who purchased
the Company's common stock during the period January 20, 1998 until
July 22, 1998 were harmed by misleading statements, misrepresentations
and omissions regarding the Company's future financial performance.
These cases, which seek monetary damages in an unspecified amount, were
later consolidated into a single action.
The Company intends to vigorously oppose this suit, but cannot give any
assurance that they will prevail in the litigation.
consolidated several securities class action pending against the
Company and:
(2) Sanjay Kumar,
(3) Ira H. Zar and
The lawsuits were initially commenced in February and March 2002,
alleging that the Company made misleading statements of material fact
or omitted to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading in connection with the Company's financial
performance. Each of the named individual plaintiffs in the 2002
lawsuits seeks to represent a class consisting of purchasers of the
Company's common stock and call options and sellers of put options for
the period May 28, 1999 through February 25, 2002.
The cases have been consolidated but class action status has not yet
been certified. Although the ultimate outcome and liability, if any,
cannot be determined, the Company believes that the facts do not
support the claims in these lawsuits and that the Company and its
officers and directors have meritorious defenses. In the opinion of
management, resolution of these lawsuits is not expected to have a
material adverse effect on the financial position of the Company.
Additionally, several shareholder derivative suits are pending against
the Company's current directors in Delaware Chancery Court. The suits
similarly allege breach of fiduciary duties resulting in damages to the
Company of an unspecified amount. This derivative suit is based on
essentially the same allegations as those contained in the February and
March 2002 stockholder lawsuits.
Additionally, in June 2002, a derivative suit against the current
directors of the Company, certain former directors and officers of the
Company, Ernst & Young LLP and KPMG LLP was filed in New York State
Supreme Court, Suffolk County. This derivative suit also is based on
essentially the same underlying allegations as those contained in the
February and March 2002 stockholder lawsuits, and in addition alleges
that the management director and officer defendants sold common stock
of the Company from June 1999 through February 2002 while in possession
of material non-public information concerning the Company.
This suit alleges breach of fiduciary duties, waste and
misappropriation of corporate assets, and damages to the Company in an
unspecified amount, and in addition seeks the imposition of a
constructive trust upon the profits allegedly realized from the sale of
common stock of the Company.
Wealthy Berkeley landlord Lakireddy Bali Reddy faces a US$100 million
class action filed in Superior Court in Alameda County by nine young
Indian woman, alleging that Mr. Reddy and his two sons illegally
brought them here to work as sex and labor slaves, BayArea.com reports.
The Reddy family allegedly instituted a wide immigration fraud scheme
that brought young girls from India to work in slave-like conditions
for over ten years. The Reddy case was uncovered late in 1999 when a
young Indian woman died of carbon monoxide poisoning in an apartment
owned by Reddy. The woman's parents, Lakshmi and Jarmani Prattipati,
are plaintiffs in the lawsuit.
Mr. Reddy is already serving eight years in federal prison for
instituting the scheme, while his son Vijay Lakireddy is also awaiting
sentencing on immigration fraud. Another son, Prasad Lakireddy, is due
to go on to trial this January on charges from the said scheme. The
suit also names Reddy's brothers, Jayaprakash Reddy Lakireddy and
Venkateswara Reddy Lakireddy, and various family-owned businesses,
including Pasand, a restaurant in Berkeley and Santa Clara.
The women were also allegedly forced to have sex with Mr. Reddy and his
sons. Last year, Mr. Reddy paid $2 million to four victims, after
pleading guilty to two counts of transporting minors for illegal sex,
BayArea.com reports.
Lawyers and advocates for the women hope that by targeting Mr. Reddy's
wealth, they can identify more victims and force the family to reveal
the full scope of the scheme. The Reddy family is worth an estimated
$70 million, based on real estate holdings in the Bay Area and India,
Michael Rubin, lawyer for the women told BayArea.com. By going after
the financial resources of the family, he and advocates hope to
undermine and "penetrate the heart of the trafficking conspiracy."
"Our suit aims to dismantle the sex traffickers' criminal empire in the
Bay Area and India," Mr. Rubin continued. "We want to send a message
to traffickers everywhere that we have the legal weapons to destroy
their networks and distribute their assets to the victims of their
crimes."
Michael Bolechowski, an Emeryville lawyer representing the Reddy
family, told BayArea.com he has not read the suit. "There's no denying
the seriousness of these charges and the sadness they have brought to
the entire Reddy family," Mr. Bolechowski said.
The Federal Panel on Multi-District Litigation (MDL) has ordered that
all class actions involving Ford Crown Victoria police cruisers be
centralized in the United States District Court in Cleveland, Ohio,
before Federal Judge Donald C. Nugent. The order was just hours before
the latest fiery crash involving the CVPIs occurred in Dallas, killing
an off-duty city police officer.
"The effect of this announcement will be to allow all of the class
action cases involving Ford Crown Victoria police cruisers to begin to
move forward," David Perry, of the Corpus Christi law firm of Perry &
Haas, LLP, who represents many surviving victims and families of
deceased victims of the crashes, said in a statement. "The pre-dawn
tragedy that occurred this morning in Dallas emphasizes the urgency of
the need for Ford to take action to repair the nearly 400,000 CVPIs
that are in use by law enforcement entities nationwide."
Prior to the federal MDL order, all class actions filed nationally
involving Crown Victoria Police Interceptor (CVPI) crashes had been
removed to federal court and placed on hold, pending the Company's
request to centralize the cases under the federal multidistrict
litigation rules.
On Tuesday, an off-duty Dallas police officer was killed when an SUV
slammed into the rear of his squad car while the officer was helping
with lane closures on the northbound Central Expressway. Both vehicles
exploded on impact, and the Dallas police officer died at the scene.
The officer's CVPI vehicle involved reportedly had the Technical
Service Bulletin (TSB) repairs recently recommended by Ford. "I am
saddened but not surprised to hear that this disaster occurred in spite
of the TSB fixes by Ford. It is sad that more than three years after
this problem was brought to Ford's attention we are still having this
kind of tragedy," Mr. Perry said.
The Dallas officer's death brings to at least thirteen the number of
police officers who have died, and nine injured seriously, in fuel-fed
fires involving Ford Crown Victoria Police Interceptors (CVPI) since
At issue is the car's fuel tank, which is located behind the rear axle
and within the vehicle's designated "crush zone." High speed rear-end
crashes push the fuel tank against portions of the rear axle or
suspension system with enough force to rupture the tank, spill fuel and
ignite the vehicle.
On September 4, several victims and survivors of police officers who
have been killed in the catastrophic collisions joined together in a
Washington, DC news conference to implore Ford Motor Company to repair
the vehicles at no cost to their owners.
Among those speaking at the event was Ann Marie Nielsen, widow of
Chandler, Arizona, Police Officer Robert Nielsen, who burned to death
June 12 when his CVPI burst into flames following a rear-end collision.
"I implore Ford to act, and act now, before another officer is killed,"
Mrs. Nielsen said at the time.
"Despite Mrs. Nielsen's pleas, the fatal crashes continue to occur,"
Mr. Perry said.
On September 27, after studying the issue for 90 days, the Company
announced that it would install rubber and plastic shields over parts
of the Crown Victoria patrol car's undercarriage that have the
potential to pierce the gas tank when the vehicles are struck from
behind. This "fix," however, did not address any of the specific
causes of puncture that had been determined in any of the fatal fires
to date.
At the time of the announcement, Ford said that its technicians would
continue to study the issue and produce more conclusive results by the
end of the year.
"It is reasonable to assume that a 20-year-history of fatal explosions
cannot be solved with 90 days of study and that more work is required,"
Mr. Perry said. "We reiterate that the only sure way to resolve the
issue of fuel-fed fires in these vehicles is to redesign them and move
the fuel tank to a protected location. Barring that, the best solution
is to install fuel tank bladders and fire retardant shields that will
preclude fuel-fed fires in any type of collision-rear, side or
rollover."
The September announcement was Ford's second attempt to "fix" the Ford
CVPI fuel tank hazard. In October 2001, Ford issued a Technical Service
Bulletin (TSB) to its dealers recommending that, on request, they saw
off bolts located in proximity to the fuel tank that might cause a
rupture in a high-speed collision. Several officers were killed later
in vehicles that had undergone the minor alteration.
"An engineering inspection and analysis will be required to determine
whether Ford's proposed new fix would have prevented the Dallas
tragedy," Mr. Perry continued. "At present, we do not know whether the
vehicle had received the first Ford fix, announced under its October
2001 TSB."
On October 10, the National Transportation Safety Administration
(NHTSA) announced that it has ended a ten-month investigation to the
CVPI, saying that the car meets current federal standards that require
a vehicle to withstand a rear-end crash at 30 miles per hour without
leaking fuel. NHTSA said that it was aware of 26 fires that led to
sixteen deaths, including four civilians and eleven injuries.
Two major national consumer organizations, Public Citizen and the
Center for Auto Safety, have called on Ford to extend its most recent
"fix" to include civilian cars that are designed similar to the Crown
Victoria Police Interceptor. These civilian models include the Crown
Victoria, the Grand Marquis and the Lincoln Town Car.
For more information, contact Teresa Kelly by Phone: 512-328-4276,
Richard Jenson by Phone: 512-656-7934 or Mike Kelly by Phone:
The United States District Court for the District of New Jersey ordered
consolidated several securities class actions pending against The
Great Atlantic & Pacific Tea Co., Inc.
The suits purport to assert claims under Sections 10(b) (and Rule 10b-5
promulgated thereunder) and 20(a) of the Securities Exchange Act of
1934 arising out of the Company's accounting practices, and allege that
the Company made material misrepresentations and omissions concerning
its financial results.
On July 17, 2002, the court dismissed one suit, upon motion by the
plaintiff, without prejudice and without costs against any party. On
September 9, 2002, the court entered an order consolidating the class
actions and appointing lead plaintiffs. A single consolidated amended
suit is expected from the plaintiffs.
The Company cannot give any assurance of a result favoring them in this
The parties in the shareholder derivative lawsuit pending against The
Great Atlantic & Pacific Tea Co., Inc. asked the Superior Court of New
Jersey in Bergen County to stay the suit, which was commenced in May
2002 against the Company's directors (some of whom are also executive
officers).
The suit alleges that the defendants violated their fiduciary
obligations to the Company and its stockholders by failing to establish
and maintain adequate accounting controls and mismanaging the assets
and business of the Company, and seeks unspecified money damages, costs
and expenses.
The Company does not believe the suit will adversely affect its
financial position or business operations.
Hawaii Circuit Court Judge Sabrina McKenna ruled that the state's Child
Support Enforcement Agency must account for more than US$3.5 million in
un-cashed child support checks before March 31, in order for thousands
of parents to get payments they never received from the agency since it
was formed in 1986, the Honolulu Advertiser reports.
In 1998, divorced mother Anne Keep filed a class action after her
initial checks from the agency were delayed for several months, even
though child support payments were being deducted from her ex-husband's
paycheck by the state.
Parents have complained about the agency for many years. Many have
written letters to the agency and visited time and again in a story
familiar to hundreds in the system, the Advertiser states. The agency
has almost 200 employees and sends checks to about 35,000 child-support
recipients a month, logging in an estimated $90 million to $95 million
in child-support payments a year.
In a 52-page decision, Judge McKenna agreed with state lawyers that the
state agency is meeting its obligations under state and federal law to
get the child support payment checks out on time. However, she ruled
that the agency has a "fiduciary duty" to the children entitled to
child support payments and to their custodial parents to account for
outstanding and un-cashed checks and checks returned for bad addresses
Francis O'Brien and Christopher Ferrara, two of the Honolulu lawyers
who worked on Kemp's case, hailed McKenna's ruling. They told the
Advertiser the state Child Support Enforcement Agency will finally have
to provide the detailed accounting they have sought for years. Deputy
Attorneys General Charles Fell and Diane Taira, who represented the
state during the trial before McKenna, could not be reached for comment
Mr. O'Brien said he believes Judge McKenna's ruling marks the first
time a state court has ruled in favor of a plaintiff class in a child
support enforcement agency case. "It's a tremendous victory for people
in this state who are entitled to child support," Mr. O'Brien told the
Advertiser.
Judge McKenna ordered the agency to come up with "a full and complete
accounting" of the un-cashed or "stale" checks, that would:
(1) include the first and last names of the custodial parents
to whom the checks were sent arranged in alphabetical order,
the check dates, the amounts and the check numbers;
(2) provide a second list, one that contains the same information
but arranged in chronological order; and
(3) fully account for checks that were returned because of bad
addresses.
The North Idaho Farmers Association (NIFA) filed a motion to dismiss
themselves from the class action pending against North Idaho bluegrass
farmers, seeking to ban field burning, the CDA Press reports.
According to an earlier Class Action Reporter story, opponents of the
practice say it is a threat to public health, tourism and the quality
of life in North Idaho. Washington already banned the practice, while
some North Idaho farmers have voluntarily given it up.
The NIFA asked to be dismissed from the suit, saying it supports field
burning as allowed by Idaho laws and regulations. Don Farley, attorney
for some of the farmers told the CDA Press, "NIFA in and of itself
doesn't own the fields or burn anything . NIFA is not promoting illegal
activity."
Attorney for the plaintiffs Brent Walton opposed the motion, saying.
"But not for NIFA's decisions, no burning would take place . NIFA is
more than aiding and abetting field burning, it is integral."
District Judge John Mitchell said he will rule first on the
association's motion to dismiss - possibly sometime this week. He
called a hearing for November 7 to hear outstanding motions and told
Mr. Walton to submit plaintiffs' medical records to the defense by the
November hearing.
Mr. Walton had asked the judge to schedule the trial in stages, the CDA
Press states. First, he asked for a spring trial on a motion to ban
field burning until the case is played out. After that, he said, he
would ask the judge to certify the class, then proceed to trial about a
year from now.
Judge Mitchell said he may want to decide next whether the case
qualifies as a class-action suit. "For this to logically proceed, the
class should be certified," Judge Mitchell said.
The Hennepin County District Court in Minneapolis, Minnesota granted
final approval to a settlement proposed by Metris Companies, Inc.
against it and its subsidiaries Metris Direct, Inc. and Direct
Merchants Bank.
The complaint seeks damages in unascertained amounts and purports to be
filed on behalf of all cardholders who were issued a credit card by
Direct Merchants Bank and were allegedly assessed fees or charges that
the cardholder did not authorize. Specifically, the complaint alleges
violations of:
(1) Minnesota Prevention of Consumer Fraud Act,
(2) Minnesota Deceptive Trade Practices Act and
(3) breach of contract
Subsequent to year-end, preliminary approval of a class action
settlement was signed by the court whereby the Company will pay
approximately $5.6 million for attorneys' fees and costs incurred by
attorneys for the plaintiffs in separate lawsuits filed in Arizona,
California and Minnesota in 2000 and 2001.
Under the terms of the settlement, which was approved by the court on
May 30, 2002, the Company denied any wrongdoing or liability.
Plaintiffs in the shareholder derivative lawsuit pending against
Prepaid Legal Services, Inc.'s directors moved for voluntary dismissal
without prejudice of the suit in the United States District Court for
the Western District of Oklahoma.
The shareholder derivative suits are connected to several securities
class actions filed in the same court against the Company and various
of its executive officers in early 2001 seeking unspecified damages on
the basis of allegations that the Company issued false and misleading
financial information, primarily related to the method the Company used
to account for commission advance receivables from sales associates.
On March 5, 2002, the court granted the Company's motion to dismiss the
complaint, with prejudice, and entered a judgment in favor of the
defendants. Plaintiffs thereafter filed a motion requesting
reconsideration of the dismissal, which was denied.
The plaintiffs have appealed the judgment and the order denying their
motion to reconsider the judgment to the Tenth Circuit Court of
Appeals, and the Company defendants will respond according to the
schedule set by the appellate court.
In August 2002, the lead institutional plaintiff withdrew from the
case, leaving two individual plaintiffs as lead plaintiffs on behalf of
the putative class. The ultimate outcome of this case is not
determinable.
The derivative suits were filed against all of the Company's directors
seeking unspecified actual and punitive damages on behalf of the
Company based on allegations of breach of fiduciary duty, corporate
waste and mismanagement by the defendant directors.
On March 1, 2002, plaintiffs filed a consolidated amended derivative
complaint, alleging that the defendant directors:
(1) caused the Company to violate generally accepted accounting
principles and federal securities laws by improperly
capitalizing commission expenses;
(2) caused the Company to allegedly pay increased salaries and
bonuses based upon financial performance which was allegedly
improperly inflated; and
(3) caused the Company to expend significant dollars in
connection with the defense of its accounting policy,
including cost incurred in connection with the defense of the
securities class action described above, and in connection
with the repurchase of its own shares on the open market at
allegedly artificially inflated prices.
This derivative action is related to the putative securities class
action described above, which has been dismissed with prejudice. After
the defendants moved to dismiss the consolidated amended derivative
complaint, the plaintiffs filed a voluntary dismissal of the case in
August 2002 without prejudice. The Company defendants have objected to
the voluntary dismissal. The case is in the preliminary stages and the
ultimate outcome is not determinable.
Hearing for class certification of a lawsuit filed against Prepaid
Legal Services, Inc. is set for March 28,2003 in the District Court of
Canadian County, Oklahoma.
The suit was commenced in June 2001 on behalf of all sales associates
of the Company. The amended petition seeks injunctive and declaratory
relief, with such other damages as the court deems appropriate, for
alleged violations of the Oklahoma Uniform Consumer Credit Code in
connection with the Company's commission advances, and seeks injunctive
and declaratory relief regarding the enforcement of certain contract
provisions with sales associates. The damages alleged on the Consumer
Credit Code claim are in excess of $315 million.
The case is in the preliminary stages and the ultimate outcome is not
Prepaid Legal Services, Inc. asked the United States District Court for
the Western District of Oklahoma to dismiss the class action pending
against it and certain of its executive officers, on behalf of all
sales associates of the Company.
The suit alleges that the marketing plan offered by the Company
constitutes a security under the Securities Act of 1933 and seeks
remedies for:
(1) failure to register the marketing plan as a security; and
(2) violations of the anti-fraud provisions of the Securities Act
of 1933 and the Securities Exchange Act of 1934 in connection
with representations alleged to have been made in connection
with the marketing plan.
The complaint also alleges violations of:
(i) the Oklahoma Securities Act,
(ii) the Oklahoma Business Opportunities Sales Act,
(iii) breach of contract,
(iv) breach of duty of good faith and fair dealing and unjust
enrichment,
(v) violation of the Oklahoma Consumer Protection Act, and
(vi) negligent supervision
This case is subject to the Private Litigation Securities Reform Act.
Pursuant to the Act, the court has approved the named plaintiffs and
counsel and an amended complaint was filed in August 2002.
The Company filed motions to dismiss the complaint and to strike the
class action allegations on September 19, 2002. All discovery in the
action is stayed pending a ruling on the motion to dismiss, which the
Company expects will occur no earlier than January 2003. The case is
in the preliminary stages and the ultimate outcome is not determinable.
Two companies that hosted psychic hot line queen Miss Cleo's late night
infomercials agreed to settle a deceptive trade practice claim asserted
by Connecticut residents, the Associated Press reports. The customers
claim that although the hot line advertised its calls as free, they
were directed to a 900 number, kept on hold and not informed they would
be charged.
Access Resource Services and the Psychic Readers Network agreed to pay
US$1.9 million to settle the claims, but did not admit any wrongdoing
in the settlement, state Attorney General Richard Blumenthal and state
Consumer Protection Commissioner James T. Fleming announced this week.
They also will pay $20,000 for fees and costs to the state.
Access Resource Services reached a similar settlement this week with
Illinois, the Associated Press states. It will stop providing the
service there, forgive unpaid debt and provide refunds to customers who
disputed whether they owed money, Attorney General Jim Ryan said. It
will also pay the state $20,000 for investigative costs.
A lawyer for Access Resource Services, Sean Moynihan, told AP the
Company had done nothing wrong. He said the company will only pay
dissatisfied customers.
Kentucky federal judge Danny C. Reeves refused to certify a class of
plaintiffs in a lawsuit against Purdue Pharma LP, the Stamford,
Connecticut-based distributor of OxyContinr (oxycodone HCl controlled-
release) Tablets. The ruling follows similar ruling he issued in
February in another case pending in the United States District Court
for the Eastern District of Kentucky.
The suit charged the Company with promoting, marketing and selling the
prescription pain medication OxyContin in a misleading manner and of
manufacturing and selling a defective and harmful product. They sought
to represent a class of plaintiffs consisting of "all persons in the
Commonwealth of Kentucky who have obtained OxyContin and/or who obtain
OxyContin in the future."
Judge Reeves refused to allow the lawsuit to proceed as a class action
after noting that the class allegations called for "subjective medical
conclusions" about each alleged member. Such an inquiry would include:
(1) where the putative class member obtained the drug,
(2) whether possession of the drug was legal, and
(3) whether each member was, in fact, injured as a result of
obtaining the drug.
Further inquiries would include the assurances each Plaintiff received
from his treating physician, individual medical histories, dosage and
length of prescriptions and method of taking the drug.
Basically, the court would need to determine, consider and resolve a
number of highly subjective facts, many of which are dependent on the
state of mind of particular individuals, in order to ascertain whether
any given individual is within or outside the alleged class.
"This is a very important decision," Howard R. Udell, Executive Vice
President and General Counsel of Purdue Pharma commented in a
statement. "It's often easier to make sweeping allegations than it is
to prove them, and that's why we defend these cases so vigorously.
Judge Reeves' detailed analysis, coupled with his earlier opinion in
the Foister case, will serve as critical legal precedents that can be
used by other judges as they review similar claims in other pending
cases."
"We will not sacrifice the reputation of our company and its products
to baseless and unwarranted claims made by personal injury lawyers in
pursuit of a quick financial settlement," added Udell. "There's more
than money at stake here. These cases involve not only the reputation
of one company, but the well-being of the many Kentucky patients for
whom pain medications can provide important relief."
Dr. Paul Goldenheim, Executive Vice President for Worldwide Research
and Development and senior physician at Purdue Pharma, added another
perspective on the Gevedon ruling. "Legal victories," he said, "are
important to us as a company. But, as a physician, I also view these
lawsuits in very human terms."
"According to organizations like the American Pain Foundation, an
estimated 50 million Americans suffer from chronic pain and only one in
four of those get proper treatment. Only within the last ten years has
the American medical establishment begun to take the treatment of pain
seriously," he stated.
"Frightening allegations about important medicines made in lawsuits
with the intention of inducing a quick settlement can instead make
patients fearful and cause them to ignore the advice of their doctors,"
Dr. Goldenheim continued. "Time and again, we hear from patients who
tell us that they 'get their lives back' when their painful conditions
are relieved through prescription medications as part of an overall
treatment program. As a prescription medication, OxyContin should only
be made available to patients who need it according to the medical
judgment of their doctors. Baseless lawsuits should not be allowed to
undercut responsible medical care."
"Now is not the time to turn back the clock on caring for people with
pain," Dr. Goldenheim concluded.
The United States District Court for the Southern District of New York
dismissed without prejudice four of the officers of Silicon
Laboratories, Inc. from the securities class action pending against the
The suit was commenced in December 2001 against the Company, four of
its officers individually and the three investment banking firms who
served as representatives of the underwriters in connection with the
Company's initial public offering of common stock which became
effective on March 23, 2000.
In April 2002, a consolidated amended complaint was filed in the same
court. The action is being coordinated with over 300 other nearly
identical actions filed against other companies. These claims are
premised on allegations that the registration statement and prospectus
for the Company's initial public offering did not disclose that:
(1) the underwriters solicited and received additional, excessive
and undisclosed commissions from certain investors; and
(2) the underwriters had agreed to allocate shares of the offering
in exchange for a commitment from the customers to purchase
additional shares in the aftermarket at pre-determined higher
prices.
The Company intends to vigorously contest this case, however, the
Company is unable at this time to determine whether the outcome of the
litigation will have a material impact on its results of operations or
financial condition in any future period.
The United States District Court for the District of Minnesota
consolidated the securities class action pending against Supervalu,
Inc. and certain of its officers and directors on behalf of purchasers
of the Company's securities between July 29, 1999 and June 26, 2002.
The complaints allege that the Company and certain of its officers and
directors violated federal securities laws by issuing materially false
and misleading statements relating to its financial performance.
Specifically, the complaint alleges that defendants issued statements
regarding the Company's annual financial performance and filed reports
confirming such performance with the United States Securities and
Exchange Commission (SEC), an earlier Class Action Reporter story
The complaint alleges that these statements were materially false and
misleading because, among other things:
(1) the Company was employing improper accounting practices
regarding the cost of goods sold for at least the past four
years in violation of Generally Accepted Accounting
Principles. As a result, the Company announced on June 26,
2002 that it expects $21 million in additional expenses; and
(2) based on the foregoing, defendants' statements concerning the
financial condition of the Company were lacking in a
reasonable basis at all times.
The Company believes that the lawsuit is without merit and intends to
vigorously defend the action. No damages have been specified. The
Company is unable to evaluate the likelihood of prevailing in the case
at this early stage of the proceedings.
The United States District Court for the District of Arizona denied a
motion by Swift Transportation Co., Inc. (AZ) and its subsidiary
companies to dismiss a lawsuit filed by the Owner-Operator Independent
Drivers Association (OOIDA). The Company asserted that the plaintiff
owner-operators did not have a private right of action under the
federal leasing regulations and therefore, the court had no
In July 2002, OOIDA and 10 of its owner-operator members filed the
class action against the Company and:
(1) Swift Transportation Co. Inc. (NV),
(2) M.S. Carriers Inc. and
(3) M.S. Carriers Warehousing Distribution Inc.
The suit alleges the leases violated federal truth-in-leasing
regulations and failed to contain a number of provisions required by 49
C.F.R. 379.12. The leases also contain provisions in direct conflict
with the leasing regulations. The carriers are also accused of:
(1) failure to provide owner-operators with required documentation
for chargebacks against compensation;
(2) forced purchase of insurance and other products and services;
illegal deductions from escrow accounts; and
(3) failure to return escrow accounts within the required time
after termination.
In his ruling on the Swift motion, Judge Paul G. Rosenblatt, rejected
the carrier's argument and concluded the court has jurisdiction over
In his dismissal, Judge Rosenblatt cited previous decisions in two
other OOIDA cases, (one against New Prime Inc. and one against
Mayflower Transit), which confirmed truckers' private right of action
to seek relief against a carrier for violations of the federal leasing
regulations. The Eighth Circuit Court of Appeals further upheld the
ruling in the Prime case.
The US asbestos crisis looked to have claimed another victim on Monday
as ABB, the Swiss-Swedish engineering giant, warned that mounting
compensation payments could force its American subsidiary to seek
bankruptcy protection.
Combustion Engineering, a Connecticut boilermaker bought by ABB in
1990, has seen costs soar to more than $1bn as thousands of healthy
victims have flooded US courts with claims for illnesses that may
result from asbestos exposure.
On Monday, ABB issued a group profits warning and threatened to seek
Chapter 11 protection for the US arm after admitting that future
asbestos liabilities were now greater than CE's total assets.
The reduction in ABB's profit forecasts was also blamed on a
deteriorating trading performance elsewhere in the group, but this was
expected by analysts whereas the asbestos problems have recently been
played down by the company.
Only last month, ABB said it was satisfied with provisions for
liabilities at CE, which it estimated at $470 million. On Monday, ABB
said it was impossible to estimate exposure but said the total
liabilities exceeded CE's book value of $812 million.
Earlier this month, ABB revealed it had settled out of court for a
large compensation case in West Virginia after failing to convince the
US Supreme Court to block the trial. The threat of bankruptcy appears
to be a direct response to this continued failure to find any political
or judicial solution to the asbestos crisis and ABB hopes the tactic
will ultimately reduce the parent group's liability.
"It is ABB's position that CE's asbestos-related liability can only be
asserted against CE," said Jurgen Dormann, ABB chairman and chief
executive. "Some claimants have named other entities in connection
with claims against CE, including ABB Inc and ABB Ltd, but there has
been no adjudication that any other entity within the ABB group has
liability for claims against CE."
Nevertheless, similar tactics by other afflicted groups have failed to
prevent claims spreading to the parent group. ABB employs 14,000 staff
in the US. The group promised more guidance on profitability next
month. The general warning, reducing the earnings outlook as a result
of lingering market weakness and slower benefits from cost reductions,
follows a profits warning in July 2001.
Until Monday, ABB had hoped for flat revenues this year and a margin on
earnings before interest and tax of between 4 and 5 per cent.
Lawyers for about 1600 former asbestos miners who worked for Gencor Ltd
have made their first attempt to calculate the mining house's liability
to claimants suffering from asbestos-related diseases. Lawyers also
expect to find 2,200 deaths of former miners caused by mesothelioma and
more than 700 deaths of lung cancer caused by Gencor's former mining
Richard Spoor, an occupational health lawyer with law firm Ntuli, Noble
& Spoor said the company's potential asbestos liabilities of 1.5
billion rand (about $144 million) figure did not include Gencor's
potential environmental liability or people who were "exposed to
asbestos pollution on the mines".
Mr. Spoor said it was the claimants' first considered attempt to "fix
some figure". The claimants had recently filed their supplementary
papers in the high court to interdict Gencor from holding a
shareholders meeting in early October.
The meeting would have decided on a proposal for the distribution of
Gencor's 46,1% stake in Impala Platinum to Gencor shareholders. The
interdict was also intended to halt Gencor's proposed unbundling. "It
was a rough and conservative assessment," said Spoor.
He said it was based on a detailed assessment by Professor Rodney
Ehrlich, head of community health at the University of Cape Town. The
study assumed that about 44000 workers were employed by the Griqualand
Exploration and Finance Corporation in the Northern Cape and 7300
workers by African Crysotile Asbestos, and Msauli Asbestos.
Mr. Spoor said if Gencor proceeded with the unbundlings the claimants
would look to the shareholders who had received distributions to meet
the claims. The Companies Act made provision for this, he said.
On Tuesday the high court in Britain granted an order to make Gencor a
co-defendant in proceedings against UK-based company Cape plc. This
followed Cape PLC's failure to honor a settlement agreement with 7500
SA victims suffering from asbestos-related diseases. Cape had agreed to
pay GBP21m into a trust fund to be established in SA.
Mr. Spoor said Gencor had a choice to contest the UK action or not. If
Gencor chose not to fight, the claimants would look to BHP Billiton
resident in the UK for compensation, he said.
BHP Billiton was the major shareholder of Gencor. In 1997 when the
company listed on the London Stock Exchange, Gencor transferred its
base metal assets including aluminum, titanium minerals and coal to
Billiton plc.
At present Gencor was contending with 37 summonses from claimants who
allege they contracted asbestos-related diseases while working at mines
linked to Gencor.
Georgia-Pacific Corp., the paper and lumber company that has been
plagued by asbestos-related liabilities, said costs for lawsuits this
year are 63 percent more than expected.
Georgia-Pacific's stock has fallen by more than half this year, partly
on concern about asbestos lawsuits that have cost the company about
$132 million this year before recoveries from insurance. At the end of
last month, the company faced 66,300 unresolved claims, 6.4 percent
more than a year earlier.
The unexpected costs ``don't do anything to make people more confident
in the reserve that they took out last year,'' said Chris Karlin, fund
manager for Kestrel Investment Management, which held 477,300 Georgia-
Pacific shares in June.
Georgia-Pacific should be able to pay the extra costs without
significantly hurting profit, he said. Georgia-Pacific had expected to
pay about $81 million, or $27 million a quarter, to settle asbestos
lawsuits in the first nine months of the year. The higher payments
mean the $350 million reserve, or $221 million after taxes, created
last year is being depleted faster than planned. The company said it
will ``review'' the reserve at the end of this year.
Insurance likely will pay a ``good deal more than half of what we're
going to be paying out,'' James Kelley, the company's chief lawyer,
said on the call. ``We've been reimbursed up to date for virtually all
the costs that have been paid.''
He added that the increase in unresolved cases comes mainly from 9,500
lawsuits filed in the quarter in Mississippi. Included in the costs was
a $10 million payment in the quarter after the company lost an appeal
of a verdict in Maryland, Mr. Kelley said.
Officials of Nebraska Citizens for Asbestos Reform, a coalition of
about 400 companies in the state, said Thursday they will begin an
advertising campaign highlighting changes they said are needed in the
way compensation claims for asbestos illnesses are handled.
Tim Hall, director of the Nebraska Insurance Federation, said the
newspaper, television and radio campaign will feature survivors of
those who have died from illnesses linked to asbestos exposure. "These
people not only suffer the painful and cruel fate of a terminal illness
but also from the indignity of not being quickly and fairly compensated
for their illness," he said.
Sharon Johns of Bloomfield, Neb., whose husband, Val, died of
mesothelioma, an asbestos-related cancer, will be included in some of
the newspaper advertisements that will run nationwide. Ms. Johns, who
said her husband died last November, said she has received no
compensation yet. Three companies she had sued have filed for
Mr. Hall said that true victims of asbestos "have to take back seats to
frivolous claims filed by the non-sick." The ad campaign, he said,
"will highlight this injustice."
The American Insurance Association, a group of property and casualty
insurance companies, and the National Association of Manufacturers are
financing and spearheading the nationwide campaign. The campaign will
cost $350,000 in Nebraska. A spokesman for the coalition said he
didn't know how much the nationwide campaign would cost.
Asbestos, a naturally occurring mineral, is made up of microscopic
bundles of fibers that can be used in a number of products. Until the
1970s, for example, asbestos was commonly used for insulation and
fireproofing.
When the fibers get into the air and are inhaled into the lungs, they
may cause health problems. Asbestos has been linked to respiratory
illness, cancer and other ailments, some of which may surface only
years after a person has been exposed.
Asbestos may not be considered an immediate hazard so long as a product
containing the substance is left alone. It's only when materials
containing asbestos are disturbed, releasing the fibers into the air,
that it becomes a health risk, which is why it was banned.
The coalition said its goal is to ensure that victims like Johns are
quickly and fairly compensated and that small and medium-sized
companies are not put out of business by claims that have no merit.
Lou Burgher, president of the Greater Omaha Chamber of Commerce, in
whose offices a press conference was held, said "this is an issue of
intense interest to business."
More than 60 companies nationwide have filed bankruptcy actions because
of claims filed by healthy people, the coalition said. None of the
companies is in Nebraska.
Among the companies that have filed for bankruptcy in the last two
years are Federal-Mogul Corp. of Southfield, Mich., a maker of
automobile engine bearings and seals, and USG Corp. of Chicago, a maker
of wallboard and other building materials.
Legislation has been introduced in Congress that would, among other
things, set minimum medical standards that a person would have to meet
to file an asbestos claim. Hearings have been held before the Senate
Judiciary Committee. Among opponents of the legislation is the
Association of Trial Lawyers of America.
A spokesman told the Senate committee that the real goal of proponents
of changing the asbestos-compensation system is to pay less in total
compensation. Proponents have proposed restrictive medical criteria
that eliminates thousands of claims, said the spokesman, Fred Baron.
Forest products giant Weyerhaeuser Co. (NYSE:WY) on Tuesday said it is
named as a defendant in 2,416 asbestos claims but does not expect these
to have a material impact on its finances. A spokesman for the Federal
Way, Washington-based company said 1,429 of the claims were filed by
sailors who claim they were exposed to asbestos while serving on a
Weyerhaeuser vessel during World War II.
A smaller number of claims relate to fire doors the company
manufactured at a Marshfield, Wisconsin facility, which has since been
sold. On average, such claims have been settled for $5,800.
Weyerhaeuser shares were down $2.23, or 4.7 percent, at $45.50 in late
afternoon trading. An explosion of asbestos-related legal claims have
battered the stock prices of many well-known manufacturing names in the
United States, pushing several into bankruptcy.
Shares of Weyerhaeuser rival Georgia-Pacific Corp., for example, have
been hammered by investor fears about its asbestos liability. Georgia-
Pacific, based in Atlanta, said last week that as of Sept. 29, it had
about 66,300 unresolved claims pending against it.
Asbestos was once widely used for fireproofing and insulation, but
scientists concluded in the 1960s and 1970s that inhaled asbestos
fibers could cause lung cancer and other diseases.
3M Co. reports that it has insurance receivables of $223 million
related to respirator/mask/asbestos litigation as of December 31, 2001,
up from $155 million recorded in December 2000. The company also
recorded $156 million and $159 million of other insurance receivables
for December 2001 and December 2000 respectively.
During October 2001, the Company defended a case in the Circuit Court
of Holmes County, Mississippi, against plaintiffs claiming that a 3M
respirator and mask did not protect them against contracting claimed
asbestos-related diseases allegedly caused by exposure to products
containing asbestos which were manufactured by other defendants.
The case against the company initially involved six plaintiffs whose
claims were consolidated for trial. The court dismissed one
plaintiff's case just before trial, and a second plaintiff abandoned
his case before it was submitted to the jury.
On October 26, the jury returned a verdict against all defendants in
favor of the plaintiffs, four of whom had claims against the company.
The jury awarded the plaintiffs $25 million each in compensatory
damages. The jury denied plaintiffs' request for punitive damages.
Based on the jury's findings of percentage of fault attributable to
each defendant, the company's share of the total verdict is $22.5
million. The company can provide no assurance at this time about the
ability of any co-defendant to pay its share of any ultimate judgment
or whether a co-defendant's inability to pay will cause a reallocation
of liability for damages among the remaining solvent defendants under
state law. Judgment was entered on January 30, 2002.
Because the company is vigorously challenging the judgment in post-
trial motions, will plan to appeal if necessary, and believes that the
judgment ultimately will be overturned, no liability has been recorded
related to this matter as of December 31, 2001. If any damages were
ultimately assessed against the company, a substantial portion of such
damages would be covered by the company's product liability insurance.
Based on the Company's experience, the vast majority of these lawsuits
and claims purportedly relate to the alleged use of company's mask and
respirator products and seek damages from the company and other
defendants for alleged personal injury from occupational exposure to
asbestos or, less frequently, silica found in products manufactured by
other defendants.
The remaining lawsuits and claims generally allege personal injury from
occupational exposure to asbestos from unspecified products claimed to
have been manufactured by the company or other defendants and/or from
specialty products containing asbestos allegedly manufactured by the
company and/or other defendants many years ago.
Based on the company's experience in defending and resolving these
lawsuits and claims to date and the substantial product liability
insurance provided by the company's insurers, the company believes
these lawsuits and claims will not have a material adverse effect on
its consolidated financial position, results of operations, or cash
flows.
As of December 31, 2001, the company had estimated accrued liabilities
of approximately $156 million for these claims. This amount represents
the company's best estimate of the amount to cover the cost and expense
of resolving current and probable future claims. The company also had
receivables for expected insurance recoveries of approximately $223
million. The difference between the accrued liability and insurance
receivable represents the time delay between payment of claims and
receipt of insurance reimbursements.
The company's current estimate of its probable liabilities and
associated expenses for respirator/mask/asbestos litigation is based on
facts and circumstances existing at this time and reasonably
anticipated trends. New developments may occur that could affect the
company's estimate of probable liabilities and associated expenses.
These developments include, but are not limited to:
(1) changes in the number of future claims,
(2) changes in the average cost of resolving claims,
(3) change in the nature of claims received,
(4) changes in the law and procedure applicable to these claims,
(5) financial viability of other co-defendants and insurers and
other unknown variables.
The company cannot determine the impact of these potential developments
on the current estimate of its probable liabilities and associated
expenses.
3M Company (NYSE: MMM)
3M Center
Employees : 71,669
Revenues : $16,079,000,000.00
Net Income : $1,430,000,000.00
Assets : $14,606,000,000.00
Liabilities : $8,520,000,000.00
Booked Asbestos Liabilities : $156,000,000
Booked Asbestos Assets : $223,000,000
(As of December 31, 2001)
Description: 3M Co., formerly Minnesota Mining and Manufacturing
Company, makes everything from masking tape to asthma inhalers. 3M has
seven operating segments: transportation; display and graphics
(specialty film, traffic control materials); health care (dental and
medical supplies and health IT); safety, security, and protection
(commercial care, occupational health and safety products); electro and
communications (connecting, splicing, and insulating products);
industrial business (tapes and adhesives); and consumer and office.
Well-known brands include Scotchgard fabric protectors, Post-it Notes,
Scotch-Brite scouring products, and Scotch tapes. Sales outside the US
account for nearly 55% of 3M's revenues.
Albany International Corp. and its affiliate, Brandon Drying Fabrics,
Inc., are defendants in a number of proceedings for injuries allegedly
suffered as a result of exposure to asbestos-containing products.
Albany marketed asbestos-containing dryer fabrics during the period
from 1967 to 1976. Such fabrics generally had a life of from three to
twelve months. At August 2, 2002, there were 9,405 claims pending
against Albany, compared to 8,934 claims pending as of May 3, 2002,
7,347 claims as of December 31, 2001, 1,997 claims as of December 31,
2000, and 2,276 claims as of December 31, 1999.
While Albany believes it has meritorious defenses to these claims, it
has settled certain of these cases for amounts it considers reasonable
given the facts and circumstances of each case. Albany's insurer,
Liberty Mutual, has defended each case under a standard reservation of
rights.
As of August 2, 2002, Albany had resolved, by means of settlement or
dismissal, 2,216 asbestos-related personal injury claims for
$1,178,500. Of this amount, $1,143,500, or 97%, was paid by Liberty
Mutual. Albany has over $130 million in confirmed insurance coverage
that should be available with respect to current and future asbestos
claims, as well as additional insurance coverage that it should be able
to access.
The Company believes that all asbestos-related claims against it are
without merit. Based upon its understanding of the insurance policies
available, how settlement amounts have been allocated to various
policies, recent settlement experience, the absence of any judgments
against the Company, and the defenses available, the Company currently
does not anticipate any material liability relating to the resolution
of the above proceedings in excess of existing insurance limits.
Consequently, the Company does not believe, based upon currently
available information, that the ultimate resolution of these claims
will have a material adverse effect on its financial position, results
of operations or cash flows.
Although the Company cannot predict the number and timing of future
claims, based upon the foregoing factors and the trends in claims
against it to date, the Company does not anticipate that additional
claims likely to be filed in the future will have a material adverse
effect on its financial position, results of operations or cash flows.
However, the Company is aware that litigation is inherently uncertain,
especially when the outcome is dependent primarily on determinations of
factual matters to be made by juries.
The Company is also aware that numerous other defendants in asbestos
cases, as well as others who claim to have knowledge and expertise on
the subject, have found it difficult to anticipate the volume of future
asbestos claims. For these reasons, there can be no assurance that the
foregoing conclusions will not change.
The Company anticipates that additional claims will be filed against it
in the future but is unable to predict the timing and number of such
future claims.
Albany International Corp. (NYSE: AIN)
http://www.albint.com
Employees : 6,769
Revenues : $836,700,000.00
Net Income : $32,200,000.00
Assets : $931,900,000.00
Liabilities : $615,300,000.00
No. of Asbestos Claims : *9,405
(*As of August 2, 2002)
Description: Albany International Corp. is the world's #1 maker of
paper machine clothing (PMC, custom-made fabric belts that move paper
stock through each phase of production). It has manufacturing
facilities in Asia, Australia, Europe, and North and South America.
Albany produces about 35% of the monofilament yarn used in its products
and relies on independent suppliers for the remainder. It markets to
paper mills in 25 countries through a direct sales staff. Albany also
makes high-performance industrial doors (Rapid Roll Doors) such as
aircraft hangar doors and dock doors. Former chairman Spencer Standish
and his family own about 30% of the company.
CenterPoint Energy Inc. has been named, along with numerous others, as
a defendant in a number of lawsuits filed by a large number of
individuals who claim injury due to exposure to asbestos while working
at sites along the Texas Gulf Coast.
Most of these claimants have been workers who participated in
construction of various industrial facilities, including power plants,
and some of the claimants have worked at locations owned by
CenterPoint.
They anticipate that additional claims like those received may be
asserted in the future, and they intend to continue their practice of
vigorously contesting claims that they do not consider to have merit.
Although their ultimate outcome cannot be predicted at this time, they
do not believe, based on their experience to date, that these matters,
either individually or in the aggregate, will have a material adverse
effect on their financial position, results of operations or cash
CenterPoint Energy, Inc. (NYSE: CNP)
1111 Louisiana St.
http://www.centerpointenergy.com
Net Income : $980,500,000.00
Liabilities : $23,822,200,000.00
Description: CenterPoint Energy (formerly Reliant Energy) has made a
complete pivot around its core operations. The company, which had grown
from a local utility to a global power provider, has spun off its
nonregulated operations and returned to its roots. CenterPoint Energy's
subsidiaries distribute electricity and natural gas to about 4.7
million customers, primarily in the southern US, and generate 14,000 MW
of electricity. CenterPoint Energy changed its name in 2002 as part of
a corporate restructuring; the company also spun off majority-owned
Reliant Resources to shareholders that year.
Along with other vehicle manufacturers, Ford Motor Company has been the
target of asbestos litigation. It is a defendant in various actions
for injuries claimed to have resulted from alleged contact with certain
Ford parts and other products containing asbestos. Asbestos was used
in brakes, clutches and other auto components from 1927-1997. The
Company no longer uses asbestos in its vehicles.
Most of the asbestos litigation the company faces involves mechanics
that worked with brakes over the years, although there are some cases
that relate to the presence of asbestos in its facilities. In most of
these cases the Company is not the sole defendant.
The company believes they are becoming more aggressively targeted in
these suits as a result of the bankruptcy filings of companies that
have been the previous targets of asbestos litigation. As with all
litigation facing the Company, the Company is prepared to defend these
asbestos related cases. Scientific evidence confirms its long-standing
position that mechanics are not at an increased risk of asbestos
related disease as a result of exposure to asbestos used in the
Company's vehicles.
The majority of these cases do not specify a dollar amount for damages
claimed and in many of those cases that do specify a dollar amount; the
specific amount referred to is only the jurisdictional minimum. In any
event, the actual damages paid out to claimants pursuant to adverse
judgments or settlements have historically been only a small fraction
of the damages claimed. To date, the annual payout on these cases has
not been material.
However, trends toward larger jury verdicts and increased awards of
punitive damages create the risk that the amounts actually paid to
asbestos claimants may increase in the future.
Ford Motor Company (NYSE: F)
1 American Rd.
Dearborn, MI 48126-2798
http://www.ford.com
Employees : 354,431
Revenues : $162,412,000,000.00
Net Income : $(5,453,000,000.00)
Assets : $ 276,543,000,000.00
Liabilities : $ 268,757,000,000.00
Description: Ford Motor is the world's largest pickup truck maker and
the #2 producer of cars and trucks, behind General Motors. It makes
vehicles with such brands as Aston Martin, Ford, Jaguar, Lincoln,
Mercury, and Volvo. Among its biggest successes are the Ford Taurus and
F-Series pickup. Ford owns a controlling (33%) stake in Mazda and has
purchased BMW's Land Rover SUV operations. The finance subsidiary, Ford
Motor Credit, is the US's #1 auto finance company. It also owns Hertz,
the world's #1 car-rental firm. The Ford family owns about 40% of the
company's voting stock.
Millennium Chemicals and certain of its subsidiaries are defendants in
a number of pending legal proceedings relating to their present and
former operations. These include several proceedings alleging
injurious exposure of the plaintiffs to various chemicals and other
materials on the premises of, or manufactured by, Millennium Chemicals'
current and former subsidiaries, including asbestos and lead pigments
used in paint.
For example, Millennium Petrochemicals is one of a number of defendants
in fewer than 100 active, premises-based asbestos cases (i.e., where
the alleged exposure to asbestos-containing materials was to employees
of third-party contractors or subcontractors on the premises of certain
facilities, and did not relate to any products manufactured or sold by
us or any of our predecessors).
Millennium Petrochemicals is also one of a number of defendants in less
than 50 inactive, or dormant, premises-based asbestos cases where they
either have not been specifically identified by any plaintiff or where
the court placed the claim on a formal registry for dormant claims, and
for which no defense costs are being incurred.
Millennium Chemicals is responsible for these cases under its
agreements with Equistar, which require it to assume responsibility and
indemnify Equistar for them. However, under these agreements, Equistar
will be required to assume responsibility and indemnify Millennium
Petrochemicals for any such claims filed on or after December 1, 2004.
In addition, Millennium Chemicals is one of a number of defendants in
approximately 40 asbestos cases in connection with the operations of
its predecessors at other facilities, which also typically involve
multiple plaintiffs. Additional cases may be filed in the future for
which Millennium Chemicals may be responsible.
Millenium, however, cannot give assurance that any liability they incur
with respect to any present or future asbestos cases against them will
not be material to them (including taking into account insurance, which
will not be available for most of these cases).
Millenium Chemicals Inc.
230 Half Mile Road
Revenues : $1,590,000,000.00
Net Income : $(43,000,000.00)
Assets : $3,004,000,000.00
No. of Asbestos Cases : 40
Description: Millenium Chemicals Inc. is a major international
chemical company, with leading market positions in a broad range of
commodity, industrial, performance and specialty chemicals. The Company
has three business segments: Titanium Dioxide and Related Products;
Acetyls; and Specialty Chemicals. The Company also owns a 29.5%
interest in Equistar, a joint venture owned by the Company, Lyondell
Chemical Company and Occidental Petroleum Corporation. The Company
accounts for its interest in Equistar as an equity investment.
On December 3, 1993, Keene filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court. Keene's chapter 11 filing came as a direct result of the demands
on Keene of thousands of asbestos-related lawsuits that named Keene as
a party. On July 31, 1996, Keene consummated its Fourth Amended Plan
of Reorganization, as modified, under the Bankruptcy Code.
On the Effective Date, Reinhold was merged into and with Keene, with
Keene becoming the surviving corporation. Keene, as the surviving
corporation of the merger, was renamed Reinhold Industries, Inc. On
the Effective Date, pursuant to the Plan the Company issued its Class B
Common Stock to the Trustees of a Creditors' Trust, which was
established under the Plan to administer Keene's asbestos liabilities.
The Creditors' Trust has since sold most of its Class B Common Stock.
The Permanent Channeling Injunction bars "Asbestos-Related Claims" and
"Demands," as defined in the Plan, against the Company and channels
those Claims and Demands to the Creditors' Trust.
Pursuant to the Permanent Channeling Injunction, on or after the
Effective Date of the Plan, any person or entity who holds or may hold
an Asbestos-Related Claim or Demand against Keene will be forever
stayed, restrained, and enjoined from taking certain actions for the
purpose of, directly or indirectly, collecting, recovering, or
receiving payment of, on, or with respect to such Asbestos-Related
Claims or Demands against the Company.
On March 1, 2001, the Company commenced an action against EPA and the
NPS in the United States District Court for the Southern District of
New York seeking a declaratory judgment that any claims asserted
against it in connection with the Valley Forge site were barred as a
matter of law due to two injunctions issued in 1996 in the bankruptcy
case against its predecessor, Keene Corporation.
On July 20, 2001, the United States served its answer and counterclaim
to the Company's complaint on behalf of the NPS. In its answer, the
government withdrew its request for reimbursement of the EPA's CERCLA
response costs ($616,878) and objected to the relief sought by the
Company. Its counterclaim seeks the recovery of past and present CERCLA
response costs incurred by the NPS at the Valley Forge site and a
declaratory judgment on liability that will be binding in future
actions to recover future response costs.
On August 3, 2001, the Company served a motion for summary judgment
requesting judgment in its favor on its complaint and dismissal of the
counterclaim.
On September 10, 2001, the United States served its response in
opposition to the Company's summary judgment motion. In its response,
the government submitted that:
(1) the NPS's claim for recovery of past and present CERCLA
response costs at the Valley Forge Site does not constitute an
Asbestos-Related Claim; and
(2) neither the Plan nor the Confirmation Order govern its claim
because Keene failed to give the NPS actual notice of the
bankruptcy proceeding.
The government sought a denial of the summary judgment motion or a
continuance to allow discovery on its defense of actual notice.
On September 26, 2001, the Company served its reply to the government's
response and asserted, among other things, that summary judgment was
not premature as the undisputed facts establish that the NPS was an
"unknown creditor" at the time of the Keene bankruptcy case such that
publication notice which indisputably was given - was legally
sufficient to subject the NPS to the terms of the two injunctions
issued under the Plan.
The Company also reiterated that the plain meaning and purpose of the
Plan and Confirmation Order compel the conclusion that the NPS claim
was an Asbestos-Related Claim.
As of December 31, 2001, the summary judgment motion is pending before
the Court.
It is difficult to estimate the timing and ultimate costs to be
incurred by the Company in connection with environmental liability
claims in the future due to uncertainties about the status of laws and
regulations, the adequacy of information available for individual sites
and the extended time periods over which site remediation occurs.
However, based on currently available information, if the environmental
liability claims relating to the Valley Forge Site arose prior to the
filing of Keene's bankruptcy case or if these claims were deemed to be
Asbestos-Related Claims or Demands within the meaning of the Plan, then
the Company does not believe that environmental liabilities associated
with the Valley Forge Site should result in a material adverse impact
on the Company's consolidated financial position or results of
However, if these claims are deemed to have arisen subsequent to the
filing of Keene's bankruptcy case, i.e, the "release" or "threatened
release," within the meaning of CERCLA, is deemed to have occurred
after Keene filed its chapter 11 petition with the Bankruptcy Court or
the claims are held to have arisen when the response costs were
incurred -- and these claims are not deemed to be Asbestos-Related
Claims or Demands as defined under the Plan, then the Company could
incur liability for the claims.
If a court were to determine that the Company was liable for
recoverable costs associated with the Valley Forge Site under CERCLA,
the resulting liability could have a material adverse impact on the
Company's consolidated financial position and results of operations.
Reinhold Industries Inc.
12827 East Imperial Hwy
Santa Fe Springs Ca 90670-4713
Employees : 381
Revenues : $48,950,000
Net Income : ($3,720,000)
Assets : $33,030,000
Liabilities : $17,950,000
Description: Reinhold Industries Inc. manufactures advanced custom
composite components, sheet molding compounds and rubber graphic arts
and industrial rollers for a variety of applications. The company
markets its products in the United States and Europe.
The St. Paul Companies, Inc. maintains gross reserves of $740 million
as of June 30, 2002, after a $248 million settlement payment in the
same month.
The Company and some of its subsidiaries are named as defendants in
asbestos lawsuits. Some of these lawsuits attempt to establish
liability under insurance contracts issued by their underwriting
operations, including liability under environmental protection laws and
for injury caused by exposure to asbestos products. Plaintiffs in
these lawsuits are seeking money damages that in some cases are
substantial or extra contractual in nature or are seeking to have the
court direct the activities of the company's operations in certain
ways.
The company says that although the ultimate outcome of these matters is
not presently determinable, it is possible that the resolution of one
or more matters may be material to its results of operations. However,
the Company does not believe that the total amounts that the company
and it subsidiaries will ultimately have to pay in all of these
lawsuits will have a material effect on their liquidity or overall
financial position.
On June 3, 2002, the Company announced that it had entered into an
agreement for the settlement of all existing and future claims arising
out of an insuring relationship of United States Fidelity and Guaranty
Company, St. Paul Fire and Marine Insurance Company and their
affiliates and subsidiaries with any of MacArthur Company, Western
MacArthur Company, and Western Asbestos Company.
The settlement agreement provides that the MacArthur Companies will
file voluntary petitions under Chapter 11 of the Bankruptcy Code to
permit the channeling of all current and future asbestos-related claims
solely to a trust to be established pursuant to Section 524(g) of the
Consummation of most elements of the settlement agreement is contingent
upon bankruptcy court approval of the settlement agreement as part of a
broader plan for the reorganization of the MacArthur Companies.
Approval of the Plan involves substantial uncertainties that include
the need to obtain agreement among existing asbestos plaintiffs, a
person to be appointed to represent the interests of unknown, future
asbestos plaintiffs, the MacArthur Companies and the USF&G Parties as
to the terms of such Plan.
Accordingly, there can be no assurance that an acceptable Plan will be
developed or that bankruptcy court approval of a Plan will be obtained.
Upon final approval of the Plan, and upon payment by the USF&G Parties
of the amounts described below, the MacArthur Companies will release
the USF&G Parties from any and all asbestos-related claims for personal
injury, and all other claims in excess of $1 million in the aggregate,
that may be asserted relating to or arising from, directly or
indirectly, any alleged coverage provided by any of the USF&G Parties
to any of the MacArthur Companies, including any claim for extra-
contractual relief.
The after-tax impact on second-quarter and six-months 2002 net of
expected reinsurance recoveries and the reevaluation and application of
asbestos and environmental reserves, was approximately $380 million.
This calculation was based upon payments of $235 million during the
second quarter of 2002, and $740 million on the earlier of the final,
non-appealable approval of the Plan, or January 15, 2003, plus interest
on the $740 million from the settlement date to the date of such
payment.
The $740 million (plus interest) payment, together with $60 million of
the original $235 million, shall be returned to the USF&G Parties if
the Plan is not finally approved.
The settlement agreement also provides for the USF&G Parties to pay $13
million and to advance certain fees and expenses incurred in connection
with the settlement, bankruptcy proceedings, finalization of the Plan
and efforts to achieve approval of the Plan subject to a right of
reimbursement in certain circumstances of amounts advanced.
As a result of the settlement, pending litigation with the MacArthur
Companies has been stayed pending final approval of the Plan. Whether
or not the Plan is approved, $175 million of the $235 million will be
paid to the bankruptcy trustee, counsel for the MacArthur Companies,
and persons holding judgments against the MacArthur Companies as of
June 3, 2002 and their counsel, and the USF&G Parties will be released
from claims by such holders to the extent of $110 million paid to such
holders.
The second-quarter 2002 results of operations included a net pretax
loss of $585 million ($380 million after-tax) related to this
settlement. The estimate of the impact of the settlement includes the
application of approximately $153 million of asbestos IBNR reserves,
and $250 million of reinsurance recoverables, net of an allowance for
non-collectible amounts. Related to the Western MacArthur settlement,
and as part of an in- depth analysis of our environmental and asbestos
reserves, St Paul recorded a $150 million reduction in net
environmental reserves, and a corresponding $150 million increase in
net asbestos reserves.
The St. Paul Companies, Inc. (NYSE: SPC)
http://www.stpaul.com
Description: St. Paul offers liability and casualty, property, workers'
compensation, auto, marine, and other commercial coverage to companies
of all sizes in North America and the UK. Its international operations
include Lloyd's of London syndicates that specialize in such niches as
kidnap and ransom, personal accident, and creditor coverage. The firm
writes facultative and treaty reinsurance through its St. Paul Re
subsidiary. British financial services company Old Mutual has bought
its life insurance subsidiary F&G Life and the company is exiting the
majority of its international operations. The John Nuveen Co. (the firm
owns about 80% of it) provides asset management.
The United States Steel Corporation faces a large number of cases in
which about 18,000 claimants allege injury resulting from exposure to
asbestos. Nearly all of these cases involve multiple defendants, and
fall into three major groups:
(1) claims made under certain federal and general maritime law by
employees of the Great Lakes Fleet or Intercoastal Fleet,
former operations of USS;
(2) claims made by persons who performed work at USS facilities;
(3) claims made by industrial workers allegedly exposed to an
electrical cable product formerly manufactured by USS.
To date all actions resolved have been either dismissed or resolved for
immaterial amounts.
In 2001, USS disposed of claims from approximately 11,300 claimants
with aggregate total payments of less than $200,000 and approximately
10,000 new claims were filed.
The factual issues with respect to each claimant vary considerably due
to the nature and duration of the alleged exposure of each individual
claimant to USS products or premises, the exposure of each individual
claimant to products or premises of other defendants, the nature and
seriousness of the alleged injuries asserted by each claimant and the
other possible causes of any such injuries (such as the use of tobacco
products or exposure to other substances).
In addition, because most claimants assert their claims against
multiple defendants, fail to allege specific damage amounts in their
complaints, fail to allocate the alleged liability among the various
defendants, and frequently amend their complaints including any
allegations of amounts sought, it is not possible to reasonably
estimate the amount claimed by any given claimant or the claimants as a
whole in pending cases.
In the cases where the claimants have asserted specific dollar damages
against USS, the amounts claimed are not material either individually
or in the aggregate. It is also not possible to predict with certainty
the outcome of these matters. However, based upon present knowledge,
management believes that it is unlikely that the resolution of the
pending actions will in the aggregate have a material adverse effect on
our financial condition.
Among the factors that management considered in reaching this
conclusion are:
(i) that USS has been subject to a total of approximately 32,000
asbestos claims over the last twelve years that have been
administratively dismissed due to the failure of the claimants
to present any medical evidence supporting their claims;
(ii) that over the last several years the total number of pending
claims has remained steady;
(iii) that it has been many years since USS employed maritime
workers or manufactured electrical cable and
(iv) USS's history of trial outcomes, settlements and dismissals.
United States Steel Corporation (NYSE: X)
600 Grant St.
http://www.ussteel.com
Net Income : $(218,000,000.00)
No. of Asbestos Claims : 18,000
Description: United States Steel (U.S. Steel, formerly USX-U.S. Steel
Group), the US's #1 steelmaker, produced more than half the nation's
steel in the early part of the 1900s. Once one of two publicly traded
companies -- along with oil and gas producer USX-Marathon Group, that
made up USX Corp., U.S. Steel manufactures sheet, tubular, and semi-
finished steel at plants in Alabama, Indiana, Pennsylvania, and the
Slovak Republic. It also produces tin, coal, and coke, and provides
engineering and mineral resource management services. Analysts
speculate that U.S. Steel, which split from USX Corp. at the end of
2001, may miss the deep financial pockets of its former parent as it
struggles along in the ailing steel industry.
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action on behalf of purchasers of the securities of AES Corporation
(NYSE: AES) between April 26, 2001 and February 14, 2002, inclusive, in
the United States District Court, Eastern District of Virginia, against
the Company and:
(1) Dennis W. Bakke,
(2) Roger W. Sant and
(3) Barry J. Sharp
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between April 26, 2001 and February 14, 2002, thereby
artificially inflating the price of Company securities.
The complaint alleges that, throughout the class period, defendants
issued numerous statements highlighting the Company's strong financial
performance, specifically its business operations in the United
Kingdom. As alleged in the complaint, these statements were materially
false and misleading because they failed to disclose and/or
misrepresented the following adverse facts, among others:
(i) that the United Kingdom adopted a new framework for the
pricing of energy that undermined the Company's ability to
achieve profitability in its United Kingdom activities, and as
a result, the Company would experience a rapid decline in its
U.K. financial operations;
(ii) the adoption of NETA (New Energy Arrangements) in the United
Kingdom caused the Company's Fifoots utility operations to
operate at a loss, as expected; defendants, however,
continuously touted AES's United Kingdom operations as
profitable;
(iii) that in the first quarter of 2001, Fifoots had an after-tax
loss of $11 million; and
(iv) that the Company's United Kingdom operations were severely
impaired as a result of new pricing arrangements adopted there
and that the Company lacked adequate long-term contracts to
avoid a rapid decline in its United Kingdom operations as a
result of the new pricing arrangements.
On February 14, 2002, AES shocked the market by announcing that it had
ceased operations at its Fifoots Point power station in the United
Kingdom because of "sliding wholesale electricity prices." The price of
the Company's stock dropped precipitously in inordinate trading volume
when the Company, for the first time, announced that it was
experiencing problems in its Fifoots Point power plant in the United
Kingdom and as a result the plant would be closed.
In response to the news, AES plummeted over 25% on February 15, 2002
after the truth concerning AES's Fifoots Point plant and future
prospects were finally revealed, dropping from $9.50 per share on
February 14, 2002, to $7.00 per share on February 15, 2002 -- on
enormous trading volumes of 29,962,400 (far greater than the Company's
average trading volume of 3.3 million shares).
For more details, contact Steven G. Schulman or Samuel H. Rudman by
Phone: 800-320-5081 or Kenneth Vianale or Tara Isaacson by Phone:
561-361-5000 by E-mail: AEScase@milbergNY.com or visit the firm's
Website: http://www.milberg.com
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Southern District of New
York on behalf of purchasers of Atlas Air Worldwide Holdings, Inc.,
formerly known as Atlas Air, Inc. (NYSE: CGO) publicly traded
securities during the period between April 18, 2000 and October 15,
2002, inclusive. The suit names as defendants the Company and:
(1) Richard H. Shuyler,
(2) Brian H. Rowe,
(3) Douglas A. Carty,
(4) Stanley J. Gadek,
(5) James T. Matheny and
(6) Stuart G. Weinroth
The defendants allegedly violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of material misrepresentations to the market
between April 18, 2000 and October 15, 2002, thereby artificially
inflating the price of Company securities.
Throughout the class period, as alleged in the complaint, defendants
issued numerous statements and filed quarterly and annual reports with
the SEC which described the Company's net income and financial
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(i) that, throughout the class period, the Company had materially
overstated its inventory, maintenance expense, and allowance
for bad debt;
(ii) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(iii) that as a result, the value of the Company's net income and
financial results were materially overstated at all relevant
On October 16, 2002, before the market opened for trading, the Company
shocked the market by announcing that it will be initiating a re-audit
of its financial results for fiscal years 2000 and 2001, which will
require the Company to restate its previously-issued financial reports.
The Company described the overstatement as being in "the areas of
inventory obsolescence, maintenance expense, and allowance for bad
debt." The Company further stated that "preliminary indications are
that the cumulative impact through 2001 will reduce after-tax income by
roughly $60 million to $65 million."
Following this report, shares of Atlas Air fell $.79 per share, to
close at $1.80 per share, on volume of more than 1.7 million shares
traded, or almost ten times the average daily volume.
For more details, contact Jackie Addison, Heather Gann or Sue Null by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com
action on behalf of purchasers of the securities of Atlas Air Worldwide
Holdings, Inc., formerly known as Atlas Air, Inc. (NYSE: CGO) between
April 18, 2000 and October 15, 2002, inclusive.
The action is pending in the United States District Court, Southern
District of New York, against the Company and:
market between April 18, 2000 and October 15, 2002, thereby
debt."
The Company further stated that "preliminary indications are that the
cumulative impact through 2001 will reduce after-tax income by roughly
$60 million to $65 million."
For more information, contact Steven G. Schulman or Samuel H. Rudman by
Mail: One Pennsylvania Plaza, 49th fl. New York, NY 10119-0165 by
Phone: 800-320-5081 by E-mail: AtlasAircase@milbergNY.com or visit the
firm's Website: http://www.milberg.com
Schiffrin & Barroway, LLP initiated a securities class action in the
against Atlas Air Worldwide Holdings, Inc. (NYSE: CGO) five senior
officers of Atlas, and Morgan Stanley Dean Witter on behalf of
purchasers of Atlas Air Worldwide Holdings, Inc. from April 18, 2000
through October 15, 2002, inclusive.
The complaint charges Atlas Air Worldwide Holdings, Inc., five senior
officers of Atlas, and Morgan Stanley Dean Witter with issuing false
and misleading statements concerning its business and financial
condition. At the same time, Atlas sold 3 million shares of Atlas
common stock for $31.75 per share in the May 2000 offering, and
controlling shareholders sold 1.5 million shares of Atlas common stock
at $43.50 per share in the September 2000 offering.
The true facts began to be disclosed on October 16, 2002 when Atlas
announced that it would be required to restate its financial results
for fiscal years 2000 and 2001, in the areas of obsolescence,
maintenance expense, and allowance for bad debt. Preliminary
indications were that the cumulative impact of the restatement of
fiscal 2000 and 2001 will reduce after-tax income for fiscal 2000 and
2001 by roughly $60 million to $65 million.
Shares of the Company's common stock, which had traded at a high of
$45.69 per share during the class period, fell to as low as $1.70 after
announcement of the restatement.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
action on behalf of purchasers of the securities of Comerica
Incorporated (NYSE:CMA) between July 17, 2002 and October 1, 2002,
inclusive, in the United States District Court, Eastern District of
Michigan, against the Company and:
(1) Ralph W. Babb Jr.,
(2) Elizabeth S. Acton and
(3) Marvin J. Elenbaas
market between July 17, 2002 and October 1, 2002, thereby artificially
issued statements regarding the Company's financial performance and
filed a quarterly report with the SEC which described the Company's
increasing revenues and financial performance. These statements were
materially false and misleading because they failed to disclose and/or
(i) that the Company had materially overstated its net income by
approximately $23 million in the second quarter of 2002;
On October 2, 2002, before the market opened for trading, the Company
issued a press release announcing that it will record a $328 million
charge "related to an incremental provision for credit losses and
goodwill impairment for the company's Munder Capital Management
subsidiary." As a result, the Company will be restating its second
quarter earnings to $161 million, compared to previously reported
earnings of $184 million. The Company further reported that the
additional provision and charge-offs related to the second quarter
"were determined during a recent subsidiary regulatory examination."
Following this report, shares of Comerica fell $10.19 per share, or
$20.3%, to close at $40 per share, on volume of more than 10.855
million shares traded, or more than ten times the average daily volume.
Phone: 800-320-5081 by E-mail: Comericacase@milbergNY.com or visit the
Bernstein Liebhard & Lifshitz LLP initiated a securities class action
Indiana on behalf of all persons who acquired Conseco, Inc. (OTC BB:
CNCE; formerly NYSE: CNC).
The suit charges the Company and certain of its officers and directors
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission.
Among other things, plaintiff claims that defendants disseminated a
series of materially false and misleading statements regarding problems
with the Company's liquidity and the Company's manufactured-homes
financing business.
The disclosure on the last day of the class period that the Company
would miss certain bond payments caused the price of Company stock to
drop substantially. The complaint charges that defendants were in
possession of materially adverse information about the Company's
liquidity problems and manufactured-homes financing business but failed
to fully disclose the information to investors, causing its stock price
to become artificially inflated, inflicting damages on investors.
For more details, contact Ms. Linda Flood by Mail: 10 East 40th Street,
New York, New York 10016 by Phone: 800-217-1522 or 212-779-1414 by E-
mail: CNCE@bernlieb.com or visit the firm's Website:
http://www.bernlieb.com.
The Law Office of Mark McNair initiated a securities class action
against First Horizon Pharmaceuticals (Nasdaq:FHRX), on behalf of, and
seeks damages for, shareholders who purchased the stock between April
24, 2002 and July 2, 2002, in the United States District Court for the
Southern District of New York.
The lawsuit alleges that the Company violated the federal securities
laws by issuing a series of materially false and misleading statements
to the market. As a result of these misrepresentations, investors have
sustained tremendous losses.
On July 2, 2002, the Company shocked the market by revealing that it
expected revenues of between $25 and $26 million and earnings per share
between $0.00 and $0.02, excluding a $2.2 million debt write-off for
the second quarter of 2002.
For the full year, the Company revised its guidance to $0.34 a share, a
substantial drop from its earlier guidance of $0.56 to $0.57 a share.
Its July 2, 2002 press release attributed the massive shortfall mainly
to "greater than expected erosion of sales in the second quarter of two
of its products," Tanafed and Prenate GT, as well as "distraction"
arising out of a sales force "realignment."
This announcement had a devastating impact on Company shareholders.
Its stock plummeted 81%, falling $14.73 to close at $3.51 on volume of
about 30 times its daily average.
If you have any questions, please contact Mark McNair at 1101 30th
Street PN.W. Suite 500, Washington, D.C, 20007 by telephone at
877-511-4717 or 202-872-4717, via e-mail at
mcnair@justice4investors.com or visit our website
www.justice4investors.com .
United States District Court for the Southern District of New York on
behalf of all purchasers of the common stock of Allied Riser
Communications Corp. (formerly (Nasdaq: ARCC)) from November 23, 1999
through July 11, 2001, inclusive.
The complaint charges Goldman Sachs & Co. and certain of its officers
and directors with issuing analyst reports regarding Allied Riser that
recommended the purchase of Allied Riser common stock and which set
price targets for Allied Riser common stock, without any reasonable
factual basis.
The complaint further alleges that, when issuing its Allied Riser
analyst reports, defendants failed to disclose significant, material
conflicts of interest which it had, in light of defendants' Allied
Riser reports, to obtain investment banking business for Goldman.
Furthermore, in issuing Allied Riser reports, in which it recommended
the purchase of Allied Riser common stock, defendants failed to
disclose material, non-public, adverse information they possessed about
Allied Riser.
Throughout the class period, defendants maintained a "BUY"
recommendation on Allied Riser in order to obtain and support lucrative
financial deals for Allied Riser. As a result of defendants' false and
misleading analyst reports, Allied Riser common stock traded at
artificially inflated levels during the class period.
Wechsler Harwood LLP initiated a securities class action in the United
States District Court for the Northern District of California on behalf
all persons who purchased or acquired Liberate Technologies
(Nasdaq:LBRT) securities between the period of September 20, 2001 and
October 15, 2002, inclusive against the Company and certain of its
officers and directors.
with violations of federal securities laws. Among other things,
plaintiff claims that defendants' material omissions and the
dissemination of materially false and misleading statements regarding
the nature of the Company's revenue and earnings caused its stock price
The suit alleges that during the class period, defendants artificially
inflated revenue by recognizing certain software license fees in
violation of GAAP and the Company's own stated policies. On October
15, 2002, after the market closed, defendants disclosed that the
"appropriateness and timing" of certain software license fees had been
called into question and that the Company would likely restate its
fourth quarter and fiscal year 2002 financial results. The Company's
stock price plummeted 16% in after-hours trading as a result of the
disclosure of its accounting problems. On the next day, October 16,
2002, the fallout from the announcement continued as Company stock
dropped more than 22% from the previous day's close.
For more details, contact Ramon Pi�on by Mail: 488 Madison Avenue, 8th
Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
rpinon@whesq.com or visit the firm's Website: http://www.whesq.com
behalf of all purchasers of the common stock of Metromedia Fiber
Network, Inc. (Pink Sheets: MFNXQ) from November 25, 1997 through July
25, 2001, inclusive.
The complaint charges Salomon Smith Barney Inc. and Jack Grubman and
certain of its officers and directors with issuing analyst reports
regarding Metromedia that recommended the purchase of Metromedia common
stock and which set price targets for Metromedia common stock, without
any reasonable factual basis.
The complaint further alleges that, when issuing its Metromedia analyst
reports, defendants failed to disclose significant, material conflicts
of interest it had, in light of defendants' Metromedia reports, to
obtain investment banking business for Salomon.
Furthermore, in issuing Metromedia reports, in which it recommended the
purchase of Metromedia common stock, defendants failed to disclose
material, non-public, adverse information they possessed about
Metromedia. Throughout the class period, defendants maintained a "BUY"
recommendation on Metromedia in order to obtain and support lucrative
financial deals for Salomon.
The class period begins on November 25, 1997 and ends on July 25, 2001,
the date defendants belatedly downgraded Metromedia from a "Buy" to a
"Neutral." As a result of defendants' false and misleading analyst
reports, Metromedia common stock traded at artificially inflated levels
during the class period.
Glancy & Binkow LLP initiated a securities class action in the United
States District Court for the District of Minnesota on behalf of a
class consisting of all persons who purchased securities of The St.
Paul Companies (NYSE:SPC) between November 5, 2001 and July 9, 2002,
The suit charges the Company, Chief Executive Officer J.S. Fishman and
Chief Financial Officer Thomas A. Bradley with violations of federal
securities laws. Among other things, plaintiff claims that defendants'
omissions and misleading statements concerning the Company's exposure
to asbestos claims liability caused its stock price to become
artificially inflated, inflicting damages on investors.
The suit alleges that during the class period, defendants failed to
make adequate disclosures or take adequate reserves concerning
litigation filed in 1993 in California state court known as Western
MacArthur Co. et al. v. United States Fidelity & Guaranty Co., et al,
Case No. 721595-7 (consolidated with Case No. 828101-2, Superior Court
of California, Alameda County).
Plaintiff claims that although trial of the Western MacArthur
litigation commenced in approximately March 2002, the Company first
disclosed the existence of the litigation on or about May 15, 2002, but
did not disclose or quantify the amount or general magnitude of
potential exposure to liability which the Company might suffer as a
result of the litigation, nor did the Company increase its reserves at
that time.
On June 3, 2002, the Company announced that a settlement had been
reached whereby it would pay almost $1 billion to satisfy the claims
reflected in the litigation, although the Company's SEC filings stated
that as of December 31, 2001, the Company's net reserves for asbestos
claims was only $367 million.
The suit charges that the Company tried to disguise the impact of the
Western MacArthur litigation settlement by focusing on the alleged
after-tax impact of the litigation and falsely claiming that $150
million of the litigation payments could be charged to the Company's
reserves, and that a subsequent SEC filing by the Company reflected its
failure to take adequate reserves for its potential liability in the
News of the Western MacArthur litigation settlement caused the price of
the Company's stock to decline during the Class Period from a high of
$49.20 on November 5, 2001 to a low of $34.65 on July 9, 2002, the last
day of the Class Period.
For more details, contact Lionel Z. Glancy by Mail: 1801 Avenue of the
Stars, Suite 311, Los Angeles, California 90067 by Phone: 310-201-9150
or 888-773-9224 or by E-mail: info@glancylaw.com.
States District Court for the Northern District of Texas, Dallas
Division on behalf of all purchasers of the common stock of TXU
Corporation (NYSE:TXU) from April 25, 2002 through October 11, 2002,
The complaint charges the Company and certain of its officers and
directors with violations of the federal securities laws arising out of
defendants' issuance of false and misleading statements about the
Company's business, operating performance and prospects.
misrepresented that the Company could succeed in the competition
created by deregulation. Defendants then misrepresented that the
Company's European operations were improving, that it would succeed in
competition in the U.K. market and that it was on track to report EPS
of $4.35+ and $4.60+ in 2002 and 2003, respectively. As a result of
these allegedly false statements, Company stock traded at artificially
inflated levels- as high as $56 per share.
Due to this inflation, defendants were able to complete a secondary
offering of 11.8 million shares of common stock, priced at $51.15 per
share and 8.8 million units of FELINE PRIDES (equity linked debt
securities), raising nearly a billion dollars in much needed financing.
Subsequent to the offering, defendants needed to maintain a high stock
price to avoid triggering additional debt and the conversion of
preferred stock into common stock pursuant to a partnership agreement.
On October 4, 2002, the Company issued an earnings warning, indicating
that due to customer attrition and ongoing problems in Europe, the
Company would report 2002 EPS of only $3.25. On this news, the
Company's stock price declined to $27 per share, from more than $40 per
share the prior week.
However, the stock remained inflated as defendants concealed the
extreme liquidity problems from which the Company was suffering.
Defendants even assured the market that the Company was strong
financially and that the dividend was "sound and secure."
Then, on October 14, 2002, before the market opened, TXU stunned the
market with news that it was cutting its dividend 80%, to $0.125 per
share, and would no longer support its European operations. The
Company's stock price immediately collapsed on this news to as low as
$10.10 per share before closing at $12.94, a one day drop of 31% on
volume of 39 million shares.
For more details, contact Craig T. Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
clowther@whhf.com or visit the firm's Website: http://www.whhf.com
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
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