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/raid1/www/Hosts/bankrupt/CAR_Public/000208.MBX C L A S S A C T I O N R E P O R T E R Tuesday, February 8, 2000, Vol. 2, No. 27 Headlines CENTURY BUSINESS: Lead Counsel to Expand Period of OH Securities Suit CHRISTIE'S INT'L: Schiffrin & Barroway Files Suit in NY Re Price Fixing CHRISTIE'S, SOTHEBY'S: European Union Probes into Alleged Collusion COMMUNITY COLLEGES: Part-Time Instructors in WA Win Case for Retirement COMPS.COM: Information Provider Agrees to Settle Securities Suit in CA CRUISE LINES: Miami-Dade Circuit Court Upholds Suit over Port Fees FARBMAN GROUP: Emergency Hearing for Indian Village Manor Lawssuit GUN MANUFACTURERS: Press Briefing at Office of the Press Secretary HMO: Nevada Ct Approves $ 28.8 Mil Settlement for RICO Claims V. Humana HMOs: Study Predicts Profits to Soar 60%; Not-For-Profits to Struggle METLIFE, CA: Retired Judge Sues over Fraud in Retirement Annuities MITSUBISHI MOTOR: Fd Judge OKs Racial Bias Suit But Invites Review MOBIL OIL: CASA Says Fuel Crisis Grounded Fewer Planes Than Feared ONTARIO: Lawsuit over Arsenic at Deloro Mine Site May Include Thousands PAYDAY LENDERS: Edelman, Combs Sues Check 'n Go & CheckSmart in Indiana PEDIATRIX MEDICAL: Announces Amended Securities Complaint Filed in FL PNC BANK: Ohio Appeals Ct Reinstates Action on Loan Payment Deferrals PRUDENTIAL INSURANCE: Some See Flaws in Settlement for Case Re Policies SHIGELLA OUTBREAK: Keller Rohrback Files Nationwide Suit in CA SOTHEBY'S INC: Schiffrin & Barroway Files Suit in NY over Price Fixing TOBACCO LITIGATION: Flight Attendants File More Second-Hand Smoke Suits * MD Lobbyists on Late-Fees Bill and Lawyers Disagree over Amount ********* CENTURY BUSINESS: Lead Counsel to Expand Period of OH Securities Suit --------------------------------------------------------------------- The Law Offices of Steven E. Cauley, P.A., court-appointed co-lead counsel in a class action filed in the United States District Court for the Northern District of Ohio, Eastern Division on behalf of purchasers of common stock of Century Business Services Inc. (Nasdaq: CBIZ) last September, announced on February 4 that they will be amending the complaint to include purchases of common stock between November 9, 1999 and January 28, 2000, inclusive. Co-Counsel moved for class certification on December 15, 1999, and filed a consolidated complaint on January 28, 2000 for purchasers of common stock between February 6, 1998 and November 23, 1998. Contact: Law Offices Of Steven E. Cauley, P.A. 2200 N. Rodney Parham Road, Suite 218, Cypress Plaza, Little Rock, AR 72212, E-mail: CauleyPA@aol.com or 1-888-551-9944 - toll free CHRISTIE'S INT'L: Schiffrin & Barroway Files Suit in NY Re Price Fixing ----------------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons who purchased art, jewelry, musical instruments and a variety of other items through Christie's International auctions during the period January 1, 1992 through the present, and on behalf of sellers of such items during the period March 1995 through the present. The complaint alleges that, in approximately January 1992, Christie's fix the price of commissions charged to buyers at 15% of the first $50,000 of merchandise purchased and 10% of any amount over the $50,000. Prior to that time, buyers were charged a flat 10% commission. The complaint further alleges that in approximately March 1995, Christie's fix the price of sellers' commissions by adopting with another auctioneer identical detailed sliding-scale commission rates to the sellers. Christie's has supplied evidence of the price fixing of auction commissions to the United States Justice Department, which has been investigating anti-competitive practices in connection with Christie's and Sotheby's auctions. For more information concerning this suit, please contact Stuart L. Berman, Esq. of Schiffrin & Barroway, LLP, toll free at 1-888-299- 7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com CHRISTIE'S, SOTHEBY'S: European Union Probes into Alleged Collusion ------------------------------------------------------------------- The European Union has launched a probe into Sotheby's Holdings Inc. and Christie's International PLC, the world's two leading art auctioneers, over alleged limited competition on commissions, an E.U. spokesperson says. Michael Tscherny, spokesperson for competition issues at the European Commission, said on January 6 in a telephone interview from Brussels that the probe had been launched a week ago. He said he could give no more details of the investigation. The news comes days after antitrust litigation in the United States against Sotheby's and Christie's escalated with the filing of five new suits alleging the two auction houses conspired to set commission prices on art and antique sales. On February 4 Christie's announced that it told the U.S. justice department that behaviour by previous management might be relevant to the government's probe into alleged price-fixing of commissions in the art world, a disclosure that appeared to give new life to the probe that began in 1997. At least eight antitrust suits seeking class-action status were filed against the auctioneers. The first alleged that, as early as 1992, the auction houses agreed to stop competing with one another on the basis of price. The suit alleged the firms conspired to raise their commissions to the same levels. COMMUNITY COLLEGES: Part-Time Instructors in WA Win Case for Retirement ----------------------------------------------------------------------- Part-time faculty at state community colleges have won a significant victory in their ongoing legal battle over retirement benefits. King County Superior Court Judge Steven Scott ruled that community colleges must count part-time instructors' work hours outside the classroom in addition to the in-class teaching hours when determining eligibility for retirement benefits and service credit. "This is a very significant decision because the state has always maintained that only in-class hours count towards retirement," said Stephen Strong, an attorney representing the part-time teachers. "The part-time instructors were never informed about their retirement eligibility and they therefore lost a valuable benefit." Attorneys for the plaintiffs argued that hundreds, perhaps thousands, of instructors lost out on benefits because their work hours were calculated incorrectly. The class-action lawsuit was filed against the state Board for Community and Technical Colleges, and Department of Retirement Systems in December 1998. Attorneys for the state could not immediately be reached for comment. Until recent changes, state law said that part-timers who worked 70 hours a month were entitled to retirement benefits. State officials had interpreted that to mean 70 hours in the classroom. The use of part-time faculty in the state's 33 community and technical colleges has grown in the past decade. In 1990., part-timers taught 34 percent of all community college courses. By fall 1998, they were teaching 40 percent. (The Associated Press, February 4, 2000) COMPS.COM: Information Provider Agrees to Settle Securities Suit in CA ---------------------------------------------------------------------- COMPS.COM, Inc. (Nasdaq:CDOT), a leading national commercial real estate information provider, has reached an agreement in principle that provides for the dismissal with prejudice of a purported shareholder class action lawsuit, which was filed following COMPS' November 4, 1999 announcement that it had entered into a merger agreement and plan of merger with CoStar Group, Inc. The lawsuit, which alleges claims for breach of fiduciary duty against COMPS and four of its directors, was filed on November 8, 1999 in the Superior Court of California, County of San Diego. A similar class action was previously filed on November 4, 1999 in the Court of Chancery in the State of Delaware but was subsequently voluntarily dismissed. The completion of the settlement is subject to Court approval. COMPS and the individual defendants deny the allegations in the lawsuit and claim that resolution of the claims is to avoid the costs of further litigation. As a result of the resolution, the parties have agreed to the following modifications relating to the proposed merger. The Merger Agreement provides that each holder of a share of COMPS' common stock may elect to receive either $7.50 in cash or 0.31496 shares of CoStar common stock, but these elections will be adjusted so that 50.1% of the COMPS shares receive CoStar common stock and 49.9% of the COMPS shares receive cash. Defendant COMPS directors Christopher A. Crane, Robert C. Beasley, and Greg Avis, on behalf of himself and Summit Partners and their affiliates, had intended to elect 100% CoStar stock in the proposed merger in exchange for their collective 7,091,567 COMPS shares. Pursuant to the settlement, each of Avis, Beasley and Crane now agree to elect to receive (a) 89.8% of these shares in CoStar stock at the exchange ratio provided for in the Merger Agreement, and (b) 10.2% of these shares in cash at $7.50 per share. This will have the effect of reducing the amount of stock consideration that Crane, Beasley, and Avis will receive, and increasing the amount of stock consideration that other shareholders will receive. The defendants also have agreed to advance attorneys' fees to plaintiff's counsel for their fees and expenses. The closing of the proposed merger between COMPS and CoStar currently is scheduled to occur on February 10, 2000 following a special meeting of COMPS shareholders to consider approval of the transaction. CRUISE LINES: Miami-Dade Circuit Court Upholds Suit over Port Fees ------------------------------------------------------------------ Plaintiffs who filed a class-action suit against Carnival Cruise Lines, Costa Cruise Lines N.V. and Kloster Cruise Lines in 1996 won an appeal in Miami-Dade Circuit Court on January 31, allowing them to proceed. Now consumers across the country will finally have their day in court, said Robert C. Gilbert, who represents the plaintiffs. The plaintiffs allege the cruise lines pocketed a portion of port charges paid by passengers. They allege the overcharge of port fees from mid-1992 to the late 1990s amounts to hundreds of millions of dollars. The alleged overcharging of passengers for port fees, which were part of the ticket price, amounts to an unfair and deceptive trade practice, the plaintiffs claim. The first lawsuit was filed in 1992. In 1996, the plaintiffs filed their class-action suit in Miami Circuit Court in an attempt to get the cruise lines to repay the overcharges. The plaintiffs appealed after the court denied class certification in March 1999. The plaintiffs claim the charges should have gone directly from passengers to the ports. In the late 1990s, all cruise lines modified their port charge practices at the request of the Florida attorney general. Cruise line passengers are now charged lump sums, without itemizing port charges. The bottom line is theres all sorts of issues that remain to be litigated, said defense attorney Joel Perwin of Podhurst Orseck Josefsberg Eaton Meadow Olin & Perwin. This [decision] simply tells them they got into the court house. Now they have to prove their case and our next step is to defend the defendant. (Miami Daily Business Review, February 4, 2000) FARBMAN GROUP: Emergency Hearing for Indian Village Manor Lawsuit ---------------------------------------------------------------- According to Herman J. Anderson, the lead class action plaintiff in a lawsuit against the Farbman Group (FG), powerful and politically well-connected southeastern Michigan real estate developers, because Wayne County Circuit Court Judge Louis F. Simmons, Jr., refused to allow them to evict Anderson from the Indian Village Manor Condominiums, the FG Attorneys, in a scurrilous, vicious, personal and racially motivated attack on Judge Simmons's judicial integrity, are asking Wayne County Circuit Chief Judge Michael Sapala to "provide counsel and assistance to Judge Simmons (and) take steps to effect compliance by Judge Simmons with applicable court rules..." The hearing is scheduled for 9:00 a.m. Mon. Feb. 7, 2000 before Wayne County Circuit Chief Judge Michael Sapala, Courtroom 701 Coleman A. Young Municipal Center. Contact: Herman J. Anderson of Anderson, Anderson & Associates, 313-331-2964 GUN MANUFACTURERS: Press Briefing at Office of the Press Secretary ------------------------------------------------------------------ Office of the Press Secretary - Press briefing by Secretary of Treasury Larry Summers, Director of Domestic Policy Council Bruce Reed, Director of ATF Brad Buckles, Under Secretary of Treasury for Enforcement Jim Johnson, The Briefing Room (Contents related to gun control are extracted and presented below.) MR. KENNEDY: We have with us Secretary Summers; Director of the Domestic Policy Council, Bruce Reed. Also with us is Jim Johnson, Under Secretary for Enforcement; and Brad Buckles of the ATF. Thank you. MR. REED: Today's announcement is further proof that we will do everything in our power this year to keep guns out of the wrong hands. We're fighting a two-front war on gun crime, first with the most aggressive enforcement efforts in history and, second, by pressing Congress to strengthen our gun laws. On enforcement, we announced earlier this year that federal gun prosecutions are up 16 percent since we took office, up 25 percent in the last year alone, and that the average sentence of those convicted of federal gun crimes is two years longer than it was when we took office. It has gone from six years to eight years. Overall, gun prosecutions, federal, state and local, are up by an even greater percentage, at a time when gun crime has dropped by a third. Today's report, which the Secretary will talk about, shows that the number of licensed gun dealers has dropped from 284,000 in '92 to just 104,000 today. Today's action, which the President announced, is the most aggressive regulatory effort on suspect dealers in history. It builds on the findings of the Commerce in Firearms Report that the Secretary will talk about and as the President mentioned, on the work of Chuck Schumer from New York. And, finally, we asked Congress for a $280 million increase for gun crime enforcement to hire 500 new agents and inspectors at ATF; to hire 1,000 new federal, state and local gun prosecutors, and take other measures. If Congress is serious about enforcing gun laws, our budget gives them the chance to put their money where their mouth is. As the President said, we also need to strengthen our gun laws this year. Our top priority is passing the gun bill to close the gun show loophole. The President called in the State of the Union on Congress to make that the first order of business. We've also proposed other measures to make it easier for ATF to do its job, by allowing three unannounced inspections a year, for example, instead of one, which is current law. And the President has called for photo licensing, requiring all new handgun buyers to have a photo license that demonstrates they passed a Brady background check and a gun safety course. We will continue to take executive actions all year long to keep guns out of the wrong hands, and to press Congress to do its part. So, now, let me turn it over to Secretary Summers, who has made fighting gun crime a top priority at Treasury, and who has assembled a very impressive team with Deputy Secretary Eizenstat, Under Secretary Jim Johnson and the new Director of ATF, Brad Buckles. SECRETARY SUMMERS: I want to acknowledge the hard work of Jim Johnson, Brad Buckles, Susan Ginsberg, Wally Nelson, Neal Wolin, on the report that is being announced today. This is the first Annual Report on Commerce and Firearms in the United States. It represents new analysis leading to new measures. Let me highlight six measures. First, the ATF will conduct intensive inspections of the one percent of dealers that account for over half of all crime guns traced last year. If violations of law are found, we will take action against these dealers. Second, ATF will require a subset of those dealers, those whose guns fall especially quickly into criminal hands, to provide it with information on all used guns taken into inventory. This will allow us, for the first time, to trace used guns sold by those dealers when they're recovered in crime. Third, ATF will require dealers who fail to cooperate with crime gun trace requests, to produce all their firearms transaction records for the past year and on an ongoing basis. This will enable us to make sure that those uncooperative dealers follow the law and revoke their licenses when appropriate. Fourth, based on our finding that large numbers of guns are lost or stolen in transit each year, the ATF will require - is proposing to require all firearms dealers to maintain close tabs on their firearms by conducting inventories and notifying ATF within 48 hours of losses or thefts. Fifth, ATF will tell manufacturers which of their guns are used in crimes, information that responsible manufacturers can use to make sure that they do not sell their guns to problem dealers. And, sixth, we are proposing - reiterating our proposal to hire 500 more ATF agents, agents and inspectors, and to increase the budget for gun tracing. This represents an aggressive set of measures directed at enforcing more fully and effectively the laws on the books so as to reduce gun crime. . . . Q A question on the ATF report. One percent of the gun dealers account for 57 percent of gun crime traces. How many - what percentage of gun sales do those dealers account for? SECRETARY SUMMERS: We don't have that number. We will get it for you. I think it's considerably less. Q And another question. You said you were going to give gun manufacturers information on which of their weapons and maybe which of their dealers are being used in crimes. Are you going to make that information public as well so that the press and the public can have access to it? SECRETARY SUMMERS: Yes. Q Mr. Secretary, at least initial comments from the National Rifle Association regarding these new initiatives reported in The New York Times today, basically NRA is saying, nothing new here, the administration is making a lot of show about stuff that it already is able to do, I believe. What's your response to that? SECRETARY SUMMERS: We welcome the NRA's agreement that we are acting within our legal authorities. But this is something new. This is an intensified focus and allocation of enforcement resources in the most effective way. This is a kind of approach with which all Americans ought to agree, because the steps are steps that are specifically targeted at gun crime and at a more effective strategy for tracing guns that are used in crime, and preventing violations of law with respect to the sale to criminals. So this is not an approach that is in any way punitive with respect to guns in general, but it is an approach of assuring that our resources are targeted as effectively as possible at reducing the incidents of gun crime. And so I would hope that it would be widely supported. Q To follow up on that, one of the criticisms of the NRA has also been that we don't need new gun laws, we need better enforcement of the ones on the books. What you're doing is better enforcing gun laws, using the ATF. Why, if that's so important, hasn't it already been done? SECRETARY SUMMERS: Well, we have worked in recent years to expand substantially our capacities in gun tracing. And as - I began my statement by saying that new analysis is leading to new measures. For the first time, we've had the most comprehensive gun tracing data available, and that's what has led us to the conclusion that a large part of the problem comes from a small part of the population of dealers, and to the focus that's been announced today. Q I'm wondering what the administration is doing about the problem of completing background checks within the three business days, as required. We're finding that guns are going to criminals because the background checks just weren't completed in a timely fashion. SECRETARY SUMMERS: Brad? MR. BUCKLES: The background checks, of course, are conducted through the national Insta-Check system. And that system is very successful in completing the overwhelming majority of cases. But there are cases where they're not being completed in time. The difficulty in the federal government fixing that problem is the fact that it generally involves limitations on state and local authorities to be able to produce the records that are necessary in time, because not all state and local systems are computerized. And there has been additional monies, as part of the overall Brady law, that were made available to upgrade those state systems, and those actions are continuing to take place. Q How serious is that statutory constraint that there can only be one inspection per year - or one unannounced, random inspection per year? And how will you conduct these focused inspections if you have to operate within that constraint? MR. BUCKLES: The statute permits one standard regulatory inspection a year. There are circumstances under which we can gain access to dealer records that require some sort of - depending on what it's for - some level of suspicion of something that's going on. We can go in anytime if we need a record for purposes of completing a criminal investigation. We can go in at other times if we have reason to believe that there's some violation going on. But for purposes of checking up on people to make sure that the routine records are being kept, that is the situation where we're limited to one inspection a year. Q And you could do these focused inspections as part of that? MR. BUCKLES: These will be using our one inspection a year. Now, what we will see out of this is that, with the 1,000, some small number of those, or some percentage of those, will be people we've done recently, already, because of our previous inspection. They weren't picked out because of this process. But we'll find that when we look at it, some of those will already have undergone intensive inspections. So with those people, we're not going to be able to go back and do a second inspection within the calendar year. . . . Q One more question on guns for Bruce. Bruce, I wonder if you can tell us what the status is of the administration's potential negotiations with the gun industry over this national class action lawsuit, and whether the administration talked with the gun industry about this new proposal it's announcing today, and if the gun industry is supportive of this crackdown on rogue gun dealers? MR. REED: Well, to the first question, as the President said today, we continue to believe that there are responsible voices within the gun industry who will want to join with us to make progress. We had planned to meet in Las Vegas two weeks ago to have those discussions and, under pressure from the gun lobby, some of the gun manufacturers refused to go forward. But we continue to believe that we will be able to make progress on it this year, however we are prepared to go forward with the lawsuit if we need to. As to today's announcement, I think these steps should be welcomed by the gun industry. They have long sought the information that ATF is now going to make available to them about gun traces and I think that, as Secretary Summers said, there should be no debate about the need to intensify our efforts to enforce gun crime laws. Q Do you think they are two separate entities, the NRA and the gun industry? MR. REED: I do. Q And one isn't supported by the other? MR. REED: I think there are a number of responsible manufacturers who have not been well-served by the gun lobby. The gun lobby has consistently tried to shoot down every legislative effort to make progress and we have had a good working relationship with many gun manufacturers who have supported legislative efforts. So I think that they are two distinct entities. SECRETARY SUMMERS: Can I just add that in this area, there are, obviously, a range of views and there is, obviously, room for substantial controversy over some aspects of this agenda. But I would hope that the idea that we should be trying to design and market firearms in a way that reduces the likelihood that children will be killed in accidents, that we should be trying to design and market firearms in a way that reduces the risk that they will come into the hands of felons is something that we can all agree on. This is not about politics, and we in the Treasury and at the ATF are committed to working with responsible manufacturers of firearms towards the achievement of those important objectives. Q Why isn't the figure of 12 children killed every day more publicized by the government? SECRETARY SUMMERS: Helen, I think the President - neither the President, nor Bruce, nor I, nor Brad has been - nor the Attorney General have been reticent in the use of that figure in any way. We believe that if one child is killed on one day, that is one too many. And we are very committed to an agenda of strengthening the available resources, strengthening the targeting under existing law, and strengthening the legislative framework. And each of those three things can make an independent contribution, and that's our approach to something that I think the President in the State of the Union made very clear was one of his major priorities. MR. REED: And, Helen, if I could just say, the American people are not the problem here. The American people overwhelmingly support what we're trying to do. They were shaken by the tragedy in Columbine 10 months ago. The problem here is that Congress has failed to act on the American people's concerns. THE PRESS: Thank you. HMO: Nevada Ct Approves $ 28.8 Mil Settlement for RICO Claims V. Humana ----------------------------------------------------------------------- A Nevada federal court has approved an approximately $ 28.8 million settlement agreement in a Racketeer Influenced and Corrupt Organizations Act and antitrust claims action against Humana Inc. (Mary Forsyth, et al. v. Humana Inc., et al., No. CV-S-89-00249-DWH [LRL], D. Nev.; See 11/24/99, Page 16). The settlement includes $ 11.8 million in attorneys' fees and $ 900,000 in court costs. The agreement for the class action was filed Aug. 12 with the U.S. District Court for the District of Nevada. The suit alleges Humana Health Insurance of Nevada Inc. received large discounts from its own hospital whereby its beneficiaries paid significantly more than the 20 percent payment for which they were responsible, and Humana paid significantly less than its obligatory 80 percent. Under terms of the settlement, the co-payor class will receive $ 11,986,200, or 7.38 times the difference between the two methods of calculation. The premium payor class will receive $ 4,113,800, a 3.6 percent refund of the total premiums paid during the class period. Humana will then be released from any and all claims that were brought or could have been brought by any class member, including claims involving co-insurance payments, premium payments or payments to any hospital services at Sunrise Hospital. According to Humana's memorandum in support of the joint motion for preliminary approval of settlement, plaintiffs' counsel will petition for an award of attorneys' fees amounting to $ 11.8 million and costs of $ 900,000. Humana said in the memo it does not believe the request is unreasonable given the 10 years of litigation involved. Humana is represented by Dennis L. Kennedy of Lionel Sawyer & Collins in Las Vegas; Jeffrey W. Kilduff and Neil K. Gilman of O'Melveny & Myers in Washington, D.C.; and Linda J. Smith and David Garcia of O'Melveny & Myers in Los Angeles. Representing the class are J. Randall Jones and Will Kemp of Harrison, Kemp & Jones in Las Vegas, Kevin R. Stolworthy of Jones Vargas in Las Vegas and W.B. "Bill" Markovits of Markovits & Greiwe in Cincinnati. (Mealey's Managed Care Liability Report, December 22, 1999) HMOs: Study Predicts Profits to Soar 60%; Not-For-Profits to Struggle --------------------------------------------------------------------- With for-profit companies leading the way, managed care industry profits are expected to top $3 billion this year, up 60% from 1999, a new study finds, as the industry faces intense political and legal challenges. "Managed Care in the New Millennium," published by Corporate Research Group, warns that big losses at not-for-profit HMOs are raising concerns about the ability of not-for-profits to survive in an increasingly cut-throat economic climate. Corporate Research Group says industry revenues should grow to $176 billion from $162 billion in 1999. Almost all the increase will come from higher rates, with enrollment expected to rise by only 1%. After-tax margins of publicly owned HMOs hit 2.6% in the third quarter of 1999, after averaging between eight-tenths of 1% and 1.6% for the previous two years. The return to profitability does not extend to a number of the leading not-for-profits, including two Massachusetts HMOs -- Harvard Pilgrim (Brookline, MA), which lost $150 million last year, and Tufts Health Plan, which lost $45 million. Kaiser Permanente, the biggest not-for-profit, is only now returning to profitability after two years of losses. Author Carl Mercurio says, "The industry's strategic underpinnings also seem to be crumbling," in the face of a consumer backlash against HMOs and now, a legal onslaught by class action lawyers. He predicts that plaintiffs "will have difficulty obtaining class action status" and says most suits will be dismissed or settled at little cost. Mercurio also predicts that "high-profile face-downs" will continue as HMOs, hospitals and physicians battle for healthcare dollars. The largest managed care companies, based on estimated 1999 revenues, are United Health Group, $19.5 billion; Aetna, $19.3 billion; Kaiser, $16.6 billion; and Cigna, $13.5 billion. Others in the top 10 are Humana, PacifiCare, Foundation Health Systems, Wellpoint, Oxford and Harvard Pilgrim. The 135-page report contains 45 company profiles and 50 charts and tables, and is priced at $1195. Companion reports cover managed care in 12 states -- Arizona, California, Florida, Illinois, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania and Texas. (Source: Corporate Research Group, Inc.) METLIFE, CA: Retired Judge Sues over Fraud in Retirement Annuities ------------------------------------------------------------------ A class action law suit was filed Friday, February 4 in Los Angeles Superior Court by retired Judge Robert P. Schifferman, age 72, on behalf of himself and other retired California State employees in Schifferman, et. al., v. Metropolitan Life Insurance Company, et. al. (MetLife), (Case No. BC22435). Howarth & Smith announces the class action lawsuit which impacts retired state employees who invested in State's "Savings Plus Program" and Purchased Annuities sold by major insurance companies. The complaint alleges fraud, misrepresentation and concealment over responsibility for the payment of taxes on annuity investments offered through the State's "Savings Plus Program." Also named as defendants are Travelers Life and Annuity Company, United of Omaha Life Insurance Company, Mutual of Omaha, Aetna Life Insurance Company, Pacific Mutual Insurance Company, Transamerica Occidental Life Insurance Company, and the State of California. Plaintiffs seek injunctive relief, general and punitive damages. Class Action Department 59 will handle pre-trial proceedings. Plaintiffs are represented by Don Howarth and Suzelle M. Smith with the Los Angeles law firm of Howarth & Smith. Judge Schifferman became a Los Angeles County Superior Court Judge in 1973 and retired in 1991. As a State employee, Judge Schifferman was entitled to participate in and enrolled in the State's "Savings Plus Program" (the Plan), a deferred compensation program offered through the California State Department of Personnel Administration (Personnel) by which retired employees can invest in annuities sold by the insurer defendants. Under the Plan, the Judge invested in a joint life for a term certain annuity from MetLife with the entire balance of $612,231.71 in his Plan account and was promised a monthly annuity of $4,143.06, beginning June 1, 1998. MetLife gave him a statement showing that he had been required to pay a 2.35% State tax, resulting in a $14,387.45 reduction in the amount available to invest in the annuity. He believed the tax was a lawfully imposed tax on the purchaser/investor under State revenue statues, rather than a tax on the insurer. Once an annuity is purchased, it cannot be increased or decreased. In August and October 1998, Judge Schifferman contacted by fax an "annuity representative" working for the Plan for information about the legislative authority for the 2.35% State tax, but received no response to his request. He later contacted a MetLife Sales Coordinator, who finally sent him copies of California Revenue & Tax Code, ss.ss. 12201 to 12204. The Judge then discovered that it is the legal responsibility of the insurer, not the purchaser of an annuity, to pay the State tax. The complaint alleges that Judge Schifferman also discovered the existence of a "sweetheart deal" his annuity provider, MetLife, had made with State Personnel and which was concealed from him. The deal, entitled "Group Annuity Contract," was designed to misrepresent the nature of the State Tax and impose it on retired employees. "As a retired person, I appreciate the fact that every penny counts," said Judge Schifferman. "Many State retired employees may have been injured by this. As a former Judge and officer of the Court, I cannot let it pass now that I have discovered what has been hidden from other, innocent retirees over the past decade. "This 'sweetheart deal' was wrong," added Judge Schifferman, "because it breached the fiduciary duty of MetLife and the State not to disclose the true facts of what was being done, thus misleading retirees into paying 2.35% of their savings for MetLife's taxes. In my experience, people do not usually question the statement that they have to pay a 'State tax' and assume that this is an act of the Legislature, which is undeniably false." "What Judge Schifferman unearthed," explained Don Howarth, "is a deception of significant proportion against retired California State employees by powerful insurance companies wrongfully enriching themselves by potentially millions of dollars." "Whom can you trust," asks Suzelle M. Smith, "when companies like MetLife using the State, have apparently conspired to conceal an arrangement that has collectively harmed thousands of unsuspecting victims? This is a blatant abuse of power. Those who have served our State and are now retired, our judges and others, do not deserve this kind of treatment." The time period alleged for the Class begins in 1990 and continues through May of 1999. Class members are defined as retired State of California judges and other retired State employees who purchased an annuity from one of the named insurance companies. Defendant insurance companies are incorporated as follows: Aetna Life Insurance Company in Connecticut; Metropolitan Life Insurance Company in New York; Mutual of Omaha in Nebraska; Pacific Mutual Insurance Company in California; Transamerica Occidental Life Insurance Company in California; Travelers Life and Annuity Company in Connecticut; and United of Omaha Life Insurance Company in Nebraska. MITSUBISHI MOTOR: Fd Judge OKs Racial Bias Suit But Invites Review ------------------------------------------------------------------ A federal judge has ruled that a racial discrimination lawsuit against Mitsubishi Motor Manufacturing of America can proceed despite a lawyer's failure to conform to several court-imposed deadlines. But U.S. District Judge Michael Mihm, sitting in Peoria, also invited higher court review of his decision on February 3. He said established law fails to address the issue directly. At issue is whether Mitsubishi or the United Auto Workers union, also named as a defendant when the lawsuit was filed in March, were properly served with the lawsuit within 120 days of filing as required. Attorney Michael Riley, who filed the lawsuit, contends he mailed copies of the lawsuit. But Mitsubishi and the UAW deny getting the complaint until October, more than six months later, prompting a federal magistrate to recommend dismissal. The lawsuit alleges that supervisors at Mitsubishi's plant in Normal denied black workers promotions and transfers and allowed other acts of discrimination. Riley no longer represents the 21 workers who filed the lawsuit. Most of them are now represented by lawyers who filed a separate class-action lawsuit on behalf of all of the Normal plant's minority workers. Those attorneys say they hope to consolidate the two lawsuits. Failure to serve legal documents to the other side is usually sufficient to dismiss a lawsuit, but Mihm made an exception. The judge said that Riley through inaction ceased to act as his clients' advocate only weeks after the lawsuit was filed. Mihm suggested the automaker's lawyers appeal his decision. I am not going to feel comfortable about this ruling," he said. (Chicago Daily Law Bulletin, February 4, 2000) MOBIL OIL: CASA Says Fuel Crisis Grounded Fewer Planes Than Feared ------------------------------------------------------------------ Canberra Departmental officials said BP, which had supplied about 700 planes with fuel sourced from Mobil, had received 11 applications for compensation and paid out up to $10,000 from a separate fund. Mobil is also facing a class action for damages for loss of income and profits, the cost of inspecting and cleaning aviation fuel from aircraft and the cost of replacing components. Mr Toller said CASA was also evaluating an alternative cleaning method to rid engines of the contaminant ethylene diamine (EDA), in addition to the water flush currently recommended. "Nothing would please us more than to find a solution that doesn't use water," he said. "(The alternative involves) a proprietary form of detergent being mixed with avgas and flushed through the system; we need to know what's in that detergent because we need to know whether it's going to have any other effect on the aircaft." The testing would likely take several weeks. (AAP Newsfeed, February 7, 2000) ONTARIO: Lawsuit over Arsenic at Deloro Mine Site May Include Thousands ----------------------------------------------------------------------- Brenda Brett was told to wear gloves last summer when she wanted to garden in the toxic soil around her well-kept home in the eastern Ontario village of Deloro. She says the advice came from provincial environment ministry officials as a precaution, even though a government study had concluded the arsenic- tainted soil in the village around a defunct gold mine and refinery posed no health threat to residents. But Brett has little faith in government assurances. The 54-year-old former Pickering resident - along with Tom Wells, who owns property in the village about 45 kilometres north of Belleville - has started a $50 million class-action lawsuit against the federal and provincial governments and companies associated with the mine. ''This is the worst case of bureaucratic bungling I have ever seen,'' Brett said. None of the allegations has been proved in court. Provincial officials refused comment. ''It's before the courts, so we are limited to what we can say,'' said environment ministry spokesperson John Steele. The 200 residents of the two-street village learned only last summer about the arsenic in their soil - while government records showed the ministry had been aware of the contamination since 1987. The lawsuit alleges in part that the government has failed to adequately clean up the site and village. It also makes a claim for compensation for lost property values. Brett says her home - for which she paid $112,000 11 years ago is now worth just $50,000. The 350-hectare site of the former mine and refinery has long been considered the most contaminated piece of land in Ontario - an admission made by the ministry several years ago after estimating it could take up to $30 million to stop piles of toxic waste from leaking into the Moira River. The ministry took control of the site in 1979 when its owners declared they were unable to afford clean-up operations. It has since spent more than $12 million. Soil in the town contains levels of arsenic 30 times higher than what the province considers to be an acceptable level for exposure, according to ministry tests. Exposure to small amounts of arsenic over a long period can cause nausea, headaches and anorexia. Larger quantities are deadly. After the Deloro Smelting and Refining Co. closed the gold mine in the early 1900s, the company continued refining cobalt, silver and nickel from other Ontario mines for another 50 years. Pesticides were made from waste arsenic. During the 1940s and '50s, the company extracted cobalt from radioactive waste shipped from a uranium processing plant in Port Hope. The company closed in 1961 and sold the homes in Deloro that it had built for its workers. The lawsuit could eventually include several thousand people with homes stretching south along the Moira River to Moira Lake, said Toronto lawyer Doug Cummings, who has taken on the case. Class-action lawsuits can't proceed until they have received approval from the Superior Court of Justice. No hearing date has been set. Included in the lawsuit are the provincial environment, health, labour, and northern development and mines ministries. Also included are the federal departments of fisheries and oceans, energy, mines and resources and environment. (The Toronto Star, February 7, 2000) PAYDAY LENDERS: Edelman, Combs Sues Check 'n Go & CheckSmart in Indiana ----------------------------------------------------------------------- The Chicago law firm of Edelman, Combs & Latturner and Indiana attorney Lemuel Stigler have filed class action lawsuits against Check 'n Go of Indiana, Inc. and Hoosier Check Cashing of Ohio, Ltd., which does business as CheckSmart. The complaints allege violation of the Truth in Lending Act and Indiana law in connection with "payday loans." They were filed in the federal district court in South Bend. Bonds v. Hoosier Check Cashing of Ohio, Ltd., 3:00CV70 (N.D.Ind.); Niblac v. Check 'n Go of Indiana, Inc., 3:00CV72 (N.D.Ind.). One of the Indiana laws alleged to have been violated is the Indiana Uniform Consumer Credit Code. The Code (i) prohibits lenders from charging interest of more than 36% per annum interest, (ii) allows a flat fee not exceeding $33, and (iii) prohibits lenders from using multiple agreements to obtain more finance charges than would otherwise be permitted. Plaintiffs allege that by imposing a finance charge that purports to be justified by the $33 exception to the general 36% limitation on a series of two-week loans -- producing finance charges in the hundreds of dollars and an effective annual percentage rate in triple digits -- the lenders violated the rate restrictions in the Indiana Uniform Consumer Credit Code. A survey conducted by the Indiana Department of Financial Institutions disclosed that the average payday loan borrower "rolls over" her loan about 10 times, so that the loan actually remains outstanding for 5-6 months (5,350 borrowers obtained 54,508 loans and rollovers, with the average loan/rollover lasting 13.67 days). The average annual percentage rate was 498.73%, or more than 10 times the 36% maximum. The average finance charge was $27.29 for each loan or rollover, showing that the lenders tried to use the $33 exception on each loan/rollover. One borrower "rolled over" her loan 66 times, or for about three years. A survey conducted by the Illinois Department of Financial Institutions produced similar results. "Payday lenders" are thus well aware of the fact that borrowers generally cannot pay their loans off in two weeks. The complaints also allege violation of another Indiana statute that makes it unlawful to charge more than 72% interest in any case. Ind. Code, Section This statute was the subject of the Attorney General's recent opinion. Finally, each lawsuit alleges failure to comply with the disclosure requirements of the federal Truth in Lending Act and the Indiana Uniform Consumer Credit Code. Similar lawsuits are pending against Ace Cash Express, E-Z Payday Loans, Advance America, Fast Cash USA, Check Into Cash, All Checks Cashed, and GRT, Inc. (A-1 Payday Loans and Castleton Cash Advance) in the federal courts in Indianapolis and Hammond. Rowings v. Ace Cash Express, Inc., IP 99-1887-C-B/S (S.D.Ind.); Livingston v. Fast Cash USA, Inc. IP99-1226-C-B/S (S.D.Ind.); Rowings v. DSA, Inc., d/b/a E-Z Payday Loans IP 00-0060-C-B/S (S.D.Ind.); Wallace v. Advance America 2:00CV123JM (N.D.Ind.); Wilson v. Check Into Cash of Indiana, LLC, IP00-0166C-H/G (S.D.Ind.); Smith v. All Checks Cashed, Inc., IP00-0165C-T/G (S.D.Ind.); Hudson v. GRT, Inc., IP00-0163C-M/S (S.D.Ind.). Edelman, Combs & Latturner concentrates in the representation of consumers against lenders, car dealers, debt collectors, and other businesses. The firm has sued numerous "payday lenders" in Illinois, Indiana and elsewhere. Contact: Daniel A. Edelman of Edelman, Combs & Latturner, 312-739-4200, or 800-644-4673, or fax, 312-419-0379 PEDIATRIX MEDICAL: Announces Amended Securities Complaint Filed in FL --------------------------------------------------------------------- Pediatrix Medical Group, Inc., (NYSE:PDX) learned on February 4 that the plaintiffs in the class action complaint filed against it and several of its officers have filed an amendment to their complaint with the U.S. District Court for the Southern District of Florida. On January 19, the court dismissed the class action complaint, but in its opinion the court permitted the plaintiffs to attempt to cure the deficiencies found in their pleadings by filing a further amendment to their complaint by no later than February 3, 2000. Pediatrix and its officers have not received a copy of the amended complaint, and therefore are not in a position to comment on the merits of the complaint. PNC BANK: Ohio Appeals Ct Reinstates Action on Loan Payment Deferrals ---------------------------------------------------------------------Finding that individual issues of law and fact did not predominate over issues common to the class of borrowers who accepted their lender's deferment offer, the Ohio Court of Appeals reversed the trial court's denial of the motion for class certification. Begala, et al. v. PNC Bank, Ohio, No. C-990033 (Ohio Ct. App. 12/30/99). John Begala obtained a 60-month loan from Central Trust Co. N.A., the predecessor of PNC Bank, Ohio N.A. In connection with his automobile loan he received nine unsolicited letters from PNC offering him a one-month deferral in exchange for paying an extension fee. Begala's loan documentation did not contain a provision regarding deferrals. The form letter from Central Trust read in pertinent part: "The authorization form attached below lists a loan extension fee which is the payment you make now in order to postpone your regular payment. Simply sign the authorization and forward it along with your extension fee payment. Your loan term will automatically be extended by the one payment you're postponing now. That's all there is to it." Begala accepted all nine deferral offers and paid more than 400 in fees to the bank. Subsequently, he discovered that the deferrals cost him 1,000 in interest. He then filed a class action against PNC alleging the bank's failure to disclose the finance charges and compound interest violated the Truth in Lending Act. (See Consumer Financial Services Law Report, Jan. 22, 1999, p. 4). Begala claimed the letters were misleading because the true cost of the "holiday payment" plan including the extension fee plus compound interest charges over the life of the loan. The trial court struck out all class-action allegations including claims of fraud, breach of contract, negligence, rescission, promissory estoppel, unjust enrichment, breach of fiduciary duty and civil conspiracy. It held that the requirements of Fed. R. Civ. P. 23(B)(3) were not satisfied because individual issues of reliance predominated over those issues common to the class. On appeal, the Court of Appeals concluded that the plaintiffs did satisfy the predominate test of Rule 23(B)(3) because PNC's alleged misrepresentation regarding the true cost of the "payment holiday" was common to the entire class. The questions of law or fact in Begala's action arose from identical form contracts, said the court. Thus, said the court, "[t]he gravamen of every complaint within each subclass is the same and relates to the use of standardized procedures and practices." The court was unpersuaded by PNC's argument that the sentence "[y]our loan term will automatically be extended by the one payment you're posting now," advised borrowers of the financial consequences of the deferment. Nor did the court accept PNC's contention that the issue of reliance presented individual issues of proof. Instead, the court found each class member represented his or her reliance upon the information provided in the uniform letter by signing the standardized acceptance form. In summary, Judge Gorman opined that "[c]ertification of the class also insulates PNC against the prospect of facing endless litigation by its loan customers." The court reversed the trial court's decision; however, Begala's TILA disclosure claim has not yet been decided. Paul DeMarco, Stanley M. Chesley and Fay E. Stilz of Waite, Schneider, Bayless & Chesley Co. in Cincinnati represented Begala. Glenn V. Whitaker and Phillip Smith of Vorys, Sater, Seymour & Pease in Cincinnati represented PNC. (Consumer Financial Services Law Report, January 25, 2000) PRUDENTIAL INSURANCE: Some See Flaws in Settlement for Case Re Policies ----------------------------------------------------------------------- Eleven years after Tommy Coffin's death from esophageal cancer, The Prudential Insurance Company of America has not paid his widow, Ruth Coffin, a dime from the $ 75,000 policy on his life. Last October, an arbitrator awarded her the full $ 75,000 as part of a 1997 class-action settlement designed to repay the victims of Prudential's rampant sales abuses in the Eighties and early Nineties. But Prudential has ignored the arbitrator's decision, telling Coffin, 49, of Wood-Ridge that she has no business receiving the benefit because her husband's policy had lapsed shortly before his death. "This company has tried to wear me down," said Coffin, a postal worker and mother of two grown children. "It's disgraceful. This was hard enough 11 years ago. Now I'm going through the aggravation again." Coffin's case is one of 640,000 claims in a class-action settlement, approved by a federal judge in Newark in 1997, covering charges that Prudential's agents tricked policyholders into buying more insurance than they needed, or in Coffin's case, wrongfully canceling policies that should have been left in good standing. The abuses took place over 14 years, beginning in 1982, affecting more than 1 million people. Hundreds, perhaps thousands, have complained about the settlement, sparking an inquiry into Prudential's conduct in handling policyholder claims. "This company is playing by its own rules, and if policyholders don't like it, too bad,"Coffin said. Letters she sent and phone calls she made to Prudential over several years proved fruitless. The company repeatedly denied the claim. Prudential says it has handled all claims properly. "We are confident that the vast majority of policyholders are happy with their settlement," said Prudential Vice President Bob DeFillippo. However, when contacted by The Record about Coffin's claim, DeFillippo said:"We're going to go back and take a fresh look at this case. This woman should expect a phone call from someone shortly." Tommy and Ruth Coffin worked together at the U.S. Postal Service Bulk Mail Center in Jersey City. They purchased a $ 75,000 life insurance policy on Tommy's life in 1984, paying premiums every month until his diagnosis with cancer in September 1988. "He was going to Memorial Sloan-Kettering Cancer Center in New York for treatment, and it was the accumulation of everything that built up. We missed one or two payments," Coffin said. In late October, she called the Prudential agent, Roger Smith, who had sold them the policy, telling him they were late and wanted to make a payment. But Smith said the policy had lapsed and couldn't be reinstated because of Tommy Coffin's cancer. The company gave the Coffins no warning that the policy would be canceled. He died two months later, at 34, leaving Ruth Coffin with no insurance benefit. "I had no idea where to go for help," she said. She contacted the company several times but claims managers wouldn't listen. Because the policy was canceled, she received nothing. Several years later, Coffin heard about the class action, which was prompted by a multistate investigation into Prudential's allegedly fraudulent sales practices. As part of the settlement, Prudential offered to refund Coffin the $ 1,323 in premiums the couple had paid from 1984 to 1988, plus interest. There was no mention of a death benefit. Coffin was allowed to appeal the offer, and she did. Her claim made its way to a binding arbitration hearing, a four-way telephone conversation in which Coffin was joined by her Prudential-appointed lawyer, an attorney for Prudential, and the arbitrator, Thomas C. Harris, of Fort Mill, S.C. Under the settlement, Prudential is paying for claimants legal counsel. The Prudential lawyer then offered to settle for $ 20,000, Coffin says. The lawyer insisted that because Tommy Coffin's policy had lapsed, the full death benefit should not be awarded. The arbitrator disagreed. The Coffins had simply missed one or two payments. Enough premiums had built up in the policy over four years to keep it in good standing even after Tommy Coffin's death. The agent was wrong in canceling the policy. Harris awarded Ruth Coffin the full $ 75,000. In letters he wrote to Coffin following the arbitration, Harris said,"A reinstatement of the policy at the time of death is in order. The full death benefit is awarded. The agent has a disciplinary history." Harris, who is a member of the American Arbitration Association, said his decision is supposed to be "final and binding," and suggested that Coffin contact the lawyer who represented her. Coffin did contact her lawyer, a woman named Merrill Berland, who no longer can be reached at the number she gave Coffin. "The last time we talked," Coffin said, "she told me she'd fought the case well, maybe too well, and perhaps I should accept the refunded premiums." Since 1997, Prudential has paid more than $ 2 billion to cover settlement claims. A federal appeals court upheld the settlement in 1998, questioning only the $ 90 million in legal fees paid to plaintiffs lawyers. In New Jersey, thousands of people have received checks in the mail. But critics say Pru has unfairly treated many policyholders such as Coffin, stalling unnecessarily with some claims and failing to consider evidence in other claims that could result in higher awards. Many people have complained that the settlement is too confusing. "You've got a lot of people who just did whatever Pru suggested, and took a nickel on a thousand dollars and just ate it,"said Cincinnati resident Gary Day, who 1 NEW3 was persuaded to buy insurance in 1982 that drained assets from other Prudential policies he owned. "There's no fairness in this settlement." Day said he paid a Hackensack private investigator $ 1,200 last fall to spend one day snooping around Prudential's remediation call center in Edison. Phone conversations he had with company officials there had left Day confused and upset. Several times, he was contacted and urged to settle his claim for $ 2,000. "I never got a call from the same person," he said. "Everyone claimed they were lawyer representatives, but their conversations with me were very amateur. Upon talking with so many of these wild people, I wanted to know who they were, if they were lawyers at all." Day said his investigator found a call center with 400 people, few of whom were lawyers. A Prudential spokeswoman said several call centers exist across the country, employing hundreds of people trained in handling claims. Now, Day says his claim may go to arbitration. Lawyers for policyholders and the judge presiding over the settlement in Newark, U.S. District Judge Alfred M. Wolin, have been investigating Pru's conduct for several months. The investigation was prompted by job-bias lawsuits filed by employees against the company in federal court in Minneapolis last year. The complaints allege that remediation center supervisors objected to some workers efforts to obtain the highest level of relief available for policyholders. In some instances, Prudential provided incentives to employees to speed cases along, holding contests and awarding prizes to those who moved the most cases off their desks. "We went quickly because, frankly, we were asked to go quickly by everyone involved," Prudential's DeFillippo said. "We've tried to move the process along as quickly as we could without sacrificing quality." Last year, Coffin unsuccessfully sought help from then-Attorney General Peter G. Verniero, and recently she wrote letters to congressional representatives and to Wolin. A clerk in Wolin's chambers in Newark said the judge has received "boxes full of letters"from claimants over the last two years. "It's very depressing,"said the clerk, Gail Hansen. If policyholders still haven't settled their claim, Hansen urged them to contact Mark Budoff, a claims manager in Newark, at (800) 798-9823. (The Record (Bergen County, NJ), February 4, 2000) SHIGELLA OUTBREAK: Keller Rohrback Files Nationwide Suit in CA -------------------------------------------------------------- Keller Rohrback, L.L.P., of Seattle and Zimmerman Reed, P.L.L.P, with offices in Minneapolis and Phoenix, have filed a nationwide class action lawsuit in San Francisco Superior Court against Senor Felix's Gourmet Mexican Food, Inc., a California corporation that manufactured shigella-contaminated bean and salsa dips implicated in the recent shigella outbreak. The named plaintiffs are Meredith Berkovich, and her two daughters, Angela and Tiffany Berkovich, who live in Oregon. Managing Partner Lynn Sarko reports that the shigella-contaminated dip was purchased from Trader Joe's grocery store in Beaverton, Oregon. Ms. Berkovich's daughters consumed the contaminated dip and subsequently became ill. Meredith Berkovich was unknowingly exposed to the shigella bacteria while caring for her daughters. Meredith became so ill that her family took her to the emergency room where she was admitted to the hospital. All three Berkovich's have confirmed cases of shigellosis. Senor Felix recalled the dip last month after it was linked to the recent shigellosis outbreak. The recall applies to five-layer dip sold under the following brand names: Senor Felix's Five-Layered Party Dip, Delicioso 5-Layer dip, Trader Joe's Five-Layered Fiesta Dip, or The Carryout Cafe Mexican Fiesta Party Dip 5 Layer. Keller Rohrback is now aware of over 60 confirmed cases of shigellosis linked to the shigella-contaminated bean and salsa dip. Most of these cases are being reported in California, Washington, Oregon, and Idaho, although reports are also trickling in from other areas. Sarko states that, "Keller Rohrback and Zimmerman Reed filed the Berkovich case on behalf of all persons injured by the shigella-contaminated dip to compensate these persons for their injuries and to hold Senor Felix accountable to produce safe products and to ensure that only wholesome food enters the marketplace." Persons who ate the contaminated dip and became ill should consider consulting their physician. Laboratory testing of a person's stool sample can determine whether shigella is the cause of a person's illness. To insure proper testing, the laboratory should be instructed to look for the shigella organism. People who cared for persons who ate the contaminated dip and became ill should also consider consulting their physician. Lynn Sarko warn,s "Like Meredith Berkovich, many people simply do not realize that they can contract shigellosis while treating their family members for what appears to be a simple case of the flu. People who care for persons experiencing the flu-like symptoms that are characteristic of shigellosis should therefore pay very close attention to hygiene to prevent the further spread of this potentially serious and highly contagious disease to themselves and others." Contact: Keller Rohrback, L.L.P. 800/776-6044 Lynn Sarko Britt Tinglum Amy Hanson Jennifer Tuato'o SOTHEBY'S INC: Schiffrin & Barroway Files Suit in NY over Price Fixing ---------------------------------------------------------------------- Schiffrin & Barroway, LLP commenced a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons who purchased art, jewelry, musical instruments and a variety of other items through Sotheby's Holdings, Inc and Sotheby's Inc auctions during January 1, 1992 through the present, and on behalf of sellers of such items during March 1995 through the present. The complaint charges that, in approximately January 1992, Sotheby's fix the price of commissions charged to buyers at 15% of the first $50,000 of merchandise purchased and 10% of any amount over the $50,000. Prior to that time, buyers were charged a flat 10% commission. The complaint further charges that in approximately March 1995, Sotheby's fix the price of sellers' commissions by adopting with another auctioneer identical detailed sliding-scale commission rates to the sellers. Christie's International, an auctioneer company, has supplied evidence of the price fixing of auction commissions to the United States Justice Department, which has been investigating anti-competitive practices in connection with Sotheby's auctions. Contact: Stuart L. Berman, Esq. of Schiffrin & Barroway, LLP, toll free at 1-888-299- 7706 or 1-610-667-7706 or at info@sbclasslaw.com via e-mail. TOBACCO LITIGATION: Flight Attendants File More Second-Hand Smoke Suits ----------------------------------------------------------------------- Flight attendants who claim second-hand smoke caused their health problems filed another round of lawsuits in Miami-Dade Circuit Court. The 300 suits filed recently are in addition to 300 filed Jan. 20 against Philip Morris Inc., R.J. Reynolds Tobacco Co., Lorillard Tobacco Co. and Brown & Williamson Tobacco Corp. The flight attendants were part of a class-action suit filed in 1991 that was settled. (Broward Daily Business Review, February 4, 2000) * MD Lobbyists on Late-Fees Bill and Lawyers Disagree over Amount ----------------------------------------------------------------- A powerful Maryland senator is pushing legislation backed by the business community that would allow companies to once again charge late fees that the state's highest court recently found to be excessive. The legislation sponsored by Senate Finance Committee Chairman Thomas L. Bromwell (D-Baltimore County) would effectively erase the court's ruling and shield companies from having to refund consumers who were overcharged. The legislation stems from a Maryland Court of Appeals decision last June that found a Baltimore cable company's policy of charging late fees in excess of 6 percent a year violated a provision of the state constitution. The justices ordered the cable service to return $ 7.59 million to its subscribers. Bromwell's bill is pitting dozens of trial lawyers, many of whom have already started working on class-action suits aimed at recouping excessive fees, against some of the largest corporations operating in Maryland. It could affect everyone from the tenant who is late paying rent to the health club member who hasn't paid dues. "We have a huge stake in this," said Paul D. Gleiberman, a Washington attorney for more than 1 million residential telephone users in a class-action suit against Bell Atlantic Corp. "They were charging their customers well in excess of what the constitution provides," he said. "Now they're asking the legislators here to reach back and change the law so they can keep the money they took illegally. It's not just. It's not proper." Sean M. Looney, a lobbyist for Bell Atlantic, said his company acted properly but recognizes the serious threat posed by class-action suits. "If the lawyers are successful in stopping this bill, it could cost us millions of dollars, and all that would be passed on to the majority of customers who have been paying on time," Looney said. Neither side is opposed to the idea of allowing companies to charge a reasonable late fee to help prod customers into paying their monthly bills. The 6 percent annual rate permitted by the constitution would mean lobbyist James J. Doyle Jr.'s clients, who rent out storage space, would be able to charge a monthly late fee of only 25 cents on a unit that costs $ 50. "If that's all the hammer you have, nobody's going to pay their bill on time," Doyle told the 11 members of the Senate finance committee during a hearing on February 1. "It will upset the whole way these companies do business." But as the bill is currently drafted, it would leave setting the fees up to the companies, something Sen. Delores Kelley (D-Baltimore) said could lead to customers being gouged. Bromwell suggested that senators discuss the possibility of setting a reasonable limit, so fees don't go overboard. He also suggested a minimum grace period, so fees aren't charged too soon after a bill comes due. The stickiest issue at hand, though, will be whether to keep the bill retroactive, absolving the companies of liability back to 1995, roughly corresponding with the statute of limitations. Laurence Levitan, a former Montgomery County senator who now is a lobbyist for the Cable Telecommunications Association of Maryland, said companies should not be held responsible because before the court ruling, they had no idea that the late fees would be considered improper. But Kelley referred to the high court's ruling, which said United Cable of Baltimore LP, formerly owned by Tele-Communications Inc., was using the fees as a way to "swell its coffers of profitability, at the expense of the public." The fees, the ruling said, far exceeded the expense that companies incurred when people paid late. Shortly before the Maryland decision, a jury in the District issued a similar ruling, ordering TCI to reimburse subscribers $ 6.7 million. Holding up a newspaper advertisement looking for people who were charged with late fees, lobbyist Paul A. Tiburzi, who represents telephone companies, told senators to expect a "feeding frenzy" if the bill doesn't pass. "If you're a lawyer in Maryland," he said, "get in line." (The Washington Post, February 2, 2000) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Romeo John D. Piansay, Jr., editor, Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *