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/raid1/www/Hosts/bankrupt/CAR_Public/000315.MBX C L A S S A C T I O N R E P O R T E R Wednesday, March 15, 2000, Vol. 2, No. 52 Headlines 9 NET: Concentric Network Corp. Moves to Dismiss Junk Fax Lawsuit AOL: Ohio Joins States Covered by Suits Charging 5.0 Damage Computers BRICK: Ap Ct Denies Appeal of Appoint of Lead Plaintiff against Texlon BUDGET RENT-A-CAR: Tells Ct Racial Bias Suit May Cost It $350M Plus CARNIVAL CORPORATION: Stull, Stull Files Securities Suit in Florida EFI: Asks Sp Ct to Reverse Cert. for Securities Suit in Parallel Action ERON MORTGAGE: Canadian Ap. Ct. Disclaims Registrar's Duty to Investors FAMILY GOLF: Rabin & Peckel Announces Securities Suit Filed in New York FEN-PHEN: American Legal Network Alerts Users of March 30th Deadline FEN-PHEN: Judge in Dakota Orders AHP CEO to Testify; Trial on April 3 FLIR SYSTEMS: Milberg Weiss Files Securities Suit in Oregon FLIR SYSTEMS: Schubert & Reed Plans to File Shareholder Suit HASS: NJ Ct OKs Suit Filed '96 for Medical Monitoring Re Toxic Waste ICN PHARMACEUTICALS: Heightened Pleading Standards Do Not Apply to SEC INFORMATION MANAGEMENT: Berman, DeValerio Files Securities Suit in CT LOS ANGELES: Justice Officials and Police to Discuss Rampart Scandal NEFF CORP: Stockholders Allege Proposed Buyout Is a Sweetheart Deal PUBLIC SERVICE: Vigorously Defends Lawsuits over Royalties in Kansas SAFETY-KLEEN: Cohen, Milstein Files Securities Suit in SC SAFETY-KLEEN: Discovers Accounting Irregularities; Cash Tight SOTHEBY'S HOLDINGS: Burt & Pucillo Files Securities Suit in New York TOBACCO LITIGATION: Australian Ct Dismisses Suit by Lung Cancer Victims TOBACCO LITIGATION: BAT Can't Claim Lack of Personal Jurisdiction in NY TYSON: NY Court Rejects Claim That Boxer's Bite Was a Rip-off VANTAGEMED CORP: Milberg Weiss Files Securities Suit in California VANTAGEMED CORP: Schiffrin & Barroway Files Securities Suit in TN WEYERHAEUSER CO: Faces CA Property Owners' Suit over Hardboard Siding WEYERHAEUSER CO: Faces TX Suit over Hardboard Siding WEYERHAEUSER CO: Lawsuits over Hardboard Siding Filed in SC, IA and OR WEYERHAEUSER CO: PA Suits Allege Price-Fixing of Linerboard WEYERHAEUSER CO: Wins WA Case over Hardboard Siding; Appeal Pending * Proposed EEOC Regulation May Allow Employees to Sue Despite Waiver ********* 9 NET: Concentric Network Corp. Moves to Dismiss Junk Fax Lawsuit ----------------------------------------------------------------- Concentric Network Corp. has fired back at the class action lawsuit by John Levine seeking to end junk faxes, filing a motion to dismiss that argues that the lawsuit has no merit as a class action, that Concentric is not a proper defendant, and that the cause of action, if any, belongs in small claims court. Levine v. 9 Net Avenue Inc. et al., Docket No. L-7965-99 (NJ Super. Ct., motion to dismiss filed Jan. 18, 2000); see Telecommunications Industry LR, December 1999, P. 14. Levine's suit, brought against 9 Net Avenue Inc., and Concentric Network Corp. as its successor, alleges that the defendants have violated the Telephone Consumer Protection Act, 47 U.S.C. Section 227 (TCPA), by sending unsolicited advertisements by facsimile to businesses and individuals for the purpose of promoting 9 Net Avenue's business. It alleges that the unsolicited faxes were sent to "hundreds and potentially thousands" of recipients throughout the country. 9 Net Avenue filed its answer in December, denying the allegations of the complaint and asserting numerous affirmative defenses. Among the defenses cited, 9 Net Avenue asserted that the TCPA did not permit class actions and that there were questions of fact and/or law not common to the class. Concentric responded to Levine's complaint with a motion to dismiss, claiming that Levine's conclusory allegations fail to state a claim for successor liability. Concentric also argues that it bought 9 Net Avenue four months after the alleged faxes were sent, and that Concentric purchased only the assets of the company, not its liabilities. The nature of its acquisition did not come within the "mere continuation" exception under New Jersey, which creates successor liability, said Concentric. Finally, Concentric adds, the TCPA does not permit class actions, and limits individual damages to $500. John Levine answered Concentric's motion first by addressing the charge that his complaint set forth only conclusory allegations regarding the nature of Concentric's liability. To the contrary, Levine argues, the complaint sets for the several factual allegations delineating how Concentric succeeded to the liabilities of 9 Network Avenue when it acquired its assets. Also, contrary to Concentric's assertions, Levine argues that Concentric falls squarely within the exception recognized by state law because it plainly is a "mere continuation" of 9 Network's business. Levine also countered Concentric's argument that the TCPA does not allow class actions, citing several cases in other states in which classes have been certified. "Nothing in the language of the Act or the legislative history suggests that an aggrieved class of consumers, subjected to the identical abuses of the Act by the same company over the same period of time, should not be able to join forces to protect their statutory rights in a manner which is most economical to each of the members of the class," he argued. The lawsuit remains to be certified as a class action. Levine is represented by Kurt Anderson, Giordano, Halleran & Ciesla, P.C., Middletown, NJ. 9 Net Avenue is represented by Brian D. Spector, Spector & Ehrenworth, P.C., Florham Park, NJ. Concentric Network Corp. is represented by Jeffrey J. Greenbaum, Sills Cummis Radin Tischman Epstein & Gross, Newark, NJ. (Telecommunications Industry Litigation Reporter, February 2000) AOL: Ohio Joins States Covered by Suits Charging 5.0 Damage Computers --------------------------------------------------------------------- America Online (NYSE:AOL), the world's largest Internet service provider, is again the target of a class-action lawsuit for its latest version AOL 5.0 which critics claim causes damage to users' computers. AOL was hit with a class-action lawsuit filed on March 13 in Ohio, allowing Ohio residents the opportunity to join the class-action lawsuits that have sprung up against AOL across the country. The proposed class-action lawsuit was filed in Hamilton County Court in Cincinnati, Ohio under the Ohio Consumer Sales Practices Act. The lawsuit claims that AOL knowingly released AOL 5.O so that, without warning, it made major changes to users' computers, rendering them unstable and, in some cases inoperable. The suit also claims that AOL effectively barred customers from connecting with competing ISPs. Attorney Steve Berman, filed a lawsuit on behalf of Ohio residents who have installed AOL 5.0 and have experienced difficulty connecting to competing ISPs. The Ohio class-action filing comes on the heels of similar lawsuits filed in Washington, Arizona, California, Colorado, New Jersey, and Oregon. "Since we filed our initial complaint in Washington, we have literally received hundreds of calls and e-mails from disgruntled AOL users from all across the country asking how they could join the AOL lawsuit," Berman said. "We've recently filed complaints in a number of states, including a national class-action suit, but could well continue to expand our efforts to other states," Berman said. The suit claims the Internet giant failed to divulge to its users that the AOL 5.0 upgrade would make dramatic changes to the users' operating systems and would interfere with the user's ability to connect to the competing ISP networks. "AOL 5.0 promised users 500 free hours of faster, better Internet access," Berman said. "But in reality, many novice users found that once they installed AOL 5.0, removing the software was nearly impossible. This was a brazen attempt by AOL to hold these customers hostage as long as they wanted to connect to the Internet." According to Berman, named plaintiff Connie Kinser installed AOL 5.0 and immediately began experiencing problems. In addition to fatal error' messages, Kinser was unable to connect with any other ISP. After spending days trying to undo the changes caused by AOL, Kinser resorted to purchasing a new computer rather than pour additional resources into correcting the problems. The class, if approved, would represent all AOL users in Ohio who subscribe to the service and installed AOL 5.0. According to Berman, the exact number of people affected by this is yet unknown, but could number in the tens of thousands. Contact: Hagens Berman Steve Berman, 206/623-7292 steve@hagens-berman.com or Mark Firmani, 206/443-9357 (MEDIA ONLY) mark@firmani.com BRICK: Ap Ct Denies Appeal of Appoint of Lead Plaintiff against Texlon ---------------------------------------------------------------------- The Sixth Circuit U.S. Court of Appeals has dismissed the Florida State Board of Administration's (FSBA) appeal of the district court's appoint of other shareholders as lead plaintiff in the securities class action against Texlon Corporation. The circuit court concluded it did not have jurisdiction, because the selection was not an appealable final judgment. Florida State Board of Administration v. Brick et al., Nos. 99-4173 & 99-4174 (6th Cir., Feb. 8, 2000). The Sixth Circuit, along with the Tenth and Second Circuits, has now declined to review orders appointing lead plaintiff under the Private Securities Litigation Reform Act of 1995. Texlon, a Delaware corporation, designs and manufacturers wireless and mobile information systems. A total of 27 class actions have been filed against the company alleging it made false and misleading statements regarding its financial condition in violation of Sec. 10(b)(5) of the Exchange Act. The FSBA appealed the district court orders appointing William Hayman and Arthur Hayman as lead plaintiff, as well as the consolidation of the underlying actions. The Council of Institutional Investors supported FSBA's position that the circuit court could consider its appeals. FSBA asserted the orders are final, because it "is out entirely, and the district court made it abundantly clear that FSBA cannot revisit the lead plaintiff issue or even participate as a party plaintiff in class proceedings below." FSBA argued that the circuit court should review the denial of its motion for appointment as lead plaintiff under the "collateral order exception" to the final judgment rule. However, the court found that the harm FSBA claims it will sustain since it has not been appointed lead plaintiff, is not significant. The court said consolidation of the suits did not "dispose" of FSBA's action and FSBA could continue to participate in the litigation as a class member. FSBA is not "out entirely," the court said, and there is clearly further action to be taken in the district court with respect to its claims. FSBA also asserted its situation was distinguishable from the Second Circuit's rulings in Metro Services Inc. v. Wiggins, (2nd Cir., 1998). In that case, argued FSBA, the district court indicated its appointment of lead plaintiff would "be subject to continuing reassessment throughout the course of the litigation." Although the Sixth Circuit agreed the language in the respective orders differed, it said there was no reason why the district court could not reassess its appointment if necessary. In the alternative, FSBA argued the "pragmatic finality" doctrine permitted an immediate appeal. According to the opinion, this doctrine takes a practical and nontechnical approach to finality in unique situations where an order will have irrevocable consequences. The court said the "nebulous" doctrine had not been adopted in the Sixth Circuit and that in extreme circumstances, mandamus was the appropriate relief. However, the court also concluded that there was no basis for a writ of mandamus as the district court did not abuse its discretion or usurped judicial power. The FSBA is represented by Arthur M. Kaufman, David C. Weiner, and Andrew S. Pollis of Hahn, Loeser & Parks in Cleveland; Catherine A. Murphy and Thomas A. Dubbs of Goodkind, Labaton, Rudoff & Scharow in New York. Telxon Corporation is represented by Steven J. Miller and Drew A. Carson of Goodman, Weiss & Miller in Cleveland. (Securities & Commodities Litigation Reporter, February 24, 2000) BUDGET RENT-A-CAR: Tells Ct Racial Bias Suit May Cost It $350M Plus ------------------------------------------------------------------- The following was released by Charfoos & Christensen, P.C.: In a stunning declaration, Budget Rent-A-Car Corp. has advised the Federal District Court in Detroit that a pending class action racial discrimination suit could cost it more than 350 million dollars, according to documents filed in the U.S. District Court, Eastern District. The lawsuit, filed by Charfoos & Christensen, P.C., charges Budget with racial discrimination for its "Cost Recovery Program" implemented in Detroit between 2/1/96 and 11/1/97. Under the program, Budget targeted 34 zip codes in the Detroit market and charged renters from those zip codes higher prices and denied them promotional rates. The majority of the zip codes were populated primarily by African-American and 91% of the affected renters in these zip code areas were African-American. Budget intended to implement the program nationally but stopped when the original suit was filed in 1997. The case, which was originally filed in Wayne County Circuit Court, was removed by Budget-Rent-A-Car to Federal Court because, as Budget claimed, "the injuries alleged are more likely than not to result in a jury verdict for each Plaintiff ... well in excess of $75,000.00." "Since at least 4,779 renters were affected, this could lead to a potential liability of more than 350 million dollars," says Ann Mandt, one of the attorneys representing the Plaintiff's class. "Although Budget believes its exposure is enormous, our goal is not to achieve unreasonable financial benefits and we think it is unlikely that each Plaintiff would receive more than $25,000.00. We are much more concerned about sending a message to Budget and other American corporations that racial profiling has no place in our society", Mandt said. "Budget's Cost Recovery Program was nothing more than a sophisticated method of racial discrimination which was intended to drive African-Americans away from its rental counters, and this is intolerable in America," Mandt said. Contact: Ann K. Mandt, Esq., or J. Douglas Peters, Esq., of Charfoos & Christensen, P.C., 313-875-8080 CARNIVAL CORPORATION: Stull, Stull Files Securities Suit in Florida ------------------------------------------------------------------- The law firm of Stull, Stull & Brody gives notice that a class action lawsuit was filed on March 13, 2000, in the United States District Court for the Southern District of Florida on behalf all persons who purchased the common stock of Carnival Corporation, (NYSE:CCL) between February 25, 1999, and February 16, 2000, inclusive (the "Class Period"). The complaint charges Carnival, including certain of its senior officers and directors with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's business, financial condition, earnings and prospects. Specifically, the Complaint alleges that defendants failed to disclose the Company's severe and pervasive safety, maintenance and regulatory problems associated with its carnival Cruise Line Ships. Despite the numerous operational problems plaguing the Carnival cruise fleet, the Company continued to tell the market place that such incidents were "isolated." Meanwhile, defendant insiders unloaded their own stock during the Class Period, reaping total proceeds of 411.5 million. As a result of these materially false and misleading statements and omissions, plaintiff alleges that the price of Carnival common stock was artificially inflated during the Class Period. Contact: Stull, Stull & Brody, New York Tzivia Brody, Esq., 1-800-337-4983 Fax: 212/490-2022 E-mail: SSBNY@aol.com EFI: Asks Sp Ct to Reverse Cert. for Securities Suit in Parallel Action ----------------------------------------------------------------------- Electronics for Imaging Inc. (EFI) has petitioned the Supreme Court of California to reverse an appellate court decision allowing class certification for a securities fraud suit in state court when a duplicate proceeding has already been certified in federal court. EFI asserts a writ of mandate from the trial court's order is necessary to avoid a waste of judicial resources as well as the possibility of inconsistent rulings in the separate forums. Electronics for Imaging Inc. et al. v. Superior Court of CA, No. S085353 (CA Sup. Ct., petition for review filed Jan. 24, 2000). "The Court of Appeal's refusal to grant writ relief puts Petitioners in the position of defending two parallel class actions in separate forums, forces both the state and federal courts to devote substantial resources to the resolution of a single dispute, and creates the possibility of inconsistent rulings in the separate forums," EFI asserts. The parallel actions currently pending against petitioner EFI are Steele et al. v. EFI , No. 403099 (CA Super. Ct., complaint filed Dec. 15, 1997) and Bader et al. v. EFI , No. 97-4739 (ND CA, complaint filed Sept. 15, 1998). Although the federal complaint was filed later than the state action, the class period of April 10, 1997 through Dec. 11, 1997 is the same for both suits. (The suits were initiated prior to passage of the Securities Litigation Uniform Standards Act of 1998.) Both complaints accuse petitioners of making a series of false and misleading statements concerning EFI's future business and financial prospects. These allegations are virtually the same, the company says, and the same lawyers represent both classes. The only material difference between the federal and state action is that the state suit asserts violations of CA Corp. Code Secs. 25400 and 25500 and CA Civ. Code Secs. 1709 through 1710, while the federal complaint limited its claims to federal securities law violations. EFI subsequently asserted a counterclaim against the shareholder plaintiffs requesting a declaration that the allegations contained in the federal complaint do not constitute violation of California state law. As a result, claims under both federal and state securities laws are now at issue in the federal action. In June of last year, EFI moved to compel certification of a plaintiff class in the federal action, which was opposed by the investors. The shareholders then moved to dismiss petitioner's counterclaim and to voluntarily dismiss the federal action. This motion was opposed by EFI. In November, District Court Judge Charles A. Legge refused to dismiss the federal action or the counterclaims and granted EFI's motion to certify the class. The following month, Superior Court Judge John W. Runde also certified a class in the state action. On Jan. 14, 2000, the California Court of Appeals denied EFI's request for a writ of mandate. Citing Schneider v. Vennard, (CA Ct. App., 1986), EFI argues a trial court may not certify a class in a securities action where a parallel federal action involving the identical class has already been certified and where the federal action is more inclusive. All claims, both state and federal, can be resolved in the federal action, whereas the state court can only address the CA Corp. Code claims. EFI says the federal action is the superior forum for adjudication of the issues. In addition, having only one proceeding will actually benefit the plaintiff shareholders, EFI contends. "If two parallel class actions are permitted to proceed, the potential recovery for class members would be significantly diminished because there would be irreversible and duplicate attorneys fees, court costs and notices mailed to nationwide classes," the company argues. EFI is represented by Boris Feldman, Douglas J. Clark, Mark D. Flanagan and David L. Lansky of Wilson Sonsini Goodrich & Rosati in Palo Alto, CA. (Securities & Commodities Litigation Reporter, February 24, 2000) ERON MORTGAGE: Canadian Ap. Ct. Disclaims Registrar's Duty to Investors ----------------------------------------------------------------------- The B.C. Court of Appeal has dismissed a class action suit alleging that the province's Registrar of Mortgage Brokers owes a duty of care to the investing public to ensure the honesty of all brokers. The claim is part of the fallout from the multi-million dollar collapse of B.C.-based Eron Mortgage Corporation. Eron raised more than $240 million from investors between January 1993 and October 1997. The registrar suspended its licence, froze its bank accounts and put the company into receivership on Oct. 3, 1997 after discovering numerous financial irregularities. Court-appointed receiver PricewaterhouseCoopers Inc. estimates less than $72 million will be recovered leaving close to 3,000 investors almost penniless. Eron president Brian Slobogian is believed to be in the United States. Vice-president Frank Biller, has since declared bankruptcy. The B.C. Securities Commission banned Slobogian from trading for life and Biller for 10 years. They were also fined a total of $1.8 million although there is little hope of collecting the money. The commission found Eron placed investors' money into mortgages that were not properly secured. It also found Eron used the funds of later investors to pay off existing investors when their mortgages failed. The RCMP is investigating the case. Eron investor Mary Francis Cooper launched the class action claiming the Registrar of Mortgage Brokers knew by August 1996, more than a year before he shut the company down, that Eron's operation violated the Mortgage Brokers Act. Cooper's lawyer, David Church, said the case is headed to Ottawa. "We have instructions to seek leave to appeal to the Supreme Court of Canada and are proceeding with that as quickly as possible,"he told The Lawyers Weekly. "There is one passage [in the ruling] where Justice Mary Newbury almost requests the Supreme Court of Canada to look at the matter, which is indicative, I think, of how the provincial courts of appeal and lower courts may be concerned about this issue." Justice Newbury noted the issue has not been considered by the Supreme Court of Canada. "If this decision is appealed,"she wrote, "it is to be hoped the question of duty of care will engage the interest of the Supreme Court of Canada and that lower courts will be given clear and practical guidance regarding cases of this kind which seem to be arising with increasing frequency." Cooper alleged the registrar owed a duty to the investing public to suspend or cancel Eron's mortgage broker's licence as soon as he became aware of the violations. But Justice Newbury said Cooper's claim did not meet the first branch of the Anns test. The House of Lords decision in Anns v. Merton London Borough Council, [1977] 2 All E.R. 492, sets out a two-part test for determining the existence of a duty of care. In the first part, a plaintiff must establish a "relationship of proximity"with the defendant such that the damage was reasonably foreseeable. Under the second part of the test, the court must consider any policy arguments that might limit the duty of care. Justice Newbury found no relationship at all between Cooper and the registrar. "The plaintiff does not even allege that she was aware of the registrar's existence or functions,"the judge said. "This is not surprising since, as a practical matter, an investor would not normally turn to the registrar for assistance in deciding whether to invest funds via, or with, a particular broker." Justice Newbury emphasized that Cooper did not allege any misrepresentation or misconduct. "The only connection between the plaintiff and the defendants is the fact that the plaintiff invested in a company that was within the registrar's authority and had been licensed by him to carry on business as a mortgage broker." The judge said Cooper's case established only foreseeability. "No relationship of the kind normally necessary to ground liability for negligence is alleged; no reliance in fact is pleaded; and any reliance would not have been reasonable." She also ruled Cooper's claim failed on the second branch of the Anns test because it potentially created unlimited liability, something the courts will not allow. "The potential liability would be virtually indeterminate, given that the [Mortgage Brokers] Act imposed no limitation on, and the registrar had no means of controlling, the number of persons who could invest or lend money via a mortgage broker or the amount of money that could be advanced." She said allowing Cooper's claim could turn the registrar - and by the principle of vicarious liability, the government - into a guarantor of all mortgage investments. Justice Mary Southin concurred with Justice Newbury. In a separate concurring ruling, Justice Carol Huddart said the registrar had discretion to act in the public interest, which was not necessarily the same as an investor's interests. "The important function of the registrar is to balance the various private interests his decision will affect so that the marketplace works honestly, openly and thereby efficiently, in the interest of the public as a whole." Asking a court to adjudicate every time the registrar makes a decision would mean substituting the court's discretion for the registrar's discretion, she said. She added that the courts can impose a private law duty of care on a government official only if "the taxpayers have, through their elected representatives, agreed to be responsible for private loss to persons caused by a regulator's choice to act or not act made in the public interest." The appeal court's ruling follows a defence motion to dismiss Cooper's claim on the grounds that it disclosed no cause of action. The decision overturns a B.C. Supreme Court decision that allowed Cooper's case to proceed. (The Lawyers Weekly, March 17, 2000) FAMILY GOLF: Rabin & Peckel Announces Securities Suit Filed in New York ----------------------------------------------------------------------- A putative class action has been commenced in the United States District Court for the Eastern District of New York, on behalf of all purchasers of Family Golf Centers, Inc. common stock during the period May 12, 1998 through August 12, 1999, inclusive. The Complaint alleges that FGCI and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing a series of false and misleading statements concerning the Company's growth and future profitability by failing to reveal problems associated with certain of its acquisitions. Contact: Joseph V. McBride, Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016, by telephone at (800) 497-8076 or (212) 682-1818, by facsimile at (212) 682-1892, or by e-mail at email@rabinlaw.com FEN-PHEN: American Legal Network Alerts Users of March 30th Deadline -------------------------------------------------------------------- The American Legal Network, a consortium of independent lawyers and law firms, is reminding users of the diet drug that they must decide by March 30th if they want to participate in the class action settlement, which the Network says is believed to be the largest personal injury settlement against any single company in U.S. history. The settlement pact and matters related to the settlement have been covered in the CAR. The American Legal Network says that a court supervised mass media campaign has been launched to generate awareness among fen-phen users about the $3.75 billion settlement and advise them to seek legal counsel prior to the March 30th filing deadline. The Network believes that many of the 6 million people who must make a decision by March 30th are unaware or uncertain of what steps to take to choose appropriate legal counsel to help them with the decision. The Network says that medical and legal details concerning fen-phen are available at their Website, http://www.americanlegalnetwork.comand fen-phen users can also contact a Network lawyer in their area for a free consultation by calling toll-free 1-888-774-2000. FEN-PHEN: Judge in Dakota Orders AHP CEO to Testify; Trial on April 3 --------------------------------------------------------------------- Fleming & Associates, L.L.P., lead counsel for two severely injured Sioux Falls, South Dakota, women who ingested Fen-Phen, has successfully petitioned the court to order John R. Stafford, chairman, president and CEO of American Home Products Corporation (NYSE: AHP) (AHP), to undergo an immediate deposition by plaintiffs' attorney George M. Fleming. The ruling was handed down during a pre-trial motion hearing on March 10 by Circuit Court Judge William J. Srstka, Jr. in South Dakota District Court. The case is slated for trial on April 3, 2000 in Sioux Falls. At the end of last year, AHP was ordered by the District Court of Montgomery County, Texas, to produce Stafford for deposition in another Fleming & Associates Fen-Phen case, but American Home Products reached a confidential settlement agreement with the plaintiffs while the ruling was being appealed by AHP in the Texas Supreme Court, thus avoiding the court's ruling. "So far, Mr. Stafford has avoided revealing the truth under oath regarding what AHP really knew about the health risks of the Fen-Phen diet drug combination, as the company continued to amass huge profits through the national pushing of Pondimin and Redux," Fleming said. "We think it's about time that the public hears the truth. This deposition will shed light on the cold fact that AHP knowingly injured countless men and women who took these drugs." Stafford's court-ordered deposition must occur prior to the start of the trial involving the two formerly healthy women from Sioux Falls. Fleming & Associates filed the case on behalf of primary pulmonary hypertension (PPH) patient Patricia Buol, who is now awaiting both a heart and a lung transplant as a result of taking Fen-Phen for approximately six months. The other Fen- Phen victim is Julie Plummer, a Gateway Computer employee, who has suffered severe heart valve damage and has already undergone extensive surgery for heart valve replacement. The lawsuit is one of some 3,200 lawsuits around the country against American Home Products involving use of the diet drug. Contact: D'Lisa R. Simmons, Fleming & Associates, L.L.P., 713-621-7944, 800-654-7139, d'lisa-simmons@fleming-law.com FLIR SYSTEMS: Milberg Weiss Files Securities Suit in Oregon ----------------------------------------------------------- Milberg Weiss (http://www.milberg.com/flir/)announced that a class action has been commenced in the United States District Court for the District of Oregon on behalf of purchasers of FLIR Systems Inc. (Nasdaq:FLIR) common stock during the period between Feb. 8, 2000 and March 3, 2000 (the "Class Period"). The complaint charges FLIR and certain of its officers and directors with violations of the Securities Exchange Act of 1934. FLIR is involved in the design, manufacture and marketing of thermal imaging and broadcast camera systems for a wide variety of applications in the commercial and government markets. The complaint alleges that on Feb. 8, 2000, FLIR announced its expected results for the fourth quarter ended Dec. 30, 1999, including net earnings of at least $0.57 per share, later telling analysts that demand and order rates were still strong and the company would report revenues of approximately $57 million. Although these amounts were a shortfall from previous expectations, FLIR management told analysts it expected to make up the shortfall in the following quarter. As a result of management's positive statements, FLIR's stock price did not collapse but declined only to the $14 range, later recovering most of its losses and increasing to $17-1/2 per share. Then on March 6, 2000, FLIR admitted that its fourth quarter 1999 results would be much lower than previously forecast due to "accounting errors," simultaneously announcing the immediate resignation of the company's Chief Financial Officer. On these shocking disclosures, FLIR's stock price declined to as low as $9 per share from $17-1/8 in its most recent trading session. Contact: Milberg Weiss Bershad Hynes & Lerach William Lerach, 800/449-4900 wls@mwbhl.com FLIR SYSTEMS: Schubert & Reed Plans to File Shareholder Suit ------------------------------------------------------------ Schubert & Reed LLP plans to file a shareholder class action against FLIR Systems Inc. (Nasdaq: FLIR) and certain of its officers and directors alleging violations of federal securities laws on behalf of a proposed class of purchasers of FLIR common stock between April 28, 1999 and March 3, 2000, inclusive (the "Class Period"). Based on the investigation of counsel, the Complaint will allege violations of Section 10 and 20 of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On March 6, 2000, FLIR Systems, Inc. announced that it expected revenue and net earnings for the fourth quarter to be "materially below" the Company's previous expectations of $0.57-$ 0.59 for the fourth quarter, announced just weeks earlier, and that a loss for the quarter was "possible." FLIR also announced that its Vice President of Finance and CFO "resigned" following the discovery of "several errors" in its accounting records, including errors in consolidating entries made for its subsidiaries in both the U.S. and Europe, and that correcting these errors would have the effect of reducing revenue and net earnings relative to the Company's previously announced expectations. FLIR said that it would delay announcement of its financial results for the fourth quarter and 1999 until after the completion of the year-end audit of its financial statements, which it expected no later than the end of March. On news of the irregularities, FLIR lost more than 40% of its value in a single day's trading, closing at $10. Contact: Juden Justice Reed, Esq. of Schubert & Reed LLP, 415-788-4220, or fax, 415-788-0161, or mail@schubert-reed.com HASS: NJ Ct OKs Suit Filed '96 for Medical Monitoring Re Toxic Waste -------------------------------------------------------------------- A New Jersey judge has certified a class action that seeks medical monitoring for Gloucester County residents who fear that they were poisoned by toxic waste dumped at one of New Jersey's worst Superfund sites. Superior Court Judge John Holston certified the class on Jan. 27, more than three years after the suit, Wilson v. Hass, L-1375-95, was filed, in July 1996. The suit asks for creation of a fund "to defray or reimburse the cost of diagnostic evaluation or medical monitoring of the health of the persons exposed to high or elevated toxic discharge." (The National Law Journal, February 21, 2000) ICN PHARMACEUTICALS: Heightened Pleading Standards Do Not Apply to SEC ---------------------------------------------------------------------- In what is believed to be the first ruling of its kind, the Central District of California has refused to dismiss the Securities and Exchange Commission's securities fraud suit against a corporate officer of ICN Pharmaceuticals, concluding the heightened pleading standards of the Private Securities Litigation Reform Act do not apply to the agency's enforcement actions. SEC v. ICN Pharmaceuticals. (Securities & Commodities Litigation Reporter, February 24, 2000) INFORMATION MANAGEMENT: Berman, DeValerio Files Securities Suit in CT --------------------------------------------------------------------- Berman, DeValerio & Pease LLP announces that a shareholder of Information Management Associates, Inc. (NYSE: IMAA) has filed a class action lawsuit in the United States District Court for the District of Connecticut. The shareholder seeks damages for violations of the Securities Exchange Act of 1934 and has brought the lawsuit on behalf of all investors who purchased Information Management common stock during the period August 12, 1999 through November 18, 1999. The action alleges that, during the Class Period, Information Management and certain of its officers overstated revenues and earnings by improperly recognizing revenue on "sales" where the customer had no obligation to pay for the product. Contact: Chauncey D. Steele IV, Michael G. Lange, Berman, DeValerio & Pease LLP, One Liberty Square, Boston, MA 02109, E-Mail: bdplaw@bermanesq.com telephone: (800) 516-9926 Website: http://www.bermanesq.com LOS ANGELES: Justice Officials and Police to Discuss Rampart Scandal -------------------------------------------------------------------- High-ranking U.S. Justice Department officials are in Los Angeles to determine why the police department has not moved forward with anticipated changes in the wake of a corruption scandal in its Ramparts Division, according to the Los Angeles Times, Monday, March 13. Justice Department officials concerned about civil rights violations arising from the scandal would meet with Police Chief Bernard Parks and other city leaders in two days of talks, the report says. The meetings come two weeks after the department released a 362-page report on the Ramparts Division scandal, in which officers allegedly shot and framed innocent victims, planted evidence and lied on the witness stand. Head of the Justice Department's civil rights division, Bill Lann Lee, wanted to determine why the Los Angeles Police Department had not implemented long-anticipated changes following the scandal and to find out how it planned to move forward on key reforms, the Los Angeles Times reported. The Justice Department has been monitoring the Los Angeles Police Department since 1996 to determine whether incidents involving excessive force fall into any recognizable pattern, according to the Times. The oversight was authorized under a 1994 federal law. NEFF CORP: Stockholders Allege Proposed Buyout Is a Sweetheart Deal ------------------------------------------------------------------- Angry stockholders are alleging insider dealing at Neff Corp., saying the company's proposed management buyout is a sweetheart deal that cheats smaller investors. Last month, Neff announced plans to buy out its public shareholders at $ 9 a share, well under the company's initial public offering price of $ 14 per share in 1998. Neff President and Chief Executive Kevin Fitzgerald will head the buyout group, along with General Electric Capital, which already owns a stake in Neff. Under terms of the proposed buyout, controlling shareholders will get a better deal than other stockholders. Jorge Mas, Juan Carlos Mas and Jose Ramon Mas -- sons of the late Jorge Mas Canosa and 63 percent owners of Neff -- would receive $ 9 a share for about 4.7 million shares of stock. But the remaining 7.1 million shares would be redeemable at $ 13 a share at a future date or in a new buyout. The $ 13 price is a 44 percent premium over the $ 9 offered to other shareholders. Shareholders are irate over the company's lack of communication. Neff has failed to issue timely information on the company's activities and has failed to provide reports on board meetings requested by shareholders. "I don't know how they can go public at $ 14 and sell off two of their best money-making assets and have the nerve to sell at $ 9," said Chris Tilley, a shareholder in Sterling, Va. "How would the SEC allow it?" Tilley is one of three shareholders who filed a class-action lawsuit against Neff, the three Mas brothers, Fitzgerald, and board members Arthur B. Laffer and Joel-Tomas Citron. The lawsuit was filed Feb. 29 in Delaware, where the company is registered. Citron is president and chief executive of MasTec, a Miami builder of telecommunications and cable television cable systems, which is also majority- owned by the Mas family. Laffer, who became well known for providing inspiration for former President Ronald Reagan's supply-side economics, also is a MasTec board member. The lawsuit alleges that shareholders "have suffered and will suffer irreparable damage unless defendants are ordered to put the company up for auction in order to maximize shareholder value." Buyers jumped into Neff when its stock was first publicly issued, and the price rose to $ 18 a share last summer after the company announced it had hired an investment banker to look for a buyer. But no deal resulted, and the stock sank as low as $ 6. When Neff announced Feb. 28 that management would pay $ 9 for the company, shareholders bitterly complained the company should have found a more generous buyer. One shareholder, Kern Minehan, who lives in Surrey, N.D., said he purchased stock last July after Fitzgerald announced that plans to sell the company were nearing completion. "I buy into this at this point because I figure, hey, the CEO of the company said this, it must be more or less accurate," Minehan said. The buyout offer must still gain board approval. (The Miami Herald, March 14, 2000) PUBLIC SERVICE: Vigorously Defends Lawsuits over Royalties in Kansas -------------------------------------------------------------------- On June 28, 1999, a complaint was served on Public Service Co of New Mexico, alleging violations of the False Claims Act by the Company and its subsidiaries, Gathering Company and Processing Company (collectively called Company, for purposes of this discussion), by purportedly failing to properly measure natural gas from Federal and tribal properties in New Mexico, and consequently, underpaid royalties owed to the Federal government. A private relator is pursuing the lawsuit. The complaint was served after the United States Department of Justice declined to intervene to pursue the lawsuit. The complaint seeks actual damages, treble damages, costs and attorneys fees, among other relief. This case was consolidated with approximately 70 others, asserting similar claims against other defendants in other jurisdictions, and transferred to Federal District Court for the District of Wyoming by the Federal Multi-District Litigation panel (MDL Panel), recaptioned as In re: Natural Gas Royalties Qui Tam Litigation, MDL Docket No. 1293. The Company joined 250 other defendants in a motion to dismiss the complaint for failure to plead properly in November 1999. The motion is set for oral argument on March 17, 2000. A class action lawsuit against 233 defendants, including the Company, captioned Quinque Operating Co. et al. v. Gas Pipelines, et al., C.A. No. 99-CV-30, was filed in the state district court for Stevens County, Kansas by representatives of classes of gas producers, royalty owners, overriding royalty owners and working interest owners, alleging that the defendants, all engaged in various aspects of the natural gas industry, mismeasured natural gas and underpaid royalties for gas produced on non-federal and non-tribal lands. The claims for relief are based on Kansas state law, including a breach of contract claim. They are factually similar, however, to the allegations of In re: Natural Gas Royalties Qui Tam Litigation. The Quinque complaint seeks actual damages, treble damages, costs and attorneys fees among other relief. The Quinque case was removed to the United States District Court for the District of Kansas. Thereafter, several defendants moved the MDL Panel to transfer the case to the United States District Court for Wyoming and to consolidate it with the In re: Natural Gas Royalties Qui Tam Litigation. Plaintiffs have filed objections to the motions to consolidate and transfer and have filed with the U. S District Court in Kansas a motion to remand the case to state court. Both matters are awaiting decision. The Company is vigorously defending this lawsuit and is unable to estimate the potential liability, if any, or to predict the ultimate outcome of this lawsuit. SAFETY-KLEEN: Cohen, Milstein Files Securities Suit in SC --------------------------------------------------------- The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C. on March 13, 2000, filed a lawsuit in the United States District Court for the District of South Carolina, on behalf of purchasers of the common stock of Safety-Kleen Corporation (NYSE:SK) during the period between July 7, 1998, and March 6, 2000, inclusive. The complaint charges Safety-Kleen and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading financial statements that materially overstated the Company's revenues, income and earnings during the Class Period. Additionally, the complaint alleges that the Company announced on March 6, 2000, that a committee had been formed to investigate possible accounting irregularities in its reported financial results since 1998 and that the Company's top officers had been placed on administrative leave pending the outcome of the investigation. Safety-Kleen's stock dropped more that $2.00 per share and has declined over 89% from its class period high of$19.25. Contact: Andrew N. Friedman, Esq. or Robert Smits Cohen, Milstein, Hausfeld & Toll, P.L.L.C. 1100 New York Avenue, N.W. Suite 500 - West Tower Washington, D.C. 20005 Telephone: 888/240-0775 or 202/408-4600 email address: afriedman@cmht.com or rsmits@cmht.com SAFETY-KLEEN: Discovers Accounting Irregularities; Cash Tight ------------------------------------------------------------- Safety-Kleen Corp. has announced that it has discovered "accounting irregularities" affecting financial results for the past three years and will continue an investigation of its policies. The company said on Monday that it may have to borrow money or sell assets to continue funding operations. The company also said it is trying to renegotiate some loan agreements. Safety-Kleen's largest shareholder, Laidlaw Inc., urged the company to finish its investigation as quickly as possible to remove uncertainty about the company. Burlington, Ontario-based Laidlaw owns 44 percent of Safety-Kleen. (Chicago Tribune, March 14, 2000) SOTHEBY'S HOLDINGS: Burt & Pucillo Files Securities Suit in New York -------------------------------------------------------------------- Pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange Act of 1934, a class action lawsuit alleging violations of the federal securities laws was filed on March 10, 2000, in the United States District Court for the Southern District of New York against Sotheby's Holdings, Inc. The action is brought on behalf of a class of persons who purchased the common stock of Sotheby's Holdings, Inc. (NYSE:BID) during the period from February 11, 1997 and January 29, 2000 (the "Class Period"). The complaint alleges that Sotheby's and certain of its officers and directors violated the Securities Exchange Act of 1934 and Rule 10b-5 by issuing materially false and misleading information concerning Sotheby's business and financial condition during the Class Period. Specifically, the complaint alleges that Sotheby's misrepresented the extent to which its revenue and earnings were the product of an illegal price-fixing conspiracy with its primary competitor, and misrepresented the extent to which prices were competitive in the auction industry. The action was filed by the firm of Burt & Pucillo, LLP ("Burt & Pucillo") of West Palm Beach, Florida. Contact: Burt & Pucillo, LLP, West Palm Beach Michael J. Pucillo, 561/835-9400 or 800/349-4612 e-mail: law@burt-pucillo.com or burtpucill@aol.com website: http://www.burtpucillo.com TOBACCO LITIGATION: Australian Ct Dismisses Suit by Lung Cancer Victims ----------------------------------------------------------------------- Australian Federal Court has dismissed a class action suit by six smokers against tobacco companies Philip Morris, WD and HO Wills, and Rothmans. The majority decision by the three-judge court agreed with the tobacco companies' argument that the class action didn't comply with Federal Court rules. Lawyers for the litigants, who were seeking unspecified damages, said they will appeal. Six people, who all claim claim they have all contracted lung cancer because of the actions and conduct of Australia's three largest tobacco companies, began the class action last year to sue the companies for damages, alleging breach of the Trade Practices Act with misleading and deceptive conduct and negligence. Two of the plaintiffs have since died. Rothmans and Wills are both owned by the trading company British American Tobacco Australasia. Philip Morris (MO) spokeswoman Nerida White said the Court's decision confirmed the company's belief that class actions are inappropriate and litigation should be determined on an individual-by-individual basis. TOBACCO LITIGATION: BAT Can't Claim Lack of Personal Jurisdiction in NY ----------------------------------------------------------------------- A New York federal court has ruled that BAT Industries PLC (BAT), the British parent company of Brown & Williamson Tobacco Corp. (B&W), may not claim lack of personal jurisdiction to shield itself from class action claims filed in New York. Simon et al. v. Philip Morris Inc. et al. , No. 99 CV 1988 (ED NY, Jan. 4, 2000); see Tobacco Industry LR, Dec. 27, 1999, P. 4. The class action was brought on behalf of lung cancer victims against tobacco companies in the Eastern District of New York. The suit asks the court to certify the named plaintiffs as representatives of a class consisting of all residents of the United States who have a 20 pack-year history of cigarette smoking and who had a timely claim as of April 9, 1999, for lung cancer allegedly caused by smoking. Like most other personal injury suits filed against tobacco companies, the New York class action alleges that the major tobacco companies conspired to: (1) conceal and misrepresent the health hazards of smoking; (2) conceal the fact that nicotine in cigarettes is addictive; and (3) conceal the fact that the companies have manipulated the nicotine levels of their products. BAT is a holding company based in London that derives its revenue from tobacco manufacturing subsidiaries. The class action names BAT as a defendant in the suit because one of its subsidiaries, B&W, has a strong market presence in the state of New York. The suit claims BAT instructed its subsidiaries to perpetuate their fraudulent position on the health risks of smoking and prohibited them from designing and manufacturing a less harmful product. BAT moved to dismiss the claims against it, alleging that the conduct alleged in the class action involved its subsidiaries and the plaintiffs produced no evidence of independent wrongdoing by BAT. The court found the plaintiffs had made a prima facie showing of conspiracy by BAT, and noted that the record contained a large amount of evidence showing BAT was involved with the tobacco conspiracy alleged by the suit. "Awareness on the part of BAT of the effects of its acts in New York may be inferred. BAT's concealment of information and enforcement of a code of silence on its subsidiaries were undertaken to protect its American subsidiary, B&W. To accomplish this, it knowingly supported the efforts of the United States tobacco industry as a whole to attempt to make cigarette smoking palatable to the American regulatory authorities and general public while hiding from smokers and potential smokers around the country, including New York, what it knew about the dangerousness of cigarettes." The plaintiffs were represented by Steven E. Finemann and Robert J. Nelson of Lieff, Cabraser, Heimann & Bernstein in New York. The defendants were represented by Joseph M. McLaughlin, Robert M. Neumann and Michael P. Panagrossi of Simson, Thacher & Bartlett in New York. (Tobacco Industry Litigation Reporter, February 25, 2000) TYSON: NY Court Rejects Claim That Boxer's Bite Was a Rip-off ------------------------------------------------------------- Pay-per-view customers who felt cheated when the June 28, 1997, boxing match between Evander Holyfield and Mike Tyson ended prematurely after Tyson bit his opponent's ear have lost a bid to bring a lawsuit against the controversial fighter. Castillo et al. v. Tyson et al.; Abate v. Tyson et al., Nos. 3133 and 3134 (NY Sup. Ct., App. Div., Jan. 20, 2000); see Sports & Entertainment LR, July 1997, P. 4. A New York appellate court, in rejecting the proposed class action, ruled that the breach of contract suit lacked merit. Plaintiffs Damian Castillo and Catherine M. Abate claimed that they were entitled to view a "legitimate heavyweight title fight" fought in accordance with the rules and regulations of the governing boxing commission. In wishing to represent all New York fans who had paid $49.95 to watch the fight, the plaintiffs sued Tyson and his promoters, as well as a number of fight telecasters, asking for their money back because the match ended in an early disqualification. New York County Supreme Court Judge Charles Ramos dismissed the lawsuit after finding that the plaintiffs had failed to state a cause of action. The fight fans were not in contractual privity with any of the defendants, the appellate division said, affirming, nor can they claim that they were third-party beneficiaries of one or more of the contracts that the defendants entered into among themselves. "Nothing in these contracts can be understood as promising a fight that did not end in a disqualification," it said. "The rules of the governing commission provide for disqualification, and it is a possibility that a fight fan can reasonably expect," the five-judge panel continued. "The plaintiffs could not reasonably rule out such a possibility by the boxer's and promoters' public statements predicting a 'sensational victory' and 'the biggest fight of all time.'" The panel also rejected the plaintiffs' claim for unjust enrichment. "The plaintiffs," it said, "received what they paid for, namely, 'the right to view whatever event transpired.'" Jay L.T. Breakstone in New York argued for the plaintiffs. Lawrence I. Weinstein, Joseph D. Pizzurro and Stuart J. Baskin in New York represented the Tyson defendants. (Sports & Entertainment Litigation Reporter, February 2000) VANTAGEMED CORP: Milberg Weiss Files Securities Suit in California ------------------------------------------------------------------ Milberg Weiss (http://www.milberg.com/vantagemed)announced that a class action has been commenced in the United States District Court for the Eastern District of California on behalf of purchasers of VantageMed Corporation (Nasdaq:VMDC) common stock pursuant to VantageMed's February 15, 2000 Initial Public Offering. The complaint charges VantageMed and certain of its officers, directors and its underwriters with violations of the Securities Act of 1933. VantageMed provides healthcare information system and services to automate administrative, financial, clinical and management functions for physicians, dentists, and other healthcare providers and provider organizations. On February 15, 2000, VantageMed completed an IPO of 3,000,000 shares of stock at $12 per share pursuant to a Registration Statement/Prospectus. The offering provided that VantageMed would receive $33.48 million in net proceeds and the underwriters would receive $2.52 million. The complaint alleges that the Registration Statement/Prospectus was false and misleading, failing to describe the fact that the Company had been delayed in introducing a new version of its most important product, Ridgeway medical management, which delay would adversely affect the Company's future results. On March 9, 2000, VantageMed revealed information that showed that the positive statements in the Registration Statement/Prospectus were false when made. On March 9, 2000, VantageMed issued a press release which disclosed that 1stQ 2000 results would be below forecasts due to a delay in the market introduction of the new version of its Ridgemark product, a medical management system. The Company also filed the press release with the SEC as a supplement to its Prospectus. While this supplement corrected the Prospectus it did not do so until after public shareholders had paid millions for VantageMed stock based on a defective Prospectus. VantageMed's stock price reacted swiftly and negatively to these revelations, falling to as low as $4-1/2 on huge volume of 3 million shares, $7-1/2 below the offering price just three and a half weeks earlier. Public investors who purchased shares in the IPO based on VantageMed's representations, paying $12 per share for VantageMed stock, have suffered tens of millions of dollars in damages. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com VANTAGEMED CORP: Schiffrin & Barroway Files Securities Suit in TN ----------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP announces that a class action lawsuit was filed in the United States District Court for the District of Tennessee on behalf of all purchasers of the common stock of VantageMed Corp. (Nasdaq:VMDC) pursuant to the Company's initial public offering on February 15, 2000. The complaint charges VantageMed and certain of its officers and directors with issuing a false and misleading Registration Statement and Prospectus for the IPO of VantageMed common stock. Contact: Schiffrin & Barroway, LLP, Philadelphia Marc A. Topaz, Esq. Stuart L. Berman, Esq. 1-888-299-7706 (toll free) or 1-610-667-7706 Or by e-mail at info@sbclasslaw.com WEYERHAEUSER CO: Faces CA Property Owners' Suit over Hardboard Siding --------------------------------------------------------------------- In June 1998, a lawsuit was filed against the company in Superior Court, San Francisco County, California, on behalf of a purported class of individuals and entities that own property in the United States on which exterior hardboard siding manufactured by the company has been installed since 1981. The action alleges the company manufactured and distributed defective hardboard siding, breached express warranties and consumer protection statutes and failed to disclose to consumers the alleged defective nature of its hardboard siding. The action seeks compensatory and punitive damages, costs and reasonable attorney fees. In December 1998, the complaint was amended narrowing the purported class to individuals and entities in the state of California. In February 1999, the court entered an order certifying the class. The company has been unable thus far to obtain a reversal of the certification. WEYERHAEUSER CO: Faces TX Suit over Hardboard Siding ---------------------------------------------------- A lawsuit was filed against the company in District Court, Johnson County, Texas, in June 1999. The case purports to be a class action on behalf of persons who own structures in the state of Texas with exterior hardboard siding manufactured by the company. The complaint alleges defective design, misrepresentation, negligence, breach of express warranty and fraudulent concealment. The complaint seeks unspecified compensatory damages. WEYERHAEUSER CO: Lawsuits over Hardboard Siding Filed in SC, IA and OR ---------------------------------------------------------------------- In July 1999, a lawsuit was filed against the company in the Court of Common Pleas, Beaufort County, South Carolina. The suit purports to be filed on behalf of all owners of residential structures or other buildings with hardboard siding manufactured by the company. The complaint alleges breach of express and implied warranties, defective design and manufacture, fraud and violation of South Carolina's unfair trade practices act. The plaintiffs seek compensatory damages, treble damages and attorneys' fees. The company is a defendant in two other cases, one in Iowa and the other in Oregon, that purport to be statewide class actions with similar allegations. The company is a defendant in approximately 25 other hardboard siding cases primarily involving multi-family structures and residential developments. WEYERHAEUSER CO: PA Suits Allege Price-Fixing of Linerboard ----------------------------------------------------------- In May 1999, two civil antitrust lawsuits were filed against the company in U.S. District Court, Eastern District of Pennsylvania. Both suits name as defendants several other major containerboard and packaging producers. The complaint in the first case alleges the defendants conspired to fix the price of linerboard and that the alleged conspiracy had the effect of increasing the price of corrugated containers. The suit purports to be a class action on behalf of purchasers of corrugated containers during the period October 1993 through November 1995. The complaint in the second case alleges that the company conspired to manipulate the price of linerboard and thereby the price of corrugated sheets. The suit purports to be a class action on behalf of purchasers of corrugated sheets during the period October 1993 through November 1995. Both suits seek damages, including treble damages, under the antitrust laws. WEYERHAEUSER CO: Wins WA Case over Hardboard Siding; Appeal Pending ------------------------------------------------------------------- In September 1998, a lawsuit purporting to be a class action involving hardboard siding was filed against the company in Superior Court, King County, Washington. The complaint was amended, in January 1999, to include individuals and entities that own homes or other structures in the United States on which exterior hardboard siding manufactured by the company at its former Klamath Falls, Oregon, facility has been installed since January 1981. The amended complaint alleges the company manufactured defective hardboard siding, engaged in unfair trade practices and failed to disclose to customers the alleged defective nature of its hardboard siding. The amended complaint seeks compensatory damages, punitive or treble damages, restitution, attorney fees, costs of the suit and such other relief as may be appropriate. In July 1999, the company's motion for summary judgment was granted in this case. The plaintiffs filed a petition for reconsideration which was denied in January 2000. The plaintiffs have appealed this decision. * Proposed EEOC Regulation May Allow Employees to Sue Despite Waiver -------------------------------------------------------------------- Under a proposed regulation making its way through the Equal Employment Opportunity Commission, signing a waiver in exchange for severance pay may no longer be an impediment to litigation. In response to the U.S. Supreme Court's 1998 opinion in Oubre v . Entergy Operations Inc., 522 U.S. 422, the EEOC has indicated that it is set to agree with the court's ruling that if a waiver is not knowing and voluntary an employee does not have to tender back severance in order to sue his employer. And although a conservative contingent of the court -- Chief Justice William Rehnquist and Justices Clarence Thomas and Antonin Scalia -- sized up the ruling as a windfall for plaintiffs, the majority held that companies could not use "tender back" as a means to evade compliance with 1990's Older Workers Benefits and Protection Act. Plaintiffs lawyers and the EEOC say companies that issue fair and proper releases -- releases that comply with the Supreme Court's knowing-and-voluntary standard -- will create an affirmative defense, shielding them from legal action. But defense attorneys say not only will the ruling saddle employers with the cost of fighting meritless claims, but workers will suffer because companies will simply stop offering severance. 'It doesn't seem right' Defense lawyers like de Bernardo say the EEOC proposed regulation �165.23 will in all likelihood open the door to frivolous claims by plaintiffs lawyers who will have little to lose by suing an employer under the 1967 Age Discrimination in Employment Act. De Bernardo sees the policy as discouraging settlement and encouraging litigation. "Now they can take the money and keep it -- it's the best of both worlds [for plaintiffs lawyers]," says de Bernardo. Conceptually, says de Bernardo, the idea of protecting aging workers from termination is a good one. "The problem is in the execution," he says. "There has to be a level playing field." Calling the policy essentially a no-lose situation for plaintiffs, the Littler Washington, D.C., partner says the rule will only result in more litigation, more acrimony, and fewer resolutions in an area of law that already accounts for one-third of the federal court backlog. And because the OWBPA only comes into play when a waiver is used, de Bernardo says companies will simply stop offering severance. "There is a potential chilling effect on employers offering severance," he says. "It is less attractive." The American Corporate Counsel Association, the 11,000-member in-house bar, agrees. In a letter to the EEOC, the corporate counsel organization argues that the regulation will destroy a waiver's value to the employer, run counter to applicable case law, and undermine amicable settlement of employment disputes. "This regulation prevents finality and undermines the system by allowing disgruntled employees with spurious claims to fight on endlessly. That's the opposite of what we all intended, isn't it?" wrote Steven Allen Bennett, chairman of ACCA's policy committee. Bennett argues that an employer pays for a release to avoid the costs and inconvenience of a lawsuit. Under the proposed regulation, even if a company has an airtight defense, it is still subject to that expense. Bennett further asks the EEOC to implement some consequence to bringing a frivolous claim -- either requiring the employee to pay back the consideration, or if the release provides, the employer's costs and attorneys fees. Proponents of the regulation, on the other hand, say empowering employees to take legal action without forfeiting pay is what Congress intended when it wrote the OWBPA statute. And lawyers like Alan Exelrod, a partner at San Francisco's Rudy, Exelrod, Zieff & True -- who won a similar action in federal court four years ago -- say the practice of bringing a claim without tendering back payment is not new. "Having this will help with some judges [who aren't clear on the statute]," Exelrod says. As for the defense argument, Exelrod says: "All they have to do is comply with the act." Plaintiffs attorney Phil Horowitz, a partner with S.F.'s Lawless, Horowitz & Lawless, says employers can protect themselves fully by just following the law. "The issue never arises if they follow the requirements," he says. Horowitz adds that the law is very straightforward, but employers often choose to ignore it. Now, he says, employers and their attorneys are upset because breaking the law has become inconvenient for them. In fact, Horowitz says the OWBPA rules should be applied to all discrimination cases. As for the defense bar's argument that denying employers the finality of their bargain goes against the statutory scheme of the OWBPA, Horowitz calls that "malarkey." "Why would Congress say [unfair] releases are not valid if they didn't mean it?" he asks. The EEOC's position is that "an individual alleging that a waiver agreement was not knowing and voluntary under the OWBPA is not required to tender back the consideration as a precondition for challenging the waiver agreement." The agency further maintains that the regulation poses little threat to companies offering fair and voluntary waiver agreements. In its notice of proposed rulemaking, the EEOC says: "The statute does not envision a waiver agreement as a bar to litigation, but rather suggests that a waiver is an affirmative defense." Nevertheless, EEOC assistant legal counsel Carol Miaskoff says although a final rule should be approved by an EEOC panel later this year, she could not predict what the final regulation will look like. ********* 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. 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 * * *