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/raid1/www/Hosts/bankrupt/CAR_Public/000525.MBX C L A S S A C T I O N R E P O R T E R Thursday, May 25, 2000, Vol. 2, No. 102 Headlines ALEXEI YASHIN: Scrapper Plans to Enlist a Thousand Fans for 2nd Lawsuit AMERICAN AIRLINES: The Times (London) Cites Brits' Chance to Join Suit BELL ATLANTIC: Retirees in Protest of Annual Meeting BREAST IMPLANT: Study Raises Concerns about Silicone's Return CENDANT CORP: Judge Says Contribution Claim Against Directors Premature CHERRY CORP: Sued in DE over Chairman's Offer; Gets 2nd Bidder CHILDRENS PLACE: Reaches Settlement Deal for Securities Suits in NJ DELTA BEVERAGE: Bottlers' '93 Complaint over Monopoly Continues in 2000 DELTA BEVERAGE: LA Residents Complain of Noxious Fumes from Pond FINOVA GROUP: Stull, Stull Files Securities Suit in Arizona FIRST SECURITY: Cauley & Geller Files Securities Fraud Lawsuit in Utah FIRST SECURITY: Milberg Weiss Files Securities Lawsuit in Utah FORT JAMES: Settles with States over Sanitary Paper Products FORT JAMES: Vigorously Defending Suits By Purchasers of Sanitary Paper GTE CORPORATION: Stull, Stull Files Securities Suit in New York HOLOCAUST VICTIMS: Report on Insurance Claims Denial Sparks CA Lawsuit LEAD PAINT: Billions of Dollars at Stake after Tobacco Litigation PETER BERZINS: Finkelstein, Thompson Files Securities Suit in Maryland SCHICK TECHNOLOGIES: Announces Settlement of Securities Lawsuit STONE & WEBSTER: Stull, Stull Files Securities Suit in Massachusetts TOBACCO LITIGATION: Attorneys for Makers Differ over Settlement Payment TOBACCO LITIGATION: B&W. Lorillard Join Ligget in Admitting Disease TOBACCO LITIGATION: Makers Sobered By Settlements, Lawyers Claim ********* ALEXEI YASHIN: Scrapper Plans to Enlist a Thousand Fans for 2nd Lawsuit ----------------------------------------------------------------------- Len Potechin, 72, Ottawa real estate mogul, and just back from two weeks in Israel where he was on vacation when Judge Michel Z. Charbonneau dismissed proceeding with the $ 27.5-million class-action lawsuit against the team's Russian star for violating the terms of his contract with the club and, the suit claimed, the season-ticket holders, said: "Our lawyer Arthur Cogan wants to appeal; but I just might get one of our fans, my friend Roger Hunter, to file another legal action, only this time we'll produce a thousand fans to say they bought season tickets on the expectation Alexei Yashin would be playing. Has Yashin won this (legal) matter? I don't think so." These options, he told me after his speech, will be discussed with Cogan; a third option being a fund-raiser to cover Ca$ hin's costs -- reported to be some $ 50,000 -- which his lawyers will petition the court to have assessed against Potechin. One idea proposed by Potechin supporters is a $ 10 donation from each season-ticket holder, monies above the final damages donated to charity. "That's if the figure is up around $ 50,000,'' said Potechin. "That's not confirmed. Both sides will enter submissions to the judge, and he'll then let us know. If it's a lot less, I'll just pay it myself. My position always was that, if we won the case, I'd donate every cent of damages to charity.'' Team Spirit If considerable damages are assessed against Potechin, many fans might balk at financially unhooking a multi-millionaire hockey player who walked out on their club, and by extension, them. Understandable, but a more noble view might be that, by doing it, they are proving they have principles, they have loyalty; loyalty to the man who stepped up and fought Ca$ hin on their behalf; and no, Alexei Ca$ hin, we're NOT going to give you the delight of stiffing Len Potechin for your costs; we'll teach you a word you don't know: Team. "Strange'' and "unbelievable.'' Those were two words Potechin used in his speech to describe the judge's dismissal of the lawsuit on grounds that Potechin failed to show that he, and the season-ticket buyers he represented, had a form of contractual right to expect Ca$ hin to honour his deal, and also that the club used Ca$ hin's status to induce the ticket buyers. "I don't get it,'' said Potechin. "This is the same judge who, earlier on, and based on the same evidence, ruled in our favour saying we had a case that could proceed. What changed his mind?'' Potechin produced a copy of the judge's dismissal that included the plaintiff's position that Ca$ hin permitted himself to be used by the club to lure existing and potential season-ticket buyers. This included a fans' subscription-renewal letter of March 1999 from owner Rod Bryden promising the club will do all it can to ice the best team. A brochure displayed Ca$ hin on the cover in full uniform. His picture inside with the words, "You'll get great hockey.'' A "ticket information'' banner was erected in the Corel Centre above posters of two players, one of whom was Ca$ hin. The transcript also contained the lengthy examination of club president Roy Mlakar. Question: "Would you ... agree that in light of (Ca$ hin's) quality as a player that the Ottawa Senators Hockey Club used his profile, his persona, to attract fans to purchase tickets? Would that be fair?'' Answer: "... most teams would utilize such a player in their marketing platforms.'' Mlakar was asked if Ca$ hin's picture on the cover of the ticket-sales brochure was "to get fans to buy tickets.'' Answer: "This brochure is all geared to sell tickets, correct.'' Mlakar was asked if the club, in its ticket-sales promotions, advertised that Ca$ hin would be a playing presence for the 1999-2000 season. Answer: "All contracted players are promoted as part of our campaign, and we would emphasize the elite players, or elite player.'' Question: "Would that include Yashin?'' Answer: "Yes.'' To whether his job is "to try and put forth best product on the ice ... so that the fans can get as best quality as they can for their money?'' he answered: "That's one of our objectives.'' The judge's dismissal: "The plaintiff is relying at best on the marketing brochures or other marketing techniques used by the Ottawa Senators Hockey Club to sell tickets as proof that the club had legally bound itself to play Mr. Yashin barring circumstances beyond its control. Evidence Falls Short "The evidence of Mr. Mlakar falls short of showing that any of the representations made in the marketing campaign were made with the necessary promissory intent.'' Excuse me for not being as brilliant as a judge, but it seems to me that a hockey player named Alexei Ca$ hin, the Senators captain, top player and attraction, had a legal contract to play last season, went along with the club using him as a ticket-buying enticement, more fans bought expecting him to play than would have had they known he wouldn't, which he disdainfully did not. (The Ottawa Sun, May 24, 2000) AMERICAN AIRLINES: The Times (London) Cites Brits' Chance to Join Suit ---------------------------------------------------------------------- Revenge is at hand for transatlantic air travellers who discover on arrival that their luggage has been lost, stolen or crushed. British travellers to America may soon be able to join a class action suit for compensation. A Supreme Court ruling opened the way this week for mass litigation over lost or damaged luggage which could cost airlines millions. The case stems from Maria Cruz, who boarded an American Airlines flight from Washington to the Dominican Republic with 13 family members in 1995. On arrival in Santo Domingo, five of their 28 suitcases had vanished and a sixth arrived battered and empty. The Supreme Court rejected an appeal by American Airlines seeking to limit how much it might have to pay. The ruling returns the case to a lower court, but reinstates the family's plea to make it a class action. If the lower court now certifies an entire class of travellers as plaintiffs, then any Briton who lost luggage within the period covered by the action would be a party to the suit. (The Times (London), May 24, 2000) BELL ATLANTIC: Retirees in Protest of Annual Meeting ---------------------------------------------------- Dozens of protesters wearing Communications Workers of America T-shirts marched in front of the Hyatt Regency Hotel in downtown Denver on Wednesday in protest of Bell Atlantic's annual meeting there. Dozens more, who also are shareholders, attended the meeting to support several issues related to retirees and the company's management. Defeated were proposals by the shareholders to require that a majority of the board of directors be financially separate from the company and to require shareholder approve of "golden parachute" severance agreements for executives. The protesters also raised issues regarding stagnant pensions for former members of the union, which is preparing for contract negotiations with the company. A private group supporting retirees' interests also asked why Bell Atlantic would have its annual meeting in Denver, far from some of its major business operating points and its base in New York. A spokesman for that group, Robert Rehm of the Association of BellTel Retirees, noted during the meeting that the company has liabilities of $40 million for executives' retention and-or severance pay. It appears they are well-compensated whether they stay or go, he said to the shouts and cheers of the CWA members who attended the meeting as shareholders. "Hey, Hey. Ho, Ho. Corporate greed has got to go," the shareholders chanted at one point. However, Ivan Seidenberg, the company's chief, said the retention and severance arrangements were needed in company contracts with executives to keep the talent the $35 billion company needs during competitive times. Having shareholders approve the agreements would unduly restrict managers, he said. Bell retirees also are pursuing a pending class action lawsuit against Bell Atlantic, the retirees' group said. And several congressional sponsors have signed onto a plan called "The Emergency Retiree Health Benefits Protection Act." (The Associated Press State & Local Wire, May 24, 2000) BREAST IMPLANT: Study Raises Concerns about Silicone's Return ------------------------------------------------------------- A study reported last week suggests that many women with silicone-gel implants are unaware that the devices have ruptured, raising concerns about at least one manufacturer's plan to bring the devices back on the market. Although a report from the National Academy of Sciences last summer concluded that women with silicone-gel implants were no more likely than the general population to develop autoimmune diseases, neurological problems or cancer, no studies have focused only on women with ruptured implants, says Diana Zuckerman, executive director of the National Center for Policy Research for Women and Families. The long-term health effects of "silent" -- or symptomless -- ruptures are not known, Zuckerman says. "Even if they're not sick now, we don't know if they're going to be sick a year from now." Since April 1992, silicone-gel implants have been available only in clinical trials for breast-reconstruction patients or women needing replacement of silicone-gel implants that predated the ban. But, given the Food and Drug Administration's favorable decision on saline breast implants this month, one manufacturer has publicized its intention to make silicone-gel models more widely available. Then-FDA Commissioner David Kessler implemented the ban on silicone-gel implants because manufacturers failed to comply with his request for scientific data about silicone-gel implants' safety and effectiveness. Even implants with intact shells leak silicone, says Eugene Goldberg, director of the Biomaterials Center at the University of Florida in Gainesville. "It is clear that the so-called gel, which is mostly fluid, swells the shell, weakens the shell and diffuses through the shell into the surrounding tissues," he says. "That goes on from the very beginning of implant placement." Sometimes that outer shell ruptures, allowing more gel to leak out. In a study reported Thursday at the 6th World Biomaterials Congress in Hawaii, researchers led by an FDA scientist found that a high proportion of silicone-gel implants had ruptured, unbeknownst to their owners. Of the 344 women in the study, magnetic resonance imaging (MRI) scans performed in 1998 revealed that more than two-thirds had ruptured implants. "There is, in my view, an extraordinary failure rate," Goldberg says. In an analysis of 43 studies, involving nearly 10,000 silicone-gel breast implants that had been removed because of complications, Goldberg found similarly high failure rates. About a third ruptured within five years, half within 10, and more than two-thirds by the time they'd been in place 17 years. "In the old days, doctors and manufacturers said these were going to last forever, but they were wrong, and nobody says this anymore," says Ilan Reich, president of Inamed, parent company of McGhan Medical, the business that is seeking to make silicone-gel breast implants widely available again in the USA. When McGhan's implants rupture, the company will provide a replacement implant free. If they rupture within 10 years of implantation, McGhan also will pay up to $ 1,200 toward the medical costs of replacing them. After a decade, it's up to women to pay for their medical costs. The warranty applies to all saline implants but only silicone-gel implants implanted after Sept. 30, 1997, the date McGhan resumed selling them in the USA after Kessler's ban. Women who received silicone implants before the ban received a settlement from a class-action lawsuit. When a saline implant ruptures, the salt water is absorbed by the body, and the breast noticeably and suddenly flattens. As the FDA study shows, though, ruptures of silicone-gel implants often aren't obvious. "Women are not adequately informed of the risk-benefit situation," says Goldberg, chairman of the symposium at which the FDA's study was presented. "I think that's a basic underlying issue of grave concern." In light of its findings, the FDA is requiring manufacturers to track silent ruptures in clinical trials necessary for approval of silicone-gel implants. "It's not reasonable to market these products without being able to tell people what to expect," says David Feigal, director of the FDA branch responsible for implants and other devices. "This is going to be a real issue that the manufacturers of these products are going to have to grapple with." Every participant in McGhan's FDA-required trial will undergo annual MRI scans for a decade, or until a rupture is detected, Reich says. "Frankly, it makes it a very expensive clinical study," Reich says. "The level of clinical trials and scientific scrutiny is really pretty high up there." McGhan, which is seeking approval of five silicone-gel models, expects to enroll nearly 1,000 women in its FDA-required trial by late June and present data by late 2002. "In medical devices, you normally don't have 1,000-patient studies," Reich says. "You have 25-patient studies." Reich attributes findings such as the FDA's and Goldberg's to the poorer quality of silicone-gel implants and surgical techniques in the 1970s and 1980s. "The standards were much lower, the science wasn't as advanced, the engineering wasn't as good," he says. "That's where the whole scare came in '92. Certainly, there was evidence these products ruptured for a lot of complicated reasons." The FDA study found that implants placed above chest muscles were more likely to rupture than those placed beneath them, a newer surgical approach. The study also found that the newest models ruptured the least, but it's unclear whether that was just a result of being in place for the shortest period. Zuckerman says she's tired of excuses like Reich's. "Every few years, it's a new thing, and the old way is always terrible, and the new way is always wonderful," says Zuckerman, who, when she worked on the House committee overseeing the FDA, was instrumental in spurring the agency to call for safety and effectiveness data from the makers of implants. Because of the FDA study's findings, her organization and the National Women's Health Network, another Washington, D.C., advocacy group, are calling for a moratorium on the sale of silicone-gel implants. Says Zuckerman: "I think this is a wake-up call to women who have implants, to doctors who are putting in implants and to women and girls who are thinking about getting implants." (USA Today, May 24, 2000) CENDANT CORP: Judge Says Contribution Claim Against Directors Premature ----------------------------------------------------------------------- A federal judge in New Jersey has found a contribution claim against officers and directors premature because the company's proposed $2.83 billion class-action settlement has not been finalized and paid. In re Cendant Corporation Derivative Action Litigation, No. 98-1998 (D.N.J., Apr. 14, 2000). The judge cited additional reasons to dismiss the contribution action, including the plaintiff's failure to make a demand on the board. A Cendant Corp. shareholder plaintiff filed a diversity-based derivative suit in the District of New Jersey, seeking in part a ruling that the company's directors cannot legally be indemnified and released from liability under Section 11(f) of the Securities Act of 1933. The complaint alleged that the directors are individually liable for false or misleading statements in the registration statement. U.S. District Judge William H. Walls denied the plaintiff's motion for partial summary judgment. First, he held that the demand for contribution is not ripe. There is no right to contribution until a defendant pays more than his or her share of a judgment or settlement, Judge Walls said, and the fact Cendant may already have written off or set aside the $2.83 billion charge as an expense in its 1999 income statement does not make the demand timely. Even if a contribution action were timely, there are other problems with the suit, the judge said. For example, the complaint alleges breach of fiduciary duty and gross negligence, but no federal securities claims, so Section 11(f) is inapplicable. In addition, the plaintiff failed to make demands on the board to plead that a majority of the board is interested or to plead other reasons why a demand would be futile, Judge Walls said. Only five of Cendant's present 14 directors are named as defendants in the derivative action. Summary judgment is unwarranted on the merits as well, he said, pointing to disputed factual issues of whether the directors reasonably relied on their auditors, whether they had a good-faith belief that portions of the financial statements were accurate when issued, whether some officers and directors reasonably relied on their subordinates' reports, and whether the registration statement accurately reported on pre-merger access. (Corporate Officers and Directors Liability Litigation Reporter, May 1, 2000) CHERRY CORP: Sued in DE over Chairman's Offer; Gets 2nd Bidder -------------------------------------------------------------- An unidentified company has offered to buy Cherry Corp. for $261 million, substantially raising the stakes in the bidding for the Waukegan-based maker of electrical components. On Tuesday, Cherry Corp. said the bidder, which it did not identify, had offered $26 in cash for all of the company's outstanding shares, dwarfing an offer late last month of $18.75 a share from its chairman, Peter Cherry. Peter Cherry sought to acquire the 46 percent of the company that he and his associates do not already own. That deal was valued at $86.25 million. Peter Cherry's buyout team previously told company officials that they would not be interested in selling their 54 percent stake to a third party, the company said. Cherry Corp. said a committee of the board of directors, which is considering Peter Cherry's bid, will consider the new proposal. Company officials would not comment on the new bid. In a filing with the Securities and Exchange Commission last week and as previously reported in the CAR, the company said it has engaged Wasserstein Perella & Co. to help the committee evaluate Peter Cherry's bid. In the filing, Cherry Corp. said that five class-action lawsuits have been filed this spring in Delaware alleging, among other things, that the directors breached their fiduciary duty in connection with Peter Cherry's proposal. In the SEC filing, Cherry Corp. called the suits "premature and without merit." In fiscal year 2000 ended Feb. 28, Cherry Corp. had net income of $12.2 million, or $1.20 per diluted share, down from $18.8 million, or $1.55 a share, a year earlier. Revenue was essentially flat, at $360.7 million, compared with $359.9 million the previous year. Cherry Corp. is a worldwide supplier to the automotive, computer and consumer markets. Its products include electrical switches and sensors, computer keyboards and automotive switches and modules. Last month, Cherry Corp. completed the sale of its subsidiary, Cherry Semiconductor Corp., to Semiconductor Components Industries. (Chicago Tribune, May 24, 2000) CHILDRENS PLACE: Reaches Settlement Deal for Securities Suits in NJ ------------------------------------------------------------------- In its report to the SEC, Childrens Place Retail Stores Inc. says that the Company has reached an agreement in principle to resolve the federal securities class action litigation which was filed against the Company and others in the United States District Court for the District of New Jersey and the securities litigation filed in Superior Court of New Jersey, Essex County Division. The proposed settlements provide for the payment of $1.7 million in the aggregate and would be funded entirely from insurance proceeds. The proposed federal action settlement requires court approval. DELTA BEVERAGE: Bottlers' '93 Complaint over Monopoly Continues in 2000 ----------------------------------------------------------------------- In August 1993, Delta Beverage Group, Inc., a company sharing common ownership with Pepsiamericas Inc. and Dakota Beverage Company, Inc. under the common control of Pohlad Companies since 1998, was named in a lawsuit filed in the District Court of Morris County, Texas by a number of soft drink bottlers and distributors. Additional defendants include PepsiCo, Pepsi-Cola Company, The Coca-Cola Company, and CCE. The plaintiffs allege that the defendants engaged in unfair trade practices and conspired to monopolize the soft drink industry in eastern Texas, Louisiana and Arkansas in violation of the Texas Free Enterprise Act and, alternatively, state antitrust statutes. The expert witness retained by the plaintiffs has theorized in deposition testimony that total damages to all plaintiffs could be as high as $33 million. The defendants assert that there is no evidence of antitrust injury or direct causation, and therefore no antitrust violations occurred. The expert witness retained by the defendants has testified that total damages to all plaintiffs would range from $0 to $10 million. Any damages awarded would likely be allocated among all defendants. The lawsuit has been bifurcated into two groups of plaintiffs, with trial scheduled to begin on April 26, 2000 for the first group of plaintiffs. Delta intends to continue to vigorously defend itself fully in this action. The defendants believe that a large recovery in this lawsuit is unlikely. However, an unfavorable decision in this case could have a material adverse effect on Delta's financial condition. DELTA BEVERAGE: LA Residents Complain of Noxious Fumes from Pond ---------------------------------------------------------------- In November and December 1999, Delta was named a defendant in several class action lawsuits filed in the District Court of the Parish of St. John the Baptist, Louisiana, by a group of residents near Delta's facility in Reserve, Louisiana. The residents complained of personal injuries resulting from noxious fumes emitted from the wastewater pond owned by the Port of South Louisiana, into which Delta discharges its wastewater. There are approximately 4,000 potential plaintiffs. No dollar amount has been demanded to date; Delta intends to fully defend itself in this action. Delta owns 62% of the Pepsi-Cola/Seven-Up Beverage Company of Louisiana (the "Joint Venture"), which distributes beer in the New Orleans metropolitan area. The Miller distributor agreement provides that a distributor cannot be owned directly or indirectly by a publicly-held company. Because Delta is owned by PAS, a publicly-held company, PAS is working with Miller to resolve this ownership issue. The company cannot assure that PAS will be able to resolve this issue with Miller. FINOVA GROUP: Stull, Stull Files Securities Suit in Arizona ----------------------------------------------------------- The law firm of Stull, Stull & Brody annouces that a class action lawsuit was filed on May 23, 2000, in the United States District Court for the District of Arizona on behalf all persons who purchased the common stock of Finova Group, Inc., (NYSE:FNV) between July 15, 1999 and May 8, 2000 (the "Class Period"). The complaint alleges that Finova, Finova Capital and certain of their directors and executive officers violated Sections 10(b) and Rule 10b-5 promulgated thereunder and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that the defendants issued materially false and misleading financial statements contained in filings with the Securities and Exchange Commission (the "SEC") and press releases, that, inter alia, overstated the Company's assets, income and earnings per share during the Class Period by understating reserves for loan losses. Further, the Complaint alleges that the Company failed to disclose credit risk of a major customer, as required under applicable accounting and SEC rules. Contact: Stull, Stull and Brody, New York Tzivia Brody, Esq., 1-800-337-4983 e-mail: SSBNY@aol.com fax: 212/490-2022 FIRST SECURITY: Cauley & Geller Files Securities Fraud Lawsuit in Utah ---------------------------------------------------------------------- The law firm of Cauley & Geller, LLP announced on May 23 that a class action lawsuit has been filed in the United States District Court for the District of Utah, Central Division, on behalf of all persons who purchased First Security Corporation (Nasdaq: FSCO) common stock between October 18, 1999 and March 2, 2000 inclusive (the "Class Period"). The complaint charges First Security and certain officers and directors of the company with violating federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of First Security common stock. For example, as alleged in the complaint, on January 19, 2000, the Company reported earnings of $0.37 per share during its fourth quarter of fiscal 1999, constituting an increase over the comparable quarter of 1998. In fact, the Company's fourth quarter earnings per share were affected by an undisclosed one-time nonrecurring gain of $0.04 per share. Thus the Company's true operating performance was $ 0.33 per share, representing a decrease over the comparable 1998 period. When the Company revealed, on March 3, 2000, that its operating results for the fourth fiscal quarter would fall short of estimates, the price of First Security common stock dropped by 38%, falling from $22.50 per share, to $13.968 per share. Contact: Cauley & Geller, LLP, 888-551-9944, or CauleyPA@aol.com FIRST SECURITY: Milberg Weiss Files Securities Lawsuit in Utah -------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on May 22, 2000, on behalf of purchasers of the common stock of First Security Corporation ( "First Security" or the "Company") (NASDAQ: FSCO) between October 18, 1999, and March 2, 2000, inclusive. The action, numbered 2:00 CV-0418K, is pending in the United States District Court for the District of Utah, Central Division, located at 350 S. Main Street, Salt Lake City, UT, 84101, against defendants First Security, Spencer F. Eccles (Chairman and Chief Executive Officer,) Morgan J. Evans (President and Chief Operating Officer,) and Brad D. Hardy (Chief Financial Officer and General Counsel.) The Honorable Dale A. Kimball is the Judge presiding over the case. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between October 18, 1999, and March 2, 2000, thereby artificially inflating the price of First Security common stock. For example, as alleged in the complaint, on January 19, 2000, the Company reported earnings of $0.37 per share during its fourth quarter of fiscal 1999, constituting an increase over the comparable quarter of 1998. In fact, the Company's fourth quarter earnings per share were affected by an undisclosed one-time nonrecurring gain of $0.04 per share. Thus the Company's true operating performance was $0.33 per share, representing a decrease over the comparable 1998 period. When the Company revealed, on March 3, 2000, that its operating results for the fourth fiscal quarter would fall short of estimates, the price of First Security common stock dropped by 38%, falling from $22.50 per share, to $13.968 per share. A copy of the complaint filed in this action is available from the Court, or can be obtained from Milberg Weiss' website at: http://www.milberg.com/firstsecurity Contact: Milberg Weiss Bershad Hynes & Lerach, LLP, New York Steven G. Schulman or Samuel H. Rudman Phone number: 800/320-5081 Email: endfraud@mwbhlny.com Website: http://www.milberg.com FORT JAMES: Settles with States over Sanitary Paper Products ------------------------------------------------------------ In May 1997, the Attorney General of the State of Florida filed a civil action in the United States District Court for the Northern District of Florida at Gainesville, against the Company and seven other manufacturers of sanitary commercial paper products alleging violations of federal and state antitrust and unfair competition laws. The complaint sought damages on behalf of the state under Florida law of $1 million against each defendant for each violation, unspecified treble damages and injunctive relief. Four other state attorney generals brought similar suits. In April, 2000, the defendants settled with the State of Florida and the matter was dismissed. The Company admitted no wrongdoing. Agreement in principle has been reached to settle the cases brought by the States of New York, Maryland and West Virginia. A case filed by the State of Kansas was dismissed earlier. FORT JAMES: Vigorously Defending Suits By Purchasers of Sanitary Paper ---------------------------------------------------------------------- Numerous private suits on behalf of an alleged class of direct purchasers have also been filed in federal courts, all seeking similar damages for similar alleged violations. In July 1998, the private suits were conditionally certified as a class action in the Florida District Court. Private class action suits also were filed in four states on behalf of an alleged class of indirect purchasers, seeking similar damages for similar alleged violations under state law. The Minnesota state court refused to certify a class in that state, and the case in Wisconsin was voluntarily dismissed prior to certification. The class certification petition was recently argued in California, but no decision has been rendered. No activity has been forthcoming in Tennessee. The Company believes that these remaining cases are without merit and is vigorously defending both the federal and state actions. GTE CORPORATION: Stull, Stull Files Securities Suit in New York --------------------------------------------------------------- The law firm of Stull, Stull & Brody announces that a class action lawsuit was filed on May 23, 2000, in the United States District Court for the Southern District of New York on behalf of investors who were shareholders of record of GTE Corporation, (NYSE:GTE) securities as of March 29, 1999, and their successors in interest. The lawsuit charges GTE and several of its top officers with violations of the securities laws and regulations of the United States. The complaint alleges that defendants issued false and misleading statements concerning the impact a proposed merger with Bell Atlantic would have on the amount of dividends received by investors. Specifically, the complaint alleges that the Company assured investors that they would receive virtually identical dividends after the merger as they did before, when, in fact, post-merger, the combined company will issue dividends one month later than GET's quarterly dividend schedule. With nearly one billion outstanding shares of GTE, the conversion of GTE's dividend schedule to coincide with Bell Atlantic's dividend schedule which distributes dividends a month later, will result in a material loss of the time-value of those dividends. Contact: Stull, Stull and Brody, New York Tzivia Brody, Esq. 1-800-337-4983, or by e-mail at SSBNY@aol.com HOLOCAUST VICTIMS: Report on Insurance Claims Denial Sparks CA Lawsuit ---------------------------------------------------------------------- Family members of Holocaust survivors whose insurance claims were denied by European insurance companies will announce the filing of a class-action lawsuit at a news conference in San Francisco on Wednesday May 24. The news conference will take place at 10:30 a.m. at the Holocaust Memorial at Lincoln Park, at 34th and Clement, San Francisco. The suit will be filed in San Francisco Superior Court on behalf of San Francisco residents Mr. Ernest Smetana, his 90-year-old sister Ms. Fritzie Wolf, Agnes Heyman and others whose claims were denied. Ms. Wolf and Ms. Heyman will be available for interview at the news conference, along with their attorneys, David Lash, Executive Director of Bet Tzedek Legal Services and Nancy Sher Cohen of Heller Ehrman White & McAuliffe. Hermann Smetana, father of plaintiff Ernest Smetana and Ms. Fritzie Wolf, purchased a life insurance policy from Assicurazioni Generali S.P.A. of Italy in 1928. He paid all the required premiums on the policy until he was sent to the Dachau concentration camp in 1938. The policy was in effect when he died on December 11, 1941. For 35 years, his children have tried in vain to collect on the policy Hermann Smetana purchased. In 1965, Generali told Mr. Ernest Smetana that the policy had been cancelled for non-payment of premiums in 1938, while his father was imprisoned in Dachau, and that he was entitled to nothing. In 1998, a letter from Generali contended, without explanation or documentation of any kind, that the policy had been "surrendered" in 1936. Plaintiff Smetana and his sister never received any benefits of any kind from their father's policy. The suit is an effort to stop the unjustified denial of claims by Assicurazioni Generali S.P.A. of Italy, and comes on the heels of revelations that European insurers, including Generali, are denying three out of four Holocaust-era claims. The companies cite various excuses for the denials: 1) money owed to policyholders was paid to the Nazis, 2) claimants cannot produce death certificates for concentration camp victims, and 3) the policy holder stopped paying premiums while imprisoned during World War II. In some cases, claims have been denied without any explanation and no means have been established to appeal the denials through the International Commission on Holocaust Era Insurance Claims (ICHEIC), set up to pay these claims. The suit alleges breach of contract, breach of the covenant of good faith and fair dealing, and unfair business practices. It is alleged that in the years leading up to WWII, Generali, (an insurance company doing business in California today), encouraged and assisted European citizens fearful of Nazi persecution, to purchase insurance in order to safeguard their families' futures. Many of the policies expressly provided that they were payable in US dollars and that the policyholder might change his/her residence outside of Europe and continue to be covered. The suit alleges that Generali and other defendants improperly liquidated many of the policies, and paid the proceeds to the Nazi regime. Holocaust survivors and their families have been fighting for more than a half century to force European insurance companies, especially Generali, to pay death benefits rightfully owed under policies they sold to victims of the Holocaust. After the disappointing result from the International Commission on Holocaust Era Insurance Claims, plaintiffs hope this lawsuit will force Generali to settle claims long overdue. Bet Tzedek -- The House of Justice -- is a Los Angeles-based non-profit public interest law organization that provides free legal representation to indigent, elderly and disabled persons on a non-sectarian basis in a variety of civil matters. Among its many services, Bet Tzedek also represents more than 800 Holocaust survivors in their claims against the German government, more than any organization in the world. Heller Ehrman White & McAuliffe LLP, which has a significant insurance coverage litigation practice, is part of a team of firms engaged in class actions on this issue in other parts of the country. The firm and its attorneys are dedicated to bringing resolution to this issue on behalf of heirs of Holocaust victims nationwide. Heller Ehrman is filing this class action with Anderson Kill & Olick, P.C., Kohn, Swift & Graf, P.C. and Fagan & Davino. LEAD PAINT: Billions of Dollars at Stake after Tobacco Litigation ----------------------------------------------------------------- Inspired by successful litigation against the tobacco industry, state and local governments across the country are filing class-action suits against the former makers of lead paint alleging the poisoning of thousands of American children. For former lead paint manufacturers, such as Sherwin-Williams, damages to pay for the cost of medical treatment, source control and public education could total billions of dollars. At stake for communities, the mental health of inner-city children in Rhode Island, St. Louis, Mo., and Santa Clara County, Calif., entities that are plaintiffs in the suits. The plaintiff list could grow even longer when the City of Milwaukee makes a final decision later this year on a proposal to sue the manufacturers. All seek relief for the cost of medical treat-ment, source control, and education. "There's likely to be a substantial financial impact felt by the lead paint manu-facturers," Jerry Schlichter, a St. Louis plaintiffs' attorney familiar with the lawsuits, told ALA. "In St. Louis, lead paint is pervasive. One out of four children tested in 1998 was found to be lead poisoned," he said. "The hazards have been well-known and well-documented for decades." Who is to Blame? "The evidence is overwhelming," said plaintiffs' attorney Richard Barnes. "The problem is determining which manu-facturer was responsible," he said. "You can't hold all of them equally responsible." The former manufacturers deny responsibility. They say manufacturers voluntarily stopped using lead in interior paint in the 1950s and supported the federal ban approved in 1978. They say most exposure-related problems result from poor maintenance by housing owners. Furthermore, it is impossible, they claim, to pinpoint blame because lead occurs in other products such as pipes. "In the 1950s the industry sponsored independent medical research that helped to define the health risk to children from deteriorated, poorly maintained interior lead paint," said Timothy Hardy, a spokesman for some of the manufacturers. "The industry then worked with the medical community and local health authorities to alert the public to the risk so that action could be taken to protect children," he said. "The companies voluntarily provided product warnings and helped formulate the standard that led to the removal of lead pigment from interior paint in the 1960s," Hardy said. Schlichter said that while "the St. Louis case will be hard to prove, it is definitely winnable. The paint on many window sills and doors on houses and apartments was put there when the industry knew of the dangers of lead paint." Ninety percent of the houses in St. Louis were built before 1978, when the government banned lead paint. While Schlichter said he would advise the city to proceed with the case, others, such as former St. Louis Mayor Freeman Bosley, one of the attorneys representing lead paint manufacturers, thinks it is a misguided idea. "Not one of the 40 suits filed nationally against lead paint manufacturers has resulted in a judgement against a manufacturer or a settlement in favor of its municipal plaintiff," Bosely said in a letter to the St. Louis American newspaper. Same Relief Sought in Lawsuits The St. Louis case and the Rhode Island case (the nation's first class-action suit against the lead paint industry) seek the same types of relief: compensation for lead-poisoning related health, education and abatement costs; punitive damages and funding of a lead-poisoning public education campaign and lead-poisoning detection and pre-ventative screening programs. In the Rhode Island case (Attorney General of Rhode Island v. lead paint manufacturers and the Lead Industries Association), the attorney general alleges "intentional, deliberate, informed decisions by the lead paint industry" caused the poisonings. The Sherwin-Williams Company, one of the defendants in the case, filed a motion to dismiss the complaint in May. The company argued the case should be dismissed because the attorney general has singled out a handful of former white lead paint manufacturers to pay for all the costs of a public education campaign. It said lead "was used in hundreds of other products (that) are still made and sold by countless other manufacturers, distributors and retailers." Moreover, says the motion, "most of the alleged misconduct is ancient; it took place in the 1920s and 1930s." The judge is expected to rule on the motion this summer. Schlichter and other lawyers predict the motion will be rejected and the case will be allowed to advance. Meanwhile, additional plaintiffs such as the city of San Jose, have joined the suit filed in March by Santa Clara County against the eight companies named as defendants in the Rhode Island case for allegedly poisoning 5,900 children who ingested dust from deteriorated lead paint. Santa Clara is the first county in the nation to sue paint manufacturers and the Lead Industries Association (LIA) for selling lead paint they allegedly knew was poisonous to children while deliberately concealing the risk. The lawsuit seeks to force paint manufacturers to spend an un-specified amount of money to remove lead paint from buildings, treat lead-poisoned children, and educate residents. The county has asked the court to certify the suit as a class action lawsuit, potentially including all public jurisdictions in California. In yet another high-profile case, Baltimore Orioles owner Peter Angelos has filed a class action suit on behalf of all residential property owners in Baltimore against lead paint and pigment manufacturers, according to an Angelos associate. The so-called "joint conspiracy" case seeks damages to compensate the plaintiffs for the cost of lead paint removal and previous abatement. The U.S. District Court in Maryland is expected to reject any motion to dismiss the case, says the associate. IAC-ACC-NO: 62267204. (Asbestos & Lead Abatement Report, May 1, 2000) PETER BERZINS: Finkelstein, Thompson Files Securities Suit in Maryland ---------------------------------------------------------------------- Finkelstein, Thompson & Loughran has filed a class action lawsuit in the United States District Court for the District of Maryland on behalf of all persons who delivered money to Peter J. Berzins for investment during the period from January 1, 1996 through March 31, 1998, inclusive (the "Class Period"), excluding all persons who received payments from Berzins equal to or exceeding the amount of that person's investment. The Complaint alleges violations of the federal securities laws and the Commodity Exchange Act, and specifically alleges that Berzins cheated and defrauded the Class in that the monies delivered to Berzins for investment were diverted and not invested consistent with his representations, and that Berzins made numerous false and misleading statements in connection with the investments. The Complaint further alleges that the other Defendants were parties to, and benefited from, Berzins' fraudulent scheme. Contact: Conor R. Crowley of Finkelstein, Thompson & Loughran, 888-333-4409 or 202-337-8000, or e-mail: CRC@FTLLAW.com SCHICK TECHNOLOGIES: Announces Settlement of Securities Lawsuit --------------------------------------------------------------- Schick Technologies, Inc. (OTC Bulletin Board: SCHK) announced on May 23 that an agreement has been reached to settle the consolidated securities class action lawsuit filed against the Company in December, 1998. Under the agreement, all claims against the Company and individuals named as defendants will be dismissed without presumption or admission of any liability or wrongdoing. The principal terms of the agreement call for payment to the Plaintiffs, for the benefit of the class, of the sum of $3.4 million. The settlement amount is to be paid in its entirety by the Company's insurance carrier and is not expected to have any direct material impact on the financial results of the Company. The terms of the settlement are subject to approval by the Court. Schick Technologies, Inc. designs, develops, and manufactures innovative digital radiographic imaging systems and devices for the dental and medical markets. STONE & WEBSTER: Stull, Stull Files Securities Suit in Massachusetts -------------------------------------------------------------------- The law firm of Stull, Stull & Brody announces that a class action lawsuit was filed on May 23, 2000, in the United States District Court for the District of Massachusetts on behalf all persons who purchased the securities of Stone & Webster, Inc., (New York Stock Exchange:SW) between April 27, 1999, and April 28, 2000 (the "Class Period"). The case alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and alleges persons who purchased the securities of Stone & Webster, suffered losses on their investments. Named as defendants are Stone & Webster, H. Kerner Smith and Thomas Langford. The case involves a manipulation of financial statements in which, among other acts of deception, defendants knowingly or recklessly overstated Stone & Webster's results of operations, revenues, expenses, net worth and income for the fiscal year 1999. Contact: Stull, Stull and Brody Tzivia Brody, Esq., 1-800-337-4983 SSBNY@aol.com TOBACCO LITIGATION: Attorneys for Makers Differ over Settlement Payment ----------------------------------------------------------------------- The level of invective in a Miami-Dade Circuit Court continued to grow on Tuesday, with lawyers for the five tobacco companies on trial breaking ranks and turning on each other as jurors and a full courtroom watched. A lawyer for R.J. Reynolds, the world's second largest tobacco company, told jurors the cigarette maker is already taking a financial beating from settlements it has reached with attorney generals around the country, including Florida's. Under a settlement agreement with Florida, the tobacco giants agreed to pay the state more than $ 13 billion throughout the next 25 years. And now, in a statewide class-action case against the industry, jurors are being asked to decide how much the tobacco companies should pay the 300,000 to 500,000 sick Florida smokers who are plaintiffs in the case. Jurors already said the tobacco industry manufactures a dangerous product and conspired to hide health risks. "The purpose (of the punitive award) is to punish and deter," said Jim Johnson, a lawyer for R.J. Reynolds. "It's not to destroy (a company) or bankrupt or penalize it for legal conduct like selling cigarettes," Johnson said. "Profits are already being squeezed by the attorney general settlement." A lawyer for Lorillard Tobacco Co., one of the smaller cigarette makers in the country, told the jury that company was a leader in industry reform. CEO Martin Orlowsky will testify that cigarettes cause disease, said Ken Riley, the company's lawyer. And using the company's small size as a defense, Riley pointed out that "better than 90 percent of the plaintiffs didn't develop addiction or disease because of Lorillard cigarettes." In a deposition on May 10, Michael Szymanczyk, CEO of industry-leading Philip Morris Inc., said the company has not adopted the position of public health officials that smoking causes cancer and is addictive even though it displays those messages on its Web site. The lawyer for Liggett Group, the smallest of the companies on trial, pointed out that it was the firm's CEO, Bennett LeBow, motivated by the negative public perception of cigarette makers, who became the first industry executive to sit down with state attorney generals to discuss issues including advertising and accountability. LeBow testified in this trial and others on behalf of the plaintiffs even though his company was a defendant, Aaron Marks, the lawyer, reminded jurors. And when Marks pointed out that the industry has not paid out one claim or settlement to a sick smoker in more than 40 years and began to talk about letters Liggett sent to smokers, Dan Webb, the lead attorney for Philip Morris, jumped to his feet to object. It was an unusual moment for a defense attorney to object to another defense attorney who has shared the same side of the courtroom and the case for more than 18 months now. And it prompted several of the class members sitting in the courtroom to turn to each other, smile, and flash a thumbs-up. All this commotion appeared to remind at least one person of a circus. Early in the day, Judge Robert Kaye interrupted the tobacco lawyers as they fought his decision not to allow them to play some of their commercials for the jury during opening statements to prove their claim that they have cleaned up methods of marketing their product. The previous day, Stanley Rosenblatt, the smokers' attorney, showed the jury cigarette advertisements. "Enough is enough," Kaye told the lawyers. "You're just making a circus out of the whole procedure." The judge went on to say that he thought he had let the lawyers get out of hand the day before, and that he was trying to correct that mistake on Tuesday. But throughout the day, he repeatedly had to remind the lawyers they were supposed to be making opening statements and not presenting evidence or arguing points made by the other side. Finally, exasperated, he told them he felt like he was "in a cage of five lions and two tigers. They're all hungry, and all I've got is a whip." (Sun-Sentinel (Fort Lauderdale, FL), May 24, 2000) TOBACCO LITIGATION: B&W. Lorillard Join Ligget in Admitting Disease ------------------------------------------------------------------- Three of the five cigarette makers fighting the prospect of a potentially crippling punitive-damage award for smokers acknowledged to jurors Tuesday that smoking causes disease. Attorneys for Brown & Williamson and Lorillard promised testimony from their chief executive officers that would for the first time place their companies on the same side of the issue as Liggett, which accepted the connection between smoking and cancer three years ago. That leaves Philip Morris and R.J. Reynolds on the other side of an issue that once united a monolithic industry. The splintered positions were offered in opening statements by tobacco attorneys trying to avoid a multibillion-dollar punitive verdict for 300,000 to 500,000 sick Florida smokers. The jury already has ruled against the industry twice, saying the companies conspired to produce a deadly product and awarding $ 12.7 million in damages to three smokers with cancer. The cigarette makers want the jury to award no punitive damages, arguing that $ 254 billion from settlements with the states is enough money to pay for decades of misconduct. The lawsuit seeks $ 100 billion in damages, but the smokers' attorney did not specify an amount in his opening statements Monday. On Tuesday, Lorillard's attorney, Ken Reilly told the jury, "We agree with the public health authorities and the surgeon general that smoking causes disease." Brown & Williamson's attorney, Gordon Smith, followed by saying that CEO Nicholas Brookes "will tell you it is and has been Brown & Williamson's position that smoking causes cancer." Such blanket acknowledgments do not amount to acceptance of blame. Tobacco executives generally say that individual risk factors prevent conclusive proof that any given smoker developed cancer from smoking. (St. Louis Post-Dispatch, May 24, 2000, Byline: the Associated Press) TOBACCO LITIGATION: Makers Sobered By Settlements, Lawyers Claim ---------------------------------------------------------------- Seeking to persuade jurors weighing massive court damages for sick smokers, a Philip Morris Cos. lawyer said on Tuesday the No. 1 cigarette maker now spends more urging U.S. teenagers to avoid smoking than pumping up the Marlboro Man. Lawyers for top tobacco companies, in opening arguments for the punitive damages phase of a sick smokers' class-action suit, portrayed the industry as sobered by late 1990s' legal settlements, not nearly as rich as commonly believed, and operating with a new openness on smoking's health risks. The Miami jury, composed of four men and two women hearing evidence since late 1998, has already found U.S. tobacco giants liable for the lung cancer, emphysema and other ailments of an estimated 500,000 sick smokers in Florida. In April, the jurors awarded a record-high US$12.7-million to three representatives of the mass class for actual losses, such as medical costs, and will decide on punitive damages some predict could total hundreds of billions of dollars. Attorney Dan Webb said Philip Morris -- whose Marlboro is both the world's best-selling cigarette and one of its most famous brands -- said the tobacco-and-food giant had changed its ways and now used the Internet, TV commercials, school publications and print ads to keep teenagers from smoking. He said the company spent US$74.1-million last year on producing and airing anti-smoking TV commercials aimed at U.S. youths as well as tens of millions of dollars more on other media. By contrast, Philip Morris, a mega-marketer whose stable of brands also includes Miller beer, Altoids mints and Post cereals company, spent US$ 66.7-million in the United States on Marlboro advertising. He did not detail worldwide ad spending for Marlboro, considered an icon of U.S. culture. 'Philip Morris spent more on youth prevention than on media spending for Marlboro,' Mr. Webb said. Philip Morris has also put health warnings and educational information about tobacco's risks on its corporate Web site and acknowledged that most health authorities consider cigarettes addictive. Attorney Jim Johnson, representing No. 2 cigarette-maker, R.J. Reynolds Tobacco Holdings, said the defendants were wobbling under US$250-billion worth of legal settlements struck with state governments in the late 1990s. Cigarette prices were raised sharply to fund those settlements with state attorneys general and have eaten into sales substantially at Reynolds, whose brands include Camel and Winston, he said. 'It means Joe Camel is gone and can't be brought back,' he said. (National Post (formerly The Financial Post), May 24, 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. 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. 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