/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000608.MBX C L A S S A C T I O N R E P O R T E R Thursday, June 8, 2000, Vol. 2, No. 111 Headlines ASBESTOS LITIGATION: Boiler Inspection Act Preempts Claims Vs. GM Corp. BANK ONE: Late Fees Action on Credit Card Unit Dismissed BANK PLUS: Will Sell MMG Credit Card Portfolio; ADC Settlement Executed CENTURY BUSINESS: Reports on Stockholder Suit Filed in March in Ohio CINAR CORP: Former VP Sues TV Outfit for Exercise of Stock Options CYBER-CARE INC: Keller Rohrback Investigates on Securities Fraud Claims FEN-PHEN: 2 Cases Settle After Judge Orders AHP to Disclose Settlements HMO: Aetna Seen to Have Pit Bull Litigation, Slow-to-Settle Policy Out I STAT: Awaits Ruling Re Common Law Fraud in Stockholder Suit in NJ INMATES LITIGATION: 9th Cir Restores Suit on Denial of AIDS Medication ORLANDO DEPT: Children Torn From Homes, Complaint Says PIZZA HUT: Former Restaurant General Managers Sue for OT & Vacation Pay PROFIT RECOVERY: Berman DeValerio Files Securities Suit in Georgia PROFIT RECOVERY: Chitwood & Harley Announces Securities Suit in Georgia SCB COMPUTER: May Be Delisted From NASDAQ, Announces Berman, DeValerio SECURITY GUARDS: Homeless Residents' Harassment Claims Stayed thru Sept SMITHKLINE BEECHAM: 1992-93 Major Media Coverage Bars 1997 Lawsuit TACO BELL: Restaurant General Managers' Suit in CA to Be Tried in 2001 U S WEST: Retirees Hopeful about Pensions with Acquisition by Qwest UNION PACIFIC: Lawsuit Disposition for Eunice Train Derailment Begins VISA, MASTERCARD: Actions in Card Probe May Point to New Suit ********* ASBESTOS LITIGATION: Boiler Inspection Act Preempts Claims Vs. GM Corp. ----------------------------------------------------------------------- Boiler Inspection Act Preempts Asbestos Claims Against Railroad. The California Supreme Court has upheld the dismissal of claims against a locomotive manufacturer for asbestos-related injuries, finding that the federal Locomotive Boiler Inspection Act preempts all state law claims regarding materials used in the manufacture of locomotives. Scheiding v. General Motors Corp., No. S073196 (Calif. March 9). The plaintiffs -- former railroad employees and their families and survivors -- sued the defendant, alleging that the locomotives it made were defective because they released asbestos fibers into the air. The five cases, concerning railroad employees who worked in and around locomotives from the 1940s through the 1980s, were consolidated by the trial court; plaintiffs' attorneys included Gregory R. Ellis, Joan Wolff and Gerald Clausen of San Francisco's Wolff, Ellis & Clausen. The trial court granted summary judgment to the defendant, which was represented by David M. Heilbron, Leslie G. Landau and Robert A. Brundage of San Francisco's McCutchen, Doyle, Brown & Enersen, ruling that the BIA preempted the plaintiffs' state law claims of false representation, negligence, negligent infliction of emotional distress, strict liability and wrongful death. On appeal, the state high court ruled that the BIA completely occupies the field of locomotive equipment and safety, and thus preempts all state law claims relating to the "design, the construction and the material of every part of the locomotive and tender and of all appurtenances." The court cited several cases that gave the BIA a "broad preemptive sweep" to ensure the uniformity of railroad operating standards throughout the country. (Product Liability Law & Strategy, May 2000) BANK ONE: Late Fees Action on Credit Card Unit Dismissed -------------------------------------------------------- A class action filed on behalf of customers against Bank One Corp.'s First USA credit card unit was dismissed Monday by a federal judge here. The suit accused the Wilmington, Del., issuer of wrongfully charging late fees ranging from $25 to $35 and taking too long to post credit card payments. After late fees mounted, the lawsuit contended, First USA raised interest rates on those credit cards. First USA faces similar lawsuits in Washington and Oregon. Richard Freese, a Birmingham, Ala., attorney represented customers in the suit. (The American Banker, June 7, 2000) BANK PLUS: Will Sell MMG Credit Card Portfolio; ADC Settlement Executed ----------------------------------------------------------------------- Bank Plus Corporation (Nasdaq: BPLS) announced on June 6 that its wholly-owned subsidiary Fidelity Federal Bank, FSB has executed a definitive agreement to sell the MMG Direct, Inc. ("MMG") credit card portfolio and the Bank's credit card servicing center located in Beaverton, Oregon. The buyer is an international financial services company with substantial subprime credit card operations. The Bank anticipates that the transaction, which is subject to regulatory approval, will be completed in June 2000, although no assurances can be given that the sale will be completed, or if completed, will be completed in June 2000. In March 2000 the Bank established a valuation allowance to reduce the carrying value of the MMG portfolio to its estimated sales value, and the Bank does not anticipate that any additional writedowns to the MMG portfolio will be necessary upon completion of the sale. The estimated loss on the sale of the Beaverton servicing center and other transaction costs are expected to total approximately $4 million. Fidelity and the buyer have also entered into a separate agreement where, upon completion of the purchase transactions, the buyer will begin servicing the Bank's American Direct Credit, Inc. ("ADC") credit card portfolio. In addition, under the servicing agreement the buyer has a one year option to purchase the ADC portfolio, subject to certain conditions which include the ability of the Bank to terminate the option. The option to acquire the portfolio is subject to the review and approval or non-objection by the Office of Thrift Supervision ("OTS"), which the Company anticipates would be granted only if the Bank was able to maintain a sufficient level of regulatory capital after recognizing the loss which would result from a sale of the ADC portfolio. Based upon current information that loss could approximate the percentage loss recorded on the MMG portfolio sale. As of May 31, 2000 total outstanding balances in the MMG and ADC portfolios were $78.4 million and $77.0 million, respectively, and together they accounted for 92% of the total outstanding balances in Fidelity's credit card portfolio. ADC Consumer Litigation Settlement Status Fidelity has executed definitive settlement agreements related to the various individual and purported class action lawsuits filed in Alabama relating to the ADC credit card portfolio. The OTS has provided its non-objection for substantially all of the agreements. OTS non-objection on the remaining agreements is expected soon. The definitive settlement agreement for the lawsuit filed against the Bank on behalf of the purported class of Alabama plaintiffs to whom Fidelity issued credit cards in the ADC affinity program, which, among other things, is subject to court approval, includes the release by the class members of all claims against Fidelity, Bank Plus and ADC, as well as any future purchaser or transferee of the ADC credit card portfolio. The Bank has also negotiated an agreement in principle to settle substantially all of the various ADC portfolio-related individual lawsuits filed in Mississippi. This settlement is subject to the execution of a definitive agreement by the parties involved and non-objection by the OTS. There can be no assurance that (i) settlement agreements acceptable to the Company will be executed in Mississippi (ii) outstanding settlements will receive non-objection from the OTS (iii) the Alabama class action agreement will be confirmed by the court or (iv) new lawsuits of a similar nature will not be filed in the future. Bank Plus Corporation is the holding company for Fidelity Federal Bank, FSB, which offers a broad range of consumer financial services, including demand and time deposits and mortgage loans. In addition, through its affiliate Gateway Investment Services, Inc., a NASD-registered broker/dealer, Fidelity provides customers of the Bank with investment products, including mutual funds, annuities and insurance. Fidelity operates through 31 full-service branches, 30 of which are located in Los Angeles and Orange counties in Southern California. CENTURY BUSINESS: Reports on Stockholder Suit Filed in March in Ohio -------------------------------------------------------------------- In its report to the SEC, Century Business Services Inc. reports that on March 2, 2000, an additional purported stockholder class-action lawsuit - Marsh, et al. v. Century Business Services, Inc., et al. - was filed in the United States District Court for the Northern District of Ohio against Century and certain of its current and former directors and officers. The plaintiffs in this case made similar allegations for the time period from March 4, 1999 to January 28, 2000. There has been no discovery. Century and the named director and officer defendants deny all allegations of wrongdoing made against them and intend to vigorously defend each of these lawsuits. CINAR CORP: Former VP Sues TV Outfit for Exercise of Stock Options ------------------------------------------------------------------ A former senior Cinar Corp. exec is suing the company, the latest in a long list of legal troubles for the Canuck TV outfit. Louis Fournier, who left his position as vice president of distribution at Cinar in February, has filed a lawsuit over stock options that he has been unable to exercise. Fournier, now president of youth and animation at rival Montreal production company TVA Intl., attempted to exercise the options in February when he exited Cinar. In a prepared statement, Cinar execs said, "the company intends to defend itself vigorously with respect to such claim." Cinar, which is already facing several class-action lawsuits filed on both sides of the border earlier this year, is also being sued by four former owners of HighReach Learning, a publisher of kids educational materials acquired by Cinar in 1998 (Daily Variety, May 26). Michael Mayberry, Sharon Mayberry, Phillip Kelley and Kathy Kelley are suing Cinar and majority shareholders Ronald Weinberg and Micheline Charest in an attempt to recover losses related to the stock-purchase agreement inked when Cinar took over HighReach two years ago. Taxing Position Meanwhile, Cinar announced that chief financial officer Jeff Gerstein is instead to assume full-time tax responsibilities for Cinar as veepee of taxation. Cinar is in negotiations with Canada Customs and Revenue regarding alleged fraud of the film and TV tax-credit system. Cinar has been accused of putting phony Canadian names on scripts actually written by Americans in order to fulfill Canadian-content quotas and obtain tax credits for its productions. In addition, Cinar continues to negotiate with Globe-X Management in the Bahamas to try to recover the outstanding $ 76 million of an unauthorized $ 122 million investment made with the Nassau firm. On May 31, $ 10 million of the investment matured, but Cinar has yet to recover the sum because Globe-X told Cinar it needs five business days to process the transaction. (Daily Variety, June 07, 2000) CYBER-CARE INC: Keller Rohrback Investigates on Securities Fraud Claims ----------------------------------------------------------------------- Seattle's Keller Rohrback L.L.P. is investigating securities fraud claims against Cyber-Care Inc. (Nasdaq:CYBR) and its Chairman and CEO on behalf of all persons who purchased shares of Cyber-Care common stock between November 4, 1999 and May 12, 2000, inclusive (the "Class Period"). The Class Shareholders allege that Cyber-Care and its Chairman and CEO made materially false and misleading statements and omitted to disclose material facts regarding Cyber-Care's operations and prospects during the Class Period. Specifically, shareholders assert that defendants failed to disclose, among other things, that since Cyber-Care's Electronic HouseCall System "EHC" had not yet received FDA approval, it could not be sold or marketed in any way, and that to the extent Cyber-Care was announcing sales or agreements to buy, Cyber-Care was in violation of governmental regulations. In addition, defendants touted multi-million dollar contracts with companies that lacked the financial means to enter into such obligations. In May 2000, it was revealed that the United States Food and Drug Administration was investigating Cyber-Care for violation of federal rules prohibiting the sale and regulating the marketing of non-FDA approved products. It was also disclosed that an analyst who issued a "Strong Buy" rating for the Company and issued a target price of $52 per share was in fact employed by Cyber-Care's own publicity company. In response, the Company's stock fell to $ 8.50 per share -- far from its Class Period high of $40 in February 2000. Contact: Keller Rohrback L.L.P. Jen Veitengruber, 800/776-6044 investor@kellerrohrback.com www.SeattleClassAction.com FEN-PHEN: 2 Cases Settle After Judge Orders AHP to Disclose Settlements ----------------------------------------------------------------------- The suits of a Georgia woman who died from primary pulmonary hypertension and another woman suffering from the usually fatal disease were settled shortly after a state court judge twice ordered American Home Products Corp. to disclose the settlement agreements it has reached with diet drug plaintiffs in other litigation around the country. Damiani v. American Home Prods. Corp. P. 6. (Source: Diet Drugs Litigation Reporter, June 2000) HMO: Aetna Seen to Have Pit Bull Litigation, Slow-to-Settle Policy Out ---------------------------------------------------------------------- When Aetna Inc. fired its healthcare unit's Chief Litigation Officer David F. Simon May 2, it turned a page in the legal history of managed care. Simon is described as combative, abrasive and unbending in interviews with 11 former colleagues and adversaries. Five years ago, those were key ingredients in a management tonic that Hartford's Aetna prescribed for itself when it bought US Healthcare, the aggressive Blue Bell, Pa. HMO founded by druggist-turned-billionaire Leonard Abramson. But with public pressure mounting to remove barriers to HMO lawsuits, Aetna is now actively working to rebuild bridges with doctors, policyholders and the public. As a result, abrasiveness is out, as Simon and other key executives from US Healthcare are now learning. As chief legal officer, Simon was famously quick to sue and slow to settle, according to a former Aetna in-house lawyer. Simon's departure came just after the surprise retirement announcement of Aetna US Healthcare president Michael CardilloQa move that company insiders more realistically describe as an ouster. In addition, Cardillo's top field executive Timothy Nolan left in January. With those departures, Aetna appears to be reclaiming its traditional, noncombative, identity, while purging key members such as Simon and Cardillo from the five-year-old U.S. Healthcare management team. Most significantly, in February Aetna's board forced the departure of CEO Richard L. HuberQa former banking executive whose controversial public statements placed him closer to US Healthcare's brash style. Huber and Simon were succeeded by two veterans as smooth as the previous two were rough, men with blue-chip credentials. Longtime board member William Donaldson became CEO and chairman. He is a former president of the New York Stock Exchange and founder of Donaldson, Lufkin & Jenrette. Edward Shaw replaced Simon as general counsel. He's a 13-year veteran of New York's former Millbank, Tweed, Hadley & McCloy and the former general counsel of Chase Manhattan Corp. Shaw said Simon's speedy removal was not a reflection on his performance. " All managed-care companies have witnessed an explosion in litigation. As the largest, we get our fair share, which means more than anybody else," Shaw said. Nonetheless, Shaw indicated a stronger desire to solve controversies without resorting to court battles. He acknowledged the perception that Aetna has been "tougher on our contract negotiations with our providersQhospitals, physiciansQand that we would tend to litigate things when there are differences of opinion, rather than try to resolve them and compromise." Although Shaw was not critical of Simon, one former colleague, who spoke on a not-for-attribution basis, said Simon had maintained an aggressive and unbending style, imported from US Healthcare, that damaged Aetna's reputation with the public and in the medical and political establishments. Donaldson's goal is to eliminate pent-up popular frustration that could lead to additional large jury awards against HMOs, or to government countermeasures, including legislation authorizing lawsuits against HMOs. William J. Sweeney, of New Britain's Sweeney & Griffen, is a former president of the Connecticut Trial Lawyer Association. He agrees that Simon's tough-guy stance with doctors and with lawyers has helped make Aetna a defendant "that everybody loves to hate." Aetna recognizes that, and Simon's recent firing, along with the exits of Cardillo and Huber are part of a deliberate corporate plan, Sweeney asserts. "The health-care business is about relationships," he says. Those range from hard-to-quantify relations with doctors, relationships with consumers who have few clear ways of knowing what they're buying and relationships with the public at large, which include future customers and jurors. As a rich industry that stood low in public esteem, managed care became a litigation magnet. Top plaintiff veterans, flush with victory in the fight against Big Tobacco, have to date filed six actions against Aetna US Healthcare in the past year, to the dismay of Wall Street insiders, already worried that states or Congress could give policyholders the power to sue HMOs. The class actions remain stayed while a test case is considered by the U.S. Court of Appeals for the Third Circuit. In Maio v. Aetna US Healthcare, Aetna argues that statements about delivering quality health care were not promises, and should only be regarded as so much "puffing." Of all the cases Simon's law department oversaw, one in particular stands out. Michael J. Bidart, the trial lawyer from Claremont, Calif., is the man Huber called an ambulance-chaser, without evident basis. Indeed, Bidart says he first met his future client, David Goodrich, at Pepperdine School of Law, where they were both students. Goodrich, a state prosecutor, developed stomach cancer, which was eventually fatal. During the course of his treatment, Aetna declined to authorize expensive procedures it deemed experimental. Bidart says Aetna sped a letter to Goodrich's deathbed to inform him of its decision to limit coverage. Says Bidart: "He went to his grave believing he'd left his wife with about $750,000 in medical bills." Of Teresa Goodrich, David's widow, Bidart says, "She was a saint." Despite the grim facts and high medical bills, Simon's defense team never offered Teresa Goodrich more than $1.2 million, Bidart says, and that was rejected as inadequate. The case failed to settle, and the jury's whopping $120 million verdict, of which $116 million was punitive, was evidence that "ordinary people are mad at HMOs," Bidart said. The amount is currently on appeal, and Aetna lawyers predict that it will be substantially reduced. Damage Control Donaldson isn't waiting for appellate courts to trim Aetna's attitude. In an unusual speech May 10 to Connecticut doctors, he introduced a theme of respect and conciliation without a word of blame to be found. He acknowledged that Aetna's relationship with physicians had been "contentious, to say the least." As the industry leader, "Aetna has become the 'lightning rod' for all that is right, and all that is wrong, with managed care. Moreover, Donaldson vowed new flexibility; less red tape and confrontation. "There are those who say the pendulum has swung too far," Donaldson said. "I agree with them. I think it's time to bring it back to center." (The Connecticut Law Tribune, June 5, 2000) I STAT: Awaits Ruling Re Common Law Fraud in Stockholder Suit in NJ ------------------------------------------------------------------- The Company is a defendant in a class action complaint entitled Susan Kaufman, on behalf of herself and all others similarly situated, Plaintiff, v. STAT Corporation, William P. Moffitt, Lionel M. Sterling, Imants R. Lauks and Matthias Plum, Jr. The class action was brought by Susan Kaufman on her behalf and on behalf of all purchasers of the Company's Common Stock between May 9, 1995 and March 19, 1996. The complaint, which was filed in the Superior Court of New Jersey in Mercer County on June 19, 1996, alleges New Jersey common law fraud and negligent misrepresentation, and is predicated on a "fraud on the market" theory in connection with certain sales of i-STAT stock by the Company's chief executive officer, chief technology officer and two outside directors during a nine-month period. The plaintiffs seek unspecified compensatory damages, interest and payment of all costs and expenses incurred in connection with the class action. The Company believes the complaint is without merit and, on April 28, 1998, the Court entered summary judgment in favor of all the defendants. The plaintiffs have appealed and on August 10,1999, the Appellate Division of the Superior Court filed an opinion sustaining the trial court's determination as to the negligent misrepresentation claims but reversing as to the common law fraud claims. The Company appealed the reversal and a hearing certification of the appeal was held at the New Jersey Supreme Court on May 1, 2000. A decision is expected within several months. Should the plaintiff prevail on this issue, it could have a material and adverse impact on the financial position, results of operations and cash flows of the Company. INMATES LITIGATION: 9th Cir Restores Suit on Denial of AIDS Medication ---------------------------------------------------------------------- Calling the he received "far from the medical norm," the U.S. Court of Appeals for the Ninth Circuit has reversed a defense summary judgment in a suit by an AIDS-infected man who says his AIDS "cocktail" medication regimen was rendered ineffective when he was denied the treatment for two days after arriving at the Pierce County, Wash., jail. Sullivan v. County of Pierce et al., No. 98-35399 (9th Cir., Apr. 21, 2000). Robert M. Sullivan, described in court papers as being in the "final stages of AIDS," was arrested on an outstanding bench warrant and placed in the custody of the Pierce County, Wash., Department of Corrections on March 8, 1996. Sullivan says that despite notifying jail personnel of his crucial need to continue the medication, he did not receive it for at least two days after his arrival. Sullivan lodged a federal civil rights negligence suit against Pierce County, county corrections chief Mark French, county jail health services manager Julie Lord, and his attending physician, Kenneth Ritter, M.D. The suit alleged that his viral load skyrocketed after missing his medication and that subsequently, the "cocktail" of drugs no longer had an effect. Judge Robert J. Bryan of the Western District of Washington found the defendants protected by qualified immunity and granted their motion for summary judgment. Upon Sullivan's appeal, the Ninth Circuit reversed in an unpublished opinion, holding that remaining questions of material fact precluded a summary judgment grant. The panel said such questions involved the level of the defendants' deliberate indifference to Sullivan's medical needs in spite of his stated requirement to remain on his course of medication. The appeals court said the record plainly shows that Sullivan was deprived of his medication for "at least 48 to 72 hours" although corrections officials knew he was "in the final stages of AIDS and that he was in dire need of that medication -- in particular, his protease inhibitor, Invirase." The panel observed that other areas of dispute include the fact that although corrections officials knew that their internal pharmacy did not stock Invirase, they allowed Sullivan to be incarcerated, even though the Pierce County jail's medical staff had the authority to turn him away. In addition, the Ninth Circuit said that despite Sullivan's medical status upon his arrival, Ritter described his condition as involving "no urgent problem" and took no action to see that Sullivan received the appropriate treatment. In testimony, Sullivan's treating physician, the Pierce County jail's head physician, as well as the booking nurse for the facility, said the Ninth Circuit, each stated it was common medical knowledge that AIDS patients taking a protease inhibitor as part of their medication cocktail "had to remain in strict compliance with that regimen at all times and without exception, lest the cocktail become ineffective." In remanding the case, the appeals court cited a 1999 federal court decision from Maine in which it was determined that the defendant corrections health provider could be found in deliberate indifference to a inmate's medical needs in a case where an HIV-positive detainee was deprived of his strict HIV medication regimen despite repeated reminders to prison medical personnel of his needs. McNally v. Prison Health Services, 46 F. Supp.2d. 49 (D. Me., 1999); see AIDS LR, Jan. 25, 1999, P. 8. The panel added that while notes on Sullivan's medical records indicated on the day he was admitted that he needed "meds started," the jail's booking nurse two full days before she contacted the facility's head physician to obtain permission to have Sullivan's family bring medication from home. The Ninth Circuit also rejected defense claims that municipal liability had not been shown because Sullivan had not offered requisite evidence of a "policy of inadequate medical treatment" for inmates. As part of an earlier class action settlement, in which Lord and French were deposed, observed the panel, "the County stipulated that policies regarding medical treatment and the provision of medication violated inmates' constitutional rights. The panel also reversed Judge Bryan's dismissal of Sullivan's associated state law claims, noting that they had been voided based solely upon the dismissal of Sullivan's federal civil rights claim. (AIDS Litigation Reporter, June 5, 2000) ORLANDO DEPT: Children Torn From Homes, Complaint Says ------------------------------------------------------ A group of irate parents filed a $500 million federal class-action lawsuit Tuesday against the state Department of Children & Families, contending the agency consistently tramples on their constitutional rights. The 59-page complaint, filed by attorney Robert Dowd in U.S. District Court in Orlando, says Children & Families has "engaged in a systematic process by which the families, parents, children and citizens of the state of Florida have been terrorized, traumatized and torn asunder." It also says parents are routinely deprived of due process in the effort to reclaim their children. The suit names 13 families and 50 anonymous children as plaintiffs, and targets as defendants a number of caseworkers and juvenile-court judges. Children & Families Secretary Kathleen Kearney also is named in her current job, in her former job as a Broward County juvenile judge and as an individual. No court date was set for the suit. The suit also asks for $500 million in damages for the wronged families, but Dowd said that number is as much of an attention-getter as a demand. "I want the kids back, period," the Orlando lawyer said. "I don't need negotiations. I want the kids back." Dowd said many of the families, who hail from all over the state, came to him, and he expects more to be added to the suit. Among the families is that of Joseph McKean, grandfather of Kayla McKean, perhaps the highest-profile child-abuse case of the decade. Kayla was 6 when her father, Richard Adams, beat her to death for soiling her pants in November 1998.Adams was convicted in Kayla's death last month and sentenced to life in prison. Joseph McKean has since become a staunch critic of Children & Families, going so far as to ask legislators to remove his granddaughter's name from a reform law passed in the wake of her death. The lawsuit alleges that Kayla's mother, Elisabeth McKean, has been a target of Children & Families because of her father's activism. McKean said all he wants is to get the attention of Kearney and Gov. Jeb Bush, to persuade them to examine the department's practices more closely. He said he's flooded with phone calls from parents desperate to win back their children. "I'm not going to sit by and just let these people suffer," McKean said. "I want to do something constructive." Another plaintiff in the suit, Shannon Musso of Osceola County, reiterated McKean's plea for more oversight for Children & Families. Nearly two years have passed since the agency took away her 3-month-old son and 18-month-old daughter and placed them in foster care. Since then, Musso said, caseworkers have told her she "fits the profile" of a woman with Munchausen Syndrome by proxy, in which a caregiver harms a child in order to get attention. Musso said she has experts who can prove she hasn't hurt her son, but has never been able to get that information in front of a judge. "The entire petition they filed is based on nothing but lies and fraud," Musso said. "I just want my baby back, before my son is too old to bond with his parents, before they do too much damage to my daughter's head." Yvonne Vassel, a spokeswoman for the Children & Families office in Orlando, said she can't comment on open cases because of confidentiality laws. But she said the department's efforts to protect children will not be affected by the suit. "These cases will continue to go through the system," she said. "We can't ignore our role with child welfare because we have a lawsuit against us. We have to handle each case with care and in as judicious a manner as we possibly can." (The Orlando Sentinel, June 7, 2000) PIZZA HUT: Former Restaurant General Managers Sue for OT & Vacation Pay ----------------------------------------------------------------------- On May 11, 1998, a purported class action lawsuit against Pizza Hut, Inc., and one of its franchisees, PacPizza, LLC, entitled Aguardo, et al. v. Pizza Hut, Inc., et al. ("Aguardo"), was filed in the Superior Court of the State of California of the County of San Francisco. The lawsuit was filed by three former Pizza Hut restaurant general managers purporting to represent approximately 1,300 current and former California restaurant general managers of Pizza Hut and PacPizza. The lawsuit alleges violations of state wage and hour laws involving unpaid overtime wages and vacation pay and seeks an unspecified amount in damages. On January 12, 2000, the Court certified a class of approximately 1,300 current and former restaurant general managers. This lawsuit is in the early discovery phase. PROFIT RECOVERY: Berman DeValerio Files Securities Suit in Georgia ------------------------------------------------------------------ Profit Recovery Group International, Inc. (Nasdaq: PRGX) was named as a defendant in a shareholder class action filed in the United States District Court for the District of Northern District of Georgia. The action, brought by Berman, DeValerio & Pease, LLP, www.bermanesq.com, seeks damages for violations of the federal securities laws on behalf of all investors who purchased Profit Recovery common stock between February 16, 2000 and March 29, 2000 (the 'Class Period"). The lawsuit charges Profit Recovery and certain of its officers, with violations of the federal securities laws by issuing materially false and misleading financial statements for the Company's 1999 fiscal fourth quarter on February 16, 2000. On March 29, 2000 Profit Recovery announced that it would restate its reported fourth quarter financial results due to improperly recording revenue. Profit Recovery's common stock plunged from $26 per share to $18 3/8 per share on March 30, 2000. Contact: Patrick T. Egan of Berman, DeValerio & Pease LLP, 800-516-9926 or bdplaw@bermanesq.com PROFIT RECOVERY: Chitwood & Harley Announces Securities Suit in Georgia ----------------------------------------------------------------------- Law firm Chitwood & Harley Martin D. Chitwood gives notice that a class action lawsuit was filed in the United States District Court for the Northern District of Georgia on behalf of all persons who purchased the stock of Profit Recovery Group International, Inc. (NASDAQ: "PRGX") between February 16, 2000 and March 29, 2000, inclusive (the "Class Period"). The complaint charges PRGX and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's publicly-reported revenues and earnings. As a result, PRGX's stock price was artificially inflated throughout the Class Period. Contact: Chitwood & Harley Martin D. Chitwood, Esq. M. Krissi Temple, Esq. (888) 873-3999 or (404) 873-3900 mkt@classlaw.com SCB COMPUTER: May Be Delisted From NASDAQ, Announces Berman, DeValerio ---------------------------------------------------------------------- According to a press release by Berman, DeValerio & Pease LLP, SCB Computer Technology, Inc. (Nasdaq: SCBI) which is a defendant in a shareholder class action lawsuit filed in the United States for the Western District of Tennessee, Western Division at Memphis, may be delisted from the NASDAQ exchange as a result of the accounting irregularities which are the subject of the shareholder action. The investor action seeks damages for violations of the federal securities laws on behalf of all investors who purchased the common stock of SCB Computer Technology between August 19, 1997 and April 13, 2000 (the "Class Period"). The lawsuit charges SCB Computer Technology and certain of its directors and officers with issuing a series of false and misleading financial statements and press releases concerning the Company's publicly reported revenues and earnings. Specifically, the complaint alleges that the Company's financial statements issued during the Class Period overstated its revenues, income and earnings through improper accounting in violation of GAAP. SCB Computer Technology's outside auditors have resigned and SCB's financial statements will be restated as a result. Due to these false and misleading statements, the Company's stock traded at artificially inflated prices during the Class Period. Contact: Berman, DeValerio & Pease LLP Patrick T. Egan or Michael Sullivan (800) 516-9926 bdplaw@bermanesq.com SECURITY GUARDS: Homeless Residents' Harassment Claims Stayed thru Sept ----------------------------------------------------------------------- Lawyers representing homeless residents have once again agreed to stay a suit against downtown property owners stemming from alleged conduct by private security guards on Los Angeles streets. As previously reported in the CAR, in that class-action lawsuit, filed last November, 12 homeless residents claimed they had been harassed and assaulted by private security guards working for four Business Improvement Districts (BID) downtown. The property owners and security companies denied any wrongdoing but agreed to mediate the dispute in an attempt to avoid litigation. Both sides committed to an interim agreement under which BID security patrols would not photograph or unlawfully search homeless residents or tell them to "move along" from public property. That pact expired in April, but was recently extended through September. As part of the extended agreement, both sides will continue to meet monthly, and the Inner City Law Center will keep monitoring the conduct of the BID security guards. The new interim agreement does not preclude the homeless plaintiffs from moving ahead with their lawsuit if the agreement breaks down this summer. "We need to get a sense of the level of compliance over the summer months when there are more people out on the streets," said Dan Marmalefsky, one of the attorneys representing the homeless. (Los Angeles Times, June 7, 2000) SMITHKLINE BEECHAM: 1992-93 Major Media Coverage Bars 1997 Lawsuit ------------------------------------------------------------------ Major media coverage in 1992 and 1993 of allegedly fraudulent billing practices by the nation's largest clinical laboratories bars an August 1997 lawsuit against defendant Smithkline Beecham Clinical Laboratories Inc., because the plaintiff insurers knew or should have known of the challenged practices by 1993, and Connecticut has a three-year statute of limitations. Blue Cross of California v. Smithkline Beecham Clinical Laboratories Inc. - U.S. District Court (Master Docket No. 3:97CV1795) - March 31, 2000. This is a consolidated action for legal and equitable relief in which the plaintiffs, thirty-seven health care insurers, four health care plans, and six individuals, claim that the defendant, SmithKline Beecham Clinical Laboratories, Inc. (SBCL), engaged in, inter alia, fraudulent billing practices. The second amended complaint and the amended class action complaint assert causes of action pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961 et seq., ("RICO"), the Employee Retirement Income Security Act, 29 U.S.C. 1001 et seq. ("ERISA"), the Pennsylvania Insurance Fraud Statute, 18 Pa. Stat. Ann. 4117(a)(2) and under state common law tenets sounding in fraud and unjust enrichment. On July 2, 1999, the court dismissed the RICO action asserted in counts I, II, and III of the second amended class action complaint, the ERISA action asserted in count IV of the second amended class action complaint to the extent the claims were asserted by 31 of the plaintiff-insurers, and count V alleging federal common law claims. Further, the court dismissed counts I and III of the consolidated class action complaint alleging causes of action under RICO and federal common law, respectively, and dismissed counts IV, V and VI of the consolidated class action complaint to the extent those claims were asserted by the four plaintiffs-employee benefit plans. Pursuant to Federal Rule of Civil Procedure 56(c), SBCL now moves for summary judgment on the plaintiffs-insurers' state law claims set forth in counts VI, VII and VIII of the second amended complaint. SBCL argues that these claims are barred by the applicable statute of limitations. The issues presented are: (1) whether count VI, which alleges violations of the Pennsylvania Insurance Fraud Statute, 18 Pa.Stat. 4117(a)(2), is barred by Pennsylvania's two-year statute of limitations governing fraud claims; (2) whether count VII, which alleges common law fraud, is barred by Connecticut's three-year limitation period governing fraud claims; and (3) whether count VIII, which seeks recovery under the equitable doctrine of unjust enrichment, should be dismissed when related legal claims are time-barred. For the reasons hereinafter set forth, counts VII and VIII are time-barred, and count VIII is properly dismissed on grounds that the related legal claims are time-barred. Accordingly, the motion is granted. On August 19, 1997, thirty-seven insurance companies ("the plaintiffs-insurers") initiated this lawsuit against SBCL. SBCL is a subsidiary of SmithKlein Beecham plc, a British corporation and incorporated in the state of Delaware. SBCL owns and operates one of the nation's largest chains of clinical laboratories. On September 19, 1998, the plaintiffs-insurers filed their second amended complaint against SBCL. The gravamen of the second amended complaint is that from 1989 to 1995, SBCL engaged in fraudulent billing practices that resulted in millions of dollars in losses to the plaintiffs-insurers. Specifically, the plaintiffs-insurers allege that SBCL exploited the health care payment system in five fundamental ways: (1) SBCL billed the plaintiffs-insurers for tests that physicians did not order or intend to order and billed for tests that it had led physicians to believe would not result in separate charges ("add-ons"); 2) SBCL offered physicians discounts for certain test packages, but billed the plaintiffs-insurers for the full price for supposedly discount test packages ("selected discounts"); 3) SBCL billed the plaintiffs-insurers separately for expensive constituents of test panels that should have been billed at a single composite rate ("unbundling"); 4) SBCL performed and billed for more expensive tests than were ordered ("upcoding"), and in some cases performed; and 5) SBCL inserted fabricated diagnosis codes to obtain reimbursement from third party payers ("code jamming"). Without admitting any of the alleged conduct, SBCL has provided the court with an abundance of undisputed evidence indicating the above enumerated " challenged activities" were widespread in the clinical laboratory industry and known to the plaintiffs-insurers long before the filing of the original complaint. In this regard, between 1990 and 1993, the national media and various professional organizations had released to the public volumes of information concerning fraudulent billing practices by several national, clinical laboratories, to include SBCL. Specifically, as early as May, 1990, the Office of the Inspector General (" OIG") was investigating National Health Laboratories ("NHL"), one of the nation's largest clinical laboratories, for "false billing and improper use of panel testing." NHL publicly acknowledged the OIG investigation in December 1990. Media coverage of the grand jury inquiry continued into the summer of 1992. In September 1992, the media reported that NHL was negotiating with federal officials to settle the probe of its laboratory billing practices, including its billing for tests containing improperly added profiles. At the same time, the National Health Care Anti-Fraud Association ("NHCAA") issued a "Fraud-Alert" to its members, including plaintiffs-insurers BC/BS Texas and BC/BS New Jersey, informing them that several unidentified clinical laboratories were "unbundling" certain tests and billing them separately from profiles in order to "generate substantial additional revenue for the laboratories." In December 1992, the New York Times, among others, reported that NHL had settled the action. In announcing the settlement on December 8, 1992, the U. S. Attorney in San Diego stated that the government was "investigating other companies for similar activity." The U.S. Attorney further stated that the "criminal practices that *NHL* has admitted are not unique to *NHL*. Indeed *he* would go so far as to say that, in one form or another, these are industry-wide practices." In January 1993, in the aftermath of the NHL settlement, several of the nations largest private health insurers, including the lead plaintiff in this case (Blue Cross of California), asserted publicly that they would be "taking a closer look at claims for lab tests as a result of the *NHL* case." As one industry consultant remarked, NHL "put** up the antennae of every insurance company in the nation." In February 1993, the press reported that the Justice Department was probing another top U.S. laboratory company MedPath, Inc. Several months later, in June 1993, CNN ran a special high-profile "investigative" report on the clinical laboratory industry. The report described how the major laboratories billed for test profiles, and alleged that they often "unbundled" tests. The report also stated that "sources tell CNN that five other large medical labs are also now under investigation on similar fraud charges by state and federal authorities across the country." Moreover, the CNN report quoted an NHL spokesman who said that its billing techniques were "common industry practice." In July 1993, the Justice Department announced that it had reached settlements with Med-Chek Laboratories for the same "unbundling" practices engaged in by NHL. On August 16, 1993, the Wall Street Journal ran a front-page story detailing how the government had built its case against NHL and the impact the prosecution had in sparking equally aggressive investigations of clinical laboratory testing and billing practices. The article also reported that several other clinical laboratories were under investigation, and that these laboratories were employing the same billing practices as NHL. Less than two weeks later, SBCL publicly acknowledged that it had received an OIG investigative subpoena as part of an industry-wide probe of laboratory billing practices. One of the named plaintiffs-insurers herein and member of the NHCAA2, BC/BS of Texas, admitted that on August 27, 1993, it had actual knowledge of "certain aspects" of SBCL's improper billing practices". This information led BC/BS Texas to become suspicious of SBCL's billing, and it commenced an investigation. In early September, 1993, two more of the nation's largest clinical laboratoriesQUnilab and MetpathQagreed to pay the federal government $39.8 million to settle charges that they had improperly "added-on" tests. On September 19, 1993, the CBS television program, 60 Minutes, aired a story called "Blood Money," which discussed the NHL and Metpath settlement. The story sought to explain the billing practices that precipitated those settlements, and attempted to "sting" NHL and SBCL by having a program producer fill a prescription for a blood test profile, along with a complete blood count and thyroid test, at NHL and SBCL testing facilities. The SBCL facility purportedly "added-on" a test for Magnesium, an allegation made on camera. The plaintiffs-insurers, for their part, all have standard practices and procedures designed to detect billing irregularities, and "may have found some errors and difficulties with claims submitted by SBCL" long before they filed the present action. Four of the plaintiffs-insurers, BC/BS of Texas, Golden Rule, Guardian, and John Deere, maintain that they contacted SBCL about billing irregularities discovered between 1992 and 1995, and assert that in response, SBCL denied any fraudulent acts. Discussion: SBCL first argues that the plaintiffs-insurers' remaining state law claims set forth in counts VI and VII are barred by the applicable statute of limitations. Specifically, SBCL asserts that the undisputed facts demonstrate that the plaintiffs-insurers knew, or should of known, of SBCL's challenged billing and coding practices by 1993. Because the plaintiffs did not file their original complaint until August 19, 1997, SBCL asserts that: (a) count VI, which alleges violations of the Pennsylvania Insurance Fraud Statute, 18 Pa.Stat. 4117(a)(2), is barred by Pennsylvania's two-year limitation on fraud claims; and (b) count VII, which alleges common law fraud, is barred by Connecticut's three-year limitation an fraud claims. The plaintiffs-insurers respond that SBCL is not entitled to summary judgment because SBCL has failed to prove either that they knew or should have known of SBCL's fraudulent schemes prior to August 19, 1994, and, in any event, SBCL's own active, fraudulent concealment of its schemes tolled the statutes of limitations. The court agrees with SBCL. Ordinarily, the statute of limitations begins to run "when the plaintiff knows or has reason to know of the injury which is the basis of *the* action." Williams v. Perry, 960 F. Supp. 534, 538 (D. Conn. 1996); Pierce v. Salvation Army, 674 A.2d 1123, 1125 (Pa. Super. 1996)(cause of action for fraud does not accrue until the fraud has been discovered). A plaintiff that does not have actual knowledge of the injury may nevertheless trigger the running of the limitations period if the plaintiff "should have known" of the injury. Dodds v. CIGNA Securities Inc., 12 F.3d 346, 350 (2d Cir. 1993). "The means of knowledge are the same thing in effect as knowledge itself." Wood v. Carpenter, 101 U.S. 135, 143, 25 L.Ed. 807 (1879). Consequently, when circumstances suggest to a person that he may have been defrauded, a "duty of inquiry" arises and knowledge of the alleged fraud will be imputed to him. Armstrong v. McAlpin, 699 F.2d 79, 88 (2d Cir. 1983). Such suggestive circumstances are known as "storm warnings" of possible fraud. Ciccarelli v. Cichner Systems Group, Inc., 862 F. Supp. 1293 (M.D.Pa. 1994); accord In re Integrated Resources, 815 F. Supp. 620, 639 (S.D.N.Y. 1993); Quantum Overseas, N.V. Touche Ross & Co., 663 F. Supp. 658, 663-64 (S.D.N.Y. 1987). Storm warnings need not provide notice of the entire fraud to constitute inquiry notice. Dodds v. Cigna Securities, Inc., 12 F.3d 346, 352 (2d Cir. 1993). Once on inquiry notice, the plaintiff has an obligation to discover the fraud with reasonable diligence. Stone v. Williams, 970 F.2d 1043, 1049 (2d Cir. 1992)(citing Campell v. Upjohn Co., 676 F.2d 1122, 1128 (6th Cir. 1982)). "The test as to when fraud should with reasonable diligence have been discovered is an objective one." Armstrong, 699 P.2d at 88. Where, on the other hand, a defendant deliberately conceals material facts relating to his wrongdoing, time does not begin to run until the plaintiff discovers, or by reasonable diligence could have discovered, the basis of the lawsuit. Barrett v. United States, 689 P.2d 324, 327 (2d Cir. 1982). Deliberate concealment requires "clear, concise and unequivocal evidence" of conduct directed to the very point of "obtaining a delay in asserting the cause of action." Gibbons v. NER Holdings, Inc., 983 F. Supp. 310, 317 (D. Conn. 1997); see also Bohus v. Beloff, 950 F.2d 919, 925-26 (3d Cir. 1991); Pocahontas Supreme Coal Co. v. Bethlehem Steel, 828 F.2d 211, 219 (4th Cir. 1987) (claim of fraudulent concealment cannot "rest on no more than an alleged failure to own up to illegal conduct.") In this case, the plaintiffs filed the original complaint on August 19, 1997. Count VI, which alleges violations of the Pennsylvania Insurance Fraud Statute, 18 Pa.Stat. 4117(a)(2), is governed by Pennsylvania's two-year limitations period governing fraud claims.3 Count VII, which alleges common law fraud, is governed by Connecticut's three year limitation on fraud claims. Consequently, the Pennsylvania statutory claim and the common law fraud claim are time-barred if the challenged billing practices were "knowable" to the plaintiffs before August 19, 1994 (or 1995 for count VI alone). The court concludes that because the plaintiffs-insurers knew or had reason to know of SBCL's challenged practices prior to August 19, 1994, and there is no evidence of active, fraudulent concealment, counts VI and VII are time- barred. The undisputed evidence demonstrates that between 1990 and 1993, the national media and various professional organizations released to the public volumes of information concerning fraudulent billing practices by several national, clinical laboratories, to include SBCL. This highly publicized information disclosed federal government investigations and settlements with several national laboratories for some of the same conduct as alleged in the within action, to include "unbundling," and "add-ons." Moreover, federal prosecutors were quoted as saying that these practices were "industry-wide" and that SBCL had become the subject of a federal investigation for irregular billing practices. Indeed, one of the plaintiffs-insurers herein, BC/BS of Texas, admitted to having actual knowledge of at least some of SBCL's irregular billing practices as early as August, 1993. BC/BS of Texas, as well as other plaintiffs-insurers herein, were members of the NHCAA, an organization where members share information to aid in the investigation of health care fraud. The court presumes that this highly publicized, industry-wide information was known to the plaintiffs prior to the end of 1993. See In re Integrated Resources Real Estate Ltd., Partnerships Sec. Litig., 815 F. Supp. 620, 640 (S.D.N.Y. 1993)("sophisticated investors legally may be presumed to know of information in the public domain, such as newspapers and magazine articles."); Seibert v. Sperry Rand Corp., 586 F.2d 949, 952 (2d Cir. 1978) (plaintiff shareholders presumed to know information in public domain); Hartford Fire Ins. Co. v. Federated Dep't Stores, Inc., 723 F. Supp. 976 (S.D.N.Y. 1989) (plaintiffs should have known about "general publicity" in the press and the financial community); Bibeault v. Advanced Health Corp., 1999 WL 301691 at *5 (S.D.N.Y. May 12, 1999) ("when the facts giving rise to a fraud action are in the public domain, courts regularly impute constructive knowledge to the plaintiffs for the purpose of triggering the statute of limitations.") With deference to the rule that a "storm warning" need not provide notice of the entire fraud to constitute inquiry notice, the court concludes that the cumulative affect of the above information constitutes a "storm warning" of sufficient magnitude to place the insurers on inquiry notice of SBCL's potentially fraudulent billing practices no later than the end of 1993. As set forth supra, if SBCL fraudulently concealed material facts relating to its wrongdoing, the limitations period would not begin to run until such time as the plaintiffs-insurers discovered, or by reasonable diligence could have discovered, the basis of the lawsuit. Barrett, 689 F.2d at 327. In this case, however, the plaintiffs-insurers have failed to offer any evidence that SBCL actively concealed the challenged activities. In this regard, four of the plaintiffs-insurers, Blue Cross/Blue Shield of Texas, Golden Rule, Guardian, and John Deere, maintain that they contacted SBCL about billing irregularities discovered between 1992 and 1995, and assert that in response, SBCL denied any fraudulent acts. Because, however, fraudulent concealment cannot "rest on a failure to own up to illegal conduct," Pocahontas, 828 P.2d at 218-19, the plaintiffs-insurers are not entitled to a tolling of the limitations period. In sum because the plaintiffs-insurers knew or had reason to know of SBCL's challenged practices prior to August 19, 1994, and there is no evidence of active, fraudulent concealment, counts VI and VII are time- barred. 2. Count VIII SBCL next argues that count VIII, which seeks relief under the equitable doctrine of "unjust enrichment," is properly dismissed because under Connecticut law, a claim sounding in equity is barred if a plaintiff's related legal claims are time-barred. The plaintiffs-insurers respond that there is simply no authority for SBCL's proposition and, in any event, actions in equity are not governed by a statute of limitations. The court agrees with SBCL. In Connecticut, claims for "unjust enrichment" are considered "equitable" rather than "legal" causes of action. See e.g. Meaney v. Connecticut Hospital Assoc., 250 Conn. 500, 511, 735 A.2d 813 (1999). Where a plaintiff pursues an action for fraud based on both "legal" and "equitable" principles, it is well settled that "equity will withhold its remedy if the legal right is barred by the relevant statute of limitations." Campbell v. New Milford Bd. of Educ., 36 Conn. Super. 357, 364 n.5, 423 A.2d 900, 905 (Conn. Super. 1980); see also Williams v. Walsh, 558 F.2d 667, 671 (2d Cir. 1977) (affirming summary judgment on "equitable" claim where legal claims dismissed on limitations grounds). Here, the "equitable" claim for unjust enrichment is based on the same conduct as the "legal" claims set forth in counts VI and VII. Because the court has concluded that counts VI and VII are time-barred, the court will exercise its equitable powers to withhold relief on the claim for unjust enrichment. Accordingly, summary judgment is granted with respect to count VIII. Conclusion For the foregoing reasons, the defendant's motion (document no. 225) is granted. 2The NHCAA exists to educate its members in the "detection *and* investigation of health care fraud" and to provide an "information-sharing network to aid in the investigation of health care fraud." Pursuant to the choice of law rules of Connecticut, count VI is governed by a Pennsylvania limitations period. See Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir. 1989)(forum state's choice of law rules govern pendent state law claims in a federal question case). Under the Connecticut rule, limitations periods are set by the law of the forum state. Baxter v. Sturm Ruger & Co., Inc., 230 Conn. 335, 339, 644 A.2d 1297, 1299 (1994) (under the " general rule," limitations period is set by "lex fori"). An exception to this general rule, however, requires that the limitations period of a foreign state apply if (1) the foreign state created the cause of action statute, and (2) the limitations period is substantive. See Feldt v. Sturm, Ruger & Co., 721 F. Supp. 403, 406 (D. Conn. 1989) (applying Georgia limitation in suit where Georgia statute created the cause of action). A statute of limitations is "substantive" with respect to a right or claim that was not present at common law. Id. (cause of action did not exist under Georgia common law). Count VI is created by a Pennsylvania statute, and its limitations period is "substantive" because the statute gives insurers new "rights" to seek treble damages and to prove fraud claims by a preponderance of the evidence, a less stringent standard than the standard at common law which requires one to prove fraud by "clear and convincing" evidence. See e.g.,Wexco, Inc. v. IMC, Inc., 820 F. Supp. 194, 203 (M.D.Pa. 1993); Majestic Box Co., Inc. v. Frank, 1998 WL 720463 at *2-3 (E.D.Pa. Sept. 2, 1998). The limitations period governing Count VI is, accordingly, substantive and is thus set by Pennsylvania law. The Pennsylvania insurance fraud statute does not provide its own limitations period and courts have not ruled on the appropriate limitation. Under Pennsylvania law, a cause of action based on a statute that lacks an express limitation provision is governed by the limitation period covering the most "analogous" enumerated claim. Menchini v. Grant, 995 F. 2d 1224, 1229 (3d Cir. 1993). The cause of action with a specified limitations period that is most "analogous" to the plaintiffs' insurance fraud claim is common-law fraud. See e.g., Menchini v. Grant, 995 F.2d 1224, 1229 (3d Cir. 1993). Accordingly, Count VI is governed by Pennsylvania's two year limitation on claims for common law fraud. See 42 Pa. Stat. 5524(7) (two-year limitation on claims for "tortious conduct" including "deceit or fraud"). Whether or not count VII is asserted under Connecticut law, it is a common law claim, and therefore is governed by the Connecticut, three year limitations period for common-law fraud. See Conn. Gen. Stat. 52-577. (The Connecticut Law Tribune, May 8, 2000) TACO BELL: Restaurant General Managers' Suit in CA to Be Tried in 2001 ---------------------------------------------------------------------- On October 2, 1996, a class action lawsuit against Taco Bell Corp., entitled Mynaf, et al. v. Taco Bell Corp. ("Mynaf"), was filed in the Superior Court of the State of California of the County of Santa Clara. The lawsuit was filed by two former restaurant general managers and two former assistant restaurant general managers purporting to represent all current and former Taco Bell restaurant general managers and assistant restaurant general managers in California. The lawsuit alleges violations of California wage and hour laws involving unpaid overtime wages. The complaint also includes an unfair business practices claim. The four named plaintiffs claim individual damages ranging from $10,000 to $100,000 each. On September 17, 1998, the court certified a class of approximately 3,000 current and former assistant restaurant general managers and restaurant general managers. Taco Bell petitioned the appellate court to review the trial court's certification order. The petition was denied on December 31, 1998. Taco Bell then filed a petition for review with the California Supreme Court, and the petition was subsequently denied. Class notices were mailed on August 31, 1999 to over 3,400 class members. The original trial date of July 10, 2000 has been continued to January 15, 2001. U S WEST: Retirees Hopeful about Pensions with Acquisition by Qwest ------------------------------------------------------------------- Retirees of U S WEST (NYSE: USW) said on June 6 they are "hopeful" about the pension/benefit safeguards that were included in Minnesota Public Utilities Commission decision to approve the acquisition of U S WEST by Qwest Communications International (NYSE: Q). "We are disappointed that the Commission didn't order all the safeguards we had requested," said Jim Norby, president of the 14-state Association of U S WEST Retirees. "But the Commission has clearly indicated that it expects US WEST and Qwest to continue honoring historic commitments to retirees, and especially to ensure that our pension and health plan benefits will not be reduced." Norby said that the Association has never opposed the acquisition itself, as shareholders and as loyal former employees who helped build the company. "Our only concern is still the potential misuse of ratepayer-approved money, including a pension-fund surplus of $5.7 billion, to enhance shareholder earnings and executive compensation." The Association also has opposed use of U S WEST pension funds for Qwest employees, who do not have a pension fund. In June 6's decision, the Minnesota Commission approved the acquisition after the company settled differences with 12 other intervenors. The retirees comprised the only intervenor with which U S WEST refused to mediate issues. The Retiree Association has charged the company with breaking historic promises by building a huge pension surplus to enhance earnings and executive pay, with no significant pension increases since 1991. Arnie Albrecht, retired U S WEST regulatory chief for Minnesota and leader of a team that filed a detailed document with the MPUC in January, said: "We are not asking for anything unreasonable. We keep hearing that ERISA precludes state jurisdiction, and will take care of us all. That is an outmoded view, and the U. S. Supreme Court has given states wider authority in several ERISA decisions. Customer money was collected by the state, for specific use by pensioners, and that is a key issue." ERISA is the 1974 federal Employee Retirement Income Security Act. "Qwest and U S WEST have said that a combined pension/benefits program has not been determined," said Norby. "That is strange at best, because it's inconceivable that use of $14 billion (the fund and $5.7 billion surplus) isn't part of the deal." He added: "This isn't just about U S WEST. Retirees of IBM, Bell Atlantic, Prudential, and other companies, are voicing similar concerns, and that is why we are joining them in the national Coalition for Retirement Security, to add our voice to theirs, and to seek legislation protecting America's pensioners." Norby announced at the Association's annual meeting on May 26 that the retirees would be joining that national group, and also outlined several initiatives for the year 2000, including an accelerated membership drive to recruit all 45,000 retirees, after quadrupling membership in just one year, to 16,000. At the annual meeting, Norby also called for: organizing a shareowner voting bloc of retirees; pushing for election of a retiree shareholder to the Qwest Board of Directors; initiating a class-action lawsuit if other means fail, and increasing political activism. "U S WEST keeps contending that pensions and what they carefully call 'earned benefits' are fully protected by ERISA," said Norby. "But ERISA has been amended to include more holes than a screen door, all letting corporations do the very things we're concerned about." He also alluded to a federal district court ruling in Denver that allows U S WEST "to change the Pension Plan language any way it wants to." Of the eight states requiring acquisition approval, only Arizona has not yet ruled on the deal, and that decision is expected in July. Other states that have approved it, some with qualifications requiring minor pension/benefits safeguards, are Colorado, Washington, Iowa, Wyoming, Utah and Montana. The recent Montana decision included requirements for pension/benefits safeguards, but with no strong legal-enforcement measures. "U S WEST vigorously opposed our intervention in these eight states, but regulators recognized that we had something to say," said Norby. "That, in itself, is a victory. We have shined the spotlight on potential disaster for pensioners of U S WEST and other companies, and we have only begun to seek legally binding assurances. The company continues to say we are 'playing on the fears of retirees.' By that, they admit that retirees have fears, and well they should." UNION PACIFIC: Lawsuit Disposition for Eunice Train Derailment Begins --------------------------------------------------------------------- Lawyers representing people seeking damages as a result of the May 27 train derailment in Eunice met with a federal judge Monday to figure out how best to try the suits. At least 15 separate lawsuits have been filed in or moved to U.S. District Court since a Union Pacific train derailed and some of its hazardous cargo caught fire. Thousands were forced to evacuate their homes and businesses. Attorneys for Union Pacific asked for all the suits, many originally filed in state district court, to be moved to federal court. On Monday U.S. District Judge Richard T. Haik consolidated the suits into one, Eunice attorney Kent Aguillard said. About 2,000 people - business owners or residents - have joined one of the 15 lawsuits filed as of Monday, Aguillard said. Two more suits were filed Tuesday in federal court in Lafayette. After Haik consolidated the suits, he told the attorneys involved to form a committee to handle the case for now, Aguillard said. The attorneys compiled a list of 12 to serve on the committee. Of that, six are attorneys who practice in Eunice, Aguillard said. The others are from Opelousas, New Orleans, Lafayette and Denham Springs, he said. The interim steering committee is headed by Denham Springs attorney Calvin Fayard, Aguillard said. Fayard handled the class action lawsuit following a 1982 train derailment in Livingston Parish and was considered by the others on the committee to be an expert on how to handle this type of case, Aguillard said. The committee plans to further divide itself into subcommittees to handle all aspects of the class-action suit - discovery, investigation, legal research, class notifications and public relations, Aguillard said. A team of investigators hired by the attorneys visited the crash and clean-up site Tuesday to inspect and catalog information for the plaintiffs' records, Aguillard said. A judge had ordered Union Pacific not to dispose of any material until plaintiffs' attorneys could visit the site to do things such as take soil and water samples, Aguillard said. Haik is still taking applications from attorneys who want to be on the permanent committee, which will be named later, Aguillard said. Some of the attorneys involved, including Aguillard, also were evacuated from their homes. "Five years from now, we're still going to be here," Aguillard said. (The Associated Press State & Local Wire, June 7, 2000) VISA, MASTERCARD: Actions in Card Probe May Point to New Suit ------------------------------------------------------------- With its antitrust trial against Visa and MasterCard only five days away, the Department of Justice appears to be stepping up its investigation of the credit card companies' debit card policies, which raises the question of whether the government will file a second lawsuit against the card associations. Over the past couple of months, credit card lenders -- including Citigroup -- have received subpoenas from the government requesting documents about debit cards, say sources close to the banks. The government has also been working closely with lawyers for major U.S. retailers that have filed a class action against Visa's and MasterCard's debit rules and prices. This is the first time Citigroup, which does not offer Visa or MasterCard-branded debit cards, has been asked for records in the debit card investigation, said a source close to the banking company. The timing seems curious, some legal experts say, because the Justice Department has been investigating Visa's and MasterCard's debit card rules since January 1999, when the matter was transferred there from the Federal Trade Commission, and because the antitrust case against the card associations is scheduled to begin June 12. Gina Talamona, a Justice Department spokeswoman, confirmed that the agency is continuing its investigation. There are a number of possible reasons, political ones included, that the government is turning its attention to debit cards with the prosecution of its credit card case so near. Some experts in antitrust speculate that the government is turning up the heat to force a settlement with Visa and MasterCard, but most say there will not be a settlement. A more likely explanation, they say, is that the government is using the debit investigation to reinforce the credit card suit. Several antitrust experts said the government could file a separate lawsuit to focus on debit cards. That could happen if, for example, the judge presiding over the credit card suit, Barbara S. Jones, gave some indication that the government has a strong case. The Department of Justice "could say, 'We are prepared to sue on the debit card issue; you might as well settle now,'" said an antitrust attorney who did not want to be named. "There may be some political leveraging going on here. Lawyers are always looking to settle," said Lawrence J. White, a former chief economist with the Justice Department who now teaches economics at New York University's Stern School of Business.Political maneuverings aside, there is little doubt of the government's keen interest in antitrust issues relating to debit cards. In January 2000 the government won the right to obtain the discovery documents in what is known as the Wal-Mart lawsuit -- the retailers' class action attacking the Visa and MasterCard debit card rules. It is scheduled to go to trial in November. The retailers object to the "honor all cards" rule that requires merchants accepting Visa and MasterCard to take those brands of debit cards, too. The merchants say interchange rates on Visa and MasterCard-branded debit cards are too high, and that they would prefer not to accept these cards. The rates are higher for these signature-based cards than for other debit cards, which are authenticated with a personal identification number and do not bear the association logos. Merchants say the associations should lower their rates for debit card transactions, in part because they are less risky than credit card purchases. In the trial to start next week, the government is seeking to overturn card association rules prohibiting member banks from issuing competing card brands -- such as American Express and Discover -- and to change the governance of the associations to ensure that each of the largest issuers is aligned with either Visa or MasterCard instead of both. The government's debit card focus is sharpening, several sources confirm. Lloyd Constantine of Constantine & Partners, the New York law firm representing the retailers, said members of his staff speak with government officials several times a day. And an attorney on the bank card side who did not want to be identified said, "Somebody is looking at debit cards" at the Department of Justice, "and that person is leading a different team from the team working on the trial." Still, "It's hard to imagine going through years of litigation and bringing yet another case," said Anita Boomstein, a partner at the New York law firm Hughes, Hubbard & Reed. Others see debit cards entering the government's arguments in the credit card trial in several ways. For one thing, the complaint notes that American Express and Morgan Stanley Dean Witter are excluded from the debit market because they are unable to issue cards through banks. In the meantime, momentum is building against Visa and MasterCard from other corners. On Monday three New Yorkers filed an antitrust suit against the card associations accusing them of forcing consumers to pay higher retail prices -- echoing the charges in the Wal-Mart case. Another consumer suit, filed against Visa and MasterCard this year in California, focuses on foreign currency conversion fees. That suit says the companies charge exorbitant fees for purchases made abroad. (The American Banker, June 7, 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. 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 * * *