/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010102.MBX C L A S S A C T I O N R E P O R T E R Tuesday, January 2, 2001, Vol. 3, No. 1 Headlines ANICOM SECURITIES: Consolidated Securities Complaint Pending in Chicago AUTO FINANCE: Class Reversed in Garcia Case for Dissimilar Interests AUTO FINANCE: Ford's Reaffirmation Agreement Permitted in Ch 7 Case CANADA: Immigrant with Deadly TB Launches Suit for Wrong Landing CHEMICAL LEAMAN: Officers Cannot Undo Defective Merger, Pa. Ct Says EAGLE GLOBAL: EEOC Seeks to Join Employment Discrimination Lawsuit FIRST FAMILY: 11th Cir Finds Clause on Arbitration OK under TILA, ECOA FIRST FAMILY: Law Expert Says Ruling Renders Classwide Relief Difficult FOUNDRY NETWORKS: Cauley Geller Announces Securities Suit in California INMATES LITIGATION: MI Lawsuit over Rights Drags on for 12 Years LAIDLAW, INC: Kirby McInerney Announces Securities Lawsuit in New York LINCOLN LIFE: Settles with Benefits and Claim Process to Policyholders MCKESSON HBOC: 9th Cir Rejects Law Firm's Appeals on Shareholder Contact NATIONAL TREASURY: Union and DOJ Progress in Special Rates Payment Talk NETWORK ASSOCIATES: Milberg Weiss Files Securities Lawsuit in California NETWORK ASSOCIATES: Rabin & Peckel Announces Securities Suit in CA NY CITY: Addict's Suit Claims Police Ignore Needle-Swap Law PROVIDIAN FINANCIAL: Agrees to Settle Lawsuits over Marketing Practices PUBLIX SUPER: Settles Employment Race Bias Suit Filed 1977 in Florida SYNTHETIC STUCCO: Federal Judge allows NC Homeowners’ Suit against Maker TOBACCO LITIGATION: R.J. Reynolds Wins FL Trial and Defeats Cert. in PA TOBACCO LITIGATION: Spaniards Who Lost Voices to Cancer Set for Suits * Law Report Suggests Five Factors to Determine Fairness of Settlement ********* ANICOM SECURITIES: Consolidated Securities Complaint Pending in Chicago ----------------------------------------------------------------------- A consolidated complaint has been filed in the Anicom Securities Class Action, pending before Judge John Darrah of the U.S. District Court in Chicago. The present defendants include Anicom Inc. and several former individual officers and/or directors of Anicom, including Scott Anixter, Alan Anixter, Carl Putnam, and Don Welchko. The case involves, among other things, Anicom's recent admission of an overstatement of net profits and revenues of at least $35 million over a period of just over two years. There are approximately 25 million common shares of Anicom stock outstanding. Many may have been purchased during the class period. Anicom has just issued a press release stating that it does not now expect Anicom shareholders who continue to hold Anicom common stock to receive any of the proceeds from an anticipated bankruptcy. (See Dec. 22, 2000 Anicom press release.) This lawsuit seeks damages for those who purchased during the class period of April 29, 1998 through July 18, 2000. Judge Darrah has appointed Kenneth McNeil and the law firm of Susman Godfrey LLP in Houston, Texas, as lead counsel in this class action. The law firm of Susman Godfrey has played a leadership role in a number of class actions. Liaison counsel in Chicago is Foley & Lardner, represented by Doug Hagerman. Assisting trial counsel is Lynn Sarko and the law firm of Keller Rohrback in Seattle, Washington. Special advisory counsel on the matter is the law firm of Wolff Popper in New York City. Lead plaintiff in the case is the State of Wisconsin Investment Board. Inquiries about the case should be directed to 800/776-6044, or any of the following: Kenneth McNeil Lead Counsel Susman Godfrey LLP 1000 Louisiana, Suite 5100 Houston, TX, 713) 653-7814 Doug Hagerman Liaison Counsel Foley & Lardner One IBM Plaza, Suite 3300 330 North Wabash Avenue Chicago, IL 60611, (312) 755-1900 Lynn Sarko Assisting Trial Counsel Keller Rohrback LLP 1201 Third Avenue, Suite 3200 Seattle, WA 98101, (206) 623-1900 Contact: Keller Rohrback L.L.P. Jen Veitengruber, 800/776-6044 AUTO FINANCE: Class Reversed in Garcia Case for Dissimilar Interests -------------------------------------------------------------------- A consumer, who receives mandatory disclosures regarding a vehicle lease, cannot adequately represent a class in an action against a dealership if her interests in the litigation are different from the interests of other class members. (Courtesy Auto Group Inc. v. Garcia, et al., No. 5D00-340 (Fla. Dist. Ct. App. 11/17/00).) Wilma Garcia leased a van from Courtesy Auto Group Inc. Immediately thereafter, Garcia tried to rescind the lease based on Courtesy's advertised 30-day money back guarantee. Courtesy refused to rescind her lease, claiming that the guarantee did not apply because of the financial incentives provided to Garcia. Courtesy assigned the lease to General Motors Acceptance Corp., which also refused to rescind the lease. Garcia sued Courtesy and GMAC for intentional misrepresentation and fraud and for violations of the Florida Deceptive and Unfair Trade Practices Act and the Florida Motor Vehicle Lease Disclosure Act. She sought rescission. When Garcia moved for class certification, she claimed the class consisted of all lessees of motor vehicles whose lease agreement failed to contain the mandatory disclosure requirements "in a separate blocked section, in capital letters of at least 12-point bold type." Garcia and GMAC settled, and pursuant to the settlement agreement Garcia returned the vehicle and was released from all future liability under the lease. Although no evidence was introduced at the certification hearing, the court determined that Garcia met the class action requirements and granted her motion for certification. Disclosures The Florida District Court of Appeal noted that when Garcia executed the lease, she also executed a "Florida Consumer Lease Disclosure" which contained the disclosures required by Florida statute. Garcia argued that the disclosure must be in the lease itself. The court stated, "it is a generally accepted rule of contract law that, where a writing expressly refers to and sufficiently describes another document, that other document ... is to be interpreted as part of the writing." The Court of Appeal concluded that Garcia had no cause of action against Courtesy for a violation of the Florida Motor Vehicle Lease Disclosure Act. As a result, the court found that the trial court erred in concluding that Garcia had standing to represent the class. Judge Orfinger stated, "[I]f the named plaintiff purporting to represent a class fails to establish the requisite case or controversy with the defendant, she may not seek relief on behalf of herself or any other member of the class." Courtesy argued, and the court agreed, that Garcia was not an adequate class representative because her interests in the litigation were different from the interests of other class members. The court held that Garcia failed to show her representation would not be antagonistic to the rest of the class and reversed the decision certifying the class. (Consumer Financial Services Law Report, December 26, 2000) AUTO FINANCE: Ford's Reaffirmation Agreement Permitted in Ch 7 Case -------------------------------------------------------------------- Creditors do not violate the automatic stay by sending reaffirmation agreements to debtors who say they want to reaffirm their debts and then accepting their payments. And, if these actions violate the discharge injunction, there is no private right of action for debtors to seek redress from offending creditors, the 6th Circuit Court of Appeals ruled in David J. and Karen A. Pertuso v. Ford Motor Credit Co., No. 99-1132 (Nov. 22, 2000). The debtors filed for Chapter 7 relief owing 18,950 to Ford Motor Credit Co. Their statement of intentions regarding their secured loans said they wanted to reaffirm this debt and retain possession of the family's van, which was collateral for the loan. Ford responded to the debtors' stated intention by sending them a reaffirmation agreement proposing monthly payments and terms according to the terms of the parties' original contract. The agreement also included all the disclosures required by Section 524(c)(2). The agreement was signed by a Ford representative. Shortly after receiving the agreement, the debtors and their attorney signed the agreement and returned it to Ford. The agreement was never filed with the court. At no time were the debtors delinquent in their payments to Ford. More than a year after receiving their discharge, the debtors attempted to bring a class action suit against Ford for improper debt collection practices. Their complaint alleged that Ford regularly solicited reaffirmation agreements from debtors, failed to file signed agreements with the court and used unfiled agreements to collect money from debtors even though the agreements were unenforceable and the debts discharged. The debtors alleged Ford's conduct violated Sections 362 and 524, as well as state law. The district court granted Ford's motion to dismiss the debtor's case. The 6th Circuit affirmed. No Private Right Of Action Under Section 524 First, the appellate court ruled that Section 524 does not impliedly create a private right of action for violations of the discharge injunction and Section 105 does not allow courts to create remedies under Section 524. "The recognition of a private right of action requires affirmative evidence of congressional intent in the language and purpose of the statute or in its legislative history," the court said. Section 524(a)(2) enjoins creditors' efforts to collect discharged debts. The traditional remedy for violations of an injunction is a contempt proceeding, not a class action lawsuit. The other part of Section 524 relied on by the debtors - Section 524(c) - does not proscribe any conduct but merely sets forth the conditions that must be met for a reaffirmation agreement to be enforceable. The consequence of failing to satisfy these conditions is that the agreement is rendered unenforceable. Not only did the court not find an intent to create a private remedy in Section 524's language, it could not find one in the section's legislative history. "Congress amended the Bankruptcy Code in 1984 to provide an express right of action under the automatic stay provision of 11 U.S.C. Section 362(h)," the court noted. "It did so because reliance on the contempt power to remedy violations of Section 362 had been widely criticized. ... Congress amended Section 524 at the same time it amended Section 362, but no private right of action was added in Section 524. The contrast, we think, is instructive." Not Filing Reaffirmation Agreement Did Not Violate Stay The private right of action under Section 362(h) was of no benefit to the debtors because the 6th Circuit found that Ford's action did not run afoul of the automatic stay. The debtors said they wanted to reaffirm their debt. Ford sent them an agreement consistent with that stated intention. The agreement was reasonable and was accepted by the debtors and their counsel. Characterizing Ford's actions as a violation of Section 362 misconstrues what happened, the court said. "It would be fair to infer from the facts alleged in the complaint that Ford did not intend to file the reaffirmation agreement. But Ford's plans in this regard are irrelevant, given the facts that the [debtors] were represented by an attorney, that they had previously stated their intent to reaffirm the debt, that they reaffirmation agreement was reasonable on its face, and that Ford was not guilty of harassment," the court said. No State Law Relief The appellate court also agreed with the district court that the debtors could find no relief under state law because those provisions were preempted by the Bankruptcy Code. The relief requested by the debtors presupposes a violation of the Bankruptcy Code. "Permitting assertion of a host of state law causes of action to redress wrongs under the Bankruptcy Code would undermine the uniformity the Code endeavors to preserve and would stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," the 6th Circuit concluded. (Consumer Bankruptcy News, December 26, 2000) CANADA: Immigrant with Deadly TB Launches Suit for Wrong Landing ---------------------------------------------------------------- An immigrant who exposed hundreds of Hamilton residents to a deadly strain of drug-resistant tuberculosis has launched a $500 million lawsuit against the federal government for wrongly allowing him to come to Canada. Gaspare Benjamin, 37, of the Dominican Republic, is suing, along with his Canadian wife, Hilary Lomas, and friends Julio Rodriguez and Mickey Medina. All three were infected by Benjamin after he immigrated to Canada in December, 1999. His contagious TB remained undetected for nearly a year. One of Benjamin's lawyers, David Smye, expects that more of the 92 people possibly infected and 1,500 others potentially exposed to the man will join the class-action lawsuit against the federal government, two unnamed doctors working for Citizenship and Immigration Canada, and physician Dr. Margaret Krol-Szpakowski. "I think all of them share a sense of outrage," Smye said. "They were infected and they shouldn't have been." A notice of action filed Dec. 18 claims immigration officials and Krol- Szpakowski were negligent for "failing to properly assess and test" Benjamin. It states they "knew or ought to have known (he) would be a danger to public health" and his illness could "cause excessive demands on health or social services." These allegations have not been proved in court. Smye said a statement of claim is to be filed within 10 days. Lomas would not comment on the lawsuit when contacted at West Park Hospital in Toronto, where the couple are being treated, but said, "The treatment is working and we're hoping to be home in a month." Krol-Szpakowski was unavailable for comment yesterday, and Citizenship and Immigration Canada refused to discuss the case. But the ministry has already admitted that a string of errors led to Benjamin being allowed to come to Hamilton to join his wife. Smye said Benjamin is entitled to join the lawsuit because he should have been promptly diagnosed and treated. (The Toronto Star, December 29, 2000) CHEMICAL LEAMAN: Officers Cannot Undo Defective Merger, Pa. Ct Says ------------------------------------------------------------------- Officers Cannot Undo Defective Merger, Avoid Challenge, Says Pa. Court In an issue of first impression, a Pennsylvania state court judge found that officers and directors of Chemical Leaman Corp. cannot just nullify a merger that failed to comply with Pennsylvania's Business Corporation Law because such flawed transactions are "voidable," rather than void outright. The court said that it would defeat the purpose of the PBCL to allow executives to simply undo a flawed transaction and thus shield themselves from liability. (Corporate Officers and Directors Liability Litigation Reporter, November 6, 2000) EAGLE GLOBAL: EEOC Seeks to Join Employment Discrimination Lawsuit ------------------------------------------------------------------ The United States Equal Employment Opportunity Commission ("EEOC") on December 29, 2000 moved to intervene in a nationwide class action lawsuit filed in the United States District Court in Philadelphia against one of the largest freight delivery services in the nation, Eagle Global Logistics ("Eagle"), a company formerly known as Eagle USA Airfreight, Inc. The EEOC filed formal papers this morning in the United States District Court for the Eastern District of Pennsylvania (Philadelphia) seeking to intervene in the case of Augustine Dube, et al. v. Eagle Global Logistics. The case could affect more than 1000 current, former and potential employees of Eagle. The suit, filed as a class action by eight Black, Hispanic and female plaintiffs on behalf of numerous class members, alleges that Eagle has discriminated against African-Americans, Hispanics and women in its hiring, promotion and compensation practices, and that Eagle has subjected African- Americans, Hispanics and women to a hostile work environment. Eagle is a publicly traded company on the Nasdaq as "EAGL." Eagle maintains offices in cities across the country including New York, Philadelphia, Atlanta, San Francisco, Los Angeles, Chicago, Kansas City, Houston, Dallas, Nashville and Miami. As part of its effort to become part of the existing lawsuit brought by the eight named plaintiffs on behalf of a class of more than 1000 people, the EEOC is asserting, after a two and one-half year investigation resulting in an extensive finding, that Eagle has violated the Equal Pay Act, Title VII of the Civil Rights Act of 1964, as amended, and the Age Discrimination in Employment Act. Eagle violated these federal laws, according to the EEOC's Complaint, by paying its female employees at wage rates which are less than the rates paid to its male employees performing substantially equal work; by underpaying Black, Hispanic and female employees relative to White male employees; by discriminating against older female and African-American employees and applicants for employment; and by unlawfully constraining promotional and transfer opportunities for Black, Hispanic and female employees. As examples of the alleged discriminatory attitudes of Eagle management, the EEOC's Complaint cites the following contentions of witnesses: * members of Eagle management used racial slurs to describe African- Americans; * Eagle management discouraged the hiring of women by claiming that there would be too much "hormonal activity," that women would become pregnant or that male employees would not work for a woman; and * Eagle's president revoked a job offer as soon as he realized that the qualified applicant was an African-American female. In addition to the allegations of unlawful employment discrimination, the EEOC asserts that Eagle destroyed relevant documents during the government's two and one-half year investigation of Eagle's employment practices. Discovery in the existing lawsuit has revealed that Eagle shredded original job applications after the EEOC began its investigation. Some of these applications were submitted by minorities just a few months before being destroyed. Federal law requires that companies, like Eagle, must retain applications for at least one year. The federal court in Philadelphia has already denied two motions filed by Eagle to dismiss individual plaintiffs' suits, and has issued an order barring Eagle from retaliating against employees who attempt to protect their rights under federal anti-discrimination laws. The existing class action lawsuit was filed by a team of law firms led by the Washington, D.C. office of Provost & Umphrey, one of the nation's most successful plaintiffs litigation firms. Provost & Umphrey served as counsel for the State of Texas in its litigation to recover billions of dollars from the tobacco industry. The firm also served as counsel in the largest series of cases ever brought under the Federal False Claims Act, resulting in the recovery of hundreds of millions of dollars in alleged unpaid oil royalties to the federal government. "The government's intervention in this litigation against Eagle is a signal that the issues before the Court are of national importance to a large number of employees," said Reuben A. Guttman, counsel for the plaintiffs in the case. The EEOC issued its own press release, which contained the following comments and statements: Jim Sacher, Regional Attorney of the EEOC's Houston District Office and lead counsel for the government in this matter, noted "This case is particularly appropriate for involvement by EEOC since the evidence indicates that Eagle's unlawful practices have affected scores of employees and applicants for employment across the country." Mr. Sacher further stated that "EEOC participation in this lawsuit will ensure that appropriate injunctive relief is fashioned to correct past discrimination and prevent future discriminatory conduct; through our intervention, we seek to represent the public interest and to enable victims of Eagle's discrimination to secure a just remedy for the unlawful employment practices to which they have been subjected." H. Joan Ehrlich, Director of the EEOC's Houston District Office, stated that "the EEOC will not tolerate discrimination in the workplace, particularly when the discrimination goes so far as to become corporate policy." Rudy L. Sustaita, Senior Trial Attorney at the EEOC's Houston District Office, stated that "it is unacceptable that Eagle for years has denied equal employment opportunities based on race, national origin, sex, and age." The EEOC enforces Title VII of the Civil Rights Act of 1964, as amended by Title I of the Civil Rights Act of 1991, which prohibits employment discrimination based on race, color, religion, sex, or national origin, and prohibits employers from retaliating against those who oppose the practices made illegal by Title VII. Additionally, the EEOC enforces the Age Discrimination in Employment Act; the Equal Pay Act; Title I of the Americans with Disabilities Act, which prohibits entities in the private sector and state and local governments from discriminating against individuals; and prohibitions against discrimination in the federal sector affecting individuals with disabilities. Further information about the Commission is available on the agency's Web site at http://www.eeoc.gov. The government's efforts have been coordinated by the EEOC's Houston Regional Attorney, Jim Sacher. He may be reached at 713-209-3398, 209-3390 or 209-3362. FIRST FAMILY: 11th Cir Finds Clause on Arbitration OK under TILA, ECOA ---------------------------------------------------------------------- Can consumers be required to sign away their rights to litigate claims arising under the Truth in Lending Act as a condition of obtaining a loan? The 11th U.S. Circuit Court of Appeals came one step closer to answering that question in the affirmative when it held that a lender's requirement that credit applicants sign arbitration agreements as part of the loan process does not violate Section 1691(a)(3) of the Equal Credit Opportunity Act. (Bowen v. First Family Financial Services Inc., No. 97-01279-CV-S-N (11th Cir. 11/22/00).) Loan Requirements Ozie Bowen and Ethel Ford separately obtained small consumer loans from First Family Financial Services Inc. In order to obtain the loans, First Family required them to sign arbitration agreements in which they consented to arbitrate "all claims and disputes" with the loan company, including "any claim or dispute based on federal or state statute." Bowen and Ford sued First Family, alleging that the TILA grants consumers a non-waivable right to obtain judicial, as distinguished from arbitral, redress of statutory violations, including the right to pursue class actions. The debtors argued First Family's requirement that they sign arbitration agreements violated the ECOA because it forced them to waive their right to litigate TILA claims in order to obtain credit. The debtors' complaint sought actual and statutory damages, as well as declaratory and injunctive relief. The court noted that, other than their challenge to the arbitration agreement requirement, the debtors did not claim that First Family violated a substantive provision of the ECOA, the TILA or any other provision of the Consumer Credit Protection Act. Right to Litigate The court began its analysis by noting that Section 1691(a)(3) of the ECOA makes it unlawful for a creditor to discriminate against any credit applicant who has "in good faith exercised any right" under the CCPA. The TILA is part of the CCPA, and it imposes disclosure obligations upon creditors and authorizes consumers to recover both actual and statutory damages when a creditor makes inaccurate or inadequate disclosures. The debtors argued that the TILA thus creates a "right to litigate," both individually and as a class, statutory claims for disclosure violations. The debtors further argued that First Family discriminated against them by requiring them to agree to arbitrate any claims arising under the CCPA, including any claims under the TILA. Congressional Intent The court disagreed, holding that "Congress did not create a non-waivable right to pursue TILA claims in a judicial forum, either individually or through a class action." The court rejected the debtor's contention that the legislative history of the TILA evinced an intent by Congress that claims initiated as class actions be exempt from binding arbitration, relying on the 3rd U.S. Circuit Court of Appeals' similar conclusion in Johnson v. West Suburban Bank, 225 F.3d 366 (3rd Cir. 2000) (see Consumer Financial Services Law Report, Sept. 15, 2000, p. 1). The court also rejected the debtors' contention that consumer arbitration agreements undermine a "critical statutory enforcement mechanism of the TILA." The court concluded that the debtors did not give up any rights or claims by signing the arbitration agreements, but "simply" agreed to move TILA claims, and all others, into an arbitral rather than a judicial forum. Discrimination Claims The court also disagreed with the debtors' claim that First Family discriminated against them for exercising their rights under the CCPA. The court emphasized that the debtors did not allege that they had objected to the arbitration agreement before signing the loan documents, or that they were refused a loan or offered unfavorable credit terms because of their objections. The court concluded that "in order to establish the discrimination element of a Section 1691(a)(3) claim, it may be necessary for the plaintiff to show either that the creditor refused to extend credit to the applicant or that it extended credit but on less favorable terms." Standing The debtors contended that, even if requiring applicants to sign arbitration clauses as a condition of credit was not a violation of the ECOA, the agreements they signed were unenforceable. The court found that, as the debtors had not shown a substantial likelihood that First Family would compel arbitration, they lacked standing to argue that the agreements were unenforceable. (Consumer Financial Services Law Report, December 26, 2000) FIRST FAMILY: Law Expert Says Ruling Renders Classwide Relief Difficult ----------------------------------------------------------------------- Arbitration law expert Alan S. Kaplinsky of Ballard, Spahr, Andrews & Ingersoll in Philadelphia stated that the recent 11th U.S. Circuit Court of Appeals' decision of Bowen v. First Family Financial Services Inc., No. 97-01279-CV-S-N (11th Cir. 11/22/00), "will make it more difficult for plaintiffs' lawyers to obtain classwide relief in a Truth-In-Lending claim against a lender that has adapted an arbitration program." The 11th Circuit held that a named-plaintiff in a Truth In Lending Act case can be compelled to arbitrate his individual claim even if the arbitration will not provide him with classwide relief. Kaplinsky observed that the 11th Circuit in Bowen joined the 3rd U.S. Circuit Court of Appeals in holding that a named-plaintiff in a TILA class action can be compelled to arbitrate his individual TILA claim. In Johnson v. West Suburban Bank, 225 F.3d 366 (3rd Cir. 2000), the 3rd Circuit ruled that a consumer can contract away his ability to pursue a class action and that a creditor can compel arbitration of claims under the TILA and the Electronic Funds Transfer Act (see Consumer Financial Services Law Reporter, Sept. 15, 2000, p. 1). After the 11th Circuit's holding, it is clear there is no "non-waivable right to litigate claims brought under TILA," Kaplinsky stated. The Bowen court recognized Kaplinsky's experience with consumer financial services arbitration agreements, citing in a footnote the May 2000 findings of Kaplinsky and Mark J. Levin that consumer financial services companies implemented arbitration programs with their customers at a record pace in 1999. Kaplinsky also noted that oral argument in Bowen took place more than one year ago, and observers speculated that the 11th Circuit was holding the case pending the Supreme Court's anticipated opinion in Randolph v. Green Tree Financial Corp. (Consumer Financial Services Law Report, December 26, 2000) FOUNDRY NETWORKS: Cauley Geller Announces Securities Suit in California ----------------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP announced on December 30 that it has filed a class action in the United States District Court for the Northern District of California on behalf of all individuals and institutional investors who purchased the common stock of Foundry Networks, Inc. (Nasdaq:FDRY) between October 18, 2000 and December 19, 2000, inclusive (the "Class Period"). The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by concealing and misrepresenting the problems it was experiencing due to the problems many of its customers were having raising money and the impact this was causing and would cause on Foundry's future revenue growth. The complaint alleges Foundry concealed this information so that the individual defendants could sell additional shares of their Foundry stock before the bottom fell out of Foundry's stock price. Thus, according to the complaint, defendants made positive but false statements about Foundry's business and future revenues during October and November 2000, artificially inflating the price of the Company's stock during the Class Period. On December 19, 2000, after the market closed, Foundry announced that in the fourth quarter 2000 it would post revenue and EPS declines from the prior quarter. The complaint alleges that this was directly contrary to what Foundry's CEO had told The Wall Street Transcript just weeks before. This disclosure shocked the market, causing Foundry's stock to decline significantly on December 20, 2000. Contact: Cauley Geller Bowman & Coates, LLP, Boca Raton Sue Null or Charlie Gastineau, 888/551-9944 INMATES LITIGATION: MI Lawsuit over Rights Drags on for 12 Years ---------------------------------------------------------------- Mail-order catalogues, postage stamps, gloves and old typewriters were key issues at the latest hearing in a 12-year prison lawsuit that has cost the state at least $1.5 million and is probably Michigan's longest-running court case. Up for debate this month: notary seals, ink pads and the broader question of whether some prisoners still should be permitted to act as notary publics behind bars. The Cain case, notorious for revealing the minutiae of prison life and raising the hackles of Gov. John Engler, enters a new phase this year. It may be in its final stage, after nearly 100 witnesses -- many of them prisoners -- and dozens of court orders from Judge James Giddings of Ingham County Circuit Court. "I don't want to still be doing this case at my retirement," said Assistant Atty. Gen. Peter Govorchin, who has been on the case since 1988. At the start, it was a dispute initiated by four lifers over property rights. But it soon grew into a broad class-action suit involving all 47,000 state inmates and the prison classification system -- the criteria by which the department shifts prisoners between levels of security. Corrections officials and Engler have accused Giddings of trying to micromanage the prison system by holding hearings on nitpicky issues. They have been accused of stomping on human rights, ignoring court orders and continuing to supply shoddy clothes. "The question here is 'who's going to have control over Michigan prisons: Is it going to be the Department of Corrections or Judge Giddings?'" said Corrections Department spokesman Matt Davis. "He has shown, through his rulings, a greater deference for the concerns of prisoners than for Michigan taxpayers." Giddings said he can't discuss pending matters, but bristles at the criticism. He cited his 1998 finding that the brown jersey gloves being provided to prisoners were inadequate. "They can't put inmates out in the cold without adequate gloves," he said. "One guy got a terrible case of frostbite on his hands. The law requires a certain base level of human decency. True, they're prisoners, but the Corrections Department isn't above the Constitution." In fact, the judge's biggest rulings have backed the government. Prison officials can control how much property inmates are allowed to keep and what they wear, he decided. After those rulings, officials removed tons of personal gear from cells and put all inmates in striped uniforms. Most had been allowed to wear their own clothing. A mid-December hearing showed why law-abiding Michiganians have no reason to envy the regimented lives of those behind bars. Things taken for granted on the outside had inflated again into issues hashed out in court. What's Next The long Cain prisoner rights case against the Michigan Department of Corrections could end this summer after 12 years of court battles. Pending this month is a hearing regarding a new law that prohibits prisoners from acting as notary publics. Then there will be a series of hearings on other matters related to the two remaining major issues: how prisoners are classified and how much the state can restrict prisoner access to legal resources. (The Detroit News, January 1, 2001) LAIDLAW, INC: Kirby McInerney Announces Securities Lawsuit in New York ---------------------------------------------------------------------- On December 29 by Kirby McInerney & Squire LLP announced Class Action Lawsuit on Behalf of All Persons Who Purchased Call Options or Sold Put Options With Respect to Laidlaw, Inc. Bonds: Please take notice that the law firm of Kirby McInerney & Squire, LLP has commenced a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons who purchased call options or sold put options or other similar securities exercisable for the bonds of Laidlaw, Inc. (NYSE: LDW, TSE: LDM) or the cash value thereof, at any given time, during the period September 24, 1997 through and including May 12, 2000 (the "Class Period"). The complaint charges defendants Laidlaw, Inc. and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Also named as defendants in the action are the Company's independent auditors during the Class Period, as well as several underwriters of bond offerings. The lawsuit seeks to recover losses suffered by individual and institutional investors who purchased Laidlaw bonds during the class period, excluding the defendants and their affiliates. Contact: Kirby McInerney & Squire, LLP Peter S. Linden, Esq. Richard L. Stone, Esq. Mark A. Strauss, Esq. Shan Anwar, Paralegal 212/317-2300 or 888/529-4787 sanwar@kmslaw.com LINCOLN LIFE: Settles with Benefits and Claim Process to Policyholders ---------------------------------------------------------------------- Lincoln National Corporation (NYSE:LNC), the parent company of the Lincoln Financial Group of companies, announced on December 29 that its subsidiary, Lincoln National Life Insurance Company (Lincoln Life), has entered into an agreement to settle a class action lawsuit, which was previously reported in the CAR, and, in a separate matter, has received payment for an amendment to a prior acquisition agreement. Fourth quarter earnings will include a charge of $28.3 million after-tax related to the settlement of the class action lawsuit and income of $28 million after-tax for amending a prior acquisition agreement. These two separate and unusual transactions will virtually offset each other in fourth quarter earnings. Lincoln Life has entered into an agreement to settle a pending class action lawsuit by providing benefits and a claim process to policyholders who purchased universal life and participating whole life insurance policies between Jan. 1, 1981 and Dec. 31, 1998. The settlement covers approximately 431,000 policies. The settlement, which is subject to court approval, includes all universal life class action suits pending against Lincoln Life. Lincoln National Corporation operates under the marketing name of Lincoln Financial Group, with headquarters in Philadelphia. Lincoln Financial Group has consolidated assets of over $103 billion and annual consolidated revenues of $ 6.8 billion. MCKESSON HBOC: 9th Cir Rejects Law Firm's Appeals on Shareholder Contact ------------------------------------------------------------------------ The U.S. Court of Appeals for the Ninth Circuit has dismissed the appeals of Much Shelist Freed Denenberg Ament & Rubenstein regarding the law firm's solicitation of shareholders in the securities fraud class action against McKesson HBOC Inc. The court ruled that the orders issued by the Northern District of California restricting the contact are not appealable injunctions or reviewable under the collateral-order doctrine. In re McKesson HBOC Inc. Securities Litigation, Nos. 00-16142, 00-16495 and 00-16535 (9th Cir., Sept. 18, 2000). In the suit, HBOC is accused of improperly recognizing revenue for three years, prior to being acquired by McKesson. In 1999, the district court consolidated 53 complaints against the merged entity and appointed the New York State Pension Fund Group as lead plaintiff. The court also approved Bernstein Litowitz Berger & Grossmann and Barrack Rodos & Bacine as lead counsel. Thereafter, Much Shelist contacted shareholders to see if they wanted to opt out of the class, which had not been certified, and file individual suits challenging the allegedly false proxy statements endorsing the McKesson/HBOC merger. The retirement fund opposed the mailing, asserting that it was misleading and counter to the purposes of the Private Securities Litigation Reform Act regarding who should control securities litigation -- the shareholders or plaintiff attorneys. In May, the district court ordered Much Shelist to refrain from any further "potentially misleading" com munications with the class and authorized the lead plaintiff to issue a curative notice regarding class membership. Much Shelist appealed the court orders arguing, among other things, that their clients would be irreparably harmed if review was not granted and that its First Amendment rights had been violated. The pension fund countered that the orders were not appealable because Much Shelist is not a party to the action and that the orders do not grant any of the substantive relief sought in the complaint. Moreover, the fund asserted that numerous federal appellate courts have held that order regulating class communications are not sufficiently important to be reviewed prior to final judgment. "This is not a sufficiently important issue to warrant immediate review, and granting review of such a determination would unnecessarily entangle this court in the minute details of the litigation below," said the fund. The circuit court agreed, holding that it lacks jurisdic tion over the appeals as they "relate only to the conduct or progress of litigation before the district court." (Corporate Officers and Directors Liability Litigation Reporter, November 6, 2000) NATIONAL TREASURY: Union and DOJ Progress in Special Rates Payment Talk ----------------------------------------------------------------------- The National Treasury Employees Union and the Justice Department have "finally" made progress in seeking an agreement on how to pay current and former "special rate" employees the millions of dollars in back pay owed them. But while "some encouragement can be taken" from discussions, "there still are a lot of outstanding issues," said NTEU President Colleen M. Kelley, following a status conference before U.S. District Court Judge John Garrett Penn. Kelley said she hoped that government lawyers would "continue in the same spirit" as negotiations proceed. Penn, who set another status conference for Dec. 18, ordered the Dec. 7 session in October when NTEU and government lawyers appeared before him to move the long-running case to conclusion. The class action suit covering some 188,000 special rate employees dates back to 1983 when NTEU challenged an Office of Personnel Management regulation blocking annual salary increases for such employees. In January 1998, the federal court determined that special rate employees - those paid a special wage to work in hard-to-fill jobs - were denied salary increases in the 1980s due to an illegal OPM regulation. The U.S. Court of Appeals for the Federal Circuit determined that affected employees were owed back pay, but remanded the case back to district court to determine the proper award. (Federal Human Resources Week, December 26, 2000) NETWORK ASSOCIATES: Milberg Weiss Files Securities Lawsuit in California ------------------------------------------------------------------------ Milberg Weiss (http://www.milberg.com/network/)announced on December 29 that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of Network Associates Inc. (NASDAQ:NETA) common stock during the period between July 19, 2000 and Dec. 26, 2000 (the "Class Period"). Network Associates is a supplier of security and availability solutions for e-businesses. The complaint alleges that Network Associates relied heavily on its distributors to purchase and resell its product to end users. Many of these distributors would not agree to accept new shipments and by the beginning of the Class Period, Network Associates' distributors were "returning" tens of millions of dollars worth of the company's product. Defendants knew this was then having a dramatic adverse impact upon, and would continue to severely impair Network Associates' future revenue growth. However, defendants wanted to spin off their Japanese subsidiary before the bottom fell out of Network Associates' stock price. Thus, defendants continued to make positive but false statements about Network Associates' current business and future prospects throughout the second half of 2000. As a result, Network Associates' stock traded as high as $27. On Dec. 26, 2000, after consulting with the company's auditors, Price Waterhouse Coopers LLP, defendants were forced to announce that for the fourth quarter 2000, Network Associates would post significant revenue and earnings per share losses and would change the way the company accounted for its sales to distributors. Network Associates also revealed that its Board of Directors had made arrangements to replace its Chairman and Chief Executive Officer in mid-November and that it had also accepted the resignations of its Chief Financial Officer and President. This was directly contrary to what Network Associates' CEO had told analysts and shareholders just weeks before. This disclosure shocked the market, causing Network Associates stock to decline to as low as $3.25 per share before closing at $4.50 per share on Dec. 27, 2000, on record volume of more than 25 million shares, wiping out hundreds of millions of dollars of shareholder value. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com NETWORK ASSOCIATES: Rabin & Peckel Announces Securities Suit in CA ------------------------------------------------------------------ The law firm Rabin & Peckel LLP announces that a class action complaint has been filed in the United States District Court for the Northern District of California on behalf of all persons or entities who purchased Network Associates, Inc. common stock (Nasdaq: NETA) between July 19, 2000 and December 26, 2000, inclusive (the "Class Period"). The Complaint alleges that Network Associates and certain of its officers and directors violated the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning the Company's financial results during the Class Period. In particular, it is alleged that during the Class Period the Company failed to disclose that it was experiencing significant product returns from its distributors. Instead it made positive, but false, statements about the Company's business and future financial results during the Class Period. The Complaint alleges that as a result of these false and misleading statements the price of Network Associates common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. Contact: RABIN & PECKEL LLP Elana M. Bourkoff (800) 497-8076 (212) 682-1818 Fax: (212) 682-1892 email@rabinlaw.com NY CITY: Addict's Suit Claims Police Ignore Needle-Swap Law ----------------------------------------------------------- James Roe, as he is identified in his lawsuit against New York City, was 21, homeless and a heroin addict when he was searched and arrested in the West Village on a spring afternoon in 1999. He was carrying a syringe from a needle-exchange program on the Lower East Side. He said he was also carrying a card showing that he was enrolled in the program, in a storefront on Avenue C, and could lawfully carry syringes he picked up there. But the card was of no help. When he was released the next morning, "I was starting to sweat and shake because I was way past my last fix." He left with two cigarettes and a court summons on a charge of criminal possession of a hypodermic instrument. And the card that was supposed to protect him was gone, he said: the officer he gave it to had cut it up. New York, like many states, carved an exception to its drug paraphernalia laws when it became clear in the early 1990's that needle sharing was spreading H.I.V. and hepatitis. But the suit against New York City, and a similar case in Connecticut, contend that the exception is often ignored, innocently or willfully, by officers on the street. "They get a kick out of it," the New York plaintiff said in a telephone interview from New Jersey, where he now lives. "They say, 'You stupid junkie.' I know I'm stupid for shooting dope, but they just like to watch you get sick." The district attorney's office declined to prosecute, but the man is seeking damages for his arrest. In his suit, filed in Federal District Court in Manhattan, he remains anonymous, with the agreement of the corporation counsel's office and the court, and he agreed to speak for publication only on the condition that his name not be used. His lawyer, Corinne Carey of the Urban Justice Center, a Manhattan organization that provides legal services to the poor, said he would be in danger from users and dealers if he were identified. His story and those of two addicts in Bridgeport, Conn., all disputed by the police, are simple allegations of unconstitutional search and seizure. But in effect they ask for a resolution of disparate policies on public health and law enforcement. "These two cases are going to be a real litmus test of how this country is going to deal with the whole question," said Scott Burris, a law professor at Temple University. "It doesn't make sense for the state to decide we have a policy of encouraging needle exchanges and a policy of arresting people who have needles." The people who run needle exchanges hope that litigation will stop arrests of the people who use them. Even more, they hope that court intervention will quiet addicts' fears of using the exchanges, because the consequences of one shared needle can be staggering. As one heroin addict in California told interviewers for an academic study, "I would rather get AIDS than go to jail." In Connecticut, possession of a syringe is legal, but a class action suit in Federal District Court there maintains that the police harass people who use the Bridgeport Exchange Program, sometimes charging them with drug possession on the basis of residue in their used syringes. In November, a judge in Federal District Court issued a temporary order barring arrests of exchange participants carrying dirty needles. Some medical and legal experts do not support needle exchanges at all, and dispute the broader strategy known as harm reduction, which encourages addicts who will not quit to adopt the safest practices possible. In a few states, including New Jersey, needle exchanges remain illegal. And even some of those people who run exchanges, most of them patched together by social service agencies using anything from shopping carts to storefronts, do not welcome a lawsuit that could bring a backlash against their tenuous legitimacy. Their cause has inched forward as exchanges have been shown to reduce the incidence of H.I.V. infection by about a third among drug users. "We've seen the proliferation of needle-exchange programs to areas even like the Deep South in church basements where church members are handing out needles," said Daniel Abrahamson, the legal director of the Lindesmith Center, a national drug policy organization. And as the new year starts, New York becomes the eighth state -- Connecticut was the first -- to allow over-the-counter sales of syringes in pharmacies. But not everyone will go to pharmacies, although they charge only 20 to 30 cents for a syringe -- the street price can easily be 10 times higher -- or to needle exchanges. In Connecticut, many addicts continue to avoid both, for fear of raising police suspicion and being caught with a dirty needle. Donald Grove, the development director of the Harm Reduction Coalition, an umbrella group of drug treatment providers that is based in New York, said addicts "may be extremely wary of carrying the syringe they need if they've already been busted." He said that when he started working in "this weird realm" in 1994, "I talked to a lot of cops, and they said if they want to bust a person they're going to bust them whether they have a card or not." Mr. Grove started collecting reports from needle-exchange participants who had been arrested and charged under the drug paraphernalia laws, and he faxed more than 100 reports to the city health commissioner. Soon afterward, police officials issued a directive that participants in the city's nine state-authorized exchanges not be charged for possessing a syringe, even when other charges are brought. But like most advocates for drug users, Mr. Grove maintains that harassment continues. And Ms. Carey, the lawyer in the New York lawsuit, said that in a brief survey she did at the Lower East Side Harm Reduction Center, where her client got his needles, 15 of the 23 people questioned said they had been stopped by the police in the previous year. Of the 15, Ms. Carey said, 8 said their cards were not honored and 4 were jailed. Advocates for needle exchanges allow that officers are usually looking not for syringes, but for charges that will stick. Ms. Carey's client, too, said usually "they see your card and tell you to get on your way." Drew D. Kramer, the executive director of the Lower East Side center, likened addict and officer to Ralph Wolf and Sam Sheepdog, the cartoon characters who punched in every morning, exchanged genial greetings and then clobbered each other until quitting time. "We've had cops bring people to our door and say, 'Do something with him,' " Mr. Kramer said. The arrests "come in waves," he said. "The police will come up with some crackdown and our folks get swept up in the nets." Police officials did not respond to questions about department policies on drug arrests. But Ralph Smith, a Police Department spokesman, said a person found with a syringe would be held "pending an investigation to find out why the person has a needle." And he said that presenting a card -- "you can get an ID card from anywhere" -- would not necessarily suffice. Since New York prohibits only "unlawful" possession of a syringe, people who buy needles at pharmacies registered to sell them under the new law will be protected just as needle-exchange participants have been since 1992. But it is not clear whether they will have to show, if questioned, that a syringe in their possession came from an authorized source. As the plaintiff in the New York suit describes his arrest, he was stopped on West 10th Street near the West Side Highway while the police had staked out the area for crack sales. He said he was carrying one used syringe but no drugs. He said that he showed his needle exchange card but that the officers who took him to the Sixth Precinct station house did not call the number on the card. At the station, he said, another officer cut up the card with scissors. He received a court summons listing charges of drug possession and possession of a hypodermic instrument. Both charges were later dropped. The corporation counsel's office has not filed its response to the suit, but a spokeswoman, Lorna Goodman, said, "He was arrested because he was shooting up heroin on the street." Ms. Goodman also said he never showed a card. She said her office could not provide the arrest report written that night. A police spokesman said it would take several weeks to obtain a copy of the report. Ms. Carey said her client would never inject on the street; because he "passes well," unlike many addicts, she said, he was able to go into restaurants and inject himself in the bathroom. And in the interview, he explained, "I don't use dope outside because I don't want to get caught." (The New York Times, January 1, 2001) PROVIDIAN FINANCIAL: Agrees to Settle Lawsuits over Marketing Practices ----------------------------------------------------------------------- Providian Financial Corp. has agreed to pay $105 million and take a $22 million fourth-quarter charge to settle a series of consumer class-action lawsuits that alleged "unlawful business practices" in its marketing and sales procedures. Subject to court approval, the proposed settlement covers dozens of consumer lawsuits that have been filed against the San Francisco credit provider since the middle of 1999. Those suits have been consolidated into two pieces of litigation, one filed in California Superior Court in San Francisco and the other in U.S. District Court in Philadelphia. Providian didn't admit any wrongdoing in the settlement plan, which came out of nine months Of mediation discussions. A spokesman for Providian said that since last year, Providian has examined all of its marketing pitches and created service initiatives that have substantially boosted customer retention and satisfaction rates. The suits alleged that Providian violated consumer protection and other laws in the marketing and sale of add-on products to its credit cards, including credit protection and credit-line increases. Robert Green, an attorney for the customers bringing the suits, said the suits alleged, among other things, that consumers were confused by Providian's "aggressive" sales pitches about so-called price-protection products like movie coupons. Providian could charge such products to an account under a "satisfaction guaranteed" plan, leaving customers responsible for returning unwanted items that they weren't sure they had purchased, he said. Under the proposed settlement, more than three million customers could be eligible for reimbursements, Mr. Green said. The $105 million would cover attorneys' fees as well as customer restitution in cash and "in-kind payments." This isn't the first time Providian has offered to reimburse customers to settle disputes about allegedly problematic marketing practices. As previously reported in the CAR, in June, the company agreed to repay consumers at least $300 million to settle both a lawsuit filed by San Francisco and an administrative enforcement action taken by the Office of the Comptroller of the Currency. At the time, it was The largest settlement ever in an OCC enforcement action. Providian said the $22 million fourth-quarter charge should subtract about seven cents a share from earnings. Despite the charge, the company said it expects to earn 71 cents to 73 cents a share in its fourth quarter, matching previous guidance. (Dow Jones, December 29, 2000) PUBLIX SUPER: Settles Employment Race Bias Suit Filed 1977 in Florida --------------------------------------------------------------------- Publix Super Markets Inc. and the attorneys representing the Plaintiffs has filed a proposed settlement of a class-action race discrimination case and sought preliminary approval from the U.S. District Court in Tampa, Fla. The lawsuit, known as the Middleton case, was filed against the company in 1997. The agreement calls for Publix to continue its 1997 Registration of Interest (ROI) program, whereby associates register interest for promotions and candidates are selected based on their qualifications. Publix will continue its system of goals for promotions into management positions. Due to the ROI program and the goals system, today 8.4% of Publix's retail management is black, which represents a 31% increase since 1997. The company will also be expanding its current process for reviewing discharge decisions to ensure they are fair and in accordance with company policy. Publix CEO and Chairman Howard Jenkins said: "The decision to discharge an associate is based on our rules of unacceptable conduct. Our goal has always been to ensure fairness and dignity in dealing with these difficult decisions. Under the agreement, we will formalize and improve how we review associate discharges." Under the agreement, $2.25 million will be paid for promotion claims and $ 5.45 million for discharge claims dating back to 1993.$2.4 million will be paid to the Plaintiffs' lawyers. Publix estimates that approximately 15,000 of its current and former black retail associates could be eligible to participate in the monetary distribution. Publix is the largest employee-owned supermarket chain in the country, with 1999 sales of $13.1 billion. Currently Publix has 646 stores in Florida, Georgia, South Carolina and Alabama. It has been named one of America's top 10 places to work in the book, "The 100 Best Companies to Work for in America," as well as one of the top companies in Fortune's recent list of best workplaces. SYNTHETIC STUCCO: Federal Judge allows NC Homeowners’ Suit against Maker ------------------------------------------------------------------------ North Carolina homeowners may proceed with a class-action lawsuit against a manufacturer of a synthetic stucco product, a federal judge has ruled. Senior U.S. District Judge W. Earl Britt certified the class this month for owners of an estimated 300 to 500 homes across the state who claim the exterior material traps water inside the walls, rotting wood structures. "It's not a victory, but clearly it's a significant step toward victory for these people," said Raleigh lawyer Gary Jackson, who represents the homeowners. Synthetic stucco first surfaced as a widespread problem in 1996 in New Hanover County, where the first class-action lawsuit was filed in the state court system. The federal lawsuit involves a different type of stucco product than the class-action lawsuit filed in state court, which was settled in January, allowing homeowners to receive $6 per square foot of damaged exterior, as previously reported in the CAR. Lawyers estimated the five major synthetic stucco manufacturers that were defendants in the state lawsuit would pay tens of millions of dollars under the settlement agreement. The manufacturers didn't admit liability and blamed the problems on building contractors. The state court suit involved a stucco application process called "exterior insulation finish system," where the stucco is applied to an insulation material and then affixed to the house. More than 15,000 homes were treated with EIFS in North Carolina. In the federal lawsuit, the stucco application is called "direct exterior finish system," and the stucco is applied directly to the wood sheathing of a house. Jackson said the federal lawsuit helps those homeowners who believed they could file claims in the statewide EIFS lawsuit but were rejected because they actually had DEFS on their homes. The federal lawsuit was filed against Dryvit Systems Inc., a Rhode Island company. (The Associated Press State & Local Wire, December 29, 2000) TOBACCO LITIGATION: R.J. Reynolds Wins FL Trial and Defeats Cert. in PA ----------------------------------------------------------------------- R.J. Reynolds Tobacco Holdings Inc. won a new trial in a case that had brought a $ 200,000 judgment against the company in favor of the family of a deceased Tampa smoker. The cigarette maker also defeated Pennsylvania smokers' bid for class-action status in a separate case. Florida state Judge Ralph Steinberg on Thursday threw out the $ 200,000 in compensatory damages the family of Suzanne Jones had been awarded in his courtroom in October. The jury had declined to award punitive damages to the family of the 62-year-old mother of one. In his order, Steinberg said he erred in allowing the jury to see several depositions, including one from Bennett LeBow, the head of Liggett Group Inc.'s parent company. LeBow became an industry pariah in 1996 when his company became the first cigarette maker to settle a health-related lawsuit. "The publication of these depositions to the jury appeared to be contrary to due process and fairness to both the defendants and the deponents," Steinberg wrote. The depositions had been taken for a different tobacco case, Steinberg said. On Oct. 26, Florida's Supreme Court ruled that a legislative amendment allowing the depositions to be admitted was unconstitutional. If Steinberg had known it was under consideration by the high court, "the deposition testimony would not have been admitted in evidence," he wrote. R.J. Reynolds said it was optimistic about the new trial and was "gratified" with the decision. Separately, R.J. Reynolds said a Pennsylvania court has declined to grant class-action status to a lawsuit that had sought to represent all Pennsylvanians who purchased light or ultra-light cigarettes. The suit claimed the company misrepresented the health risks of smoking those types of cigarettes. The court said a class action would not be feasible since it would need to look at the individual claims as to why consumers chose to smoke the light or ultra-light cigarettes, R.J. Reynolds said. The six jurors in the Jones case, who deliberated for about a day, decided the company was negligent in making a dangerous product that caused her death. Jones, who suffered from lung and colon cancer, smoked for about 42 years. The case in Steinberg's Hillsborough County courtroom was the first tobacco trial in Florida since a Miami jury in July assessed $ 145 billion in punitive damages against the industry in a class-action lawsuit on behalf of hundreds of thousands of smokers in the state. (Los Angeles Times, December 29, 2000) TOBACCO LITIGATION: Spaniards Who Lost Voices to Cancer Set for Suits --------------------------------------------------------------------- Spaniards who lost their voices to throat cancer after years of smoking plan a series of class-action lawsuits against tobacco companies, including the Spanish affiliates of U.S. giants R.J. Reynolds and Philip Morris, attorneys and activists said Friday. Starting Wednesday, associations representing 4,300 cancer patients will file separate suits in 14 Spanish cities in a bid to win damages totaling about $22 million. That's a minuscule fraction of the $145 billion that Florida smokers were awarded in July in a landmark ruling against major U.S. cigarette makers, including R.J. Reynolds and Philip Morris. The Spaniards want compensation for a very specific purpose: To fund rehabilitation centers where cancer victims whose larynxes were removed can receive psychological counseling and learn to speak again. ''We are not interested in money. What we want are services,'' said Jose Angel Manoso, a lawyer for 650 plaintiffs in Barcelona. His clients are seeking a lump-sum payment of $2.8 million to leave the tiny rehab center they rent in Spain's second largest city and buy a more spacious place of their own, $165,000 a year to run it. Manoso said he and attorneys for a similar association in the northern city of Leon will file suit Wednesday. The other 12 groups will do so by the end of January, once the government formally grants them status as nonprofit groups, which means if they lose their suits they don't have to pay court costs. That's important because these suits will probably take years to decide, Manoso said. The defendants will be the same each time: The Spanish branches of Reynolds, Philip Morris and British American Tobacco, plus the Franco-Spanish tobacco company Altadis, Cita Tobacos de Canarias and another Spanish firm called Logista. Gumersindo Rodriguez, president of the Leon association, said groups like his are essential because Spaniards who undergo laryngectomies surgical removal of the larynx or voice box get absolutely no postoperative aid from the government. ''The state health care system carries out the operation, then leaves you there to rot,'' he said. They must learn a new way of breathing, through a hole in the neck called a stoma, which also allows speech techniques that don't involve the vocal chords. (AP Online, December 29, 2000) * Law Report Suggests Five Factors to Determine Fairness of Settlement ---------------------------------------------------------------------- To determine whether the proposed class action settlement was fair, adequate and reasonable under the circumstances, Judge Jay C. Waldman considered the following five factors in Hall v. Midland Group and Midfirst Bank, No. 99-3108 (E.D. Pa. 11/20/00): * The complexity, expense and duration of the litigation. * The reaction of the class. * The extent of discovery and the stage of the proceedings. * The risk of liability. * The risk of establishing damages. (Consumer Financial Services Law Report, December 26, 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 * * *