/raid1/www/Hosts/bankrupt/CAR_Public/010117.MBX
C L A S S A C T I O N R E P O R T E R
Wednesday, January 17, 2001, Vol. 3, No. 12
Headlines
BEAR, STEARNS: Investors Fail to Establish Broker's Primary Liability
CLASSIC RESIDENCE: Ordinance Does Not Apply to Senior Citizens Dwellings
COVAD COMMUNICATIONS: CA Ct Denies Shareholders Writ of Attachment
COVAD COMMUNICATIONS: Former Employees Claim Wrongful Termination
ECONOMY CLASS SYNDROME: Los Angeles Times Suggest Reducing Rows of Seats
HOLOCAUST VICTIMS: Bill Passed By Polish Parliament Faces Opposition
HOLOCAUST VICTIMS: Panel Defends Not Returning Assets To Victims
INGENUUS CORPORATION: Reaches Settlement Agreements in Securities Suits
PROPERTY FORFEITURES: NJ Thunderbird Suit Is Seen As Test For Legality
QUESTAR MARKET: Lessors Sue Alleging Mismeasurement of Natural Gas
QUESTAR MARKET: OK Lawsuit over Royalties Voluntarily Dismissed
QUESTAR MARKET: TX Ct OKs Settlement of Lawsuit over Oil Royalties
SANDOVAL: CNN Coverage on Supreme Ct Case on English-Only Drivers' Tests
SANDOVAL: Lawyers Urge Sp Ct to Focus on Right to Sue in Anti-Bias Case
SCHLOTZSKY'S, INC: Dist. Ct Dismisses Securities Suit; 5th Cir Remands
VIVENDI UNIVERSAL: CA Securities Lawsuits Consolidated
VIVENDI UNIVERSAL: CAPR’s Puerto Rico Plant Target of Suits outside U.S.
VIVENDI UNIVERSAL: Shareholders’ Voting Rights Subject of Paris Suit
WATER CONTAMINATION: Walkerton E.Coli Rumored Days Before Warning
* Survey Says Mississippians Think Class Action Is Useful But Is Abused
*********
BEAR, STEARNS: Investors Fail to Establish Broker's Primary Liability
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Investors sued brokerage houses for damages allegedly suffered when
purchasers bought over 50 different stocks through 13 different brokerage
houses for whom defendant Bear Stearns & Co. Inc. served as the clearing
broker. Plaintiffs alleged that these brokerage houses, or "introducing
brokers," manipulated the price of the stocks at issue and that Bear
Stearns was a knowing participant in these manipulations. Defendants
moved, among other things, to dismiss the complaint on the ground that it
does not state a cause of action. The instant court dismissed the claims
against Bear Stearns for manipulation under @ 10(b), finding that
plaintiffs' allegations do not establish Bear Stearns' primary liability.
The court noted that the complaint fails to allege that Bear Stearns did
anything other than act in its capacity as a clearing broker.
Judge Martin
GOLDBERGER v. BEAR, STEARNS & CO., INC. QDS:02763352 Plaintiffs bring
this class action complaint against Bear, Stearns & Co., Inc., its
subsidiary Bear Stearns Securities Corp., and one of its former officers,
Richard Harriton, (collectively referred to herein as "Bear Stearns")
seeking to recover damages allegedly suffered by the purchasers of over
fifty different stocks that were purchased through thirteen different
brokerage houses for whom Bear Stearns served as the clearing broker. The
gravamen of the complaint is that these brokerage houses, referred to in
the complaint as "introducing brokers," manipulated the price of the
stocks at issue and that Bear Stearns was a knowing participant in these
manipulations.
The complaint also alleges that Bear Stearns similarly participated in
the manipulation of twenty-eight other stocks by two other introducing
brokers for whom Bear Stearns also served as clearing broker. Because
these transactions are already the subject of earlier-filed class action
complaints, Plaintiffs do not assert any claims against Bear Stearns with
respect to the manipulation of these securities. Rather, Plaintiffs argue
that these allegations are relevant on the issue of Bear Stearns'
scienter.
Although the complaint seeks to assert claims on behalf of investors who
purchased through thirteen different introducing brokers, the named
plaintiffs did not purchase through seven of those brokers, nor did they
purchase any of the stocks allegedly manipulated by those brokers. Of the
over eighty stocks referred to in the complaint as having been
manipulated, the named plaintiffs purchased only twenty-four. In
addition, there is a prior pending class action in the Eastern District
of New York against one of the introducing brokers, Sterling Foster & Co.
("Sterling Foster"), through whom named plaintiffs purchased six
allegedly manipulated securities. Subsequent to the filing of this
complaint, Bear Stearns was added as a defendant in that action.
The defendants move to dismiss the entire complaint on the ground that it
does not state a cause of action and also to dismiss or stay the claims
relating to Sterling Foster in favor of the pending action in the Eastern
District.
Discussion
As the above description of the complaint demonstrates, the named
plaintiffs purchased allegedly manipulated securities through only six of
the fifteen introducing brokers referred to in the complaint. n1 In
ruling on the motion to dismiss, the Court must focus on the allegations
concerning Bear Stearns' relationship with the introducing brokers
through whom the named plaintiffs purchased the allegedly manipulated
securities. In order to maintain a class action, Plaintiffs must first
establish that they have a valid claim with respect to the shares that
they purchased. If the named plaintiffs have no cause of action in their
own right, their complaint must be dismissed, even though the facts set
forth in the complaint may show that others might have a valid claim. See
Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 40 n.20, 96
S. Ct. 1917, 1925 n.20 (1976); Warth v. Seldin, 422 U.S. 490, 497-502, 95
S. Ct. 2197, 2205-07 (1975).
n1 There is a serious question whether plaintiffs who purchased
manipulated securities through one brokerage house can represent a class
of plaintiffs who purchased different securities through different
introducing brokers. However, that question is not presently before the
Court because Plaintiffs have not moved for class certification.
A. Claims Relating to Sterling Foster
As noted above, there is a class action presently pending in the Eastern
District of New York against Bear Stearns that involves claims identical
to those asserted here by customers of Sterling Foster. Because that
action was filed before this one, the defendants claim that the present
action should be dismissed or stayed under the first-filed rule.
Plaintiffs contend, however, that as to Bear Stearns this action is the
first-filed one because Bear Stearns was not named as a defendant in the
Eastern District action until after this case was filed.
The principles to be applied in determining which of two identical cases
should be given priority were set forth by the Second Circuit Court of
Appeals in Gluckin & Co. v. International Playtext Corp., 407 F.2d 177
(2d Cir. 1969):
The general rule in this Circuit is that, as a principle of sound
judicial administration, the first suit should have priority, "absent the
showing of balance of convenience in favor of the second action," or
unless there are special circumstances which justify giving priority to
the second. In deciding between competing jurisdictions, it has often
been stated that the balancing of convenience should be left to the sound
discretion of the district courts.
Id. at 178 (citations omitted).
The first-filed rule is not to be applied mechanically, however. The
Court must concern itself with the special circumstances that may
accompany competing lawsuits filed in different districts. See Riviera
Trading Corp. v. Oakley, Inc., 944 F. Supp. 1150, 1158 (S.D.N.Y. 1996).
The factors to be considered include a regard to "conservation of
judicial resources and comprehensive disposition of litigation." Computer
Assocs. Int'l v. Altai, Inc., 893 F.2d 26, 29 (2d Cir. 1990).
Whether one considers this action or the Eastern District action as the
"first filed," a due regard for the "conservation of judicial resources
and comprehensive disposition of litigation" compel the conclusion that
the case against Bear Stearns by the customers of Sterling Forster should
go forward in the Eastern District. There is no reason to have two cases
involving the manipulation of securities by Sterling Foster going forward
in two districts and no basis for this Court to enjoin the proceedings in
the Eastern District. Judicial economy would not be served by having the
same facts litigated in two federal courts less than five miles apart.
Therefore, in the exercise of its discretion, this Court will dismiss the
claims asserted against Bear Stearns relating to the securities purchased
by the named plaintiffs through Sterling Foster.
B. Claims of Purchasers from the Remaining Introducing Brokers
Because the allegations concerning Bear Stearns' relationship with
Sterling Foster will be dismissed, there remain only five introducing
brokers through whom the named plaintiffs purchased the allegedly
manipulated securities (referred to herein collectively as "the
Introducing Brokers"). n2 The allegations concerning Bear Stearns'
relationship with the Introducing Brokers do not establish liability on
Bear Stearns' part for any manipulation of which they may have been
guilty.
n2 These Introducing Brokers are: First Cambridge Securities Corp.;
Hillcrest Financial Corp.; Josepthal, Lyon & Ross, Inc.; Kensington Wells
Inc.; and Meyers Pollock Robbins, Inc.
In order to state a cause of action for securities manipulation under @
10(b), Plaintiffs must allege that: (1) they were injured; (2) in
connection with the purchase or sale of securities; (3) by relying on a
market for securities; (4) controlled or artificially affected by the
defendant's deceptive or manipulative conduct; and (5) the defendants
engaged in the manipulative conduct with scienter. Ernst & Ernst v.
Hochfelder, 425 U.S. 185, 199, 96 S.Ct. 1375, 1383-84 (1976).
In Central Bank v. First Interstate Bank, 511 U.S. 164, 190- 91, 114 S.
Ct. 1439, 1455 (1994), the Supreme Court held that secondary liability
for "aiding and abetting" is not a basis for a @ 10(b) claim. In Shapiro
v. Cantor, 123 F.3d 717, 721-22 (2d Cir. 1997), the Second Circuit
extended that holding to bar claims for "conspiracy" under @ 10(b). Thus,
in order to state a claim against Bear Stearns, the complaint must allege
that Bear Stearns itself engaged in manipulative conduct.
Here, Plaintiffs' allegations might support a conspiracy or aiding and
abetting claim against Bear Stearns, but they do not establish the
primary liability of Bear Stearns which is necessary to support a @ 10(b)
claim. In this regard, the two opinions of Judge Sweet in the class
action pending against Bear Stearns with respect to securities allegedly
manipulated by D. Blech & Co. are instructive in determining the type of
conduct by a clearing broker that crosses the line between secondary and
primary liability under @ 10(b). See In re Blech Securities Litigation
(Blech I), 928 F.Supp. 1279 (S.D.N.Y. 1996); In re Blech Securities
Litigation (Blech II), 961 F. Supp. 569 (S.D.N.Y. 1997).
In Blech I, Judge Sweet dismissed a claim of manipulation against Bear
Stearns on the ground that its activity as clearing broker, standing
alone, was not a ground for liability under @ 10(b). Blech I, 928 F.
Supp. at 1295-96. However, in Blech II, Judge Sweet sustained the
viability of the claims because:
[The] Complaint crosses the line dividing secondary liability from
primary liability when it claims that Bear Stearns "directed" or
"contrived" certain allegedly fraudulent trades. Under these
circumstances, the Complaint adequately alleges that Bear Stearns engaged
in conduct, with scienter, in an attempt to affect the price of the Blech
securities.
961 F.Supp. at 584.
In the instant case, the complaint fails to allege that Bears Stearns did
anything other than act in its capacity as a clearing broker; there is no
allegation of conduct that constitutes primary rather than secondary
liability with respect to Bear Stearns' relationship with the Introducing
Brokers. This is best demonstrated by contrasting the alleged conduct
found to sustain a claim of primary liability against Bear Stearns by
Judge Sweet in Blech II and by Judge Sprizzo in Berwecky v. Bear, Stearns
& Co., Inc., 197 F.R.D. 65 (S.D.N.Y. 2000), a case involving stocks
manipulated by A.R. Baron & Co.
In Blech II, the complaint was sustained because:
Plaintiffs allege that Bear Stearns "directed" Blech & Co. to sell Blech
Securities by demanding that Blech reduce its debit balance with
knowledge of Blech's history of sham trading, and that Blech, in response
to Bear Stearns' pressure, engaged in manipulative parking transactions,
which Bear Stearns cleared. This course of conduct by Bear Stearnsthe
instigation of trading that Bear Stearns knew or should have known would
result in fraudulent trades that would artificially inflate the price of
the Blech Securities, and the subsequent clearing of the resultant
fraudulent trades for its own pecuniary benefitconstitutes an attempt to
affect the price of the Blech Securities. As a result, by participating
at both the initiation and clearing stages of the allegedly fraudulent
transactions, Bear Stearns knowingly engaged in a manipulative scheme to
defraud under Section 10(b), which affected the market upon which
Plaintiffs relied in purchasing the Blech Securities. The pressure
exerted by Bear Stearns on Blech to reduce his debit balance, when
combined with Bear Stearns' knowledge of Blech's sham trading and its
clearing of such trades, does not "reflect ... the standard practice of
[a] clearing broker."
Plaintiffs further properly allege manipulative conduct against Bear
Stearns when they claim that on July 5, 1994, Bear Stearns, in an effort
to sell and transfer certain Blech Securities, "contrived and agreed to
fund" the pre- planned fraudulent sale of Blech Securities. This
allegation satisfies the conduct element of a Section 10(b) claim because
Bear Stearns is alleged to have conceived of and participated in the
initiation and clearing of sham transactions aimed at affecting [ ] the
price of the Blech Securities.
Blech II, 961 F. Supp. at 584-85 (citations omitted).
Judge Sweet distinguished this conduct establishing primary liability
from the normal activity of a clearing broker:
These allegations stand on grounds different from those presented in Ross
v. Bolton, 904 F.2d 819, 821 (2d Cir. 1990). There, the plaintiffs were
only alleging the conduct of a normal clearing broker that extends loans
on margin to its clients. Here, however, it is alleged that Bear Stearns
knowingly contrived and funded sham transactions. This allegation,
assumed for purposes of this motion to be true, states a claim that Bear
Stearns employed a manipulative device that suffices for the imposition
of primary liability under Central Bank.
Id. at 585.
In Berwecky, Judge Sprizzo sustained the complaint because:
Plaintiffs assert that throughout the class period Harriton and others at
Bear, Stearns shed their role as a mere clearing broker for A.R. Baron,
and with actual knowledge, directly participated in the heretofore
described scheme. Moreover, plaintiffs allege that after Baron was
sanctioned by the National Association of Securities Dealers ("NASD")
defendants asserted control over Baron's trading operations by, inter
alia, placing Bear, Stearns' employees at Baron's offices to observe
Baron's trading activities, approving or declining to execute certain
trades, imposing restrictions on Baron's inventory, and loaning funds to
Baron. All of this was done, plaintiffs contend, in order to keep A.R.
Baron a viable concern while Bear, Stearns and Harriton continued to reap
the large profits that they received from their activities with A.R.
Baron.
197 F.R.D. at 67 (footnote and citations omitted).
Here, there are no allegations that Bear Stearns instigated trading that
it "knew or should have known would result in fraudulent trades that
would artificially inflate the price" of the manipulated securities. Nor
are there allegations that Bear Stearns "asserted control over [the
Introducing Brokers'] trading operations by, inter alia, placing Bear,
Stearns' employees at [their] offices to observe [their] trading
activities, approving or declining to execute certain trades, imposing
restrictions on [their] inventory, and loaning funds to [them]."
Although this complaint does contain the allegations that Judges Sweet
and Sprizzo found sufficient to establish primary liability against Bear
Stearns with respect to the securities manipulated by D. Blech & Co. and
A.R. Baron, there is no claim asserted against Bear Stearns with respect
to those securities. While these allegations may be admissible under
Federal Rule of Evidence 404(b) to prove that Bear Stearns acted with
scienter, they are not relevant on the question of whether the complaint
establishes Bear Stearns' primary liability under @ 10(b).
With respect to the Introducing Brokers, the complaint does no more than
allege that Bear Stearns performed the normal function of a clearing
broker. Even if one accepts that the complaint sufficiently alleges that
Bear Stearns did this with knowledge that these brokers were manipulating
the securities at issue, the complaint does not establish Bear Stearns'
primary liability under @ 10(b). See Shapiro v. Cantor, 123 F.3d at 722;
Dietrich v. Bauer, 76 F. Supp. 2d 312, 335 (S.D.N.Y. 1999); Blech II, 961
F. Supp. at 584.
Conclusion
For the foregoing reasons, the claims against Bear Stearns for
manipulation under @ 10(b) are dismissed. Because these are the only
federal claims asserted, the Court will not retain jurisdiction over the
state claims alleged. Therefore, the complaint is dismissed. (New York
Law Journal, January 5, 2001)
CLASSIC RESIDENCE: Ordinance Does Not Apply to Senior Citizens Dwellings
------------------------------------------------------------------------
The provisions of the Residential Landlord Tenant Ordinance do not apply
to senior citizens dwellings known as extended care facilities.
Antler v. Classic Residence Management Limited Partnership, Illinois
Appellate court, First District. 315 Ill.App.3d 259, 733 N.E.2d 393, 247
Ill.Dec. 929 (2000).
Lucille Antler, the named plaintiff in the underlying class-action
lawsuit, filed a complaint against the named defendants, who collectively
own, operate and manage an apartment building (the Hallmark) for
independent seniors in which Antler resided.
The complaint alleged that defendants violated the Chicago Residential
Landlord Tenant Ordinance (RLTO) and the Illinois Consumer Fraud and
Deceptive Business Practices Act (Consumer Fraud Act) by failing to
attach summaries of the RLTO to Antler's residency agreements and by
failing to pay her hundreds of dollars in interest on her building
entrance fee.
Defendants moved to dismiss on the ground that the Hallmark is an
extended care facility," explicitly exempt from compliance with the RLTO.
The trial court granted defendants' motion to dismiss pursuant to section
2-619 with prejudice.
The Illinois Appellate Court, in an opinion written by Justice Francis
Barth, without dissent, ruled as follows:
Plaintiff entered into her first life care contract at age 82 in October
1990, when the Hallmark first opened. At that time, the Hallmark was
owned by the First National Bank of Chicago, as trustee for LEAAF.
Classic Residence Management Limited Partnership (Classic LP), the
manager of the Hallmark, executed the first residency agreement on
LEAAF's behalf.
Contemporaneously with the execution of the first residency agreement,
Antler paid an entrance fee of $ 29,200. Of that amount, the residency
agreement required LEAAF to deposit $ 10,000 into a Health Care Fund'
escrow account, to be used for the payment of Antler's long-term health
care. In addition to providing for long-term health care insurance, LEAAF
contracted with St. Joseph's (the hospital adjacent to the Hallmark) to
operate a wellness center on the Hallmark's premises.
Also, the residency agreement provided Antler with priority admission to
St. Joseph's nursing facility, should it be required, on either a
temporary or a permanent basis. If no beds were available at St. Joseph's
or another facility were preferred, assistance with transfer would be
provided.
The remaining balance of Antler's entrance fee, $ 19,200, was placed in
an escrow account and, beginning in the 14th month after occupancy, was
to be used as additional consideration' to pay for the basic services
provided at the Hallmark....
In August 1992, LEAAF assigned its interest in the Hallmark to one of the
other defendants, K/2960 Limited Partnership, and the Prime Group Inc.
began acting as the owner's agent/manager of the building....
Antler's lawsuit is based on the premise that the RLTO governs the
actions of the defendants, since they are landlords' as defined by that
ordinance, she is a tenant' thereunder, and the contract she signed when
she took up residence in the Hallmark was a rental agreement.' ...
We conclude that by exempting the category of dwellings known as extended
care facilities,' the Chicago City Council acknowledged that certain
groups of individuals, such as senior citizens, may seek or require more
specialized living arrangements than are contemplated by the
landlord/tenant relationship created in the ordinary lease agreement.
Concomitantly, the state has statutorily created life care facilities,
wherein senior citizens may receive certain services that they are no
longer willing or able to provide for themselves, such as assistance with
transportation, laundry, and meals. Life care facilities reasonably can,
in our judgment, be construed as included under the extended care
facilities' rubric ordained by the City Council.
We further observe that the services available to Hallmark residents
comport in important respects with the very definition of extended care
facility' that Antler urges this court adopt, buttressing in our view the
conclusion that the owners and operators of the Hallmark are not subject
to the RLTO....
We decline to infer the inclusion of life care facilities under the
purview of the RLTO as it is written.
For the foregoing reasons, we affirm the judgment of the circuit court
granting the defendants' motion to dismiss Antler's complaint pursuant to
section 2-619.
Affirmed."
Beerman, Swedlove, Woloshin, Barezky, Becker, Genin & London, of Chicago
(Howard A. London and Christopher A. White, counsel) for appellant.
Bank One, NA, of Chicago (John C. Simons, counsel), for appellee Living
Environments for an Aging America Fund.
Novack & Macey, of Chicago (Eric N. Macey, Michael A. Weinberg, and
Gillian D. Madsen, counsel), for appellee Classic Residence Management
Limited Partnership.
Butler, Rubin, Saltarelli & Boyd, of Chicago (Robert N. Hermes and James
A. Morsch, counsel), for appellee Prime Group Inc. (Chicago Daily Law
Bulletin, January 15, 2001)
COVAD COMMUNICATIONS: CA Ct Denies Shareholders Writ of Attachment
------------------------------------------------------------------
As previously reported in the CAR, several of the company’s shareholders
have filed class action lawsuits against the company, its former
president and Chief Executive Officer, Robert E. Knowling, and current
executive vice president and Chief Financial Officer, Mark H. Perry.
These lawsuits were filed in the United States District Court for the
Northern District of California. The complaints in these matters allege
violations of federal securities laws on behalf of persons who purchased
our securities, including those who purchased common stock and those who
purchased convertible notes, during the periods from September 7, 2000 to
October 17, 2000 or September 7, 2000 to November 14, 2000.
The relief sought includes monetary damages and equitable relief. In
addition, three purchasers of the convertible notes have filed complaints
in California Superior Court for the County of Santa Clara. These
complaints allege fraud and deceit, negligence and violations of state
securities laws in connection with our sale of the convertible notes. The
relief sought includes rescission of their purchases of approximately $90
million in aggregate principal amount of convertible notes and
unspecified damages, including punitive damages.
Update
The plaintiff in one of these matters has requested a trial date in
August 2001, but the company intends to oppose this request. One of the
plaintiffs in these matters has also sought a writ of attachment for the
full amount of its rescission claims for its purchases of convertible
notes. On December 11, 2000, this request for a writ of attachment was
denied.
Three additional purchasers have indicated that they intend to file
similar lawsuits.
COVAD COMMUNICATIONS: Former Employees Claim Wrongful Termination
-----------------------------------------------------------------
A group of the company’s former employees have filed a complaint against
the company in California Superior Court, alleging that they were
terminated wrongfully and are entitled to various amounts arising from
their employment with Covad. The company believes that it does not owe
these employees any money, but recognizes that litigation is
unpredictable and there is no guarantee that the company will prevail in
this matter.
Another employee has filed a complaint against Covad in California
Superior Court, alleging that he was terminated wrongfully based on his
age. The company says it does not believe that Covad owes this employee
any money.
ECONOMY CLASS SYNDROME: Los Angeles Times Suggest Reducing Rows of Seats
------------------------------------------------------------------------
Until last October few airline passengers worried about blood clots
forming during flights. Then a 28-year-old English woman stepped off a
plane at London's Heathrow Airport after a 12,000-mile journey from
Australia and collapsed and died. An autopsy attributed her death to a
pulmonary embolism resulting from deep vein thrombosis, in other words a
blood clot that had lodged in a lung. The likely cause of the clot was
the passenger's restricted movement in a cramped seating space during the
long trip.
Since then what has come to be called economy-class syndrome has drawn a
lot of attention. Last week a hospital near Heathrow reported that at
least 30 people had died over the last three years after debarking at the
airport following long flights. That's the toll at just one hospital near
one airport. Some aviation medicine experts estimate that several hundred
cases a year of air-travel-related clots occur in the United States.
No one really knows, because the symptoms of a clot, which can include
swelling and cramping, vary and are often mistaken for something else. In
many cases passengers who develop clots may not seek medical treatment
until days after their flight, lessening the chance that a connection
will be made between their complaint and recent air travel.
Risk-reducing measures help prevent blood from pooling in the legs and
lower abdomen during flights. Doctors recommend sitting on the aisle or
near a bulkhead to increase leg room, drinking plenty of water and
avoiding alcohol on flights to stem off dehydration in a plane's dry air.
Walking around once an hour, or at least doing foot and leg stretches,
will help as well. The trouble with this advice is obvious: There are a
limited number of the more comfortable aisle and bulkhead seats, and
strolling around crowded airplanes whose narrow aisles are often clogged
with food carts is not so much an option as a challenge.
The most common-sense preventive measure of all gets little mention. Note
that the clotting problem isn't described as first-class syndrome. It's
called economy class syndrome because of the limited space between the
seat rows where most passengers sit. Removing a few rows of seats, as
some airlines on some routes are already doing, would certainly allow for
greater squirming, stretching and movement, presumably lowering the risk
of deep vein thrombosis.
Removing seats does reduce airline revenues, but as more evidence of the
clotting problem turns up, the airlines may conclude that the cost is
worth bearing. Already, class-action lawsuits are being threatened. The
airlines understand the health risk, which is why some provide written
warnings to passengers or show videos that encourage stretching. But
these are really no substitute for room to move. (Los Angeles Times,
January 16, 2001)
HOLOCAUST VICTIMS: Bill Passed By Polish Parliament Faces Opposition
--------------------------------------------------------------------
Poland is preparing to pass a long-awaited law to allow those who had
property expropriated under Communism the right to reclaim it.
If approved, the act would permit tens of thousands of former owners and
their heirs to claim property or compensation worth up to about Dollars
10bn.
The government hopes the law will end a decade of argument and lift the
threat of court suits - including politically-sensitive class actions by
Jewish claimants in the US.
But, the planned legislation put forward by the ruling Solidarity
movement could yet fail. It faces tough opposition from the former
Communist left, which says it is too generous to former owners at the
expense of ordinary citizens - many of whom fear eviction.
The bill has also been denounced by many potential claimants living
overseas who are mostly excluded from the provisions unless they are
Polish citizens. They include Jewish claimants living in the US, the UK
and Israel, plus claimants from the Polish Catholic diaspora.
Mel Urbach, an attorney for about 3,000 claimants fighting a class action
in New York, described the proposed law as "seriously flawed". He said:
"It proves to our clients that the US courts are the only place where
they can hope to achieve any justice."
The bill was passed last week by the lower house of parliament and is
expected to be passed later this month by the upper house, where the
Solidarity grouping also has a majority. However, President Aleksander
Kwasniewski, a former Communist, shares the left's reser vations about
the bill and could veto it.
Poland is the only ex-Communist country outside the former Soviet Union
which has yet to pass restitution laws to return property taken by Nazi
and/or Communist governments. However Poland's case is uniquely
complicated because the country lost a swathe of its eastern territory to
the Soviet Union in 1945 while gaining former German lands in the west.
The government estimates that there could be 170,000 potential claims
with a value of 95bn zloty (Dollars 23bn). Lawyers say actual claims will
be lower because of the exclusion of non-citizens and because many claims
lack supporting documentary evidence.
The government originally planned to return properties to all owners who
had been expropriated by either the Nazis or the Communist authorities
from 1939. It also intended to give foreign nationals the same rights as
Polish citizens.
However, the bill was revised in parliament by Solidarity politicians
bowing to populist pressures. Opinion polls repeatedly showed that
restitution was unpopular. Ordinary people fear being thrown out of their
homes by former owners and their heirs (even though the law would not
permit eviction). Many also consider restitution unfair on the grounds
that everybody suffered under Communism but only property owners will
receive compensation.
Under the current bill, only claimants whose property was expropriated
after the formation of the first Communist administration in 1944 would
be considered. Original owners, now elderly, would qualify whatever their
citizenship. But heirs would qualify only if they held Polish citizenship
on December 31 1999.
The bill envisages the return of only 50 per cent of each property, on
the grounds that 100 per cent restitution would be too expensive.
Claimants would end up sharing ownership with the current owners, usually
local authorities and other public bodies. Where returning property
proved impossible compensation would be paid in government-backed bonds.
The government puts the total costs at 43bn zloty.
Miroslaw Szypkowski, president of the Polish Property Owners' Union, the
biggest claimants' group, pledged to fight the proposals to exclude most
non-citizens and to exclude pre-1944 claims. He said: "I'm glad you are
going to write about it in an international newspaper. This is very
unfair to Polish emigres and to Jews. These were not people who left
Poland voluntarily. They were forced to leave."
Mr Szypkowski also criticised the 50 per cent plan. "The government has
100 per cent. Why does it only give back half?" (Financial Times
(London), January 16, 2001)
HOLOCAUST VICTIMS: Panel Defends Not Returning Assets To Victims
----------------------------------------------------------------
Jewelry, art and other property plundered by Nazi Germany were not
returned to Holocaust victims because the United States and its allies
had "more pressing" things to deal with at the end of World War II, a
presidential commission reported Tuesday. "Whether it was the need to
rebuild shattered European economies, restore democracy to Germany, wage
the Cold War ... the interests of individual Holocaust victims suffered,"
said Edgar M. Bronfman, the panel's chairman.
While the U.S. government "performed admirably" in trying to return
looted property, the issue ended up on "the back burner," said the report
by the Presidential Advisory Commission on Holocaust Assets in the United
States.
The report, the result of a massive two-year research effort, was being
presented to President Clinton later Tuesday.
The commission recommends creating a joint government and private
foundation to do more work on restitution issues. It also announced it
has reached what it called "landmark agreements" with museums, the New
York Bankers Association and the Library of Congress under which those
organizations will try to identify assets they may still have that belong
to Holocaust victims.
Adolf Hitler's forces in the 1930s and 1940s slaughtered 6 million Jews
and 5 million others, enslaved 12 million and plundered Europe in one of
the darkest chapters of the 20th century. But an addendum written in the
past several years also will show private organizations and governments
worked in the late 1990s to "bring some measure of justice" to more than
a million survivors, says Stuart Eizenstat, the top U.S. envoy on the
Holocaust.
Compensation programs valued at billions of dollars have been negotiated
in the past several years and may begin paying money this spring.
On Wednesday, Eizenstat wants to finish negotiating an Austrian plan to
compensate for stolen Jewish property and on Thursday, France's plan to
pay for bank accounts confiscated during the wartime collaborationist
Vichy regime.
All are part of an unprecedented half-decade campaign to re-examine what
happened in the Holocaust - and recalculate what's still owed its aging
victims. "It proved there's no statute of limitations on the violation of
human rights," Eizenstat said in an interview. The Clinton administration
ends Saturday - and administration officials are urging President-elect
Bush to continue with Holocaust restitution.
Though a number of restitution programs were started right after the war
they have since been judged to have left out categories of victims and
categories Holocaust abuses. For instance, Central and Eastern European
Christians soon are to receive compensation for having been used as
forced laborers, in the first program of any substantial size to address
the suffering of Hitler's non-Jewish victims.
Tuesday's report to Clinton will say the U.S. government did "a
remarkably good job" in trying to return property that Nazis plundered
from Europe and that later came under American control. But it says some
victims were nonetheless "shortchanged," said Kenneth Klothen, executive
director of the panel, the Presidential Advisory Commission on Holocaust
Assets in the United States. Among problems, he said, was that the U.S.
adopted the international legal standard that war booty should be
returned to countries from which it was stolen, and things didn't always
ultimately end up in the hands of individual victims.
The report echoes a preliminary report last year which said that although
U.S. military forces in Europe "generally behaved in a commendable way,"
an "egregious" exception was the suspected taking of some looted items by
five U.S. generals for the European residences and offices they used
during the postwar occupation. Klothen said further study has not
uncovered what became of that property, including rugs, silverware and
other valuables. Tuesday's report recommends follow-up action on that and
other findings.
The new round scrutiny and demand for additional compensation was made
possible partly by the end of the Cold War and release of long-secret
documents.
The United States took a lead in the effort - which sometimes strained
relations with European allies - as did the World Jewish Congress,
Conference for Jewish Material Claims Against Germany and U.S. lawyers
who assembled class action survivors' suits.
The campaign was unwelcome in many quarters. It was the lawsuits that
forced the issue. Settlements were made in return for legal peace - the
U.S. government promised to discourage its courts from entertaining
future lawsuits.
Swiss banks agreed to compensate for keeping assets of slain Jews, German
and Austrian governments and businesses to compensate for having used
forced and slave labor, and some European insurers for withholding
payment on policies of those who died in the Holocaust
Some 20 nations have set up commissions to study Holocaust issues. (The
Associated Press, January 16, 2001)
INGENUUS CORPORATION: Reaches Settlement Agreements in Securities Suits
-----------------------------------------------------------------------
Ingenuus Corporation (NASDAQ:INGE) announced on January 16 that all
parties have agreed to settle the private securities class action
litigation arising from the Company's initial public offering in April
1998 and the restatement of the Company's financial statements in
December 1998. Although the settlement is not final, and is subject to
preliminary and final court approval, the agreement calls for Ingenuus to
pay $1.4 million into the settlement fund now and issue 1.75 million
shares of common stock to the plaintiff class upon final approval of the
settlement by the court. Ingenuus also announced that all parties have
agreed to settle a shareholders' derivative lawsuit arising out of the
initial public offering. Although this settlement also is not final, and
is subject to preliminary and final court approvals, the Company has
agreed to make certain changes to its Audit Committee Charter and pay
$395,000 in plaintiff's legal fees and expenses, subject to court
approval of the settlement.
About Ingenuus [As Described in the Company's Announcement]
Ingenuus Corporation (NASDAQ: INGE) is the technology leader in
Intelligent Manufacturing Collaborative Commerce(TM). Ingenuus allows
manufacturers to take command, and take control of the complete
manufacturing change life cycle, whether a discrete manufacturer in
electronics or mechanical assembly and test, or a process manufacture in
semiconductors or pharmaceuticals. For Original Equipment Manufacturers
(OEM), Contract Manufacturing Services (CMS), customers or suppliers,
Ingenuus provides real time Intelligent Collaboration(TM) throughout the
entire supply chain, globally. Using Manufacturing Change Manager(TM),
the entire organization will speak the same language, plan together,
transact together, and execute together. All departments, divisions, and
members of the supply chain will function together at the same optimized
pace and speed, while eliminating friction of all type across the
complete supply chain. Ingenuus' Manufacturing Change Manager solution is
a state of the art, next-generation product that surpasses all of its
competitors, especially those who offer c-platforms and c-tool kits.
Ingenuus corporate headquarters are located at 830 East Arques Avenue,
Sunnyvale, CA 94086.
PROPERTY FORFEITURES: NJ Thunderbird Suit Is Seen As Test For Legality
----------------------------------------------------------------------
A lawsuit filed last year in New Jersey has become a test case to
determine whether forfeitures are unconstitutional.
The Institute for Justice, a libertarian group that litigates cases
involving individual rights, filed the lawsuit to challenge whether
Americans' property can legally be taken.
Carol Thomas' 1990 Thunderbird was seized last year when her 17-year-old
son borrowed the car and sold marijuana to an undercover agent.
Cumberland County narcotics task force detectives seized the car even
though no drugs were found in it and Thomas did not know her son was
using it to sell marijuana. At the time, Thomas had been a deputy for the
Cumberland County Sheriff's Department for seven years and had served on
the task force.
"The direct financial incentives at the heart of forfeiture dangerously
transform law enforcement from the administration of impartial justice to
the pursuit of profit and property," Scott Bullock, one of the lead
plaintiff attorneys, wrote in a paper describing the case. (The Kansas
City Star, January 16, 2001)
QUESTAR MARKET: Lessors Sue Alleging Mismeasurement of Natural Gas
------------------------------------------------------------------
In Quinque Operating Company v. Gas Pipelines, et al., each of Questar
Gas Management, Wexpro and Universal Resources Corporation (now known as
Questar E&P) is named as a defendant in a lawsuit involving allegations
of mismeasurement of natural gas resulting in underpayment of royalties
to private and state lessors. Relief sought by the plaintiff is
unspecified. Plaintiffs have asked that the case be certified as a
nationwide class action. The case was removed from state to federal court
and a motion to remand is pending. There are over 220 defendants. The QMR
subsidiaries dispute these claims.
Royalty class actions such as Quinque are being asserted in numerous
states against other companies in the oil and gas production and
marketing businesses in which QMR's subsidiaries participate.
Accordingly, QMR expects similar royalty class actions to be filed in
other states in which it has significant production and marketing
activities such as Wyoming and Colorado, although such actions have not
yet been filed and are not currently threatened.
Other Gas Mismeasurement Lawsuits
(1) In United States ex rel. Grynberg v. Questar Corp., et al., each
of Questar Gas Management, Wexpro and Universal Resources Corporation
d/b/a Questar Energy Trading Company are named as defendants in a case
involving allegations of gas mismeasurement and of improper royalty
valuations. The plaintiff filed on behalf of the federal government to
recover underpaid royalties under the False Claims Acts, and the
Department of Justice declined to intervene. Relief sought by the
plaintiff is unspecified. This case and 75 substantially similar cases
filed by the plaintiff have been consolidated for discovery and pre-trial
rulings in Wyoming's federal district court. Motions to dismiss have been
filed. The QMR subsidiaries dispute these claims.
(2) Questar Energy Trading and Questar Gas Management, two of the
Company's wholly owned subsidiaries, have been added as defendants in a
lawsuit filed by Jack Grynberg, an independent producer, pending in a
Utah state district court (Grynberg v. Questar Pipeline Company). The
lawsuit was originally filed against Questar Pipeline Company, an
affiliate of the Company in Questar's Regulated Services unit, in
September of 1999. It alleges that the Questar defendants mismeasured gas
volumes attributable to his working interest from a property in
southwestern Wyoming. The plaintiff cites mismeasurement to support
claims for breach of contract, negligent misrepresentation, fraud, breach
of fiduciary responsibilities and alleges damages of $27 million. The
Questar defendants have filed a comprehensive motion to dismiss the
complaint on several grounds including expiration of the applicable
statute of limitations, no basis for independent tort claims, and federal
preemption.
QUESTAR MARKET: OK Lawsuit over Royalties Voluntarily Dismissed
---------------------------------------------------------------
At December 31, 1999, Questar E&P was a defendant in a case styled
Greghol Limited Partnership vs. Universal Resources Corporation, filed in
Oklahoma state court, which was originally asserted as a statewide class
action raising issues relative to calculation of royalties, and whether
such calculations should reflect deductions for certain post-production
costs. Relief sought by the plaintiff was unspecified. The Court has
sustained Questar E&P's motion to de-certify the class. Questar E&P
disputes these claims. In August 2000, plaintiff voluntarily dismissed
the case without prejudice.
QUESTAR MARKET: TX Ct OKs Settlement of Lawsuit over Oil Royalties
------------------------------------------------------------------
At December 31, 1999, Questar E&P, as well as other Questar Market
Resources Inc. affiliates and Questar, were among the named defendants in
a class action lawsuit commenced in 1995 involving royalty payments in
Oklahoma state court for Texas County, Oklahoma.
In Bridenstine vs. Kaiser-Francis Oil Company, the plaintiffs alleged
various fraud and contract claims against all defendants for a 17-year
period. While this litigation did not specify the amount of damages being
claimed, estimates at times were in excess of $80 million, plus punitive
damages. The plaintiffs' primary claim alleges that a transportation fee
charged against royalty payments was improper or excessive. The claims
involved wells connected to an intrastate pipeline system that Questar
Gas Management presently owns and operates.
The suit also alleged claims for mismeasurement of gas and failure to
market the gas for the "best available price." Kaiser-Francis and Questar
E&P are the major working interest owners and operators of a majority of
the wells connected to this pipeline system. QMR disputes plaintiffs'
claims.
On January 4, 2001, a district court judge in Texas County, Oklahoma,
approved the settlement agreement reached by QMR and Union Pacific
Resources Company (predecessor in interest to Questar E&P) in Bridenstine
v. Kaiser-Francis Oil Company. Under the terms of the settlement, QMR and
Union Pacific Resources paid $22.5 million ($16.5 million by QMR and $6
million by Union Pacific Resources) to resolve all of the issues pending
against QMR in the litigation. Questar E&P has paid the settlement funds,
which are being held in escrow pending the expiration of a 30-day appeal
period following the entry of the judge's order. Payment of the
settlement funds did not have a material adverse impace on QMR's
financial results.
SANDOVAL: CNN Coverage on Supreme Ct Case on English-Only Drivers' Tests
------------------------------------------------------------------------
(Broadcast on the Cable News Network on January 16, 2001)
Highlight: The Supreme Court is hearing a couple of high-profile
discrimination cases this week. Today, the nine justices will be
listening to arguments in a suit challenging Alabama's English-only
requirement for driver's license tests.
CAROL LIN, CNN ANCHOR: Now across the street from the Capitol, the
Supreme Court is hearing a couple of high-profile discrimination cases
this week. Today, the nine justices listen to what they will be listening
to arguments in a suit challenging Alabama's English-only requirement for
driver's license tests. But there is more to today's case than just
language.
CNN senior Washington correspondent Charles Bierbauer is outside the high
court this morning -- Charles.
CHARLES BIERBAUER, CNN CORRESPONDENT: Good morning, Carol.
This too is a question about civil rights with the Alabama English-only
language requirement for those driver's license tests being challenged
under the Civil Rights Act. But it's also one of those federalism cases
that come before the court quite frequently, separating the issues of
what the federal government and state governments can do, and
specifically in this instance, when an individual can sue a state
government.
(BEGIN VIDEOTAPE)
BIERBAUER (voice-over): After Martha Sandoval emigrated to the U.S.
from Mexico, she was told she could not take an Alabama driver's license
test in Spanish.
MARTHA SANDOVAL: No. They said to me no, no interpret, speaking
English. I, no, me, no speak English.
BIERBAUER: Alabama is the only state with an English-only test. It
used to test drivers in 14 languages. But a 1990 amendment to the State
Constitution made English Alabama's official language.
BILL PRYOR, ALABAMA ATTORNEY GENERAL: After that, the Attorney
General's office found that we could no longer administer driver's
license tests under that new law in foreign languages.
BIERBAUER: Sandoval filed a class-action discrimination suit, was
allowed to take her test in Spanish, and got her license.
SANDOVAL: The problem is not a personal issue, it is a social issue,
and many people really need to have the driver's license here. We don't
have the public service that you can count on. BIERBAUER: On an emotional
level, the case is about the English- only requirement. The justices know
something about that.
JOSEPH SCHMITZ, ATTORNEY, "U.S. ENGLISH": The rules of the United
States Supreme Court require that all documents be submitted in English.
BIERBAUER: On a legal level, it's whether an individual may sue a
state under federal civil rights laws because the state receives federal
funds. Sandoval claimed discrimination based on her national origin.
UNIDENTIFIED MALE: There is no law that says you can't discriminate
based on language. That's just -- that's just not one of the categories
that's illegal.
BIERBAUER: The case has potentially broad ramifications beyond
language.
PRYOR: This can have an impact on how states run their schools, their
prisons, where they place hazardous waste facilities. Anything that is
viewed as having a discriminatory affect.
(END VIDEOTAPE)
BIERBAUER: And there is always other people beyond Martha Sandoval --
excuse me -- we'll be watching -- excuse me, Carol. We'll be watching
others -- we'll be watching to see the breadth of the court's ruling when
we get it in a couple of months, because some legal experts say that the
impact of this could even reach into the private enterprises that might
require English only in the workplace -- Carol.
LIN: Charles, I am not going to keep you outside the court any
longer. You get inside and get some hot tea. Thanks so much.
BIERBAUER: Thank you.
SANDOVAL: Lawyers Urge Sp Ct to Focus on Right to Sue in Anti-Bias Case
-----------------------------------------------------------------------
Martha Sandoval understood a little English - enough to know what signs
like ''stop'' or ''right turn'' meant, but not enough to read a book, or
a driver's license exam. Sandoval, originally from Mexico, wanted to take
Alabama's driver's exam in 1996. She gave up when she learned that the
state, following up a 1990 ''English only'' law, had stopped offering the
test in Spanish.
The Supreme Court was hearing from her lawyers Tuesday in a case that
will test the scope of a major federal anti-discrimination law. The court
agreed to settle whether private individuals such as Sandoval can sue
under the part of the 1964 Civil Rights Act that bars state recipients of
federal money from discriminating based on race, color or national
origin.
Sandoval won a federal class-action suit scrapping the English language
rule for driver's exams, and the 11th U.S. Circuit Court of Appeals
agreed.
The lower courts said the policy violated the federal anti-bias law
because it would have a ''disparate impact'' on non-English speakers, and
ordered the state to offer the tests in other languages.
''The protection of the Constitution extends to all,'' the appeals court
wrote. ''To those who speak other languages as well as to those born with
English on the tongue.''
Both lower courts rejected state officials' arguments that the relevant
portion of the 1964 law does not allow lawsuits by private citizens.
All the federal appeals courts that have studied that issue have reached
the same conclusion, but the Supreme Court has never spoken definitively
on the issue. It is not clear whether a Supreme Court ruling would
revisit the legality of the English-only tests, but if Sandoval never had
the right to sue, her class-action case could be a hollow victory.
Lawyers for Sandoval, a house cleaner and shopkeeper in Mobile, Ala.,
urged the court to keep the case narrowly focused on Sandoval's right to
sue, which the lawyers argue is plain. Ensuring the right to sue is
especially important because a previous Supreme Court ruling blocked
alleged victims from receiving money such as back pay in similar
situations. ''If private civil actions are not available, funding
recipients will have even less incentive to comply with these
regulations,'' her lawyers wrote in court papers.
The Clinton administration sided with Sandoval.
Alabama agrees that the ''national origin'' part of the 1964 law bars
intentional discrimination. But the state claims that the driver's exam
rules did not discriminate intentionally and had nothing to do with the
several million dollars of federal aid that the Alabama Department of
Public Safety receives each year.
''The problem is, every law has a disparate impact on someone,'' Alabama
Attorney General Bill Pryor wrote in court papers.
The state has cast the argument as a state's rights issue, saying the
state had the authority to require English on driver's exams and that a
private right to sue would undermine state authority. ''The decision to
imply a private cause of action against a state on the basis of an
administrative regulation fails to respect the independent role of the
states in our national government,'' Pryor wrote.
At least 20 states in recent years have designated English as the
official state language, but many of the laws appear to be symbolic and
do not restrict government use of other languages.
Alabama's 1990 amendment declared English the state's official language
and instructed state officials to ''take all steps necessary'' to
preserve and enhance ''the role of English as the common language.''
The case is Alexander v. Sandoval, 99-1908.
On the Net: Supreme Court site: http://www.supremecourtus.gov
For the appeals court ruling in Hagan v. Sandoval:
http://www.uscourts.gov/links.htmland click on 11th Circuit.
(Report from AP Online, January 16, 2001)
SCHLOTZSKY'S, INC: Dist. Ct Dismisses Securities Suit; 5th Cir Remands
----------------------------------------------------------------------
Schlotzsky's, Inc. (NASDAQ:BUNZ) announced that the purported securities
class action against the Company, dismissed with prejudice by the United
States District Court in August 1999, has been remanded back to the
District Court by the Fifth Circuit Court of Appeals.
The Fifth Circuit ruling permits Plaintiffs to file a proposed amended
complaint alleging non-fraud based claims pursuant to the Securities Act
of 1933. Assuming Plaintiffs file the complaint permitted by the Fifth
Circuit's ruling, their 1934 Securities Exchange Act claims alleging
fraud and intentional misconduct, which were also dismissed by the
District Court, will no longer be part of the purported class action.
The Company does not believe that it has any liability in this case and
intends to continue vigorously defending the case. The Company believes
resolution of this litigation will not have a material impact on the
Company's financial position and results of operations.
Schlotzsky's, Inc., founded in Austin, Texas, in 1971, is a brand
licensor and franchisor of quick-service deli restaurants featuring
sandwiches served on distinctive sourdough bread, along with pizzas,
salads, soups and deli items. As of September 30, 2000, there were 722
Schlotzsky's(R) Deli restaurants open and operating in 38 states, the
District of Columbia and 11 foreign countries.
VIVENDI UNIVERSAL: CA Securities Lawsuits Consolidated
------------------------------------------------------
Five complaints have been filed in federal court in the Central District
of California on behalf of putative former shareholders of United States
Filter Corporation, which Vivendi acquired in 1999. The litigation was
previously reported in the CAR. These putative class actions seek to
represent all former public shareholders of United States Filter
Corporation. The lawsuits name Jean Marie Messier, Vivendi and certain of
its affiliates as defendants and assert violations of U.S. securities
laws on the ground that payments made to three members of United States
Filter Corporation's management, which were stated in the tender offer
documents for United States Filter Corporation to have been made with
respect to their employment arrangements, were allegedly additional
consideration to these executives for the purchase of their United States
Filter Corporation shares.
The complaints allege that the U.S. securities regulations requiring that
all shareholders receive the same consideration for shares sold in a
tender offer were thereby violated, and seek damages in an unspecified
amount.
Update
The complaints have been consolidated with a lawsuit filed on March 23,
1999 by putative shareholders of United States Filter Corporation against
its former directors, alleging that they breached their fiduciary duties
by accepting the merger proposal and failing to maximize shareholder
value.
Two amended consolidated complaints dated July 7, 2000 and July 12, 2000
combine allegations of the U.S. securities laws violations described in
the preceding paragraph with claims for breach of fiduciary duties
against former directors of United States Filter Corporation. If these
lawsuits are ultimately determined adversely to Vivendi they could have a
material adverse effect on its financial position. Vivendi believes the
allegations to be without merit and intends to defend the suits
vigorously.
VIVENDI UNIVERSAL: CAPR’s Puerto Rico Plant Target of Suits outside U.S.
------------------------------------------------------------------------
Lawsuits were filed on September 22, 1999 and February 10, 2000 in the
Commonwealth Court in Arecibo, Puerto Rico against, among others,
Compania de Aquas de Puerto Rico ("CAPR"), an indirect subsidiary of
Vivendi Environnement. The complaints allege that CAPR, which operates
numerous water and water treatment plants in Puerto Rico, has unlawfully
allowed its Barceloneta plant to emit offensive odors and toxic
substances in the environment, and has thereby harmed the health of the
plaintiffs, a group of local residents. Vivendi does not believe the
suits will have a material adverse effect on its business and intends to
defend them vigorously.
VIVENDI UNIVERSAL: Shareholders’ Voting Rights Subject of Paris Suit
--------------------------------------------------------------------
A lawsuit was filed on April 7, 2000 in the Commercial Court of Paris by
the Association de Defense des Actionnaires Minoritaires seeking
invalidation of a provision of Vivendi's statuts that adjusts the rights
of shareholders who own in excess of 2% of the total voting power of
Vivendi through the application of a formula pursuant to which the voting
power of those shareholders will be equal to that which they would
possess if 100% of the shareholders were present or represented at the
meeting at which the vote in question takes place. The complaint alleges
that the provision improperly limits the number of votes that a proxy may
carry and improperly assimilates the voting rights of different
shareholders. Vivendi believes the allegations to be without merit and
intends to defend the suit vigorously.
WATER CONTAMINATION: Walkerton E.Coli Rumored Days Before Warning
-----------------------------------------------------------------
Days before Walkerton residents were officially warned their water had
possibly been tainted with deadly bacteria, rumours of contamination were
circulating through the town, the judicial inquiry heard Monday.
Meanwhile, victims of the tainted water were in a Toronto courtroom
arguing before a judge to allow their class-action lawsuit to proceed.
JoAnn Todd, managing director of the Maple Court Villa retirement
residence, testified a member of her staff heard the water system was
contaminated as early as Friday of the May long weekend.
According to earlier evidence at the inquiry, that was two days before
the local health unit issued its boil water advisory. And, according to
the testimony of PUC manager Stan Koebel, it was one day before he even
read the tests results showing the water was grossly contaminated.
The Friday rumours were enough to prompt Todd to call the public
utilities commission to ask if there was a problem with the water.
Todd said she told the man who answered the telephone at the PUC there
had been outbreak of diarrhea at the residence and three people were ill.
"I was reassured that the water in the town was OK, that there was no way
the water in the town could become contaminated because it was taken from
a deep well."
As a result of the advice, Todd said she believed the water was safe.
Two of the three ill residents later died from the E. coli contamination
that claimed a total of seven lives and sickened an estimated 2,300
people.
The inquiry is expected to hear the testimony of Don Moore on Tuesday,
administrator of the Brucelea Haven nursing home in Walkerton.
In a move the medical officer of health has called "puzzling," the
nursing home started boiling water for residents on the Friday.
Todd testified on Monday staff at the retirement residence learned of the
boil water advisory on Sunday from radio reports, not the health unit.
In earlier testimony, Dr. Murray McQuigge, medical officer of health,
said that had been a mistake. The retirement home should have been called
when the advisory was issued, he said.
The inquiry also heard on Monday the rain storm blamed for washing
bacteria from farm fields into the town's water system could be expected
to happen once every 10 years.
Environment Canada meteorologist and climatologist Heather Auld testified
Walkerton received more rainfall in May 2000 than it had since records
were started in 1916.
But other months of the year matched or exceeded the May record.
In Toronto, victims of the outbreak said a class-action lawsuit is the
best way to ensure they get justice.
Lawyers for those who got sick or had relatives die from drinking tainted
water argued a class action would ensure adequate compensation and an
answer to who is to blame for the tragedy.
Superior Court Justice Warren Winkler must give his approval before the
class-action suit, which seeks $ 250 million in general and punitive
damages, can proceed. (The London Free Press, January 16, 2001)
* Survey Says Mississippians Think Class Action Is Useful But Is Abused
-----------------------------------------------------------------------
An independent public opinion survey found that Mississippians believe
class action lawsuits benefit lawyers more than plaintiffs and lead to
higher costs for a range of products and services.
The Center for Survey Research and Analysis (CSRA) at the University of
Connecticut and the American Tort Reform Association, in partnership with
STOP Lawsuit Abuse in Mississippi, released a survey to measure
Mississippians' attitudes toward class action. Chip Reno, executive
director, STOP Lawsuit Abuse in Mississippi, said that he was not
surprised by the survey results. "Mississippi has become a target for
filing federal class action lawsuits and numerous other types of suits,"
Reno said. "Mississippi consumers and businesses are guinea pigs in a
lawsuit laboratory that's been established in our state by personal
injury lawyers."
Mississippi law has no provisions for class actions, but it does allow
personal injury lawyers to file suits on behalf of groups of individuals
with unrelated claims. Personal injury lawyers have filed federal class
action lawsuits in Mississippi against health care companies, drug
manufacturers and others.
Class action lawsuits were designed to allow a number of plaintiffs who
have suffered similar harm to collectively file one lawsuit to seek
restitution.
According to the survey, Mississippians support the idea of class action
lawsuits but believe that some lawyers are taking advantage of the system
for personal gain. The survey shows that while respondents initially have
favorable attitudes toward class action lawsuits, the more they learn
about them, the less they like.
Among key findings in the survey:
-- Sixty-eight percent of respondents believe the legislation and
regulation are better ways to protect individuals from injuries than
class action lawsuits.
-- Sixty-two percent of respondents agree that class action lawsuits
lead to higher prices for goods and services without providing real
benefits. Seventy percent of Mississippians believe that class action
lawsuits benefit lawyers more than injured parties.
-- Nearly two-thirds (64 percent) of respondents disapprove of the
practice of lawyers representing people who have not hired them, a common
practice in class action lawsuits.
-- Almost three-fourths (74 percent) of Mississippians believe that
class action lawsuits against health insurance providers unnecessarily
raise the price of health insurance.
-- More than half of Mississippians (52 percent) strongly believe
this.
The survey also found that a majority of respondents believe class action
lawsuits unnecessarily raise the prices of cars and computers, while a
plurality (48 percent) believe class action lawsuits also increase the
price of guns. And while the survey did find that respondents believe
that contingency fees help people who are least able to afford to hire a
personal injury lawyer, respondents also strongly disapprove when lawyers
are paid more than the people who were harmed, which is often the case
with class action lawsuits.
"Clearly, the survey demonstrates that while Mississippians think class
action lawsuits are a useful tool, they also firmly believe that the
process is being abused by personal injury lawyers," Reno said.
Federal legislation was introduced and debated in Congress last year to
address class action lawsuit abuse but was not enacted owing to strong
opposition by the Clinton Administration and many Congressional
Democrats, who are strongly supported by personal injury lawyers.
*********
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 * * *