/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010215.MBX C L A S S A C T I O N R E P O R T E R Thursday, February 15, 2001, Vol. 3, No. 33 Headlines ALABAMA GOVERNOR: 2nd Suit Filed over Cuts in Ed. Budbe ACLU Joins Fray AXS-ONE: Former Computron Settles SEC Investigation CHS: Shareholders of Bankrupt Co. Get Settlement Money from Insurer COMPUTER LEARNING: Bankruptcy Plan Puts Fate of Fees in Limbo CORRECTIONS CORP: Gets Final Ct Approval of Securities Suit Settlement EXXON MOBIL: Gas Station Dealers Sue for Payment for Discounts Promised FALK, TRANSOUTH: Hard Job Giving out Money; Few File Settlement Claims GEORGIA-PACIFIC: Named in Lawsuit for Migrants' Wages for Planting Trees HIP IMPLANTS: Lawsuit Filed in San Francisco; Hundreds Need Surgery HMOs: Aetna Responds to Lawsuit By Connecticut State Medical Society IBP, INC: Harvey Greenfield Announces Securities Suit Filed in S. Dakota MARKETING SERVICES: Brodsky & Smith Announces Securities Suit in Fd Cts. MICRON ELECTRONICS: MN Suit over Faulty Computers Is in Discovery Stage MICROSOFT, COREL: DOJ Probes on Alliance Before Arguments on Competition NETWORK ASSOCIATES: LeBlanc & Waddell Announces Securities Lawsuit in CA NICE SYSTEMS: Abraham & Paskowitz Announces Securities Suit Filed in NJ NICE SYSTEMS: Kirby, McInerney Retained To Commence Securities Lawsuit ORACLE CORP: Vigorously Defends Shareholder Suit in CA Re Apr to Dec ‘97 PLC SYSTEMS: Announces Settlement of Securities Lawsuit in MA TOBACCO LITIGATION: Judge Certifies Light Cigarette Smokers' Suit V. PM TOBACCO LITIGATION: Lawyer Seeks Part of the Pie for Doing Referral TOBACCO LITIGATION: Miami Judge Dismisses Atty's Claim for Referral Fee ********* ALABAMA GOVERNOR: 2nd Suit Filed over Cuts in Ed. Budbe ACLU Joins Fray ----------------------------------------------------------------------- The American Civil Liberties Union has joined the fray over cuts in Alabama's education budget, representing a coalition of poor school districts suing Gov. Don Siegelman over the issue. The lawsuit in Montgomery County Circuit Court claims the cuts defy a U.S. Supreme Court ruling that ordered the state to provide "adequate and equitable" education. The high court had found Alabama's system of education funding unconstitutional. The spending cuts "further exacerbate failures of the system that the (Supreme Court) has already recognized and already ordered the state to remedy," said ACLU executive director Olivia Turner. The suit was filed last Friday February 9 by Alabama Coalition for Equity, which includes the Fayette, Franklin, Greene, Hale, Lawrence, Pickens and Sumter county school systems and the Russellville city school system. The Alabama Disabilities Advocacy Program and a class of plaintiffs representing school children are also part of the suit. The suit is the second against Siegelman since his Feb. 2 order to cut 6.2 percent, or $266 million, from the state education budget. ACLU lawyers have asked a judge to consolidate the cases. The Alabama Association of School Boards and the Mobile and Pike County school boards also sued Siegelman. Circuit Judge Tracy McCooey was scheduled to hold a hearing Thursday morning on the first lawsuit. Siegelman has said he is sympathetic with the goals of the first lawsuit. But he was mandated by law to order cuts because of looming red ink in the education budget and it remained unclear how the budget deficit might be repaired. The ACLU sued in 1990 in an effort to have the state's method of education funding declared unconstitutional because of its inadequacy and unfairness. The Supreme Court ruled in favor of the ACLU and the Legislature responded in 1995 by changing the way the state funds public schools. However, Turner said the issue of inadequacy state education funding was never addressed, despite a 1997 order to begin working on a plan. (The Associated Press State & Local Wire, February 14, 2001) AXS-ONE: Former Computron Settles SEC Investigation --------------------------------------------------- Accepting an Offer of Settlement submitted to it by AXS-One Inc., formerly known as Computron Software, Inc. (AMEX:AXO), regarding events that led Computron to restate earnings for the periods ending December 31, 1992 through September 30, 1996, the Securities and Exchange Commission has issued a cease and desist order prohibiting the company from committing or causing any future violations of the securities laws. The company has also agreed, as it has in the past, to cooperate with the SEC in any investigations or proceedings relating to these matters. The SEC did not impose any fines on the company. The company's financial statements from these accounting periods were previously the subject of securities class action litigation that was fully settled in 1998. There have been no allegations made of any improper conduct by the company for the periods after September 30, 1996. In 1997, the company hired senior executives with significant experience in the software industry and improved its financial and accounting processes, controls, reporting systems and procedures. The company has not admitted or denied any wrongdoing. The company is unable to determine at this time the expenses that it may hereafter incur in connection with any cooperation with the SEC, including any expenses it may incur under the indemnification provisions of its certificate of incorporation and Delaware law. "We are pleased that the SEC accepted our Offer of Settlement and that we can now finally put the last vestiges of the difficulties surrounding the company prior to 1997 behind us," said John Rade, CEO and President of AXS-One. "We have a new management team, strong competitive products and in my opinion a bright future. This settlement removes one final distraction." CHS: Shareholders of Bankrupt Co. Get Settlement Money from Insurer -------------------------------------------------------------------A trustee for creditors of bankrupt Miami computer distributor CHSs Electronics failed Monday to stop shareholders from getting first crack at a $ 20 million settlement. The trustee had asked a bankruptcy judge to stop CHSs insurance company from paying $ 11 million to shareholders suing in a class action. The trustees attorney, Berger Singermans Anthony J. Carriuolo, argued the insurance money shouldnt be allowed to go to the shareholders until a district court ironed out an overall settlement. Also, Carriuolo said, the court should step in because the amount of the policy isnt enough to pay creditors. Creditors are claiming $ 800 million. U.S. Bankruptcy Judge Robert Mark ruled that the trustee didnt have a right to oppose the settlement. Marks also said that insurance companies by law are required to pay out on a first-come-first-serve basis -- no matter the claims of creditors. There is no reason to stay the distribution of insurance proceeds, even if [the trustee] has a claim that may exceed the $ 20 million original settlement, Mark said. The once high-flying CHS filed for Chapter 11 bankruptcy protection in early 2000. CHS once ranked in the Fortune 500 list and held the distinction of being one of the largest publicly held Hispanic companies. CHSs primary insurance company agreed to the $ 11 million settlement in April 2000, according to Ronald G. Neiwirth, attorney for the plaintiffs. CHSs problems began in early 1999 when it was forced to restate its revenues and earnings after it discovered that the head of its European subsidiary had been overstating the value of manufacturers rebates. (Broward Daily Business Review, February 13, 2001) COMPUTER LEARNING: Bankruptcy Plan Puts Fate of Fees in Limbo -------------------------------------------------------------- When Jerry Mathews arrived for classes at the Computer Learning Center in Schaumburg on Jan. 22, he and about 150 other students found the doors locked. When an administrator finally came to the door, the students were told that all 23 technical schools in the Manassas, Va.-based chain were suspending operations and probably going into bankruptcy court. As a result, any tuition already paid might be lost. "It's a joke. They closed, and now they don't care about us anymore," said Mathews, 24, who paid $5,200 for a seven-month course. He is paying back a $7,000 federal loan by working as a part-time store manager. About 450 students from the school's downtown Chicago and Schaumburg locations were in limbo when the troubled school filed for bankruptcy protection. The filing came soon after federal education officials determined that the school had violated federal student aid rules and demanded repayment of more than $187 million. Computer Learning Centers Inc., with reported annual revenue of $131 million, is appealing that ruling by the U.S. Department of Education. "We're being set as a poster child for a message that is still not clear," said John Corse, the president and chief executive officer of the company. Illinois education officials have been fielding hundreds of calls from students. Like Mathews, many are outraged that they may not get refunds, are still paying off student loans and don't have grade transcripts to help them transfer to another school or get a job. Frank Swanson, an Elk Grove man who worked nights as a security guard, saidit has been hard to get information about where to go for help with federal loans. "I'm just mad no one realized this until late," said Swanson, 25. State officials usually take possession of a closing school's student records to avoid such problems. With Computer Learning Centers, however, efforts were thwarted because the school initially only suspended operations, officials said. Then the school did not notify state officials about the imminent closing or plans to file for bankruptcy. "It's been a long saga trying to work with the school," said Sheila Radford-Hill, who heads the Illinois Board of Education's division that oversees technical schools. "This case is having a significant impact because of the number of students and the number of dollars they have paid into tuition. This is a campus where some students have paid $16,000." State officials are trying to get the school's records so they can give them to students, Radford-Hill said. According to information posted on Computer Learning Centers' Web site, the school has not determined how to proceed with transcripts. It also is trying to line up "third parties" to continue classes, which were canceled several days before the bankruptcy filing. Students who do not continue classes could apply to have federal grants forgiven, officials said. On Jan. 25 Computer Learning Centers filed for Chapter 7 bankruptcy protection in Alexandria Va., a process that--unless a company can resolve problems and settle with creditors--usually leads to a company's liquidation. Among those creditors would be students and employees. In December the U.S. Department of Education determined that the company had been violating rules governing federal student loans by, in effect, basing recruiters' salaries on how many students they enrolled, Corse said. That ruling contributed to the bankruptcy filing, he said. Since 1992, federal rules have prohibited such commission-based salaries because some schools would enroll unqualified students solely to get the federal revenue. At Computer Learning Centers, federal aid accounts for about two-thirds of tuition revenue. On Dec. 8, federal regulators said school officials must repay a portion of the federally backed student financial aid received since the recruitment policy was instituted in 1994. The repayment is estimated at more than $187 million. Corse said federal regulators overlooked other criteria--such as teamwork and aptitude--that also determined a recruiter's salary and had been considered in the past. Federal regulators have said that those criteria were negligible in determining how much money a recruiter earned. The federal determination is the most recent legal trouble for the company. In March 1998 the Illinois attorney general sued it after investigating about 45 complaints from students who believed they had been misled about class sizes, job placement statistics, the ability to transfer credits and the quality of instruction. While denying wrongdoing, school officials reached a settlement three months later, agreed to pay more than $500,000 in fines and gave refunds to dissatisfied students. The company also was required change teaching and marketing practices and hire an ombudsman to handle students' claims. Later in 1998, students in six states, including Illinois, filed class-action lawsuits against the company. So far, the school has paid out $7.5 million in settlements, according to federal regulators. Many recent students said they were unaware of the ongoing legal turmoil. "I finally got talked into and encouraged myself to go back to school," said Swanson, a former Marine still paying $200 a month for student loans. "Then it goes bankrupt." The school has a March 5 meeting with creditors in Virginia. (Chicago Tribune, February 14, 2001) CORRECTIONS CORP: Gets Final Ct Approval of Securities Suit Settlement ---------------------------------------------------------------------- Corrections Corporation of America, formerly Prison Realty Trust, Inc. (NYSE:CXW), announced today that it has received final court approvals of the revised terms of the definitive agreements with respect to the settlement of a series of class action and derivative lawsuits brought against CCA by current and former stockholders of CCA and its predecessors. The final terms of the settlement provide for the "global" settlement of all outstanding stockholder litigation against CCA and certain of its existing and former directors and executive officers. Pursuant to the revised terms of the settlements, CCA will issue to the plaintiffs: * an aggregate of 46,900,000 shares of CCA's common stock; and * a subordinated promissory note in the aggregate principal amount of $29.0 million. Other than with respect to the issuance of the common stock and the promissory note by CCA, the original settlement agreements have not been altered by the terms of the revised settlement agreements, including the requirement that CCA pay approximately $47.5 million in cash insurance proceeds to the plaintiffs. The promissory note will be due January 2, 2009, and will accrue interest at a rate of 8.0% per annum. All principal and interest due under the note will be payable in one lump sum at maturity; provided, however, that should the average trading price of CCA's common stock meet or exceed a "termination price" equal to $1.63 per share for 15 consecutive trading days at any time prior to the maturity date of the note, all amounts outstanding under the promissory note will be deemed fully satisfied without further action by CCA. To the extent the highest average trading price of the common stock does not reach the designated "termination price" during the period, the amount to be paid under the note will be reduced by the amount the shares of stock issued to the plaintiffs appreciate in value pursuant to a calculation to be made at the time of the maturity of the note. CCA previously announced on January 19, 2001, that it had obtained preliminary court approval of the terms of the definitive settlement agreements. The terms of the definitive settlement agreements described above with respect to the issuance of the common stock and the promissory note replace all previously existing obligations of CCA, under the provisions of the original settlement agreements and a Memorandum of Understanding between the parties, to issue shares of its common stock and/or other indebtedness to the plaintiffs in the litigation. Also, as part of the revised settlement, the deadline for claimants who have not already done so to submit a Proof of Claim and Release Form to the Settlement Administrator has been extended to March 12, 2001. EXXON MOBIL: Gas Station Dealers Sue for Payment for Discounts Promised----------------------------------------------------------------------- Exxon Mobil and some 10,000 gas station dealers have squared off for a second time in a class-action suit alleging the oil giant failed to pay millions of dollars in discounts promised to its struggling dealers from 1982 to 1994. Attorneys for both sides presented closing arguments Tuesday in Federal District Court in Miami and jury deliberation is expected to get underway. The first trial, held in the same court also with U.S. District Judge Alan S. Gold presiding, ended in a mistrial in September 1999 after jurors became deadlocked. The latest trial began Jan. 16. The suit centers on whether Exxon violated its sales agreement to give its dealers less than two pennies back on each gallon of gasoline sold for cash payments that was supposed to offset the 3 percent fee charged to dealers for the use of credit cards to purchase gasoline at the pump. Attorneys representing the Exxon dealers from 35 states have asked for $ 500 million in compensatory damages. Eugene Stearns, attorney for the dealers, said that on the surface, the oil company promised to help nationwide dealers, struggling with falling profit margins because of a glut of stations and strong competition from independent dealers. But in reality Exxon had a "secret business plan" to whittle down the number of dealers, Stearns said. Each dealer was making $ 9,000 too much a year, company documents show. Although Stearns conceded that the discounts were delivered briefly in the beginning, the discounts never materialized in most of the 12 years of this program. The dealers did not realize what was happening for years, then a November 1990 National Dealer Advisory Council held a meeting and later wrote Exxon--"you have abandoned us." Some 5,000 out of 7,000 dealers nationwide went out of business. Dealers filed suit in 1991. "Follow the money; who got it and who didn't?" Stearns said. "Exxon got the money and the dealers didn't." But Exxon attorney Larry Stewart insisted that dealers received the discount and saw profit margins rise during the 12 year period of the discounts, and credited the Exxon business plan with helping dealers survive the tough market. "They the dealers got competitive," Stewart said. "They were able to go out in the street and fight." The Exxon side also said while its books were opened, there was no examination of the finances of the small dealers. "There are very few companies that would come out unscathed if they were treated the way Exxon has been treated," Stewart said. (The Miami Herald February 14, 2001) FALK, TRANSOUTH: Hard Job Giving out Money; Few File Settlement Claims ---------------------------------------------------------------------- Where have all of Charlie Falk's customers gone? Only 545 former customers of the used-car dealer have stepped forward to claim part of a $ 6 million class-action fraud settlement in Norfolk's federal court. That's about one-sixth of the 3,000 claims that were expected. At a hearing Tuesday, several lawyers struggled to explain why they have found so few people eligible for the settlement from TranSouth Financial Corp. One reason: Many folks who lived here from 1988 to 1993, the period covered by the settlement, are long gone and have no forwarding addresses. Another reason: Charlie Falk has been less than forthcoming with his customer records, the customers' attorney said. That brought a stinging rebuke Tuesday from a judge who ordered Falk to find the records and turn them over within 10 days. "I don't care if someone in Charlie Falk's office has to stop selling cars!" Magistrate Judge James E. Bradberry told Falk's attorney, nearly shouting. "I expect that Charlie Falk's records will be made available." The outburst came as lawyers and judges put the final touches on the settlement, ending one of the longest-running, most complex civil cases in Norfolk's federal court. Filed in 1993, the lawsuit claimed that Falk and TranSouth swindled thousands of customers who bought used cars, lost them to repossession, then found themselves on the hook for large court judgments. Charlie Falk settled its part of the case within a year by forgiving $ 10.5 million in defaulted loans to customers and paid $ 400,000 in damages, mainly for legal fees. But the case against TranSouth lingered for years, bouncing five times between Norfolk and a Richmond appeals court. Late last year, TranSouth agreed to its own settlement. The company agreed to pay $ 1,350 to each of about 3,000 former Falk customers. After expenses, each customer would get $ 1,296. Under that arrangement, the final payout was expected to be about $ 4 million to the customers and about $ 2 million to the customers' attorneys. But the total payout will be much smaller if fewer than the expected 3,000 customers file claims, which now seems likely. Those customers who do file claims would not get bigger shares of the $ 4 million. Instead, each claimant would get the same $ 1,296, but TranSouth would keep the remainder. On Tuesday, District Judge Raymond A. Jackson approved the settlement, calling it "fair, adequate and reasonable." He noted that the case has dragged on for nearly eight years. It was settled only after intensive mediation by Bradberry. "It's time for this case to be put to rest," Jackson told the lawyers Tuesday. But implementing the deal has been difficult. Both sides agreed to a list of 2,054 customers who qualified for the settlement. They called it "the A List." The lawyers also listed about 5,000 more customers who might qualify. They called it "the B List." A claims administrator -- Barry Roberts, vice president of First Union Bank in Jacksonville, Fla. -- mailed 7,200 claim notices for former Falk customers. The claims deadline was set for Feb. 23. Then a strange thing happened: Very few claims were filed, only 302 from the A list and 243 from the B list. It was far less than the 3,000 both sides expected. One problem was finding current addresses for the customers. More than 1,000 notices bounced back as undeliverable. "That's a large number," Bradberry said Tuesday, but "it's not terribly unusual in a case that goes back as far as this case." Roberts said he used Social Security numbers, and checked credit reports and the post office's change-of-address database to find customers. "That is a very, very comprehensive attempt," he said. The customers' attorney, Kieron F. Quinn of Baltimore, was skeptical. The number of bounce-backs "doesn't seem reasonable to me," he said. Quinn asked for a new round of notices through the Social Security Administration, but Bradberry refused, saying that could delay the settlement by months or years. Instead, Bradberry ordered one final round of notices, using new addresses, to the 1,061 former customers whose mail bounced back, and he set a new deadline for them. He also ordered Falk to find and deliver additional customer records. He was adamant, at times almost angry. "I think the presence of Mr. Falk's records will be very, very helpful," Bradberry said. As the hearing ended, Quinn thanked the judges for pushing the settlement that, he said, will help "people of modest means who were taken advantage of." Jackson replied, "The court needs no thank-yous. That's what the court's here to do." (Virginian-Pilot, February 14, 2001) GEORGIA-PACIFIC: Named in Lawsuit for Migrants' Wages for Planting Trees ------------------------------------------------------------------------ Outside the Pine Tree Motel, under the reddish glow of a neon sign, Ruben and 10 other Mexican workers pile into a van at 5:30 a.m. and head to a warehouse an hour away, where they load thousands of pine seedlings into a trailer. Then it is back in the van for the long trip to the fields, where the day is spent poking holes in the ground and planting thousands of seedlings. It is not until well after dark that they return to the motel, shoulders aching, boots caked with mud. Ruben is one of more than 15,000 workers, most of them Mexican, who come to the United States each year on temporary visas to plant tens of millions of trees. These modern-day Johnny Appleseeds, whose numbers have more than doubled in the last three years, journey north in the hope of earning more than the $5 a day they earn back home. Federal officials say these migrants are often paid far less than they are due because of widespread violations of wage and hour laws. It is these violations that make Ruben and those like him a concern not just for labor groups and the government but also for President Vicente Fox of Mexico, who, when he meets with President Bush on Feb. 16, is expected to press Mr. Bush to expand the number of these workers allowed in the United States and to provide them more protections. Traditionally, poor whites have done the work of replanting American forests. In the last 10 years, however, the forestry business, like other industries that depend on unskilled labor, has turned largely to immigrants on temporary visas to do the arduous work. Although Mexican migrants plant as far north as Maine and Washington State, they are concentrated in the South. They typically replant fields that were clear-cut months earlier and often work for contractors that plant for big corporations. Back in his motel after work, Ruben, who spoke on the condition that his last name not be used, said he regularly worked a 70-hour week but usually made less than $300, which works out to about $4.30 an hour, well below the $5.15 federal minimum wage. "Sometimes it just doesn't seem worth it," he said. "We work hard, and we're not getting much." Convinced that wage violations are widespread, lawyers are pressing three class-action lawsuits on behalf of thousands of immigrant forestry workers. The suits are directed against Georgia-Pacific, International Paper and Champion, acquired by International Paper last year, corporations that rely on the contractors for tree planting. The contractors say that the workers exaggerate hours. Michael Economopoulos, executive director of the South Eastern Forestry Contractors Association, said, "There are probably abuses out there, as in any industry, but I don't think there are wholesale abuses going on." Advocates for the workers disagree. "They're robbing these workers blind," said Mary Bauer, legal director of the Virginia Justice Center. "The number of people involved and the number of violations are beyond anything I've ever seen." Labor Department officials, echoing some of the suits' accusations, said companies often flouted record keeping and wage and overtime laws by counting only the hours workers planted and not those spent loading seedlings and driving to the fields. The large corporations being sued argue that they are not responsible for the actions of the contractors. "We do not directly employ these seasonal migrant workers," said Jack Cox, a spokesman for International Paper. "We have contractors who employ these workers." Federal rules require that tree planters in the H-2B temporary visa program in Arkansas be paid $8.43 an hour and receive time and a half for every hour worked in a week over 40. But tree planters, called pineros in Spanish, and several foremen here in south-central Arkansas, produced pay records showing that the migrants often make less than $5 an hour, when they include the time it takes to pick up the seedlings and drive to the fields. Even though the workers often work 60, 70, even 80 hours in a week, they said, overtime is hardly ever paid. "The office often wrote 40 hours, but many times the pineros worked more than 50," said Miguel Lopez, a foreman for a contractor in Arkansas. Though he praised his current employer, Mr. Lopez said he was convinced that a previous contractor he worked for, F & K Enterprises, underpaid its workers. Mr. Lopez made available wage records from F & K showing that no crew member worked more than 40 hours a week, a virtual impossibility, he said, given the nature of the workday. Kerry Stanley, an owner of F & K, declined to comment. In documents from the class-action lawsuits, F & K executives said that many workers exaggerated their hours. They also said they told foremen not to work the planters more than 40 hours a week and acknowledged that they never paid overtime. The planting companies often recruit their workers by sending foremen to Mexico and running radio commercials there. Though recruiters tell workers that they can make big money, the pineros say, the pay falls far short of expectations. So does the job itself, workers said. Once they reach the field at daybreak, the pineros fill saddlebags with 800 to 1,000 seedlings. They strap the bags, which weigh 40 pounds, to their waists. Using three-foot-long metal poles, they make thin, six-inch holes in the ground. They bend to place the seedling into the hole, making sure the roots are straight. The holes need to be eight feet apart. A proficient worker can plant six or more trees a minute. Lawyers involved in the class-action suits are seeking millions in back pay from employers they accuse of keeping inaccurate records and violating wage and overtime laws. Though the contractors hire the workers directly, the suits are against the large corporations that often own the forested land. The migrants' lawyers contend that the corporations are joint employers and should be held responsible for any wage violations and back pay. "This is one of the clearest cases of joint employment I've ever seen," said Gregory Schell, a lawyer with Florida Legal Services. "The forestry companies often own the land. They send their foresters to the fields to make sure the planting is done right. They tell the foremen what to do." The forestry companies deny responsibility. "In all our contracts with these companies," said Mr. Cox of International Paper, "we have provisions that they have to agree to abide by all applicable labor laws." Gregory Guest, a Georgia-Pacific spokesman, said the contractors were the planters' employers. When the company finds contractors not complying with the law, "we take the appropriate action and that can include terminating the contractor." One worker staying at the Pine Tree Motel said he feared he might not clear $1,500 for three months' work after expenses. Frustrated, he said he might not return next year. "Every year they promise us it's going to get better, but it doesn't," he said. "But they know that they can always get new people who don't know what they're getting into." (The New York Times, February 14, 2001) HIP IMPLANTS: Lawsuit Filed in San Francisco; Hundreds Need Surgery ------------------------------------------------------------------- At least 341 people have required surgery after receiving faulty prosthetic hips, leading to a class-action lawsuit Tuesday in San Francisco against the manufacturer, several other legal actions and a recall of unused devices. The prosthetic hips, manufactured by Sulzer Orthopedics, were implanted in thousands of patients throughout the United States from 1997 to late 2000. According to patients and attorneys who are suing the company, they sometimes fail to attach to patients' bones, rendering their legs nearly useless and prompting severe pain in the groin, leg or hip area. "I was told if I had this hip replacement I'd be as good as new," said arthritis sufferer Rhonda Silva, one of about 15 plaintiffs in a class-action suit filed in San Francisco against Sulzer on Tuesday. "It's ruined my entire life." The Austin, Texas-based company in December voluntarily recalled thousands of the prosthetic hips not yet implanted in patients, and it has told doctors to replace only those prostheses that have failed. The device is known as the Inter-Op hip shell. Sulzer, which also has headquarters in Switzerland, has apologized to patients and last month revamped its cleaning procedures to make sure that residue is not left on its prostheses. The company makes about 12% of the artificial hips used in the United States. The problems have been scattered throughout the country, although a significant number of the potentially damaged prostheses were distributed in Texas, Florida, Arizona and California, a Sulzer spokesman said. Lawsuits have been filed in several other states besides California. The company blames a new manufacturing process, which left an oily residue on an unknown percentage of the 17,500 high-tech Sulzer hips that doctors have implanted since 1997. The residue is said to prevent the devices from properly bonding to patients' bones. "The oil fills the pores in part of the prosthesis and it's like trying to attach something to an oily chalkboard," said Robert Romano, a Teaneck, N.J., attorney whose firm has also filed a class-action suit. "You're just not going to be able to get a grip." Silva and the other plaintiffs in the San Francisco suit are seeking unspecified damages from Sulzer, along with funding to monitor the medical conditions of patients who have not displayed symptoms of faulty hip replacements. The plaintiffs will try to find out exactly when Sulzer knew about the problem, said Richard Heimann, the San Francisco-based lead attorney. "We had some reports from physicians of this phenomenon occurring, and so we looked into it," Sulzer spokesman Jim Johnson said. According to both Romano and the company, symptoms that an artificial hip has not properly grafted to a patient's pelvic bone usually begin to show up within three to six weeks of surgery, although it can be as long as six months. Key signs, Romano said, are pain in the groin, inner thigh and buttock, as well as pain while walking or putting weight on the hip. Another sign is the inability to exert resistance with the leg. Perhaps because it was marketed as a device that lasts longer than most hip replacements, a significant number of middle-aged arthritis sufferers have been affected, along with elderly patients. Silva, of Oakland, had exercised daily and run a small company before a crippling case of arthritis forced her to walk with a cane. There was just one cure, her doctors said: a hip replacement. But a few weeks after the 48-year-old public relations executive had the surgery last April, she said, she collapsed in pain more excruciating than any she had ever felt. Somehow, she said, the synthetic hip that had replaced her own deteriorating joint had separated from the pelvic bone to which it had been grafted. Her leg was no longer fully anchored to anything within her body. Her doctors recommended another cure: Replace the replacement. But Sulzer had not yet recalled the faulty hip and Silva's new hip came from the same batch as her old one, she said. The operation failed again. Now, Silva is scheduled for a third surgery--with a new doctor whom she has instructed not to use a Sulzer hip. Cherie Lewis, who is also a plaintiff in the San Francisco lawsuit, was progressing well after her Oct. 30 hip replacement in Contra Costa County, where she lives and works as a sales manager. Like Silva, she was working with a physical therapist, and she had almost reached the point where she was allowed to put her full weight on her new hip. Then, on the Sunday before Thanksgiving, she woke up in pain. Her doctors didn't know what it was, she said. They increased her dose of painkillers and told her to cut out the physical therapy. It wasn't until December, Lewis said, that she learned about the faulty hips. She received a replacement hip last month. The U.S Food and Drug Administration is monitoring the recall to make sure that Sulzer is taking the proper steps to remove the problem prosthetics from the market. FDA spokeswoman Sharon Snider said the regulatory agency learned about the faulty hips from officials at Sulzer. "We're in touch with the company, and we're looking to see what their recall strategy is and whether it's adequate," Snider said. Artificial Hip Recalled Sulzer Orthopedics, a manufacturer of artificial joints, is recalling one of its prosthetic hip implants--the Inter-Op hip shell. How the implant works: * Hip implant replacement surgery creates an artificial joint that imitates the ball-and-socket structure of the hip joint. * The surgeon inserts a shell with a smooth plastic lining into the pelvis socket. * The ball part of the thighbone is replaced with a metal ball mounted on a stem, which is fitted into the thighbone. * The implant is supposed to integrate with the natural bone structure. The part being recalled is Sulzer's metal shell, which in some cases is failing to attach to patients' bones. (Los Angeles Times, February 14, 2001) HMOs: Aetna Responds to Lawsuit By Connecticut State Medical Society -------------------------------------------------------------------- Statement in Response to Connecticut State Medical Society Lawsuit Hartford, Conn., Feb. 14, 2001 -- During the past year, Aetna has been working diligently to address many of the concerns of physicians in Connecticut and around the country. In fact, Aetna Chairman William H. Donaldson initiated discussion with the Connecticut State Medical Society within 60 days of being appointed, and we have continued a constructive dialogue that has led to important changes in Connecticut and across the country. As recently as one week ago, we had a discussion with the CSMS leadership, and absolutely nothing was said about the issues involved in this litigation. They specifically indicated that they were pleased with our evolving relationship and looked forward to the additional initiatives that we are working on together. So we are surprised and disappointed that the parties have chosen to use litigation, which is costly, cumbersome and adversarial, instead of raising these issues directly with us. While we have not yet seen the litigation, it appears that it is similar to claims made in purported class-action suits filed around the country since late 1999. These complaints seek to engage in a policy quarrel with the managed care system. The U.S. Supreme Court recognized in a unanimous decision last June (Pegram v. Herdrich) that for over 27 years, Congress has promoted the formation of HMOs. The Court emphasized that the choices inherent in the managed care system properly should be made by legislatures and admonished the courts not to get involved in these essentially legislative questions. For our part, we will continue to pursue changes to our business consistent with the evolution of markets and the best interests of our various constituents. We believe that suits such as this one are without legal merit and we will, of course, vigorously pursue our defense. IBP, INC: Harvey Greenfield Announces Securities Suit Filed in S. Dakota ------------------------------------------------------------------------ The following is an announcement by the Law Firm of Harvey Greenfield: Notice is hereby given that a class action lawsuit was filed in the United States District Court for the District of South Dakota brought on behalf of all purchasers of common stock of Iowa Beef Processors Inc. (NYSE: IBP) who purchased or acquired shares of IBP between February 7, 2000 and January 25, 2001, inclusive (the "Class Period"). The Complaint alleges, among other things, that IBP and certain of its top officers issued false and misleading public statements about IBP's earnings and revenue during the Class Period in its public filings with the Securities and Exchange Commission ("SEC") and press releases. Plaintiff alleges that on January 25, 2001, IBP belatedly disclosed that the SEC had sent IBP's lawyers a comment letter on December 29, 2000, citing 45 apparent instances of improper accounting in financial reports filed by the Company, including the accounting at its DFG Foods Subsidiary ("DFG"). As a result, in a press release on January 26, 2001, IBP announced that it would take a pre-tax charge of at least $47 million against year 2000 earnings to compensate for the accounting errors involving DFG, and that it may need to further adjust its financial results to reflect impairment of goodwill or other long-lived assets associated with DFG. The public dissemination of materially misleading financial information caused IBP's common stock to be artificially inflated throughout the Class Period. The market price of IBP stock dropped almost $4.00, or about 15%, following the Company's belated disclosure of the accounting irregularities. If you have any questions or wish to discuss this action or your rights with regard to this litigation, you may contact Harvey Greenfield, Esq. at the Law Firm of Harvey Greenfield, 60 East 42nd Street, Suite 2001, New York, NY 10165, telephone 212-949-5500, or toll free 877-949-5500, facsimile 212-949-0049, or by e-mail at hgreenf@banet.net. MARKETING SERVICES: Brodsky & Smith Announces Securities Suit in Fd Cts. ------------------------------------------------------------------------ Brodsky & Smith, L.L.C., of Bala Cynwyd, PA, on February 13 announced that class action lawsuits involving the purchase of the stock of Marketing Services Group, Inc. (NASDAQ:MSGI) during the period 01-01-99 to 11-30-00 have been initiated in federal courts across the country alleging violations of the federal and/or state securities laws for the following proposed time period: The class has not been certified by the court for this stock, and until certified, an investor is not represented. You have the right to be represented and participate as a plaintiff in this lawsuit if you purchased the above-named stock during the identified proposed class period. Contact: Brodsky & Smith, L.L.C. Jason L. Brodsky or Evan J. Smith, 877/LEGAL90 jbrodsky@brodsky-smith.com MICRON ELECTRONICS: MN Suit over Faulty Computers Is in Discovery Stage ----------------------------------------------------------------------- The Company is defending a consumer class action lawsuit filed in the Federal District Court of Minnesota based on the alleged sale of defective computers. No class has been certified in the case. The case involves a claim that the Company sold computer products with a defect that may cause errors when information is written to a floppy disk. Substantially similar lawsuits have been filed against other major computer manufacturers. The case is currently in the early stages of discovery, and we are therefore unable to estimate total expenses, possible loss or range of loss that may ultimately be connected with the matter. MICROSOFT, COREL: DOJ Probes on Alliance Before Arguments on Competition ------------------------------------------------------------------------ The Department of Justice confirmed that it has launched an investigation into Microsoft's alliance with Corel Corp. to determine whether the deal could reduce competition in the market for office software packages. "We're looking into the transaction," said Gina Talamona, a Justice Department spokeswoman. The investigation was first reported in the online edition of Wall Street Journal early Wednesday. The Justice Department served Microsoft a civil subpoena on the Corel matter three weeks ago. News of the latest government scrutiny of the software giant comes less than two weeks before Microsoft and the Department of Justice begin oral arguments on Feb. 26 and 27 in the company's appeal of the government's ruling last year that the software giant should be broken into two companies. But Talamona denied the Journal's report that it was investigating Microsoft's $1.1 billion buyout of Great Plains Software announced in December. She noted that the deal was undergoing routine antitrust review. "We never opened an investigation into Great Plains," she said. Issues of Competition Last October, Redmond, Wash.-based Microsoft made a $135 million investment in Corel, its long-time adversary in the market for word-processing and spreadsheet software. Under the arrangement, both companies said they would jointly develop and market new products related to Microsoft's .Net platform, which aims to take its existing software to the Internet and develop new, Web-based services. In addition, Microsoft and Corel said they would settle undisclosed legal issues. Microsoft Office dominates the market for office software such as word processing, spreadsheets and graphics, with a 90 percent share. Justice's investigation into the alliance was unexpected because the 24 million shares of Corel's convertible preferred stock that Microsoft purchased did not carry voting rights, thus skirting automatic federal review. Corel's WordPerfect Office software is important for competitive reasons because it is also available in a version based on the Linux operating system, which competes with Microsoft Windows. On Jan.23, Corel said it planned to spin off its Linux Distribution system and retain an interest in the prospective new entity, but that it would continue to develop its WordPerfect application for the Linux operating system. Microsoft spokesman Jim Cullinan said the company is fully cooperating with the Justice Department's investigation, adding that, "Nothing in the agreement prevents Corel from developing other software platforms." Taking into the account the prevalent suspicion about Microsoft's business activities among its competitors and on Capitol Hill, antitrust lawyer Steven Mahinka of Morgan, Lewis & Bockius in Washington, D.C. said the Justice Department's investigation should not come as much of a surprise. "Microsoft is not going to get the benefit of the doubt," he commented. The Corel deal is seen as a test case for the new Bush administration in its handling of Microsoft given that the subpoena was signed by a Clinton appointee Douglas Melamed, who became antitrust chief after Joel Klein resigned last year. President Bush is expected to name Charles James, who has served high-level positions at the Justice Department and the Federal Trade Commission, to the post. James, head of antitrust practice at the high-powered Washington law firm Jones, Day Reavis & Pogue, is believed to not favor a breakup of Microsoft and will probably not take any action on the case until after an appeals court ruling expected by June. (CBS.MarketWatch.com.) NETWORK ASSOCIATES: LeBlanc & Waddell Announces Securities Lawsuit in CA ------------------------------------------------------------------------ The law firm of LeBlanc & Waddell, LLC, (http://www.lw-law.net)on February 13 announced that a Class Action Complaint has been filed against Network Associates, Inc. (Nasdaq:NETA), accusing the company of inflating its stock price by improperly booking revenue. The class action, filed in the United States District Court for the Northern District of California, seeks damages for violations of federal securities laws on behalf of all investors who bought Network Associates common stock between July 19, 2000 and Dec. 26, 2000. Network Associates is a Santa Clara-based provider of network security and availability solutions for e-business. According to the complaint, Network Associates misled investors by recognizing revenue when it shipped software to its distributors instead of waiting until it was shipped to end-users. The complaint also accused Network Associates of "channel stuffing" - overselling to its distributors to pad short-term results. On Dec. 26, 2000, the company issued a press release reporting a fourth-quarter sales shortfall of $120 million due to returns of excess inventory by its distributors. In addition, Network Associates announced that henceforth it would book revenue only after software was shipped to end-users. The company also said it was replacing it's CEO, CFO and president. As a result, Network Associates shares lost 62% of their value. Contact: LeBlanc & Waddell LLC, Baton Rouge Chad A. Dudley, 225/768-7222 cdudley@lw-law.net http://www.lw-law.net NICE SYSTEMS: Abraham & Paskowitz Announces Securities Suit Filed in NJ ----------------------------------------------------------------------- The law firm of Abraham & Paskowitz announces that a class action lawsuit was filed on February 13, 2001, on behalf of all purchasers of the American Depositary Shares of Nice Systems, Ltd. (Nasdaq:NICE) between February 16, 2000 and February 8 2001, inclusive. A copy of the complaint filed in this action is available from Abraham & Paskowitz by calling toll free, 1-800-938-0015, or by making a request via e-mail to classattorney@aol.com. The action, which has not yet been assigned a docket number, is pending in the United States District Court, District of New Jersey, located at the Martin Luther King Building and U.S. Courthouse, 50 Walnut Street, Newark New Jersey 07101. The Court may be reached by telephone at 973-645-3730. A further notice to class member will be published by us once the case has been assigned a docket number and a presiding U.S. District Judge. The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. Specifically, defendants failed to properly account for revenues or prematurely recognized revenues in its fiscal year ending December 31, 1999 and in the first three quarters of the year 2000. The Company also failed to accurately disclose its difficulties in integrating acquisitions made during the year 2000, and the affect a necessary reorganization was having on its ability to obtain and close contracts. On February 8, 2001, however, defendants shocked the market by announcing that revenues had been improperly booked in 1999 and in the first three quarters of 2000, and that the Company would be restating those financial results. In addition, the Company disclosed a material workforce reduction, drastically reduced revenue expectations, and expected substantial losses related to a reorganization. The Company further announced that its Chairman of the Board was resigning from that position. In response to this announcement, the Company's common stock fell approximately 30% from its closing price on the previous day. Contact: Abraham & Paskowitz, New York Laurence Paskowitz or Jeffrey Abraham, 800/938-0015 classattorney@aol.com NICE SYSTEMS: Kirby, McInerney Retained To Commence Securities Lawsuit ---------------------------------------------------------------------- The law firm of Kirby McInerney & Squire, LLP has been retained to bring a class action lawsuit on behalf of all purchasers of Nice Systems Ltd. (Nasdaq: NICE) securities from February 16, 2000 through February 8, 2001, inclusive (the "Class Period"). The action will charge Nice Systems Ltd. ("Nice" or the "Company") and certain of its officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by reason of material misrepresentations and omissions. The complaint will allege that, during the Class Period, defendants Nice, Nice Chairman Benjamin Levin and Nice Chief Financial Officer Yuval Yanai misstated the Company's financial results for 1999 and 2000. As a result, the Company's stock price was inflated throughout the Class Period. The true state of the Company's finances was revealed on February 8, 2001, when the Company admitted that previously-reported financial results had been materially misstated as a result of the improper booking of millions of dollars of revenue from consignment sales. The Company also announced the resignation of its chairman Benjamin "Benny" Levin. In reaction to this announcement, Nice's share price fell more than 30% in a single day, to $12.75 per share. The lawsuit will seek to recover losses suffered by individual and institutional investors who purchased or otherwise acquired publicly traded securities of the Company during the class period, excluding the defendants and their affiliates. Contact: KIRBY McINERNEY & SQUIRE, LLP Ira M. Press, Esq. Mark A. Strauss, Esq., (212) 317-2300 or Toll Free (888) 529-4787 E-Mail: sanwar@kmslaw.com ORACLE CORP: Vigorously Defends Shareholder Suit in CA Re Apr to Dec ‘97 ------------------------------------------------------------------------ Shareholder class actions were filed in the Superior Court of the State of California, County of San Mateo against the Company and its Chief Financial Officer and former President and Chief Operating Officer on and after December 18, 1997. The class actions were brought on behalf of purchasers of the stock of the Company during the period April 29, 1997 through December 9, 1997. Plaintiffs allege that the defendants made false and misleading statements about the Company's actual and expected financial performance, while selling Company stock, in violation of state securities laws. Plaintiffs further allege that the individual defendants sold Company stock while in possession of material non-public information. Discovery is ongoing in these actions. The Company believes that it has meritorious defenses to these actions and is vigorously defending them. A related shareholder derivative lawsuit was filed in the Superior Court of the State of California, County of San Mateo on November 17, 1998. The derivative suit was brought by Company stockholders, allegedly on behalf of the Company, against certain of the Company's current and former officers and directors. The derivative plaintiffs allege that these officers and directors breached their fiduciary duties to the Company by making or causing to be made alleged misstatements about the Company's revenue, growth, and financial status while certain officers and directors sold Company stock and by allowing the Company to be sued in the shareholder class actions. The derivative plaintiffs seek compensatory and other damages, disgorgement of compensation received and temporary and permanent injunctions requiring the defendants to relinquish their directorships. On January 15, 1999, the Court entered a stipulation and order staying the action until further notice. PLC SYSTEMS: Announces Settlement of Securities Lawsuit in MA ------------------------------------------------------------- PLC Systems Inc. (Amex: PLC), the leader in carbon dioxide (CO2) transmyocardial revascularization (TMR), on February 14 announced that the United States District Court for the District of Massachusetts has issued final approval of the settlement of the securities class action litigation against the Company. Under the terms of the settlement agreement, the plaintiff class members and their attorneys will receive a total of $1.5 million. PLC Systems' insurance carriers will fund the entire $1.5 million settlement. TOBACCO LITIGATION: Judge Certifies Light Cigarette Smokers' Suit V. PM ----------------------------------------------------------------------- Judge Nicholas G. Byron, by court order filed February 8, 2001, certified a class action suit brought on behalf of Cambridge Lights and Marlboro Lights cigarette smokers in the Third Judicial Circuit Court for Madison County, Illinois. The suit alleges that Philip Morris engaged in deceptive conduct in connection with the promotion and sale of these so-called "light" cigarettes. The Court explains that the "gist of plaintiffs' claims is that these light cigarettes are by nature of their design not significantly lighter than regular cigarettes and that any person who purchased defendants' light cigarettes did not get what the defendants purported to sell; i.e. a 'light' cigarette containing significantly lower tar and nicotine than regular cigarettes." The complaint accuses Philip Morris of misleading consumers by packaging cigarettes as "Lights" and claiming that these cigarettes contain "lower tar and nicotine than regular cigarettes." The complaint states that Philip Morris failed to disclose certain material information regarding their claims of low tar and nicotine in their "light" cigarettes. In particular, the complaint states that Philip Morris failed to disclose that the so-called low tar and nicotine content in their "light" cigarettes depends more upon the existence of additional ventilation holes in the filter of the cigarette than the actual content of the cigarette tobacco. In theory, the vent holes allow air to mix with the cigarette smoke inhaled by the consumer and thereby dilute the tar and nicotine content of smoke per puff. Defendants rely on tar and nicotine measurements obtained from industry "smoking machines" to designate their ventilated cigarettes as "light." As the complaint explains, however, the vent holes are placed on the filter and are virtually invisible. As a result, consumers -- unlike the industry smoking machines -- block the vent holes with their lips and fingers, thereby receiving more tar and nicotine than the machines. The complaint states that Philip Morris failed to disclose that consumers could not achieve the lower tar or nicotine in "light" cigarettes if they inadvertently blocked some or all of the vent holes with their lips or fingers. Plaintiff and the Class, which includes all residents of Illinois who purchased and consumed Cambridge Lights and Marlboro Lights cigarettes, seek economic damages in the form of a refund of purchase costs. The Class as defined does not include smokers who have claims for personal injury resulting from the purchase or consumption of cigarettes. In fact, the Court specifically held that, "the consumer fraud claims brought by plaintiffs are distinct from any personal injury claims relating to the smoking of cigarettes that Class members may have against defendants." As a result, the Court concludes that "claims for personal injury and/or addiction are not and could not be included in this action and are, therefore, specifically preserved." Similar claims have been made against Philip Morris in suits filed in Florida, Massachusetts, Missouri, New Jersey, Ohio, Pennsylvania, and Tennessee. Similar suits have also been filed against R.J. Reynolds and Brown & Williamson. Plaintiff and the Class are represented by the following law firms, among others: Carr, Korein, Tillery, Kunin, Montroy, Cates, Katz & Glass, LLC (Stephen M. Tillery); Newman & Bronson (Mark I. Bronson); Finkelstein, Thompson & Loughran (William P. Butterfield); Sheller, Ludwig & Badey (Stephen Sheller); William, Cuker & Berezofsky (Esther Berezofsky); Smoger & Associates, P.C. (Gerson H. Smoger); Bonnet, Fairbourn, Friedman & Balint (Van Bunch). For more information regarding this case or similar cases filed across the country, please call toll free 800-874-9094. Source: Finkelstein, Thompson & Loughran Contact: Richard M. Volin of Finkelstein, Thompson & Loughran, 202-337-8000 TOBACCO LITIGATION: Lawyer Seeks Part of the Pie for Doing Referral ------------------------------------------------------------------- Drop Stanley Rosenblatts name around Miami and many people recognize him as the man who brought Big Tobacco to its knees, first on behalf of flight attendants, then on behalf of Florida smokers. But mention Peter Schwedock, and many might be hard-pressed to place the name. Rosenblatt and wife Susan are best known as having taken on Americas cigarette makers single-handedly. But Schwedock says that had he not been the first to refer those flight attendants to the Rosenblatts, the two lawyers never would have collected $ 49 million in attorney fees and expenses. Schwedock says he is entitled to a piece of the pie. Today, Miami-Dade Circuit Judge Thomas Wilson Jr. is scheduled to hear arguments on whether Schwedock has a case. In December, Circuit Judge Robert Kaye, who presided over both tobacco suits brought by the Rosenblatts, said he didnt. The dispute between Schwedock and the Rosenblatts erupted in October. Thats when Schwedock sued the Rosenblatts, claiming that they broke a written contract requiring the husband-and-wife legal team to give Schwedock a portion of the money. The millions they received were part of a historic agreement that also required Big Tobacco to pay $ 300 million to fund a research foundation. Schwedock says there would never have even been a class action had he not introduced the Rosenblatts to the lead plaintiff, Norma Broin. Broin, an American Airlines flight attendant turned anti-tobacco zealot, met Schwedock years ago while he was helping flight attendants win workers compensation claims. Schwedock says he was representing flight attendants who had been grounded because they had been suffering from severe sinus problems -- the apparent result of inhaling secondhand smoke in the days when smoking was allowed aboard airliners. The flight attendants were angry because they were not being paid for their sick days. Thats how I first got involved in secondhand smoke, Schwedock said. Then I started thinking about a class action. But when Schwedock met Broin, who was diagnosed with lung cancer, he says, he knew he had something really big. She was the catalyst, Schwedock said. So, Schwedock, who had worked with the Rosenblatts in the past, introduced them to Broin. Broin had become a spokeswoman in the anti-secondhand smoke movement and her name also was known in the airline industry. With Broin as a plaintiff, Schwedock said he convinced the Rosenblatts to put together what eventually became a nationwide class-action lawsuit against Big Tobacco on behalf of some 60,000 other flight attendants, said David Goodwin, an attorney with Akerman Senterfitt in Miami who represents Schwedock. But Schwedocks involvement didnt end there. Goodwin claims his client also provided the Rosenblatts with critically important information on flight attendants which allowed the attorneys to build an army of plaintiffs for their lawsuit. The press release that went out after the complaint was filed [in 1991] started out saying that Stanley Rosenblatt and Peter Schwedock have filed an historic lawsuit. Schwedock was listed as co-counsel, Goodwin said. But in court papers, the Rosenblatts claim that Schwedock wasnt all that involved in the case, which dragged on for seven years. Furthermore, they claim that the contract they signed with Schwedock, Broin and her husband, Mark Elroy Broin, is incomplete in that it fails to provide for any particular attorneys fee or division of fees. Stanley Rosenblatt declined to comment for this article. Schwedock admits the contract was left blank, but it was because Stanley said, I will take care of you. Besides, he notes, Stanley Rosenblatts signature is on the contract, as is the Broins. But the Rosenblatts claim that Schwedock should have spoken up in 1998 when the settlement agreement was being approved by the court, not a year later. At no time during the proceedings did the plaintiff ever file or submit any request for payment of attorneys fees in connection with services he allegedly rendered in the flight attendant class action, wrote Rosenblatt in a motion to dismiss the suit against him. The claim for fees, he wrote in his motion, was clearly an after thought. The Rosenblatts allege that had the plaintiffs known of such a claim, they might not have approved the deal and they have since filed affidavits opposing any referral fee. Goodwin claims his client had no obligation to speak out during the settlement agreement talks because his deal was with the Rosenblatts, not with the flight attendants. The point is, the deal was the deal, he said. When the monies were finally paid in the fall of 1999 to Mr. Rosenblatt, Mr. Schwedock went over there to get his portion of the fee and Mr. Rosenblatt stonewalled him. Last November, the Rosenblatts took their concerns about Schwedocks claim to Kaye, who oversaw the settlement agreement. The judge first agreed with Goodwin, noting that the dispute was between his client and the Rosenblatts and therefore belonged before Wilson, who was assigned to the case. But less than a month later, Kaye reversed himself and denied Schwedocks request, saying it was untimely and an unenforceable and invalid claim. For one judge to cross division lines is shocking, Goodwin said. In his motion to vacate Kayes ruling, Goodwin argues his clients claim is the result of a valid Florida Bar approved contract for legal services signed by Peter Schwedock, signed by the Broins and signed by Stanley M. Rosenblatt. The only link to the class-action case, argues Goodwin, was made by the Rosenblatts through their rhetoric, imagination and unwillingness to share their enormous fee. portion of the money. The millions they received were part of a historic agreement that also required Big Tobacco to pay $ 300 million to fund a research foundation. Schwedock says there would never have even been a class action had he not introduced the Rosenblatts to the lead plaintiff, Norma Broin. Broin, an American Airlines flight attendant turned anti-tobacco zealot, met Schwedock years ago while he was helping flight attendants win workers compensation claims. Schwedock says he was representing flight attendants who had been grounded because they had been suffering from severe sinus problems -- the apparent result of inhaling secondhand smoke in the days when smoking was allowed aboard airliners. The flight attendants were angry because they were not being paid for their sick days. Thats how I first got involved in secondhand smoke, Schwedock said. Then I started thinking about a class action. But when Schwedock met Broin, who was diagnosed with lung cancer, he says, he knew he had something really big. She was the catalyst, Schwedock said. So, Schwedock, who had worked with the Rosenblatts in the past, introduced them to Broin. Broin had become a spokeswoman in the anti-secondhand smoke movement and her name also was known in the airline industry. With Broin as a plaintiff, Schwedock said he convinced the Rosenblatts to put together what eventually became a nationwide class-action lawsuit against Big Tobacco on behalf of some 60,000 other flight attendants, said David Goodwin, an attorney with Akerman Senterfitt in Miami who represents Schwedock. But Schwedocks involvement didnt end there. Goodwin claims his client also provided the Rosenblatts with critically important information on flight attendants which allowed the attorneys to build an army of plaintiffs for their lawsuit. The press release that went out after the complaint was filed [in 1991] started out saying that Stanley Rosenblatt and Peter Schwedock have filed an historic lawsuit. Schwedock was listed as co-counsel, Goodwin said. But in court papers, the Rosenblatts claim that Schwedock wasnt all that involved in the case, which dragged on for seven years. Furthermore, they claim that the contract they signed with Schwedock, Broin and her husband, Mark Elroy Broin, is incomplete in that it fails to provide for any particular attorneys fee or division of fees. Stanley Rosenblatt declined to comment for this article. Schwedock admits the contract was left blank, but it was because Stanley said, I will take care of you. Besides, he notes, Stanley Rosenblatts signature is on the contract, as is the Broins. But the Rosenblatts claim that Schwedock should have spoken up in 1998 when the settlement agreement was being approved by the court, not a year later. At no time during the proceedings did the plaintiff ever file or submit any request for payment of attorneys fees in connection with services he allegedly rendered in the flight attendant class action, wrote Rosenblatt in a motion to dismiss the suit against him. The claim for fees, he wrote in his motion, was clearly an after thought. The Rosenblatts allege that had the plaintiffs known of such a claim, they might not have approved the deal and they have since filed affidavits opposing any referral fee. Goodwin claims his client had no obligation to speak out during the settlement agreement talks because his deal was with the Rosenblatts, not with the flight attendants. The point is, the deal was the deal, he said. When the monies were finally paid in the fall of 1999 to Mr. Rosenblatt, Mr. Schwedock went over there to get his portion of the fee and Mr. Rosenblatt stonewalled him. Last November, the Rosenblatts took their concerns about Schwedocks claim to Kaye, who oversaw the settlement agreement. The judge first agreed with Goodwin, noting that the dispute was between his client and the Rosenblatts and therefore belonged before Wilson, who was assigned to the case. But less than a month later, Kaye reversed himself and denied Schwedocks request, saying it was untimely and an unenforceable and invalid claim. For one judge to cross division lines is shocking, Goodwin said. In his motion to vacate Kayes ruling, Goodwin argues his clients claim is the result of a valid Florida Bar approved contract for legal services signed by Peter Schwedock, signed by the Broins and signed by Stanley M. Rosenblatt. The only link to the class-action case, argues Goodwin, was made by the Rosenblatts through their rhetoric, imagination and unwillingness to share their enormous fee. (Broward Daily Business Review, February 13, 2001) TOBACCO LITIGATION: Miami Judge Dismisses Atty's Claim for Referral Fee ----------------------------------------------------------------------- Miami-Dade Circuit Judge Thomas Tam Wilson Jr. on Tuesday dismissed, without prejudice, a lawsuit filed by Miami attorney Peter Schwedock against anti-tobacco lawyers Stanley and Susan Rosenblatt. As the Review reported, Schwedock, filed suit against the Rosenblatts last October claiming that they owed him a referral fee for being the first to bring to the Rosenblatts several flight attendants who eventually became the name plaintiffs in a class action lawsuit against Big Tobacco. The Rosenblatts argued that because the $ 49 million they received in attorney fees and costs were the result of a deal they struck with cigarette makers, and because all of the court proceedings related to that case had been before Miami-Dade Circuit Judge Robert Kaye, that he should be the one to hear the Schwedock case. Indeed, last December, Kaye ruled against Schwedock, saying the request was untimely and an unenforceable and invalid claim. Schwedocks attorney, David Goodwin, of Akerman Senterfitt in Miami has filed a motion before Kaye for a rehearing and to have his December order vacated. That motion is set to be heard Feb. 23. Noting that the issues were already before Kaye, Wilson said he saw no purpose in having two litigations going at the same time. (Miami Daily Business Review, February 14, 2001) ********* 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. 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