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/raid1/www/Hosts/bankrupt/CAR_Public/010223.MBX C L A S S A C T I O N R E P O R T E R Friday, February 23, 2001, Vol. 3, No. 38 Headlines AIR FORCE: Officials in TN Try to Quell Fears over Methane Pocket AMTRAK, CSX: Railroads Sued for Alleged Negligence in Accident BEAR STEARNS: Seeks to End Lawsuit Re Insolvent MA Investment Fund CABLE OPERATORS: L.A. Ct. Denies Cert. in Antitrust Suit By Customers CANKER PROGRAM: Cities Leave Class Action Portion to Private Attorneys GERMANY, FRANCE: Lawyers in Nazi Suit Plan to Sue over Mad Cow Crisis HIP IMPLANT: Krupnick Campbell Announces $500M FL Suit Vs. Sulzer Medica HMOs: United Healthcare Settles Charges of Overbilling the Elderly in IL HOLOCAUST VICTIMS: Author of Book about IBM Shrugs off Accusations HOLOCAUST VICTIMS: IBM Suit Raises Concern About Legal Peace for Germany INTERSTATE, INTERMODAL: Appeal Planned In Re Truck Drivers’ Earnings KRAFT FOODS: Milk Producer Can Have Day in Court for Price-Fixing Claims LIPARI LANDFILL: Settlement Reached over Toxic Waste Dump in NJ Near PA MATAV CABLE: Israeli Broadband Provider Settles Lawsuit over Connection MICHAEL HEISLEY: Vancouver Grizzlies Owner Sued for Moving NBA Team NORTEL NETWORKS: Brokerage Cuts Target on Price to $25 As Suits Filed NORTEL NETWORKS: Milberg Weiss Extends Period in Securities Suit in N.Y. NORTEL NETWORKS: Wechlser Harwood Announces Securities Lawsuit TOBACCO LITIGATION: MA Accused of Medicaid Seizure Despite $7.6 Bil Pact XCHANGE, INC: Johnson & Perkinson Announces Securities Lawsuit in MA XEROX CORPORATION: Mark McNair Files Securities Lawsuit ZONOLITE LITIGATION: W.R. Grace Says Disturbing Insulation Is Hazardous * Pharmacists' Anti-Abortion 'Conscience' Bill Advances ********* AIR FORCE: Officials in TN Try to Quell Fears over Methane Pocket -----------------------------------------------------------------Officials in Coffee County, Tenn., are trying to quell fears that a methane gas pocket could explode on Coffee County Central High School property, while a related $ 2.5 billion suit filed in U.S. District Court in Chattanooga moves forward. Residents in Franklin and Coffee counties filed the class action suit last October against the Air Force, Department of Defense and CH2M Hill, a Denver, Colo.-based contractor reporting over $ 1 billion in revenues last year. The suit alleges the defendants knowingly released hazardous waste and methane gas into the community. A landfill on nearby Arnold Airforce base is the source of the problem, plaintiffs say. A public meeting was held at the high school in Manchester Jan. 29 during which Air Force officials and representatives of EPA answered resident's questions. Independent Study Requested EPA, the Tennessee Department of Environment and Conservation and the Air Force maintain there is no danger to students. During the week before the meeting, the Air Force installed an underground ventilation system to intercept and capture methane gas, and paid an industrial hygienist to be on duty at the school to monitor methane. Coffee County School Superintendent Bobby Cummings asked for an independent study of the methane gas situation after a plaintiff in the lawsuit, environmental engineer Roger Painter, presented information to the school system. As of the beginning of this month, students were still going to school. The plaintiffs, calling themselves Citizens Against Pollution, have asked a federal judge to act to protect the 1,500 students at the high school from the threat of a methane explosion. The suit seeks $ 2 billion in compensatory damages and $ 500 million in punitive damages. The suit also alleges that water consumed by local residents has been poisoned with dangerous chemicals including trichlorethylene (TCE). Nashville attorney Tom Nebel is representing the group. Coffee County government operated the landfill for many years under lease from the Air Force. Since the landfill closed in 1989, the Air Force has spent $ 17 million to control methane and groundwater pollution at the site. "A large part of that work was accomplished by CH2M Hill, the landfill cap and gas extraction system," said Capt. Tim White, public affairs officer at the base. Contractors continue to work at the landfill, and have expanded the methane extraction system. "We had planned the work long before the suit was filed," White said. (Solid Waste Report, February 8, 2001) AMTRAK, CSX: Railroads Sued for Alleged Negligence in Accident -------------------------------------------------------------- A class-action lawsuit has been filed against Amtrak and CSX Transportation claiming the two railroads were negligent in an accident that left 61 people injured. The lawsuit was filed Friday in U.S. District Court on behalf of 15 of the injured passengers. It seeks $75,000 per passenger from the two railroads, said attorney Peter Catalano, a partner in one of the two law firms involved in the lawsuit. "There's strength in numbers," Catalano said of the decision to file a class-action suit on behalf of all the passengers on the train. Lawyers have said anyone injured in the Feb. 5 accident should contact them to join the lawsuit. They scheduled a news conference Thursday in Syracuse to discuss the suit. A preliminary investigation by the National Transportation Safety Board found the accident occurred when veteran Amtrak engineer Steven R. Gill of Rensselaer misread a signal that warned him there was an obstruction on the track ahead and to go slow. The crash happened just moments after the five-car passenger train left the Regional Transportation Center in Syracuse. The train was traveling from Buffalo to Albany with 98 passengers and a crew of four. Investigators determined that the 92-car CSX freight train was moving 7 mph as it waited behind another freight train to enter a nearby rail yard. According to "event recorders" on the trains and signal mechanisms, Gill apparently missed a signal indicating "restricted" speed of 15 mph or less. Investigators said evidence indicated the Amtrak train reached a speed of 58 mph before the engineer applied the emergency brake. Investigators said the Amtrak train hit the freight train at about 35 mph. Gill, 48, was put on an unpaid leave until federal authorities issue their final report. (The Associated Press State & Local Wire, February 22, 2001) BEAR STEARNS: Seeks to End Lawsuit Re Insolvent MA Investment Fund ------------------------------------------------------------------ The "deep pocket" defendants in a proposed class action brought by investors who reportedly lost $400 million on the now insolvent Manhattan Investment Fund have filed motions to dismiss the case. The motions by defendants Bear Stearns & Co., Deloitte & Touche and Ernst & Young seek to end the Southern District of New York suit against them by Tortola-based Cromer Finance Ltd. Columbus, Ohio-based introducing broker Financial Asset Management Inc. and Fund Administrative Services (Bermuda) Ltd., an Ernest & Young company, have also filed motions to dismiss. Cromer alleges in its first amended complaint that the so-called deep-pocket defendants either facilitated the collapse of the hedge fund through fraud or negligence, or aided and abetted the fund's demise for their own gain. According to the complaint, the fund's operator, Michael W. Berger, began losing millions of dollars on short sales of Internet and high-tech company stock in 1996. He allegedly concealed the losses from investors and continued trading. By Jan. 18, 2000, the Manhattan Investment Fund had lost $400 million and investors were dismayed to find the hedge fund had less than $50 million in assets. Within days, the Securities and Exchange Commission sued Berger, the fund filed for bankruptcy, and Berger was arrested on criminal charges by federal authorities in New York. Bear Stearns acted as the fund's clearing broker. In its motion to dismiss, the New York broker-dealer asserts it executed Berger's trades, reported all trading losses to the fund's administrator and auditor, and did nothing wrong. Its inclusion in the suit, Bear Stearns says, is "simply an effort to bring another deep pocket defendant into this litigation." "Plaintiffs attempt to hold Bear Stearns liable for their losses by claiming it aided and abetted Berger's fraud," the broker-dealer says in a brief supporting its motion to dismiss. " They argue that Bear Stearns provided excessive margin credit to the fund, which allegedly extend the fund's life and Berger's ability to defraud investors . As a matter of law, these allegations are not sufficient to satisfy the standard of aiding and abetting." Bear Stearns goes on to assert that court precedent holds against the extension of excessive margin as the sole determinant for an aiding-and-abetting claim. By contrast, Financial Asset Management's brief echoes a tone of incredulity. The company says it is only a small Ohio broker that merited no mention at all in the SEC's action against Berger. The brief asks the court to dismiss the company from the suit because the case against it is made up of "scant and unsubstantiated allegations." In the suit, Cromer charges Ernst & Young's Fund Administrative Services with allegedly passing Berger's false information on to Deloitte & Touche Bermuda, which then made its way to investors. Fund Administrative Services' motion seeks dismissal for failure to plead fraud adequately, for lack of subject matter jurisdiction, and for failure to state proper claims for relief under Rules 9(b), 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. Ernst & Young International and Ernst & Young Bermuda, also defendants, seek dismissal on the same grounds. Finally, two motions to dismiss were filed by Deloitte & Touche entities, Deloitte & Touche LLP and Deloitte & Touche Tohmatsu. Both assert that they are separate legal entities from Deloitte & Touche Bermuda, which acted as the Manhattan Investment Fund's auditor. In its brief, DTT asserts that the only reason it was named a defendant in the suit was because it was "perceived as a deep pocket." (Chapter 11 Update, November 2000) CABLE OPERATORS: L.A. Ct. Denies Cert. in Antitrust Suit By Customers --------------------------------------------------------------------- U.S. Dist. Court, L.A., denied class action certification in antitrust suit against 13 cable operators by 2 customers. Suit alleges that subscribers to cable high-speed data services must buy content services of affiliated ISPs at artificially inflated prices. Arguing that exclusivity agreements between MSOs and Excite@Home and Road Runner forced cable companies to impose condition on customers, plaintiffs sought unspecified damages and injunctive relief that would have imposed open access obligations on cable operators. Court's denial of class certification was without prejudice, so plaintiffs could file amended compliant. In suit, Arthur Simon and John Galley said exclusivity agreements were contracts, combinations or conspiracies in restraint of trade, and bundling of transmission services with interface/content services constituted illegal tying arrangements in violation of Sherman Antitrust Act. As result of "illegal" tie, cable modem subscribers have been forced to pay "supracompetitive" prices and/or pay for unwanted service, they said. AT&T, Adelphia, Cablevision, Comcast, Cox, MediaOne and Time Warner head list of MSOs cited. Plaintiffs said issues that lent themselves to classwide action were: (1) Whether bundle of high-speed Internet transport and content services was one or 2 services. (2) Whether cable operators actually coerced customers to accept tie between 2. (3) Whether cable companies had market power. They said "injury in fact" could be proved on classwide basis. Cable companies said principal arguments in case related to market power. which varied greatly by region, precluding common proof. They also contended that variations in prices and terms argued against common proof of "injury of fact." In denying class action certification, court said relevant geographic market was local cable franchise area because, in analyzing legality of tying arrangement, focus was on deal between seller and buyer rather than contract between sellers of tying and tied product. Competition in these markets clearly was relevant to whether cable companies had requisite market power to restrain trade and force their purchasers to buy unwanted product, court said. Court agreed with defendants that to prove injury, plaintiffs must produce evidence that prices would have been lower without tie. It ruled that common questions didn't predominate for class action certification. (Communications Daily, February 22, 2001) CANKER PROGRAM: Cities Leave Class Action Portion to Private Attorneys ---------------------------------------------------------------------- With legal bills from the citrus canker fight mounting, Plantation is moving to join other Broward municipalities in dropping out of the class-action portion of the lawsuit against the state. Like the other cities, Plantation officials will stay in what they see as the central legal battle: keeping an injunction in place to halt the state Department of Agriculture's cutting of fruit trees. But Plantation's attorney says there is little reason for the city to represent individual property owners from Broward and Miami-Dade, suing the state for monetary damages--when there are private attorneys willing to do it, for no up-front costs. Private lawyers--who have already begun work on the class-action suit--would probably collect from any potential damages awarded to citrus owners, at the end of a lawsuit. "There are lawyers who are willing to do it on contingency," Plantation City Attorney Donald Lunny Jr., said. "At this time, it doesn't make much sense to go forward (seeking damages) when there people out there willing to do it for free." Broward County and Pompano Beach already have decided to drop out of the class-action suit, attorneys for the cities said. Like Lunny, their attorneys questioned the legal standing of the municipalities staying in the suit, if trees hadn't been cut down from their public property. The cutting of citrus began as an effort to stop the spread of disease state officials said threatened Florida's fruit-tree industry. Last year, Plantation and a number of other Broward cities filed suit against the state, seeking to halt the cutting of citrus trees they deemed to be healthy. In October, a Broward judge ordered the program halted, a decision the state is appealing. In a separate action, a number of tree owners from Miami-Dade and Broward filed a class-action suit, demanding more money than the much-criticized, $ 100-per-tree voucher offered by the state. So far, Plantation has spent about $ 24,000 on legal bills from both the injunction and class-action sides of the lawsuit, Lunny said. Andrew Meyers, an attorney representing Broward County, estimated his government had spent around $ 20,000 up to this point. But those bills are dwarfed by the Department of Agriculture's legal costs. Through the end of December, the state had spent $ 177,477 on lawyers' bills in the separate legal battles in Broward, Department of Agriculture spokeswoman Liz Compton said. The state is represented by the prominent Greenberg Traurig law firm, among other lawyers, she said. Lunny asked City Council members two weeks ago if they wished to remain in the class-action lawsuit, and he discussed the issue with them again in a closed-door meeting on Wednesday. (Sun-Sentinel (Fort Lauderdale, FL), February 22, 2001) GERMANY, FRANCE: Lawyers in Nazi Suit Plan to Sue over Mad Cow Crisis --------------------------------------------------------------------- Two lawyers best known for their efforts to win compensation for former Nazi slave laborers said Thursday they will file lawsuits against Germany and France on behalf of farmers hit by the mad cow crisis. U.S. lawyer Ed Fagan and Munich-based Michael Witti told a news conference the governments should shoulder more of the blame and the cost for fighting the disease that has plunged beef sales as the scare has spread across the continent. ''The government told the farmers that there was no problem, you're safe. That was either stupid or lies,'' Fagan said. Witti said farmers had also suffered from the practices of feed manufacturers who supplied them with animal feed containing ground animal carcasses suspected of transmitting the diseases. The European Union banned animal meal from feed in January. Before the first German case was detected in November, officials had long insisted it was free of the disease, known as bovine spongiform encephalopathy, or BSE, and related to a similar brain-wasting condition in humans that has killed more than 80 people in Britain and France. Germany's farm and agriculture ministers reisgned last month amid sharp criticism of their handling of the crisis. French consumers took fright last year after possibly infected meat was found on store shelves. Witti said he had five farmers from Germany, Austria, Switzerland and Poland as clients and expected to file first suits within two months. There are no plans to bundle farmers cases in a Europe-wide class-action, he said, declining to estimate the size of the claims. Germany's main farmers group said Thursday it was also weighing legal action on behalf of its members. Germany Farmers Association President Gerd Sonnleitner said the association will examine claims for damages from German farmers who own cattle found to carry the disease a diagnosis that has lead to whole herds being slaughtered. Sonnleitner said his group had spoken to Witti but had decided to work independently. Fagan, who has recently been involved in Holocaust-related claims against Austrian and German banks, has also sought to represent families of the victims of the cable-car fire in the Austria ski resort of Kaprun which killed 155 people. The cause of the fire is still unknown. (AP Worldstream, February 22, 2001) HIP IMPLANT: Krupnick Campbell Announces $500M FL Suit Vs. Sulzer Medica ------------------------------------------------------------------------ Krupnick Campbell Malone Roselli, with offices in Fort Lauderdale, has filed a nationwide class action lawsuit in the United States District Court in Miami against Sulzer Medica Corporation (NYSE:SM) (Swiss Stock Exchange:SMEN), a Swiss based corporation, and its subsidiaries which develop, manufacture, and market orthopedic products worldwide. Krupnick Campbell Malone Roselli announced that a Florida woman has filed this case on behalf of the thousands of patients who have received the defective hip replacement, estimated to be 17,500 patients. Michael J. Ryan, lead attorney on the case states, "This class action suit has been filed to compensate patients with the defective hip for their injuries and to hold Sulzer Medica accountable for failing to properly inspect this product. Sulzer was negligent in allowing a defective product to be distributed. We are bringing this action for patients who have endured and will endure years of suffering." After patients went through painful and dangerous surgery for hip replacement and then extensive rehabilitation, the Company now admits the product was defective and needs to be removed and replaced. Sulzer Orthopedics issued a recall on December 5, 2000, alerting surgeons that patients have implanted a hip prosthesis with a defective shell which requires replacement. According to the company, an oily residue was improperly left on the surface of the shell because of a manufacturing error. In many cases, the residue caused inflammation and pain and prevented the patients' bones from fusing normally with the hip implant. Symptoms caused by a loose connection between the implant and the bone include severe groin pain and an inability for the joint to bear weight. California, Utah, and Florida have the largest percentage of the defective hip replacements implanted. Contact: Krupnick Campbell Malone Roselli, Fort Lauderdale Tricia Rutsis, 954/763-8181, Ext. 8603 trutsis@krupnicklaw.com 954/592-3209 (cellular) 954/763-8292 (facsimile) HMOs: United Healthcare Settles Charges of Overbilling the Elderly in IL ------------------------------------------------------------------------ A Chicago-based HMO has agreed to pay the U.S. government $2.9 million to settle charges that it overbilled for the care of thousands of senior citizens in six Illinois counties. United Healthcare of Illinois Inc. denied any wrongdoing, but agreed to settle with the government to avoid the expense and uncertainty of a False Claims Act lawsuit. The HMO was accused of falsely listing nearly 30 percent of its Medicare patients as being institutionalized in nursing homes or other long-term care facilities for a period of two years from Oct. 1, 1995, to Sept. 30, 1997. By falsely claiming that the patients were institutionalized, United Healthcare was able to charge nearly double the amount it would have received if the patients' level of care was categorized correctly, according to U.S. Attorney Scott R. Lassar. In 1996, United Healthcare would have received an average of $583 a month for each female beneficiary, age 85 and older, who was not institutionalized, while it would have received $1,019 for a similar beneficiary who was being cared for in a nursing home, rehabilitation facility, convalescent home, long-term care hospital or other similar facility. The over-billing was discovered when federal auditors selected a random sample of 100 Medicare beneficiaries from more than 16,000 patients that United Healthcare listed as institutionalized, and discovered that 29 of the 100 were incorrectly categorized, thus, resulting in an exceptionally high 29 percent error rate. No lawsuit was filed prior to the agreement, and United Healthcare officials cooperated fully with the U.S. Attorney's Office's investigation of the matter, according to the agreement. A United Healthcare spokesman attributed the errors to billing problems it inherited when it acquired Share Health Plan in 1995. As part of the settlement, United Healthcare agreed to enter into a corporate integrity agreement to correct its past billing errors and avoid future mistakes. As part of that agreement, the HMO must submit to periodic audits by federal regulators. If the government filed a false claims act action against United Healthcare, the HMO would have faced treble damages and civil penalties of $5,000 to $10,000 for each violation of the act. (Antitrust Litigation Reporter, January 2001) HOLOCAUST VICTIMS: Author of Book about IBM Shrugs off Accusations ------------------------------------------------------------------ The author of a book about IBM and the Holocaust on Thursday shrugged off accusations by the company that its publication was timed to coincide with a new lawsuit filed by Holocaust survivors. ''I wish all these lawsuits would disappear; I'm not here to help out any lawsuits,'' Edwin Black said at a Berlin news conference promoting the German-language version of ''IBM and the Holocaust,'' published earlier this month in the United States. In the book, Black cites documents showing IBM's German subsidiary provided and serviced punch-card machines used to keep records on Nazi prisoners. The cards kept track of whether they were Jewish, homosexual or communist, also listing their eventual fate, from escape to ''special handling'' a euphemism for anything from torture to execution. The new class-action lawsuit filed earlier this month in New York accuses IBM of being an accomplice in the Holocaust because it was aware its machines were used at death camps. It is seeking to force IBM to open its archives and to pay ''ill-gotten gains.'' But even the lead attorney in the IBM lawsuit, Michael Hausfeld of Washington, has said that he doesn't yet have the documents proving IBM in the United States knew its machines were being used in Nazi death camps. Black acknowledged he hadn't yet found documents directly linking IBM to participating in the Holocaust, and has also called on the company to open archives. But he alleges they would have known how the machines were being used. ''While most people didn't understand the technology behind this, I think some did,'' he said. IBM has said the subsidiary, Deutsche Hollerith Maschinen GmbH, was taken over by the Nazis before World War II, like other companies operating in Germany, and the use of the machines is well-known. One of the punch-card counters is on display at the U.S. Holocaust Memorial Museum in Washington. The company also acknowledges that the head of IBM at the time, Thomas J. Watson, was awarded a medal by Hitler for his role in global economic relations, which he later returned. But Black said documents from archives in Germany and the United States show IBM maintained further contact with its subsidiary in Germany through other European branches and didn't lose administrative control of Hollerith until 1942. ''It was never about anti-Semitism, it was never about Nazis, it was always about the money,'' Black said. ''We've gone after the men in the camps, we've gone after the German companies,'' he said. ''The final frontier of Holocaust accountability is the United States. Yes, German efficiency _ American inventiveness.'' (AP Worldstream, February 22, 2001) HOLOCAUST VICTIMS: IBM Suit Raises Concern About Legal Peace for Germany ------------------------------------------------------------------------ Concern has been raised in Germany recently that the law suit filed by class action claimants against IBM in federal court will endanger the legal peace for German companies sought by last year's Foundation Agreement. The United States wishes to re-assure the government of Germany and German companies that the United States will seek legal peace for claims against German companies in accordance with the Executive Agreement that Germany and the United States signed on July 17, 2000. The Foundation covers all Nazi era claims against German companies and the US will file a statement of interest in all such cases. The Foundation does not cover claims against U.S. companies for actions unrelated to that of German companies. The lawyers who filed the suit against IBM have indicated that they have no intent to raise claims against German companies. If it is determined that the IBM suit is a suit against a U.S. company unrelated to actions of a German company, then it is irrelevant to the Foundation and to "legal peace" for German companies. There is no reason why the IBM lawsuit should hold up payments to victims. It was not a case pending when the Foundation Agreement was signed. New claims were expected to be filed after the Agreement, and commitment of the U.S. Government to file Statements of Interest in future cases was designed to deal with that eventuality. The United States believes that payments to the victims should begin promptly after the last class actions listed in the agreement are dismissed. The United States will continue to live up to its obligations in connection with subsequent litigation. We have been fully implementing our commitments under the Agreement and we will continue to do so. We have every confidence that the last few cases will soon be dismissed; that the German companies will fulfill their obligation to contribute to the Foundation; and - most importantly - that the victims who have waited so long for some measure of justice will soon receive payments. A measure of justice for the victims should remain the primary focus of all parties. (M2 Presswire, February 22, 2001) INTERSTATE, INTERMODAL: Appeal Planned In Re Truck Drivers’ Earnings -------------------------------------------------------------------- Two subsidiaries of Pacer Logistics, Interstate Consolidation, Inc. and Intermodal Container Service, Inc., are named defendants in a class action filed by Irwin Albillo in July, 1997 in the State of California, Los Angeles Superior Court, Central District, alleging, among other things, breach of fiduciary duty, unfair business practices, conversion and money had and received in connection with monies allegedly wrongfully deducted from truck drivers' earnings. Defendants have entered into a Judge Pro Tempore Submission Agreement dated as of October 9, 1998 pursuant to which the plaintiffs and defendants have waived their rights to a jury trial, stipulated to a certified class and agreed to a minimum judgment of $250,000 and a maximum judgment of $1.75 million. On August 11, 2000, the court issued its Statement of Decision, in which Interstate and Intermodal prevailed on all issues except one. The court found that Interstate failed to issue certificates of insurance to the owner-operators and therefore failed to disclose that in 1998, the company’s retention on its liability policy was $250,000. The court has ordered that restitution of $488,978 be paid for this omission. Plaintiff's counsel has indicated he intends to appeal the entire ruling and the company intends to appeal the restitution issue. Based upon information presently available and in light of legal and other defenses and insurance coverage, management does not expect these legal proceedings, claims and assessments, individually or in the aggregate, to have a material adverse effect on our financial position or results of operations. KRAFT FOODS: Milk Producer Can Have Day in Court for Price-Fixing Claims ------------------------------------------------------------------------ Calif. Milk Producer Can Press Claim Against Cheese Makers, 9th Cir. Rules. Knevelbaard Dairies, a California milk producer, will get its day in court to pursue its price-fixing claims against cheese makers, now that the Ninth Circuit has reversed a district court's dismissal of the case and remanded the matter for further proceedings. Knevelbaard Dairies v. Kraft Foods. (Antitrust Litigation Reporter, January 2001) LIPARI LANDFILL: Settlement Reached over Toxic Waste Dump in NJ Near PA ----------------------------------------------------------------------- A settlement has been reached in a lawsuit involving more than 1,600 people who said they were exposed to poisons from a toxic waste dump that was once dubbed the nation's worst, The Philadelphia Inquirer reported Thursday. The settlement, which is still being finalized, would provide $2.5 million to $3 million to pay for the plaintiffs' medical monitoring. The money would be paid by about a dozen companies that dumped hazardous waste at the Lipari landfill in Mantua, N.J., near Philadelphia. The settlement would not provide for treatment costs or preclude plaintiffs from individually suing the companies should any medical problems be detected. ''The goal of this was to get everybody monitored who was exposed and we have done that,'' Harris Pogust, a lawyer for the plaintiffs, told the newspaper. A spokesman for Rohm & Haas Inc., a defendant in the suit, said the chemical manufacturer was pleased that the class-action suit was close to being resolved. The 16-acre landfill was a dumping site for hazardous chemicals, and drums were dumped in open trenches. The state closed Lipari in 1971 after residents complained about respiratory problems, nausea, dying vegetation and odors. It was so bad that when the federal Superfund program was created to clean up waste sites, Lipari was ranked No. 1 in eligibility for money. Cleanup of the site, which is largely complete, has cost about $130 million, with the Environmental Protection Agency recouping most of the money from defendants in the class-action suit. Those companies include Owens-Illinois, CBS, AT&T Technologies and Firestone Tire & Rubber Co. Through the years, several studies of the landfill's health effects have been conducted, but none has been conclusive. (AP Online, February 22, 2001) MATAV CABLE: Israeli Broadband Provider Settles Lawsuit over Connection ----------------------------------------------------------------------- Matav Cable Systems Media Ltd. (Nasdaq: MATV), a leading Israeli provider of broadband cable TV services, announced on February 21 that following a press release issued by the Company on September 27, 1999 with respect to a class action that was filed against it (the "Class Action"), it has reached a settlement agreement (the "Agreement"), which was approved by the Israeli court on February 18, 2001, with respect to the Class Action. The Class Action was first filed against the Company on behalf of residents of certain municipalities in northern Israel (the "Relevant Residents") regarding the Relevant Residents' claim that the Company did not connect them to its CATV network. According to the Agreement, the Company shall pay a total sum of $820,000, of which $719,000 shall be allocated to the relevant municipalities, in which the Relevant Residents live, for the development of education, sports and culture in those municipalities. The Agreement will settle all of the disputes, upon which the Class Action was based. However, if within a period of 45 days from the date of the official publication in the media of the Agreement, 1,500 or more Relevant Residents give notice that they do not wish to be a party to the Agreement, the Company will have the right to cancel the Agreement and will then continue the legal proceedings of the Class Action in court. Matav is one of Israel's three cable television providers, serving roughly 25 percent of the population in a government-mandated monopoly market. Matav's investments include 15 percent of Partner Communications Ltd., a GSM mobile phone company, 10 percent of Barak Ltd., Israel's second-largest provider of international long distance and Internet telephony, and 100 percent of Non-Stop, a new company preparing to offer broadband Internet services. MICHAEL HEISLEY: Vancouver Grizzlies Owner Sued for Moving NBA Team ------------------------------------------------------------------- Saying they were betrayed by a "savvy takeover artist," two separate class-action lawsuits have been filed against Vancouver Grizzlies owner Michael Heisley, arguing his decision to move the NBA team breaks a contract with fans. At the same time, a group trying to keep the franchise in Vancouver has arranged a March 16 meeting in New York with NBA commissioner David Stern to argue that professional basketball can work in the city. Meanwhile, Heisley met with officials in New Orleans on Wednesday to discuss relocating the franchise in the Big Easy. The meeting followed similar sitdowns in Louisville, Ky., and St. Louis. (The London Free Press, February 22, 2001) NORTEL NETWORKS: Brokerage Cuts Target on Price to $25 As Suits Filed --------------------------------------------------------------------- Wall Street brokerage Lazard Freres & Co. slashed its 12-month target price on Nortel Networks Corp. shares to US$25 from US$45 on February 21, as new class-action lawsuits were filed in the United States and speculation grew Nortel may have had concerns it would not meet the Street's earnings estimates days before it issued a Feb. 15 profit warning, according to National Post (formerly The Financial Post). The National Post also reports that more details emerged about the controversial deal that saw Nortel buy a Swiss optical plant from JDS Uniphase Corp. for up to US$3-billion in Nortel shares. About US$1-billion was wiped off the value of the deal two days after it closed, when Nortel disclosed it would miss first-quarter sales numbers by 50%, sending its stock price down by 33%, the report says. According to the National Post, a source close to the transaction said the sale was designed as a share swap so that JDS could defer a hefty capital gains tax bill. 'It was always contemplated as a share deal,' he said, adding that was likely at the insistence of JDS, which would have owed substantial tax in a cash transaction since it bought the Zurich plant from IBM Corp. in 1997 for just US$ 45-million. At a 30% tax rate, the capital gains liability would have been about US$ 750-million. Under the terms of the deal, Nortel tendered 65.7 million of its shares to JDS, with another US$500-million payable in stock in 2004 if Nortel fails to meet purchase commitments, the National Post report says. The source, who spoke on condition of anonymity, acknowledged the deal did not contain a clause guaranteeing a floor value of the shares but said it is not unusual to not have an after-close collar. 'It's 20-20 hindsight,' he said when asked if JDS would have been better off taking cash, the report adds. The Post also reports that Paul Sagawa, a telecommunications analyst with Sanford C. Bernstein in New York, said the sudden and extreme nature of the Nortel warning means JDS 'has been aggrieved,' but he expects the sides will work out a compromise that could see Nortel guarantee additional purchases from JDS. JDS designs and makes products for the fibre-optic networking industry and includes Brampton, Ont.-based Nortel as one of its major customers. After rattling markets with its warning after previously affirming guidance on several occasions, Nortel maintained its outlook in a meeting with clients of RBC Dominion Securities Inc. on Feb. 12, according to a report by the Financial Post on Monday. According to observation reported by the National Post, at least one money manager was troubled by assurances given by Frank Dunn, Nortel's chief financial officer, at a Toronto luncheon for institutional investors almost a week before that. It was observed that Mr. Dunn 'stuck to the script' but his body language at the Feb. 6 lunch seemed peculiar: 'When the guy's eyes start darting around, you get worried.' The institutional investor, who spoke on condition of anonymity, said his firm was also concerned about prospects for the entire sector but that 'a huge amount of discomfort' was sensed coming from Mr. Dunn as he spoke about Nortel's outlook. The source said his company -- which manages tens of billions of dollars in assets -- decided to lighten its position in Nortel as a result. John Roth, Nortel chief executive, says the company learned of a precipitous drop in sales only after a regular review with sales staff last week, well after the Feb. 6 luncheon. That leaves a narrow window -- after the Monday investors' meeting and after the purchase of the laser plant sale closed Tuesday -- during which Mr. Roth became aware of the company's deteriorating revenue picture and disclosed the information to markets, the National Post says. 'It seems like they've had their heads in the sand,' said Nick Majendie, a telecommunications analyst at Canaccord Capital Corp. Meanwhile, two more class-action lawsuits were filed against Nortel on February 21 in New York. (National Post (formerly The Financial Post), February 22, 2001) NORTEL NETWORKS: Milberg Weiss Extends Period in Securities Suit in N.Y. ------------------------------------------------------------------------ The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on February 21, 2001, on behalf of purchasers of the securities of Nortel Networks Corp. (NYSE:NT; TSE:NT) between November 1, 2000 and February 15, 2001, inclusive (the "Class Period"). A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/nortel/ The action, numbered 01-CV-1033, is pending in the United States District Court for the Eastern District of New York, located at 225 Cadman Plaza East, Brooklyn NY, 11201, against defendants Nortel, John Andrew Roth (CEO, President and Director), William F. Conner (President of Nortel's E-Business Solutions), Chahram Bolouri (President of Nortel's Global Operations) and Frank Dunn (Chief Financial Officer). The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between November 1, 2000 and February 15, 2001 concerning the demand for its products. Specifically, the complaint alleges that defendants issued several press releases in which they provided revenue and earnings guidance to Wall Street and the investing public for the first quarter and full year 2001. Defendants knew at the time they made these statements that, in fact, Nortel was experiencing a substantial shortfall in first quarter sales and earnings due to decreased orders from its customers. Specifically, in one of its press releases, dated January 18, 2001, defendants represented that Nortel's "global reach and industry leading portfolio" would allow it to "continue to outpace the market and gain profitable market share" even in the face of the "tightening of capital within the telecom sector." The announcement sent its stock price soaring 10% in one day. The complaint alleges that the statement was materially false and misleading when made because the Company had no basis for reassuring the market that demand for its products would remain robust, given the economic slowdown that was impacting companies in general and the telecommunications sector -- upon which Nortel relies -- in particular. On February 15, 2001, less than a month after issuing its latest market moving representations, Nortel issued a press release announcing that it was drastically lowering its guidance for Nortel's 2001 fiscal year because of decreased demand for its products due, in large part, to spending cuts by telecommunications companies. Following the announcement, Nortel's stock price plunged by 34% in one day, from $29.75 per share to $19.50 per share (erasing $ 33 billion of Nortel's market capitalization). Prior to the disclosure of the true state of its business, individual defendants Bolouri and Conner collectively sold over $7 million of their personally held Nortel stock. Additionally, during the Class Period, Nortel used $2.5 billion of its artificially inflated stock price to complete its purchase of JDS Uniphase's Zurich, Switzerland-based subsidiary and related assets in Poughkeepsie, New York. Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G. Schulman or Samuel H. Rudman, 800/320-5081 Nortelcase@milbergNY.com http://www.milberg.com NORTEL NETWORKS: Wechlser Harwood Announces Securities Lawsuit -------------------------------------------------------------- The law firm of Wechsler Harwood Halebian & Feffer LLP announces that a class action lawsuit was filed on February 21, 2001, on behalf of purchasers of the securities of Nortel Networks Corp.,("Nortel" or the "Company") (NYSE: NT; TSE: NT) between January 19, 2001 and February 15, 2001, inclusive (the "Class Period"). The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 18, 2001 and February 15, 2001 concerning the demand for its products. Specifically, the complaint alleges that defendants issued a press release on January 18, 2001, (after the close of the securities markets) announcing record operating results for the year 2000, and especially strong fourth quarter of 2000 performance. In the press release, defendants represented that Nortel's "global reach and industry leading portfolio" would allow it to "continue to outpace the market and gain profitable market share" even in the face of the "tightening of capital within the telecom sector." The announcement sent its stock price soaring 10% in one day. The complaint alleges that the statement was materially false and misleading when made because the Company had no basis for reassuring the market that demand for its products would remain robust, given the economic slowdown that was impacting companies in general and the telecommunications sector -- upon which Nortel relies -- in particular. On February 15, 2001, less than a month after issuing its market moving representations, Nortel issued a press release announcing that it was drastically lowering its guidance for Nortel's 2001 fiscal year because of decreased demand for its products due, in large part, to spending cuts by telecommunications companies. Following the announcement, Nortel's stock price plunged by 34% in one day, from $29.75 per share to $19.50 per share (erasing $ 33 billion of Nortel's market capitalization). Prior to the disclosure of the true state of its business, individual defendants Bolouri and Conner collectively sold over $7 million of their personally held Nortel stock. Contact: Ramon Pinon, Shareholder Relations Department of Wechlser Harwood Halebian & Feffer, rpinoniv@whhf.com TOBACCO LITIGATION: MA Accused of Medicaid Seizure Despite $7.6 Bil Pact ------------------------------------------------------------------------ Despite a $7.6 billion settlement with tobacco companies to cover the cost of treating indigent smokers, Massachusetts has continued to seize the meager assets of Medicaid recipients who died from years of smoking - including their homes - according to a class action lawsuit filed on February 21 in federal court. The first-in-the-nation suit accuses the state's Division of Medical Assistance, in effect, of double-dipping by taking the property of Medicaid recipients after the state has already been reimbursed for their care by the historic 1998 settlement with the tobacco industry. The lawsuit was filed in the name of the estate of Mary Watkins, an elderly woman from New Bedford who smoked Chesterfields for 25 years and died three years ago from coronary thrombosis and chronic lung disease. The administrators of her estate paid the state $16,000 in reimbursement for her medical care after they sold her home last year. "The people who really ought to benefit from this recovery from the tobacco companies are people who have smoking-related illnesses and who have Medicaid benefits," said Louis Massery, one of the lawyers who filed the suit. "It seems very unfair for these individuals to be reimbursing the state when the state's got their money, and an extraordinary amount of money." In a legal memorandum filed last year in another case, a lawyer for the state defended the practice of recovering assets from the estates of deceased Medicaid recipients. In that case, which also involved a woman who died of a smoking-related illness, Mark Miller, assistant general counsel for the Division of Medical Assistance, quoted the state law that allows such reimbursement. The law allows the state to sue for reimbursement within one year of the Medicaid patient's death. Miller also pointed to a 1979 case where the state Supreme Judicial Court recognized the state's right to recover assets. The agency collects about $20 million a year through its Estate Recovery Program, which takes assets from deceased Medicaid recipients for reimbursement, according to the lawsuit. Massery and his cocounsel, Albert Farrah, say about $3 million of that money comes from the estates of people who died from smoking-related illnesses. "Typically, the home is their only asset," Massery said. "It is the only asset they have to bequeath to their children. If they are low-income, the homes are not likely to be substantial homes." In 1993, Congress required states to seek reimbursement for Medicaid benefits. People who apply for Medicaid agree that reimbursement can be collected from their estates. But Massery argues that once the tobacco companies began reimbursing states for the cost of treating smoking-related illnesses, it became illegal for them to continue collecting from the estates of people who died from smoking. "It's very clear under common law that you can't collect for the same damages twice," he said. The suit asks that the practice be stopped and that Medicaid recipients whose estates were forced to repay the state be reimbursed. This is apparently the first lawsuit filed in an attempt to end the practice, carried out in every state. But Massachusetts seizes assets more aggressively than most states, Massery contends. In fiscal year 1998, for instance, the state collected about $20 million from estates for Medicaid reimbursements. New York, a much larger state, collected $ 28 million, Massery said, quoting from federal statistics. That same year, Florida seized $6 million; Illinois, $15 million; New Jersey, $3 million, he said. Massery and Farrah decided to file the suit after their double-dipping argument got a suit against the estate of a former Medicaid patient dismissed. In that case, the state was seeking $58,000 from the estate of Rita Fillon, 76, of Weymouth, who died in 1997 of lung cancer after a lifetime of smoking Pall Mall cigarettes. Fillon often smoked at least two packs a day. It was Fillon's adult son, Charles, who first questioned whether the state should be reimbursed by his mother's estate, in light of the tobacco settlement. (The Boston Globe, February 22, 2001) XCHANGE, INC: Johnson & Perkinson Announces Securities Lawsuit in MA -------------------------------------------------------------------- Johnson & Perkinson announce that a class action lawsuit has been commenced in the United States District Court for the District of Massachusetts on behalf of purchasers of the common stock of Xchange, Inc., formerly Xchange Applications, Inc. (NASD: EXAP) between July 24, 2000 through and including September 29, 2000 (the "Class Period"). 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 a series of material misrepresentations to the market during the Class Period. As alleged in the Complaint, Defendants issued numerous statements touting the contracts it entered into even though the nature of these contracts required that revenue be recognized over an extended period of time, rather than in the third quarter. As a result, the price of the Company's shares was artificially inflated throughout the Class Period. Contact: Johnson & Perkinson Dennis J. Johnson, Esquire or Jacob B. Perkinson, Esquire 1-888-459-7855 LODJJ@aol.com XEROX CORPORATION: Mark McNair Files Securities Lawsuit ------------------------------------------------------- The Law Office of Mark McNair announced that it has filed class action lawsuit against Xerox Corporation. Class Period: February. 15, 1998 to February 6, 2001 The complaint alleges that Xerox and several of its top officers reported false financial results during the class period, failing to adhere to the standard accounting practices the company claimed to follow. Xerox issued a statement about the "irregularities" in Mexico on June 16, 2000, falsely portraying them as an aberration perpetrated by rogue executives. But on February 6, 2001, a Wall Street Journal article reported allegations of accounting fraud that went far beyond Mexico. Meanwhile, Xerox shares fell from as high as $124 a share during the Class Period to just $4.43 a share. The company's accounting practices are now the subject of a Securities and Exchange Commission investigation. Contact: Mark McNair, Esq., of The Law Office of Mark McNair, 877-511-4717, or wmmcnair@justice4investors * Pharmacists' Anti-Abortion 'Conscience' Bill Advances ------------------------------------------------------- A "conscience" bill to protect pharmacists who refuse to fill prescriptions for abortion drugs advanced toward the Kentucky Senate on Thursday. A physician can refuse on moral grounds to perform an abortion. A pharmacist should have an equal right, Sen. Elizabeth Tori, the bill sponsor, said in testimony to the Senate Health and Welfare Committee. She said the bill was aimed primarily at pharmacists who are employees, not owners, of a pharmacy. They could not be fired or otherwise punished for refusing to fill an abortion prescription if they had stated a conscientious objection. "It simply balances conscience with authority," Tori, R-Radcliff, said. The bill had one opponent on the committee - Democratic Sen. Joey Pendleton of Hopkinsville, who said people in rural areas might not have a second pharmacist to fall back on. The only real debate was between some committee members and a retired Methodist clergyman, the Rev. Gilbert Schroerlucke of Louisville, who said a pharmacist was "obligated to respond to a patient's needs." "Can one person's conscience be allowed to control free trade and the rights of others?" Schroerlucke said. He then attempted to draw historical parallels that irked some senators. Schroerlucke said Hitler's extermination of Jews, George Wallace's defense of segregation and Pope John Paul II's denial of a woman's "basic human right" to be a pastor all were matters of conscience. Schroerlucke also said pharmacists who object to filling abortion prescriptions should find another line of work, prompting Sen. Charlie Borders, R-Russell, to suggest that Schroerlucke do the same. Sen. Dick Roeding, himself a pharmacist and former lobbyist for pharmaceutical companies, told Schroerlucke he had at times refused to fill prescriptions in his own practice. Tori's bill originally would have forbidden a pharmacist to be denied a promotion. One of her supporters, Sen. David Karem of Louisville, persuaded her to remove it, lest it create a class of plaintiffs. "It sets up someone who may never have been pro-life, and now they're pro-life because they didn't get promoted," Karem said. (The Associated Press State & Local Wire, February 22, 2001) ZONOLITE LITIGATION: W.R. Grace Says Disturbing Insulation Is Hazardous ----------------------------------------------------------------------- W.R. Grace & Co. has answered the first amended complaint in a proposed class-action suit filed on behalf of homeowners who claim the company knew its Zonolite attic insulation was hazardous. Grace admits that the insulation contains a form of asbestos but denies that its users were exposed to sufficient quantities to cause harm. Lindholm et al. v. W.R. Grace & Co. et al., No. 00CV10323, answer filed (D. Mass., Aug. 28, 2000). The complaint alleges that the company aggressively promoted and sold hundreds of millions of cubic feet of Zonolite from 1963 through 1984, even though it had information indicating that the insulation contained tremolite asbestos. Homeowner Edward Lindholm and a class of Zonolite purchasers assert claims of fraud, negligence, breach of implied warranties, violations of deceptive trade practices statutes, nuisance, strict liability for ultrahazardous activity, and unjust enrichment. They seek compensatory and punitive damages and prejudgment interest. They also seek equitable relief, asking the U.S. District Court for the District of Massachusetts to order Grace to remove and abate existing Zonolite from all residences containing the insulation. In its answer to the amended complaint, Grace stated that disturbing Zonolite attic insulation would expose individuals to dangerous levels of asbestos. The company denied that the product had contaminated any real property. Grace also argues that the plaintiffs are not entitled to maintain the suit as a class action. The answer raises 24 defenses, including that the plaintiffs lack standing to bring suit on behalf of putative class members who reside outside of Massachusetts. Grace also asserts that its product complied with all the applicable codes, standards and regulations. W.R. Grace & Co. is represented by Robert A. Murphy and Douglas K. Mansfield of Casner & Edwards in Boston. The plaintiffs are represented by Kenneth G. Gilman of Gilman & Pastor in Boston. (Mass Tort Litigation Reporter, November 2000) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *