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               Thursday, March 15, 2001, Vol. 3, No. 52


ABBOT LAB: 4 New Complaints Filed Over False Pregnancy Test Positives
AIR FORCE: U.S. Argues Suit Alleging Leak Not Covered Under CERCLA
AUTO INSURANCE: PA AG To Seek Big Fines Vs Allstate for Confusing People
BECTON-DICKINSON: PA Ct Rejects Medical Workers' Case for HIV Monitoring
CA POWER: State Legislature To Consider Energy Market Manipulation

CINCINNATI: Lawsuit Seeks Ban on Race Profiling
E.W. BLANCH: Berger & Montague Files Securities Lawsuit in Minnesota
FIDELITY NATIONAL: GA Adopts Percentage of the Fund Approach for Fees
HIP IMPLANT: JPMDL Asked To Create Sulzer MDL; More Complaints Filed
HOLOCAUST VICTIMS: German Media Hail Slave Labor Payment News

HOLOCAUST VICTIMS: Germany Demands End To US Lawsuits Before Paying
HOLOCAUST VICTIMS: Groups Press for Fast Payments As Fund Target Reached
IL REGULATORS: Investors of Failed Independent Trust Sue Alleging Delay
KERR-MCGEE: Columbus Residents Seek $80M in Damages Due to Plant
METLIFE: Female Employees Sue Claiming Bias in Hiring and Promotion

NAPSTER INC: Lawsuits Pile up over Music-Swapping Site
NORTH CAROLINA: 3 State Agencies Accused of Lacking Care for the Needy
NORTHBRIDGE EARTHQUAKE: Calif. Insurers Challenge New Claim Law
RAYTHEON: SEC Investigates on Private Briefings to Analysts on Outlook
RITALIN LITIGATION: Judge Dismisses Complaint Against Makers

SCHERING-PLOUGH: Drug Marketing Practices Under Investigation
VIACOM: DE Suit Reinstates Suit Alleging Stock Price Manipulation
WOOD COMPANIES: Miami-Dade Man Sues Over Use Of Arsenic


ABBOT LAB: 4 New Complaints Filed Over False Pregnancy Test Positives
Four complaints have been filed against Abbott Laboratories Inc. alleging
that false positive reading by its (-hCG laboratory pregnancy test resulted
in unnecessary chemotherapy and a hysterectomy for the plaintiffs (Ilena
Glazer v. Abbott Laboratories Inc., No. 01-1310, Shannon Goldman v. Abbott
Laboratories Inc., No. 01-1312, Brittany Hofmann v. Abbott Laboratories
Inc., No. 01-1313, and Ellen R. Gibbs v. Abbott Laboratories Inc., No.
01-1315, N.D. Ill, Eastern Div.).

The claims are similar to those found in a class action filed against
Abbott in 1999 (Toby Block, et al. v. Abbott Laboratories Inc., No.
99-7457, N.D. Ill.; See 12/3/99, Page 4). That case is in discovery and a
class certification motion is pending.

In the new complaints, four women complained that when their doctors used
Abbott's (-hCG laboratory test kit to check for elevated levels of human
chorionie gonadotrophin (hCG) and test for pregnancy, the kits returned a
false positive. After doctors determined that the women were not pregnant,
they were diagnosed with trophoblastic disease, a type of cancer, and were
given chemotherapy. One had a hysterectomy.

In all cases, other tests, some invasive, discovered the false positive.

The complaints say Abbott was and is aware of the false positive problem
and has failed to adequately warn health care practitioners or consumers
about it. It says Abbott could inexpensively fix the problem but has not.

Robert A. Clifford and Sheri Tarr of the Clifford Law Offices in Chicago,
Steve W. Berman and Jeniphr A.E. Breckenridge of Hagen Berman in Seattle
and Paul Luvera and Joel Cunningham of Luvera, Barnett, Brindley, Beninger
& Cunningham in Seattle represent the plaintiffs. (Mealey's Emerging Drugs
& Devices, March 1, 2001)

AIR FORCE: U.S. Argues Suit Alleging Leak Not Covered Under CERCLA
In response to a $ 2.5 billion suit by neighbors of the Arnold Air Force
Base for damages associated with the alleged release of toxic chemicals,
the United States and environmental consultant CH2M Hill Co. have moved to
dismiss the case on the grounds that the neighbors have failed to state a
claim under CERCLA (Larry Matlock, et al. v. United States Department of
Defense, et al., No. 00CV332, E.D. Tenn.; See Oct. 6, 2000, Page 4.).

Responding to the neighbors allegations in a series of motions filed in
January, the defendants, the Department of Defense, the U.S. Air Force and
consultant CH2M Hill Inc., contend the neighbors claims fail on a series of
varying grounds, including failing to satisfy citizen suit requirements and
response costs criteria under RCRA and CERCLA, respectively.

                       Alleged Contamination

The neighbors originally filed suit against the defendants Sept. 29,
accusing U.S. Rep. Van Hilleary, R-4th of Spring City, and the
Environmental Protection Agency of failing to respond in an appropriate
fashion to the alleged contamination of the air and water around the Air
Force base. Experts who warned of the dangers at the landfill, the
reservoirs on the base and in the surrounding area have were shunned and
ignored, according to the complaint.

The suit, seeking $ 2 billion for personal property damage plus $ 500
million in punitive damages, also claims Arnold Air Force Base officials
and consultant CH2M intentionally did not place appropriate methane
controls on the Coffee County Landfill and allowed methane to migrate; had
knowledge of an internal memorandum acknowledging the dangers linked to the
methane migration from the landfill into the community, including in the
direction of the Coffee County Central High School; and allowed drums with
toxins discovered in the landfill to be buried.

Plaintiffs accuse the Department of Defense, the U.S. Air Force and
consultant CH2M Hill Inc. of threatening the safety of some 1,500 students
in a public school near a landfill because of their handling of methane
generated on Arnold Air Force Base. Defendants are also accused of
mishandling and disposing of chemicals including 1,1,1-trichloroethane,
1,1-dichloroethylene, perchloroethylene, mercury, arsenic, methylene
chloride, chromium, PCBs, benzene, toluene, ethylene, xylene, vinyl
chloride and asbestos.

Filing their claims under the citizen-suit provisions in CERCLA and RCRA,
the neighbors alleged nuisance, trespass, negligence, strict liability and
concert of action claims and sought $ 2 billion for personal and property
damages plus $ 500 million in punitive damages against CH2M.

                        Response To Complaint

In response the claims, the defendants allege that class certification
should be denied and the case dismissed because the neighbors have failed
to state a claim under CERCLA. The defendants contend that because the
neighbors have not incurred any response costs, have not stated a claim as
individuals under the federal law who may assert natural resource claims,
their claims under CERCLA should be dismissed. In addition, medical
monitoring claims are not covered under the federal environmental statute,
the defendants assert.

The defendants also argue that because the neighbors failed to provide the
mandatory 60-day pre-filing notice of intent to file suit under RCRA, their
claims under that law should be dismissed as well. "Plaintiffs [neighbors]
make the conclusory assertion that prior RCRA notice is not necessary in
this case. To the contrary, pre-filing notice here is mandatory under the
citizen-suit provision of the statute yet not been provided. Plaintiff's
count under RCRA must therefore be dismissed," the defendants contend.

Specifically, the United States claims the complaint should be dismissed
for lack of subject matter jurisdiction because the United States has not
waived its sovereign immunity to suit and the neighbors failed to file an
administrative claim as required under the Federal Torts Claims Act.


CH2M contends the plaintiffs failed to state specifically what permit,
regulation or other provision the company violated and what actions the
company is guilty of. The company also argues the neighbors failed to
specify a class under Federal Rule of Civil Procedure 23(a) and failed to
show any basis for their claims of nuisance, trespass, strict liability and
concert of action.

"CH2M submit that plaintiff's RCRA and CERCLA claims should be dismissed
and that plaintiffs be ordered to file a more definite statement specifying
the class they purport to represent, how the putative class members meet
the criteria set forth under F.R.C.P. 23 and how the actions of CH2M
violated plaintiff's rights," the company argued.

Bobby L. Cook of Cook & Connelly of Summerville, Ga., and G. Thomas Nebel
of Nashville represent the neighbors. CH2M is represented by Shelby R.
Grubbs, David M. Bullock and James T. Williams of Miller & Martin in
Chattanooga, Tenn. The U.S. is represented by Lois J. Schiffer, Lewis M.
Barr, Leland Vankoten and Mei-Fei Kuo of the Department of Justice in
Washington, D.C. (Mealey's Emerging Toxic Torts, March 2, 2001)

AUTO INSURANCE: PA AG To Seek Big Fines Vs Allstate for Confusing People
The Pennsylvania Attorney General's Office said it would seek a hefty fine
from Allstate Insurance Company in the wake of a judge's decision that the
insurer was guilty of trying to confuse people who brought auto accident
claims against the company.

Harrisburg, Pa. Commonwealth Court Judge Dan Pellegrini's grant of a
summary judgement against the company is the toughest official response to
date concerning a controversial mailing program Allstate has pursued since
1995. Governments in four other states have taken action.

Allstate said it would appeal Judge Pellegrini's decision, which came in
response to a civil case brought by Pennsylvania Attorney General Mike

The Northbrook, Ill.-based carrier has been embroiled with legal cases in
Pennsylvania and elsewhere for sending correspondence that advise those
involved in auto accidents with its policyholders that they can settle
their cases without a lawyer.

Besides actions that have been brought by state attorneys general, there
are prospective class actions pending in Illinois and Connecticut.

The Pennsylvania case, filed in 1998, "alleged that Allstate provided
consumers with personal letters and form documents that touted the benefits
of allowing the company to settle their claims against its policyholders
without hiring an attorney," according to a statement from Mr. Fisher's

After the court's finding that the company willfully violated state
consumer protection laws, the court set a Feb. 15 date for a hearing on
civil penalties.

Mr. Fisher's office said he was seeking as much as $ 1,000 per violation.
Mr. Fisher's representative, Barbara Petito, said there were "thousands" of
violations and Mr. Fisher would "absolutely" seek substantial in penalties.

After the Pennsylvania suit was filed, the company significantly altered
the format of its mailings to remove objections.

The judge found that prior to that, Allstate's mailings of a "Do I Need An
Attorney?" form had the intent of swaying claimants away from hiring an
attorney and suggested that "there is no benefit to using an attorney
because to do so might net a smaller settlement." The judge wrote that an
"Authorization to Furnish Medical/Employment Information" was "likely to
cause confusion and misunderstanding, but without the benefit of an
attorney to review the document, the claimant could lose any benefit in a
settlement." Judge Pellegrini found, after reviewing Allstate internal
documents, that "the company's activities were designed to boost its bottom

A representative for Allstate, Justin Schmitt, said the company persists in
its mailings despite the legal actions that have resulted because the
public is "inundated by ads from plaintiffs' lawyers and we believe our
voice is entitled to be heard as well." Allstate, he said, is "more willing
to litigate to make sure we pay the fair and right amount on each claim."

The revised forms, Mr. Schmitt said, "still answer simple, frequently asked
questions that claimants have.

He said that the judge's decision does not address these revised materials.
In fact the judge noted the only forms at issue are the old ones, he said.
"We can unequivocally state that Allstate's goal is to handle every claim
in a fair and prompt manner. Allstate simply provides information to
claimants to allow them to make informed decisions," he added. (National
Underwriter Property & Casualty-Risk & Benefits Management, February 5,

BECTON-DICKINSON: PA Ct Rejects Medical Workers' Case for HIV Monitoring
that the prospective class representative had not shown that she has
incurred expenses for exposure-related testing or treatment, a state court
has refused to certify a class action on behalf of Pennsylvania medical
professionals who seek medical monitoring for HIV and other infections
because of workplace injuries involving contaminated needles. McGeehan v.
Becton-Dickinson & Co., 2000 WL 33128993 (Pa. C.P., Dec. 18, 2000).

A Pennsylvania common pleas court refused to certify the class based not
only on the lack of evidence of any occupational exposure to a "blood-borne
pathogen," but also because existing federal regulations require medical
monitoring and follow-up care for all health care employees.

An Occupational Safety and Health Administration regulation, 29 C.F.R. @
1910.1030, requires the provision of no-cost, postexposure evaluation and
follow-up care, including vaccinations for all employees who have had an
"exposure incident." The court observed that the rule applies to HIV and
hepatitis exposures and mandates that separate courses of testing and care
be provided after every such "exposure incident."

The court dismissed the prospective class action against medical devices
manufacturer Becton-Dickinson & Co. without leave to amend. It noted that
even in five drafts of the complaint, those initiating the action have
failed to show that any member of the putative class could "state a
cognizable cause of action for medical monitoring."

Becton-Dickinson had argued that the proposed class definition was
defective because it appeared to include Pennsylvania health care workers
who were not exposed to blood-borne pathogens when stuck, and thus, at no
risk of a resulting disease.

"Because the plaintiff does not allege (and   cannot allege) that she has
been (or will be) forced to pay for any testing or treatment necessitated
by the contaminated stick, she has sustained no compensable damages and has
thus failed to state a claim for which relief may be granted," the court

The proposed fourth amended complaint in the case sought to secure medical
monitoring benefits for all health care workers who: by virtue of their
employment, were stuck by contaminated syringe needles or other fixed
exposure hollow-core needle devices; and reported the contaminated stick;
underwent examination, and/or testing, and/or treatment; and tested
negative for HIV and for hepatitis. (AIDS Litigation Reporter, February 12,

CA POWER: State Legislature To Consider Energy Market Manipulation
The San Francisco Examiner/AP (3/13) reports, "In a move that could force
power generators to open their books and justify their profits, the state
Senate is launching its own probe into whether California's electricity
market has been illegally manipulated to drive up prices."

The Examiner continues, "The power generators have consistently denied any
wrongdoing and blamed the high prices on the poor planning of California
lawmakers who voted to deregulate the state's electricity market in 1996."
However, according to California Independent System Operator, which runs
the state's electricity grid, "The power generators imposed 'unjust and
unreasonable' charges totaling $555 million during December and January."

The Examiner adds, "At least five lawsuits seeking class-action status on
behalf of all Californians have been filed against the out-of-state
generators, alleging they colluded to drive up prices by illegally sharing
sensitive market information and withholding power to create artificial
shortages." (The Bulletin's Frontrunner, March 14, 2001)

CINCINNATI: Lawsuit Seeks Ban on Race Profiling
City police have illegally targeted and harassed blacks for 30 years on the
basis of race, a federal lawsuit filed Wednesday contends.

The American Civil Liberties Union and the Cincinnati Black United Front
asked for a court order to ban so-called racial profiling.

The lawsuit was filed because Cincinnati officials haven't kept their
promises to end police harassment of blacks, said Alphonse Gerhardstein, a
lawyer for the plaintiffs. ''Every time somebody gets mad, a politician
makes a promise,'' he said. ''We need to have a set of promises that are

ACLU officials say 13 blacks have been killed in situations involving
Cincinnati officers since 1995. One of them, Roger Owensby Jr., suffocated
while in police custody Nov. 7. Two white officers are charged in his

The ACLU has filed 16 similar lawsuits in recent years against such
defendants as the Los Angeles, Pittsburgh, Maryland and New Jersey police.
The Cincinnati plaintiffs, who are seeking class-action status, said they
have proposed mediation with city officials. (AP Online, March 14, 2001)

E.W. BLANCH: Berger & Montague Files Securities Lawsuit in Minnesota
The law firm of Berger & Montague, P.C. (http://www.investorprotect.com),
filed a class action in the United States District Court for the District
of Minnesota on behalf of all persons or entities who purchased E.W. Blanch
Holdings, Inc. (NYSE: EWB) securities during the period from October 19,
1999 through March 20, 2000, inclusive.

E.W. Blanch provides integrated risk management and distribution services,
including reinsurance intermediary services. The Company was involved in
Unicover Managers, Inc.'s ("Unicover") controversial system for sharing
premiums and risk in underwriting reinsurance for a workers compensation
pool. When the Unicover pool ran into trouble, E.W. Blanch never took a
charge to earnings in connection with that business.

E.W. Blanch misled investors by stating that it would be unlikely to
experience any adverse impact in connection with Unicover. On March 20,
2000, when E.W. Blanch revealed that it would be negatively impacted by the
Unicover reinsurance scandal, its stock dropped 64%. The individual
defendants sold over $24.7 million of the Company's stock during the Class
Period while in possession of information they had not disclosed to

The Complaint charges E.W. Blanch and its senior officers with violations
of sections 10 and 20(a) of the Securities and Exchange Act of 1934 for
materially false and misleading statements and filings with the SEC.

Contact: Sherrie R. Savett, Esquire, Karen S. Orman, Esquire or Kimberly A.
Walker, Investor Relations Manager, all of Berger & Montague, P.C.,
888-891-2289, 215-875-3000, or fax, 215-875-5715 or InvestorProtect@bm.net

FIDELITY NATIONAL: GA Adopts Percentage of the Fund Approach for Fees
When assessing attorney's fees following the settlement of a class action
lawsuit, the preferred method of determining fees is the percentage of the
fund approach. (Friedrich, et al. v. Fidelity National Bank, No. A00A1970
[Ga. Ct App. 1/29/01].)

The Automobile Insurance Premiums Trust was formed to provide loans to
licensed premium finance companies, which in turn, provided financing for
insurance premiums. Following a failed securities offering, a class action
filed against Fidelity National Bank, as trustee, alleged Fidelity breached
the trust agreement. After a negotiated settlement, Fidelity agreed to pay
the class 500,000. In its application for attorney's fees, class counsel
sought 125,169, representing 25 percent of the settlement amount. The trial
court awarded attorney's fees in the amount of 81,982. Class counsel
appealed, arguing the trial court used an improper standard of awarding

                        Calculation Method

In a case of first impression, the Georgia Court of Appeals addressed the
issue of how to determine the method of awarding attorney's fees following
the settlement of a class action. Citing Camden I Condominium Ass'n. v.
Dunkle, 946 F.2d 768 (11th Cir. 1991), the court noted the 11th U.S.
Circuit Court of Appeals discussed the method of awarding attorney's fees
in a class action lawsuit. The Camden court rejected the "lodestar" method
of computing fees, in which the trial court multiples the number of hours
reasonably spent by trial counsel by a reasonable hourly rate. Instead, the
Camden court found the percentage of the find approach to be "the better
reasoned in a common fund case."

Persuaded by Camden, the Court of Appeals found the percentage of the fund
approach to be "the most equitable, sensible, and fair." The court held,
"When assessing attorney fees in a common fund case, a percentage of the
fund analysis is the preferred method of determining these fees, unless
circumstances would make its use unfair or impractical."

            Factors Considered in Percentage Approach

Under the percentage of the fund approach, the Court of Appeals concluded a
trial court must identify all factors on which the court relied and set
forth how each factor affected the selection of the percentage awarded.
Factors to be considered include: the time required to reach a settlement,
whether there are any substantial objections by class members to the
settlement terms, any non-monetary benefits conferred upon the class by the
settlement, and the economics involved in prosecuting a class action.

Although the trial court identified factors on which it relied, the Court
of Appeals determined the trial court's order failed to state a specific
percentage of the fund awarded as attorney's fees and failed to explain how
each factor impacted the court's decision. Therefore, the court vacated the
award and remanded the case to the trial court to enter an award "complying
with the requirements for awarding attorney fees in a common fund case, as
set out in Camden I." (Consumer Financial Services Law Report, March 5,

HIP IMPLANT: JPMDL Asked To Create Sulzer MDL; More Complaints Filed
The Judicial Panel on Multidistrict Litigation (JPMDL) has been asked to
create an MDL for litigation involving the Sulzer Inter-Op hip implant (In
Re: Inter-Op Hip Prosthesis, MDL Docket No. 1401, JPMDL).

One motion seeks to have the litigation assigned to Judge Donald L. Graham
of the U.S. District Court for the Southern District of Florida. Another
seeks to have it transferred to the Northern District of Ohio.

The motion to locate an MDL in Florida notes that because the state's large
elderly population has a high rate of hip replacement surgery, Sulzer
allegedly targeted the state in its marketing efforts.

The motions come as more class and individual complaints continue to be
filed across the country in the wake of Sulzer Orthopedics Inc.'s December
disclosure that 17,500 of its Inter-Op hip implants may have to be replaced
because manufacturing lubricant residue prevents them from anchoring in the

Two of the most recent class action complaints were filed in federal court.
One, filed in the Northern District of California on behalf of plaintiff
James Ferguson, lists four type of Inter-Op shells involved in the recall:
hemispherical, rim flare, revision and protrusion (James Ferguson, et al.
v. Sulzer Medica, et al., No. 01-660, N.D. Calif.).

Ferguson claims negligence, strict products liability-failure to warn,
strict products liability-manufacturing defect, breach of warranty,
negligence per se, unfair competition in violation of California Business
and Professions Code 17200 and medical monitoring.

A complaint filed in the Southern District of Florida on behalf of
plaintiff Madeline Faircloth proposes a general class of all person who
received the Inter-Op Acetabular Hip Shell with a subclass who had the
device explanted, a subclass for those who have symptoms but no
explantation and a subclass of asymptomatic patients (Madeline Faircloth,
et al. v. Sulzer Medica Ltd., et al., No. 01-6269, S.D. Fla.).

Faircloth claims strict products liability, breach of warranty and

A class action filed in California state court on behalf of plaintiff Alma
Jones claims strict products liability, negligence, breach of warranty and
medical monitoring (Alma Jones, et al. v. Sulzer Orthopedics Inc., et al.,
No. n/a, Calif. Super., Los Angeles Co.)

In individual personal injury complaint filed in Missouri state court on
behalf of plaintiff Marilyn Huntsman names various Sulzer entities and a
Missouri-based agent (Marilyn Huntsman v. Sulzer Medica, et al., No.
CV0101-609, Mo. Cir., Greene Co.).

Huntsman claims: strict products liability for manufacturing defect;
negligence; strict liability for failure to warn; strict liability for
defective product; breach of express and implied warranties; common law
fraud and misrepresentation and violation of the Missouri Merchandising
Practices Act.

Richard M. Heimann, Donald C. Arbitblit and Steven M. Tindall of Lieff,
Cabraser, Heimann & Bernstein in San Francisco and Perry Weitz and John
Broaddus of Weitz & Luxenberg in New York represent Ferguson.

Michael J. Ryan and Kelley B. Gelb of Krupnick, Campbell, Malone, Roselli,
Buser, Slama, Hancock, McNelis, Liberman & McKee in Fort Lauderdale
represent Faircloth.

Major A. Langer and E. Todd Trumper of Perona, Langer, Beck & Lallande in
Long Beach, Calif., and Mark Robinson Jr. and Kefin F. Calcagnie of
Robinson, Calcagnie & Robinson in Newport Beach, Calif., represent Jones.

Zoe B. Littlepage, Chetna Gosain and Joshua Brockman of Littlepage &
Associates in Houston represent Huntsman. (Mealey's Emerging Drugs &
Devices, March 1, 2001)

HOLOCAUST VICTIMS: German Media Hail Slave Labor Payment News
German media expressed relief Wednesday at the announcement that industry
had finally collected the five billion marks (2.6 billion euros, 2.4
billion dollars) pledged to compensate Nazi-era slave laborers.

Media reports noted, however, that several obstacles remained before
payments could be made.

The announcement Tuesday, nearly 56 years after the end of World War II,
closed an embarrassing 1.4 billion mark gap in funding thanks to an
agreement by the compensation fund's founding members to raise their
initial pledges.

But the start of payments has been delayed by legal wrangling over
outstanding lawsuits in the United States on behalf of elderly former slave
laborers, who are dying off at a rate of 10 percent a year, against German

"The money does not solve the real problem of reparations for slave
laborers," the Sueddeutsche Zeitung wrote in an editorial. "The government
has got to present proposals as to how the legal trap can be avoided," the
paper added.

The industry foundation, which now includes some 6,000 member companies,
has said the firms must have legal guarantees against such suits before
paying their share to the more than one million survivors, most of whom are
non-Jewish eastern Europeans.

But in a legal Catch-22, a New York district court judge last week refused
to dismiss a class-action suit brought against German banks, saying that
because German industry has failed to contribute its full share, the
victims could not be sure they would be paid.

"German industry still does not have the legal security it has been
promised," wrote Die Welt newspaper in a front-page editorial, referring to
the suit before the New York court but also the threat of future suits by
"inventive litigation lawyers". "Legal closure must be enforced politically
and vigorously represented in Washington," the paper said.

Chancellor Gerhard Schroeder travels to the United States March 29 and
several newspapers noted that he had put pressure on industry bosses to get
the money together before his departure. He is to meet with the initiators
of the foundation Wednesday evening to discuss the remaining legal problems
standing in the way of payments.

The founders include some of the biggest names in German business and
industry, including industrial giant DaimlerChrysler, Germany's top
commercial bank Deutsche Bank, electronics group Siemens and automaker

"The companies thought that good will would be good enough for the New York
judge to reject the slave laborers' suits," Berlin's Tagesspiegel wrote.
"Now some foundation members are paying more for those who did not want to
pay at all, and so this shameful tragedy will come to an end."

The sum of 2.55 billion euros from German industry is being matched by an
equal amount from the German government under an agreement reached with US,
Israeli and eastern European representatives last July. (Agence France
Presse, March 14, 2001)

HOLOCAUST VICTIMS: Germany Demands End To US Lawsuits Before Paying
German Chancellor Gerhard Schroeder said Wednesday that a
five-billion-dollar (-euro) fund for former Nazi slave and forced laborers
will not be disbursed until pending US lawsuits against German firms are

Schroeder said after meeting German business leaders in Berlin that the
German government and industry "want legal closure for (German) firms in
the United States." He said lawsuits being heard by New York Judge Shirley
Wohl Kram should be concluded in a positive way and that having these suits
dismissed was "necessary but not sufficient" since there were other claims
by former slave and forced laborers pending in US courts against German
firms. "There is no 100 percent guarantee but we want to make sure that the
firms no longer have to fear legal pursuits," Schroeder said.

German businesses said Tuesday they had achieved their pledged target of
five billion marks (2.55 billion euros, 2.39 billion dollars) to compensate
former Nazi-era slave laborers.

The German government is contributing another five billion marks to the
fund, bringing its total to 10 billion marks (5.1 billion euros, 4.8
billion dollars).

But Schroeder's comments Wednesday made clear that there is still a delay.

Many of those awaiting the compensation and their lawyers say any
postponement would be tragic, as the one million former Nazi victims have
an average age of over 80 and are dying off at the rate of around 10,000 a

The German companies involved -- including German giants DaimlerChrysler,
international bank Deutsche Bank, electronics group Siemens and automaker
Volkswagen -- want their liability to former victims to end with the
payments from the compensation fund set up by German and the United States
last July. It is thus seeking legal closure, that is guarantees against any
further lawsuits before letting the foundation payments begin.

A New York district court has refused to dismiss a class-action suit
brought against German banks, saying that because German industry had at
that point failed to contribute its share, the victims could not be sure
they would be paid. (Agence France Presse, March 14, 2001)

HOLOCAUST VICTIMS: Groups Press for Fast Payments As Fund Target Reached
Victims' representatives and Jewish groups pressed Wednesday for speedy
payments to former Nazi-era slave and forced laborers in light of the
announcement by Germany industry that it had overcome the shortfall in its
10 billion marks (dlrs 4.8 billion) fund.

Despite the breakthrough in reaching the fund's full target of 10 billion
marks, the timetable for distributing payments from the joint
industry-government fund to the estimated 1 million elderly survivors
remains unclear.

The firms still insist on guarantees that they will not face future
class-action suits in the United States and closure on suits now pending.
In addition, industry's share has not yet been turned over to the fund; the
German government turned over its 5 billion mark (dlrs 2.4 billion)
contribution last month.

Lothar Evers, head of a German advocacy group for Nazi victims, urged the
foundation to quickly transfer the money to the fund. ''It can't be that
more than a million slave laborers are held as hostages and are there just
to make German banks and company lawyers feel more comfortable,'' he told
Norddeutscher Rundfunk radio. ''The bitter aftertaste should not be
deepened by new bureaucratic and legal pseudo-arguments,'' said Michel
Friedmann, deputy head of Germany's Central Council of Jews.

The German firms' failure to come up with their half of the 10 billion mark
(dlrs 4.8 billion) fund was cited by a New York judge in her refusal to
dismiss a class-action suit against German banks last week.

That is one of several pending cases that the companies have insisted be
set aside before any payments begin to the survivors, mostly non-Jewish
eastern Europeans who were deported to Nazi Germany to keep industry
running during World War II.

Deidre Berger, the American Jewish Committee's envoy to Berlin, said the
firms' fulfillment of their pledge was ''psychologically a very important

But she blamed German industry squarely for the ongoing delay in payments
to survivors. ''German industry has demanded a level of legal security that
simply doesn't exist,'' she told German radio.

Chancellor Gerhard Schroeder is to meet with industry leaders later
Wednesday and has expressed optimism earlier they would find a way to start
payments, which officials had hoped could begin in spring.

Industry foundation spokesman Wolfgang Gibowski said the meeting would
focus on the issue of legal security. He insisted that ''not a single
penny'' of the money would be transferred until that is assured. (AP
Worldstream, March 14, 2001)

IL REGULATORS: Investors of Failed Independent Trust Sue Alleging Delay
Investors of a failed trust company are suing Illinois regulators, claiming
that their losses resulted from regulatory delay.

Independent Trust Corp. of Orland Park, Ill., was put into receivership
last April after a $68.1 million investment in an affiliate turned sour.
James Matkins, an individual investor from Rapid City, S.D., and Aztec
Management Service Inc., a privately held investment firm in West Chester,
Pa., allege in a lawsuit filed last month that the Illinois Office of Banks
and Real Estate was negligent in its examination of Independent Trust, also
known as Intrust.

Both plaintiffs say the state agency knew the company was in trouble and
should have put the company in receivership much sooner.

"These massive losses would not have occurred" if the regulatory office
"had not negligently and wantonly violated its affirmative statutory
duties," the suit says. It puts the plaintiffs' losses at $89.9 million,
including the investment in the affiliate and $21.8 million in fees to the
state-appointed receiver, Pricewaterhouse Coopers LLP.

Intrust, which had been in business since 1984, focused on managing
individual retirement accounts. Over six years it lost $68.1 million
invested in an affiliate, Intercounty Title Corp. of Illinois in Chicago, a
title insurance company that is also in receivership. A grand jury is
conducting a criminal investigation into possible fraud connected with the

Examiners repeatedly criticized Intrust's business practices but only asked
for voluntary changes, the lawsuit says. It further alleges that regulators
should have investigated and put Intrust under stricter regulations rather
than taking the company's word that the problems would be corrected. As
recently as September 1999, the Office of Banks gave Intrust a clean bill
of health, according to the plaintiffs. Intrust was put into receivership
on April 14 after the agency decided it was "operating in an unsafe,
unsound, and unlawful manner and would not be able to pay off all the
demands of its customers."

The state banking agency has 60 days to respond to the suit, which was
filed Feb. 23 in the Illinois Court of Claims.

"We certainly understand the concern of the customers that lost money with
Intrust, although the agency followed appropriate examination procedures,
and ultimately we discovered the embezzlement," said Scott D. Clarke,
assistant commissioner at the banking agency. This is the first trust
company that has failed in Illinois since 1934, he added, and the lawsuit
is the first of its kind.

Benjamin Schwartzman, a lawyer with Grant Law Firm in Seattle, which
represents Aztec, also said this is the first such case he has seen. "It's
really a different scenario than most times when investment companies have
bitten the dust," he said. Usually when a company fails, it is only later,
when "sifting through the rubble," that problems come to light. Intrust was
a case where regulators knew beforehand but waited too long to act, Mr.
Schwartzman said.

Mr. Clarke noted that fees assessed so far are only $2.1 million, not the
$21.8 million sought in the lawsuit. A spokesman for Kirkland & Ellis, the
law firm representing Pricewaterhouse, confirmed this figure and said no
new fees would be assessed.

About 1,700 accounts are being frozen while the case is resolved. When
related and subaccounts are included, the number rises to 21,000, with a
market value of approximately $3 billion, said Jim Boyd, chief executive
officer of Millennium Trust Co., also of Orland Park, which purchased
Intrust's assets on Nov. 30. The plaintiffs want the lawsuit to be a class
action, but the court has not made that call yet. (The American Banker,
March 14, 2001)

KERR-MCGEE: Columbus Residents Seek $80M in Damages Due to Plant
A group of Columbus residents is seeking $80 million in damages from
Kerr-McGee Corp., a one-time plant supervisor and a neighboring plumbing
company, alleging air and ground pollution.

The circuit court lawsuit is the second filed by a group of attorneys who
last week announced their clients were taking Kerr-McGee to federal court
in the latest in a long-standing controversy over a plant at Columbus that
uses the wood preservative creosote to make railroad cross ties.

In court documents, the plaintiffs claim the level of toxins at the plant
are higher than those found at Love Canal, the subject of a toxic waste
scandal in the 1970s.

Plaintiffs list numerous health problems they claim resulted from the
plant. Plaintiff Mary Burgin also claims a loss of property value because
her home is close to the plant. The plaintiffs each demand more than $11
million in damages.

Besides the Oklahoma City-based energy and inorganic chemical company, the
lawsuit names Kerr-McGee Chemical, former plant supervisor Gilbert D. Lowe
and Sanderson Plumbing as defendants.

A Kerr-McGee spokeswoman has said the corporation will defend itself
against what it sees as attorneys promoting a lawsuit by creating fear and
presenting misinformation. Lowe declined comment, as did a representative
of Sanderson.

The Columbus plant has been in place since 1928 and has been owned and
operated by Kerr-McGee since 1964.

Railroad cross ties are processed, sorted and stacked for seasoning in a
yard, with creosote used as a preservative. After seasoning, the wood
undergoes additional preparation for use before being shipped out.

Plaintiffs also claim another preservative was used in the preservative
process, pentachlorophenol, before restrictions were placed on its use.

The suit claims numerous instances of releasing toxic chemicals and
compounds into the environment.

It alleges that Kerr-McGee disposed of wood treatment in ditches that
carried the waste to the Luxapalila Creek.

It also claims that from the 1930s to the 1970s, wood treatment and septic
waste were disposed in a wood-lined ditch that connected to the 14th Avenue
ditch and ultimately ran into the creek.

Plaintiffs also claim another ditch, known as the Beneke Ditch, went across
Sanderson Plumbing's property and connected to the 14th Avenue ditch, which
ultimately ran into the creek.

The suit claims Sanderson allowed Kerr-McGee to move waste through the
Beneke ditch and withheld information from the state Department of
Environmental Quality and the U.S. Environmental Protection Agency.

Although the wood preserving industry implemented waste treatment as early
as the 1940s, the lawsuit said, defendants did not implement a waste water
treatment system until the state required them to do so in the 1970s. (The
Associated Press State & Local Wire, March 13, 2001)

METLIFE: Female Employees Sue Claiming Bias in Hiring and Promotion
Several current and former female employees of Metropolitan Life Insurance
Co. are suing the New York-based insurer, claiming discrimination against
women in its hiring and promotion practices.

MetLife, which employs 500 in North Carolina and has an office in
Charlotte, is being accused of hiring significantly fewer qualified women
than similarly qualified men for entry-level jobs, not providing female
employees the same staff and administrative support as male employees and
denying women promotions in favor of less qualified men.

The suit, filed Tuesday in U.S. District Court of the Southern District of
New York, seeks class-action status.

MetLife spokesman John Calagna said the company's management has not seen a
copy of the suit and can't comment on it directly. "However, as a company,
MetLife takes very seriously the issue of equal opportunities for women,"
Calagna said.

According to the complaint, one plaintiff, Janet Ramsey of Durham, was
hired by MetLife in 1983 and was denied several promotions offered to men
in similar situations. In one instance, she sought a regional manager's
position which was open but her boss, a man, told her company management
didn't think she could handle the job "as a woman," the suit claims.

After complaining about discriminatory conduct, Ramsey was demoted,
according to the complaint.

The suit seeks, among other things, an injunction against what the
plaintiffs say are MetLife's discriminatory practices, assignment of
plaintiffs to the jobs the suit claims they should occupy and back pay and
damages, said Kelly Dermody, lead attorney for the plaintiffs, with Lieff,
Cabraser, Heimann & Bernstein. (The Charlotte Observer, March 14, 2001)

NAPSTER INC: Lawsuits Pile up over Music-Swapping Site
Consumers aren't the only ones downloading a treasure trove from Napster
Inc. More than a dozen law firms are involved in litigation over the
music-swapping site. As of last week nine copyright infringement suits had
been filed against the Redwood City-based company. Complaints also have
been filed against several Napster officials and one of the company's

The suits are not only potential money-makers for firms, they also offer
attorneys the chance to be involved in one of the highest-profile cases
involving the Internet. "It's fun to have a business reason to be reading
about the case," said Annette Hurst, a partner at Howard, Rice, Nemerovski,
Canady, Falk & Rabkin, who is representing Napster founder Shawn Fanning in
one of the suits. Other firms representing people linked to Napster include
Cotchett, Pitre & Simon, counsel to Napster CEO Hank Barry, Cooley Godward,
which is representing Hummer Winblad Venture Partners, a venture capital
firm that invested in Napster, and Bartko, Zankel, Tarrant & Miller,
counsel to John Fanning, Shawn's uncle, who helped start Napster.

Firms squaring off against Napster include Gray Cary Ware & Freidenrich,
counsel to Emusic.com Inc., and Quinn Emanuel Urquhart Oliver & Hedges,
representing the National Academy of Recording Arts & Sciences. Both filed
suits against Napster last week. Class action giant Milberg Weiss Bershad
Hynes & Lerach has also joined the fray, serving as co-counsel in a class
action brought on behalf of independent artists.

The legal battle over Napster began in December 1999 when 18 record labels
filed suit against the company for contributory and vicarious copyright
infringement. A month later songwriters Jerry Leiber and Mike Stoller
(co-authors of such songs as "Hound Dog" and "Jailhouse Rock") filed a
separate suit on behalf of themselves and other music composers. Musician
Dr. Dre and the band Metallica subsequently added their suits to the list.

And musician and attorney Hannah Bentley filed a class action, Casanova
Records v. Napster, 00-2638, on behalf of independent artists whose music
is being traded on Napster without their consent. A hearing on class
certification in that case is scheduled for next month. Bentley said the
class could include as many as 125,000 artists, which is the number that
post their music on the music site MP3.com. The plaintiffs in the Leiber
suit are similarly seeking class certification of the approximately 25,000
music composers represented by Harry Fox Agency Inc.

Bentley said she was galvanized into action when she saw artists were
losing rights to their music on the Internet. Two years ago she left her
practice as a public interest and environmental attorney and began
recording music. In her most notable case she won a temporary restraining
order from U.S. District Chief Judge Marilyn Hall Patel - who is also
overseeing the Napster litigation - to block the transfer of a radioactive
waste dump to Ward Valley. Bentley resumed her legal career to take on
Napster. She now has substantial legal muscle on her side as Milberg Weiss
recently agreed to serve as co-counsel. "It's an iffy thing for us to step
into now," said Reed Kathrein, a partner in Milberg Weiss' San Francisco
office. "If Napster doesn't continue to exist we won't get anything." But,
he added, taking the case "is the right thing to do. Independent artists
and labels need some representation here."

If personal disgust with the site brought Bentley to the suit, Hurst and
Howard, Rice got their role in the legal drama through more mundane means.
Fenwick & West partner Laurence Pulgram - who is the lead attorney on
Napster's defense team - is a former Howard, Rice partner. He referred
Fanning to his former colleague, a move Hurst says is typical in such
cases. Companies and their employees often retain separate counsel to avoid
potential conflicts, Hurst said. For copyright holder and music producer
Matthew Katz, the legal strategy has been to file complaints against
Napster and just about anyone he can link to the company. In addition to
Napster officials, he has named as defendants Napster investor Hummer
Winblad; Fred Durst, lead singer of the band Limp Bizkit, which
participated in a concert tour promoted by Napster; and Jonathan Greene, an
individual Napster user.

Katz, who is representing himself, claims the conduct of defendants makes
them liable for Napster's infringement of sound recordings that he holds
rights to. "The only way to get attention is to file complaints," said
Katz, a former producer for Jefferson Airplane. "They won't answer your
phone calls and letters." Howard, Rice's Hurst said Katz is "trying to get
around standards of corporate law" by suing individuals. Attorneys for the
defendants in the Katz litigation have filed motions to dismiss his

Among other suits, independent record label TeeVee Toons Inc. settled its
dispute with Napster about a month ago. The case originally was filed in a
New York federal district court. Thus far, all but the two most recent
Napster suits have been placed before Patel for pretrial proceedings as In
re Napster Litigation, 00-1369.

The latest plaintiffs include the National Academy of Recording Arts &
Sciences - producer of the annual Grammy Awards - which filed suit on March
5, the day Patel issued a revised injunction against Napster. The group
claims that almost every live performance recorded at the Feb. 21 awards
program is available on Napster. Online music seller Emusic.com sued
Napster the following day.

The Redwood City-based company has licensed the rights to sell digital
copies of more than 160,000 songs over its subscription based service. "In
the last six months to a year we've requested Napster to try to block songs
on their servers that we've licensed digital rights to," said Emusic
spokesperson Steve Curry. "They said it was not possible to implement
technology" to do so and then last week launched a filtering software.
Napster began blocking access to copyrighted files on its system the day
before Patel issued a revised injunction against the company.

In her March 5 ruling, Patel said Napster had to remove infringing music
files from its index once notified by plaintiffs of their existence on the
Napster service. Patel's initial injunction, issued in July, placed the
entire burden on Napster of making sure that copyrighted works are kept off
its system. The Ninth Circuit U.S. Court of Appeals immediately stayed the
injunction in order to review the case. On Feb. 12 the court upheld the
majority of Patel's findings but ordered her to narrow the injunction to
ensure that both sides shared the burden of keeping infringing material off
Napster's system.

Using Napster's free software and computer servers, Internet users logged
onto the Napster service are able to exchange MP3 music files from
individual computer hard drives. An index includes all the files of those
logged on the system at a given time. Napster's filtering system blocks
users from downloading specific copyrighted songs.

It is unclear whether Napster will continue to litigate the terms of the
injunction. The company is seeking an en banc review of the Ninth Circuit's
decision and is continuing mediation with plaintiffs.

Now the key question is the amount of damages Napster may be liable for.
Under copyright law statutory damages may go up to $150,000 per
infringement. If the figure is applied to Napster, the total in damages
"would exceed the national gross product," said Howard King, attorney for
Metallica and Dr. Dre and a partner at Los Angeles' King, Purtich, Holmes,
Paterno & Berliner. At the damages phase Napster will be "gone and
forgotten" unless it comes to an arrangement with the various players, King
said. "If Napster knew its tab was $500 million or $1 billion it could go
and see if it could raise that money." He said he thought the company would
be able to do so if it had the backing of the five labels and one of the
music publishers.

Jeffrey Knowles, a partner at Coblentz, Patch, Duffy & Bass and an attorney
for the music publishers, said he expects damages will be gargantuan. "The
only way Napster can survive that," he said, "is if it comes up with a
business model to generate revenue." Reporter Brenda Sandburg's e-mail
address is bsandburg@therecorder.com.

NORTH CAROLINA: 3 State Agencies Accused of Lacking Care for the Needy
The rest home industry filed a lawsuit Tuesday against three state
agencies, contending that North Carolina does not provide enough money for
the care it requires for poor, elderly residents.

The suit, filed in Wake Superior Court, alleges that as a result of
"chronic underfunding" the state is neglecting 23,000 people who rely on
public assistance to live in rest homes. "We're taking a stand for poor,
elderly and disabled persons who have no voice ... that the state has
wronged," said Lou Wilson, executive director of the N.C. Association of
Long Term Care Facilities, which brought the suit along with a small group
of rest home residents and operators.

North Carolina now provides for about $ 48 a day on average for the care of
rest home residents on public assistance. That money comes from a
combination of federal, state and county governments, as well as from the
individual residents.

Wilson said that is not enough, and that the industry will argue in court
that it needs an additional $ 120 million a year. The lawsuit also seeks
almost $ 8.2 million to compensate for inadequate funding in the past.

Rest homes provide a lower level of care than nursing homes, but have
increasingly taken on residents who have greater needs. It has been
estimated that about 8,000 of the residents on public assistance are
mentally ill.

The state has also increased its standards for care in rest homes. Two
years ago, the legislature enacted a package of reforms that required
additional staff training and established new standards for homes that
offer special care for residents with Alzheimer's disease or other forms of
dementia. "We pay them less than what it would cost you to stay at a
Hampton Inn for the night," said Rep. Lanier Cansler, an Asheville
Republican. "My concern is if we really want to provide these services,
we've got to be willing to pay enough to do that."

Officials at the state Department of Health and Human Services, one of the
agencies named in the suit, declined comment. A spokeswoman said they had
not received a copy of the lawsuit.

The suit also named the N.C. Medical Care Commission and the N.C. Social
Services Commission, both of which have established rules under which rest
homes operate. The industry has already sued the state to change rules
implemented two years ago. "We've all worked hard to do what's reasonable,"
said Lucy Bode, chairwoman of the Medical Care Commission. "It's time to
let the courts decide whether we succeeded."

State Rep. David Redwine, a Brunswick County Democrat who chairs the House
budget committee, said the industry may have a valid complaint "that we're
asking them to do a lot more with not enough money to do that."

Roughly $ 207 million in public assistance was provided last year for
residents in rest homes. About $ 87 million of that was from Medicaid,
while about $ 120 million was from what is known as special assistance.
That cost is shared equally by the state and counties and based on a rate
set by the General Assembly.

In its suit, the industry said that 42 percent of the almost 1,700 rest
homes (or adult care homes) in the state operated at a loss in 1999 and
that the industry lost more than $ 1 million.

The suit seeks to be classified as a class action, representing both the
23,000 residents on public assistance and the rest homes themselves.

State Rep. Beverly Earle, a Charlotte Democrat who helped shepherd the rest
home reform package through the legislature two years ago, said the
industry never came forward with specific figures on how much the
additional requirements would cost them. "I don't think they have a valid
argument," she said. "If they've got the money to spend on a lawsuit, they
could possibly be redirecting that money back into services." (The News and
Observer (Raleigh, NC), March 14, 2001)

NORTHBRIDGE EARTHQUAKE: Calif. Insurers Challenge New Claim Law
Insurers are seeking to blunt the impact of a new California law allowing
the refiling of thousands of damage claims stemming from the 1994
Northridge earthquake, contending that the law is an open invitation to
submit meritless claims and foster class-action lawsuits.

A coalition of insurance trade groups have Piled a friend-of-the-court
brief in the complex case, the latest legal move in a series of maneuvers
that have included a direct--and unsuccessful--request to the state Supreme
Court urging that the new law be declared unconstitutional.

The high court said the insurers must have the issue decided at a lower
court level, which is the path the insurers are now following.

The January 1994 Northridge quake caused $ 15.3 billion in insured losses
and killed dozens of people. The insurers' filings, which challenge the
constitutionality of the law, are being submitted to the state Court of
Appeal. A hearing has not yet been scheduled.

The filing focuses on a single case arising from a March 1997 lawsuit filed
by the owners of an apartment complex damaged in the quake. The insurer,
Allstate Insurance Company, settled, but the owners continued to pursue a
bad-faith action in court.

However, the insurers' legal issues extend far beyond the original case. In
effect, the insurers are challenging the core constitutionality of the law.

The sweeping constitutional question remains undecided. In a separate
action, the state attorney general has decided that the insurers'
contention lacks merit. A hearing on that decision is expected next month.

The crux of the dispute is SB 1899, authored by Senate leader John Burton,
D-San Francisco, that gives quake victims who felt they were unfairly
treated by their insurers one year to file new claims. The law took effect
Jan. 1.

Sen. Burton and the consumer groups who backed the bill said SB1899 could
permit perhaps 10,000 policyholders, to resubmit claims.

Insurers contend the law is vaguely worded and could allow potentially
hundreds of thousands of new claims totaling billions of dollars.

The law is an outgrowth of testimony before the legislature last year
during an investigation into the conduct of former Insurance Commissioner
Charles Quackenbush, who ultimately was forced to resign.

Among other things, the testimony disclosed that market conduct exams
compiled by department auditors alleged hundreds of claims-handling
violations, including the low-balling of claims and delayed settlements.

Insurers denied the allegations, and said the state's confidentiality laws
prevented them from formally responding to the allegations in public.

The Burton law was an attempt to give quake victims another opportunity to
resolve their damage claims, but insurers believe the goal of the law was
to make it easier to file class-action suits.

It is unclear how many new claims have been filed. By one insurance
industry estimate, perhaps two-dozen lawsuits already have been filed, none
of them class-action suits.

An insurance industry coalition, including the Alliance of American
Insurers and several other groups, said SB 1899 has injected turmoil into
the marketplace and threatens the contracts between insurers and their

"If upheld, it could serve as a precedent for similar legislation, creating
an atmosphere of uncertainty in California's insurance marketplace," said
Joyce Kraeger an attorney for the Alliance, which is based in Downers
Grove, Ill. "The impairment in this case is not supported by a significant
and legitimate public purpose and is neither reasonable nor necessary.

Other groups joining in the filing include the Personal Insurance
Federation of California and the Association of California Insurance
Companies, both based in Sacramento, as well as the National Association of
Independent Insurers in Des Plaines, Ill.

Last November, the California Supreme Court, without comment, declined to
hear the insurers' petition. Insurers said at the time that they went
directly to the state's top court in an unusual action they argued was
necessary to forestall the new law, which was scheduled to take effect just
weeks later.

"Without immediate [state] Supreme Court review, a tidal wave of litigation
will surely engulf the Los Angeles trial courts and all divisions of the
Second Appellate District in Los Angeles, creating a potential for
contradictory decisions on the various constitutional issues and a cloud
over all contractual relationships in California," said Sam Sorich,
Sacramento-based vice president and Western regional manager of the NAIL.
(National Underwriter Property & Casualty-Risk & Benefits Management,
February 26, 2001)

RAYTHEON: SEC Investigates on Private Briefings to Analysts on Outlook
Raytheon is being investigated by the Securities and Exchange Commission
after the defense contractor privately briefed analysts on its
first-quarter outlook, according to people familiar with the probe. The
investigation is one of the first involving a possible violation of
Regulation FD, for fair disclosure, a rule enacted in October that requires
companies to provide access to possible market-moving information to all
investors. (The Washington Post, March 14, 2001)

RITALIN LITIGATION: Judge Dismisses Complaint Against Makers
Novartis Pharmaceuticals Corporation, the manufacturer of Ritalin(R)
(methylphenidate), is pleased with the ruling of U.S. District Judge Rudi
M. Brewster in the class action that is pending in San Diego federal court.
This class action attempts to discredit the diagnostic criteria for
Attention Deficit/Hyperactivity Disorder, and the use of Ritalin to treat
the disorder. In the very first court appearance by the parties, Judge
Brewster dismissed the Complaint against the defendants and held that the
Complaint is so vague and unclear it does not even state a legal claim.
Further, Judge Brewster also held that if the defects in the Complaint are
not rectified by the parties who brought the lawsuit, he will dismiss the
case entirely under a California statute that provides for the dismissal of
lawsuits that attack defendants for their speech about an issue of public

Judge Brewster's ruling vindicates the view of the Ritalin class action
lawsuits which Novartis has held from the beginning: they are unmerited
attempts to promote through the courts a position which has been soundly
and repeatedly rejected by the scientific community. If plaintiff files a
new Complaint as allowed by Judge Brewster, it will be the plaintiff's
third attempt to state a valid claim in this litigation. According to
Novartis General Counsel, Dorothy Watson, Novartis is confident that such a
third attempt would be no more successful than the first two.

"The plaintiff's claim that we conspired with the American Psychiatric
Association to expand the diagnosis of ADHD is ludicrous," said Watson.
Contrary to the position advanced in the lawsuits, ADHD is a real and
serious disorder. It is a well established and valid diagnosis recognized
by all leading medical authorities in the U.S. including the American
Medical Association, American Psychiatric Association, American Academy of
Pediatrics and the U.S. Surgeon General. Ritalin has been shown to be an
effective and safe medication for more than forty years and has been widely
studied with more than 170 studies completed involving more than 6,000
school-aged children. However many complaints may be drafted, however many
lawsuits filed, these facts are simply the truth and cannot be litigated
away by lawyers and anti-psychiatry advocates.

Judge Brewster gave the plaintiff until April 16 to attempt to cure the
defects in his Complaint. If another Complaint is filed, Judge Brewster
will hear additional motions from the defendants at that time.

A VNR on ADHD is available free for your unrestricted use. It contains
information about the disorder. Elements include 3-D medical animation of
how Ritalin and other stimulants are thought to work inside the brain,
bites with a psychiatrist from Harvard Medical School, bites with the
mother of a child with ADHD who is on medication and bites with the General
Counsel for Novartis Pharmaceuticals talking about these lawsuits in
general and why they are without merit.

SCHERING-PLOUGH: Drug Marketing Practices Under Investigation
A major drug manufacturer's marketing practices are under scrutiny by state
and federal investigators, as part of an expanding criminal probe into the
pharmaceuticals industry, the Wall Street Journal reported Wednesday.

The probe into the Schering-Plough Corp. is focusing on whether the company
caused the "unlawful inflation" of the amount the government reimbursed the
company for certain drugs, the company said. Investigators are also looking
into whether the company shorted Medicaid on payments designed to ensure
the government pays the lowest price for the drugs.

The probe is the latest in a series of legal problems that has beset the
New Jersey-based drug manufacturer. Schering-Plough was recently named in
at least 10 class-action lawsuits, filed on shareholder's behalf, that
accuse the company of concealing news of manufacturing problems that
delayed the release of Clarinex, a new allergy drug.

The delays stemmed from the Food & Drug Administration's decision to shut
down the company's production lines in New Jersey and Puerto Rico because
of repeated quality violations.

Federal prosecutors in Boston are also looking into criminal violations by
a number of drug companies, including Bristol-Myers Squibb Co., TAP
Pharmaceuticals Inc., and an Abbott Laboratories venture with Japan's
Takeda Chemical Industries, Ltd., the newspaper reported. (The Associated
Press State & Local Wire, March 14, 2001)

VIACOM: DE Suit Reinstates Suit Alleging Stock Price Manipulation
The Delaware Supreme Court Tuesday has reinstated a lawsuit charging that
Viacom manipulated its stock price during its takeovers of Paramount
Communications and Blockbuster Entertainment.

Suit, in which $ 1.6 billion in damages are sought, was originally filed by
lead plaintiff Emil Rossdeutscher in 1998. The trial court dismissed it,
however, ruling that the suit had been brought too late under federal
securities laws. In Tuesday's lengthy opinion, a three-judge panel held
that the lawsuit could be brought forth as a state claim for violation of
the covenant of good faith and fair dealing. State claims have a longer
statute of limitations.

The case will now go back to the trial court for a series of pre-trial
determinations, including whether the case can proceed as a class action.

Viacom general counsel Michael Fricklas said, "We intend to vigorously
defend this lawsuit and believe it to be without merit."

Suit stems from Viacom's 1994 acquisitions of Paramount, for $ 10 billion,
and Blockbuster, for $ 7.7 billion later that year. Derivative securities
were issued to Paramount and Blockbuster shareholders in connection with
the merger. These securities were designed to provide a "collar" to protect
Par and Blockbuster shareholders in the merger. Their value varied
inversely to the value of Viacom stock at certain specified time periods
after the mergers.

Plaintiffs allege that Viacom deliberately released false economic data at
the critical time periods for the purpose of artificially inflating the
price of its stock. Aim was to reduce the payout on the derivative
securities to Paramount and Blockbuster shareholders.

According to the complaint, which is detailed in the opinion, Viacom
released false financial information to coincide with the critical periods
for Par and Blockbuster shareholders. The stock price would spike and then
fall back once the market realized the information was false. By then,
however, the critical period had passed and the damage was done to

According to the charges, Viacom manipulated the stock price by, among
other things, understating amortization costs and deferring purchases of
videos for Blockbuster, leading to higher reported profits. The rosy
financial results, in turn, led to "buy" recommendations for Viacom stock
from analysts, which pushed the share price higher. (Daily Variety, March
14, 2001)

WOOD COMPANIES: Miami-Dade Man Sues Over Use Of Arsenic
Makers and sellers of lumber treated with arsenic have misinformed
customers about the dangers of wood used for building playgrounds, decks
and picnic tables, a lawsuit filed in federal court stated.

Lawyers filed the 39-page lawsuit on behalf of Miami-Dade resident Jerry
Jacobs, who owns a deck treated with chromated copper arsenate. CCA is a
powerful pesticide that is injected into the boards to give them long life
against termites, beetles and humidity.

The chemical has been banned in several countries, however, and might be an
environmental hazard, experts say.

Gov. Jeb Bush on Tuesday ordered Florida's wood-treatment plant in Raiford,
which is north of Gainesville, to stop using arsenic as a preservative. The
move came in the wake of reports that the chemical is leaking into soil
from arsenic-treated wooden structures at levels far higher than the state
considers safe.

The lawsuit, filed Thursday in U.S. District Court in Miami, said the wood
is "defective and unsafe" and that companies have hidden its harmful effect
from the public through a campaign of "misrepresentation, omission and

Two of the three largest manufacturers of CCA are named in the filing,
along with retailers Home Depot and Lowe's and several companies that make
treated wood.

Jacobs' lawyers, who asked that the lawsuit be certified as a class-action,
want the companies to pay for the removal of decks, playgrounds and other
structures made with CCA-treated wood. They also want contaminated soil to
be cleaned up, payment for medical expenses of people that may be at risk
and punitive damages.

None of the Jacobs' four attorneys would discuss the lawsuit, The
Gainesville Sun reported in its Wednesday editions. Jacobs was not
available for comment.

The wood industry says its studies show the wood is safe. It has fought
efforts to ban CCA-treated lumber in Minnesota.

The Environmental Protection Agency banned most arsenic pesticides years
ago but made an exception for pressure-treated wood.

Switzerland, Vietnam and Indonesia have banned CCA-treated wood. Japan,
Denmark, Sweden, Germany, Australia and New Zealand have restricted or
proposed restrictions for it. (The Associated Press State & Local Wire,
March 14, 2001)


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Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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