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/raid1/www/Hosts/bankrupt/CAR_Public/010412.MBX C L A S S A C T I O N R E P O R T E R Thursday, April 12, 2001, Vol. 3, No. 72 Headlines AR COMMUNICATIONS: Shalov Stone Files Securities Suit in New York DETROIT POLICE: Accused of "Arresting" Homicide 'Witnesses' EL PASO: Continue to Defend Suits over Conspiracy in Inflating Gas Rates EL PASO: Named in Grynberg and Quinque Suits re Claims of Gas Royalties ELGIN HIGH: Suit Alleges Boys Get Better Treatment in School Sports FRED HUTCHINSON: Surgeon General Wants Cancer Trials Investigated GAS RATES: Philadelphia Residents Protest Gas Company's Rate Increases HONEYWELL INTERNATIONAL: Named in Lawsuit v. LOCKFORMER over Degreaser LASON, INC: Announces Amendment to Bank Credit Facility LEAD PAINT: Cohen Milstein, City of Milwaukee Files Complaint MEDICAL MANAGER: 11th Cir Upholds Dismissal of Securities Suit re Y2K MERRILL LYNCH: Milberg Weiss Announces Securities Suit Filed in N.Y. NAPSTER INC: Fd Judge Calls Failure to Block Copyright Songs a Disgrace NEW YORK LIFE: Insurer Settles with Armenian Genocide Heirs NY CITY: Panel Dismisses Challenge to Federal Oversight of AIDS Services OPUS360 CORP: eBusiness Software Provider Reports Shareholder Suit in NY SOUTHERN CO: CA Suits Allege of Manipulation of Wholesale Power Markets TAINTED BLOOD: 5 International Firms to Pay HIV-Infected Haemophiliacs TOBACCO LITIGATION: NY Ct Hears Cert. Arguments In Punitive Damages Case TOBACCO LITIGATION: U.S. Chamber Of Commerce Targets Attorney Fees U.K. HOSPITALS: Families Seek Group Litigation Order re Organs Scandal WAR LITIGATION: Former Forced Laborers In Australia Seek Compensation ********* AR COMMUNICATIONS: Shalov Stone Files Securities Suit in New York ----------------------------------------------------------------------A class action was commenced on behalf of all persons who purchased the securities of Winstar Communications Inc. (Nasdaq: WCII) in the period from August 2, 2000 to April 2, 2001. The complaint names Winstar, William Rouhana, Richard Uhl and Nathan Kantor as defendants. The complaint alleges that the defendants made material misrepresentations and omissions of material facts concerning the company's business performance during the relevant time. According to the complaint, throughout the relevant time period, defendants repeatedly assured investors that the company was performing well, that the company was enjoying strong growth and that it was well-funded to follow its growth-oriented business plan through the first quarter of 2002. At the same time, however, the complaint alleges that the defendants knew or recklessly disregarded that Winstar was overstating revenues and assets. In April 2001, contrary to prior representations, Winstar announced that it was halting its expansion and laying off thousands of employees. The company has delayed the filing of its annual Report on Form 10-K with the SEC and its stock price has collapsed. The lawsuit was filed April 10 in the United States District Court for the Southern District of New York. Contact: Mark J. Nemetz, Law Clerk, of Shalov Stone & Bonner, 212-686-8004 DETROIT POLICE: Accused of "Arresting" Homicide 'Witnesses' ----------------------------------------------------------- The law is clear here in Michigan and throughout the country: the police can arrest someone only if they have probable cause to believe that the person committed a crime. The police cannot arrest people they think might know something about a crime and lock them up so they will disclose what, if anything, they know. Yet that is what dozens of people say the Detroit Police Department did over the last few years: detaining witnesses in homicide cases, taking them in handcuffs to police headquarters and holding them for questioning for hours or even days without obtaining a court order or filing criminal charges. The accusations come from witnesses and criminal lawyers, who say that the department has done this for years. The charges have come to the forefront now because of federal statistics made available recently showing that since 1996, Detroit has arrested far more people in homicide cases than any other big-city police department, reporting an average of nearly three arrests per killing. Most cities average roughly one arrest per homicide case. The numbers, which the police reported to the Federal Bureau of Investigation, show that in 1998 and 1999, Detroit alone accounted for 1 in 13 homicide arrests in the country. The statistics, coupled with several lawsuits alleging false arrest of witnesses that the city lost or agreed to settle, have prompted more people to come forward with accusations in recent weeks. A federal lawsuit filed recently on behalf of witnesses claiming false arrest is seeking class-action status. Officials in Detroit, which has long had one of the nation's highest homicide rates, say that the Police Department has no policy permitting officers to arrest witnesses. But while officials have not acknowledged that this has happened, they have not exactly denied it. "I don't think anybody has anything to say, but gosh, and let's not let that practice happen again,"' Mayor Dennis W. Archer said in an interview. "For whatever reason may have provoked that practice, it's going to be over." City officials have offered varying reasons for the F.B.I. arrest statistics, saying most recently that they are the result of computer glitches or the arrests of people at homicide scenes on unrelated charges. The police chief, Benny N. Napoleon, said in a recent statement that he was investigating "to determine what steps, if any, are necessary to ensure that persons are not unconstitutionally detained." Arresting witnesses would be a violation of the Fourth Amendment's prohibition against unreasonable search and seizure, legal experts say. The police are allowed to detain a person briefly at a crime scene if they have a "reasonable suspicion" that the person was involved in a crime, said Alan Saltzman, a professor at the University of Detroit Mercy Law School. But when the police take people away from a crime scene or any other location against their will, Professor Saltzman said, there must be probable cause to believe that they are suspects. The police must demonstrate that to a judge within 48 hours, he said. "The law is obvious," Professor Saltzman said. "If you take somebody into custody, that's an arrest, even if they're not charged, and you have to have probable cause to make an arrest." A state law allows prosecutors to ask a judge to issue an investigative subpoena to persuade a reluctant witness to talk to the police about unsolved murders, and a witness can be jailed for disregarding the subpoena, but lawyers say no such subpoenas were sought. Further muddying things is a sentence in the police manual stating that at a homicide scene, "upon direction of the Homicide Section," an officer "shall arrange transportation for witnesses to the headquarters building for interviewing." City officials said that sentence was being rewritten. Law enforcement experts said they had never encountered a police department with a practice of detaining witnesses to get information. "In all the study and practice I've done in this area, this is the first I've ever heard of it," said James J. Fyfe, a criminologist at Temple University and a former New York City police officer. And if the Detroit police had thoughts that detaining witnesses helped them solve murders, they would have found the statistics disappointing. According to the F.B.I., Detroit's homicide clearance rate -- the rate at which suspects in a particular case were identified, though not necessarily charged -- was 45.5 percent in 1999, less than in most other big cities. The issue of witness arrests comes as other serious questions are being raised about the Detroit Police Department. The Justice Department is investigating police shootings of civilians here and the conditions under which some people have died or become ill in police detention. And the City Council has been holding hearings about why the city has paid at least $123 million since 1987 to settle lawsuits against the police. Criminal lawyers in Detroit say that the practice of detaining witnesses to compel them to cooperate has gone on for years. "It is absolutely standard practice for them," said Corbett Edge O'Meara, a defense lawyer. "I think it was due to laziness and just kind of a siege mentality that exists in the Detroit Police Department. And they think they can get away with it. It's a great racket for criminal defense lawyers. They arrest people illegally, and then criminal defense lawyers like myself charge people money to get a writ to get them out of jail." Police testimony in one lawsuit filed by a witness who claimed false arrest also seemed to suggest the practice was not unusual. The plaintiff in that case was Janetta Toles, who said she was arrested at her apartment in March 1997, taken to police headquarters and held there for nearly four days. She had to leave her children, a 2-year-old and and an 8-month-old, with a teenage neighbor she hardly knew. She was never charged or offered a lawyer, could not make phone calls and was released from detention for only a few hours during that time. According to testimony in a civil suit Ms. Toles filed against the department, the police held her to learn what she knew about a homicide that people in her apartment building were suspected of committing. In testimony and depositions in her civil suit, one homicide sergeant testified that witnesses were frequently held overnight. Another sergeant said the procedure of holding witnesses in homicide investigations was part of his training. "You're comfortable having violated someone's rights?" Ms. Toles's lawyer, Daniel Romano, asked that sergeant, Reginald Harvel. "Yes," Sergeant Harvel replied. "And you'll do it again, won't you?" Mr. Romano asked. "Yes," Sergeant Harvel said. Ms. Toles won her lawsuit, and the City of Detroit paid her $200,000. After 1998, the city paid settlements in similar suits, including one last year for $500,000 to five people who said they were held as witnesses in a 1999 murder case. City officials said settlements are not always an admission of wrongdoing but may be paid to end expensive litigation. The issue arose again in September, according to the mayor and a recent statement issued by Chief Napoleon. The United States attorney, asked by the mayor to investigate police shootings, raised concerns about the high number of homicide arrests and the possibility that some witnesses had been improperly detained. Mr. Napoleon said in his statement that he had ordered his commanders to "conduct a full review of the Police Department's handling of arrests, and to ensure that all department practices conform to the law and the recommendations of the U.S. attorney." Since then, however, there have been other accusations of witness arrests, which city officials would not comment on because of litigation. In October, Maribel Franco-Rosario, a nursing mother, was handcuffed, taken from her 3-week-old infant and held for three and a half days for questioning by the police, who suspected her husband in a murder and were looking for him, said her lawyer, Steven Fishman. A few hours after her arrest, she had to be hospitalized for abdominal pain related to her recent Caesarean section, and after that, Mr. Fishman said, the police disregarded hospital recommendations that she see a gynecologist and again detained her. And in January, Barbara Berry said, the police went to two different houses at 2 a.m. and rounded her up along with two of her sons, one son's fiancee and a friend. They took them all to headquarters, along with Ms. Berry's 2 1/2-month-old granddaughter and 7-year-old grandson. The adults and the 7-year-old were kept in separate rooms and questioned. The Berrys said the police kept showing them pictures of a murder suspect and asking where he was. Ms. Berry said she did not recognize him. One son, Antonio, 24, knew the suspect only by his street name, Hustleman, and had bought a stolen stereo from him two years ago but said he had had nothing to do with him since. The adults were held for 14 hours, released after a relative called their lawyer, Mr. O'Meara. The F.B.I. figures suggest that Detroit, at minimum, is "out of whack" with other departments, said Maryvictoria Pyne, director of the F.B.I. communications unit. In 1999, the last year for which statistics are available, Detroit reported 1,152 arrests in 415 murder cases. In 1998, the police made 1,310 arrests in 430 murder cases. Experts say that kind of disparity is almost unheard of. In 1999, for example, New York had 748 arrests in 664 cases and Chicago had 637 arrests in 642 cases. When The Detroit Free Press inquired about the arrest numbers in March, police officials issued a statement attributing the figures to people jailed for interfering in investigations, fighting with investigators or harboring suspects. Later, the paper quoted Chief Napoleon as saying that a substantial portion of the people arrested in connection with homicide cases were witnesses detained under a practice that allows investigators to interview people away from sometimes-chaotic crime scenes. The day that the Free Press article appeared, however, Mr. Napoleon said in a statement that he had been misrepresented and had been referring to detentions of witnesses at crime scenes until investigators determined if they were suspects. Mr. Napoleon declined to be interviewed for this article. Mr. Archer and his press secretary, Greg Bowens, said the police had told them that an "antiquated" computer system might explain the F.B.I. figures, and that officers might have accidentally entered a suspect's name two or three times. Mr. Bowens also said that people with outstanding warrants were arrested at a homicide scene, and that the police listed those arrests in connection with the homicide, even though they might have been completely unrelated. And Mr. Archer said the police at a homicide scene might also detain people who are "momentarily uncooperative." Edgar Vann, the chairman of the Police Commission, a civilian panel that monitors the department, called those justifications unsatisfactory. "Those explanations that we've received are, you know, hard to believe, difficult to accept for us," Mr. Vann said. "At the same time we've got citizens who are lining up, talking a whole lot about 'Oh, yeah, I was detained, too. They held me for two days, for three days.'" (The New York Times, April 11, 2001) EL PASO: Continue to Defend Suits over Conspiracy in Inflating Gas Rates ------------------------------------------------------------------------ In late 2000, El Paso Natural Gas and El Paso Merchant Energy and several of its subsidiaries, were named as defendants in four purported class action lawsuits filed in state court in California. (Continental Forge Co. v. Southern California Gas Co., et al, Los Angeles; Berg v. Southern California Gas Co., et al, Los Angeles; John Phillip v. El Paso Merchant Energy, et al, San Diego; John WHK Phillip v. El Paso Merchant Energy, et al, San Diego.) Two of these cases, filed in Los Angeles, contend generally that the company conspired with other unrelated companies to create artificially high prices for natural gas in California; the other two cases, filed in San Diego, assert that El Paso used Merchant Energy's acquisition of capacity on the company's pipeline to manipulate the market for natural gas in California. These cases have been moved to the federal courts in California and we have filed motions to dismiss in the San Diego actions. On March 20, 2001, two additional lawsuits, The City of Los Angeles, et. al. v. Southern California Gas Company, et. al. and The City of Long Beach, et. al. v. Southern California Gas Company et. al. were filed in a Los Angeles County Superior Court. Update In addition, on March 22, 2001, a lawsuit filed on behalf of a purported class, Sweeties, et. al. v. El Paso Corporation, et al., was filed in Superior Court of San Francisco, State of California. These cases seek monetary damages against the company and make similar allegations to the Continental Forge and Berg cases discussed above. EL PASO: Named in Grynberg and Quinque Suits re Claims of Gas Royalties ----------------------------------------------------------------------- In 1999, the company was served as a defendant in actions brought by Jack Grynberg on behalf of the U.S. Government under the False Claims Act. Generally, these complaints allege an industry-wide conspiracy to under report the heating value as well as the volumes of the natural gas produced from federal and Native American lands, which deprived the U.S. Government of royalties. These matters have been consolidated for pretrial purposes. (In re: Natural Gas Royalties Qui Tam Litigation, U.S. District Court for the District of Wyoming.) The company is also a named defendant in an action styled Quinque Operating Company, et al v. Gas Pipelines and Their Predecessors, et al, filed in 1999 in the District Court of Stevens County, Kansas. This class action complaint alleges that the defendants mismeasured natural gas volumes and heating content of natural gas on non-federal and non-Native American lands. The Quinque complaint, once transferred to the same court handling the Grynberg complaint, has been sent back to the Kansas State Court for further proceedings. El Paso tells investors the company is also a named defendant in numerous lawsuits and a named party in numerous governmental proceedings arising in the ordinary course of our business. While the outcome of the matters discussed above cannot be predicted with certainty, the company does not expect the ultimate resolution of these matters will have a material adverse effect on its financial position, operating results, or cash flows. ELGIN HIGH: Suit Alleges Boys Get Better Treatment in School Sports ------------------------------------------------------------------- An Elgin High School girl who overcame barriers to play on the boys football team filed a class-action lawsuit with three other students in federal court Tuesday, alleging widespread disparities in the treatment of boys and girls in sports. The lawsuit, filed in U.S. District Court in Chicago, alleges that female athletes at Elgin High School get inferior treatment in almost every respect, from locker room and playing facilities to scheduling, parking, concession-stand workers, coaches, timekeepers and more. Although she won a highly publicized battle to play football last fall, freshman Adrianna Delhotal was taunted and slurred constantly and school officials failed to eliminate that hostile environment, the lawsuit alleges. The suit seeks far-reaching redress for female athletes through 12 actions, such as construction of new locker rooms, improvements to playing fields and facilities, better maintenance policies, more equipment and assignment of team physicians and trainers on par with the boys. Peggy Sikora, whose daughter, Kellen, 15, a three-sport athlete, is one of the students who filed the suit, said parents have repeatedly voiced concerns to school officials to no avail. "Some of the parents asked, 'Why can't we build dugouts for the girls while the boys have them?' but the issues have never been addressed," Sikora said in an interview Tuesday. Elgin District 46 spokesman Larry Ascough said officials can't comment on the allegations until they study the complaint. "We'll review them, and if there's some merit, we'll address them," he said. The lawsuit was filed under Title IX, a nearly 30-year-old federal law mandating that no American "shall, on the basis of sex, be excluded from participation in, be denied the benefits of or be subjected to discrimination" in any school athletic program. Ascough said the district has a Title IX compliance officer, but he did not know whether the families of the girls who filed suit first filed complaints with the district. Foremost among the girls' complaints is that the boys have two locker rooms dedicated to sports teams--one at the high school stadium and one at the gymnasium. The lawsuit says there is no locker room for girls sports, so female athletes must use facilities reserved for gym classes. The lawsuit also alleges that many boys sports programs have twice as many coaches as girls teams. And it says games for girls are scheduled on weeknights, affecting attendance and studies, while the boys are more likely to get prime-time hours on weekends. Delhotal made headlines last year when she fought for the right to play on the football team. But the lawsuit alleges that after the spotlight turned away, Delhotal, a defensive end, experienced extraordinary harassment. Her mother, Brenda Delhotal, declined to comment on the lawsuit Tuesday. Robert W. Smith, an attorney for the girls, could not be reached for comment. (Chicago Tribune, April 11, 2001) FRED HUTCHINSON: Surgeon General Wants Cancer Trials Investigated ----------------------------------------------------------------- The surgeon general has called for a federal investigation into cancer trials at the Fred Hutchinson Cancer Research Center that are the subject of a proposed class-action lawsuit. The lawsuit filed by an Alabama man last month in Kitsap County Superior Court claims violations of laws on medical ethics, consumer protection and the use of humans in research in the mid-1980s trials. It seeks unspecified damages on behalf of 82 Hutchinson center patients The lead plaintiff in the lawsuit is William Lee "Pete" Wright Sr. of Heflin, Ala., whose wife, Becky, died of leukemia in 1987 after she received a bone-marrow transplant at the center. The suit followed a series of articles in The Seattle Times alleging that leukemia patients and their families were neither fully informed about the risks of the experiments nor told that some doctors involved in the trials had financial interests in the drugs being tested. At least 20 people died of graft failures, cancer relapses and new cancers linked to the experimental treatment, the newspaper reported. "I certainly think that we have to make sure that the systems are in place to make sure that that doesn't happen again at this particular research center," Surgeon General David Satcher told The Times in an interview Monday at the meeting of the National Human Research Protections Advisory Committee in Bethesda, Md. Satcher also called for investigation of a separate experiment covered in The Times series. In that trial, the newspaper alleged, breast-cancer patients were given a drug intended to protect them against high-dose chemotherapy, even though some researchers involved had concluded that the drug didn't work. At least four women died of that treatment, the newspaper reported. Satcher praised the overall work of the Hutchinson Center, which receives more funds from the National Cancer Institute than any other research institution. "These were more the exception than the rule in terms of its work, but that's a struggle that we face," he said. The center, which has challenged The Times' findings and harshly criticized the series, has convened its own panel of outside experts and others to review the way it handles financial conflicts and informed consent. Hutchinson officials have declined comment on the lawsuit, but a detailed response to the newspaper series is posted on the center Web site. A preliminary staff review of the trials also is being conducted by the Office for Human Research Protections of the federal Department of Health and Human Services. It is that office, not the surgeon general's, that has final say over whether a full investigation will be launched. Office director, Dr. Greg Koski, said he has no immediate plans to order a full investigation, and he is more interested in looking forward than backward. "We have to focus really to prevent harm rather than to look back and punish," he said. The surgeon general said he was troubled by Koski's stance. "It's hard for me to believe that he would say that we were not interested in what happened in those cases and didn't want to understand them in detail, and the implications of it in terms of that center, whether there does need to be changes," Satcher said. "I would say that we need to look at it that way." Both Satcher and Koski said the filing of the lawsuit would make any federal investigation more complicated. Cheryl Chambers, the sister of the Alabama woman who died of leukemia after receiving a bone-marrow transplant at the center, spoke to the research protections meeting in Maryland, and Wright's daughter, Mindy Pritchard of Heflin, also attended. Chambers, who had been Becky Wright's bone marrow donor, told the committee that she feels she was misled by Hutchinson doctors and is disappointed that a federal review in the late 1990s brought no action. "Why was not something done about this?" Chambers asked. "As a sibling, I cannot sue in the state of Washington, so I am here to state my case." Chambers said she never thought to ask doctors about how many people had died in the trial, or whether the doctors had any financial interests in the experiment. "When somebody is sick, you can't sit there and say, 'Do you have any financial investment in this? If you do, let us know.' You don't ask any questions about it. Your mind is not in that framework. What I would like to see done is all have financial disclosure immediately," she said. Genetic Systems, a Seattle-based biotechnology company, paid royalties for an exclusive commercial license for 37 drugs developed at the center, including three of the eight drugs used for the "antibody cocktail" tested in Protocol 126. The company also gave stock and positions to doctors involved, and it gave stock and cash to a center-affiliated foundation. Genetic Systems and its successor corporation are named as defendants in the lawsuit. The National Human Research Protections Advisory Committee is helping the Bush administration determine the need for reforms in experimental trials involving humans. The committee will meet again July 30-31. (The Associated Press State & Local Wire, April 11, 2001) GAS RATES: Philadelphia Residents Protest Gas Company's Rate Increases ---------------------------------------------------------------------- Irate city residents took to the streets April 9 to protest recent rate increases by the city-owned Philadelphia Gas Works and sometimes staggering utility bills that they say can devastate ratepayers on fixed incomes. Just two days before PGW said it might begin turning off natural-gas service to customers who have not paid their bills, a coalition representing 187 community groups marched through Center City to the PGW offices at Ninth and Montgomery Streets, gathering support for a possible class-action lawsuit against PGW. "My last bill was $ 1,295!" said Herman Epperson, of Germantown, carrying a bullhorn. "Normally, it's about $ 150 in the winter. I'm outraged at being ripped off by this gas company and these high gas bills." The rally, organized by the Urban Leadership Council, drew three dozen marchers, who walked from 12th and Chestnut Streets to PGW's headquarters. They collected signatures for a possible lawsuit aimed at forcing PGW to lower its rates, said the Rev. Bruce Edwards, president of the Urban Leadership Council, part of the Greater Philadelphia Urban Affairs Coalition. PGW, which has had three rate increases in the last five months, has asked the state Public Utility Commission to approve a second base-rate increase. The utility says the increase would boost the typical residential bill by 7 percent and bring in an extra $ 65 million in revenue. The other two increases were to cover natural-gas costs. Residents and consumer activists shouted angrily outside PGW headquarters on North Ninth Street, accusing the financially troubled utility of poor service, high bills and inept management. Salim Ali, a graphic artist who lives in the 1200 block of Mount Vernon Street, said his monthly winter heating bills had soared from about $ 175 to $ 600 as a result of recent increases in PGW's base rates and gas-cost surcharges 24 percent in November, an additional 30 percent in January, and 6 percent more in February. Combined with the coldest Philadelphia winter in three years, those increases have left Ali and other customers reeling, he said. "You can't keep on squeezing the people who don't have money," Ali said. Peco Energy Co. has passed on similar gas-cost surcharges to its suburban customers in recent months to recover money it has lost buying natural gas on the wholesale market. State Rep. Jewell Williams (D., Philadelphia) said most of the calls at his North Philadelphia office since January have been from residents who cannot afford to pay their PGW bills. "They are people between low and low-moderate income. They are being affected the most. For the really low-income, there are assistance programs, but not for the people who are slightly above the poverty level." Williams, who came to the rally, said he wants PGW to "review their books and recognize the recent increases are a hardship." He suggested that the cash-strapped utility could sell some of its parking lots and buildings in North Philadelphia to nearby Temple University "and then use that money as a grant to lower the gas rates." Philip Bertocci, a Community Legal Services attorney who serves as the public advocate for PGW residential customers, said PGW rates went up 50 to 60 percent during the winter heating season "and now people are seeing huge bills." "These bills are coming in really off the charts," said Bertocci, who also represents several groups that have challenged PGW's recent rate increases. "PGW has been so poorly managed over the last decade. The city should give up the $ 18 million annual dividend it gets from PGW until PGW has been put back on the path to recovery." Kevin Boyle, a spokesman for PGW, said: "We're not out to shut anybody's gas off. We simply want people to pay for the natural gas they've used. We're willing to work with them in any way that we possibly can to make payment arrangements." "The prices that we pay have gone up as much as 400 percent. We have to pass some of this on to customers in order to stay afloat," Boyle said. "We've been granted authority by the PUC to begin shutting off service later this week," Boyle said the base rate increase March 1 was the first increase in more than 10 years, "and amounted to less than $ 5 a month to typical home heating customers." "The other rate increases were gas-cost hikes," he said. "There's no denying they were steep, but it was something out of PGW's control. There's no extortion on the part of PGW. If anything, there is a tendency among a number of our customers to not pay their bills. We are the only utility in the world that allows our customers to get away with that." (The Philadelphia Inquirer, April 10, 2001) HONEYWELL INTERNATIONAL: Named in Lawsuit v. LOCKFORMER over Degreaser ---------------------------------------------------------------------- With a federal judge's permission, plaintiffs in a class-action lawsuit against Lockformer Co. have added the company's chemical supplier as another defendant. Judge Harry D. Leinenweber agreed Tuesday that Honeywell International Inc. could be added to the lawsuit filed in November. The suit alleges that more than 100 homes could be contaminated by a degreaser used for nearly 30 years by the metal forming and fabricating company at its Ogden Avenue plant. The degreaser, containing the possible carcinogen trichloroethene, or TCE, spilled numerous times over the years as workers for a company now owned by Honeywell delivered the chemical to the plant. Lockformer has said it was unaware that some of the chemical was landing on the ground while the supplier filled rooftop storage tanks. The homeowners sued Lockformer and its parent company after samples of water from outside spigots showed the presence of TCE or its byproduct in several of the wells. The supplier also is a defendant in a suit filed last week in DuPage County Circuit Court by 12 other residents living south of the plant and a civil suit filed in January by Illinois Atty. Gen. Jim Ryan and the DuPage state's attorney's office. (Chicago Tribune, April 11, 2001) LASON, INC: Announces Amendment to Bank Credit Facility ------------------------------------------------------- Lason, Inc. (OTCBB:LSON) announced on April 10 that the Company has signed a definitive agreement with its bank group, whose agent is Bank One, Michigan, to amend its existing bank credit facility. Terms of the amendment include a mechanism to improve the Company's working capital position, reduce its liability to its earnout creditors, and significantly de-leverage its balance sheet. This amendment to the original credit facility is in place through January 2002. The Company intends, prior to January 2002, to enter into further negotiations with the bank group with regards to its credit facility. "We are pleased that we were able to structure an amendment with the bank group that addresses the needs of all affected parties, the Company, its earnout creditors, and the bank group," stated Ronald D. Risher, Executive Vice President and Chief Financial Officer of Lason. "This agreement provides us with the resources necessary to continue our re-structuring, improve our working capital position and meet our obligations while continuing to provide superior service to our customers and, we believe, shows the confidence of the bank group in the current Lason management team." About the Company LASON is a leading provider of integrated information management services, transforming data into effective business communication, through capturing, transforming and activating critical documents. LASON has operations in the United States, Canada, Mexico, India, Mauritius and the Caribbean. The company currently has over 85 multi-functional imaging centers and operates over 60 facility management sites located on customers' premises. LEAD PAINT: Cohen Milstein, City of Milwaukee Files Complaint -------------------------------------------------------------The City of Milwaukee on April 10 filed a complaint against the nation's largest producer of lead pigments to force it to bear the primary responsibility for the poisoning of children from lead paint. The necessary clean up in Milwaukee will cost the City up to $100 million. Attorney Richard S. Lewis, a veteran litigator of childhood lead paint poisoning cases, filed the case in behalf of the city. The complaint was filed in Milwaukee County Circuit Court against Texas-based NL Industries, Inc., formerly known as the National Lead Company, and against Mautz Paint. NL Industries produced millions of tons of lead pigment. Mautz Paint is a Wisconsin paint company that also produced the lead paint. "Milwaukee has put together one of the best abatement programs in the country, but the city is still devastated by the staggering costs of abatement," Lewis said. "The only way to prevent the epidemic of poisoning in the inner city is to hold companies like NL responsible for their wrongdoing which caused the problem." Decades before 1978, when lead paint was banned by federal law, the lead paint and pigment industry knew that their product was killing and seriously injuring hundreds of children each year. Already at the turn of the 20th century, leading medical journals in Britain and in the United States reported that children were dying from lead poisoning caused by peeling or chalking lead paint. In 1909, France banned the use of lead paint. Many countries followed suit in the years immediately following World War I. In the 1920s and 1930s, medical journals cited hundreds of cases of such poisonings, and reported the deaths of dozens of children. Yet in 1930, National Lead was issuing lead paint coloring books to children. Through the Lead Industries Association, which it was instrumental in founding, it denied or downplayed reports of children being poisoned by paint. National Lead sponsored major promotional campaigns for lead pigment in the late 1930s and 1040s. National Lead and Mautz Paint played important roles in the National Paint and Coatings Association, which fought against warning labels for lead paint, defeating or weakening regulations and legislation in California, Maryland, and New York. Still today, Mautz Paint cans bear no warnings that would protect purchasers against the dangers of sanding painted surfaces when they prepare for repainting. This action by the City of Milwaukee follows the favorable ruling last week by a Rhode Island court, which permitted the State of Rhode Island to proceed with its lawsuit against former manufacturers of lead paints and pigments. Similar lawsuits have been filed by a number of local governments, including the City of New York, the City of St. Louis, and the County of Santa Clara, California. The City of Milwaukee is represented by the law firms of Cohen, Milstein, Hausfeld & Toll, of Washington, D.C.; Lieff, Cabraser, Heimann & Bernstein, of San Francisco, New York, and Boston, Warshafsky, Rotter, Tarnoff, Reinhardt & Bloch, S.C., of Milwaukee; and Ronald P. Britton, S.C., of Milwaukee. Lewis is a partner with Cohen, Milstein, Hausfeld & Toll P.L.L.C., a national class action law firm with offices in Washington, D.C., and Seattle, Washington. Cohen, Milstein regularly litigates plaintiffs' class action cases, including those involving antitrust, health care, consumer protection, product liability, civil rights, securities and other business class actions, as well as environmental toxic tort actions. Contact: Cohen, Milstein, Hausfeld & Toll Richard S. Lewis, 202/408-4608 or Lieff, Cabraser, Heimann & Bernstein John R. Low-Beer, 212/355-9500 MEDICAL MANAGER: 11th Cir Upholds Dismissal of Securities Suit re Y2K ---------------------------------------------------------------------The U.S. Court of Appeals, Eleventh Circuit, in a March 30, 2001 decision, upheld an earlier decision dismissing a securities class action against Medical Manager Corporation and its directors and officers. The company was acquired by WebMD (Nasdaq: HLTH) in 2000. The action, originally brought in the fall of 1998 on behalf of investors who claimed the company failed in its prospectus to adequately disclose information about Y2K compliance issues, was originally dismissed in January of 2000. It was the first Y2K securities case in the country. The affirmation closes the case. "It is gratifying to see the conclusion of this case, and the acknowledgement that Medical Manager Corporation did, in fact, provide enough information for an investor to evaluate risks involved with investing," said Larry Silverman, a shareholder with Akerman Senterfitt, who represented Medical Manager. The Judge agreed with the earlier ruling that Medical Manager made forward-looking statements in the company prospectus that were protected by the Private Securities Litigation Reform Act. Steve Hartz, Larry Silverman and Chris Carver of Akerman Senterfitt's Miami office represented Medical Manager in the two-and-a-half year legal battle. "The Court granted a clean win," said Hartz. "It also granted our cross-appeal and is remanding the case to the District solely to determine whether the case should be deemed frivolous under Rule 11 of the Federal Rules of Civil Procedure. We are, of course, delighted with the decision." A copy of the decision may be viewed at http://laws.lp.findlaw.com/11th/0010163opn.html WebMD Corporation provides connectivity and a full suite of services to the healthcare industry for improving administrative efficiencies and clinical effectiveness enabling high-quality patient care. MERRILL LYNCH: Milberg Weiss Announces Securities Suit Filed in N.Y. --------------------------------------------------------------------The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on April 10, 2001, on behalf of purchasers of the B2B Internet Holdrs Depositary Receipts (AMEX:BHH) between, February 23, 2000 to April 9, 2001 inclusive. 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/merrill/ The action, numbered, 01 Civ. 3023, is pending in the United States District Court for the Southern District of New York, located at 500 Pearl Street, New York, NY against defendants Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill Lynch & Co., Ahmass L. Fakahany, John L. Steffens, E. Stanley O'Neal and George A. Schieren. The lawsuit alleges claims under Sections 11, 12 and 15 of the Securities Act of 1933 and seeks to recover damages. The complaint alleges that the B2B Internet Holdrs depositary receipts were "basket securities" whose price was directly related to, and moved with, the price of 20 underlying securities held in the B2B Internet Holdrs trust. The complaint further alleges that defendants violated the federal securities laws by issuing and selling B2B Internet Holdrs Depositary Receipts, in an IPO on February 23, 2000, pursuant to a registration statement and prospectus that were materially false and misleading because they failed to disclose that a substantial proportion of the B2B Internet Holdrs trust's initial portfolio consisted of stocks whose prices had been artificially inflated through the use of improper practices relating to their initial public offering, and that they therefore traded at artificially inflated prices. The price of B2B Internet Holdrs has fallen from a March 14, 2000 high of $108 per B2B Internet Holdr to a low of $4.26 on April 3, 2001. Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or Samuel H. Rudman 800/320-5081 Email: merrillcase@milbergNY.com Website: http://www.milberg.com NAPSTER INC: Fd Judge Calls Failure to Block Copyright Songs a Disgrace -----------------------------------------------------------------------In her harshest rebuke since last summer, a federal judge Tuesday called Napster's failure to block copyrighted songs from its service "disgraceful" and once again raised the specter of shutting down the online music-swapping service to stop piracy. An attorney for songwriters presented U.S. District Court Judge Marilyn Hall Patel with a list of more than 1,000 copies of two songs -- "Unchained Melody" and "Jailhouse Rock" -- that remain on Napster, more than a year after songwriters demanded they be removed. Indeed, the lawyer, Carey Ramos, said he could still find 84 percent of the copyrighted music on the Napster system as recently as Monday. "That I think is disgraceful," said Patel, pinching an inch-thick list of copyrighted songs found on Napster. "With all the notice that you've had, there are this many copies of 'Unchained Melody' on the system. You had better find a way to get them off the system." Tuesday's routine hearing to discuss Napster's compliance with Patel's March 6 injunction that ordered it to block access to copyrighted songs turned so rancorous Patel suggested that attorneys for Napster and the record labels might want to "take it outside." The record labels and songwriters repeated claims made in court documents: that Napster's filtering efforts are a digital smoke-and-mirror act that still leaves vast parts of their catalog exposed to piracy. Napster attorney Robert Silver depicted Napster's filtering efforts as costly, elaborate and broad, resulting in the service blocking access to some 1.3 billion song files and cutting the number of files available for swapping in half. Patel pressed Silver, asking how Napster's filtering could work so effectively -- and still leave so many copies of songs free for the taking. Silver said Napster could filter out "99.9 percent" of the copyrighted songs, but it can't catch every copy of every song. Individual tracks will continue to float around the system, undetected, he said. "Maybe the system needs to be closed down," said Patel. Napster sought to portray Patel's questions as a rhetorical in nature -- not as a threat. Attorney Jonathan Schiller said officials from Napster and the record labels will meet Friday with Patel's newly appointed technical expert, A.J. "Nick" Nichols, to review the technical details of Napster's filtering efforts -- and make recommendations to the judge on how to improve the system. The compliance dispute came at the end of a more-than-three-hour hearing, in which Patel heard a series of other, procedural motions. Songwriters, the majority of whom are represented by the Harry Fox Agency in New York, asked Patel to recognize composers as a "class" whose rights would be recognized in the copyright-infringement case. Patel did not rule in the class-certification issue. Another attorney, Hannah Bentley, argued that independent artists and record labels from around the world should also be recognized as a distinct "class." Patel indicated that she would reject the motion, noting the proposal failed to meet the basic criteria: namely, an identifiable group whose work is protected under U.S. copyright laws. Patel also reacted coolly to an attempt by Matthew Katz, the original producer for the classic rock bands Jefferson Airplane, Moby Grape and It's a Beautiful Day, to sue Napster's executives -- including Chief Executive Hank Barry and founder Shawn Fanning -- along with venture capital firm Hummer Winblad for copyright infringement. Separately Tuesday, Napster said it has acquired the technology of Gigabeat to add new music search and indexing features to Napster's service. Along with the music indexing technology, Gigabeat co-founders Wilburt Labio and Narayanan Shivakumar, as well as the Gigabeat engineering team, have joined Napster. (San Jose Mercury News, April 11, 2001) According to the Chicago Tribune, the judge appeared to take a dim view of efforts to amplify Napster Inc.'s legal troubles but didn't immediately rule Tuesday on requests to allow thousands of music publishers, songwriters and other artists to join the case. The National Music Publishers' Association asked the judge to certify its 26,000 members as a class deserving payments from Napster for copyright songs that have been illegally traded. Lawyers for another group of musicians also asked for class-action status. "I'm not going to supervise the whole world," U.S. District Judge Marilyn Hall Patel said. Patel also suggested she would dismiss Napster's major financial backers, including acting Chief Executive Hank Barry and a San Francisco venture capital firm, from the case. (Chicago Tribune, April 11, 2001) NEW YORK LIFE: Insurer Settles with Armenian Genocide Heirs ----------------------------------------------------------- A multimillion- dollar settlement has been reached in a class-action lawsuit on behalf of heirs of the Armenian Genocide for unpaid life insurance benefits against New York Life Insurance Co. The class action represents thousands of ethnic Armenians living in the United States and abroad (Marootian, et al. v. New York Life Insurance Company). As part of the settlement, New York Life agreed To contribute $3 million to Armenian civic organizations in addition to paying class members 10 times the face-value amount of the policy on valid claims made to the company. New York Life, an American corporatiov, sold life insurance policies to Armenians living in the Ottoman Empire (now Turkey) during the period prior to the Armenian Genocide, which began in 1915. Because Armenians were killed or forced to flee their homes during the genocide, life insurance policies, as were other important papers, were lost or destroyed. "As part of the settlement, New York Life will publish a list of names of families who purchased life insurance in Turkey during the time prior to the genocide," said Brian Kabateck, lead attorney for the class and partner with the Los Angeles law firm of Quisenberry & Kabateck LLP. "This is the first time New York Life has agreed to disclose this list. Now, heirs of those policyholders will be able to file claims and New York Life will pay these claims with interest." "We appreciate New York Life for being forthcoming in providing a list of insureds upon which we were able to have meaningful discussions and reach a well-deserved settlement. This is in sharp contrast to the European insurers that have not been as forthcoming with policyholder information," said William M. hernoff, co-counsel in the lawsuit. From 1915 to approximately 1920, more than 1.5 million Armenians were murdered at the hands of the Ottoman Turks and tens of thousands more were deported in what was the 20th century's first genocide. Today, outside of the Republic of Armenia, the United States, in particular California, is home to the largest population of Armenians in the world. "It's appropriate that we reached this settlement in April," said Kabateck, whose maternal ancestors were victims of the Armenian Genocide. "On April 24, Armenians around the world will commemorate the 86th anniversary of the genocide. New York Life's acknowledgment of the genocide and the help it is giving to those who suffered is commendable. They are one of the few companies, internationally, to acknowledge the genocide and the tremendous impact it has on history." Marootian, et al. v. New York Life Insurance Company was originally filed in November 1999 yn federal court in Los Angeles. Representing the class are Kabateck of Quisenberry & Kabateck LLP, Shernoff of Shernoff Bidart & Darras, and Varkes Yeghiayan of Yeghiayan & Associates. Contact: Quisenberry & Kabateck LLP, Los Angeles LaShawn King, 310/785-7966, ext. 203 www.qklaw.com or Shernoff Bidart & Darras, Claremont, Calif. Carla Levenson, 909/621-4935, ext. 234 NY CITY: Panel Dismisses Challenge to Federal Oversight of AIDS Services ------------------------------------------------------------------------A three-judge panel dismissed New York City's challenge to federal oversight of the city's Division of AIDS Services and Income Support. The decision by the United States Court of Appeals for the Second Circuit sent the matter back to Federal District Court. In their ruling, the judges said they did not have jurisdiction in the case. The city was appealing last year's decision by a federal judge in Brooklyn who ruled that the city agency had failed to provide adequate services for thousands of people with AIDS. In that ruling, the judge, Sterling Johnson Jr., ordered the agency placed under a federal monitor for three years. Judge Johnson found that the agency had delayed or ended subsistence benefits like emergency housing, rent assistance, food stamps and Medicaid that it administers for about 25,000 New Yorkers who have AIDS or are H.I.V. positive. His ruling, delivered in September 2000, specified no required action on the part of the city. The federal judges considering the city's appeal stated that they lacked jurisdiction to overturn the original ruling since the district court had yet to determine what action the city had to take. "We will be able to appeal again once the case becomes final," said Leonard Koerner, the city's chief assistant corporation counsel. "The merits of the case shall be reviewed again by circuit court at a later date." The ruling on the agency, an arm of the Human Resources Administration, came after the conclusion of a class-action lawsuit brought by Housing Works Inc., an AIDS service and awareness group. "We had hoped they would have simply upheld the lower court decision," said Armen Merjian, a Housing Works lawyer. "But it was not wholly unexpected. They raised the issue and indicated this might be one way they would rule. Substantially, there's been no change." (The New York Times, April 11, 2001) OPUS360 CORP: eBusiness Software Provider Reports Shareholder Suit in NY ------------------------------------------------------------------------ Opus360 Corporation (Nasdaq: OPUS), a leading provider of eBusiness software for acquiring and managing skilled professionals, reported that it has been named as a defendant in a class action complaint, filed April 6, 2001 in United States District Court in the Southern District of New York, alleging violation of federal securities laws. The Company believes the claims described in the complaint are without merit and will vigorously contest the complaint. About Opus360 Corporation Opus360 provides eBusiness software to enable companies to manage and acquire skilled professionals strategically. SOUTHERN CO: CA Suits Allege of Manipulation of Wholesale Power Markets ----------------------------------------------------------------------- Five lawsuits have been filed in the superior courts of California alleging that certain owners of electric generation facilities in California, including Southern Company, engaged in various unlawful and anticompetitive acts that served to manipulate wholesale power markets and inflate wholesale electricity prices in California. Four of the suits seek class action status. One lawsuit naming Southern Company, Mirant, and other generators as defendants alleges that, as a result of the defendants' conduct, customers paid approximately $4 billion more for electricity than they otherwise would have and seeks an award of treble damages, as well as other injunctive and equitable relief. The other suits likewise seek treble damages and equitable relief. While two of the suits name Southern Company as a defendant, it appears that the allegations, as they may relate to Southern Company, are directed to activities of subsidiaries of Mirant. One such suit names Mirant itself as a defendant. Southern Company has notified Mirant of its claim for indemnification for costs associated with these actions under the terms of the master separation agreement that governs the spin off of Mirant. Mirant has undertaken the defense of all of the claims. The final outcome of these lawsuits cannot now be determined. Previously, SOUTHERN owned all the outstanding common stock of Mirant. In April 2000, SOUTHERN announced an initial public offering of up to 19.9 percent of Mirant and its intentions to spin off the remaining ownership of Mirant to SOUTHERN's common stockholders within 12 months of the initial stock offering. On October 2, 2000, Mirant completed an initial public offering of 66.7 million shares. On February 19, 2001, SOUTHERN's board of directors approved the spin off of the remaining ownership of 272 million Mirant shares to be completed in a tax free distribution on April 2, 2001. As a result of the spin off, SOUTHERN's financial statements and related information in Item 8 herein reflect Mirant as discontinued operations. TAINTED BLOOD: 5 International Firms to Pay HIV-Infected Haemophiliacs ---------------------------------------------------------------------- Five international drug companies have agreed a GBP 5.3 million settlement in a claim by 60 haemophiliacs who were infected with HIV by contaminated blood products. The settlement figure includes GBP4 million in general and special damages and GBP1.32 million in legal costs. Ivor Fitzpatrick & Co, the Dublin solicitors who are handling the High Court claim, have told the haemophiliacs that the lawyers and other experts "have agreed to accept a reduction in their fees" and have "all agreed to be paid on a scaled-down basis". The haemophiliacs have been told that the deal is strictly confidential, and must not be discussed with anyone else. The settlement figure represents a 150 per cent increase on the original offer of GBP1.8 million plus GBP350,000 costs in November 1998. In February last year, following "ongoing and intensive negotiations", that offer was increased to GBP3 million, plus GBP1 million towards costs. The costs in the original settlement offer represented 19 per cent of the damages; they total one third of the current offer. The five drug companies involved are Armour Pharmaceutical Company Inc, Baxter Healthcare Corp, Miles Laboratories Inc, Immuno Ltd and Osterreichisches Institut fur Haemoderivate GesmbH. The High Court proceedings, issued in 1993, seek damages for HIV infection through contaminated factor concentrates. Armour (which supplied Factorate concentrate) and Baxter (which supplied Hemofil) provided most of the blood products used by Irish haemophiliacs between 1979 and 1986. Tens of thousands of documents were made available by the drug companies during the course of the High Court action. Tests on blood samples obtained by High Court order from the Virus Reference Laboratory in Dublin proved that most of the haemophiliacs had been infected within a short period of time. Some of the haemophiliacs involved have died since the proceedings started. Survivors have to take substantial quantities of drugs every day in order to stay alive. The daily drugs for each victim can cost the state more than GBP300 much of which returns to the drug companies in profits. A number of the haemophiliacs also contracted hepatitis C from the infected blood products. It is understood that the drug companies wanted to be indemnified against any future claim in relation to hepatitis C, but eventually agreed to settle on the basis of HIV infection alone, on the basis that the haemophiliacs could claim full compensation from the Hepatitis C Compensation Tribunal. Awards by the tribunal are funded by the state. The settlement is being made without admission of liability on the part of the drugs companies. A new HIV Compensation Tribunal is now being set up by the government. Fitzpatrick's has sought an assurance from the Attorney General that draft legislation setting up the tribunal will not bar the haemophiliacs from making a further claim to the new tribunal. A spokesman for the Department of Health said it was the minister's intention that a haemophiliac who had received compensation from the drugs companies would still be entitled to take a case to the compensation tribunal. The proposed settlement is conditional on acceptance by all 60 haemophiliacs. It is understood that 59 of them have agreed to accept the offer, but one is still refusing to accept the terms of the settlement. Each plaintiff was asked to sign an "authorisation to negotiate settlement", agreeing to accept a specified minimum compensation figure. In many cases, that figure was GBP30,000, the lower limit of the jurisdiction of the High Court. The rest of the settlement fund (less legal expenses) would be apportioned individually by an "independent expert" elected by the haemophiliacs. The size of each individual award would depend on a number of factors, including the amount of compensation received in other claims. Fitzpatrick's asked a number of senior counsel and retired judges whether they would act as independent experts. Three lawyers indicated their willingness to act: former Supreme Court justice Jonah Barrington, former Bar Council chairman John McMenamin and Bar Council vice-chairman Denis McCullough. Ballot papers were sent out to the 60 plaintiffs and Barrington was elected by a majority. In the case of haemophiliacs who have already died and who have dependent children, the High Court will decide the size of the payout. Fitzpatrick's say they won't discuss the size of any settlement with any of the other plaintiffs. The GBP1.32 million in legal costs, including Vat, will be divided between Ivor Fitzpatrick & Co, three senior counsel, nine junior counsel and a number of experts. The haemophiliacs will have to pay separately the costs of the independent expert and a $ 1,000 fee for access to a US court document depository out of their damages award. (Sunday Business Post, April 8, 2001) TOBACCO LITIGATION: NY Ct Hears Cert. Arguments In Punitive Damages Case ------------------------------------------------------------------------ A New York federal judge on March 15 heard oral arguments on whether or not a mandatory, non-opt out fraudulent conduct and punitive damages case should be certified as a class action (In re: Simon II Litigation, No. 00-CV-5332, Simon, et al. v. Philip Morris Inc., et al., No. 99-CV-1988, Decie, et al. v. The American Tobacco Co. Inc., et al., No. 00-CV-2340, Ebert, et al. v. Philip Morris Inc., et al., No. 00-CV-4632, Mason, et al. v. The American Tobacco Co. Inc., et al., No. 00-CV-4442, The National Asbestos Workers Medical Fund, et al. v. Philip Morris Inc., et al., No. 98-CV-1492, Bergeron, et al. v. Philip Morris Inc., et al., No. 99-CV-6142, Blue Cross and Blue Shield of New Jersey Inc., et al. v. Philip Morris Inc., et al., No. 98-CV-3287, H.K. Porter Co. Inc. v. The American Tobacco Co., et al., No. 97-CV-7658, Raymark Industries Inc. v. The American Tobacco Co., et al., No. CV-0675, Falise, et al. v. The American Tobacco Co., et al., No. 99-CV-7392, E.D. N.Y.; See 2/26/01, Page 10). Classes, Subclasses In the Simon I class, the plaintiffs seek compensatory damages for cancer due to its members' smoking and punitive damages. The Simon II class involves a broader class of people who may have been injured by tobacco and includes those suing in Simon I. In an amended complaint, the Simon II plaintiffs seek an adjudication of common liability issues, adjudication of punitive damages and declaratory relief. The Simon II plaintiffs seek certification of a mandatory, non-opt-out class of people who are alleged to have been harmed by willful, wanton and oppressive misconduct by the tobacco defendants to determine the tobacco companies' total liability for punitive damages. Plaintiffs seek certification of a fraudulent conduct class, which would determine the issues relating to the tobacco defendants' alleged fraudulent, deceptive and conspiratorial course of conduct. This proposed class would exclude the plaintiffs in Falise, et al. v. The American Tobacco Co., et al. (No. 99-CV-7392, E.D. N.Y.) and Blue Cross and Blue Shield of New Jersey Inc., et al. v. Philip Morris Inc., et al. (No. 98-CV-3287, E.D. N.Y.). Plaintiffs also seek certification of a punitive damages class, which would include all people who fall under the proposed subclasses: (1) all people in the United States who have smoked defendants' cigarettes from 1920 through the date of class notice and who have been diagnosed with certain smoking-related diseases, (2) the estates or personal representatives of smokers who have died due to smoking-related illnesses, (3) all people who have smoked defendants' cigarettes at any time from 1920 through the date of class notice but who are not as of that date suffering from a smoking-related disease, (4) any smoker who has received medical treatment for smoking-related diseases, the cost of which were paid in whole or in part by the U.S. Medicare Administration, (5) all people with pending civil actions which have not proceeded to final judgment, (6) all multi-employer health benefit plans established under the Labor Management Relations Act that, as of Sept. 6, 2000, have paid to detect, diagnose or treat certain smoking-related diseases, (7) all other non-governmental entities in the United States who have asserted claims on behalf of themselves or others and (8) certain asbestos entities and asbestos entities' trusts, including all manufacturers, distributors, and asbestos producers, and all asbestos entities that are bankrupt. Certification Sought In a Dec. 22 motion for class certification, the Simon II plaintiffs argue that the numerosity requirement is met because each of the classes and subclasses are so numerous that joinder is impracticable. Likewise, the plaintiffs maintain that the commonality requirement is satisfied because there are questions of law common to each of the class and subclass members. "Because all issues concerning Defendants' fraudulent, deceptive, and conspiratorial conduct (based on the same decades-long course of behavior) and liability for punitive damages arise from factual questions relating to Defendants' wanton and willful course of conduct and financial condition, which do not vary from class member to class member, proof of Defendants' fraudulent and deceptive conduct and entitlement to punitive damages will be common to all class members and can be tried on a classwide basis," the plaintiffs assert. Additionally, plaintiffs maintain that the typicality requirement is met because each class and subclass members' claims arise from the same common course of fraudulent and malicious conduct by defendants, and each class and subclass member must make substantially the same legal and factual arguments to establish defendants' misconduct with respect to the fraud and fraudulent concealment claims. Adequacy Moreover, plaintiffs maintain that the adequacy requirement is met because there are no conflicts of interest among plaintiffs and members of the subclass who are each separately represented and because plaintiffs have retained counsel qualified to conduct the litigation. "Certification of the Fraudulent conduct Class and Subclasses is also appropriate because it is superior to the only other method available for the adjudication of Defendants' fraudulent, deceptive and conspiratorial conduct - individual litigation and trial," the plaintiffs add. The smokers further argue that certification of the proposed classes and subclasses, in conjunction with an overall trial structure, will permit the claims to be adjudicated in a fair, efficient and manageable way. Opposition In a Feb. 26 consolidated opposition, Philip Morris, RJR, Lorillard and B&W note that the U.S. Supreme Court have twice rejected class certification in mass tort cases, citing Ortiz v. Fibreboard Corp. (527 U.S. 815 [1999]) and Amchem Products Inc. v. Windsor (521 U.S. 591 [1997]). "Attempting to evade the unanimous federal authorities rejecting certification, plaintiffs seek certification of only two supposedly 'common issues' - issues related to defendants' allegedly fraudulent conduct and to punitive damages. As for the myriad of other, concededly individual issues, plaintiffs would have this Court simply ignore them for purposes of class certification. But the Court cannot ignore these individual issues," the tobacco companies argue. "The sad truth is that plaintiffs' 'trial plan' is a cruel hoax on the plaintiff class and the judicial system." Noting that Simon II purports to be a limited consolidation of 10 other lawsuits already pending before the court, the tobacco companies argue that the plaintiffs have not met their class certification requirements. The tobacco companies add that punitive damages cannot be awarded to the class on a limited fund theory or any other basis prior to a determination of liability and compensatory damages to the class. 'Due Process' "Another defect in the proposed certification is that it would trample upon the due process rights of absent class members by adjudicating their claims without providing sufficient notice or any opportunity to opt-out," the defendants maintain. The defendants add that there are serious conflicts that preclude class certification and, because each of the conflicts exist within the various subclasses, plaintiffs' breakdown of the case into subclasses does not solve the problem. "Even plaintiffs' purportedly common issues regarding whether defendants engaged in fraud are individualized. Any special verdict form in plaintiffs' proposed fraudulent conduct trial would have to cover a broad range of conduct, and make countless individual findings concerning discrete events, advertisements, and other actions over time. The vastness of this enterprise belies any notion that common issues could possibly predominate," the companies add. Attorneys On brief for the plaintiffs are Steven E. Fineman, Robert L. Lieff, Richard M. Heimann, Elizabeth J. Cabraser and Robert J. Nelson of Lieff, Cabraser, Heimann & Bernstein in New York, Thomas M. Sobol of Lieff Cabraser in Boston, Perry Weitz, Robert J. Gordon, Jerry Kristal, Richard Akel and John M. Broaddus of Weitz & Luxenberg in New York, M. Frederick Pritzker and Gregory T. Arnold of Brown, Rudnick, Freed in Boston and Jon W. Barrett of Barrett Law Offices in Lexington, Miss. Philip Morris is represented by Murray R. Garnick, David S. Eggert and Eric Suter of Arnold & Porter in Washington, D.C. RJR is represented by Theodore M. Grossman of Jones, Day, Reavis & Pogue in Cleveland, Robert H. Klonoff of Jones Day in Washington, D.C., and Harold K. Gordon, Byron Stier and George Kostolampros of Jones Day in New York. B&W is represented by David M. Bernick of Kirkland & Ellis in Chicago and Peter A. Bellacosa of Kirkland & Ellis in New York. Lorillard is represented by Alan Mansfield and Stephen L. Saxl of Greenberg Traurig in New York and John K. Sherk III, Holly M. Pauling and Rebecca J. Schwartz of Shook Hardy & Bacon in Kansas City, Mo. (Mealey's Litigation Report: Tobacco, March 26, 2001) TOBACCO LITIGATION: U.S. Chamber Of Commerce Targets Attorney Fees ------------------------------------------------------------------ A group representing more than 3 million American businesses launched an assault March 14 on what it claims are "excessive" attorney fees paid to private counsel representing states in tobacco litigation that yielded $ 246 billion in settlements. The U.S. Chamber of Commerce filed 21 Freedom of Information Act requests seeking all documents and contracts pertaining to the hiring of outside counsel in tobacco litigation, whether competitive bidding was involved, how much time was spent on the cases, whether any attorneys had made contributions to state officials and the size of the attorney fees awarded. The organization called on Congress to investigate the "excessive legal fees." "If we allow these trial lawyers to collect this massive windfall, the damage to our economy could be incalculable," Chamber President and CEO Thomas Donohue said. "They've made no secret of the fact that a portion of those billions of dollars are earmarked for new causes of action, with new businesses and industries on their 'hit' list. The threat is real and no industry is immune." Not surprisingly, trial lawyers are firing back at the Chamber's allegations that the fees are "excessive." "Not one penny of taxpayer dollars paid any attorney a dime in any of the tobacco cases," Association of Trial Lawyers of America President Fred Baron told the Los Angeles Times. "The states benefited dramatically from that litigation." The Chamber's Institute of Legal Reform said it is planning to introduce legislation later this year in an attempt to curb what it views as some of the excesses of class action lawsuits. (Mealey's Litigation Report: Tobacco, March 26, 2001) U.K. HOSPITALS: Families Seek Group Litigation Order re Organs Scandal ----------------------------------------------------------------------The families of patients whose organs were retained by hospitals without informed permission began an attempt on April 10 to start a national class action for compensation. Lawyers acting for the National Committee Relating to Organ Retention (Nacor), which has 900 members, said an application has been made to the High Court for a group litigation order. A solicitor, Mervyn Fudge, said the application, which will be heard on 11 May, relates to the Leeds Teaching Hospitals NHS Trust. But it is intended to pave the way for claims relating to 134 hospitals across Britain. The proposed action will be a separate claim to the cases at Alder Hey hospital, in Liverpool, which are already being treated together. Mr Fudge, who was legal adviser for the Bristol Heart Children Action Group in the Bristol Royal Infirmary inquiry, said: "It involves one case against Leeds Teaching Hospitals NHS Trust. The purpose of this is to enfranchise all the people affected. It in no way singles out Leeds." Litigation began in Liverpool after the Redfern report on Alder Hey hospital. But the judge, Mr Justice Penry-Davey, agreed that this group litigation order would only be in relation to Alder Hey and associated hospitals in Liverpool. Mr Fudge said: "I am sure the rest of the country does not want the perception that justifiable claims are being left behind while Alder Hey progresses." (The Independent (London), April 11, 2001) WAR LITIGATION: Former Forced Laborers In Australia Seek Compensation---------------------------------------------------------------------More than 7,000 post-World War II migrants to Australia and New Zealand may be eligible for compensation being paid to people forced into slave labor by the Nazis, a migrant group said Wednesday. Members of the International Organization for Migration (IOM) said some 3,000 people in Australia and New Zealand have already applied for a share of a 10 billion Deutsche mark (dlrs 4.5 billion) fund set up by the German government and industry, but urged another 4,000 potentially eligible people to apply before the Aug. 11 deadline. Thousands of people, many of them from southern and eastern Europe, emigrated to Australia and New Zealand after the war. IOM director general Brunson McKinley said his organization expects to handle claims from 200,000 people around the world by the Aug. 11 deadline. People who were put to work by the Nazis will be eligible for up to 15,000 Deutsche marks (dlrs 7,000) each in line with their suffering and loss. ''No one is pretending that this ... could compensate adequately these people who suffered as slave laborers,'' McKinley said. ''(The money) is a form of recognition to say to the people who did go through this harrowing experience that they are not forgotten.'' However, it is uncertain when victims would see the money, as a class action lawsuit brought by a small group of former forced laborers remains unresolved in the United States. Under an agreement last year, German companies insisted on ''legal peace'' in U.S. courts meaning a resolution of all pending lawsuits seeking money in return for compensation. McKinley said the IOM is hopeful that the lawsuit will be dismissed in May, and that payments can be made from July. All claims would be subject to checks in case of fraudulent petitions, he said. McKinley said it is disappointing that many people forced into slave labor by the Nazis had died before their suffering could be recognized. ''I think that this particular group of people were a little bit forgotten and overlooked because there were many other groups that were ahead of them and making there claims in a loud and more forceful manner,'' he said. ''We want to find everybody who qualifies and help them make a claim.'' (AP Worldstream, April 11, 2001) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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