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/raid1/www/Hosts/bankrupt/CAR_Public/010413.MBX C L A S S A C T I O N R E P O R T E R Friday, April 13, 2001, Vol. 3, No. 73 Headlines CREDIT CARDS: Planned Mail Service Cutback Seen Squeezing Payers FEN-PHEN: AHP Hit with TX Jury Award of $56.5M to Woman for Heart Attack GENERAL DYNAMICS: Appeals for Reduced Verdict in CA Suit By Employees HMOs: Physicians at Odds over Blue Cross New Reimbursement Rates Quit INFINITY INVESTORS: Settlement Hearing Set for Securities Suit re UPEI IOMEGA CORP: Settlement Proposed in DE Suit re Alleged Defect in Zip(R) IRWIN LEASING: Health Professionals Sue in PA Over Misrepresentation IRWIN MORTGAGE: Appeals against Cert. of RESPA Suit in AL By Brokers JOHN HANCOCK: Intends to Appeal in Harris Trust Suit Filed in 1983 in NY KOREAN GOVT: Ordered to Pay Compensation for U.S. Bombing Exercises LEGIONNAIRE'S DISEASE: Aussi Sufferers Sue Owners of Melbourne Aquarium MOLTEN METAL: Settles Securities Suit in CA, Shapiro Haber Announces RACIAL PROFILING: Judge Rules against Fed Probe & Refuses to Delay Suit RACIAL PROFILING: Rogers Police Deny Claims of Illegal Stops, Detentions REDIFF AMERICAN: Lovell & Stewart and Sirota & Sirota File Suit in NY S. CA EDISON: L.A. County Joins Plaintiffs over Nonpayment STATE RAIL: Glenbrook Disaster Victims Win Victory in Australian Court VERSATA, INC: Schubert & Reed Brings Securities Lawsuit in California * Privacy, GSEs Top Roundtable's Agenda ********* CREDIT CARDS: Planned Mail Service Cutback Seen Squeezing Payers ---------------------------------------------------------------- If the U.S. Postal Service wins congressional approval for its proposal to eliminate Saturday mail deliveries, the result could be a late-fee windfall for credit card issuers or that consumers will be prodded to pay more bills online. Banking industry experts say the Postal Service's money-saving proposal, recommended by the agency's board of governors at an April 3 meeting, could force consumers to pay their card bills earlier, or risk owing penalties. These observers also say that if U.S. mail service were cut back to five days a week, the major credit card issuers -- some of which recently paid large class action settlements over late-fee disputes -- might have to soften their policies or extend grace periods to avoid customer outrage. The proposed reduction in mail service, which is meant to offset an anticipated $2 billion to $3 billion Postal Service shortfall this fiscal year, could happen fairly soon. On April 4, William J. Henderson, the postmaster general and chief executive officer of the Postal Service, testified before the U.S. House of Representatives Committee on Government Reform that his agency had begun a 90-day study on the ramifications of such a move. The report is slated to be ready in July for presentation to Congress, which will make the ultimate decision. The Postal Service says that new electronic media, such as e-mail and fax, have cut into its business. By this argument, a reduction in first class mail delivery could make consumers more inclined to use online bill presentment and payment and person-to-person e-mail services. Depending on the service and method of payment, Internet transactions tend to be processed faster than those sent by snail mail. Even so, the majority of consumers would probably still rely on the old-fashioned method. "Obviously, if the Postal Service did this it would be another problem for consumers trying to pay their credit cards on time," said Ed Mierzwinski, executive director of the U.S. Public Interest Research Group in Washington. "Clearly, credit card companies have put a lot of roadblocks in the way of consumers by shortening the due dates, raising late fees. There are questions about whether credit card companies are posting bills on time." Spokesmen for several credit card companies said it was too soon to know how a shorter mail delivery week would affect billing cycles. "If they're only talking about delivery, but not other operations, that wouldn't be a problem because we actually go to the post office a couple of times a day and pick up our mail," said Jeff Unkle, a spokesman for the First USA division of Bank One Corp. "If they don't do any work on the weekends, we would have to assess how we would handle that, but any decision we'd make would minimize the impact to the customer." A spokesman for Providian Financial Corp., Alan Elias, said his company already has provisions to protect customers over weekends. "The way our system is set up, if a payment is due on a Saturday or Sunday, we don't expect it to be paid until the following business day," he said. "And then we have a three-day grace period that kicks in after that." Ken Kerr, an analyst for GartnerGroup Financial Services, said he did not think a five-day delivery week would prompt a stampede to electronic bill payment. "The reaction will be, 'I have to make my payment a day sooner,' " he said. Online bill payment "will be a slow rather than a rapid uptake." (The American Banker, April 12, 2001) FEN-PHEN: AHP Hit with TX Jury Award of $56.5M to Woman for Heart Attack ------------------------------------------------------------------------ The US pharmaceuticals company was hit by a Texas jury last week which awarded a woman Dollars 56.5m for heart damage she said was caused by diet drugs. AHP said it planned to appeal and repeated that it had already set aside Dollars 12.25bn to cover the litigation, which has dogged the company for months. AHP issued Dollars 3.5bn in debt last month, in part to help fund the litigation. The company has reached a class-action settlement with most users of the drugs, but there are about 8,000 outstanding claims from people who opted out of the settlement. Analysts said they expected the Texas award to be cut drastically, and there is no suggestion that AHP is in financial difficulties. However, bond investors are worried that AHP cannot define the extent of its risk and may have to increase the size of its litigation reserves even further. The company said recently: "We understand that in some few instances plaintiffs may prefer to litigate rather than to settle and we are fully prepared to meet such cases at trial and, if necessary, to take them through the appellate process, as we will here." Nonetheless, investors have indicated that they view AHP's bonds as carrying more risk. The spread, or risk premium, between them and US Treasury bonds has widened to 2 percentage points from 1.6 points just after they were issued late last month. Deerfield Capital Management was one investor that purchased some of the bonds when they were issued but sold them after the jury award. "We evaluate risk versus reward on a continuous basis," said Gregory Sachs, chairman and chief executive. "Once headline news comes out on any security that is potentially damaging, the risk-reward ratio usually becomes skewed more towards the risk than the reward." Moody's, the credit rating agency, said that while last week's jury award did not change its assessment of the company's risk level, the emergence of significantly more awards could decrease its comfort level that AHP's reserves are adequate. Bond investors have been deserting American Home Products paper this week, taking fright at continued diet-drug litigation in spite of company reassurances. (Financial Times (London), April 12, 2001) GENERAL DYNAMICS: Appeals for Reduced Verdict in CA Suit By Employees --------------------------------------------------------------------- On April 19, 1995, 101 then-current and former employees of General Dynamics Convair Division in San Diego, California filed a six-count complaint in the Superior Court of California, County of San Diego, titled Argo, et al. v. General Dynamics, et al. In addition to General Dynamics, four of Convair’s then-current or former managers were also named as individual defendants. The plaintiffs alleged that the company interfered with their right to join an earlier class action lawsuit for overtime wages brought pursuant to the Federal Fair Labor Standards Act by, among other things, concealing its plans to close the Convair Division. On May 1, 1997, a jury rendered a verdict of $101 against the company and one of the defendants in favor of 97 of the plaintiffs. The jury awarded the plaintiffs a total of $1.8 in actual damages and $99 in punitive damages. The company and the individual defendant have appealed the judgment to the Court of Appeals of the State of California, Fourth Appellate District. On April 12, 2000, the California Supreme Court transferred the appeal to the Fifth Appellate District. Subsequent to year-end, the parties argued this case in the Court of Appeals. On appeal, the company is seeking to have the judgment overturned in its entirety or, alternatively, a substantial reduction in the jury s punitive damage award. The company believes it has substantial legal defenses, but in any case, it believes the punitive damage award is excessive as a matter of law. The company believes that the ultimate outcome will not have a material impact on the company s results of operations or financial condition. Williamson et al. v. General Dynamics Less than a month following the jury’s verdict in Argo, on June 27, 1997, General Dynamics Corporation was named as a defendant in a complaint filed in the Superior Court of California, County of San Diego, titled Williamson, et al. v. General Dynamics Corporation, et al. On August 7, 1997, General Dynamics removed the case to the United States District Court for the Southern District of California. The Williamson allegations are virtually identical to the allegations made in the Argo lawsuit; however, Williamson is styled as a class action lawsuit. On April 3, 1998, the district court granted General Dynamics motion to dismiss plaintiffs complaint in its entirety. Plaintiffs appealed that decision to the Ninth Circuit Court of Appeals. On April 12, 2000, the Ninth Circuit issued an opinion reversing the district court’s order of dismissal and remanded the case to the district court for further proceedings. On remand, the district court entered a stay of the case pending the final outcome of Argo. There will not likely be any further developments until a final decision is reached in Argo. Plaintiffs seek compensatory damages in an unspecified amount as well as punitive damages. The company believes that the ultimate outcome will not have a material impact on the company’s results of operations or financial condition. HMOs: Physicians at Odds over Blue Cross New Reimbursement Rates Quit --------------------------------------------------------------------- Seventy area physicians are leaving or have left Blue Cross of Idaho's popular managed health-care plan, a local doctors' group said. Their departures mean that patients who use Blue Cross' Preferred Provider Organization may have to choose between switching doctors or paying more for health care. The physicians and Blue Cross are at odds over the company's new reimbursement rates, and doctors also say they do not want Blue Cross managing health-care decisions. Blue Cross counters that it only oversees coverage. Magic Valley Health Network is an organization of 84 doctors. Its executive director, Tony Burns, said 70 either have left the Blue Cross managed-care plan or have given notice they will. Some independent physicians and all of the doctors at Southern Idaho Medical Group and Physician Center have left or will be leaving. Magic Valley Regional Medical Center and Twin Falls Clinic & Hospital are continuing their contracts, though the clinic's doctors will not. The Blue Cross plan covers many local employers. Burns said the health network does have more negotiations scheduled with Blue Cross. Patients in the plan are free to see any doctors they choose, even those who do not contract with Blue Cross. But patients who go to physicians outside the network may pay more. As Blue Cross PPO membership in Twin Falls shrinks, local physicians and Regence BlueShield of Idaho are moving toward renewed relations after a contract dispute between BlueShield and doctors statewide in 1999. That dispute led to a class-action lawsuit brought by 19 Idaho doctors, which has been settled. (The Associated Press State & Local Wire, April 12, 2001) INFINITY INVESTORS: Settlement Hearing Set for Securities Suit re UPEI ---------------------------------------------------------------------- Gilman and Pastor, LLP and Sirota & Sirota announced the following on April 12 for Civil Action No. 3:97-CV-226: UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE AT KNOXVILLE JAMES M. LYNN, individually and on ) behalf of all others similarly situated, ) Civil Action No. 3:97-CV-226 and JOHN PISACRETA, individually, ) ) Plaintiffs, ) Class Action ) (Hull/Inman) ) INFINITY INVESTORS LIMITED, ) FAIRWAY CAPITAL LIMITED, ) LAKE MANAGEMENT, LDC, LAUREL ) ANGELA MACDONALD, SEACREST ) CAPITAL LIMITED and CLARK K. HUNT, ) ) Defendants. ) SUMMARY NOTICE OF PENDENCY OF CLASS ACTION, OF HEARING ON PROPOSED SETTLEMENT THEREOF, AND SETTLEMENT HEARING THEREON TO: ALL PERSONS OR ENTITIES WHO PURCHASED OR OTHERWISE ACQUIRED THE COMMON STOCK OF UNITED PETROLEUM CORPORATION ("UPET") DURING THE PERIOD OF MAY 1, 1996 THROUGH AND INCLUDING JANUARY 16, 1997 (THE "CLASS," THE "CLASS PERIOD"), EXCLUD ING THE DEFENDANTS HEREIN, THEIR IMMEDIATE FAMILY MEMBERS AND ENTITIES IN WHICH ANY DEFENDANT HAS A CONTROLLING INTEREST. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE CONCERNS THE PENDENCY AND PROPOSED SETTLEMENT OF THE ABOVE CLASS ACTION. YOUR RIGHTS MAY BE AFFECTED BY LEGAL PROCEEDINGS IN THIS ACTION. IF YOU ARE A MEMBER OF THE CLASS, YOU MAY BE ENTITLED TO RECEIVE PAYMENTS PURSUANT TO THE PROPOSED SETTLEMENT DESCRIBED HEREIN. CLASS MEMBERS WHO WISH TO SHARE IN THE SETTLEMENT FUND MUST TIMELY SUBMIT A PROOF OF CLAIM AND RELEASE ("PROOF OF CLAIM"). YOU ARE HEREBY NOTIFIED pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the District Court that a hearing will be held on May 21, 2001, at 1:30 p.m. in the United States District Court for the Eastern District of Tennessee, 101 Summer Street West, Greeneville, Tennessee, in the Courtroom of the Honorable Thomas G. Hull. The purpose of the hearing shall be: (1) to determine whether the proposed settlement of the above-referenced class action should be approved by the Court as fair, reasonable and adequate; (2) to determine whether judgments should be entered dismissing the Action as to the Settling Defendants and Defendant Clark K. Hunt on the merits and with prejudice; and (3) to pass on the reasonableness of the application of Class Plaintiffs' Counsel for the payment of attorneys' fees and expenses. If you acquired UPET common stock during the Class Period, you may be a member of the Class and, if so, your rights may be affected by this litigation and the partial settlement of the Action. To share in the Settlement Fund, you must file a Proof of Claim and Release Form on or before August 21, 2001 establishing that you are entitled to recovery for any losses you suffered. IF YOU DO NOT FILE A PROPER PROOF OF CLAIM AND HAVE NOT EXCLUDED YOURSELF FROM THE CLASS, YOU WILL NOT SHARE IN THE SETTLEMENT FUND, BUT YOU WILL BE BOUND BY THE FINAL JUDGMENT OF THE COURT. The proposed partial settlement of this Action and requirements pertaining to submission of a Proof of Claim are described fully in the printed Notice of Pendency of Class Action, Proposed Settlement of Class Action, Settlement Hearing, and Requirement of Submitting Proof of Claim and Release (the "Class Notice") and Proof of Claim form, which has been mailed to all members of the Class who could be identified through reasonable efforts. If you are a member of the Class and desire additional information, or have not received a copy of the printed Class Notice and Proof of Claim form, you may obtain such information by writing to: Settlement Administrator United Petroleum Corporation Securities Litigation P.O. Box 9014 Jericho, NY 11753-8914 Fax: (516) 931-0810 Website: www.dberdon.com/claims The Co-Lead Counsel for Plaintiffs are: GILMAN AND PASTOR, LLP SIROTA & SIROTA LLP Stonehill Corporate Center 110 Wall Street 999 Broadway, Suite 500 New York, New York 10017 Saugus, MA 01906 PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORMATION. Dated: March 20, 2001 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE SOURCE Gilman and Pastor, LLP Contact: David Pastor of Gilman and Pastor, LLP, 781-231-7850 IOMEGA CORP: Settlement Proposed in DE Suit re Alleged Defect in Zip(R) ----------------------------------------------------------------------- Iomega Corporation and class counsel announce the entry of a proposed settlement in the Superior Court of the State of Delaware, County of New Castle on March 21, in the class action entitled (Jason Rinaldi, et al, v. Iomega Corporation, 98C-09-064-RR). The action, initially filed September 10, 1998, alleged that Iomega's Zip(R) drive products contained a manufacturing and/or design defect that sometimes caused the drives and the removable media to fail. The plaintiffs contended that the alleged defect also caused the drive to emit continual clicking noises, which became colloquially known as the "Click of Death." The class is represented by the law firms of New York-based Milberg Weiss Bershad Hynes & Lerach LLP; Dallas-based Dodge, Fazio, Anderson & Jones, P.C., and New York-based Lax & Noll. As a result of the settlement (and as explained in the Notice of Settlement issued by the Court), all United States consumers who purchased an Iomega Zip(R) drive at retail, or through an authorized Iomega Original Equipment Manufacturer (such as a computer manufacturer) between January 1, 1995, and March 19, 2001, would be entitled to certain rebates on various Iomega products. Additionally, Iomega will make available a free technical support service for customers with questions regarding "clicking" problems with their Zip(R) drives. Iomega will also make a $1,000,000 charitable donation of its products and services to schools. Under the terms of the settlement, Iomega will pay for the expenses incurred in administration of the settlement as well as class counsels' fees once awarded by the Court. Details of the settlement are available online at http://www.iomega.com/rinaldi/index.html. Plaintiffs' Attorney Mike Dodge commented, "We are pleased with the settlement, and the substantial benefits that the class, as well as our nation's schools, will receive as a result. The case presented many difficult legal and technical issues. After nearly three years of litigation, which involved examination of over 150,000 of Iomega's technical documents and consultation with experts in the field, the settlement allows us to not only eliminate the risks inherent in litigation, but also to provide real value to, potentially, an estimated 28 million Zip drive purchasers in the class. Those not planning on purchasing additional Iomega products will be able to transfer the certificate to someone who is, or to give it to friends or family. The certificate may also be combined with one other non-settlement coupon or rebate offered by Iomega on the same product." "Iomega is pleased that the litigation has been resolved," said Bruce Albertson, president and CEO, Iomega Corporation. "Although the Company continues to dispute the underlying allegations, Iomega believes that bringing closure to allegations about our products in the past is in the best interests of our shareholders and customers. We are also pleased that our charitable donation will help educate America's youth, and that through this program Iomega will play a key role in bringing our children into the new digital age. Most importantly, Iomega Corporation remains committed to providing consumers with high-quality products, reliable data management solutions, and award- winning customer service that allows them to manage and enjoy their digital lives." Contact: Michael C. Dodge of Dodge, Fazio, Anderson & Jones, P.C., 800-947-0177, or iomega-inquiries@texasatty.com; or Sanford P. Dumain of Milberg Weiss Bershad Hynes & Lerach LLP, 212-594-5300, or iomegaclaims@milbergny.com; or Robert Lax of Lax & Noll, 212-818-9150; or Chris Romoser of Iomega Corporation, 801-332-3678, or romoser@iomega.com IRWIN LEASING: Health Professionals Sue in PA Over Misrepresentation -------------------------------------------------------------------- In January, 2001, Irwin Leasing Corporation (formerly Affiliated Capital Corp.), Irwin Equipment Finance Corporation and Irwin Financial Corporation were served as defendants in United States ex rel. Paranich v. Sorgnard et. al, an action filed in the U.S. District Court for the Middle District of Pennsylvania. The suit alleges that a manufacturer/importer of certain medical devices (Matrix Biokinetics, Inc., and others) made misrepresentations to health care professionals and to government officials to improperly obtain Medicare reimbursement for treatments using the devices, and that the Irwin Companies, through Affiliated Capital's financing activities, aided in making the alleged misrepresentations. The Irwin Companies filed a motion to dismiss on February 12, 2001. Because the case is in the early stages of litigation, the Corporation is unable at this time to form a reasonable estimate of the amount of potential loss, if any, that the Corporation could suffer. The Corporation intends to vigorously defend this lawsuit. IRWIN MORTGAGE: Appeals against Cert. of RESPA Suit in AL By Brokers -------------------------------------------------------------------- Culpepper, et. al v. Inland Mortgage Corporation continues on appeal before the United States Court of Appeals for the 11th Circuit. This lawsuit was filed against Irwin Mortgage Corporation ("IMC") (formerly Inland Mortgage Corporation) in April, 1996, in the United States District Court, Northern District of Alabama. The suit alleges that IMC violated the Real Estate Settlement Procedures Act (RESPA) in connection with certain payments IMC made to mortgage brokers, and the plaintiffs sought to have the claims certified as a class action. In June, 1999, the trial court certified a limited class of borrowers, and in December, 1999, IMC appealed the trial court's grant of class certification. On January 23, 2001, the court of appeals heard oral argument by Irwin Mortgage. It is uncertain when a ruling will be issued. If the class certification is upheld, the case would proceed to an adjudication on the merits of the alleged RESPA violations. Because the case is in the early stages of litigation, the Corporation is unable at this time to form a reasonable estimate of the amount of potential loss, if any, that the Corporation could suffer. The Corporation intends to continue to vigorously defend this lawsuit. JOHN HANCOCK: Intends to Appeal in Harris Trust Suit Filed in 1983 in NY ------------------------------------------------------------------------ Since 1983, we have been involved in complex litigation known as Harris Trust and Savings Bank, as Trustee of Sperry Master Retirement Trust No. 2 v. John Hancock Mutual Life Insurance Company (S.D.N.Y. Civ. 83-5491). This lawsuit originally raised only state law causes of action, but in 1984, the plaintiff amended the Complaint to allege that John Hancock was a fiduciary and party in interest under ERISA in rendering investment advice and exercising control over plan assets. Plaintiff alleged that John Hancock breached its fiduciary duty in failing to act for the exclusive benefit of plan participants by retaining excess funds of the plan, by imposing arbitrary charges for a return of plan funds, by failing to pay an appropriate rate of interest on plan funds, and by charging the plan excessive compensation. In 1989, the district court dismissed all of plaintiff's ERISA claims and, in 1991, also dismissed all of plaintiff's state law claims. The plaintiff appealed to the Second Circuit Court of Appeals, seeking reversal of several of the district court's rulings, including two of the rulings regarding the applicability of ERISA to the dispute. The district court's state law rulings were upheld, and the ERISA rulings were affirmed in part and reversed in part. Specifically, the Second Circuit upheld the district court's conclusion that John Hancock was not a fiduciary under ERISA with respect to the insurance policy as a contract. The Second Circuit, however, reversed the district court's determination that none of the assets, held by John Hancock in its general account in connection with this contract were plan assets, and held that "free funds" associated with this contract constitute plan assets for ERISA purposes. This decision was appealed to the Supreme Court, which affirmed the Second Circuit's ruling in 1993. The Department of Labor filed an amicus brief in support of John Hancock's position on the merits before the Supreme Court. The case was remanded to the district court. The case was tried to a federal district court judge in 1997, and the judge issued an opinion in November 2000. In that opinion the judge determined that John Hancock should have allowed the Trust to withdraw the free funds by means of an extracontractual payout. The Court awarded the Trust $13,767,200 in relation to this claim together with unspecified additional pre-judgment interest on this amount from October 1988. The Court also determined that Hancock violated its fiduciary duty when it failed to revalue the liabilities for guaranteed benefits, which had been established at rates set out in the contract, on a basis which was more favorable to the Trust. In addition, the Court concluded that certain of Hancock's internal allocations of expenses and investment income violated ERISA. Damages in the amount of $5,724,528, together with unspecified prejudgment interest from December 1996, were awarded on these issues. As part of the relief, the judge ordered the removal of Hancock as a fiduciary to the plan. The Court also awarded the Plaintiff unspecified fees and costs. Given this litigation's long history, the amount of these fees and costs, along with the pre-judgment interest, may substantially exceed the damages already awarded by the District Court judge. However, John Hancock believes that the underlying case was incorrectly decided and intends to appeal the lower court's decision. Notwithstanding what the company believes to be the merits of the Company's position in this case, the company is unable to predict the outcome of our appeal; and, if unsuccessful, its ultimate liability, including fees, costs and interest could be material with respect to earnings in any given reporting period. However, the company does not believe that any such liability would be material in relation to our financial position or liquidity. KOREAN GOVT: Ordered to Pay Compensation for U.S. Bombing Exercises ------------------------------------------------------------------- Residents of the coastal village of Maehyang-ri in Hwasong County, Kyonggi- do, have won a court battle against the government for compensation for damages caused U.S. bombing exercises. The Seoul District Court on April 11 ordered the government to pay a combined total of 132 million won ($100,000) in compensation to 14 Maehyang-ri residents who claimed they suffered damages from strafing exercises at the nearby Koon-ni range run by the U.S. Air Force. It marked the first time that the Korean government was ordered to pay compensation for damage inflicted on residents by U.S. Forces Korea (USFK) military exercises. Legal experts said that the ruling has significant implications as the government is in the process of screening the scope of damages on other Maehyang-ri residents allegedly caused by strafing drills. The ruling is also expected to have a direct effect on other damage suits filed against American troops stationed in the country. The 14 residents of Maehyang-ri filed the suit against the Korean government in February in 1998 after it rejected their damage claims. The plaintiffs insist that residents have been injured by noise, stray bullets and accidental bombings from U.S. warplanes on numerous occasions since the government allowed the U.S. military to use 290,000 pyong (one pyong equals 3.3 square meters) of farm land near the village and another 6.9 million pyong on a nearby islet off the West Coast in 1955. In May last year, several residents were surprised by the ear-splitting detonation of a bomb that was released by a U.S. warplane during an exercise and some were allegedly injured while trying to take cover. They maintained that walls of their houses were cracked, calling for damage compensation and demanding the relocation of the shooting range. They also held several protest rallies in front of the military compound. Many civic groups joined the residents to protest the U.S. military presence in Korea. The action was led by the National Campaign for the Eradication of Crimes by U.S. Troops in Korea, the Korean Federation for Environmental Movement (KFEM) and the Green Korea United. They urged the government to rewrite the unequal'' Status of Forces Agreement (SOFA), the bilateral pact between Korea and the U.S. that defines the legal status of American troops in the country. The current SOFA entitles Koreans to seek compensation from the Korean government for damages arising from illegal activities by U.S. troops. The court order is likely to encourage civic groups to launch a move to press for the revision of the just-amended SOFA in a bid to have the U.S. military take direct responsibility for all of its illegal activities. We have found that Maehyang-ri residents have been troubled with an intolerable' level of noise pollution caused by the U.S. military's firing exercises almost every day since Koon-ni range was set up in 1955,'' presiding judge Chang Jun-hyon said in the ruling. We have decided to order the government to pay the plaintiffs 132 million won,'' he said. Each plaintiff will be compensated in accordance with the level of damage suffered. In September 1998, the court asked an Ajou University research team to measure the noise level in Maehyang-ri's residential area. The team discovered that the level stood at an average of 70 decibel in the region during a six month test period that ended in March last year, far higher than the tolerable level of 50 decibel, indicating that residents could suffer from a loss of hearing as a result. Lee Tae-sok, a lawyer for the plaintiffs, said, The ruling has significant meaning in that the damages caused by U.S. Air Force exercises have for the first time in Korea been recognized by the judiciary.''He expects that the decision would positively influence another damage suit filed by 2,161 Maehyang-ri residents with the Suwon District Court in Kyonggi-do. They are demanding a total of 21.6 billion won in compensation for damages caused by the bombing exercises. Chon Man-kyu, one of the 14 plaintiffs and head of a residents' group calling for damage compensation, welcomed the ruling. But he said that the compensation amount is extremely small considering the five decades of pains and inconveniences the residents suffered. Chon vowed to file additional suits on behalf of the residents and take further legal steps to help shut down the U.S. firing range. USFK stopped dropping bombs at Maehyang-ri in August last year, caving in to the public outcry over the range. However, American warplanes still conduct their strafing exercises on the nearby Nongsom islet, 1.5 kilometers from the village. (Korea Times, April 12, 2001) LEGIONNAIRE'S DISEASE: Aussi Sufferers Sue Owners of Melbourne Aquarium ----------------------------------------------------------------------- Legionnaire's disease sufferers have begun legal action against building owners for not regularly checking air conditioning systems. In Victoria, around 130 people have joined a class action against the owners of the Melbourne Aquarium, claiming negligence in installing, maintaining, cleaning and testing the cooling towers. Two people died and 100 were hospitalised after the outbreak last year. In Brisbane, personal injury law firm Watling Roche warns that some body corporates and owners are unaware of legislation which requires regular checks on air conditioning systems to ensure levels of bacteria remain safe. Principal Barry Roche says body corporates and owners of commercial buildings are at risk of legal action if workers contract Legionnaire's through failure to comply with occupational health and safety laws. Legionella bacteria causes flu-like symptoms but can be fatal. (AAP Newsfeed, April 12, 2001) MOLTEN METAL: Settles Securities Suit in CA, Shapiro Haber Announces -------------------------------------------------------------------- Shapiro Haber & Urmy LLP and Berman DeValerio & Pease LLP, co-lead counsel for the class, announce that the following Summary Notice has been approved by the United States District Court for the District of Massachusetts to notify the class of the proposed settlement of the following actions: In re Molten Metal Technology, Inc. Securities Litigation, C.A. No. 97-10325-MLW" and "Marilyn Axler, et al. v. Scientifica Ecology Group, Inc. and H.W. "Bud" Arrowsmith, C.A. No. 98-10161-MLW Summary Notice of Pendency of Class Actions, Proposed Settlements and Settlement Hearing All Persons Or Entities Who Purchased The Common Stock Of Molten Metal Technology, Inc. ("Molten Metal") In The Open Market During The Period March 28, 1995 Through And Including May 27, 1997, And Were Damaged Thereby (The "Class") ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil Procedure and Orders of the Court dated March 9, 2001 that a hearing will be held before the Honorable Mark L. Wolf at the United States Courthouse, One Courthouse Way, Boston, MA 02210, at 3 p.m., on August 6, 2001 to determine whether the above actions should be certified as class actions, whether proposed settlements should be approved by the Court as fair, reasonable and adequate, and to consider the application of Class Counsel for attorneys' fees and reimbursement of expenses. IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR RIGHTS WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT FUNDS. If you have not yet received the full printed Notice of Pendency of Class Actions, Hearing on Proposed Settlements and Attorneys' Fee Petitions and Right to Share In Settlement Funds, and a Proof of Claim form, you may obtain copies of these documents by identifying yourself as a member of the Class and by writing to the Claims Administrator: In re Molten Metal Technology, Inc. Securities Litigation c/o David Berdon & Co., LLP P.O. Box 9014 Jericho, New York 11753-8914 Telephone 800-766-3330 Facsimile 516-931-0810 www.dberdon.com/claims Inquiries, other than requests for the forms of Notice and Proof of Claim, may be made to the following Plaintiffs' Co-Lead Counsel: Thomas Shapiro, Esq. Norman Berman, Esq. Shapiro Haber & Urmy LLP Berman, DeValerio & Pease LLP 75 State Street One Liberty Square Boston, MA 02109 Boston, MA 02109 To participate in the Settlements, you must file a Proof of Claim postmarked no later than July 17, 2001. To exclude yourself from the Class you must file a request for exclusion so as to be received no later than July 23, 2001. IF YOU ARE A CLASS MEMBER AND DO NOT EXCLUDE YOURSELF OR DO NOT FILE A PROPER PROOF OF CLAIM, YOU WILL NOT SHARE IN THE SETTLEMENTS BUT YOU WILL BE BOUND BY THE FINAL ORDERS AND JUDGMENTS OF THE COURT. Further information may be obtained by directing your inquiry in writing to the Claims Administrator. PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORMATION. By Order of The Court UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS IN RE MOLTEN METAL TECHNOLOGY, INC. SECURITIES LITIGATION C.A. No. 97-10325-MLW MARILYN AXLER, et al., Plaintiffs, v. SCIENTIFIC ECOLOGY GROUP, INC. and H. W. "BUD" ARROWSMITH, Defendants. C.A. No. 98-10161-MLW Contact: In re Molten Metal Technology, Inc. Securities Litigation: c/o David Berdon & Co., LLP, 800-766-3330, www.dberdon.com/claims RACIAL PROFILING: Judge Rules against Fed Probe & Refuses to Delay Suit ----------------------------------------------------------------------- A judge on Thursday rejected a federal prosecutor's request to force the city to turn over internal reports on people who were stopped and frisked by the Police Department's Street Crime Unit. But in a related ruling, the same judge denied the city's bid to delay a private class-action lawsuit alleging officers systematically singled out minorities for searches. U.S. Attorney Mary Jo White - who is investigating allegations of racial profiling by the NYPD - had sought confidential data produced by the city in response to the class-action suit filed two years ago in federal court in Manhattan. The city has refused to voluntarily give White the information. In a 15-page decision, U.S. District Judge Shira Scheindlin found that White's office "has failed to demonstrate an extraordinary circumstance or compelling need for the confidential materials in issue." White began the investigation in 1999 following the fatal shooting of Amadou Diallo, an unarmed black man, by members of the Street Crime Unit. Four police officers were cleared of criminal charges in the shooting. The Justice Department has the power to sue the NYPD to impose reforms and a police monitor if it can show the department's stop-and-frisk tactics violated the civil rights of blacks and other minorities. Despite siding with the city, Scheindlin warned city officials that by not voluntarily cooperating with White's investigation, they risked a federal suit - a position she called "odd, if not reckless." "The city has opted to take this risk and that is its choice," the judge wrote. In the separate civil suit, the city has been ordered to give the plaintiffs its so-called "UF-250 database" - a compilation of reports of stops by the Street Crime Unit. But city attorneys have asked a higher court to limit the scope of the case and size of the class, and had sought a stay pending a decision on the appeal. But Scheindlin rejected the request for a stay on Thursday, saying the case should not be delayed any longer. "Plaintiffs are litigating a controversial matter of serious public concern, namely racial profiling," the judge wrote. "Accordingly, the most expeditious resolution of this matter is in the public's best interest." (The Associated Press State & Local Wire, April 12, 2001) RACIAL PROFILING: Rogers Police Deny Claims of Illegal Stops, Detentions ------------------------------------------------------------------------ The Rogers Police Department has denied claims made in a suit accusing the agency of illegally stopping and detaining Hispanics because of their ethnicity. The filing Wednesday in federal court at Fayetteville was in response to a suit filed March 23 by three Rogers residents. The suit claims that police routinely stop Hispanic motorists without cause, ask them for immigration papers and detain them until federal immigration agents arrive. Gary Kennan of Bentonville and Joe Berra of the Mexican-American Legal Defense and Educational Fund, attorneys for the plaintiffs, are seeking class-action status for the suit. In the suit, Miguel and Nora Virginia Lopez say police stopped their vehicle last July, searched it and asked them to produce immigration papers. The Lopezes were not ticketed, the suit says. A third plaintiff, Justino Carranza, says in the suit that he was stopped by police last August and asked to produce a driver's license and Social Security card. Carranza also wasn't ticketed, the suit says. The lawsuit claims the officers violated the plaintiffs' rights by stopping them without having a reasonable suspicion of criminal activity. Police Chief Tim Keck denies the claims. He said he has met with Hispanic community leaders to discuss racial profiling complaints but has not seen anything he believes is unconstitutional. (The Associated Press State & Local Wire, April 12, 2001) REDIFF AMERICAN: Lovell & Stewart and Sirota & Sirota File Suit in NY --------------------------------------------------------------------- The law firms of Lovell & Stewart, LLP ((212) 608-1900 or www.lovellstewart.com) and Sirota & Sirota, LLP ((212) 425-9055 or www.sirotalaw.com) filed a class action lawsuit on April 10, 2001 on behalf of all persons and entities who purchased Rediff American Depositary Shares (NASDAQ: REDF) between June 14, 2000 and April 4, 2001, inclusive. The class action lawsuit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Exchange Act of 1934 and seeks to recover damages. Any member of the class may move the Court to be named lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than June 12, 20 1. The action, Suresh Khanna v.Rediff.com India Ltd. et al., is pending in the U.S. District Court for the Southern District of New York (500 Pearl Street, New York, New York), Docket No. 01-CV-3020 and has been assigned to the Honorable Harold Baer, Jr., U.S. District Judge. The complaint alleges that Rediff.com India Ltd. ("Rediff"), certain of its officers and directors, and the lead underwriters for Rediff's initial public offering (the "IPO") violated the federal securities laws by issuing and selling American Depositary Shares pursuant to the June 14, 2000 IPO without disclosing to investors that Rediff=s Internet business had been experiencing difficulty with its e-mail software and that it was known that many significant advertising contracts would terminate by December 2000. When Rediff failed to renew these sponsorship and "dotcom" advertising contracts, Rediff announced that it failed to achieve anticipated revenues and it would not attain contemplated revenue growth. The complaint alleges that Rediff had falsely stated in the Prospectus that one of its directors, Richard Li, was a graduate of Stanford University. In fact, he was not. Furthermore, Rediff failed to disclose that Li had falsely claimed that he was a graduate of Stanford University. Rediff thereby falsely represented that it had put together a superb leadership team when in fact it had not. The complaint alleges that Rediff had stated in the Prospectus that there were significant restrictions on the use of funds obtained from the IPO. Rediff failed to discloke that it intended to invest in speculative securities. Nonetheless, without any prior disclosure to the investing public, Rediff purchased millions of dollars of the securities of two Indian Internet companies at a time when the value of "dotcom" stocks was highly volatile and generally decreasing in value. Rediff thereby falsely represented that it would conservatively apply the funds received through the IPO when in fact it would not. The complaint alleges that Rediff omitted to disclose in the Prospectus that any mergers would likely entail a substantial drain of IPO proceeds which would increase Rediff's "burn rate" for corporate funds and accelerate the need for additional financing. This omission misled purchasers to believe that Rediff would have significant cash reserves for the foreseeable future when in fact it would not. S. CA EDISON: L.A. County Joins Plaintiffs over Nonpayment ---------------------------------------------------------- Small energy producers who have sued Southern California Edison over nonpayment will soon be joined by Los Angeles County. The Board of Supervisors on Tuesday authorized a lawsuit against the utility, which owes about $10 million for electricity provided since November by the 22-megawatt co-generation station at the Pitchess Honor Rancho. Several small power generators have sued to suspend contracts with both Edison and Pacific Gas & Electric, which owe the producers about $1.5 billion for past electricity sales. PG&E, which recently filed for bankruptcy protection, had been paying the small generators about 15 cents on the dollar since November. Edison has made no payments, but is scheduled to resume paying producers April 16. In one case, a hearing has been scheduled for April 16 in Imperial County over a lawsuit filed by CalEnergy against Edison. A judge previously allowed the geothermal producer out of its contract because the utility failed to pay the company. The court is expected to rule on CalEnergy's request for $99 million in back payments and could also rule on Edison's request to require CalEnergy to resume selling it power. CalEnergy has been selling the 270 megawatts it previously provided to Edison on the spot market. Edison and PG&E claim they've lost nearly $14 billion since June because of high wholesale prices that the state's electricity deregulation law bars them from passing onto ratepayers. PG&E filed for federal bankruptcy protection April 6, saying that state regulators and lawmakers failed to help the utility remain solvent. In a related matter, a Tulare lighting company sued SoCal Edison on Tuesday claiming the utility violated state law by failing to implement a 10 percent rate cut mandated under the state's 1996 deregulation law. Anchor Lighting is seeking class-action status for business and residential customers in the lawsuit filed in Los Angeles Superior Court. The action seeks unspecified compensatory and exemplary damages. Steven Conroy, a spokesman for SoCal Edison, said he had not seen the lawsuit and could not comment. (The Associated Press State & Local Wire, April 12, 2001) STATE RAIL: Glenbrook Disaster Victims Win Victory in Australian Court ---------------------------------------------------------------------- Glenbrook rail disaster victims on April 12 won a major victory in their class action against the State Rail Authority (SRA) after the NSW Supreme Court was told it had admitted liability. A total of 43 victims are suing the SRA for compensation over the rail crash on December 2, 1999 in the Blue Mountains west of Sydney which killed seven people and injured 51. Dennis Wheelahan, QC, for the victims, told the court that after talks between the parties, the SRA had admitted liability in the crash. The parties had agreed the damages would be assessed according to common law and would be unaffected by the Motor Vehicle Accidents Act, 1999, he said. Outside the court, Mr Wheelahan said this would mean the damages would be decided "without restrictions, ceilings and caps imposed by the Motor Vehicle Accidents Act". "This is a very important victory for these people. We have argued consistently that ought to be the way these matters are assessed. "Had we not done so, approximately 90 per cent of these people would have recovered nothing," he said. Yesterday in a damning report, Justice Peter McInerney found the SRA was more interested in timetables than safety. "Rail operations were not being conducted with a proper regard to safety. The focus of the culture ... remained very much one of on-time running," he said. Master Joanne Harrison stood the class action over until September 17. (AAP Newsfeed, April 12, 2001) VERSATA, INC: Schubert & Reed Brings Securities Lawsuit in California --------------------------------------------------------------------- A class action suit alleging securities fraud has been filed in the United States District Court for the Northern District of California against Versata, Inc. (Nasdaq:VATA) and others by the San Francisco law firm of Schubert & Reed LLP. The case was filed on behalf of all persons who purchased Versata shares during the period April 24, 2000 to March 29, 2001 (the "Class Period"). The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that the defendants made material misrepresentations and omissions of material facts concerning the Company's business performance during the Class Period. In particular, on March 29, Versata Inc. announced that it would file a Notification of Late Filing of its Annual Report on Form 10-K, for the year ended December 31, 2000, with the SEC. The delay was attributed to an ongoing inquiry into improper recognition of revenue during the 2000 fiscal year. Kevin Ferrell, CFO during the 2000 fiscal year, left the company on February 7, 2001. John A. Hewitt, Jr., president and CEO during the 2000 fiscal year, left the company on March 29, 2001 without explanation, as did Peter Harrison, Sr. VP - Sales. During the Class Period, certain of the company's officers and directors, including President and CEO Hewitt, sold 295,000 shares of the company's stock at allegedly inflated prices (as high as $24.97) for insider trading proceeds in excess of $3.7 million. On news of the revenue recognition problems and executive exodus, VATA shares fell more than 72% in a single day, until NASDAQ halted trading, requesting further information from the company. On March 29, 2001, VATA closed at $0.28, down $ 0.75 from the prior day's close of $1.03, and down from a 52 week high of $83. Trading in the Company's stock remains halted while NASDAQ seeks further information. Contact: Schubert & Reed LLP, San Francisco Juden Justice Reed, 415/788-4220 mail@schubert-reed.com * Privacy, GSEs Top Roundtable's Agenda --------------------------------------- A newly beefed-up team of lobbyists at the Financial Services Roundtable will use this session of Congress to try to undo a key privacy provision of the Gramm-Leach-Bliley Act and to back legislation that would toughen oversight of Fannie Mae and Freddie Mac. The roundtable's president, Steve Bartlett, said that board members at their annual meeting in Florida this week directed the group's government relations arm, which recently hired two lobbyists to what is now a seven-member lobbying team, to pressure Congress to adopt national uniform privacy standards. Overall, he said, roundtable board members are pleased with the way that the privacy requirements in Gramm-Leach-Bliley are being implemented, but a provision that permits states to adopt tougher state standards, introduced by Sen. Paul Sarbanes, D-Md., sows "seeds of instability" in the banking system. "You can't have one state set different standards, because then you have no standards or disjointed standards," Mr. Bartlett said. "This is a large issue that you have to get right," because privacy considerations affect every banking product. No states have passed such legislation yet. But, Mr. Bartlett said, "We have a fear that at some point the Congress or state legislatures will make further changes ... and disrupt the marketplace." James L. Pitts, executive director of the Financial Services Coordinating Council, predicted an uphill battle for any bill promoting national privacy standards. "I think the chances are slim to none" that any such bill will become law, he said. "There just doesn't seem to be the political consensus on Capitol Hill as to what federal preemption would look like." Mr. Pitts, whose organization was formed primarily to address financial institutions' privacy concerns, said that his group will focus on preventing the passage of any laws, at the state or federal level, that would increase privacy protections. The roundtable has hired longtime banking lobbyist Theodore A. Doremus, who had previously represented banking companies such as J.P. Morgan Chase, as a special counsel for privacy issues. The group's second new hire, Andy Barbour, a former official in the office of the United States Trade Representative, is scheduled to start work Monday and will focus on securities and insurance. Also on the roundtable agenda is reform of the regulation of government-sponsored enterprises such as Fannie Mae and Freddie Mac. Mr. Bartlett said his members support legislation introduced last week by Rep. Richard H. Baker, R-La. The bill would abolish the enterprises' current safety-and-soundness regulator, the Office of Federal Housing Enterprise Oversight, and transfer that authority to the Federal Reserve Board. Another item on the roundtable's wish list is that Congress establish a clear definition of the enterprises' mission and be strict in keeping them on that mission. The group also favors increasing the 20-year-old cap on individual IRA contributions to $5,000 per year from $2,000. "We have waited long enough to increase IRA coverage," he said. "The government is saying that people can provide for their retirement, but in fact you can't provide with a $2,000 cap. The math doesn't work." Other priorities include pushing for laws to restrict abuse of class action lawsuits and for passage of bankruptcy reform legislation. The roundtable will also actively oppose efforts under way to raise the $100,000 coverage limit of federal deposit insurance. (The American Banker, April 12, 2001) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *