/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/011003.mbx C L A S S A C T I O N R E P O R T E R Wednesday, October 3, 2001, Vol. 3, No. 193 Headlines ANSETT INTERNATIONAL: Cohen Woolf Investigates Possible Consumer Suit ARCHER DANIELS: Faces Thirty Antitrust Suits Over Corn Syrup Sales AUTOBYTEL.COM: Bernstein Liebhard Initiates S.D. NY Securities Suit AUTOMOBILE INSURANCE: LA Appellate Courts Decide in Favor of Insurers BAYER AG: Cauley Geller Files PA Anti-Cholesterol Drug Lawsuit CIGNA CORPORATION: Discovery Proceeds In Landmark Illinois Suit COX COMMUNICATIONS: Appellate Court Denies CA Class Certification CYBERGUARD CORPORATION: Sued For Securities Act Violations In S.D. FL ESCALON MEDICAL: $500T New York Suit Settlement Approval Pending FLEETWOOD ENTERPRISES: Limited Discovery Sole Motor Home Suit Action HANDSPRING INC.: Sued By Stockholders For Securities Violations in NY HSM INC.: Prevails As Federal and Appellate Courts Dismiss RICO Suit INTERNET SECURITY: Chitwood Harley Initiates N.D. GA Securities Suit NCH CORPORATION: Weiss Yourman Initiates Securities Suit in Delaware NORTHWEST AIRLINES: Brothers Say They'll Sue Over Airline Ordeal ORAL CONTRACEPTIVES: Women Sue Three Drug Firms Over Pill Risks OSI SYSTEMS: Subsidiary Faces Suit Relating To Security Products in LA ST. JOSEPH: State Court Applies Federal Pre-Emption, Dismisses Suit THIMEROSAL LITIGATION: Link To Disorders In Children Undetermined TOBACCO LITIGATION: Former Surgeon General Testifies in WV Suit WEST VIRGINIA: Officials Consider Suit Challenging Redistricting Plan ********* ANSETT INTERNATIONAL: Cohen Woolf Investigates Possible Consumer Suit --------------------------------------------------------------------- Melbourne law firm Cohen, Woolf and Weinberg is rounding up support for a class action against Australian airline Ansett International. Hundreds of Ansett frequent flyer members and passengers are lining up to take legal action against the directors of the crippled airline. Partner Michael Lipshutz said several hundred calls had been made to the firm's office after a newspaper advertisement sought support for a claim against Ansett directors. "We are checking to see if it is worthwhile making a claim. We're just gauging the opinion of creditors and the public at the moment," Lipshutz said. About 90 per cent of inquiries had been from Global Rewards members who lost points or a flight that was rendered invalid. Any future court action would hinge on the directors' responsibilities and whether Ansett board members breached their duties while presiding over the airline's affairs. Catriona Lowe, senior policy officer at the Consumer Law Centre, said it was too early to tell if a class action would pay off but ". it would be prudent for consumers to consider registering with a law firm at this stage." The threat of action came as Qantas was forced to use foreign planes on international routes to cope with domestic demand. Three 767s leased from Air Canada, complete with pilots and crew, will fly from Sydney and Melbourne to New Zealand, after a similar leasing deal with Ansett broke down. The Australian Securities and Investments Commission is investigating the Ansett collapse. ASIC officers began the probe on September 14, focusing on possible breaches of director duties under the Corporations Act. ARCHER DANIELS: Faces Thirty Antitrust Suits Over Corn Syrup Sales ------------------------------------------------------------------ Food additives producer Archer Daniel Midland, Inc. has been named as defendant, along with other companies in thirty antitrust suits involving the sale of high fructose corn syrup in the United States. Twenty-two of these putative class actions allege violations of federal antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup. The putative classes in these cases comprise certain direct purchasers of high fructose corn syrup during certain periods in the 1990s. These twenty-two actions have been transferred to the United States District Court for the Central District of Illinois and consolidated under the caption, In Re High Fructose Corn Syrup Antitrust Litigation, MDL No. 1087 and Master File No. 95-1477. On April 3, 2001, the Company and the other defendants filed motions for summary judgment. On August 23, 2001, the Court entered a written order granting the defendants' motions for summary judgment. The Company, along with other companies, also has been named as a defendant in seven putative class action antitrust suits filed in California state court involving the sale of high fructose corn syrup. These California actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup. One of the California putative classes comprises certain direct purchasers of high fructose corn syrup in the State of California during certain periods in the 1990s. This action was filed on October 17, 1995 in Superior Court for the County of Stanislaus, California. The above action as since been removed to federal court and consolidated with the federal class action litigation pending in the Central District of Illinois referred to above. The other six California putative classes comprise certain indirect purchasers of high fructose corn syrup and dextrose in the State of California during certain periods in the 1990s. One such action was filed on July 21, 1995 in the Superior Court of the County of Los Angeles, California and is encaptioned Borgeson v. Archer-Daniels-Midland Co., et al., Civil Action No. BC131940. This action and four other indirect purchaser actions have been coordinated before a single court in Stanislaus County, California under the caption, Food Additives (HFCS) cases, Master File No. 39693. AUTOBYTEL.COM: Bernstein Liebhard Initiates S.D. NY Securities Suit ------------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP commenced a securities class action lawsuit on behalf all persons who acquired Autobytel.com, Inc. (NASDAQ: ABTL) securities between March 25, 1999 and December 6, 2000. The case is pending in the United States District Court for the Southern District of New York. Named as defendants in the complaint are underwriters of Autobytel's initial public offering: Lehman Brothers, Inc., Bear, Stearns & Co., Inc., Goldman Sachs & Co., and Morgan Stanley & Co. Incorporated. The complaint charges defendants with violations of the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with Autobytel's initial public offering of 4.5 million shares of common stock at $23.00 per share that was completed on or about March 25, 1999. The complaint alleges that the Prospectus was false and misleading because it failed to disclose: (i) the Underwriter Defendants' agreement with certain investors to provide them with significant amounts of restricted Autobytel shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Autobytel shares in the after-market at pre-determined prices. For more information, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779- 1414 by E-mail: ABTL@bernlieb.com or visit the firm's Website: www.bernlieb.com AUTOMOBILE INSURANCE: LA Appellate Courts Decide in Favor of Insurers --------------------------------------------------------------------- The First and Second Circuit Courts of the Louisiana Court of Appeals ruled insurance companies meet policy obligations to the insured when repairing a damaged automobile, despite the issue of "diminished value". Several class action suits have been filed throughout the country based upon the theory that once an automobile is repaired, the value of the vehicle is diminished. The lawsuits seek compensation for the alleged loss in value. In two cases: Townsend vs. State Farm Mutual Automobile Insurance Co. and Campbell v. Markel American Insurance Co., the appellate courts held that the insurance contract didn't obligate the insurer to compensate for lost market value. The plaintiffs originally filed suit claiming that the vehicles in question, repaired following traffic accidents, suffered a reduction in market value. The alleged reduction of value is known as "diminished value". The appeals court decisions held that "where an insurer has paid for full and adequate physical repair to a damaged vehicle.its obligation under the policy is satisfied, and it is not required to pay for any reduction in market value of the vehicle." The Alliance for American Insurers, a trade organization representing 326 property insurers, hailed the decision, saying, "The courts' reasoning is sound and hopefully will serve as guidance for other courts construing similar policy language." "These two cases are just the most recent victories earned by insurers on this issue," said Kirk Hansen, Alliance director of claims. "The insurance industry has been successful in defending class-action litigation for alleged diminished value in Delaware, Florida, Illinois, Louisiana, Massachusetts, Pennsylvania, Rhode Island and Washington." BAYER AG: Cauley Geller Files PA Anti-Cholesterol Drug Lawsuit -------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP has filed a class action lawsuit in the United States District Court for the Western District of Pennsylvania on behalf of all persons who were prescribed the drug Cerivastatin, also known as Baycol (Lipobay outside the United States). As alleged in the complaint, Bayer corporation, a unit of Bayer AG (OTCBB:BAYZY), is named as the defendant in this action due to its responsibility in manufacturing, promoting, marketing, distributing and selling Baycol and/or Lipobay. On Aug. 8, 2001 the Food and Drug Administration (FDA) announced that Bayer withdrew Baycol from all markets in which it distributed Baycol and/or Lipobay, other than Japan. According to the FDA, the recall was announced for a number of reasons, including the fact that more than 480 Baycol users developed rhabdomyolysis after being prescribed the Baycol. Rhabdomyolysis is a condition that results in muscle cell breakdown and release of the contents of muscle cells into the bloodstream. Symptoms of rhabdomyolysis include muscle pain, weakness, tenderness, malaise, fever, dark urine, nausea and vomiting. The pain may involve specific groups of muscles or may be generalized throughout the body. Most frequently the involved muscle groups are the calves and lower back. In some cases the muscle injury is so severe that patients develop renal failure and other organ failure, which can be fatal. Cases of fatal rhabdomyolysis in association with the use of Baycol have been reported significantly more frequently than for other approved statins. The FDA has received reports of 31 U.S. deaths due to severe rhabdomyolysis associated with the use of Baycol. For more details, contact Liza McPhail or Kandie Gibson by Phone: (888) 551-9944 by E-mail: mcphail@classlawyer.com or visit the firm's Website: www.classlawyer.com CIGNA CORPORATION: Discovery Proceeds In Landmark Illinois Suit --------------------------------------------------------------- Discovery in the class action suit against CIGNA Corporation is underway after a Madison County, Illinois judge certified the case as a nationwide class action early this year. The case, file by doctors Timothy N. Kaiser and Suzann LeBel Corrigan, is the only suit of its kind in the country that has been certified as a nationwide class action. The ruling means that several hundred thousand physicians who had contracts with the Company have a stake in the case's outcome. The suit, Kaiser v. CIGNA, accuses the health plan of bundling and downcoding Current Procedural Technology (CPT) codes. CPT is a medical software program that describes medical or psychiatric procedures performed by physicians and other health providers. The codes were first developed by the Health Care Financing Administration (HCFA) to assist in the assignment of reimbursement amounts to providers by Medicare carriers. Eventually, managed care and other insurance companies based their reimbursements on the values established by HCFA. The suit claims the contracts physicians signed don't address bundling (paying for services performed with one price) or downcoding (paying the doctor for less than what he actually provided). Consequently, the suit claims, the Company has breached their contract. "We have a very simple contract claim: Pay us for what we do," said Dr. Kaiser's attorney, Judy L. Cates. In a statement, CIGNA executives said they did not think the two physicians' suit should have been classified as a class action. They reiterated that the judge's March decision to let the case go forward as a class action didn't mean there was any truth to the physicians' allegations. "We believe we have fully honored our PPO contracts with the physicians and that the underlying legal claims in this suit are without merit," the statement read. "We will oppose those claims vigorously." No trial date has been set in Madison County court, but attorneys are proceeding with discovery. Those involved in the suit hope it will raise physicians' consciousness about several issues when they're dealing with health plans. Dr. Kaiser said he hoped to change the way physicians and health plans interact. "They do not negotiate with small providers," he said. "It's the big boys quashing the little boys, and they're doing it because they can." COX COMMUNICATIONS: Appellate Court Denies CA Class Certification ----------------------------------------------------------------- The Ninth Circuit Court of Appeals refused to allow plaintiffs in the class action suit against Cox Communications to appeal a California federal court's decision denying class certification in the case. Plaintiffs Fred and Roberta Lipschutz, Arthur Simon and John Galley III originally filed the suit in the United States District Court for the Central District of California. The plaintiffs filed the suit on behalf of themselves and persons who have purchased broadband Internet data transmissions services and named as defendants, At Home Corporation, parent company of Cox Communications and Road Runner Corporation. The suit arises from alleged agreements among the defendants, who have required the putative class to purchase both Internet data transmission services and interface/content services from Excite@Home or Road Runner. The complaint asserts claims under Section 1 of the Sherman Antitrust Act, the California Cartwright Act, and California unfair competition law. The plaintiffs later amended the complaint in December 1999 to name additional plaintiffs. On January 29, 2001, the federal court refused to certify the class in the suit but granted plaintiffs leave to amend their motion for certification. The plaintiffs' asked the federal court to reconsider that decision, but the court denied their motion for reconsideration. The plaintiffs promptly filed a motion in the Ninth Circuit Court of Appeals, asking for permission to appeal the federal court order, which the appellate court denied in June 2001. CYBERGUARD CORPORATION: Sued For Securities Act Violations In S.D. FL --------------------------------------------------------------------- Cyberguard Corporation faces a consolidated class action suit filed in the United States District Court for the Southern District of Florida charging them with violating federal securities acts. The suit was filed after the the Company announced in 1998 that due to a review of its revenue recognition practices relating to distributors and resellers, it would restate prior financial results. After the announcement, twenty-five purported class action lawsuits were filed by alleged shareholders on behalf of purchasers of the Company's stock from November 7,1996 to August 24,1998. The suits name as defendants, the Company and: (1) Robert L. Carberry, Chief Executive Officer from June 1996 through August 1998, (2) William D. Murray, Chief Financial Officer from November 1997 through August 1998, (3) Patrick O. Wheeler, the Company's Chief Financial Officer from April 1996 through October 1997, (4) C. Shelton James, the Company's former Audit Committee Chairman, and (5) KPMG Peat Marwick LLP. Pursuant to an order issued by the Court, these actions were consolidated into one action, styled STEPHEN CHENEY, ET AL. V. CYBERGUARD CORPORATION, ET AL., Case No. 98-6879-CIV-Gold. On August 23, 1999, the plaintiffs filed a Consolidated and Amended Class Action Complaint, which alleges that as a result of accounting irregularities relating to the Company's revenue recognition policies, the Company's previously issued financial statements were materially false and misleading. The suit also alleges that the defendants knowingly or recklessly published these financial statements which caused the Company's common stock prices to rise artificially. The action alleges violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and SEC Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act. Subsequently, the defendants, including the Company, filed their respective motions to dismiss the Consolidated and Amended Class Action Complaint. On July 31, 2000, the Court issued a ruling denying the Company's and Robert L. Carberry's motions to dismiss. However, the court granted the motions to dismiss with prejudice for defendants William D. Murray, Patrick O. Wheeler, C. Shelton James, and KPMG Peat Marwick LLP. On August 14, 2000, the plaintiffs filed a motion for reconsideration of that order. On March 20, 2001, the Court denied the plaintiffs' motion for reconsideration that: (i) the previously dismissed defendants William D. Murray, Patrick O. Wheeler and C. Shelton James should not have been dismissed from the action and shall be defendants in this action under the control person liability claims under Section 20(a) of the Exchange Act, and (ii) that the plaintiffs may amend the Consolidated and Amended Class Action Complaint to bring claims against C. Shelton James under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. In April 2001, the plaintiffs filed their Second Consolidated and Amended Class Action Complaint to include amended claims against C. Shelton James and an amended motion for class certification. Both parties are currently conducting class certification and limited merits discovery. Trial is set to begin on June 2, 2003. ESCALON MEDICAL: $500T New York Suit Settlement Approval Pending ---------------------------------------------------------------- Escalon Medical Corporation awaits the approval of a $500,000 settlement agreement of the securities class action pending in the United States District Court for the Southern District of New York The suit was filed on behalf of purchasers of the Company's stock from November 17, 1993, to and including September 21, 1994. The complaint alleges that the Company, together with certain of its officers and directors, David Blech and D. Blech & Co., Inc., issued a false and misleading prospectus in violation of Sections 11, 12 and 15 of the Securities Act of 1933. The complaint also asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and common law. The court denied a motion by Escalon and the named officers and directors to dismiss the complaint and the defendants promptly filed an answer to the complaint denying all allegations of wrongdoing and asserting various affirmative defenses. The Company has continued to deny any wrongdoing but in an effort to curtail its legal expenses related to this litigation, the Company entered into the settlement on its behalf and on the behalf of its former and present officers and directors. The Company's directors and officers insurance carrier has agreed to fund a significant portion of the settlement amount. Both the Company and the insurance carrier have deposited such funds in an escrow account. FLEETWOOD ENTERPRISES: Limited Discovery Sole Motor Home Suit Action -------------------------------------------------------------------- Fleetwood Enterprises, Inc. intends to vigorously oppose the class action suit filed April 1999 in the United States District Court for the Western District of Texas, San Antonio Division. The complaint was filed on behalf of purchasers of the Company's Class A motor homes for the model years 1994-1999 and makes claims with respect to the: (1) alleged breach of express and implied warranties, (2) negligent misrepresentation, (3) fraudulent concealment, and (4) violation of various state statutes in connection with the ability of such motor homes to tow an automobile or other vehicle or cargo. Plaintiffs are requesting an order compelling the Company to provide information on the alleged limitations of the motor homes, compensatory damages, litigation expenses and attorneys' fees. Only limited discovery has been completed in the case. The Company is confident it will prevail in the case, however they stated in a regulatory filing, ".It is not possible at this time to properly assess the risk of an adverse verdict or the magnitude of possible exposure." HANDSPRING INC.: Sued By Stockholders For Securities Violations in NY --------------------------------------------------------------------- Handspring, Inc. faces multiple securities class action suits filed in the United States District Court for the Southern District of New York, alleging federal securities act violations. The action is pending against defendants Handspring, Credit Suisse First Boston Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated. The complaint alleges that defendants violated the federal securities laws by issuing and selling Handspring common stock pursuant to the June 20, 2000 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated Handspring shares to customers at the IPO price. To receive the allocations at the IPO price, the underwriters' brokerage customers allegedly had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Handspring stock rocketed upward was allegedly intended to drive Handspring's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. The Company has not yet responded to the suits. HSM INC.: Prevails As Federal and Appellate Courts Dismiss RICO Suit -------------------------------------------------------------------- The statute of limitations aided the dismissal of a class action suit filed against HSM, Inc. The suit, titled JOHN W. MATHEWS, ET AL. V. KIDDER, PEABODY & CO., ET AL. AND HSM INC., ET AL., was filed on January 23, 1995 in the United States District Court for the Western District of Pennsylvania. The suit was filed on behalf of approximately 6,000 limited partners who invested approximately $85 million in three public real estate limited partnerships during the period beginning in 1982 and continuing through 1986. The defendants include HSM Inc., a wholly owned subsidiary of real estate company, Grubb & Ellis, Co., and several subsidiaries of HSM Inc., along with other parties unrelated to HSM Inc. The complaint alleges violations under the Racketeer Influenced and Corrupt Organizations Act (RICO), securities fraud, breach of fiduciary duty and negligent misrepresentation surrounding the defendants' organization, promotion, sponsorship and management of the real estate limited partnerships. On August 18, 2000, the district court issued an opinion granting defendants' motions for summary judgment dismissing the federal RICO claims as time-barred under the statute of limitations. As to the state law claims for breach of fiduciary duty and negligent misrepresentation, the court declined to exercise supplemental jurisdiction and dismissed them without prejudice. The court declined to rule on defendants' motion to decertify the class because it was moot. Plaintiffs appealed the summary judgment to the Third Circuit Court of Appeals, who later affirmed and upheld the dismissal of the suit. The Plaintiffs' petition for rehearing was denied on August 28, 2001. INTERNET SECURITY: Chitwood Harley Initiates N.D. GA Securities Suit -------------------------------------------------------------------- Atlanta law firm Chitwood & Harley has filed a class action lawsuit against Atlanta-based Internet Security Systems Inc. (Nasdaq: ISSX ) in the United States District Court for the Northern District of Georgia. The suit also names as defendants: (1) Internet Security Systems CEO and President, Thomas E. Noonan, (2) Chief Financial Officer Richard Macchia, and (3) Founder and Chief Technology Officer, Christopher Klaus. The lawsuit alleges violations of federal securities fraud statutes and seeks to recover damages for investors who purchased ISS securities between April 5, 2001 and July 2, 2001. ISS describes itself as a global provider of security management solutions for protecting digital business assets. The complaint alleges that the defendants issued materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the company's securities. For example, on April 18, 2001, ISS reported its 23rd consecutive quarter of growth and said that for the quarter ending June 30, 2001, the company "expects to achieve revenues in the range of $64 million to $67 million and earnings in the range of 15 cents to 16 cents a diluted share" In that same release, defendants reiterated that ISS was comfortable with the low end of its earlier expectations for the fiscal year as a whole, despite a general technology depression. The complaint alleges that in reality, however, defendants had the information to determine that the company could not live up to the expectations created by these statements. As a result of statements like these, the securities markets were misled and, as a result, the price of ISS securities was artificially inflated throughout the said Period. The complaint also alleges that during this period of artificial inflation, company insiders (including defendants Klaus, Noonan, and Macchia) took advantage of their insider status to sell thousands of their own shares of ISS stock at artificially high prices for proceeds of more than $18 million. The complaint further alleges that during this period, the company further took advantage of the artificially inflated share prices by using ISS stock as currency to acquire another company, Network ICE Corp. On July 2, 2001, however, Defendants revealed that rather than achieving revenues of $64 million to $67 million for the second quarter as they had led investors to expect, the company's revenues were actually in the $50 million to $52 million range. Instead of earning 15 cents to 16 cents a share, the company would actually suffer losses of up to 2 cents a share. Ultimately, the company announced losses of 13 cents per share for the quarter. The complaint alleges that as a result of these announcements, ISS stock fell by more than 40 percent in one day, and ISS stock that traded between $40 a share and $60 a share during much of the class period is now worth less than $10 a share. For more information, contact CHITWOOD & HARLEY by Mail: 2900 Promenade II, 1230 Peachtree Street, N.E., Atlanta, Georgia 30309 by Phone: 404/ 873-3900 or 888/ 873-3999 by Fax: 404/876-4476 or by E-mail: mail@classlaw.com NCH CORPORATION: Weiss Yourman Initiates Securities Suit in Delaware -------------------------------------------------------------------- The law firm of Weiss and Yourman commenced a class action lawsuit against NCH Corporation (NYSE:NCH), and certain officers and directors of NCH, in the Court of Chancery of the State of Delaware in and for New Castle County. The suit was filed on behalf of investors who are or will be threatened with injury arising out of a plan by members of the Levy Family to acquire the remaining stock of NCH. The NCH Board of Directors has allegedly received a buy-out proposal from Defendants Irvin and Lester Levy on behalf of certain members of the Levy family who currently own approximately 57% of NCH's stock. Under the proposal, as set forth in a letter of NCH's board of directors, the Levy Family Group would acquire shares of NCH common stock not currently owned by them for $47.50 per share. The price of NCH stock has traded as high as $56.10 per share in June 2001 and has a 52-week high of over $57. The price proposed is particularly unfair in light of the Company's recent and anticipated financial performance. On June 1, 2001, the Company announced income had increased by $5.5 million from the previous year and that income from continuing operations had increased $11 million during the same period. Because the Levy Family Group controls a majority of the Company's common stock, no third party will likely bid for NCH. The Levy Family Group thus will be able to proceed with the Proposal without an auction or other type of market check to maximize value for the public shareholders. The Complaint alleges that the Levy Family Group is intent on paying the lowest possible price to Class members, even though the Levy Family Group is duty-bound to pay the highest fair price to the Company's public shareholders. Thus, the Levy Family Group has a clear and material conflict of interest in the Proposal. For more information, contact David C. Katz and James E. Tullman by Phone: (888) 593-4771 or (212) 682-3025 by E-mail: info@wynyc.com or by Mail: Weiss & Yourman, The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176. NORTHWEST AIRLINES: Brothers Say They'll Sue Over Airline Ordeal ---------------------------------------------------------------- Kareem Alasady, his brother Akram, and a friend say that they were not allowed to board a Northwest Airlines flight from Minneapolis to Salt Lake City recently, because the crew and the passengers refused to fly with them, according to a recent report in the Deseret News. Alasady, back home in Salt Lake City told the Deseret News that he will be contacting an attorney and filing a class-action suit against Northwest Airlines. "There's no doubt about that," he said. Patrick Hogan, public affairs officer for the Metropolitan Airports Commission Police Department, said that no illegal items were found in any of the men's bags, and that the INS confirmed that one brother was a U.S. citizen, the other brother was a student and their traveling companion was a resident alien. Despite that, "Northwest management decided the three individuals would not be allowed to board due to concerns of crew members and passengers, Hogan said. "It was an airline decision." Alasady and his companions were finally taken to Delta Air Lines, where they were put on a flight to Salt Lake City. Alasady told the Deseret News he was so upset he did not know when he could return to work. "I'm in shock," he said. Similar incidents recently occurred; one, in San Antonio, where a man was planning to fly to Pakistan for his brother's wedding on a Delta Airlines flight; and, second, in Orlando, where two Pakistani businessmen were intending tp fly to Baltimore on a U.S. Airlines flight. In both instances, the men were ordered off the planes because their flight crews did not feel safe flying with them. ORAL CONTRACEPTIVES: Women Sue Three Drug Firms Over Pill Risks --------------------------------------------------------------- More than 100 women filed a suit against the makers of the newest oral contraceptives accusing the companies of failing to protect people from harmful side effects. The suit was filed on behalf of the families of five women who have died after taking the medication and 118 others who have suffered disability. The claimants include the families of five teenagers who had died, as well as young women who had been paralyzed and were now confined to wheelchairs. Other women had suffered painful blood clots. The suit names the following pharmaceutical companies, as defendants: (1) Schering AV, a German pharmaceutical firm, (2) Organon, a unit owned by Dutch chemical group Akzo Nobel NV, (3) Wyeth, British arm of American Home Products Corporation. These companies could face millions of dollars in compensation claims. The suit is believed to be the first major class action of its kind against big drug companies and follows the death and disability of some women taking the medication. Claimants allege the third-generation pills produce an increased risk of blood clots. The lawyers expressed confidence that they could establish that the risks associated with the oral contraceptive pills are greater than those of their predecessor pills and that the manufacturers should have carried out research into this and taken steps to protect the public. Friday, the European Medicines Evaluation Agency (EMEA), the European Union drug regulatory body, confirmed an increased risk with third- generation pills, which lawyers in the class-action case said should help their argument. A spokeswoman for Schering said the company does not accept the EMEA conclusion about the increased risk of third-generation pills. The trial is expected to take place in the High Court in London next January. OSI SYSTEMS: Subsidiary Faces Suit Relating To Security Products in LA ---------------------------------------------------------------------- OSI Systems, Inc. subsidiary Rapiscan Security Products intends to vigorously oppose the class action suit pending in the Superior Court of California, County of Los Angeles. Gail Marie Harrington-Wisely and Joyce Garland filed the suit in March 2000. The plaintiffs are wives of men incarcerated in California prisons. The suit alleges that while attempting to visit their husbands in prison, as a condition to such visits, prison personnel have subjected them, and other members of the putative class, to scans by the Company's Secure 1000 (a concealed weapon detection system), strip searches, and body cavity searches. The plaintiffs allege those searches are illegal and have caused emotional injuries. The other defendants in the action include the State of California, the California Department of Corrections, its Director and other Department of Corrections personnel. The suit further asserts that: (1) the Company is somehow responsible for illegal searches conducted by prison personnel, with respect to Rapiscan Security Products, (2) the Company was negligent because it knew or should have known that the Secure 1000 would be used by prison personnel to conduct illegal searches of prison visitors, that the Secure 1000 is defective in design and manufacture because of alleged inconsistent and false-positive results, (3) that the Company has failed to properly train the prison personnel using the Secure 1000 as to how to interpret the scans, and (4) that the Company has failed to warn subjects that they might be subjected to illegal searches using the Secure 1000 and that the scans are more intrusive than frisk searches. The Company has denied the allegations in the suit. ST. JOSEPH: State Court Applies Federal Pre-Emption, Dismisses Suit ------------------------------------------------------------------- St. Joseph Healthcare was successful recently in winning dismissal of a class-action lawsuit filed by senior citizens who said they had been subjected to bait-and-switch tactics on its Medicare-Plus plan, according to a recent Albuquerque Journal report. State District Judge Susan Conway based her ruling on a legal principle that provides for federal supremacy when there are conflicts between state and federal jurisdiction. St. Joseph attorneys have been arguing for the relevance of the doctrine of federal pre-emption since the lawsuit was filed in April by the Senior Citizen Law Center in Albuquerque, New Mexico. But the doctrine received a new level of scrutiny when the defendants asked for summary judgment. Charles Pharris, St. Joseph's attorney, pointed out in court that the seniors' claims, based on alleged breaches of New Mexico's Unfair Practices Act and on breach of contract, were, in turn, based on a single letter mailed the day after Christmas last year. That letter, which said that St. Joseph was reversing its previously announced decision to get out of the Medicare-plus market because of last-minute congressional action increasing payments to HMOs for Medicare patients, was actually drafted by federal officials at the Health Care Finance Administration in Washington, D.C. Even when St. Joseph officials pointed out that the letter contained potentially misleading language, HCFA signed off on it. The defense was arguing, essentially, that a state court could not second-guess a federal agency -- the doctrine of federal supremacy, or pre-emption. Plaintiffs' lawyers, however, argued that the letter, which failed to tell potential clients that benefits would be radically altered or even eliminated within a couple of months, was not St. Joseph's only allegedly misleading act. Michael Parks of the Senior Citizens Law Office said he was surprised by the ruling, in part because of Judge Conway's earlier rulings rejecting the pre-emption defense and certifying the lawsuit for class- action status, which resulted in including in the lawsuit all the people who had received the December 26th letter, a total of nearly 5,000 people in four counties. The ruling really leaves people affected by St. Joseph's false and misleading promises without any remedy," said Parks. Janice Torrez, president of St. Joseph's Medicare Plus, said she was pleased with the decision. "We really want to get focused on our mission, which is serving the seniors in our community," she said after the hearing. THIMEROSAL LITIGATION: Link To Disorders In Children Undetermined ----------------------------------------------------------------- The National Academy of Sciences revealed that scientists are still unable to determine if there is a link between thimerosal, a mercury- containing preservative used in some vaccines, and disorders in children. More than 35 law firms have formed a coalition to try to force the pharmaceutical industry to pay for studies to determine whether trace amounts of mercury in vaccines caused autism and learning disabilities in young children. The coalition, led by an Oregon firm, is combining individual complaints filed since last May to create a national class- action lawsuit. Thimerosal has been removed from most vaccines and the academy said that, despite the lack of proof that it is a hazard, prudence dictates that steps be taken to further reduce its use. While thimerosal contains a different form of mercury than the one that has been implicated in nervous disorders, critics have complained that it also may pose a hazard. Thimerosal was used for many years to prevent bacterial contamination of vaccines. Currently, however, few vaccines given to children in the United States contain the product. It was never used in vaccines against measles, mumps, rubella, chicken pox and polio. However, until recently, some other vaccines on the recommended childhood immunization list used it. The institute said it conducted an extensive analysis of studies assessing whether thimerosal was associated with disorders and found them to be inconclusive. No evidence was found that would prove a link between thimerosal-containing vaccines and autism, attention deficit- hyperactivity disorder, speech or language delays or other neurodevelopmental disorders. However, it said that as a precaution, the government should consider changing policies to reduce exposure to thimerosal as much as possible. TOBACCO LITIGATION: Former Surgeon General Testifies in WV Suit --------------------------------------------------------------- Dr. Julius Richmond, the nation's top public health official under President Carter from 1977 to 1981, testified in a class-action lawsuit filed by some 250,000 healthy West Virginia smokers against four tobacco companies, Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard. The smokers, who have smoked a pack of cigarettes a day for at least five years without becoming sick, want an unprecedented medical monitoring program to detect lung diseases. The former U.S. surgeon general said that medical monitoring for smokers is "reasonable" because lung cancer, emphysema and other diseases take time to develop. Richmond said that in 1954, tobacco companies issued a statement that ran in newspapers nationwide, pledging to help safeguard public health. Instead, Richmond said, they withheld information about additives in cigarettes and held a pre-emptive news conference the day before he released his 1979 surgeon general's report, which focused in part on smoking and lung cancer. The industry called the focus on smoking potentially ``dangerous and unfounded'' at the news conference, suggesting it diverted attention from other possible causes of lung cancer, such as air pollution. ``We were in the midst of the largest man-made epidemic in history, and that is lung cancer,'' Richmond testified. The industry contends there is no benefit to medical monitoring, and the best solution for smokers concerned about their future health is to quit. WEST VIRGINIA: Officials Consider Suit Challenging Redistricting Plan --------------------------------------------------------------------- Berkeley County's State Senator John R. Unger II and other elected officials are thinking of filing a class action suit to challenge the West Virginia Senate's new redistricting plan. Since its passage in a special legislative session in Charleston last week, Unger and other elected officials have said will leave fast-growing Berkeley and Jefferson counties underrepresented in the senate from 2002, and increasingly so until 2010. "We have a team of lawyers looking at this," Unger told the Berkeley County Commission at its regular meeting Thursday. "We want to move forward to challenge it in the courts." Unger urged the County Commission to join the fight, and the commission responded with strong language and a resolution to send a letter to Gov. Bob Wise and senate leaders to express their "outrage" at the redistricting plan. Unger charged that the plan was drawn up without adequate public input, and primarily to benefit the political base in Charleston and other areas of southern West Virginia, where populations are shrinking. At issue are two aspects of the redistricting plan: (1) The Senate went beyond a federally mandated limit that districts must not vary by more than 10 percent in population size from smallest to largest. The Senate made the new 16th District, which would include two-thirds of Berkeley County and all of Jefferson County, almost 5 percent larger in population size than the "ideal," or average district size, while making Kanawha County's district almost 6 percent smaller than the ideal. (2) The Senate violated federal guidelines that it create "compact" districts by moving a third of Berkeley County and all of Morgan County from the 16th District, where they are now, to the 15th District, which stretches more than half the length of West Virginia's eastern boundary to the edge of Greenbrier County. Berkeley and Jefferson counties have been growing by almost 2,300 residents a year for the past decade, Unger said. He and fellow Sen. Herb Snyder of Jefferson County argued in the Senate first for a less- populated district than average, due to the potential for continued heavy growth over the next decade. Rebuffed, they held out for an average-sized district, Unger said. What they got was a district that was 2,500 residents larger than the average size, growing by more than 2,000 residents a year. "It's going to get worse as time goes by," Unger said. ********* 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., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2001. 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. 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