/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/030321.mbx C L A S S A C T I O N R E P O R T E R Friday, March 21, 2003, Vol. 5, No. 56 Headlines ACCELR8 TECHNOLOGY: CO Court Preliminarily Approves Lawsuit Settlement ALLERGAN INC.: Dismissed As Defendant in RICO Violations Lawsuit in MA ANADARKO PETROLEUM: New Petition Filed Over Certification in Texas Suit ARIAD PHARMACEUTICALS: NY Court Approves Securities Lawsuit Settlement BEHR PROCESS: WA State Judge Approves Settlement For Wood Sealant Suit CALIFORNIA PIZZA: Workers File Suit Over Meal Breaks, Wages in CA Court CH ROBINSON: Denies Allegations in Female Employees Overtime Wage Suit CH ROBINSON: Denies Allegations in FLSA Violations Lawsuit in MN Court CORVAS INTERNATIONAL: Faces AVF Lawsuit Opposing Dendreon Merger in DE FIREPOND INC.: NY Court Refuses To Dismiss Consolidated Securities Suit FREEMARKETS INC.: PA Court Refuses To Dismiss Securities Fraud Lawsuit FREEMARKETS INC.: NY Court Refuses To Dismiss Securities Fraud Lawsuit KAPLAN INC.: Lecturers Commence Overtime Wage, Business Practices Suit LONE STAR: CalPERS Launches Second Amended Securities Suit In CA Court MERRILL LYNCH: NY Court Refuses to Dismiss Securities Fraud Lawsuits MERRILL LYNCH: To Ask NY Court To Dismiss 170 Securities Fraud Lawsuits MERRILL LYNCH: NY Court Refuses To Dismiss Enron Securities Fraud Suits MERRILL LYNCH: To Ask NY Court To Dismiss IPO Fee Antitrust Lawsuits MERRILL LYNCH: To Ask Court For Dismissal From Global Securities Suit NAVISITE INC.: NY Court Refuses To Dismiss Consolidated Securities Suit OPTICAL CABLE: Securities Settlement Deemed Final After No Appeal Filed PRG SCHULTZ: GA Court Grants Certification To Securities Fraud Lawsuit REHABCARE GROUP: Asks MO Court To Dismiss Consolidated Securities Suit STERLING TRUST: CA Court Denies Motion To Compel Arbitration in Lawsuit STRATOS LIGHTWAVE: Faces CA Stockholder Suit Over Tsunami Acquisition VALICERT INC.: NY Court Dismisses In Part Consolidated Securities Suit Asbestos Alert ASBESTOS LITIGATION: Outlook Brightens for Bill on Asbestos Litigation ASBESTOS LITIGATION: Lawyer's Fee in ABB Ltd. Litigation Under Scrutiny ASBESTOS LITIGATION: Argonaut Group Inc. Posts Wide Loss, Reorganizes ASBESTOS LITIGATION: AWI Notes $2.5B Asbestos Charge, Proposes Payout ASBESTOS LITIGATION: Congoleum Corporation To Resolve Asbestos Claims ASBESTOS LITIGATION: Federal Mogul Plant Gets `All-Clear' on Asbestos ASBESTOS LITIGATION: Gencor Settles Asbestos Claims, Completes Spin-off ASBESTOS LITIGATION: Gencor Settles Asbestos Claims, Completes Spin-off ASBESTOS LITIGATION: NY Court Rules in Genlyte's Favor in Asbestos Suit ASBESTOS LITIGATION: Halliburton Files Affidavit on Asbestos Settlement ASBESTOS LITIGATION: Hartford May Face Asbestos, Acquisition Cost Hit ASBESTOS LITIGATION: WR Grace Reports $973.2 Million Asbestos Liability ASBESTOS LITIGATION: Wolseley Plays Down Concerns Over Asbestos Suits ASBESTOS ALERT: Ethyl Corp. Bills Albemarle for Asbestos Liability ASBESTOS ALERT: Florida-Based Jim Walter Homes Updates Corporate Image ASBESTOS ALERT: Moen Battles 110 Asbestos-Related Personal Injury Suits New Securities Fraud Cases BAYER AG: Milberg Weiss Commences Securities Fraud Lawsuit in S.D. NY BLOCKBUSTER INC.: Bernstein Liebhard Lodges Securities Suit in N.D. TX SOLECTRON CORPORATION: Wolf Haldenstein Launches Securities Suit in CA VAXGEN INC.: Charles Piven Commences Securities Fraud Suit in N.D. CA WORLDCOM INC.: Cauley Geller Commences Securities Fraud Suit in S.D. NY ********* ACCELR8 TECHNOLOGY: CO Court Preliminarily Approves Lawsuit Settlement ---------------------------------------------------------------------- The United States District Court for the District of Colorado granted preliminary approval to a settlement proposed by Accelr8 Technology Corporation to settle a consolidated securities class action against the Company and: (1) Thomas V. Geimer, (2) Harry J. Fleury, and (3) James Godkin The consolidated suit alleges violations of Section 10(b) of the Exchange, and Rule 10b-5 thereunder, relating to the Company's accounting and public disclosure from October 1997 to November 1999. The defendants have answered the suit, in which they denied liability and raised affirmative defenses. In January 2001, the court granted the plaintiff's motion for class certification. The parties to the consolidated suit then reached an agreement in principle to settle the suit against all parties. Under the contemplated settlement, the Company will contribute to a Settlement Fund $450,000 and 375,000 chares of common stock in the Company. The Settlement Fund will be distributed in a manner over which the Company has no control. On February 28, 2003, the court issued a Preliminary Order Approving Settlement and Attached Documents, and scheduled a settlement fairness hearing for May 20, 2003. Under the terms of the agreement, on March 4, 2003 the Company deposited $450,000 into an escrow account pending final approval of the settlement. In the event that final approval of the settlement is not given, the escrowed funds will be returned, less expenses incurred for the cost of notification to class members. Although management believes that it is probable that the settlement agreement will receive final court approval, there can be no assurance that court approval will occur. In the event that the settlement is not completed, the litigation will continue. While management believes it has substantial defenses to the suit, there is no assurance that the resolution of the suit will not have a material adverse effect on the Company. ALLERGAN INC.: Dismissed As Defendant in RICO Violations Lawsuit in MA ---------------------------------------------------------------------- The United States District Court for the District of Massachusetts finally dismissed a consolidated class action filed against Allergan, Inc. and other pharmaceutical companies alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). The first suit was filed in Massachusetts federal court December 2001, entitled "Citizens for Consumer Justice, et al. v. Abbott Laboratories, Inc., Allergan, Inc., et al." The lawsuit contended that the Company and 22 other pharmaceutical companies violated RICO by: (1) promulgating average wholesale prices that bear no relation to actual wholesale prices, (2) abusing Congressional authority to formulate and publish legitimate and accurate average wholesale prices, (3) creating artificial and inflated average wholesale prices for publication in resources used by carriers and clinicians to determine Medicare reimbursement allowances and (4) encouraging clinicians to administer drugs with the highest average wholesale prices In April 2002, a class action entitled "Teamsters Health Welfare Fund of Philadelphia and Vicinity v. Abbott Laboratories, Inc., Allergan, Inc., et al." was filed in the United States District Court for the District of Pennsylvania. The lawsuit contended that ten pharmaceutical companies, including the Company, violated RICO by: (i) implementing fraudulent marketing and sales schemes to substantially increase and/or maintain the sales of their pharmaceutical products, which are administered directly by doctors and other medical providers, and (ii) deliberately overstating the products' average wholesale prices The case was subsequently consolidated with the first suit. A stipulation of voluntary dismissal without prejudice as to the Company was filed on October 28, 2002 and the court issued an order of dismissal soon after. ANADARKO PETROLEUM: New Petition Filed Over Certification in Texas Suit ----------------------------------------------------------------------- Plaintiffs in the class action against Anadarko Petroleum Corporation filed a new petition in the 21st Judicial District Court of Washington County, Texas on behalf of Anadarko Holding's gas royalty owners in Texas. The suit was granted class action certification in December 1999 in connection with a gas royalty underpayment case against the Company. This certification did not constitute a review by the court of the merits of the claims being asserted. The royalty owners' pleadings did not specify the damages being claimed, although most recently a demand for damages in the amount of $100 million was asserted. The Company appealed the class certification order. A favorable decision from the Houston Court of Appeals decertified the class. The royalty owners did not appeal this matter to the Texas Supreme Court and the decision from the Houston Court of Appeals became final in the second quarter of 2002. The royalty owners recently filed a new petition alleging that the class may properly be brought so long as "sub-class" groups are broken out. ARIAD PHARMACEUTICALS: NY Court Approves Securities Lawsuit Settlement ---------------------------------------------------------------------- The United States District Court for the Southern District of New York granted final approval to a settlement proposed by Ariad Pharmaceuticals, Inc. to settle a class action commenced in June 1995. The suit names as defendants the Company and: (1) the underwriter of its initial public offering and a market maker in the Company's stock, D. Blech & Co., (2) the managing director and sole shareholder of D. Blech & Co. and one of our former directors, David Blech; (3) certain other of its directors, and (4) the qualified independent underwriter for the initial public offering, Shoenberg Hieber, Inc. (SHI). Counsel for the plaintiff class, counsel for the named director defendants of the Company (excluding David Blech), or the Company Defendants, and the Company, and counsel for SHI have executed a stipulation of settlement in the action. The final order and judgment orders that a payment of $620,000 (of which the Company's contribution was not material and no liability was recorded on the 2002 balance sheet) be distributed to the plaintiffs from a legal escrow account. It also states that this action and a related action entitled In re: Blech Securities Litigation, 94 Civ. 7696 (RWS) are dismissed with prejudice, and that non-settling parties are barred from pursuing contribution- type claims against the Company defendants. BEHR PROCESS: WA State Judge Approves Settlement For Wood Sealant Suit ---------------------------------------------------------------------- A Superior Court judge in Grays Harbor County, Washington, approved a $55 million settlement in a class action, filed against Behr Process Corporation, located in Santa Ana, California, the Associated Press Newswires reports. The plaintiffs alleged that the wood sealants, manufactured by the company, allowed the entry of water, resulting in mildew damage to their decks and homes. The settlement covers customers in Western Washington who bought Super Liquid Rawhide or Natural Seal Plus wood sealants after May 1992. As many as 5,000 customers in 19 counties may be eligible, said Michael Withey, the attorney representing the plaintiffs. The attorney for Behr Process did not immediately return recent calls for comment, AP Newswires reports. CALIFORNIA PIZZA: Workers File Suit Over Meal Breaks, Wages in CA Court ----------------------------------------------------------------------- California Pizza Kitchen, Inc. faces a class action filed by one of its former servers in Orange County Superior Court in California, alleging that the Company failed to give its food servers, bussers, runners and bartenders rest and meal breaks as required by California law. Under the California Labor Code, an employer must pay each employee one additional hour of pay at the employee's regular rate of compensation for each work day that the required meal or rest period is not provided. The plaintiff also alleges that additional penalties are owed as a consequence of the Company's resulting failure to pay all wages due at the time of termination of employment and under theories characterizing these alleged breaches as unfair business practices. If the plaintiff is able to achieve class certification and prevails on the merits of the case, the Company could potentially be liable for significant amounts. The Company is still investigating the claims and have not yet responded to the complaint. No discovery has taken place and no date has been set for a hearing on class certification or for trial. The Company believes that all of its employees were provided with the opportunity to take all required meal and rest breaks. CH ROBINSON: Denies Allegations in Female Employees Overtime Wage Suit ---------------------------------------------------------------------- CH Robinson Worldwide, Inc. faces a class action filed in the United States District Court for the District of Minnesota by a number of the Company's present and former female employees. The lawsuit alleges a hostile working environment, unequal pay, promotions and opportunities for women and failure to pay overtime. The plaintiffs seek unspecified monetary and non-monetary damages and class action certification. The Company denies all allegations and is vigorously defending the suit. Currently, the amount of any possible loss to the Company cannot be estimated; however, an unfavorable result could have a material adverse effect. CH ROBINSON: Denies Allegations in FLSA Violations Lawsuit in MN Court ---------------------------------------------------------------------- CH Robinson Worldwide, Inc. faces a class action filed in the United States District Court for the District of Minnesota by a number of its former employees, alleging systematic failure by the Company to pay for overtime hours worked by its male employees under the federal Fair Labor Standards Act (FLSA). The suit seeks payment of the overtime wages earned, as well as double damages and other relief, on behalf of the plaintiffs and potential collective members who join in the lawsuit. The Company denies all allegations and are vigorously defending the suit. Currently, the amount of any possible loss to the Company cannot be estimated; however, an unfavorable result could have a material adverse effect. CORVAS INTERNATIONAL: Faces AVF Lawsuit Opposing Dendreon Merger in DE ---------------------------------------------------------------------- Corvas International, Inc. and its directors face a class action filed in March 2003 by the Asset Value Fund Limited Partnership (AVF) in Delaware State Court alleging that the Company's Board of Directors violated their fiduciary duties to shareholders when they approved the proposed merger of the Company and Dendreon Corporation. Specifically, the complaint alleges that: (1) the directors failed to consider all available information when deciding to pursue the merger; (2) the directors failed to negotiate a mechanism to protect shareholders from the effects of a decline in Dendreon's stock price before the merger; and (3) a minority of the directors were furthering their own interests in approving the merger instead of the interests of shareholders. AVF seeks to enjoin the Company from proceeding with the merger, and also seeks compensatory damages and reimbursement of the costs of bringing suit. Neither the Company nor any of its directors has yet been served with the complaint. FIREPOND INC.: NY Court Refuses To Dismiss Consolidated Securities Suit ----------------------------------------------------------------------- The United States District Court for the Southern District of New York refused to dismiss the consolidated securities class action filed on behalf of an alleged class of persons who purchased shares of Firepond, Inc.'s common stock between the date of its initial public offering and December 6, 2000. The complaints name as defendants the Company, certain of its directors and officers, FleetBoston Robertson Stephens, and other parties as underwriters of the Company's initial public offering. The suit alleges, among other things, that the Company's prospectus, incorporated in the Registration Statement on Form S-1 filed with the Securities and Exchange Commission, was materially false and misleading because it failed to disclose that the investment banks which underwrote the Company's initial public offering of securities received undisclosed and excessive brokerage commissions, and required investors to agree to buy shares of the Company's securities after the initial public offering was completed, at predetermined prices, as a precondition to obtaining initial public offering allocations. The plaintiffs further allege that these actions artificially inflated the price of the Company's common stock after the initial public offering. The action against the Company is being coordinated with over three hundred other nearly identical actions filed against other companies. A motion to dismiss addressing issues common to the companies and individuals who have been sued in these actions was filed in July 2002. In October 2002, the court dismissed the individual defendants from the case without prejudice based upon stipulations of dismissal filed by the plaintiffs and the individual defendants. After a hearing on the motion to dismiss, the court, on February 19, 2003, denied dismissal of the claims against the companies and individuals, including the Company Defendants. While the Company believes the claims against it are without merit, the litigation is in the preliminary stage and the Company cannot predict the outcome with certainty. The Company may incur substantial legal fees and expenses, and the litigation may divert the attention of some of the Company's key management. The Company's defense of this litigation, regardless of its outcome, may be costly and time-consuming. Should the outcome of the litigation be adverse to the Company, it could be required to pay significant monetary damages to the plaintiff, which could harm the business. FREEMARKETS INC.: PA Court Refuses To Dismiss Securities Fraud Lawsuit ---------------------------------------------------------------------- The United States District Court in Pittsburgh, Pennsylvania refused to dismiss the consolidated securities class action filed against FreeMarkets, Inc. and two executive officers. The suit stems from the Company's announcement on April 23, 2001 that, as a result of discussions with the Securities and Exchange Commission (SEC), it was considering amending its 2000 financial statements for the purpose of reclassifying fees the Company earned under a service contract with Visteon. In October 2001, the Company filed a motion to dismiss all of the cases in their entirety. On January 17, 2003, the court denied the motion to dismiss. On March 3, 2003, the Company filed an answer to the complaint in which all of the claims asserted by the plaintiffs were contested. The case is currently in the class certification phase. In addition, on September 24, 2001, an individual claiming to be a FreeMarkets stockholder filed a stockholder's derivative action, nominally on behalf of the Company, against all of the Company's directors and certain of our executive officers. The Company is also named as a nominal defendant. The suit is based on the same facts alleged in the foregoing securities fraud class actions and was stayed pending a ruling on our motion to dismiss those class actions. The parties have agreed to a continuance of the stay until April 15, 2003. The Company believes that the plaintiffs' allegations are without merit. FREEMARKETS INC.: NY Court Refuses To Dismiss Securities Fraud Lawsuit ---------------------------------------------------------------------- The United States District Court for the Southern District of New York refused to dismiss the consolidated securities class action filed against FreeMarkets, Inc., certain of its officers and the underwriters of its initial public offering (IPO). The suit alleges violations of the securities laws in connection with the Company's December 1999 IPO. The suit further alleges that the prospectus used in the Company's IPO contained material misstatements or omissions regarding the underwriters' allocation practices and compensation in connection with the IPO, and also alleges that the underwriters manipulated the aftermarket for the Company's stock. Damages in an unspecified amount are sought, together with interest, costs and attorney's fees. In addition, the suit has been consolidated for pretrial purposes with approximately 1,000 other lawsuits filed against other issuers, their officers, and underwriters of their initial public offerings. All defendants filed a motion to dismiss the consolidated suit. By stipulation and order dated October 9, 2002, the individual defendants were dismissed without prejudice from the consolidated suit. On February 19, 2003, the court denied the Company's motion to dismiss. The Company believes that the claims asserted against it are without merit. KAPLAN INC.: Lecturers Commence Overtime Wage, Business Practices Suit ---------------------------------------------------------------------- Kaplan, Inc., a wholly owned subsidiary of the Washington Post Company, faces a class action filed in the Superior Court of the State of California, County of Alameda, brought by individuals who were engaged as Kaplan lecturers, teachers and tutors in California since December 20, 1998. The suit alleges breaches of implied contracts as well as violations of the California wage and hour laws and the California Business and Professions Code prohibitions against unfair competition by means of unlawful, unfair or fraudulent business practices or acts. The case arose out of claims that the Company failed to pay its instructors for time spent preparing for lectures, classes and tutoring sessions, time spent after class answering students' questions, and time spent traveling to and from different teaching locations. The suit seeks unspecified damages (which may in certain instances include penalties). While it is not possible to predict the outcome of this lawsuit, in the opinion of management its ultimate disposition should not have a material adverse effect on the financial position, liquidity or results of operations of the Company. LONE STAR: CalPERS Launches Second Amended Securities Suit In CA Court ---------------------------------------------------------------------- The California Public Employees Retirement System (CalPERS) filed an amended class action in California State Court against Lone Star Steakhouse & Saloon, Inc. Initially, CalPERS filed a shareholder derivative action in October 2001 against certain of the Company's present and former directors alleging breach of fiduciary duties by certain present and former directors and that certain of such defendants were unjustly enriched through related party transactions and by the re-pricing of stock options previously issued. The lawsuit also seeks to prevent enforcement of certain change of control agreements granted to executive officers of the Company, seeks declaratory and injunctive relief and seeks damages to be paid to the Company. The Company is a nominal defendant. The Company has indemnified present and former directors with respect to the shareholders derivative action filed by CalPERS by contractual agreement, as well as by the Articles of Incorporation of the Company as provided in accordance with the Delaware General Corporation Law. On January 9, 2002, CalPERS filed an amended complaint and added a class action claim to attempt to certify a class action based on their allegation that a provision in the change of control agreements violates Delaware law. A motion to dismiss was filed by all defendants on February 8, 2002, asking to dismiss all claims of CalPERS. Discovery was stayed pending a court decision on the motion to dismiss. The Vice Chancellor issued his decision on December 18, 2002 dismissing numerous counts and also substantially reduced the scope of two other claims, both involving the re-pricing of stock options. Two of the counts sustained by the court involve challenges to change of control agreements which have now expired. On January 17, 2003, the Vice Chancellor agreed to permit the plaintiff to proceed with its discovery to obtain certain documents from certain third parties and the named defendants, and ordered the plaintiff to timely file its motion to amend its complaint. On March 6, 2003, CalPERS filed a second amended complaint, which contains several new allegations pertaining to various events subsequent to the date the original complaint was filed. The plaintiffs did not make any new claims or add any new parties. The Company is involved from time to time in litigation arising in the ordinary course of business as well as the matter set forth above. The Company believes the outcome of such matters will not have a material adverse effect on its consolidated financial position or results of operations. MERRILL LYNCH: NY Court Refuses to Dismiss Securities Fraud Lawsuits -------------------------------------------------------------------- The United States District Court for the Southern District of New York refused to dismiss Merrill Lynch & Co., Inc. and other underwriting firms as defendants in hundreds of consolidated securities class actions, involving the allocations of stocks in hundreds of initial public offerings. The suits named over a thousand defendants. The consolidated complaints allege that investment firms, including the Company, violated securities laws by allegedly requiring or inducing customers who were allocated IPO securities to pay back some of their profits in the form of higher commissions and/or to buy the IPO securities in the aftermarket. The complaints also allege that research issued by the financial services firms, including the Company, improperly increased the prices of the IPO securities in the aftermarket. The complaints seek unspecified damages and other relief. Approximately 108 of the more than 300 amended consolidated complaints name the Company as one of the defendants, which is based on its involvement as one of the underwriters for the issuers named in each of those complaints. A similar action is pending which alleges violations of the antitrust laws. The underwriter defendants, including the Company, filed motions to dismiss. In February 2003, the motion to dismiss the consolidated securities suits was denied. The motion to dismiss the antitrust action is pending. MERRILL LYNCH: To Ask NY Court To Dismiss 170 Securities Fraud Lawsuits ----------------------------------------------------------------------- Merrill Lynch & Co., Inc. intends to file a motion to dismiss approximately 170 class actions filed in the United States District Court for the Southern District of New York since April 2002. The suits also name various Merrill Lynch-related entities, including: (1) ML & Co., (2) Merrill Lynch, Pierce, Fenner & Smith Incorporated, (3) Merrill Lynch Canada Inc., (4) FAM Distributors, Inc., (5) Fund Asset Management, L.P., (6) Merrill Lynch B2B Internet HOLDRS Trust, (7) Merrill Lynch Internet Infrastructure HOLDRS Trust, (8) Merrill Lynch Internet Architecture HOLDRS Trust, (9) Merrill Lynch Internet Strategies Fund Inc., (10) Merrill Lynch Global Technology Fund, Inc. and (11) Merrill Lynch Focus Twenty Fund Inc., The suits challenge the independence and objectivity of Merrill Lynch's research recommendations and related disclosures. The complaints seek unspecified damages and other relief. Many of these class actions make virtually identical allegations, and the Company expects that they will eventually be consolidated into approximately 30 separate actions. MERRILL LYNCH: NY Court Refuses To Dismiss Enron Securities Fraud Suits ----------------------------------------------------------------------- The United States District Court for the Southern District of New York denied the motions to dismiss filed by defendants, including Merrill Lynch & Co., Inc., in two class actions related to the collapse of Enron Corporation, which filed for protection under US bankruptcy laws in December 2001. The cases are pending in the United States District Court for the Southern District of Texas, and each case names more than seventy defendants. One of the cases is brought on behalf of investors who purchased Enron debt or equity securities on or after October 1, 1998. The other is brought on behalf of 24,000 Enron employees who were participants in the Enron Corporation Savings Plan, the Enron Corporation Employee Stock Ownership Plan or the Cash Balance Plan, or who received :phantom stock" as compensation. The Company underwrote securities for Enron, served as private placement agent for an Enron-related partnership known as LJM2, issued research related to Enron and engaged in other transactions involving Enron. Plaintiffs allege that as a result of these and other activities related to Enron, the Company engaged in securities fraud and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). Merrill Lynch, along with other defendants, has filed motions to dismiss these actions. However, the court denied most of the motions to dismiss, including the motion filed by Merrill Lynch, in the investor action. The motion to dismiss the employee action is pending. MERRILL LYNCH: To Ask NY Court To Dismiss IPO Fee Antitrust Lawsuits -------------------------------------------------------------------- Merrill Lynch & Co., Inc. intends to file a new motion to dismiss the securities class actions pending in the United States District Court for the Southern District of New York, against it and approximately two-dozen underwriter defendants. The suit alleges that underwriters conspired to fix the "fee" paid to purchase initial public offering securities at 7% in violation of antitrust laws. In February 2001, the court dismissed the action brought by the investor plaintiffs, but not the action brought by issuer plaintiffs. In December 2002, the Second Circuit Court of Appeals reversed the dismissal of the action brought by the investor plaintiffs and remanded for further proceedings. The firm plans to file a new motion to dismiss the action. An earlier investigation by the Department of Justice into related practices was closed without action. MERRILL LYNCH: To Ask Court For Dismissal From Global Securities Suit --------------------------------------------------------------------- Merrill Lynch & Co., Inc. intends to ask the United States District Court for the Southern District of New York to dismiss it as a defendant in the purported class action captioned "In re Global Crossing, Ltd. Securities Litigation." The complaint alleges that the defendants, including Merrill Lynch, violated the federal securities laws in connection with the purchase and sale of securities of Global Crossing between February 1, 1999 and January 28, 2002. Global Crossing is in bankruptcy. The Company intends to file a motion to dismiss or an answer denying the allegations in the complaint. NAVISITE INC.: NY Court Refuses To Dismiss Consolidated Securities Suit ----------------------------------------------------------------------- The United States District Court for the Southern District Court of New York refused to dismiss the consolidated securities class action pending against Navisite, Inc. and: (1) Joel B. Rosen, (2) Kenneth W. Hale, (3) BancBoston Robertson Stephens, Inc. The complaint charges defendants with violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The defendants allegedly issued a registration statement and prospectus that contained material misrepresentations and/or omissions in connection with the Company's initial public offering of 5,500,000 shares of common stock at $14.00 per share, an earlier Class Action Reporter story states. The complaint further alleges that the prospectus was false and misleading because it failed to disclose, among other things, that: (i) the underwriter had solicited and received excessive and undisclosed commissions from certain investors in exchange for which they allocated to those investors material portions of the restricted number of shares issued in connection with the IPO; and (ii) the underwriter had entered into agreements with customers whereby they agreed to allocate Company shares to those customers in the IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. OPTICAL CABLE: Securities Settlement Deemed Final After No Appeal Filed ----------------------------------------------------------------------- The settlement proposed by Optical Cable Corporation to settle the consolidated securities class action pending against it is deemed final after no oppositions to it were filed in the United States District Court for the Western District of Virginia. The suit also names as defendants: (1) former Chairman, President and Chief Executive Officer Robert Kopstein, (2) Luke J. Huybrechts, (3) Kenneth W. Harber, and (4) various John Does The plaintiffs purported to represent purchasers of our common stock during the period ranging from June 14, 2000, through September 26, 2001 (the class period), and alleged that the defendants violated Sections 10(b) and 20 of the federal Securities Exchange Act of 1934 in making certain alleged misrepresentations and/or omitting to disclose material facts. The plaintiffs in the consolidated suit sought compensatory damages in an unspecified amount, as well as reasonable costs and expenses incurred in the cause of action, including attorneys' fees and expert fees. In June 2002, the Company issued a press release announcing it reached a tentative agreement to resolve the suit. The settlement provided for a cash payment of $700,000 and the issuance of warrants to purchase 250,000 shares (adjusted for the 1-for-8 reverse stock split approved on July 30, 2002) of the Company's common stock at an exercise price per share of $4.88 (adjusted for the 1-for-8 reverse stock split). In July 2002, the court entered an order of preliminary approval of the proposed settlement. On September 23, 2002, the court entered an order and final Judgment, approving the settlement and dismissing the consolidated suit with prejudice. The order and final judgment was subject to appeal for 30 days after being entered. Since no appeal was filed, the settlement became final and binding. PRG SCHULTZ: GA Court Grants Certification To Securities Fraud Lawsuit ---------------------------------------------------------------------- The United States District Court for the Northern District of Georgia granted class certification to a consolidated securities suit filed against PRG Schultz International, Inc. and certain of its present and former officers, namely: (1) John M. Cook, (2) Scott L. Colabuono, former Chief Financial Officer, and (3) Michael A. Lustig, former Chief Operating Officer The suit alleges the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by allegedly disseminating false and misleading information about a change in the Company's method of recognizing revenue and in connection with revenue reported for a division. Plaintiffs purport to bring this action on behalf of a class of persons who purchased the Company's stock between July 19, 1999 and July 26, 2000. Plaintiffs seek an unspecified amount of compensatory damages, payment of litigation fees and expenses, and equitable and/or injunctive relief. On January 24, 2001, defendants filed a motion to dismiss the complaint for failure to state a claim under the Private Securities Litigation Reform Act, 15 U.S.C. 167 78u-4, et seq. The court denied the motion on June 5, 2001. Defendants served their answer to the suit in June 2001. Discovery is currently ongoing. The Company believes the alleged claims in this lawsuit are without merit, but is unable to predict the outcome of this litigation. If the outcome of this litigation is adverse to the Company, it could have a material adverse effect on the Company's business, financial condition, and results of operations. REHABCARE GROUP: Asks MO Court To Dismiss Consolidated Securities Suit ---------------------------------------------------------------------- Rehabcare Group, Inc. asked the United States District Court for the Eastern District of Missouri to dismiss a class action, alleging violations of the federal securities laws. The suit also names as defendants certain of the Company's current and former officers, and was filed on behalf of persons that purchased shares of the Company's common stock between August 10, 2000 and January 21, 2002. The amended suit focuses primarily on alleged weaknesses in the software system selected by the Company's StarMed Staffing Group and the purported negative effects of such systems on the healthcare staffing services business operations. The Company's director and officer liability insurance carrier has preliminarily accepted coverage of the action, including the payment of defense costs after the satisfaction of the Company's deductible. No discovery has been commenced in the case pending the court's ruling on the motion to dismiss. Additionally, each of the Company's directors was named as a defendant and the Company was named as the nominal defendant in a derivative suit filed in the Circuit Court of St. Louis County, Missouri. The complaint, which is based upon substantially the same facts as are alleged in the federal securities class action, was filed on behalf of the derivative plaintiff by a law firm that had earlier filed suit against the Company in the federal case. The Company filed a motion to dismiss based primarily on the derivative plaintiff's failure to make a pre-suit demand on the board. Alternatively, the Company filed a motion to stay the derivative suit until the final resolution of the federal securities law class action. The federal court hearing the securities law class action recently stayed discovery in the derivative proceeding until discovery commences in the class action. STERLING TRUST: CA Court Denies Motion To Compel Arbitration in Lawsuit ----------------------------------------------------------------------- The Superior Court of the State of California denied Sterling Trust Company's motion to compel arbitration in the class action filed against it, seeking unspecified damages and alleging: (1) negligent misrepresentation, (2) breach of fiduciary duty and (3) breach of written contract on the part of the Company The Company believes it has meritorious defenses to these allegations. STRATOS LIGHTWAVE: Faces CA Stockholder Suit Over Tsunami Acquisition --------------------------------------------------------------------- Statos Lightwave, Inc. faces a class action filed by Catherine Lego, as representative of the former stockholders of Tsunami Optics, Inc. filed a lawsuit in the United States District Court for the Northern District of California, relating to the Company's acquisition of Tsunami Optics, Inc. in February 2002. The complaint alleges, among other things, that the Company breached the acquisition agreement by failing and refusing to allow Tsunami to operate as a separate subsidiary in the ordinary course and by firing the Tsunami executives necessary to operate the business in the ordinary course, making it impossible for Tsunami to achieve the potential earn-out payment of up to $18 million provided for in the acquisition agreement. The complaint also alleges failure of consideration in connection with the acquisition agreement, and breach of covenants of good faith and fair dealing. Plaintiff is seeking a declaratory judgment that the Company has materially breached the agreement and $18 million in damages or, in the alternative, rescission of the acquisition agreement. The Company has filed various affirmative defenses to this lawsuit. In addition, the Company has filed a cross complaint against James P. Campbell and Catherine Lego, individually. In its cross-complaint, the Company seeks declaratory judgment that it has the right to make changes in Tsunami's business under the agreement for the Tsunami acquisition. The cross-complaint also includes claims against Ms. Lego and Mr. Campbell for fraud and breach of contract for misrepresentations made by them to the Company in connection with the Tsunami acquisition and a claim for breach of fiduciary duty against Campbell. The cross-complaint seeks compensatory and punitive damages. The Company believes that this lawsuit is without merit. VALICERT INC.: NY Court Dismisses In Part Consolidated Securities Suit ---------------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed in part the consolidated securities class action filed on behalf of purchasers of Valicert, Inc.'s common stock from July 27, 2000 through December 6, 2000. The complaint names as defendants the Company, its former chief executive officer, its chief financial officer, and an investment banking firm that served as underwriter for its initial public offering in July 2000. The amended complaint alleges violations of Sections 11 and 15 of the Securities Act, and Sections 10(b) and 20(a) of the Exchange Act, on the grounds that the prospectus incorporated in the registration statement for the offering failed to disclose, among other things, that: (1) the underwriter had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriter allocated to those investors material portions of the shares of the Company stock sold in the initial public offering; and (2) the underwriter had entered into agreements with customers whereby the underwriter agreed to allocate shares of the Company's stock sold in the initial public offering to those customers in exchange for which the customers agreed to purchase additional shares of Company stock in the aftermarket at pre-determined prices. The amended complaint also alleges that false analyst repots were issued. No specific damages are claimed. The Company is aware that similar allegations have been made in other lawsuits filed in the same court challenging over 300 other initial public offerings and secondary offerings conducted in 1999 and 2000. Those cases have been consolidated for pretrial purposes before the Honorable Judge Shira A. Scheindlin. On July 15, 2002, the Company and its affiliated individual defendants (as well as all other issuer defendants) filed a motion to dismiss the complaint. The court denied the motions to dismiss claims under the Securities Act in all but 10 of the cases, including the Company's case. The court granted the motion to dismiss the claims under the Exchange Act against the Company and the individual defendants. Management believes that the allegations against the Company and its officers are without merit. If the outcome of the litigation is adverse to the Company and if, in addition, the Company is required to pay significant monetary damages in excess of available insurance, its business would be significantly harmed. Asbestos Alert ASBESTOS LITIGATION: Outlook Brightens for Bill on Asbestos Litigation ---------------------------------------------------------------------- The chances for asbestos litigation reform in Congress appear brighter than ever this year because of expanding agreement in favor of a federal solution, growing bipartisanship on the issue in the Senate and a split in the plaintiffs' bar. "I think there's definitely movement, but whether it will be enough to produce a sufficient consensus to get legislation passed is still a big question," said Jonathan Hiatt, general counsel to the AFL-CIO. "So many people are working so hard right now. We're cautiously optimistic." Business, labor and the bar all now acknowledge that there is an asbestos crisis, one that has clogged the courts, delayed compensation to seriously sick claimants and bankrupted companies, said Jan Amundson, junior vice president and general counsel to the National Association of Manufacturers. "Where the parties may not share the same ground is in how far you can go in getting a political fix -- what's feasible and what's not," she explained. Amundson's organization is the chief force behind the Asbestos Alliance, which includes the US Chamber of Commerce and the American Insurance Association. The Alliance and the AFL-CIO are among four large groups working to find that politically feasible solution. The others are the plaintiffs' bar and the Asbestos Study Group. The groups also share a new sense of urgency created by Senate Judiciary Committee Chairman Orrin Hatch, R-Utah. During a hearing on March 5 on asbestos reform, Sen. Hatch gave them two weeks to show progress. Otherwise he will move on his own, he said. "We're going to take him at his words and work as hard as we can," said Joel Johnson of Washington's Swidler Berlin Shereff Friedman, counsel to the Asbestos Study Group, which includes such companies as Dow Chemical Co., General Electric Co. and Viacom Inc. "I think the political environment is cause for more than cautious optimism . It's not unusual for people to have different views of legislative solutions moving into the process. The real test is whether people of good intentions and goodwill can come together and forge a consensus to take advantage of that political environment." For tort reform proponents, the Senate traditionally has been less hospitable than the House. The Republican-controlled House generally takes the lead in moving class action, medical malpractice and other tort-related proposals. Even with Republicans now controlling the Senate, the parties are narrowly divided, and tort reformers expect uphill battles on all fronts. But the odds in favor of asbestos legislation in the Senate grew considerably this year when nationally recognized asbestos litigator Fred Baron of Dallas' Baron & Budd indicated that federal legislation would be appropriate and the American Bar Association (ABA) came out in favor of so-called medical-criteria legislation, said tort expert Victor Schwartz of Kansas City, Mo.'s Shook, Hardy & Bacon. That approach would limit payments to people who are actually ill from specific asbestos-related diseases. Baron does not support the ABA approach, which is backed by a contingent of trial lawyers who primarily represent claimants suffering from asbestos-related cancers. The US Supreme Court last week in an asbestos-related decision again called on Congress to address concerns with the litigation. "The plaintiffs' bar is divided on some of the approaches," said Mr. Schwartz, noting that bar's historical opposition to liability reforms. "The fact of the split augurs well for something to happen. "You also have Sen. Dodd calling for an asbestos summit to try to figure out what to do," he said, referring to Sen. Christopher Dodd, D- Conn. "He's a Democrat in the Democratic leadership . Sen. Leahy has at least indicated something ought to be done, whereas on other issues, like medical malpractice, he says no. You have at least a flickering light of bipartisanship, which is essential for anything to pass." Sen. Patrick Leahy, D-Vt., is the ranking Democrat on the Senate Judiciary Committee. On the negative side, Mr. Schwartz and others said, there is a logjam in the Senate because of the possible war with Iraq and the current battle over the judicial nomination of Miguel Estrada. More important, they add, the business community is divided over the most effective solution to the asbestos morass. The Asbestos Alliance, for example, for two years has been pushing the so-called medical-criteria approach. However, the Asbestos Study Group is urging the creation of a trust fund outside of the tort system. "If the business community is divided, two things can happen," said Mr. Schwartz. "One side won't block the other's initiative, but if one side thinks the other's approach is going to make things worse, they could oppose the bill, and then you lose Republican votes and the bill dies. That is the absolute riddle of the sphinx." The prospects in Congress are probably better for some sort of asbestos reform than for any other type of tort reform this year, said one key Senate staffer. "The split in the trial bar presents an enormous opportunity to get this through," he said. "The only thing now is to get people up here to stop meandering in circles looking for the perfect bill that everybody would like and find the best one out there and get it passed." From the Asbestos Alliance's perspective, the best bill right now is S. 413, the Asbestos Claims Criteria and Compensation Act, sponsored by Sen. Don Nickles, R-Okla. Under the Nickles bill and the ABA's approach, standard medical criteria would be used to distinguish between claimants who are sick and those who have been exposed to asbestos but do not have any functional impairment. The alliance and the ABA note a recent Rand Corporation report stating that the vast majority of the substantial increase in asbestos filings since the mid-1990s is attributable to claims that don't involve functional, objectively measurable impairment from asbestos-related disease. "The ABA is concerned that funds are being dissipated by payments to those who are not now sick and may never be sick with asbestos-related diseases, and the costs associated with administering those claims," ABA President-elect Dennis Archer said at the March 5 judiciary hearing. Mr. Archer and others say the not-yet-sick often file claims to meet state statutes of limitations or because they fear that defendant companies may go bankrupt and they will be left uncompensated. The Nickles bill and the approaches pushed by the ABA and the alliance also would toll all applicable statutes of limitations. This approach, said Mr. Amundson, "represents the intersection of what you want -- which is like a line that goes up -- and what you can get -- which is a line that comes down. Our proposal does not mean someone loses the right to sue, but the right is deferred until you meet the medical standard." While not agreeing with every aspect of the Nickles bill, the alliance supports it generally, as do a group of about 20 plaintiffs' firms that primarily represent claimants impaired by asbestos-related diseases. Labor, other trial lawyers and the Asbestos Study Group don't support the Nickles bill. "What the so-called medical-criteria approach does is it shuts off the right of people with less than the most serious disease to file claims," said the AFL-CIO's Hiatt. "While they call them the non-sick, that's a simplistic way of looking at it. People who don't have cancer but who do have diminished lung capacity, to the point they can't climb stairs, would definitely be cut off . To make matters worse, even those who can file claims under this approach are basically being left to the existing tort system, with the companies and insurance carriers likely to fight much harder against individual claims because they no longer have the incentives of mass settlements." Some opposed to the medical-criteria approach believe it would shift the costs in the system. They believe that trial lawyers like Baron, whose asbestos clients are largely unimpaired claimants, would raise the demand level for their cancer cases when they realize they can't get money for their non-cancer cases. Labor and the Asbestos Study Group have been discussing a trust fund proposal that would take asbestos claims out of the tort system, effectively ending asbestos litigation. A payment schedule would be based on medical criteria. A trust fund solution, they argue, would provide certainty to both victims and companies. There would be a limited, last-resort access to the courts. In the 1980s, there were about 40 asbestos defendants. Today, there are an estimated 8,000. A trust fund would operate on a no-fault basis and would be funded by contributions from those 8,000 defendants. Skeptics ask about how contributions are apportioned among the 8,000 defendants when exposure varies and about which insurance carriers are constantly fighting. "It would be terrific if a fund worked," said Mr. Amundson. "It takes everything out of court. As elegant as a fund is, it usually breaks down when you see how it's going to be funded." Trust fund supporters contend the federal government should contribute because it promoted the use of asbestos, particularly in the defense industries. "I think there's a political calculus here that is relevant over and above the substantive equation -- what kind of solution can get more than 60 votes in the Senate?" said Mr. Johnson of the Asbestos Study Group. "The most viable solution is probably one where you're removing this asbestos crisis from the more politically contentious debates over reform of the tort system and legal reform issues. It's a different kind of solution that might attract supporters who might not otherwise be attracted to a tort-style scheme," he explained. The Association of Trial Lawyers of America believes many things can be done to streamline asbestos litigation and deliver benefits better, said Mr. Baron, but it is not behind the Nickles approach. Another idea, still sketchy but gathering some support, he said, is a new statute permitting companies to pay some of their liabilities similar to what happens in Chapter 11 bankruptcies. It would require strict court supervision, he said. "I think that's actually the best idea," said Mr. Baron. "I also think that neither end of the spectrum is going to carry the day -- not the medical-criteria people nor the people who say there isn't a problem . There is a real belief on the part of all parties that something needs to be done." ASBESTOS LITIGATION: Lawyer's Fee in ABB Ltd. Litigation Under Scrutiny ----------------------------------------------------------------------- Joseph F. Rice, a leading class action lawyer, has agreed to accept a $20,000,000 fee from the parent of a company that he is suing in addition to the fees that he will collect from his clients for settling their claims against that very company. Legal ethicists said the payment raised serious ethical concerns because he was in effect being paid by both sides in the dispute, and several class action lawyers criticized the payment. Mr. Rice said he did not believe that the fee indicated a conflict of interest, and a lawyer for ABB, the Swiss company that will pay the fee, said it was justified and fair. The fee is part of a proposed settlement for the bankruptcy of Combustion Engineering, a United States company owned by ABB that faces 220,000 claims from people who say they were injured by asbestos in its boilers. Mr. Rice is being paid for helping to broker a settlement with other lawyers handling asbestos claims against the company. Under the settlement, people who develop asbestos-related disease because of their exposure to the boilers will receive a fixed payout from a trust being created by the companies. They will not be allowed to sue ABB or Combustion Engineering. If the trust is overwhelmed with claims, as expected, people badly injured by asbestos - representing a small fraction of the claimants - may receive less money than if they could pursue their cases in court, lawyers for those plaintiffs say. However, the trust will pay lightly injured plaintiffs quickly, producing a windfall for a handful of lawyers who represent thousands of those claimants. Some lawyers who represent seriously injured plaintiffs are protesting the creation of the trust, and similar structures that other companies, including Honeywell and Halliburton, are trying to create. The disclosure of Mr. Rice's fee in a letter discussing the bankruptcy has further provoked those lawyers, as well as legal ethicists, who say Rice should not be paid by the company he is suing. The fee creates a conflict of interest for Rice and his firm, said Susan P. Koniak, a Boston University law professor and expert on legal ethics. "They're representing people who were ostensibly allegedly injured by products produced by these companies," she said. "And they're taking money from the other side to get a deal through that the other side wants too? What does one need to say?" George Kuhlman, ethics counsel for the American Bar Association, said the group did not have absolute rules that bar lawyers from being paid by both sides in a case. "We have very complex rules on lawyers and conflicts of interest," Mr. Kuhlman said. "There are things that you are supposed to avoid, but it does not boil down to that you are supposed to avoid a fee from someone you are otherwise suing." He said he would have to do much more research to determine whether this case passed muster. Mr. Rice, whose South Carolina firm, Ness Motley, rose to prominence because of his work suing tobacco companies, said the arrangement had been favorable for his clients. He does not see a conflict because his $20,000,000 fee, a portion of which he said he had already received, was coming from ABB, which owns all of Combustion Engineering, rather than Combustion Engineering itself. "I'm not taking the fee from anybody that I'm suing," he said in a phone interview yesterday. "I did a business transaction." In addition, Mr. Rice said he and his firm did not advise any client on whether to vote in favor of the agreement, which was approved by outside experts including lawyers representing future claimants against Combustion Engineering. "The agreement was good for both sides," Mr. Rice said. ABB "had its independent problems that needed to get solved, and in solving their problems my asbestos clients came out ahead of the game." Claimants typically pay a contingency fee to lawyers like Mr. Rice, a fee that generally ranges from 25 to 40 percent of the total. In addition, he has consulting arrangements with other law firms under which he receives a portion of the fees that they bill their clients in exchange for his work on their cases. David Bernick, outside counsel for ABB, said he considered Mr. Rice's fee for brokering the settlement reasonable. Mr. Rice worked hard to negotiate the deal, which was completed in a matter of months last fall, with ABB and Combustion Engineering on the verge of bankruptcy. He played a crucial role in explaining the agreement to other plaintiffs' lawyers and winning them over, Mr. Bernick said. "Why shouldn't he get paid for brokering a deal?" he continued. John Brett, general counsel for ABB in the United States, said ABB believed that most lawyers approved of the settlement, including the fee. For the deal to be passed, more than 75 percent of all claimants must vote in favor of it, and the bankruptcy judge overseeing the case must approve the agreement. "We believe that we have more than adequate votes for its approval," Mr. Brett said. The case was filed in bankruptcy court in Delaware but will be heard by Judith Fitzgerald, a federal bankruptcy judge in Pittsburgh. Combustion Engineering was forced into bankruptcy because of claims from people who say they were injured by asbestos-lined boilers made before 1972. Most of those people are not seriously hurt, and many have no injuries at all, aside from plaque in their lungs that does not affect their ability to breathe. However, both ABB and plaintiffs' lawyers agree that the combined cost of the claims is more than Combustion Engineering can afford to pay, making bankruptcy the only alternative. To keep the bankruptcy relatively short and inexpensive, ABB began negotiating with plaintiffs' lawyers about the structure of a trust that would be created from the filing, as well as the amount of money ABB would put into the trust. Under the deal, ABB agreed to contribute all of Combustion Engineering's assets, valued at about $800,000,000, to the trust, which will be used to pay current and future claims of asbestos-related injury. ABB will also contribute $250,000,000 in cash and $50,000,000 in shares to the trust, and it may contribute $100,000,000 more in the future. Honeywell International and Halliburton are trying similar legal tactics to relieve themselves of asbestos liability by putting subsidiaries into bankruptcy, and lawyers for both plaintiffs and defendants say the process will probably become more common as big companies seek a way to put asbestos lawsuits behind them. Halliburton said it would not pay a success fee like Mr. Rice's as part of its settlement, and Honeywell declined to comment. The $20,000,000 fee for Mr. Rice is equal to almost 7 percent of the cash and stock that ABB is initially contributing to the settlement, and nearly 2 percent of the overall value of the trust. That amount is too much, said Bill Connelly, a partner at Richardson, Patrick, a Charleston, S.C., firm formed by lawyers who left Rice's firm last year. "David Bernick at a meeting in Houston before 40 or 50 lawyers said that before he even started negotiating, he offered $20,000,000 if Rice could put this package together," Connelly said. Lawyers who generally represent lightly injured claimants say that Mr. Rice should not be paid by ABB. "It makes Joe Rice look bad," said Fred Baron, a Dallas lawyer whose firm represents about 8,000 people who have sued Combustion Engineering and other companies because of asbestos exposure. Mr. Baron said the fee was particularly inappropriate because the total cost of settling all ABB claims at full face value would far outstrip the $1,100,000,000 to $1,300,000,000 that will be available for payment. As a result, many claimants will be paid a fraction of the face value of their claims. "Virtually everybody I've talked to has said that it would be unseemly for the $20,000,000 to be paid if 100 cents on the dollar are not being paid," Mr. Baron said. He said he was not opposed in principle to allowing lawyers to be paid directly by companies they were suing. Some other class-action lawyers defended Mr. Rice's fee. "You're being paid a facilitating fee," said Perry Weitz, whose firm represents 35,000 asbestos claimants, including 20,000 that have sued Combustion Engineering. "The court's got to approve it." Mr. Weitz said he planned to ask for similar fees in future bankruptcy settlements. "I would have no reservations," he said. ASBESTOS LITIGATION: Argonaut Group Inc. Posts Wide Loss, Reorganizes --------------------------------------------------------------------- Argonaut Group Inc. (NASDAQ:AGII) posted a widened fourth-quarter net loss, citing reserve strengthening, as the company made plans to reorganize. The net loss widened to $105,300,000, or $4.88 a share, compared with a net loss of $600,000, or 3 cents a share, in the fourth quarter of 2001, impacted by a $52,800,000 strengthening of asbestos reserves in run-off lines and the establishment of a partial valuation allowance of $71,900,000 against Argonaut's deferred tax asset, the company said. In the first half of 2003, Argonaut plans to reorganize operations to concentrate on casualty and risk-management solutions for upper-middle- market accounts, historically its core business, the company said. With the elimination of non-strategic businesses, Argonaut is to reduce its work force by 15% over the next two quarters and expects to incur a reorganization charge of about $3,000,000 in the first quarter, the insurer said. The reorganization also is expected to reduce operating expenses in the second half of 2003 and in future years, the company said. In its refocused configuration, Argonaut Insurance Co. is expected to produce less than 20% of the group's gross written premium. "The solid underlying performance of our core business was adversely affected by the strengthening of our asbestos reserves and deferred tax asset allowance," Mark E. Watson III, president and chief executive officer, said in a statement. "Our E&S and specialty commercial lines continue to perform well. The public entity unit is emerging from a start-up mode, and the focus of Argonaut Insurance Co. on its insurance and risk-management services should help return that unit to profitability." ASBESTOS LITIGATION: AWI Notes $2.5B Asbestos Charge, Proposes Payout --------------------------------------------------------------------- Armstrong World Industries, Inc. (OTC: ACKHQ) recorded, during the fourth quarter of 2002, a non-cash charge of $2,500,000,000 to increase the Company's estimated asbestos-related liability. This charge was the result of progress in the Chapter 11 proceedings, including the filing of a Plan of Reorganization and proposed Disclosure Statement with the US Bankruptcy Court during the fourth quarter of 2002. Armstrong, in the latest of five months' worth of court papers unveiling the company's strategy for getting out of bankruptcy, proposed procedures for paying those claims. In the complex 19-page document, Armstrong proposed creating an eight-level scale of payments, with the amount varying by the severity of the disease a person is suffering. The mildest disease on the scale, described as "other asbestos disease," would be valued at $400. The most severe, a usually fatal kind of lung cancer named mesothelioma, would be valued at $110,000. These values, said Armstrong, were set in line with past settlements. Claimants with that mildest disease would get paid the full value, the $400, but claimants with the seven more severe levels of disease apparently would not. For those other seven levels, the values would be multiplied by something called a "payment percentage." The claimant would get the result of that math. Unless the payment percentage is 100 percent -- and the document implies that's unlikely -- the claimants would get something less than the listed monetary value. How much less is not known. The Armstrong filing shows the payment percentage as a blank -- to be filled in later by a trust to be created to pay all the current and future asbestos claims against Armstrong. The payment percentage would be set by the trustees who'll run the trust, with input from an advisory committee and a person designated to represent future claimants, according to the document. The percentage would be reviewed at least every three years, taking into account the volume and type of claims, the value of the trust's assets and liabilities, and the trust's administrative and legal expenses. Perhaps the biggest variable in all that, said Armstrong, is the amount of insurance money that the company will recover from carriers who are disputing Armstrong's coverage or whose solvency is in doubt. The insurance proceeds potentially could bring "substantial additional funds" to the trust, said Armstrong. Should that happen, the trust would first use the extra money to maintain the existing payment percentage. Then, if it's prudent, the trust would use the extra money to boost the payment percentage. If the percentage goes up, the trust would send a supplemental payment to claimants who it paid earlier at the older, lower rate to make up the difference. Armstrong emphasized that these variables that would affect the fund's finances are full of "inherent uncertainty." Consequently, the payment percentage -- and ultimately, what the claimants would receive -- is full of "inherent uncertainty" too, said Armstrong. Armstrong was pushed into bankruptcy in December 2000 by a deluge of asbestos personal-injury claims that were costing the company millions of dollars a month to settle. The bankruptcy filing put an automatic, but temporary, freeze on those settlement payments. Over the past five months, Armstrong has gradually unfurled its strategy for resolving those hundreds of thousands of claims and getting out of bankruptcy. The unveiling of the plan began in November, when Armstrong said it wanted to reorganize by canceling its current stock and dissolving its current corporate structure. In its place would be a new corporation with a new stock, about two-thirds of it held by a newly formed trust that would pay all current and future asbestos personal-injury claims, a quantity somewhere in six figures. The trust would permanently relieve Lancaster-based Armstrong of the burden of paying asbestos claims, allowing it to focus on its core business of making floors, ceilings and cabinets. The trust would start with $2,100,000,000 in assets -- new Armstrong stock, new Armstrong notes and cash from Armstrong -- plus whatever money Armstrong can recover from its insurance coverage. However, the November filing did not detail how the trust would operate. Later, Armstrong said that intricate information would be filed by February 28, then by March 11. Finally, it was submitted March 14. The procedures document showed that the trust would handle claims on a first-filed, first-paid basis. Claimants would need to provide: (1) a doctor's diagnosis of an asbestos-related illness; (2) evidence of exposure to an Armstrong asbestos product prior to 1983; and (3) evidence that at least 10 years elapsed between the exposure and the diagnosis Depending on the level of disease, the claimants would face additional requirements of proof of illness, such as medical test results, and proof of the duration and kind of exposure. However, the trust also would provide higher payments, beyond the so-called "scheduled values," to claimants who could document special circumstances. If a claimant would dispute what level of payment he's to receive, the dispute would go first to arbitration, then to court if necessary. The claimant also could choose to have his claim reviewed in a special way. Armstrong said the disease levels, medical and exposure criteria, and payment values would be stable for the first six months after it emerges from bankruptcy, expected this summer. Thereafter, the trust could make changes. Among the other documents filed, Armstrong also submitted to the court an amended version of its disclosure statement -- a mandatory document that's intended to supplement the information in the reorganization plan. By law, the statement must provide enough detail about the plan for a "reasonable" creditor and claimant to make an informed judgment when voting on it. Armstrong filed its 94-page original statement in December. In response to objections and comments from various players in the case, Armstrong filed the amended version, with many revisions and additions. It's 130 pages, plus exhibits. ASBESTOS LITIGATION: Congoleum Corporation To Resolve Asbestos Claims --------------------------------------------------------------------- Congoleum Corporation (CGM) plans to seek bondholder approval of certain amendments to the indenture governing its senior notes to help resolve its asbestos liabilities. In a press release, the maker of flooring products said the amendments to the 8.625% notes due 2008 are intended to give it more flexibility to proceed with certain steps and transactions in connection with its asbestos settlement negotiations. Upon successful completion of these negotiations, Congoleum plans to file a prepackaged plan of reorganization under Chapter 11, which would incorporate the asbestos settlement and leave its bondholders, trade creditors and other non-asbestos related claim creditors unimpaired. Adoption of the proposed amendments to the indenture requires bondholder consent representing a majority of the total principal amount of the outstanding notes as of the record date. Congoleum said a majority of the holders have agreed to the proposed amendments. Congoleum is 55%-owned by American Biltrite Inc. (ABL), a maker of plastic and fiber products. ASBESTOS LITIGATION: Federal Mogul Plant Gets `All-Clear' on Asbestos --------------------------------------------------------------------- Workers at a Bridgwater factory have been reassured they are not in danger from high levels of asbestos. A major error in data led bosses of Federal Mogul to believe levels of asbestos found at the Colley Lane plant were 100 times greater than they actually were. Checks were made with the laboratory and none of the samples came anywhere near to the level at which action must be taken to deal with potential problems. The highest reading recorded was one fiftieth of the amount needed to trigger action. Letters have been sent to workers informing them of the error made. To comply with legislation a survey of the factory was carried out and when the misleading results were returned from a laboratory bosses took immediate action. The heat treatment furnace area was sealed off, the Health and Safety Executive called in and the 300-strong workforce was informed. A registered asbestos removal company was called in to clear the heat treatment furnace area and doctors from Somerset Occupational Health Service spoke to workers. The fear was that exposure to asbestos could cause illness up to 15 years later. Health and Safety experts said the figures should be rechecked and this was done. A spokesman for Federal Mogul said, "We have now been informed that the laboratory that analyzed the asbestos samples from our Bridgwater site made a major miscalculation. Its calculations of the amount of asbestos in the air at the Bridgwater site were out by a factor of 100. This means the levels of asbestos in the air were reported to be 100 times higher than was actually the case. None of the samples came anywhere near the level at which action must be taken to address potential problems from asbestos. We are concerned that our employees have been unnecessarily alarmed as a result of this error." Bosses have now arranged for another air quality survey to be carried out by a different company and a different laboratory. Workers will be informed of the results of the survey. A Transport and General Workers' Union spokesman said, "I was satisfied the precautions they were taking were appropriate to keep asbestos away from workers." ASBESTOS LITIGATION: Gencor Settles Asbestos Claims, Completes Spin-off ----------------------------------------------------------------------- Gencor Ltd. settled claims by ex-employees of asbestos associates, paving the way for the group to wind up by distributing its $1,720,000,000 stake in Impala Platinum Holdings Ltd. Gencor and its associates agreed to pay about ZAR490,000,000 ($60,700,000) to settle the complaints, without admitting liability, said Richard Spoor, a lawyer representing the claimants. The settlement had been held up by disagreement on how to split up the money between the former employees. "The agreement is dependent on the distribution of Impala shares going ahead," Mr. Spoor said. The settlement will enable Gencor to close down four decades after it was founded on assets divested by Anglo American Plc to appease Afrikaner politicians who threatened to nationalize South Africa's mining industry. A preference among some of the top investment fund managers for companies that focus on individual businesses led Gencor to break off its divisions, spawning Billiton Plc, now part of BHP Billiton, Gold Fields Ltd. and Sappi Ltd., the world's biggest maker of glossy magazine paper. The distribution to shareholders of Gencor's 46 percent stake in Impala Platinum, which was held up by court processes related to the asbestos claims, will make the shares in the world's second-biggest platinum company easier to trade, analysts have said. It could also make the company a takeover target. Former employees of Gencor's asbestos associates last year took the company to court to block the Impala distribution, which would have been the biggest transaction in South Africa last year. Gencor never had a majority stake in any asbestos mines, instead holding about 40 percent of asbestos producer Griqualand Exploration & Finance Co. until 1988 and an interest in Msauli Asbestos Ltd., companies which helped make South Africa the world's third-biggest asbestos miner in the 1970s. Exposure to asbestos fibers can cause respiratory disease, asbestosis, lung cancer and Mesothelioma, a cancer. Former employees of Cape Plc, who also worked for companies associated with Gencor, will receive as much as ZAR42,000,000, Mr. Spoor said. Lawyers representing former employees Cape Plc joined the case against Gencor after Cape failed to meet the terms of an agreed settlement because it ran out of money. The money will not bring her dead husband back, but at least it might help her family survive, Annamarie Renoster said after Gencor said it would compensate victims of asbestos-related diseases. Ms. Renoster's husband James, a carpenter, died in June 2001. Although he never worked in an asbestos mine, he contracted asbestosis through environmental exposure while growing up at Pomfret near Kuruman in the Northern Cape, where his father Johannes Renoster worked on a mine. The elder Renoster died in 1980, also from asbestosis. Since her husband first fell ill in 1999, life became an uphill battle, said Ms. Renoster, the mother of four daughters. They have been living off the salary of her eldest daughter Ingrid, 24, who works as a secretary. Another of the Renoster daughters, Yolandi, is currently in London. Ingrid's boyfriend helped pay for the ticket. Yolandi wrote to her mother to say she was homesick but would stay on as a waiter and send money back home because, "I am here with a purpose, I promised dad that I would look after mom." Yolandi had to leave school while in the 10th grade, to look after her two younger brothers when her father fell ill. Ms. Renoster spent months at her husband's bedside in various hospitals. Another Kuruman woman, Victoria Kabari, 23, said the compensation would hopefully enable her to resume studying. Ms. Kabari, the eldest of five children, gave up her studies at the Kimberley College when her father, Herman, fell ill in 2001 and could no longer pay for her tuition. He died this past January. Ms. Kabari's mother, Florence, hopes to finish the roof of their house with the compensation payments. Herman built the house himself, but could not complete it after he fell ill. Since her father stopped working, Ms. Kabari said the family's only income has been her grandmother's monthly pension. "Now and then she gives us food and money," Ms. Kabari said. She also hoped to change her major from marketing management to law. "I want to become a lawyer, because of what happened to my father." ASBESTOS LITIGATION: Gencor Settles Asbestos Claims, Completes Spin-off ----------------------------------------------------------------------- Gencor Ltd. settled claims by ex-employees of asbestos associates, paving the way for the group to wind up by distributing its $1,720,000,000 stake in Impala Platinum Holdings Ltd. Gencor and its associates agreed to pay about ZAR490,000,000 ($60,700,000) to settle the complaints, without admitting liability, said Richard Spoor, a lawyer representing the claimants. The settlement had been held up by disagreement on how to split up the money between the former employees. ``The agreement is dependent on the distribution of Impala shares going ahead,'' Spoor said. The settlement will enable Gencor to close down four decades after it was founded on assets divested by Anglo American Plc to appease Afrikaner politicians who threatened to nationalize South Africa's mining industry. A preference among some of the top investment fund managers for companies that focus on individual businesses led Gencor to break off its divisions, spawning Billiton Plc, now part of BHP Billiton, Gold Fields Ltd. and Sappi Ltd., the world's biggest maker of glossy magazine paper. The distribution to shareholders of Gencor's 46 percent stake in Impala Platinum, which was held up by court processes related to the asbestos claims, will make the shares in the world's second-biggest platinum company easier to trade, analysts have said. It could also make the company a takeover target. Former employees of Gencor's asbestos associates last year took the company to court to block the Impala distribution, which would have been the biggest transaction in South Africa last year. Gencor never had a majority stake in any asbestos mines, instead holding about 40 percent of asbestos producer Griqualand Exploration & Finance Co. until 1988 and an interest in Msauli Asbestos Ltd., companies which helped make South Africa the world's third-biggest asbestos miner in the 1970s. Exposure to asbestos fibers can cause respiratory disease, asbestosis, and Mesothelioma, a cancer. Former employees of Cape Plc, who also worked for companies associated with Gencor, will receive as much as ZAR42,000,000, Spoor said. Lawyers representing former employees Cape Plc joined the case against Gencor after Cape failed to meet the terms of an agreed settlement because it ran out of money. ASBESTOS LITIGATION: NY Court Rules in Genlyte's Favor in Asbestos Suit ----------------------------------------------------------------------- The United States District Court for the Southern District of New York issued summary judgment in favor of all defendants in the case of "Lippe et al., Trustees for the Keene Creditors Trust vs. Bairnco Corporation et al." As a result, the case against all remaining defendants, including The Genlyte Group Incorporated, was dismissed in its entirety. "This is a tremendous legal victory for Genlyte and its stockholders," said Larry Powers, Chairman, President and Chief Executive Officer of Genlyte. "We believe the Federal Court has completely vindicated us by this ruling in our favor. The Court has agreed with what we have said all along in this nearly 10-year-old matter, that there was no merit whatsoever to the fraudulent conveyance claim against Genlyte when it purchased certain of its lighting companies in 1984 from Keene." The Federal Court pointed out on the second page of its 74-page Opinion that the "Plaintiffs have been unable . to support their theory with any concrete evidence. To the contrary, on the record before the Court, no reasonable jury could find that Keene and its officers, directors, lawyers, and auditors engaged in any scheme to defraud. Although the asbestos cases were a real concern to Keene as early as the 1970s, the evidence shows, as a matter of law, that there were no fraudulent conveyances here. Instead, a reasonable jury could only find that the transactions were legitimate." "This ruling was based on a mountain of evidence in our favor," said Dan Fuller, Vice President and General Counsel of Genlyte. "Any time a Federal Court grants a summary judgment, it must first weigh every issue of material fact in favor of the party trying to keep the case alive. Here, despite the thousands of pages of deposition testimony before the court, and the millions of documents which have been produced, the Court is basically saying the Creditor's Trust could not provide any tangible proof to support its case." The Genlyte Group Incorporated (NASDAQ: GLYT) holds a 68% interest in Genlyte Thomas Group LLC, which is a leading manufacturer of lighting fixtures and controls for the commercial, industrial and residential markets. Genlyte Thomas sells products under the major brand names of Capri, Chloride Systems, Crescent, Day-Brite, Gardco, Hadco, Ledalite, Lightolier, Lightolier Controls, Lumec, Stonco, Thomas and Wide-Lite in the United States and Canlyte and Thomas in Canada. ASBESTOS LITIGATION: Halliburton Files Affidavit on Asbestos Settlement ----------------------------------------------------------------------- Halliburton (NYSE: HAL) filed an affidavit with a bankruptcy court, stating that 75 percent of the plaintiffs in the asbestos lawsuits have agreed to an earlier $4,000,000,000 settlement. The affidavit was submitted to the court in an effort to extend the stay on the more than 200,000 pending asbestos claims against Halliburton unit DII Industries LLC. The Company believes the filing is consistent with the court order of February 18. The court order had extended its previously issued temporary restraining order, staying the more than 200,000 pending asbestos claims against Halliburton's subsidiary, DII Industries, LLC (DII), until March 21. The court order also stated that oral arguments would be held on March 21 on a motion to lift the stay, unless DII filed an affidavit by March 14 stating that executed agreements had been signed by an estimated 75% of DII's asbestos plaintiffs. The affidavit filed by DII stated that DII and KBR have definitive written agreements, or written "highly confident" representations that such definitive agreements are forthcoming, from attorneys representing an estimated 75% of claimants. These estimates are based on certain assumptions and exclude the impact of certain claims in the Harbison- Walker bankruptcy, for which the Company indicated it had certain defenses or did not have reliable information. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services Group and Engineering and Construction Group business segments. For more information, visit the firm's Website: http://www.halliburton.com. ASBESTOS LITIGATION: Hartford May Face Asbestos, Acquisition Cost Hit --------------------------------------------------------------------- Morgan Stanley life insurance analyst Nigel Dally reduced his 2003 and 2004 earnings estimate for Hartford Financial Services Group (HIG), citing the difficult operating environment and potential charges for asbestos and other issues. In a research note, Mr. Dally cut his 2003 expectation to $4.38 a share from $4.70 and his 2004 view to $4.82 a share from $5.30 a share. He also reduced his stock price target to $54 a share from $62 a share. "Times are tough, and Hartford is feeling the brunt of the challenging operating environment," Mr. Dally said. "Equity markets continue to collapse, rating agencies have turned negative on the industry and asbestos-related litigation continues to run rampant." Mr. Dally said he expects the insurer to take a $300,000,000 pretax non-cash write-down related to deferred acquisition costs, which are associated with the sale of life insurance policies and must be amortized over the length of those policies. He also expects the insurer to add about $600,000,000 pretax to its asbestos reserves after the completion of its asbestos review. Hartford, like many insurers, will have to establish reserves for guaranteed minimum death benefits beginning in 2004. Mr. Dally said that will likely cost the insurer $155,000,000, or 61 cents a share, in below the line charges. As a result of these issues, Hartford will have to raise between $425,000,000 to $725,000,000 of additional equity capital, Mr. Dally said. It's likely Hartford will raise about $600,000,000 in capital, he said. "That being said, we remain unwavering in our view that the company remains one of the best-run insurers in the U.S. with a solid fundamental and strategic position in the market," Mr. Dally said. The issues are "adequately" reflected in Hartford's stock price. He maintained an overweight rating on the stock. ASBESTOS LITIGATION: WR Grace Reports $973.2 Million Asbestos Liability ----------------------------------------------------------------------- W.R. Grace & Co.'s (NYSE: GRA) total asbestos-related liability as of the end of 2002 was $973,200,000, the company estimates, down from $996,300,000 at the end of 2001. The lower amount is mainly due to administrative costs for claims management that the company paid after it filed for Chapter 11 bankruptcy protection in April 2001, according to a filing with the Securities and Exchange Commission. In its annual report, W.R. Grace said it has accrued the $973,200,000 and expects that amount will cover all the present and future asbestos- related bodily injury claims the company expects to be filed against it, as well as all pending property damage claims for which it has enough information to make an estimate. Prior to filing for bankruptcy protection, W.R. Grace settled or paid judgments totaling about $646,000,000 on more than 163,000 asbestos- related injury claims. Under settlements with insurers, W.R. Grace expects to receive $282,600,000 in payments from them related to its asbestos liability. In 2000 the company received payments of $85,600,000 from insurers, in 2001 it received $78,800,000, and in 2002, $10,800,000. Prior to 2000, the company received payments from insurers totaling $968,500,000. As reported, Sealed Air Corporation (NYSE:SEE) and Fresenius Medical Care AG (NYSE:FMS) have agreed to settlements in a fraudulent conveyance case brought by asbestos claimant committees in W.R. Grace's bankruptcy case. Under the pacts, which are subject to bankruptcy court approval, when W.R. Grace's plan of reorganization is confirmed, Fresenius Medical would pay $115,000,000 to the bankruptcy estate of W.R. Grace, while Sealed Air would pay $512,500,000 and deliver 9,000,000 shares of its common stock. ASBESTOS LITIGATION: Wolseley Plays Down Concerns Over Asbestos Suits --------------------------------------------------------------------- Wolseley PLC, the building products and plumbing supplies group, has again moved to de-emphasize concerns over its exposure to asbestos litigation in the US. The group said there has been no profit and loss account charge in relation to asbestos claims and no such charge is expected to arise in the future. "The asbestos claims we're talking about are still in the hundreds rather than thousands," finance director Steve Webster declared. "The estimated liability is immaterial and we don't expect any P&L effect going forward. We're in a unique position in the industry because we have full insurance cover and the experience we've had in the first half is bang in line with expectations." The group reported a 2.7 pct increase in pretax profit before goodwill amortization to GBP201,100,000, against GBP195,900,000 the previous year, at the lower end of market forecasts which ranged from GBP200,000,000 - 210,000,000. It is confident that the US housing market will not weaken and sees the current rate of 1,600,000 new housing starts a year being at least maintained. "The demand for housing in the States should be substantial for the next twenty years," chief executive Charles Banks said. "Between immigration, people living longer, more single parent families, and more second home families, we think that the band will be more in the 1,700,000." The group derives around a third of its sales from the US housing market. Finance director Steve Webster confirmed the company is pursuing a number of acquisition opportunities and has a target spend of GBP200,000,000 per annum but he added it will "continue to be selective" when appraising opportunities. ASBESTOS ALERT: Ethyl Corp. Bills Albemarle for Asbestos Liability ------------------------------------------------------------------ Ethyl Corporation (EY) said it has sent an invoice to Albemarle Corporation (ALB) for $3,700,000 related to asbestos liability obligations. According to its annual report filed with the Securities and Exchange Commission, Albemarle disputes this payment and its obligations for asbestos liabilities. Ethyl said it already has established a receivable from Albemarle for that amount. The Company said Albemarle is responsible for the payment as well as certain current and future liability claims under an indemnification agreement between the parties dated as of February 28, 1994. Under the terms of the agreement, Albemarle is responsible for tax, environmental and certain other exposures related to its operations before Feb. 28, 1994, which was the date Ethyl completed the spinoff of Albemarle. Albemarle manufactures Methylcyclopentadienyl Manganese Tricarbonyl, a fuel additive, for the company under a long-term, exclusive supply arrangement that expires in 2014, according to the filing. Ethyl said it has never manufactured, sold or distributed products that contain asbestos. COMPANY PROFILE Ethyl Corporation (NYSE: EY) 330 S. 4th St. Richmond, VA 23218-2189 Phone: 804-788-5000 Fax: 804-788-5788 Toll Free: 800-625-5191 http://www.ethyl.com Employees : 1,100 Revenues : $656,400,000 Net Income : $9,900,000 Assets : $656,300,000 Liabilities : $503,100,000 (As of December 31, 2002) Description: Ethyl Corporation's petroleum additives are used in gasoline, heating oil, and other fuels to improve refining and performance, and as a lubricant in motor oil, fluids, and grease. Its other product, antiknock additive tetraethyl lead (TEL), is rapidly losing ground in markets where unleaded gas has taken over due to automakers' compliance with the Clean Air Act. Equilon, Exxon Mobil, and Pennzoil-Quaker State had been Ethyl's biggest customers, but Ethyl lost them when it tried to raise prices. Chairman Bruce Gottwald and his family own about 25% of Ethyl. Albemarle Corporation (NYSE: ALB) 330 S. Fourth St., PO Box 1335 Richmond, VA 23219 Phone: 804-788-6000 Fax: 804-788-6020 Toll Free: 800-535-3030 http://www.albemarle.com Employees : 3,000 Revenue : $980,200,000 Net Income : $74,700,000 Assets :$1,193,000,000 Liabilities : $623,100,000 (As of December 31, 2002) Description: Albemarle is a spin-off from Ethyl Corp. (which also spun off Tredegar), the company produces polymer additives and fine chemicals used by a variety of industries. Its polymer additives -- such as catalysts, flame retardants, and curatives -- add desired properties to various plastics. Albemarle's fine chemicals include bromine-based chemicals, agricultural chemicals, and the popular pain reliever ibuprofen. BP Chemicals produces aluminum alkyls, a type of co-catalyst, for the company. Customers include chemical, plastics, pharmaceutical, cleaning products, and paper companies. The Gottwald family, which also owns large stakes in Tredegar and Ethyl, owns about 22% of Albemarle. ASBESTOS ALERT: Florida-Based Jim Walter Homes Updates Corporate Image ---------------------------------------------------------------------- For more than 50 years, Tampa-based Jim Walter Homes built hundreds of thousands of affordable houses -- but only for people who already owned some land. In the 1980s, Jim Walter Corporation - known by then as Walter Industries - was one of the nation's giant conglomerates. In 1989, under attack from asbestos litigation, the company filed for bankruptcy court protection. Still, it reorganized and managed to emerge from bankruptcy in 1995. Part of the home-building unit's new strategy is to offer higher-priced houses to broaden its appeal among prospective homebuyers. Its average price last year was only $63,000. Though many of the homes to be offered will probably still be priced below $70,000, some spec and subdivision homes will cost $90,000 to $120,000 -- high for Jim Walter, but still below the prices of most large subdivision builders, who tend to charge $150,000 or more. Walter Industries has acquired three other home-building companies in recent years: Dream Homes and Neatherlin Homes, both Texas on-your-lot builders, and Crestline Homes, a North Carolina modular-home manufacturer. The parent company is also evaluating its land holdings in 15 states for potential subdivision development. Roberts estimates that more than 5,000 acres are suitable for this. COMPANY PROFILE Walter Industries, Inc. (NYSE: WLT) 4211 W. Boy Scout Blvd. Tampa, FL 33607-2551 Phone: 813-871-4811 Fax: 813-871-4399 http://www.walterind.com Employees : 6,535 Revenue : $1,943,200,000 Net Income : $(52,500,000) Assets : $3,317,900,000* Liabilities: $2,877,200,000* (*As of December 31, 2001) (As of December 31, 2002 preliminary) Description: Walter Industries, which has announced that it intends to streamline its mix of businesses, operates five different segments. The biggest contributor to Walter Industries' sales is its industrial products unit, which includes U.S. Pipe (which makes iron pressure pipe), Sloss Industries (which sells foundry and furnace coke), and JW Aluminum. Its AIMCOR unit markets coke and ferrosilicon. The company's homebuilding unit includes Jim Walter Homes (single family homes in 18 states), Crestline Homes (modular homes), and Walter Mortgage (home financing). A KKR affiliate owns 31% of the company. ASBESTOS ALERT: Moen Battles 110 Asbestos-Related Personal Injury Suits ----------------------------------------------------------------------- A subsidiary of Fortune Brands, Inc., Moen Incorporated, has been named as a defendant in around 110 cases claiming personal injury from asbestos. All of these suits name multiple defendants and, in most cases, in excess of 75 defendants are named in addition to Moen. None of these cases identify any Moen products or premises as the cause of the alleged injury to any of the plaintiffs identified. It is not possible to predict the outcome of the pending litigation, and, as with any litigation, it is possible that some of these actions could be decided unfavorably. Management believes it has meritorious defenses to these actions and that these actions will not have a material adverse effect upon the results of operations, cash flows or financial condition of the Company. COMPANY PROFILE 25300 Al Moen Dr. North Olmsted, OH 44070 Phone: 440-962-2000 Fax: 440-962-2761 Toll Free: 800-289-6636 http://www.moen.com Employees : 3,600 (est. as of December 31, 2001) Revenue : $5,677,700,000* Net Income : $525,600,000* Assets : $5,822,200,000* Liabilities: $3,509,000,000* (*As of December 31, 2002 of Fortune Brands, Inc) Description: Inventor Al Moen created the single-handle mixing faucet in 1937. A Fortune Brands (NYSE: FO) company, Moen is North America's #1 faucet maker. The company also pours out sinks, bath accessories, and more than 10,000 plumbing repair products. The faucet and sink segment makes a wide variety of kitchen and bathroom faucets, sinks, and tub/shower products along with Asceri Accents' interchangeable bath faucet and accessory pieces. Through its Creative Specialties International division, Moen produces bath accessories (towel bars, hooks, grab bars, and toothbrush and soap holders) under the Moen, Decorum, Donner, and Home Care names. Founder Al Moen died in 2001. New Securities Fraud Cases BAYER AG: Milberg Weiss Commences Securities Fraud Lawsuit in S.D. NY --------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the American Depositary Receipts (ADRS) of Bayer AG BAY between March 2, 1998 and February 21, 2003, inclusive, and who suffered damages thereby. (Prior to January 23, 2002, Bayer AG traded on the Nasdaq under the symbol BAYZY.) The action is pending in the United States District Court for the Southern District of New York against the Company and: (1) David Ebsworth, (2) Manfred Schneider and (3) Werner Wenning The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between March 2, 1998 and February 21, 2003. Specifically, the complaint alleges that during the class period, defendants made false and misleading statements about the successful introduction and strong sales of the Company's new cholesterol fighting product, Baycol, and represented that the Company enjoyed and would continue to enjoy strong revenue, earnings and earnings per share growth as a result of the addition of Baycol to the Company's product line. The complaint further alleges that defendants also misrepresented that Baycol was safe for use by patients attempting to treat high cholesterol and did not present a significant risk of adverse side effects. In fact, Baycol was not safe but rather, dangerous to the public requiring the drug to be withdrawn. Baycol caused fatal Rhabdomyolysis in patients who used Baycol in combination with gemfibrozil, another lipid lowering drug, the complaint alleges. The complaint further alleges that senior executives at Bayer were aware that Baycol had serious problems and presented health risks to patients long before the Company pulled the drug from the market in August 2001, and that defendants overstated Bayer's assets and understated its liabilities (totaling in excess of $257 million) associated with the Company overcharging Medicaid, the United States government's health plan for the poor. For more details, contact Steven G. Schulman by Mail: One Pennsylvania Plaza, 49th fl., New York, NY, 10119-0165 by Phone: 800/320-5081 by E- mail: bayer@milbergNY.com or visit the firm's Website: http://www.milberg.com BLOCKBUSTER INC.: Bernstein Liebhard Lodges Securities Suit in N.D. TX ---------------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action on behalf of all persons who acquired securities of Blockbuster, Inc. (NYSE: BBI) between April 24, 2002 and December 17, 2002, inclusive, (the "Class Period"). A copy of the Complaint is available from the in the United States District Court for the Northern District of Texas, Dallas Division against the Company, John Antioco, and Nigel Travis. The suit charges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the class period, regarding the Company's financial performance and future prospects, thereby artificially inflating the price of Blockbuster securities. The suit alleges defendants misrepresented and/or omitted that: (1) Blockbuster's business was being negatively impacted by declining DVD sale prices; (2) Blockbuster was unable to effectively compete with other retailers of DVDs as many of those retailers offered DVDs as loss leaders -- selling the DVDs below or at cost in order to entice shoppers into the store; (3) as a result, growth at stores that were open for more than one year was slowing to such an extent that the same-store growth rates that defendants had promised investors would not be realized; and (4) Blockbuster was experiencing problems with certain of the movie studios with whom it had profit-sharing arrangements. On December 18, 2002, the Company shocked the market when it announced that it would not meet its previous earnings guidance for the fourth quarter of 2002 and fiscal year 2002. Further, Blockbuster reported that fourth quarter same store revenue would be in the mid-single digit range as opposed to the low to mid-teen range previously shared with investors. In response to this announcement, the price of Blockbuster common stock dropped from $19.40 per share to $13.64 per share. Prior to the disclosure of this adverse information, certain defendants sold their personally-held Blockbuster common stock to the unsuspecting public reaping proceeds of more than $25 million. For more details, contact Ms. Linda Flood, Director of Shareholder Relations, by Mail: 10 East 40th Street, New York, New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 by E-mail: BBI@bernlieb.com or visit the firm's Website: http://www.bernlieb.com. SOLECTRON CORPORATION: Wolf Haldenstein Launches Securities Suit in CA ---------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Northern District of California, on behalf of all persons who purchased the securities of Solectron Corporation (SLR) between September 17, 2001 and September 26, 2002, inclusive, against the Company and certain officers and directors of the Company. The complaint alleges that defendants issued numerous statements reporting artificially inflated financial results. The complaint further alleges that these statements were materially false and misleading because they failed to disclose and/or misrepresented several adverse facts, such as that the Company possessed tens of millions of dollars of obsolete and unsaleable inventory in its Technology Solutions division which would need to be written down. Solectron's reported financial results were thereby artificially inflated at all times during the class period. As a result of the Company's failure to writedown its inventory in a timely manner, the financial statements published by Solectron during the class period were not prepared in accordance with Generally Accepted Accounting Principles and were materially false and misleading. If the Company had properly accounted for its inventory, it would have missed its guidance severely. On September 26, 2002, following the close of the market, Solectron issued a press release announcing its financial results for the fourth quarter of 2002 and fiscal year 2002. The Company further reported a booking of a pre-tax charge of $97 million to reserve for inventory revaluation and write-off. Solectron ascribed most of the charge to "inventory risk assumed by Solectron's product-oriented Technology Solutions business unit ..." Shares of Solectron common stock dropped from their previous close, following that announcement, as well as other disclosures. For more details, contact Fred Taylor Isquith, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016, by Phone: (800) 575-0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com. All e-mail correspondence should make reference to Solectron. VAXGEN INC.: Charles Piven Commences Securities Fraud Suit in N.D. CA --------------------------------------------------------------------- The Law Offices Of Charles J. Piven, PA initiated a securities class action on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of VaxGen, Inc. (NASDAQ: VXGN) between August 6, 2002, and February 26, 2003, inclusive, in the United States District Court for the Northern District of California against the Company and certain of its officers and directors. The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, contact Charles J. Piven by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202, by Phone: 410-986-0036 by E-mail: hoffman@pivenlaw.com or visit the firm's Website: http://www.pivenlaw.com WORLDCOM INC.: Cauley Geller Commences Securities Fraud Suit in S.D. NY ----------------------------------------------------------------------- Cauley Geller Bowman Coates & Rudman, LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf of a class of all persons or entities who purchased 12% GOALs(+) (Nasdaq: GPLD) and 18.25% GOALs(+) (Nasdaq: NYWA) Equity Linked Notes linked to the common stock of WorldCom, Inc. between May 17, 2001 and June 25, 2002, inclusive. The complaint names as defendants: (1) Bernard J. Ebbers, (2) Scott D. Sullivan, (3) David F. Myers, (4) Buford Yates, Jr., (5) James C. Allen, (6) Judith Areen, (7) Max E. Bobbitt, (8) Francesco Galesi, (9) Stiles A. Kellett, Jr., (10) John W. Sidgmore, and (11) UBS AG, who offered GOALs to the public. The individual defendants were all officers and/or directors of WorldCom, Inc. during the class period. Specifically, the complaint alleges that the individual defendants issued a series of materially false and misleading statements regarding WorldCom. Specifically, the suit alleges that throughout the class period WorldCom's revenue, earnings, income and assets were materially overstated and its financial statements issued during the class period violated Generally Accepted Auditing Principles (GAAP). As a result of the Individual Defendants' violations of the federal securities laws, WorldCom has declared bankruptcy and its shares are virtually worthless. The suit alleges that the purchase price of the GOALs was materially inflated because their value was directly tied to the market value of WorldCom common stock, which was materially inflated as a result of the fraud. In addition, because UBS incorporated WorldCom financial data by reference into the offering documents, they are strictly liable for the false and misleading information contained therein. For more details, contact Samuel H. Rudman, David A. Rosenfeld, Jackie Addison, Heather Gann or Sue Null by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 by E-mail: info@cauleygeller.com ********* 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 BeardGroup, Inc., Frederick, MD, Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2003. 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 Marjorie Guerette at 240/629-3300, ext. 27. * * * End of Transmission * * *