/raid1/www/Hosts/bankrupt/CAR_Public/050513.mbx
C L A S S A C T I O N R E P O R T E R
Friday, May 13, 2005, Vol. 7, No. 94
Headlines
AMERICAN SKANDIA: High Court Refuses To Review NY Suit Dismissal
AMERICAN SKANDIA: Shareholders Launch Fraud Lawsuits in S.D. NY
ARVIDA/JMB PARTNERS: Reaches Settlement For FL Homeowners Suit
ARVIDA/JMB PARTNERS: FL Court Dismisses Homeowner Fraud Lawsuit
ASAP MEDS: Forges Settlement With FL AG Crist Over Price-Gouging
AUDIOVOX CORPORATION: Asks DE Court To Dismiss Derivative Suit
AUDIOVOX CORPORATION: Faces Consolidated IL Suit Over 911 Calls
BIOGEN IDEC: Shareholders Launch Securities Fraud Lawsuits in MA
BIOGEN INC.: Continues To Face Average Wholesale Pricing Suits
BLUE BIRD: Recalls 2108 MY 2004-06 Buses For Brake System Defect
COMMUNITY BANCSHARES: Settles With 2 Plaintiffs in AL Fraud Suit
CONNECTICUT: Suit Launched To Halt New England's First Execution
CONSUMER PORTFOLIO: Forges Settlement For Cross-Claim in CA Suit
CONSUMER PORTFOLIO: Appeals Remand of Consumer Suit To AL Court
CONSUMER PORTFOLIO: Faces Consumer Fraud Suit in CA State Court
CORPORATE COMPLIANCE: FL AG Launches Consumer Fraud Complaint
D&G AUTO: IL Attorney General Commences Consumer Fraud Complaint
DEL WEBB: Sun-City Summerlin Homeowners Launch Mold Suit in NV
EDWARD D. JONES: Asks MO Court To Dismiss Securities Fraud Suit
EDWARD D. JONES: MO Court Refuses To Dismiss Investor Fraud Suit
EDWARD D. JONES: Asks CA Court To Dismiss Unfair Trade Lawsuit
GEXA CORPORATION: TX Court Dismisses Suit For Securities Fraud
GLAXOSMITHKLINE INC.: Signs Consent Decree On Facility Problems
IBIS TECHNOLOGY: MA Court Yet To Rule on Stock Lawsuit Dismissal
ILLINOIS: County Judge Enters Default Judgment V. Diamond Giants
INTERSTATE BAKERIES: MO Judge OKs $18M Suit Settlement Proposal
KEYSTONE RV: Recalls 174 Cambridge Motorhomes For Crash Hazard
MRL INC.: Recalls 597 AED20 Defibrillators Due To Malfunction
NEBRASKA: Judge Grants Certification To Suit V. Mental Hospitals
NEW YORK: SEC Obtains Order Imposing Penalty V. Cole Bartiromo
QUIGLEY CORPORATION: Trial Continues in PA Consumer Fraud Suit
RADIOSHACK CORPORATION: Recalls 1M Cleaners Due To Toxic Hazard
SILICON STORAGE: Shareholders Lodge Stock Fraud Suits in N.D. CA
SINO BESTFOOD: Recalls Apricots Due To Undeclared Sulfites
SKYTERRA COMMUNICATIONS: Reaches Settlement For CA Overtime Suit
STRACQ INC.: NY Court Enters Consent Judgment in SEC Fraud Case
UNITED LIBERTY: Working on Settlement Of Ohio Policyholder Suit
UNITED STATES: Firm Has Highest Average Settlement Total in 2004
Asbestos Alert
ASBESTOS LITIGATION: Cleco Named as Defendant by LA Site Workers
ASBESTOS LITIGATION: Allstate Corp. Lowers Reserves to US$1.39B
ASBESTOS LITIGATION: MO Residents Sue City Over Removal Method
ASBESTOS LITIGATION: Goodyear Had 129,100 Pending Claims at 1Q05
ASBESTOS LITIGATION: NJ Appeals Panel Reinstates Asbestos Suit
ASBESTOS LITIGATION: Texas Tort Reform Prompts Surge in Filing
ASBESTOS LITIGATION: Everest Re Posts US$18M Reserve Adjustments
ASBESTOS LITIGATION: ArvinMeritor, Maremont Meets Injury Claims
ASBESTOS LITIGATION: Crown Cork & Seal Receives 3,000 New Claims
ASBESTOS LITIGATION: Entergy Faces 480 Lawsuits, 10,000 Claims
ASBESTOS LITIGATION: AXA Pays US$35M of Claims and Costs in 2004
ASBESTOS LITIGATION: Washington Group Int'l. Faces Injury Suits
ASBESTOS LITIGATION: IL EPA Probes Demolition Firm for Breaches
ASBESTOS LITIGATION: MeadWestvaco Corp. Faces 550 Asbestos Suits
ASBESTOS LITIGATION: Ingersoll-Rand Posts US$3.3M Costs in 1Q05
ASBESTOS LITIGATION: TODCO Named in Suits in MS Circuit Courts
ASBESTOS LITIGATION: TRW Disputes Claims Against Subsidiaries
ASBESTOS LITIGATION: Harsco Corp. Battles 31,784 Pending Claims
ASBESTOS LITIGATION: Honeywell Deals With NARCO, Bendix Claims
ASBESTOS LITIGATION: Albany Int'l. Handles 25,679 Injury Claims
ASBESTOS LITIGATION: Allmerica Posts US$25.6M Reserves in 1Q05
ASBESTOS LITIGATION: Ex-worker Pursues Claim in Madison Court
ASBESTOS LITIGATION: Fairchild Named in 19 Personal Injury Cases
ASBESTOS LITIGATION: Eastman Chemical Defends Against 3T Claims
ASBESTOS LITIGATION: CA Coastal, RESCO Pays US$1.33M Settlement
ASBESTOS LITIGATION: IDEX, Subsidiaries Face Suits in 22 States
ASBESTOS LITIGATION: Navigators Group Deals with Liabilities
ASBESTOS LITIGATION: MSA Faces Potential Rise of Liability Suits
ASBESTOS LITIGATION: 3M Co. Accrues $232M Liability from Claims
ASBESTOS LITIGATION: Hercules Reveals 32,088 Unresolved Claims
ASBESTOS LITIGATION: Dana Corp. Battles 120,000 Active Claims
ASBESTOS LITIGATION: Union Pacific Gets 338 Claims, Settles 216
ASBESTOS LITIGATION: CIRCOR Int'l. Faces Claims in 20 States
ASBESTOS LITIGATION: Senate Panel Resumes Work on Asbestos Bill
ASBESTOS LITIGATION: RAND Study Says Claims Cost Industry US$70B
ASBESTOS LITIGATION: ASIC Gets Funds to Investigate James Hardie
ASBESTOS LITIGATION: Bill Saves Asbestos Firms Billions, Report
ASBESTOS LITIGATION: Tyco Int'l. Battles 16,000 Pending Cases
ASBESTOS LITIGATION: Midwest Generation Records US$68M Liability
ASBESTOS ALERT: UK Magistrates Court Imposes Fine on Lemec Ltd.
New Securities Fraud Cases
FRIEDMAN BILLINGS: Lerach Coughlin Lodges Securities Suit in NY
FRIEDMAN BILLINGS: Schatz & Nobel Files Securities Lawsuit in NY
FRIEDMAN BILLINGS: Scott + Scott Lodges Securities Lawsuit in NY
MARTEK BIOSCIENCES: Lasky & Rifkind Lodges Securities Suit in MD
MARTEK BIOSCIENCES: Squitieri & Fearon Files Stock Lawsuit in MD
MBNA COPRORATION: Schatz & Nobel Lodges Securities Lawsuit in DE
PETCO ANIMAL: Brain M. Felgoise Files Securities Suit in S.D. CA
R&G FINANCIAL: Klafter & Olsen Files Securities Fraud Suit in NY
R&G FINANCIAL: Marc S. Henzel Lodges Securities Fraud Suit in NY
TRIBUNE CO.: Brodsky & Smith Lodges Securities Fraud Suit in IL
TRIBUNE CO.: Marc S. Henzel Files Securities Fraud Lawsuit in IL
*********
AMERICAN SKANDIA: High Court Refuses To Review NY Suit Dismissal
----------------------------------------------------------------
The United States Supreme Court refused to review an appeals
court ruling denying plaintiffs' petition to appeal the
dismissal of a nationwide class action filed against American
Skandia Life Assurance Corporation.
The suit, filed in the United States District Court for the
Southern District of New York in December 2002 and designated as
"Donovan v. American Skandia Life Ass. Corp. et al.," alleged
that the Company and certain of its affiliates violated federal
securities laws in marketing variable annuities. The suit seeks
injunctive relief and compensatory damages in unspecified
amounts.
In July 2003, the court granted the Company's motion to dismiss
the complaint with prejudice. The United States Court of
Appeals for the Second Circuit upheld the dismissal in May 2004.
The United States Court of Appeals for the Second Circuit denied
plaintiffs petition for the appeal to be reheard en banc and
plaintiffs sought review by the United States Supreme Court,
which request was denied.
AMERICAN SKANDIA: Shareholders Launch Fraud Lawsuits in S.D. NY
---------------------------------------------------------------
American Skandia, Inc. faces six purported nationwide class
action lawsuits. Each of these lawsuits alleged that the
Company and others violated federal securities laws in
connection with late trading and market timing activities and
seeks remedies, including compensatory and punitive damages in
unspecified amounts. The cases are as follows:
(1) Lowinger v. Invesco Advantage Health Sciences Fund, et
al., filed in the United States District Court for the
Southern District of New York in December 2003 and
served on the Company in February 2004;
(2) Russo, et al. v. Invesco Advantage Health Sciences
Fund, et al., filed in the United States District Court
for the Southern District of New York in December 2003,
this suit has not been served on the Company;
(3) Lori Weinrib v. Invesco Advantage Health Sciences Fund,
et al., filed in the United States District Court for
the Southern District of New York in January 2004, this
suit has not been served on ASI;
(4) Erhlich v. Invesco Advantage Health Sciences Fund et
al., filed in the United States District Court for the
District of Colorado in December 2003, this suit was
served on ASI in February 2004;
(5) Fattah v. Invesco Advantage Health Sciences Fund, et
al., filed in the United States District Court for the
District of Colorado in December 2003, this suit has
not been served on ASI.
The Company is also aware that it may be a defendant designated
as one of "Does 1-500" in a suit filed in October 2003 in the
United States District Court for the Central District of
California entitled "Mike Sayegh v. Janus Capital Corporation,
et al."
This suit alleges that various defendants engaged in improper
late trading and market timing activities in various funds also
named as defendants. The complaint further alleges that such
activities were in violation of California Business and
Professional Code Section 17200. This suit has not been served
on ASI.
ARVIDA/JMB PARTNERS: Reaches Settlement For FL Homeowners Suit
--------------------------------------------------------------
Arvida/JMB Partners, L.P. reached a settlement for the class
action filed against it and Walt Disney World Company in the
Circuit Court of the Eleventh Judicial Circuit in and for Miami-
Dade County, Florida. The suit is styled "Lakes of the Meadow
Village Homes Condominium Nos. One, Two, Three, Four, Five, Six,
Seven, Eight and Nine Maintenance Associations, Inc., v.
Arvida/JMB Partners, L.P. and Walt Disney World Company, Case
No. 95-23003-CA-08."
In the lawsuit, plaintiffs sought unspecified damages,
attorneys' fees and costs, recission of specified releases, and
all other relief that plaintiffs might be entitled to at equity
or at law on behalf of the 460 building units they allegedly
represented for, among other things, alleged damages discovered
in the course of making Hurricane Andrew repairs. Plaintiffs
alleged that Walt Disney World Company was responsible for
liabilities that might arise in connection with approximately
80% of the buildings at the Lakes of the Meadow Village Homes
and that the Partnership was potentially liable for the
approximately 20% remaining amount of the buildings. In the
three count amended complaint, plaintiffs alleged breach
of building codes and breach of implied warranties.
The Partnership tendered this matter to The Walt Disney Company
(n/k/a Disney Enterprises, Inc., "Disney") pursuant to the
Partnership's indemnification rights and filed a third-party
complaint against it pursuant to the Partnership's rights of
contractual indemnity. The Partnership also answered the
amended complaint and filed a cross-claim against Disney's
affiliate, Walt Disney World Company, for common law indemnity
and contribution. The Partnership completed settlements in this
case with the condominium associations and their members during
the second quarter of 2004.
ARVIDA/JMB PARTNERS: FL Court Dismisses Homeowner Fraud Lawsuit
---------------------------------------------------------------
The Circuit Court of the 17th Judicial Circuit in and for
Broward County, Florida dismissed the class action filed against
Arvida/JMB Partners, L.P., its General Partner Arvida/JMB
Managers, Inc., and certain related and unrelated parties,
styled "Rothal v. Arvida/JMB Partners Ltd. et al., Case No. 03-
10709 CACE 12."
In this suit that was originally filed on June 20, 2003,
plaintiffs purport to bring a class action allegedly arising out
of construction defects occurring during the development of
Camellia Island in Weston, which has approximately 150 homes.
On September 20, 2004, plaintiffs filed a twelve count amended
complaint seeking unspecified general damages, special damages,
statutory damages, prejudgment and post-judgment interest,
costs, attorneys' fees, and such other relief as the court may
deem just and proper. Plaintiffs complain, among other things,
that:
(1) the homes were not built of high quality and adequate
construction,
(2) the homes were not built in conformity with the South
Florida Building Code and plans on file with Broward
County, Florida,
(3) the roofs were not properly attached or were
inadequate,
(4) the truss systems and installation thereof were
improper, and
(5) the homes suffer from improper shutter storm protection
systems.
The amended complaint was dismissed pursuant to the
Partnership's motion to dismiss and the plaintiffs were given
the right to file a further amended complaint. The Partnership
will file an appropriate response to the further amended
complaint, when filed.
ASAP MEDS: Forges Settlement With FL AG Crist Over Price-Gouging
----------------------------------------------------------------
Florida Attorney General Charlie Crist's office reached an
agreement with Broward County-based ASAP Meds, Inc., doing
business as Meds-Stat, relating to allegations that the company
committed price gouging on flu vaccinations during last year's
vaccination shortage. Under the agreement, the company will
refrain from further flu vaccine sales and will provide more
than $220,000 in reparation for its activities.
In October 2004, the Attorney General's Office sued Meds-Stat
for deceptive and unfair trade practices over the pricing of flu
vaccines. The company was selling vials of flu vaccine, which
contained 10 doses per vial, for $900 when the normal price
range was $63-$85 per vial. This amounted to a markup of more
than 900 percent per vial. The suit included both a request for
an injunction that would prevent Meds-Stat from selling vaccines
at unconscionable prices and a request for damages and penalties
as allowed by law. A court order was entered against Meds-Stat
shortly after the lawsuit was filed preventing the company from
buying or selling any more flu vaccines. The company was also
required to surrender the remaining vaccines, which were made
available to the public free of charge.
"Price gouging is the worst example of taking advantage of those
in situations of great need," said Attorney General Crist.
"There is no excuse for anyone to capitalize on the unfortunate
situation caused by the vaccine shortage, and this agreement
will prevent the company from participating in such activities
in the future."
Under the agreement, Meds-Stat must permanently refrain from
selling flu vaccine. Meds-Stat also agreed that it will refrain
from intentionally making false statements to consumers relating
to how much of a given drug is in stock, how quickly it is being
sold and how long the current supply will last. In addition, the
company will provide $150,000 for the Teen Empowerment Program,
affiliated with the University Area Community Development
Corporation, Inc. This program provides job training,
employability skills, cultural, recreational and educational
activities to at-risk youth in the Tampa-Hillsborough area.
Meds-Stat will also submit more than $71,000 to be used to
assist pharmacies that were affected by Meds-Stat's activities.
AUDIOVOX CORPORATION: Asks DE Court To Dismiss Derivative Suit
--------------------------------------------------------------
Audiovox Corporation asked the Court of Chancery of the State of
Delaware, New Castle County to dismiss the consolidated
derivative and class action filed against it, Audiovox
Communications Corporation (ACC) and the Company's directors,
styled "In re Audiovox Corporation Derivative Litigation."
During the fourth quarter of 2004, several purported derivative
and class actions were filed. On January 10, 2005, Vice
Chancellor Steven Lamb of the Court of Chancery granted an order
permitting the filing of a Consolidated Complaint by several
shareholders of Audiovox Corporation derivatively on behalf of
the Company. The complaint seeks rescission of agreements;
amendments to long-term incentive awards; and severance payments
pursuant to which the Company and ACC executives were paid from
the net proceeds of the sale of certain assets of ACC to
UTStarcom, Inc. The suit also seeks disgorgement to ACC of $16
million paid to Philip Christopher pursuant to a Personally Held
Intangibles Purchase Agreement in connection with the UTStarcom
Transaction and disgorgement to the Company of $4 million paid
to Philip Christopher as compensation for termination of his
Employment Agreement and Award Agreement with ACC. The suit
also seeks disgorgement to ACC of $1,916,477 paid to John Shalam
pursuant to an Award Agreement with ACC, and recovery by ACC of
$5 million in severance payments distributed by Philip
Christopher to ACC's former employees. ACC is sued as a nominal
defendant only.
AUDIOVOX CORPORATION: Faces Consolidated IL Suit Over 911 Calls
---------------------------------------------------------------
Plaintiffs filed a consolidated amended class action against
Audiovox Corporation, other manufacturers of wireless phones and
cellular service providers in the United States District Court
for the Northern District of Illinois.
Two class action lawsuits were initially filed, alleging non-
compliance with Federal Communications Commission ("FCC")
ordered emergency 911 call processing capabilities. These
lawsuits were consolidated and transferred to the United States
District Court for the Northern District of Illinois, which in
turn referred the cases to the FCC to determine if the
manufacturers and service providers are in compliance with the
FCC's order on emergency 911 call processing capabilities.
During the third quarter of 2004, the FCC confirmed that
plaintiffs' interpretation of the FCC's second order on
emergency 911 call processing capabilities was incorrect and as
a result, plaintiffs have filed a consolidated amended
complaint. Defendants have moved to dismiss the consolidated
amended complaint, but to date, the motion has not been heard.
The suit is styled "Becker, et al v. Toshiba Corp, et al, case
no. 1:03-cv-02605," filed in the United States District Court
for the Northern District of Illinois, under Judge John F.
Grady. Representing the plaintiffs is Roger F. Claxton, Claxton
& Hill Mail: 3131 McKinney Avenue, Suite 700 LB103 Dallas, TX
75204-2471 Phone: (214)-969-9029
BIOGEN IDEC: Shareholders Launch Securities Fraud Lawsuits in MA
----------------------------------------------------------------
Biogen Idec, Inc., its Executive Chairman William H. Rastetter,
and its Chief Executive Officer James C. Mullen faces two
securities class actions filed in the United States District
Court for the District of Massachusetts.
On March 2, 2005, a purported class action, captioned "Brown v.
Biogen Idec Inc., et al.," was filed, alleging violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder. The action is purportedly
brought on behalf of all purchasers of the Company's publicly-
traded securities between February 18, 2004 and February 25,
2005.
The plaintiff alleges that the defendants made materially false
and misleading statements regarding potentially serious side
effects of TYSABRI in order to gain accelerated approval from
the FDA for the product's distribution and sale. The plaintiff
alleges that these materially false and misleading statements
harmed the purported class by artificially inflating the
Company's stock price during the purported class period and that
company insiders benefited personally from the inflated price by
selling the stock. The plaintiff seeks unspecified damages, as
well as interest, cost and attorneys' fees.
A substantially similar action, captioned "Grill v. Biogen Idec
Inc., et al.," was filed on March 10, 2005 in the same court by
another purported class representative.
BIOGEN INC.: Continues To Face Average Wholesale Pricing Suits
--------------------------------------------------------------
Biogen, Inc. (now Biogen Idec MA, Inc., one of Biogen Idec,
Inc.'s wholly-owned subsidiaries) Biogen Idec, Inc., and several
other major pharmaceutical and biotechnology companies face
several class actions related to Medicaid Average Wholesale
Pricing (AWP).
The suits were filed by the County of Suffolk, New York, the
County of Westchester, New York, the County of Rockland, New
York, the County of Nassau, New York, the County of Onondaga,
New York, the County of Chenango, New York, the County of Erie,
New York, the City of New York and the County of Chautauqua, New
York. All of the cases are pending in the U.S. District Court
for the District of Massachusetts, with the exception of the
Onondaga, Chenango and Chautauqua lawsuits, which are expected
to be transferred to the U.S. District Court for the District of
Massachusetts, and the Erie lawsuit, which is pending in the
Supreme Court of the State of New York for the County of Erie.
The complaints allege that the defendants:
(1) fraudulently reported the Average Wholesale Price for
certain drugs for which Medicaid provides
reimbursement, also referred to as Covered Drugs;
(2) marketed and promoted the sale of Covered Drugs to
providers based on the providers' ability to collect
inflated payments from the government and Medicaid
beneficiaries that exceeded payments possible for
competing drugs;
(3) provided financing incentives to providers to over-
prescribe Covered Drugs or to prescribe Covered Drugs
in place of competing drugs; and
(4) overcharged Medicaid for illegally inflated Covered
Drugs reimbursements.
The complaints allege violations of New York state law and
advance common law claims for unfair trade practices, fraud, and
unjust enrichment. In addition, all of the complaints, with the
exception of the County of Erie, allege that the defendants
failed to accurately report the "best price" on the Covered
Drugs to the Secretary of Health and Human Services pursuant to
rebate agreements entered into with the Secretary of Health and
Human Services, and excluded from their reporting certain drugs
offered at discounts and other rebates that would have reduced
the "best price."
The Suffolk, Westchester, Rockland, and Nassau County complaints
also claim that the Company violated the Racketeering Influence
and Corrupt Organizations Act (RICO) 18 U.S.C. 1962(c).
In September 2003, the Company joined other named defendants in
filing a motion to dismiss the Suffolk County complaint. The
Company also separately filed a motion on its own behalf arguing
that the plaintiffs made no specific factual allegations against
it to connect it with the alleged scheme. In September 2004, the
court, in ruling on defendants' joint motion to dismiss, allowed
the motion, in part, and dismissed the RICO claim, the Medicaid
best price claim, the breach of contract claim, and the common
law fraud claim. The court did not dismiss the claims brought
under the New York State Medicaid and Social Services statutes,
the unfair trade practices claim, or the claim for unjust
enrichment.
In October 2004, the court issued a partial decision on the
Company's individual motion to dismiss. The court dismissed all
of the state law claims against the Company based on the alleged
failure to report best price, but deferred ruling on the fraud-
based claims and ordered Suffolk County to produce all documents
in support of its fraud-based claims. Suffolk County
subsequently produced documents in response to the court's
request and the Company renewed its motion to dismiss. Neither
Biogen nor the other defendants have answered or responded to
the other complaints, as all of the plaintiffs except Erie
County have agreed to stay the time to respond until the
resolution of the pending motion to dismiss the Suffolk County
complaint.
BLUE BIRD: Recalls 2108 MY 2004-06 Buses For Brake System Defect
----------------------------------------------------------------
Blue Bird Body Company in cooperation with the National Highway
Traffic Safety Administration's Office of Defects Investigation
is voluntarily recalling about 2108 units of 2004-2006 Blue
Bird/Vision Buses.
According to ODI, on certain Blue Bird MY 2004-2006 Vision
school buses equipped with hydraulic brakes manufactured between
March 24, 2003 and April 25, 2005. The hydraulic brake dash
warning light was incorrectly labeled with the Canadian version,
which uses symbols rather than words as required by the Federal
Motor Vehicle Safety Standard No. 105, hydraulic and electric
brake systems.
As a consequence, the original dash warning light displays an
international symbol on the brake warning light indicator
whereas FMVSS 105 requires the word "brake" to be displayed. The
operator may not recognize the international symbol as a warning
indicating a problem in the hydraulic brake system, which could
result in a vehicle crash should the warning not be heeded.
To remedy this Blue Bird will mail replacement decals with
correct nomenclature for the brake dash-warning indicator light.
For more details, contact Blue Bird by Phone: 478-822-2242 or
the NHTSA Auto Safety Hotline: 1-888-327-4236.
COMMUNITY BANCSHARES: Settles With 2 Plaintiffs in AL Fraud Suit
----------------------------------------------------------------
Community Bancshares, Inc. settled the claims of two plaintiffs
in the class action filed against it and Community Bank in
Alabama State Court, styled "William Alston, Murphy Howard, and
Jason Tittle v. Community Bancshares, Community Bank, Holsombeck
Motors, Inc., Lee Brown d/b/a Alabama Bond & Investigation a/k/a
ABI Recovery, Chris Holmes d/b/a Alabama Bond & Investigation
a/k/a ABI Recovery, Regina Holsombeck, Kennon "Ken" Patterson,
Sr., Hodge Patterson, James Timothy "Tim" Hodge, Ernie Stephens,
and the State of Alabama Department of Revenue."
On October 11, 2002, the plaintiffs filed a class action against
the defendants alleging that the Company and others conspired or
used extortionate methods to effect a lending scheme of
"churning phantom loans," and that profits from the scheme were
used to secure an interest in and/or to invest in an enterprise
that affects interstate commerce. The plaintiffs specifically
allege that Community Bank used various methods to get
uneducated customers with fair to poor credit to sign numerous
"phantom loans" when the customers only intended to sign for one
loan. Claims include racketeering activity within the meaning
of the Racketeer Influenced and Corrupt Organizations Act of
1970, conspiracy, spoliation, conversion, negligence,
wantonness, outrage, and civil conspiracy.
On February 17, 2004, an amended complaint was filed in this
lending acts litigation. The amended complaint, which completely
replaces the original complaint, omits class action and
racketeering claims and alleges violations of the Truth in
Lending Act and Regulation Z of the Federal Reserve Board in
addition to conversion, negligence, outrage, suppression, fraud
and misrepresentation, trespass, conspiracy and failure to
provide notice before disposition of collateral for loans.
On April 2, 2004, eighty-one individuals, most of whom were
formerly members of the purported class in the lending acts
litigation filed by Mr. Alston, filed suit against Community
Bancshares, Community Bank and a former Community Bank employee
in the Circuit Court of Jefferson County, Alabama. This suit
claims that the defendants injured the plaintiffs, primarily in
connection with lending at Community Bank's office in Double
Springs, Alabama, by wrongfully taking property, committing
fraud, furnishing inaccurate information to credit reporting
agencies, negligently hiring, training and supervising
employees, negligently handling customer accounts, altering loan
documents and failing to honor oral and written contracts with
the plaintiffs.
On February 2, 2005, the Company and Community Bank settled the
claims of Mr. Alston and Mr. Howard for amounts not material to
the financial statements of Community Bancshares.
CONNECTICUT: Suit Launched To Halt New England's First Execution
----------------------------------------------------------------
The planned execution of serial killer Michael Ross would cause
a wave of suicide attempts among troubled Connecticut prisoners,
according to a federal lawsuit that is attempting as to stop New
England's first execution in 45 years, The Associated Press
reports.
Mr. Ross has decided to forgo further appeals and accept his
death sentence, which is to be carried out by lethal injection
early Friday, but those trying to stop his execution say the
move amounts to state assisted suicide. According to the suit,
"If the voluntary execution of Michael Ross is not enjoined,
suicidal and suicide-prone prisoners will be profoundly
negatively influenced by it, suicide contagion will result,
these prisoners will try to kill themselves in the hours, days
and weeks following Michael's death, the Department of
Correction will be impotent to prevent or respond to many of
these suicides, and one or more of these desperate inmates will
suffer profound injuries and others will succeed in taking their
own lives."
Filed in U.S. District Court in Bridgeport but was scheduled to
be heard by U.S. District Judge Christopher Droney in Hartford,
the suit was one of several legal maneuvers filed to stop the
lethal injection, including a hearing before the state Supreme
Court brought by Mr. Ross' sister. During that hearing, Mr.
Ross, through an affidavit read by his attorney T.R. Paulding,
made it clear he wants no outside interference.
That affidavit read, "I wish to make it clear that I do not
authorize, endorse concur in or approve of any legal pleadings
or petitions filed in any court anywhere in the time remaining
between the execution of this affidavit and the moment of my
execution unless they are filed by me or attorney T.R. Paulding,
Jr."
Attorneys who have represented Mr. Ross' father Dan Ross, who
has also tried unsuccessfully to stop his son's execution, filed
the class action lawsuit on behalf of a mentally ill inmate.
The suit states that at least 11 suicides have occurred in
Connecticut prisoners in the past year, the worst rate in the
department's history. It also points out, "This is the
catastrophic state of affairs at the Connecticut Department of
Correction even without the epidemic of contagion suicides that
will follow in the wake of Michael's execution on May 13."
Suicide contagion is well recognized by prison officials,
according to the lawsuit, which quotes Connecticut's former
corrections commissioner warning about the phenomenon in another
case.
CONSUMER PORTFOLIO: Forges Settlement For Cross-Claim in CA Suit
----------------------------------------------------------------
Consumer Portfolio Services, Inc. reached a settlement for the
cross-claim in a class action filed in the California Superior
Court, Los Angeles County.
The original plaintiffs in that case were persons entitled to
receive regular payments (the "Settlement Payments") under out-
of-court settlements reached with third party defendants.
Stanwich Financial Services Corporation, an affiliate of the
former Chairman of the Board of Directors of the Company, is the
entity that was obligated to pay the Settlement Payments.
Stanwich has defaulted on its payment obligations to the
plaintiffs and in June 2001 filed for reorganization under the
Bankruptcy Code, in the federal Bankruptcy Court of Connecticut.
At year-end, the Company was a defendant only in a cross-claim
brought by one of the other defendants in the case, Bankers
Trust Company, which asserted a claim of contractual indemnity
against it. Subsequent to year-end, the Company settled the
cross-claim of Bankers Trust by payment of $3.24 million, on or
about February 8, 2005. Pursuant to that settlement, the court
has dismissed the cross-claim, with prejudice.
CONSUMER PORTFOLIO: Appeals Remand of Consumer Suit To AL Court
---------------------------------------------------------------
Consumer Portfolio Services, Inc. appealed the remand of a
consumer class action filed against it to The Circuit Court of
Tuscaloosa, Alabama.
On November 15, 2000, Denice and Gary Lang filed a lawsuit
against the Company in South Carolina Common Pleas Court,
Beaufort County, alleging that they, and a purported nationwide
class, were harmed by an alleged failure to refer, in the notice
given after repossession of their vehicle, to the right to
purchase the vehicle by tender of the full amount owed under the
retail installment contract. They sought damages in an
unspecified amount.
The Company filed a counterclaim to recover any delinquent
amounts owed by the members of the putative class in the event
that the class became certified. In February 2004, the Company
reached an agreement to settle that case on a class basis for
payment of attorneys' fees and other immaterial consideration.
On June 2, 2004, Delmar Coleman filed a lawsuit in the Circuit
Court of Tuscaloosa, Alabama, making allegations similar to
those that were asserted in the Lang case, and seeking damages
in an unspecified amount, on behalf of a purported nationwide
class. The Company removed the case to federal bankruptcy court,
and filed a motion for summary judgment as part of its adversary
proceeding against the plaintiff in the bankruptcy court. The
federal bankruptcy court granted the plaintiff's motion to send
the matter back to Alabama state court. The Company has
appealed the ruling. Although the Company believes that it has
one or more defenses to each of the claims made in this lawsuit,
no discovery has yet been conducted and the case is in its
earliest stages.
CONSUMER PORTFOLIO: Faces Consumer Fraud Suit in CA State Court
---------------------------------------------------------------
Consumer Portfolio Services, Inc. faces a class action filed in
the California Superior Court, San Diego County, alleging
improper practices related to the notice given after
repossession of a vehicle that he purchased.
Plaintiff Jeremy Henry filed the suit in June 2004, styled a
class action, though no motion for class certification has yet
been filed. The Company and its subsidiary have a number of
defenses that may be asserted with respect to the claims of Mr.
Henry, the Court said in a disclosure to the Securities and
Exchange Commission.
CORPORATE COMPLIANCE: FL AG Launches Consumer Fraud Complaint
-------------------------------------------------------------
Attorney General Charlie Crist filed a civil lawsuit against a
California company and its owner under Florida's Deceptive and
Unfair Trade Practices Act for attempting to defraud thousands
of Floridians in early May 2005.
The Corporate Compliance Center (CCC) solicited Florida
corporations across the state implying the business had to
submit a $100 fee and file their corporate minutes with the
state, and that directors and owners could be personally liable
for sums in excess of their stock if they failed to keep these
minutes.
An investigation launched by the Attorney General's office in
March, revealed that CCC mailed out an "Annual Minutes
Compliance Notice" to businesses throughout the United States,
including Florida. The solicitation looks similar to the Florida
Department of State's For Profit Corporation Uniform Business
Report form but requested a fraudulent $100 fee. The
solicitation's official appearance conveyed the false impression
that businesses were required to pay the fee to create minutes
of corporate meetings in order to avoid official late fees.
"Those behind this outfit claimed they were from the government
and here to help -- they were lying on both accounts," said the
Attorney General. "Florida's business owners can be assured we
will prosecute companies or individuals who defraud Florida
businesses."
The investigation was in response to a request from the
Secretary of State's office after that office received numerous
telephone calls about the notice. According to complaints
received, several recipients of CCC's solicitation believed it
was a legitimate requirement. In this case, the address provided
for the Corporate Compliance Center was 400 Capital Circle,
Suite 18-403, Tallahassee, FL 32301. That location proved to be
a local United Parcel Service (UPS) Store, from which mail was
forwarded unopened to an address in California. The
investigation revealed that similar acts occurred in Arizona and
California in 2002. The Attorney General is seeking restitution
in the amount of $100 for each victim, plus $10,000 for each
violation by CCC. The total number of victims in unknown.
Any business owner who believes he has been a victim should call
the Attorney General's Fraud Hotline toll free at
1-866-9-NO-SCAM (866-966-7226). A copy of the complaint is
available at http://myfloridalegal.com/RenewalComplaint.pdf.
D&G AUTO: IL Attorney General Commences Consumer Fraud Complaint
----------------------------------------------------------------
Illinois Attorney General Lisa Madigan filed a lawsuit against a
DuPage County used car dealership for allegedly accepting trade-
ins but failing to pay off the remaining car loan balances. The
complaint also alleges the dealership resold cars to
unsuspecting consumers without providing proper titles or
informing customers of outstanding liens against the cars.
The lawsuit, filed on May 2, 2005 in DuPage County Circuit
Court, names as defendants D&G Auto Sales, Inc., formerly
located on North Avenue in Lombard, and its owner, David Goldby.
Mr Goldby closed D&G Auto in the late summer or early fall of
2004. The defendants are charged with violations of the Illinois
Consumer Fraud and Deceptive Business Practices Act and the
Illinois Motor Vehicle Retail Installment Sales Act.
Since September 2002, seven consumers have filed complaints with
Attorney General Madigan's Consumer Protection Division against
D&G Auto. Some of the complainants allege D&G Auto took
possession of trade-in vehicles and accepted responsibility for
paying off the consumers' trade-in liens, transferring the
titles and registrations and paying additional fees. However,
the lawsuit contends that D&G Auto failed to pay the loan
balances due on the trade-in vehicles and on some occasions
wrote "pay off" checks that were returned as unpaid due to
insufficient funds. These unpaid loans negatively affected the
sellers' credit histories.
Other complainants reported to the Attorney General's office
that D&G Auto resold cars without informing customers about the
remaining unpaid loan balances. On at least one occasion when
D&G Auto failed to pay the loan to release the lien against a
car it already had resold, the car was repossessed and the used
car purchaser was left without a car and without the money paid
to D&G Auto during the original transaction.
"The fraudulent practices of D&G Auto hurt both the used car
sellers and purchasers, leaving them either with outstanding
loans for cars they no longer possessed or expensive liens
against used cars they had purchased," Attorney General Madigan
said. "When consumers engage in financially responsible
transactions, it is unacceptable -- and illegal -- for a third
party to ruin consumers' credit with irresponsibility and
deceptive practices."
The lawsuit asks the court to prohibit the defendants from
engaging in the business of selling motor vehicles in Illinois.
The lawsuit also seeks a civil penalty of $50,000 and additional
penalties of $50,000 per violation found to be committed with
the intent to defraud. Finally, the lawsuit asks the court to
order the defendants to pay restitution to consumers.
The Attorney General's office provides fact sheets for consumers
regarding the purchase of new and used vehicles on its Web site
at the Website:
http://www.illinoisattorneygeneral.gov/consumers/new_vehicle.pdf
and
http://www.illinoisattorneygeneral.gov/consumers/used_vehicle.pd
f. Consumers who believe they have been victims of D&G Auto
or another consumer fraud scam can download a complaint form at
the Website: http://www.IllinoisAttorneyGeneral.gov/consumersor
call the Attorney General's Consumer Fraud Hotline at the
following numbers:
Chicago: 1-800-386-5438 and 1-800-964-3013 (TTY)
Springfield: 1-800-243-0618 and 1-877-844-5461 (TTY)
Carbondale: 1-800-243-0607 and 1-877-675-9339 (TTY)
Spanish-language hotline: 1-866-310-8398
Assistant Attorney General Sarah Alipourian is handling the case
for Attorney General Madigan's Chicago Consumer Fraud Bureau.
DEL WEBB: Sun-City Summerlin Homeowners Launch Mold Suit in NV
--------------------------------------------------------------
Homeowners in Sun-City Summerlin initiated a class action
lawsuit in Nevada alleging that there are stucco-related defects
in more than 1400 homes, defects, which according to them could
allow mold to grow inside the walls, creating a health hazard
for the senior citizens who live in this community, The KVBC
reports.
Glenn Hayward, who has a beautiful golf course home in Sun-City
initiated the class-action lawsuit accusing homebuilder Del Webb
of knowingly deviating from standard building practices by
eliminating a stucco feature known as a "weep screed," a metal
barrier that allows moisture to escape from behind the stucco.
Without that feature, Mr. Hayward claims his stucco cracked and
crumbled and allowed large patches of mold to grow inside the
walls.
The lawsuit, which alleges that each home may have already
sustained 50-thousand dollars worth of damage as a result of the
way they were built, is demanding that Del Webb pay for repairs
to all of the affected homes. Though attorneys for Del Webb are
still reviewing the allegations, the company did give KVBC a
brief statement saying that they stand behind their homes and
will work diligently with homeowners to resolve any issues.
EDWARD D. JONES: Asks MO Court To Dismiss Securities Fraud Suit
---------------------------------------------------------------
Edward D. Jones & Co., L.P. asked the United States District
Court for the Eastern District of Missouri to dismiss the
consolidated securities class action filed against it, styled
"Spahn IRA, et al. v. Edward D. Jones & Co., L.P., et al."
The Amended and Consolidated Complaint alleges that the
Partnership violated Section 10(b), 12(2), and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder, by
failing to adequately disclose its revenue sharing arrangements
to customers. Plaintiffs seek to represent a class of all
persons who purchased shares of the Preferred Family mutual
funds from January 25, 1999 through December 2004.
The Partnership has filed a Motion to Dismiss the Amended and
Consolidated Complaint, which motion is in the process of being
briefed. No class has been certified in these cases.
EDWARD D. JONES: MO Court Refuses To Dismiss Investor Fraud Suit
----------------------------------------------------------------
The Circuit Court for the City of St. Louis, Missouri refused to
dismiss the class action filed against Edward D. Jones & Co.,
L.P., styled "Enriquez, et al. v. Edward D. Jones & Co., L.P.,
et al."
Plaintiffs allege that the Partnership breached fiduciary duties
to its customers by receiving revenue sharing payments in
exchange for the mere holding of mutual fund shares under
management without making a disclosure to those customers. In
addition, Plaintiffs allege that the Partnership was unjustly
enriched by the receipt of revenue sharing associated with those
customers mutual fund shares held under management. Plaintiffs
seek to represent a class of all Partnership customers who held
Preferred Family mutual fund shares during the period of January
1999 through December 2004.
The Partnership filed a Motion to Dismiss the Petition, which
was denied in January 2005. The Partnership is seeking a
discretionary appellate review of the dismissal order. No class
has been certified in this case, although a request for class
certification has been filed.
EDWARD D. JONES: Asks CA Court To Dismiss Unfair Trade Lawsuit
--------------------------------------------------------------
Edward D. Jones & Co., L.P. asked the Superior Court for Los
Angeles, California to dismiss the class action filed against
it, styled "Bressler, et al. v. Edward D. Jones & Co., L.P."
This case was filed in February 2004. Plaintiffs, in their
Amended and Consolidated Complaint, allege that the Partnership
violated Section 17200 of the California Business and
Professions Code by failing to disclose the receipt of revenue
sharing associated with customers holding of mutual fund shares
under management at the partnership. In addition, Plaintiffs
allege that the Partnership breached fiduciary duties by
accepting account fees and revenue sharing incident to the
holding of mutual fund shares without adequate disclosures, as
well as alleging unjust enrichment. The Plaintiffs only seek to
represent California resident customers of the Partnership who
held Preferred Family mutual fund shares from January 1999
through 2004. It is estimated that California residents account
for approximately 5% to 5.5% of the Partnership's business.
The Partnership has filed a Motion to Dismiss the Amended and
Consolidated Complaint, which has yet to be heard by the Court.
No class has yet been certified.
GEXA CORPORATION: TX Court Dismisses Suit For Securities Fraud
--------------------------------------------------------------
The United States District Court for the Southern District of
Texas, Houston Division dismissed without prejudice the
securities class action filed against Gexa Corporation, styled
"Frederick T. Pappey, et al. vs. Gexa Corp., Neil Leibman,
Marcie Zlotnik and Sarah Veach, Civil Action No. H-04-2869."
The complaint alleges, among other things, that the Company's
publicly filed reports and public statements contained false and
misleading information, which resulted in damages to the
plaintiff and members of the proposed class when they purchased
Company securities. Specifically, the complaint alleges that the
Company overstated revenue during the second and third quarters
of 2003 by $2.07 million and $2.05 million, respectively, by
utilizing an improper accounting method for calculating sales of
electric power.
The complaint alleges that the Company's conduct and the conduct
of the other defendants violated Sections 10(b) and 10b-5 and
that the individual defendants violated Section 20(a) of the
Securities Exchange Act of 1934. The complaint seeks
unspecified damages.
GLAXOSMITHKLINE INC.: Signs Consent Decree On Facility Problems
---------------------------------------------------------------
GlaxoSmithKline, Inc. (GSK), (through its U.S. subsidiaries SB
Pharmco Puerto Rico, Inc., GlaxoSmithKline Puerto Rico Inc., and
SmithKline Beecham Corporation), signed a consent decree with
the United States Food and Drug Administration (FDA) to correct
manufacturing deficiencies at its Cidra, Puerto Rico facility,
The U.S. Food and Drug Administration (FDA) announced in an
April 28,2005 statement.
FDA is concerned that the Company's violation of manufacturing
standards may have resulted in the production of drug products
that could potentially pose risks to consumers. The Decree
requires GSK to post a penal bond of $650,000,000 contingent
upon GSK's either successfully reconditioning drugs seized in
March 2005 or destroying them and paying costs to the
government.
"The consent decree shows that FDA is serious about enforcing
the manufacturing standards essential for safe and effective
prescription drugs," said John Taylor, FDA Associate
Commissioner for Regulatory Affairs. "It should also reassure
the American people that we are doing everything we can to
preserve the integrity of the American drug supply."
FDA's last inspection found Paxil CR tablets, approved to treat
depression and panic disorder, could split apart. This
deficiency could cause patients to receive a portion of the
tablets that lacks any active ingredient, or alternatively a
portion that contains an active ingredient and does not have the
intended controlled-release effect. Additionally, FDA found that
some Avandamet tablets, used to treat Type II diabetes, did not
have an accurate dose of rosiglitazone, an active ingredient in
this product.
The FDA urges patients who use these two drugs to continue
taking their medication and to talk with their health care
provider about possible alternative products until the
manufacturing issues have been resolved.
Under the terms of this decree the company has agreed to take
measures to ensure that its Cidra facility and the two drugs,
Paxil CR and Avandamet, fully comply with current Good
Manufacturing Practice ( cGMP) requirements and to ensure that
ongoing shipments have the quality attributes they are required
to possess. The decree also requires that all corrections and
the firm's compliance with cGMP requirements be certified by a
third-party expert. Additionally, FDA will continue to monitor
these activities through its inspections.
The Decree was presented on April 27,2005 for consideration by
the United States District Court for the Eastern District of
North Carolina. The Decree will take effect after it has been
signed and entered by the Court.
IBIS TECHNOLOGY: MA Court Yet To Rule on Stock Lawsuit Dismissal
----------------------------------------------------------------
The United States District Court for the District of
Massachusetts has yet to rule on the motion to dismiss the
consolidated securities class action filed against Ibis
Technology Corporation, styled "In re Ibis Technology Securities
Litigation, C.A. 04-10446 RCL."
Five class action securities lawsuits were initially filed,
namely:
(1) Martin Smolowitz v. Ibis Technology Corporation., et
al., Civ. No. 03-12613 (RCL)
(2) Fred Den v. Ibis Technology Corporation., et al., Civ.
No. 04-10060 (RCL)
(3) Weinstein v. Ibis Technology Corporation., et al., Civ.
No. 04-10088 (RCL)
(4) George Harrison v. Ibis Technology Corporation., et
al., Civ. No. 04-10286 (RCL)
(5) Eleanor Pitzer v. Ibis Technology Corporation, et al,
Civ. No. 04-10446 (RCL)
On July 6, 2004, a consolidated amended class action complaint
was filed which alleges, among other things, that the Company
violated federal securities laws by allegedly making
misstatements to the investing public relating to demand for
certain Ibis products and intellectual property issues relating
to the sale of the i2000 oxygen implanter. The plaintiffs are
seeking unspecified damages.
On August 5, 2004, the Company filed a motion to dismiss the
consolidated amended complaint on the grounds, among others,
that it failed to state a claim on which the relief could be
granted. That motion now has been fully briefed, and the Company
is awaiting ruling on it from the Court.
ILLINOIS: County Judge Enters Default Judgment V. Diamond Giants
----------------------------------------------------------------
After the failing to respond to a class action lawsuit filed
against diamond giants De Beers Centenary A.G. and DB
Investments by Madison County couple Emert and Katie Null,
Madison County Circuit Judge George Moran Jr. entered a default
judgment order against the duo, The Madison County Record
reports.
Court documents show that attorneys Stephen Tillery, Donald
Flack and Eugene Barash of Korein Tillery of St. Louis filed
suit against them the day before President George W. Bush signed
the Class Action Fairness Act into law on February 17. The suit
alleges DeBeers has a monopoly on the diamond market and in
addition accuses the Swiss company of restraining trade,
increasing prices, controlling inventory, limiting supply,
restricting purchase and falsely advertising the scarceness of
diamonds. According to the complaint, "These actions have
caused both the price and demand for diamonds to remain
artificially high and thus have caused diamond purchasers actual
damages."
Barring any filing by De Beers to set aside the default
judgment, which it has however not yet filed, Judge Moran stated
in his order that he will set hearings on class certifications
and damages, but has yet to set a date.
The class action names DB Investments of Luxembourg, which owns
De Beers S.A., De Beers S.A. of Luxembourg, which owns
Consolidated Mines, Consolidated Mines of South Africa, De Beers
Centenary A.G. of Switzerland, and Diamond Trading Company, the
marketing arm of the De Beers Group of the United Kingdom.
Additionally, the Null's are claiming in their suit that in
October of 1999, De Beers Chairman Nicky Oppenheimer, speaking
at a gathering of Harvard alumni, went so far as to boast about
De Beers illegal monopolistic behavior, stating that De Beers
"likes to think of itself as the world's longest running
monopoly.and seeks to manage the diamond market, to control
supply, to manage prices and to act collusively with our
partners in the business."
The class action is brought on behalf of diamond purchasers to
recover damages for violations of the Illinois Consumer Fraud
and Deceptive Business Practice Act and for unjust enrichment.
The suit also claims, "The Court has jurisdiction over the
defendants as they either maintain their principal place of
business within Illinois, are registered to do business in
Illinois, or conduct substantial business within Illinois. In
addition, the acts giving rise to the causes of action stated
occurred in the State of Illinois." It goes on to state, "Venue
is proper in this Court pursuant to 735 ILCS 5/2-101 as
defendants' liability arose, in part, in this county, and they
may be found here." It also reiterates that the action is not
based on federal law and the Nulls do not seek and will not
accept recovery in excess of $75,000 exclusive of costs and
interest.
The Nulls claim that for more than a century the De Beers
"cartel" has dominated the market for rough diamonds in the
United States and worldwide controlling as much as 80 percent of
the world diamond supply. Currently, De Beers controls 50
percent of the world's diamond supply, and an even greater
percentage of the world's supply of two-carat and larger rough
diamonds, according to the suit.
In 2003 alone, the Nulls claim De Beers sold $5.52 billion worth
of rough diamonds, and used its market dominance to raise the
price of rough diamonds three times during the year, allegedly
creating a 10 percent hike in rough diamond prices. "Over the
years including presently, De Beers has used its monopolistic
power to illegally and artificially restrain trade and increase
the price of diamonds by controlling inventory," the complaint
states.
INTERSTATE BAKERIES: MO Judge OKs $18M Suit Settlement Proposal
---------------------------------------------------------------
Federal Judge Fernando Gaitan Jr. gave preliminary approval to
an $18 million settlement proposed by Interstate Bakeries Corp.,
the bankrupt maker of Wonder Bread and Twinkies, to end a class-
action lawsuit brought against it by shareholders, The
Associated Press reports.
In a ruling filed in U.S. District Court of Western Missouri,
the judge stated that he accepted the settlement and thus
summarily scheduled an August 26 hearing of arguments from
shareholders opposed to the agreement and to determine
attorneys' fees. The class covers all shareholders who owned
Interstate Bakeries stock between April 2, 2002, and April 8,
2003.
As previously reported in the September 30, 2004 edition of the
Class Action Reporter, the shareholders' class action suit
claims that company officials intentionally misled investors
during a September 2002 conference call by saying snack cake
sales were rebounding. Several officials sold $16 million worth
of stock after the conference call, and when the company
reported in December that sales continued to fall, the stock
lost 35 percent of its value.
The nation's largest wholesale baker disclosed the settlement in
securities filings last year and signed the agreement on
September 21, a day before filing for Chapter 11 bankruptcy
protection from creditors, blaming a continued decline in sales
and fixed or increasing operational and employee costs.
Under the settlement, Interstate Bakeries would pay $3 million
and its insurers would pay the rest. The settlement though has
been on hold while both sides waited for U.S. Bankruptcy Judge
Jerry Venters, who is overseeing the bankruptcy case in Kansas
City, to allow the settlement to go forward.
In his ruling, Judge Gaitan said class members would be treated
as unsecured claims against the company. He also ordered the
plaintiff's attorneys to mail notices to all known class members
and publish notices in national newspapers and on the Web sites
of the law firms and Interstate Bakeries.
KEYSTONE RV: Recalls 174 Cambridge Motorhomes For Crash Hazard
--------------------------------------------------------------
Keystone RV Company is cooperating with the National Highway
Traffic Safety Administration (NHTSA) by voluntarily recalling
174 Keystone Cambridge motor homes, model 2006.
On certain motor homes equipped with tredit wheels, the wheels
may develop a separation at the weld between the center portion
of the wheel and the outer rim. This could result in a wheel
separation increasing the risk of a crash.
Dealers will replace the steel wheels with aluminum wheels. The
recall is expected to begin on May 9,2005. For more details,
contact the Company by Phone: 574-537-3925 or contact the
NHTSA's auto safety hotline: 1-888-327-4236.
MRL INC.: Recalls 597 AED20 Defibrillators Due To Malfunction
-------------------------------------------------------------
MRL, Inc., a Welch Allyn Company, is initiating a voluntary
worldwide recall of 597 AED20 Automatic External Defibrillators
manufactured in Buffalo Grove, IL between February and July of
2004. The AED20 may display a "Defib Comm" error message on the
device display during use resulting in a failure of the device
to analyze the patient's ECG and deliver the appropriate
therapy, which prevents the defibrillator from resuscitating a
patient. This problem occurs when an impact to the exterior of
the AED20 causes a circuit board connector to perforate an
insulation shield enabling an electrical short between the
connector and the external housing of the AED20.
The company has received 12 related complaints with this
specific group of AED20's, including one instance in which the
short may have prevented patient resuscitation. This corresponds
to 2 percent of the 597 recalled devices. The company has taken
corrective action and no other devices besides those
manufactured between the above dates are subject to this
voluntary recall.
MRL, Inc initiated notification via certified mail on May 5,
2005 to its customers who purchased AED20's in this group of
devices (296 of which were sold within the US and 301 outside of
the US). The company is providing customers with a loaner AED20
at no cost while their unit is being serviced and will pay all
costs associated with shipping, handling and corrective service.
This recall is being conducted with the full knowledge of the
U.S. Food and Drug Administration (FDA). FDA has determined that
this action is a Class 1 recall. The FDA defines Class 1 as a
situation in which there is reasonable probability that the use
of or exposure to the product will cause serious adverse health
consequences or death.
Customers with questions may contact the company at
1-800-462-0777 for more information.
NEBRASKA: Judge Grants Certification To Suit V. Mental Hospitals
----------------------------------------------------------------
After a judge ruled that a lawsuit filed on behalf 16 female
patients should be a class action lawsuit that alleges state
officials did nothing to stop sexual assaults and other abuse of
female patients at Nebraska's three mental health hospitals,
more than 1,000 women will be allowed to join the legal action,
The Associated Press reports.
By making the suit a class action, U.S. District Judge Lyle
Strom made it applicable to more than 1,000 women who have lived
or now live at the centers in Lincoln, Hastings and Norfolk.
The suit, filed in 2002 by the Nebraska Advocacy Services Inc.,
the suit alleges that male hospital workers and patients
sexually assaulted women patients.
Bruce Mason, litigation director for Nebraska Advocacy Services
said the request to expand the lawsuit was made after taking
statements and depositions from scores of female patients who
were subjected to "rape, sexual assault, sexual harassment,
sexual exploitation and physical assault," AP reports. In court
documents, Mr. Mason stated, "In one instance, a male staff
member who raped, sexually assaulted, and sexually abused
numerous plaintiffs had a felony criminal record and an
employment record involving sexually inappropriate behavior
resulting in termination from that employment prior to his
hiring at one of the ... facilities."
Additionally, Mr. Mason told AP that he has compiled a list of
alleged assaults at the hospitals during a period from 2001
through part of 2004. He adds though that he has yet to review
records for the rest of 2004 and 2005.
The state had argued that past female patients could not be
certified as class members because they would "no longer be
subject to an ongoing violation of federal law." However, Judge
Strom cited a 1908 U.S. Supreme Court ruling in rejecting that
argument. He pointed out, "The Supreme Court carved out a narrow
exception to this rule. When the claim on the merits is 'capable
of repetition, yet evading review,' the ... plaintiff may
litigate the class certification issue despite loss of his
personal stake in the outcome of the litigation."
He also noted that many of the women have been residents of the
facilities on more than one occasion, "And it is possible that
they could become residents again in the future, due to their
continuing mental illnesses." Judge Strom also said the result
of the lawsuit would apply to future residents at the facilities
and thus set a trial date of October 31.
The lawsuit stems from settlement of a 1995 federal action filed
by four women at the Hastings Regional Center that required the
state to provide better supervision of patients.
NEW YORK: SEC Obtains Order Imposing Penalty V. Cole Bartiromo
--------------------------------------------------------------
The Securities and Exchange Commission reports that U.S.
District Judge Barbara S. Jones of the Southern District of New
York entered an Order granting the Commission's motion for a
preclusion order and summary judgment against Defendant Cole A.
Bartiromo, 17, and Defendant Invest Better 2001 (IB2001), Mr.
Bartiromo's Internet alias. The Order precludes Mr. Bartiromo
from introducing certain evidence based on his refusal to answer
deposition questions and invocation of his Fifth Amendment
privilege, finds that Mr. Bartiromo and IB2001 violated Sections
5(a), 5(c) and 17 (a) of the Securities Act of 1933 and Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder, finds Mr. Bartiromo liable for ill-gotten gains of
$47,216 in addition to the more than $1 million of gains the
defendants previously disgorged to the Court and imposes a civil
penalty against Mr. Bartiromo in the amount of $1,273,371. The
Court found the civil penalty to be appropriate because, among
other things, "the boldness of the fraud conclusively
demonstrates the Defendant's high level of scienter, and because
the risk of loss and the actual loss was substantial. The scheme
ensnared approximately 5,000 victims, and would have continued
to mushroom had Mr. Bartiromo not been caught."
Previously, on May 29, 2002, the District Court issued an
Amended Partial Final Judgment and Order, on consent, which
permanently enjoined Mr. Bartiromo and IB2001 from violating the
above registration and antifraud provisions of the federal
securities laws, directed Mr. Bartiromo and IB2001 to repatriate
all assets outside the United States and deposit such assets
into the Court's account, froze Mr. Bartiromo's and IB20001's
assets and granted other relief.
In its first amended complaint, filed Jan. 7, 2002, the
Commission alleged that Mr. Bartiromo raised more than $1
million from more than 1,000 investors through a scheme known as
"Invest Better 2001," which, from at least Nov. 1, 2001,
purportedly offered "guaranteed" and "risk-free" investment
programs in which IB2001 pooled investors' funds to bet on
sporting events, and promised to repay investors between 125%
and 2500% of their principal within specified periods ranging
from three days to several weeks.
In its second amended complaint, filed April 29, 2002, the
Commission alleged that Mr. Bartiromo conducted an Internet
pump-and-dump scheme in which he manipulated the stock price of
fifteen publicly traded companies from approximately May 14,
2001, to July 5, 2001. More specifically, Mr. Bartiromo
disseminated numerous false and misleading messages concerning
publicly traded companies on the Internet. The complaint alleges
that for each manipulation Mr. Bartiromo purchased large blocks
of stock, consisting in some cases of nearly 50% of the volume
on that day, then posted thousands of identical false messages
on Internet message boards, and subsequently sold his entire
position. According to the second amended complaint, Mr.
Bartiromo posted over 6,000 messages and traded several million
shares of the fifteen companies in this manner, and, as a
result, generated a net profit of over $91,000. The action is
titled, SEC v. Invest Better 2001, Cole A. Bartiromo, and
John/Jane Does 1-10, 01 Civ. 11427 (BSJ) SDNY (LR-19221).
QUIGLEY CORPORATION: Trial Continues in PA Consumer Fraud Suit
--------------------------------------------------------------
Trial in the nationwide class action filed against the Quigley
Corporation is proceeding in the Court of Common Pleas of
Philadelphia County, Pennsylvania.
In September 2000, two individuals, namely Jason Tesauro and
Elizabeth Eley, both residents of Georgia, filed the suit on
behalf of a "nationwide class" of "similarly situated
individuals," alleging that the Plaintiffs purchased certain
Cold-Eeze(R) products between August 1996, and November 1999,
based upon cable television, radio and internet advertisements
which allegedly misrepresented the qualities and benefits of the
Company's products. The Complaint requests an unspecified
amount of damages for violations of Pennsylvania's consumer
protection law, breach of warranty and unjust enrichment, as
well as a judicial determination that the action be maintained
as a class action.
In October 2000, the Company filed Preliminary Objections to the
Complaint seeking dismissal of the action. The Court sustained
certain objections thereby narrowing Plaintiffs' Complaint. In
May 2001, Plaintiffs filed a Motion to Certify the Alleged
Class. The Company opposed the Motion. In November 2001, the
Court held a hearing on Plaintiffs' Motion for Class
Certification. In January 2002, the Court denied in part and
granted in part the Plaintiffs' Motion. The Court denied
Plaintiffs' Motion to Certify a Class based on Plaintiffs' claim
under the Pennsylvania Consumer Protection Law; however, the
Court certified the class based on Plaintiffs' breach of
warranty and unjust enrichment claims. Discovery has been
completed and trial that was originally scheduled for May 2004
has been continued pending determination of certain dispositive
pre-trial motions filed by the Company.
RADIOSHACK CORPORATION: Recalls 1M Cleaners Due To Toxic Hazard
---------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission
(CPSC), RadioShack Corp., of Fort Worth, Texas is voluntarily
recalling about 1,000,000 Wet System Video Head Cleaners.
The cleaning solution bottle, which is labeled as containing
isopropanol, actually contains methanol. Methanol can be fatal
or cause blindness if swallowed. It is much more toxic than
isopropanol. Also, the cleaning solution bottle does not have
special cautionary labeling and child-resistant packaging, as
required by Federal regulation for methanol. RadioShack has
received 39 reports from their poison center of children
accessing this product. No injuries or illnesses have been
reported.
The recalled non-abrasive "Wet System" Video Head Cleaner was
sold in a box labeled "Video Head Cleaner," "RadioShack" and
"44-1230" or "44-1213." The box contains a cleaning video
cassette and a bottle of cleaning solution. The 4-inch-high
white plastic cleaning solution bottle is labeled "Video Head
Cleaning Fluid" or "Cleaning Liquid for HEAD CLEANER." Other
writing on the bottle includes "Contents: Isopropanol," and the
item number "44-1230" or "44-1213."
Manufactured in Chian, the cleaners were sold at all RadioShack
stores nationwide and http://www.radioshack.comfrom December
1995 through January 2005 for about $13.
Consumers should immediately place this product out of reach of
children and return the product to the nearest RadioShack store
for a refund, or dispose of the bottle of cleaning fluid in
accordance with all state and local requirements.
Consumer Contact: Call RadioShack at (800) 843-7422 anytime, or
go to the firm's Web sites: http://www.radioshack.comand
http://www.radioshackcorporation.com.
SILICON STORAGE: Shareholders Lodge Stock Fraud Suits in N.D. CA
----------------------------------------------------------------
Silicon Storage Technology, Inc. and certain of its directors
and officers face a securities class action filed in the United
States District Court for the Northern District of California,
following the Company's announcement of anticipated financial
results for the fourth quarter of 2004. The complaints are
captioned:
(1) Hunt v. Silicon Storage Technology, Inc., et al., Case
No. C 05 00408 WHA (N.D. Cal.);
(2) Baker v. Silicon Storage Technology, Inc., et al., Case
No. C 05 00295 PJH (N.D. Cal.);
(3) Grobler v. Silicon Storage Technology, Inc., et al.,
Case No. C 05 00376 MHP (N.D. Cal.);
(4) Talmo v. Silicon Storage Technology, Inc., et al., Case
No. C 05 00390 MMC (N.D. Cal.); and
(5) DiCintio v. Silicon Storage Technology, Inc., et al.,
Case No. C 05 0708 MMC (N.D. Cal.)
The complaints seek unspecified damages on alleged violations of
federal securities laws during the period from March 22, 2004 to
December 20, 2004. Consolidation and the appointment of lead
plaintiff are currently pending in these purported class
actions.
SINO BESTFOOD: Recalls Apricots Due To Undeclared Sulfites
----------------------------------------------------------
State Agriculture Commissioner Nathan L. Rudgers alerted
consumers that Sino Bestfood, Inc., 7 Koster Blvd., Suite 3B,
Edison, New Jersey 08837 is recalling 9.88 oz. packages of
preserved fruit (apricot) because they may contain undeclared
sulfites. People who have severe sensitivity to sulfites may run
the risk of serious or life-threatening reactions if they
consume this product.
The recalled preserved fruit (apricot), a product of China,
comes in a 9.88 oz. plastic tray package coded 20-12-2005. It
was sold in metropolitan New Jersey and New York.
The recall was initiated after routine sampling by New York
State Department of Agriculture and Markets Food Inspectors and
subsequent analysis by the Department's Food Laboratory
personnel revealed the presence of sulfites in product packages
which did not declare sulfites on the label. The consumption of
10 milligrams of sulfites per serving has been reported to
elicit severe reactions in some asthmatics. Anaphylactic shock
could occur in certain sulfite sensitive individuals upon
ingesting 10 milligrams or more of sulfites.
No illnesses have been reported to date to this Department in
connection with the problem.
Consumers who have purchased preserved fruit (apricot) should
return it to the place of purchase.
SKYTERRA COMMUNICATIONS: Reaches Settlement For CA Overtime Suit
----------------------------------------------------------------
Skyterra Communications, Inc. reached a settlement of a class
action filed against it, its discontinued services subsidiary
Rare Medium, Inc. and certain other former subsidiaries merged
into Rare Medium, Inc., styled "Joe Robuck, individually and on
behalf of all similarly situated individuals v. Rare Medium
Group, Inc., Rare Medium L.A., Inc., Rare Medium, Inc., and Rare
Medium Dallas, Inc., Los Angeles County Superior Court Case No.
BC300310."
In August 2003, a former California employee of Rare Medium
filed the putative class action and putative representative
action asserting that:
(i) certain payments were purportedly due and went unpaid
for overtime for employees with five job titles;
(ii) certain related violations of California's overtime
statute were committed when these employees were not
paid such allegedly due and unpaid overtime at the time
of their termination; and
(iii) certain related alleged violations of California's
unfair competition statute were committed.
Plaintiff seeks to recover for himself and all of the putative
class, alleged unpaid overtime, waiting time penalties (which
can be up to 30 days' pay for each person not paid all wages due
at the time of termination), interest, attorneys' fees, costs
and disgorgement of profits garnered as a result of the alleged
failure to pay overtime.
In February 2005, the Company reached an agreement in principle
with the plaintiff's counsel pursuant to which the class action
will be dismissed without prejudice. As part of the agreement,
the Company will receive releases from certain individuals in
exchange for an immaterial settlement payment to each of the
individuals. The effectiveness of a settlement agreement will be
subject to court approval.
STRACQ INC.: NY Court Enters Consent Judgment in SEC Fraud Case
---------------------------------------------------------------
The U.S. District Court for the Southern District of New York
entered a Final Consent Judgment against Stracq, Inc. The
Commission's complaint, filed on July 24, 2003, alleges that,
beginning in June 2000, the defendants engaged in a fraud
arising out of the unregistered offer and sale of securities in
Tecumseh, a purported financial services company with offices in
New Jersey and California, and Tecumseh's subsidiary, Tradevest.
Tecumseh and Tradevest conducted the fraud largely through the
efforts of Milling, a securities lawyer and Tecumseh's senior
official. According to the complaint, Tecumseh, Tradevest and
Milling acted with the assistance of defendants Cantor, a
registered broker-dealer; Gerard A. McCallion, Cantor's
President; Anthony M. Palovchik, Tecumseh's Vice President; and
Dale Carone, manager of Tecumseh's California office; and
others. Through the unregistered fraudulent offerings, the
defendants together raised approximately $10 million from about
500 investors nationwide. The complaint also names as relief
defendants three Tecumseh affiliates: Alpha Fund, Alpha LLC, and
Stracq, Inc. The complaint alleges that Tecumseh, Tradevest and
Milling induced investors to acquire securities of Tecumseh and
Tradevest by means of a host of material misrepresentations.
Through offering memoranda and other materials, these defendants
touted false and misleading profit projections, promised some
investors "returns on investment" or "dividends" without
disclosing that Tecumseh and Cantor had no earnings to
distribute and that any such payments necessarily would come
from capital, including funds raised from other investors and
made materially misleading statements concerning NASD approval
for Tecumseh's acquisition of Cantor. Tecumseh, Tradevest and
Milling knew or acted in reckless disregard of the fact that
their representations to investors concerning these matters were
materially false and misleading. The complaint also alleges that
relief defendant Stracq, Inc., in which Tecumseh held a
controlling interest, was a recipient, without consideration, of
proceeds of the fraud.
Without admitting or denying the allegations of the complaint,
Stracq, Inc. consented to the Final Consent Judgment ordering it
to disgorge $660,000. The judgment provides that it will be
deemed satisfied by payment of $500,000 in cash to the court-
appointed receiver for Tecumseh and the delivery to the receiver
of a secured note payable to the receiver in the original
principal amount of $160,000 in connection with the receiver's
sale of Tecumseh's controlling interest in Stracq to Stracq's
current management. The Court entered an Order approving the
sale on March 29, 2005. The litigation is pending. The action is
titled, SEC v. Tecumseh Holdings Corp., et al., Civil Action No.
03 Civ. 5490 (SAS), SDNY (LR-19222).
UNITED LIBERTY: Working on Settlement Of Ohio Policyholder Suit
---------------------------------------------------------------
The United Liberty Life Insurance Company is working on the
settlement of a class action filed in an Ohio state court by two
policyholders. The Complaint referred to a class of life
insurance policies, including related certificates of
participation, that the Company issued over a period of years
ending around 1971 (known as "Five Star Policies").
The suit alleged that the Company's dividend payments on these
policies from 1993 through 1999 were less than the amounts
required by the certificates of participation. It did not
specify the amount of the alleged underpayment but implied a
maximum of about $850,000. The plaintiffs also alleged that the
Company is liable to pay punitive damages, also in an
unspecified amount, for breach of an implied covenant of good
faith and fair dealing to the plaintiffs in relation to the
dividends. The action has been certified as a class action on
behalf of all policyholders who were Ohio residents and whose
policies were still in force in 1993.
As a result of a provisional settlement agreement dated October
8, 2004 that would apply to all holders of the Five Star
policies wherever they reside, the Company has recognized as of
December 31, 2004 an obligation for future payments to the
policyholders and their attorneys totaling $825,000. The terms
of the settlement agreement are subject to the approval of the
court in which the action is pending. The court will schedule a
hearing on the issue of approval, following notice to members of
the class, who will be afforded the opportunity to argue in
support of or opposition to the settlement agreement.
Accordingly, this description is subject to change depending
upon the outcome of the hearing.
The $825,000 obligation for future payments consist of:
(1) up to $500,000 payable to all persons who owned Five
Star Policies that were still in force in 1993,
(2) $315,000 in attorneys' fees payable to counsel for the
class and
(3) a $10,000 incentive award payable to the lead
plaintiffs for the class
The $500,000 portion is payable in respect of dividend
obligations on the Five Star Policies from 1993 through 2000 and
is to be paid in three annual installments beginning within 60
days after expiration of the time within which any appeal may be
taken from the trial court's approval of the settlement
agreement. The Company currently projects the first payment
date to be after June 30, 2005. The attorneys' fees and
incentive award are also payable by the Initial Payment Date.
UNITED STATES: Firm Has Highest Average Settlement Total in 2004
----------------------------------------------------------------
The law firm of Barrack, Rodos & Bacine won $2.888 billion for
its clients in 2004, and according to a survey by the Securities
Class Action Services (SCAS), the firm ranked second in total
client recoveries nationwide.
With an average settlement of $722 million per case, Barrack,
Rodos & Bacine had the highest average settlement of any law
firm in the SCAS survey, besting its closest competitor by $232
million per suit.
"We take great pride in the results of this critical survey,"
Leonard Barrack, senior and founding partner for the firm said,
"especially as it underscores our commitment to our client's
long-term interests. Ensuring that the millions of Americans who
invest their retirement and other savings in public pension
plans are kept safe from fraud is our top priority. And when
that trust is violated by those who seek to make a fast buck, we
will not hesitate to bring the full weight of the nation's
securities laws to bear on behalf of our clients."
With a proven history of winning record-breaking settlements for
its clients, such as the New York Common Retirement Fund,
Barrack, Rodos & Bacine has been instrumental in helping to make
fundamental changes to the ways in which investors are protected
on Wall Street and around the country. Recent key victories and
recoveries orchestrated by the firm include:
(1) WorldCom - $6.1 billion recovered in the civil trial.
(2) Cendant - $3.18 billion in the class action case.
(3) McKesson - $960 million in a securities case.
(4) DaimlerChrysler - $300 million in a securities case.
"The expertise we have developed in representing public funds
enables us to perfectly understand their fiduciary obligations,"
Mr. Barrack said. "And, as a result, enables us to recommend
only the highest quality cases to our clients, and ones in which
we are confident we can achieve a positive financial impact for
all investors."
The firm has also gained the respect of the judicial community
over this course of its many complex cases. During settlement
negotiations in the WorldCom securities case, for example, Judge
Denise L. Cote said, "The quality of the representation given by
Lead Counsel (Barrack, Rodos & Bacine) is unsurpassed in this
Court's experience with plaintiffs' council in Securities
Litigation."
Asbestos Alert
ASBESTOS LITIGATION: Cleco Named as Defendant by LA Site Workers
----------------------------------------------------------------
In several lawsuits, Cleco Corporation (NYSE: CNL) has been
named as a defendant by individuals who claim injury due to
exposure to asbestos while working at sites in central
Louisiana. Most of the claimants were workers who participated
in the construction of various industrial facilities, including
power plants, and some of the claimants have worked at locations
owned by the Pineville, LA-based Company.
Cleco's management regularly analyzes current information and,
as necessary, provides accruals for probable liabilities on the
eventual disposition of these matters. The Company's management
believes that the disposition of these matters will not have a
material adverse effect on the registrants' financial condition,
results of operations, or cash flows.
The holding company's utility unit, Cleco Power, generates,
transmits, and distributes electricity to more than 260,000
residential and business customers in more than 100 communities
in Louisiana. Cleco Power has a generating capacity of nearly
1,400 MW from its interests in fossil-fueled power plants.
ASBESTOS LITIGATION: Allstate Corp. Lowers Reserves to US$1.39B
---------------------------------------------------------------
The Allstate Corporation (NYSE: ALL), the second largest US
personal lines insurer, divulged in its latest filing to the
Securities and Exchange Commission that its reserves for
asbestos claims were US$1.39 billion and US$1.46 billion, net of
reinsurance recoverables of US$885 million and US$963 million at
March 31, 2005 and December 31, 2004, respectively.
Reserves for environmental claims were US$227 million and US$232
million, net of reinsurance recoverables of US$48 million and
US$49 million at March 31, 2005 and December 31, 2004,
respectively. About 62% of the total net asbestos and
environmental reserves at both March 31, 2005 and December 31,
2004 were for incurred but not reported estimated losses.
Headquartered in Northbrook, IL, the Company's exposure to
asbestos, environmental and other discontinued lines claims
arises principally from assumed reinsurance coverage written
during the 1960s through the mid-1980s, including reinsurance on
primary insurance written on large US companies, and from direct
excess insurance written from 1972 through 1985, including
substantial excess general liability coverages on Fortune 500
companies. Additional exposure stems from direct primary
commercial insurance written during the 1960s through the mid-
1980s.
Management believes its net loss reserves for environmental,
asbestos and other discontinued lines exposures are
appropriately established based on available facts, technology,
laws and regulations. However, the ultimate cost of these claims
may vary materially from the amounts currently recorded,
resulting in an increase in loss reserves.
In addition, while the Company believes that improved actuarial
techniques and databases have assisted in its ability to
estimate asbestos, environmental, and other discontinued lines
net loss reserves, these refinements may subsequently prove to
be inadequate indicators of the extent of probable losses.
Allstate Financial sells life insurance, retirement and
investment products to individual and institutional customers.
Individual retail products include traditional life, interest-
sensitive life, supplemental accident and health insurance,
variable life, long-term care insurance, variable and fixed
annuities and funding agreements.
ASBESTOS LITIGATION: MO Residents Sue City Over Removal Method
--------------------------------------------------------------
Bridgeton residents filed a federal lawsuit last week seeking to
stop the city of St. Louis and its airport authority from
continuing to use a controversial asbestos-removal technique to
make way for a new airport runway. The group also seeks soil and
air testing, a remediation plan and civil penalties, reports The
Columbia Daily Tribune.
The suit accuses the city of St. Louis and Lambert Field of
violating the federal Clean Air Act in using the so-called "wet
method" of asbestos removal on more than 300 buildings in the
past six years. The citizens' suit alleges that "significant
quantities" of asbestos were released during the test and that
no level of asbestos exposure is considered safe.
The Trial Lawyers for Public Justice in Washington sued on
behalf of the residents, who call themselves Families for
Asbestos Compliance, Testing and Safety, or FACTS.
Deputy Airport Director Gerard Slay said he was disappointed in
the lawsuit and that the city is confident its work practices
and techniques "were protective of public health, the
environment and workers at the site." He suggested that the
expense of defending the suit might delay moving residents from
the buyout area.
Asbestos is a hazardous material that can cause cancer and other
diseases decades after the exposure occurs. The Centers for
Disease Control and Prevention said 1,493 people died from
asbestos exposure in 2000.
The airport used this "wet method" on hundreds of buildings that
were structurally sound, sometimes while neighbors were still
living nearby. Airport expansion spokesman Chuck Reitter said
that the method had been approved in advance by the St. Louis
County Health Department.
The U.S. Environmental Protection Agency twice ordered the
airport to halt using the method. It is permitted under certain
exceptions, but the city didn't apply for any exceptions, said
one of the group's attorneys, Richard Miller of Kansas City.
Given the dangers, asbestos handling is rigidly controlled by
the EPA. Federal law requires contractors to remove asbestos by
hand, bag it and take it to a hazardous waste disposal site.
Mr. Miller said the city used the wet demolition method without
notifying the state or EPA, then later sought and got a year's
waiver he maintains was inappropriately granted and extended for
another year.
Plaintiffs' attorney, Bruce Morrison, with the Great Rivers
Environmental Law Center of St. Louis, said, at this point, the
residents are "very afraid of what they're being exposed to."
Mr. Slay said the wet method was used on 255 of the 1,488 homes
demolished since the project began in 1999. More than 400 homes
remain, but since July, the wet method has not been used and
won't be until the issue is resolved. He said the airport had
prior approval from St. Louis County and state and federal
authorities to use the wet method.
ASBESTOS LITIGATION: Goodyear Had 129,100 Pending Claims at 1Q05
----------------------------------------------------------------
Goodyear Tire & Rubber Company (NYSE: GT) disclosed that it had
about 129,100 asbestos-related claims pending against the
company as of March 31, 2005. The plaintiffs are seeking
unspecified actual and punitive damages and other relief.
The Company said in its quarterly report filed with the
Securities and Exchange Commission that the plaintiffs in the
claims allege asbestos-related diseases resulting from exposure
to asbestos in products that it manufactures or in materials
containing asbestos present in its facilities.
During the first quarter, Goodyear said about 2,600 new claims
were filed against the company and roughly 800 were settled or
dismissed. The amount spent on asbestos defense and claim
resolution by Goodyear and its insurance carriers during the
first quarter totaled US$8 million, according to the filing.
As previously reported in the April 22, 2005 edition of the
Class Action Reporter, the Company reached an agreement
effective April 13, 2005 to settle its claims for insurance
coverage for asbestos and pollution-related liabilities with
respect to insurance policies before 1993 that were issued by
underwriters at insurer Lloyd's, London, and reinsured by
Equitas Ltd.
Under the agreement, Equitas will pay US$22 million to Goodyear
in the second quarter and will place US$39 million into a trust.
The insurance company will make the payment in exchange for "a
complete termination" of its obligation.
From 1914 to 1973, Goodyear manufactured rubber-coated asbestos
sheets used to manufacture gaskets, and before 1987 produced
aircraft brake systems that contained asbestos, the filing
notes.
Headquartered in Akron, Ohio, the company manufactures tires,
engineered rubber products and chemicals in more than 90
facilities in 28 countries. It has marketing operations in
almost every country around the world. Goodyear employs more
than 80,000 people worldwide.
ASBESTOS LITIGATION: NJ Appeals Panel Reinstates Asbestos Suit
--------------------------------------------------------------
New Jersey's Appellate Division last week ruled that a local
refiner company had an obligation to inform the plaintiff that
the dangers of asbestos brought home with him on his clothes
could cause his wife to contract a fatal illness, reports The
Courier-Post. The case will now be remanded to Superior Court
for trial or settlement negotiations.
This is the third case nationally, in which state appellate
courts have tackled this issue, said Joshua Spielberg, a Cherry
Hill attorney, who represented 84-year-old Anthony Olivo of
Deptford.
Mr. Olivo's wife of 58 years, Eleanor, aged 82, died in 2001
from mesothelioma, a cancer of the lining of the lungs caused
only by asbestos inhalation. She washed the clothing that her
husband wore to work. Anthony Olivo worked as a steamfitter at a
number of companies in the area between 1947 and 1984, including
the then-Mobil Paulsboro refinery in Greenwich.
Mr. Olivo filed a wrongful-death suit in Superior Court in
Gloucester County against 32 companies that manufactured,
supplied and installed asbestos products or owned properties
where asbestos was used. All settled except Exxon Mobil.
A Superior Court judge in Gloucester County ruled that Exxon
Mobil had no liability. The Appellate Division disagreed,
writing, "Exxon Mobil owed a duty to decedent because it was in
the best position to prevent the harm."
The court noted that the company knew as early as 1937 exposure
to asbestos created a threat. It also noted that a Mobil
hygienist wrote a report in 1954 that identified asbestos as a
toxic material commonly found in refineries that required
monitoring.
"Moreover, it was generally known as early as 1916, that to
avoid contaminating employees' homes, employees laboring around
industrial chemicals should be provided with changing rooms,
washing facilities, and encouraged not to wear work clothing
home," the court wrote.
James C. Orr represented Exxon Mobil. The company has 20 days to
file an appeal with the state Supreme Court.
ASBESTOS LITIGATION: Texas Tort Reform Prompts Surge in Filing
--------------------------------------------------------------
Faced with impending tort reform, the Jefferson County District
Clerk's Office experienced a sudden rush of lawsuit filings. The
office, which normally receives about 300 civil lawsuits a
month, got 400 asbestos lawsuits in less than a week, said
District Clerk Lolita Ramos.
The Texas Legislature set the May 1 deadline to fall before the
asbestos bill is passed in order to prevent lawyers from
recruiting new claims before the law takes effect, Beaumont
attorney Bryan Blevins said. The counsels for these cases
hurriedly filed before a law limiting asbestos and silica
litigation takes effect. If it is signed into law, Senate Bill
15, which is expected to be signed by the governor within the
month, will make it more difficult to file asbestos and silica
lawsuits. Cases filed after May 1 will face slightly stricter
medical criteria and will be subject to dismissal.
The rush appears to be over for now, but large, multi-party
lawsuits still are stacked on desks, awaiting service.
Mr. Blevins said the interruption should be over for now, adding
that the surge of lawsuits left about US$100,000 in revenue from
filing fees. He expects the House will pass the bill this week
with minor modifications. Then it will then go back to the
Senate and then to the governor's desk next week. He expressed
little doubt that it will be passed.
Mr. Blevins commented that while it could have been worse, the
bill is not what he would have it be. "We appreciated the
opportunity to represent our clients in an attempt to improve
the bill. We avoided the worst-case scenario, but make no
mistake about it: It is an industry-friendly, victim-unfriendly
bill."
ASBESTOS LITIGATION: Everest Re Posts US$18M Reserve Adjustments
----------------------------------------------------------------
Everest Re Group, Ltd. (NYSE: RE) revealed that for the three
months ended March 31, 2005, the net adverse reserve adjustments
included net adverse asbestos and environmental adjustments of
US$18.0 million and net catastrophe development of US$13.7
million partially offset by pre-1995 non-asbestos and
environmental favorable development.
The reserve adjustments for the three months ended March 31,
2004 included asbestos and environmental adjustments of US$63.2
million, which were partially offset by US$9.0 million of
favorable loss adjustments.
The Company continues to receive claims under expired contracts,
both insurance and reinsurance, asserting alleged injuries and
damages relating to or resulting from environmental pollution
and hazardous substances, including asbestos. The Company's
asbestos claims typically involve potential liability for bodily
injury from exposure to asbestos or for property damage
resulting from asbestos or products containing asbestos.
The U.S. Reinsurance segment accounted for US$11.3 million of
net adverse prior period reserve adjustments for the three
months ended March 31, 2005, which included US$10.6 million of
unfavorable non-asbestos and environmental prior period reserve
adjustments as compared to net adverse prior period reserve
adjustments of US$13.2 million for the three months ended March
31, 2004. Asbestos exposures accounted for US$0.7 million and
US$4.2 million of adverse reserve adjustments for the three
months ended March 31, 2005 and 2004, respectively.
The U.S. Insurance segment reflected US$3.6 million of net
favorable prior period reserve adjustments for the three months
ended March 31, 2005 and US$11.6 million of net adverse prior
period reserve adjustment for the three months ended March 31,
2004. The March 31, 2004 prior period reserve adjustments were
principally due to non-workers' compensation programs and
related to accident years 2000 through 2002.
The Bermuda segment reflected US$3.3 million and US$27.3 million
of net adverse prior period reserve adjustments for the three
months ended March 31, 2005 and 2004, respectively. The adverse
development in the three months ended March 31, 2005 was
primarily due to US$17.3 million of asbestos and environmental
reserve development, with most of this development related to
exposures assumed through the September 19, 2000 loss portfolio
transfer from Mt. McKinley Insurance Company. Non-asbestos
reserves assumed through this portfolio transfer experienced
favorable development of US$13.5 million. The development in the
first quarter of 2004 was the result of US$59.0 million of
asbestos reserve development, partially offset by US$37.7
million of favorable development on other pre-1995 exposures.
At March 31, 2005 the Company had asbestos loss reserves of
US$630.0 million, of which US$304.7 million was for assumed
business and US$325.3 million was for direct business.
Everest Re was formed in 1973 but was not fully engaged in
underwriting casualty business, under which asbestos and
environmental exposures generally arise, until 1974, and it
effectively eliminated exposures through contract exclusions
effected in 1984.
ASBESTOS LITIGATION: ArvinMeritor, Maremont Meets Injury Claims
---------------------------------------------------------------
ArvinMeritor Inc. (NYSE: ARM), recently submitted a filing to
the Securities and Exchange Commission, stating that Maremont
Corporation, its subsidiary, is a co-defendant with many other
companies in suits brought by individuals claiming personal
injuries as a result of exposure to asbestos-containing
products. The Company manufactured friction products containing
asbestos from 1953 through 1977, when it sold its friction
product business. Arvin acquired Maremont in 1986.
Maremont's potential liabilities for asbestos-related claims can
be grouped into three categories.
The first group includes unbilled committed settlements entered
into by the Center for Claims Resolution. The liability for
unbilled committed settlements relates to committed settlements
that Maremont agreed to pay when it participated in the Center
for Claims Resolution. The Company shared in the payments of
defense and indemnity costs of asbestos-related claims with
other CCR members. The CCR handled the resolution and processing
of asbestos claims on behalf of its members until February 1,
2001, when it was reorganized and discontinued negotiating
shared settlements. There were no significant billings to
insurance companies related to committed settlements in the six
months ended March 31, 2005. There were US$1 million in billings
to insurance companies related to committed settlements in the
six months ended March 31, 2004.
Pending claims compose the second group. Upon dissolution of the
CCR in February 2001, Maremont began handling asbestos-related
claims through its own defense counsel and is committed to
examining the merits of each asbestos-related claim. Maremont
had about 68,600 and 74,000 pending asbestos-related claims at
March 31, 2005 and September 30, 2004, respectively. Although
Maremont has been named in these cases, in the cases where
actual injury has been alleged, very few claimants have
established that a Maremont product caused their injuries.
Although the company expects legal defense costs to continue at
higher levels than when it participated in the CCR, the company
believes its litigation strategy has reduced the average
indemnity cost per claim. The decline in pending claims and
related liability since September 30, 2004 reflects the
settlement of 8,500 claims in one jurisdiction and lower defense
costs. Billings to insurance companies for indemnity and defense
costs of resolved cases were US$4 million and US$6 million in
the six months ended March 31, 2005 and 2004, respectively.
The third group constitutes the shortfall. Several former
members of the CCR have filed for bankruptcy protection, and
these members have failed to pay certain financial obligations
with respect to settlements that were reached while they were
CCR members. Maremont is subject to claims for payment of a
portion of these defaulted member shares. In an effort to
resolve the affected settlements, the Company has entered into
negotiations with plaintiffs' attorneys, and an estimate of its
obligation for the shortfall is included in the total asbestos-
related reserves. In addition, Maremont and its insurers are
engaged in legal proceedings to determine whether existing
insurance coverage should reimburse any potential liability
related to this issue. There were no payments by the company
related to shortfall and other in the six months ended March 31,
2005 and 2004.
Maremont has insurance that reimburses a substantial portion of
the costs incurred defending against asbestos-related claims.
The coverage also reimburses Maremont for any indemnity paid on
those claims. The coverage is provided by several insurance
carriers based on the insurance agreements in place. Based on
its assessment of the history and nature of filed claims to
date, and of its insurance carriers, management believes that
existing insurance coverage is adequate to cover substantially
all costs relating to pending asbestos-related claims.
Maremont is a division of ArvinMeritor Light Vehicle
Aftermarket, a global automotive aftermarket Company providing
exhaust, filter, and ride control products to its customers.
ArvinMeritor Light Vehicle Aftermarket is headquartered in
Brentwood, TN and is a division of ArvinMeritor Inc.
ASBESTOS LITIGATION: Crown Cork & Seal Receives 3,000 New Claims
----------------------------------------------------------------
Crown Holdings, Inc. (NYSE: CCK) stated that its operating
subsidiary, still known as Crown Cork & Seal Company, a
worldwide producer of consumer packaging, is one of many
defendants in a substantial number of lawsuits filed throughout
the United States by persons alleging bodily injury as a result
of exposure to asbestos. These claims arose from the insulation
operations of a U.S. company, the majority of whose stock Crown
Cork purchased in 1963. About ninety days after the stock
purchase, this U.S. Company sold its insulation assets and was
later merged into Crown Cork.
During the three months ended March 31, 2005, Crown Cork
received about 3,000 new claims, settled or dismissed about
1,000 claims and had about 76,000 claims outstanding at the end
of the period.
As of March 31, 2005, the Company's accrual for pending and
future asbestos-related claims was US$231 million. The Company
estimates that its probable and estimable liability for pending
and future asbestos-related claims would range between US$231
million and US$349 million. The accrual balance of US$231
million includes US$110 million for unasserted claims and US$11
million for committed settlements that will be paid over time.
Prior to 1998, the amounts paid to asbestos claimants were
covered by a fund made available to Crown Cork under a 1985
settlement with carriers insuring Crown Cork through 1976, when
Crown Cork became self-insured. The fund was depleted in 1998
and the Company has no remaining coverage for asbestos-related
costs.
In January 2005 and April 2004, the States of Ohio and
Mississippi, respectively, enacted legislation that limits the
asbestos-related liabilities under state law of companies such
as Crown Cork that allegedly incurred these liabilities because
they are successors by corporate merger to companies that had
been involved with asbestos. The new legislation, which applies
to pending and future claims, caps asbestos-related liabilities
at the fair market value of the predecessor's total gross assets
adjusted for inflation. Crown Cork has paid significantly more
for asbestos-related claims than the total adjusted value of its
predecessor's assets. Crown Cork has integrated the legislation
into its claims defense strategy. The Company cautions, however,
that the legislation may be challenged and there can be no
assurance regarding the ultimate effect of the legislation on
Crown Cork.
In June 2003, the State of Texas enacted legislation that limits
the asbestos-related liabilities in Texas courts of companies
such as Crown Cork that allegedly incurred these liabilities
because they are successors by corporate merger to companies
that had been involved with asbestos. The Texas legislation,
which applies to future claims and pending claims, caps
asbestos-related liabilities at the total gross value of the
predecessor's assets adjusted for inflation. Crown Cork has
paid significantly more for asbestos-related claims than the
total adjusted value of its predecessor's assets.
Historically, Crown Cork estimates that about one-quarter of all
asbestos-related claims made against it have been asserted by
claimants who claim first exposure to asbestos after 1964.
However, because of Crown Cork's settlement experience to date
and the increased difficulty of establishing identification of
the subsidiary's insulation products as the cause of injury by
persons alleging first exposure to asbestos after 1964, the
Company has not included in its accrual and range of potential
liability any amounts for settlements by persons alleging first
exposure to asbestos after 1964.
ASBESTOS LITIGATION: Entergy Faces 480 Lawsuits, 10,000 Claims
--------------------------------------------------------------
Numerous lawsuits have been filed in federal and state courts in
Texas, Louisiana, and Mississippi primarily by contractor
employees in the 1950-1980 timeframe against Entergy Gulf
States, Entergy Louisiana, Entergy New Orleans, and Entergy
Mississippi as premises owners of power plants, for damages
caused by alleged exposure to asbestos or other hazardous
material. Many other defendants are named in these lawsuits as
well. Presently, there are about 480 lawsuits involving about
10,000 claims.
Management believes that adequate provisions have been
established to cover any exposure. Additionally, negotiations
continue with insurers to recover more reimbursement, while new
coverage is being secured to minimize anticipated future
potential exposures. Management believes that loss exposure has
been and will continue to be handled successfully so that the
ultimate resolution of these matters will not be material, in
the aggregate, to the financial position or results of operation
of the domestic utility companies involved in these lawsuits.
Entergy Corporation is an integrated energy company engaged
primarily in electric power production, retail distribution
operations, energy marketing and trading, and gas
transportation.
ASBESTOS LITIGATION: AXA Pays US$35M of Claims and Costs in 2004
----------------------------------------------------------------
AXA, one of the world's largest insurers, in its filing
submitted to the Securities and Exchange Commission, revealed
that under insurance and reinsurance contracts, it paid claims
and legal costs of US$51 million related to environmental
pollution in 2004 of which US$35 million related to asbestos and
US$16 million related to environmental pollution (2003: US$53
million and 2002: US$45 million).
At December 31, 2004, the Paris, France-based Company had made
cumulative payments relating to such contracts of US$571 million
of which US$422 million related to asbestos and US$149 million
related to environmental pollution (2003: US$536 million).
In prior years, AXA issued insurance policies and assumed
reinsurance for cover related to environmental pollution and
asbestos exposure. Its insurance companies have been and
continue to be involved in disputes regarding policy coverage
and judicial interpretation of legal liability for potential
environmental and asbestos claims. AXA has received and
continues to receive notices of potential claims asserting
environmental and asbestos losses under insurance policies
issued or reinsured by AXA. Such claim notices are frequently
merely precautionary in nature. There are significant
uncertainties that affect the insurance companies' ability to
estimate future losses for these types of claims. However, AXA
still carries out regular actuarial reviews to ensure that loss
provisions relating to these risks are adequate.
At December 31, 2004, AXA had insurance claim reserves (gross of
reinsurance) of US$1,021 million (of which US$875 million
related to asbestos and US$146 million related to environmental
pollution) or US$914 million net of reinsurance of which US$793
million related to asbestos and US$121 million related to
environmental pollution (2003: US$944 million gross of
reinsurance or US$858 million net of reinsurance), including:
(1) US$380 million for reported claims of which US$298 million
related to asbestos and US$82 million related to environmental
pollution (2003: US$365 million); and
(2) US$641 million for IBNR (incurred but not reported) claims
of which US$576 million related to asbestos and US$64 million
related to environmental pollution (2003: US$579 million).
The IBNR liabilities are estimated and evaluated regularly based
on information received by management.
ASBESTOS LITIGATION: Washington Group Int'l. Faces Injury Suits
---------------------------------------------------------------
Construction and engineering firm, Washington Group
International, Inc. (NASDAQ: WGII), disclosed in its regulatory
filing submitted to the Securities and Exchange Commission that
it is a defendant in various lawsuits resulting from allegations
that third parties sustained injuries and damage from the
inhalation of asbestos fibers contained in materials used in
construction projects.
In addition, the Company stated that it is aware of other
potential asbestos claims against it based on proofs of claims
filed with the court during the bankruptcy proceedings. However,
the Company asserted that it was never a manufacturer of
asbestos or asbestos-containing products.
Asbestos-related lawsuits against the Boise, ID-based Company
result from allegations that third parties sustained injuries
and damage from the inhalation of asbestos fibers contained in
materials used in construction projects. The suits claim that
the Company was allegedly negligent, the typical negligence
claim being that it had a duty but failed to warn the plaintiff
or claimant of, or failed to protect the plaintiff or claimant
from, the dangers of asbestos.
In 1996, Washington Construction Group, Inc. acquired a major
interest in publicly traded Morrison Knudsen Corporation (MK).
Merging the financially powerful Washington Construction Group
with MK revitalized this historic and respected company. In
1998, MK acquired Westinghouse engineering and construction
operations. In 2000 MK also acquired Raytheon Engineers &
Constructors (RE&C). Recognizing the synthesis of what had
essentially become a new company and a major force in the
industry, MK changed its name to Washington Group International,
Inc.
Previously, the Company had determined that all of the asbestos
claims relating to old MK are fully insured and most, but
potentially not all, of the asbestos claims relating to RE&C are
fully insured. The potentially uninsured asbestos claims relate
to a company acquired by RE&C in 1986. The Company recently
reviewed the 1986 stock purchase agreement, pursuant to which
RE&C had acquired that company, and has recently obtained and
reviewed the insurance policies obtained by the prior owners of
the company. Based on these reviews, Washington Group believes
it is entitled to the benefit of the insurance coverage obtained
by the prior owners. The Company has tendered the claims related
to the acquired company to such insurance carriers, but it is
undetermined yet if the carriers will accept the claims.
The outcome of these claims, including the adequacy of insurance
coverage, cannot be predicted with certainty. Prior to receiving
and reviewing the insurance policies, the Company believed that
the annual range of reasonably possible additional loss,
including related legal costs, was zero to US$1.2 million.
ASBESTOS LITIGATION: IL EPA Probes Demolition Firm for Breaches
---------------------------------------------------------------
The Illinois Environmental Protection Agency is investigating a
complaint against Champion Environmental Services Inc., the
demolition firm contracted by CNH Global to tear down its plant
in East Moline, for alleged asbestos handling violations.
Acting on a tip from a watchdog organization, inspectors went to
the site and found that workers were not following proper
asbestos removal procedures. Some siding and roofing material
containing asbestos had broken apart, possibly releasing
asbestos fibers. The inspector then went ahead and instructed
the demolition contractors on the proper handling of asbestos.
Asbestos is usually found in old buildings like the Case plant,
which was built in 1927. As long as asbestos is contained or
covered properly, the risk of inhaling it is limited, said IEPA
spokeswoman Maggie Carson.
Asbestos was widely used for insulation in many building
materials. If inhaled, asbestos can cause severe lung damage and
cause cancer in the chest and stomach, according to Occupational
Safety & Health Administration.
However, a CNH Global representative said the investigation
would not slow down demolition of the plant. Rich Nelson, senior
director of external communications at CNH, said the demolition
is going well. He said Champion Environmental Services has not
received a citation from the Illinois EPA and is certified in
asbestos removal.
Ms. Carson said the IEPA would issue a report on the matter in
the next few weeks.
CNH contracted Champion Environmental Services in February to
demolish the 150-acre site. Once cleared, the site has the
potential to be the biggest single piece of riverfront property
in the Quad-Cities, East Moline officials said.
ASBESTOS LITIGATION: MeadWestvaco Corp. Faces 550 Asbestos Suits
----------------------------------------------------------------
As with numerous other large industrial companies, MeadWestvaco
Corporation (NYSE: MWV), a manufacturer of packaging and paper
products, has been named a defendant in asbestos-related
personal injury litigation. As of May 4, 2005, there were about
550 lawsuits.
Typically, these suits also name many other corporate
defendants. All of the claims against the Stamford, CT-based
Company resolved to date have been concluded before trial,
either through dismissal or through settlement with payments to
the plaintiff that are not material to the company. To date, the
costs resulting from the litigation, including settlement costs,
have not been significant.
At March 31, 2005, the company has litigation liabilities of
about US$28 million, a significant portion of which relates to
asbestos. Should the volume of litigation grow substantially, it
is possible that the company could incur significant costs
resolving these cases. After consulting with legal counsel and
after considering established liabilities, it is the company's
judgment that the resolution of pending litigation and
proceedings is not expected to have a material adverse effect on
the company's consolidated financial condition or liquidity.
Management believes that the company has substantial
indemnification protection and insurance coverage, subject to
applicable deductibles and policy limits, with respect to
asbestos claims. The company has valid defenses to these claims
and intends to continue to defend them vigorously. Additionally,
based on its historical experience in asbestos cases and an
analysis of the current cases, the company believes that it has
adequate amounts accrued for potential settlements and judgments
in asbestos-related litigation.
ASBESTOS LITIGATION: Ingersoll-Rand Posts US$3.3M Costs in 1Q05
---------------------------------------------------------------
Ingersoll-Rand Company Limited (NYSE: IR) stated in its latest
filing to the Securities and Exchange Commission that a
subsidiary, Ingersoll-Rand Company (IR-New Jersey), is a
defendant in numerous asbestos-related lawsuits in state and
federal courts. In virtually all of the suits a large number of
other companies have also been named as defendants. The claims
against IR-New Jersey generally allege injury caused by exposure
to asbestos contained in certain of IR-New Jersey's products.
Although IR-New Jersey was neither a producer nor a manufacturer
of asbestos, some of its formerly manufactured products utilized
asbestos-containing components, such as gaskets, purchased from
third-party suppliers.
All claims resolved to date have been dismissed or settled. For
the quarter ended March 31, 2005, total costs for settlement and
defense of asbestos claims after insurance recoveries and net of
tax were about US$3.3 million as compared to US$3.2 million for
the quarter ended March 31, 2004. The Company performs a
thorough analysis, updated periodically, of its actual and
potential asbestos liabilities projected seven years into the
future. Based upon such analysis, the Company believes that its
reserves and insurance are adequate to cover its asbestos
liabilities, and that these liabilities are not likely to have a
material adverse effect on its financial position, results of
operations, liquidity or cash flows.
Discontinued operations, net of tax, for the first quarter of
2005 amounted to expense of US$9.2 million compared to US$16.7
million of income for the first quarter of 2004. The first
quarter of 2004 included US$19.4 million (after tax) recorded
for claims filed under the Continued Dumping and Subsidy Offset
Act of 2000, and the results of operations for divested
businesses for the period owned by the Company. In addition,
retained costs, mainly related to asbestos liability claims and
employee benefit costs, were higher in the first quarter of
2005.
The Company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental
laws and regulations from the Environmental Protection Agency
and similar state authorities. It is identified as a potentially
responsible party for cleanup costs associated with off-site
waste disposal at federal Superfund and state remediation sites.
For all sites there are other parties and, in most instances,
the Company's site involvement is minimal.
ASBESTOS LITIGATION: TODCO Named in Suits in MS Circuit Courts
--------------------------------------------------------------
Certain subsidiaries of TODCO (NYSE: THE), a provider of
contract oil and gas drilling services, have been named, along
with other defendants, in several complaints that have been
filed in the Circuit Courts of the State of Mississippi
involving over 700 persons that allege personal injury arising
out of asbestos exposure in the course of their employment by
some of these defendants between 1965 and 1986. The complaints
also name as defendants certain of Transocean's subsidiaries to
whom the Company may owe indemnity and other unaffiliated
defendant companies, including companies that allegedly
manufactured drilling related products containing asbestos that
are the subject of the complaints.
The number of unaffiliated defendant companies involved in each
complaint ranges from about 20 to 70. The complaints allege that
the defendant drilling contractors used those asbestos-
containing products in offshore drilling operations, land based
drilling operations and in drilling structures, drilling rigs,
vessels and other equipment and assert claims based on, among
other things, negligence and strict liability, and claims
authorized under the Jones Act. The plaintiffs seek, among other
things, awards of unspecified compensatory and punitive damages.
Based on a recent decision of the Mississippi Supreme Court, the
Company anticipates that the trial courts may grant motions
requiring each plaintiff to name the specific defendant or
defendants against whom such plaintiff makes a claim and the
time period and location of asbestos exposure so that the cases
may be properly severed. The Company has not yet had an
opportunity to conduct any discovery nor has it been able to
determine the number of plaintiffs, if any, that were employed
by its subsidiaries or Transocean's subsidiaries or otherwise
have any connection with the Company's or Transocean's drilling
operations.
The Company intends to defend itself vigorously and, based on
the limited information available to it at this time, the
Company does not expect the ultimate outcome of these lawsuits
to have a material adverse effect on its consolidated results of
operations, financial position or cash flows.
TODCO provides services to exploration and production businesses
operating in the shallow waters of the Gulf of Mexico, and in
the Gulf Coast inland marine region. TODCO, which was a part of
the R&B Falcon business Transocean acquired, operates a fleet of
about 70 drilling rigs. Transocean controls 22% of the Company,
but intends to sells its shareholding.
ASBESTOS LITIGATION: TRW Disputes Claims Against Subsidiaries
-------------------------------------------------------------
TRW Automotive Holdings Corp. (NYSE: TRW) disclosed that certain
of the Livonia, MI-based Company's subsidiaries have been
subject in recent years to asbestos-related claims. In general,
these claims seek damages for illnesses alleged to have resulted
from exposure to asbestos used in certain components sold by the
subsidiaries. Management believes that the majority of the
claimants were assembly workers at the major U.S. automobile
manufacturers.
According further to the filing submitted to the Securities and
Exchange Commission, the vast majority of these claims name as
defendants numerous manufacturers and suppliers of a wide
variety of products allegedly containing asbestos. Management
believes that, to the extent any of the products sold by these
subsidiaries and at issue in these cases contained asbestos, the
asbestos was encapsulated. Based upon several years of
experience with such claims, management believes that only a
small proportion of the claimants has or will ever develop any
asbestos-related impairment.
Neither settlement costs in connection with asbestos claims nor
average annual legal fees to defend these claims have been
material in the past. These claims are strongly disputed by the
Company and its subsidiaries and it has been the policy to
defend against them aggressively. Many of these cases have been
dismissed without any payment whatsoever. Moreover, there is
significant insurance coverage with solvent carriers with
respect to these claims.
ASBESTOS LITIGATION: Harsco Corp. Battles 31,784 Pending Claims
---------------------------------------------------------------
Harsco Corporation (NYSE: HSC), a global provider of high-value
industrial services and engineered products, disclosed that as
of March 31, 2005, there were 31,784 pending asbestos personal
injury claims filed against the Camp Hill, PA-based Company. Of
these cases, 26,510 were pending in the New York Supreme Court
for New York County in New York State and 4,988 of the cases
were pending in state courts of various counties in Mississippi.
The other claims totaling about 286 are filed in various
counties in a number of state courts, and in certain Federal
District Courts, and those complaints assert lesser amounts of
damages than the New York cases or do not state any amount
claimed.
The plaintiffs brought up legal actions against the Company,
alleging personal injury from exposure to airborne asbestos over
the past several decades. In their suits, they named as
defendants many manufacturers, distributors and installers of
numerous types of equipment or products that allegedly contained
asbestos.
The Company believes that the claims against it are without
merit. The Company has never been a producer, manufacturer or
processor of asbestos fibers. Any component within a Company
product that may have contained asbestos would have been
purchased from a supplier. Based on scientific and medical
evidence, the Company believes that any asbestos exposure
arising from normal use of any Company product never presented
any harmful airborne asbestos exposure, and moreover, the type
of asbestos contained in any component that was used in those
products is protectively encapsulated in other materials and is
not associated with the types of injuries alleged. Finally, in
most of the depositions taken of plaintiffs to date in the
litigation against the Company, plaintiffs have failed to
identify any Company products as the source of their asbestos
exposure.
The majority of the asbestos complaints have been filed in
either New York or Mississippi. Almost all of the New York
complaints contain a standard claim for damages of US$20 million
or US$25 million against the about 90 defendants, regardless of
the individual's alleged medical condition, and without
identifying any Company product as the source of plaintiff's
asbestos exposure. With respect to the Mississippi complaints,
most contain a standard claim for an unstated amount of damages
against the numerous defendants, typically 240 to 270, without
identifying any Company product as the source of plaintiff's
asbestos exposure.
The Company has not paid any amounts in settlement of these
cases, with the exception of two settlements totaling less than
US$10,000 paid in 1998 from insurance proceeds. The Company's
insurance carrier has paid all legal costs and expenses to date.
The Company has liability insurance coverage available under
various primary and excess policies that the Company believes
will be available if necessary to substantially cover any
liability that might ultimately be incurred on these claims.
As of March 31, 2005, the Company has obtained dismissal by
stipulation, or summary judgment prior to trial, in all cases
that have proceeded to trial. To date, the Company has been
dismissed from 9,677 cases.
In the same period, the Company was listed as a defendant in
about 163 pending cases in the New York Supreme Court for New
York County that have been designated as Active or "In Extremis"
and assigned to trial groups. To date, the Company has been
dismissed as a defendant prior to trial in all New York cases
that have proceeded to trial. The number of these dismissals is
currently about 1,231.
During the first quarter of 2005, the Company obtained a
significant number of case dismissals in Mississippi. These
dismissals were in the wake of the Mississippi Supreme Court's
decision in the Mangialardi case (in which the court held that
consolidation of personal injury claims is impermissible and
that restricted out of state residents from bringing asbestos
suits in Mississippi).
Based on these dismissals, the total number of pending
Mississippi cases as of March 31, 2005 is now 4,988.
Significantly, however, 2,879 of those cases were filed in, or
removed to, the Mississippi federal district court, which is in
the process of transferring them to the federal Multidistrict
Asbestos Docket in Philadelphia. In accordance with an order of
the MDL court entered several years ago, the transferred cases
are deemed "administratively dismissed," subject to being
reinstated only when each individual plaintiff can demonstrate
both a present physical injury and that asbestos exposure
resulted from the products or activities of identifiable
defendants.
ASBESTOS LITIGATION: Honeywell Deals With NARCO, Bendix Claims
---------------------------------------------------------------
Honeywell International Inc. (NYSE: HON), a diversified
technology and manufacturing leader mostly known for its
aerospace products and services, is a defendant in personal
injury actions related to asbestos. The company claims that it
did not mine or produce asbestos, nor did it make or sell
insulation products or other construction materials that have
been identified as the primary cause of asbestos related disease
in the vast majority of claimants. Products containing asbestos
previously manufactured by Honeywell or by previously owned
subsidiaries fall into two general categories: refractory
products and friction products.
Honeywell owned North American Refractories Company (NARCO) from
1979 to 1986. NARCO produced refractory products that were sold
largely to the steel industry in the East and Midwest. Less than
2 percent of NARCO's products contained asbestos.
When the Company sold the NARCO business in 1986, it agreed to
indemnify NARCO with respect to personal injury claims for
products that had been discontinued prior to the sale. NARCO
retained all liability for all other claims. NARCO had resolved
about 176,000 claims through January 4, 2002, the date NARCO
filed for reorganization under Chapter 11 of the U.S. Bankruptcy
Code, at an average cost per claim of US$2,200. Of those claims,
43 percent were dismissed on the ground that there was
insufficient evidence that NARCO was responsible for the
claimant's asbestos exposure.
As of the date of NARCO's bankruptcy filing, there were about
116,000 remaining claims pending against NARCO, including about
7 percent in which Honeywell was also named as a defendant.
Since 1983, Honeywell and our insurers have contributed to the
defense and settlement costs associated with NARCO claims.
As a result of the NARCO bankruptcy filing, all of the claims
are automatically stayed pending the reorganization of NARCO.
The bankruptcy court has also temporarily enjoined any claims
against Honeywell, current or future, related to NARCO, except
one claim which is not material as to which the stay was lifted
in August 2003.
As a result of negotiations with counsel representing NARCO
related asbestos claimants regarding settlement of all pending
and potential NARCO related asbestos claims against Honeywell,
the company has reached definitive agreements with about 260,000
claimants, which represents an excess of 90 percent of the
anticipated current claimants who are expected to file a claim
as part of the NARCO reorganization process. The company
believes that a trust will be established pursuant to these
Trust Distribution Procedures for the benefit of all asbestos
claimants, current and future.
The Company now expects the NARCO plan of reorganization and the
NARCO trust to be approved by the Court in 2005. As part of its
ongoing settlement negotiations, Honeywell has reached agreement
in principle with the representative for future NARCO claimants
to cap its annual contributions to the trust with respect to
future claims at a level that would not have a material impact
on Honeywell's operating cash flows.
During the three months ended March 31, 2005, the Company
recognized a charge of about US$52 million to reflect a
settlement of certain pending asbestos claims during the
quarter. Substantially all settlement payments with respect to
current claims are expected to be made by the end of 2007.
Bendix Friction Materials business manufactured automotive brake
pads that contained chrysotile asbestos in an encapsulated form.
There is a group of existing and potential claimants consisting
largely of individuals that allege to have performed brake
replacements.
From 1981 through March 31, 2005, the Company has resolved about
72,000 Bendix related asbestos claims including trials covering
120 plaintiffs, which resulted in 115 favorable verdicts. Trials
covering five individuals resulted in adverse verdicts; however,
two of these verdicts were reversed on appeal and the remaining
three claims were settled. In the first quarter of 2005, the
Company recognized a charge of US$34 million for Bendix related
asbestos claims filed, net of probable insurance recoveries. The
asbestos related charge also included the net effect of a
settlement of certain NARCO related pending asbestos claims, a
Bendix related structured insurance settlement and write-offs of
certain Bendix related insurance receivables.
Honeywell currently has about US$1.9 billion of insurance
coverage remaining with respect to pending and potential future
Bendix related asbestos claims. This coverage is provided by a
large number of insurance policies written by dozens of
insurance companies in both the domestic insurance market and
the London excess market. Insurance receivables are recorded in
the financial statements simultaneous with the recording of the
liability for the estimated value of the underlying asbestos
claims.
During the three months ended March 31, 2005, the Company
entered into a structured insurance settlement, which converted
policies into future fixed, non-contingent payment streams,
resulting in a gain of about US$160 million. Additionally,
during the first quarter of 2005, the Company recognized a
charge of about US$108 million for write-offs of certain amounts
due from insurance carriers. It had amounts receivable from its
insurers of about US$400 million representing probable
reimbursements associated with its liability for pending claims
and previously settled and paid claims, and for amounts due
under negotiated fixed payment streams. On a cumulative
historical basis, Honeywell has recorded insurance receivables
equal to about 50 percent of the value of the underlying
asbestos claims recorded.
During the three months ended March 31, 2005, the Company paid
US$92 million in indemnity and defense costs related to NARCO
and Bendix claims and received US$9 million of asbestos related
insurance recoveries. It also recognized a charge of US$34
million for Bendix related asbestos claims filed and defense
costs incurred during the first quarter of 2005, net of probable
insurance recoveries. The asbestos related charge included the
net effect of a settlement of certain NARCO related pending
asbestos claims, a Bendix related structured insurance
settlement and write-offs of certain Bendix related insurance
receivables.
ASBESTOS LITIGATION: Albany Int'l. Handles 25,679 Injury Claims
---------------------------------------------------------------
In the latest regulatory filing submitted by Albany
International Corp. (NYSE: AIN), maker of paper machine
clothing, the Company stated that it is defending against 25,679
asbestos-related claims as of April 22, 2005. This compares with
29,138 such claims as of February 11, 2005 and 29,411 claims as
of December 31, 2004. These suits allege a variety of lung and
other diseases based on alleged exposure to products previously
manufactured by Albany.
Headquartered in Albany, NY, the Company's production of
asbestos-containing paper machine clothing products was limited
to certain synthetic dryer fabrics marketed during the period
from 1967 to 1976 and used in certain paper mills. Such fabrics
generally had a useful life of three to 12 months.
These suits typically involve claims against from 20 to over 200
defendants, and the complaints usually fail to identify the
plaintiffs' work history or the nature of the plaintiffs'
alleged exposure to Albany's products. In cases in which work
histories have been provided, about one-third of the claimants
have alleged time spent in a paper mill, and only a portion of
those claimants have alleged time spent in a paper mill to which
Albany is believed to have supplied asbestos-containing
products.
About 20,763 of the claims pending against Albany are filed in
various counties in Mississippi. A total of 11,900 such claims
are included in only 6 proceedings. As the result of a 2004
ruling of the Mississippi Supreme Court, courts in counties
throughout the State began to issue orders severing the
individual claims of plaintiffs in mass joinder asbestos cases.
Once severed, the courts are requiring the plaintiffs to file
amended complaints which include more detailed information
regarding their allegations of asbestos exposure, and have begun
to dismiss or transfer improperly filed cases. As a consequence,
a number of plaintiffs have voluntarily dismissed their claims.
As to the plaintiffs filing amended complaints, these cases are
being transferred to the proper counties within Mississippi, or,
in limited instances, are being removed to federal court. The
Company expects more of the remaining claims pending in
Mississippi to be dismissed, amended or transferred; and that
the only claimants remaining in Mississippi at the conclusion of
this process will be those who are residents of, or who allege
exposure to asbestos in, that State, and whose amended
complaints satisfy the requirement for specific information
regarding their exposure claims.
The Company expects that only a portion of these remaining
claimants will be able to demonstrate time spent in a paper mill
to which Albany supplied asbestos-containing products during a
period in which Albany's asbestos-containing products were in
use. The Company expects the percentage of claimants with paper
mill exposure in the Mississippi proceedings to be considerably
lower than the total number of claims previously asserted.
It is the position of Albany and the other paper machine
clothing defendants that there was insufficient exposure to
asbestos from any paper machine clothing products to cause
asbestos-related injury to any plaintiff. Furthermore, asbestos
contained in Albany's synthetic products was encapsulated in a
resin-coated yarn woven into the interior of the fabric, further
reducing the likelihood of fiber release.
While the Company believes it has meritorious defenses to these
claims, it has settled certain of these cases for amounts it
considers reasonable given the facts and circumstances of each
case. The Company's insurer, Liberty Mutual, has defended each
case under a standard reservation of rights. As of April 22,
2005, the Company had resolved, by means of settlement or
dismissal, 11,760 claims, and had reached tentative agreement to
resolve an additional 4,563 claims reported above as pending.
The total cost of resolving all 16,323 such claims was
US$6,081,000. Of this amount, US$6,046,000, or 99%, was paid by
the Company's insurance carrier. The Company has more than
US$130 million in confirmed insurance coverage that should be
available with respect to current and future asbestos claims, as
well as additional insurance coverage that it should be able to
access.
Brandon Drying Fabrics, Inc., a subsidiary of Geschmay Corp., is
also a separate defendant in most of these cases. Brandon was
defending against 9,670 claims as of April 22, 2005. This
compares with 9,599 such claims as of February 11, 2005 and
9,985 claims as of December 31, 2004.
The Company acquired Geschmay Corp., formerly known as Wangner
Systems Corporation, in 1999. Brandon is a wholly-owned
subsidiary of Geschmay Corp. In 1978, Brandon acquired certain
assets from Abney Mills, a South Carolina textile manufacturer.
Among the assets acquired by Brandon from Abney were assets of
Abney's wholly-owned subsidiary, Brandon Sales, Inc. which,
among other things, had sold dryer fabrics containing asbestos
made by its parent, Abney.
It is believed that Abney ceased production of asbestos-
containing fabrics prior to the 1978 transaction. Although
Brandon manufactured and sold dryer fabrics under its own name
subsequent to the asset purchase, none of such fabrics contained
asbestos. Under the terms of the Assets Purchase Agreement
between Brandon and Abney, Abney agreed to indemnify, defend,
and hold Brandon harmless from any actions or claims on account
of products manufactured by Abney and its related corporations
prior to the date of the sale, whether or not the product was
sold subsequent to the date of the sale. It appears that Abney
has since been dissolved. Nevertheless, a representative of
Abney has been notified of the pendency of these actions and
demand has been made that it assume the defense of these
actions.
As of April 22, 2005, Brandon has resolved, by means of
settlement or dismissal, 6,944 claims for a total of US$152,499.
Brandon's insurance carriers initially agreed to pay 88.2% of
the total indemnification and defense costs related to these
proceedings, subject to the standard reservation of rights. The
remaining 11.8% of the costs had been borne directly by Brandon.
During 2004, Brandon's insurance carriers agreed to cover 100%
of indemnification and defense costs, subject to policy limits
and the standard reservation of rights, and to reimburse Brandon
for all indemnity and defense costs paid directly by Brandon
related to these proceedings.
In some of these cases, Albany is named both as a direct
defendant and as the successor in interest to Mount Vernon
Mills. The Company acquired certain assets from Mount Vernon in
1993. Certain plaintiffs allege injury caused by asbestos-
containing products alleged to have been sold by Mount Vernon
many years prior to this acquisition. Mount Vernon is
contractually obligated to indemnify the Company against any
liability arising out of such products. The Company denies any
liability for products sold by Mount Vernon prior to the
acquisition of the Mount Vernon assets. Pursuant to its
contractual indemnification obligations, Mount Vernon has
assumed the defense of these claims. On this basis, the Company
has successfully moved for dismissal in a number of actions.
ASBESTOS LITIGATION: Allmerica Posts US$25.6M Reserves in 1Q05
--------------------------------------------------------------
Although Allmerica Financial Corporation (NYSE: AFC) does not
specifically underwrite policies that include asbestos,
environmental damage and toxic tort liability, the Company
revealed that it may be required to defend such claims.
Ending loss and loss adjustment expense reserves for all direct
business written by property and casualty companies related to
asbestos, environmental damage and toxic tort liability,
included in the reserve for losses and loss adjustment expense,
were US$25.6 million and US$24.7 million at March 31, 2005 and
December 31, 2004, respectively, net of reinsurance of US$15.5
million and US$16.3 million at March 31, 2005 and December 31,
2004, respectively.
The outstanding reserves for direct business asbestos and
environmental damage have remained relatively consistent for the
last three years. As a result of the Worcester, MA-based
Company's historical direct underwriting mix of commercial lines
policies toward smaller and middle market risks, past asbestos,
environmental damage and toxic tort liability loss experience
has remained minimal in relation to its total loss and loss
adjustment expense incurred experience.
In addition, the Company has established loss and loss
adjustment expense reserves for assumed reinsurance and pool
business with asbestos, environmental damage and toxic tort
liability of US$48.2 million at March 31, 2005 and December 31,
2004. These reserves relate to pools in which it has terminated
its participation; however, it continues to be subject to claims
related to years in which it participated.
As part of its pool reserves, it participated in Excess and
Casualty Reinsurance Association voluntary pool from 1950 to
1982. In 1982, the pool was dissolved and since that time, the
business has been in runoff. The Company's percentage of the
total pool liabilities varied from 1.15% to 6.00% during these
years. Its participation in this pool has resulted in average
paid losses of US$2.0 million annually over the past ten years.
Because of the inherent uncertainty regarding the types of
claims in these pools, the Company cannot provide assurance that
its reserves will be sufficient. Although these outstanding
claims are not significant, their existence gives rise to
uncertainty and are discussed because of the possibility that
they may become significant. The Company believes that,
notwithstanding the evolution of case law expanding liability in
asbestos and environmental claims, recorded reserves related to
these claims are adequate. In addition, it is not aware of any
litigation or pending claims that are expected to result in
additional material liabilities in excess of recorded reserves.
The asbestos and environmental liability reserves could be
revised in the near term if the estimates used in determining
the liability are revised.
ASBESTOS LITIGATION: Ex-worker Pursues Claim in Madison Court
-------------------------------------------------------------
Marking Madison County's first asbestos trial in nearly two
years, Judge Daniel J. Stack listened to opening arguments in a
case filed by a worker with mesothelioma, a fatal cancer of the
lung linings. This also stands as the Judge Stack's first trial
since taking over the asbestos docket from Circuit Judge
Nicholas Byron last fall.
Willard King, aged 77, of Fenton, Mo., is accusing Bondex,
Georgia Pacific, John Crane, RPM Inc. and Lynn Tractor and
Equipment Company for causing his illness. He claims he was
contaminated from working on farm equipment and cars from 1950
through 1987. Mr. King, who is represented by Barry Julian of
Alton and Troyce Wolff of Texas, was diagnosed with mesothelioma
on May 5, 2004.
A trial was originally scheduled to begin last February 14 but
it was delayed when Jeff Hebrank, attorney for Georgia-Pacific
and Bondex, asked for a continuance because plaintiff attorney
Julian asked the court to deny admission of asbestos-related
rulings from other jurisdictions. In light of Mr. Julian's
motion, Mr. Hebrank asked for more time to prepare his case.
In the first day of testimony, Mr. King's daughter, Kathy
McClelland, aged 55, attested to the brands that she claims her
father asked her to buy from a store in the old Central Hardware
chain 35 years ago. On cross-examination, defense attorneys
grilled her on why she came to remember the brand, which was
manufactured by Georgia-Pacific, when she failed to recall the
names of the other materials that were bought together with the
joint compound.
Mr. Hebrank also took occasion to charge plaintiff's counsel
with sitting on documents and stalling the discovery process.
Judge Stack warned the jurors not to discuss the case, to avoid
any independent research regarding asbestos litigation or
litigation in general and any related newspaper articles during
the three-month recess.
The Madison County Circuit Court has a national reputation for
asbestos litigation, but trials are rare. Hundreds of
mesothelioma suits are settled annually; most settlements are in
the US$3 million to US$5 million range.
ASBESTOS LITIGATION: Fairchild Named in 19 Personal Injury Cases
----------------------------------------------------------------
On January 21, 2003, distributor of aircraft parts Fairchild
Corporation (NYSE: FA) and one of its subsidiaries were served
with a third-party complaint in an action brought in New York by
a non-employee worker and his spouse alleging personal injury as
a result of exposure to asbestos-containing products.
The defendant, which is one of many defendants in the action,
had purchased a pump business from Fairchild, and asserts the
right to be indemnified by Fairchild under its purchase
agreement. This case was discontinued as to all defendants,
extinguishing the indemnity claim against the Company in the
instant case.
The purchaser has also notified Fairchild of its intention to
claim its right to indemnify from the Company for the other
asbestos-related claims filed against it. The Company has not
received enough information to assess the impact, if any, of the
other claims.
During the last 18 months, the Dulles, VA-based Company has been
served directly by plaintiffs' counsel in 19 cases related to
the same pump business. Two of the 19 cases were dismissed as to
all defendants, based upon forum objections. The Company, in
coordination with its insurance carriers, intends to
aggressively defend itself against these claims.
During the same period, the Company reports that it has resolved
ten similar (non-pump business) asbestos-related lawsuits that
were previously served upon the Company. In eight cases,
Fairchild was voluntarily dismissed, without payment of
consideration to plaintiffs. The remaining two cases were
settled for nominal amounts.
The Company further states that its insurance carriers have
participated fully in the defense of both its pump and non-pump
related asbestos claims. It believes that its insurance coverage
levels are adequate, and that asbestos claims will not have a
material adverse effect on its financial condition, future
results of operation, or net cash flow.
ASBESTOS LITIGATION: Eastman Chemical Defends Against 3T Claims
---------------------------------------------------------------
Over the years, Eastman Chemical Company (NYSE: EMN) has been
named as a defendant, along with numerous other defendants, in
lawsuits in various state courts in which plaintiffs alleged
injury due to exposure to asbestos at its manufacturing sites
and sought unspecified monetary damages and other relief. The
Kingsport, TN-based Company intends to defend vigorously the
about 3,000 pending claims or to settle them on acceptable
terms.
Eastman is the largest producer of polyester plastics for
packaging and the leading supplier of raw materials for
formulated products in the global market.
In recently filed cases, plaintiffs allege exposure to asbestos-
containing products allegedly made by Eastman. Based on its
investigation to date, the Company has information that it
manufactured limited amounts of an asbestos-containing plastic
product between the mid-1960s and the early 1970s. The Company's
investigation has found no evidence that any of the plaintiffs
worked with or around any such product alleged to have been
manufactured by the Company.
The Company has finalized an agreement with an insurer that
issued primary general liability insurance to certain
predecessors of the Company prior to the mid-1970s, pursuant to
which that insurer will provide coverage for a portion of
certain of the Company's defense costs and payments of,
settlements or judgments in connection with asbestos-related
lawsuits.
Evaluation of the allegations and claims made in recent
asbestos-related lawsuits continue to be reviewed by the
Company. Based on such evaluation to date, the Company continues
to believe that the ultimate resolution of asbestos cases will
not have a material impact on the Company's financial condition,
results of operations, or cash flows, although these matters
could result in the Company being subject to monetary damages,
costs or expenses, and charges against earnings in particular
periods. To date, costs incurred by the Company related to the
recent asbestos-related lawsuits have not been material.
ASBESTOS LITIGATION: CA Coastal, RESCO Pays US$1.33M Settlement
---------------------------------------------------------------
On April 6, 2005, RESCO and California Coastal Communities, Inc.
settled asbestos-related litigation with Dresser Industries
Inc., according to a filing submitted to the Securities and
Exchange Commission.
California Coastal paid US$1.33 million, its share of the
settlement, which is the amount of the Company's litigation
accrual as of March 31, 2005 and December 31, 2004. The Company
and RESCO did not admit fault or liability with respect to
Dresser's claims, but settled the matter in order to avoid the
continued cost and uncertainty of litigation.
In May 2002, Dresser Industries, Inc. filed litigation,
captioned Dresser Industries, Inc. vs. California Coastal
Communities, Inc. and RESCO Holdings, Inc. (a former affiliate),
in the 58th Judicial District Court of Jefferson County, Texas.
Dresser sought a declaratory judgment regarding the rights and
obligations of the parties under a January 1988 purchase
agreement. Dresser's indemnity claims related to several hundred
lawsuits encompassing about 5,900 contested asbestos claims made
by third parties in connection with work in facilities in which
the Dresser-acquired engineering and construction business was
allegedly connected. The Company denied Dresser's allegations
and vigorously defended itself in this case and related matters.
California Coastal Communities, Inc. and its consolidated
subsidiaries is a residential land development and homebuilding
company with properties located primarily in southern
California.
ASBESTOS LITIGATION: IDEX, Subsidiaries Face Suits in 22 States
---------------------------------------------------------------
Engineered products manufacturer, IDEX Corporation (NYSE: IEX),
and nine of its subsidiaries have been named as defendants in a
number of lawsuits claiming various asbestos-related personal
injuries, allegedly as a result of exposure to products
manufactured with components that contained asbestos. Such
components were acquired from third party suppliers, and were
not manufactured by any of the subsidiaries.
To date, all of the Northbrook, IL-based Company's settlements
and legal costs, except for costs of coordination,
administration, insurance investigation and a portion of defense
costs, have been covered in full by insurance subject to
applicable deductibles. However, the company cannot predict
whether and to what extent insurance will be available to
continue to cover such settlements and legal costs, or how
insurers may respond to claims that are tendered to them.
Claims have been filed in Alabama, California, Connecticut,
Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Nevada, New Jersey, New York,
Ohio, Oregon, Pennsylvania, Texas, Utah, Washington and Wyoming.
Most of the claims resolved to date have been dismissed without
payment. The balance has been settled for reasonable amounts.
Only one case has been tried, resulting in a verdict for the
Company's business unit.
No provision has been made in the financial statements of the
Company, other than for insurance deductibles in the ordinary
course, and IDEX does not currently believe the asbestos-related
claims will have a material adverse effect on the Company's
business or financial position.
ASBESTOS LITIGATION: Navigators Group Deals with Liabilities
------------------------------------------------------------
The Navigators Group, Inc. (NASDAQ: NAVG) disclosed in its
latest regulatory filing that its exposure to asbestos and
environmental liability principally stems from marine liability
insurance written on an occurrence basis during the mid-1980s.
In general, its participation on such risks is in the excess
layers, which requires the underlying coverage to be exhausted
prior to coverage being triggered in its layer. In many
instances the Company is one of many insurers who participate in
the defense and ultimate settlement of these claims, and it is
generally a minor participant in the overall insurance coverage
and settlement.
The reserves the New York, NY-based insurance company
established for asbestos exposures are for:
(1) Estimated losses for excess insurance policy limits exposed
to class actions suits against two insureds involved in the
manufacturing or distribution of asbestos products;
(2) Other insureds not directly involved in the manufacturing or
distribution of asbestos products, but that have more than
incidental asbestos exposure for their purchase or use of
products that contained asbestos;
(3) Attritional asbestos claims that could be expected to occur
over time; and
(4) The 2004 settlement of a large claim exposed to a class
action suit which settlement will be paid over seven years
starting in June 2005.
At March 31, 2005 and December 31, 2004, the Company had
allowances for uncollectible reinsurance of US$33.4 million and
US$32.4 million, respectively. The allowances include US$25.7
million for uncollectible reinsurance as a result of loss
reserves established in 2003 for asbestos exposures on marine
and aviation business written mostly prior to 1986. Charges or
recoveries for uncollectible reinsurance amounts, all of which
were recorded to incurred losses, were US$1.0 million and
US$117,000 for the three months ended March 31, 2005 and 2004,
respectively
ASBESTOS LITIGATION: MSA Faces Potential Rise of Liability Suits
----------------------------------------------------------------
Various lawsuits and claims are pending against Mine Safety
Appliances Company (NYSE: MSA), a manufacturer of safety
equipment and systems. These lawsuits, primarily involving
product liability claims, represent a total of about 2,400 cases
brought by plaintiffs who allege that they suffered injuries as
a result of faulty respiratory protection products supposedly
manufactured by the Company.
According further to the filing submitted by the Pittsburgh, PA-
based Company, these lawsuits represent a total of about 32,000
plaintiffs. About 90% of these lawsuits involve plaintiffs
alleging they suffer from silicosis, with the remainder alleging
they suffer from other or combined injuries, including
asbestosis. These lawsuits typically allege that these
conditions resulted in part from respirators that were
negligently designed or manufactured by us.
Consistent with the experience of other companies involved in
silica and asbestos-related litigation, there has been an
increase in the number of asserted claims that could potentially
involve the Company. The potential maximum liability for such
claims cannot be determined, in part because the defendants in
these lawsuits are often numerous, and the claims generally do
not specify the amount of damages sought.
With some limited exceptions, the Company maintains insurance
against product liability claims. It also maintains a reserve
for uninsured product liability based on expected settlement
charges for pending claims and an estimate of unreported claims
derived from experience, sales volumes, and other relevant
information.
ASBESTOS LITIGATION: 3M Co. Accrues $232M Liability from Claims
---------------------------------------------------------------
Headquartered in St. Paul, MN, 3M Company (NYSE: MMM) disclosed
that as of March 31, 2005, the Company is a named defendant,
typically with multiple co-defendants, in numerous lawsuits in
various courts that purport to assert claims by about 58,000
individual claimants and has accrued liabilities of US$232
million and receivables for the likely amount of insurance
recoveries of US$437 million related to this litigation.
For more than 25 years, the Company has defended and resolved
the claims of over 350,000 individual claimants alleging
injuries from occupational dust exposures. The vast majority of
the lawsuits and claims resolved by and currently pending
against the Company allege use of some of the Company's mask and
respirator products and seek damages from the Company and other
defendants for alleged personal injury from workplace exposures
to asbestos, silica, coal or other occupational dusts, found in
products manufactured by other defendants or generally in the
workplace. The remaining claimants generally allege personal
injury from occupational exposure to asbestos from products
previously manufactured by the Company, which are often
unspecified, and by other defendants, or occasionally at Company
premises.
As a result of the caseload and the costs of aggressively
defending itself, the Company made payments of US$81 million in
2004 and increased its reserves in the fourth quarter of 2004
for the respirator mask/asbestos liabilities by US$40 million to
US$248 million.
Because of the time delay between payment of claims and receipt
of insurance reimbursements, the March 31, 2005 and December 31,
2004 amounts for respirator mask/asbestos liabilities are less
than expected insurance recoveries. Thus, the expected net
inflow of cash will increase future cash flows from operating
activities.
ASBESTOS LITIGATION: Hercules Reveals 32,088 Unresolved Claims
--------------------------------------------------------------
Hercules Incorporated (NYSE: HPC) revealed that as of March 31,
2005, there were about 32,088 unresolved asbestos-related
personal injury claims. About 950 were premises claims, which
represent suits alleging exposure to asbestos at facilities
formerly or presently owned or operated by the Company. The rest
are comprised of products claims, or those that arose from
alleged exposure to asbestos fibers from resin encapsulated pipe
and tank products sold by one of the Company's former
subsidiaries to a limited industrial market.
There were also about 1,425 unpaid claims that have been settled
or are subject to the terms of a settlement agreement. In
addition, as of March 31, 2005, there were about 3,728 claims
which have either been dismissed without payment or are in the
process of being dismissed without payment, but with plaintiffs
retaining the right to re-file should they be able to establish
exposure to an asbestos-containing product for which the Company
bears liability.
In 2004, the Company received about 8,305 new claims, about one
third of which were included in "consolidated" complaints naming
one hundred or more plaintiffs and a large number of defendants,
but providing little information connecting any specific
plaintiff's alleged injuries to any specific defendant's
products or premises. It is the Company's belief that a
significant majority of these "consolidated" claims will be
dismissed for no payment. Since the beginning of 2005 until
March 31, 2005, the Company received about 795 new claims, none
of which were in consolidated complaints.
The Company's primary and first level excess insurance policies
that provided coverage for these asbestos-related matters
exhausted their products limits at or before the end of July
2003. Since that time, the Company has fully funded the costs
associated with the defense and settlement of its asbestos-
related liabilities. From January 1, 2005 through March 31,
2005, the Company spent about US$10.6 million on these matters,
including about US$8.1 million in settlement payments and about
US$2.5 million for defense costs.
Both prior to and following the exhaustion of the products
limits of the Company's primary and first level excess insurance
policies, the Company undertook efforts to negotiate with
certain of its other excess insurance carriers for reimbursement
of defense costs and indemnity payments relating to these
asbestos-related liabilities. Those efforts, however, did not
progress at a rate satisfactory to the Company. As a result, on
November 27, 2002, the Company initiated litigation against the
solvent excess insurance carriers that provided insurance
coverage for asbestos-related liabilities in a matter captioned
Hercules Incorporated v. OneBeacon, et al., Civil Action No.
02C-11-237 (SCD), Superior Court of Delaware, New Castle County.
Beginning in August 2004 and continuing through October 2004,
the Company entered into settlements with all of the insurers
named in that lawsuit. As a result, the lawsuit was dismissed in
early November 2004.
Specifically, effective August 23, 2004, the Company entered
into a comprehensive settlement agreement with respect to those
insurance policies issued by certain underwriters at Lloyd's,
London, and reinsured by Equitas Limited and related entities.
As part of that settlement, during the third quarter of 2004,
Equitas paid US$30.0 million to the Company and placed US$67.0
million into a trust.
The First Settlement Agreement generally provides for the
payment of money to the Company in exchange for the release by
the Company of claims under those policies and the cancellation
of those policies; the agreement by the Company to indemnify the
underwriters from any such claims asserted under those policies;
and the impact on the settlement should federal asbestos reform
legislation be enacted on or before January 3, 2007. The trust
funds have been and are continuing to be used to reimburse the
Company for a portion of costs it incurs to resolve certain
asbestos claims from and after August 2004.
In addition, effective October 8, 2004, the Company entered into
a comprehensive settlement agreement with respect to certain
insurance policies issued by various insurance companies
operating in the London insurance market, and by one insurance
company located in the United States.
Under this Second Settlement Agreement, the Company will receive
payments from the participating insurers totaling about US$102.2
million over a four-year period beginning in 2005. The trust
funds may be used to reimburse the Company for costs it incurs
to resolve asbestos claims from and after October 8, 2004. Any
funds remaining in trust subsequent to 2008 may be used by the
Company to pay both asbestos-related claims and non-asbestos
related claims.
As of March 31, 2005, and for the three-month period then ended,
US$35.2 million of the US$102.2 million has been placed into the
trust. In addition, the agreement provided the United States
insurer until December 28, 2004 to elect an alternative payment
option that would have modified that insurer's payment
obligations but the United States insurer did not elect to
exercise that option.
In addition, effective October 13, 2004, the Company reached a
confidential settlement agreement with the balance of its
solvent excess insurers whereby a significant portion of the
costs incurred by the Company with respect to future asbestos
product liability claims will be reimbursed, subject to those
claims meeting certain qualifying criteria. That agreement is
not expected to result in reimbursement to the Company, however,
unless and until defense costs and settlement payments for
qualifying asbestos products claims paid by the Company
aggregate to about US$330 million to US$370 million.
ASBESTOS LITIGATION: Dana Corp. Battles 120,000 Active Claims
-------------------------------------------------------------
Auto parts manufacturer Dana Corporation (NYSE: DCN) revealed
that as of March 31, 2005, the Company had about 120,000 active
pending asbestos-related product liability claims, compared to
116,000 at December 31, 2004. Included at both figures were
10,000 claims that were settled but awaiting final documentation
and payment.
The Toledo, OH-based Company accrued US$143 million for
indemnity and defense costs for these claims at March 31, 2005,
compared to US$139 million at December 31, 2004. The amounts
accrued are based on the Company's assumptions and estimates
about the values of the claims and the likelihood of recoveries
derived from historical experience and current information.
The Company has agreements with insurance carriers providing for
the payment of a significant majority of the defense and
indemnity costs for the pending claims, as well as claims which
may be filed against it in the future. It had recorded US$122
million as an asset for probable recovery from the insurers for
these claims at March 31, 2005, compared to US$118 million at
December 31, 2004. In addition to amounts related to pending
claims, the Company had a net amount recoverable from its
insurers and others of US$28 million at March 31, 2005, compared
to US$26 million at December 31, 2004. This recoverable
represents reimbursements for settled asbestos-related product
liability claims and related defense costs, including billings
in progress and amounts subject to alternate dispute resolution
proceedings with some of the insurers.
ASBESTOS LITIGATION: Union Pacific Gets 338 Claims, Settles 216
---------------------------------------------------------------
Union Pacific Corporation (NYSE: UNP) received 338 asbestos-
related claims during the first quarter of 2005 and 158 claims
in the first quarter of 2004. The Company settled or dismissed
216 claims during the first quarter of 2005 and 198 claims in
the first quarter of 2004. Payments for asbestos-related claims
were US$1.5 million and US$3.5 million during the first three
months of 2005 and 2004, respectively.
These lawsuits represent claims in which current and former
employees allege exposure to asbestos. Additionally, it has
received claims for asbestos exposure that have not been
litigated. The claims and lawsuits allege occupational illness
resulting from exposure to asbestos-containing products. In most
cases, the claimants do not have credible medical evidence of
physical impairment resulting from the alleged exposures.
Additionally, most claims filed against Union Pacific do not
specify an amount of alleged damages.
The greatest potential for asbestos exposure in the railroad
industry existed while steam locomotives were used. The railroad
industry, including UPRR and its predecessors, phased out steam
locomotives between 1955 and 1960. The use of asbestos-
containing products in the railroad industry was substantially
reduced after steam locomotives were discontinued, although it
was not completely eliminated. Some asbestos-containing products
were still manufactured in the building trade industry and were
used in isolated component parts on locomotives and railroad
cars during the 1960s and 1970s. By the early 1980s,
manufacturers of building materials and locomotive component
parts developed non-asbestos alternatives for their products and
ceased manufacturing asbestos-containing materials.
The Omaha, NE-based Company's liability for asbestos-related
claims is not discounted to present value and was US$324 million
at both March 31, 2005 and December 31, 2004. At the same
periods, US$17 million was classified as current liabilities,
while the remainder was classified as long-term accrued casualty
costs. About 14% of the recorded liability related to asserted
claims, and about 86% related to unasserted claims. These claims
are expected to be paid out over the next 30 years. During the
first quarter of 2005, the Company evaluated actual experience
compared to forecasted future claims and claim payments and
determined that no adjustment to its estimate was necessary.
Based on its average claims experience over a multi-year period,
the Company increased its liability for asbestos-related claims
to US$326 million in the fourth quarter of 2004.
ASBESTOS LITIGATION: CIRCOR Int'l. Faces Claims in 20 States
------------------------------------------------------------
Like many other manufacturers of fluid control products, CIRCOR
International, Inc. (NYSE: CIR) has been named as a defendant in
a growing number of product liability actions brought on behalf
of individuals who seek compensation for their alleged exposure
to airborne asbestos fibers.
In particular, the Burlington, MA-based Company's subsidiaries,
Leslie, Spence, and Hoke, collectively have been named as
defendants or third-party defendants in asbestos related claims
brought on behalf of about 22,000 plaintiffs typically against
anywhere from 50 to 400 defendants.
In some instances, the Company has also been named individually
and as successor in interest to one or more of these
subsidiaries. These cases have been brought in state courts in
Alabama, California, Connecticut, Georgia, Illinois, Maryland,
Michigan, Mississippi, Montana, New Jersey, New York, Ohio,
Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia,
Washington and Wyoming with the vast majority of claimants
having brought their claims in Mississippi.
The cases brought on behalf of the vast majority of claimants
seek unspecified compensatory and punitive damages against all
defendants in the aggregate. However, the complaints filed on
behalf of claimants who do seek specified compensatory and
punitive damages typically seek millions or tens of millions of
dollars in damages against the aggregate of defendants.
Any components containing asbestos formerly used in Leslie,
Spence and Hoke products were entirely internal to the product
and would not give rise to ambient asbestos dust during normal
operation or during normal inspection and repair procedures. To
date, the Company's insurers have been paying the vast majority
of the costs associated with the defense of these actions,
particular with respect to Spence and Hoke for which insurance
has paid all defense costs to date.
Due to certain gaps in historical insurance coverage, Leslie had
been responsible for in excess of 40% of the defense costs
associated with asbestos actions. However, during 2003 the
Company discovered evidence of additional policy coverage. As a
result, during the first quarter of 2004 it negotiated a revised
cost sharing understanding with Leslie's insurers, which results
in a lowering of Leslie's responsibility to 29% of defense
costs.
Circor International Inc. designs, manufactures, and supplies
valves, related products and services to OEMs, processors,
manufacturers, and the military. Circor was spun off from Watts
Industries (now Watts Water Technologies) in 1999.
ASBESTOS LITIGATION: Senate Panel Resumes Work on Asbestos Bill
---------------------------------------------------------------
After a nearly two-week lull, the Senate Judiciary Committee
continued work on legislation to create a new US$140 billion
trust fund to compensate victims of asbestos-related disease.
Procedural wrangling by a democratic senator had forced the
delay. The panel only completed work on 12 amendments before an
opponent invoked a Senate rule that committees cannot work more
than two hours after the full Senate has gone into session.
Judiciary Committee Chairman Arlen Specter, R-Pa., and his chief
ally on the bill, Sen. Patrick Leahy, D-VT, adopted a number of
proposed changes to the bill, through a 14-amendment managers'
package. The committee approved the package, which contained new
language relating to how insurers would discount their payments
to the fund, on a voice vote.
At the urging of California Democrat Sen. Dianne Feinstein, the
Committee voted to include deadlines in the legislation for
payments to the most seriously ill victims. This would ensure
that sufferers of mesothelioma, a lethal cancer of the lung
lining and who are entitled to US$1.1 million from the fund,
would be paid within 30 days from the time their claims are
approved by the fund's administrator or within six months from
the date the claims are filed, whichever comes first.
The committee also voted to allow the Department of Defense to
seek an exemption from the bill's ban on the manufacture,
processing or distribution of asbestos-containing products.
Another amendment that was accepted included giving a break to
small companies that have complained they may be asked to pay a
disproportionate amount to the fund. It would give a reduction
to companies that would otherwise pay more to the fund each year
than their average annual expenditures on asbestos suits in the
past 10 years.
The two senators delayed consideration of two of the package's
amendments that dealt with the use of specific medical
technologies in assessing impairment. Other committee members
have already prepared another 80 of the amendments and whether
the bill has enough votes to pass when debate ends is still in
question.
The bill will need 10 of 18 votes to pass the committee. As of
Wednesday, the bill appeared to have eight sure votes, while
seven others in the committee have gone against it. That leaves
the votes of three committee members in question.
Dow Jones reports that U.S. asbestos stocks have shown
volatility in the last month, trading down on the slightest hint
of bad news, while spiking on positive indicators. Generally,
though, they have traded up since early April when the draft of
the bill was completed.
ASBESTOS LITIGATION: RAND Study Says Claims Cost Industry US$70B
----------------------------------------------------------------
Asbestos-related claims filed by more than 730,000 people in the
U.S. from the early 1970s through 2002 have cost businesses and
insurance companies more than US$70 billion, the RAND Corp.
reported.
The RAND report found that the vast majority of asbestos claims
were made by those who had been injured by asbestos, but had
little or no current functional impairment from the injury.
Alarmingly, 90% of all new claims, which the study says
escalated sharply through the 1990s and into 2002, came from
people who have non-malignant injuries.
The study also found at least 8,400 entities had been named as
defendants in asbestos claims through 2002. At least 73
companies named in a substantial number of asbestos claims filed
for bankruptcy through mid-2004.
Of that US$70 billion, only US$29 billion or 42 cents of every
dollar went to claimants, the study by the RAND Institute for
Civil Justice added. Another 31 cents has gone to defense costs,
and 27 cents has gone to plaintiffs' attorneys and other related
costs.
The report also found that where asbestos-related claims had
largely been limited to workers from asbestos manufacturers,
RAND found more and more such claims are being made by workers
in places where asbestos wasn't manufactured, but happened to be
in their workplace.
The report made no estimate of possible future claims, but noted
that there is consensus among other estimates that "at most,
only about three-quarters of the final number of claimants have
come forward."
Asbestos is a mineral used in many industrial processes because
of fire-retardant properties. Asbestos fibers are easily
inhaled, and can cause various respiratory illnesses including a
fatal, incurable cancer called mesothelioma.
RAND is a nonprofit research organization. RAND's Institute for
Civil Justice, which produced the report, has been studying
asbestos litigation since 1983.
ASBESTOS LITIGATION: ASIC Gets Funds to Investigate James Hardie
----------------------------------------------------------------
In the 2005-06 budget released in Canberra, the Australian
Securities & Investment Commission will receive extra funds to
pursue its investigation of James Hardie Industries Ltd. after a
New South Wales state government inquiry found the company
misled investors about the cost of compensating asbestos
victims.
Treasurer Peter Costello said that the securities regulator
would receive AUD13.4 million or US$10 million in over four
years.
Building materials giant Hardie signed an AUD1.5 billion
landmark compensation deal for thousands of Australian victims.
It relocated to the Netherlands in 2001, leaving an earlier
compensation fund seriously underfunded and eventually forcing
it to file for liquidation last year. Hardie began phasing out
asbestos production in Australia in 1974 and ceased all asbestos
manufacturing in 1987.
"Well-resourced defendants have initiated costly appeals and
challenges to ASIC," Mr. Costello said.
"These tactics may have been adopted with a view to `pricing
out' the regulator. Failure to proceed with these matters could
lead to a perception that wealthy defendants may avoid sanctions
and have an adverse impact on community confidence," he said.
ASBESTOS LITIGATION: Bill Saves Asbestos Firms Billions, Report
---------------------------------------------------------------
U.S. asbestos companies would see a huge cut in their future
liabilities under legislation being considered by the Senate
Judiciary Committee, according to a report released by Public
Citizens Congress Watch.
Ten asbestos manufacturing or producing companies forced into
bankruptcy under a mountain of asbestos-related liabilities
would see their future liabilities fall from an estimated
US$25.9 billion to US$5.6 billion under the legislation, Public
Citizen said. On an individual basis, asbestos companies would
effectively see their total payments over the life of the fund
on behalf of asbestos victims decline by margins ranging from
40.5 percent to 100 percent. These Tier I companies include
Armstrong World Industries, Babcock & Wilcox, NARCO, Owens
Corning, Pittsburgh Corning, USG Corp. (USG), and W.R. Grace &
Co. (GRA).
Another eight companies - Fortune 500 businesses who used
asbestos in their production - would be "huge winners" under the
bill, the report said. Those so-called Tier II companies' annual
payments to a proposed asbestos trust fund would be capped at
US$27.5 million a year for 30 years, the report found. The
current value of those payments over 30 years for any company
would be capped at about US$378.5 million. By comparison, Dow
Chemical Co. (DOW) projects future asbestos liabilities of
between US$1.6 billion and US$2.2 billion over the next 15
years.
Other likely winners under the bill include General Electric Co.
(GE), Ford Motor Co. (F), General Motors Corp. (GM), Georgia-
Pacific Corp. (GP), Honeywell International Inc. (HON), Pfizer
Inc. (PFE) and Viacom Inc. (VIAB), the report said.
Most of those companies have said their future asbestos
liability couldn't be estimated, or have refused to give an
estimate, according to Public Citizen.
Meanwhile, some of the nation's largest financial investment
firms have spent millions of dollars in lobbying and campaign
contributions to position themselves to score big rewards should
the legislation pass. A relatively unknown entity called the
Asbestos Study Group, which refuses to make its full membership
list public, is spearheading this campaign, said to have already
spent US$27.9 million to pass the asbestos legislation, Public
Citizen found.
Under the bill, asbestos companies with large existing
liabilities that are in Chapter 11 bankruptcy would have those
liabilities erased, in favor of contributions to the proposed
national asbestos trust fund. But the value of contributions to
the trust fund would be substantially less than the existing
liabilities, providing significant windfalls to the companies
involved.
"The Senate should not allow this legislation to become a
feeding frenzy for companies that from all indications care more
about their bottom lines than for the lives of the Americans
their products harmed and for whom this legislation was
intended," said Frank Clemente, director of Public Citizen's
Congress Watch.
A copy of the report can be found at Public Citizens' Web site,
www.citizen.org.
ASBESTOS LITIGATION: Tyco Int'l. Battles 16,000 Pending Cases
-------------------------------------------------------------
Tyco International Ltd. (NYSE: TYC), manufacturer of electronics
and medical supplies, had roughly 16,000 asbestos liability
cases pending against it and its units as of April 1, 2005,
according to a regulatory filing submitted to the Securities and
Exchange Commission. The majority of these cases have been filed
against subsidiaries in health-care and engineered products and
services. Each case typically names dozens to hundreds of
corporate defendants.
A limited number of the cases allege premises liability, based
on claims that individuals were exposed to asbestos while on a
subsidiary's property. A majority of the cases involve product
liability claims, based principally on allegations of past
distribution of heat-resistant industrial products that
contained asbestos.
Tyco said its involvement in asbestos cases has been limited
because its units didn't mine or produce asbestos. The company
also said a large percentage of the claims never were
substantiated and have been dismissed by the courts.
During the first half of fiscal 2005, Tyco undertook a detailed
study of its pending asbestos claims and determined the impact
of the study wasn't material to the company's financial
position, results of operations or cash flows.
Tyco, which has about 250,000 employees and US$40 billion in
annual revenue, has its headquarters in Bermuda, but now
operates out of West Windsor, NJ.
ASBESTOS LITIGATION: Midwest Generation Records US$68M Liability
----------------------------------------------------------------
Mission Energy Holding Co. said that a subsidiary, Midwest
Generation, an independent power producer, was potentially
liable for between 130 and 170 cases that had not been settled
and dismissed at March 31, 2005. Midwest Generation recorded a
US$68 million liability related to this matter.
Midwest Generation entered into a supplemental agreement with
Commonwealth Edison and Exelon Generation Company on February
20, 2003 to resolve a dispute regarding interpretation of its
reimbursement obligation for asbestos claims under the
environmental indemnities set forth in the Asset Sale Agreement.
Under this supplemental agreement, Midwest Generation agreed to
reimburse Commonwealth Edison and Exelon Generation for 50% of
specific existing asbestos claims and expenses less recovery of
insurance costs, and agreed to a sharing arrangement for
liabilities and expenses associated with future asbestos-related
claims as specified in the agreement.
As a general matter, Commonwealth Edison and Midwest Generation
apportion responsibility for future asbestos-related claims
based upon the number of exposure sites that are Commonwealth
Edison locations or Midwest Generation locations. The
obligations under this agreement are not subject to a maximum
liability. The supplemental agreement has a five-year term with
an automatic renewal provision. Payments are made under this
indemnity upon tender by Commonwealth Edison of appropriate
proof of liability for an asbestos-related settlement, judgment,
verdict, or expense.
ASBESTOS ALERT: UK Magistrates Court Imposes Fine on Lemec Ltd.
---------------------------------------------------------------
The London Magistrates Court heard how employees of Lemec Ltd.
broke down two asbestos-riddled water tanks, exposing around ten
people to the released carcinogenic fibers. Former company
director Chris Jones admitted contravening health and safety
regulations during the hearing.
The electricians of the Company, which has now been dissolved,
used a sledgehammer and an angle grinder to smash the water
tanks during work on Philip and Andrea Robinson's home in Anzio
Walk, off Burton Road, Lincoln, last August. On each tank, there
was a label warning that the cement, branded Asbestolux,
contained the dreaded material, asbestos. They were installing a
new heating system. Lemec charged around GBP3,600 for the work,
which took four days.
Despite voiced concerns from Mr. Robinson, Mr. Jones insisted
that it was not dangerous to break up the tanks. But Mr.
Robinson and his pregnant wife did not believe him and went to
stay with relatives. Mr. Robinson then took his own sample of
the white dust to an independent analyst and paid GBP40 to have
it tested, confirming it contained asbestos.
A report by the Health and Safety Executive revealed that the
dust particles taken from the house contained up to 50 percent
asbestos. The house was so covered in dust that the clean-up
operation cost more than GBP3,000.
Graham Hills, prosecuting for the Health and Safety Executive,
told the court that Mr. Jones should have employed a licensed
asbestos removal firm. He failed to heed the warnings and take
proper precautions. As a result, Mr. Jones, now a self-employed
electrician was fined GBP1,500 and must pay GBP1,000 costs.
Lemec was based just yards away from the couple's home in
Dunkirk Road and employed 16 people before it was dissolved.
Every year 3,500 people across the country die from asbestos-
related diseases such as lung cancer because of past exposure.
New Securities Fraud Cases
FRIEDMAN BILLINGS: Lerach Coughlin Lodges Securities Suit in NY
---------------------------------------------------------------
The law firm of Lerach Coughlin Stoia Geller Rudman & Robbins
LLP initiated a class action in the United States District Court
for the Southern District of New York on behalf of purchasers of
Friedman, Billings, Ramsey Group, Inc. ("FBR") (NYSE:FBR) common
stock during the period between January 29, 2003 and April 25,
2005 (the "Class Period").
The complaint charges FBR and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. FBR is an investment bank that provides investment
banking, institutional brokerage and asset management services,
and invests as principal in mortgage-backed securities and
merchant banking investments.
The complaint alleges that during the Class Period, defendants
made false and misleading statements regarding FBR's business
and prospects. On November 9, 2004, FBR filed its third quarter
2004 Form 10-Q in which it disclosed an SEC and NASD
investigation concerning its role in 2001 as a placement agent
for an issuer in a PIPE (private investment in public equity)
transaction. On this news, FBR's stock dropped to $16.93 per
share, some 40% lower than the Class Period high of $28.70 per
share. However, according to the complaint, the market was not
apprised as to the seriousness of the investigation, nor that
FBR's earnings were not sustainable. On April 4, 2005, Emanuel
J. Friedman, the CEO, resigned. Then, on April 25, 2005, after
the market closed, FBR announced disappointing preliminary
results for the first quarter 2005, including a charge for its
liability in the PIPE transaction. On this news, FBR's stock
dropped to $12.52 on volume of 7.5 million shares.
The complaint alleges that the true facts, which were known to
each of the defendants during the Class Period but were
concealed from FBR's shareholders, include:
(1) the 2001 PIPE transaction manipulation was extremely
serious and reached the highest level of the Company;
(2) FBR's earnings would be adversely affected by charges
related to the investigation into the PIPE transaction
and due to the problems the bad publicity would cause
FBR; and
(3) FBR's 2005 EPS would be much worse than market
expectations due to the PIPE transaction as well as due
to interest rate increases which would have a much more
severe impact on FBR's business than defendants had
represented to the market.
For William Lerach or Darren Robbins of Lerach Coughlin by
Phone: 800/449-4900 or 619/231-1058 by E-mail: wsl@lerachlaw.com
or visit their Web site: http://www.lerachlaw.com/cases/fbr/.
FRIEDMAN BILLINGS: Schatz & Nobel Files Securities Lawsuit in NY
----------------------------------------------------------------
The law firm of Schatz & Nobel, P.C. initiated a lawsuit seeking
class action status has been filed in the United States District
Court for the Southern District of New York on behalf of all
persons who purchased the publicly traded securities of
Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) ("FBR")
between January 29, 2003 and April 25, 2005 (the "Class
Period").
The Complaint alleges that FBR violated federal securities laws
by making materially false or misleading public statements.
Specifically, the Complaint alleges that FBR did not properly
disclose the adverse effect of an SEC and NASD investigation
into FBR's 2001 role as a placement agent for an issuer in a
PIPE (private investment in public equity) transaction. On
November 9, 2004, FBR filed its third quarter 2004 Form 10-Q in
which it disclosed this SEC and NASD investigation. On this
news, FBR's stock dropped to $16.93 per share. On April 4, 2005,
Emanuel J. Friedman, FBR's CEO, resigned. Then, on April 25,
2005, FBR announced disappointing preliminary results for the
first quarter 2005, including a charge for its liability in the
PIPE transaction. On this news, FBR's stock dropped to $12.52 on
volume of 7.5 million shares
For more details, contact Wayne T. Boulton or Nancy A. Kulesa of
Schatz & Nobel, P.C. by Phone: (800) 797-5499 by E-mail:
sn06106@aol.com or visit their Web site: http://www.snlaw.net.
FRIEDMAN BILLINGS: Scott + Scott Lodges Securities Lawsuit in NY
----------------------------------------------------------------
The law firm of Scott + Scott, LLC initiated a shareholder class
action lawsuit by request and on behalf of purchasers of
Friedman, Billings, Ramsay Group, Inc. (NYSE:FBR) securities
from January 29, 2003 and April 25, 2005 in the United States
District Court for the Southern District of New York, which had
been assigned the case number 05-cv-4617.
This is a class action on behalf of purchasers of the common
stock (other securities investors may contact the firm as well)
of Friedman, Billings, Ramsey Group, Inc. ("FBR" or the
"Company") between January 29, 2003 and April 25, 2005,
inclusive (the "Class Period"), seeking to pursue remedies under
the Securities Exchange Act of 1934 (the "Exchange Act"). FBR is
an investment bank that provides investment banking,
institutional brokerage and asset management services, and
invests as principal in mortgage-backed securities ("MBS") and
merchant banking investments. In March 2003, the Company was
formed through the merger of two existing companies, both
engaged in related business and both managed by the FBR
management team.
The complaint alleges that the true facts, which were known to
each of the defendants during the Class Period but were
concealed from FBR's shareholders, include:
(1) the 2001 PIPE transaction manipulation was extremely
serious and reached the highest level of the Company;
(2) FBR's earnings would be adversely affected by charges
related to the investigation into the PIPE transaction
and due to the problems the bad publicity would cause
FBR; and
(3) FBR's 2005 EPS would be much worse than market
expectations due to the PIPE transaction as well as due
to interest rate increases which would have a much more
severe impact on FBR's business than defendants had
represented to the market.
Defendants include FBR, an investment bank with its investment
banking business based in New York, New York, that provides
institutional brokerage, investment banking and asset management
services, and invests as principal in MBS and merchant banking
investments; Defendant Eric F. Billings ("Billings") who was, at
all relevant times, Co-Chief Executive Officer and Co-Chairman
of FBR; Defendant Emanuel J. Friedman ("Friedman") who was, at
all relevant times, Co-Chairman and Co-Chief Executive Officer
of FBR; and Defendant Kurt R. Harrington ("Harrington") who was,
at all relevant times, CFO of FBR.
For more details, contact Neil Rothstein or Amy K. Saba of Scott
+ Scott, LLC by Mail: 108 Norwich Avenue, Colchester, CT 06415
by Phone: 860/537-3818 by Fax: 860/537-4432 by E-mail:
nrothstein@scott-scott.com or asaba@scott-scott.com or visit
their Web site: http://www.scott-scott.com.
MARTEK BIOSCIENCES: Lasky & Rifkind Lodges Securities Suit in MD
----------------------------------------------------------------
The law firm of Lasky & Rifkind, Ltd., initiated a lawsuit in
the United States District Court for the District of Maryland,
on behalf of persons who purchased or otherwise acquired
publicly traded securities of Martek Biosciences Corporation
("Martek" or the "Company") (NASDAQ:MATK) between December 9,
2004 and April 27, 2005, inclusive, (the "Class Period"). The
lawsuit was filed against Martek, Henry Linsert, Jr., and Peter
L. Buzy ("Defendants").
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically, the complaint alleges that
the Company failed to disclose or misrepresented that Defendants
had put into place a system which allowed customers to build a
moderate safety level of inventory, and that Defendants
manipulated its channels of distribution, flooding the Company's
few customers with excess inventory in order for the Company to
make its financial projections and complete a stock offering.
On April 27, 2005, after the market closed, Martek provided an
earnings update and revealed that it now anticipated a decrease
in third quarter sales, after having reported rapidly increasing
sales and product supply shortages. Shares of Martek reacted
dramatically to the whipsaw by the Company, shedding $32.49 per
share, or nearly 46% on very heavy volume.
For more details, contact Lasky & Rifkind, Ltd. by Phone:
(800) 495-1868 or by E-mail: investorrelations@laskyrifkind.com.
MARTEK BIOSCIENCES: Squitieri & Fearon Files Stock Lawsuit in MD
----------------------------------------------------------------
The law firm of Squitieri & Fearon, LLP initiated class action
in the United States District Court for the District of Maryland
on behalf of investors who purchased the securities of Martek
Biosciences Corporation (NYSE:MATK) ("Martek" or the "Company")
during the period from December 9, 2004 through April 27, 2005
(the "Class Period").
This lawsuit claims that Martek and its officers misrepresented
the Company's financial performance and failed to disclose
significant problems with the Company's business in order to
complete an $81 million stock offering. The claims are brought
pursuant to the federal securities laws and allege that Martek
and the officers who are named in the lawsuit violated the
Securities Act of 1933 and the Securities Exchange Act of 1934.
The lawsuit seeks to recover for investors who bought the
Company's securities, including those investors who bought the
Company's common stock in the January 2005 secondary offering.
On April 27, 2005 investors began to learn the truth when Martek
issued a press release that revealed the significant shortfall
in its sales and earnings. In response to this news Martek's
shares fell from $60.08 per share to close at $32.49 on April
28, 2005.
For more details, contact Sara Mirsky or Stephen J. Fearon of
Squitieri & Fearon, LLP by Phone: (212) 421-6492 or by E-mail:
smirsky@sfclasslaw.com or Stephen@sfclasslaw.com.
MBNA COPRORATION: Schatz & Nobel Lodges Securities Lawsuit in DE
----------------------------------------------------------------
The law firm of Schatz & Nobel, P.C., which has significant
experience representing investors in prosecuting claims of
securities fraud, announces that a lawsuit seeking class action
status has been filed in the United States District Court for
the District of Delaware on behalf of all persons who purchased
the publicly traded securities of MBNA Corp. (NYSE: KRB)
("MBNA") between January 20, 2005 and April 20, 2005 (the "Class
Period").
The Complaint alleges that MBNA violated federal securities laws
by making materially false or misleading public statements.
Specifically, the Complaint alleges that MBNA's projection of
10% annual income was improper. On April 21, 2005, MBNA
announced that its first-quarter income was down 93% percent
year-over-year, including a one-time restructuring charge,
making it highly unlikely that MBNA would be able to achieve 10%
annual income growth. The reduced earnings included a $207
million write-down of MBNA's "interest-only strip receivable,"
which is a measure of anticipated credit-card interest payments
that is supposed to be adjusted on an ongoing basis. On this
news, shares of MBNA fell from a close of $23.11 on April 20,
2005, to close at $19.28 on April 21, 2005.
For more details, contact Wayne T. Boulton or Nancy A. Kulesa of
Schatz & Nobel, P.C. by Phone: (800) 797-5499 by E-mail:
sn06106@aol.com or visit their Web site: http://www.snlaw.net.
PETCO ANIMAL: Brain M. Felgoise Files Securities Suit in S.D. CA
----------------------------------------------------------------
The Law Offices of Brian M. Felgoise, P.C. filed a securities
class action on behalf of shareholders who acquired PETCO Animal
Supplies, Inc. (NASDAQ: PETC) securities between November 18,
2004 and April 14, 2005, inclusive (the Class Period).
The case is pending in the United States District Court for the
Southern District of California, against the company and certain
key officers and directors.
The action charges that defendants violated the 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. No class has yet been
certified in the above action.
For more details, contact Brian M. Felgoise, Esq. by Mail: 261
Old York Road, Suite 423, Jenkintown, Pennsylvania, 19046 by
Phone: (215) 886-1900 or by E-mail: FelgoiseLaw@aol.com.
R&G FINANCIAL: Klafter & Olsen Files Securities Fraud Suit in NY
----------------------------------------------------------------
The law firm of Klafter & Olsen LLP initiated a securities fraud
class action complaint against R&G Financial Corporation ("R&G")
(NYSE: RGF) in the U.S. District Court for the Southern District
of New York, the complaint asserts claims on behalf of investors
who purchased the publicly traded securities of R&G during the
period from April 21, 2003 through and including April 25, 2005
(the "Class Period").
The complaint alleges that R&G and certain of its officers and
directors violated the Securities Exchange Act of 1934. R&G is a
diversified financial holding company with operations in Puerto
Rico and the United States, providing banking, mortgage banking,
investments, consumer finance and insurance through its wholly-
owned subsidiaries. Plaintiff seeks to recover damages on behalf
of all purchasers of R&G publicly traded securities during the
Class Period (the "Class"). The plaintiff is represented by
Klafter & Olsen LLP which has extensive expertise in prosecuting
investor class actions involving financial fraud.
The complaint alleges that during the Class Period, defendants
made materially false and misleading statements regarding the
Company's business and prospects. On April 25, 2005, the Company
announced that after consultation with its independent
accountants and firms with experience in valuation issues, it
had "determined to review the independent market valuations used
in valuing residual interests retained in securitization
transactions of the Company. As a result of that review, the
Company stated that it is revising its valuation methodology
used in valuing these interests that are presented in the
Company's audited consolidated financial statements.... and
considering alternative valuation methodologies. Depending on
the valuation methodology used, the Company has preliminarily
estimated that the fair value of its residual interests would be
reduced as of December 31, 2004 by an amount equal to between
approximately $90 million to $150 million ($55 million and $90
million after taxes, respectively)."
According to the complaint, the true facts, which were known by
each of the defendants but concealed from the investing public
during the Class Period, were as follows:
(1) the Company was using manipulative accounting practices
that materially overstated the value of the Company's
residual interests in these securitized transactions
its net income, net gain on mortgage loan sales and net
capital; and
(2) the Company was using ineffective risk management and
hedging strategies against the increasing risk of
rising interest rates.
As a result of these false statements, R&G's stock price traded
at inflated levels during the Class Period, increasing to as
high as $40 per share. However, after the truth began to be
revealed in R&G's press release on April 25, 2005, the Company's
shares fell to below $15 per share.
For more details, contact Kurt B. Olsen of Klafter & Olsen LLP
by Phone: +1-202-261-3553 or visit their Web site:
http://www.klafterolsen.com.
R&G FINANCIAL: Marc S. Henzel Lodges Securities Fraud Suit in NY
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit in the United States District Court for the Southern
District of New York on behalf of purchasers of the publicly
traded securities of R&G Financial Corporation (NYSE: RGF)
between April 21, 2003 and April 25, 2005, inclusive (the "Class
Period").
The complaint charges R&G Financial, Victor J. Galan, and Joseph
R. Sandoval with violations of the Securities Exchange Act of
1934. R&G Financial is a Puerto Rico-chartered, financial
holding company that operates R-G Premier Bank of Puerto Rico
(Premier Bank) a Puerto Rico commercial bank, and R-G Crown Bank
(Crown Bank), a Florida domiciled federal savings bank. The
Company also operates R&G Mortgage Corp (R&G Mortgage) in Puerto
Rico, The Mortgage Store of Puerto Rico, Inc. (Mortgage Store),
a subsidiary of R&G Mortgage and Continental Capital Corp.
(Continental), a mortgage-banking subsidiary of Crown Bank,
which does business in the continental United States.
According to the complaint, the Company failed to disclose and
misrepresented the following material adverse facts known to
defendants or recklessly disregarded by them:
(1) that R&G Financial's earnings quality had been
significantly weakened by the Company's use of more
aggressive assumptions to generate gain on sale income,
as well as to the value it retained in its interest
only ("IO") residuals in securitization transactions;
(2) that R&G Financial's methodology used to calculate the
fair value of its IO residual interests retained in
securitization transactions was incorrect and caused
the Company to overstate its financial results by at
least $50 million;
(3) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles ("GAAP");
(4) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(5) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On March 25, 2005, after the market had closed, R&G Financial
announced that it would restate its financial results for fiscal
years 2003 and 2004. News of this shocked the market. Shares of
R&G Financial, on April 26, 2005, fell $8.14 per share, or 35.12
percent, to close at $15.04, on unusually heaving trading
volume. After the market closed on April 26, 2005, R&G Financial
issued a press release wherein it announced that it was subject
to an informal SEC probe relating to its restatement
announcement.
For more details, contact the Law Offices of Marc S. Henzel by
Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by
Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by
E-mail: mhenzel182@aol.com.
TRIBUNE CO.: Brodsky & Smith Lodges Securities Fraud Suit in IL
---------------------------------------------------------------
The Law offices of Brodsky & Smith, LLC initiated a securities
class action lawsuit on behalf of shareholders who purchased the
common stock and other securities of Tribune Company (NYSE:TRB)
("Tribune" or the "Company") between January 24, 2002 to July
15, 2004 inclusive (the "Class Period"). The class action
lawsuit was filed in the United States District Court for the
Northern District of Illinois.
The Complaint alleges that defendants violated federal
securities laws by issuing a series of material
misrepresentations to the market during the Class Period,
thereby artificially inflating the price of TRB securities. No
class has yet been certified in the above action.
For more details, contact Evan J. Smith, Esq. or Marc L.
Ackerman, Esq. of Brodsky & Smith, LLC, by Mail: Two Bala Plaza,
Suite 602, Bala Cynwyd, PA 19004 by Phone: 877-LEGAL-90 by E-
mail: clients@brodsky-smith.com or visit their Web site:
http://www.brodsky-smith.com.
TRIBUNE CO.: Marc S. Henzel Files Securities Fraud Lawsuit in IL
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit in the United States District Court for the Northern
District of Illinois on behalf of purchasers of Tribune Company
(NYSE: TRB) publicly traded securities during the period between
January 24, 2002 and July 15, 2004 (the "Class Period").
The complaint charges Tribune and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Tribune is a media and entertainment company. Through its
subsidiaries, the Company is engaged in newspaper publishing,
television and radio broadcasting and entertainment.
The complaint alleges that defendants intentionally overstated
the circulation of several of Tribune's publications, including
Hoy and Newsday, in order to fraudulently extract higher
incentive payments from the papers' advertisers. These inflated
circulation numbers were reported to investors and the market on
a regular basis and artificially inflated Tribune's financial
results.
In June 2004, Tribune reported that two of its papers, Newsday
and Spanish-language publication Hoy, had inflated circulation
figures since 2001. As alleged in the complaint, this
announcement set off a wave of increased scrutiny throughout the
publishing industry, with advertisers keen to ensure that they
were not being similarly duped. Tribune also came under
increased scrutiny with the Audit Bureau of Circulations, a non-
profit, private entity charged with monitoring the accuracy of
circulation numbers for publications nationwide. As a result of
this increasing pressure, Tribune admitted on July 15, 2004 that
its reported circulation numbers for Hoy and Newsday were
overstated. Tribune eventually announced it was conducting an
internal investigation and that it may refund to advertisers all
amounts that they had been overcharged. In response to this
announcement, Tribune's stock price fell to $41 at the close of
business on July 15, 2004, and has never recovered.
According to the complaint, the facts, known by defendants but
concealed from the investing public during the Class Period,
were as follows:
(1) since at least FY 2001, defendants were inflating the
circulation of Tribune's Hoy and Newsday publications;
(2) as a result of said inflation, the Company's financial
results during the Class Period were artificially
inflated (including revenue, earnings per share ("EPS")
and accounts receivables) and the Company's liabilities
were understated;
(3) the Company's revenue and income was grossly overstated
by millions of dollars;
(4) defendants had knowingly established extremely weak, if
not purposeless, circulation controls which allowed for
the circulation overstatements and did not require that
circulation managers certify the claimed circulation;
and
(5) as a result, defendants' ability to continue to achieve
future EPS and revenue growth would be severely
threatened and would and did result in $95 million in
costs, fines, refunds and investigation expenditures.
For more details, contact the Law Offices of Marc S. Henzel by
Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by
Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by
E-mail: mhenzel182@aol.com.
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
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
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Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Glenn Ruel Senorin, Aurora Fatima Antonio and Lyndsey
Resnick, Editors.
Copyright 2005. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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