/raid1/www/Hosts/bankrupt/CAR_Public/051104.mbx
C L A S S A C T I O N R E P O R T E R
Friday, November 4, 2005, Vol. 7, No. 219
Headlines
3M COMPANY: Employees Broadens Scope of Age Discrimination Suit
ADMINISTAFF INC.: TX Court Yet To Rule on Stock Suit Dismissal
ASSOCIATED ESTATES: Asks OH Court For Summary Judgment in Suit
BRUSH WELLMAN: Continues To Face 15 Beryllium Injury Proceedings
CALIFORNIA: Court Certifies San Mateo Strip Search Lawsuit
CMS ENERGY: Plaintiffs Renew Motion For Stock Suit Certification
CMS ENERGY: Trial in MI ERISA Violations Suit Expected Mid-2006
COMPUCREDIT CORPORATION: Continues To Face NC Consumer Lawsuit
COSINE COMMUNICATIONS: NY Court Preliminarily OKs Lawsuit Pact
DOWNEY FINANCIAL: CA Court Approves Overtime Suit Settlement
GULFSTREAM AEROSPACE: Court Favors Firm in Dispute With Workers
INSTINET GROUP: Enters Into Proposed Settlement For DE Complaint
INTEL CORPORATION: Faces 77 Antitrust Suits After AMD Lawsuit
ISOLAGEN INC.: Skadden Arps Hired as Counsel For Various Suits
LABORATORY CORPORATION: NC Court Mulls Dismissal of Stock Suit
LEGAL SERVICES: NY Court Hears Oral Arguments in Valazquez Case
MAINE: Judge Deems County, Officials Liable For Strip Searches
NATIONWIDE INSURANCE: Removes Payouts Suit to IL Federal Court
NATIONWIDE INSURANCE: Removes Payouts Suit to IL Federal Court
NETFLIX INC.: Offers Upgrade to Settle CA False Advertising Suit
OMNICOM GROUP: Discovery Continues in NY Securities Fraud Suit
PEKIN INSURANCE: Avery Decision Invoked in Madison County Case
PEROT SYSTEMS: TX Court Mulls Dismiss of Securities Fraud Suit
PFIZER INC.: IL Judge Remands Bextra Lawsuit to Madison County
PUGET SOUND: Working To Settle CA Energy Suit Cross-Complaints
QUAKER MAID: Recalls Frozen Beef Due To E. Coli Contamination
QWEST COMMUNICATIONS: Reaches Settlement For CO Securities Suit
QWEST COMMUNICATIONS: Continues To Face ERISA Fraud Suit in CO
QWEST COMMUNICATIONS: Continues To Face CO State Securities Suit
REFCO INC.: Law Firm Retained by Hedge Funds in Securities Suits
REFCO INC.: Law Firms Obtain TRO in NY V. CEO Phillip R. Bennett
TENET HEALTHCARE: CA Court Mulls Wage, Hour Suit Certification
WAL-MART STORES: HI Residents Join Nationwide Suit by Workers
WAL-MART STORES: Worker Files Suit Over "Time Shaving" Practice
WHITEHALL JEWELLERS: Enters Mediation For IL Securities Lawsuit
Asbestos Alerts
ASBESTOS LITIGATION: BNSF Records US$288M A&E Liability Charge
ASBESTOS LITIGATION: AFG Attributes 3Q-2005 Losses to Asbestos
ASBESTOS LITIGATION: AFG Reveals Results of A&E Exposures Study
ASBESTOS LITIGATION: SEE Posts Settlement Liability at US$512.5M
ASBESTOS LITIGATION: Corning Notes US$68 Mil for PCC Litigation
ASBESTOS LITIGATION: Lone Star Subsidiaries Deal with 47 Suits
ASBESTOS LITIGATION: American Standard Resolves 32,008 Claims
ASBESTOS LITIGATION: ASD Posts Asbestos Receivables for 3Q2005
ASBESTOS LITIGATION: American Standard Updates Asbestos Lawsuits
ASBESTOS LITIGATION: BorgWarner Reports 83,000 Pending Claims
ASBESTOS LITIGATION: BorgWarner Inc. Posts CNA Lawsuit Updates
ASBESTOS LITIGATION: U.S. Court Upholds Conviction of Consultant
ASBESTOS LITIGATION: IN Court Grants Rehearing for Suit V. PSI
ASBESTOS LITIGATION: MS Court Rules in Favor of Monsanto Company
ASBESTOS LITIGATION: Court Allows Testimony in Lawsuit V. Bondex
ASBESTOS LITIGATION: WV Court Remands Zuleski Suit V. Insurers
ASBESTOS LITIGATION: PolyOne Corp. Posts $2M Reserves for Claims
ASBESTOS LITIGATION: Exelon Sets $43M Reserve for Future Claims
ASBESTOS LITIGATION: Rohm & Haas Anticipates More Premises Cases
ASBESTOS LITIGATION: Electrolux Holds 980 Pending Suits in 3Q05
ASBESTOS LITIGATION: Cleveland-Cliffs Faces 2 New Maritime Suits
ASBESTOS LITIGATION: Coca-Cola Challenges Aqua-Chem's Demands
ASBESTOS LITIGATION: Goodyear Hit With 1,400 New Claims in 3Q05
ASBESTOS LITIGATION: CA Court Denies Eastman Kodak's Petition
ASBESTOS LITIGATION: U.S. Steel Corp. Defends Against 470 Cases
ASBESTOS LITIGATION: Crum & Forster Manages Exposure to Claims
ASBESTOS LITIGATION: CNA Financial Carries $1,579Mil for Claims
ASBESTOS LITIGATION: Selective Insurance Group Sets 3Q Reserves
ASBESTOS LITIGATION: Illinois Tool Works Named in Exposure Suits
ASBESTOS LITIGATION: Honeywell Int'l Inc. Gains Ground on Claims
ASBESTOS LITIGATION: Factory Worker's Widow Launches Suit V. BTH
ASBESTOS LITIGATION: Hardie, NSW to Discuss Asbestos Agreement
ASBESTOS LITIGATION: Lincoln Electric Responds to 35,795 Claims
ASBESTOS LITIGATION: PPG Industries Holds Off 116,000 Claims
ASBESTOS LITIGATION: USG Corp. Mulls Debtors' Injury Liabilities
ASBESTOS LITIGATION: Court Says Employer Owes No Duty to Spouse
ASBESTOS LITIGATION: DE Court to Rule on Landowners' Liability
ASBESTOS LITIGATION: OH Court Denies Allocating Norfolk Judgment
ASBESTOS LITIGATION: South African Asbestos Ban Almost Complete
ASBESTOS LITIGATION: Brit Ex-Worker Awaits MoD Lawsuit Decision
ASBESTOS LITIGATION: Aussie Unions Concerned Over Govt. Reforms
ASBESTOS LITIGATION: EnPro Industries Spends Higher for Suits
ASBESTOS LITIGATION: Union Carbide's Liability Totals US$1.5Bil
ASBESTOS LITIGATION: Eastman Chemical Defends 3T Pending Claims
ASBESTOS LITIGATION: Aussie MP Bill to Hasten Asbestos Claims
ASBESTOS LITIGATION: AU Councils to Fight Govt. Asbestos Plans
ASBESTOS LITIGATION: FRA Govt. Blamed for Asbestos Mismanagement
ASBESTOS LITIGATION: White Mountains Notes 3Q05 Claims Exposure
ASBESTOS LITIGATION: ALL Notes $1.49B Asbestos Reserves in 3Q05
New Securities Fraud Cases
ANDRX CORPORATION: Federman & Sherwood Lodges Fraud Suit in FL
ANDRX CORPORATION: Stull Stul Lodges Securities Fraud Suit in FL
DANA CORPORATION: Cohen Milstein Lodges Securities Suit in OH
FIRST BANCORP: Lerach Coughlin Files Securities Fraud Suit in NY
PIXAR ANIMATION: Charles J. Piven Lodges Securities Suit in CA
*********
3M COMPANY: Employees Broadens Scope of Age Discrimination Suit
---------------------------------------------------------------
Current and former employees of 3M Company (NYSE: MMM) broadened
the scope of their age discrimination litigation against the
Minnesota-based firm by filing a class action lawsuit in New
Jersey and charges of discrimination with the federal Equal
Employment Opportunity Commission ("EEOC"), according to their
attorneys at Sprenger & Lang.
In December 2004, a current and a former 3M employee filed a
class action age discrimination lawsuit against 3M in state
court in St. Paul, Minnesota, alleging violations of the
Minnesota Human Rights Act. The proposed class in that case
consists of between 5,000 and 10,000 current and former salaried
employees who have worked in the State of Minnesota, where about
half of 3M's United States workforce is located, and who did not
sign releases of claims when their employment was terminated.
Recently, another current 3M employee filed a second age
discrimination class action lawsuit in state court in Newark,
New Jersey. The suit is brought under that state's Law Against
Discrimination on behalf of about 100 current and former
salaried employees who have worked in the State of New Jersey.
In recent weeks, several former employees have filed charges
with the EEOC alleging that 3M engaged in a pattern or practice
of age discrimination in violation of the federal Age
Discrimination in Employment Act. These employees also claim
that 3M persuaded them and as many as 2,000 other employees over
the age of 40 throughout the United States to sign unlawful
releases when they were terminated from the company. The charges
ask the EEOC to invalidate the release because they are used as
part of an illegal scheme to insulate 3M from liability for its
widespread pattern of age discrimination, and because the
releases failed to inform signers why they were selected for
termination, prohibited the employees from filing EEOC charges,
and used confusing and manipulative language, all in violation
of federal law.
The Minnesota and New Jersey lawsuits and the federal EEOC
charges allege consistent patterns of age discrimination at 3M.
According to these legal documents, 3M has intentionally
discriminated against older employees in performance appraisals,
training, promotions, pay and terminations, largely through HR
practices adopted since 2001. These include selecting younger
employees for training as Black Belts and Master Black Belts in
3M's newly-initiated Six Sigma program, assigning older
employees lower performance evaluations than younger employees
through a forced distribution, or quota, process, and using the
lower performance ratings to discriminate against older
employees in promotions and compensation and to justify their
termination.
Michael Lieder, a partner in the law firm of Sprenger & Lang,
stated: "We believe that 3M engaged in a concerted effort to
disadvantage and terminate its older employees and that 3M's
discrimination was directed and encouraged by high-level
employees in its corporate headquarters. Because of this, we
expect to see consistent patterns of discrimination throughout
3M locations in the United States. As we continue to receive
contacts from current and former employees, we anticipate filing
other actions in other states throughout the country, as well as
additional EEOC charges."
Sprenger & Lang is working with the litigation section of the
AARP Foundation on the Minnesota case and the federal charges,
and the Newark-based law firm of Reitman Parsonnet P.C. on the
New Jersey case.
The issues raised in these actions are much broader than these
lawsuits. Dan Kohrman of AARP explained, "We know of many
companies using forced distribution systems and programs such as
Six Sigma. Although neither is necessarily discriminatory, many
companies use them to the disadvantage of older employees. And
the releases used by many other companies share the deficiencies
in 3M's form release. If they were properly informed of their
rights, many persons over 40 might challenge the validity of
releases they signed and ultimately challenge their termination
and other discrimination."
According to its company website, 3M is a diversified technology
company with worldwide sales of $20.011 billion and more than
67,000 employees. For more information about the case, please
visit
For more details, contact Michael Lieder of Sprenger & Lang,
PLLC, Phone: 202-772-1159, Web site: http://www.sprengerlang.com
or Bennet Zurofsky of Reitman Parsonnet, P.C., Phone:
973-642-0885, Web site: http://www.minnesotaclassaction.com.
ADMINISTAFF INC.: TX Court Yet To Rule on Stock Suit Dismissal
--------------------------------------------------------------
The United States District Court for the Southern District of
Texas has yet to rule on Administaff, Inc.'s motion to dismiss
the consolidated securities class action filed against it and
certain of its officers and directors on behalf of purchasers of
the Company's common stock.
The suit alleges violations of the federal securities laws. The
suit alleges that Administaff and certain of its officers and
directors made false and misleading statements or failed to make
adequate disclosures concerning, among other things:
(1) the Company's pricing and billing systems with respect
to recalibrating pricing for clients that experienced a
decline in average payroll cost per worksite employee;
(2) the matching of price and cost for health insurance on
new and renewing client contracts; and
(3) the Company's former method of reporting worksite
employee payroll costs as revenue
The complaint sought unspecified damages, among other remedies.
On March 31, 2004, the court appointed Carpenters Pension Trust
for South California as "lead plaintiff" and Lerach Coughlin
Stoia Geller Rudman & Robbins LLP as "lead counsel." The lead
plaintiff alleges that its losses are $352,000, although the
alleged damages of the purported class have not been specified.
In the consolidated complaint, the lead plaintiff has
essentially abandoned the allegations of fraud contained in the
initial seven lawsuits. Through the consolidated complaint, the
lead plaintiff now generally asserts, among other things, that
Administaff and certain of its officers and directors
fraudulently made false and misleading statements regarding the
cost of its health plan during 2001 and 2002. In June 2004, the
Company filed a motion to dismiss the consolidated complaint.
The suit is styled "Arnone, et al. v. Administaff, Inc., et al.,
case no. 03-CV-2082," filed in the United States District Court
for the Southern District of Texas, under Judge Melinda Harmon.
Representing the Company is Philip J. John, Jr of Baker Botts,
910 Louisiana, Houston, TX 77002, Phone: 713-229-1215, Fax:
713-229-2815 fax, E-mail: philip.john@bakerbotts.com. Lead
counsel for the plaintiffs is Lerach Couglin Stoia Geller Rudman
& Robbins LLP, One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300.
ASSOCIATED ESTATES: Asks OH Court For Summary Judgment in Suit
--------------------------------------------------------------
The Ohio Court of Common Pleas, Franklin County has yet to rule
on Associated Estates Realty Corporation's motion seeking
summary judgment in the class action filed against it by Melanie
and Kyle Kopp, seeking undetermined damages, injunctive relief
and class action certification.
This case arose out of the Company's Suredeposit program. This
program allows cash short prospective residents to purchase a
bond in lieu of paying a security deposit. The bond serves as a
fund to pay those resident obligations that would otherwise have
been funded by the security deposit.
Plaintiffs allege that the non-refundable premium paid for the
bond is a disguised form of security deposit, which is otherwise
required to be refundable in accordance with Ohio's Landlord-
Tenant Act. Plaintiffs further allege that certain
nonrefundable pet deposits and other nonrefundable charges
required by the Company are similarly security deposits that
must be refundable in accordance with Ohio's Landlord-Tenant
Act.
On January 15, 2004, the plaintiffs filed a motion for class
certification. The Company subsequently filed a motion for
summary judgment. Both motions are pending before the Court.
BRUSH WELLMAN: Continues To Face 15 Beryllium Injury Proceedings
----------------------------------------------------------------
Brush Wellman Inc., continues to face 15 proceedings in various
state and federal courts brought by plaintiffs alleging that
they have contracted, or have been placed at risk of
contracting, chronic beryllium disease or other lung conditions
as a result of exposure to beryllium. Plaintiffs in beryllium
cases seek recovery under negligence and various other legal
theories and seek compensatory and punitive damages, in many
cases of an unspecified sum. Spouses of some plaintiffs claim
loss of consortium.
During the third quarter of 2005, the number of beryllium cases
decreased from 16 (involving 61 plaintiffs) as of July 1,
2005 to 15 cases (involving 60 plaintiffs) as of September 30,
2005. During the third quarter, one-third party case (involving
one plaintiff) that had previously been reported as settled, was
dismissed by the court.
The 15 pending beryllium cases as of September 30, 2005 fall
into two categories: 11 cases involving third-party individual
plaintiffs, with 19 individuals (and six spouses who have filed
claims as part of their spouse's case and two children who have
filed claims as part of their parent's case); and four purported
class actions, involving 33 plaintiffs, as discussed more fully
below. Claims brought by third party plaintiffs (typically
employees of the Company's customers or contractors) are
generally covered by varying levels of insurance.
The first purported class action is styled "Manuel Marin, et al.
v. Brush Wellman Inc.," filed in Superior Court of California,
Los Angeles County, case number BC299055, on July 15, 2003. The
named plaintiffs are Manuel Marin, Lisa Marin, Garfield Perry
and Susan Perry. The defendants are Brush Wellman, Appanaitis
Enterprises, Inc., and Doe Defendants 1 through 100. A First
Amended Complaint was filed on September 15, 2004, naming five
additional plaintiffs. The five additional named plaintiffs are
Robert Thomas, Darnell White, Leonard Joffrion, James Jones and
John Kesselring. The plaintiffs allege that they have been
sensitized to beryllium while employed at the Boeing Company.
The plaintiffs' wives claim loss of consortium. The plaintiffs
purport to represent two classes of approximately 250 members
each, one consisting of workers who worked at Boeing or its
predecessors and are beryllium sensitized and the other
consisting of their spouses. They have brought claims for
negligence, strict liability - design defect, strict liability -
failure to warn, fraudulent concealment, breach of implied
warranties, and unfair business practices. The plaintiffs seek
injunctive relief, medical monitoring, medical and health care
provider reimbursement, attorneys' fees and costs, revocation of
business license, and compensatory and punitive damages. Mr.
Marin, Mr. Perry, Mr. Thomas, Mr. White, Mr. Joffrion, Mr. Jones
and Mr. Kesselring represent current and past employees of
Boeing in California; and Ms. Marin and Ms. Perry are spouses.
Defendant Appanaitis Enterprises, Inc. was dismissed on May 5,
2005.
The second purported class action is styled "Neal Parker, et al.
v. Brush Wellman Inc., filed in Superior Court of Fulton County,
State of Georgia, case number 2004CV80827, on January 29, 2004.
The case was removed to the U.S. District Court for the Northern
District of Georgia, case number 04-CV-606, on March 4, 2004.
The named plaintiffs are Neal Parker, Wilbert Carlton, Stephen
King, Ray Burns, Deborah Watkins, Leonard Ponder, Barbara King
and Patricia Burns. The defendants are Brush Wellman; Schmiede
Machine and Tool Corporation; Thyssenkrupp Materials NA Inc.,
d/b/a Copper and Brass Sales; Axsys Technologies, Inc.; Alcoa,
Inc.; McCann Aerospace Machining Corporation; Cobb Tool, Inc.;
and Lockheed Martin Corporation. Mr. Parker, Mr. Carlton,
Mr. King and Mr. Burns and Ms. Watkins are current employees of
Lockheed. Mr. Ponder is a retired employee, and Ms. King and
Ms. Burns are family members. The plaintiffs have brought
claims for negligence, strict liability, fraudulent concealment,
civil conspiracy and punitive damages. The plaintiffs seek a
permanent injunction requiring the defendants to fund a court-
supervised medical monitoring program, attorneys' fees and
punitive damages.
On March 29, 2005, the Court entered an order directing
plaintiffs to amend their pleading to segregate out those
plaintiffs who have endured only subclinical, cellular, and
subcellular effects from those who have sustained actionable
tort injuries, and that following such amendment, the Court will
enter an order dismissing the claims asserted by the former
subset of claimants; dismissing Count I of the complaint, which
sought the creation of a medical monitoring fund; and dismissing
the claims against defendant Axsys Technologies Inc. On April
20, 2005, the plaintiffs filed a Substituted Amended Complaint
for Damages, contending that each of the eight named plaintiffs
and the individuals listed on the attachment to the original
Complaint, and each of the putative class members have sustained
personal injuries; however, they allege that they identified
five individuals whose injuries have manifested themselves such
that they have been detected by physical examination and/or
laboratory test.
The third purported class action is styled "George Paz, et al.
v. Brush Engineered Materials Inc., et al." filed in the United
States District Court for the Southern District of Mississippi,
case number 1:04CV597 on June 30, 2004. The named plaintiffs are
George Paz, Barbara Faciane, Joe Lewis, Donald Jones, Ernest
Bryan, Gregory Condiff, Karla Condiff, Odie Ladner, Henry Polk,
Roy Tootle, William Stewart, Margaret Ann Harris, Judith Lemon,
Theresa Ladner and Yolanda Paz. The defendants are Brush
Engineered Materials Inc.; Brush Wellman Inc.; Wess-Del Inc.;
and the Boeing Company. Plaintiffs seek the establishment of a
medical monitoring trust fund as a result of their alleged
exposure to products containing beryllium, attorneys' fees and
expenses, and general and equitable relief. The plaintiffs
purport to sue on behalf of a class of present or former Defense
Contract Management Administration (DCMA) employees who
conducted quality assurance work at Stennis Space Center and the
Boeing Company at its facility in Canoga Park, California;
present and former employees of Boeing at Stennis; and spouses
and children of those individuals. Mr. Paz and Mr. Lewis and
Ms. Faciane represent current and former DCMA employees at
Stennis. Mr. Jones represents DCMA employees at Canoga
Park. Mr. Bryan, Mr. Condiff, Mr. Ladner, Mr. Park, Mr. Polk,
Mr. Tootle and Mr. Stewart and Ms. Condiff represent Boeing
employees at Stennis. Ms. Harris, Ms. Lemon, Ms. Ladner and Ms.
Paz are family members. The Company filed a Motion to Dismiss
on September 28, 2004, which was granted and judgment was
entered on January 11, 2005; however, the plaintiffs have filed
an appeal.
The fourth purported class action is styled "Gary Anthony v.
Brush Wellman Inc., et al." filed in the Court of Common
Pleas of Philadelphia County, Pennsylvania, case number 01718 on
March 3, 2005. The case was removed to the United States
District Court for the Eastern District of Pennsylvania, case
number 05-CV-1202, on March 14, 2005. The only named plaintiff
is Gary Anthony. The defendants are Brush Wellman Inc., Gary
Kowalski, and Dickinson Associates Manufacturers
Representatives. The plaintiff purports to sue on behalf of a
class of current and former employees of the U.S. Gauge facility
in Sellersville, Pennsylvania who have ever been exposed to
beryllium for a period of at least one month while employed at
U.S. Gauge. The plaintiff has brought claims for negligence.
Plaintiff seeks the establishment of a medical monitoring trust
fund, cost of publication of approved guidelines and procedures
for medical screening and monitoring of the class, attorneys'
fees and expenses.
CALIFORNIA: Court Certifies San Mateo Strip Search Lawsuit
----------------------------------------------------------
As many as 2,000 women could receive damage awards after U.S.
District Judge Saundra Brown Armstrong granted class action
status to a lawsuit claiming that they were illegally strip-
searched in San Mateo County, California, The Associated Press
reports.
In a recent hearing, Judge Armstrong ruled that all members of
the lawsuit, filed last April, would be eligible for damages if
the county's former search policy were ruled illegal. That
policy was changed in December 2003.
In opposing class action status, San Mateo County had argued
that each woman should be required to prove she was searched
without justification. However, Judge Armstrong disagreed
pointing out that the county's witnesses acknowledged the
searches were conducted under a common policy, which didn't
require evidence an inmate was hiding contraband.
According to Andrew Schwartz, a lawyer for the plaintiffs, about
2,000 women were strip-searched after being arrested in San
Mateo County between February 2002 and December 2003.
Deputy County Counsel Carol Woodward estimated the number at
1,800 and told The Associated Press that the county might be
able to justify at least some of the searches.
In the past, similar lawsuits were filed against Northern
California counties over strip searches of newly jailed inmates,
which under state law and U.S. Supreme Court rulings is allowed
only if an inmate is reasonably suspected of concealing drugs or
weapons.
The suit is styled, "Gallagher v. County of San Mateo et al,
Case No. 4:04-cv-00448-SBA," filed in the United States District
Court for the Northern District of California, under Judge
Saundra Brown Armstrong. Representing the Plaintiff/s are, Thom
Seaton, Andrew C. Schwartz and Micha Star Liberty of Casper
Meadows & Schwartz, California Plaza, 2121 North California
Boulevard, Suite 1020, Walnut Creek, CA 94596, Phone:
925-947-1147, Fax: 925-947-1131, E-mail: schwartz@cmslaw.com and
liberty@cmslaw.com; and Mark E. Merin, Esq. of Law Office of
Mark E. Merin, 2001 P. St., Suite 100, Sacramento, CA 95814,
Phone: 916-443-6911, Fax: 916-447-8336, E-mail:
mark@markmerin.com. Representing the Defendant is Carol L.
Woodward, County Counsel, County of San Mateo, Hall of Justice
and Records, 6th Floor, 400 County Center, Redwood City, CA
94063-1662, Phone: 650-363-4746, Fax: 650-363-4034, E-mail:
cwoodward@co.sanmateo.ca.us.
CMS ENERGY: Plaintiffs Renew Motion For Stock Suit Certification
----------------------------------------------------------------
Plaintiffs filed an amended motion asking the United States
District Court for the Eastern District of Michigan to grant
class certification for the securities lawsuit filed against CMS
Energy Corporation, Consumers Energy Corporation, certain of the
Company's officers and directors and its affiliates, including
but not limited to Consumers Energy which, while established,
operated and regulated as a separate legal entity and publicly
traded company, shares a parallel Board of Directors with CMS
Energy.
The complaints were filed as purported class actions
shareholders who allege that they purchased the Company's
securities during a purported class period running from May 2000
through March 2003. The cases were consolidated into a single
lawsuit. The consolidated lawsuit generally seeks unspecified
damages based on allegations that the defendants violated United
States securities laws and regulations by making allegedly false
and misleading statements about the Company's business and
financial condition, particularly with respect to revenues and
expenses recorded in connection with round-trip trading by CMS
Energy Resource Management Company.
In January 2005, a motion was granted, dismissing Consumers and
three of the individual defendants, but the court denied the
motions to dismiss for the Company and the 13 remaining
individual defendants. Plaintiffs filed a motion for class
certification on April 15, 2005 and an amended motion for class
certification on June 20, 2005.
CMS ENERGY: Trial in MI ERISA Violations Suit Expected Mid-2006
---------------------------------------------------------------
Trial in the consolidated class action filed against CMS Energy
Corporation is expected to begin in mid-2006 in the United
States District Court for the Eastern District of Michigan. The
suit also names as defendants Consumers Energy Corporation, CMS
Energy Resource Management Company, and certain named and
unnamed officers and directors.
Two lawsuits were initially filed on behalf of participants and
beneficiaries of the CMS Employees' Savings and Incentive Plan
(the Plan). The two cases were later consolidated by the court.
Plaintiffs allege breaches of fiduciary duties under the
Employee Retirement Income Security Act (ERISA) and seek
restitution on behalf of the Plan with respect to a decline in
value of the shares of CMS Energy Common Stock held in the Plan.
Plaintiffs also seek other equitable relief and legal fees.
In March 2004, the judge granted in part, but denied in part,
the Company's motion to dismiss the complaint. The Company,
Consumers and a number of individual defendants remain parties.
The judge has conditionally granted plaintiffs' motion for class
certification. A trial date has not been set, but is expected to
be no earlier than mid 2006.
COMPUCREDIT CORPORATION: Continues To Face NC Consumer Lawsuit
--------------------------------------------------------------
CompuCredit Corporation and five of the Company's subsidiaries
continue face a purported class action lawsuit filed in the
Superior Court of New Hanover County, North Carolina, entitled
"Knox, et al. vs. First Southern Cash Advance, et al, No 5 CV
0445."
The plaintiffs allege that in conducting a so-called "payday
lending" business, certain of the Company's Retail Micro-Lending
and Servicing segment subsidiaries violated various laws
governing consumer finance, lending, check cashing, trade
practices and loan brokering. The plaintiffs further allege that
the Company is the alter ego of its subsidiaries and is liable
for their actions. The plaintiffs are seeking damages of up to
$75,000 per class member.
COSINE COMMUNICATIONS: NY Court Preliminarily OKs Lawsuit Pact
--------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
consolidated securities class action filed against CoSine
Communications, Inc., certain of its officers and directors and
the investment bank underwriters involved in its initial public
offering (IPO).
The complaint generally alleges that various investment bank
underwriters engaged in improper and undisclosed activities
related to the allocation of shares in CoSine's IPO. The
complaint brings claims for the violation of several provisions
of the federal securities laws against those underwriters, and
also against the Company and each of the directors and officers
who signed the registration statement relating to the initial
public offering.
Various plaintiffs have filed similar actions asserting
virtually identical allegations against more than 250 other
companies. The lawsuit and all other "IPO allocation" securities
class actions currently pending in the Southern District of New
York have been assigned to Judge Shira A. Scheindlin for
coordinated pretrial proceedings.
In October 2002, the individual defendants were dismissed
without prejudice pursuant to a stipulation. The issuer
defendants filed a coordinated motion to dismiss on common
pleading issues, which the Court granted in part and denied in
part in an order dated February 19, 2003. The Court's order
dismissed the Section 10(b) and Rule 10b-5 claims against the
Company but did not dismiss the Section11 claims against the
Company.
In June 2004, a stipulation for the settlement and release of
claims against the issuer defendants, including the Company, was
submitted to the Court for preliminary approval. Under the
proposed settlement, the plaintiffs will dismiss and release all
claims against participating issuer defendants in exchange for a
contingent payment guaranty by the insurance companies
collectively responsible for insuring the issuer defendants in
all of the related cases, and the assignment or surrender to the
plaintiffs of certain claims the issuer defendants may have
against the underwriters.
Under the guaranty, the insurers will be required to pay the
amount, if any, by which $1 billion exceeds the aggregate amount
ultimately collected by the plaintiffs from the underwriter
defendants in all the cases, up to the limits of the applicable
insurance policies. The Company will not be required to make
any cash payments under the settlement, unless the Company's
insurer is required to pay on the Company's behalf an amount
that exceeds the Company's insurance coverage. The settlement
is still subject to a number of conditions, including
certification of a class for settlement purposes and formal
Court approval. On August 31, 2005, the court issued an order
granting preliminary approval of the settlement. The settlement
is subject to a number of conditions, including final court
approval, which cannot be assured.
The suit is styled "In re CoSine Communications, Inc. Initial
Public Offering Securities Litigation, 01 Civ. 10105 (Sas),"
related " In re Initial Public Offering Securities Litigation,
Master File No. 21 MC 92 (SAS)," filed in the United States
District Court for the Southern District of New York under Judge
Shira A. Scheindlin. The plaintiff firms in this litigation
are:
(1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300,
(3) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd,
PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E-
mail: info@sbclasslaw.com
(4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(5) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
DOWNEY FINANCIAL: CA Court Approves Overtime Suit Settlement
------------------------------------------------------------
The Los Angeles Superior Court in California granted final
approval to the settlement of the class action filed against
Downey Savings and Loan Association by two of its former in-
store banking employees, styled "Michelle Cox and Mary Ann
Tierra et al. v. Downey Savings and Loan Association, case no.
Case No. BC318964."
The complaint seeks unspecified damages for alleged unpaid
overtime wages, inadequate meal and rest breaks, and other
unlawful business practices and related claims. The plaintiffs
also seek class action status to represent all other current and
former California employees who held the position of branch
manager or assistant manager at in-store branches who were
treated as exempt and not paid overtime between July 23, 2000
and November 2002 and allegedly received inadequate meal/rest
periods since October 1, 2000.
At mediation in March 2005, the parties agreed to settle the
lawsuit. In June 2005 the court preliminarily approved the
settlement, and in September 2005, the court granted final
approval of the settlement.
GULFSTREAM AEROSPACE: Court Favors Firm in Dispute With Workers
---------------------------------------------------------------
A three-judge panel of the 11th U.S. Circuit Court of Appeals
upheld a ruling that favored Gulfstream Aerospace in a dispute
with its employees, The Fulton County Daily Report reports.
Judge Frank M. Hull affirmed a federal trial court's decision to
grant summary judgment to Gulfstream. He is joined by Judge
Stanley F. Birch Jr. and visiting 8th Circuit Senior Judge Pasco
M. Bowman II,
The case concerned 10-page letters sent to thousands of
Gulfstream factory workers that asked employees to limit their
rights to sue the company and instead take complaints to
arbitration. Though the letters did not ask the employees to
sign anything, it did state that coming to work the next day
would suffice as agreement. The suit, Caley v. Gulfstream, No.
04-14462, was filed in 2003 on behalf of 200 Gulfstream workers,
claiming that the company violated federal labor laws in
deciding that employees could not receive overtime pay. The lead
plaintiffs worked at Gulfstream's Savannah, Georgia, plant.
Gulfstream, a unit of General Dynamics Corporation, is the
world's largest maker of private jets.
Gulfstream moved to compel arbitration and dismiss the workers'
complaint, pointing out that the workers gave up their rights to
class action suits under the 2002 dispute resolution policy, or
DRP, that was mailed to employees' homes. The policy told
employees that if they didn't like the changes, they were free
to leave the company, but continued employment constituted an
agreement with Gulfstream.
In the recently issued opinion, Judge Hull writing on behalf of
the panel, stated, "Although there is some bargaining disparity
here, as often in the employment context, the plaintiffs have
failed to show that the DRP and its making is so one-sided as to
be unconscionable." The judge added, that the terms of the
agreement "are not oppressive."
INSTINET GROUP: Enters Into Proposed Settlement For DE Complaint
----------------------------------------------------------------
Instinet Group Incorporated (Nasdaq: INGP) entered into a
proposed settlement for consolidated amended complaint filed in
the Court of Chancery in the State of Delaware pursuant to a
Stipulation and Agreement of Compromise, Settlement and Release.
Pursuant to the proposed settlement with stockholders:
(1) Instinet revised the definitive proxy statement to
include certain disclosures that have been agreed upon
and reviewed by plaintiffs;
(2) Nasdaq and Instinet agreed to reduce by 15%, from
$66,500,000 to $56,525,000, the break-up fee that
Instinet would pay to Nasdaq under certain conditions
pursuant to Section 8.6(a) of the merger agreement; and
(3) Nasdaq agreed to waive, with respect to members of the
purported plaintiff class only, the provisions of the
merger agreement pursuant to which the aggregate merger
consideration was to have been reduced by up to $2.5
million based on the total amount of certain of our
transaction liabilities, the net effect of which is an
increase of approximately $0.007 per share (or
approximately $1.0 million in the aggregate) in the
merger consideration that will be received by Instinet
stockholders other than the defendants.
On September 16, 2005, Instinet mailed a notice of settlement to
its stockholders. On October 25, 2005, the Delaware Court of
Chancery certified the class of Instinet Group shareholders and
approved the proposed settlement as fair and reasonable.
Separately, on November 30, 2005, the Court will hold a hearing
to consider plaintiffs' counsel's application for an award of
attorneys' fees and reimbursement of expenses. The settlement is
still subject to the entry of a final and non-appealable
judgment dismissing the consolidated action with prejudice and
the delivery of appropriate releases.
In April and May 2005, four purported class action lawsuits were
initially filed in the Court of Chancery in the State of
Delaware against Instinet Group, each of our directors and
Reuters alleging, among other things, that defendants breached
their fiduciary duties as to our public stockholders in
connection with the proposed merger by approving the transaction
at an allegedly unfair and inadequate price. The plaintiffs
voluntarily dismissed one of the lawsuits. The remaining
lawsuits, styled "Donovan Spamer, et al. v. Instinet Group,
Inc., et al. (Filing ID 5675328; filed on April 22, 2005),"
"Caroline Weisz, et al. v. Instinet Group, Inc., et al. (Filing
ID 5773404; filed on May 9, 2005)" and "Dr. Lee J. Pittman, et
al. v. Instinet Group Inc., et al. (Filing ID 5773404; filed May
9, 2005)" were filed on behalf of all stockholders other than
the defendants and were consolidated under the caption "In re
Instinet Group, Inc. Shareholders Litigation, Civil Action No.
1289-N)," an earlier Class Action Reporter story (September 14,
2005) reports.
On June 22, 2005, plaintiffs, through their counsel, filed a
consolidated amended complaint. The consolidated action is being
brought on behalf of a putative class consisting of stockholders
of the company who are not affiliated with the defendants. The
amended complaint alleges, among other things, that defendants
breached their fiduciary duties as to the Company's public
stockholders in connection with the proposed merger by approving
the transaction at an allegedly unfair and inadequate price. The
amended complaint seeks, among other things, class action
status, an injunction against consummation of the merger,
invalidation of certain provisions of the merger agreement,
damages in an unspecified amount, rescission in the event the
merger is consummated and attorney's fees, an earlier Class
Action Reporter story (September 14, 2005) reports.
Plaintiffs filed for expedited proceedings, which the Court
granted on June 29, 2005. The Court scheduled a preliminary
injunction hearing for September 13, 2005, an earlier Class
Action Reporter story (September 14, 2005) reports.
INTEL CORPORATION: Faces 77 Antitrust Suits After AMD Lawsuit
-------------------------------------------------------------
Intel Corporation faces several class actions filed in various
federal and state courts, related to a lawsuit filed by rival
computer chip-maker Advanced Micro Devices, Inc. (AMD), alleging
that it violated federal antitrust laws.
In June 2005, AMD filed a complaint in the United States
District Court for the District of Delaware alleging that the
Company and its Japanese subsidiary engaged in various actions
in violation of the Sherman Act and the California Business and
Professions Code, including providing secret and discriminatory
discounts and rebates and intentionally interfering with
prospective business advantages of AMD. AMD's complaint seeks
unspecified treble damages, punitive damages, an injunction and
attorney's fees and costs. Subsequently, AMD's Japanese
subsidiary also filed suits in the Tokyo High Court and the
Tokyo District Court against the Company's Japanese subsidiary,
asserting violations of Japan's Antimonopoly Law and alleging
damages of approximately $55 million, plus various other costs
and fees.
At least 77 separate class actions, generally repeating AMD's
allegations and asserting various consumer injuries, including
that consumers in various states have been injured by paying
higher prices for Intel microprocessors, have been filed in the
U.S. District Courts for the Northern District of California,
Southern District of California and the District of Delaware as
well as in various California, Kansas and Tennessee state
courts. A motion has been filed requesting that all cases that
were filed in or removed to federal court be consolidated for
pretrial purposes in a single federal district court.
ISOLAGEN INC.: Skadden Arps Hired as Counsel For Various Suits
--------------------------------------------------------------
Isolagen, Inc. (Amex: ILE) engaged the law firm of Skadden,
Arps, Slate, Meagher & Flom, LLP to represent the Company and
other of the defendants named in the various class action suits.
The Company does not expect to respond to the suits until there
has been a consolidation of the complaints and lead plaintiff is
selected at which time the Company expects to file a motion to
dismiss the claims.
The various suits are pending before the Honorable Ronald
Buckwalter in the United States District Court for the Eastern
District of Pennsylvania against defendants Isolagen, and
certain of the Company's former and current officers and
directors. They allege in form or another that the defendants
violated sections 10(b) and 20(a) of the Securities Exchange Act
of 1934, and Rule 10b-5, by issuing a series of material
misrepresentations to the market.
LABORATORY CORPORATION: NC Court Mulls Dismissal of Stock Suit
--------------------------------------------------------------
The United States District Court for the Middle District of
North Carolina has yet to rule on Laboratory Corporation of
America's motion to dismiss the consolidated securities class
action filed against it and certain of its executive officers,
alleging securities fraud.
The suit, filed under Judge James Beatty, alleges that the
defendants violated the federal securities laws by making
material misstatements and/or omissions that caused the price of
the Company's stock to be artificially inflated between February
13 and October 3, 2002. The plaintiffs seek certification of a
class of substantially all persons who purchased shares of the
Company's stock during that time period and unspecified monetary
damages.
LEGAL SERVICES: NY Court Hears Oral Arguments in Valazquez Case
---------------------------------------------------------------
The U.S. Court of Appeals for the Second Circuit heard oral
argument in Velazquez v. Legal Services Corporation (LSC), a
lawsuit brought by three New York nonprofit organizations that
provide free legal representation to low-income people. Burt
Neuborne of the Brennan Center for Justice at NYU School of Law,
appearing for the legal services organizations, urged the court
to uphold a lower court ruling that had declared that the
government imposed unconstitutional restrictions on the ability
of the organizations to use their own non-federal funds.
At stake is the ability of legal service providers who receive
some federal LSC funding to use their non-federal dollars to
provide certain important services, such as representing clients
in class action lawsuits, claiming court-ordered attorneys' fee
awards, or providing assistance to certain categories of legal
immigrants. Under the challenged rule, programs would have to
establish physically separate offices and hire new staff to do
such work -- even if they pay for those cases with money from
non-federal sources. This "physical separation requirement"
imposes a severe burden on the plaintiff legal services
programs, which struggle to find funding to meet the needs of
their clients.
"These unfair restrictions cut off vulnerable clients from the
help they need, and tie the hands of legal service providers who
should be able to help," says Laura Abel, Deputy Director of the
Poverty Program at the Brennan Center. "The restrictions go far
beyond anything necessary to serve the government's interests,
and amount to a mean-spirited and unconstitutional attempt to
deter constitutionally protected representation of low-income
people."
The lawsuit has broad implications for low-income people in need
of legal assistance, and also for a broad range of organizations
that operate in partnership with government. While the lower
court's ruling applies directly to three New York legal services
programs, well over a hundred similar programs throughout the
country - serving millions of low-income families and
individuals - may be able to rely on the court's reasoning to
obtain local court rulings that would enable them to spend their
nonfederal resources more efficiently and to strengthen their
representation of low-income clients. Other categories of non-
profits like museums and universities that are financed in part
by federal funding also have a stake in the outcome of this
appeal.
For more information about efforts to remove civil legal aid
funding restrictions imposed by federal, state and local
funders, please visit the Brennan Center's Poverty Program:
http://www.brennancenter.org/programs/pov/atj.html.
For more details, contact Natalia Kennedy of BRENNAN CENTER FOR
JUSTICE AT NYU SCHOOL OF LAW, Phone: 212-998-6736, Web site:
http://www.brennancenter.org/.
MAINE: Judge Deems County, Officials Liable For Strip Searches
--------------------------------------------------------------
Senior U.S. Justice Gene Carter strongly criticized Knox County
Jail officials for the practice and tolerance of
unconstitutional strip searches and cleared the way for a major
class action lawsuit against the county to continue, The Knox
Village Soup reports.
In a 48-page decision, the federal judge stated, "The court is
struck by the fact that even after [it was] clearly found that
misdemeanor detainees were being routinely strip searched, there
is no evidence that any official at Knox County made a clear or
plain statement that this practice was to stop."
Judge Carter's ruling was a response to a motion for summary
judgment brought by Laurie Tardiff, a Thomaston woman who filed
suit against the jail, jail personnel and Sheriff Dan Davey in
December 2002. Ms. Tardiff, who is represented by Dale Thistle
of Newport, claims that the county violated the rights of
hundreds of detainees by conducting unconstitutional, and
humiliating, strip searches.
In November 2003, the U.S. District Court certified the suit as
class action, which allowed certain detainees booked into the
Knox County Jail since 1996 to pursue damages against the
county. As many as 5,000 people might eligible to become
plaintiffs.
The decision by Judge Carter damaged the county's defense
against the claims, as the judge took jail officials to task for
allowing unconstitutional strip searches to continue unabated,
despite repeated warnings about allowing them to continue.
Judge Carter wrote, the evidence culled from thousands of pages
of jail records shows corrections officers and administrators
knowingly strip searched all inmates, regardless of charges or
probable cause, in defiance of jail policy and Maine state law.
The judge further wrote that without evidence suggesting county
officials tried to halt the practice, it must be implied that
they condoned or even promoted the practice.
Judge Carter also wrote, "Given the strong evidence of the
persistence of the unconstitutional practice.no reasonable
person could conclude that the actions of Knox County were
directed at stopping the practice. At some point, it must have
been evident to Knox County officials that the corrections staff
had not gotten the message. Yet there is no evidence
that.Sheriff [Dan] Davey or any other official from Knox County
promulgated any procedures, conducted any training or engaged in
any closer oversight directed at eliminating the
unconstitutional misdemeanor search practices of the corrections
officers at the Knox County Jail."
In 1994 and again in 2000, state jail inspector John Hinkley,
now the Knox County Jail administrator, found the jail
noncompliant with Maine standards for strip-searching every
detainee booked into the jail. Mr. Hinkley's reports are key to
Ms. Tardiff's claims of widespread abuse of the strip-search
laws. Judge Carter agreed, saying, "An affirmative link between
Knox County's failure to.stop the unconstitutional practice of
its corrections officers and the violation of the constitutional
rights of plaintiffs arrested on misdemeanor charges has been
established."
Claims against Sheriff Davey as an individual were also upheld
by Judge Carter, who rebuked the sheriff for his "reckless
indifference of the constitutional rights" of Knox County Jail
detainees charged with misdemeanor crimes and his toleration of
the practice. As late as 2003, Judge Carter wrote, jail
personnel under Sheriff Davey still operated under the
assumption that policies should be ignored in favor of blanket
strip searches, regardless of charge or reasonable suspicion.
According to Judge Carter, "The widespread practice was
sufficient to alert Sheriff Davey that the unlawful strip-search
practice persisted. Sheriff Davey's reckless indifference
allowed the practice to persist for years and caused the
violation of the constitutional rights of plaintiffs arrested on
misdemeanor charges."
Even the policy of strip-searching detainees charged with
felonies is unconstitutional, Judge Carter says, if the charge
is unrelated to violence, drugs or use of a weapon. Despite the
mostly favoring the plaintiff/s, not all of Judge Carter's
opinions sided with them. Judge Carter did deny summary judgment
for claims brought by Ms. Tardiff, and three others against
specific guards, and also denied a claim the county failed to
provide adequate training for jail personnel.
NATIONWIDE INSURANCE: Removes Payouts Suit to IL Federal Court
--------------------------------------------------------------
Nationwide Insurance removed a proposed Madison County class
action suit to federal court under the Class Action Fairness Act
that Congress passed in February, The Madison County Record
reports.
After the plaintiffs, chiropractors Gerald Bemis Sr., and Mark
Eavenson, added a third plaintiff to the case, the insurer moved
the case to U.S. District Court.
Attorney Jeffrey Millar, of the Lakin Law Firm in Wood River,
Illinois, originally filed the suit in 2004. The suit named
Allied Property and Casualty as lead defendant, though in later
filings Mr. Millar noted that Allied merged with Nationwide.
In the case, Mr. Bemis and Mr. Eavenson argue, as they have
argued in many others, that the insurer improperly reduced
payouts on medical bills.
Mr. Millar previously filed a motion to have Circuit Judge Andy
Matoesian certify Mr. Bemis and Mr. Eavenson as representatives
of a class of plaintiffs.
Last September, Mr. Millar filed an amended complaint that added
Acuna PT, a physical therapy clinic in Corpus Christi, Texas, as
a plaintiff.
In reaction to the addition of a third plaintiff, Nationwide
attorney Lisa Wood removed the suit on October 17, arguing that
the Class Action Fairness Act requires federal jurisdiction for
new suits. She also argued that addition of a new party
constituted a new suit.
NATIONWIDE INSURANCE: Removes Payouts Suit to IL Federal Court
--------------------------------------------------------------
Nationwide Insurance removed a proposed Madison County class
action suit to federal court under the Class Action Fairness Act
that Congress passed in February, The Madison County Record
reports.
After the plaintiffs, chiropractors Gerald Bemis Sr., and Mark
Eavenson, added a third plaintiff to the case, the insurer moved
the case to U.S. District Court. Attorney Jeffrey Millar, of
the Lakin Law Firm in Wood River, Illinois, originally filed the
suit in 2004. The suit named Allied Property and Casualty as
lead defendant, though in later filings Mr. Millar noted that
Allied merged with Nationwide. In the case, Mr. Bemis and Mr.
Eavenson argue, as they have argued in many others, that the
insurer improperly reduced payouts on medical bills. Mr. Millar
previously filed a motion to have Circuit Judge Andy Matoesian
certify Mr. Bemis and Mr. Eavenson as representatives of a class
of plaintiffs.
Last September, Mr. Millar filed an amended complaint that added
Acuna PT, a physical therapy clinic in Corpus Christi, Texas, as
a plaintiff. In reaction to the addition of a third plaintiff,
Nationwide attorney Lisa Wood removed the suit on October 17,
arguing that the Class Action Fairness Act requires federal
jurisdiction for new suits. She also argued that addition of a
new party constituted a new suit.
NETFLIX INC.: Offers Upgrade to Settle CA False Advertising Suit
----------------------------------------------------------------
Netflix, Inc. (NASDAQ: NFLX) will offer members a one-month
service upgrade as part of its recent settlement of a class
action lawsuit that accuses it of false advertising, the company
said in an e-mail to subscribers, The Video Business reports.
Filed in San Francisco Superior Court, the suit alleged that
Netflix didn't provide unlimited rentals and one-day deliveries
as advertised. Netflix has denied wrongdoing but agreed to
settle the suit, whose costs dragged down Netflix third-quarter
net income by $3.4 million.
According to the proposed settlement, Netflix subscribers who
joined the service before January 15 and remained members
through October 19, will get a one-month upgrade in their
service level while paying their usual subscription price. For
example, subscribers to the three-movies-out plan would pay
$17.99 but would get four movies out at a time for one month.
Meanwhile, those who subscribed to Netflix before January 15 but
canceled their membership before October 19 are eligible to one
month of free service. Netflix users must register by February
17 to receive the upgrade. Before customers can receive any of
these windfalls, the court still must approve the settlement
offer.
OMNICOM GROUP: Discovery Continues in NY Securities Fraud Suit
--------------------------------------------------------------
Discovery is still proceeding in the consolidated securities
class action filed against Omnicom Group, Inc. and certain of
its senior executives in the United States District Court for
the Southern District of New York.
Beginning on June 13, 2002, several putative class actions were
filed and were later consolidated under the caption "In re
Omnicom Group Inc. Securities Litigation, No. 02-CV4483 (RCC)."
The suit was filed on behalf of a proposed class of purchasers
of the Company's common stock between February 20, 2001 and June
11, 2002.
The consolidated complaint alleges, among other things, that the
Company's public filings and other public statements during that
period contained false and misleading statements or omitted to
state material information relating to:
(1) the Company's calculation of the organic growth
component of period-to-period revenue growth,
(2) its valuation of and accounting for certain internet
investments made by its Communicade Group
("Communicade"), which the Company contributed to
Seneca Investments LLC ("Seneca") in 2001, and
(3) the existence and amount of certain contingent future
obligations in respect of acquisitions.
The complaint seeks an unspecified amount of compensatory
damages plus costs and attorneys' fees. Defendants moved to
dismiss the complaint and on March 28, 2005, the court dismissed
portions (1) and (3) of the complaint. The court's decision
denying the defendants' motion to dismiss the remainder of the
complaint did not address the ultimate merits of the case, but
only the sufficiency of the pleading. Defendants have answered
the complaint, and discovery has commenced.
In addition, on June 28, 2002, a derivative action was filed
purportedly on behalf of the Company in New York State court. On
February 18, 2005, a second shareholder derivative action, again
purportedly brought on behalf of the Company, was filed in New
York State court. The derivative actions were consolidated
before a New York State Justice and the plaintiffs have filed an
amended consolidated complaint.
The consolidated derivative complaint questions the business
judgment of certain current and former directors of the Company,
by challenging, among other things, the valuation of and
accounting for the internet investments made by Communicade and
the contribution of those investments to Seneca. The
consolidated complaint alleges that the defendants breached
their fiduciary duties of good faith. The lawsuit seeks from the
directors the amount of profits received from selling Omnicom
stock and other unspecified damages to be paid to the Company,
as well as costs and attorneys' fees. The defendants intend to
move to dismiss the complaint and, pursuant to an agreed
schedule, briefing on the motion to dismiss should be complete
in November 2005.
The suit is styled "Brody, et al v. Omnicom Group, Inc., et al,
case no. 1:02-cv-04696-RCC," filed in the United States District
Court for the Southern District of New York, under Judge Richard
C. Casey. Representing the plaintiffs are David Avi Rosenfeld,
Samuel Howard Rudman, Steven G. Schulman, Milberg Weiss Bershad
& Schulman LLP (NYC), One Pennsylvania Plaza, New York, NY
10119, Phone: 212-946-9356, Fax: 212-273-4406, E-mail:
sschulman@milbergweiss.com, srudman@lerachlaw.com,
drosenfeld@lerachlaw.com.
PEKIN INSURANCE: Avery Decision Invoked in Madison County Case
--------------------------------------------------------------
In a motion to dismiss a proposed Madison County class action
suit against it, Pekin Insurance Company invoked the Illinois
Supreme Court's blockbuster decision in Avery vs. State Farm,
The Madison County Record reports.
Filed in February 2005 by chiropractor Frank Bemis, the suit
accuses Pekin Insurance of improperly reducing payouts on
medical bills. Mr. Bemis seeks to represent a class of
plaintiffs in at least five states.
In June, Pekin Insurance attorney David Osborne asked Madison
County Circuit Judge George Moran to dismiss, arguing that Mr.
Bemis failed to state a cause of action.
Last August, the Supreme Court overturned a $1.2 billion verdict
in the Avery case, a decision that profoundly changed the rules
of class action litigation in Illinois.
With the decision in the Avery case, Mr. Osborne moved on
October 11 for leave to revise his motion to dismiss, which
Judge Moran granted.
In that revised motion Mr. Osborne argued that under Avery, a
plaintiff must plead that the defendant committed a deceptive
act or practice and must also plead that the defendant intended
for the plaintiff to rely on the deception. He further states
that under Avery, a plaintiff must plead that the deception
involved trade or commerce, that the plaintiff suffered actual
damage, and that the deception was the proximate cause of the
damage. Mr. Osborne pointed out that Mr. Bemis's complaint fails
on all five of those points.
In addition, in the revised motion, Mr. Osborne wrote that the
Supreme Court put to rest the notion that a plaintiff can base a
consumer fraud claim on a breach of contract. He also wrote,
"Plaintiff respectfully suggests that the Supreme Court's
controlling decision in Avery mandates dismissal with prejudice
in this case."
With Mr. Osborne motion before him, Judge Moran ordered Mr.
Bemis to respond by December 9.
PEROT SYSTEMS: TX Court Mulls Dismiss of Securities Fraud Suit
--------------------------------------------------------------
The United States District Court for the Northern District of
Texas, Dallas Division has yet to rule on Perot Systems
Corporation's motion to dismiss the second amended consolidated
class action filed against the Company, Ross Perot and Ross
Perot, Jr., styled "Vincent Milano v. Perot Systems
Corporation."
Eight suits were initially filed in June, July and August 2002,
alleging violations of Rule 10b-5, and, in some of the cases,
common law fraud. These suits allege that the Company's filings
with the Securities and Exchange Commission contained material
misstatements or omissions of material facts with respect to its
activities related to the California energy market. All of these
eight cases were later consolidated. On October 19, 2004, the
court dismissed the case with leave for plaintiffs to amend. In
December 2004, the plaintiffs filed a Second Amended
Consolidated Complaint.
The suit is styled "Milano v. Perot Systems Corp, et al., case
no. 3:02-cv-01269," filed in the United States District Court
for the Northern District of Texas, under Judge Sidney A.
Fitzwater. Representing the plaintiffs is William B. Federman,
Federman & Sherwood - Oklahoma City, 120 N Robinson, Suite 2720,
Oklahoma City, OK 73102, Phone: 405/235-1560, Fax: 405/239-2112,
E-mail: wfederman@aol.com. Representing the Company are Stephen
G. Gleboff of Hughes & Luce, BankOne Center, 1717 Main St, Suite
2800, Dallas, TX 75201, Phone: 214/939-5500, Fax: 214/939-6100,
E-mail: steve.gleboff@hughesluce.com; and Stephen C. Rasch,
Thompson & Knight, 1700 Pacific Ave, Suite 3300, Dallas, TX
75201-4693, Phone: 214/969-1700, Fax: 214/969-1751, E-mail:
raschs@tklaw.com.
PFIZER INC.: IL Judge Remands Bextra Lawsuit to Madison County
--------------------------------------------------------------
U.S. District Judge Michael J. Reagan remanded a proposed class
action suit against drug maker Pfizer, Inc. (NYSE: PFE) to
Madison County, declaring the argument behind last year's
removal of the suit "impuissant," which means it lacks power,
The Madison County Record reports. Judge Reagan told the
plaintiff to send Pfizer a bill for costs associated with the
removal and ordered Pfizer to pay the bill by November 10.
Pfizer attorney Robert Shultz had taken the case to federal
court after spotting an apparent contradiction in the suit of
Barbara Mihalich of Granite City. Ms. Mihalich sued in November
2004, seeking to represent all U.S. buyers of Bextra, a pain
reliever. In her suit, she claimed that Pfizer concealed,
suppressed and withheld information about health risks of
Bextra. Ms. Mihalich's attorney, William Faulkner, wrote that
Bextra increased risks of clots, strokes and heart attacks.
Additionally, Mr. Faulkner wrote that Ms. Mihalich sought to
recover less than $75,000. If she had sought more than that, she
would have had to sue in federal court. In the same complaint,
Mr. Faulkner, who also sought punitive damages, wrote that
Pfizer gained "many millions" by covering up the risks.
Mr. Shultz removed the case to U.S. District Court in December,
arguing that Ms. Mihalich sought more than $75,000. He pointed
out that her claim for less than that was "illusory." In
January, Mr. Faulkner moved in federal court to remand the suit
to Madison County. Judge Reagan granted that motion on September
29, rejecting Mr. Shultz's reasoning as impuissant.
Judge Reagan ruled that Ms. Mihalich's statement of intent to
recover less than $75,000 controlled his decision. He stated
that he disagreed with the argument that her statement was
illusory. In ruling to remand the case back to Madison County,
Judge Reagan cited that Pfizer had not shown that Ms. Mihalich
alone would receive more than $75,000.
PUGET SOUND: Working To Settle CA Energy Suit Cross-Complaints
--------------------------------------------------------------
The Superior Court of San Diego, California indicated that it
intends to grant preliminary approval to the settlement of the
consolidated class actions filed against Reliant Energy Services
and Duke Energy Trading & Marketing, where Puget Sound Energy,
Inc. is named in cross-complaints.
Reliant Energy Services and Duke Energy Trading & Marketing
filed the two cross-complaints against the Company. Plaintiffs
in the lawsuits seek, among other things, restitution of all
funds acquired by means that violate the law and payment of
treble damages, interest and penalties. The cross-complaints
asserted essentially that the cross-defendants, including the
Company, were also participants in the California energy market
at relevant times, and that any remedies ordered against some
market participants should be ordered against all. Reliant and
Duke also seek indemnification and conditional relief as buyers
in transactions involving cross-defendants should the plaintiffs
prevail.
The case was removed to federal court and in December 2002, the
federal district court remanded the proceeding to state court,
an action which Duke and Reliant later appealed to the Ninth
Circuit. The Ninth Circuit remanded the case to state court. On
June 3, 2005, the cross-defendants, including the Company, filed
a demurrer seeking to dismiss the action. Further briefing and
hearing on the demurrer is currently stayed pending the outcome
of demurrers filed by Duke and Reliant on the main complaint,
which currently is set to be heard on September 9, 2005. In
addition, on July 22, 2005 the court considered a proposed
settlement that would resolve all claims against the Duke
parties and indicated "preliminary approval," setting a hearing
date for final approval of December 9, 2005.
In August, Reliant Energy also announced it had reached a
settlement that would result in the dismissal of the Master
Complaint. No date has yet been set for approval of the Reliant
Settlement. The defendants, including Duke Energy and Reliant,
also filed demurrers on the Master Complaint, which were
preliminarily sustained by the court in an order dated October
4, 2005, based on federal preemption principles and the filed
rate doctrine. The order sustaining the demurrers acknowledges
that the demurrers were removed from the calendar pending
approval of the proposed settlements. The Court set a status
conference for November 10, 2005 to discuss the remaining issues
in the cross-complaints.
QUAKER MAID: Recalls Frozen Beef Due To E. Coli Contamination
-------------------------------------------------------------
Quaker Maid Meats, Inc., a Reading, Penn., firm, is voluntarily
recalling approximately 94,400 pounds of frozen ground beef
patties that may be contaminated with E. coli O157:H7, the U.S.
Department of Agriculture's Food Safety and Inspection Service
announced.
The products in the recall are
(1) Three-pound boxes of "PHILLY-GOURMET, 100% PURE BEEF,
HOMESTYLE PATTIES" with the packaging code of "2005A,"
"2005B," "2005C" or "2005D."
(2) Five-pound boxes of "PHILLY-GOURMET, 100% PURE BEEF,
HOMESTYLE PATTIES" with the packaging code of "2005A,"
"2005B," "2005C" or "2005D."
The products also bear the establishment code "Est. 2748" inside
the USDA mark of inspection. The patties were produced on July
19 and were shipped to retail stores in Connecticut, Florida,
Georgia, Maine, Maryland Massachusetts, New Jersey, New York,
Pennsylvania, South Carolina, Virginia and Wisconsin.
Testing done by the New York Department of Health has linked the
product to illnesses. E. coli O157:H7 is a potentially deadly
bacterium that can cause bloody diarrhea and dehydration. The
very young, seniors and persons with weak immune systems are the
most susceptible to foodborne illness.
Consumers and media with questions about the recall may contact
company President, Sergei Szortyka at (610) 376-1500. Consumers
with food safety questions can call the toll-free USDA Meat and
Poultry Hotline at (888) 674-6854. The hotline is available in
English and Spanish and can be reached from l0 a.m. to 4 p.m.
(Eastern Time) Monday through Friday. Recorded food safety
messages are available 24 hours a day.
QWEST COMMUNICATIONS: Reaches Settlement For CO Securities Suit
---------------------------------------------------------------
Qwest Communications International, Inc. reached a settlement
for the consolidated securities class action filed against it in
the United States District Court of Colorado, alleging
violations of federal securities laws.
Since July 27, 2001, 13 putative class action complaints have
been filed against the Company. One of those cases has been
dismissed. By court order, the remaining actions have been
consolidated into a consolidated securities action.
On August 21, 2002, plaintiffs in the consolidated securities
action filed their Fourth Consolidated Amended Class Action
Complaint, or the Fourth Consolidated Complaint, which
defendants moved to dismiss. On January 13, 2004, the court
granted the defendants' motions to dismiss in part and denied
them in part. In that order, the court allowed plaintiffs to
file a proposed amended complaint seeking to remedy the pleading
defects addressed in the court's dismissal order.
On February 6, 2004, plaintiffs filed a Fifth Consolidated
Amended Class Action Complaint, or the Fifth Consolidated
Complaint. The Fifth Consolidated Complaint is purportedly
brought on behalf of purchasers of publicly traded securities of
the Company between May 24, 1999 and July 28, 2002, and names as
defendants the Company and:
(1) former Chairman and Chief Executive Officer, Joseph P.
Nacchio,
(2) former Chief Financial Officers, Robin R. Szeliga and
Robert S. Woodruff,
(3) other of Qwest's former officers and current directors
and
(4) Arthur Andersen LLP
The Fifth Consolidated Complaint alleges, among other things,
that during the putative class period, the Company and certain
of the individual defendants made materially false statements
regarding the results of Qwest's operations in violation of
section 10(b) of the Securities Exchange Act of 1934, or the
Exchange Act, certain of the individual defendants are liable as
control persons under section 20(a) of the Exchange Act, and
certain of the individual defendants sold some of their shares
of Qwest's common stock in violation of section 20A of the
Exchange Act.
The Fifth Consolidated Complaint further alleges that Qwest and
certain other defendants violated section 11 of the Securities
Act of 1933, as amended, or the Securities Act, by preparing and
disseminating false registration statements and prospectuses for
the registration of Qwest common stock to be issued to US WEST
shareholders in connection with the merger of the two companies
(the "Merger"), and for the exchange of $3 billion of Qwest's
notes pursuant to a registration statement dated January 17,
2001, $3.25 billion of Qwest's notes pursuant to a registration
statement dated July 12, 2001, and $3.75 billion of Qwest's
notes pursuant to a registration statement dated October 30,
2001.
Additionally, the Fifth Consolidated Complaint alleges that
certain of the individual defendants are liable as control
persons under section 15 of the Securities Act by reason of
their stock ownership, management positions and/or membership or
representation on the Company's Board of Directors, or the
Board. The Fifth Consolidated Complaint seeks unspecified
compensatory damages and other relief. However, counsel for
plaintiffs has indicated that the putative class will seek
damages in the tens of billions of dollars. On March 8, 2004,
Qwest and other defendants filed motions to dismiss the Fifth
Consolidated Complaint.
Further, a non-class action brought by Stichting Pensioenfonds
ABP (SPA) has also been consolidated with the consolidated
securities action. The suit was filed in the United States
District Court in Colorado. This action was filed on February
9, 2004. SPA alleges, among other things, that defendants
created a false perception of Qwest's revenue and growth
prospects and that its losses from investments in Company
securities are in excess of $100 million. SPA seeks, among other
things, compensatory and punitive damages, rescission or
rescissionary damages, pre-judgment interest, attorneys' fees
and costs.
On October 31, 2005, the Company and the putative class
representatives in "In re Qwest Communications International
Inc. Securities Litigation" entered into a Memorandum of
Understanding, or MOU, to settle that case. The MOU requires the
parties to execute an agreement substantially in the form of the
settlement agreement attached to the MOU, provided that
plaintiffs' counsel prepare the following documents that are
acceptable to the Company:
(1) a supplemental agreement regarding requests by putative
class members to be excluded from the settlement;
(2) a plan of allocation of the settlement proceeds; and
(3) exhibits to the settlement agreement and related
documents
The company and the plaintiffs agreed to perform all necessary
actions to finalize and file the settlement agreement and
related documents as soon as reasonably possible. Under the
contemplated settlement agreement, the Company would pay a total
of $400 million in cash - 100 million 30 days after preliminary
approval of the proposed settlement by the federal district
court in Colorado, $100 million 30 days after final approval of
the settlement by the court, and $200 million on January 15,
2007, plus interest at 3.75% per annum on the $200 million
between the date of final approval by the court and the date of
payment.
The contemplated settlement agreement would settle the
individual claims of the putative class representatives and the
claims of the class they purport to represent against the
Company and all defendants in "In re Qwest Communications
International Inc. Securities Litigation," except Joseph
Nacchio, the Company's former chief executive officer, and
Robert Woodruff, its former chief financial officer. (The non-
class action brought by SPA that has been consolidated for pre-
trial discovery purposes with the consolidated securities action
is not part of the settlement.) As part of the contemplated
settlement, the Company would receive $10 million from Arthur
Andersen LLP, which is also being released by the putative class
representatives and the class they purport to represent, which
will offset $10 million of the $400 million that would be
payable by the Company.
The contemplated settlement agreement would be subject to a
number of conditions and future contingencies. Among others, it
would:
(i) require both preliminary and final court approval;
(ii) provide plaintiffs with the right to terminate the
settlement if the $250 million we previously committed
to pay to the SEC in settlement of its investigation
against the Company is not distributed to the class
members;
(iii) provide the Company with the right to terminate the
settlement if class members representing more than a
specified amount of alleged securities losses elect to
opt out of the settlement;
(iv) provide the Company with the right to terminate the
settlement if it does not receive adequate protections
for claims of indemnification relating to substantive
liabilities of non-settling defendants; and
(v) be subject to review on appeal even if the district
court were to finally approve it.
The suit is styled "In re Qwest Communications International
Inc. Securities Litigation, case no. 1:01-cv-01451-REB-CBS,"
filed in the United States District Court for the District of
Colorado under Judge Robert E. Blackburn. Representing the
plaintiffs are:
(1) Dyer & Shuman, LLP, 801 East 17th Avenue, Denver, CO,
80218-1417, Phone: 303.861.3003, Fax: 800.711.6483, E-
mail: info@dyershuman.com
(2) Leo W. Desmond, 2161 Palm Beach Lakes Boulevard, Suite
204, West Palm Beach, FL, 33409, Phone: 561.712.8000,
E-mail: stocklaw@bellsouth.net
(3) Milberg, Weiss, Bershad, Hynes & Lerach LLP (San Diego,
CA), 600 West Broadway, 1800 One America Plaza, San
Diego, CA, 92101, Phone: 800.449.4900, E-mail:
support@milberg.com
QWEST COMMUNICATIONS: Continues To Face ERISA Fraud Suit in CO
--------------------------------------------------------------
Qwest Communications International, Inc. continues To face a
consolidated class action filed in the United States District
Court in Colorado, on behalf of all participants and
beneficiaries of the Qwest Savings and Investment Plan and
predecessor plans, or the Plan from March 7,1999 to the present.
Since March 2002, seven putative class action suits brought
under the Employee Retirement Income Security Act of 1974
(ERISA), as amended, were filed. These suits purport to
seek relief on behalf of the Plan. By court order, these
putative class actions have been consolidated and a Second
Amended and Consolidated Complaint was filed on May 21, 2003,
referred to as the "consolidated ERISA action."
An eighth case was filed in June 2004, which, although not a
putative class action, purports to seek relief on behalf of the
Plan. This case contains allegations similar to those in the
consolidated ERISA action, and thus the Company expects it to be
consolidated with that action.
Defendants in the consolidated ERISA action include the Company,
several of its former and current directors, certain of its
former officers, Qwest Asset Management, Qwest's Plan Design
Committee, the former Plan Investment Committee and the former
Plan Administrative Committee of the pre-Merger Qwest 401(k)
Savings Plan.
The consolidated ERISA action alleges, among other things, that
the defendants breached fiduciary duties to the Plan
participants and beneficiaries by allegedly allowing excessive
concentration of the Plan's assets in Qwest's stock, requiring
certain participants in the Plan to hold the matching
contributions received from Qwest in the Qwest Shares Fund,
failing to disclose to the participants the alleged accounting
improprieties that are the subject of the consolidated
securities action, failing to investigate the prudence of
investing in Qwest's stock, continuing to offer Qwest's stock as
an investment option under the Plan, failing to investigate the
effect of the Merger on Plan assets and then failing to vote the
Plan's shares against it, preventing Plan participants from
acquiring Qwest's stock during certain periods, and, as against
some of the individual defendants, capitalizing on their private
knowledge of Qwest's financial condition to reap profits in
stock sales. Plaintiffs seek equitable and declaratory relief,
along with attorneys' fees and costs and restitution.
The suit is styled "Stuhr v. Qwest Comm Intl Inc, et al., case
no. 1:02-cv-02120-REB," filed in the United States District
Court for the District of Colorado, under Judge Robert E.
Blackburn. Representing the Company are William T. Hankinson
and Theodore Alan Olsen of Sherman & Howard, L.L.C.- 17th Street
Denver CO, United States District Court Box 12, 633 Seventeenth
Street, #3000, Denver, CO 80202 U.S.A., Phone: 303-299-8468,
Fax: 303-298-0940, E-mail: bhankinson@sah.com or tolsen@sah.com.
Representing the plaintiffs is Josiah Oakes Hatch, III of
Ducker, Montgomery, Aronstein & Bess, P.C., 1560 Broadway #1400,
Denver, CO 80202, U.S.A., Phone: 303-861-2828, Fax:
303-861-4017, E-mail: jhatch@duckerlaw.com
QWEST COMMUNICATIONS: Continues To Face CO State Securities Suit
----------------------------------------------------------------
Qwest Communications International, Inc. faces a class action
filed on behalf of purchasers of its stock between June 28, 2000
and June 27, 2002 and owners of U.S. WEST stock on June 28, 2000
in the District Court for the County of Boulder, Colorado.
Plaintiffs allege, among other things, that the defendants
issued false and misleading statements and engaged in improper
accounting practices in order to accomplish the U.S. WEST/Qwest
merger, to make the Company appear successful and to inflate the
value of its stock. Plaintiffs seek unspecified monetary
damages, disgorgement of illegal gains and other relief.
REFCO INC.: Law Firm Retained by Hedge Funds in Securities Suits
----------------------------------------------------------------
The law firm of Bernstein Liebhard & Lifshitz, LLP, was retained
by several hedge funds in a securities class action against
Refco, Inc. (NYSE: RFX) (OTC: RFXCQ) on behalf of individuals or
entities who purchased or acquired Refco securities between
August 10, 2005 and October 18, 2005 (the "Class Period").
The suit was filed in the United States District Court for the
Southern District of New York on behalf of a class consisting of
all persons or entities who purchased or otherwise acquired
securities of Refco between August 11, 2005 and October 18,
2005, including those who purchased the common stock of Refco
pursuant and/or traceable to the Company's initial public
offering on August 11, 2005.
The Complaint charges certain of the Company's officers and
directors with violations of federal securities laws. Refco
provides execution and clearing services for exchange-traded
derivatives and brokerage services in the fixed income and
foreign exchange markets in the United States, Bermuda and the
United Kingdom. On August 11, 2005, Refco and Refco insiders
completed an initial public offering of Refco common stock,
selling 26.5 million shares at $22 per share for proceeds of
$583 million. Two months later, on October 10, 2005, before the
market opened defendants revealed that the Company had been
carrying an undisclosed $430 million receivable from its Chief
Executive Officer, Defendant Phillip R. Bennett, and that
Bennett was taking a leave of absence and Company financial
statements issued since 2002 could no longer be relied upon.
This announcement shocked the market, driving down the price of
Refco shares from $28.56 per share to $15.60 per share on heavy
trading volume.
Three days later, on October 13, 2005, the Company issued a
press release announcing, among other things, a fifteen-day
moratorium on all activities, including customer withdrawals, of
Refco Capital Markets, Ltd. As a result of this news, Refco
stock declined an additional $2.95 per share on extremely heavy
volume. On October 17, 2005, Refco announced that the Company
and certain of its subsidiaries have filed for protection under
Chapter 11 of the United States Bankruptcy Code.
For more details, contact Joseph R. Seidman, Esq. of Bernstein
Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, NY
10016, Phone: (800) 217-1522 or (212) 779-1414, E-mail:
seidman@bernlieb.com, Web site: http://www.bernlieb.com.
REFCO INC.: Law Firms Obtain TRO in NY V. CEO Phillip R. Bennett
----------------------------------------------------------------
The law firm of Wechsler Harwood, LLP, and its co-counsel in
FrontPoint Financial Services Fund, LP v. Refco, Inc., et al.,
Case No. 05-Civ-8663 (DC)(RHM) (the "FrontPoint Action"),
obtained a Temporary Restraining Order ("TRO") against ousted
Refco, Inc. ("Refco" or the "Company") (Pink Sheets:RFXCQ) CEO
and Chairman, Phillip R. Bennett, freezing the assets obtained
from his Refco stock sales in the Company's August 2005 Initial
Public Offering ("IPO").
The TRO, resulting from a motion filed by Wechsler Harwood and
its co-counsel Scott + Scott LLC, as well as court proceedings
held in the FrontPoint Action, was issued by United States
District Judge Denny Chin for the Southern District of New York.
The TRO prohibits Mr. Bennett from dissipating his IPO proceeds
(approximately $111 million) pending a Preliminary Injunction
hearing currently scheduled for December 1, 2005. At that time,
the Court will determine whether or not a more permanent
restraining order should issue pending a full trial on the
merits.
The FrontPoint Action, one of the very first filed against
Refco, Mr. Bennett and others, alleges defendants violated the
federal securities laws by failing to disclose the related-party
loan of $430 million to an entity controlled by Mr. Bennett. The
Registration Statement and Prospectus, prepared in connection
with the IPO, failed to disclose Bennett's fraudulent
transaction. As a result, some 26.5 million shares of Refco's
common stock were sold to the unsuspecting public. On October
12, the U.S. Attorney's Office in New York announced that it had
filed securities fraud charges against Bennett for his part in
hiding hundreds of millions of dollars from investors who bought
stock in Refco's IPO.
For more details, contact Jeffrey M. Norton, Esq. of Wechsler
Harwood, LLP, 488 Madison Avenue, 8th Floor, New York, NY 10022,
Phone: (877) 935-7400, E-mail: jmn@whesq.com.
TENET HEALTHCARE: CA Court Mulls Wage, Hour Suit Certification
--------------------------------------------------------------
The Los Angeles Superior Court in California have yet to decide
on whether to grant class certification to the two wage and hour
lawsuits filed against Tenet Healthcare Corporation.
The suits allege that the Company's hospitals violated certain
provisions of the California Labor Code and applicable
California Industrial Welfare Commission Wage Orders with
respect to meal breaks, rest periods and the payment of
compensation for overtime and meal breaks and rest periods not
taken. Plaintiffs seek to certify this action on behalf of
virtually all non-exempt employees of the Company's California
subsidiaries.
The Company said in a regulatory filing that it will argue that
certification of a class in the action is not appropriate
because the Company's uniform policies comply with the
applicable Labor Code and Wage Orders. In addition, it is the
Company's position that each of these claims must be addressed
individually based on its particular facts and, therefore,
should not be subject to class certification.
WAL-MART STORES: HI Residents Join Nationwide Suit by Workers
-------------------------------------------------------------
Two Hawaii residents, who worked at the Hilo branch of Wal-Mart
Stores, Inc. (NYSE: WMT) joined a nationwide class action
lawsuit that accuses the Arkansas-based retailer of shaving time
off of workers' time cards and cheated them out of part of their
pay, TheHawaiiChannel.com reports.
The suit claims that it was a common practice at Wal-Marts
across the country. It also claims that the company made it
appear that employees' workdays ended one minute after their
lunch break, deleted overtime, or even failed to pay workers for
an entire day.
Attorney Wayne Parsons told TheHawaiiChannel.com, "On a random
basis, the small amount of time would be shaved off an employees
time sheet for the pay period and employee might not notice that
this little bit of time is missing in that paycheck."
According to the two Hawaii-based attorneys, who are
representing the workers, all hourly employees who worked at
Wal-Mart from 1997 to 2000 may be eligible for compensation.
WAL-MART STORES: Worker Files Suit Over "Time Shaving" Practice
---------------------------------------------------------------
A class action lawsuit filed by Mark Curless, a former Wal-Mart
Stores, Inc. (NYSE: WMT) employee in Cody, Wyoming alleges that
the Arkansas-based retailer cheated its employees for time
worked, including overtime hours, The Casper Star-Tribune
reports.
According to the complaint filed in U.S. District Court and
assigned to Judge Alan Johnson in Cheyenne, the suit was filed
due to recently discovered memos, which revealed that the
retailer was deleting thousands of hours of time worked from
payroll records in a practice known as "time shaving." The
complaint, which was filed by Mr. Curless's attorney, Laurence
Stinson of the Bonner Stinson firm in Powell, states, "Injustice
can be avoided only if the Court mandates that Wal-Mart, as an
(employer) of thousands of Wyoming citizens, pay its employees
(which it refers to as 'family' members) all wages earned." The
suit also states, "Indeed, allowing Wal-Mart to punitively ride
the backs of its hourly paid employees to extreme profitability
would result in an extreme and gross miscarriage of justice."
Wal-Mart spokeswoman Christi Gallagher told The Casper Star-
Tribune that company attorneys had not been served with the
complaint and could not comment. However, the complaint notes
that Wal-Mart has denied its time-shaving practices "by mounting
an expensive and deceptive public relations campaign..."
In an interview with The Casper Star-Tribune, Mr. Stinson stated
that Mr. Curless, a Marathon Oil Co. retiree, worked for Wal-
Mart from 2001 to 2003 in several positions, and resigned
voluntarily to take a better-paying job. He also told the Casper
Star-Tribune, "He's strongly motivated to act in this class
action. He feels when he was at Wal-Mart that fellow employees
weren't treated fairly." Mr. Stinson adds that current employees
might face disciplinary action if they filed such a lawsuit.
The lawsuit in Wyoming as well as others around the country
arose after an April 4, 2004, New York Times article in which
Wal-Mart admitted it had surreptitiously deleted hours from
employees' time records since January 1, 1997, the complaint
states.
Wal-Mart did this in at least five ways, according to the
lawsuit:
(1) Altering employees' records to make it appear as if
their workdays ended one minute after their meal
periods ended, which effectively denied them three or
four hours of pay.
(2) Deleting overtime hours over 40 hours.
(3) Deleting employee time card punches so they would not
be paid for an entire day or afternoon of work.
(4) Altering records to make it appear employees took meal
periods when they did not.
(5) Failing to pay employees for all reported time.
The suit explains that the plaintiffs in other class action
lawsuits in other states have obtained databases with this
evidence, but that information is under protective order,
unavailable to people in Wyoming, and Wal-Mart has denied these
allegations.
Though Mr. Stinson doesn't have specific data to show that Mr.
Curless had his time shaved, he does know of a precise way to
determine that. He also told The Casper Star-Tribune that the
lawsuit has thousands of potential members in the class action,
which he expects will be joined with similar litigation
elsewhere in the country.
The suit is styled, "Curless v. Wal-Mart Stores Inc et al, Case
No. 2:05-cv-00277-ABJ," filed in the United States District
Court for the District of Wyoming, under Judge Alan B. Johnson,
with referral to Judge William C. Beaman. Representing the
Plaintiff are, Bradley D. Bonner and Laurence William Stinson of
BONNER STINSON, P.O. Box 799, Powell, WY 82435, Phone:
307-754-4950, Fax: 307-754-4961.
WHITEHALL JEWELLERS: Enters Mediation For IL Securities Lawsuit
---------------------------------------------------------------
Whitehall Jewellers, Inc. entered mediation for the second
amended consolidated securities class action filed in the United
States District Court for the Northern District of Illinois
against it and certain of its current and former officers.
On February 12, 2004, a putative class action complaint
captioned "Greater Pennsylvania Carpenters Pension Fund, et al.
v. Whitehall Jewellers, Inc. et al., Case No. 04 C 1107," was
filed in the U.S. District Court for the Northern District of
Illinois against the Company and certain of the Company's
current and former officers. The complaint makes reference to
the litigation filed by Capital Factors, Inc. ("Capital
Factors") and settled as disclosed in the Company's Quarterly
Report in Form 10-Q for the fiscal quarter ended October 31,
2004 and to the Company's November 21, 2003 announcement that it
had discovered violations of Company policy by the Company's
Executive Vice President, Merchandising, with respect to Company
documentation regarding the age of certain store inventory.
The complaint further makes reference to the Company's December
22, 2003 announcement that it would restate results for certain
prior periods. The complaint purports to allege the Company and
its officers made false and misleading statements and falsely
accounted for revenue and inventory during the putative class
period of November 19, 2001 to December 10, 2003. The Complaint
purports to allege violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder.
On February 18, 2004, a putative class action complaint
captioned "Michael Radigan, et al., v. Whitehall Jewellers, Inc.
et al., Case No. 04 C 1196," was filed in the same court against
the Company and certain of the Company's current and former
officers, charging violations of Sections 10(b) and 20(a) of the
1934 Act and Rule 10b-5 promulgated thereunder, and alleging
that the Company and its officers made false and misleading
statements and falsely accounted for revenue and inventory
during the putative class period of November 19, 2001 to
December 10, 2003. The factual allegations of this complaint are
similar to those made in the Greater Pennsylvania Carpenters
Pension Fund complaint discussed above.
On February 20, 2004, a putative class action complaint
captioned "Milton Pfeiffer, et al., v. Whitehall Jewellers, Inc.
et al., Case No. 04 C 1285," was filed in the U.S. District
Court for the Northern District of Illinois against the Company
and certain of the Company's current and former officers,
charging violations of Sections 10(b) and 20(a) of the 1934 Act
and Rule 10b-5 promulgated thereunder, and alleging that the
Company and its officers made false and misleading statements
and falsely accounted for revenue, accounts payable, inventory,
and vendor allowances during the putative class period of
November 19, 2001 to December 10, 2003. The factual allegations
of this complaint are similar to those made in the Greater
Pennsylvania Carpenters Pension Fund complaint discussed above.
On April 6, 2004, the District Court in the Greater Pennsylvania
Carpenters case, No. 04 C 1107 consolidated the Pfeiffer and
Radigan complaints with the Greater Pennsylvania Carpenters
action, and dismissed the Radigan and Pfeiffer actions as
separate actions. On April 14, 2004, the court granted the
plaintiffs up to 60 days to file an amended consolidated
complaint. The Court also designated the Greater Pennsylvania
Carpenters Pension Fund as the lead plaintiff in the action and
designated Greater Pennsylvania's counsel as lead counsel.
On June 10, 2004, a putative class action complaint captioned
"Joshua Kaplan, et al., v. Whitehall Jewellers, Inc. et al.,
Case No. 04 C 3971," was filed in the U.S. District Court for
the Northern District of Illinois against the Company and
certain of the Company's current and former officers, charging
violations of Sections 10(b) and 20(a) of the 1934 Act and Rule
10b-5 promulgated thereunder, and alleging that the Company and
its officers made false and misleading statements and falsely
accounted for revenue, accounts payable, inventory, and vendor
allowances during the putative class period of November 19, 2001
to December 10, 2003. The factual allegations of this complaint
are similar to those made in the Greater Pennsylvania Carpenters
Pension Fund complaint discussed above.
On June 14, 2004, lead plaintiff Greater Pennsylvania Carpenters
Pension Fund in Case No. 04C 1107 filed a consolidated amended
complaint. On July 14, 2004, the District Court in the Greater
Pennsylvania Carpenters action consolidated the Kaplan complaint
with the Greater Pennsylvania Carpenters action, and dismissed
the Kaplan action as a separate action. On August 2, 2004, the
Company filed a motion to dismiss the consolidated amended
complaint. The motion to dismiss was granted in part and denied
in part, with plaintiffs granted leave to file an amended
complaint by February 10, 2005.
On February 10, 2005, the lead plaintiff filed a first amended
consolidated complaint. On March 2, 2005, the Company filed a
motion to dismiss the amended complaint. Briefing on this
motion is complete and the parties are awaiting the Court's
ruling. If the Company is successful on its motion, the class
in this action may be limited to the period November 19, 2001
through June 6, 2002. On April 19, 2005, the Court issued an
order, sua sponte, directing the parties to submit simultaneous
briefs addressing what impact, if any, the Supreme Court's
ruling in Dura Pharmaceuticals, Inc. v. Broudo, 125 S.Ct. 1627
(2005), has on Plaintiff's loss causation allegations. In
response to this order, the Company filed a brief on May 4, 2005
in which it requested that the Court dismiss the amended
complaint in its entirety for failure to adequately plead loss
causation.
On June 30, 2005, the Court denied Defendants' motions to
dismiss. On July 28, 2005, Defendants filed their Answers to the
First Amended Consolidated Complaint. Written discovery has
commenced and document production is ongoing. On September 23,
2005, lead plaintiff filed its motion for class certification
Briefing on this motion is not yet completed. The parties have
scheduled a mediation for November 8, 2005 in an attempt to
resolve the 10(b)-5 claims.
Asbestos Alerts
ASBESTOS LITIGATION: BNSF Records US$288M A&E Liability Charge
--------------------------------------------------------------
Burlington Northern Santa Fe Corp (NYSE: BNI) recorded a US$288
million net of tax charge, or US$0.76 per diluted share to
reflect changes in the railroad's estimate of asbestos and
environmental liabilities, a BNSF press report states.
The Fort Worth, TX-based Company also reported 2005-3rd quarter
net profits of US$414 million, or US$1.09 per share, as opposed
to 2004-3rd quarter's US$2 million, or US$0.01 per share.
"Demand for rail transportation continues to outpace the rest of
the economy," said Matthew K. Rose, BNSF Chairman, President and
CEO. "BNSF continues to operate a fluid rail network and, as a
result, we have recorded our fourteenth consecutive quarter of
year-over-year volume increases."
The 2005-3rd quarter's operating expenses were US$2.54 billion.
This compares with 2004-3rd quarter 2004 operating expenses of
US$2.69 billion, which included a pre-tax charge of US$465
million. The 2005-3rd quarter operating expenses reflect a 5%
increase in gross ton-miles and a 45% increase in fuel prices
after hedge benefit compared to the prior-year quarter. BNSF's
quarterly operating ratio continued to decrease to 75.8%.
Burlington Northern Santa Fe Corp, through its primary
subsidiary BNSF Railway, is the second-largest railroad in the
US, behind Union Pacific. BNSF makes tracks through 28 states in
the West, Midwest, and Sunbelt regions of the US and in two
Canadian provinces.
ASBESTOS LITIGATION: AFG Attributes 3Q-2005 Losses to Asbestos
--------------------------------------------------------------
American Financial Group Inc (NYSE: AFG) reported a US$26.4
million net loss, or US$0.34 per share in the 2005-3rd quarter,
the result of an after-tax charge of US$121.6 million, or
US$1.55 per share, from strengthening reserves for asbestos and
other environmental exposures with the Company's runoff
operations, the Cincinnati Business Courier reports.
The company also raised the bottom end of its full-year profit
forecast, saying it now expects core earnings per share of
US$3.55 to US$3.70, instead of US$3.40 to US$3.70, exceeding
analysts' forecasts of US$3.48 a share.
Core earnings from operations were US$88.6 million, or US$1.13
per share for the 2005-3rd quarter, which included an after-tax
gain of US$20.1 million, or US$0.26 per share from the sale of
Illinois coal reserves. Not including the effect of that sale,
2005-3rd quarter core earnings of US$68.5 million, or US$0.87
per share, were 72% above the 2004 results of US$39.7 million,
or US$0.53 per share.
Based in Cincinnati, Ohio, American Financial Group Inc, through
the Great American Insurance Group of Companies and its flagship
Great American Insurance Company, AFG offers property and
casualty insurance focused on specialty commercial lines such as
workers' compensation, professional liability, ocean and inland
marine, and multi-peril crop insurance.
ASBESTOS LITIGATION: AFG Reveals Results of A&E Exposures Study
---------------------------------------------------------------
American Financial Group Inc (NYSE: AFG) reports on the results
of its recently concluded comprehensive study of asbestos and
environmental exposures relating to the run-off operations of
its property & casualty group.
AFG recorded a 2005-3rd quarter pre-tax charge of US$179
million, net of reinsurance recoverables, which resulted in an
increase in asbestos reserves of US$124 million and
environmental and other mass tort reserves of US$55 million.
At September 30, 2005, AFG's A&E reserves were US$475 million,
net of reinsurance recoverables. At that date, AFG's three-year
survival ratio was 21.8 times paid losses for the asbestos
reserves and 13.2 times paid losses for the total A&E reserves.
In the 2005 study, the actuaries are giving additional weight to
claims associated with peripheral defendants. While no single
claim presents an unduly large exposure, the increase in the
number of claims notices from peripheral defendants has
increased the projections of future defense cost and loss
exposure.
Establishing reserves for A&E claims relating to policies and
participations in reinsurance treaties and former operations is
subject to uncertainties that are significantly greater than
those presented by other types of claims. Estimating ultimate
liability for asbestos claims presents a unique and difficult
challenge to the insurance industry due to inconsistent court
decisions, an increase in bankruptcy filings as a result of
asbestos-related liabilities, novel theories of coverage, and
judicial interpretations that often expand theories of recovery
and broaden the scope of coverage.
The casualty insurance industry is engaged in extensive
litigation over these coverage and liability issues as the
volume and severity of claims against asbestos defendants
continue to increase.
Through the operations of the Great American Insurance Group,
AFG is engaged primarily in property and casualty insurance,
focusing on specialized commercial products for businesses, and
in the sale of retirement annuities, supplemental insurance and
life products.
ASBESTOS LITIGATION: SEE Posts Settlement Liability at US$512.5M
----------------------------------------------------------------
Packaging giant Sealed Air Corp (NYSE: SEE), in a Securities and
Exchange Commission filing, discloses that its asbestos
settlement liability, as of September 30, 2005, remains at
US$512.5 million.
As of December 31, 2005, the Company listed its asbestos
settlement liability at US$512.5 million.
The Saddle Brook, New Jersey-based Company also lists its effect
of assumed issuance of asbestos settlement shares. For the
quarter ended September 30, 2005, the figure is tagged at US$9
million, which is the same for the 2004-3rd quarter.
Sealed Air Corp's largest food packaging segment, which is its
largest, produces Cryovac shrink films, absorbent pads, and foam
trays used by food processors and supermarkets to protect meat
and poultry. Sealed Air's products reach about 80% of the
world's population.
ASBESTOS LITIGATION: Corning Notes US$68 Mil for PCC Litigation
---------------------------------------------------------------
For the 2005-3rd quarter, Corning Inc (NYSE: GLW) records a
US$68 million pretax and after-tax charge to reflect the
increase in market value of the Company's common stock to be
contributed to settle the asbestos litigation related to
Pittsburgh Corning Corp.
The charge included the value of 25 million shares of Corning
common stock that the Company will contribute as part of the
settlement if the PCC plan of reorganization is approved and
becomes effective. The Company indicated that any changes in the
value of its common stock contribution would be recognized in
its quarterly results through the date of contribution to the
settlement trust.
Beginning with the 2003-1st quarter, the Company has recorded
total net charges of US$635 million to reflect the initial
settlement and to mark-to-market the value of its common stock.
On March 28, 2003, the Company announced that it had reached
agreement with the representatives of asbestos claimants for the
settlement of all current and future asbestos claims against it
and PCC, which might arise from PCC products or operations.
Accordingly, the Company recorded a charge of US$298 million in
the first quarter of 2003.
Recently, Corning Inc posted a US$203 million profit in the
third quarter in contrast to a loss of nearly US$2.5 billion a
year ago.
The industrial materials maker said it earned the equivalent of
US$0.13 a share in the July-to-September period. That compared
with a loss of US$2.49 million, or US$1.78 a share, in the 2004-
3rd quarter when it was hit with US$2.7 billion in
restructuring, asbestos litigation and other charges.
Sales jumped 18% to US$1.19 billion from US$1.01 billion a year
ago. Revenues from its display technologies segment jumped 66%
to a record US$489 million from US$295 million in last year's
third quarter, helped by a surge in revenue from liquid crystal
display glass.
The Corning, NY-based Company is the world's top maker of fiber-
optic cable, which it invented more than 30 years ago. Once
known mainly for its kitchenware and lab products, Corning now
derives 40% of its sales from optical fiber and cable products
and communications network equipment made by its
telecommunications unit.
ASBESTOS LITIGATION: Lone Star Subsidiaries Deal with 47 Suits
--------------------------------------------------------------
Lone Star Technologies Inc (NYSE: LSS) reports that its
subsidiary Lone Star Steel, for the past six years, has been
named as one of a number of defendants in 47 lawsuits alleging
that certain individuals were exposed to asbestos on the
defendants' premises, according to a Securities and Exchange
Commission filing.
To date several of these lawsuits have been settled for about an
aggregate of US$0.3 million. Of the 47 lawsuits, 20 have been
settled or are pending settlement and 12 have been dismissed or
are pending dismissal.
Beginning in 2003, Lone Star subsidiary Zinklahoma Inc, inactive
since 1989, was named as one of a number of defendants in seven
lawsuits alleging that the plaintiffs had contracted
mesothelioma as the result of exposure to asbestos in products
manufactured by the defendants and John Zink Company. Three of
these lawsuits have been dismissed and one was settled for less
than US$0.1 million.
Lone Star acquired the stock of Zink in 1987 and, in 1989, sold
the assets of the former Zink to Koch Industries Inc and renamed
the now-inactive subsidiary Zinklahoma Inc. Lone Star retained,
and agreed to indemnify Koch against, certain pre-closing
liabilities of Zink. Koch continues to operate the business as
John Zink Co LLC.
Zink LLC has been named in six lawsuits in which the plaintiffs,
two of whom have mesothelioma, allege asbestos exposure to
Zink's products (three of these lawsuits have been dismissed)
and three personal injury lawsuits resulting from a 2001
explosion and flash fire at a flare stack and crude unit
atmospheric heater. Koch is seeking indemnification from Lone
Star with respect to these six pending lawsuits.
During the second quarter of 2005, Zink LLC was dismissed from
the three personal injury lawsuits when it was determined that
Zink did not manufacture the flare and components involved in
the fire.
The Dallas, TX-based Lone Star Technologies Inc operates
subsidiaries Lone Star Steel (oil field products), Fintube
Technologies (specialty tubing products for heat-recovery
applications), Bellville Tube (oil field products), Delta
Tubular Processing (thermal treating services), and Wheeling
Machine Products (couplings supplier).
ASBESTOS LITIGATION: American Standard Resolves 32,008 Claims
-------------------------------------------------------------
American Standard Companies Inc (NYSE: ASD) reports that it
resolved 32,008 asbestos related claims from receipt of its
first claim more than twenty years ago to September 30, 2005,
according to a Securities and Exchange Commission filing.
The Company paid about US$61.0 million, with an average US$1,905
per claim, for all settlements. The average payment per claim
resolved in the nine months ended September 30, 2005 and each of
the years ended December 31, 2004 and 2003 was US$1,795,
US$3,637 and US$1,986, respectively.
At December 31, 2002, 2003, 2004 and September 30, 2005 the
total asbestos liability was estimated at US$43.3 million,
US$69.5 million, US$699.4 million and US$693.3 million,
respectively. The Company increased its estimate by US$40.1
million during 2003 primarily as a result of new claims filed,
partially offset by US$13.9 million of claims payments.
The asbestos indemnity liability decreased to US$693.3 million
as of September 30, 2005, primarily from claims payments made
during the period of about US$10.0 million.
The Piscataway, NJ-based American Standard Companies Inc is a
leading maker of air-conditioning systems, plumbing products,
and automotive braking systems. The Company's bathroom
contributions include plumbing fixtures under such names as
American Standard, Ideal Standard, and Porcher.
ASBESTOS LITIGATION: ASD Posts Asbestos Receivables for 3Q2005
--------------------------------------------------------------
American Standard Companies Inc (NYSE: ASD) reports on its
asbestos receivables for the 2005-3rd quarter, according to a
Securities and Exchange Commission report.
At December 31, 2002, 2003, 2004 and September 30, 2005 the
asbestos receivable was US$41.5 million, US$84.6 million,
US$405.6 million and US$396.0 million, respectively. The Company
increased its receivable in 2003 by US$47 million to reflect the
recoverable portion of new claims filed, partially offset by a
US$4.1 million reduction to reflect current information obtained
regarding the solvency status of certain carriers.
In 2004, the Piscataway, NJ-based Company increased its asbestos
insurance receivable to US$405.6 million. About US$348.4 million
of the increase reflected the recoverable portion of the change
in the Company's asbestos liability calculation. This increase
was primarily related to the US$568.2 million increase to the
liability recorded in the fourth quarter of 2004 to reflect an
estimate of the liability for unasserted potential future
asbestos-related claims. The receivable was reduced by US$24.2
million during 2004 to reflect cash received from insurance
companies and US$4.1 million to reflect current information
obtained regarding solvency of insurance carriers. The Company's
asbestos insurance receivable decreased to US$396.0 million as
of September 30, 2005. The reduction was largely the result of
US$17.6 million of cash received from insurance companies,
partially offset by US$7.9 million of adjustments to reflect the
recoverable portion of incurred legal expenses.
In February 2005, the Company settled with Equitas for US$84.5
million to buy out the participants of certain underwriters in
pre-1993 Lloyd's, London policies included in the company's
insurance coverage. During the first nine months of 2005,
US$14.4 million of this amount was received by the Company to
cover asbestos and environmental costs, and US$70.1 million
remains in a trust expiring January 3, 2007.
If, during the trust period, there is federal legislation that
takes asbestos claims out of the courts and requires Equitas to
make a duplicate payment to the asbestos trust, the remaining
balance in the trust will be disbursed to Equitas minus some
allowance to the Company for claim settlements that may be made
or have been made in the period January 1, 2005 through January
3, 2008. If there is no such legislation by January 3, 2007, the
balance of funds in the trust, including accrued interest, will
be disbursed to the Company.
ASBESTOS LITIGATION: American Standard Updates Asbestos Lawsuits
----------------------------------------------------------------
American Standard Companies Inc (NYSE: ASD) notes updates to its
asbestos-related litigation, according to a report filed to the
Securities and Exchange Commission.
The Piscataway, NJ-based Company is in litigation against
certain of its carriers whose policies it believes provide
coverage for asbestos claims. In April 1999, the Company filed
an action in the Superior Court of New Jersey, Middlesex County
entitled American Standard Inc. v. Admiral Insurance Company, et
al. with Case No. MID-L-1429-99.
The suit is against several of the Company's primary and lower
layer excess insurance carriers seeking coverage for
environmental claims. The NJ Litigation was later expanded to
also seek coverage for asbestos related liabilities from twenty-
one primary and lower layer excess carriers and syndicates.
On September 19, 2005, the court granted the Company's motion to
add to the NJ Litigation 16 additional insurers and 117 new
insurance policies. The court also required the parties to
submit to mediation. The Company expects to enter into
settlement negotiations with the insurers that are party to the
NJ Litigation, including with some in the fourth quarter of 2005
and in early 2006.
ASBESTOS LITIGATION: BorgWarner Reports 83,000 Pending Claims
-------------------------------------------------------------
BorgWarner Inc (NYSE: BWA), a maker of power train products for
the world's major automakers, reports that as of September 30,
2005, it had about 83,000 pending asbestos-related product
liability claims, according to the Company's 10-Q report filed
to the Securities and Exchange Commission.
Of these outstanding claims, about 76,000 are pending in just
three jurisdictions, where significant tort reform activities
are underway.
In the first nine months of 2005, of the around 11,700 claims
resolved, only 229 (2.0%) resulted in any payment being made to
a claimant by or on behalf of the Company. In 2004, of the 4,062
claims resolved, only 255 (6.3%) resulted in any payment being
made to a claimant by or on behalf of the Company. In 2003 of
the 4,664 claims resolved, only 273 (5.9%) resulted in any
payment being made to claimants.
The settlement and defense costs of these claims were paid by
the insurance carriers, except for US$3.4 million paid in the
first nine months of 2005 and US$1.0 million for the full year
in 2004.
Prior to June 2004, all claims were covered by the Company's
primary layer insurance coverage, and these carriers
administered, defended, settled and paid all claims under a
funding agreement. In June 2004, primary layer insurance
carriers notified the Company of the exhaustion of their policy
limits. This led the Company to access the next available layer
of insurance coverage. Since June 2004, secondary layer insurers
have paid asbestos-related litigation defense and settlement
expenses pursuant to a funding agreement.
The Auburn Hills, MI-based Company has paid US$3.4 million in
the first nine months of 2005 and US$1.0 million in the fourth
quarter of 2004 as a result of the funding agreement.
ASBESTOS LITIGATION: BorgWarner Inc. Posts CNA Lawsuit Updates
--------------------------------------------------------------
In its 2005-3rd quarter report filed to the Securities and
Exchange Commission, BorgWarner Inc (NYSE: BWA) reports on
litigation updates regarding litigation filed by Continental
Casualty Company against BorgWarner.
As reported in the June 18, 2004 Class Action Reporter edition,
CNA and related firms filed, on January 2004, a declaratory
judgment action against the Company and some of its other
historical general liability insurers.
The lawsuit seeks to determine the extent of insurance coverage
available to the Company including whether the available limits
exhaust on a "per occurrence" or an "aggregate" basis, and to
determine how the applicable coverage responsibilities should be
apportioned.
On August 15, 2005, the Court issued an interim order regarding
the apportionment matter. The order has the effect of making
insurers responsible for all defense and settlement costs pro
rata to time-on-the-risk, with the pro-ration method to hold the
insured harmless for periods of bankrupt or unavailable
coverage. This interim order is under appeal.
In addition to the primary insurance available for asbestos-
related claims, the Company has substantial additional layers of
insurance available for potential future asbestos-related
product claims. As such, the Company continues to believe that
its coverage is sufficient to meet foreseeable liabilities.
Based in Auburn Hills, Michigan, BorgWarner Inc is a maker of
power train products for the world's major automakers. Its
largest customers include Ford (21% of sales), DaimlerChrysler
(14%), General Motors (10%), and Volkswagen (10%). The Company
operates 43 manufacturing facilities worldwide.
ASBESTOS LITIGATION: U.S. Court Upholds Conviction of Consultant
----------------------------------------------------------------
The U.S. Court of Appeals for the Tenth Circuit on Oct. 13, 2005
affirmed the conviction of Edward Shaw who was sentenced to four
months imprisonment for knowingly engaging in a scheme to
falsify, conceal or cover up the presence of asbestos at the
Shallow Water Refinery.
On appeal, Mr. Shaw challenged his conviction and sentence on
the following grounds:
(1) The district court lacked subject matter jurisdiction over
his prosecution;
(2) His prosecution was barred by the five-year statute of
limitations;
(3) The Government failed to show he had a legal duty to
disclose the presence of asbestos at the refinery; and
(4) The district court erred in holding him accountable for the
cost of the cleanup of the buried asbestos at the refinery.
The Government cross-appealed, arguing the district court erred
in denying a two level enhancement to Shaw's sentence for more
than minimal planning.
Mr. Shaw, a professional engineer, owns and operates ESCM &
Associates Inc., an engineering and environmental consulting
firm. In 1993, EZ Serve contacted him concerning the Shallow
Water Refinery, an abandoned oil refinery, which EZ Serve owned
and wished to demolish.
Mr. Shaw decided to obtain bids for the demolition. On July 15,
1993, Mr. Shaw escorted several metal salvage companies through
the refinery. One of those companies was Southwest Wrecking, a
small company owned and operated by Jean Stiffler and Carl
Stiffler. Also present at the walk-through were Steve Allred and
Barry Yaffe, representatives of the Yaffe Companies, another
potential bidder.
At trial, Allred and Yaffe testified that they observed
materials throughout the refinery, which they believed contained
asbestos. They said that Mr. Shaw informed them the property was
clean and the materials they observed contained calcium silicate
(cellulose) not asbestos.
Mr. Shaw decided to purchase the property from EZ Serve and
immediately reconvey it to the Stifflers. ESCM purchased the
property from EZ Serve for US$5,000. On August 23, 1993, ESCM
sold it to the Stifflers for US$50,000. The sales agreement
declared that the property may contain asbestos, gasoline
hydrocarbons, and other contaminants and that the Stifflers
assumed "all responsibility for complying with and/or bringing
the [property] into compliance with any environmental law or
regulation." However, Jean Stiffler testified that since she had
"complete trust" in Mr. Shaw, neither she nor any of her family
members read the agreement before signing it. She testified that
she never knew the agreement indicated asbestos might be on the
property and Mr. Shaw never told her or her family that asbestos
may be present.
After closing, the Stifflers began demolishing the refinery and
salvaging the scrap metal for sale. On November 3, 1993, David
Branscum from the Kansas Department of Health and Environment
arrived at the refinery to inspect it. Mr. Branscum informed the
Stifflers there were some compliance issues, including licensing
requirements, which needed to be addressed, and it would be in
their best interests to cease their demolition activities. The
EPA also conducted its own inspection and consequently issued an
emergency order, requiring the Stifflers to cease all demolition
activity at the refinery.
On June 15, 1999, Mr. Shaw and Carl and Jean Stiffler were
charged by indictment with conspiracy to violate the National
Emissions Standards for Hazardous Air Pollutants or NESHAP
pertaining to asbestos. Mr. Shaw was additionally charged with
engaging in a scheme to falsify, conceal or cover up the
presence of asbestos and making a false statement.
On March 24, 2000, the Government charged Carl and Jean Stiffler
with failure to notify the EPA about the storage and disposal of
asbestos at the Shallow Water Refinery, a misdemeanor. The
Stifflers entered into a plea agreement whereby they agreed to
plead guilty and to cooperate in the prosecution of Mr. Shaw. In
exchange, the Government agreed to recommend an adjustment to
their sentences. It was not until they received this bargain
that the Stifflers admitted they had buried asbestos on the
property. On March 27, 2000, Carl and Jean Stiffler were
sentenced to one year unsupervised probation.
On March 28, 2000, Mr. Shaw testified that he informed the
Stifflers there was a possibility the property had asbestos and
that he denied ever representing that the refinery was a clean
plant. Mr. Shaw said that he merely agreed to assist the
Stifflers in the designing of riggings and the testing of any
liquids in the tanks of the refinery but he never agreed to be
their environmental consultant. He also testified that he never
deliberately misled anyone concerning what was on the property
and that he never instructed any of the Stifflers to bury
insulation.
The U.S. Court of Appeals found the district court's reasons
insufficient for reversing its previous determination that the
offense involved more than minimal planning. Therefore, it
concluded that the court clearly erred and that a remand to the
district court for re-sentencing is necessary.
Alan G. Metzger, Office of the United States Attorney, Wichita,
KS, stood for the U.S. government.
Joseph D. Johnson, Topeka, KS, represented Mr. Shaw.
ASBESTOS LITIGATION: IN Court Grants Rehearing for Suit V. PSI
--------------------------------------------------------------
The Supreme Court of Indiana on Sept. 27, 2005 granted PSI
Energy, Inc.'s petition for rehearing of the asbestos-related
suit, with Case No. 49S02-0405-CV-217, brought by William Lee
Roberts, Jr. and his wife, Beverly Roberts.
As previously disclosed in the July 15, 2005 edition of the
Class Action Reporter, the Court affirmed the judgment of the
trial court, which found PSI Energy, Inc. 13% at fault for the
death of Mr. Roberts, an employee of Armstrong Contracting and
Supply Company or ACandS.
Mr. Roberts sued PSI Energy for having contracted the asbestos-
related cancer, mesothelioma, which he claims to have gotten
from his work at its power generation facilities. This Court
held that although PSI Energy, the landowner, is not vicariously
liable for the negligence of its independent contractor ACandS,
it believes that there was sufficient evidence to support the
jury's verdict in favor of Mr. Roberts and his wife under the
premises liability theory.
ACandS, the nation's largest insulation contractor over this
period, supplied its insulation services to a variety of
industrial customers and assigned employees, to install and
service insulation at a number of facilities. Mr. Roberts
routinely installed, handled, removed, and otherwise worked
directly with insulation containing asbestos. He knew that he
was working with asbestos insulation and could recognize
asbestos on sight. He estimated that over the course of his
career he spent 15 to 18 years at various generating stations
owned by PSI Energy.
The Supreme Court, presided by Justice Theodore R. Boehm,
concluded that PSI Energy, Inc.'s petition for rehearing raised
an important point of Indiana trial procedure that it failed to
address. This Court granted a rehearing to elaborate PSI
Energy's contention that under federal court procedure, and
under the procedures in some other states, it is not necessary
to object to instructions in order to preserve for appeal a
claim that a motion for judgment on the evidence was erroneously
denied even if the evidence supported the judgment under the
instructions.
The Supreme Court ruled that since it had affirmed a result
justified under unobjected instructions but not supported under
the law, it would grant the rehearing to prevent the issue from
recurring.
Robert K. Stanley, Kevin M. Toner, Jon B. Laramore, Lucetta
Pope, Indianapolis, Eric M. Cavanaugh, Plainfield, IN, stood for
PSI Energy, Inc.
Linda George, W. Russell Sipes, Kathleen A. Musgrave,
Indianapolis, IN, represented Mr. and Mrs. Roberts.
One of Indiana's largest utilities, Cinergy subsidiary PSI
Energy transmits and distributes electricity to 700,000
customers. The Plainfield, IN-based utility also owns power
plants, which are operated by Cinergy's merchant energy
division.
ASBESTOS LITIGATION: MS Court Rules in Favor of Monsanto Company
----------------------------------------------------------------
The Supreme Court of Mississippi on Oct. 6, 2005 reversed the
trial court's denial of summary judgment and rendered judgment
in favor of Monsanto Company in the asbestos product liability
suit, with Case No. 2004-IA-00918-SCT, filed by Bobby G. Hall,
et al.
Bobby G. Hall, Thurman Ferguson, Delano Reeves, Israel Stewart,
Jr., Wilbert White, Aubrey Arnold, and James Hemphill worked in
at least one common work site, International Paper in Natchez,
Mississippi, and filed this suit against more than 270
defendants, including St. Louis, MO-based Monsanto, for injuries
allegedly resulting from exposure to asbestos products.
Monsanto, the seed and biotechnology company, filed this
interlocutory appeal on the trial court order, handed down by
Judge Forrest A. Johnson, Jr., denying its motion for summary
judgment. The Company claimed that the plaintiffs did not offer
sufficient probative evidence regarding the necessary elements
to establish a prima facie case.
The plaintiffs argued that because summary judgment deals with
existence of genuine issues of material facts, Monsanto's
argument that a new legal standard should be officially adopted
in Mississippi is misguided. The plaintiffs further asserted
that Monsanto must show first that no genuine issue of material
fact existed and that it is entitled to a judgment as a matter
of law.
The Supreme Court, presided by Justice George C. Carlson, agreed
with the company's argument that the plaintiffs failed to prove
the three elements necessary in a products liability action to
survive summary judgment, namely, sufficient evidence of product
identification, exposure, and proximate cause. For these
reasons, the Court reversed the Adams County Circuit Court's
ruling denial of summary judgment, finally dismissing the
plaintiffs' complaint and this action with prejudice.
James Lawrence Jones, Bradley S. Clanton, Scott W. Pedigo,
Robert M. Arentson, Jr., Robert H. Bass, were the attorneys for
Monsanto Company.
Stacey L. Sims, Anthony Sakalarios, served as the attorneys for
Bobby G. Hall, et al.
ASBESTOS LITIGATION: Court Allows Testimony in Lawsuit V. Bondex
----------------------------------------------------------------
The Second District Court of Appeal on Oct. 4, 2005 reversed the
trial court ruling that prohibited the use of a deposition taken
under Texas law in a California asbestos case involving the same
parties.
The appeal for the case styled, "Doris Silvestro et al., v.
Bondex International, Inc. et al., with Case No. B175382,
stemmed from the judgment of Judge Joseph R. Kalin of the
Superior Court for the County of Los Angeles.
The Court of Appeal stated that California law permits a
deposition lawfully taken in another jurisdiction for use in a
subsequent action with the same subject matter and the same
parties. It held that the trial court abused its discretion
because while the trial court has the authority to exclude
evidence in order to curb abusive litigation tactics that
prejudice an adverse party, no evidence in the record indicates
that the plaintiff's counsel engaged in these tactics. The Court
also failed to prove that use of the deposition would be "highly
prejudicial" to the defendants.
Doris Silvestro filed a wrongful death action alleging that her
husband, Salvatore Silvestro, died from exposure to asbestos-
containing products manufactured or distributed by Bondex
International, Inc. and five other defendants. The suit names 18
companies, but only five others--Kaiser Gypsum Company, Inc.,
CertainTeed Corporation, Guard-Line, Inc., Owens-Illinois, Inc.,
and Kelly-Moore Paint Company, Inc.--are parties to this appeal.
On June 13, 2001, Salvatore and Doris Silvestro filed a personal
injury lawsuit in Dallas County, Texas. Venue in Texas was
proper, because several of the asbestos products alleged to have
caused Salvatore Silvestro's injuries were manufactured in
Texas. However, the Silvestros lived in California, and Mr.
Silvestro's entire history of exposure to asbestos products
occurred in California.
On June 29, 2001, the results of a biopsy procedure involving
Salvatore Silvestro confirmed a diagnosis of malignant pleural
mesothelioma. On July 20 and 21, 2001, Salvatore Silvestro's
deposition was taken at his home in San Mateo, under Texas Rules
of Civil Procedure. Bondex and the other defendants who are
parties to this appeal attended.
On August 30, 2001, Salvatore Silvestro requested trial
preference in California, and on September 10, 2001, the Texas
lawsuit was dismissed. On November 29, 2001, Salvatore Silvestro
died.
The Court concluded that although Mr. Silvestro's counsel may
have sought a tactical advantage by filing in Texas rather than
California, those tactics are abusive only if undertaken in bad
faith. The Court added that because the deposition was lawful
under Texas law, more evidence is required to exclude the
deposition from evidence.
The Court further ordered that the case be remanded to the trial
court for further proceedings.
Waters & Kraus, Michael L. Armitage and Paul C. Cook represented
Doris Silvestro, et al.
Horvitz & Levy, Lisa Perrochet and Wendy S. Albers; Jackson &
Wallace and Catherine Golden represented Kaiser Gypsum Company,
Inc.
McKenna Long & Aldridge, William J. Sayers, Farah S. Nicol and
Margaret I. Johnson stood for CertainTeed Corporation.
Walsworth, Franklin, Bevins & McCall, Stephen M. Nichols and
Mary T. McKelvey were the counsels for Bondex International,
Inc.
Prindle, Decker & Amaro and James G. Murray stood for Guard-
Line, Inc.
Morgenstein & Jubelirer, Jean L. Bertrand and Bruce A. Wagman
represented Owens-Illinois, Inc.
Foley & Mansfield, Stephen J. Foley and Peter B. Langbord
represented Kelly-Moore Paint Company, Inc.
ASBESTOS LITIGATION: WV Court Remands Zuleski Suit V. Insurers
--------------------------------------------------------------
The U.S. District Court of the Southern District West Virginia
on Oct. 24, 2005 granted William Zuleski's motion to remand to
the Circuit Court of Kanawha County the suit against Hartford
Accident and Indemnity Co., Hartford Casualty Insurance Co.,
Hartford Fire Insurance Co., Twin City Fire Insurance Co., and
First State Insurance Co.
Judge Chambers presided over this suit, with Case No. Civ.A.
2:05-0490, which Mr. Zuleski, as representative of a proposed
class action, brought forward to the Court.
The plaintiffs, who previously resolved claims for personal
injury resulting from exposure to asbestos, filed this action in
the Circuit Court of Kanawha County on February 17, 2005,
alleging that the defendants engaged in unfair claim settlement
practices in relation to those claims.
The defendants timely removed the action to this Court on June
15, 2005, citing as grounds for removal the Class Action
Fairness Act, which extends jurisdiction of the federal courts
to certain class actions. The defendants added that removal
would be proper under pre-CAFA diversity jurisdiction because
Mr. Zuleski was fraudulently joined for the purpose of defeating
that jurisdiction.
The Class Action Fairness Act, which allows defendants to remove
certain class actions to federal court, was enacted on February
18, 2005. The plaintiffs contended that the act does not apply
to this action because they filed suit in state court on
February 17, 2005. The defendants, however, argued that in this
context an action should be considered to have "commenced" on
the date of removal rather on the date of filing.
The defendants contended that even if CAFA does not apply, this
Court still may maintain jurisdiction over this case because not
only was Mr. Zuleski fraudulently joined, they said that the
plaintiff cannot bring a claim under the West Virginia Unfair
Trade Practices Act.
ASBESTOS LITIGATION: PolyOne Corp. Posts $2M Reserves for Claims
----------------------------------------------------------------
PolyOne Corporation posted reserves totaling about US$0.5
million as of Sept. 30, 2005 for asbestos-related claims. The
Company had declared a total of about US$2 million as of June
30, 2005 as cited in the August 5, 2005 edition of the Class
Action Reporter.
The Company continues to defend itself against lawsuits
involving multiple claimants and defendants for alleged asbestos
exposure among workers and contractors and their families at
plants or ships that the Company or its predecessors owned.
The Company believes the probability is remote that losses in
excess of the amounts it accrued could be material to its
financial condition, results of operations or cash flows. This
belief is based upon its ongoing assessment of the strengths and
weaknesses of the specific claims and its defenses and insurance
coverages available with respect to these claims, as well as the
probability and expected magnitude of reasonably anticipated
future asbestos-related claims.
The Company's assessment includes: whether the pleadings allege
exposure to asbestos, asbestos-containing products or premises
exposure; the severity of the plaintiffs' alleged injuries from
exposure to asbestos or asbestos-containing products and the
length and certainty of exposure on our premises, to the extent
disclosed in the pleadings or identified through discovery;
whether the named defendant related to us manufactured or sold
asbestos-containing products; the outcomes of cases recently
resolved; and the historical pattern of the number of claims.
PolyOne Corporation (NYSE:POL) is an Avon Lake, OH-based Company
that is one of North America's largest plastics compounders and
resins distributors.
ASBESTOS LITIGATION: Exelon Sets $43M Reserve for Future Claims
----------------------------------------------------------------
A subsidiary of Exelon Corporation, Exelon Generation disclosed
in its latest filing to the Securities and Exchange Commission
that in the second quarter of 2005, it recorded an undiscounted
US$43 million pre-tax charge for its portion of all estimated
future asbestos-related personal injury claims to be presented
through 2030. This amount does not include legal costs
associated with handling these matters.
Exelon Generation is a defendant in personal injury actions
related to asbestos exposure in certain facilities it owned or
were previously owned by ComEd and PECO. The vast majority of
these injury claims allege a variety of lung-related diseases
based on exposure to asbestos by third-party contractors
involved in the original construction or maintenance of the
facilities. The construction of these facilities primarily
occurred between 1950 and 1975. The Company does not have
significant asbestos-related bodily injury claims occurring
after 1980.
As part of the 2001 restructuring in which Generation purchased
ComEd's and PECO's energy-producing facilities, the Company
assumed all of ComEd's and PECO's current and future benefits
and liabilities associated with these facilities.
The US$43 million pre-tax charge was recorded as part of its
operating and maintenance expense for the nine months ended
Sept. 30, 2005 and reduced net income by US$27 million. At Sept.
30, 2005, Exelon had about US$52 million reserved in total for
asbestos-related bodily injury claims. About US$10 million of
this amount relates to 136 open claims presented as of Sept. 30,
2005, while the remaining US$42 million of the reserve is for
estimated future asbestos-related bodily injury claims
anticipated to arise through 2030.
Operating and maintenance expense increased for the nine months
ended Sept. 30, 2005 as compared to the same period in 2004
primarily due to a reserve for the estimated future asbestos-
related bodily injury claims that was recorded in the second
quarter of 2005, the gain recorded in 2004 related to the DOE
Settlement, higher costs associated with planned nuclear
refueling outages and increased costs related to an operating
agreement with a subsidiary of Tamuin International, Inc.
(formerly Sithe International, Inc.), partially offset by the
sale of Boston Generating and decreased severance and benefit
expense.
Headquartered in Chicago, IL, Exelon Corporation (NYSE: EXC)
distributes electricity to millions of customers in northern
Illinois and in southeastern Pennsylvania through subsidiaries
Commonwealth Edison (ComEd) and PECO Energy. Subsidiary Exelon
Generation holds the company's power plants, which produce some
28,000 MW of capacity.
ASBESTOS LITIGATION: Rohm & Haas Anticipates More Premises Cases
----------------------------------------------------------------
Rohm and Haas Company (NYSE: ROH), a manufacturer of specialty
chemicals, disclosed in its latest filing to the Securities and
Exchange Commission that as a result of the bankruptcy of
asbestos producers, plaintiffs' attorneys are shifting their
focus on peripheral defendants, including the said Company,
which had asbestos on its premises.
The Company asserted that historically, these premises cases
have been dismissed or settled for small amounts because of the
minimal likelihood of exposure at its facilities. However, as
more asbestos producers are bankrupted, the demands against
companies with older manufacturing facilities, such as itself,
are increasing. Although the Company has reserved amounts for
premises asbestos cases that it believes are probable and
estimable, it cannot reasonably estimate what its asbestos costs
will be if the current situation deteriorates and there is no
tort reform.
There are also pending lawsuits filed against one of its
acquisitions, Morton International, related to employee exposure
to asbestos at a manufacturing facility in Weeks Island,
Louisiana with additional lawsuits expected. The Company expects
that most of these cases will be dismissed because they are
barred under worker's compensation laws; however, cases
involving asbestos-caused malignancies may not be barred under
Louisiana law. Subsequent to the Morton acquisition, the Company
commissioned medical studies to estimate possible future claims
and recorded accruals based on the results.
Morton has also been sued in connection with asbestos-related
matters in the former Friction Division of the former Thiokol
Corporation, which merged with Morton in 1982. Settlement
amounts to date have been minimal and many cases have closed
with no payment. The Company estimates that all costs associated
with future Friction Division claims, including defense costs,
will be well below its insurance limits.
Headquartered in Philadelphia, PA, Rohm and Haas has 150
manufacturing and research sites located around the world. Sales
take place in more than 100 countries and total more than US$6
billion annually. In 1999 Rohm and Haas acquired Morton
International, maker of specialty chemicals and famous Morton
Salt.
ASBESTOS LITIGATION: Electrolux Holds 980 Pending Suits in 3Q05
----------------------------------------------------------------
As of Sept. 30, 2005, Aktiebolaget Electrolux had 980 cases
pending, representing about 8,680 plaintiffs. During the third
quarter of 2005, 301 new cases with about 250 plaintiffs were
filed and 306 pending cases with about 360 plaintiffs were
resolved. About 7,530 of the plaintiffs relate to cases pending
in the state of Mississippi.
On the July 29, 2005 edition of the Class Action Reporter, the
Company declared that it had 985 cases pending, representing
about 8,800 plaintiffs during the second quarter of 2005.
According further to the filing the Company submitted to the
Securities and Exchange Commission, almost all of the cases
refer to externally supplied components used in industrial
products manufactured by discontinued operations prior to the
early 1970s. It added that many of the cases involve multiple
plaintiffs who have made identical allegations against many
other defendants who are not part of the Electrolux Group.
Electrolux, founded in 1910, is the world's largest supplier of
household appliances, but also a leading producer of similar
equipment for professional use. Electrolux, whose complete
registered name is Aktiebolaget Electrolux, is headquartered in
the Municipality of Stockholm.
ASBESTOS LITIGATION: Cleveland-Cliffs Faces 2 New Maritime Suits
----------------------------------------------------------------
Cleveland-Cliffs Inc (NYSE: CLF), producer of iron ore pellets,
revealed in a U.S. Securities and Exchange Commission filing
that two new maritime asbestos cases were brought against its
subsidiaries in the third quarter of 2005.
The Cleveland-Cliffs Iron Company and The Cleveland-Cliffs
Steamship Company have been named defendants in 482 actions
brought from 1986 to date by former seamen or their
administrators in which the plaintiffs claim damages under
federal law for illnesses allegedly suffered as the result of
exposure to airborne asbestos fibers while serving as crew
members aboard the vessels previously owned or managed by its
entities until the mid-1980s.
The Cleveland, OH-based Company further stated that all these
actions have been consolidated into multidistrict proceedings in
the Eastern District of Pennsylvania, whose docket now includes
a total of over 30,000 maritime cases filed by seamen against
shipowners and other defendants. All of these cases have been
administratively dismissed without prejudice, but can be
reinstated upon application by plaintiffs' counsel.
Cleveland-Cliffs declared that the claims against its entities
are insured, however, the manner in which these retentions will
be applied remains uncertain. It added that it would continue to
vigorously contest these claims and that it had made no
settlements on these claims.
Cleveland-Cliffs sells its iron ore pellets primarily in the US
and Canada but also in Europe and China. It owns or holds stakes
in six iron ore properties, including Northshore Mining and
Empire Iron, that represent more than 45% of North American iron
ore pellet production capacity. International Steel Group
accounts for more than 40% of the company's sales.
ASBESTOS LITIGATION: Coca-Cola Challenges Aqua-Chem's Demands
-------------------------------------------------------------
The Coca-Cola Company (NYSE: KO) continues to dispute Aqua-Chem
Inc.'s demands for reimbursement incurred from litigation
expenses related to asbestos-containing products Aqua-Chem
manufactured in the past.
During the period from 1970 to 1981, the Atlanta, GA-based soft-
drink Company owned Aqua-Chem, Inc. A division of Aqua-Chem
manufactured certain boilers that contained gaskets that Aqua-
Chem purchased from outside suppliers. Several years after Coca-
Cola sold this division, Aqua-Chem received its first lawsuit
relating to asbestos, a component of some of the gaskets. In
September 2002, Aqua-Chem notified Coca-Cola that it believes
the Company is obligated to them for certain costs and expenses
associated with the litigation. Aqua-Chem demanded for a
reimbursement of about US$10 million for out-of-pocket
litigation-related expenses incurred over the last 18 years.
Aqua-Chem has also demanded that the Company acknowledge a
continuing obligation to Aqua-Chem for any future liabilities
and expenses that are excluded from coverage or for which there
is no insurance.
Coca-Cola expressed confidence that it has substantial legal and
factual defenses to Aqua-Chem's claims. The parties entered into
litigation to resolve this dispute, which was stayed by
agreement of the parties pending the outcome of litigation filed
in Wisconsin by certain insurers of Aqua-Chem. In that case,
five plaintiff insurance companies filed a declaratory judgment
action against Aqua-Chem, the Company and 16 defendant insurance
companies seeking a determination of the parties' rights and
liabilities under policies issued by the insurers.
Aqua-Chem and Coca-Cola have reached a settlement agreement with
five of the insurers in the Wisconsin insurance coverage
litigation, and those insurers will pay funds into an escrow
account for payment of costs arising from the asbestos claims
against Aqua-Chem. Aqua-Chem and the Company will continue to
litigate their claims for coverage against the 16 other insurers
that are parties to the Wisconsin insurance coverage case. The
Company also believes Aqua-Chem has substantial insurance
coverage to pay Aqua-Chem's asbestos claimants.
ASBESTOS LITIGATION: Goodyear Hit With 1,400 New Claims in 3Q05
---------------------------------------------------------------
The Goodyear Tire & Rubber Company (NYSE: GT) disclosed that
during the third quarter of 2005, about 1,400 new asbestos-
related claims were filed against the Company and about 4,700
were settled or dismissed. As of Sept. 30, 2005, there were
about 125,800 pending claims, seeking unspecified actual and
punitive damages and other relief. The amount expended on
asbestos defense and claim resolution by Goodyear and its
insurance carriers during the third quarter and first nine
months of 2005 were US$5 million and US$18 million,
respectively.
As previously disclosed in the August 12, 2005 edition of the
Class Action Reporter, the Akron, OH-based Company reported
about 129,100 claims pending against it as of June 30, 2005.
These lawsuits claim that various asbestos-related personal
injuries resulted from exposure to asbestos in certain rubber
encapsulated products or aircraft braking systems manufactured
by the Company in the past, or to asbestos in certain of its
facilities. Typically, these lawsuits have been brought against
multiple defendants in state and Federal courts.
The Company added that it has disposed of about 33,300 claims by
defending and obtaining the dismissal or by entering into a
settlement. The sum of its accrued asbestos-related liability
and gross payments, including legal costs, totaled about US$233
million through Sept. 30, 2005 and US$226 million through Dec.
30, 2004.
During the three and nine months ended Sept. 30, 2005, Goodyear
recorded gains of US$14 million and US$61 million, respectively,
from settlements with certain insurance companies related to
environmental and asbestos coverage. It recorded gross
liabilities for both asserted and unasserted claims, inclusive
of defense costs, totaling US$109 million at Sept. 30, 2005 and
US$119 million at December 31, 2004.
The Company stated that the portion of the liability associated
with unasserted asbestos claims and related defense costs was
US$30 million at Sept. 30, 2005 and US$38 million at Dec. 30,
2004. At Sept. 30, 2005, its liability with respect to asserted
claims and related defense costs was US$79 million, compared to
US$81 million at Dec. 30, 2004. It recorded a receivable related
to asbestos claims of US$56 million, compared to US$108 million
at Dec. 30, 2004.
ASBESTOS LITIGATION: CA Court Denies Eastman Kodak's Petition
-------------------------------------------------------------
The Second District Court of Appeal of California on October 26,
2005 upheld the decision of the trial court to deny Eastman
Kodak Co.'s petition for summary judgment.
On June 28, 2005, Judge Mel R. Recana of the Superior Court of
Los Angeles County denied Eastman Kodak's motion to dismiss the
asbestos-related suit brought by Douglas Wilson, who sued for
personal injuries he suffered as a result of exposure to
asbestos. Eastman Kodak is named in four of the eight causes of
action set forth in the complaint, including negligence, product
liability, "False Representation Under Restatement of Torts
Section 402-B", and a cause of action on behalf of Helen Marie
Smith-Wilson for loss of consortium.
Eastman Kodak sought summary judgment on the ground that there
was no triable issue of material fact, because an essential
element of the plaintiff's claim could not be proven. After the
trial court denied the motion, the Company sought a writ of
mandate to compel the trial court to vacate its order and enter
an order granting the motion. On August 18, 2005, the Court of
Appeal of California issued an order to show cause.
In its court opinion, the Court found that the petitioner's
motion and supporting papers were wholly inadequate and that the
trial court did not err in denying the motion.
Lafayette & Kumagai, Gary T. Lafayette, George M. Duff, and
Althea V. Bovell represented Eastman Kodak Co.
Brayton Purcell, Alan R. Brayton, Gilbert L. Purcell, Lloyd F.
LeRoy, and Nancy B. Thorington represented Douglas Wilson.
ASBESTOS LITIGATION: U.S. Steel Corp. Defends Against 470 Cases
---------------------------------------------------------------
United States Steel Corporation (NYSE: X) disclosed in its
latest filing to the Securities and Exchange Commission that it
is currently a defendant in about 470 active asbestos cases
involving about 8,200 plaintiffs.
Headquartered in Pittsburgh, PA, U.S. Steel was a defendant in
about 500 active cases involving about 11,000 plaintiffs at
December 31, 2004. The Company stated that the actual number of
plaintiffs who ultimately assert claims against U.S. Steel would
likely be a small fraction of the total number.
These asbestos cases allege a variety of respiratory and other
diseases based on alleged exposure to asbestos. Many of these
cases involve multiple defendants, typically from 50 to more
than 100. More than 7,900, or about 96%, of these claims are
currently pending in jurisdictions which permit filings with
massive numbers of plaintiffs. These claims against U.S. Steel
fall into three major groups:
(1) Claims made under certain federal and general maritime laws
by employees of the Great Lakes Fleet or Intercoastal Fleet,
former operations of U.S. Steel;
(2) Claims made by persons who allegedly were exposed to
asbestos at U.S. Steel facilities; and
(3) Claims made by industrial workers allegedly exposed to
products formerly manufactured by U.S. Steel.
While U.S. Steel has excess casualty insurance, these policies
have multi-million dollar self-insured retentions. To date, the
Company has not received any payments under these policies
relating to asbestos claims. In most cases, this excess casualty
insurance is the only insurance applicable to the claims.
U.S. Steel is currently a defendant in cases in which a total of
about 160 plaintiffs allege that they are suffering from
mesothelioma. The Company stated that in many of these claims,
the plaintiffs have been unable to establish any causal
relationship to U.S. Steel or its products or premises. In
addition, in many asbestos cases, the plaintiffs have been
unable to demonstrate that they have suffered any identifiable
injury or compensable loss at all; that any injuries that they
have incurred did in fact result from alleged exposure to
asbestos; or that such alleged exposure was in any way related
to U.S. Steel or its products or premises.
U.S. Steel does not accrue for unasserted asbestos claims
because it believes it is not possible to determine whether any
loss is probable with respect to such claims or even to estimate
the amount or range of any possible losses. Among the reasons
that U.S. Steel cannot reasonably estimate the number and nature
of claims against it is that the vast majority of pending claims
against it allege so-called "premises" liability based exposure
on U.S. Steel's current or former premises. These claims are
made by an indeterminable number of people such as truck
drivers, railroad workers, salespersons, contractors and their
employees, government inspectors, customers, visitors and even
trespassers.
Management believes that the ultimate resolution of these
matters will not have a material adverse effect on the Company's
financial condition. Among the factors considered in reaching
this conclusion are:
(1) That U.S. Steel has been subject to a total of about
34,000 asbestos claims over the past 13 years that have been
administratively dismissed or are inactive due to the failure of
the plaintiffs to present any medical evidence supporting their
claims;
(2) That over the last several years, the total number of
pending claims has generally declined;
(3) That it has been many years since it employed maritime
workers or manufactured or sold asbestos-containing products;
and
(4) The Company's history of trial outcomes, settlements and
dismissals.
In every asbestos case in which U.S. Steel is named as a party,
the complaints are filed against numerous named defendants and
generally do not contain allegations regarding specific monetary
damages sought. Historically, about 89% of the cases against
U.S. Steel stated that the damages sought exceeded the amount
required to establish jurisdiction of the court in which the
case was filed. About 4% did not specify any damages sought at
all, about 6% alleged damages of US$1.0 million or less, another
0.6% alleged damages between US$2.0 million and US$10.0 million,
and 0.4% alleged damages over US$10 million.
ASBESTOS LITIGATION: Crum & Forster Manages Exposure to Claims
--------------------------------------------------------------
A subsidiary of Fairfax Financial Holdings, Crum & Forster
Holdings Corp. revealed that it continues to face exposure to
asbestos and environmental claims arising from the sale of
general liability, commercial multi-peril and umbrella insurance
policies, the majority of which were written for accident years
1985 and prior.
According further to the filing the Morristown, NJ-based Company
submitted to the Securities and Exchange Commission, it reasoned
that estimation of ultimate liabilities for these exposures is
unusually difficult due to such issues as whether or not
coverage exists, definition of an occurrence, determination of
ultimate damages and allocation of such damages to financially
responsible parties.
The Company added that currently, it is not possible to predict
judicial and legislative changes and their impact on the future
development of asbestos and environmental claims and litigation.
This trend will be affected by future court decisions and
interpretations, as well as changes in applicable legislation
and the possible implementation of a proposed federal
compensation scheme for asbestos-related injuries. As a result
of these uncertainties, additional liabilities may arise for
amounts in excess of current reserves for asbestos,
environmental and other latent exposures.
As a result of these claims, management continually reviews
required reserves and related reinsurance recoverable. In each
of these areas of exposure, the Company litigates individual
cases when appropriate and endeavors to settle other claims on
favorable terms.
ASBESTOS LITIGATION: CNA Financial Carries $1,579Mil for Claims
---------------------------------------------------------------
As of September 30, 2005 and December 31, 2004, CNA Financial
Corporation carried about US$1,579 million and US$1,686 million
of claim and claim adjustment expense reserves, net of
reinsurance recoverables, for reported and unreported asbestos-
related claims, according to a filing presented to the
Securities and Exchange Commission.
The Chicago, IL-based Company recorded US$8 million and US$44
million of unfavorable asbestos-related net claim and claim
adjustment expense reserve development for the nine months ended
September 30, 2005 and 2004. The unfavorable net prior year
development for the nine months ended September 30, 2004 was
primarily related to a commutation. The Company paid asbestos-
related claims, net of reinsurance recoveries, of US$115 million
and US$104 million for the nine months ended September 30, 2005
and 2004.
CNA revealed that it receives claims from some asbestos-related
defendants who insist that their insurance policies are not
subject to aggregate limits on coverage. Some of these claims
involve insureds facing exhaustion of products liability
aggregate limits in their policies, who have asserted that their
asbestos-related claims fall within so-called "non-products"
liability coverage contained within their policies rather than
products liability coverage. They assert that the claimed "non-
products" coverage is not subject to any aggregate limit.
The Company has attempted to manage its asbestos exposure by
aggressively seeking to settle claims on acceptable terms. Where
CNA cannot settle a claim on acceptable terms, the Company
litigates the claim. A recent court ruling by the United States
Court of Appeals for the Fourth Circuit has supported certain of
the Company's positions with respect to coverage for "non-
products" claims.
In the past several years, CNA has experienced significant
increases in claim counts for asbestos-related claims. During
2004 and continuing in 2005, the rate of new filings appears to
have decreased from the filing rates seen in the past several
years.
Nevertheless, the Company continues to experience an overall
increase in total asbestos claim counts. The majority of
asbestos bodily injury claims are filed by persons exhibiting
few, if any, disease symptoms. Recent studies have concluded
that the percentage of unimpaired claimants to total claimants
ranges between 66% and up to 90%. Some courts, including the
federal district court responsible for pre-trial proceedings in
all federal asbestos bodily injury actions, have ordered that
so-called "unimpaired" claimants may not recover unless at some
point the claimant's condition worsens to the point of
impairment.
As a result of bankruptcies and insolvencies, management has
observed an increase in the total number of policyholders with
current asbestos claims as additional defendants are added to
existing lawsuits and are named in new asbestos bodily injury
lawsuits. New asbestos bodily injury claims have also increased
substantially in 2003, but the rate of increase has moderated in
2004 and continues to moderate in 2005.
At September 30, 2005, CNA had 1,082 small accounts, about 81%
of its total active asbestos accounts, with reserves of US$113
million, net of reinsurance. At December 31, 2004, the Company
had 1,109 small accounts, about 83% of its total active asbestos
accounts, with reserves of US$141 million, net of reinsurance.
Small accounts, which are active accounts with US$100,000 or
less cumulative paid losses, are typically representative of
policyholders with limited connection to asbestos.
The Company also evaluates its asbestos liabilities arising from
its assumed reinsurance business and its participation in
various pools. At September 30, 2005 and December 31, 2004, CNA
had US$145 million and US$148 million of reserves, net of
reinsurance, related to these asbestos liabilities arising from
the Company's assumed reinsurance obligations and CNA's
participation in pools, including Excess Casualty Reinsurance
Association.
ASBESTOS LITIGATION: Selective Insurance Group Sets 3Q Reserves
---------------------------------------------------------------
Selective Insurance Group Inc. disclosed that it established a
range of reasonably possible reserves for net claims of about
US$1,529 million to US$1,695 million at December 31, 2004.
Included in its net carried loss and loss expense reserves were
net reserves for environmental claims of US$38.5 million at
September 30, 2005 and US$38.5 million at December 31, 2004.
Headquartered in Branchville, NJ, the Company included
environmental claims, both asbestos and non-asbestos, in the
loss and loss expense reserves on the consolidated balance
sheets. These claims have arisen primarily under older policies
containing exclusions for environmental liability that certain
courts have determined do not bar such claims.
Since 1986, policies issued by the Company's insurance
subsidiaries have contained a more expansive exclusion for
losses related to environmental claims. Its asbestos and non-
asbestos environmental claims have arisen primarily from insured
exposures in municipal government, small commercial risks, and
homeowners' policies. However, the Company declared that it is
not aware of any emerging trends that would result in future
reserve adjustments.
ASBESTOS LITIGATION: Illinois Tool Works Named in Exposure Suits
----------------------------------------------------------------
Illinois Tool Works Inc. (NYSE: ITW) disclosed in the filing
submitted to the Securities and Exchange Commission that the
Company, as well as its subsidiaries Hobart Brothers Company and
Miller Electric Mfg. Co., were named along with numerous other
defendants, in lawsuits alleging injury from exposure to
asbestos and manganese and toxic fumes in connection with the
welding process.
The plaintiffs in these suits claim unspecified damages for
injuries resulting from the exposure to these toxic materials.
Based upon the Company's experience in litigating these claims,
the Company believes that the resolution of these proceedings
will not have a material adverse effect on the Company's
financial position, liquidity or future operations. The Company
has not recorded any significant reserves related to these
cases.
With some 650 separate companies in 45 nations, the Glenview,
IL-based Company makes a range of products used in the
automotive, construction, paper products, and food and beverage
industries. Its engineered products segment offers fasteners,
nail guns, industrial adhesives, and automotive transmission
components. The specialty systems unit's products include paint
application equipment and welding machines.
ASBESTOS LITIGATION: Honeywell Int'l Inc. Gains Ground on Claims
----------------------------------------------------------------
Honeywell International Inc. disclosed that from 1981 through
September 30, 2005, it resolved about 74,000 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.
Headquartered in Morristown, NJ, 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 primarily fall into two general categories:
refractory products and friction products.
Honeywell, a diversified technology and manufacturing leader
mostly known for its aerospace products and services, owned
North American Refractories Company from 1979 to 1986. NARCO
produced refractory products (high temperature bricks and
cement), which were sold largely to the steel industry in the
East and Midwest. Less than 2% of NARCO's products contained
asbestos.
When the Company sold the NARCO business in 1986, it agreed to
indemnify NARCO 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% were dismissed. As of the date of NARCO's
bankruptcy filing, there were about 116,000 remaining claims
pending against NARCO, including about 7% in which Honeywell was
also named as a defendant based on alleged exposure to NARCO
products.
Since 1983, Honeywell and its 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 pending
against NARCO are automatically stayed pending the
reorganization of NARCO.
In connection with NARCO's bankruptcy filing, the Company paid
NARCO's parent company US$40 million and agreed to provide NARCO
with up to US$20 million in financing. It also agreed to pay
US$20 million to NARCO's parent company upon the filing of a
plan of reorganization for NARCO acceptable to Honeywell, and to
pay NARCO's parent company US$40 million, and to forgive any
outstanding NARCO indebtedness, upon the confirmation and
consummation, respectively, of such a plan. 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
reached definitive agreements with about 260,000 claimants,
which represents in excess of 90% of the anticipated current
claimants who are expected to file a claim as part of the NARCO
reorganization process.
The Company is also in discussions with the NARCO Committee of
Asbestos Creditors and the Court-appointed legal representative
for future asbestos claimants on Trust Distribution Procedures
for NARCO. If the trust is put in place and approved by the
Court as fair and equitable, Honeywell believes that the Company
as well as NARCO will be entitled to a permanent channeling
injunction barring all present and future individual actions in
state or federal courts and requiring all asbestos related
claims based on exposure to NARCO products to be made against
the federally-supervised trust.
NARCO filed its amended proposed plan of reorganization on
September 15, 2005. A hearing on the proposed Disclosure
Statement for the plan is set for November 30, 2005. Honeywell
expects the NARCO plan of reorganization and the NARCO trust to
be approved by the Court in 2006.
As part of its ongoing settlement negotiations, Honeywell has
reached agreement with the representative for future NARCO
claimants and the Asbestos Claimants Committee 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.
Honeywell developed an estimated liability for settlement of
pending and future asbestos claims and recorded a charge of
US$1.4 billion for NARCO related asbestos litigation charges,
net of insurance recoveries. This charge consisted of the
estimated liability to settle current asbestos related claims,
the estimated liability related to future asbestos related
claims through 2018 and obligations to NARCO's parent, net of
insurance recoveries of US$1.8 billion. During the nine months
ended September 30, 2005, Honeywell recognized a charge of about
US$52 million to reflect a settlement of certain pending
asbestos claims during the period.
Substantially all settlement payments with respect to current
claims are expected to be made by the end of 2007.
Honeywell's 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. The Company recorded a charge of
US$32 million for Bendix-related asbestos claims filed and
defense costs incurred during the third quarter of 2005, net of
probably insurance recoveries.
Honeywell currently has about US$1.9 billion of insurance
coverage remaining with respect to pending and potential future
Bendix related asbestos claims. During the nine months ended
September 30, 2005, Honeywell paid US$418 million in indemnity
and defense costs related to NARCO and Bendix claims and
received US$110 million of asbestos related insurance
recoveries. It also recognized a charge of US$116 million for
Bendix related asbestos claims filed and defense costs incurred
during the first nine months of 2005, 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.
ASBESTOS LITIGATION: Factory Worker's Widow Launches Suit V. BTH
----------------------------------------------------------------
The widow of a factory worker who died of lung cancer has
initiated legal proceedings against his former employer, British
Thomson-Houston/AEI, the icCoventry reports.
Mary Cox stated that her husband, Robert, died from
mesothelioma, allegedly caused from exposure to asbestos in his
occupation as a lathe turner at the Warwickshire factory at Mill
Road, Rugby. Mr. Cox worked at the turbine department from 1937
to 1969. He succumbed to the disease at the age of 79 only eight
months after being diagnosed.
Martyn Hayward, of Irwin Mitchell solicitors, who is
representing Mrs. Cox, said, "... Mrs. Cox wants other workers
who might have been exposed to asbestos to be aware that there
is help available as well as legal redress."
BTH merged with Metropolitan Vickers Electrical in 1928 to form
Associated Electrical Industries and in 1967 was taken over by
GEC, which later became Alstom.
Headquartered in Paris, France, Alstom SA's principal activity
operates as a holding company providing products and services to
the following sectors: power, transport, industry, marine and
contracting.
ASBESTOS LITIGATION: Hardie, NSW to Discuss Asbestos Agreement
--------------------------------------------------------------
Amidst clamor for the deal to be finalized, James Hardie lawyers
continue to discuss the latest draft of an agreement to address
asbestos claims with NSW government representatives. The parties
this week will thrash out details to draft 11 of the deal.
Last December, James Hardie pledged to meet its responsibilities
to victims through a deal, which wipes out a funding shortfall
for compensation. The deal is currently valued at about US$1.685
billion, but could potentially be worth as much as US$4.5
billion over the next 40 years.
NSW Premier Morris Iemma told parliament in September that the
company was seeking to ensure changes to its corporate structure
would not affect its obligation to asbestos victims. He added
that the company was opposed to measures that would prevent the
firm and its creditors using Dutch or United States law to
reduce its obligations to victims.
Hardie spokesman James Rickards said progress had been made in
the negotiations, which did not have a deadline for completion.
He said discussions remained focused on how the deal may be
affected by possible changes that could happen to the company
over the next 40 years. The company is expected to provide a
further update on the negotiations when it releases its half-
yearly results next week.
ASBESTOS LITIGATION: Lincoln Electric Responds to 35,795 Claims
---------------------------------------------------------------
At September 30, 2005, Lincoln Electric Holdings, Inc. (NASDAQ:
LECO) was a co-defendant in cases alleging asbestos induced
illness involving claims by about 35,795 plaintiffs, which is a
net decrease of 3,063 claims from those previously reported. In
each instance, the Company is one of a large number of
defendants. The asbestos claimants seek compensatory and
punitive damages, in most cases for unspecified sums.
Since January 1, 1995, the Cleveland, OH-based Company has been
a co-defendant in other similar cases that have been resolved as
follows: 18,129 of those claims were dismissed, 9 were tried to
defense verdicts, 4 were tried to plaintiff verdicts and 298
were decided in favor of the Company following summary judgment
motions. The Company has appealed or will appeal the 4 judgments
based on verdicts against the Company.
The company is a manufacturer of arc-welding, cutting products,
and welding supplies including arc-welding power sources,
automated wire-feeding systems, and consumable electrodes for
arc-welding. The company operates 26 manufacturing facilities in
the US and 17 other countries.
ASBESTOS LITIGATION: PPG Industries Holds Off 116,000 Claims
------------------------------------------------------------
As of September 30, 2005, PPG Industries (NYSE: PPG) was one of
many defendants in numerous asbestos-related lawsuits involving
about 116,000 claims, indicating no change since the Company's
last filing on June 30, 2005.
For over 30 years, PPG has been a defendant in lawsuits
involving claims alleging personal injury from exposure to
asbestos. Most of PPG's potential exposure relates to
allegations by plaintiffs that the Company should be liable for
injuries involving asbestos-containing thermal insulation
products manufactured and distributed by Pittsburgh Corning
Corporation. PPG and Corning Incorporated are each 50%
shareholders of PC. PPG has denied responsibility for, and has
defended, all claims for any injuries caused by PC products.
On April 16, 2000, PC filed for Chapter 11 Bankruptcy in the
U.S. Bankruptcy Court for the Western District of Pennsylvania.
In the first quarter of 2000, PPG recorded an aftertax charge of
US$35 million for the write-off of all of its investment in PC.
As a consequence of the bankruptcy filing and various motions
and orders in that proceeding, the asbestos litigation against
PPG as well as against PC has been stayed and the filing of
additional asbestos suits against them has been enjoined.
The Company further revealed that the fair value of the equity
forward instrument is US$11 million and US$19 million as of
September 30, 2005 and December 31, 2004, respectively. The
current portion of the asbestos settlement liability as of
September 30, 2005, consists of all such payments required
through June 2006, the fair value of PPG's common stock and
legal fees and expenses. Accretion expense associated with the
asbestos liability will be about US$6 million for the fourth
quarter of 2005.
Because the filing of asbestos claims against the Company has
been enjoined since April 2000, a significant number of
additional claims may be filed against the Company if the
Bankruptcy Court stay were to expire.
If the PPG Settlement Arrangement is not implemented, for any
reason, and the Bankruptcy Court stay expires, the Company said
that it intends to vigorously defend the pending and any future
asbestos claims against it and its subsidiaries. The Company
believes that it is not responsible for any injuries caused by
PC products, which represent the preponderance of the pending
bodily injury claims against it. Prior to 2000, PPG had never
been found liable for any such claims, in numerous cases PPG had
been dismissed on motions prior to trial, and aggregate
settlements by PPG to date have been immaterial.
ASBESTOS LITIGATION: USG Corp. Mulls Debtors' Injury Liabilities
----------------------------------------------------------------
One of USG Corporation's subsidiaries and a Debtor, U.S. Gypsum,
continues to be among many defendants in more than 100,000
asbestos lawsuits alleging personal injury or property damage
liability, according to USG Corp.'s filing submitted to the
Securities and Exchange Commission. Most of the suits against
U.S. Gypsum seek compensatory and punitive damages for personal
injury allegedly resulting from exposure to asbestos-containing
products.
U.S. Gypsum's liability derives from its sale of certain
asbestos-containing products beginning in the late 1920s. In
most cases, the products were discontinued or asbestos was
removed from the formula by 1972, and no asbestos-containing
products were produced after 1978.
In addition to the Personal Injury Cases pending against U.S.
Gypsum, two other Debtors, L&W Supply and Beadex Manufacturing,
LLC, have been named as defendants in a small number of asbestos
personal injury cases. The Official Committee of Asbestos
Personal Injury Claimants, the legal representative for future
asbestos claimants, and the Official Committee of Asbestos
Property Damage Claimants have also asserted in a court filing
that the Debtors are liable for the asbestos liabilities of A.P.
Green Refractories Co., a former subsidiary of U.S. Gypsum.
The Debtors' Chapter 11 Cases are assigned to Judge Judith K.
Fitzgerald, a bankruptcy court judge, and Judge Joy Flowers
Conti, a district court judge, who was assigned to the Debtors'
Chapter 11 Cases in September 2004. There are significant
proceedings before Judge Conti relating to estimation of the
Debtors' liability for asbestos personal injury claims, and
there are significant proceedings pending before Judge
Fitzgerald relating to whether the Debtors other than U.S.
Gypsum have responsibility for U.S. Gypsum's asbestos
liabilities, including any liabilities that might be associated
with A.P. Green.
The Debtors have requested Judge Conti to conduct hearings to
estimate their asbestos personal injury liability, taking into
account the legal and scientific issues that govern the validity
of claims. Although Judge Conti has not issued a ruling
regarding which specific issues she will consider in the
estimation of the Debtors' liabilities, she has indicated in
court hearings that she will allow the parties to take discovery
of, and present evidence regarding, issues that they consider
relevant to estimation of those liabilities, including the
medical and scientific issues.
In an order entered on October 17, 2005, Judge Conti ruled that
the Debtors may submit a questionnaire to a sample of about
2,000 asbestos personal injury claimants who had a claim pending
against U.S. Gypsum. The questionnaire asks for information,
including certain medical records, relating to the claimants'
alleged injury and exposure to U.S. Gypsum asbestos-containing
products. Judge Conti also set June 30, 2006, as the date for
the end of all fact discovery relating to estimation. Judge
Conti has scheduled a status conference for July 18, 2006, to
set a date for the end of all discovery regarding expert
witnesses to be presented at the estimation hearing.
In addition to the motion the Debtors filed seeking estimation
of their asbestos personal injury liabilities, the Debtors also
filed a motion in 2002 requesting a ruling that putative
claimants who cannot satisfy objective standards of asbestos-
related disease are not entitled to vote on a Section 524(g)
plan. To date, there has been no ruling or hearing on the
motion.
Meanwhile, there are significant proceedings before Judge
Fitzgerald relating to whether Debtors other than U.S. Gypsum
have responsibility for U.S. Gypsum's asbestos liabilities and
whether the Debtors have responsibility for the liabilities of
A.P. Green, a former subsidiary of U.S. Gypsum. In the fourth
quarter of 2004, the Debtors other than U.S. Gypsum filed a
complaint for declaratory relief before Judge Fitzgerald
requesting a ruling that the assets of the Debtors other than
U.S. Gypsum are not available to satisfy the liabilities of U.S.
Gypsum. The Official Committee of Unsecured Creditors and the
Official Committee of Equity Holders joined the Debtors in this
action.
The Official Committee of Asbestos Personal Injury Claimants and
the legal representative for future asbestos claimants oppose
the Debtors in this proceeding. The committee and the legal
representative have alleged that the asbestos personal injury
liabilities of U.S. Gypsum exceed its value, and, in opposition
to the Debtors' complaint, the committee and the legal
representative filed counterclaims in late 2004 seeking a ruling
that the assets of all Debtors should be available to satisfy
the liabilities of U.S. Gypsum.
In that same proceeding, the asbestos committees and the legal
representative sought a ruling that L&W Supply has direct
liability for asbestos personal injury claims. They also allege
that the Debtors are liable for claims arising from the sale of
asbestos-containing products by A.P. Green. They allege that
U.S. Gypsum is responsible for A.P. Green's liabilities due to
U.S. Gypsum's acquisition by merger of A.P. Green in 1967.
They further allege that because the Debtors other than U.S.
Gypsum are liable for U.S. Gypsum's liabilities, the other
Debtors are therefore liable for A.P. Green's liabilities.
However, in the third quarter of 2005, the Official Committee of
Asbestos Personal Injury Claimants and legal representative for
future asbestos claimants filed motions to dismiss these
proceedings.
USG concluded that there are many uncertainties associated with
the resolution of the asbestos liability in the bankruptcy
proceeding however, the Company will continue to review its
asbestos liability as the Chapter 11 Cases progress and as
issues relating to the estimation of the Debtors' asbestos
liabilities are addressed.
ASBESTOS LITIGATION: Court Says Employer Owes No Duty to Spouse
---------------------------------------------------------------
An employer may not be held liable for a spouse's secondary
exposure to asbestos, the Court of Appeals held in reversing a
ruling of the Appellate Division panel.
The court concluded that the Port Authority of New York and New
Jersey owed no duty of care to a woman who allegedly contracted
a disease through washing her husband's asbestos-contaminated
clothing.
The ruling is said to be a disappointment to advocates seeking
for ways to open a new avenue of relief to asbestos victims.
As previously reported in the Dec. 12, 2004 edition of the Class
Action Reporter, the midlevel panel favored Mrs. Elizabeth
Holdampf who was diagnosed in 2001 with mesothelioma, a fatal
cancer caused by exposure to asbestos. The panel explained that
the lower court should have given consideration to the issue of
"whether the plaintiff was within the zone of foreseeable harm."
The Appellate Division gave an order to modify the judgment for
dismissal and reinstate the negligence cause of action.
However, in the opinion by Judge Susan Phillips Read, the court
ruled that the Port Authority could not be held liable as either
an employer or landowner. The court reiterated its "reluctance
to extend liability to a defendant for failure to control the
conduct of others" and expressed concern that a contrary ruling
would open a Pandora's box of litigation. The judges said they
were obligated to "consider the likely consequences of adopting
the expanded duty urged by plaintiffs," and indicated those
potential consequences are more than they are willing to risk.
The asbestos case involves John Holdampf, who worked as a Port
Authority mechanic from 1960 to 1996. The Port Authority
provided laundry services for its employees' work clothes, but
the husband usually wore his uniforms home as a matter of
convenience and because there were no showers at work.
Mr. Holdampf died of mesothelioma one week after arguments were
heard in this case. After Elizabeth Holdampf's cancer was
diagnosed, she immediately filed suits seeking unspecified
damages from more than 20 defendants, including the Port
Authority, which she accused of negligence.
A trial court dismissed her claim for the proposition that there
is no statutory or common law principle that would extend a duty
of care owed to an employee to someone who was neither an
employee nor a laborer at the work site at issue.
Judge Read said the Port Authority had "no relationship" with
Holdampf that could trigger liability. She also rejected the
plaintiff's argument that the Port Authority was in the best
position to protect Mrs. Holdampf and could have required her
husband to wear clean clothes home or could have warned her of
the dangers in washing his clothes.
The plaintiff's attorney, Erik Jacobs of Weitz & Luxenberg in
Manhattan, said there is no indication the agency ever
affirmatively advised Mr. Holdampf of the dangers of asbestos
contamination, much less his wife.
Christian H. Gannon, of Segal McCambridge Singer & Mahoney in
Manhattan, stood as counsel for the Port Authority.
ASBESTOS LITIGATION: DE Court to Rule on Landowners' Liability
--------------------------------------------------------------
The state Supreme Court will soon decide whether a landowner who
hires an independent contractor but does not directly control
the work of that contractor should be held potentially liable
for injuries stemming from the contractor's work. Earlier this
week, the Court heard the arguments of the issue, which could
lead to a decision bearing a significant impact on the future
course of asbestos litigation.
The case involves claims by construction workers who blame their
health problems to asbestos exposure at industrial sites in
Delaware from the 1950s to the 1970s. They argue that the
landowners knew or should have known about the risks of asbestos
and were obligated to protect employees of the contractors, or
warn them of the risks.
The defendants in the case, including the DuPont Co., Honeywell,
Conectiv, Rhone-Poulenc and ICI Americas, argue that they should
not be held liable for dangerous conditions created by
independent contractors hired to install or remove asbestos-
containing materials at their facilities.
If a contractor failed to exercise the proper care in handling
asbestos, the liability burden should be on them, said John
Phillips Jr., an attorney representing DuPont.
In February, Superior Court Judge John Babiarz Jr. granted the
defendants partial summary judgment on the grounds that they did
not control the manner or methods of the contractors' work.
Judge Babiarz denied summary judgment, however, on whether the
defendants owed a duty to the contractors' employees under
Delaware's safe workplace doctrine, which has never been applied
to an asbestos case in Delaware.
The defendants filed an interlocutory appeal of Judge Babiarz's
decision, saying case law dictates that a landowner must have
control, not just mere knowledge of a hazardous condition
created by a contractor, in order to be held liable.
Albert Manwaring IV, an attorney representing Honeywell, said
that with many manufacturers and sellers of asbestos products in
bankruptcy, plaintiffs have turned to "premise liability"
lawsuits such as those before the Supreme Court.
ASBESTOS LITIGATION: OH Court Denies Allocating Norfolk Judgment
----------------------------------------------------------------
The Norfolk Southern Railway Company cannot apportion a share of
the judgment to asbestos manufacturers but is entitled only to a
dollar-for-dollar credit of the settlement to its employees,
held the Supreme Court of Ohio on October 26, 2005.
Railroad employees brought Federal Employers' Liability Act
action against employer, alleging that they suffered from lung
cancer due to exposure to asbestos in workplace. The Court of
Common Pleas, Cuyahoga County, No. CV-390337, decided in favor
of the employees after a jury trial.
Twenty-eight former employees of Norfolk Southern Railway
Company filed a master complaint, alleging that Norfolk had
negligently exposed them to asbestos at its Spencer, North
Carolina, facility, which caused them to contract various forms
of pneumoconiosis. Four of the cases, i.e., those brought by
Lee McAdoo Hess, Lester L. Poe Sr., Charlie Leon Miller, and
Baxter Lovelace Wyatt, all of whom have since died of lung
cancer, were consolidated for trial.
Before trial, Norfolk presented a proposal to apportion damages
according to degree of fault, weighing the railroad's negligence
in exposing the employees to asbestos not only against their own
negligence, but also against the negligence of non-FELA
defendants who contributed to the injuries. Norfolk requested
that the Court decrease the amount of any award by the
percentage allocated to the fault of the employees and the
asbestos manufacturers.
The trial court refused the proposal to include third parties
and instead, ordered the jury to apportion responsibility only
between Norfolk and the employees.
On October 15, 2001, the jury returned verdicts, ranging from
US$510,000 to US$1.07 million, but found each employee partially
responsible for his lung cancer. The jury awarded US$1.07
million to Hess, US$510,000 to Miller, US$570,000 to Poe, and
US$905,000 to Wyatt. The jury found Hess and Wyatt 25 percent
responsible and Miller and Poe 50 percent responsible for their
lung cancer.
Norfolk later discovered that a settlement with the asbestos
manufacturers had already been reached before trial. The parties
agree that Hess received settlement proceeds totaling US$12,682,
that Poe received US$4,900, Miller US$3,450, and Wyatt US$9,000.
Norfolk filed two post-trial motions. In one, Norfolk requested
a new trial arguing that the court excluded evidence that the
plaintiffs had separately sued the asbestos manufacturers. In
the other motion, Norfolk demanded that it be given a set-off of
any damages, which the plaintiffs would recover in their claims
against the manufacturers. Norfolk requested a stay of any entry
of judgment until the claims against the manufacturers have been
resolved. Otherwise, Norfolk argued, the plaintiffs will obtain
a double recovery.
The trial court denied both motions and, after adjusting the
verdicts for the employees' comparative negligence, entered
final judgments totaling US$1.86 million. As adjusted by the
trial court, Hess's net recovery amounted to US$705,746.92,
Miller's amounted to US$248,853.88, Poe's equaled US$322,343.69,
and Wyatt's net damages totaled US$585,025.18.
Norfolk appealed to the Eighth Appellate District, asserting
eight assignments of error. The Court of Appeals, Judge Frank D.
Celebrezze, Jr., affirmed the judgment.
In the opinion by Judge Alice Robie Resnick of the Supreme
Court, she concluded that the trial court was correct in
refusing to allow the jury to apportion damages to the asbestos
manufacturers. She held that the circumstances fail to justify a
new trial to allow for a proportionate-share adjustment. The
Court added that Norfolk is entitled only to a pro tanto or
dollar-for-dollar credit for those settlements under federal
law. The Court concluded that the judgment of the court of
appeals is affirmed in part and reversed in part and further
ordered that the cause be remanded to the trial court to apply
the appropriate credit.
Gallagher, Sharp, Fulton & Norman, Kevin C. Alexandersen, Monica
A. Sansalone, and Holly M. Olarczuk-Smith, Cleveland; Burns,
White & Hickton, L.L.C., and David A. Damico, Pittsburgh, PA,
represented Norfolk.
ASBESTOS LITIGATION: South African Asbestos Ban Almost Complete
---------------------------------------------------------------
South African Environment Minister Marthinus van Schalkwyk
declares that the new regulations on the use of asbestos will
guarantee that the mineral never again threatens the health of
South Africans.
Manufacture or distribution of asbestos would be prohibited.
Mr. Van Schalkwyk said, "In recognition of the reliance of some
other SADC (Southern African Development Community) countries on
asbestos exports, the regulations will also allow South Africa
to be used as a transit point for some materials, as long as
they are not further processed or repackaged, to ensure that we
do not undermine neighboring economies."
The Minister noted there has been a "dramatic" decline in local
asbestos consumption, from more than 12,600 tons in 2000 to just
over 7,700 tons in 2002. One study showed a total asbestos ban
would result in a ZAR27 million annual short-term savings in
compensation and health costs.
"For too many years communities across South Africa have lived
with the dangers of asbestos and asbestos products - we are now
taking the final steps to ensure that this health hazard never
again threatens our people and our communities," Mr. Van
Schalkwyk concluded.
ASBESTOS LITIGATION: Brit Ex-Worker Awaits MoD Lawsuit Decision
---------------------------------------------------------------
Peter Harris, a former laborer of Britain's Ministry of Defense,
currently awaits a Ministry decision on whether he has won his
fight for compensation after contracting mesothelioma, a fatal
asbestos-related disease, the Medway Messenger reports.
Fifty-eight year old Mr. Harris has argued that he was exposed
to asbestos in the 1970s and subsequently contracted
mesothelioma. He worked for the Ministry in Chatham, Hoo and
Lower Upnor from 1969 until he was made redundant in 1997.
Mr. Harris' solicitor, Paul Meehan of Pattinson & Brewer in
London, said, "Mr. Harris believes he was exposed many times to
asbestos while working at Chatham, Lower Upnor and Lodge Hill.
He and his colleagues had to remove pipes that were covered in
asbestos and the working atmosphere became very dusty."
The Ministry intends to announce the results in a few weeks. A
Ministry spokesman said, "We are still investigating Mr. Harris'
claim."
ASBESTOS LITIGATION: Aussie Unions Concerned Over Govt. Reforms
---------------------------------------------------------------
The Australian Federal Government's planned industrial relations
reforms spawns concern among South Australian unions that the
number of asbestos-related diseases would rise, the Australian
Associated Press reports.
SA Union representatives said the Government's attack of
workers' rights would limit unions' access to worksites and
raised the fear of a rise in asbestos-related diseases decades
from now.
SA Unions secretary Janet Giles said unions had led the way in
exposing the horrible asbestos legacy and ensuring tight safety
standards for its handling and disposal. She added that the
issue was of particular importance in South Australia, which had
a high rate of asbestos-linked mesothelioma.
Between 1980 and 2001, 690 mesothelioma cases were reported in
SA, which means one in every 2,173 people was affected.
The SA Unions' concerns will be aired at an asbestos forum in
Adelaide, which will also launch the SA Asbestos Coalition. The
Coalition will comprise of unions, researchers, medical experts,
asbestos victims, Government and asbestos removal companies and
will merge efforts to increase public awareness of asbestos'
risks and seek better protection and compensation for victims.
ASBESTOS LITIGATION: EnPro Industries Spends Higher for Suits
-------------------------------------------------------------
EnPro Industries, Inc. (NYSE: NPO) reported higher asbestos-
related expenses in the third quarter of 2005, according to the
filing it submitted to the Securities and Exchange Commission.
Ernie Schaub, president and chief executive officer, attributed
the increase to higher legal fees from trial activity and the
impact of insolvent insurance coverage. He explained however
that the Company received US$4.4 million from an insolvent
insurer, which would offset expenses in the fourth quarter and
result to only a slight increase for the remainder of the year.
Net cash outflows for asbestos claims and expenses increased to
US$30.0 million in the first nine months of 2005, compared with
US$23.3 million in the first nine months of 2004. The increase
reflects higher legal fees as Garlock tries more cases and
payments associated with several large settlements made earlier
in the year.
Asbestos claims continue to be filed at a lower rate than at any
time since the early 1990s. New filings declined in the first
nine months of 2005, decreasing by nearly 30% from the first
nine months of 2004.
"We believe our settlement strategy, state legislative and
judicial reforms and the declining incidence of asbestos-related
disease have contributed to the reduced numbers of new claims,"
said Mr. Schaub.
EnPro Industries, Inc., is a leader in sealing products, metal
polymer and filament wound bearings, compressor systems, diesel
and dual-fuel engines and other engineered products for use in
critical applications by industries worldwide.
ASBESTOS LITIGATION: Union Carbide's Liability Totals US$1.5Bil
---------------------------------------------------------------
Union Carbide Corp. revealed that its asbestos-related liability
for pending and future claims was US$1.5 billion at September
30, 2005 compared to US$1.6 billion at December 31, 2004,
according to the latest filing it submitted to the Securities
and Exchange Commission.
Claims unresolved as of September 30, 2005 totaled 179,203;
61,524 of those were claims against both UCC and Amchem while
individual claimants totaled 117,679.
The Corporation is involved in a large number of asbestos-
related suits filed primarily in state courts during the past
three decades. These suits allege personal injury resulting from
exposure to asbestos-containing products and frequently seek
both actual and punitive damages. The claims relate to products
that UCC sold in the past, alleged exposure to asbestos-
containing products located on its premises, and responsibility
for asbestos suits filed against a former subsidiary, Amchem
Products, Inc. In many cases, plaintiffs are unable to
demonstrate that they have suffered any compensable loss as a
result of such exposure, or that injuries incurred in fact
resulted from exposure to the Corporation's products.
At September 30, 2005, about 36% of the recorded liability
related to pending claims and about 64% related to future
claims. At December 31, 2004, about 37% of the recorded
liability related to pending claims and about 63% related to
future claims. Based on the Corporation's review of 2005
activity, the Corporation determined that no change to the
accrual was required at September 30, 2005.
The Corporation's receivable for insurance recoveries related to
its asbestos liability was US$550 million at September 30, 2005
and US$712 million at December 31, 2004. At September 30, 2005,
US$443 million of the receivable for insurance recoveries was
related to insurers that are not signatories to the Wellington
Agreement and do not otherwise have agreements in place
regarding their asbestos-related insurance coverage.
In addition, the Corporation had US$419 million worth
receivables for defense and resolution costs submitted to
insurance carriers for reimbursement. Receivables for defense
costs totaled US$86 million while receivables for resolution
costs reached US$333 million.
The pretax impact for defense and resolution costs, net of
insurance, was US$24 million in the third quarter of 2005 (US$19
million in the third quarter of 2004) and US$56 million in the
first nine months of 2005 (US$92 million in the first nine
months of 2004).
In September 2003, the Corporation filed a comprehensive
insurance coverage case in the Circuit Court for Kanawha County
in Charleston, West Virginia. This lawsuit was filed against
insurers that are not signatories to the Wellington Agreement or
do not otherwise have agreements in place with the Corporation
regarding their asbestos-related insurance coverage. In early
2004, several of the defendant insurers in the West Virginia
action filed a competing action in the Supreme Court of the
State of New York, County of New York.
The West Virginia action was dismissed in August 2004 based on a
ruling that the state was an inconvenient location for the
parties. Through the third quarter of 2005, the Corporation
reached settlements with several of the carriers involved in the
New York action.
ASBESTOS LITIGATION: Eastman Chemical Defends 3T Pending Claims
---------------------------------------------------------------
According to a Securities and Exchange Commission report,
Eastman Chemical Co (NYSE: EMN) defends, together with other
numerous defendants, lawsuits in various state courts in which
plaintiffs alleged injury due to asbestos exposure at Eastman's
manufacturing sites and sought unspecified monetary damages and
other relief. The Company intends to defend vigorously about
3,000 pending claims or to settle them on acceptable terms.
In recently filed cases, plaintiffs claimed exposure to
asbestos-containing products allegedly made by Eastman. The
Company has information that it manufactured limited amounts of
an asbestos-containing plastic product between the mid-1960s and
the early 1970s. Eastman's investigation has found no evidence
that any of the plaintiffs worked with or around any such
product alleged to have been manufactured by it.
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.
The Kingsport, TN-based Company continues to believe that the
ultimate resolution of asbestos cases will not have a material
impact on its 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.
Eastman Chemical Co. has developed into a major producer of
chemicals, fibers, and plastics, with three business segments:
the Eastman Division, which makes raw materials for coatings,
adhesives, and performance chemicals; the Voridian Division,
which makes polymers used to make products such as food and
medical packaging, films, and toothbrushes; and the Developing
Businesses Division.
ASBESTOS LITIGATION: Aussie MP Bill to Hasten Asbestos Claims
-------------------------------------------------------------
Nick Xenophon, a South Australian independent MP, will propose
legislation to State Parliament to accelerate the processing of
asbestos-related claims, the Australian Associated Press
reports.
"This issue is even more urgent because South Australia now has
the shocking burden of having the highest per capita rate of
mesothelioma, the deadliest and most excruciating lung cancer in
the world," Mr. Xenophon said.
The MP's move is designed to overcome a High Court ruling that
blocked access by victims in South Australia and other states to
the fast-track claims system in NSW.
Mr. Xenophon also wants to bring damage payments in SA into line
with other states and simplify the rules of evidence. He hoped
the Gtate Government would support the legislation as a matter
of urgency.
According to Mr. Xenophon, asbestos-related deaths were expected
to peak in SA in 2020 with up to 2,000 people likely to die by
that time.
ASBESTOS LITIGATION: AU Councils to Fight Govt. Asbestos Plans
--------------------------------------------------------------
Councils in Queensland, Australia are set to go against State
Government laws that charge local governments with monitoring
asbestos abatement from homes, the Australian Associated Press
reports.
Local Government Association president Paul Bell said the
legislation, passed in State Parliament as part of the public
health bill, marked another cost-shifting exercise onto
councils. Instead, he said the Government should pass tough
legislation making home renovators stop disturbing deadly
asbestos fibers and potentially putting themselves and their
neighbors at risk.
Health Minister Stephen Robertson defended the legislation,
saying it was impossible for the State Government to monitor
tens of thousands of asbestos-riddled homes statewide.
Mr. Robertson rejected the LGA's claim that councils were not
consulted, saying the issue had been discussed over the past 18
months.
Brisbane City Council deputy mayor David Hinchcliffe, meanwhile
called for councils to accept the new responsibility.
ASBESTOS LITIGATION: FRA Govt. Blamed for Asbestos Mismanagement
----------------------------------------------------------------
A French Senate report blamed the Government for mismanagement
of the country's asbestos contamination problem and estimated it
will cost EUR27 billion to EUR37 billion in the next 20 years to
treat victims of what researchers see as an "inescapable and
irreversible" cancer epidemic, Forbes reports.
The report forecasted that asbestos-related cancer deaths would
rise to 60,000-100,000 in the next 20-25 years from 35,000 in
the 30 years that ended in 1995.
The Senate report particularly criticized a Government
committee, business and scientific officials on the asbestos
issue, calling it a "model of lobbying, communication and
manipulation."
ASBESTOS LITIGATION: White Mountains Notes 3Q05 Claims Exposure
---------------------------------------------------------------
During the three and nine months ended September 30, 2005, White
Mountains Insurance Group Ltd (NYSE: WTM) experienced US$45.2
million and US$43.9 million, respectively, of unfavorable
development on prior accident year loss reserves due to a study
of subsidiary Folksamerica Reinsurance Co.'s exposure to
asbestos claims completed in the 2005-3rd quarter.
The study examined losses incurred by all insureds that had
reported over US$250,000 of asbestos claims to Folksamerica and
a significant sample of all other insureds with reported
asbestos claims of less than US$250,000.
During the three and nine months ended September 30, 2004, White
Mountains experienced US$41.1 million and US$72.2 million,
respectively, of net unfavorable loss reserve development on
prior accident year loss reserves, principally due to emerging
claims experienced in subsidiary OneBeacon Insurance Group LLC's
run-off operations and increases in reserves at OneBeacon as a
result of audits of national account and program claims
administered by third parties.
Accordingly, White Mountains recognized US$9.1 million and
US$28.1 million of such charges, recorded as loss and LAE, for
the three and nine months ended September 30, 2005,
respectively, and US$10.2 million and US$33.1 million of such
charges for the three and nine months ended September 30, 2004,
respectively.
Based in Hanover, New Hampshire, White Mountains Insurance Group
Ltd, provides insurance products and services through its three
main operating divisions: OneBeacon Insurance, White Mountains
Re, and Esurance.
ASBESTOS LITIGATION: ALL Notes $1.49B Asbestos Reserves in 3Q05
---------------------------------------------------------------
In its 2005-3rd quarter report to the Securities and Exchange
Commission, the Allstate Corp.'s reserves for asbestos claims
were US$1.49 billion and US$1.46 billion, net of reinsurance
recoverables of US$912 million and US$963 million at September
30, 2005 and December 31, 2004, respectively.
Reserves for environmental claims were US$219 million and US$232
million, net of reinsurance recoverables of US$44 million and
US$49 million at September 30, 2005 and December 31, 2004,
respectively. About 66% and 62% of the total net asbestos and
environmental reserves at September 30, 2005 and December 31,
2004, respectively, were for incurred but not reported estimated
losses.
Reserve additions for asbestos in the 2005-3rd quarter, totaling
US$139 million, were primarily for products-related coverage.
They were essentially a result of a continuing level of
increased claim activity being reported by excess insurance
policyholders with existing active claims, excess policyholders
with new claims, and re-estimates of liabilities for increased
assumed reinsurance cessions, as ceding companies (other
insurance carriers) also experienced increased claim activity.
The Company's exposure to non-product-related losses represents
about 5% of total asbestos case reserves. Its reinsurance
recoverables are estimated to be about 38% of the Company's
gross estimated loss reserves.
As of September 30, 2005, the allowance for uncollectible
reinsurance is US$213 million, or about 17% of total
recoverables from reinsurers in the Discontinued Lines and
Coverages segment.
The Northbrook, IL-based Allstate Corp (NYSE: ALL) is the
second-largest US personal lines insurer, behind rival State
Farm. The company sells auto, homeowners, and other property &
casualty and life insurance products in Canada and the US.
New Securities Fraud Cases
ANDRX CORPORATION: Federman & Sherwood Lodges Fraud Suit in FL
--------------------------------------------------------------
The law firm of Federman & Sherwood initiated a class action
lawsuit in the United States District Court for the Southern
District of Florida against Andrx Corporation (Nasdaq: ADRX).
The complaint alleges violations of federal securities laws,
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5, including allegations of issuing a series of
material misrepresentations to the market which had the effect
of artificially inflating the market price. The class period is
from March 09, 2005 through September 05, 2005.
For more details, contact William B. Federman of FEDERMAN &
SHERWOOD, 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102,
Phone: (405) 235-1560, Fax: (405) 239-2112, E-mail:
wfederman@aol.com, Web site: http://www.federmanlaw.com.
ANDRX CORPORATION: Stull Stul Lodges Securities Fraud Suit in FL
----------------------------------------------------------------
The law firm of Stull, Stull & Brody initiated a class action in
the United States District Court for the Southern District of
Florida, on behalf of purchasers of Andrx Corporation ("ANDRX"
or the "Company") (Nasdaq: ADRX) common stock during the class
period between March 9, 2005 and September 5, 2005 (the "Class
Period").
The Complaint charges defendants with violations of the
Securities Exchange Act of 1934. The Complaint alleges that
defendants were aware of and failed to disclose the fact that
their manufacturing facilities did not comply with all
applicable good manufacturing practices ("cGMP") regulations and
that Andrx was facing serious regulatory sanctions as a result
of its cGMP violations including a sanction that would preclude
the Food and Drug Administration ("FDA") approval of Andrx'
pending and future drug applications. On September 6, 2005,
defendants shocked the market when they announced that the FDA
had recently placed a halt on approving Andrx' s drug
applications. In response to this press release, Andrx stock
dropped from a closing price of $17.94 on September 5, 2005 to
$14.89 on September 6, 2005 on heavy trading volume.
For more details, contact Tzivia Brody, Esq. of Stull, Stull &
Brody, 6 East 45th Street, New York, NY 10017, Phone:
1-800-337-4983, Fax: 212/490-2022, E-mail: SSBNY@aol.com, Web
site: http://www.ssbny.com.
DANA CORPORATION: Cohen Milstein Lodges Securities Suit in OH
-------------------------------------------------------------
The law firm Cohen, Milstein, Hausfeld & Toll, P.L.L.C., filed a
lawsuit in the United States District Court for the Northern
District of Ohio, Western Division (Toledo) on behalf of its
client and on behalf of other similarly situated purchasers of
Dana Corporation ("Dana" or the "Company") (NYSE:DCN) common
stock between February 11, 2004 through and including October
10, 2005 (the "Class Period").
The Complaint charges Dana and certain of its officers and
directors with violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"). The
Complaint alleges that defendants omitted or misrepresented
material adverse facts about the Company's financial condition,
business prospects, and revenue expectations during the Class
Period.
The Complaint alleges that defendants issued, or caused to be
issued, false and misleading statements during the Class Period.
Specifically, it is alleged, that the defendants'
representations regarding Dana were materially false and
misleading when made for the following reasons:
(1) the Company had improperly recognized price increases
in its commercial-vehicle business, which materially
inflated its income figures;
(2) Dana's financial statements were presented in violation
of Generally Accepted Accounting Principles; and
(3) the Company lacked the necessary personnel and controls
to issue accurate financial reports and projections.
The Complaint alleges that on September 15, 2005, Dana announced
that it would restate its second quarter 2005 financial results
and lowered its 2005 earnings guidance from $1.30-$1.45 per
share, to $0.60-$0.70 per share. Following this news, Dana stock
fell from a close of $12.78 per share on September 14, 2005, to
close at $9.86 per share on September 15, 2005.
It is also alleged that on October 10, 2005, prior to the
opening of the market, Dana announced that it would restate its
2004, first-quarter 2005, and second-quarter 2005 financial
statements and stated that the Company postponed its third-
quarter 2005 earnings release and was withdrawing its earnings
guidance for full-year 2005.
Following this announcement, the price of Dana stock fell again
from $9.19 per share on Friday, October 7, 2005 to $6.04 per
share on Monday, October 10, 2005, a single-trading day drop of
34.28% on unusually heavy trading volume.
For more details, contact Steven J. Toll, Esq. or Robert C.
Smits of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., 1100 New
York Avenue, N.W., West Tower, Suite 500, Washington, D.C.
20005, Phone: 888-240-0775 or 202-408-4600, Email:
stoll@cmht.com or rsmits@cmht.com.
FIRST BANCORP: Lerach Coughlin Files Securities Fraud Suit in NY
----------------------------------------------------------------
The Law firm of Lerach Coughlin Stoia Geller Rudman & Robbins,
LLP, initiated a class action on behalf of an institutional
investor in the United States District Court for the Southern
District of New York on behalf of purchasers of First BanCorp
("First BanCorp") (NYSE:FBP) publicly traded securities during
the period between October 20, 2003 and August 25, 2005 (the
"Class Period").
The complaint charges First BanCorp and certain of its officers
and directors with violations of the Securities Exchange Act of
1934. First BanCorp operates as the holding company for First
Bank Puerto Rico, which provides various financial services in
Puerto Rico, the U.S. Virgin Islands, and British Virgin
Islands.
The complaint alleges that during the Class Period, defendants
issued false statements about First BanCorp's earnings, assets,
capital and prospects causing the Company's stock to trade at
artificially inflated levels. While the Company's stock price
dropped somewhat in the late spring of 2005 due to problems
announced by First BanCorp's competitors in Puerto Rico, as well
as an adverse interest rate environment, the stock soon
recovered as defendants did not own up to significant accounting
issues, such as those disclosed earlier by its competitors, and
the Company continued to report favorable financial results.
Then on August 25, 2005, the Company issued a press release
announcing that the Company had "received a letter from the
(SEC) in which the SEC indicated that it was conducting an
informal inquiry into the Company. The inquiry pertains, among
other things, to the accounting for mortgage loans purchased by
the Company from two other financial institutions during the
calendar years 2000 through 2004." As a result of this
disclosure, First BanCorp's stock dropped to $18.23 per share on
August 26, 2005. Later, on September 30, 2005, both the
Company's CEO and CFO suddenly announced they were resigning.
According to the complaint, during the Class Period defendants
concealed the following adverse information from the investing
public:
(1) the Company's financial statements were materially
false and misleading in that the Company had
manipulated its accounting for mortgage loans purchased
between 2000 and 2004;
(2) the Company's internal controls were grossly weak,
thereby allowing the Company's top management to
manipulate them at will;
(3) the Company's "record" quarterly income reported during
the Class Period was a product of accounting fraud, not
synergies produced by effective fiscal and personnel
management; and
(4) as a result, the Company's published financial
statements violated Generally Accepted Accounting
Principles.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin, Phone: 800/449-4900 or 619/231-1058, E-mail:
wsl@lerachlaw.com, Web site:
http://www.lerachlaw.com/cases/firstbancorp/.
PIXAR ANIMATION: Charles J. Piven Lodges Securities Suit in CA
--------------------------------------------------------------
The Law Offices Of Charles J. Piven, P.A., filed a securities
class action on behalf of shareholders who purchased, converted,
exchanged or otherwise acquired the common stock of Pixar
Animation Studios (NASDAQ: PIXR) between January 18, 2005 and
June 30, 2005, inclusive (the "Class Period").
The case is pending in the United States District Court for the
Northern District of California against defendant Pixar and one
or more of its officers and/or directors. The action charges
that defendants violated federal securities laws by issuing a
series of materially false and misleading statements to the
market throughout the Class Period, which statements had the
effect of artificially inflating the market price of the
Company's securities. No class has yet been certified in the
above action.
For more details, contact the Law Offices Of Charles J. Piven,
P.A., The World Trade Center-Baltimore, 401 East Pratt St.,
Suite 2525, Baltimore, MD 21202, Phone: 410/986-0036, E-mail:
hoffman@pivenlaw.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.
*********
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Class Action Reporter is a daily newsletter, co-published by
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Copyright 2005. All rights reserved. ISSN 1525-2272.
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