/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/070413.mbx C L A S S A C T I O N R E P O R T E R Friday, April 13, 2007, Vol. 9, No. 73 Headlines AFFILIATED COMPUTER: Faces Suit Over Cerberus Acquisition Plan ALABAMA: Jefferson County Withdraws $32M Winston Suit Settlement AMARANTH ADVISORS: Offers Options for Investors to Recoup Losses AUSTRALIA: F-111 Technicians Drop Suit Over Chemical Exposure AUSTRALIA: Esperance Residents Consider Suit Over Lead Poisoning BARODON SF: Recalls Dietary Supplement V.MAX with Aminotadalafil BECTON DICKINSON: Medical Clinic Files Antitrust Lawsuit in N.J. CALIFORNIA: Suit by LA Foster Kids Remanded to District Court CALIFORNIA: San Diego County's Medical Care Policy Challenged CANADA: Suit Over Failed Richmond Hill Project Settled for CA$2M CHEMNUTRA INC: Recalls Wheat Gluten Containing Melamine CHICAGO BOARD: Faces Lawsuit in Del. Over Proposed $8.9B Merger DIGITAL SECURITY: Recalls Smoke Detectors that Could Fail in Use DIRECT GENERAL: Faces Suit in Tenn. Over Elara Holdings Merger FARO TECHNOLOGIES: To Seek Dismissal of Securities Fraud Claims FEDEX EXPRESS: Agrees to $53.5M Settlement of Racial Bias Case FIRST DATA: Faces Del. Suit Over Kohlberg Acquisition Proposal HARMONIC INC: August 2008 Trial Set in Securities Fraud Suit ING LIFE: NYSUT Trust Members File ERISA Violations Lawsuit MICHIGAN: Talks to Settle Suit Over Foster Care System Unravel NATURAL HEALTH: Faces Amended Securities Fraud Complaint in Tex. SEARS HOLDINGS: Faces Consolidated Securities Fraud Suit in N.Y. SEARS HOLDINGS: Still Faces Ill. Lawsuits Over Kmart Merger SEARS ROEBUCK: Discovery Underway in Ill. Suit Over 7% Notes SEARS ROEBUCK: Delivers $215M Ill. Securities Suit Settlement SEARS ROEBUCK: Settles Consolidated ERISA Violations Suit SELECT MEDICAL: Pa. Securities Fraud Lawsuit in Discovery Phase UNIVERSAL ENGINEERING: Recalls Motorcycle Radius Triple Clamps * FDA Orders Recall of Pergolide Drugs Linked to Heart Disease Asbestos Alert ASBESTOS LITIGATION: Crown Cork Accrues $198M for Claims in 4Q06 ASBESTOS LITIGATION: Claims v. Cytec Ind. Drop to 8,600 in 4Q06 ASBESTOS LITIGATION: Chubb Corp. Reserves $841M for Claims in 4Q ASBESTOS LITIGATION: EMC Insurance Group Reserves $7.29M at 4Q06 ASBESTOS LITIGATION: General Motors Has $127M Charge for Claims ASBESTOS LITIGATION: NYMAGIC Reserves $55.4M for A&E Policies ASBESTOS LITIGATION: Essex Still Faces Product Liability Actions ASBESTOS LITIGATION: Ford Motor Co.'s Defense Costs Drop in 2006 ASBESTOS LITIGATION: GlobalSantaFe Units Face 6 Pending Suits ASBESTOS LITIGATION: GSF Unit Has Pending Insurer Suit in Calif. ASBESTOS LITIGATION: Halliburton Co. Has $240M Receivable in 4Q ASBESTOS LITIGATION: Hercules Has 26,045 Pending Claims in 4Q06 ASBESTOS LITIGATION: Hercules Records $233.6M Liabilities in 4Q ASBESTOS LITIGATION: Enstar Has $666.07M for A&E Claims in 4Q06 ASBESTOS LITIGATION: Park-Ohio Records 365 Injury Cases in 4Q06 ASBESTOS LITIGATION: Standard Motor Records 3,270 Cases in 4Q06 ASBESTOS LITIGATION: United America Reserves $36M for A&E Losses ASBESTOS LITIGATION: United Industrial Has $11.3M Gain on Merger ASBESTOS LITIGATION: Liggett Group Faces 3 Third-Party Lawsuits ASBESTOS LITIGATION: ITT Corp., Goulds Pumps Resolve 8.2T Claims ASBESTOS LITIGATION: ITT Faces Insurance Suits in Calif., N.Y. ASBESTOS LITIGATION: Noble Corp. Unit Still Faces Suits in Miss. ASBESTOS LITIGATION: OfficeMax Continues to Face Injury Suits ASBESTOS LITIGATION: Great Lakes Dredge Has No Active Open Cases ASBESTOS LITIGATION: TriMas Records 1,708 Pending Cases at 4Q06 ASBESTOS LITIGATION: Colonial Commercial Has 93 Hilco Plaintiffs ASBESTOS LITIGATION: Lawsuits v. Entrx Corp. Drop to 404 in 4Q06 ASBESTOS LITIGATION: Metalclad Still Faces Suit by ACE, Insurers ASBESTOS LITIGATION: Kaiser Ventures Has 9 Pending Injury Claims ASBESTOS LITIGATION: Norcross Safety Has 96 Exposure Suits in 4Q ASBESTOS LITIGATION: GenCorp Inc. Has 161 Pending Injury Claims ASBESTOS LITIGATION: Kaiser Aluminum Corp. Has $1.115B Liability ASBESTOS LITIGATION: VWR Int'l. Continues to Face Exposure Suits ASBESTOS LITIGATION: Reading Int'l. Faces Rail Workers' Claims ASBESTOS LITIGATION: Leap Tech. Has No Renewed Cases Since 1996 ASBESTOS LITIGATION: Kaanapali, D/C Still Face Exposure Actions ASBESTOS LITIGATION: Congoleum Records $13.9M Liability in 4Q06 ASBESTOS LITIGATION: Boss Holdings Faces Glove-Exposure Actions ASBESTOS LITIGATION: Armstrong World Has $91.5M Insurance Asset ASBESTOS LITIGATION: Thomas Properties Accrues $4M Removal Costs ASBESTOS LITIGATION: Oneida Rostone Still Faces Injury Lawsuits ASBESTOS LITIGATION: Reunion Industries Faces 2,368 Open Claims ASBESTOS LITIGATION: Fansteel Inc. Dismissed from Ivan Hand Suit ASBESTOS LITIGATION: American Biltrite Faces 1,332 Claims in 4Q ASBESTOS LITIGATION: ABI Has $1.1M-$1.6M Liability at Maine Site ASBESTOS LITIGATION: RPM Int'l. Records $57.9M Liabilities in 3Q ASBESTOS LITIGATION: RPM Int'l. Units Face 10,846 Active Actions ASBESTOS LITIGATION: RPM Int'l. Reserves $52.1M for Claims in 3Q ASBESTOS LITIGATION: CompuDyne Corp. Still Faces Injury Actions ASBESTOS LITIGATION: Entrade Says Artra's Plan Became Effective ASBESTOS LITIGATION: W.R. Grace & Co. Urged to Produce Documents ASBESTOS LITIGATION: Claimants Move to Conduct Grace's Discovery ASBESTOS LITIGATION: Four Plaintiffs Sue 163 Defendants in W.Va. ASBESTOS LITIGATION: Couple Files Suit v. 56 Defendants in W.Va. ASBESTOS LITIGATION: Smoker Files Suit v. 43 Firms in Tex. Court ASBESTOS LITIGATION: JR Tokai Had Locomotive Parts with Asbestos ASBESTOS LITIGATION: Parties Settle Adams Lawsuit in Tex. Court ASBESTOS LITIGATION: OSHA to Penalize Aapex for Exposing Workers ASBESTOS ALERT: Pioneer Companies Faces "Premises" Suits in La. ASBESTOS ALERT: DT Solutions Faces Removal Lawsuit in Md. Court New Securities Fraud Cases ACCREDITED HOME: Glancy Binkow Files Securities Fraud Lawsuit ELI LILLY: Grant & Eisenhofer Files N.Y. Securities Fraud Suit NEW CENTURY: Zwerling, Schachter Files Securities Fraud Suit US AUTO: Lerach Coughlin Files Securities Fraud Suit in Calif. ********* AFFILIATED COMPUTER: Faces Suit Over Cerberus Acquisition Plan -------------------------------------------------------------- Affiliated Computer Services Inc. said it faces two class actions filed by purported shareholders opposed to a proposal to acquire the company presented by Darwin Deason and Cerberus Capital Management, L.P. on March 20, 2007, reports say. The suits were filed in the Court of Chancery of the State of Delaware, New Castle County against the company and certain directors. The company stated that the allegations in both lawsuits are substantially similar. In each of the lawsuits, the plaintiff claims to be a shareholder of the company purporting to bring the action on behalf of all public shareholders of the company. Each plaintiff alleges that the $5.9 billion proposal is "inadequate and to have resulted from an unfair process," Affiliated said in a filing with the U.S. Securities & Exchange Commission. ALABAMA: Jefferson County Withdraws $32M Winston Suit Settlement ---------------------------------------------------------------- Jefferson County commissioners voted on April 10 to withdraw from an agreement that would settle a purported class action filed against the county over excess money from the sale of delinquent taxpayers' estates, The Birmingham News reports. The suit was filed on behalf of hundreds of people whose property was sold by the county for delinquent taxes from 1992 to 2005 and who have not collected refunds of amounts paid for their property in excess of what they owed. The county has kept the excess money in trust, and with interest, was able to come up with $32 million from which payments are set aside for the proposed settlement class. But it said additional claims have been filed and could exhaust the account before all involved have had an opportunity to make their claims. The class is known as the Winston class for an original plaintiff, Raymond Winston. Lawyers for the class have asked U.S. District Judge David Proctor to enforce the settlement. Judge Proctor is to consider the proposed settlement Friday. "We're trying to make sure we don't have multiple lawsuits all after the same thing," Assistant County Attorney Charlie Wagner said. Earlier, Birmingham news reported that Mr. Wagner has given court notice that additional lawsuits have been filed on different issues, but all challenge the distribution of tax sale proceeds. The suit is "Winston et al. v. Jefferson County, Alabama et al., Case No. 2:05-cv-00497-RDP," filed in the U.S. District Court for the Northern District of Alabama under Judge David Proctor. Representing the plaintiffs are: (1) G Daniel Evans at Evans & Sexton PC, 1736 Oxmoor Road, Suite 101, Birmingham, AL 35209, 870-1970, E-mail: gdevans@evanslawpc.com; and (2) Edgar C Gentle, III at Gentle Pickens & Turner, Two North Twentieth Building, Suite 1200, 2 North 20th Street, Birmingham, AL 35203, 716-3000, E-mail: escrowagen@aol.com. Representing the defendants are: (1) Lee W. Loder at Loder PC, P.O. Box 13545, Birmingham, AL 35202-3545, Phone: 205-326-0566, Fax: 205-326-0564, E-mail: loderlawfirm@aol.com; and (2) Charles S. Wagner at Jefferson County Attorney's Office, 716 Richard Arrington Jr Blvd North, Birmingham, AL 35203, 325-5688, E-mail: cockrellh@jccal.org. AMARANTH ADVISORS: Offers Options for Investors to Recoup Losses ---------------------------------------------------------------- Amaranth Advisors LLC, a collapsed hedge fund, is polling investors to determine whether they are interested in a proposal by an unidentified investor group regarding recovery of investments, CNNMoney.com. A March 22 letter reportedly obtained by Reuters proposes two options: if an investor agrees not to sue Amaranth, they could get faster distributions from the ongoing liquidation, but if they decide not to release the firm from liability, a portion of their pending proceeds would be set aside in a litigation reserve fund. If there is a successful class action settlement, investors who waived litigation rights could still be entitled to a portion of those proceeds. The investor group who proposed the options represents about 10 percent of the capital in its flagship multi-strategy fund, according to the report. Amaranth is a former $9.2 billion hedge fund group that lost about $6.4 billion in energy trading last September. It was left with about $2.25 billion in assets after the collapse. Amaranth said if there is "sufficient interest in this proposal," it will draw up formal consent documents, according to the letter. It is unclear whether any investor has sued Amaranth, the report said. AUSTRALIA: F-111 Technicians Drop Suit Over Chemical Exposure ------------------------------------------------------------- Former RAAF maintenance workers who suffered serious health problems after working on Australia's F-111 strike fighters withdrew a class action scheduled for a hearing in Brisbane Supreme Court on April 11, reports say. The case was filed in December in the Brisbane Supreme Court. The technicians' lawyer, Debra Daniels, said the move was due to "legal issues" but said a new class action would be launched, complying with the Personal Injuries Proceedings Act. The technicians worked at the Amberley RAAF base, west of Brisbane, between 1973 and 1989, when they were exposed to dangerous chemicals while servicing aircraft fuel tanks. Members of the group have reportedly developed cancer, depression and skin and neurological disorders. AUSTRALIA: Esperance Residents Consider Suit Over Lead Poisoning ---------------------------------------------------------------- Residents of Esperance are considering filing a class action against the state government and local port officials over lead poisoning resulting from the export of Magellan Metals' lead carbonate from Esperance Port. Slater & Gordon lawyer Chris Prast traveled to the remote coastal town last week to meet locals and discuss their concerns, according to The Australian. More than 4000 birds died late last year and early this year as a result of lead poisoning. The Department of Environment confirmed recently that isotope testing had identified Magellan Metals as the source of the lead found in dead birds and rainwater tanks around Esperance. Magellan Metals subsequently stopped all mining operations. A blood test of more than 900 Esperance residents, or 7 percent of the population, showed that 12 residents have returned lead levels above World Health Organization's recommendation, including two infants, according to the report. BARODON SF: Recalls Dietary Supplement V.MAX with Aminotadalafil ---------------------------------------------------------------- Barodon SF, based in Los Angeles, is conducting a voluntary nationwide recall of the company's supplement product sold under the name V.MAX. Barodon SF is conducting this recall after being informed by representatives of the U.S. Food and Drug Administration that lab analysis by FDA of V.MAX samples found the product contains aminotadalafil. Aminotadalafil is an analog of Tadalafil, an FDA-approved drug used as treatment for male erectile dysfunction. This poses a threat to consumers because aminotadalafil may interact with nitrates found in some prescription drugs (such as nitroglycerin) and may lower blood pressure to dangerous levels. According to the FDA, consumers with diabetes, high blood pressure, high cholesterol, or heart disease often take nitrates. According to the FDA, erectile dysfunction is a common problem in men with these conditions, and they may seek products to enhance sexual performance. Additionally, FDA advises that aminotadalafil may cause side effects, such as headaches and flushing. V.MAX is sold nationwide and in the past has also been exported to South Korea and Japan. V.MAX is packaged with an outer box containing three smaller inner boxes each containing five capsules making it a total of 15 capsules per unit. No illnesses have been reported to the company to date in connection with this product. BECTON DICKINSON: Medical Clinic Files Antitrust Lawsuit in N.J. ---------------------------------------------------------------- Becton Dickinson & Co. is facing a purported federal class action that accuses it of using its size to suppress competition and overcharge its products. The suit, "International Multiple Sclerosis Management Practice v. Becton Dickinson & Co.," was filed on April 5 in the U.S. District Court for the District of New Jersey. IMSMP, a New York-based medical clinic, filed the suit, which is seeking class-action status, on behalf of itself and other "similarly situated" but unnamed health care providers. Generally, the suit charges the Franklin Lakes-based medical- device maker of violating federal antitrust laws through various illegal business practices to maintain its near monopoly in the market for hypodermic products. According to the suit, the company's conduct resulted in it being able to overcharge hospitals and other health care providers for its disposable hypodermic products. It adds that plaintiffs have been left to pay the bill for Becton's abuse of its dominant position. Additionally, the suit also accuses the company of stifling competition by "bundling" its products and offering customers deep discounts to buy an array of items. The "bundling contracts" have reduced competition because smaller companies that make fewer products can't afford to offer similar discounts, the suit argues. The suit is "International Multiple Sclerosis Management Practice v. Becton Dickinson & Co., Case No. 2:07-cv-01602-JLL," filed in the U.S. District Court for the District of New Jersey under Judge Jose L. Linares. Representing the plaintiffs is James v. Bashian of The Law Office Of James V. Bashian, PC, Fairfield Commons, 271 Route 46 West, Suite F207, Fairfield, NJ 07004, Phone: (973) 227-6330, E- mail: jbashian@bashianlaw.com. CALIFORNIA: Suit by LA Foster Kids Remanded to District Court --------------------------------------------------------------- The 9th Circuit reversed and remanded a class action filed by foster children in the custody of Los Angeles County who otherwise could face institutionalization, according to CourtHouseNews. The suit, on appeal from the U.S. District Court for the Central District of California, was filed in July 2002, on behalf of a class of children who were in Los Angeles County foster care or at risk of being placed into foster care. The suit seeks declaratory and injunctive relief against the director of the state Department of Health Services and the director of Department Social Services as well as Los Angeles County, the Los Angeles County Department of Children and Family Services (DCFS), and the Director of DCFS (LA County Defendants). The complaint alleged that the class was entitled to and had not received "medically necessary mental health services in a home- like setting." Separate claims were alleged based on violations of the children's rights under the Medicaid Act and the Due Process Clause of the federal Constitution; under the Americans with Disabilities Act and the Rehabilitation Act; under the Due Process Clause of the California Constitution; and under California statutory law. The complaint was later amended to include a statewide class of children in foster care or at risk of being placed in foster care. The district court certified the class and approved a settlement agreement between the plaintiff class and LA County Defendants. Preliminary Injunction Plaintiffs then moved for a preliminary injunction to require the Director of DHS and the Director of DSS to provide wraparound services and therapeutic foster care (TFC) to members of the class. Plaintiffs described wraparound and TFC as highly effective "integrated community-based interventions for children with emotional, behavioral, and mental health disorders." Plaintiffs argued that the Early Periodic Screening, Diagnosis, and Treatment provisions obligate the State to provide wraparound and TFC to them. In particular, they alleged that MediCal policies impeding access to wraparound services or TFC violated the Medicaid statute. They alleged that MediCal covered only some components of wraparound and TFC, and that state policies made it difficult to access either type of care. Defendants argued that the Medicaid statute does not require them to provide services in the wraparound or TFC forms demanded by plaintiffs, and that MediCal provides all required services. They characterized wraparound and TFC as processes or approaches, rather than services, and argued that the Medicaid Act does not create obligations to provide either. Defendants also disputed plaintiffs' contention that all of the components of wraparound and TFC are health care services properly covered by Medicaid. On March 14, 2006, the district court entered an order granting a mandatory preliminary injunction against defendants, ordering them to provide medically necessary wraparound services and TFC to class members on a consistent, statewide basis within 120 days of the order's entry. Stating that defendants did not dispute that they did not provide wraparound and TFC as such, the court found that "wraparound services and therapeutic foster care fall within the EPSDT obligations of Medicaid-participating states." The court also cited what it described as plaintiffs' undisputed evidence that wraparound and TFC are medically necessary for children with serious mental health needs. On this basis, the court concluded that plaintiffs had shown a strong likelihood of succeeding on the merits of their Medicaid Act claim. The court also described the potential for irreparable harm to plaintiffs in the form of unnecessary institutionalization and unmet mental health needs, if the injunction were not issued. The court denied defendants' motions for clarification and reconsideration, but subsequently issued an Addendum to the order, which contained short answers to defendants' questions from their motion for clarification. Defendants Appeal On appeal, defendants argue that the district court abused its discretion in granting a preliminary injunction against them and in denying their motion for reconsideration. Specifically, they contend that the court: (1) failed to make findings of fact and conclusions of law, as required by Federal Rule of Civil Procedure; (2) committed clear error in its factual findings; (3) applied the wrong legal standard both as to the standard for issuance of a mandatory preliminary injunction against a state agency and as to the underlying legal questions; and (4) failed to comply with Federal Rule of Civil Procedure's requirement that an injunction be specific in its terms. 9th Circuit Court's Ruling In a ruling filed March 23, the U.S. Court of Appeals for the 9th Circuit ruled that the district court abused its discretion by relying on an erroneous legal interpretation of the federal Medicaid statute in granting plaintiffs' motion for a preliminary injunction. The preliminary injunction is reversed and the case is remanded for further proceedings consistent with this opinion. A copy of the order is available for free at: http://ResearchArchives.com/t/s?1d1b The suit is "Katie A, et al. v. Diana Bonta, et al., Case No. 2:02-cv-05662-AHM-SH," filed in the U.S. District Court for the Central District of California under Judge A. Howard Matz with referral to Judge Stephen J. Hillman. Representing the plaintiffs are: (1) Patrick H. Gardner of National Center For Youth Law, 405 14th St., 15th Fl., Oakland, CA 94612, Phone: 510- 835-8098; (2) Alison Barkoff of Bazelon Center for Mental Health Law, 1101 15th Street Northwest, Suite 1212, Washington, DC 20005, US, Phone: 202-467-5730, E-mail: alisonb@bazelon.org; (3) Melinda R. Bird of Protection & Advocacy, 3580 Wilshire Blvd., Ste. 902, Los Angeles, CA 90010-2512, Phone: 213-427-8747, E-mail: melinda.bird@pai-ca.org; and (4) Lew Hollman of Center for Law in the Public Interest, 3250 Ocean Park Blvd., Ste. 300, Santa Monica, CA 90405-3219, Phone: 310-314-1947. Representing the defendants are, Jerry M. Custis of Montery County Counsel, Children's Services Div., 201 Centre Plz Dr Suite 1, Monterey Park, CA 91754-2143, Phone: 323-526-6257; and Sandra L. Goldsmith, CAAG - Office of the Attorney General of California, 300 S. Spring St., Ste. 1702, Los Angeles, CA 90013, Phone: 213-897-2000, Fax: 213-897-2805. CALIFORNIA: San Diego County's Medical Care Policy Challenged ------------------------------------------------------------- Lawyers for the Western Center on Law and Poverty asked a state appeals court to overturn a ruling that regulates poor people's eligibility for medical care in San Diego County, according to reports. Previously, Superior Court Judge Ronald L. Styn ruled that the County Medical Services program could not refuse to pay for treatment to persons earning more than $802. Later, however, the court approved a new income limit when county supervisors increased the threshold to $1,078 a month. Lawyers for the Western Center on Law and Poverty, representing more than 20 class action clients, filed an appeal to overturn that ruling in June. On appeal, the lawyers said there should be no income limit, and that patients who earn more than the county's income threshold should be allowed to pay for a part of their treatment and still receive it, according to North County Times. County officials argue that opening up the system to "sliding-scale" payments would make all county residents eligible, and could bankrupt the system, the report said. Officials said the appeals court is expected to issue its own ruling within the next 90 days. Western Center on Law and Poverty on the Net: http://www.wclp.org. CANADA: Suit Over Failed Richmond Hill Project Settled for CA$2M ---------------------------------------------------------------- Justice Colin Campbell has approved a CA$2 million settlement for distribution to investors in a failed Richmond Hill project, according to YorkRegion.com. The suit relates to a defunct 1994 project at the Bayview Landmark mall, at Blackmore Avenue, north of Hwy. 7 involving 133 people who put deposits for the development so they could own stores in the mall. They invested anywhere from $25,000 to $100,000 in the condo units. The development was stopped due to municipal opposition. Later, it was found out that deposits that were supposed to be held in trust by lawyers were spent by the developer. A class action was certified in 1996. A settlement was reached by lawyer Landy Marr who took over the case in 2004. The settlement will be dispersed, based on pro-rated shares, to the 133 tenants. Claims filing deadline is June 30. CHEMNUTRA INC: Recalls Wheat Gluten Containing Melamine ------------------------------------------------------- ChemNutra Inc. of Las Vegas recalled all wheat gluten it had imported from one of its three Chinese wheat gluten suppliers, Xuzhou Anying Biologic Technology Development Co. Ltd. The wheat gluten ChemNutra recalled was all shipped from China in 25 kg. paper bags, and distributed to customers in the same unopened bags. The bags were all labeled "Wheat Gluten Batch No.: _______ Net Weight: 25 kg Gross Weight: 25.1 kg Made in China". The batch numbers included in the recall are 20061006, 20061027, 20061101, 20061108, 20061122, 20061126, 20061201, 20061202, 20061203, 20061204, 20061205, 20061206, 20061208, 20061221, 20070106, 20070111, 20070116, and 20070126. Each ChemNutra shipment had the certificate of analysis information from the supplier, including batch number and the supplier's content analysis and test results. ChemNutra shipped from its Kansas City warehouse to three pet food manufacturers and one distributor who supplies wheat gluten only to the pet food industry. ChemNutra's shipments commenced Nov. 9, 2006 and ended March 8, 2007. ChemNutra did not ship to facilities that manufacture food for human consumption, and the distributor ChemNutra shipped to supplies wheat gluten only to pet food manufacturers. The total quantity of Xuzhou Anying wheat gluten shipped was 792 metric tons. ChemNutra learned on March 8 from one pet food manufacturer that the wheat gluten it had sold them -- all from the Xuzhou Anying -- was among ingredients suspected as a potential cause of pet food problems. ChemNutra immediately quarantined its entire wheat gluten inventory and assisted this customer's investigation. After that manufacturer issued a pet food recall, the U.S. Food and Drug Administration immediately commenced a thorough investigation of ChemNutra's wheat gluten, including documentation analysis, inspection, and laboratory testing. ChemNutra cooperated fully with the FDA and immediately notified its other three wheat gluten customers about the FDA's investigation. Those customers had all purchased smaller amounts of the Xuzhou Anying wheat gluten commencing in January, 2007. On Friday, March 30, the FDA announced they had found melamine in samples of the wheat gluten ChemNutra had imported from Xuzhou Anying. The FDA did not inform ChemNutra of any other impurities in the Xuzhou Anying wheat gluten, nor of any impurities in the wheat gluten from ChemNutra's other two Chinese suppliers. The toxicity of melamine is not clear. However, since melamine is not approved by the FDA for pet food, it should absolutely not have been in wheat gluten. ChemNutra is extremely concerned about the purity of all of its products. The company is particularly troubled that the certificates of analysis provided by the above-named supplier did not report the presence of melamine. ChemNutra wants to ensure its products are safe. Consequently, in addition to its ongoing cooperation with the FDA, ChemNutra will be conducting its own independent, analytical tests of wheat gluten from all of its suppliers. ChemNutra has sent recall notices to all four of its direct customers. CHICAGO BOARD: Faces Lawsuit in Del. Over Proposed $8.9B Merger --------------------------------------------------------------- The Chicago Board of Trade (CBOT) and its board of directors were named as defendants in a purported shareholder class action that challenges a proposed $8.9 billion merger with Chicago Mercantile Exchange Holdings, Inc. The Louisiana Municipal Employees' Retirement System filed the suit on March 16 in the Court of the Chancery of the State of Delaware in and for New Castle County. Specifically named as defendants in the suit are: -- CBOT Holdings, Inc.; -- Charles P. Carey; -- Robert F. Corvino; -- Bernard W. Dan; -- John E. Callahan; -- James E. Cashman; -- Mark E. Cermak; -- Jackie Clegg; -- Brent M. Coan; -- James A. Donaldson; -- Larry G. Gerdes; -- James P. McMillin; -- Joseph Niciforo; -- C.C. Odem, II; -- John Pittrzak; -- Christopher Stewart; -- Michael D. Walter; -- Charles M. Wolin; and -- Chicago Mercantile. The suit, which is seeking class-action status, alleges that the Chicago Mercantile merger agreement contains "numerous coercive and preclusive" protections that "heavily tilt the playing field in the favor of Chicago Mercantile." These provisions include a $240 million termination fee, and the prohibition of CBOT directors from seeking other suitors. According to the suit, by considering the Chicago Mercantile offer, CBOT directors put "their own personal interests ahead" of shareholders and failed "to maximize shareholder value." The suit makes three counts of claims of relief, they are: -- Count I - Class Action Claim For Breach of Fiduciary Duty Against the Individual Defendants; -- Count II - Class Action Claim For Breach of Fiduciary Duty of Disclosure Against the Individual Defendants; and -- Count III - Class Action Claim for Aiding and Abetting Breaches of Fiduciary Duties Against Chicago Mercantile. A copy of the complaint is available free of charge at: http://researcharchives.com/t/s?1d1e The suit is "Louisiana Municipal Employees' Retirement System v. CBOT Holdings, Inc., et al. Case No. 2803," filed in the Court of the Chancery of the State of Delaware in and for New Castle County. Representing the plaintiffs are: (1) Gerald H. Silk of Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019, Phone: (212) 554-1282 and (212) 554-1400, Fax: (212) 554-1444, E-mail: jerry@blbglaw.com, Web site: http://www.blbglaw.com;and (2) Stuart M. Grant of Grant & Eisenhofer, P.A., 1201 N. Market Street, Suite 2100, Wilmington, DE 19801, Phone: (302) 622-7070, Fax: (302) 622-7100, E-mail: sgrant@gelaw.com, Web site: http://www.gelaw.com/stuartm_grant.cfm. DIGITAL SECURITY: Recalls Smoke Detectors that Could Fail in Use ---------------------------------------------------------------- The U.S. Consumer Product Safety Commission, in cooperation with Digital Security Controls, of Toronto, Canada, is recalling about 32,000 units of Digital Security Controls FSA and FSB Series Smoke Detectors. The CPSC said these smoke detectors could fail to reliably detect smoke during a fire. No incidents or injuries have so far been reported. The recall involves Digital Security Controls FSA and FSB series photo-electric smoke detectors. They are wired directly into the building circuitry, and do not use a battery. The dome shaped units have a metal mesh covering around the smoke sensor. The smoke detectors, manufactured in Canada, are sold by commercial and residential installers nationwide from October 2006 through December 2006 for between $60 and $70 per unit. Customers are advised to immediately contact their installer to receive a free inspection to determine if their units are included in the recall. If so, they will receive free replacement smoke detectors with installation. Customers also can contact Digital Security Controls for additional information on how to receive free replacement smoke detectors. Only professional installers should remove and replace these units. Picture of the recalled product: http://www.cpsc.gov/cpscpub/prerel/prhtml07/07136.jpg Digital Security Controls on the Net: http://www.dsc.com. DIRECT GENERAL: Faces Suit in Tenn. Over Elara Holdings Merger -------------------------------------------------------------- Direct General Corp. faces a purported class action in the Circuit Court of Davidson County, Tennessee over its definitive merger agreement with Elara Holdings, Inc., according to the company's March 15 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2006. Elra Holdings is an affiliate of Calera Capital and TPG Capital (formerly known as Fremont Partners and Texas Pacific Group respectively), and Elara Merger Corp. On Jan. 4, a putative class action complaint was filed against the company under the caption, "Thompson v. Direct General Corp." The suit purports to be brought on behalf of all Direct General Corp. public shareholders and names Direct General Corp. and all of its directors as the Direct General defendants and Elra, Texas Pacific, and Fremont Partners as the Parent defendants. The complaint alleges that the company's board of directors violated fiduciary duties to shareholders by entering into the merger agreement, and that the Parent defendants aided and abetted the alleged violation. Furthermore, the complaint alleges, among other things, that the consideration to be paid to shareholders is grossly inadequate. Direct General Corp. on the Net: http://www.direct-general.com/. FARO TECHNOLOGIES: To Seek Dismissal of Securities Fraud Claims --------------------------------------------------------------- Faro Technologies, Inc. is seeking the dismissal of an amended complaint in a securities fraud class action pending against it in the U.S. District Court for the Middle District of Florida. On Dec. 6, 2005, the first of four essentially identical securities fraud suits were filed against the company and certain of its officers. On April 19, 2006, the four lawsuits were consolidated, and Kornitzer Capital Management, Inc. was appointed as the lead plaintiff. On May 16, 2006, Kornitzer filed its consolidated amended class action complaint against the company and the individual defendants. The amended complaint also names Grant Thornton LLP, the company's independent registered public accounting firm, as an additional defendant. In the amended complaint, Kornitzer seeks to represent a class consisting of all persons who purchased or otherwise acquired the company's publicly traded securities between April 15, 2004 and March 15, 2006. On behalf of the alleged class, Kornitzer seeks an unspecified amount of damages, premised on allegations that each defendant made misrepresentations and omissions of material fact during the class period in violation of the Securities Exchange Act of 1934. The Kornitzer suit alleges: -- that the company's reported gross margins and net income were knowingly overstated as a result of manipulation of the company's inventory levels; -- that the company failed to disclose deficiencies associated with the company's implementation and use of its enterprise resource planning system and material requirements planning system; -- made false and misleading statements regarding the company's internal controls; -- failed to disclose the fact that the company was accruing commissions and bonuses which would have a material, adverse effect upon the company's profitability; and -- improperly reported sales and net income based, in part, on sales and new orders obtained in violation of the Foreign Corrupt Practices Act. The company's deadline for responding to the second amended complaint is April 26. The company intends to file a motion to dismiss the second amended complaint, according to the company's March 15 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2006. The suit is "Goldberger v. Faro Technologies, Inc. et al., Case No. 6:05-cv-01810-ACC-DAB," filed in the U.S. District Court for the Middle District Court of Florida under Judge Anne C. Conway and with referral to Judge David A. Baker. Representing the plaintiffs are: (1) John F. Edgar and John M. Edgar of Edgar Law Firm, LLC, 4520 Main St., Suite 1650, Kansas City, MO 64111, US, Phone: 816/531-0033, Fax: 816/531-3322, E-mail: jfe@edgarlawfirm.com and jme@edgarlawfirm.com. (2) Patrick A. Klingman, Karen M. Leser, James E. Miller, James C. Shah, Nathan Zipperian and Scott R. Shepherd of Shepherd, Finkelman, Miller & Shah, LLC, Phone: 860- 526-1100, 610-891-9880 and 954-943-9191, Fax: 860-526- 1120, 610-891-9883 and 954-943-9173, E-mail: pklingman@sfmslaw.com, kleser@sfmslaw.com, jmiller@sfmslaw.com, jshah@classactioncounsel.com, nzipperian@classactioncounsel.com and sshepherd@classactioncounsel.com. Representing the defendants are: (i) Richard S. Davis and Robert A. Scher of Foley & Lardner, LLP, Phone: (407) 244-3260 and (212) 682-7474, Fax: (407) 648-1743 and (212) 687-2329, E-mail: rdavis@foley.com; and (ii) Daniel A. Casey and Jeffrey T. Kucera of Kirkpatrick & Lockhart Nicholson Graham, LLP, 201 S. Biscayne Blvd., Suite 2000, Miami, FL 33131-2399, Phone: 305-539-3324 and 305-539-3322, Fax: 305-358-7095, E-mail: dcasey@klng.com and jkucera@kl.com. FEDEX EXPRESS: Agrees to $53.5M Settlement of Racial Bias Case -------------------------------------------------------------- FedEx Express, a unit of FedEx Corp., agreed to settle for $53.5 million a racial discrimination lawsuit that was filed against the company in the U.S. District Court for the Northern District of California. The suit, "Satchell et al. v. FedEx Express," was originally filed on June 6, 2003 on behalf of: -- Daniel Sherman; -- Derrick Satchell; -- Kalini Boykin; -- Ken Stevenson; -- Kevin Smith; -- Rachel Hutchins; -- Rick Gonzales; -- Sophia Shainza Hanif; and -- Valerie Brown. In general, the suit alleges that the company discriminated against its African-American and Hispanic workers by passing them over for promotion, paying them less than white workers and treating them unfairly in evaluation and disciplinary proceedings. According to a FedEx spokeswoman, the $53.5 million cost of the settlement will be covered by insurance. She explains that the company entered into the settlement, which is still subject to court approval, voluntarily. The spokeswoman adds that the company decided to settle the case in order to avoid a lengthy and costly litigation and appeals process. James Finberg, a partner at San Francisco-based law firm Altshuler Berzon, L.L.P., which was handling the class action explains that settlement had been mediated by a third party. Under the proposed deal, the company denied any acts of racial discrimination. In addition, as part of the settlement, the company will tighten up and improve its human resources operations, according to a FedEx spokeswoman. The settlement would affect about 20,000 Hispanics and African- Americans who work or have worked for FedEx in the company's western U.S. region, which includes the states of California, Washington, Utah and Hawaii, since October 1999. The suit is "Satchell v. FedEx Express, Case No. 03-2659," filed in the U.S. District Court for the Northern District of California under Judge Susan Illston. Representing the plaintiffs are: (1) Guy B. Wallace of Schneider & Wallace, 180 Montgomery Street, Suite 2000, San Francisco, Ca 94109, Phone: 415-421-7100, Fax: 415-421-7105, E-mail: gwallace@schneiderwallace.com; (2) Michael S. Davis of The Law Offices of Michael S. Davis, 345 Hill Street, San Francisco, CA 94114, Phone: (415) 282-4315, Fax: (415) 358-5576, E-mail: msdlegal@comcast.net; (3) Waukeen Q. Mccoy of The Law Offices of Waukeen Q. McCoy, 703 Market Street, Suite 1407, San Francisco, CA 94103, Phone: 415-675-7705, Fax: 415-675-2530, E-mail: mccoylawsf@yahoo.com; and (4) James M. Finberg of Altshuler Berzon, LLP, 177 Post Street, Suite 300, San Francisco, CA 94108, Phone: 415- 421-7151, Fax: 415-362-8064, E-mail: jfinberg@altshulerberzon.com. FIRST DATA: Faces Del. Suit Over Kohlberg Acquisition Proposal -------------------------------------------------------------- First Data Corp. was named a defendant in a purported stockholder's class action that sought to block a planned $29 billion buyout of the company by investment firm Kohlberg Kravis Roberts & Co., The Rocky Mountain News reports. Chris Larson, a stockholder of the company, filed the suit in Delaware Chancery Court in Wilmington. He alleges in his suit that the deal shortchanges investors, and thus he is seeking an order blocking it "until the company adopts and implements a procedure or process to obtain the highest possible price." Mr. Larson also said in his complaint, which seeks class-action status, that KKR's offer, a 26 percent premium at the time, "is wholly inadequate, as First Data is worth far more than $34 a share." First Data Corp. on the Net: http://www.firstdata.com/. HARMONIC INC: August 2008 Trial Set in Securities Fraud Suit ------------------------------------------------------------ An August 2008 trial is slated for the consolidated securities class action against Harmonic, Inc., according to the company's March 15 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2006. Between June 28 and Aug. 25, 2000, several actions alleging violations of the federal securities were filed in or removed to the U.S. District Court for the Northern District of California. The actions were subsequently consolidated. A consolidated complaint, filed on Dec. 7, 2000, was brought on behalf of a purported class of persons who purchased Harmonic's publicly traded securities between Jan. 19 and June 26, 2000. It alleged claims on behalf of a purported subclass of persons who purchased C-Cube Microsystems Inc.securities between Jan. 19 and May 3, 2000. In addition to the company and certain of its officers and directors, the complaint also named C-Cube Microsystems and several of its officers and directors as defendants. The complaint alleged that, by making false or misleading statements regarding Harmonic's prospects and customers and its acquisition of C-Cube, certain defendants violated sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934 (the Exchange Act). The complaint also alleged that certain defendants violated section 14(a) of the Exchange Act and sections 11, 12(a)(2), and 15 of the U.S. Securities Act of 1933 by filing a false or misleading registration statement, prospectus, and joint proxy in connection with the C-Cube acquisition. On July 3, 2001, the District Court dismissed the consolidated complaint with leave to amend. An amended complaint alleging the same claims against the same defendants was filed on Aug. 13, 2001. Defendants moved to dismiss the amended complaint on Sept. 24, 2001. On Nov. 13, 2002, the District Court issued an opinion granting the motions to dismiss the amended complaint without leave to amend. Judgment for defendants was entered on Dec. 2, 2002. On Dec. 12, 2002, plaintiffs filed a motion to amend the judgment and for leave to file an amended complaint pursuant to Rules 59(e) and 15(a) of the Federal Rules of Civil Procedure. On June 6, 2003, the District Court denied plaintiffs' motion to amend the judgment and for leave to file an amended complaint. Plaintiffs filed a notice of appeal on July 1, 2003. A panel of three judges from the U.S. Court of Appeals for the 9th Circuit heard the appeal on Feb. 17, 2005. On Nov. 8, 2005, the 9th Circuit panel affirmed in part, reversed in part, and remanded for further proceedings the decision of the District Court. The 9th Circuit affirmed the District Court's dismissal of the plaintiffs' fraud claims under Sections 10(b), 14(a), and 20(a) of the Exchange Act with prejudice, finding that the plaintiffs failed to adequately plead their allegations of fraud. The 9th Circuit reversed the District Court's dismissal of the plaintiffs' claims under Sections 11 and 12(a)(2) of the Securities Act, however, finding that those claims did not allege fraud and therefore were subject to only minimal pleading standards. Regarding the secondary liability claim under Section 15 of the Securities Act, the 9th Circuit reversed the dismissal of that claim against Anthony J. Ley, the company's chairman and chief executive officer, and affirmed the dismissal of that claim against Harmonic, while granting leave to amend. The 9th Circuit remanded the surviving claims to the District Court for further proceedings. On Nov. 22, 2005, both the Harmonic defendants and the plaintiffs petitioned the 9th Circuit for a rehearing of the appeal. On Feb. 16, 2006 the 9th Circuit denied both petitions. On May 17, 2006 the plaintiffs filed an amended complaint on the issues remanded for further proceedings by the 9th Circuit, to which the Harmonic defendants responded with a motion to dismiss certain claims and to strike certain allegations. On Dec. 11, 2006, the court granted the motion to dismiss with respect to the Section 12(a)(2) claim against the individual Harmonic defendants and granted the motion to strike, but denied the motion to dismiss the Section 15 claim. A case management conference was held on Jan. 25, 2007, at which the court set a trial date in August 2008, with discovery to close in February 2008. The court also ordered the parties to attend a settlement conference with a magistrate judge or a private mediation before June 30. Harmonic, Inc. on the Net: http://www.harmonicinc.com/. ING LIFE: NYSUT Trust Members File ERISA Violations Lawsuit ----------------------------------------------------------- Two members of the ING Opportunity Plus and Opportunity Independence programs filed a suit alleging Employee Retirement Security Act violations against the management of the employee organization and the company that offered annuities under the programs. Plaintiffs Betsabe Montoya and Blanche Pesce filed the suit in U.S. District Court for the Southern District of New York on March 28. They filed the suit on behalf of themselves and other participants and beneficiaries of the ING Opportunity Plus and Opportunity Independence programs (the Plan), section 403(b) tax deferred annuity programs established and maintained by defendant New York State United Teachers Member Benefits Trust, an arm of defendant New York State United Teachers. The annuities offered under the Plan were issued by defendant ING Life Insurance and Annuity Co., and its predecessor Aetna Life Insurance and Annuity Co. (collectively, ING). This case is brought pursuant to sections 502(a)2 and (a)3 of the Employee Retirement Security Act of 1974, as amended, against the fiduciaries of the Plan for violations of ERISA. Defendants are: * NYSUT, * NYSUT Trust, * NYSUT Trust Board of Trustees during the class period, and * ING Life Insurance and Annuity Co. NYSUT and NYSUT Trust are accused of engaging in elaborate "exclusive endorsement" scheme whereby NYSUT Trust was paid millions of dollars by ING to market and promote the program directly to NYSUT members. They allegedly vigorously promoted the Plan for financial gain and to the detriment of the Plan participants. Defendants are accused of: -- breaching their duties of prudence and loyalty through their exclusive endorsement of the scheme; and -- breaching their fiduciary duties under ERISA by charging excessive fees and failing to adequately monitor the plan to ensure that it was in the best interests of the Plan participants; -- failing to provide complete and accurate information to Plan participants regarding endorsement fees paid to NYSUT Trust and Revenue Sharing Kickback Fees paid to ING. ING is accused of engaging in improper revenue sharing kickback scheme with Investment Advisors. The proposed class period is June 1, 1989 to Dec. 31, 2006. Plaintiffs pray for: -- an order compelling defendants to make good to the plan all losses to the plan resulting from defendants' breaches of their fiduciary duties, including losses to the plan resulting from imprudent investment of the plan's assets, to restore to the plan all profits the defendants made through use of the plan's assets; and to restore to the plan all profits which the plan participants would have made if defendants had fulfilled their fiduciary obligations; -- imposition of Constructive Trust on any amounts by which any defendant was unjustly enriched at the expense of the plan as the result of breaches of fiduciary duty, and in connection therewith: (1) an order requiring NYSUT Trust to disgorge the endorsement fees that it received from ING and pay such fees to the plan; (2) an order requiring ING to disgorge revenue sharing payments it received from Investment Advisors and to pay such payments to the plan; and (3) an order requiring ING to disgorge excessive fees charged to plan accounts with respect to its management and administration of the plan -- an order enjoining defendants, and each of them, from any further violations of their ERISA fiduciary obligations; -- an order requiring defendants to appoint one or more independent fiduciaries to participate in the management of the plan; -- an order awarding actual damages in the amount of any losses the plan suffered; -- an order awarding pre- and post- judgment interest based on the greatest of: (1) the defendants' internal rates of return; (2) the Pension Benefits Guaranty Corporation's interest rates; (3) statutory interest rates; -- an order awarding costs pursuant to ERISA Section 502(g), 29 U.S.C. Section 1132(g) and other applicable laws or regulations; -- an order awarding attorneys' fees pursuant to ERISA Section 502(g), 29 U.S.C. Section 1132(g) and the common fund doctrine; -- an order for equitable restitution and other appropriate equitable and injunctive relief against the defendants; and -- such other and further relief as the court may seem just and proper. A copy of the complaint is available free of charge at: http://ResearchArchives.com/t/s?1cfd The suit is "Montoya et al.v. ING Life Insurance and Annuity Co. et al., Case No. 1:07-cv-02574-NRB," filed in the U.S. District Court for the Southern District of New York under Judge Naomi Reice Buchwald. Representing plaintiffs are: (1) Jeffrey C. Engerman of Law Offices of Jeffrey C. Engerman, PC, 12400 Wilshire Boulevard, 7th Floor, Los Angeles, CA 90025, Phone: (310) 207-7777; (2) Gary A. Gotto of Keller Rohrback, L.L.P., 3101 North Central Avenue, Suite 1400, Phoenix, AZ 850012, Phone: (602) 248-0088; (3) Derek W. Loeser, Lynn Lincoln Sarko and Amy Williams- Derry, all of Keller Rohrback, L.L.P., 1201 Third Avenue, Suite 3200, Seattle, WA 98101, Phone: (206) 623-1900; and (4) David Steven Preminger of Rosen Preminger & Bloom LLP, 708 Third Avenue, Suite 1600, New York, NY 10017, Phone: (212) 682-1900, Fax: (212) 867-6878, E-mail: dpreminger@rpblawny.com. MICHIGAN: Talks to Settle Suit Over Foster Care System Unravel -------------------------------------------------------------- The Michigan Department of Human Services and Children's Rights, a New York advocacy group that filed a lawsuit to reform Michigan's foster care system, have broken off settlement talks designed to resolved the case. According to Marcia Lowry, the head of Children's Rights, the only way to now resolve the matter is by way of a trial. Ms. Lowry made the comment following a recent hearing before Judge Nancy Edmunds of the U.S. District Court for the Eastern District of Michigan. In that hearing, attorneys for the state argued to dismiss the lawsuit, which alleges the foster care system suffers from a gross shortage in resources and services for foster children. Judge Edmunds did not immediately issue a ruling; instead, she scheduled a June 2008 trial. Until recently, resolving the allegations in the lawsuit has been on a dual track. As the litigation moved forward, the parties involved entered into settlement talks. However, those talks broke off last week, according to Ms. Lowry. Case Background The suit, "D.B. et al. v. Granholm et al.," was filed on Aug. 8, 2006 by the Children's Rights. It was brought on behalf of six foster children identified by first names or last initial only. But it is expected to affect nearly 19,000 foster children in the state. In February, Judge Edmunds granted class-action status to the case, after reviewing written briefs and verbal arguments from lawyers for the advocacy group and the state Attorney General's Office. Generally, the suit seeks to force the state Department of Human Services to adequately provide for the safety, well-being, and permanency of foster children. In seeking for class certification, Children's Rights argued that Michigan's foster care system is accused of routinely violating the constitutional rights of foster children by denying them adequate services such as finding permanent adoptive homes. In arguing against class certification, Assistant Attorney General William Morris stated that the Children's Rights had not provided evidence that such problems afflict thousands of other children in the foster care system and that. He adds that in any event, the children have lawyers assigned to them and juvenile court judges can address the issues plaintiffs are raising. The suit is "D. B. et al. v. Granholm et al., Case No. 2:06-cv- 13548-NGE-DAS," filed in the U.S. District Court for the Eastern District of Michigan under Judge Nancy G. Edmunds with referral to Judge Donald A. Scheer. Representing the plaintiffs are: (1) Susan Lambiase, Children's Rights, 330 Seventh Avenue, New York, NY 10001, US, Phone: 212-683-2210; and (2) Richard J. Landau of Dykema Gossett (Ann Arbor), 2723 S. State Street, Suite 400, Ann Arbor, MI 48104-6188, Phone: 734-214-7669, E-mail: rlandau@dykema.com. Representing the defendants is William R. Morris of Michigan Department of Attorney General, P.O. Box 30758, Lansing, MI 48909, Phone: 517-373-7700, E-mail: morriswr@michigan.gov. NATURAL HEALTH: Faces Amended Securities Fraud Complaint in Tex. ---------------------------------------------------------------- Plaintiffs in a securities fraud class action pending in the U.S. District Court for the Northern District of Texas against Natural Health Trends Corp. have filed an amended complaint. On Sept. 11, 2006, The Rosen Law Firm P.A. filed a putative class action purportedly on behalf of certain purchasers of the company's common stock to recover damages caused by alleged violations of federal securities laws. The lawsuit names the company and certain current and former officers and directors as defendants. On Dec. 20, 2006, the court granted an unopposed motion to designate The Rosen Law Firm P.A. as lead counsel. On Feb. 18, the plaintiffs filed an amended complaint, according to the company's March 28 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2006. The suit "Zagami v. Natural Health Trends Corp et al., Case No. 3:06-cv-01654," is filed in the U.S. District Court for the Northern District of Texas under Judge Sidney A. Fitzwater. Representing the plaintiffs are: (1) Thomas E. Bilek of Hoeffner & Bilek, 1000 Louisiana St., Suite 1302, Houston, TX 77002, Phone: 713/227- 7720, Fax: 713/227-9404, E-mail: tbilek@hb-legal.com; (2) Christopher S. Hinton of The Hinton Law Firm, 350 Fifth Ave., Suite 5508, New York, NY 10118, Phone: 646/723- 3377, Fax: 212/202-3827; and (3) Phillip Kim and Laurence Rosen both of The Rosen Law Firm, 350 Fifth Ave., Suite 5508, New York, NY 10118, Phone: 212/686-1060, Fax: 214/202-3827. SEARS HOLDINGS: Faces Consolidated Securities Fraud Suit in N.Y. ---------------------------------------------------------------- Sears Holdings Corp. is facing a consolidated securities fraud class action filed in the U.S. District Court for the Southern District of New York. In May and July 2006, two putative class actions, which each name as defendants Sears Holdings Corp. and Edward Lampert, were filed in U.S. District Court for the Southern District of New York, purportedly on behalf of a class of persons that sold shares of Kmart Holding Corp. stock on or after May 6, 2003 through June 4, 2004. The plaintiffs in each case allege that Kmart Holding Corp.'s Plan of Reorganization and Disclosure Statement filed on Jan. 24, 2003 and amended on Feb. 25, 2003 misrepresented Kmart's assets, particularly its real estate holdings, as evidenced by the prices at which Kmart subsequently sold certain of its stores in June 2004 to Home Depot and Sears. They, thus, seek damages for alleged misrepresentations. On Dec. 19, 2006, the court consolidated the suits. Plaintiffs' consolidated complaint was due March 30. The suit is "In re: Sears Holdings Corp. Securities Litigation, Case No. 1:2006cv04053," filed in the U.S. District Court for the Southern District of New York. SEARS HOLDINGS: Still Faces Ill. Lawsuits Over Kmart Merger ----------------------------------------------------------- Sears Holdings Corp. remains a defendant in several purported class actions in Illinois in relation to its merger with Kmart Holding Corp., according to the company's March 27 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Feb. 3. Sears Holdings is the parent company of Kmart Holding Corp. and Sears, Roebuck and Co. It was formed as a Delaware corporation in 2004 in connection with the merger of Kmart and Sears. The merger, completed on March 24, 2005, combined two of America's oldest existing retail entities, both with origins dating to the late 1800s. Following the announcement of the merger on Nov. 17, 2004, several actions have been filed relating to the transaction. Fischer Litigation "William Fischer, et al. v. Sears, Roebuck and Co., et al.," was a consolidated action filed in the Circuit Court of Cook County, Illinois. Originally, the case was one of three actions that were filed and then later consolidated. The actions assert claims on behalf of a purported class of Sears' stockholders against Sears and certain of its officers and directors, together with Kmart, Edward S. Lampert, William C. Crowley and other affiliated entities, alleging breach of fiduciary duty in connection with the merger and seeking damages. The plaintiffs allege that the merger favors interested defendants by awarding them disproportionate benefits, and that the defendants failed to take appropriate steps to maximize the value of a merger transaction for Sears' stockholders. On Sept. 7, 2006, plaintiffs filed a notice of appeal of the court's Aug. 8, 2006 order dismissing plaintiffs' amended complaint. Briefing on the appeal is underway. Levie Litigation "Maurice Levie, et al. v. Sears, Roebuck & Co., et al.," was filed in the U.S. District Court for the Northern District of Illinois. This action asserts claims under the federal securities laws on behalf of a purported class of Sears' stockholders against Sears and Alan J. Lacy, for allegedly failing to make timely disclosure of merger discussions with Kmart during the period Sept. 9 through Nov. 16, 2004, and seeks damages. The court appointed a lead plaintiff and lead counsel, and an amended complaint was filed on March 11, 2005. The amended complaint names Edward S. Lampert and ESL Partners, L.P. as additional defendants, and purports to assert claims on behalf of sellers of Sears stock during the period Sept. 9 through Nov. 16, 2004. The defendants have answered the amended complaint. On Oct. 2, 2006, plaintiffs filed their motion for class certification, the briefing on which has been completed. Meanwhile, the parties have commenced written discovery. Sears Holdings Corp. on the Net: http://www.searsholdings.com/. SEARS ROEBUCK: Discovery Underway in Ill. Suit Over 7% Notes ------------------------------------------------------------ Discovery is ongoing in a purported class action relating to 7% notes that Sears Roebuck Acceptance Corp. issued on June 21, 2002. On June 17, 2003, an action was filed in the U.S. District Court for the Northern District of Illinois against the company and certain officers, purportedly on behalf of a class of all persons who, between June 21, 2002 and Oct. 17, 2002, purchased 7% notes that Sears Roebuck issued. Pursuant to a subsequently filed amended complaint, plaintiffs named as additional defendants certain former Sears officers not originally named, Sears Roebuck and several investment banking firms which had acted as underwriters for Sears Roebuck's March 18, May 21 and June 21, 2002 notes offerings. The complaint purports to allege violations of Sections 11, 12(a)(2), and 15 of the U.S. Securities Act of 1933, Section 10(b) of the U.S. Exchange Act and Rule 10b-5 promulgated thereunder and, as against the individual defendants, violations of Section 20(a) of the Exchange Act. The complaint purports to allege that defendants made a number of false and misleading statements in one or more prospectuses for debt securities offerings and in U.S. Securities and Exchange Commission filings and other public statements, concerning the adequacy of reserves for uncollectible accounts, and the condition of Sears' former credit business, among other things. Plaintiffs have filed a motion for class certification. Discovery is underway, according to Sears Holdings Corp.'s March 27 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Feb. 3 The suit is "Ong, et al. v. Sears Roebuck & Co., et al., Case No. 1:03-cv-04142," filed in the U.S. District Court for the Northern District of Illinois under Judge Rebecca R. Pallmeyer. Representing the plaintiffs is Carol V. Gilden of Much, Shelist, Freed, Denenberg, Ament & Rubenstein, P.C., 191 North Wacker Drive, Suite 1800, Chicago, IL 60605-1615, Phone: (312) 521- 2403, Fax: (312) 521-2100, E-mail: cgilden@muchshelist.com. Representing the defendants are: (1) Walter C. Carlson of Sidley Austin, LLP, One South Dearborn Street, Chicago, IL 60603, Phone: (312) 853- 7000, E-mail: wcarlson@sidley.com; (2) Robert Y. Sperling of Winston & Strawn, 35 West Wacker Drive, 41st Floor, Chicago, IL 60601, Phone: (312) 558- 5600, E-mail: rsperling@winston.com; and (3) Mary B. Anderson of Sonnenschein, Nath & Rosenthal, LLP, 233 South Wacker Drive, 8000 Sears Tower, Chicago, IL 60606, Phone: (312) 876-8000, E-mail: mbanderson@sonnenschein.com. SEARS ROEBUCK: Delivers $215M Ill. Securities Suit Settlement ------------------------------------------------------------- The U.S. District Court for the Northern District of Illinois entered an order and final judgment in a consolidated securities fraud class action against Sears, Roebuck and Co. that was settled for $215 million. On and after Oct. 18, 2002, several actions were filed in the U.S. District Court for the Northern District of Illinois against Sears and certain former officers alleging that certain public announcements by Sears concerning its credit card business violated Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The court consolidated the actions and certified the consolidated action as a class action. On Jan. 18, 2007, Sears made a payment to plaintiffs of approximately $215 million pursuant to the terms of a settlement dated Sept. 14, 2006. Sears received proceeds totaling $125 million from claims made under relevant insurance policies and thus the cash payment for settlement by Sears was approximately $90 million on a pre-tax basis. On Jan. 10, 2007, the court entered an order and final judgment as to the consolidated action and, with the time for appeal of such order and final judgment having expired without any appeal having been filed, this matter is concluded. The suit is "In re: Sears, Roebuck and Co. Securities Litigation, case no. 1:02-cv-07527," filed in the U.S. District Court for the Northern District of Illinois under Judge Elaine E. Bucklo. Representing the plaintiffs are: (1) Steven G. Schulman of Milberg Weiss Bershad & Schulman, LLP, One Pennsylvania Plaza, 49th Floor, New York, NY 10119-0165, Phone: (212) 594-5300; and (2) Jennifer Winter Sprengel of Miller Faucher and Cafferty, LLP, 30 North LaSalle Street, Suite 3200, Chicago, IL 60602, Phone: (312) 782-4880, E-mail: jsprengel@millerfaucher.com. Representing the defendants are: (i) Jeffrey C. Fourmaux of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, HY 10019, Phone: (212) 403-1000; and (ii) Harold C. Hirshman of Sonnenschein, Nath & Rosenthal, LLP, 233 South Wacker Drive, 8000 Sears Tower, Chicago, IL 60606, Phone: (312) 876-8000, Web site: http://www.sonnenschein.com. SEARS ROEBUCK: Settles Consolidated ERISA Violations Suit --------------------------------------------------------- Sears, Roebuck, and Co., a wholly owned subsidiary of Sears Holdings Corp., have reached a settlement for the matter, " In re: Sears, Roebuck and Co. ERISA Litigation," according to Sears Holdings' March 27 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Feb. 3. On and after Nov. 15, 2002, several actions were filed in the U.S. District Court for the Northern District of Illinois against Sears, certain officers and directors, and alleged fiduciaries of Sears' 401(k) Savings Plan, seeking damages and equitable relief under the Employee Retirement Income Security Act of 1974. The plaintiffs purport to represent participants in the Plan, and allege breaches of fiduciary duties under ERISA in connection with the Plan's investment in Sears' common shares and alleged communications made to Plan participants regarding Sears' financial condition. The court has consolidated these actions and certified the consolidated action as a class action. Pursuant to an agreement dated Feb. 13, defendants have agreed to settle the matter. The suit is "Kehr v. Sears Roebuck & Co., et al., Case No. 1:02- cv-08324," filed in the U.S. District Court for the Northern District of Illinois under Judge John W. Darrah. Representing the plaintiffs are: (1) Steven E. Cauley of Lerach Coughlin Stoia Geller Rudman & Robbins, LLP, 200 Broadhollow Road, #406, Melville, NY 11747, Phone: (631) 367-7100; and (2) Christopher B. Sanchez of Miller Faucher and Cafferty, LLP, 30 North LaSalle Street, Suite 3200, Chicago, IL 60602, (312) 782-4880, E-mail: csanchez@millerfaucher.com. Representing the defendants are: (i) Harold C. Hirshman of Sonnenschein, Nath & Rosenthal, LLP, 233 South Wacker Drive, 8000 Sears Tower, Chicago, IL 60606, Phone: (312) 876-8000; and (ii) Elissa Eun Choo Rhee-Lee of Sears, Roebuck & Co., Sears Law Department, 3333 Beverly Road, Hoffman Estates, IL 60179, Phone: (708) 286-9214. SELECT MEDICAL: Pa. Securities Fraud Lawsuit in Discovery Phase --------------------------------------------------------------- The securities class action pending against Select Medical Corp. in the U.S. District Court for the Eastern District of Pennsylvania remains in the discovery and class certification phase, according to the company's March 28 Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 3006. On Aug. 24, 2004, Clifford C. Marsden and Ming Xu filed a purported class action complaint on behalf of the public stockholders of the company against Martin F. Jackson, Robert A. Ortenzio, Rocco A. Ortenzio, Patricia A. Rice and the company. In February 2005, the court appointed James Shaver, Frank C. Bagatta and Capital Invest, die Kapitalanlagegesellschaft der Bank Austria Creditanstalt Gruppe GmbH as lead plaintiffs. On April 19, 2005, lead plaintiffs filed an amended complaint, purportedly on behalf of a class of shareholders of Select, against Martin F. Jackson, Robert A. Ortenzio, Rocco A. Ortenzio, Patricia A. Rice, and the company as defendants. The amended complaint continues to allege, among other things, failure to disclose adverse information regarding a potential regulatory change affecting reimbursement for the company's services applicable to long-term acute care hospitals operated as hospitals within hospitals, and the issuance of false and misleading statements about the financial outlook of the company. The amended complaint seeks, among other things, damages in an unspecified amount, interest and attorneys' fees. The company believes that the allegations in the amended complaint are without merit and intends to vigorously defend against this action. In April 2006, the court granted in part and denied in part the company and the individual officers' preliminary motion to dismiss the amended complaint. In February 2007, the court vacated in part its previous decision on the company's and the individual officers' motion to dismiss and dismissed plaintiffs' claims regarding the company's alleged improper revenue practices. The company and the individual officers have answered the amended complaint and the case has moved to the discovery and class certification phase. The suit is "Marsden, et al. v. Select Medical Corp., et al., Case No. 2:04-cv-04020-JCJ," filed in the U.S. District for the Eastern District of Pennsylvania under Judge J. Curtis Joyner. Representing the plaintiffs are: (1) Sanford P. Dumain, Lori G. Feldman, Shannon L. Hopkins and Peter E. Seidman of Milberg Weiss Bershad & Schulman, LLP, One Pennsylvania Plaza, New York, NY 10119, Phone: 212-594-5300, E-mail: sdumain@milbergweiss.com, lfeldman@milbergweiss.com and shopkins@milbergweiss.com; and (2) Eric L. Young of Kenney Lennon & Egan, 3031 Walton Road, Building C, Suite 202, Plymouth, PA 19462, Phone: 215-260-5493, E-mail: eyoung@kle-law.com. Representing the defendants are, David M. Howard, Michael L. Kichline and Stuart T. Steinberg of Dechert, LLP, Phone: 215- 994-4000, 215-994-2749 and 215-994-2521, E-mail: david.howard@dechert.com, michael.kichline@dechert.com and stuart.steinberg@dechert.com. UNIVERSAL ENGINEERING: Recalls Motorcycle Radius Triple Clamps -------------------------------------------------------------- Universal Engineering, of Temecula, California, in cooperation with the U.S. Consumer Product Safety Commission, is recalling 48 radius triple clamps sold for use with Motocross Motorcycles. CPSC said the radius triple clamps on these motorcycles can crack during operation, posing a risk that the fork of the bike could separate and result in serious injury or death to the rider. No incidents or injuries have been reported so far. The recall involves Radius Triple Clamps sold as an upgrade for use with a certain make and models of motocross motorcycles. The clamps are black in color and display the Universal logo on each end and the name "UNIVERSAL" on one side. They were ordered under part numbers 1025-40-0618 and 1025-40-0678. The radius triple clamps were made in China and sold at off-road motorcycle dealers and distributors sold the recalled clamps from July 2006 through February 2007 for about $180. Consumers who have installed the Clamp should not operate their motorcycle until the Clamp has been removed and replaced with a factory OEM clamp. Universal Engineering will not be issuing replacement clamps. Universal Engineering is providing a full refund for the cost these clamps. Consumers who have been identified as having purchased the Clamps will be notified by mail directly from Universal Engineering. Picture of the recalled product: http://www.cpsc.gov/cpscpub/prerel/prhtml07/07538.jpg * FDA Orders Recall of Pergolide Drugs Linked to Heart Disease -------------------------------------------------------------- The U.S. Food and Drug Administration announces that manufacturers of pergolide drug products, which are used to treat Parkinson's disease, will voluntarily remove these drugs from the market because of the risk of serious damage to patients' heart valves. The products being withdrawn are Permax, the trade name for pergolide marketed by Valeant Pharmaceuticals, and two generic versions of pergolide manufactured by Par and Teva. Pergolide is in a class of medications called dopamine agonists and is used with levodopa and carbidopa to manage the symptoms (tremors and slowness of movement) of Parkinson's disease. In 2006, an estimated 12,000 patients received prescriptions for pergolide from retail pharmacies in the U.S. Patients taking pergolide should contact their doctors to discuss alternate treatments. Patients should not stop taking the medication, as stopping pergolide abruptly can be dangerous. There are alternative therapies available for Parkinson's disease, including three other dopamine agonists that have not been associated with valvular heart disease. The removal of pergolide products is not expected to adversely affect patient care because of the alternative therapies available. "Based on important new drug safety information, FDA has been working with the manufacturers of pergolide products to voluntarily remove these drugs from the market," said Douglas Throckmorton, M.D., deputy director of FDA's Center for Drug Evaluation and Research. "The FDA's increased evaluation of post-market safety is benefiting the public because, in this case, as new data about the product became available, we were able to remove a less safe drug from the market." Two recent New England Journal of Medicine studies confirm previous findings associating pergolide with increased chance of regurgitation (backflow of blood) of the mitral, tricuspid, and aortic valves of the heart. Valve regurgitation is a condition in which valves don't close tightly, allowing blood to flow backward across the valve. Symptoms include shortness of breath, fatigue and heart palpitations. In light of this additional post-market safety information, the companies that manufacture and sell pergolide will stop shipping pergolide for distribution and, in cooperation with FDA, will withdraw the products from the market. Permax was approved in 1988 for Eli Lilly and company as an adjunctive therapy with levodopa in Parkinson's disease. Valvular heart disease was first described in association with pergolide in 2002. In 2003, FDA asked Lilly to add valvulopathy (abnormality of cardiac valves) to the warnings section of Permax labeling, at which time a Dear Healthcare Practitioner letter was sent by Lilly. In 2006, the warning was upgraded to a black box warning, the FDA's strongest form of warning, because of new data concerning risks of heart valve damage. FDA is issuing a Public Health Advisory detailing the removal of pergolide products from the market. Information and recommended actions for physicians, pharmacists and patients are available at http://www.fda.gov/cder/drug/advisory/pergolide.htm. The effect of the voluntary withdrawal on supplies of pergolide currently in pharmacies will not be immediate. This delay will allow time for health care providers and patients to discuss appropriate treatment options and time to change treatments. FDA is working with the manufacturers of pergolide to determine if it might be possible, once the drug is withdrawn from the market, to make the drug available under an Investigational New Drug Application for those few patients who are currently receiving pergolide and who cannot be successfully converted to other available treatments. Asbestos Alert ASBESTOS LITIGATION: Crown Cork Accrues $198M for Claims in 4Q06 ---------------------------------------------------------------- Crown Cork & Seal Company Inc., a Crown Holdings Inc. subsidiary, as of Dec. 31, 2006, accrued US$198 million for pending and future asbestos-related claims, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. Crown Cork estimates that its range of potential liability for pending and future asbestos claims that are probable and estimable is between US$198 million and US$247 million. Crown Cork faces suits filed throughout the U.S. by persons alleging bodily injury as a result of exposure to asbestos. In 1963, Crown Cork acquired a subsidiary that had two operating businesses, one of which is alleged to have made asbestos- containing insulation products. The Company recorded pre-tax charges of US$10 million in 2006 and 2005 to increase its accrual for asbestos-related liabilities. Crown Cork made cash payments of US$26 million in 2006 and US$29 million in 2005 for asbestos-related claims. Non-current asbestos liabilities were US$173 million in 2006, compared with US$184 million in 2005. During 2006, Crown Cork received 5,000 new claims, settled or dismissed 5,000 claims, and had 79,000 claims outstanding at the end of the year. During 2005, Crown Cork received 9,000 new claims, settled or dismissed 4,000 claims, and had 79,000 claims outstanding at the end of the year. The outstanding claims at Dec. 31, 2006 exclude 33,000 pending claims involving plaintiffs who allege that they are, or were, maritime workers subject to exposure to asbestos. Historically (1977-2006), Crown Cork estimates that about one- quarter of all asbestos-related claims made against it have been asserted by claimants who claim first exposure to asbestos after 1964. Based in Philadelphia, Crown Holdings Inc. designs, manufactures, and sells packaging products. The Company's main products include steel and aluminum cans for food, beverage, household, and other consumer products and metal caps and closures. At Dec. 31, 2006, the Company operated 141 plants along with sales and service facilities throughout 42 countries and had about 21,700 employees. ASBESTOS LITIGATION: Claims v. Cytec Ind. Drop to 8,600 in 4Q06 ---------------------------------------------------------------- Cytec Industries Inc., for the year ended Dec. 31, 2006, had 8,600 claimants in asbestos-related lawsuits, compared with 22,200 claimants for the year ended Dec. 31, 2005, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. In the nine months ended Sept. 30, 2006, the Company recorded 9,100 claimants in asbestos-related suits, compared with 18,100 claimants in the year ended Dec. 31, 2005. (Class Action Reporter, Nov. 24, 2006) For the year ended Dec. 31, 2006, the Company recorded 15,800 claimants associated with claims closed and 2,200 claimants associated with claims opened. For the year ended Dec. 31, 2005, the Company recorded 12,500 claimants associated with claims closed and 7,200 claimants associated with claims opened. The Company has been named as a defendant in suits filed by persons alleging bodily injury from asbestos. The claimants allege exposure to asbestos at facilities that the Company owned or formerly owned or from products that the Company formerly made for specialized applications. At Dec. 31, 2006, the Company's asbestos liability was US$54.6 million, compared with US$47.8 million at Dec. 31, 2005. At Dec. 31, 2006, the Company's asbestos-related insurance receivable was US$38.1 million, compared with US$34.7 million at Dec. 31, 2005. Based in West Paterson, N.J., Cytec Industries Inc. is a specialty chemicals and materials company focused on developing, manufacturing and selling value-added products. The Company's products serve end markets including aerospace, adhesives, automotive and industrial coatings, chemical intermediates, inks, mining and plastics. ASBESTOS LITIGATION: Chubb Corp. Reserves $841M for Claims in 4Q ---------------------------------------------------------------- The Chubb Corp., for the year ended Dec. 31, 2006, recorded gross asbestos-related loss reserves of US$841 million, compared with US$930 million for the year ended Dec. 31, 2005, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. For the year ended Dec. 31, 2006, the Company recorded net asbestos-related loss reserves of US$789 million, compared with US$880 million for the year ended Dec. 31, 2005. At Dec. 31, 2006, the Company had 414 policyholders, of which 22 were traditional defendants and 392 were peripheral defendants. At Dec. 31, 2006, the Company had net loss reserves of US$22 million and paid US$43 million for the 22 traditional defendants. At Dec. 31, 2006, the Company had net loss reserves of US$451 million and paid US$66 million for the 392 peripheral defendants. In December 2002, Company subsidiary Chubb Indemnity Insurance Co. was named in actions commenced by various plaintiffs against Chubb Indemnity and other non-affiliated insurers in the District Courts in Nueces, Travis and Bexar Counties in Texas. The plaintiffs generally allege that Chubb Indemnity and the other defendants breached duties to asbestos product end-users and conspired to conceal risks associated with asbestos exposure. The plaintiffs seek to impose liability on insurers directly. The plaintiffs seek unspecified monetary damages and punitive damages. Pursuant to the asbestos reform bill passed by the Texas legislature in May 2005, these actions were transferred to the Texas state asbestos Multidistrict Litigation on Dec. 1, 2005. In June 2003, Chubb Indemnity was also named in a number of similar cases in Cuyahoga, Mahoning, and Trumbull Counties in Ohio. The allegations and the damages sought in the Ohio actions are substantially similar to those in the Texas actions. In May 2005, the Ohio Court of Appeals sustained the trial court's dismissal of a group of nine cases for failure to state a claim. After the appellate court's decision, Chubb Indemnity and other non-affiliated insurers were dismissed from the remaining cases filed in Ohio, except for a single case, which had been removed to federal court and transferred to the federal asbestos Multidistrict Litigation. There has been no activity in that case since its removal. Based in Warren, N.J., The Chubb Corp. is known for comprehensive homeowners insurance for yacht owners. The Company also offers property-casualty insurance to companies. The Company's specialty commercial insurance includes the lucrative executive risk business that offers professional liability policies to executives. ASBESTOS LITIGATION: EMC Insurance Group Reserves $7.29M at 4Q06 ---------------------------------------------------------------- EMC Insurance Group Inc., at Dec. 31, 2006, recorded US$7,288,116 as reserves for asbestos and environmental related claims for direct insurance and assumed reinsurance business, compared with US$6,895,641 at Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 15, 2007. The Company has exposure to A&E claims associated with the insurance business written by the parties to the pooling agreement and the reinsurance business assumed from Employers Mutual Casualty Co. by the reinsurance subsidiary. However, with regard to the assumed reinsurance business, all A&E exposures related to 1980 and Employers Mutual retains prior accident years. For the year ended Dec. 31, 2006, the Company incurred US$945 million for A&E losses and settlement expenses, compared with US$1.660 billion for the year ended Dec. 31, 2005. For the year ended Dec. 31, 2006, the Company reserved US5.182 billion for A&E loss and settlement expense, compared with US$4.680 billion for the year ended Dec. 31, 2006. The Company is defending about 600 asbestos bodily injury lawsuits, some of which involve multiple plaintiffs. Most of these defenses are subject to express reservation of rights based upon the lack of an injury within the Company's policy periods, because many asbestos suits do not specifically allege dates of asbestos exposure or dates of injury. At Dec. 31, 2006, about 25,000 plaintiff cases remain open. Four former policyholders and one current policyholder dominate the Company's asbestos claims. At Dec. 31, 2006, the Company carried A&E reserves for direct insurance and assumed reinsurance business totaling US$7,288,000, which represents 1.3 percent of total loss and settlement expense reserves. The A&E reserves include US$1,367,000 of case loss reserves, US$4,185,000 of IBNR loss reserves, and US$1,736,000 of bulk settlement expense reserves. At Dec. 31, 2006, the Company had 57,569 open asbestos-related claims, reported 33,145 claims during the year, and disposed of 34,176 claims during the year. At Dec. 31, 2005, the Company had 58,600 open asbestos-related claims, reported 925 claims in 2006, and disposed of 579 claims during the year. Based in Des Moines, Iowa, EMC Insurance Group Inc. conducts operations in property and casualty insurance and reinsurance through its subsidiaries. The Company focuses on the sale of commercial lines of property and casualty insurance to small and medium-sized businesses. Most of the Company's business is marketed and generated in the Midwest. ASBESTOS LITIGATION: General Motors Has $127M Charge for Claims ---------------------------------------------------------------- General Motors Corp., in the 2006-4th quarter, recorded an additional US$127 million charge for unasserted asbestos-related claims, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 15, 2007. The charge reduced net income by US$82 million or earnings per share by US$0.15 for the year ended Dec. 31, 2006. The Company has been subject to asbestos-related claims. The Company has seen these claims arise from three circumstances. Most of these claims seek damages for illnesses alleged to have resulted from asbestos used in brake components. A limited numbers of claims have arisen from asbestos in the insulation and brakes used in the manufacturing of locomotives and claims brought by contractors who allege exposure to asbestos-containing products while working on Company premises. The Company said it believes that the US$127 million recorded at Dec. 31, 2006, is the best estimate of its minimum probable future obligation for the resolution of incurred but not yet reported asbestos claims. Based in Detroit, General Motors Corp. makes cars and trucks with brands like Buick, Cadillac, Chevrolet, GMC, Pontiac, Saab, and Saturn. The Company also produces cars through its Holden, Opel, and Vauxhall units, and heavy-duty transmissions through Allison Transmission. ASBESTOS LITIGATION: NYMAGIC Reserves $55.4M for A&E Policies ---------------------------------------------------------------- NYMAGIC Inc.'s gross reserves for asbestos/environmental policies, at Dec. 31, 2006, amounted to US$55.4 million, compared with US$72.2 million at Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 15, 2007. At Dec. 31, 2006, the Company's ceded reserves for A&E policies amounted to US$43.2 million, compared with US$59.2 million at Dec. 31, 2005. At Dec. 31, 2006, the Company's net loss and loss adjustment expense reserves for A&E policies amounted to US$12.2 million, compared with US$13 million at Dec. 31, 2005. For the year ended Dec. 31, 2006, the Company recorded 401 pending claims, 80 claims reported during the year, and 148 claims settled, dismissed, or otherwise resolved. For the year ended Dec. 31, 2005, the Company recorded 469 pending claims, 96 claims reported during the year, and 102 claims settled, dismissed, or otherwise resolved. Based in New York, NYMAGIC INC. is a holding company, which owns and operates insurance companies, risk bearing entities and insurance underwriters and managers. ASBESTOS LITIGATION: Essex Still Faces Product Liability Actions ---------------------------------------------------------------- Superior Essex Inc. said that, since about 1990, Essex International Inc. and certain subsidiaries have been faced with asbestos-related product liability lawsuits, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 15, 2007. Essex International is a subsidiary of Superior Essex Holding Corp., which is a subsidiary of Superior Essex Inc. The suits were filed by electricians, other skilled tradesmen and others claiming injury, in most cases, from exposure to asbestos found in electrical wire products. Litigation against various past insurers of Essex International, in which the insurers had previously refused to defend and indemnify Essex International against these suits, was settled in 1999. Under the settlement, Essex International was reimbursed for most of its costs and expenses incurred in the defense of these suits. The insurers have also undertaken to defend, are currently defending and, will indemnify Essex International against those asbestos suits. Under Superior TeleCom Inc.'s plan of reorganization, certain of the claimants in these actions will be able to assert claims under applicable insurance coverage and other arrangements. Based in Atlanta, Superior Essex Inc. operates as a wire and cable manufacturer with a broad portfolio of wire and cable products with primary applications in the communications, magnet wire, and related distribution markets. The Company operates 21 manufacturing facilities in North America, Europe, and China, and employs more than 4,000 people. ASBESTOS LITIGATION: Ford Motor Co.'s Defense Costs Drop in 2006 ---------------------------------------------------------------- Ford Motor Co.'s annual payout and related defense costs in asbestos cases decreased in 2006, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. However, the Company said that these costs may become substantial in the future. The Company's annual payout and related defense costs in asbestos cases had been increasing between 1999 and 2003, and began to decline in 2004 and 2005. Asbestos was used in brakes, clutches and other automotive components dating from the early 1900s. Along with other vehicle manufacturers, the Company has been the target of asbestos litigation and is a defendant in various actions for injuries claimed to have resulted from alleged contact with certain Ford parts and other products with asbestos. Plaintiffs in these personal injury cases allege various health problems as a result of asbestos exposure, either from component parts found in older vehicles, insulation or other asbestos products in Company facilities, or asbestos aboard its former maritime fleet. Most of these cases have been filed in state courts. Most of the asbestos litigation the Company faces involves mechanics or other individuals who have worked on the brakes of the Company's vehicles over the years. In most of the asbestos litigation, the Company is not the sole defendant. Most of the Company's asbestos cases do not specify a dollar amount for damages, and in many of the other cases the dollar amount specified is the jurisdictional minimum. The majority of these cases involve multiple defendants, with the number in some cases exceeding one hundred. Many of these cases also involve multiple plaintiffs, and the Company is often unable to tell from the pleadings which of the plaintiffs are making claims against the Company as opposed to other defendants. Based in Dearborn, Mich., Ford Motor Co. makes cars and trucks with brands like Ford, Lincoln, and Mercury. ASBESTOS LITIGATION: GlobalSantaFe Units Face 6 Pending Suits ---------------------------------------------------------------- Certain GlobalSantaFe Corp. subsidiaries continue to face six asbestos-related lawsuits filed in Mississippi, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. Five of the Mississippi suits are pending in the Circuit Court of Jones County and one of which is pending in the Circuit Court of Jasper County, Miss., alleging that certain individuals aboard its offshore drilling rigs had been exposed to asbestos. These six suits are part of a group of 23 suits filed on behalf of about 800 plaintiffs against a large number of defendants, most of which are not affiliated with the Company. The Company's subsidiaries have not been named as defendants in any of the other 17 suits. The suits assert claims based on theories of unseaworthiness, negligence, strict liability and the Company's subsidiaries' status as Jones Act employers; and seek unspecified compensatory and punitive damages. In general, the defendants are alleged to have made, distributed, or utilized products with asbestos. In the case of the Company's named subsidiaries and that of several other offshore drilling companies named as defendants, the suits allege those defendants allowed those products to be used aboard offshore drilling rigs. Based in Houston, GlobalSantaFe Corp. is an offshore oil and gas drilling contractor, owning or operating a fleet of 59 marine drilling rigs. As of Dec. 31, 2006, the Company's fleet included 43 cantilevered jackup rigs, 11 semisubmersible rigs, three drillships, and two more semisubmersible rigs the Company operates for third parties. ASBESTOS LITIGATION: GSF Unit Has Pending Insurer Suit in Calif. ---------------------------------------------------------------- A GlobalSantaFe Corp. subsidiary continues to be involved in an asbestos-related insurance lawsuit filed against its insurance underwriters in the Superior Court of San Francisco County, Calif., according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. Filed in 2004, the suit seeks a declaration as to its rights to insurance coverage and the proper allocation among its insurers of liability for claims payments in order to assist in the future management and disposition of certain claims. The subsidiary's three primary insurers have historically been paying settlement and defense costs for the subsidiary. One of these insurers was nearing insolvency and claimed exhaustion of its coverage limits. However, after negotiations, the insurer has agreed to make a cash payment in exchange for a release of all further liability for the subsidiary's asbestos liabilities. Both of the subsidiary's other primary insurers have entered into settlement agreements with the subsidiary that will provide for limited additional funding of asbestos liabilities and attorneys' fees and associated costs. The insurance coverage in question relates to suits filed against the subsidiary arising out of its involvement in the design, construction and refurbishment of major industrial complexes. The operating assets of the subsidiary were sold and its operations discontinued in 1989, and the subsidiary has no remaining assets other than the insurance policies involved in the litigation and funds received from the cancellation of certain insurance policies. The subsidiary has been named as a defendant in suits alleging personal injury from exposure to asbestos. As of Jan. 1, 2007, the subsidiary had been named as a defendant in about 4,200 lawsuits, the first of which was filed in 1990, and a number of which are pending. The Company said it believes that as of Jan. 1, 2007, from US$35 million to US$40 million had been expended to resolve claims (including both attorney fees and expenses, and settlement costs, with the subsidiary having expended US$4 million of that amount due to insurance deductible obligations. The same subsidiary is a defendant in a suit filed against it by Union Oil Company of California in the Circuit Court of Cook County, Ill. That suit arises out of claims alleging personal injury caused by exposure to asbestos at a refinery owned by Union and constructed by the Company's subsidiary. Union has alleged that the subsidiary is required to defend and indemnify it under the terms of contracts entered into for the construction of the refinery. The Company has also been named as a defendant in the pending litigation. Based in Houston, GlobalSantaFe Corp. is an offshore oil and gas drilling contractor, owning or operating a fleet of 59 marine drilling rigs. As of Dec. 31, 2006, the Company's fleet included 43 cantilevered jackup rigs, 11 semisubmersible rigs, three drillships, and two more semisubmersible rigs the Company operates for third parties. ASBESTOS LITIGATION: Halliburton Co. Has $240M Receivable in 4Q ---------------------------------------------------------------- Halliburton Co.'s insurance receivables for asbestos- and silica-related liabilities, at Dec. 31, 2006, totaled US$240 million, of which US$68 million is current, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. Several Company subsidiaries, particularly DII Industries and Kellogg Brown & Root, face asbestos- and silica-related suits. Effective Dec. 31, 2004, the Company resolved all open and future claims in the prepackaged Chapter 11 proceedings of DII Industries, Kellogg Brown & Root, and the Company's other affected subsidiaries, which were filed on Dec. 16, 2003, when the plan of reorganization became final and nonappealable. In 2004, the Company settled insurance disputes with substantially all the insurance companies for asbestos- and silica-related claims and all other claims under the applicable insurance policies and terminated all the applicable insurance policies. In 2006, the Company received about US$167 million in asbestos- and silica-related insurance proceeds. The Company expects to receive US&68 million in 2007, US$46 million in 2008, $131 million in 2009, and US$16 million in 2010. Based in Houston, Halliburton Co.'s 80 percent-owned KBR division has two segments: Government and Infrastructure provides logistics, management, and field support for military bases and civilian installations; and Energy and Chemicals designs and builds oil production facilities around the world as well as offshore. ASBESTOS LITIGATION: Hercules Has 26,045 Pending Claims in 4Q06 ---------------------------------------------------------------- Hercules Inc., as of Dec. 31, 2006, recorded about 26,045 unresolved asbestos-related claims, of which about 980 were premises claims and the rest were products claims, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. There were also about 2,075 unpaid claims, which have been settled or are subject to the terms of a settlement agreement. As of Sept. 30, 2006, the Company recorded about 30,125 unresolved asbestos-related claims, of which about 995 were premises claims and the rest were products claims. (Class Action Reporter, Nov. 24, 2006) The Company faces asbestos-related personal injury lawsuits and claims that arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products that were sold by one of the Company's former subsidiaries to a limited industrial market. The Company also faces suits alleging exposure to asbestos at facilities formerly or presently owned or operated by the Company. Moreover, as of Dec. 31, 2006, there were about 528 claims, which have either been dismissed without payment or are in the process of being dismissed without payment, but with plaintiffs retaining the right to re-file. Between Jan. 1, 2006 and Dec. 31, 2006, the Company received about 2,665 new claims. During that same period, the Company spent about US$31.5 million to resolve and defend asbestos matters, including $23.1 million in settlement payments and about US$8.4 million for defense costs. Based in Wilmington, Del., Hercules Inc. makes and markets specialty chemicals and related services for a broad range of business, consumer and industrial applications. The Company has operations in North America, Europe, Asia, and Latin America. Product sales occur in over 135 countries with significant revenue streams generated on five continents. ASBESTOS LITIGATION: Hercules Records $233.6M Liabilities in 4Q ---------------------------------------------------------------- Hercules Inc.'s long-term asbestos-related liabilities, as of Dec. 31, 2006 and Dec. 31, 2005, amounted to US$233.6 million, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. As of Dec. 31, 2006 and Dec. 31, 2005, the Company's current asbestos-related liabilities amounted to US$36.4 million. As of Dec. 31, 2006, the Company's long-term asbestos-related assets amounted to US$87.5 million, compared with US$120.7 million as of Dec. 31, 2005. The Company's primary and first level excess insurance policies that provided coverage for these asbestos-related matters exhausted their products limits at or before the end of July 2003. On Nov. 27, 2002, the Company initiated litigation against the solvent excess insurance carriers that provided insurance coverage for asbestos-related liabilities in a matter captioned Hercules Inc. v. OneBeacon, et al., Civil Action No. 02C-11-237 (SCD), Superior Court of Delaware, New Castle County. Beginning in August 2004 and continuing through October 2004, the Company entered into settlements with all of the insurers named in that suit. As a result, the suit was dismissed in early November 2004. The Company entered into several settlements with its insurers in 2004. The first settlement involved insurance policies issued by certain underwriters at Lloyd's, London, and reinsured by Equitas Ltd. and related entities. As part of that settlement, Equitas placed US$67 million into a trust set up to reimburse the Company for a portion of the costs it incurred to defend and resolve certain asbestos claims. On Jan. 4, 2007, the Company received as a lump sum distribution about US$41.3 million, an amount representing a complete liquidation of the remaining balance of the Equitas Trust, including accrued interest, and the Equitas Trust has been terminated. In addition, effective Oct. 8, 2004, the Company entered into a comprehensive confidential settlement agreement with respect to certain insurance policies issued by various insurance companies operating in the London insurance market, and by one insurance company located in the United States. Under the terms of the Second Settlement Agreement, the participating insurers agreed to place a total of about US$102.2 million into a trust, with such amount to be paid over a four- year period commencing in January 2005 and ending in 2008. As of Dec. 31, 2006, about US$66.1 million of the US$102.2 million had been placed into the Second Trust, and the Second Trust had a balance of about US$13.8 million. On or about Jan. 31, 2007, an extra US$16.4 million was placed into the Second Trust. In addition, effective Oct. 13, 2004, the Company reached a confidential settlement agreement with the balance of its solvent excess insurers whereby a significant portion of the costs incurred by the Company with respect to future asbestos product liability claims will be reimbursed, subject to those claims meeting certain qualifying criteria. That agreement is not expected to result in reimbursement to the Company, however, unless and until defense costs and settlement payments for qualifying asbestos products claims paid by the Company subsequent to the effective date of the agreement (with credit for certain amounts spent prior to the effective date of the agreement) aggregate to about US$330 million to US$370 million. As of Dec. 31, 2006, defense costs and settlement payments for qualifying asbestos products claims of about US$132.4 million have been credited towards the range of US$330 million to US$370 million. Based in Wilmington, Del., Hercules Inc. makes and markets specialty chemicals and related services for a broad range of business, consumer and industrial applications. The Company has operations in North America, Europe, Asia, and Latin America. Product sales occur in over 135 countries with significant revenue streams generated on five continents. ASBESTOS LITIGATION: Enstar Has $666.07M for A&E Claims in 4Q06 ---------------------------------------------------------------- Enstar Group Ltd., for the year ended Dec. 31, 2006, recorded a gross provision of US$666,075,000 for asbestos & environmental claims and allocated loss adjustment expenses, compared with US$578,079,000 for the year ended Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 16, 2007. For the year ended Dec. 31, 2006, the Company recorded a net provision of US$349,963,000 for A&E claims and ALAE, compared with US$383,957,000 for the year ended Dec. 31, 2005. A number of Company subsidiaries wrote general liability policies and reinsurance before their acquisition by the Company under which policyholders continue to present asbestos-related injury claims and claims alleging injury, damage or clean-up costs arising from environmental pollution. The Company's A&E exposure is administered out of its offices in the United Kingdom and Rhode Island and centrally administered from the U.K. As of Dec. 31, 2006, the Company had 13 separate insurance and reinsurance subsidiaries whose reserves are categorized into about 215 reserve categories in total, including 21 distinct asbestos reserving categories and 24 distinct environmental reserving categories. As of Dec. 31, 2006, the Company had net loss reserves of US$306.9 million for asbestos-related claims and US$43.1 million for environmental pollution-related claims. During 2006, excluding the impact of loss reserves acquired during the year, the Company's reserves for A&E liabilities increased by US$10.1 million gross and decreased by US$55.1 million net. Based in Montgomery, Ala., The Enstar Group Inc., through Castlewood Holdings and other affiliates, provides claims administration, adjustment and settlement, and collection services for companies. ASBESTOS LITIGATION: Park-Ohio Records 365 Injury Cases in 4Q06 ---------------------------------------------------------------- Park-Ohio Holdings Corp., at Dec. 31, 2006, was a co-defendant in about 365 cases asserting claims on behalf of about 8,500 plaintiffs alleging personal injury as a result of exposure to asbestos, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 16, 2007. At Sept. 30, 2006, the Company was a co-defendant in about 370 cases asserting claims on behalf of about 9,900 plaintiffs alleging personal injury as a result of exposure to asbestos. (Class Action Reporter, Dec. 1, 2006) These asbestos cases generally relate to production and sale of asbestos-containing products and allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and, punitive damages. In every asbestos case in which the Company is named a party, the complaints are filed against multiple defendants. In substantially all of the asbestos cases, the plaintiffs either claim damages in excess of a specified amount, typically a minimum amount sufficient to establish jurisdiction of the court in which the case was filed, or do not specify the monetary damages sought. There are four asbestos cases, involving 21 plaintiffs that plead specified damages. In each of the four cases, the plaintiff is seeking compensatory and punitive damages based on a variety of potentially alternative causes of action. In three cases, the plaintiff has alleged compensatory damages in the amount of US$3 million for four separate causes of action and US$1 million for another cause of action and punitive damages in the amount of US$10 million. In another case, the plaintiff has alleged compensatory damages in the amount of US$20 million for three separate causes of action and US5 million for another cause of action and punitive damages in the amount of US$20 million. Historically, the Company has been dismissed from asbestos cases on the basis that the plaintiff incorrectly sued one of the subsidiaries or because the plaintiff failed to identify any asbestos-containing product made or sold by the Company or its subsidiaries. Based in Cleveland, Park-Ohio Holdings Corp., through subsidiaries owned by direct subsidiary, Park-Ohio Industries Inc., is an industrial supply chain logistics and diversified manufacturing business operating in three segments: Integrated Logistics Solutions, Aluminum Products, and Manufactured Products. ASBESTOS LITIGATION: Standard Motor Records 3,270 Cases in 4Q06 ---------------------------------------------------------------- Standard Motor Products Inc., at Dec. 31, 2006, recorded about 3,270 outstanding asbestos-related cases for which it was responsible for any related liabilities, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 16, 2007. At Sept. 30, 2006, the Company had about 3,300 outstanding asbestos-related cases, for which the Company was responsible for any related liabilities. (Class Action Reporter, Dec. 8, 2006) In 1986, the Company acquired a brake business, which it sold in March 1998. The Company assumed future liabilities relating to any alleged exposure to asbestos-containing products made by the seller of the acquired brake business. The Company agreed to assume the liabilities for all new claims filed after Sept. 1, 2001. Since inception in September 2001 through Feb. 28, 2007, the amounts paid for settled claims were about US$5 million. Based in Long Island City, N.Y., Standard Motor Products Inc. makes engine management and air-conditioning replacement parts for the automotive aftermarket. Among the Company's top customers are auto parts warehouse distributors like CARQUEST and NAPA and major auto parts retailers like Advance Auto Parts and AutoZone. ASBESTOS LITIGATION: United America Reserves $36M for A&E Losses ---------------------------------------------------------------- United America Indemnity Ltd., for the year ended Dec. 31, 2006, recorded US$36,010,000 as gross reserves for asbestos & environmental losses and loss adjustment expenses, compared with US$40,124,000 for the year ended Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 16, 2007. For the year ended Dec. 31, 2006, the Company recorded US$11,157,000 as net reserves for A&E losses and LAE, compared with US$11,519,000 for the year ended Dec. 31, 2005. The Company's environmental exposure arises from the sale of general liability and commercial multi-peril insurance. The Company's policies continue to exclude classic environmental contamination claims. As of Dec. 31, 2006, the Company had US$4.8 million of net loss reserves for asbestos-related claims and US$6.3 million for environmental claims. As of Dec. 31, 2006, the Company's survival ratio on a gross basis for its open A&E claims was 7.4 years, compared with 7.1 years as of Dec. 31, 2005. As of Dec. 31, 2006, the Company's survival ratio on a net basis for its open A&E claims was 10.6 years, compared with 9.6 years as of Dec. 31, 2005. Based in the Cayman Islands, United America Indemnity Ltd., through its United National Group and Penn-America Group subsidiaries, provides specialty and surplus property/casualty insurance, including insurance for social service agencies, equine mortality risks, and vacant properties. ASBESTOS LITIGATION: United Industrial Has $11.3M Gain on Merger ---------------------------------------------------------------- United Industrial Corp., as a result of a Merger, included in the gain on the Merger the elimination of asbestos-related liabilities, net of insurance receivables, in the amount of US$11,265,000. On Dec. 29, 2006, Detroit Stoker Co. was acquired by a newly formed corporation affiliated with a private investment group (Merger Parent) by way of a merger of Bram Acquisition Corp. (Merger Sub) with and into Detroit Stoker with Detroit Stoker being the surviving corporation (the Merger). The Company and Detroit Stoker have been, and may in the future be, named as defendants in asbestos-related personal injury litigation arising out of commercial stoker products made by the Company and Detroit Stoker, some of the parts and components of which used asbestos-containing material fabricated and provided by third parties. Under the Merger Agreement, Merger Parent and the surviving corporation agreed to indemnify the Company for any asbestos- related litigation liabilities, including any asbestos liabilities from Detroit Stoker's operation as a division of the Company and the Company's own operations. To secure these indemnity obligations, Merger Parent established an escrow account for the sole benefit of the Company. Historically, the Company recorded an undiscounted liability for its best estimate of liabilities for asbestos-related matters in the amount of US$31,450,000 as of Dec. 31, 2005, including damages and defense costs, and its insurance receivables for asbestos-related liabilities were US$20,186 at Dec. 31, 2005. Based in Hunt Valley, Md., United Industrial Corp. designs, produces, and supports aerospace and defense systems. The Company operates through subsidiary AAI Corp., and AAI Corp.'s direct and indirect wholly owned subsidiaries AAI Services Corp., Aerosonde Pty Ltd, Aerosonde North America Inc., ESL Defence Ltd., McTurbine Inc., and Symtx Inc. ASBESTOS LITIGATION: Liggett Group Faces 3 Third-Party Lawsuits ---------------------------------------------------------------- Vector Group Ltd., as of Dec. 31, 2006, recorded three third- party payor actions pending against its subsidiary Liggett Group LLC, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 16, 2007. As of Sept. 30, 2006, the Company recorded four third-party payor actions pending against Liggett. (Class Action Reporter, Dec. 15, 2006) Insurance companies, union health and welfare trust funds, asbestos manufacturers and others have commenced the Third-Party Payor Actions. Although no specific amounts are provided, it is understood that requested damages against the tobacco company defendants in these cases might be in the billions of dollars. For the year ended Dec. 31, 2006, Liggett incurred legal fees and other litigation costs totaling about US$5,353,000, compared with US$8,048,000 for the year ended Dec. 31, 2005. Based in Miami, Vector Group Ltd.'s Liggett unit makes discount cigarettes under brands including Liggett Select, Grand Prix, and Eve, OMNI-branded "reduced-carcinogen" cigarettes, and several generic lines of cigarettes. ASBESTOS LITIGATION: ITT Corp., Goulds Pumps Resolve 8.2T Claims ---------------------------------------------------------------- ITT Corp. and its subsidiary Goulds Pumps Inc., during 2006, resolved about 8,200 asbestos-related claims, compared with 16,000 claims in 2005, and 4,200 claims in 2004, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. The Company and Goulds have been joined as defendants with numerous other industrial companies in product liability lawsuits alleging injury due to asbestos. These claims stem primarily from products sold before 1985 that contained a part made by a third party, e.g., a gasket, which allegedly had asbestos. The asbestos was encapsulated in the gasket (or other) material and was non-friable. In certain other cases, it is alleged that former ITT companies were distributors for other manufacturers' products that may have contained asbestos. Frequently, the plaintiffs are unable to demonstrate any injury or do not identify any Company or Goulds product as a source of asbestos exposure. Nearly all of the claims were dismissed, with settlement on a small percentage of claims. The average amount of settlement per plaintiff has been nominal and substantially all defense and settlement costs have been covered by insurance. Based in White Plains, N.Y., ITT Corp., with 2006 sales and revenues of about US$7.81 billion, is a global multi-industry company engaged directly and through its subsidiaries in the design and manufacture of a wide range of engineered products and related services. ASBESTOS LITIGATION: ITT Faces Insurance Suits in Calif., N.Y. ---------------------------------------------------------------- ITT Corp. continues to face two insurance asbestos-related actions in California and New York, according to the Company's 2006 annual report filed with the U.S. Securities and Exchange Commission. The suits are styled: Cannon Electric Inc. et al. v. Ace Property & Casualty Co. et al. Superior Court, County of Los Angeles, Calif., Case No. BC 290354, and Pacific Employers Insurance Co. et al., v. ITT Industries Inc., et al., Supreme Court, County of New York, N.Y., Case No. 03600463. The parties in both cases seek an appropriate allocation of responsibility for the Company's historic asbestos liability exposure among its insurers. The California action is filed in the same venue where the Company's environmental insurance recovery litigation has been pending since 1991. The New York action has been stayed in favor of the California suit. The Company and ACE and Nationwide Indemnity have successfully resolved the matter and the Company is working with other parties in the suit to resolve the matter as to those insurers. Moreover, Utica National and Goulds Pumps Inc., a Company subsidiary, are finalizing a coverage-in-place agreement to allocate the Goulds' asbestos liabilities between insurance policies issued by Utica and those issued by others. The Company continues to receive the benefit of insurance payments during the pendency of these proceedings. Based in White Plains, N.Y., ITT Corp., with 2006 sales and revenues of about US$7.81 billion, is a global multi-industry company engaged directly and through its subsidiaries in the design and manufacture of a wide range of engineered products and related services. ASBESTOS LITIGATION: Noble Corp. Unit Still Faces Suits in Miss. ---------------------------------------------------------------- An indirect, wholly owned subsidiary of Noble Corp. continues to face three asbestos-related lawsuits filed in the Circuit Courts of the State of Mississippi. In August 2004, the subsidiary was served as a named defendant in two suits filed in the Circuit Courts of the State of Mississippi involving numerous other unaffiliated companies as co-defendants. In December 2004, the subsidiary was served as a named defendant in a third suit filed in Mississippi Circuit Court. The suits seek an unspecified amount of monetary damages on behalf of about 131 named individuals alleging personal injury, including claims under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and associated facilities during the period 1965 through 1986. Although the suits continue to be in procedural stages, amended complaints recently filed by plaintiffs reflect that about 20 or fewer of about 131 named individuals may have claims that they were employed by the subsidiary or otherwise associated with the Company's drilling operations. Of these 20, 14 served amended complaints on the subsidiary by the applicable deadline. Based in Sugar Land, Tex., Noble Corp. performs contract- drilling services with its fleet of 63 offshore drilling units. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 44 jackups and three submersibles. ASBESTOS LITIGATION: OfficeMax Continues to Face Injury Suits ---------------------------------------------------------------- OfficeMax Inc., over the past several years and continuing into 2006, faces cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to asbestos while working at job sites. The claims vary widely and often are not specific about the plaintiffs' contacts with the Company. None of the claims seeks damages from the Company individually, and the Company is generally one of many defendants. Many of the cases filed against the Company have been dismissed, although the Company has settled some cases. The settlements have been covered mostly by insurance, and the Company said it believes any future settlements or judgments in these cases would be similarly covered. To date, no asbestos case against the Company has gone to trial. Based in Naperville, Ill., OfficeMax Inc. provides office supplies and paper, print and document services, technology products and solutions and furniture to large, medium and small businesses, government offices, and consumers. ASBESTOS LITIGATION: Great Lakes Dredge Has No Active Open Cases ---------------------------------------------------------------- Great Lakes Dredge & Dock Corp. said that there are no active asbestos-related cases pending against it or its former subsidiary, NATCO Ltd. Partnership, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 22, 2007. The Company or NATCO are named as defendants in about 280 lawsuits, most of which were filed between 1989 and 2000, and 18 of which were filed in the last three years. In these suits, the plaintiffs allege personal injury, mainly fibrosis or asbestosis, from exposure to asbestos on the Company's vessels. Most of these suits have been filed in the Northern District of Ohio and a few in the Eastern District of Michigan. All of the cases filed against the Company before 1996 were administratively dismissed in May 1996 and any cases filed since that time have similarly been administratively transferred to the inactive docket. Plaintiffs in these cases could seek to reinstate the cases at a future date without being barred by the statute of limitations. However, to date, no plaintiffs with claims against the Company have sought reinstatement. Based in Oak Brook, Ill., Great Lakes Dredge & Dock Corp. provides dredging services in the United States. The Company was founded in 1890 as Lydon & Drews Partnership and contracted its first project in Chicago. ASBESTOS LITIGATION: TriMas Records 1,708 Pending Cases at 4Q06 ---------------------------------------------------------------- TriMas Corp., as of Dec. 31, 2006, was a party to about 1,708 pending asbestos-related cases involving an aggregate of about 10,551 claimants, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 22, 2007. As of Sept. 30, 2006, the Company was party to about 1,704 pending cases involving about 11,119 claimants alleging personal injury from exposure to asbestos-containing materials. (Class Action Reporter, Dec. 15, 2006) These cases allege personal injury from exposure to asbestos containing materials formerly used in gaskets made or distributed by certain Company subsidiaries for use in the petrochemical refining and exploration industries. For the fiscal year ended Dec. 31, 2006, the Company recorded 3,766 claims filed, 12,508 claims dismissed, and 123 claims settled. For the period, the average settlement amount per claim was US$5,613 and the total defense costs were US$4,895,104. For the fiscal year ended Dec. 31, 2005, the Company recorded 2,596 claims filed, 1,998 claims dismissed, and 66 claims settled. For the period, the average settlement amount per claim was US$8,660 and the total defense costs were US$5,324,407. Of the 10,551 claims pending at Dec. 31, 2006, 143 cited specific amounts of damages. Of the 143 claims, 119 claims sought between US$1 million and US$5 million in total damages and 24 sought between US$5 million and US$10 million in total damages. With respect to compensatory damages, 119 of the 143 claims sought between US$50,000 and US$600,000 and 24 sought between US$1 million and US$5 million. With respect to punitive damages, 111 of the 143 claims sought between US$1 million and US$2.5 million and 32 sought US$5 million. Total settlement costs for those cases, some of which were filed over 20 years ago, have been about US$3.8 million. All relief sought in the asbestos cases is monetary in nature. To date, about 50 percent of the Company's costs related to settlement and defense of asbestos litigation have been covered by primary insurance. Effective Feb. 14, 2006, the Company entered into a coverage-in-place agreement with its first level excess carriers regarding the coverage to be provided to the Company for asbestos-related claims when the primary insurance is exhausted. Based in Bloomfield Hills, Mich., TriMas Corp. makes highly engineered products serving niche markets in a diverse range of commercial, industrial, and consumer applications. ASBESTOS LITIGATION: Colonial Commercial Has 93 Hilco Plaintiffs ---------------------------------------------------------------- Colonial Commercial Corp. faces asbestos-related personal injury lawsuits, with 93 plaintiffs, from predecessor Hilco Inc., in the Superior Court of New Jersey in Middlesex County. The Company has never sold any asbestos related products. Of the existing plaintiffs, seven filed actions in 2006, 15 filed actions in 2005, 44 filed actions in 2004, 24 filed actions in 2003, and three filed actions in 2002. There are 108 other plaintiffs that have had their actions dismissed and eight other plaintiffs that have settled as of Dec. 31, 2006 for a total of US$3,313,000. There has been no judgment against Hilco. The Company's Universal Supply Group Inc. subsidiary was named by 24 plaintiffs. Of these, two filed actions in 1999, one filed an action in 2000, five filed actions in 2001, 11 filed actions in 2005, and five filed actions in 2006. Six plaintiffs naming Universal have had their actions dismissed and, of the total US$3,313,000 of settled actions, two plaintiffs naming Universal have settled for US$26,500. No money was paid by Universal in connection with any settlement. After these dismissed and settled actions, 16 plaintiffs name Universal. The Company said that it believes that none of the litigation that was brought against the Company's Universal subsidiary through Dec. 31, 2006 is material, and that the only material litigation that was brought against Hilco through that date was Rhodes v. A.O. Smith Corp., filed on April 26, 2004 in the Superior Court of New Jersey, Law Division, Middlesex County, Docket Number MID-L-2979-04AS. The Company was advised that the Rhodes case was settled for US$3,250,000 under an agreement reached in connection with a US$10,000,000 jury verdict that was rendered on Aug. 5, 2005. The Company was not a defendant in the Rhodes case. On April 29, 2005, before the Rhodes case trial, Hilco filed a third party complaint against Sid Harvey Industries in an action demanding contributor payment in connection with the Settlement. Sid Harvey Industries moved successfully for summary judgment. Hilco filed an appeal as to the dismissal of Hilco's Third Party Complaint. In a decision dated Dec. 29, 2006, the Superior Court of New Jersey, Appellate Division, reversed the dismissal of Hilco's Third Party Complaint and remanded the matter for further proceedings as to Hilco's claim for contribution. Based in Hawthorne, N.J., Colonial Commercial Corp.'s operations are conducted through subsidiaries, Universal Supply Group Inc., The RAL Supply Group Inc., and American/Universal Supply Inc. The Company distributes heating, ventilating and air conditioning equipment (HVAC), parts and accessories, climate control systems, appliances, and plumbing fixtures. ASBESTOS LITIGATION: Lawsuits v. Entrx Corp. Drop to 404 in 4Q06 ---------------------------------------------------------------- Entrx Corp., primarily its subsidiary Metalclad Insulation Corp., for the year ended Dec. 31, 2006, recorded 404 pending asbestos-related cases, compared with 507 pending cases for the year ended Dec. 31, 2005, according to the Company's annual report, on Form 10-KSB, filed with the U.S. Securities and Exchange Commission on March 23, 2007. At Sept. 30, 2006, the Company recorded 458 pending asbestos- related cases, down from 485 pending cases at June 30, 2006. (Class Action Reporter, Dec. 1, 2006) Before 1975, the Company was engaged in the sale and installation of asbestos-related insulation materials, which has resulted in claims of personal injury allegedly related to asbestos exposure. To date all of the Company's asbestos-related injury claims have been paid and defended by its insurance carriers. In 2006, the Company recorded 232 new cases filed, 254 defense judgments and dismissals, 82 settled cases, and 335 total resolved cases. In 2006, the Company recorded US$4,858,750 as total indemnity payments, US$59,254 as the average indemnity paid on settled cases, and US$14,504 as the average indemnity paid on all resolved cases. In 2005, the Company recorded 199 new cases filed, 294 defense judgments and dismissals, 108 settled cases, and 402 total resolved cases. In 2005, the Company recorded US$8,513,750 as total indemnity payments, US$78,831 as the average indemnity paid on settled cases, and US$21,178 as the average indemnity paid on all resolved cases. Based in Minneapolis, Entrx Corp. conducts its business operations subsidiary, Metalclad Insulation Corp. For over 30 years, the Company and its predecessors have been providing insulation and asbestos abatement services, primarily on the West Coast. ASBESTOS LITIGATION: Metalclad Still Faces Suit by ACE, Insurers ---------------------------------------------------------------- Entrx Corp.'s subsidiary, Metalclad Insulation Corp., and several other liability insurers continue to face an asbestos- related declaratory relief action filed by ACE Property & Casualty Co., Central National Insurance Co. of Omaha, and Industrial Underwriters Insurance Co. On Feb. 23, 2005, ACE, Central National, and Industrial Underwriters, which are all related entities, sued Metalclad and a number of Metalclad's other liability insurers, in the Superior Court of the State of California, County of Los Angeles. ACE, Central National and Industrial Underwriters issued umbrella and excess policies to Metalclad, which has sought and obtained from the plaintiffs both defense and indemnity under these policies for the asbestos lawsuits brought against Metalclad during the last four to five years. The ACE Law seeks declarations regarding various coverage issues, but is centrally focused on issues involving whether historical and pending asbestos suits brought against Metalclad are subject to either an "aggregate" limits of liability or separate "per occurrence" limits of liability. The ACE suit also seeks to determine the effect of the settlement agreement between the Company and Allstate Insurance Co. on the insurance obligations of various other insurers of Metalclad, and the effect of the "asbestos exclusion" in the Allstate policy. The ACE suit does not seek any monetary recovery from Metalclad. Allstate, in a cross-complaint filed against Metalclad in October 2005, asked the court to determine the Company's obligation to assume and pay for the defense of Allstate in the ACE suit under the Company's indemnification obligations in the Settlement Agreement. Based in Minneapolis, Entrx Corp. conducts its business operations subsidiary, Metalclad Insulation Corp. For over 30 years, the Company and its predecessors have been providing insulation and asbestos abatement services, primarily on the West Coast. ASBESTOS LITIGATION: Kaiser Ventures Has 9 Pending Injury Claims ---------------------------------------------------------------- Kaiser Ventures LLC faces about nine active asbestos-related injury claims, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 27, 2007. The Company had 12 pending bodily injury asbestos-related suits. (Class Action Reporter, April 7, 2006) These injury claims are pending against Kaiser LLC and Kaiser Steel Corp. The bankruptcy estate of Kaiser Steel is embodied in KSC Recovery Inc. Many of the plaintiffs allege that they or their family members were aboard Kaiser ships or worked in shipyards in the Oakland- San Francisco area or Vancouver, Washington area in the 1940s and that the Company or KSC Recovery were associated with one or more shipyards or has successor liability. However, there is an increasing number of claims related to other facilities like the former Kaiser Steel Mill Site Property. Most of these suits are third party premises claims alleging injury from exposure to asbestos or asbestos containing products and involve multiple defendants. Virtually all of the complaints against the Company and KSC Recovery are non-specific, but involve allegations relating to pre-bankruptcy activities. Of the claims resolved to date, about 78 percent have been resolved without payment to the plaintiffs, and of the 46 cases that have been settled to date involving a payment made to plaintiffs, the settlement amount was US$37,500 or less for 38 of those cases. Based in Ontario, Canada, Kaiser Ventures LLC's holdings include an 82.5 percent stake in Mine Reclamation Corp. and a 50 percent stake in West Valley Materials Recovery Facility and Transfer Station. The Company is the reorganized successor to Kaiser Steel Corp. ASBESTOS LITIGATION: Norcross Safety Has 96 Exposure Suits in 4Q ---------------------------------------------------------------- Norcross Safety Products LLC, as of Dec. 31, 2006, had about 644 product liability lawsuits, of which 15 percent, or about 96 suits, is asbestos-related, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 27, 2007. About 85 of these 644 suits involve plaintiffs alleging injury from exposure to silica dust. As of Sept. 30, 2006, the Company recorded about 669 product liability lawsuits, in which about 9 percent, or about 60 suits, is asbestos-related. (Class Action Reporter, Dec. 15, 2006) Most of these suits and claims are product liability matters that arise out of the use of respiratory product lines made by the Company's North Safety Products subsidiary. As of Dec. 31, 2006, North Safety Products, along with its predecessors and the former owners of those business were named as defendants in about 632 suits involving respirators allegedly made and sold by it or its predecessors. The Company monitors 12 more suits in which it feels that North Safety Products, its predecessors and the former owners of those businesses may be named as defendants. Collectively, these 644 suits represent a total of about 8,746 plaintiffs. These suits typically allege that the purposed injuries resulted in part from respirators that were negligently designed or manufactured. Invensys plc, formerly Siebe plc, is contractually obligated to indemnify the Company for any losses, including costs of defending claims, resulting from respiratory products made or sold before the acquisition of North Safety Products in October 1998. Based in Oak Brook, Ill., Norcross Safety Products LLC designs, makes, and markets branded products in the fragmented personal protection equipment industry. The Company's products include respiratory protection, protective footwear, hand protection, eye, head and face protection, bunker gear and linemen equipment for utility workers. ASBESTOS LITIGATION: GenCorp Inc. Has 161 Pending Injury Claims ---------------------------------------------------------------- GenCorp Inc., for the three months ended Feb. 28, 2007, recorded 161 pending asbestos-related claims filed against it, according to the Company's quarterly report filed with the U.S. Securities and Exchange Commission on March 29, 2007. For the year ended Nov. 30, 2006, the Company recorded 154 pending asbestos-related claims filed against it, compared with 152 claims for the year ended Nov. 30, 2005. (Class Action Reporter, Feb. 2, 2007. For the three months ended Feb. 28, 2007, the Company recorded 19 claims filed, 11 claims dismissed, and one claim settled. For the period, the Company recorded US$3,000 as the aggregate settlement costs and US$3,000 as the average settlement costs. For the year ended Nov. 30, 2006, the Company recorded 62 claims filed, 55 claims dismissed, and five claims settled. For the period, the Company recorded US$67,000 as the aggregate settlement costs and US$14,000 as the average settlement costs. The Company continues to face lawsuits alleging personal injury or death due to exposure to asbestos in building materials, products or in manufacturing operations. Most of the cases have been filed in Madison County, Ill. and San Francisco. Since 1998, more than 200 of these asbestos suits have been resolved with the majority being dismissed. Legal and administrative fees for the asbestos cases for the fiscal 2007-1st quarter were US$100,000. Legal and administrative fees for the asbestos cases for fiscal 2006 and fiscal 2005 were US$500,000 for each period. Based in Rancho Cordova, Calif., GenCorp Inc. is a technology- based manufacturer of aerospace and defense products and systems with a real estate business segment that includes activities related to the re-zoning, entitlement, sale, and leasing of the Company's excess real estate assets. The Company's continuing operations are organized into two segments: Aerospace and Defense and Real Estate. ASBESTOS LITIGATION: Kaiser Aluminum Corp. Has $1.115B Liability ---------------------------------------------------------------- Kaiser Aluminum Corp., as of June 30, 2006, recorded a US$1.115 billion liability for subsidiary Kaiser Aluminum & Chemical Corp.'s asbestos, silica, and coal tar pitch volatiles-related claims, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 29, 2007. The Company was one of many defendants in a number of lawsuits, some of which involved claims of multiple persons, in which the plaintiffs allege that certain of their injuries were caused by exposure to asbestos or exposure to products with asbestos produced or sold by the Company or as a result of employment or association with the Company. The suits related to products the Company had not sold for more than 20 years. As of the Feb. 12, 2002 bankruptcy filing date, about 112,000 asbestos-related claims were pending. Due to the reorganization proceedings, holders of asbestos, silica and coal tar pitch volatile claims were stayed from continuing to prosecute pending litigation and from commencing new suits against the Debtors. As a result, the Company did not make any asbestos payments during the pendency of the reorganization proceedings. The Company estimated that its total liability for asbestos, silica and coal tar pitch volatile personal injury claims was expected to be between about US$1.1 billion and US$2.4 billion. The Company said that it believed that substantial recoveries from the insurance carriers were probable and had estimated the amount of remaining solvent insurance coverage to be in the range of US$1.4 billion to US$1.5 billion. The Company disclosed that it believed that it would be able to recover from insurers amounts totaling about US$965 million. During the latter half of 2005 and the first half of 2006, the Company entered into conditional settlement agreements with insurers under which the insurers agreed, in aggregate, to pay about US$1.246 billion in respect of substantially all coverage under certain policies having a combined face value of about US$1.460 billion. Many of the agreements provided for multi-year payouts and for some of the settlement amounts to be accessed, claims would have to be made against the PI Trusts that would aggregate well in excess about US$1.115 billion liability amount reflected by the Company at June 30, 2006. The Company did not provide any accounting recognition for the conditional settlement agreements in the June 30, 2006 financial statements. Based in Foothill Ranch, Calif., Kaiser Aluminum Corp. is an independent fabricated aluminum products manufacturing company with 2006 net sales of about US$1.4 billion. The Company operates 10 production facilities in the U.S. and one in Canada. The Company makes rolled, extruded, drawn and forged aluminum products. The Company produced and shipped about 523 million pounds of fabricated aluminum products in 2006. ASBESTOS LITIGATION: VWR Int'l. Continues to Face Exposure Suits ---------------------------------------------------------------- VWR International Inc. continues to face asbestos-related exposure lawsuits stemming from the distribution of certain of its products, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 30, 2007. From time to time, the Company is named a defendant in cases that arise as a result of its distribution of scientific supplies, including litigation resulting from the distribution of products with asbestos by the Company and certain of its predecessors. Until 1987, the Company distributed certain asbestos-containing products for use in laboratories, including pads, protective clothing and laboratory equipment. Individuals who were exposed to these asbestos-containing products have, from time to time, brought claims against the Company for asbestos-related injuries. Based in West Chester, Pa., VWR International Inc. distributes products like chemicals, glassware, instruments, protective clothing and other assorted laboratory products. The Company maintains operations in more than 20 countries and processes an average of 52,000 order lines daily from 20 strategically located distribution centers. ASBESTOS LITIGATION: Reading Int'l. Faces Rail Workers' Claims ---------------------------------------------------------------- Reading International Inc., from time to time, has claims brought against it relating to the exposure of former employees of its railroad operations to asbestos and coal dust, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 30, 2007. These are generally covered by an insurance settlement reached in September 1990 with the Company's insurance carriers. However, this insurance settlement does not cover litigation by people who were not Company employees and who may claim second hand exposure to asbestos, coal dust, or other chemicals or elements now recognized as potentially causing cancer in humans. Based in Commerce, Calif., Reading International Inc.'s business consists primarily of: the development, ownership and operation of multiplex cinemas in the U.S., Australia, and New Zealand. ASBESTOS LITIGATION: Leap Tech. Has No Renewed Cases Since 1996 ---------------------------------------------------------------- None of the asbestos-related cases against subsidiaries of Leap Technology Inc. have been reinstated since May 1, 1996, according to the Company's annual report, on Form 10-KSB, filed with the U.S. Securities and Exchange Commission on March 30, 2007. The Company is involved in litigation relating to the offshore supply business conducted before Aug. 14, 1996 by certain Company subsidiaries, which are now inactive. The cases were filed against those subsidiaries and other ship- owning companies based on the alleged exposure of 64 former seamen to maritime asbestos and other toxic substances while working on vessels operated by such companies as part of an industry wide series of similar claims. On May 1, 1996, the claims against the Company's subsidiaries and the other defendants were administratively dismissed subject to reinstatement against one or more specific defendants upon a specific showing that a plaintiff suffers from an asbestos- related disease and that he was exposed to asbestos containing products on the vessels operated by those defendants. During the past five years, the Company has incurred between about US$600 and US$1,400 per year in legal fees monitoring the status of the claims against the Company's subsidiaries. Based in Fort Lauderdale, Fla., Leap Technology Inc., formerly known as Seal Holdings Corp., is a holding company that was formerly focused on the acquisition of, and strategic investments in, companies providing services in health care and life sciences. ASBESTOS LITIGATION: Kaanapali, D/C Still Face Exposure Actions ---------------------------------------------------------------- Kaanapali Land LLC, as successor by merger to other entities, and subsidiary D/C Distribution Corp. continue to face personal injury actions from asbestos exposure, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 30, 2007. There are in excess of 60 cases against D/C that are pending on the U.S. mainland, primarily in California, and are allegedly based on D/C's former business operations. On Feb. 15, 2005, D/C was served with a lawsuit entitled American & Foreign Insurance Co. v. D/C Distribution and Amfac Corp., Case No. 04433669 filed in the Superior Court of the State of California for the County of San Francisco, Central Justice Center. In the eight-count complaint for declaratory relief, reimbursement and recoupment of unspecified amounts, costs and for such other relief as the court might grant, plaintiff alleges that it is an insurance company to whom D/C has tendered for defense and indemnity various personal injury suits allegedly based on exposure to asbestos containing products. Plaintiff alleges that because none of the parties have been able to produce a copy of the policy or policies in question, a judicial determination of the material terms of the missing policy or policies is needed. D/C has filed an answer and an amended cross-claim. In February 2006, D/C merged into a newly formed Illinois limited liability company named D/C Distribution LLC. Based in Chicago, Kaanapali Land LLC is the reorganized entity resulting from the Joint Plan of Reorganization of Amfac Hawaii LLC, certain of its subsidiaries, and FHT Corp. under Chapter 11 of the Bankruptcy Code, dated June 11, 2002. The Company's continuing operations are in three business segments: Agriculture, Property, and Golf. ASBESTOS LITIGATION: Congoleum Records $13.9M Liability in 4Q06 ---------------------------------------------------------------- Congoleum Corp.'s current asbestos-related liabilities, as of Dec. 31, 2006, amounted to US$13,959,000, compared with US$28,369,000 as of Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 30, 2007. As of Dec. 31, 2006, the Company's asbestos-related receivable amounted to US$21.8 million, compared with US$14.8 million as of Dec. 31, 2005. On Dec. 31, 2003, the Company filed a voluntary petition with the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. In October 2006, Congoleum and the Asbestos Claimants' Committee jointly filed a revised version of the Tenth Plan of Reorganization, the Eleventh Plan, which reflected minor technical changes agreed to by the various parties supporting Congoleum's plan. In October 2006, the Bankruptcy Court held a hearing to consider the adequacy of the disclosure statements with respect to the Tenth Plan and the Revised Plan of Continental Casualty Co. and Continental Insurance Co. and to hear arguments on respective summary judgment motions that the Tenth Plan and the CNA Plan are not confirmable as a matter of law. In February 2007, the Bankruptcy Court issued two separate opinions ruling that the Tenth Plan and the CNA Plan are not confirmable as a matter of law. Because the Tenth Plan and Eleventh Plan are substantially identical, the Company said it believes the ruling issued with respect to the Tenth Plan also applies to the Eleventh Plan. In March 2007, Congoleum resumed global plan mediation discussions seeking to resolve the issues raised in the Bankruptcy Court's ruling with respect to the Tenth Plan. Congoleum has also appealed the ruling with respect to the Tenth Plan to the District Court. Based in Mercerville, N.J., Congoleum Corp. makes flooring products for residential and commercial use. Its products include plank flooring, resilient sheet flooring (linoleum or vinyl flooring), do-it-yourself vinyl tile, and laminate and commercial flooring. American Biltrite Inc. owns about 55 percent of the Company. ASBESTOS LITIGATION: Boss Holdings Faces Glove-Exposure Actions ---------------------------------------------------------------- Boss Holdings Inc. continues to face asbestos-related glove- exposure actions, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 30, 2007. The Company has been named as a defendant in several lawsuits alleging past exposure to asbestos contained in gloves sold by one of the Company's predecessors-in-interest. One or more of the Company's general liability or products liability insurers is defending these actions. Based in Kewanee, Ill., Boss Holdings Inc. operates primarily in the work gloves and protective wear business segment. The Company also conducts operations in the pet supplies business segment and promotional and specialty products segments. Specialty lighting products are part of the work gloves and protective wear business segment. ASBESTOS LITIGATION: Armstrong World Has $91.5M Insurance Asset ---------------------------------------------------------------- Armstrong World Industries Inc., as of Sept. 30, 2006, recorded an asbestos-related insurance asset in the amount of US$91.5 million, compared with US$98.6 million as of Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 30, 2007. No recorded insurance asset was recorded in respect of asbestos claims as of Dec. 31, 2006. On Oct. 2, 2006, the Company's plan of reorganization, which was confirmed by order dated Aug. 18, 2006, became effective, and the Company emerged from Chapter 11. Before the Filing, AWI was a member of the Center for Claims Resolution, which handled the defense and settlement of asbestos-related personal injury claims on behalf of its members. The CCR pursued broad-based settlements of asbestos- related personal injury claims under the Strategic Settlement Program and had reached agreements with law firms that covered about 130,000 claims that named the Company as a defendant. Upon the Company's emergence on Oct. 2, 2006, the Asbestos Personal Injury Claimants' Committee was disbanded. The Future Claimants' Representative will continue to serve, but as of Oct. 2, 2006 his expenses will be borne by the Asbestos Personal Injury Trust. As of Oct. 2, 2006, when the POR became effective, all present and future asbestos-related personal injury claims against the Company, including contribution claims of co-defendants, arising directly or indirectly out of the Company's pre-Filing use of or other activities involving asbestos are channeled to the Asbestos PI Trust. The Company reflected the resolution of this liability, which totaled about US$3.2 billion as of Sept. 30, 2006, as part of emerging from Chapter 11. Based in Lancaster, Pa., Armstrong World Industries Inc.'s Floor Products unit produces vinyl sheet and tile, linoleum, specialty carpet, and hardwood flooring. Its Armstrong Building Products unit produces acoustical ceilings and suspension systems, and its Armstrong Cabinet Products makes hardwood, kitchen, and bathroom cabinets. ASBESTOS LITIGATION: Thomas Properties Accrues $4M Removal Costs ---------------------------------------------------------------- Thomas Properties Group Inc., as of Dec. 31, 2006, has accrued US$4 million for asbestos-related removal costs, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. As of March 31, 2006, the Company accrued US$2.5 million for estimated future costs regarding asbestos remediation of the Company's City National Plaza property. (Class Action Reporter, May 26, 2006) With respect to asbestos materials present at the Company's City National Plaza property, these materials have been removed or abated from certain tenant and common areas of the building structure. The Company continues to remove or abate asbestos materials from various areas of the building structure. Based in Los Angeles, Thomas Properties Group Inc. is a full- service real estate operating company that owns, acquires, develops and manages office, retail and multi-family properties on a nationwide basis. The Company is successor to Thomas Properties Group LLC and its affiliates. ASBESTOS LITIGATION: Oneida Rostone Still Faces Injury Lawsuits ---------------------------------------------------------------- Reunion Industries Inc. says that Oneida Rostone Corp. continues to face asbestos-related injury or wrongful death actions, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. Oneida Rostone is pre-merger Reunion's Plastics subsidiary and the Company's Plastics segment. Since July 10, 2001, the actions have been filed in multiple states, including California, Oregon, Washington, New York, and Mississippi. In October 2001, Allen-Bradley Co. (currently owned by Rockwell Automation Inc.), a former owner of the Rostone business of Oneida Rostone, accepted the Company's tender of its defense and indemnification in the first such suit filed. Subsequent to this acceptance in the first suit, Rockwell Automation has accepted and defended all additional suits, a total of 241 separate actions, which the Company has tendered. Based in Pittsburgh, Reunion Industries Inc. owns and operates industrial manufacturing operations that design and manufacture engineered, high-quality products for specific customer requirements. Products include large-diameter seamless pressure vessels, hydraulic and pneumatic cylinders and metal bar grating. ASBESTOS LITIGATION: Reunion Industries Faces 2,368 Open Claims ---------------------------------------------------------------- Reunion Industries Inc. faces 2,368 open and active asbestos- related claims filed against it, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. The Company has been named in asbestos lawsuits filed since Jan. 1, 2001 by various plaintiffs' law firms in Michigan, Pennsylvania, Ohio, Illinois, Maryland, Alabama, and West Virginia. The claims are primarily directed against over 100 defendants, including the Company, and allege that cranes from the Company's former crane manufacturing location in Alliance, Ohio, were present in various steel mills located in those states and that those cranes had asbestos to which plaintiffs were exposed over a 40 year span. Counsel for the Company has filed an answer to each complaint denying liability by the Company and asserting all alternative defenses permitted under the various Courts' Case Management Orders. Counsel for the Company has successfully resolved about 750-800 cases without any liability to the Company. The Company denies that it made any products with asbestos or otherwise knew or should have known that any component part other manufacturers provided contained any dangerous or toxic materials. Based in Pittsburgh, Reunion Industries Inc. owns and operates industrial manufacturing operations that design and manufacture engineered, high-quality products for specific customer requirements. Products include large-diameter seamless pressure vessels, hydraulic and pneumatic cylinders and metal bar grating. ASBESTOS LITIGATION: Fansteel Inc. Dismissed from Ivan Hand Suit ---------------------------------------------------------------- Fansteel Inc., in January 2007, was dismissed from an asbestos- related exposure lawsuit filed in August 2005 by the Estate of Ivan Hand, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. The Company's insurance carriers were notified and one insurance carrier agreed to defend the Company. Based in Deerfield, Ill., Fansteel Inc. and its subsidiaries make engineered metal components. Products made are used in a various markets including military and commercial aerospace, automotive, energy, agricultural and construction machinery, lawn and garden equipment, marine, plumbing and electrical hardware and general industrial. ASBESTOS LITIGATION: American Biltrite Faces 1,332 Claims in 4Q ---------------------------------------------------------------- American Biltrite Inc., as of Dec. 31, 2006, is a co-defendant in about 1,332 pending asbestos-related claims involving about 1,918 individuals, compared with 1,703 claims as of Dec. 31, 2005, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. As of Sept. 30, 2006, the Company had about 1,314 pending asbestos-related claims, with about 1,661 plaintiffs, filed against it. (Class Action Reporter, Dec. 8, 2006) These claims relate to products of the Company's former Tile Division, which was previously acquired by subsidiary Congoleum Corp. The claimants allege personal injury or death from exposure to asbestos or asbestos-containing products. During the year ended Dec. 31, 2006, the Company noted 625 new claims filed, 30 settlements, and 966 dismissals. During the year ended Dec. 31, 2005, the Company noted 621 new claims, 24 settlements, and 732 dismissals. The total indemnity costs incurred to settle claims were about US$3.1 million in 2006 and US$1.3 million for each of the years 2005 and 2004, all of which were paid by the Company's insurance carriers, as were the related defense costs. The average indemnity cost per resolved claim was about US$3,100 in 2006, US$1,700 in 2005, and US$2,000 in 2004. The estimated range of liability for settlement of current claims pending and claims anticipated to be filed through 2012 was US$10.3 million to US$35.3 million as of Dec. 31, 2006. As of Dec. 31, 2006, the Company's insurance for asbestos- related liabilities amounted to US$9,320,000, compared with US$8,959,000 as of Dec. 31, 2006. As of Dec. 31, 2006, the Company's long-term asbestos-related liabilities amounted to US$10,300,000, compared with US$9,500,000 as of Dec. 31, 2005. Based in Wellesley, Mass., American Biltrite Inc. produces Congoleum-brand vinyl tile flooring and sheet-vinyl floors, and it distributes fashion jewelry through its K&M Associates supplier. The Company also makes industrial products like adhesive-coated, pressure-sensitive tapes used to protect materials during handling and for varied applications. The Company owns 70 percent of Congoleum Corp. ASBESTOS LITIGATION: ABI Has $1.1M-$1.6M Liability at Maine Site ---------------------------------------------------------------- American Biltrite Inc. estimates between about US$1.1 million and US$1.6 million as the total cost of site investigation, remediation, maintenance, and monitoring for land at its formerly owned sheet vinyl plant in Lisbon, Maine, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. The Company had estimated between US$1.2 million and US$1.5 million. (Class Action Reporter, Sept. 22, 2006) The Maine Department of Environmental Protection has put Miller Industries Inc., the present owner of the Lisbon Falls, Maine, plant on notice to clean up a dumpsite where there is exposed asbestos from sheet vinyl waste along with other hazardous substances. In September 2005, a lawsuit was filed by Miller against the Company, in which the suit alleged that the Company and another named defendant were liable for costs to clean up a dumpsite (Parcel A) and a second parcel of land (Parcel B), which is alleged to contain polychlorinated biphenyls in the soil. The suit, captioned Miller Industries Inc. v American Biltrite Inc. et al, was filed on Sept. 22, 2005 in the Androscoggin Superior Court of Maine. Miller was seeking indemnification or contribution from the Company for the cleanup of both parcels of land (Maine Sites). In Feb. 3, 2006, the Superior Court of Maine dismissed the suit for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. In January 2006, the Maine DEP notified the Company that it is a potentially responsible party as to both Parcel A and Parcel B, which was subsequently named a U.S. Environmental Protection Agency site. Before the commencement of the Miller suit, the Company had been investigating and reviewing the condition of the Parcel A and its potential liability for its share of any clean-up costs. Miller has advised the Company that the cost of site investigation, and remediation for Parcel B is about US$550,000. At this time, the Company is not able to determine what its potential liability will be with regard to the Maine Sites since the Company has neither accepted nor negotiated its allocable share of the costs with Miller. Under an agreement between the Company and The Biltrite Corp., TBC is liable for 37.5 percent of costs incurred by the Company for the Maine Sites. Based in Wellesley, Mass., American Biltrite Inc. produces Congoleum-brand vinyl tile flooring and sheet-vinyl floors, and it distributes fashion jewelry through its K&M Associates supplier. The Company also makes industrial products like adhesive-coated, pressure-sensitive tapes used to protect materials during handling and for varied applications. The Company owns 70 percent of Congoleum Corp. ASBESTOS LITIGATION: RPM Int'l. Records $57.9M Liabilities in 3Q ---------------------------------------------------------------- RPM International Inc.'s current asbestos-related liabilities, for the quarter ended Feb. 28, 2007, amounted to US$57,925,000, compared with US$58,925,000 for the year ended May 31, 2006, according to the Company's quarterly report filed with the U.S. Securities and Exchange Commission on April 9, 2007. For the quarter ended Feb. 28, 2007, the Company's long-term asbestos-related liabilities amounted to US$314,935,000, compared with US$362,360,000 for the year ended May 31, 2006. Certain of the Company's wholly-owned subsidiaries, mainly Bondex International Inc., face various asbestos-related bodily injury lawsuits filed in various state courts with most current claims pending in five states: Illinois, Ohio, Mississippi, Texas, and Florida. These cases generally seek unspecified damages for asbestos- related diseases based on alleged exposures to asbestos- containing products previously made by the Company's subsidiaries or others. Based in Medina, Ohio, RPM International Inc. is divided into two units: industrial and consumer products. Industrial offerings include products for waterproofing, corrosion resistance, floor maintenance, and wall finishing. The Company's do-it-yourself items include caulks and sealants, rust- preventative and general-purpose paints, repair products, and hobby paints. ASBESTOS LITIGATION: RPM Int'l. Units Face 10,846 Active Actions ---------------------------------------------------------------- RPM International Inc.'s subsidiaries, as of Feb. 28, 2007, had a total of 10,846 active asbestos-related cases, compared with a total of 10,175 cases as of Feb. 28, 2006, according to the Company's quarterly report filed with the U.S. Securities and Exchange Commission on April 9, 2007. Certain of the Company's wholly owned subsidiaries, mainly Bondex International Inc., face various asbestos-related bodily injury lawsuits filed in various state courts with most current claims pending in five states: Illinois, Ohio, Mississippi, Texas, and Florida. For the quarter ended Feb. 28, 2007, the subsidiaries secured dismissals and settlements of 736 claims and made total payments of US$18.2 million, which included defense costs paid during the current quarter of US$7.2 million. For the comparable period ended Feb. 28, 2006, dismissals and settlements covered 213 claims and total payments were US$17.1 million, which included defense costs paid during the quarter of US$7 million. Excluding defense costs, the average costs to resolve a claim, including dismissed claims, were US$14,946 for the quarter ended Feb. 28, 2007 and US$47,418 for the quarter ended Feb. 28, 2006. Certain of the Company's subsidiaries filed a complaint in July 2003 for declaratory judgment, breach of contract and bad faith against various third-party insurers, challenging their assertion that their policies covering asbestos-related claims have been exhausted. The coverage litigation involves insurance coverage for claims arising out of alleged exposure to asbestos containing products made by the previous owner of the Bondex tradename before March 1, 1966. On March 1, 1966, Republic Powdered Metals Inc., as it was known then, bought the assets and assumed the liabilities of the previous owner of the Bondex tradename. That previous owner subsequently dissolved and was never a subsidiary of Republic Powdered Metals, Bondex, RPM Inc., or the Company. The Company discovered that the defendant insurance companies in the coverage litigation had wrongfully used cases alleging exposure to these pre-1966 products to erode their aggregate limits. Two of the defendant insurers have filed counterclaims seeking to recoup certain monies should the plaintiffs prevail on their claims. Under a case management order, the parties have substantially completed all fact and expert discovery relating to the liability phase of the case. The parties will next file dispositive motions, including motions for summary judgment, and related briefs. The subsidiaries anticipate a trial during the 2007 calendar year. During the quarter ended Nov. 30, 2006, Bondex reached a cash settlement of US$15 million, the terms of which are confidential by agreement of the parties, with one of the defendant insurers. The settling defendant has been dismissed from the case. Claim filings in Mississippi, Ohio, Texas, Florida and Illinois at the quarter ended Feb. 28, 2007, comprise about 75 percent of the total aggregate claims filed against Bondex. At the end of fiscal 2006, the Company increased its reserve for asbestos claims by about US$335 million, while paying out US$12.9 million for dismissals and settlements resulting in the Company's reserve moving from US$99.2 million at Feb. 28, 2006 to US$421.3 million at May 31, 2006. As of Feb. 28, 2007, total reserves were about US$372.9 million, of which US$314.9 million was reserved for unasserted potential future claims and US$58 million was reserved for pending known claims. Based in Medina, Ohio, RPM International Inc. is divided into two units: industrial and consumer products. Industrial offerings include products for waterproofing, corrosion resistance, floor maintenance, and wall finishing. The Company's do-it-yourself items include caulks and sealants, rust- preventative and general-purpose paints, repair products, and hobby paints. ASBESTOS LITIGATION: RPM Int'l. Reserves $52.1M for Claims in 3Q ---------------------------------------------------------------- RPM International Inc., at Feb. 28, 2007, reserved US$52.1 million for current asbestos-related liabilities, compared with US$53.8 million at May 31, 2006 and US$53.7 million at Feb. 28, 2006, according to the Company's quarterly report filed with the U.S. Securities and Exchange Commission on April 9, 2007. At Feb. 28, 2007, the Company's long-term asbestos reserves totaled US$7 million, compared with US$13.3 million at May 31, 2006, and US$11.8 million at Feb. 28, 2006. The Company provides, through its wholly owned insurance subsidiaries, certain insurance coverage, primarily product liability, to its other subsidiaries. Third party insurers provide excess coverage. The Company's reserves provide for these potential losses as well as other uninsured claims. The changes in the reserve balance have occurred as a result of the Company's continuing evaluation of its liability under a class action lawsuit settlement covering its Dryvit residential exterior insulated finish systems product line. Third party excess insurers have historically paid varying shares of Dryvit's defense and settlement costs for individual commercial and residential EIFS suits under various cost-sharing agreements. Dryvit has assumed a greater share of the costs associated with its EIFS litigation as it seeks funding commitments from the Company's third party excess insurers and will likely continue to do so pending the outcome of coverage litigation involving these same third party insurers. One of the Company's excess insurers filed suit seeking a declaration with respect to its rights and obligations for EIFS related claims under its applicable policies. During last year's fiscal 3rd-quarter, the court granted Dryvit's motion to stay the federal filing based on a more complete state court complaint filed against these same insurers and the Company's insurance broker. The coverage case is now proceeding in state court. Discovery in this litigation is ongoing. The trial is scheduled for Dec. 3, 2007. A previously set scheduling order is likely to be amended by the court in April 2007. Based in Medina, Ohio, RPM International Inc. is divided into two units: industrial and consumer products. Industrial offerings include products for waterproofing, corrosion resistance, floor maintenance, and wall finishing. The Company's do-it-yourself items include caulks and sealants, rust- preventative and general-purpose paints, repair products, and hobby paints. ASBESTOS LITIGATION: CompuDyne Corp. Still Faces Injury Actions ---------------------------------------------------------------- CompuDyne Corp., individually and as an alleged successor, continues to face lawsuits involving asbestos-related personal injury and death claims, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 10, 2007. The Company has been named as a defendant in cases related to claims for asbestos exposure allegedly due to asbestos in certain of its predecessor's products. The Company has advised its insurers of each of these cases, and the insurers are providing a defense pursuant to agreement with the Company, subject to reservation of rights by the insurers. The insurers have advised that claims in asbestos litigation for punitive damages, exemplary damages, malicious and willful and wanton behavior and intentional conduct are not covered. One of the carriers has given notice that asbestos related claims are excluded from certain of these policies. The insurers have additional coverage defenses, which are reserved, including that claims may fall outside of a particular policy period of coverage. To date, litigation costs have not been significant and the Company has not paid any settlements from its own funds. Based in Annapolis, Md., CompuDyne Corp. provides products and services to the public security markets. The Company operates in four segments: Institutional Security Systems, Attack Protection, Integrated Electronic Systems, and Public Safety and Justice. ASBESTOS LITIGATION: Entrade Says Artra's Plan Became Effective ---------------------------------------------------------------- Entrade Inc. said that the Amended Joint Reorganization Plan of wholly owned subsidiary Artra Group Inc., on April 2, 2007, became effective, according to a Company press release, on Form 8-K, filed with the U.S. Securities and Exchange Commission on April 9, 2007. On June 3, 2002, Artra Group Inc. filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. The Petition was filed in the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division and is known by Case Number 02 B 21522. The Petition was filed in response to a growing number of asbestos and asbestos related litigation claims directed toward Artra, arising from Artra's prior ownership of Baltimore Paint and Chemical (a division or subsidiary of Artra Group Inc.) and The Synkoloid Co. (a division or subsidiary of Artra Group Inc.) and their affiliated entities. On or about June 25, 2002, the U.S. Trustee for the Northern District of Illinois appointed the Official Committee of Unsecured Creditors of Artra Group Inc. to represent the interests of Artra's unsecured creditors. The Creditors Committee filed an action in the Bankruptcy Court seeking to consolidate the Company and Artra in the Bankruptcy Case. In connection with the Committee Action, the Creditors Committee alleged that the Company was obligated to Artra about US$23,337,000, plus accrued interest, under a series of promissory notes made by the Company during calendar year 2001. In response to the Committee Action, the Company negotiated a settlement with Artra, the Creditors Committee and the Futures Representative. Under the terms of the Original Asbestos Settlement, the Company agreed to make a one-time payment of US$3,000,000 to Artra, and further agreed to issue a promissory note to Artra in the principal amount of US$2,000,000, which promissory note was to be secured by a letter of credit. On Jan. 24, 2007, Artra and the Committee filed an Amended Joint Reorganization Plan of Artra Group Inc. As proposed under the Plan, Artra would emerge from the bankruptcy case as an operating business. On Jan. 25, 2007, the Bankruptcy Court entered an order confirming the Plan. On Feb. 28, 2007, the U.S. District Court for the Northern District of Illinois entered an additional order affirming confirmation of the Plan. After confirmation of the Plan, on April 9, 2007, the Company entered into an agreement with reorganized Artra and the Asbestos Trust under which the parties amended the terms of the Original Asbestos Settlement. On April 5, 2007, the Company received notice from the Asbestos Trust that all conditions required under the Amended Asbestos Settlement had been satisfied, and that payment of an aggregate amount of US$2,000,000 was due from the Company under the terms of the Amended Asbestos Settlement. On April 9, 2007, the Company tendered to the agent for Reorganized Artra and the Asbestos Trust US$2,000,000 in payment of the cash portion of its obligations under the Amended Asbestos Settlement. COMPANY PROFILE Entrade Inc. 500 Central Ave. Northfield, Ill. 60093 Phone: 847-441-6650 Fax: 847-441-6959 Description: Entrade Inc. is focused on developing its Nationwide Auction Systems. Nationwide specializes in the disposal of surplus property like vehicles, equipment, excess inventory, and repossessions. ASBESTOS LITIGATION: W.R. Grace & Co. Urged to Produce Documents ---------------------------------------------------------------- The Official Committee of Asbestos Personal Injury Claimants and the Future Claims Representative further ask the U.S. Bankruptcy Court to compel W.R. Grace & Co. and the other Debtors to produce documents and deposition discovery concerning the Debtors' prepetition estimates of their potential asbestos personal injury liability. Mark Harford, Esq., at Campbell & Levine, LLC, in Wilmington, Del., relates that the Debtors have published the estimates of their asbestos liabilities in Form 10-K filings with the Securities and Exchange Commission in the years between 1996 and 2001. The PI liabilities estimates were used by the Debtors in asserting that the transfer of their business to Sealed Air Corporation was a fraudulent transfer because they were insolvent at the time of transfer. The Debtors, however, contended in February 2007, in one of the PI estimation pre-trial hearings, that their PI claims payment history is an improper basis for estimating their future asbestos liabilities. In support of their position, the Debtors maintained that the hundreds of millions of dollars they paid in asbestos PI settlements before the Petition Date were not paid to avoid legitimate trial risks. To test the Debtors' position, the PI Committee and the FCR thus ask the Court to compel the Debtors to comply with discovery aimed at uncovering the actual views of the Debtors' lawyers. The PI Committee and the FCR also seek the Court's permission to file under seal, as exhibits, deposition testimonies containing confidential information relating to the Debtors' policies regarding the settling and litigation of PI claims and the history of PI judgments against them. (W.R. Grace Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASBESTOS LITIGATION: Claimants Move to Conduct Grace's Discovery ---------------------------------------------------------------- In December 2006, the Bankruptcy Court held Zonolite Attic Insulation does not pose a serious threat of disease. One of the evidences that the Bankruptcy Court used in making that conclusion was a study conduced by the Agency for Toxic Substances and Disease Registry (ATSDR) in the Libby, Mont., area, describing it as a scientific study negating any disease risk from ZAI. William D. Sullivan, Esq., in Wilmington, Del., relates that in February 2005, the Montana federal court indicted the Debtors for its activities involving Libby vermiculite. Under the Montana Litigation, the Debtors sought to exclude the ATSDR study as evidence, asserting that the study was unscientific and totally inadmissible. In August 2006, the Montana federal court granted the Debtors' motion and excluded the study as failing Daubert. However, the Debtors did not attempt to amend in ZAI briefs to reflect the Montana federal court's ruling, Mr. Sullivan notes. The Debtors' continued use of a study, which has been excluded as evidence in another court, raises a serious issue, Mr. Sullivan asserts. "Representing to one court that a scientific study is competent and persuasive evidence on risk of disease, while advising another court that the work is not even a 'study,' raises questions of judicial process that deserves answers." Thus, the ZAI Claimants ask the Court to grant them 90 days to pursue discovery concerning the situation and direct all of the Debtors' personnel, including counsel, to make themselves and all relevant documents available without the necessity of a subpoena. The ZAI Claimants also ask the Court to direct the Debtors and their counsel to prepare a detailed privilege log for any documents withheld from production. According to Mr. Sullivan, the anticipated discovery will focus on these issues: (a) Who among the Debtors' law firms handling asbestos matters knew of the Montana federal court ruling and who were also involved in ZAI matters; (b) DID any discussions took place about alerting the Bankruptcy Court through the ZAI briefing about the Debtors' contradictory position; (c) Was the failure to amend the ZAI briefs excusable in light of the complexities of the case; and (d) Did anyone on the Debtors' side, after the issuance of the December 2006 Opinion with its reliance on the ATSDR Study, considered informing the Bankruptcy Court it had relief on a study that was inadmissible for any purpose. (W.R. Grace Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASBESTOS LITIGATION: Four Plaintiffs Sue 163 Defendants in W.Va. ---------------------------------------------------------------- Four plaintiffs, on March 30, 2007, jointly filed an asbestos- related lawsuit, naming 163 defendants, in Kanawha Circuit Court, W.Va., The West Virginia Record reports. Pittsburg attorney David Chervenick filed the suits on behalf of Jack and Edith England, Clifford and Edwina Maffett, John Nesselroad Jr., and Ralph and Naomi Smith. The Englands live in Little Hocking, Ohio. The suit says Mr. England was a sheetmetal worker for Union Local 33. He has asbestosis and lung cancer. The Maffetts live in Toronto, Ohio. In the suit, Mr. Maffett was a millwright with Union Local USWA 1190. He has asbestosis and lung cancer. Mr. Nesselroad Jr. lives in Colliers, W.Va. He was a boilermaker for Union Local 154. He has asbestosis. The Smiths live in Cairo, W.Va. Mr. Smith was a millwright for Union Local 1755 and has asbestosis and mesthelioma. The suit says the plaintiffs were exposed to and inhaled asbestos dust, which caused the disabilities. Each exposure occurred at various places in West Virginia, the suit says. Forty-one of the plants are located in West Virginia. The suit claims the companies knew about the risk associated with the exposure to asbestos fibers, yet did not warn their employees. In an 18-count suit, the plaintiffs seek compensatory and punitive damages against all the defendants, both jointly and severally. A visiting judge will be assigned to Case No. 07-C-620. ASBESTOS LITIGATION: Couple Files Suit v. 56 Defendants in W.Va. ---------------------------------------------------------------- Attorney William Schwartz, on behalf of Charles and Beatrice Coffman of Jackson County, W.Va., sued 56 companies in an asbestos-related suit filed in Kanawha Circuit Court, The West Virginia Record reports. The suit was filed on March 30, 2007. Mr. Coffman was a member of Pipefitter Local 521 and worked on various industrial sites from 1952 to 2004. The suit claims he was exposed to asbestos while working on the different sites. According to the suit, Mr. Coffman was unaware of the dangers of asbestos and suffers from mesothelioma. The suit names 16 plants at which Mr. Coffman worked, where he was exposed. They are Appalachian Power Co., Allied Chemical, Ashland Oil Inc., B.F. Goodrich Co., Glasgow Powerhouse, Goodyear, John Amos Power Plant, Kaiser Aluminum & Chemical Corp., Kyger Creek Powerhouse, Louisa Powerhouse, Monongahela Power Co., Monsanto Co., Ohio Power Co., Ravenswood Aluminum Corp., Union Carbide Corp., and Virginia Electric & Power Co. In the 10-count suit, Mr. Coffman claims the companies were negligent in informing their employees about the risks of asbestos. Therefore, he claims he did not know the danger of the asbestos, which caused him to suffer physically and mentally. The Coffmans seek judgment and damages against all defendants. Kanawha Circuit Court case number 07-C-616 has been assigned to a visiting judge. ASBESTOS LITIGATION: Smoker Files Suit v. 43 Firms in Tex. Court ---------------------------------------------------------------- Willie Scott, represented by Attorney Bryan Blevins of Provost Umphrey, sued the A.O. Smith Corp., with 42 other corporations, for distributing products with asbestos throughout Jefferson County, Tex., The Southeast Texas Record reports. Mr. Scott blames corporations, like Lockheed Martin and Zurn Industries, for making and distributing asbestos products. Medical records attached to Mr. Scott's suit state that he had occupational exposure to asbestos, probably while working as a laborer for the Texaco refinery from 1952 to 1983. The document also says Mr. Scott, a lung cancer patient, has been a cigarette smoker for most of his adult life. He is around 71 years of age. The petition says the 43 defendants named in his suit were negligent, failing to adequately test their asbestos-laced products before flooding the market with dangerous goods. Moreover, the petition faults Minnesota Mining and Manufacturing Corp. (3M Corp.) and American Optical Corp. for producing defective masks that failed to "provide respiratory protection." Mr. Scott is suing for physical pain and suffering in the past and future, mental anguish in the past and future, lost wages, loss of earning capacity, disfigurement in the past and future, physical impairment in the past and future, and past and future medical expenses. Mr. Scott filed his petition on April 4, 2007 with the Jefferson County District Court. Judge Milton Shuffield, 136th District Court, has been assigned to Case No. D179-064. ASBESTOS LITIGATION: JR Tokai Had Locomotive Parts with Asbestos ---------------------------------------------------------------- JR Tokai, on April 9, 2007, said that it used asbestos in train parts but said that passengers were not in danger, Mainichi Daily News reports. JR Tokai officials said that they would replace all parts containing asbestos in April 2007. The Company admitted that parts with asbestos were used in 35 bullet train cars and 172 other train carriages. The parts include air compressors and heaters. According to Company officials, asbestos was inside the parts and passengers were not in danger. ASBESTOS LITIGATION: Parties Settle Adams Lawsuit in Tex. Court ---------------------------------------------------------------- Parties of a lawsuit, styled Helen Adams et al. vs. AC&S et al., reached a settlement before trial began in Jefferson County District Court in Texas, The Southeast Texas Record reports. The suit was originally filed in 2004 on behalf of more than 2,000 plaintiffs against around 400 corporations. The suit alleges that plaintiffs or their representatives were exposed to asbestos or asbestos-related products of the defendants, resulting various respiratory and other diseases. Brent Coon & Associates of Beaumont, Tex., represents the plaintiffs. While filed under the same case number, each of the plaintiffs' cases is being handled separately. The April 2, 2007 settlement named James Jones as plaintiff, represented by Jason Cansler of Brent Coon & Associates. The April 2, 2007 settlement brings the number of decided cases within the suit to 220. In the original petition, defendants including AC&S, Foster Wheeler, H.B. Zachry, Brown & Root, Bechtel and Dresser as contractors or distributors sold, installed, removed or distributed asbestos-containing products, which were dangerous and defective. 3M Corp. is specifically named for providing mask products to plaintiffs that did not provide adequate respiratory protection. Plaintiffs seek damages not limited to: past and future pain and suffering, past and future mental anguish, lost wages, loss of earning capacity, disfigurement, past and future physical impairment, medical bills and funeral bills in the event of death. ASBESTOS LITIGATION: OSHA to Penalize Aapex for Exposing Workers ---------------------------------------------------------------- The Occupational Safety and Health Association has proposed to impose a US$57,000 fine to Aapex Environmental Services Inc. for allegedly exposing employees to asbestos-related health problems at a suburban construction project, Insurance Journal reports. The OSHA cited Aapex Environmental for six alleged violations of occupational health standards at the former Agway building in DeWitt following an inspection. OSHA's inspection found that required monitoring of employee exposure to asbestos was not conducted on several occasions. That finding resulted in a proposed fine of US$42,000. The inspection also found that Aapex Environmental failed to collect short-term air sampling, keep accurate exposure monitoring records, notify employees of sampling results, train employees to properly establish an asbestos containment system, and prevent asbestos-contaminated water from leaking from an enclosed work area. Those five citations resulted in another US$15,000 in proposed fines. According to OSHA spokesman Ted Fitzgerald, Aapex Environmental has scheduled an April 20, 2007 meeting with OSHA to discuss the penalties. The proposed fines come on the heels of an admission in March 2006 by an Aapex Environmental supervisor that he improperly disposed of asbestos fibers, allowing them to drain into public sewers, contaminate construction debris and collect in public spaces outside the Agway building. Everett Blatche, 44, pleaded guilty to one felony count of conspiracy to violate the Clean Water Act, Clean Air Act and Superfund law. Mr. Blatche faces up to five years in prison and up to US$250,000 in fines when he is sentenced in August 2007. ASBESTOS ALERT: Pioneer Companies Faces "Premises" Suits in La. ---------------------------------------------------------------- Pioneer Companies Inc. faces pending asbestos-related "premises liability" lawsuits in Louisiana, according to the Company's annual report filed with the U.S. Securities and Exchange Commission on March 15, 2007. These premise liability cases allege exposure to asbestos- containing materials by employees of third-party contractors or subcontractors who allegedly performed services at the Company's St. Gabriel, La. Facility. The cases do not relate to any products made or sold by the Company or any predecessor company. The Company said it believes there are about 65 pending premises liability suits, which allege or may allege exposure at the St. Gabriel plant. Most of these suits have multiple plaintiffs who make claims against multiple defendants without providing reliable details of where or when the claimants were exposed to asbestos. Since most of these cases are in the preliminary stages, the Company is unable to estimate a range of potential liability for these cases at this time. COMPANY PROFILE: Pioneer Companies Inc. 700 Louisiana St., Ste. 4300 Houston, Tex. 77002 Phone: 713-570-3200 Fax: 713-225-6475 http://www.piona.com/ Fiscal Year-End: December 2006 Sales (mil.): US$525.7 1-Year Sales Growth: 1.9 percent 2006 Net Income (mil.): US$67.2 1-Year Net Income Growth: (4.4 percent) 2005 Employees: 524 Description: Pioneer Companies Inc. and its subsidiaries manufacture and market chlorine, caustic soda, and related products. The Company conducts its business through units: PCI Chemicals Canada Co. and Pioneer Americas LLC. ASBESTOS ALERT: DT Solutions Faces Removal Lawsuit in Md. Court ---------------------------------------------------------------- Diversified Thermal Solutions Inc.'s wholly owned subsidiary, DT Solutions Inc., faces an asbestos-related removal lawsuit filed in the Circuit Court of Allegheny County, Md., according to the Company's annual report filed with the U.S. Securities and Exchange Commission on April 2, 2007. First Capital Insulation Inc. filed the suit against DT Solutions and Mt. Savage Firebrick Co. on Sept. 25, 2005. DT Solutions entered into an agreement for the purchase of real property from Mt. Savage Firebrick. First Capital Insulation seeks about US$38,000 for its removal and disposition of asbestos containing material from two brick ovens. As of Dec. 31, 2006, this matter had not been resolved. COMPANY PROFILE Diversified Thermal Solutions Inc. 4126 Delp St., Ste. 200 Memphis, Tenn. Phone: 901-365-7650 Fax: 901-365-9617 http://www.dthermal.com Description: Diversified Thermal Solutions Inc. makes refractory products, like clay and brick, for the linings of high-temperature furnaces and reactors. Before the refractory business, the Company was involved in providing international long distance communications service. New Securities Fraud Cases ACCREDITED HOME: Glancy Binkow Files Securities Fraud Lawsuit ------------------------------------------------------------- Glancy Binkow & Goldberg LLP filed a class action in the U.S. District Court for the Southern District of California on behalf of a class consisting of all persons or entities who purchased or otherwise acquired the common stock of Accredited Home Lenders Holding Co. (LEND) between Nov. 1, 2005 and March 12, 2007, inclusive. The complaint charges Accredited and certain of the company's executive officers with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and dissemination of materially false and misleading statements concerning the company's financial performance caused Accredited's stock price to become artificially inflated, inflicting damages on investors. Accredited and its subsidiaries operate as a mortgage banking company in the U.S. and Canada, which originates, finances, securitizes, services and sells "non-prime" or "sub-prime" mortgage loans secured by residential real estate. The complaint alleges that during the Class Period defendants knew but failed to disclose material adverse facts about the company's financial well-being, business relationships, and prospects, including that: (1) the company was improperly accounting for loan losses as conditions in the sub-prime industry deteriorated; (2) as a result, the company's financial statements were materially misstated; (3) the company's underwriting guidelines were not adequately restrictive for borrowers in the sub-prime loan market; (4) the company would be forced to further tighten its underwriting guidelines which would have a material impact on its future loan production; (5) the company was operating without effective risk management policies and procedures in place; (6) the company lacked adequate internal and financial controls; and (7) for the foregoing reasons, the company's statements about its financial well-being and future business prospects were lacking in any reasonable basis when made. On Feb. 14, 2007, Accredited reported its financial and operating results for the fourth quarter and year ended Dec. 31, 2006, emphasizing that it had "continued to increase reserve balances" by increasing the company's total reserves by $42 million for the quarter, and was maintaining "strong liquidity." Less than one month later, on March 12, 2007, Accredited shocked investors when the company revealed that its cash resourses had effectively been depleted, and that the company was now forced to explore strategic options for continued survival. The company further revealed for the first time that it had been forced to pay approximately $190 million in margin calls since Jan. 1, 2007, one-third of which had been received prior to the company's Feb. 14, 2007 announcement. The company further revealed that it was forced to seek financial waivers and extensions of the covenants it had made with its financial lenders. As a result of this news, analysts predicted that the company could face liquidation and possible bankruptcy, causing Accredited shares to decline $7.43 per share, or 65 percent, to close on March 13, 2007 at $3.97 per share, on unusually heavy trading volume. Plaintiff seeks to recover damages on behalf of Class members and is represented by Glancy Binkow & Goldberg LLP. For more information, contact Michael Goldberg, Esquire, of Glancy Binkow & Goldberg LLP -- http://www.glancylaw.com-- 1801 Avenue of the Stars, Suite 311, Los Angeles, California 90067, by telephone at (310) 201-9150 or Toll Free at (888) 773-9224 or by e-mail to info@glancylaw.com. ELI LILLY: Grant & Eisenhofer Files N.Y. Securities Fraud Suit -------------------------------------------------------------- A securities class action was commenced in the Eastern District of New York on behalf of all persons who acquired securities of Eli Lilly and Co. (LLY) between March 28, 2002 and Dec. 22, 2006 inclusive. The complaint charges the defendants with violations of Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, for misrepresenting to investors known adverse side-effects associated with the use of Zyprexa, the company's best-selling drug and by failing to disclose a systematic and illegal campaign by the company to increase Zyprexa sales by marketing Zyprexa for unapproved, off- label uses. The complaint alleges that for over a decade, Eli Lilly knew of links between Zyprexa and extreme weight gain and diabetes. In addition, during the Class Period, the company engaged in a scheme to market Zyprexa for uses that were not approved by the FDA, in violation of FDA regulations that proscribed such marketing. Federal and state regulators have commenced lawsuits against Lilly based on these marketing schemes and the company has denied any wrongdoing. During the Class Period, in the face of mounting independent research connecting Zyprexa to diabetes and weight gain, and lawsuits by persons who suffered these side-effects, Lilly emphatically denied any such link. Yet, as public agencies raised warnings about the safety of Zyprexa, and Lilly settled product liability lawsuits involving the drug, Lilly's stock lost more than $30 billion in market value in connection with the fraud. Lead plaintiff filing deadline is June 1, 2007. For more information, contact Sharan Nirmul or Naumon A. Amjed, at Grant & Eisenhofer P.A., Chase Manhattan Centre, 1201 North Market Street, Wilmington, DE 19801, at 888-464-3529 or 302-622- 7000 or by e-mail at lawyers@gelaw.com. NEW CENTURY: Zwerling, Schachter Files Securities Fraud Suit ------------------------------------------------------------ Zwerling, Schachter & Zwerling, LLP filed a class action in the U.S. District Court for the Central District of California on behalf of all persons and entities who purchased the securities of New Century Financial Corp. (OTC: NEWC.PK) during the period from Feb. 3, 2005 through March 2, 2007. The complaint extends the existing class period from the originally filed actions. The deadline to file a motion seeking to be appointed lead plaintiff is April 10, 2007. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that throughout the Class Period defendants issued numerous materially false and misleading statements concerning New Century's profitability, underwriting standards, and financial strength. On Feb. 7, 2007, in contrast to the positive statements issued throughout the Class Period, New Century announced that it would restate its financial results because the company had: (1) failed to reserve adequately for all of the non- performing mortgages it was forced to repurchase; and (2) failed to account properly for the reduction in value of the mortgages repurchased. On March 2, 2007, in a filing with the U.S. Securities & Exchange Commission, the company stated that the Audit Committee of the Board of Directors initiated its own independent investigation concerning, among other things, "issues pertaining to the company's valuation of residual interests in securitizations in 2006 and prior periods." Also on March 2, 2007, New Century stated that it was out of compliance with debt covenants and that if it were unable to reach agreements with all of its lenders, the company's auditor will include an explanatory paragraph on the company's financial statements indicating that substantial doubt exists as to the company's ability to continue as a going concern. On March 5, 2007, New Century's common stock dropped more than 60% to a low of $5.25. On April 2, 2007, New Century announced that it filed for voluntary bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. New Century's common and preferred shares have been de- listed from the New York Stock Exchange and now trade on the over-the-counter market. On April 4, 2007, New Century's common stock closed at $1.00 per share. For more information, contact Kevin McGee, Esq. or Jayne Nykolyn at Zwerling Schachter -- http://www.zsz.com-- Phone: 1-800-721- 3900, E-mail: kmcgee@zsz.com or jnykolyn@zsz.com. US AUTO: Lerach Coughlin Files Securities Fraud Suit in Calif. -------------------------------------------------------------- Lerach Coughlin Stoia Geller Rudman & Robbins LLP announces that a class action has been commenced in the U.S. District Court for the Central District of California on behalf of all persons or entities who acquired the common stock of U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) pursuant to the company's Registration Statement and Prospectus (the Registration Statement) issued in connection with its Feb. 8, 2007 initial public offering. The complaint charges U.S. Auto Parts and certain of its officers and directors with violations of the U.S. Securities Act of 1933. U.S. Auto Parts is an online provider of aftermarket auto parts, including body parts, engine parts, performance parts and accessories. The complaint alleges that on Feb. 8, 2007, U.S. Auto Parts accomplished its IPO of 10 million shares at $10.00 per share (including 8 million shares sold by U.S. Auto Parts and 2 million shares sold by stockholders, including certain of the defendants) for net proceeds of $100 million, pursuant to the false and misleading Registration Statement. The Registration Statement failed to disclose that U.S. Auto Parts was having difficulty with its acquisition of PartsBin -- a company it acquired in May 2006 -- which would adversely affect its fourth quarter 2006 and first quarter 2007 results. Due to defendants' positive but false statements, by March 2007 the stock was trading around $11 per share. Then on March 20, 2007, after the market closed, U.S. Auto Parts issued a press release announcing disappointing fourth quarter 2006 and year-end results. On this news, U.S. Auto Parts' stock price collapsed in one day from $11.07 per share on March 20, 2007 to close at $6.49 per share on March 21, 2007. Allegedly, the true facts which were omitted from the Registration Statement were: (a) the company was having difficulty with the integration of PartsBin due in large part to the different distribution methods utilized by U.S. Auto Parts and PartsBin to fill customer orders; (b) PartsBin was suffering from certain internal control deficiencies which caused or led to at least the following problems for U.S. Auto Parts: (i) the company was having trouble filling customer orders under its drop-ship distribution system and was required to issue credits to its customers for out-of-stock products that it had previously recorded as sales; and (ii) the products offered via the drop-ship distribution method generated lower product margins than the products offered under the stock-and-ship distribution method, which further eroded and would continue to erode U.S. Auto Parts' already suffering margins; and (c) the company had experienced a disastrous fourth quarter which would result in disappointing 2006 results. Plaintiff seeks to recover damages on behalf of all persons or entities who acquired the common stock of U.S. Auto Parts pursuant to the company's false and misleading Registration Statement issued in connection with its Feb. 8, 2007 IPO. The plaintiff is represented by Lerach Coughlin, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. For more information, contact William Lerach or Darren Robbins of Lerach Coughlin (http://www.lerachlaw.com/cases/usautoparts/) at 800/449-4900 or 619/231-1058, or via e-mail at wsl@lerachlaw.com. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Glenn Ruel Senorin, Ma. Cristina Canson, and Janice Mendoza, Editors. Copyright 2007. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *