/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990301.MBX C L A S S A C T I O N R E P O R T E R Monday, March 1, 1999, Vol. 1, No. 17 Headlines AIDS-TAINTED BLOOD: Canadians Plan to Sue United States AT&T WIRELESS: Washington State Minute Rounding Suit to Proceed CARVER BANCORP: Settles Three Shareholder Suits for $250,000 CITIZENS UTILITIES: Customer Lawyers Prefer Class Action Process GILL NETS: District Court in Baton Rouge to Consider Lifting Ban GUN MANUFACTURERS: NRA Supports Florida Law to Bar City Suits HECHINGER COMPANY: No Progress in Delaware Shareholder Suit HOME HEALTH: Bankruptcy Filing Stays Shareholder Class Action INTERCARGO CORPORATION: Shareholders File Merger-Related Suit INTERMEDIA COMMUNICATIONS: Files Motion to Dismiss DIGEX Action LOCKHEED MARTIN: Stull Stull Files Complaint in California MARCOS FAMILY: Marcos/Philippine Govt. Human Rights Case Settled METRIS COMPANIES: Shareholder Suits Over; Plaintiffs Take Nothing NOISE POLLUTION: Pentagon Quietly Settles Helicopter Noise Suit NORTHWEST AIRLINES: Issues Apology for January Runway Detainment ORBITAL SCIENCES: Bernstein Litowitz Files Complaint in Virginia ORBITAL SCIENCES: Berger & Montague File Complaint in Virginia SAFEWAY, INC.: Litigation to Block Carrs Acquisition Resolved SOLV-EX CORPORATION: Quarterly Material Litigation Status Report TOBACCO LITIGATION: Addiction Expert & Bennett LeBow Testify TOTAL RENAL: Hoffman & Edelson Files Complaint in California TOTAL RENAL: Berman DeValerio Files Complaint in California TOTAL RENAL: Cauley Firm Files Complaint in California TWINLAB CORP.: Wolf Haldenstein Files Complaint in New York WABASH NATIONAL: Rabin & Peckel File Complaint in Indiana WAL-MART STORES: New Mexico Upholds Sexual Harrassment Award WASTE MANAGEMENT: Posts Strong Year-End Earnings ********* AIDS-TAINTED BLOOD: Canadians Plan to Sue United States ------------------------------------------------------- Maggie Fox, a Health and Science Correspondent for Reuters, reports that a group of Canadians who say they were infected with the AIDS virus and hepatitis C from imported U.S. blood in the early 1980s indicate they plan to sue the United States, and perhaps even President Bill Clinton. They say the blood was taken from inmates at prisons in Louisiana and Arkansas during the time that Clinton was Arkansas governor and sold not just to Canada but to other countries. They are also asking the Justice Department to investigate whether prison and health officials acted criminally in failing to screen the blood and warn of its source. "It is time we hold those responsible for the collection and distribution of prison blood and plasma in the U.S. that was known to be contaminated with hepatitis C and was shipped to Canada and elsewhere," Michael McCarthy, a Canadian who says he is infected with HIV and hepatitis, told a news conference earlier this week. The FDA decided the blood product was "not fit for the United States," hemophiliac Michael McCarthy told the Associated Press. "It's unbelievable that they allowed it to be exported." McCarthy is the lead plaintiff in the lawsuit filed against the Canadian government for failing to safeguard that nation's blood supply. The group of 400 Canadians filed a C$1 billion class-action claim against the Canadian government and two companies in late January and vowed then to expand their case over the border. David Harvey, lead Canadian attorney for the group, said they had not decided just who to sue or on what grounds. "We are putting together a lawsuit to parallel what we are doing in Canada," he said. It will focus on the U.S. Food and Drug Administration (FDA), which regulates blood products, as well as authorities in Louisiana and Arkansas. The FDA, as usual, declined comment. But, Reuters says, the FDA has said in the past that there was no way to know in the early 1980s that the blood was contaminated. The group said the prisoners sold their blood, which was collected by an Arkansas company called Health Management Associates Inc., which sold some blood to Toronto-based Connaught Laboratories. "From there, the plasma was pooled and turned into a special blood product and then sent to the Canadian Red Cross, which distributed it to thousands of hemophiliacs," the group said in a statement. Hemophiliacs' blood fails to clot properly and they need regular infusions of blood products. Regarding President Clinton, "there's no credible suggestion of any involvement by the president when he was governor," White House spokesman Jim Kennedy told the AP, adding that, "Any issues relating to how the state of Arkansas dealt with this matter should be referred to the relevant agencies. Any suggestion of any possible future legal actions involving the President are at this point hypothetical, and unless and until legal action is taken we're not going to comment on hypothetical legal actions." AT&T WIRELESS: Washington State Minute Rounding Suit to Proceed --------------------------------------------------------------- As previously reported, the U.S. Supreme Court declined, without comment, to stop a class-action lawsuit by AT&T Wireless Services customers who say they were overcharged millions of dollars when the company rounded mobile-phone air-time charges to the next full minute. The justices, without comment, rebuffed calls from and an industry trade group to bar suits that demand refunds for allegedly deceptive billing practices. The decision, Bloomberg News explains, now forces AT&T Wireless, with 9 million subscribers, to fight a Washington state court lawsuit that seeks tens of millions of dollars on behalf of customers in five western states. It also allows customers to pursue dozens of billing-practices suits that seek hundreds of millions of dollars from wireless phone companies. "If the wireless services have to tell people what they're being billed for, they may have to change their practices," said Steve W. Berman, a lawyer pressing several of the lawsuits told Bloomberg, adding that although the suit doesn't specifically seek to bar AT&T Wireless from ever using full-minute pricing, the customers claim the company owes them damages because it broke its promise to them that it wouldn't round charges up to the next full minute. AT&T spokesman Jim McGann said the company was simply following a widespread industry practice by rounding up. "We make full disclosure on customer billing agreements regarding rounding up," he told Bloomberg. AT&T contended the lawsuit effectively demands state regulation of wireless rates, which is barred by a 1993 law that set up a federal system of rate regulation for the industry. CARVER BANCORP: Settles Three Shareholder Suits for $250,000 ------------------------------------------------------------ In its latest quarterly report filed with the SEC, Carver Bancorp, Inc., reminded investors that, in August, 1998, the plaintiffs in three suits (Dougherty v. Carver Federal Savings Bank, Gomberg v. Carver Federal Savings Bank and Uminer v. Carver Federal Savings Bank, alleging that the offering circular, used by Carver to sell its never-appraised stock in its public offering, contained material misstatements and omissions), with the consent of the defendants, filed a motion with the District Court for preliminary approval of a settlement proposed by the parties herein. In November, 1998, Judge Makasey of the U.S. District Court for the S.D.N.Y. preliminarily approved the proposed settlement and scheduled a hearing on the fairness of the same for February 16, 1999. On February 16, 1999, Judge Mukasey approved the final settlement. The Company incurred a one time charge of $250,000 during the second quarter of fiscal year 1999 in connection with the settlement. CITIZENS UTILITIES: Customer Lawyers Prefer Class Action Process ---------------------------------------------------------------- Citizens Utilities customers would collect more by joining a lawsuit against the utility than by using the previously established claims process, attorneys argued this week in a class-action suit against the utility moved in court to block the process that the city of Nogales and the utility agreed to last week. As previously reported, the utility has been under fire since power went out in Santa Cruz County nine times in four months last year. The city filed a complaint against the utility with the Arizona Corporation Commission, and three businesses filed a class-action suit against the utility. Last week, the Nogales City Council approved a settlement that included a process through which utility customers could file claims of damages resulting from power outages. Under the settlement, the utility agreed to send out claim forms and a list of outage dates to its approximately 12,500 Santa Cruz County customers. If a customer was not satisfied with the utility's decision on a claim, the issue would go before an arbitrator, whose decision would be binding. Attorney Eric S. Sparks argued the process would unnecessarily limit the pay-outs the utility makes. "Citizens has crafted a process that it obviously hopes will result in customers unknowingly binding themselves to its one-sided arbitration process," Sparks wrote. Nogales City Attorney Hugh Holub, who helped negotiate the claims process, said the motives of Sparks and his colleagues are selfish. "They think a bunch of lawyers can make a lot of money out of squeezing Citizens," Holub told the Arizona Daily Star. "More money going to legal-service fees means less money going to electric service." GILL NETS: District Court in Baton Rouge to Consider Lifting Ban ---------------------------------------------------------------- >From Baton Rouge, Louisiana, United Press International reports that the Louisiana gill net law is headed back to federal court. Commercial fisherman want a 1996 lawsuit challenging the law to be reopened. A judge had put the suit on hold until a similar suit in state court was decided. A March 3rd hearing is set to discuss the ban which took effect in 1995. GUN MANUFACTURERS: NRA Supports Florida Law to Bar City Suits ------------------------------------------------------------- The National Rifle Association has indicated its support of the bill introduced in the Florida Legislature to make it a class- three felony for Florida mayors to sue weapons manufacturers. As previously reported, State Rep. George Albright, an Ocala Republican, says his bill would retroactively apply to a suit filed last month by Miami-Dade County that seeks to force gun manufacturers to pay the costs of gun violence for failing to make their firearms "reasonably safe." In introducing the legislation, Albright said, "I look forward to (Miami-Dade) Mayor (Alex) Penelas, if he continues this lawsuit, being a convicted felon and being removed from office by the governor." Florida Gov. Jeb Bush has said he disagrees with using lawsuits to strong-arm gunmakers. Speaking of the suit engineered by Penelas, Bush said: "His motives are good. The end result he aspires to is good, but this is bad policy." A similar lawsuit by the city of Atlanta was dropped days after it was filed when the Georgia Legislature made it against the law for any community to sue gunmakers. HECHINGER COMPANY: No Progress in Delaware Shareholder Suit ----------------------------------------------------------- Hechinger Company in its latest quarterly report filed wit the SEC, reminds investors that, on July 23, 1997, a purported class action complaint was filed in the Delaware Chancery Court on behalf of all holders of the Company's common stock against the Company and the former Company directors. The plaintiff has alleged that the former officers and directors of the Company breached their fiduciary duties to the holders of the common stock by, among other things, failing to take all reasonable steps to assure the maximization of stockholder value including the implementation of a bidding mechanism to foster a fair auction of the Company and by entering into an agreement with Centers Holdings under which the consideration offered by Centers Holdings to holders of the common stock was "unfair and grossly inadequate." The Company continues to believe that the plaintiff's claims are without merit and intends to defend such action vigorously. No significant activity occurred with respect to this lawsuit during 1998 or thus far in 1999. HOME HEALTH: Bankruptcy Filing Stays Shareholder Class Action ------------------------------------------------------------- Home Health Corporation of America, Inc., filed its annual report with the SEC and reminded investors that the Company and certain officers are party to a class action lawsuit against the Company entitled Koenig v. Feldman, et al., which was filed on February 19, 1998 in the United States District Court for the Eastern District of Pennsylvania. On January 24, 1999, the court granted, in part, a motion filed by the Company to dismiss the lawsuit; but also concluded that valid claims were stated concerning disclosure regarding possible managed care organization terminations and that a substantial write-down in the value of the Company's oxygen business would be necessary. The court also granted the plaintiffs leave to file a second amended complaint within 30 days. Because Home Health Corporation of America, Inc. and its subsidiaries have filed for protection under Chapter 11 of the Bankruptcy Code, any further actions on pre-petition claims, including continuation of legal proceedings, like the shareholder suit, or entry of or execution of any judgments in any legal proceedings against the Company, generally violate the automatic stay provisions of Section 362 of the Bankruptcy Code. INTERCARGO CORPORATION: Shareholders File Merger-Related Suit ------------------------------------------------------------- Intercargo Corporation (NASDAQ:ICAR) disclosed that, on February 17, 1999, certain purported stockholders of Intercargo filed a lawsuit in the Court of Chancery in New Castle County, Delaware against Intercargo and Intercargo's directors, seeking class action status and claiming, among other things, that Intercargo's directors breached their fiduciary duties to Intercargo's stockholders in approving the previously announced definitive agreement to merge between Intercargo and a subsidiary of XL Capital Ltd. (NYSE.XL) and that they failed to adequately explore alternative transactions and maximize shareholder value. The lawsuit requests, among other things, injunctive relief and payment of damages to the class members. Intercargo believes that the lawsuit is without merit and intends to contest the lawsuit vigorously. INTERMEDIA COMMUNICATIONS: Files Motion to Dismiss DIGEX Action --------------------------------------------------------------- On June 5, 1997, Intermedia Communications, Inc., announced its intention to acquire 100% of the outstanding equity of DIGEX. The DIGEX Acquisition was consummated through a tender offer for all of the outstanding shares of DIGEX, which closed on July 9, 1997, followed by a cash merger effective on July 11, 1997. On June 20, 1997, two purported class action complaints were filed in the Court of Chancery of the State of Delaware in and for New Castle County respectively by TAAM Associates, Inc. and David and Chaise Steinberg, purported stockholders of DIGEX, on behalf of all non-affiliated common stockholders of DIGEX, against us, DIGEX and the directors of DIGEX. The Complaints allege that the DIGEX Directors violated their fiduciary duties to the public stockholders of DIGEX by agreeing to vote in favor of the DIGEX Merger and that we knowingly aided and abetted such violation by offering to retain DIGEX management in their present positions and consenting to stock option grants to certain executive officers of DIGEX. The Complaints sought preliminary and permanent injunctions enjoining the DIGEX Merger but no applications were made for such injunctions prior to consummation of the DIGEX Merger on July 11, 1997. In addition, the Complaints seek cash damages from the DIGEX Directors. In August 1997, a motion to dismiss the Complaints was filed on behalf of us, DIGEX and the DIGEX Directors. Intermedia discloses in its annual report filed with the SEC that it filed a motion to dismiss for failure to prosecute in February 1999. If not granted, Intermedia intends to defend vigorously the claims in the Complaints. LOCKHEED MARTIN: Stull Stull Files Complaint in California ---------------------------------------------------------- Stull, Stull, & Brody announced that it filed a class action suit in the United States District Court for the Central District of California on behalf of purchasers of Lockheed Martin Corporation (NYSE:LMT) common stock during the period August 13, 1998 to December 23, 1998. The complaint charges Lockheed and certain of its officers and directors with violations of the Securities and Exchange Act of 1934. The complaint alleges that beginning in August of 1998, in an effort to overcome investor's and analysts' skepticism about Lockheed's first half of 1998 performance, and in an attempt to boost its stock price, Lockheed launched a concerted publicity campaign. In furtherance, Lockheed, on October 20, 1998, reported its third quarter 1998 results, and stated that EPS of $1.67 were "consistent with expectations" and that "we are on track" for 10% EPS growth in 1998, with $1 billion in cash flow. Lockheed additionally assured analysts that it was "on target" to achieve 10% EPS for 1998, with fourth quarter EPS of about $2.06 - $2.10, resulting in fourth quarter 1998 cash flow of $750 million. However, Lockheed concealed that $78 million of the $318 million in net income which Lockheed reported for the third quarter 1998 was generated by a secret accounting adjustment of $120 million from reserves maintained in connection with Lockheed's Atlas rocket launch program. The profits came not from operation, but rather from the secret accounting adjustment. Thus, in actuality, 25% of Lockheed's EPS and $0.41 of its reported $1.67 EPS for the third quarter 1998 came from this accounting adjustment and not from the current operations. Had this adjustment not occurred, Lockheed's third quarter 1998 EPS, net income and operating margins would have been far below that which Lockheed forecasted. On December 23, 1998, Lockheed revealed that fourth quarter 1998 and 1998 results and 1999 results, would fall below that previously forecasted due to shortfalls in the delivery of C-130-J aircraft and Proton satellite launches and a large CalComp write-off. Lockheed's stock declined from $95 3/4 to $82. However, prior to the December 23, 1998 revelations, Individual Defendants Bennett, Augustine, Marafino, Blackwell and Corcoran sold 268,659 shares of Lockheed stock at artificially inflated prices as high as $109.97, for over $28 million in proceeds. MARCOS FAMILY: Marcos/Philippine Govt. Human Rights Case Settled ---------------------------------------------------------------- The Marcos family and the Philippine government have agreed to pay $150 million to settle a lawsuit filed by thousands of people who were tortured and abused under the late dictator Ferdinand Marcos, according to press reports released by the Associated Press, Reuters and an article appearing in the Los Angeles Times. U.S. District Judge Manuel Real, who is based in Los Angeles, gave preliminary approval to the settlement. A final hearing is scheduled April 14 in Hawaii. "The result is both historic and fair," plaintiffs' attorney Robert Swift told the AP. "Never before have human rights victims in any country recovered on a judgment against the perpetrator," Swift said. "The average victim, or the heir of a deceased victim, will receive enough to buy land, start a business, educate children, or just improve his or her quality of life." The lawsuit was filed in Honolulu on behalf of 9,539 Filipinos who in 1995 won a class-action suit against the Marcos estate for torture, summary executions and disappearances. The original lawsuit was filed in 1986 against Marcos, who was subject to the jurisdiction of the U.S. courts because he was residing in Hawaii. Jurors awarded $1.9 billion to the plaintiffs, including $1.2 billion in punitive damages. The judgment was upheld by the 9th U.S. Circuit Court of Appeals in December 1996, but the plaintiffs had trouble collecting money in foreign accounts with contested ownership. Lawyers representing the Marcos family applauded the settlement. "Any time you can settle a judgment like that $1.9 billion for that kind of money, $150 million, you've got a good deal," said James Linn, the Oklahoma City lawyer who represented Marcos' widow, Imelda. If the deal is approved, the money will be distributed through the U.S. District court in Hawaii. The plaintiffs could get about $16,000 each. Mrs. Marcos said last September that she was willing to settle the case for $150 million "out of compassion, not guilt" for the victims, the AP recalled. The Philippine government was involved in the suit because it claimed that all of Marcos' assets rightly belonged to the government. "A despot who abuses his people will finally pay," said a statement issued by Mr. Swift and lawyer Rod Domingo, the victims' Philippine counsel. Domingo, who released the statement in Manila, told Reuters the agreement would still need the approval of the Manila government, which has accused Marcos of looting the Treasury and also claims his assets. Domingo confirmed to Reuters that the agreement was signed for the Marcos family by former first lady Imelda Marcos and her son, provincial governor Ferdinand Jr, and by Swift for the victims. The Marcos family declined comment on the report. "All statements will come from the office of President Estrada," a spokesman for Marcos's son told Reuters. METRIS COMPANIES: Shareholder Suits Over; Plaintiffs Take Nothing ----------------------------------------------------------------- Metris Companies, Inc., announced that the claims against the Company in the shareholder lawsuits filed in October 1998 in United States District Court, District of Minnesota have been dismissed with prejudice. The Complaints had alleged securities fraud and other claims related to a decline in Metris Companies stock price. The lawsuits were dismissed through a Stipulation and Order entered into by counsel for the plaintiffs and defendants, and ordered by the Federal District Court. This dismissal was agreed to and ordered prior to the case having been certified as a class action and without payment to the named plaintiffs or their counsel. NOISE POLLUTION: Pentagon Quietly Settles Helicopter Noise Suit --------------------------------------------------------------- The San Diego Union And Tribune says, "It's a deal." Helicopters will stay at Miramar Marine Corps Air Station and the Marines will look for new routes in hopes of reducing the noise and public rancor caused by chopper flights near residential neighborhoods. With a few handshakes and signatures last week, a grass-roots group, the city of Del Mar and two area residents settled a two-year lawsuit against the Pentagon over the noise caused by the transfer of helicopters to Miramar. The controversy, the Tribune explains, began nearly four years ago when the federal Base Closure and Realignment Commission decided to transfer control of Miramar from the Navy to the Marine Corps, close down two Orange County bases and move Marine helicopters and jets to Miramar. Area residents, mainly in Poway and Del Mar, protested the move, arguing the helicopters would increase noise, while reducing safety and property values. Yesterday's settlement requires the Marines to study noise and air pollution caused by approximately 250 jets and helicopters based at Miramar and, if needed, change flight paths and reduce pollution emissions. Monitoring the studies and any changes will be the plaintiffs who sued -- the Move Against Relocating Choppers Here coalition, or MARCH; the group's chairman, Jerry Hargarten; the city of Del Mar; and Del Mar businessman Richard Hertzberg. "Yeah, we won, but so did they," Hertzberg said. The Marines' top officer here, Maj. Gen. Robert Magnus, said the military, the plaintiffs and the community are winners because everyone will be working together in the future. Both sides gave on some of their positions in the settlement. The major terms of the agreement are: (1) The Marines will study new routes for helicopters along the coast and inland areas in hopes of minimizing noise to area communities. (2) In the meantime, helicopters will fly higher and less often, and late-night flights will be restricted on some routes. And, the military will give the plaintiffs monthly statistics on helicopter flights. (3) A new air pollution impact study will be conducted to determine whether Miramar operations meet the federal Clean Air Act. If the study confirms the base pollutes too much, the Marines would develop a plan to reduce air pollution to acceptable levels. (4) The government will pay the plaintiffs $680,000 to cover legal bills. (5) The agreement will expire in two to three years, depending on how soon the various studies and mitigation efforts are completed. The MARCH coalition, founded in hopes of keeping helicopters out of Miramar, tacitly acknowledged that the helicopters are here to stay. The Marines agreed there were flaws in earlier environmental studies. "It's a trade," Hertzberg said. "It's part law, it's part deal . . . it's a new start." NORTHWEST AIRLINES: Issues Apology for January Runway Detainment ---------------------------------------------------------------- Admitting to mistakes during the January blizzard that snarled Metro Airport traffic, Northwest Airlines said Tuesday it is taking steps to cope more effectively. "The whole thing could've been handled a lot better," Ray Vecci, Northwest's new president of Michigan operations was quoted as saying in Detroit News. "Everyone had good intentions, but it was a simple matter of miscommunication," Vecci said. "We get in the habit of trying to get all our flights out on time, but looking back, we should've cancelled a lot of those flights." Northwest admits to "shortcomings in planning, coordination and communication" and a remediation plan calls for formation of "Go Teams," Minneapolis employees to be dispatched to Metro when inclement weather looms. A newly outlined company-wide system also would allow instant communication among executives. Yousif Ghafari of Dearborn told Detroit News he was glad to hear Northwest admitted it erred, but he said it's too little too late. He is among passengers who filed a class-action lawsuit against the airline for being forced to remain on the planes during the storm. Ghafari and his family sat in an airplane for seven hours during the blizzard. "I'm still very angry at Northwest. It wasn't the pilots or the flight attendants -- they were great. I felt sorry for them. I blame the top management." ORBITAL SCIENCES: Bernstein Litowitz Files Complaint in Virginia ---------------------------------------------------------------- Bernstein Litowitz Berger & Grossmann LLP commenced a class action lawsuit in the United States District Court for the Eastern District of Virginia on February 23, 1999, on behalf of purchasers of the common stock of Orbital Sciences Corp. (NYSE:ORB), from April 21, 1998 through February 16, 1999, inclusive. The complaint charges Orbital, and certain of its officers and directors, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as SEC Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that, during the Class Period, Orbital issued materially false and misleading financial statements for its first three quarters of fiscal 1998, that artificially inflated the Company's financial results through the improper recognition of revenue in violation of generally accepted accounting principles. The Complaint further alleges that defendants utilized their inside information regarding the artificial inflation of the Company's stock price to sell significant amounts of their own personal Orbital holdings for proceeds of over $3 million. ORBITAL SCIENCES: Berger & Montague File Complaint in Virginia -------------------------------------------------------------- Berger & Montague, P.C. announced that on February 18, 1999, it filed a class action lawsuit for violations of the federal securities laws in the United States District Court for the Eastern District of Virginia against Orbital Sciences Corp. (NYSE: ORB) and its two highest officers, on behalf of all persons who purchased Orbital common stock between April 21, 1998, and February 16, 1999. The Complaint charges that Orbital and its two highest officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Complaint alleges that defendants issued a series of materially false and misleading financial statements and failed to reveal that the Company was employing fraudulent accounting methods which artificially inflated Orbital's earnings. After the close of trading on February 16, 1999, the Company announced that, due to the improper accounting treatment of certain items, the Company would materially restate earnings for the first three quarters of 1998. Its earnings had been decreasing in the first three quarters of 1998, not increasing as previously claimed. The Complaint further alleges that defendants utilized their inside information regarding the artificial inflation of the Company's stock price to sell significant amounts of their personal Orbital holdings, for proceeds of over $3 million. SAFEWAY, INC.: Litigation to Block Carrs Acquisition Resolved ------------------------------------------------------------- In a Form 8-K filed with the SEC, Safeway Inc. and Carr-Gottstein Foods Co. report that, on February 19, 1999, the companies settled with the Alaska Public Interest Research Group and six individual plaintiffs in Meyers et al. v Safeway et al., a purported class action lawsuit pending in state court in Anchorage, Alaska, which sought to prevent the proposed acquisition of Carrs by Safeway. The settlement says Alaska Public Interest and the plaintiffs will no longer oppose the proposed acquisition of Carrs by Safeway or the consent decree regarding the merger filed recently in a proceeding initiated by the Alaska Attorney General's office, and will dismiss the Meyers et al. v Safeway et al. action. SOLV-EX CORPORATION: Quarterly Material Litigation Status Report ---------------------------------------------------------------- In its latest quarterly filing with the SEC, Solv-Ex Corporation provides investors with a status report about material litigation in which the Company is involved: (1) The Company and certain officers of the Company were defendants in securities actions pending in the federal courts of New York and New Mexico and in state courts in Arizona and New Mexico. In October 1996, the Company was served with a complaint in the Sedita v. Solv-Ex Corporation, Butler, Campbell, Rendall and Deutsche Morgan Grenfell, Inc., case #96CIV7575, U.S. District Court, Southern District of New York, and in December 1996, the Company was also served with a complaint in Joseph B. Grossman and Stephen Disch v. Butler, Rendall, Campbell, Deutsche Morgan Grenfell, Inc., Charles Maxwell, and Solv-Ex Corporation, case #96CIV8744, United States District Court, Southern District of New York. On December 23, 1996 the New York federal court consolidated the two actions. The complaints in the consolidated actions allege, among other things, damage to shareholders of the Company by acts or conduct of the Company and its officers in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and the New Mexico Securities Act. The plaintiffs asked that the court accord class action status to purchasers of the Company's common stock between February 15, 1995 and September 30, 1996. Two similar actions were filed in U.S. District Court, District of New Mexico, and served upon the Company in November, 1996. These two cases, Fournier v. Solv-Ex Corporation, Butler, Campbell, Rendall and Deutsche Morgan Grenfell, Inc., case #CIV961526JC, and Boyer v. Solv-Ex Corporation, Rendall and Deutsche Morgan Grenfell, Inc., case #CIV96602JC, were consolidated with the other actions in the U.S. District Court, Southern District of New York. (2) In November 1996, the Company was served with a complaint in Murken v. Solv-Ex Corporation, Rendall, Butler, Deutsche Morgan Grenfell, Inc., case CV9609869, Second Judicial District, Bernalillo County, New Mexico, in which plaintiffs sought class action treatment for purchasers of the Company's common stock between February 15, 1995 and September 10, 1996, alleging that shareholders suffered damage as a result of violations of New Mexico securities laws and negligent misrepresentation. The case was dismissed against the Company during its Chapter 11 proceedings but is still pending against Deutsche Morgan Grenfell and the individual defendants. The Company cannot determine at present how this litigation will proceed and whether any further proceedings will be pursued against the individual defendants, Messrs. Rendall and Butler. Mr. Rendall is a director and the Chairman and Chief Executive Officer of the Company and Mr. Butler is a former officer and director of the Company and, as such, both individuals have certain rights of indemnification against the Company as provided in the By-laws. (3) In December 1996, the Company was served with a complaint in Phoenix Pacific Properties, Ltd., John C. Padelford III and Patricia J. Padelford v. Solv-Ex Corporation, Rendall, and Campbell, case #CV96-20453, Superior Court, Maricopa County, Arizona. The plaintiffs alleged violation of the Arizona Securities Act, fraud, consumer fraud, negligent misrepresentation, and breach of contract resulting from the Plaintiffs' purchase of shares of the Company's common stock in the open market and in a private placement directly from the Company. The case was removed by the defendants to the United States District Court for the District of Arizona (No. CIV 96- 2765 PHX ROS), where it is pending against the individual defendants. The Order of the United States Bankruptcy Court for the District of New Mexico dated July 31, 1998, confirming the Company's Plan of Reorganization constitutes a permanent injunction against the Plaintiffs in the Sedita and Phoenix Pacific Properties cases regarding further pursuit of the litigation claims against the Company other than as claims against the estate through the Bankruptcy Court. The Court Order does not, however, affect the litigation claims against the individual defendants, all of whom may have claims for indemnification against the Company regarding defense of the actions. The Company intends to vigorously defend the claims filed against it if such actions are pursued as claims in the U.S. Bankruptcy Court and believes that the allegations made against the Company, its officers and directors are without merit. Within limits of its financial capability, the Company also intends to provide the legal defense for the individual officer and director defendants named in the New York, New Mexico and Arizona actions described above. Additionally, On December 4, 1998, the Company brought an action styled as, Solv-Ex Corporation, et. al. v. Deutsche Bank AG, et al., in the District Court for the State of New Mexico, Bernalillo County, case #CV98-11647, against Deutsche Bank AG, and its affiliates, Deutsche Morgan Grenfell, Inc., and Morgan Grenfell Asset Management Ltd., as well as against certain short-sellers of the Company's common stock, including Parker Quillen, Quilcap Corporation, Martin Zweig, Zweig Advisors, Michelle Sarian, Fahnestock & Co. Inc., George Voelker, Tim Rice, Rice Voelker Bros. & Frantzen, Lee Mikles, Mark Miller, Mikles/Miller Management Inc., Stanley Trilling, Trilling Partners, Paine Webber Group, Inc., Manuel Asensio, Asensio & Co., and Weir-Jones Engineering Consultants, Ltd. In the suit, the Company alleges damages caused by a campaign to destroy the Company as an ongoing concern, misuse of its confidential information and manipulation of its common stock. The Company also alleges that it was forced to seek bankruptcy protection as a result of the alleged wrongdoing. The Zweig, Quilcap and Weir-Jones defendants attempted to block this action as to them by claiming that the suit was brought in violation of the New York Federal Court's order in Solv-Ex v. Quillen et al., which was dismissed without prejudice as described above. On January 29, 1999, the New York Court ruled against the defendants, which allows the suit to continue in New Mexico. In New Mexico, the defendants have removed the suit to the United States District Court for the District of New Mexico. The Company does not believe that the basis for removal is proper and is seeking to have the case remanded to the New Mexico State Court. On July 20, 1998, the Securities and Exchange Commission ("SEC") filed a civil action against the Company and two of its senior officers, Securities and Exchange Commission v. Solv-Ex Corporation, et al., Civil No. 98-860 BB/RLP, United States District Court, District of New Mexico. The complaint alleges among other things that the Company, John S. Rendall (Chairman and CEO) and Herbert M. Campbell II (Senior Vice President), violated the securities laws through issuance of false, misleading or deficient public statements and filings during the period January 1995 through April 1997 regarding the Company's processes developed to extract oil and industrial minerals from oil sands, as well as its technology to produce metallic aluminum. The complaint also alleges that the Company understated its outstanding common stock by 3 million shares in the Form 10-Q filed for the period ending March 31, 1996. This allegation relates to a 3 million-share certificate issued in the name of Mr. Rendall (which was subsequently cancelled) in connection with a transaction, which was never completed. The complaint seeks injunctive relief against the defendants with respect to future violations of the securities laws and, in the case of Mr. Rendall and Mr. Campbell, civil penalties in an amount to be determined by the Court. No civil penalties are being sought against the Company. In its Answer, the Company denies any allegations of wrongdoing and, in a separate motion filed concurrently, specifically asked that the Court dismiss the complaint with respect to allegations involving issuance of the 3 million-share certificate to Mr. Rendall. The Company also has requested that it be awarded its fees and other expenses in the matter pursuant to the Equal Access to Justice Act. TOBACCO LITIGATION: Addiction Expert & Bennett LeBow Testify ------------------------------------------------------------ Jeffrey Arnett, a visiting professor at the University of Maryland, testified on the third day of the $2 billion class- action lawsuit filled against tobacco companies by more than 100 Ohio labor union health and benefit funds. During today's Akron, Ohio, federal court session, Jeffrey T. Ottenbacher, writing for United Press International, reports that Arnett described what he called the "optimistic bias" that exists in teenagers, making them believe they are invincible to disease even though they understand the risks of smoking. Arnett said teenagers accept the health risk, believing long range consequences are avoidable or not applicable to them. Arnett, Mr. Ottenbacher says, told the jury that tobacco industry documents prove the companies knew about adolescent and teenage optimistic bias. He cited one document that said, "Attract a smoker at the earliest opportunity and let brand loyalty turn that smoker into a valuable asset." Arnett said the nation's tobacco companies learned "that kids are the key to corporate profits." He said the documents show tobacco industry officials understood that less than a third of smokers start smoking after age 18 and only 5 percent after the age of 24. Prior to presenting Arnett's testimony, the Unions called an expert witness to talk about chemical dependency. That expert detailed for the jury the affects of drug addiction and withdrawal. On day four of the trial, Bennett LeBow, president and CEO of the Liggett Group Inc., told the jury that the nation's tobacco companies targeted young people in their advertising and promotional campaigns. Mr. LeBow said: "I believe the industry targeted young people with marketing campaigns like Joe Camel [because] if you aren't selling to children, you'll have no business in 25 years. You'll have no customers left." Mr. LeBow explained that is what happened to the Liggett Group, which produced two of the most popular brands of cigarettes during the 1940s and 1950s -- Chesterfield and L&M. Mr. LeBow said his company is the only tobacco company that has publicly linked cigarette smoking to illnesses such as lung cancer, heat disease and emphysema. On cross examination today, Mr. LeBow admitted his company had been dropped as a defendant from the union lawsuit in exchange for his testimony. Defense lawyers accused Mr. LeBow of not being concerned for anyone's health, but rather being concerned for the health of his company. The defense lawyers accused LeBow of testifying for the plaintiffs to avoid his company paying a portion of any court-ordered settlement in the case. Mr. LeBow denied the accusation. TOTAL RENAL: Hoffman & Edelson Files Complaint in California ------------------------------------------------------------ Hoffman & Edelson announce that it filed a class action lawsuit in the United States District Court for the Central District of California against Total Renal Care Holdings, Inc. (NYSE: TRL) and its officers and directors for violations of the Securities Exchange Act of 1934. TOTAL RENAL: Berman DeValerio Files Complaint in California ----------------------------------------------------------- Total Renal Care Holdings, Inc. (NYSE: TRL) was charged with misleading investors by overstating its earnings and understating expenses throughout 1998 and 1999. The case was filed by Berman DeValerio & Pease LLP as a class action on behalf of all persons and entities who purchased the common stock of Total Renal Care during the period February 17, 1998 through and including February 17, 1999. The complaint, filed in the United States District Court for the Central District of California, charges defendants with violations of the federal securities laws. The action charges that Total Renal Care and certain of its senior officers issued a series of false and misleading statements about Total Renal Care's business, the successful integration of Renal Treatment Centers, Total Renal Care's earnings growth and financial condition, and its ability to continue to achieve profitable growth. Specifically, it is charged that defendants overstated earnings, understated expenses and liabilities and concealed the failure of Total Renal Care to establish adequate internal controls of Renal Treatment Centers' accounting and management systems which it acquired in February 1998. On February 17, 1999, Total Renal Care stunned the market when it disclosed much weaker earnings for the fourth quarter of 1998, announced it was writing-off $11 million in receivables, and revealed it received a letter from the Securities and Exchange Commission questioning the Company's accounting practices. In response to the unexpected disclosures, the price of Total Renal Care common stock plunged to $8 3/4 per share, from a Class Period high of $36 1/8. TOTAL RENAL: Cauley Firm Files Complaint in California ------------------------------------------------------ The Law Offices of Steven Cauley announced that a class action suit has been filed in United States District Court for the Central District of California on behalf of all purchasers of Total Renal Care Holdings Inc. (NASDAQ:TRL) common stock during the period February 17, 1998 to February 17, 1999. The complaint charges that Total Renal Care and certain of its officers and directors violated the federal securities laws by making misrepresentations about Total Renal Care's business, the successful integration of Renal Treatment Centers, earnings growth and financial condition and its ability to continue to achieve profitable growth. By issuing these allegedly false and misleading statements, defendants artificially inflated Total Renal Care's stock price to a Class Period high of $36-1/8 in June 1998, allowing Total Renal Care to make acquisitions using its artificially inflated stock as currency and to complete a $345 million convertible debt offering. However, when the true facts about Total Renal Care's troubled integration, diminished profitability, and inadequate financial statement disclosures were revealed, the price of its stock collapsed to as low as $8-3/4 per share. TWINLAB CORP.: Wolf Haldenstein Files Complaint in New York ----------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP announces that it is filing a class action lawsuit in the United States District Court for the Eastern District of New York on behalf of investors who bought Twinlab Corp. (NASDAQ: TWLB) stock between April 28, 1998 and February 24, 1999. The lawsuit charges Twinlab and several of its top officers with violations of the securities laws and regulations of the United States. The complaint alleges that defendants issued a series of false and misleading statements concerning the Company's revenues during the 1st, 2nd and 3rd quarters of its 1998 fiscal year. The Company announced today that due to the incorrect statement of its revenues in the first three quarters of 1998 it would have to restate those results downwards. Upon the announcement of the restatement of its financial results the Company's stock price dropped approximately 25% on extraordinarily heavy trading volume. WABASH NATIONAL: Rabin & Peckel File Complaint in Indiana --------------------------------------------------------- Rabin & Peckel LLP announced that it filed a putative class action suit on February 24, 1999 in the United States District Court for the Northern District of Indiana on behalf of all purchasers of Wabash National Corporation (NYSE: WNC) securities from April 20, 1998 to January 15, 1999, inclusive. The Complaint alleges that, during the Class Period, Wabash and certain of its officers and directors violated the Securities Exchange Act of 1934 (Sections 10(b) and 20(a)) by, among other things, knowingly or recklessly overstating Wabash's results of operations, net worth, gross profit, and earnings for the first, second, and third quarters of fiscal 1998. It was only on January 19, 1999 that the Company disclosed that it would have to restate its financial statements for the first, second, and third quarters of fiscal 1998, resulting in a reduction of approximately 20% in earnings over that time period. The Complaint further alleges that the false and misleading financial statements were knowingly or recklessly made by defendants during the Class Period in violation of Generally Accepted Accounting Principles, and that defendants' misrepresentations artificially inflated the price of Wabash securities during the Class Period. WAL-MART STORES: New Mexico Upholds Sexual Harrassment Award ------------------------------------------------------------ >From Santa Fe, New Mexico, Reuters reports that the New Mexico Supreme Court upheld a $2.3 million award to two women who sued Wal-Mart Stores Inc. after their sexual harassment complaints were repeatedly ignored by the retailer, an attorney for the women told Reuters. The high court rejected a Wal-Mart appeal of a 1996 state court decision in favor of two former employees of a Santa Fe Sam's Club Stores, a unit of Wal- Mart. Their lawyers said they were awarded $1.75 million in punitive damages and $177,000 in compensatory damages. The plaintiffs in the case, Cathy Jean Coates and Madeline Duran, claimed they were sexually harassed by a male co-worker in 1993 and 1994 while working at Sam's Club in Santa Fe, Reuters relates. The women said management did not investigate, even though they repeatedly reported incidents of verbal and physical harassment. They asserted that many of the incidents were witnessed by other employees, including an assistant manager. The lower court found that store managers were aware of the conduct and allowed it to continue "with utter indifference to the consequences". Wal-Mart spokeswoman Laura Pope told Reuters that the company had not yet seen the latest ruling on Monday, and had no comment. But it disagreed with the lower court's decision. Albuquerque attorneys for Wal-Mart were not available to Reuters for comment. WASTE MANAGEMENT: Posts Strong Year-End Earnings ------------------------------------------------ For the year ended December 31, 1998, Waste Management, Inc., reports operating revenues of $12.7 billion and net income of $1,105.1 million. "Our successes in this quarter and throughout 1998 give the entire organization confidence and energy as we enter 1999," John E. Drury, Chief Executive Officer of Waste Management, stated. Earnings are net of $191.6 million in charges related to the shareholder class-action lawsuit against Waste Management Holdings, Inc., and other legal matters. ********* 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., Princeton, NJ, and Beard Group, Inc., Washington, DC. Peter A. Chapman, Editor. Copyright 1999. All rights reserved. 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