/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990607.MBX C L A S S A C T I O N R E P O R T E R Monday, June 7, 1999, Vol. 1, No. 87 Headlines ARCHER DANIELS: $4.8 Million Settlement in Sodium Gluconate Case CHEMINOVA INC.: Floridians Balk at Contaminated Malathion Spray CLAIBORNE LIZ: Mademoiselle Employees' Contract Claims Dismissed DISABILITY ACCESS: Visually Impaired Can't Find Talking ATMs ESSO: Down Under, Lawyers Argue Over Ad Space for Class Notices FRANKLIN ELECTRONICS: Consumer Suit Demands Bug-Free Electronics HYPODERMIC SYRINGES: Makers Blamed for Accidental Punctures IMMIGRATION LAWS: INS Can Revoke Citizenship Obtained by Fraud INTERNATIONAL GAME: Las Vegas Suit Charges Gambling is a Racket ITRON INC.: Insurance Pays $12 Million to Settle Investor Suit MARRIOTT RESIDENCE: Partners Complain About Merger and Fees MCI WORLDCOM: Investors Complain About Skytel Disclosures MERRILL LYNCH: Finds Sex Discrimination in 300 of 900 Claims NATIVE AMERICANS: Suit Claims Tribes Excluded from Tobacco Funds PINNACLE MICRO: California Securities Case Settled THE CASH STORE: Judge Okays Class Action for Payday Loan Claims ZILOG INC.: Plaintiffs Appeal Dismissal of California Litigation ********* ARCHER DANIELS: $4.8 Million Settlement in Sodium Gluconate Case ---------------------------------------------------------------- Archer Daniels Midland Co. and four other companies will pay $4.8 million over the next 12 months to settle allegations they conspired to fix the price of sodium gluconate, an organic chemical used in industrial cleaning agents. The settlement resolves a 1997 class-action suit filed on behalf of direct purchasers of the chemical. Named as defendants are the only U.S. makers, sellers and distributors of sodium gluconate: ADM, Japan's Fujisawa Pharmaceutical Co. Ltd., Akzo Nobel NV, based in the Netherlands, France's Roquette Freres and Swiss-based Jungbunzlauer Holding Ltd. (Chicago Sun-Times; 05/29/99) CHEMINOVA INC.: Floridians Balk at Contaminated Malathion Spray --------------------------------------------------------------- The Orlando Sentinel reported that a class-action lawsuit was filed in U.S. District Court in Tampa by residents who claimed they suffered toxic exposure to contaminated batches of malathion. Plaintiffs in the suit against Wayne, N.J.-based Cheminova Inc. are seeking reimbursement of medical bills, future medical-monitoring costs and expenses related to property damage and relocation outside the malathion spray zones. An alternative to malathion has been approved to fight the Mediterranean fruit fly and other exotic pests that threaten Florida's $7 billion agriculture industry. If there's an outbreak, spinosad, developed by Dow AgroSciences, would replace ground applications and aerial spraying of malathion in rural areas. The Environmental Protection Agency approved the use of the pesticide last week for use against fruit flies in Florida. Malathion, which is being blamed for numerous health problems of residents in the Tampa Bay area, still could be sprayed from the air in urban areas if there were a widespread outbreak. Even though Dow says the new product is safe, the company won't allow spinosad to be sprayed over populated areas to avoid litigation. "It certainly is encouraging to see a shift away from such a toxic chemical as malathion," said Elaine Holmes, an attorney and member of CRAM, Citizens for Responsible Alternatives to Malathion. "It's more target-specific and less toxic to humans and beneficial insects, like bees and ladybugs." According to the manufacturer, spinosad is a natural product made from fermented soil bacteria. And unlike malathion, which was blamed for killing fish and a host of other animals in the Tampa Bay area in 1997, spinosad is more selective, said Joe Eger, a field development biologist for Dow. However, spinosad is just as effective as malathion at killing Medflies, according to the EPA. Plus, Eger said, the bait used to attract the flies to the spinosad is better than the lure used with malathion and less damaging to cars. The Medfly, smaller than a household fly, targets 250 kinds of vegetables and fruits, especially citrus. It burrows through the skin to deposit larvae, eventually causing the fruit to rot. State agriculture officials battled outbreaks in 1997 and 1998 in Lake, Hillsborough, Sarasota, Manatee and Polk counties. Malathion was sprayed on the ground and from the air. An estimated 1 million people lived and worked in the spray zone, and the state received more than 7,000 complaints of sinus congestion, rashes, headaches and respiratory problems. (THE ORLANDO SENTINEL; June 4, 1999) CLAIBORNE LIZ: Mademoiselle Employees' Contract Claims Dismissed ---------------------------------------------------------------- On May 6, 1998, Mademoiselle Knitwear, Inc. ("Mademoiselle"), a former knitgoods supplier for the Company, filed suit against CLAIBORNE LIZ INC and three labor unions. The suit seeks $30 million in compensatory damages, trebling under civil RICO, and $50 million in punitive damages for a variety of claims against the Company related to an alleged commitment by the Company to supply orders to Mademoiselle for a certain number of knitwear goods during the period June 1992 through June 1998. On September 30, 1997, a related putative class action, Chun Hua Mui v. Union of Needletrades Industrial and Textile Employees (UNITE), et. al., was filed against the Company and the three unions who are defendants in the Mademoiselle lawsuit noted above. The employee complaint seeks on behalf of a class of current and former Mademoiselle employees $30 million in damages, an injunction requiring the Company to provide knitwear orders to Mademoiselle through June 1998, and a constructive trust on certain liquidated damage payments paid by the Company to UNITE in May 1997. The Company and the unions moved to dismiss the complaint for failure to state a claim for relief. On August 18, 1998, the court issued an opinion dismissing all of the claims against the Company, including the claim under Section 302 of the NLRA brought jointly against the Company and the unions. On September 2, 1998, plaintiffs moved for reargument of the dismissal of the contract claims against the Company or, alternatively, for leave to amend the complaint. The Company responded and the matter was fully briefed and submitted to the court on October 30, 1998. On December 31, 1998, the court issued an opinion granting reargument but adhering to its original determination dismissing the contract claims against the Company and denying plaintiffs' motion for leave to amend. In that same opinion, the court granted class certification with respect to the claims remaining in the case, which are pending only against various of the union defendants. The Company believes that these claims are without merit and intends to defend these actions vigorously. DISABILITY ACCESS: Visually Impaired Can't Find Talking ATMs ------------------------------------------------------------ PHILADELPHIA - York Daily Record A group of blind Pennsylvanians filed suit Thursday against two banks, accusing them of violating federal disability laws because their ATMs are not accessible to people who cannot see. The suits ask that Mellon Bank and PNC Bank upgrade or buy new machines to allow users to plug in headphones or pick up a receiver to hear step-by-step instructions as they appear on the screen. They were filed by several individuals and the National Federation of the Blind of Pennsylvania in the U.S. District Courts in Pittsburgh and Philadelphia. The federation is seeking class-action status on behalf of the estimated 60,000 visually impaired Pennsylvanians. Officials from both banks refused to comment, saying they hadn't had time to review the suit. Neither bank could say whether talking ATM technology had been considered in Pa. (York Daily Record; 06/04/99) ESSO: Down Under, Lawyers Argue Over Ad Space for Class Notices --------------------------------------------------------------- The AAP Information Services Pty. Ltd. reported from Australia that Victoria's gas crisis was back in court, where lawyers debated the size of newspaper advertisements to be used to alert Victorians to the class action claim. Civil litigation brought by firms Maurice Blackburn and Slater & Gordon is seeking more than $1 billion in compensation on behalf of all gas consumers who allegedly suffered financial losses during the 10-day gas stoppage last year. An explosion and fire knocked Esso's Longford natural gas plant off line on September 25, leaving most of the state without gas. The accident prompted a lengthy Royal Commission and a welter of legal cases. In the Federal Court this morning, lawyers began considering the form of advertisement which should be used so Victorians knew how to participate in the case. Because the advertisements will ask those who do not want to be part of the claim to register, Esso lawyers argued for a large campaign. The other side, which is to meet the estimated $1 million cost of placing the advertisements in Victorian newspapers, was seeking a smaller- scale approach. Justice Ron Merkel is expected to rule on the campaign this afternoon, making it possible for the claims process to begin. Meanwhile, Esso's barrister John Middleton, QC, managed to stave off attempts to have sections of the company's lengthy defense against the claim removed. The move allowed Esso to start its case against those it considers share any blame over the crisis. In a cross-claim, Esso is seeking unspecified damages from the 18 parties it names in its claim as well as a contribution from them to any successful damages actions brought against the company arising out of the Longford disaster. Esso is suing gas retailers and distributors, state government departments, Treasurer Alan Stockdale and the State of Victoria. FRANKLIN ELECTRONICS: Consumer Suit Demands Bug-Free Electronics ---------------------------------------------------------------- The San Francisco Examiner reports that a New Jersey class- action recently challenged a longtime software industry practice of issuing imperfect titles, in this case forcing a software publisher to release a free fix. "There has to be a line drawn between a bug and a design defect," said Michael Boni, the Philadelphia attorney who filed the class- action case against Burlington, N.J.-based Franklin Electronics Publishers Inc. "And the courts have to do that drawing." Most computer users expect some software "bugs" - errors that hamper a software title's performance. Consumers either wait for the software publisher to issue a "patch" or fix or hope that the bug is repaired in the next version to appear on store shelves - which they usually have to pay for. It's an uneasy relationship that's akin to buying a new car that sometimes refuses to start. In the case of the car, though, government- ordered recalls and consumer lawsuits are common remedies. In the case of defective software, users have been content with complaining on customer support lines, hunting the Internet for fixes or simply giving up and buying new software. New Jersey native Jacob Winigrad refused to follow that route. In October 1997, Winigrad bought a REX PC companion, a best- selling credit card-sized electronic organizer that let him track his phone list, keep a calendar and to prioritize a to-do list. However, according to court records, Winigrad's REX PC companion had an annoying habit of scrambling the order of his to-do lists, contrary to the claims of Franklin Electronics Publishers, its manufacturer. When Winigrad called Franklin's product support line, he was told the company knew of the problem, but that it could not, or would not, fix it - an all- too-familiar scenario for home software users. Adding insult to injury, Winigrad alleged he was charged for every minute he was on Franklin's product support telephone line. "Thus," his complaint stated, "plaintiff was advised that he would be billed $2 per minute, just to learn that the product he purchased, and which was under warranty, was defective and would not be repaired or replaced by the company." On Feb. 24, 1998, in what is believed to be a first-of-its-kind consumer software bug lawsuit, Winigrad filed a class-action against Franklin in Camden County, N.J., Superior Court. In his multicount complaint, Winigrad accused Franklin of negligence, breach of warranty and violation of New Jersey consumer protection statutes. Winigrad alleged that the REX he and others bought was defective in design. In May of this year, in a first-of-its-kind lawsuit settlement, Franklin announced it would issue a free software upgrade to fix the REX's to-do list priority problem. "Although Franklin vigorously denies any liability," the company said, "it has agreed to settle the case to avoid the burden of continued litigation." Franklin did not return phone calls seeking further comment on the settlement. "This lawsuit brings to a head an important issue," said Boni, Winigrad's attorney. "We wanted to test the boundaries of what is considered a bug and what is considered a design defect. "It's not clear, and this class-action seeks to define that boundary." It's a test many home computer users will welcome. According to a recent PC World magazine poll, almost 80 percent of its subscribers say they've bought software that contains bugs. "Buggy software is a huge problem," said Scott Spanbauer, PC World contributing editor who writes the magazine's monthly "Bugs and Fixes" column. "It's a massive waste of time and utterly frustrating, and we pretty much take it lying down." The software industry counters that producing bug-free software is impossible, given the different combinations of computers, printers, scanners, Internet connections and other configurations that users install software on. "You can test and retest and retest software in as many configurations that you can think of, and there will always be someone who will use the software in a way you didn't anticipate," said Lauren Hall, chief technology officer for the Software and Information Industry Association, a Washington, D.C., software publishers group. "It's just impossible to create bug-free software titles." One proposed package of legal remedies for software bugs has been wending its way through various law groups. Called the Uniform Computer Information Transaction Act (UCITA), these model laws will help state lawmakers and courts arbitrate software defect disputes. The guidelines will be voted on for adoption in July when the National Conference of Commissioners on Uniform State Laws meets in Denver. These guidelines, backed by software industry heavyweights, such as Microsoft and IBM, have been roundly criticized by consumer groups as favoring software publishers in computer bug courtroom battles. The guidelines "permit software sellers to write contracts that sidestep the usual statutes and case law protecting consumers," said Jamie Love, director of the Consumer Project on Technology, a Washington, D.C., high-tech consumer advocacy group started by Ralph Nader. "They want to elevate themselves above the law, basically." Emery Simon, counselor with the Washington, D.C.-based Business Software Alliance, disagreed. "UCITA has been drafted by a committee of professors and experts," said Simon, whose group represents software companies. "It's designed to reflect the current statutes and case law in 50 states, so how could Love possibly be right? UCITA was created to ensure uniformity in dealing with these problems, not overturn or otherwise do harm to existing law." While the software industry continues to wrestle with bugs, Boni predicts there'll be more software bug lawsuits. "It's a field that will grow," he said. "With year 2000 coming, attorneys are focusing on software problems as an area in need of litigation." (San Francisco Examiner; 06/03/99) HYPODERMIC SYRINGES: Makers Blamed for Accidental Punctures ----------------------------------------------------------- Becton Dickinson & Co., American Home Products Corp. and three other makers and sellers of hypodermic syringes are facing a lawsuit alleging their needles should have safety features to protect health-care workers from accidental puncture wounds that could expose them to disease. The complaint seeks class-action status on behalf of about one million health-care workers accidentally pricked by needles each year and $3,500, plus other damages, for each class member. (National Post; June 4, 1999) Additionally, the News and Observer (Raleigh, NC, June 4, 1999) reported that similar cases have been filed against needle makers and sellers in at least nine states. In the current case, the plaintiff, Marilyn Benner, a critical-care nurse, was reportedly stuck by a needle in 1998 after it was used on a man infected with HIV, the virus that causes AIDS, and Hepatitis C, the suit said. While Benner wasn't infected, the suit claims that she suffered emotional distress from the exposure and the testing she had to endure. IMMIGRATION LAWS: INS Can Revoke Citizenship Obtained by Fraud -------------------------------------------------------------- The Associated Press reported that a federal appeals court ruled federal immigration authorities can revoke an immigrant's naturalized citizenship if it was obtained by fraud. The 2-1 ruling by a panel of the 9th U.S. Circuit Court of Appeals overturned the decision of a Seattle judge who said the power of the Immigration and Naturalization Service to revoke citizenship for fraud was open to serious question. The case arose from a class-action lawsuit that challenged the INS's authority to revoke the citizenship of immigrants who failed to disclose their past arrests. The immigrants argued that only a court could revoke their citizenship. A 1990 law authorized the INS to grant citizenship to qualified immigrants, a power that was previously handled by the courts. But the INS said the power to grant citizenship included the power to revoke it as well, although that was not expressly stated in the wording of the statute. On Friday, the appeals court said the power to revoke was implicit in the power to naturalize. The Seattle federal judge, in ruling against the INS, had halted revocation proceedings involving fraud until the class-action lawsuit could be tried. Those can now go forward. Jonathan S. Franklin, a lawyer for the immigrants, said he would appeal by asking for a hearing before the full appellate court. The case effects about 4,500 people. "Citizenship is among a person's most cherished rights," he said. "This is the first time any court has ever held that the INS may take that right away on its own, without going before a judge." INS spokeswoman Elaine Komis said the agency had not seen the ruling and would not comment. (AP Online; 06/04/99) INTERNATIONAL GAME: Las Vegas Suit Charges Gambling is a Racket --------------------------------------------------------------- Along with a number of other public gaming corporations, INTERNATIONAL GAME TECHNOLOGY is a defendant in three class action lawsuits, one filed in the United States District Court of Nevada, Southern Division, entitled Larry Schreier v. Caesar's World, Inc., et al., and two filed in the United States District Court of Florida, Orlando Division, entitled Poulos v. Caesar's World, Inc., et al. and Ahern v. Caesar's World, Inc., et al., which have been consolidated into a single action. The Court granted the defendants' motion to transfer venue of the consolidated action to Las Vegas. The actions allege that the defendants have engaged in fraudulent and misleading conduct by inducing people to play video poker machines and electronic slot machines, based on false beliefs concerning how the machines operate and the extent to which there is an opportunity to win on a given play. The amended complaint alleges that the defendants' acts constitute violations of the Racketeer Influenced and Corrupt Organizations Act, and also give rise to claims for common law fraud and unjust enrichment, and seeks compensatory, special, consequential, incidental and punitive damages of several billion dollars. In December 1997, the Court denied the motions that would have dismissed the Consolidated Amended Complaint or that would have stayed the action pending Nevada gaming regulatory action. The defendants filed their consolidated answer to the Consolidated Amended Complaint on February 11, 1998. At this time, motions concerning class certification are pending before the Court. ITRON INC.: Insurance Pays $12 Million to Settle Investor Suit -------------------------------------------------------------- Itron Inc. has resolved a class-action investor lawsuit for $12 million, a sum to be paid by its insurance carriers. The lawsuit was filed in May 1997 on behalf of all investors who bought Itron stock between September 1995 and October 1996. The price of Itron shares soared to $60 in early 1996. By October, they had fallen to $15. The complaint claimed the wild ride was prompted by misleading company reports about its technology and the reason sales were below expectations. The complaint said Itron was covering up shortcomings in its remote meter-reading equipment and customer disappointment with its performance. The stock price began to suffer, finally hitting $15 when Itron reported a loss for the third quarter of 1996, the end of the class period. Subsequent losses pushed the price lower. Shares closed at $7 Thursday, off 44 cents. Spokeswoman Mima Scarpelli told The Spokesman Review that the agreement with attorneys representing company shareholders was reached last Thursday in negotiations mediated by federal Magistrate Lonnie Suko. The company and Chairman Johnny Humphreys, also named in the lawsuit, admitted no wrongdoing or liability in making the settlement, she noted. "We've believed since day one that the allegations were without merit," Scarpelli said. She said the deal will remove an ongoing distraction for management and end legal expenditures, also covered by insurance. Scarpelli said the company's technology has been vindicated by operations in the Pittsburgh area and in Virginia. Also, the Itron reported a profit the past two quarters. Seattle attorney Steven Toll said the settlement avoids the risks and delay of taking the case to trial. Preliminary agreement documents should be forwarded to U.S. District Court Judge Robert Whaley this month, he said. Because many shares are held by brokers for clients, Toll said, there is no way of knowing how many Itron shareholders are part of the settlement until notices are mailed. He said the number is likely in the thousands. Itron had more than 12 million shares outstanding during the period in question. No one is likely to see checks before next year, he said. (Spokesman Review; 06/04/99) MARRIOTT RESIDENCE: Partners Complain About Merger and Fees ----------------------------------------------------------- On February 11, 1998, four individual limited partners in partnerships sponsored by Host Marriott Corporation ("Host Marriott") filed a class action lawsuit, styled Ruben, et al. v. Host Marriott Corporation, et al., Civil Action No. 16186, in Delaware State Chancery Court against Host Marriott and the general partners of Courtyard by Marriott Limited Partnership, Courtyard by Marriott II Limited Partnership, Marriott Residence Inn Limited Partnership, Marriott Residence Inn II Limited Partnership, and Fairfield Inn by Marriott Limited Partnership (collectively, the "Five Partnerships"). The plaintiffs alleged that the proposed merger of the Five Partnerships (the "Merger") into an umbrella partnership real estate investment trust proposed by CRF Lodging Company, L.P. in a preliminary registration statement filed with the Securities and Exchange Commission, dated December 22, 1997, constituted a breach of the fiduciary duties owed to the limited partners of the Five Partnerships by Host Marriott and the general partners of the Five Partnerships. In addition, the plaintiffs alleged that the Merger breached various agreements relating to the Five Partnerships. The plaintiffs sought, among other things, the following: certification of a class; injunctive relief to block consummation of the Merger or, in the alternative, rescission of the Merger; and damages. The defendants, in light of market conditions, decided to abandon their efforts to complete the Merger. As a result of this decision, the plaintiffs voluntarily dismissed the lawsuit. On March 16, 1998, limited partners in several partnerships sponsored by Host Marriott filed a lawsuit, styled Robert M. Haas, Sr. and Irwin Randolf Joint Tenants, et al., v. Marriott International Inc., et. al., Case No. 98-CI-04092 (the "Haas Case"), in the 57th Judicial District Court of Bexar County, Texas against Marriott International, Inc. ("Marriott International"), Host Marriott, various of their subsidiaries, J.W. Marriott, Jr., Stephen Rushmore, and Hospitality Valuation Services, Inc. (collectively, the "Defendants"). The lawsuit relates to the following limited partnerships: Courtyard by Marriott Limited Partnership, Courtyard by Marriott II Limited Partnership, Marriott Residence Inn Limited Partnership, Marriott Residence Inn II Limited Partnership, Fairfield Inn by Marriott Limited Partnership, Desert Springs Marriott Limited Partnership, and Atlanta Marriott Marquis Limited Partnership (collectively, the "Seven Partnerships"). The plaintiffs allege that the Defendants conspired to sell hotels to the Seven Partnerships for inflated prices and that they charged the Seven Partnerships excessive management fees to operate the Seven Partnerships' hotels. The plaintiffs further allege, among other things, that the Defendants committed fraud, breached fiduciary duties, and violated the provisions of various contracts. The plaintiffs are seeking unspecified damages. The Defendants, which do not include the Seven Partnerships, believe that there is no truth to the plaintiffs' allegations and that the lawsuit is totally devoid of merit. The Defendants intend to vigorously defend against the claims asserted in the lawsuit. They have filed an answer to the plaintiffs' petition and asserted a number of defenses. A related case concerning Courtyard by Marriott II Limited Partnership was filed by the plaintiffs' lawyers in the same court, involves similar allegations against the Defendants, and has been certified as a class action. Trial in this related case is presently scheduled for May 1999. Due to the prosecution of the related case, there has been no meaningful activity in the Haas case. Although the Seven Partnerships have not been named as defendants in the lawsuit, the partnership agreements relating to the Seven Partnerships include an indemnity provision which requires the Seven Partnerships, under certain circumstances, to indemnify the general partners against losses, expenses and fees. MCI WORLDCOM: Investors Complain About Skytel Disclosures --------------------------------------------------------- MCI WorldCom is being sued by investors and may be facing a federal probe over whether it improperly concealed its plans to buy paging company Skytel Communications, according to an Associated Press story. A class-action suit was announced by a group of investors charging they made money-losing trades after MCI WorldCom made misleading statements. Regulators, meanwhile, are reportedly investigating whether MCI WorldCom intentionally mislead investors with its statements regarding the Web address on May 25, three days before announcing the $1.3 billion purchase of Skytel. According to the Atlanta Journal and Constitution, the suit alleges MCI Worldcom violated securities law by falsely denying any intentions to acquire SkyTel. On May 25, the news agency Company Sleuth said MCI had registered skytelworldcom.com as an Internet domain name. The plaintiffs' attorneys said the name was a sign of MCI's intention to acquire Skytel. The attorneys said Skytel shares shot up about 16 percent, from $18.87 a share to $21.87 a share after the registration. As reported, MCI Worldcom said the registration was not an indication of the company's intention to acquire Skytel. Plaintiffs' attorneys said MCI's denial was a deliberate ploy to reduce the price of Skytel shares and thereby reduce the amount MCI would have to pay for Skytel. The attorneys said after MCI issued the denial Skytel shares fell to $18.69. MCI agreed to acquire SkyTel for $1.27 billion in stock, about $21.50 a share. MERRILL LYNCH: Finds Sex Discrimination in 300 of 900 Claims ------------------------------------------------------------ The Associate Press writes that Merrill Lynch & Co. will begin settlement negotiations with about 300 of the 900 women who filed sex discrimination claims against the firm earlier this year as part of a nationwide class-action lawsuit. Merrill Lynch, the nation's largest brokerage firm, acknowledged in a memo Friday to its national sales staff that "in some instances, where it is clear that co-workers or managers did not treat women properly, Merrill Lynch will take appropriate action against those responsible for the improper conduct." The case, originally filed on behalf of eight women, covered financial consultants who worked for Merrill Lynch between January 1994 through June 1998. Of the 2,900 women eligible to join the case, 31 percent came forward and claimed the firm gave men more walk-in clients, referrals, leads, departing brokers' accounts and initial public offerings. "This has been a long hard fight, and we are pleased to see, for the first time, Merrill is acknowledging that in fact there were legitimate claims and there was mistreatment of women at the firm," said Linda Friedman, a plaintiff lawyer for with Stowell & Friedman in Chicago. Merrill Lynch, however, found the remaining two-thirds of the complaints did not have the information to "support the allegations made in the claims," according to the memo, which was signed by Launny Steffens, vice chairman of the New York- based company. Those 600 women have 90 days in which to request mediation, after which, if they are still not satisfied with the outcome, can request a hearing. The closely watched case is helping change the way discrimination cases are handled on Wall Street. Until recently, nearly all cases were handled through industry arbitration a system criticized as biased in favor of companies because most of the arbitrators were men. Under the settlement, Merrill Lynch became the first Wall Street firm to end mandatory arbitration for civil rights claims. Merrill Lynch is making other changes too. "We have recently put into place a variety of initiatives intended to foster success and fairness, including new policies for account distribution and leaves of absence," Steffens wrote in the memo. "We will be announcing more initiatives shortly." (AP Online; 06/04/99) NATIVE AMERICANS: Suit Claims Tribes Excluded from Tobacco Funds ---------------------------------------------------------------- The Associated Press reports that American Indians have filed a $1 billion lawsuit against the tobacco industry, claiming they were unfairly excluded from the massive settlement reached by states. Representatives of more than 20 American Indian tribes and groups said they were snubbed in the tobacco industry's $200 billion settlement with the states, and they're suing for what they claim is their fair share. "Once again in Indian country we have been left clear out of the process," said Wilfred Louie, one of several tribal officials who appeared at a news conference Thursday to discuss the class action federal suit filed on behalf of 20 tribes and pueblos. The suit, filed in San Francisco, demands $1 billion in compensation and punitive damages from several tobacco companies. The suit stems from an agreement reached last November in which the tobacco industry promised to pay $40 billion over 25 years to settle four state lawsuits and another $206 billion in a broader deal with the other 46 states. According to the suit, Indians were counted in census data used to determine how the money would be distributed but were not allotted their own share of the money. The suit claims that is a violation of Indian sovereignty and amounts to racial discrimination. A spokesman for the tobacco industry said officials had not seen the suit and could not comment on its allegations. Nathan Barankin, a spokesman for California Attorney General Bill Lockyer, said the assumption that Indians won't benefit from the settlement is "perhaps a premature conclusion, at least for California." According to the suit, Indians traditionally have used tobacco for ceremonial and medicinal purposes only. But during World War II, Indian soldiers were introduced to cigarettes and tobacco companies began targeting that population, the suit charges. Today, American Indians smoke at a rate of 39 percent, compared to 26 percent for blacks, 25 percent for whites, 18 percent for Hispanics and 15 percent for Asians, the suit says. (AP Online; 06/03/99) Additionally, the San Francisco Chronicle reported that the press conference announcing the class action suit was held at the American Indian Public Charter School in Oakland. Wilfred Louie, vice chairman of the Coleville Confederacy of Tribes, reportedly said "Once again we are seeing Indian people left out of the process, and yet we bury our people every day (because of tobacco)." The Chronicle explained that the sum being demanded by the tribes was calculated by applying a per capita formula to the $206 billion settlement, according to Michael McShane, an attorney with the San Jose firm Alexander, Hawes and Audet. Lawyers for the tribes also want a court order prohibiting the release of the money they say should go to the Indians until the matter is resolved, McShane said. If the Indians prevail, tribal officials said the money would be funneled into health and education programs that address the problem of tobacco addiction within their community. PINNACLE MICRO: California Securities Case Settled -------------------------------------------------- On March 15, 1996, a complaint was filed against PINNACLE MICRO INC and certain of its current and then directors and executive officers in a securities class action lawsuit which alleges that Company management engaged in improper accounting practices and made certain false and misleading statements. The complaint was filed in the United States District Court for the Central District of California under the case name Wills, Cohen, et al. v. William Blum et al., Case No. SACV96-261GLT. On or about November 10, 1997, the Company reached an agreement in principle with the plaintiffs to settle the lawsuit. Plaintiffs have agreed to accept payment of $2,325,000 in exchange for a complete release of all claims arising from the allegations set forth in the plaintiffs' complaint. All of the terms of the settlement are not final, and the settlement is subject to preliminary and final approval by Court as well as approval by the members of the class. The Company's insurers have agreed to advance all settlement and defense costs, including the Company's attorneys' fees and expenses, subject to the Company's agreement to reimburse the insurers for up to approximately $577,000 of those settlement and defense costs if the Company achieves certain positive financial results prior to the Federal Court's final approval of the settlement. Although the Company does not concede that any portion of the class action settlement is allocable to the Company, the Company has agreed to the terms of the settlement to avoid further costs. The Company's portion of the settlement, which totaled $232,000, has been included in the results of operations for the fourth quarter ended December 27, 1997. THE CASH STORE: Judge Okays Class Action for Payday Loan Claims --------------------------------------------------------------- The Wisconsin State Journal reports that a federal judge has cleared the way for about 10,000 people to pursue a class-action lawsuit against a Texas loan company with about 15 offices in Wisconsin. U.S. District Judge John Shabaz decided that people who borrowed money from The Cash Store's state offices from Oct. 1, 1997, to Dec. 1, 1998, can jointly sue the company in federal court. "This is a case where many plaintiffs have identical potential claims and where each individual claim is too small to warrant separate prosecution," Shabaz wrote in an opinion released Wednesday. The lawsuit against the loan company was filed in December by Jim and Renata Davis of Beloit who borrowed $600 from the company in 1997 for Christmas presents for their three children. They paid about $1,500 in interest before going bankrupt about six months later. The Cash Store and similar companies often are called payday loan companies because low-income working people strapped for cash use them to borrow money with plans to pay it back out of their next paycheck. The borrowers must give the companies a postdated check for the amount of the loan, plus a fee of about 20 percent of the loan. The loans, usually less than $1,000, often can be renewed every two weeks with payments of another 20 percent fee. The lawsuit claims The Cash Store violated state law by not giving customers a signed copy of the loan agreement and violated federal law in not conspicuously disclosing the finance charge and annual interest rate of more than 500 percent. The company changed its forms in December to meet the complaints in the lawsuit. The Davises have dropped a third claim that said the loans were unconscionable under court-made law and the Wisconsin Consumer Act. The state has no limit on interest rates. Shabaz rejected The Cash Store's argument that borrowers could recover greater damages in separate lawsuits. "Ever solicitous of its borrowers' interest in pursuing claims against it, defendant argues that class certification is inferior to separate actions because it will yield too small a recovery compared to what the claimants could receive in separate actions," the judge wrote. "This argument, of course, ignores the reality that potential greater individual recovery is probably not sufficient incentive for individual claims." (Wisconsin State Journal; 06/03/99) ZILOG INC.: Plaintiffs Appeal Dismissal of California Litigation ---------------------------------------------------------------- ZILOG INC. has been named as a defendant in a purported class action lawsuit that was filed on January 23, 1998 in the U.S. District Court for the Northern District of California. Certain executive officers of the Company are also named as defendants. The plaintiff purports to represent a class of all persons who purchased the Company's Common Stock between June 30, 1997 and November 20, 1997. The complaint alleges that the Company and certain of its executive officers made false and misleading statements regarding the Company that caused the market price of its Common Stock to be "artificially inflated." The complaint does not specify the amount of damages sought. On March 24, 1999, the district court granted ZiLOG's motion to dismiss and entered judgment in favor of all defendants. On April 16, 1999, the plaintiffs filed their notice of appeal to the Ninth Circuit Court of Appeals. ********* 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. Kent L. Mannis, Project Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. 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