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/raid1/www/Hosts/bankrupt/CAR_Public/990618.MBX C L A S S A C T I O N R E P O R T E R Friday, June 18, 1999, Vol. 1, No. 96 Headlines ALABAMA PRISONERS: Hitching Posts Make a Comeback to Detain Inmates AMERICAN CYANAMID: Settlement Rattles Two Class Actions CARGILL, INC.: Archer Daniels Executive Tells Feds His Price-Fixing Story CENTRAL SPRINKLER: Sold to Tyco International for $115 Million CITY OF CHESTER: White Police Officer Sues for Employment Discrimination COCA-COLA: Black Employee-Plaintiffs Granted Broad Access to Company Documents COLONIAL REALTY: Seven Firms Seek Big Slice Of $90 Million Pie COMMAND SYSTEMS: $5.75 Mil. Settlement Obtains Preliminary Approval GLOBAL STREET: Michigan 401(k) Participants Sue for Mishandling of Funds HOLOCAUST VICTIMS: Condemn German Compensation Plans KMART CORP.: Former Hudson Bay Employees Get Green Light in Litigation LLOYDS OF LONDON: Dist. Ct. Keeps Jurisdiction In DES Suit Against Lloyds NORTHRIDGE HOSPITAL: Women Denied Epidurals in Childbirth File Class Action NORTHWEST AIRLINES: Stranded Passengers Prepare for Certification Hearing PICTURETEL CORPORATION: Agrees to $12 Mil Settlement of Shareholder Litigation POLAROID CORPORATION: Shepherd & Geller Files Complaint in Massachusetts POLAROID CORPORATION: Finkelstein & Krinsk Files Complaint in Massachusetts PRINTRON, INC.: Court Rejects Excusable Neglect for Failure to Answer PROVIDIAN FINANCIAL: Bernstein Litowitz Files Complaint in New York R.J. REYNOLDS: Spin-Off from RJR Nabisco Completed SEARS ROEBUCK: Complaint Estimates 7 to 30 Million AccuBalance Plaintiffs TOBACCO LITIGATION: Sup. Ct. Declines Review of Medical Monitoring Case VITAMIN MANUFACTURERS: Justice Ready to Charge 10 More with Price-Fixing Y2K LITIGATION: Senate Okays Bill to Limit Suits * Class-Action Price-Fixing Litigator Harold Cohn, Esq., Dies at 85 ********* ALABAMA PRISONERS: Hitching Posts Make a Comeback to Detain Inmates ------------------------------------------------------------------- The long, heavy shackles of Alabama's chain gangs are gone. But prison hitching posts --- which trace their history to Colonial pillories --- may be back. Backed by Gov. Don Siegelman, Alabama prison Commissioner Mike Haley argued in federal court this week to reinstate the practice of shackling "disruptive" inmates to outdoor hitching posts. That would make Alabama, again, the only state to use them. The horizontal metal bars --- one secured 50 inches above the ground, another at 45 inches to accommodate inmates of different heights --- resemble tall bike racks. Prisoners who fight or refuse hard labor assignments are handcuffed to the posts to change their behavior, officials testified. Today in a conference call with U.S. District Judge Myron Thompson, attorneys with the Southern Poverty Law Center in Birmingham, representing two inmates who brought a class action lawsuit, and the Alabama corrections agency will review legal arguments. While Thompson contemplates his decision, the state's hitching posts will remain unused. Portraying himself last fall as a progressive Democrat, Siegelman ousted Republican incumbent Fob James, an evangelical Christian accused of miring Alabama in backwoods stereotypes by encouraging defiance of court rulings against school prayer and advocating harsher prisons. James rejuvenated widespread use of the hitching post in 1995. An August ruling by Thompson suspended their use. Siegelman has tried elevating the state's image. He recently helped secure a multimillion-dollar Honda plant outside Birmingham and returns to the state today after a European recruiting trip. But prisoners suffering in 95-degree heat until they decide to work isn't a bothersome image to state officials. In June 1995, one inmate was hitched for seven hours without water after a fight with six corrections officers. When he asked for a drink, guards who gave ice water to prison dogs tipped over a cooler in front of the man, according to testimony in the case. "Governor Siegelman and I agree inmates should have to work just like taxpayers work, and he and I agree the restraining bar is an effective management tool," Haley said at a court hearing Tuesday. Hitched inmates typically eat lunch while shackled and standing. At Limestone Correctional Facility in Capshaw, officials once let prisoners eat with one hand unshackled, but the experiment ended because it took too much time and too many extra officers to secure the area. In the summer of 1994, the U.S. Department of Justice investigated hitching post use at Alabama's Easterling Correctional Facility. Federal officials concluded the posts were an improper use of restraints and were "potentially dangerous from a medical standpoint." Despite a federal recommendation that the hitching post be abandoned, the practice continued and state officials wrote back that "the security bar is not used with malice or cruelty but with the intent of maintaining prison security." Decades of abusive practices led a federal judge in 1979 to order Alabama to fix its prison system, said historian Dixie Dysart, who has researched conditions in the state's women's prisons. "Alabama has a pretty checkered history in treating its inmates," Dysart said. Alabama prisons decades ago put unruly inmates in something called the "sweatbox" or the "doghouse" --- what Dysart describes as "very small boxes that looked like coffins." In an earlier hearing, a prison expert for the plaintiffs testified that the hitching post traced its lineage to pillories and stocks. "If anything," the expert testified, "the pillory, as it was designed, was probably more comfortable because in most cases the prisoner sat on the ground and had his feet and his hands put through a stock. In this case we're perhaps more barbarous because what we're doing is stretching an inmate out in the hot sun so he's uncomfortable and can't move." In 1996, two inmates sued the state prison commissioner. Prisoners testified they defecated on themselves after hours of standing locked to the posts without restroom breaks. In August, Thompson ruled the devices unconstitutionally cruel. Their use ceased. If the state wanted them back, officials would need a version that would pass constitutional muster. Since then, guards have locked prisoners who refused hard labor inside pens paved with asphalt. "They lie down on the ground and go to sleep, which really defeats the purpose," Haley said. Haley consulted with wardens and the governor before proposing a new policy. The major change recommends using video cameras to monitor when water and restroom breaks are needed. "Essentially, it's the same policy as the old policy," said plaintiffs' attorney Rhonda Brownstein. "There is unnecessary pain and punishment." (The Atlanta Journal and Constitution 17-Jun-1999) AMERICAN CYANAMID: Settlement Rattles Two Class Actions -------------------------------------------------------------------------- Atlanta Farmers who won a major decision before the 11th U.S. Circuit Court of Appeals last week may never get to enjoy the fruits of victory. The spoiler? A Tennessee state court which just a week before approved the settlement of a similar class action, resolving all state and federal claims. At stake aside from antitrust claims potentially worth more than $ 100 million are constitutional questions about competing class action cases."It's one that could go all the way to the Supreme Court," said Atlanta lawyer Kenneth S. Canfield, one of a team of Alabama, Georgia and California lawyers for the federal plaintiffs.Both cases are class actions and deal with farmers' antitrust claims against American Cyanamid Co. The farmers claim the company conspired to fix prices when they offered bonuses to herbicide dealers for selling Cyanamid products at or above wholesale prices. American Cyanamid officials denied their sales program was anticompetitive and last year won a dismissal of the federal case, which was brought by Doug Lowell and four other farmers in Mobile, Ala. There, U.S. District Court Judge Brevard Hand ruled a 1977 U.S. Supreme Court case, Illinois Brick v. Illinois, barred cases by "indirect purchasers" against sellers. To sue Cyanamid, Hand wrote, the farmers would have to sue 2,500 dealers as well, a prospect Canfield calls "a nightmarish situation." DEAL REACHED IN TENNESSEE But while the federal case was on appeal at the 11th Circuit, Cyanamid and lawyers for James E. Fox and other Tennessee plaintiffs hammered out an agreement settling their case. The deal resolved all state and federal claims for $ 5.2 million, with a third going to the plaintiffs' lawyers. In April, lawyers from the federal case went to Union City, Tenn., to ask Obion County Chancery Court Judge W. Michael Maloan to postpone approving the settlement until the 11th Circuit ruled in the federal case. If revived by the 11th Circuit, they argued, the federal case was worth at least $ 100 million, given six years' of alleged price-fixing and treble damages awarded in antitrust cases. "The Lowell plaintiffs suspect, although American Cyanamid would never admit it, that American Cyanamid settled with the Fox plaintiffs because it fears that the 11th Circuit will rule against it," the federal plaintiffs wrote in briefs. Cyanamid responded that it expected a victory in the 11th Circuit, but even if it lost, the Tennessee Court of Appeals could review the fairness of the deal. In the meantime, Maloan should approve the settlement so that payments could be made, the company wrote. On June 2, Maloan did just that, approving the settlement as "fair, reasonable and adequate." A week later, an 11th Circuit panel of Judges J.L. Edmonson, Susan H. Black and, sitting by designation, Judge Jane A. Restani of the U.S. Court of International Trade, ruled for the farmers. Writing for the panel, Edmonson ruled the farmers were not indirect purchasers, who are barred from making antitrust claims under the Supreme Court's Illinois Brick case. Instead, he wrote, the plaintiffs were "direct purchasers from a conspiring party. "While Edmonson wrote the decision "makes no new law," others disagree. Knoxville, Tenn., attorney Gordon Ball, a lawyer for the Tennessee plaintiffs, is among them. "I think it changes things," he said of the 11th Circuit decision, certainly in his case. Ball said he originally thought Illinois Brick barred claims by indirect purchasers in federal courts, so he didn't think the federal plaintiffs' case was worth very much, if anything. That's why he had no trouble including their claims in the Tennessee settlement, he said. CHANGE SOUGHT IN SETTLEMENT Now that the 11th Circuit which officially interprets law only in Alabama, Georgia and Florida has ruled Illinois Brick does not apply in the Cyanamid cases, Ball said he'll tell Maloan the settlement "needs to be re-examined." That's what the federal plaintiffs lawyers did June 11 in an emergency motion to reconsider the settlement approval, according to John T. Crowder of Mobile's Cunningham Bounds Yance Crowder & Brown.Meanwhile, A. Stephen Hut, a partner in Cyanamid's Washington firm, Wilmer Cutler & Pickering, said his client is considering its appeal options of the 11th Circuit decision. The case officially has been remanded to the district court, and if it ends up there, Hut said he expects the Tennessee settlement "will have important implications." Hut would not confirm this, but that presumably means Cyanamid would argue that the Tennessee court settlement bars the federal case. Whether that issue comes before the Supreme Court is unclear, but it's not one unfamiliar to the justices. In 1996, the high court ruled a Delaware court that approved a settlement releasing defendants from exclusively federal claims "was entitled to full faith and credit." in Matsushita Electric Industrial Co. v. Epstein. (Fulton County Daily Report and The Legal Intelligencer 17-Jun-1999) CARGILL, INC.: Archer Daniels Executive Tells Feds His Price-Fixing Story ------------------------------------------------------------------------- A senior executive at the Archer Daniels Midland Company told Government investigators that he had held secret talks with an executive at Cargill Inc. to rig bids and prices in a huge food additive market, according to recently released documents. The Archer Daniels executive, Barrie R. Cox, told Federal officials that in the early 1990's he had spoken more than a dozen times with the Cargill executive, William M. Gruber, "about what each would be bidding on specific accounts" in the sale of citric acid to giant food and consumer product companies. Citric acid is an additive used in everything from soft drinks to detergents. According to records of two interviews in 1996 and 1997, which were recently made public as part of a related criminal case, Mr. Cox told investigators that he believed Mr. Gruber, formerly the head of national sales of citric acid at Cargill, might have been acting without the knowledge of other Cargill officials. Government prosecutors have said that Cargill did not take part with Archer Daniels and three other companies -- the Haarmann & Reimer Corporation of Springfield, N.J.; Hoffman-LaRoche Inc., a division of Roche Holdings in Switzerland, and Jungbunzlauer Inc. of Austria -- in a much broader international conspiracy. That scheme involved regular meetings in the early 1990's to illegally fix prices in the citric acid market. The four companies eventually paid more than $100 million to settle Government charges of illegal price-fixing. The Justice Department said last week that it was not investigating Cargill or Mr. Gruber at this time. The Cox statements could play a significant role in an appeal of a class action suit against Cargill, filed by purchasers of citric acid who contend they were cheated by the company. Earlier this week, lawyers for the purchasers filed a motion citing the Cox statements as grounds for overturning a dismissal of the case for lack of evidence. Mr. Cox said in interviews with Federal prosecutors that between 1992 and 1995 he and Mr. Gruber worked together to rig bids on the sale of citric acid to giant United States companies. The interviews were conducted under a Federal order that granted Mr. Cox immunity but did not shield him from criminal prosecution for making false or misleading statements. Cargill officials vehemently denied any suggestion that the company or Mr. Gruber took part in bid- rigging or price-fixing. Richard J. Favretto, an attorney for Cargill, called Mr. Cox's statements "wholly unsubstantiated" and said that after a thorough, four-year investigation of the citric acid market, the Justice Department had taken no action against Cargill or any of its employees. Cargill officials said Mr. Gruber declined to comment. Cargill also released a letter it secured upon request last week from Phillip H. Warren, assistant chief of the Justice Department's antitrust division, which said that "Cargill Inc. and William M. Gruber are neither targets of, nor currently under investigation in, the antitrust division's investigation of possible criminal antitrust violations in the citric acid industry." Justice Department officials confirmed that they had sent the letter but declined to elaborate. Archer Daniels, Cargill and the three other makers of citric acid were also accused in the class action suit of conspiring to fix the price of citric acid. Mr. Cox told investigators that he and Mr. Gruber discussed the bids for Coca-Cola, Mars, Procter & Gamble and Phillip Morris's Kraft Foods division. Coca-Cola and Mars are part of the class action suit. Procter & Gamble and Kraft are not. Archer Daniels and the three other companies agreed to pay $94 million to settle the class action suit in 1996. But Cargill refused to join the settlement, saying it was not part of the conspiracy. The class action suit proceeded against Cargill. But early last year, before these F.B.I. documents were available, a Federal judge dismissed the case on the ground that there was not enough evidence to bring it to trial. The case is now before a Federal appellate court in San Francisco. Earlier this week the plaintiffs filed a motion to include the record of the F.B.I. interviews with Mr. Cox as evidence. Notes of the interviews were released this winter in connection with the sentencing of three Archer Daniels executives who were convicted last September in a Federal price-fixing trial. Mr. Cox, who was a key prosecution witness in that trial, is now a consultant for Archer Daniels. Mr. Cox declined comment. In the records, which are Federal Bureau of Investigation notes of the interview, Mr. Cox says that he often arranged bids with Mr. Gruber and that "these discussions usually occurred toward the end of the year, when contracts came up for renewal." "They would talk about 'x' being a good price for an account," he says in the records. Mr. Cox also told investigators that "the effect of the Gruber-Cox conversations is that Cargill and A.D.M. would bid at close to the same price, but not the identical price, as that would look suspicious." According to the records, Mr. Cox suggests that he and Mr. Gruber operated outside the larger international conspiracy to fix the prices of citric acid around the globe. In his statements, Mr. Cox says that he acted as a "conduit" between the international conspiracy and Cargill, and that he believed Mr. Gruber understood that. But he says that executives at the other companies knew that he and Mr. Gruber were having these discussions. Mr. Favretto, the attorney for Cargill, said Mr. Cox's comments to investigators were groundless. "There is not a shred of evidence supporting his statements," he said, adding that they unfairly damage the reputation of Cargill and Mr. Gruber, who is now a vice president in the company's corn milling division. Mr. Favretto also cited statements made by Scott Lassar, the United States Attorney in Chicago who prosecuted and won convictions against three Archer Daniels executives last year. In his closing arguments, Mr. Lassar told a jury that "Cargill was not involved in price-fixing in citric acid." (The New York Times 17-Jun-1999) CENTRAL SPRINKLER: Sold to Tyco International for $115 Million -------------------------------------------------------------- Central Sprinkler Corp., the Lansdale, Pennsylvania-based fire suppression firm that has been reeling from a massive federal recall, was sold yesterday to its major rival, Tyco International Ltd., for $ 115 million, according to a report appearing in The Philadelphia Inquirer. Central chief executive E. Talbot Briddell, a turn-around manager hired last July, said the cost of the product-liability crisis -- more than $ 65 million -- left the company without enough capital to compete effectively. The sale to Tyco "assures that Central will survive" the Omega crisis and that the firm's 1,480 employees will have jobs, Briddell said. The new owner, Bermuda-based Tyco, operates in 80 countries and has annual revenues of $17 billion. Central's crisis began in 1995 when its Omega model sprinkler heads, a break-through product when introduced 16 years ago, failed to respond in three relatively minor fires that caused no injuries. In several rounds of subsequent laboratory tests, Omega heads posted failure rates as high as 40 percent. This ultimately led to last October's federally mandated recall of all 8.5 million Omega heads sold by Central. The U.S. Consumer Product Safety Commission said the Omega heads had failed to perform in 17 fires, resulting in four injuries and $ 4.3 million in property damage, since 1990. Central will operate as a separate subsidiary, keep its brand-name and be headquartered in Lansdale. It will continue to compete with other Tyco units, including the Grinnell group of companies, the fire-suppression industry leader. The proposed acquisition must be approved by the Justice Department. Briddell said he will remain as chief executive through a transition. George Meyer, son of Central founder William Meyer, will continue as president and chief operating officer at least through the transition, Briddell said. Briddell said the terms of Central's sale require that Tyco honor its commitments to the government-mandated recall, as well as settlements in class action lawsuits filed by Omega purchasers. Central has received requests for replacements for only about two million heads, and about 75 percent of the orders have been filled, Briddell said. Omega heads were widely used in sensitive government buildings, including the White House, the Library of Congress and key defense installations, and to protect the nation's most prized artifacts. CITY OF CHESTER: White Police Officer Sues for Employment Discrimination ------------------------------------------------------------------------ The City of Chester has been hit with a reverse race discrimination suit by a white police officer who says he was passed over for a promotion to the Narcotics Unit despite having the highest seniority because the commissioner preferred African-American officers for the job.The suit says Edward M. McClellan is a 21-year veteran of the Chester force and had the greatest seniority of the 20 officers who applied for the three openings. But Commissioner Wendell N. Butler Jr. passed over McClellan and other whites when he awarded the three posts to African Americans who ranked sixth and ninth in terms of seniority, and a white man who ranked fourth. Six officers filed grievances, claiming that the department had violated their union's collective bargaining agreement, which calls for all promotions and transfers to be made according to seniority and prohibits discrimination on the basis of race, creed, sex, age, national origin or disability. In the arbitration of that claim, the department argued that it was justified in passing over some of the white officers because Chester is predominantly black and it was necessary to place black officers in the narcotics unit where they would be expected to apprehend sellers and users of drugs. The arbitrator rejected that claim and found that the city had violated its contract with the police union by failing to follow the seniority policy. But the ruling was no help for McClellan, who had the highest seniority, since the arbitrator separately ruled that the city had properly passed him over for a different reason that he had physical limitations from a prior injury. In his federal suit, McClellan insists that he was not working "light duty" at the time of the promotions and should never have been treated as an officer who was unable to handle the physical aspects of job in the narcotics unit. But even if he was injured, McClellan claims that using that fact against him is an obvious pretext since the city has previously hired black officers to join the narcotics unit while they are still on light duty. The case, McClellan v. Chester Police Department, 99-cv-2855, has been assigned to U.S. District Judge Robert F. Kelly. (The Legal Intelligencer 16- Jun-1999) COCA-COLA: Black Employee-Plaintiffs Granted Broad Access to Company Documents ------------------------------------------------------------------------------ In the first week of June, U.S. District Judge Richard Story ordered Coke to deliver to black employee-plaintiffs' lawyers six years' worth of computerized data about thousands of employees. Story also wrote that the current plaintiffs -- one former and three current Coke employees -- also are entitled to "any reports, recommendations or similar documents that refer to the race of employees in discussing, analyzing or reviewing Coca-Cola's employment or human resources practices. . . ." The documents are due today, while the deadline for the computerized data is July 1, Story writes. Coke's lawyers from Atlanta's King & Spalding and Los Angeles-based Paul, Hastings, Janofksy & Walker had hoped to avoid any discovery. At a hearing last month, lead counsel William Clineburg Jr. of King & Spalding warned Story of "a global discovery battle" unless the judge first ruled on Coke's motion to dismiss the class action claims. In briefs, the company argues the plaintiffs' claims are too individualized to be resolved in a class action designed to resolve common questions of law or fact. For example, the company compares plaintiff Motisola Malikha Abdallah's claims she was underpaid as an administrative assistant with security guard Gregory Clark's claims he was denied promotions because he was black, in _Clark v. The Coca-Cola Co._, 98-3679 (N.D.Ga. motion May 28, 1999.) Differences such as those, Coke argues, "will require the court to consider hundreds of different claims of disparate treatment." The company cites numerous cases in which judges denied class certification, including one from Story himself -- _Medlock v. Chase Manhattan Mortgage Corp._, 98-1927 (N.D.Ga. April 20, 1999) -- who in April denied class status to plaintiffs alleging a real estate kickback scheme " d ue to the case-specific, fact-intensive nature" of the case. Calling Coke's arguments "extreme," the plaintiffs responded to Coke's motion late Thursday. Story's order does not show any signs he'll grant Coke's request. The order specifically sets out months of discovery and briefing, after which, Story writes, he will rule on whether the plaintiffs' case deserves class certification. (The Recorder 17-Jun-1999) COLONIAL REALTY: Seven Firms Seek Big Slice Of $90 Million Pie -------------------------------------------------------------------------- Legal fees don't get much higher than the ones proposed in the groundbreaking, $90 million settlement reached in April between Colonial Realty investors and accounting giant Arthur Andersen Inc. But neither do the risks taken by the seven firms that represented the thousands of people who lost money when the Colonial empire collapsed in the late 1980s. In Waterbury, Connecticut, attorney James E. Hartley's estimation, the group of lawyers was the single largest "investor" on the line had the class action against Arthur Andersen proved fruitless. In return, the seven firms have put in a request to U.S. District Judge Alfred V. Covello for 30 percent of the $90 million settlement, according to Hartley whose firm, Drubner Hartley O'Connor & Mengacci, is one of the seven. A fairness hearing is scheduled to be held June 28 before Covello, who must sign off on the deal struck with the help of retired federal judge Robert C. Zampano and retired federal magistrate F. Owen Eagan. (See "ADR Settles Record Breaking $90 Million Class Action Suit," The Connecticut Law Tribune, April 26, 1999, page 1.) Hartley says he is uncertain whether Covello will consider the plaintiffs' fee application during the hearing or at a later date. Besides Hartley's firm, the $27 million bounty, if approved by Covello, would be divided among: Bridgeport's Koskoff Koskoff & Bieder; the Law Office of R. Bartley Halloran in Hartford; Perry & Windels in New York and Dillwyn, Va.; William H. Clendenen Jr. and Gorman & Enright, both in New Haven; and New York's Lasky & Rifkind; according to Hartley. Lawyers at those firms, he says, collectively logged 170,000 hours on the case during the nine years of litigation that preceded the settlement. They also racked up roughly $4 million in reimbursable expenses, Hartley maintains. That amount, he says, includes $700,000 spent on expert witnesses in preparing to go to court over the first of 31 failed Colonial partnerships. Plaintiffs contend that Andersen's allegedly inept advice induced them to invest in various Colonial deals that were doomed from the start. Under the terms of the settlement, the accounting firm admits no wrongdoing. In addition to expert witnesses, copying costs also were enormous, Hartley contends. "We copied millions of documents." Tacking on nonreimbursable expenses, which includes the cost of renting office space in Waterbury, approximately $5 million of the lawyers' own money was riding on the case, Hartley estimates. "If we were compensated at our hourly rate, . . . our fee application would be much larger," he contends. "It would probably be $15 to $20 million greater." "It would sound petty," to say that the fee request isn't adequate, Hartley concedes. "In no way are we suggesting that we're unhappy in any respect." How the $27 million would be split up is the subject of a longstanding agreement crafted by the plaintiffs' attorneys when they joined forces back in the early 1990s, according to Hartley. But the terms of that pact, he notes, is "something we've agreed not to discuss." Hartley will say, however, that the question of who gets what is based not just on hours, but on other considerations, such as the firms' expertise. But for the moment, Hartley says he and his colleagues' focus is on finalizing the settlement and returning to the 6,800 clients a good portion of the money they lost. Only then, will Hartley entertain ideas about how to spend his firm's share of the proposed fee request. To do otherwise, would be "a little presumptive," he concludes. (The Connecticut Law Tribune 17-Jun- 1999) COMMAND SYSTEMS: $5.75 Mil. Settlement Obtains Preliminary Approval ------------------------------------------------------------------- Command Systems, Inc. (NASDAQ: CMND) today announced that the United States District Court for the Southern District of New York has preliminarily approved the settlement of a consolidated securities class action against it and certain of its officers and directors. The Court directed that notice be given to a conditionally certified class of shareholders of Command Systems common stock. The Court set a hearing for August 10, 1999 to consider final approval of the proposed settlement. The proposed settlement would result in the distribution of $5.75 million plus accrued interest, minus approved attorneys' fees and related expenses, to persons who purchased the common stock of Command Systems during the period March 12, 1998 through April 29, 1998, inclusive. Of the final settlement amount, the Company will be reimbursed for all but $1.65 million, plus the interest thereon. In addition, the Company may be responsible for certain legal fees and related expenses incurred in connection with the litigation. There can be no assurance, however, that a settlement will receive final approval by the Court. Command Systems, whose main office is in Farmington, Connecticut, provides a wide range of information technology solutions and services, consulting, training and outsourcing to financial services organizations to support their evolving business processes and systems requirements; at http://www.commandsys.comthe Company maintains its corporate Web site. GLOBAL STREET: Michigan 401(k) Participants Sue for Mishandling of Funds ------------------------------------------------------------------------ Some government retirees say the state mishandled their 401(k) retirement plans, costing each of them thousands of dollars, reports The Detroit News. The retirees have filed a lawsuit, saying the state and its contractor, State Street Global Advisors of Boston, converted their mutual fund investments to cash in 1997 without their permission. The state and the company deny the allegations. Ingham County Circuit Judge Lawrence Glazer is expected to decide June 16 whether the case can proceed as a class-action lawsuit. In disputing the claims, Assistant Atty. Gen. Terrence Grady said the state did what the retirees instructed it to do with money invested in their 401(k) plans. "They wanted to more individually control their own destinies and wanted to get out of the state system," Grady said. But the retirees said they lost money when the Treasury Department privatized the 401(k) retirement plan by putting the money under the control of the Boston company. Maureen McNulty Saxton, a spokeswoman for the Treasury Department, said the state opted to go with a private company in 1997 to give state employees a wider range of investment options. State employees have nearly $ 700 million invested in 401(k) plans, she said. Only four retirees are named in the suit so far. It is unclear how many will join the suit if it proceeds as a class action. HOLOCAUST VICTIMS: Condemn German Compensation Plans ---------------------------------------------------- Former Nazi-era slave laborers Thursday condemned a compensation fund offered by German industry and demanded they be allowed to take part in future negotiations. ''The victims are not being accepted as equal negotiating partners,'' said Lothar Evers, head of a German group representing Nazi victims. ''Instead, they are being asked to apply as supplicants, as charity cases.'' Sixteen German companies that profited from Nazi-era slave labor last week announced details of a promised compensation fund that aims to quashing U.S. and German lawsuits by slave laborer survivors. But victims' groups were enraged by provisions that payments would only be offered for six months of slave labor or longer, and that they would be based on average pensions and the cost of living in claimants' home countries, not back wages. The latest criticism by victims came as Chancellor Gerhard Schroeder's chief of staff, Bodo Hombach, met industry bosses in Bonn for a new round of closed-door talks on a possible settlement. U.S. Undersecretary of State Stuart Eizenstat was also expected to attend. Schroeder and German industry have pledged to have the fund in operation by September. (Associated Press 17-Jun-1999) KMART CORP.: Former Hudson Bay Employees Get Green Light in Litigation ---------------------------------------------------------------------- About 4,000 former Kmart Canada Ltd. employees laid off when Zellers bought the company last year may get up to $11 million in added severance pay. Ontario's Superior Court of Justice has certified a class-action lawsuit launched in May, 1998, and ruled that Hudson's Bay Co. - Zellers' parent company - dismissed the employees without just cause. In a summary partial judgment, Mr. Justice John Brockenshire wrote that Hudson's Bay admitted it dismissed the employees without cause and thus must provide ''reasonable notice of termination and/or pay in lieu of notice.'' Hudson's Bay has already paid severance packages, but lawyers for the class action argue much more is required. Dorothy Fong, of McGowan & Associates, a Toronto law firm specializing in class-action suits, said it was reported employees received roughly a week of severance for each year of employment, the bare minimum under Ontario's Employee Standards Act. ''Generally, what courts have done is give a month for every year of service, '' she said. ''That is how far apart we are.'' Fong, whose firm has represented many high-profile class actions including the 1995 TTC subway crash and the 1997 GO Transit collision, said the settlements could reach $11 million. She has asked the court to appoint independent mediators to settle all the individual claims. Jim Ingram, general counsel for Hudson's Bay, told The Star late yesterday that an appeal will be filed in the next few days. He conceded the liability associated with dismissing the 4,000 non-unionized workers without cause, but insisted that Hudson's Bay treated them fairly and paid severance packages in excess of the minimum required. ''We felt we were certainly generous.'' In explaining his decision to certify the case as a class action, Justice Brockenshire cited Hudson's Bay's in-court treatment of class representative Karen Webb, an 18-year veteran with Kmart Canada. ''From the inquiries made and the examinations held of Mrs. Webb in this proceeding, it is easy to visualize the defence (Hudson's Bay) discouraging individual litigants through procedural complications and delay,'' he wrote. Those comments are ''extremely nasty,'' responded Ingram. ''I don't know where he is coming from.'' The court ruling does not include about 2,000 former Kmart Canada employees in Quebec and British Columbia because those provinces have their own class- action legislation. Another 120 people will be excluded from the suit if Hudson's Bay proves, as it claims, that they were fired with just cause. (The Toronto Star 17-Jun- 1999) LLOYDS OF LONDON: Dist. Ct. Keeps Jurisdiction In DES Suit Against Lloyds ------------------------------------------------------------------------- In a ruling that could show plaintiffs in hundreds of suits around the country how to keep their claims against Lloyd's of London in federal court, a Southern District judge yesterday found he had jurisdiction over a 17-year-old action brought against the insurer by the pharmaceutical giant E. R. Squibb & Sons Inc. Contradicting at least one Circuit court and several district courts, U.S. District Judge John S. Martin Jr. found British law permits such suits to proceed if brought against a lead Lloyd's of London underwriter, in the underwriter's individual capacity. "It would be a strange law indeed that would hold that an individual, who had so clearly bound himself individually by contract, could not be sued individually to enforce that contractual obligation," Judge Martin wrote in E. R. Squibb & Sons Inc. v. Accident & Casualty Insurance Co., et. al., 82 Civ. 7327. His 43-page ruling, after making the general finding that such suits are permitted against individual underwriters, then went on to find jurisdiction for the specific E. R. Squibb suit against a now-deceased lead underwriter, Alan Peter Denis Haycock, a former British citizen. Filed in 1982, the suit seeks to resolve the share of liability to be borne by various insurers for millions of dollars in claims stemming from birth defects blamed on ingestion by pregnant women of the Squibb drug diethyl stilbestrol (DES). The case was remanded to Judge Martin last year after the U.S. Court of Appeals for the Second Circuit, on its own, raised questions about whether it belonged in federal court. (NYLJ, Nov. 30) Squibb's lead lawyer, Louis Solomon, called yesterday's ruling groundbreaking largely because it "creates a blueprint for finding jurisdiction for hundreds of cases pending around the country involving Lloyd's." In addition, although the Seventh Circuit and several other district courts have addressed the issue of jurisdiction to sue individual Lloyd's underwriters, no ruling has followed such a painstaking review of an extensive record, said Mr. Solomon, of Solomon, Zauderer, Ellenhorn, Frischer & Sharp. Lloyd's lead lawyer, George Marshall Moriarty, of Ropes & Gray in Boston, declined to comment late yesterday, saying he had yet to read the ruling. Diversity Found as a preliminary matter, Judge Martin found that extensive discovery revealed diversity jurisdiction exists for all 2,247 anonymous underwriters, known as "Names," who had underwritten the Lloyd's of London Squibb policies. He went on to find British law and the contracts in dispute in this case permit the suit to proceed against a lead underwriter in his or her individual capacity. After that, Judge Martin found alternate bases for permitting suit against Mr. Haycock or Stephen Merrett, a Name who belonged to the same syndicate as the now-deceased Mr. Haycock. First, Judge Martin found Squibb satisfied tests that the defendants have diverse citizenship and its claims meet either the jurisdictional threshold amount of $10,000 (when the suit was filed) or $ 75,000 (the current threshold). Alternately, Judge Martin found even if the claims against the individual underwriters did not meet the $ 10,000 threshold, there is still jurisdiction. He cited exceptions permitted under 28 U.S.C. Sec. 1332(a)(3) and jurisdiction for the claims as a class action suit. At several points, Judge Martin declared it contrary to public policy to dismiss the suit, now, for a belated jurisdictional challenge or for failure to meet the threshold jurisdictional amount. "It would be ironic if a rule designed to prevent the federal court from wasting its resources was construed to turn to waste 16 years of federal judicial effort," he wrote. "This is an appropriate case to take the steps necessary to preserve jurisdiction." In addition to Mr. Solomon, Robert Rifkind, of Cravath, Swaine & Moore, represented E. R. Squibb. In addition to Mr. Moriarty, John Montgomery, Rachel Hershfang and Cathy Mondell, also of Ropes & Gray, represented Lloyd's. Other insurance company defendants were represented by Richard Gimer, of Semmes, Bowen & Semmes, Washington, D.C.; Charles Booth, of Ford Marrin Esposito Witmeyer & Gleser; Norman Golub, of Marshall, Conway & Wright, as well as Anthony R. Gambardella and James Jennings, of Rivkin Radler & Kremer, Uniondale, N.Y. (New York Law Journal 03-Jun-1999) NORTHRIDGE HOSPITAL: Women Denied Epidurals in Childbirth File Class Action --------------------------------------------------------------------------- Eight women who say they were denied or forced to pay cash for anesthesia during childbirth have filed a class-action lawsuit against several Southern California hospitals alleging violations of the state's consumer protection laws. The suit, brought to light in the Los Angeles Times, claims that several hospitals, including Northridge Hospital Medical Center and the medical group contracted to provide anesthesia services there, have unfair business practices. It says they improperly colluded with doctors and others to set a cash price for epidurals and require women to pay it. The suit was filed, the Times says, one year to the day after The Times detailed the practice of forcing Medi-Cal recipients to pay cash for epidural anesthesia, said Bruce Fishelman, one of the plaintiffs' attorneys, in order to ensure that the statute of limitations did not lapse. It was filed in Los Angeles County Superior Court on Monday. The Times reported that nationwide, certain anesthesiologists were demanding cash from women on public assistance who requested the common pain-relief procedure. By refusing to treat women unless they agreed to be treated outside the federal Medicaid program and paid cash, these doctors believed, they would be able to circumvent what they considered to be low payments from the government. One of the articles detailed the case of Ozzie Chavez, a West Hills mother who underwent a complicated birth without anesthesia, because the anesthesiologist on call at Northridge Hospital Medical Center refused to treat her without a $400 cash payment. Andie Bogdan, spokeswoman for Northridge Hospital Medical Center, said hospital officials had not yet seen the suit and could not comment on it. NORTHWEST AIRLINES: Stranded Passengers Prepare for Certification Hearing ------------------------------------------------------------------------- Geoffrey Fieger, Esq., and other attorneys for Northwest Airlines passengers are to argue Friday for class-action status of their lawsuits stemming from a Jan. 2-3 snowstorm at Metro Airport. Hearing the lawsuits as a single class action as the plaintiffs want could spell more bad news for Northwest. Lawyers say it's easier for a large corporation to defend itself against several smaller suits filed by individuals than against a large number of plaintiffs working as a group. As a class action, the suit would carry the potential for higher financial penalties for Northwest. The plaintiffs' attorneys also say Northwest would want to avoid the bad publicity that comes with a major class action. "In my own humble opinion, there is no way they will want to go to court on this one. They cannot afford all of the adverse publicity," said Byron Siegel, a Southfield-based lawyer handling one of the cases with Fieger. Wayne County Circuit Judge Daphne Means Curtis is expected to rule today after hearing arguments in the dispute. Three lawsuits have been filed in Wayne County Circuit Court stemming from the snowstorm that left about 4,000 passengers stranded on Northwest planes on runways at Metro Airport for up to nine hours. Northwest has apologized for the events that left passengers without food, water or, in a few cases, toilets that worked. The carrier has sent vouchers for free tickets to thousands of customers. But it says the lawsuits are without merit and that it expects them to be dismissed. The incident inflamed public resentment of airlines. The Federal Aviation Administration and Michigan lawmakers have blamed Northwest for the problems. (Detroit Free Press 17-Jun-1999) PICTURETEL CORPORATION: Agrees to $12 Mil Settlement of Shareholder Litigation ------------------------------------------------------------------------------ PictureTel Corporation (Nasdaq:PCTL) yesterday announced that it has entered into an agreement to settle the consolidated securities class-action lawsuit that is currently pending against the company. The litigation is related to PictureTel's restatement of revenues in certain quarters of 1996 and 1997. The settlement provides that the claims against PictureTel and its former chief financial officer, Les Strauss, will be dismissed. In agreeing to the proposed settlement, the company and Mr. Strauss specifically deny any wrongdoing. The settlement provides for a cash payment of approximately $12 million by PictureTel, plus interest, after the settlement is final. More than three- quarters of the settlement amount will be covered by PictureTel's insurance. The settlement is subject to certain customary conditions, including preliminary and final approval by the United States District Court for the District of Massachusetts, and notice to the class. Once the court gives preliminary approval to this settlement, formal notices with the details of the settlement will be sent to the purported class members who purchased PictureTel common stock during the period of October 16, 1996 through November 13, 1997. "We are pleased to put this situation behind us," said Bruce R. Bond, PictureTel's chairman and CEO. "This settlement will enable the company to avoid further costly and protracted litigation and to continue our commitment to serve our customers and shareholders." POLAROID CORPORATION: Shepherd & Geller Files Complaint in Massachusetts ------------------------------------------------------------------------ The Law Firm of Shepherd & Geller, LLC announced it filed a class action in the United States District Court for the District of Massachusetts, on behalf of all individuals and institutional investors that purchased POLAROID CORPORATION common stock (NYSE:PRD) between April 16, 1997 and August 28, 1998, inclusive. The complaint charges that Polaroid and certain of its officers and directors violated the federal securities laws by making numerous false and misleading statements about the Company's financial condition, operating results, and operations, causing the stock to trade at artificially inflated prices during the Class Period. When the truth was uncovered, the stock price fell. Contact Shepherd & Geller, LLC, Boca Raton, Paul J. Geller, Esq., 561/750- 3000, Toll Free: 1-888-262-3131, or pgeller@classactioncounsel.com by e-mail. POLAROID: Finkelstein & Krinsk Files Complaint in Massachusetts --------------------------------------------------------------- Polaroid Corporation (NYSE:PRD) is accused in a class action lawsuit of violating the federal securities laws by misrepresenting the true nature of the Company's financial situation, condition and operations. As a result of publicly disseminated false and misleading statements, Polaroid Corporation's common stock was artificially inflated during the Class Period. According to the complaint, filed by Finkelstein & Krinsk, Polaroid and its chief executives issued materially false and misleading statements to the public investors designed to artificially inflate the Company's reported film sales, and deliberately failed to disclose, inter alia, that the Company was engaging in "loading" transactions, which resulted in the Company's involvement in various transactions designed to mask the decline in its instant film sales from investors. Finkelstein & Krinsk, the prominent San Diego law firm specializing in class action recoveries for institutional and individual investors, was retained by Polaroid shareholders to recover losses suffered by investors from at least April 16, 1997 through August 28, 1998. The complaint, filed by Finkelstein & Krinsk in the United States District Court for the District of Massachusetts, alleges that Polaroid Corporation and certain of its chief executives violated the Securities Exchange Act of 1934 and specifies the Company's false statements and omitted material facts. For additional information, contact Jeffrey R. Krinsk, Esq., at Finkelstein & Krinsk, The Koll Center, 501 West Broadway, Suite 1250, San Diego, CA 92101, toll-free: 1-877-493-5366, e-mail: fk@class-action-law-.com or fax: 619-238- 5425. PRINTRON, INC.: Court Rejects Excusable Neglect for Failure to Answer --------------------------------------------------------------------- Plaintiff filed a class action alleging violations of federal securities laws and other claims in connection with the sale of Printron Inc. stock. Two defendants failed to answer the second amended complaint or to respond to the order to show cause why they should not be defaulted. Later they moved to vacate the defaults entered against them. Defendant Ms. Firestone argued that her failure to appear resulted from mistake and excusable neglect in that she believed her attorneys had filed the necessary papers in response before their motion to withdraw as counsel was granted. Denying her motion, the court noted that she did not offer any explanation for not responding to the papers and concluded that her failure was "deliberate, even if not in bad faith." BARNES v. PRINTRON, INC., QDS:02761072, U.S. Dist. Ct., S.D.N.Y., Judge Keenan. (New York Law Journal 02-Jun-1999) PROVIDIAN FINANCIAL: Bernstein Litowitz Files Complaint in New York ------------------------------------------------------------------- Bernstein Litowitz Berger & Grossmann LLP, on June 15, 1999, commenced a class action lawsuit in the United States District Court for the Eastern District of New York on behalf of all persons who purchased Providian Financial Corporation (NYSE: PVN) common stock from January 21, 1999 through May 26, 1999, inclusive. The complaint charges Providian, 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. The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements to the investing public concerning Providian's financial results, which had the effect of inflating the price of the Company's common stock. Specifically, the Complaint alleges, among other things, that the Company was able to achieve its financial results only through a company-wide scheme to engage in high-pressure, misleading sales tactics that enabled Providian to record as revenue and include in its loan receivable amounts fees from products which customers had never ordered. If you wish to discuss this Action, contact Robert S. Gans or Gerald H. Silk of Bernstein Litowitz Berger & Grossmann LLP at (800) 380-8496 or (212) 554- 1400 or at robert@blbglaw.com by e-mail. R.J. REYNOLDS: Spin-Off from RJR Nabisco Completed -------------------------------------------------- R.J. Reynolds Tobacco began operating on its own Tuesday after being spun off. RJR Nabisco Holdings Corp. distributed shares in the maker of Winston, Camel and Salem cigarettes to RJR shareholders after the stock market closed on Monday, creating a separate $5.7 billion company. The tobacco company had been the foundation for RJR Nabisco and now trades on the New York Stock Exchange. The spin-off left RJR Nabisco with an 80 percent stake in Nabisco Holdings Corp., which makes Oreo cookies and Planters nuts. So it renamed itself Nabisco Group Holdings Corp. and will also trade on the NYSE. In NYSE trading, R.J. Reynolds Tobacco closed at $32.43 3/4 a share, up 18 3/4 cents from where it had been trading in expectation of the spin-off, and Nabisco Group Holdings closed at $21.56 1/4, up 25 cents. Financier Carl Icahn, who had been pushing RJR Nabisco leaders for a breakup for several years, didn't wait around for the spin-off. Ichan disclosed in a government filing that he had sold his entire 8 percent stake of RJR Nabisco shares late in Monday's session for about $813 million. That was about $130 million more than he paid for the stock accumulated over the past eight months, said people close to Icahn who spoke on the condition of anonymity. SEARS ROEBUCK: Complaint Estimates 7 to 30 Million AccuBalance Plaintiffs ------------------------------------------------------------------------- Sears Roebuck collected up to $ 400 million for tire-balancing services it never performed, then paid millions to keep the fraud quiet, according to a lawsuit filed in Illinois. The lawsuit, filed Tuesday, also says managers destroyed the tire-balancing machines with sledgehammers to cover up the fraud. The balancing machines were used to shave off a tiny layer of rubber to make sure the tires were round. The complaint, which seeks class-action status, estimates 7 million to 30 million people who purchased Sears AccuBalance service from 1989 to 1994 were potentially defrauded. TOBACCO LITIGATION: Sup. Ct. Declines Review of Medical Monitoring Case ----------------------------------------------------------------------- The Supreme Court has declined to review an opinion by the Third Circuit U.S. Court of Appeals affirming a trial court's refusal to certify a state-wide class of smokers who seek medical monitoring expenses from tobacco companies. Barnes et al. v. The American Tobacco Co. Inc. et al., No. 98-1489 (U.S., May 17, 1999, cert. denied); see Tobacco Industry LR, April 9, 1999, P. 9. In the trial court, U.S. District Court Judge Clarence Newcomer initially certified the class under Fed. R. Civ. P. 23(b)(2), the federal rule which permits class actions seeking injunctive relief. As certified, the class included "all current residents of Pennsylvania who are cigarette smokers as of Dec. 1, 1996, and who began smoking before age 19, while they were residents of Pennsylvania." However, on Oct. 17, 1997, the judge reversed himself by vacating his earlier ruling and decertifying the class. He said that the action implicated far too many individual issues to proceed as a class action. The judge cited several aspects of the case which raise individual issues that he said could not be resolved on a class-wide basis, including the plaintiffs' addiction claims, their negligence and strict liability claims, and the defendants' affirmative defenses. In his second Oct. 17, 1997, opinion, Judge Newcomer addressed tobacco company motions for summary judgment asserting the statute of limitations as an affirmative defense. He determined that Pennsylvania's two-year statute of limitations applies to the plaintiffs' medical monitoring claim, rejected the plaintiffs' argument that the statute was tolled by the "continuing harm" inflicted on them by the defendants and ruled that each plaintiff's claim for medical monitoring accrued when he or she was placed at a "significantly increased risk" of contracting a serious latent disease. He then cited testimony from the plaintiffs' experts that a smoker has a significantly increased risk of contracting a smoking-related disease and would therefore benefit from medical monitoring after he or she has a smoked one pack per day for 20 years. "Applying the twenty-pack-year level, the court concludes that five of the six plaintiffs were placed at a 'significantly increased risk of contracting a serious latent disease,' and thus the last event occurred which would make their medical monitoring claims suable, many years ago," the judge wrote. The five claims barred by the statute of limitations are those of Rodweller, Salzman, Slivak, Potts and Barnes. In a final portion of his opinion, the judge determined that the tobacco companies are entitled to summary judgment on the medical monitoring claims by the remaining claimant, Cairin McNally. He noted that, under the medical monitoring program proposed by the plaintiffs' experts, McNally would only be entitled to a physical examination and cardiovascular risk assessment, two tests which would be recommended for her even if she did not smoke. The Third Circuit affirmed last November. It held that three significant issues -- nicotine addiction, the need for medical monitoring and application of the statute of limitations -- must be resolved for each member of the class and make class treatment inappropriate. The three judge panel also agreed with the District Court that the claims of five named plaintiffs were time-barred and that the sixth plaintiff had failed to prove her need for medical monitoring. In their petition for Supreme Court review, the smokers argued that the Third Circuit misapplied the concept of cohesiveness when it determined that the presence of too many issues peculiar to individual class members made the proposed class inappropriate for certification under Fed. R. Civ. P 23(b)(2). "None of the three 'individual issues' (addiction, causation, and affirmative defenses), which the court below found to militate against cohesiveness, actually create conflicts within the class," the smokers insisted. They also maintained that the Third Circuit misapplied the Supreme Court's 1997 ruling on class certification in Georgine v. Amchem Products, Inc., a case in which the high court refused to certify a nationwide class of asbestos claimants. They distinguish Georgine by noting that it involved a class certified of claimants seeking damages under Fed. R. Civ. P. 23(b)(3), while their action involves a proposal to certify a state-wide medical monitoring class under Fed. R. Civ. P. 23(b)(2). The smokers further maintained that the Third Circuit's ruling conflict with rulings by other U.S. Circuit Courts of Appeals which have recognized a "crucial delineation" between the legal and factual issues raised by a personal injury claim for damages and those relevant to a medical monitoring claim. Damages claims depend upon proof of personal injury, while medical monitoring claims turn on proof of need for medical monitoring because of a risk of potential injury resulting from a defendant's conduct or product, they explained. "In this case," they insisted, "the Third Circuit has erroneously imported . . . considerations, which might be appropriate in the context of mass personal injury claims, into a class-wide equitable claim for medical monitoring relief." At least one other state has approved class action treatment of smokers seeking medical monitoring expenses from tobacco companies. In Louisiana, the state Supreme Court in February refused to review a lower court opinion affirming the certification of a class of smokers seeking medical monitoring (Scott v. The American Tobacco Co.; see Tobacco Industry LR, March 12, 1999, P. 10). The Pennsylvania smokers are represented in the Supreme Court by Diane M. Nast with Roda & Nast, P.C., of Lancaster, PA, and by Arnold Levin and Criag D. Ginsburg with Levin Fishbein Sedran & Berman of Philadelphia. Wendell H. Gauthier of Metairie, LA; Stanley M. Chesley of Cincinnati; Elizabeth J. Cabraser of San Francisco; and Robert L. Redfearn of New Orleans are of counsel. (Tobacco Industry Litigation Reporter 28-May-1999) VITAMIN MANUFACTURERS: Justice Ready to Charge 10 More with Price-Fixing ------------------------------------------------------------------------ The Justice Department is preparing criminal charges against at least 10 more vitamin makers in its ongoing probe of price fixing in the industry, according to people involved in the investigation. Investigators believe every major maker of bulk vitamins in the world was involved in fixing prices on nearly every vitamin sold in the USA. Three of the largest companies and six executives already have entered guilty pleas and agreed to $750 million in fines for price-fixing conspiracies. The charges against additional companies are expected to be brought this summer. The investigation will continue into next year as the Justice Department attempts to build criminal cases against individual conspirators. Fines are likely to top $1 billion and some executives may face jail sentences. Among the targets: * The Japanese companies Takeda and Easai, which both have U.S. operations. The firms will be charged with participating in conspiracies to fix prices on vitamins C and E respectively. Both companies are expected to plead guilty and together could face more than $ 100 million in fines. Takeda is Japan's largest pharmaceutical firm. * Nepera, of Harriman, N.Y., and Vitachem of Indianapolis, a joint venture of Germany's DeGussa-Huls and Belgium's Reilly Industries. The two will face charges of fixing prices on vitamin B3. * Bioproducts, the U.S. subsidiary of Japan's Mitsui & Co., Toronto-based Chinook Group and DuCoa of Highland, Ill. The government is planning to bring criminal charges for an alleged conspiracy to fix prices in the market for vitamin B4, an animal feed additive. Executives at these companies said they were unaware of any pending charges or could not be reached for comment. The companies that have pleaded guilty include Lonza, a Swiss maker of vitamin B3, and two of the world's three largest makers of vitamin E: Hoffmann-LaRoche and BASF. The No. 3 maker, Rhone-Poulenc, cooperated with investigators and avoided charges. The last three are in talks with lawyers for customers in a class action. The settlement could reach $ 950 million. Plaintiffs' attorneys Boies & Schiller had no comment. (USA Today 17-Jun-1999) Y2K LITIGATION: Senate Okays Bill to Limit Suits ------------------------------------------------ The Senate approved legislation Tuesday that supporters said could save the economy from being crushed by lawsuits against companies in connection with Year 2000 computer problems. But the White House has threatened a veto, saying the bill gives too little protection to consumers, and the 62-37 vote was five short of the two-thirds that would be needed to override such a veto. The measure attempts to head off what some estimate could be billions of dollars in lawsuits by encouraging mediation and giving companies 90 days to fix year 2000 computer problems before they can be taken to court. It also puts limits on class-action lawsuits, tries to stifle the practice of targeting big rich companies for lawsuits and sets punitive damage caps for small companies. (Wire Reports and Bloomberg News 16-Jun-1999) * Class-Action Price-Fixing Litigator Harold Cohn, Esq., Dies at 85 ------------------------------------------------------------------- Harold Kohn, an attorney who filed some of the earliest class-action lawsuits accusing corporations of price-fixing, died Monday at the age of 85. In the 1960s, Kohn became nationally known by winning a key case against General Electric, Westinghouse and two dozen other companies that the federal government had accused of illegal price-fixing. People who had bought the companies' electrical equipment filed hundreds of lawsuits. Kohn's case, brought on behalf of public utilities, was the first to go to trial and resulted in a $29 million verdict. In 1981, a jury awarded his clients $2 billion in a class-action suit against the timber industry. At the time, it was the largest verdict ever in an antitrust case. Kohn was also known for public interest cases taken on behalf of the American Civil Liberties Union and other groups. During the Vietnam War, he helped file a case that argued that the draft was unconstitutional because it excluded women. The Supreme Court rejected that argument in 1981. ********* 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. 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 301/951-6400. * * * End of Transmission * * *