/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/991015.MBX C L A S S A C T I O N R E P O R T E R Friday, October 15, 1999, Vol. 1, No. 178 Headlines 2THEMART.COM INC: Keller Rohrback Files Securities Fraud Suit BLUE CROSS: Doctors May Seek Class Arbitration Re CA Health Plan Fees COLMAR BELTING: Rhode Island Sp Ct Rules Part Distributor Liable CORPORATE EXPRESS: Agrees To Settle Outstanding Shareholder Litigation DIGITAL LINK: Milberg Announces Santa Clara Prelim. Injunction Hearing HOLOCAUST VICTIMS: Bill Would Free Victims From Tax On Settlement HOLOCAUST VICTIMS: Jewish Group May Pressure Insurers With Asset List IBARAKI PREFECTURE: Japanese Ct Rules On Payment For Wrongful Transfer IDPA: Authorized Official's Word To Settle Binds Ill. Public Aid Dept. INAMED CORP: Announces Payment For Settlement Of Breast Implant Suit INTERNATIONAL RECTIFIER: Securities Suit In CA Will Be Heard In 2000 LEAD PAINT: Rhode Island Files First State Suit; Other States May Sue N.Y. LIFE: Louisiana Sp Ct Decertifies Class For Lack Of Common Issues ATIONAL PARTNERSHIP: CA Suit Says REIT Statement Shortchange Investors OMTOOL LTD: Announces And Decries Merit Of Securities Suit In New Hamp. OMTOOL LTD: Kaplan Kilsheimer Files Securities Suit In New Hampshire PENNSYLVANIA ELECTRIC: Super Ct Oks Dismissal Of Staff Sex Bias Case PSE&G CO: U.S. Labor Dept Sues Utility In Camden Over Unpaid OT RAYMOND SCHOOL: Ap Ct Lets Maine Bar Subsidy To Religious Sch. Students SKINNER ENGINE: Retirees' Benefits May Be Changed, 3rd Cir Rules TENNESSEE VALLEY: Utility Sued For Over-Billing Industrial Users TOBACCO LITIGATION: Aussie Lawyers Say Industry's Admission "Too Late" UCAR INT'L: Settles Connecticut Securities And Derivative Suits U.S. LIQUIDS: Whittington, von Sternberg Files Securities Suit In Texas W.R. GRACE: NY Sp Ct Oks Settlement; CalPERS Recoups Shareowners' Money * MI Is Contemplating Bills For Increasing Prison Sex Penalty ********* 2THEMART.COM INC: Keller Rohrback Files Securities Fraud Suit ------------------------------------------------------------- Keller Rohrback LLP announced that it is investigating securities fraud claims of shareholders who purchased or otherwise acquired 2TheMart.Com Inc. (OTCBB:TMRTE) common stock between January 19, 1999 and August 26, 1999. On September 13, 1999, 2TheMart's ticker symbol was changed from TMRT to TMRTE indicating that the company is delinquent in its filings and may face removal from the OTC Bulletin Board. 2TheMart is an Internet-based electronic commerce company which claims to be developing an auction web site in which parties will be brought together to buy and sell a variety of goods. Once fully functional, 2TheMart web site users will be able to browse through all items in a fully automated, topically arranged online service that is expected to be available 24 hours a day, seven days a week. 2TheMart.com shares increased 25-fold in January, after the company announced that its web site was in final development and expected to be up and running before the end of the second quarter 1999. 2TheMart shares subsequently lost approximately 84% of their value after the Company revealed that the inauguration of its web site would be delayed and that it would need additional capital to remain viable. Shareholders are asserting that 2TheMart and certain officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b(5) established thereunder. They charge that defendants rendered false and misleading statements and/or omissions concerning the present and future financial condition and business prospects of the Company, as well as the financial benefits that would flow to 2TheMart and its shareholders. If you wish to discuss this announcement, have information relevant to the case, wish to learn about your rights to seek to serve as a lead plaintiff, or have any questions on how to join as a class representative in any securities class action, you may contact Keller Rohrback L.L.P. (Lynn L. Sarko or Elizabeth Leland, Esq.) toll free at 800/776-6044, or via e-mail at investor@kellerrohrback.com TICKERS: OTCBB:TMRTE NASDAQ:AMPD BLUE CROSS: Doctors May Seek Class Arbitration Re CA Health Plan Fees --------------------------------------------------------------------- Doctors challenging changes in the fee schedule for one of Blue Cross's most popular California health plans may seek arbitration as a class, the Ninth U.S. Circuit Court of Appeals ruled. In an opinion by Judge A. Wallace Tashima, the panel held that the Employee Retirement Income Security Act of 1974 doesn't preempt California law permitting class arbitration. The dispute concerns 1993, 1994, and 1995 amendments to the fee schedules under the 2 million-member Prudent Buyer Plan. Over 60 percent of the plan members are enrolled by private employers as a job benefit. A group of doctors, all of whom had private-employer-enrolledand thus ERISA covered patients in the plan, requested class-wide arbitration of their objections to the fee amendments in March 1997. Blue Cross responded that it was amenable to individual arbitrations only. It filed actions against each of the named claimants in the U.S. district courts for the Northern, Central, and Eastern districts seeking to compel individual arbitrations under the Federal Arbitration Act. The doctors reacted with a class action complaint in San Francisco Superior Court charging Blue Cross with breach of contract and bad faith. Blue Cross removed the action to federal court. U.S. District Judge Maxine Chesney sided with the doctors, remanding their action to the Superior Court and dismissing Blue Cross's petitions to compel individual arbitrations with claimants in the Northern District. Judges Garland Burrell of the Eastern District and Consuelo Marshall of the Central District likewise dismissed Blue Cross's petitions to compel individual arbitrations with the claimants in those districts. A San Francisco Superior Court judge last year granted the doctors' petition to compel class arbitration, but reserved jurisdiction over class certification and administration issues while the federal appeal went forward. Tashima agreed with the district judges that federal courts lack jurisdiction under the Federal Arbitration Act, which governs disputes involving a federal question or diversity of citizenship. ERISA does not provide a basis for federal jurisdiction over the dispute, Tashima concluded. "We hold that the Providers' claims are not preempted by ERISA; therefore, that the district courts properly dismissed Blue Cross' petitions for lack of subject matter jurisdiction," Tashima said. Blue Cross argued that ERISA applies because the dispute concerns the interpretation of the terms of the plan, but Tashima disagreed: "[T]he Providers' claims arise from Blue Cross' alleged breach of the provider agreements' provisions regarding fee schedules, and the procedure for setting them, not what charges are 'covered' under the Prudent Buyer Plan. The Providers' claims, therefore, do not rest upon this term of the Prudent Buyer Plan. Where the meaning of a term in the Plan is not subject to dispute, the bare fact that the Plan may be consulted in the course of litigating a state-law claim does not require that the claim be extinguished by ERISA's enforcement provision." Tashima also rejected the argument that the doctors' claims would impose economic burdens on ERISA plans and their beneficiaries, and were thus subject to the express preemption of ERISA Sec. 514(a). The provision generally preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan " governed by ERISA. While the claims may affect ERISA plans by increasing the costs of the pland and/or the co-payments made by patients, Tashima wrote, those effects don't trigger preemption. "Only where the indirect economic impact of the state law is 'acute,' so as to force an ERISA plan to adopt a 'certain scheme of substantive coverage or effectively restrict its choice of insurers' might a state law imposing only economic effects on ERISA plans be preempted under S 514(a)," Tashima wrote, citing a pair of U.S. Supreme Court cases. The case is Blue Cross of California v. Anesthesia Care Associates, 99 S.O.S. 7023. (Metropolitan News-Enterprise 8-30-1999) COLMAR BELTING: Rhode Island Sp Ct Rules Part Distributor Liable ---------------------------------------------------------------- Part Distributor Can Be Held Liable. The Rhode Island Supreme Court has held that if a component part distributor "substantially participated" in integrating its part into a final product, the distributor may be held liable for injuries caused by the final product. Buonanno v. Colmar Belting Co., No. 98-21 (R.I. July 12). The plaintiff was working with a conveyor belt when he lost his balance and fell into the machine; his arm was severely crushed. Represented by Donna M. DiDonato and Howard Klein of Providence, R.I.'s Decof & Grimm, the plaintiff sued two component makers and a welder involved in making the conveyor system, alleging that they had been negligent in not recommending, supplying or installing a shield to prevent such accidents. The manufacturers, represented by Jonathan Bruno of Boston's Schwartz, Shaw & Griffith and by Harrison Richardson of Portland, Maine's Richardson, Whitman, Large & Badger, moved for summary judgment, arguing that as makers and distributors of component parts, they had no duty to ensure that the final product was safe. The trial court granted summary judgment to both; the plaintiff appealed. The high court upheld the award of summary judgment to the maker of a wing pulley, finding that it was not involved in integrating its part into the final conveyor system. However, it reversed summary judgment for the belt system manufacturer, finding that it had worked closely with the plaintiff's employer in assembling the conveyor system, and thus could be held liable. (Product Liability Law & Strategy, September 1999) CORPORATE EXPRESS: Agrees To Settle Outstanding Shareholder Litigation ---------------------------------------------------------------------- On September 27, 1999, the Company issued a press release announcing that on September 24, 1999, the Company entered into the First Amendment to Agreement and Plan of Merger among Buhrmann NV, North Acquisition Corporation and the Company as well as the following events: (i) the setting of an October 22, 1999 date for the Company's special shareholders' meeting; (ii) the consummation of the sale of the Company's same-day courier delivery business; and (iii) the execution by the Company of an agreement to settle all outstanding shareholder litigation. Corporate Express filed its definitive proxy materials with the Securities and Exchange Commission on September 27, 1999, and has scheduled a special shareholders meeting on October 22, 1999 for the purpose of voting on the merger between the Company and Buhrmann. All shareholders as of the record date of September 13, 1999 will be mailed notice of the special meeting and proxy materials and must submit their proxies by October 22, 1999. The Company also announced its September 24, 1999 closing of the sale of its subsidiary. Corporate Express Delivery Systems, Inc. ("Delivery Systems"), to United Shipping & Technology, Inc., (Nasdaq: USHP), a logistics company based in Minneapolis, Minnesota. The sale of Delivery Systems has no effect on the daily delivery of Corporate Express' office and computer products and services, which will continue to be delivered via Corporate Express' fleet of more that 900 delivery vehicles. In addition, Corporate Express entered into an agreement to settle all outstanding class action shareholder litigation in connection with the proposed merger. As a part of the settlement, the Company agreed to make certain additional disclosures in its proxy statement, obtain an updated fairness opinion from one of its financial advisors and agreed to pay certain legal fees of counsel to the plaintiffs. The settlement is subject to confirmatory discovery and court approval. Other than the shareholder vote to be taken at the special shareholders meeting, the Company said it has satisfied most of the conditions precedent to closing the Buhrmann merger, and currently anticipates that the transaction will close by the end of October. DIGITAL LINK: Milberg Announces Santa Clara Prelim. Injunction Hearing ---------------------------------------------------------------------- The Santa Clara Superior Court has issued an order setting a preliminary injunction hearing in connection with the proposed buy-out of Digital Link (Nasdaq:DLNK) by DLZ Acquisition Corporation, which is owned and controlled by Digital Link CEO Vinita Gupta. Although it denied a temporary restraining order ("TRO") sought by several Digital Link shareholders who filed suits challenging the allegedly unfair Tender Offer/Merger, the Court set a preliminary injunction hearing for December 2, 1999. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@mwbhl.com TICKERS: NASDAQ:DLNK HOLOCAUST VICTIMS: Bill Would Free Victims From Tax On Settlement ----------------------------------------------------------------- Holocaust victims will not have to pay state income tax on reparations, returned assets and settlements from class-action lawsuits under a bill that overwhelmingly passed the state House. Bill sponsor Rep. Marc Shulman, R-West Bloomfield, says he expects about 2,500 survivors and benefactors would be eligible for the deduction. The bill would apply to assets owned by Holocaust victims from 1920-45 which were not returned to them before January 1994. The bill now goes to the Senate for consideration. (The Detroit News 10-14-1999) HOLOCAUST VICTIMS: Jewish Group May Pressure Insurers With Asset List --------------------------------------------------------------------- A nonprofit Jewish group said Wednesday that it hoped to pressure European insurers to make good on Holocaust claims with the posting on the Internet of a Nazi registry of seized assets. Negotiations between Jewish survivors and European insurance companies hit a setback at a meeting of the International Commission on Holocaust Era Insurance Claims last month, when German insurer Allianz AG refused to reveal its list of unpaid policyholders. A negotiating team is hoping to resolve the issue before the next commission meeting Oct. 21 in Washington, D.C. ''We want to encourage, to enforce, to do whatever's necessary to get the insurance companies to provide those names,'' Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center, said at a press conference in London. Launched last month, the Web site www.LivingHeirs.com contains an independent list of 50,000 Austrian Jews whose bank accounts and insurance policies were seized by the Gestapo in 1938. In some cases, the documents reveal that insurance policies were paid out to the Austrian government instead of Jewish policyholders or heirs. The information was retrieved from government archives in Vienna, among other sources. Efforts are under way to access further records in Germany, Italy, the Netherlands and Poland. The Web site is designed to let visitors find their relatives, obtain copies of records that document confiscated assets, and try to establish their status as rightful heirs. In addition to insurance policy holdings, the list includes Nazi-confiscated real estate, bank accounts, art, jewelry and other valuables. ''To see these figures for the first time is both emotional and shocking,'' said Peter Weil, a London-based businessman who is investigating whether his grandfather's property and insurance policies were seized by the Third Reich. In the past few years, Holocaust victims have launched a class-action lawsuit against Swiss and German banks, insurance companies and other corporations. As a result, Swiss and Austrian banks have offered separate settlements to families who lost assets during the Holocaust. The deadline to file claims for the $ 1.25 billion Swiss fund is Oct. 22. (AP Worldstream 10-13-1999) IBARAKI PREFECTURE: Japanese Ct Rules On Payment For Wrongful Transfer ---------------------------------------------------------------------- In a sign of the ongoing recession, more and more employees are filing lawsuits against their companies alleging unfair labor practices. The number of lawsuits filed by salaried employees at district courts nationwide swelled last year to a 10-year high of about 1,800. Meanwhile, lawyers at the Labor Lawyers Association of Japan in Tokyo reportedly received 858 calls in one day when they conducted a telephone counseling session in June this year. According to Kenji Tokuzumi of the lawyers union, conventional disputes between management and labor unions have now given way to disputes between management and individual employees. "Therefore, as we try to solve these cases as quickly as possible, we have to come up with various approaches to each case," he said. One day in October 1996, a 44-year-old employee at a food container manufacturing plant in Ibaraki Prefecture was informed point-blank by his department chief that he was to be transferred to the company's main factory in Fukuyama, Hiroshima Prefecture. "I want you to tell me whether you will go by yourself or with your family," the chief announced. When the employee asked why he had not been consulted about the transfer beforehand, the chief answered coolly, "The company doesn't consult." The employee, a former canoe manufacturer, had joined the company three years earlier. At the time, he had been assured that he would not be transferred to another plant. Moreover, on the day he was informed of the transfer, the nature of his work at the Ibaraki factory changed. In the room where he had previously processed plastics, he was now required to manually weed out defective products on the assembly line. His colleagues reportedly expressed sympathy over his demotion. A few days later, the employee again talked to the department chief, reminding him of the company's initial promise that he would not be transferred. The chief reportedly replied, "As long as you work for the company, the situation can change at the company's convenience." When the employee protested that he could not move to Hiroshima for family reasons, he was bluntly told: "If you can't go, you should resign by the end of the year." The company never changed its stance. With plans afoot to set up a new subsidiary, it was apparently trying to carve up its manufacturing division by recruiting employees for the new venture. The employee recalled, "Since I didn't want to go, I seemed to have become expendable." Nine other workers were also told by the chief that they would be moved to other plants. Lawyer Tetsuro Kamoda, who the employee consulted over the telephone in November 1996, immediately suspected that the company's decision was aimed at forcing workers to quit. After interviewing the employee, Kamoda submitted a petition to a court in December requesting a temporary termination of the company's order. But the company insisted that it had not announced the order and therefore had never forced the man to leave because of his refusal to be transferred. The court decided that it was not necessary to put a temporary freeze on the order. The employee was then transferred to another section at the factory where most workers were female part-time employees. Full-time employees rarely spoke to him and his senior officers reportedly bullied him by saying sarcastically: "What, you're still here?" "I couldn't stand it any more," he said. The employee handed in his resignation in April 1997. It is often said that salaried workers should never resign while fighting against alleged unfair labor practices because leaving voluntarily can undermine their cases. While Kamoda did not stop the employee from tendering his resignation, he filed a damages suit against the company for the 44-year-old employee and five others who also quit the company for similar reasons. "They don't want to work for such a company anymore. But they are not satisfied with the way they were forced to quit. This lawsuit reflects the feelings of these employees," Kamoda said. Although the plaintiffs formally quit the company of their own accord, they demanded redundancy payment, compensation money and additional salaries that would have been paid to them if they had been employed by the company for one more year. In June this year, the Shimozuma branch of Mito District Court ruled that the company must pay a total of 20 million yen to the plaintiffs, saying, "The plaintiffs, who were employed in the local area and not obliged to move to other places, were forced to quit by the company's bullying or harassment." Kamoda spoke highly of the court's ruling, saying it sent a strong message to companies that they must abide by the rules when discharging employees. The plastic container manufacturer appealed to the high court, insisting: "We just persuaded our employees to move to other plants in order to avoid discharging them. We never forced them to quit." The company also asked, "If workers employed in specific local areas cannot be transferred to other places, how can a company deal with surplus workers?" (The Daily Yomiuri (Tokyo) 10-13-1999) IDPA: Authorized Official's Word To Settle Binds Ill. Public Aid Dept. ---------------------------------------------------------------------- A state may not be bound by an agreement unless the agency official who enters into the agreement has actual authority when the agreement is made, the U.S. Court of Appeals for the 7th Circuit held on Sept. 1. King v. Walters, No. 98-2086. Remanding, Judge Diane P. Wood rejected the state of Illinois' contentions that only its governor may approve a consent decree, but she remanded the case for a hearing on the issue of whether the agency official who agreed to the decree had authority to bind the state. A class action was filed in 1992 against the director of the Illinois Department of Public Aid (IDPA) and the administrator of IDPA's Division of Child Support Enforcement (DCSE) program to force the state to comply with federally mandated child support laws. After long delays, the court ordered the parties to appear with an official possessing the authority to decide whether to settle or litigate. Robert Lyons, DCSE's deputy administrator, appeared in response and indicated that the state intended to settle. The judge nevertheless set a trial date. Negotiations intensified. A date was set to present a signed consent decree to the court. The day before, the defendants backed out of the consent decree, stating that they had decided to litigate. The district judge, relying heavily on the fact that Illinois sent Mr. Lyons to court as someone with decision-making authority, held the state to its agreement. (The National Law Journal 9-20-1999) INAMED CORP: Announces Payment For Settlement Of Breast Implant Suit -------------------------------------------------------------------- In its Report on Form 8-K for the Conformed Period of Report 19991010, Inamed Corporation (formerly First American Corp, date of name change: 19860819) includes the press release issued May 10, 9999 announcing that an equity financing had been completed which enabled the Company to make the final payment of monies owed to the court-appointed escrow agent in the mandatory class action settlement of the breast implant litigation against the Company. Press Release of INAMED Corporation dated May 10, 1999 INAMED "Innovation and Medicine" INAMED CORPORATION 700 Ward Drive Santa Barbara, CA 93111 (805) 692-5400 Telephone (805) 692-5441 Facsimile Company Contacts: Jeff Barber (805) 692-5400 Ilan K. Reich (212) 626-6800 INAMED CORPORATION COMPLETES EQUITY FINANCING AND MAKES FINAL PAYMENT TO PLAINTIFFS IN BREAST IMPLANT LITIGATION May 10, 1999 - Santa Barbara, CA - INAMED Corporation (OTCBB: IMDC) announced hat it has completed a $31.1 million equity financing, in which 5.4 million new shares of common stock were issued to various warrant holders in exchange or the payment of $20.4 million of cash and the surrender of $10.7 million of the Company's 11% notes. Virtually all of the holders of warrants who were eligible to exercise at this time participated in the financing. The Company also received $3 million of cash from its noteholders, which was used to purchase on their behalf the 426,323 shares of common stock held by the court-appointed escrow agent. All of the 5.8 million shares of common stock purchased by the warrant holders and noteholders contain a legend which restricts transferability absent an exemption under Rule 144 (after the one year holding period) or an effective registration statement. As a result of this equity financing, the Company now has approximately 16.9 million shares outstanding and approximately 20 million shares on a fully-diluted basis. The Company's debt has decreased from $27.6 million to $16.9 million. Cash on hand, which fluctuates based on regular working capital needs, is currently more than $12 million. The Company's tangible net worth is now approximately $22 million, as compared to the significant deficit position of the past few years. Finally, due to an incentive fee which was paid as part of the equity financing, the Company expects to record a non-operating charge for accounting purposes of approximately $1.9 million in the second quarter of 1999. The Company also announced that it has made the final payment of all of the monies owed to the court-appointed escrow agent on behalf of the plaintiffs in the mandatory class action settlement of the breast implant litigation. The payment was $29.9 million in cash, and included $25.5 million as full payment of the 6% promissory note which was issued in June 1998 at the time the settlement received preliminary approval, $1.4 million of accrued interest on that note, and $3 million to repurchase the 426,323 shares of common stock which were also issued in June 1998 to the escrow agent. As a result of this payment, the $30 million of liabilities relating to the settlement which was recorded on the Company's balance sheet as of December 31, 1998 has now been eliminated. The settlement fund for the benefit of the plaintiff class now has on hand over $33 million to distribute to claimants and pay administrative expenses. A distribution plan will be formulated under the supervision of Judge Pointer in proceedings which are expected to occur in the next few months. Under the terms of the final order and judgment entered by Judge Pointer in February 1998, all of the thousands of cases and claims arising from the Company's breast implant products which were implanted before June 1, 1993 were consolidated into a mandatory class action settlement and dismissed. Individual plaintiffs cannot opt-out of the settlement, and there is a permanent injunction prohibiting class members from commencing or prosecuting new federal or state court lawsuits, as well as a bar against lawsuits by certain persons and entities with indemnification and contribution claims. INAMED is engaged in the development, manufacturing and marketing of medical devices for the plastic and reconstructive, bariatric and general surgery markets. INTERNATIONAL RECTIFIER: Securities Suit In CA Will Be Heard In 2000 -------------------------------------------------------------------- The Company and certain of its directors and officers have been named as defendants in three class action lawsuits filed in Federal District Court for the Central District of California in 1991. These suits seek unspecified but substantial compensatory and punitive damages for alleged intentional and negligent misrepresentations and violations of the federal securities laws in connection with the public offering of the Company's common stock completed in April 1991 and the redemption and conversion in June 1991 of the Company's 9% Convertible Subordinated Debentures due 2010. They also allege that the Company's projections for growth in fiscal 1992 were materially misleading. Two of these suits also named the Company's underwriters, Kidder, Peabody & Co. Incorporated and Montgomery Securities, as defendants. On March 31, 1997, the Court, on the Company and the individual defendants' motion for summary judgment, issued the following orders: (a) the motion for summary judgment was granted as to claims brought under Sections 11 and 12(2) of the Securities Act of 1933; (b) the motion was denied as to claims brought under Section 10(b) of the Securities Exchange Act of 1934 and the Securities and Exchange Commission Rule 10b-5; and (c) the motion was granted as to the common law claims for fraud and negligent misrepresentation to the extent said claims are based on representations contained in the offering prospectus and was denied as to other such claims. The Court also granted the summary judgment motion brought by the underwriters. The plaintiffs' motion for reconsideration or certification of an interlocutory appeal of these orders was denied. On January 28, 1998, the Court decertified the class pursuing common law claims for fraud and negligent misrepresentation and granted the defendants' motion to narrow the stockholder class period to June 19, 1991 through October 21, 1991. Plaintiffs' motion for reconsideration or certification of an interlocutory appeal of these rulings was denied. On June 14, 1999, the Court approved a notice of the pendency of the class action and a proof of claim form for dissemination to class members. Such dissemination took place in June 1999. Trial is scheduled for March 14, 2000. Although the Company believes that the remaining claims alleged in the suits are without merit, the ultimate outcome cannot be presently determined. A substantial judgment or settlement, if any, could have a material adverse effect on the Company's results of operations, financial position or cash flows. No provision for any liability that may result upon adjudication of these matters has been made in the Consolidated Financial Statements. LEAD PAINT: Rhode Island Files First State Suit; Other States May Sue --------------------------------------------------------------------- Rhode Island is suing manufacturers of lead paint for allegedly conspiring to market a dangerous product that poisons children, the first suit by an American state over lead paint. Encouraged by the multi-state tobacco settlement, state Attorney General Sheldon Whitehouse sued eight paint manufacturers and called upon the industry to ''take responsibility and clean up its mess.'' The lawsuit, filed Tuesday in Superior Court, seeks damages from big paint companies like Glidden Co. and Sherwin Williams Co. for treatment of children with lead paint poisoning and abatement of lead paint from homes and other buildings. ''We know now that this industry knew lead paint was toxic dating back as early as 1904, yet it promoted its uses and profited by that use,'' Whitehouse said. At least a dozen other states are also considering lawsuits against makers of lead paint, said John J. McConnell, a lawyer for Rhode Island who is also pursuing a class-action lawsuit on behalf of 30,000 lead-poisoned children in Cleveland, Ohio. Rhode Island has one of the highest lead-poisoning rates in the nation. Nearly 20 percent of children entering kindergarten last month showed high levels of lead paint poisoning. State health officials say dust and flakes from the old paints have poisoned one of three children in Providence and cost Rhode Islanders millions of dollars for health care, special education programs and building repairs. The lawsuit accuses paint and pigment makers and the Lead Industries Association, their trade group, of conspiring from the 1920s to downplay the danger and keep selling their products. European countries began banning lead in residential paint in the 1920s. Defendants include Atlantic Richfield Co. of Los Angeles; DuPont Co. of Wilmington, Deleware; Sherwin-Williams Co. of Cleveland; and NL Industries Inc. of Houston. NL Industries lawyer Timothy S. Hardy said the paint industry shouldn't be held responsible, and it is up to landowners, landlords and the government to remove lead paint from buildings. Also named were Glidden Co., a unit of Imperial Chemical Industries PLC in England; O'Brien Corp., which was bought by ICI; and SCM Chemicals Inc. and American Cyanamid Co., whose paint liabilities were assumed by Cytec Industries Inc. of West Paterson, N.J. Lead has been banned from paint in the United States since 1978. But children in older buildings are still at risk of learning disabilities and behavioral problems if they eat or inhale older paint as it flakes off door jams and window sills. At high levels, lead can cause kidney damage, seizures, coma and death. N.Y. LIFE: Louisiana Sp Ct Decertifies Class For Lack Of Common Issues ---------------------------------------------------------------------- Finding too many individual issues affecting liability, the Louisiana Supreme Court on July 2 reversed its prior affirmation of class certification for New York Life Insurance Co. policyholders who alleged the carrier misled them about life insurance policies and engaged in churning (Major Banks, et al. v. New York Life Insurance Co., et al., No. 98-C-0551, La. Sup.). On rehearing, the high court affirmed the First Circuit Louisiana Court of Appeal's decision overturning the class certification. (Text of Opinion in Section A. Mealey's Document # 07-990803-101.) In 1996, Major Banks and Charles Edwards filed a seven-count complaint against New York Life on behalf of all Louisiana policyholders who opted out of a settlement in a New York class action (Willson v. New York Life Insurance Co., No. 94-127804, N.Y. Sup., N.Y. Co. [Nov. 8, 1995], aff'd 228 A.D.2d 368, 644 N.Y.S.2d 617 [App. Div. 1996], cert. dismissed sub nom., Zoller v. New York Life Ins. Co., 521 U.S. 1112, 117 S.Ct. 2500 [1997]). The complaint alleges unfair and deceptive practices regarding a "premium offset proposal," bad faith, material misrepresentation, negligent misrepresentation, fraud and negligence. Trial Court Certification The 18th Judicial District Court certified the class of all people who purchased universal or whole life from New York Life between 1982 and 1994 and opted out of the Willson settlement while living in Louisiana. The class was approximately 1,849 people. The appeals panel found class certification was inappropriate on the grounds the claims lacked a common character because the alleged misrepresentations were made by individual agents. The high court initially disagreed in its December 1998 opinion, finding the insurer's corporate structure was the common source of the alleged misconduct. Rehearing In its most recent opinion, the Supreme Court found the trial court abused its discretion. The allegations of the seven representative class members involves a myriad of individualized complaints "that ultimately will require plaintiff-by-plaintiff adjudication of liability issues thereby militating against a finding of predominance of common character and the superiority of the class action procedure," the high court said. Further, the high court found it questionable whether two plaintiffs suffered any injury - their policies are still in effect and they have not paid any out-of-pocket premiums. "We conclude in the instant case that causation and injury-in-fact will be difficult if not impossible to prove on a class-wide basis since each member of the class must prove that the alleged fraud or misrepresentation and not some other cause resulted in an injury to him," the Supreme Court said. Finally, the high court noted that New York Life may assert affirmative defenses such as comparative fault and prescription. At least two of the policy purchasers were knowledgeable about insurance, others admitted they failed to read their policies and some failed to take timely action. Too Many Issues "In sum, we conclude that there are too many individual issues affecting New York Life's and its agents' liability in this case to find that common issues predominate," the Supreme Court said. "While we realize the expense to class members in having to pursue their claims in individual lawsuits, nevertheless, we cannot find a class action which would result in a multitude of mini-trials to be superior under the circumstances of this case." Counsel to New York Life are C. Jerome D'Aquila, Charles Sterling Lambert, Jules Burton LeBlanc III and Randy J. Ungar of LeBlanc, Maples & Waddell in Baton Rouge, La., Robert M. Johnston and Debra B. Hayes of Adams & Johnston in New Orleans and Christopher A. Kesler of Fleming & Associates in Houston. Eugene R. Preaus and Maura Zivalich Pelleteri of Preaus, Roddy & Krebs in New Orleans and Phillip A. Wittman, Stephen Henry Kupperman and Patrick W. Pendley of Stone, Pigman, Walther, Wittman Hutchinson in New Orleans represent the plaintiffs. Clare Frances Jupiter of Bryan & Jupiter in New Orleans, Stephen J. Goodman of Jones, Day, Reavis & Pogue in Washington, D.C., and Phillip E. Stano of Jorden, Burt, Boros, Cicchetti, Berenson & Johnson in Washington, D.C., represent amicus curiae American Council of Life Insurance. (Mealey's Litigation Report: Insurance Bad Faith August 3, 1999) NATIONAL PARTNERSHIP: CA Suit Says REIT Statement Shortchange Investors ----------------------------------------------------------------------- Claiming she was deceived by a Real Estate Investment Trust (REIT) solicitation statement that contained false and misleading statements, a California woman has filed a proposed class action seeking "tens of millions of dollars" the REIT allegedly concealed from investors. Field v. National Partnership Investments Corp. et al., No. 99-CV-07963 (CD CA, complaint filed Aug. 4, 1999). Sheila L. Field was the holder of one share or unit in Housing Programs Ltd., a real estate limited partnership, when Housing was purchased by the Casden Investment Corp. REIT. The purchase was part of a major real esta te partnership acquisition. At the time, Casden was the managing general partner of Housing and eight other limited partnerships known as the REAL Partnerships. The Casden REIT, a Casden spin-off, purchased a controlling interest in all nine REAL limited partnerships. The nine partnerships all held residential properties, most of which qualified for housing assistance payment contracts (HAPS) under the U.S. Housing Act. Earnings to investors are derived from streams of income generated by mortgage and rent payments. Under HAPS, mortgage notes are insured or payable to the U.S. government, which also subsidizes a portion of rent for qualifying tenants. The Housing Act does not permit all HAPS revenue to be returned to investors, in this case the REAL Partnerships. Instead, a portion must be held in reserve for capital improvements, mortgage escrow reimbursements, and undistributed cash flow. "As a result of this requirement, the local limited partnerships owning such properties accumulated and held undisclosed reserves which Plaintiffs estimate to be in the tens of millions of dollars and which, at the maturity of the mortgage or termination of the HAPS contracts, may become available for distribution, in whole or in part, to the REAL Partnerships (or their successors,)" the complaint asserts. Field's suit claims that 18,807 investors spent $300 million for shares in the partnerships, and when the Casden REIT wanted to purchase controlling interests in all nine REAL partnerships, it was required to explain the impact on investors in a solicitation statement. The proposed class action alleges the Casden REIT painted a rosy picture of the acquisition for investors while concealing the "tens of millions of dollars" in earnings the REAL Partnerships made as a result of HAPS revenues. The Casden and Casden REIT partners allegedly reaped the benefits of the HAPS earnings. The suit further says the solicitation statement allegedly misstated the acquisition earnings by failing to account for tax liabilities. Many investors found they owed more in taxes than earnings received as part of the Casden REIT acquisition. The suit makes claims for violation of the false statement provisions contained in Sec. 14(a) of the Securities Exchange Act, and for breach of fiduciary duty and breach of trust. The action asks the court to restore the investors to their financial position before the acquisition, and makes claims for expert witness fees, court costs, and attorneys' fees. (Bank & Lender Liability Litigation Reporter 9-1-1999) OMTOOL LTD: Announces And Decries Merit Of Securities Suit In New Hamp. ----------------------------------------------------------------------- Omtool Ltd. (Nasdaq:OMTL - news) announced that it has been named as a defendant in a purported securities class action lawsuit filed in United States District Court for the District of New Hampshire allegedly brought on behalf of purchasers of the Company's common stock during the period August 8, 1997 to October 6, 1998. The complaint also names as defendants among others, certain of the Company's directors and officers. The complaint alleges, among other things, that the defendants made misstatements in the Company's initial public offering registration statements and prospectus. The Company believes the allegations in the complaint are without merit and intends vigorously to contest them. Omtool, headquartered in Salem, N.H. is a provider of client/server software, delivering solutions that automate and integrate communication throughout the enterprise. OMTOOL LTD: Kaplan Kilsheimer Files Securities Suit In New Hampshire -------------------------------------------------------------------- The following is an announcement by the law firm of Kaplan Kilsheimer & Fox LLP: Kaplan, Kilsheimer & Fox LLP has filed a Class Action lawsuit against Omtool, Ltd. ("Omtool") (NASDAQ: OMTL) and certain of its officers and directors in the United States District Court for the District of New Hampshire. The suit is brought on behalf of all persons or entities who purchased or otherwise acquired the common stock of Omtool between August 8, 1997 and October 6, 1998, inclusive. The Complaint charges Omtool and certain of its top officers and directors with violations of the securities laws and regulations of the United States. The complaint alleges that the defendants knowingly or recklessly misled investors. During the Class Period, defendants caused or permitted Omtool to issue and sell, by means of a public offering, 4 million shares (including over-allotments) of Omtool common stock at a price of $ 9 per share throughout the Class Period, which allowed the Company to report materially inflated revenue and earnings. After the IPO, Omtool's stock traded as high as $ 14-3/4 per share. The Class Period ends on October 6, 1998, the day the Company stunned the financial community by announcing that its financial results for the quarter ended September 30, 1998 would be poor and the stock declined to $ 1.6875 per share on the day following the disclosure. Defendants' false and misleading statements artificially inflated the price of Omtool common stock during the Class Period. Plaintiff is represented by Kaplan, Kilsheimer & Fox LLP. If you are a member of the Class, you may move the Court, no later than 60 days from today to serve as a lead plaintiff for the Class. In order to serve as a lead plaintiff, you must meet certain legal requirements. Contact Robert N. Kaplan, Esq. Adrienne L. Valencia, Esq. Donald R. Hall, Esq. Kaplan, Kilsheimer & Fox LLP (800) 290-1952 (212) 687-1980 E-mail address: mail@kkf-law.com Fax: (212) 687-7714 805 Third Avenue - 22nd Floor New York, NY 10022 or Richard B. Drubel, Esq. Kimberly Schultz, Esq. Boies & Schiller 26 South Main Street Hanover, NH 03755 (603) 643-9091 Fax: (603) 643-9009 TICKERS: NASDAQ:OMTL PENNSYLVANIA ELECTRIC: Super Ct Oks Dismissal Of Staff Sex Bias Case -------------------------------------------------------------------- Sex Discrimination * PHRA * Disparate Treatment * Disparate Impact * Legitimate Non-Discrimatory Reason Campanaro v. Pennsylvania Electric Co., PICS Case No. 99-1751 (Pa. Super. Sept. 8, 1999) Lally-Green, J. (15 pages). Female clerical workers who were subject to a wage freeze failed to establish a prima facie case of sex discrimination under the theories of disparate treatment and disparate impact, because the wage freeze was based upon job classification rather than gender distinctions. Affirmed. Plaintiffs' union ratified a new collective-bargaining agreement that increased compensation for members who were not in plaintiffs' job classification. Approximately 92 percent of those receiving wage increases were male. The collective-bargaining agreement froze wages for workers in the clerical classification, janitorial classification and two unskilled-labor classifications. The clerical classification is comprised primarily of females. Plaintiffs, employees in the clerical classification, brought a class action against defendant under the Pennsylvania Human Relations Act (PHRA), alleging sex discrimination on the basis of disparate treatment and disparate impact. The trial court granted defendant's motion for summary judgment, and plaintiffs appealed. The Superior Court affirmed. The court found that plaintiffs had failed to establish a prima facie case of disparate treatment under the PHRA. Plaintiffs argued disparate treatment because a study defendant had commissioned from the Hay Management Group did not include male-dominated job classifications. The court found, however, that plaintiffs did not oppose or contradict the many other surveys and studies upon which defendant had based its decision to freeze their wages. All of these studies had concluded that wage rates paid to defendant's clerical employees were significantly higher than market wage rates for the same positions. Consequently, the mere fact that defendant did not commission the Hay Management Group to perform a similar study of male-dominated job classifications did not establish a discriminatory motive. Moreover, given that over 31 percent of defendant's female employees were not in the clerical classification and thus were not subject to the wage freeze, and that other job classifications subject to the wage freeze included male employees, the court concluded that the wage freeze was based upon job classification rather than gender distinctions. Even assuming, arguendo, that plaintiffs had established a prima facie case, the court opined that defendant had articulated a legitimate, nondiscriminatory reason for the wage freeze, i.e., that their clerical employees were significantly overpaid. Because plaintiffs did not demonstrate that defendant's reasons were pretextual, defendant was entitled to summary judgment on plaintiff's theory of disparate treatment. The court also held that plaintiffs had not demonstrated that a facially neutral policy or practice caused a disparate impact on a protected group. Accordingly, the court affirmed the trial court's grant of summary judgment in favor of defendant on plaintiff's theory of disparate impact. (Pennsylvania Law Weekly 9-27-1999) PSE&G CO: U.S. Labor Dept Sues Utility In Camden Over Unpaid OT --------------------------------------------------------------- The U.S. Labor Department is suing the Public Service Electric and Gas Co., saying the utility owes about 80 workers at three nuclear power plants $ 500,000 in unpaid overtime, a department spokesman said Tuesday. Workers at the plants, in Salem County, were not paid overtime for hours worked during initial training or requalification training since 1996, the Labor Department said. The allegations, on behalf of nuclear-control and nuclear-equipment operators at the Salem I, Salem II, and Hope Creek plants in Lower Alloways Creek Township, were made in a lawsuit filed last week in U.S. District Court. Newark-based PSE&G will have no comment on the pending litigation, said company representative Josephine V. Anderson. A different group of non-union workers at the plants sued PSE&G about overtime last year, charging that the utility has systematically cut overtime to engineers, schedulers, and quality-control personnel. In response, PSE&G issued a statement last year acknowledging that modification of overtime policy in 1996 affected engineers and others. That class-action lawsuit is pending in U.S. District Court in Camden. (The Record (Bergen County, NJ) 10-13-1999) RAYMOND SCHOOL: Ap Ct Lets Maine Bar Subsidy To Religious Sch. Students ----------------------------------------------------------------------- Dodging the debate over school vouchers, the court let Maine subsidize children attending private, nonreligious schools while refusing to spend state money for those who go to religious schools. The court, without comment, rejected an appeal in Bagley v. Raymond School Department and Strout v. Albanese in which parents of religious-school students said the state violates their rights by withholding from them the same financial help received by parents whose children attend nonreligious private schools. The court's action set no legal precedent and is not expected to lessen the furious political dispute over vouchers. In Maine, many public school districts in sparsely populated areas do not operate their own schools, but instead pay tuition to send children to neighboring public or private schools of their choice. Since 1981, the state has barred the use of that money to send children to religious schools. State officials say such aid would violate the constitutionally required separation of church and state. Both the Maine Supreme Judicial Court and the 1st U.S. Circuit Court of Appeals upheld the ban on using state funds to send children to religious schools. In another case involving church and state issues, the court refused to let state officials in New York resurrect a public school district for a community of Hasidic Jews. The court, by a 6-3 vote, turned away the state's argument that its third attempt to create a district for disabled children in the Kiryas Joel community does not breach the constitutionally required separation of church and state. (The Legal Intelligencer 10-13-1999) SKINNER ENGINE: Retirees' Benefits May Be Changed, 3rd Cir Rules ---------------------------------------------------------------- Circuit Split Widens; Third Circuit Rules Retirees' Benefits May Be Changed. The U.S. Court of Appeals for the Third Circuit joined the Fifth and Eighth Circuits in rejecting a precedent established in the Sixth Circuit, adopted in the First, Fourth and Eleventh Circuits, and known as the "Yard-Man inference," which requires courts to presume that the parties to a collective bargaining agreement intended retirees' welfare benefits to continue for life. See International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America v. Yard-Man Inc., 716 F.2d 1476 (6th Cir. 1984) A group of retired union workers brought a class action suit against their former employer after certain medical and life insurance benefits were either eliminated or modified. The plaintiffs relied on the "Yard-Man inference" in support of their claims. Also, that the plain language of the CBA provided for lifetime benefits or was ambiguous. Because retiree benefits are not mandatory subjects of collective bargaining and are merely permissive, the Yard-Man court found retiree benefits to be ordinarily vested. The Yard-Man court reasoned that these benefits are normally understood to be a form of delayed compensation or a reward for past services and therefore would not likely be the subject of future negotiations. Yard-Man further stood for the proposition that retiree benefits should be viewed as "status" benefits, meaning that they would continue as long as the prerequisite status of the parties remained. The Third Circuit rejected the "Yard-Man inference," holding that there is no presumption of lifetime benefits in the context of employee welfare benefits. Further, the court stated that retiree benefits are not "status benefits." "Congress explicitly exempted welfare benefits from ERISA's vesting requirements. It, therefore, seems illogical to infer an intent to vest welfare benefits in every situation where an employee is eligible to receive them on the day he retires." The court further stated that "it is not at all inconsistent with labor policy to require plaintiffs to prove their case without the aid of gratuitous inferences." The court concluded that, generally, an employer is free to adopt, modify or terminate a welfare plan "for any reason, at any time." Although vesting can occur, it is only where an employer relinquishes its right to unilateral termination of benefits and specifically provides for lifetime vesting. That situation, the court's analysis revealed, was not present here. Inter-national Union, United Automobile, Aerospace & Agricultural Implement Workers of America, U.A.W. v. Skinner Engine Co., No. 98-3461 (Aug. 10). (The Corporate Counsellor, September 1999) TENNESSEE VALLEY: Utility Sued For Over-Billing Industrial Users ---------------------------------------------------------------- The Tennessee Valley Authority over-billed industrial customers for surplus power but did not reap the windfall alleged in federal lawsuit, according to a review by the agency's inspector general. In recent weeks, hundreds of TVA's industrial customers claimed that the agency overcharged them between $70 million and $100 million. But TVA's inspector general, in a recent report, found the agency only overcharged by about $1.6 million. The overbilling involved less than 1 percent of the agency's sales during June and July 1998, TVA spokesman Gil Francis said. TVA is crediting the overpaid amounts, which officials blamed on a computer programming error. Rep. Bob Clement (D-Tenn.) asked for the review in March after customers complained they were greatly overcharged and that TVA would not give refunds. The inspector general's report said TVA sold about $107 million of power on the open market, in June and July of 1998. Based on complaints about overcharges, TVA earlier gave rebates of about $9 million. Lawyers in a class-action lawsuit against TVA may get to double-check the inspector general's findings. Alleging $100 million in overcharges for hundreds of industrial customers in the summer of 1998, Birmingham Steel Corp. filed a federal lawsuit against TVA in Birmingham. That case is pending. (The Electricity Daily 10-5-1999) TOBACCO LITIGATION: Aussie Lawyers Say Industry's Admission "Too Late" ---------------------------------------------------------------------- Lawyers for thousands of former Australian smokers who are suing for damages dismissed as window dressing an admission by the world's biggest tobacco company that cigarettes are harmful. Melbourne law firm Slater and Gordon is representing up to 60,000 Australians who claim they have developed serious health problems as a result of their former smoking habits. The admission comes from the Philip Morris company, which has launched a website which says "there is no 'safe' cigarette" and "cigarette smoking is addictive. The company, which for years disputed research that found smoking contributed to health problems, also acknowledged that smokers faced tremendous health hazards. Senior partner Peter Gordon said the change of heart by Philip Morris Co Inc is too late. "It took until 13 October, 1999 to make admissions about facts they have known about but denied for 40 years," he said in a statement. "If they wish the community to change their perception of the company, the appropriate step is to apologise, to admit liability and to compensate the families of generations of Australians whose lives they have wrecked," Mr Gordon said. "As recently as a month ago Philip Morris has been challenging us to prove addiction and identify health problems that we claim are tobacco-related." "As recently as three months ago Philip Morris was relying upon the evidence of a so-called health expert who argues that there is no such thing as addiction." "Suddenly the truth is out - and tragically, for tens of thousands of Australian families it is too late," Mr Gordon said. Slater and Gordon has mounted a class action against Philip Morris, WD & HO Wills and Rothmans. (AAP Newsfeed 10-14-1999) UCAR INT'L: Settles Connecticut Securities And Derivative Suits --------------------------------------------------------------- UCAR International Inc. (NYSE: UCR) announced that it has entered into agreements settling the securities class action and shareholder derivative lawsuits which have been pending against it since 1998. "These settlements mark a major milestone and turning point for UCAR in resolving our remaining contingencies," commented Mr. Gilbert E. Playford, Chairman and Chief Executive Officer. "We are now able to move forward on our plans for the future, with a new management team and new growth strategies, without the overhang of these lawsuits. Our legal and finance staffs have done an outstanding job in managing stage by stage the containment and resolution of these contingencies. Since the inception of the antitrust investigation, we have paid out about $ 200 million in fines and customer settlements and today our total debt level is lower than the second quarter 1998, all during a time of difficult market conditions for our major product lines." Under the settlements, $ 40.5 million will be contributed to one or more escrow accounts for the benefit of former and current stockholders who are members of the class for whom the securities class action was brought, as well as plaintiffs' attorney's fees. UCAR will contribute $ 11 million and the insurers under UCAR's directors and officers insurance policies at the time the lawsuits were filed will contribute the balance of $ 29.5 million. UCAR expects to incur about $ 2.0 million of unreimbursed expenses related to the lawsuits. These expenses, combined with the $ 11.0 million, will be recorded as a one-time special charge to operations of $ 13.0 million in the third quarter ending September 30, 1999. The impact on net income will be approximately $ 8.5 million, or $ 0.18 per diluted share. UCAR has not made any provisions for these lawsuits since they were in their early stages and no estimable evaluation of liability was determinable. In addition, a new outside director, acceptable to both UCAR and the lead securities class action plaintiff, the Florida State Board of Administration, the eighth largest state employees' pension fund, will be added to UCAR's Board of Directors by May, 2000. The class is expected to consist of all purchasers of UCAR common stock during the period from August 10, 1995 through March 31, 1998 other than UCAR, the other defendants and certain related parties. The settlements provide for a full release of UCAR, the other defendants and certain related parties from all claims and liabilities arising out of public disclosures, failures to make public disclosures and breaches of fiduciary duty during the class period. The settlements are subject to court approval, court certification of the class, customary notice and termination provisions, and other terms and conditions. Satisfaction of all conditions and completion of judicial and statutory procedures are expected to take about 120 days. The securities class action is pending in the U.S. District Court for the District of Connecticut. The shareholder derivative action is pending in the Connecticut Superior Court. Full details of the settlements will be set forth in filings with the courts. U.S. LIQUIDS: Whittington, von Sternberg Files Securities Suit In Texas ----------------------------------------------------------------------- Notice is hereby given that a class action lawsuit has been filed against U S Liquids Inc. (Amex: USL) in the United States District Court for the Southern District of Texas. The lawsuit was filed by the Houston, Texas law firm Whittington, von Sternberg, Emerson & Wilsher, LLP and will protect all persons who purchased U S Liquids securities on the March 17, 1999 secondary public offering in which U S Liquids offered 3 million shares of common stock at $21.00 per share, as well as all persons who purchased U S Liquids securities during the period May 28, 1998 through August 25, 1999. The Complaint charges that defendants violated the U.S. securities laws by issuing materially false and misleading statements and by failing to disclose material facts required to be disclosed, in order to make the statements issued not materially false and misleading in the Form S-3/A Registration Statement filed with the SEC on February 24, 1999, the Prospectus filed pursuant to Rule 424(b)(1), dated March 12, 1999, and throughout the Class Period. In particular, the Complaint alleges that defendants falsely represented that the Company was in material compliance with applicable environmental laws when defendants knew, or were reckless in not knowing, that certain of the Company's employees, including the Vice President in charge of the Company's Detroit, Michigan facility, had ordered and supervised an illegal hazardous waste disposal program involving the discharge of untreated toxic liquid waste directly into the Detroit sewer systems. The Plaintiff is represented by two law firms, including Whittington, von Sternberg, Emerson & Wilsher. If you are a member of the class described above, you may, no later than sixty (60) days from August 31, 1999, move the court to serve as one of the lead plaintiffs of the Class. If you wish to discuss this case or have any questions on how you may be able to recover for the losses you have incurred, please e-mail, telephone or fax one of the following: John G. Emerson, Jr. or Craig von Sternberg WHITTINGTON, VON STERNBERG, EMERSON & WILSHER LLP 2600 S. Gessner, Suite 600 Houston, Texas 77063 Telephone: 713-789-8850 Facsimile: 713-789-0033 E-mail: je-mlaw@worldnet.att.net W.R. GRACE: NY Sp Ct Oks Settlement; CalPERS Recoups Shareowners' Money ----------------------------------------------------------------------- The California Public Employees' Retirement System (CalPERS) announced that the New York Supreme Court has approved a settlement of a shareowner's lawsuit against the former officers and directors of W.R. Grace & Co. (Grace). The settlement has recovered nearly $ 4 million of shareowners dollars that were part of a severance package that was alleged to have been improperly paid to J.P. Bolduc, former CEO of W.R. Grace. "This is a clear victory for CalPERS and shareowners of W.R. Grace," said Charles P. Valdes, Chair of CalPERS Investment Committee. "This settlement serves as a reminder to all corporations that shareowners won't stand by and let their interests be taken for granted and their capital wasted." Additionally, Grace has agreed to adopt a strong policy on sexual harassment which CalPERS believes can be a model for corporate sexual harassment policies throughout the country. In March of 1995, Grace directors awarded Bolduc approximately $ 20 million in severance benefits, consisting of the repurchase of shares and various cash payments, when he resigned as president and CEO. The severance package was bestowed upon Bolduc even though his employment agreement, in effect at the time of his resignation, reportedly did not require or provide for such payment. A March 30, 1995 New York Times article reported that Bolduc "resigned" under pressure because of allegations of sexual harassment against him by at least five Grace employees. In 1996, CalPERS intervened in an existing shareowner lawsuit against Grace and was later named lead plaintiff in the case. In papers filed in the Supreme Court of the State of New York, the pension fund alleged that an agreement to pay enormous severance payments to Bolduc was a breach of fiduciary duty by the board members and a waste of the company's assets. Prior to the pension fund's intervention, a settlement had been proposed that would have returned no money to the corporation, and would have required the adoption of a sexual harassment policy that CalPERS believed was seriously inadequate. After CalPERS intervention, Grace adopted a number of corporate governance reforms, including the appointment of independent outside directors to serve on the company's Audit, Compensation and Nominating committees. CalPERS is one of Grace's largest shareowners, owning approximately 1.3 million shares of common stock. The System was represented in the litigation by Robinson, Curley & Clayton, Sachnoff & Weaver of New York, and the law office of Klari Neuwelt. CalPERS is the nation's largest pension fund with assets of nearly $ 160 billion. The System provides retirement and health benefits to more than one million state and public employees and their families. * MI Is Contemplating Bills For Increasing Prison Sex Penalty ------------------------------------------------------------- The Michigan Legislature is contemplating bills that would significantly increase the penalties for state prison system employees who have sexual contact with inmates. The legislation is supported by the state Corrections Department. The bills reflect yet another "progressive" policy gone wrong. The bills would make sexual contact between prison workers and inmates a 15-year felony, compared with the current penalty, which is a misdemeanor with a two-year maximum sentence. Of course, forcible rape of an inmate by a prison worker is already a major felony. But the legislation is receiving its impetus because of recent charges that inmates in Michigan's three women's prisons are at particular risk from male employees. Class-action lawsuits pending in U.S. District Court in Detroit and before the state Supreme Court allege patterns of abuse. The state Corrections Department denies these charges and notes that in addition to the severe penalties that already exist for rape, inappropriate sexual fraternization is a firing offense as well as a high misdemeanor. The department observes that it already has a no-sex policy. Still, the department supports the increased penalties as a means of enforcing its policy. The department's job in screening possible problem employees hasn't been made any easier by state Atty. Gen. Jennifer Granholm's recent ruling that it is not allowed to ask job applicants and current workers about arrests, such as for domestic abuse, that haven't led to convictions. The ruling was made pursuant to the request of a prison guard through his state senator -- and was one of the issues that prompted a legislative attempt to curtail the attorney general's authority to issue rulings. But the ultimate genesis of the department's problems stems from a series of lawsuits and federal agency decrees that women should be allowed to serve as guards in male prisons in Michigan. Concommitantly, males were allowed to serve as guards in female prisons. This was the "progressive" view of merely two decades ago. Now, attorneys for the women are demanding that only women guard the women -- which makes sense. And recent incidents in the Wayne County jail and Wayne County youth home suggest that female jail workers are also capable of misconduct with men. But females now make up some 15 percent of the prison guard force, and women are now senior wardens in the system. A mixed-sex guard force is built into the state and federal laws and personnel rules governing Michigan's prisons. It may not be good policy, but it is the law. So Michigan is left with ratcheting up the penalties for inappropriate behavior. Once the law disregards human nature, that is the only remaining option. View Of "The Detroit News" The Legislature should adopt harsher penalties for sexual contact between prison system workers and inmates. Opposing views The Legislature is unjustly penalizing all prison workers for the misbehavior of a few. (The Detroit News 10-13-1999) ********* 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. Theresa Cheuk and Peter A. Chapman, editors. 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 * * *