text:
Friday, May 23, 2003, Vol. 5, No. 101
ACCEPTANCE INSURANCE: NE Court Refuses To Reinstate Fraud Claims
ALPHARMA INC.: Plaintiffs Appeal NJ Securities Lawsuit Dismissal
CHECKPOINT SYSTEMS: New Jersey Court Stays Antitrust Lawsuits
EMULEX CORPORATION: Reaches Agreement To Settle Securities Suits
EQUITABLE LIFE: Former Agents File Work Related Suit in N.D. IL
EQUITABLE LIFE: Faces Suit For Investment Act Violations in NY
EVERGREEN RESOURCES: Faces Suit Filed By Colorado Royalty Owners
FARMERS BANK: KY High Court Refuses Review of Lower Court Ruling
FEDERATED DEPARTMENT: Macy's Charged With Targeting Minorities
KING POWER: Asks Court To Dismiss Securities Suit Against Merger
HANGER ORTHOPEDIC: Plaintiffs Appeal Securities Suit Dismissal
HARLEY DAVIDSON: Appeals Court Reverses Consumer Suit Dismissal
HMO LITIGATION: Insurers Settle Consumer Suits For Token Amounts
ILLINI CORPORATION: IL Court To Hear Motion To Intervene in Suit
INTERNATIONAL RECTIFIER: CA Stock Settlement Receives Objections
IRWIN MORTGAGE: Faces RESPA Violations Suits Over Brokers' Fees
LOUISIANA: Officials To Settle LW Higgins School Injury Lawsuit
NHP RETIREMENT: Asks Court To Dismiss Securities Fraud Lawsuit
ORLEANS HOMEBUILDERS: Reaches Settlement in NJ Homeowners' Suit
ROYAL CARIBBEAN: Pays More In Taxes Than It Charges Passengers
THIMEROSAL LITIGATION: Authorities Label Chemical as Hazardous
US AIRWAYS: NC Court Sets Agents Suit Trial For September 2003
US AIRWAYS: To Ask For Dismissal as Defendant in CA Travel Suit
US AIRWAYS: To Ask Ohio Court To Dismiss Travel Agents' Lawsuit
WILLISTON BASIN: Plaintiffs To File Amended KS Royalties Lawsuit
ASBESTOS LITIGATION: Glitches Stall Asbestos Legislation
ASBESTOS LITIGATION: 3M Pegs Asbestos Liabilities At $231M
ASBESTOS LITIGATION: Ciba Employee's Death Not Asbestos-Related
ASBESTOS LITIGATION: Collins & Aikman Updates Asbestos Story
ASBESTOS LITIGATION: Pfizer Continues to Battle Asbestos Suits
ASBESTOS LITIGATION: RJ Reynolds Reports the Latest on Asbestos
ASBESTOS LITIGATION: Sears Asbestos Cases Could Cause Problems
ASBESTOS ALERT: Viacom Reports Latest Asbestos-Related Stats
ASBESTOS ALERT: Park Ohio Discloses Asbestos Liabilities
ASBESTOS ALERT: Tyler Expounds on Asbestos-Related Litigation
ALLOU HEALTHCARE: Lockridge Grindal Lodges Securities Suit in NY
AVERY DENNISON: Goodkind Labaton Lodges Securities Lawsuit in CA
AVERY DENNISON: Abbey Gardy Lodges Securities Lawsuit in C.D. CA
CORE LABORATORIES: Faruqi & Faruqi Lodges Securities Suit in NY
FIFTH THIRD: Bernstein Liebhard Files Securities Suit in S.D. OH
GOLDMAN SACHS: Pomerantz Haudek Files Securities Suit in S.D. NY
J. JILL: Shapiro Haber Lodges Securities Fraud Suit in MA Court
J. JILL: Charles Piven Lodges Securities Fraud Suit in MA Court
PHARMACIA CORPORATION: Bernstein Liebhard Files Fraud Suit in NJ
SARA LEE: Much Shelist Lodges Securities Fraud Suit in N.D. IL
SARA LEE: Glancy & Binkow Files Securities Fraud Suit in N.D. IL
The United States District Court for the District of Nebraska
refused to reinstate certain claims in the securities class
action filed against Acceptance Insurance Companies, Inc.
Plaintiffs alleged the Company knowingly and intentionally
understated the Company's liabilities in order to maintain the
market price of the Company's stock at artificially high levels
and made untrue statements of material fact, and sought
compensatory damages, interest, costs and attorney fees. The
suit also alleges the Company intentionally understated
liabilities in a registration statement filed in conjunction
with the Company's Trust Preferred Securities.
Plaintiffs sought to represent a class consisting of all persons
who purchased either Company common stock between March 10, 1998
and November 16, 1999, or AICI Capital Trust Preferred
Securities between the July 29, 1997 public offering and
The suit alleges violation of Section 11 of the Securities Act
of 1933 through misrepresentation or omission of a material fact
in the registration statement for the Trust Preferred
Securities, and violation of Section 10b of the Securities
Exchange Act of 1934 and Rule 10b-5 of the US Securities and
Exchange Commission through failure to disclose material
information between March 10, 1998 and November 16, 1999.
The Company, three of its former officers, the Company's
directors and independent accountants and other individuals, as
well as the financial underwriters for the Company's Trust
Preferred Securities, were named as defendants.
On March 2, 2001, the court entered an order dismissing all
claims alleging violations of Section 11 of the Securities Act,
and dismissing the Company's 146;s Directors, financial
underwriters, independent accountants and others as defendants
in this action. The court also ruled that certain of
plaintiffs' allegations regarding the remaining defendants'
alleged failure to properly report contingent losses
attributable to the Montrose decision did not state a claim
under Section 10b and Rule 10b-5.
In two subsequent rulings, the Court and Magistrate Judge
clarified the March 2 ruling to specify which of plaintiffs'
Montrose-related allegations failed to state a Section 10b and
Rule 10b-5 claim. These three rulings reduced the litigation to
a claim that the Company and three of its former officers,
during the period from August 14, 1997 to November 16, 1999,
failed to disclose adequately information about various aspects
of the Company's operations, including information relating to
the Company's exposure after January 1, 1997 to losses resulting
from the Montrose decision. Nevertheless, plaintiffs continue
to seek compensatory damages, reasonable costs and expenses
incurred in this action and such other and further relief as the
court may deem proper.
In August 2001, the Magistrate Judge granted plaintiffs' motion
for class certification. Plaintiffs' fact discovery was
concluded July 31, 2002 in accordance with a schedule
established by the court. On September 16, 2002, plaintiffs
sought the court's permission to reinstate certain previously
dismissed claims under Section 11 and 15 of the Securities Act.
The court denied plaintiffs' request in its entirety on February
27, 2003; plaintiffs asked the court to reconsider this decision
and the court has not ruled on that request.
On March 31, 2003, however, the Court established a schedule for
the submission during May 2003 of briefs regarding the Company's
proposed motion to decertify the class. The court also
established a schedule concluding in August 2003 for submission
of briefs regarding both parties' anticipated motions for
summary judgment.
The Company intends to continue contesting this action and
believes plaintiffs' allegations are without merit.
Nevertheless, the ultimate outcome of this action cannot be
predicted at this time and the Company currently is unable to
determine the potential effect of this litigation on its
consolidated financial position, results of operations or cash
flows.
2000. The Company is named as a defendant along with two of its
board members, one of whom is an officer, and two of its former
The complaint alleges that, among other things, the plaintiffs
were damaged when they acquired the Company's securities
because, as a result of alleged irregularities in the Company's
Animal Health business in Brazil, allegedly improper revenue
recognition practices and the October 2000 revision of its
financial results for 1999 and 2000, the Company's previously
issued financial statements were materially false and
misleading, thereby artificially inflating the price of the
Company's securities. The complaint alleges violations of
Sections 10(b), 20(a) and Rule 10b-5 of the Securities and
Exchange Act of 1934. The plaintiffs seek damages in
unspecified amounts.
The Company moved to dismiss the complaint on legal grounds and
the court granted its motion with prejudice as to all
defendants. The plaintiffs filed a motion for reconsideration
with the court and the court affirmed its earlier dismissal.
The plaintiffs have appealed the court's decision to the Third
Circuit Court of Appeals.
The Company intends to vigorously defend this appeal. Based
upon the facts as presently known, the Company does not believe
that it is likely that the class action will result in liability
which will be material to the Company's financial position.
However, it is not possible for the Company to conclude
definitively that resolution of the lawsuit will not be material
to the Company's financial position or its results of operations
or cash flows in the quarter or year in which it occurs.
Checkpoint Systems, Inc. faces several class actions filed after
a Pennsylvania jury decided against the Company in an antitrust
lawsuit filed by ID Security Systems Canada Inc. The purported
class actions generally allege a claim of monopolization and are
substantially based upon the same allegations as contained in
the Pennsylvania litigation.
On August 1, 2002, a civil action was filed in United States
District Court for the Eastern District of Pennsylvania,
designated as Civil Action No. 02-6379(ER) by plaintiff Diane
Furs, Inc. t/a Diane Furs against Checkpoint Systems, Inc. and
served on August 21, 2002. On August 21, 2002, a Notice of
Substitution of Plaintiff and Filing of Amended Complaint was
filed by the plaintiff, and the named plaintiff was changed to
Medi-Care Pharmacy, Inc.
On August 2, 2002, a civil action was filed in the United States
District Court, District of New Jersey (Camden) designated as
Docket No. 02-CV-3730(JEI) by plaintiff Club Sports
International, Inc., d/b/a Soccer CSI against the Company and
served on August 26, 2002.
On October 2, 2002, a civil action was filed in the United
States District Court, District of New Jersey (Camden)
designated as Docket No. 02-CV-4777 (JBS) by plaintiff Baby
Mika, Inc. against Checkpoint Systems, Inc. and served on
On October 23, 2002, a civil action was filed in the United
designated as Docket No. 02-CV-5001 (JEI) by plaintiff
Washington Square Pharmacy, Inc. against Checkpoint Systems,
Inc. and served on November 1, 2002.
The United States District, District of New Jersey (Camden)
entered an order staying the proceedings in the Club Sports
International, Inc. and Baby Mika, Inc. cases referred to above.
In accordance with the order, the stay will also apply to the
Washington Square Pharmacy, Inc. case referred to above. In
addition, the Medi-Care Pharmacy, Inc. case, referred to above,
will be voluntarily dismissed, and it is expected to be re-filed
in New Jersey and be included in the stay order.
The stay is expected to remain in place until such time as the
ID Security Systems case, referred to above, is either
terminated or any appeals have been exhausted in the Third
On November 13, 2002, a civil action was filed in the United
designated as Docket No. 02-CV-5319 (JEI) by plaintiff 1700
Pharmacy, Inc. against Checkpoint Systems, Inc. and served on
On December 30, 2002, a civil action was filed in the United
designated as Docket No. 02-CV-6131 (JEI) by plaintiff Medi-Care
Both the 1700 Pharmacy, Inc. case and the Medi-Care Pharmacy,
Inc. case were consolidated with the previously mentioned cases
and are included in the stay order referred to above. No
liability has been recorded for any of the purported class
action suits as management believes that, based on input from
outside legal counsel, it is not probable the judgment will be
upheld and that the lower end of the reasonably possible range
of the contingent liability is zero at this time. The high end
of the range cannot be estimated at this time.
Emulex Corporation reached memoranda of understanding to settle
the consolidated securities class action and the shareholder
derivative suit filed against it and certain of its
officers and directors.
The consolidated securities class action was filed in the United
States District Court, Central District of California on behalf
of purchasers of the Company's common stock during various
periods ranging from January 18, 2001, through February 9, 2001.
The suit alleges that the Company and certain of its officers
and directors made misrepresentations and omissions in violation
of sections 10(b) and 20(a) of the Securities Exchange Act of
1934, as amended. The suit generally seeks compensatory
damages, costs and attorney's fees in an unspecified amount.
Defendants moved to dismiss the suit, but the court denied the
motion. Defendants' motion for reconsideration of that order
was denied by an order dated May 3, 2002. Plaintiffs commenced
discovery. The court certified the class action by an order
dated September 30, 2002.
Following the class action, a number of derivative cases were
filed in state courts in California and Delaware, and in federal
court in California, alleging that certain officers and
directors breached their fiduciary duties to the Company in
connection with the events alleged in the class action. The
derivative cases filed in California State courts were
consolidated in Orange County Superior Court and plaintiffs
filed a consolidated and amended complaint on January 31, 2002.
On May 10, 2002, the Orange County Superior Court ordered that
the consolidated actions be stayed pending resolution of the
federal class action. The derivative suit in Delaware was
dismissed on August 28, 2001.
On March 15, 2002, the California Federal Court ordered that the
federal derivative action be stayed pending resolution of the
class action described above. The Company has received
inquiries about events giving rise to the lawsuits from the
Securities and Exchange Commission and the Nasdaq Stock Market.
On April 22, 2003, the Company entered into two Memoranda of
Understanding (MOU) agreeing to terms of settlement of both
the class action and derivative litigation. The MOUs call for
settlement payments totaling $39.0 million, plus up to $0.5
million of the cost of providing notice to the class members.
The settlements will require court approval, which will be
sought after the settlement documentation is completed.
The Equitable Life Assurance Society of the United States and
AXA Network, LLC face a class action filed in the United States
District Court for the Northern District of Illinois by two
former agents on behalf of themselves and other similarly
situated present, former and retired agents who, according to
the complaint:
(1) were discharged by Equitable Life from `statutory
employee status' after January 1, 1999, because of
Equitable Life's adoption of a new policy stating that
in any given year, those who failed to meet specified
sales goals during the preceding year would not be
treated as `statutory employees,' or
(2) remain subject to discharge from `statutory employee'
status based on the policy applied by Equitable Life."
The complaint alleges that the company improperly "terminated"
the agents' full-time life insurance salesman statutory employee
status in or after 1999 by requiring attainment of minimum
production credit levels for 1998, thereby making the agents
ineligible for benefits and "requiring" them to pay Self-
Employment Contribution Act taxes.
The former agents, who assert claims for violations of the
Employee Retirement Income Securities Act (ERISA) and 26 U.S.C.
3121, and breach of contract, seek declaratory and injunctive
relief, plus restoration of benefits and an adjustment of their
benefit plan contributions and payroll tax withholdings.
The Equitable Life Assurance Society of the United States faces
a class action filed in the United States District Court for the
Eastern District of New York. The complaint asserts a single
claim for relief under Section 47(b) of the Investment Company
Act of 1940 based on the Company's alleged failure to register
as an investment company.
According to the complaint, the Company was required to register
as an investment company because it was allegedly issuing
securities in the form of variable insurance products and
allegedly investing its assets primarily in other securities.
from the Company on or after May 7, 1998. The complaint seeks
to void their variable insurance contracts, restitution of all
Although the outcome of litigation cannot be predicted with
certainty, the Company's management believes that the ultimate
resolution of the matters should not have a material adverse
effect on the consolidated financial position of the Company.
Evergreen Resources, Inc. was named as a defendant in a class
action filed in the United States District Court for the
District of Colorado by plaintiffs Mountain West Exploration,
Inc., Joel Nelson and Synergy Operations Company, LLC. The
plaintiffs are royalty owners and overriding royalty owners who
are alleging that they were underpaid royalties and seek to
recover damages and declaratory and injunctive relief.
The Company intends to vigorously defend this action and has
asserted numerous affirmative defenses. It is too early to
provide an evaluation of the likelihood of an unfavorable
outcome or an estimate of the amount or range of potential loss.
The Kentucky Supreme Court denied plaintiffs' motion for a
discretionary review of a lower court's decision in favor of
Farmers Bank & Capital Trust Company in the class action filed
on behalf of all present and former owners of the County of
Jefferson, Kentucky, Nursing Home Refunding Revenue Bonds
(Filson Care Home Project) Series 1986A and County of Jefferson,
Kentucky, Nursing Home Improvement Revenue Bonds (Filson Care
Home Project) Series 1986B.
The suit was initially filed in Jefferson Circuit Court,
Louisville, Kentucky, alleging that the class had been damaged
through a reduction in the value of the Bonds and a loss of
interest on the Bonds because of the actions of the bank in its
capacity as indenture trustee for the bondholders. The
plaintiffs demanded compensatory and punitive damages.
On July 6, 1993, the court denied the plaintiffs' motion to
certify the case as a class action. Subsequently, the
plaintiffs amended their complaint to join additional
bondholders as plaintiffs. The plaintiffs claimed to hold bonds
in the aggregate principal amount of $480,000. Before trial,
the court dismissed thirty-nine of the plaintiffs because they
were unable or unwilling to present testimony to support their
The case was tried before a jury beginning on March 28, 2000,
based on the claims of four plaintiffs holding bonds in the
aggregate principal amount of $80,000. The court granted a
directed verdict in favor of the Bank on the plaintiffs' claim
that the bank had engaged in commercial bribery and that the
legal fees that were paid by the bank should be disgorged
because of an alleged conflict of interest of the bank's
counsel. The jury found for the plaintiffs on the claim that
the bank had breached its fiduciary duty and awarded the
plaintiffs $99,875 in compensatory damages and $600,000 in
punitive damages.
The Bank filed a motion for judgment notwithstanding the verdict
or, in the alternative, for a new trial, asserting that the
jury's verdict that the Bank breached its fiduciary duty was not
supported by sufficient evidence, that the jury's award of
damages was speculative and was not supported by the evidence,
and that the jury's award of punitive damages was not supported
by sufficient evidence. The Bank also asserted that a new trial
was warranted because of the erroneous admission of evidence
concerning legal fees paid by the Bank.
Plaintiffs filed an appeal contending that the denial of class
certification was erroneous, that the individual plaintiffs
should not have been dismissed from the lawsuit, that certain
evidence was erroneously excluded, and that the directed verdict
regarding the disgorgement of legal fees and the commercial
bribery claims was erroneous. On August 1, 2000, the Kentucky
Court of Appeals dismissed the appeal as having been prematurely
filed.
On January 3, 2001, the Jefferson Circuit Court entered judgment
in favor of the Bank notwithstanding the jury's verdict in favor
of the plaintiffs, holding that the Bank reasonably relied in
good faith on the advice of its counsel, that there was no
evidence that the Bank breached its fiduciary duty to the
plaintiffs, and that there was no evidence that the Bank caused
the plaintiffs' losses.
On January 31, 2001, the plaintiff bondholders appealed, and on
February 9, 2001, defendant Bank cross-appealed, the judgment of
the Jefferson Circuit Court to the Kentucky Court of Appeals.
In their appeal, the bondholders claim that the trial court's
denial of class certification was erroneous, that certain
individual plaintiffs should not have been dismissed from the
lawsuit, that the trial court erroneously directed a verdict
against them on the issue of a conflict of interest, and that
the judgment notwithstanding the verdict was erroneously granted
because the evidence was sufficient to support the jury's
In its cross-appeal, the Bank claims that the trial court
erroneously bifurcated the trial on the issue of liability and
damages, that certain witnesses should have been excluded from
the trial, that the Bank should have been granted summary
judgment, and that certain evidence and testimony regarding
attorneys' fees should have been excluded.
On May 10, 2002, the appeals court affirmed the judgment in
favor of the Bank. The plaintiff bondholders filed a motion
for discretionary review to the Kentucky Supreme Court on June
7, 2002. On April 17, 2003 the Supreme Court denied plaintiffs'
motion. The judgment in favor of the Bank is therefore now final
and subject to no further appeal or judicial review.
A lawsuit recently filed in US District Court in Manhattan,
accuses Cincinnati-based Federated Department Stores Inc., and
its Macy's stores in the Northeast, of targeting minorities in
an effort to catch shoplifters, the Associated Press Newswires
reports. The lawsuit is seeking class status.
The lawsuit claims the defendants have engaged in a series of
acts which constitute a pattern of subjecting minorities to
false accusations of shoplifting, wrongful and unjustified
detentions and harassment. The plaintiffs have asked for
The lawsuit was brought on behalf of Sharon Simmons-Thomas, a
legal secretary from the Bronx in New York City. She alleges
she was falsely accused of shoplifting, searched and falsely
imprisoned at Macy's flagship store on 34th Street in Manhattan
last Christmas season.
King Power International Group Co., Ltd. seeks the dismissal of
one of the class actions filed against it and each of its
directors, over a proposed merger transaction in which the
Company will be taken private by shareholders Vichai
Raksriaksorn, Viratana Suntaranond, Aimon Raksriaksorn and
Niphon Raksriaksorn and certain other shareholders who hold
approximately 88.6% of the Company's common shares.
The suit was filed in August 2002 in the District Court of Clark
County, Nevada, by Pennsylvania Avenue Partners, LLC, alleging,
among other things, that the directors of the Company had
breached their fiduciary duties in pursuing the proposed merger
transaction in which the Company would be taken private by
certain shareholders and in allegedly failing to obtain the
highest price per share. The lawsuit seeks to enjoin the
proposed merger transaction and seeks payment of fees of
plaintiff's counsel and experts.
Two similar lawsuits were filed in the same court. The Company
believes that each of the lawsuits is without merit, and intends
to vigorously defend each suit.
District of Maryland's dismissal of a class action filed against
Hanger Orthopedic Group, Inc. on behalf of all purchasers of the
Company's common stock from November 8, 1999 through and
including January 6, 2000. The complaint also names as
defendants Ivan R. Sabel, the Company's Chairman of the Board
and Chief Executive Officer (and then President), and Richard A.
Stein, the Company's former Chief Financial Officer, Secretary
and Treasurer.
The complaint alleges that during the above period of time, the
defendants violated Section 10(b) and 20(a) of the Securities
Exchange Act of 1934 by, among other things, knowingly or
recklessly making material misrepresentations concerning the
Company's financial results for the quarter ended September 30,
1999, and the progress of the Company's efforts to integrate the
recently-acquired operations of NovaCare O&P.
The complaint further alleges that by making those material
misrepresentations, the defendants artificially inflated the
price of the Company's common stock. The plaintiff seeks to
recover damages on behalf of all of the class members. The suit
has been dismissed for failure to comply with statutory
requirements. The plaintiffs filed a notice of appeal to the
United States Court of Appeals for the Fourth Circuit.
The Company believes that the allegations have no merit and is
vigorously defending itself against the suit. Additionally, the
Company believes that it is remote that any claims would result
from this action and therefore, no related liabilities have been
The Wisconsin Court of Appeals reversed the dismissal of a class
action filed against Harley Davidson, Inc. relating to its
January 2001 announcement notifying each owner of 1999 and
early-2000 model year Harley-Davidson(R) motorcycles equipped
with Twin Cam 88 and Twin Cam 88B engines that the Company was
extending the warranty for a rear cam bearing to 5 years or
50,000 miles.
The suit was commenced in state court in Milwaukee County,
Wisconsin, alleging that this cam bearing is defective and
asserted various legal theories. The complaint sought
unspecified compensatory and punitive damages for affected
owners, an order compelling the Company to repair the engines,
and other relief.
On February 27, 2002 the Company's motion to dismiss the amended
complaint was granted by the court and the amended complaint
was dismissed in its entirety. An appeal was filed with the
Wisconsin Court of Appeals.
On April 12, 2002, the same attorneys filed a second putative
nationwide class action against the Company in state court in
Milwaukee County, Wisconsin relating to this cam bearing issue
and asserting different legal theories than in the first action.
The complaint sought unspecified compensatory damages, an order
compelling the Company to repair the engines and other relief.
On September 23, 2002, the Company's motion to dismiss was
granted by the Court, the complaint was dismissed in its
entirety, and no appeal was taken. On January 14, 2003, the
Wisconsin Court of Appeals reversed the trial court's February
27, 2002 dismissal of the complaint in the first action and the
Company has petitioned the Wisconsin Supreme Court to consider
confirming the earlier dismissal.
The Company believes that this reversal is in error, and intends
to continue to defend this matter. The Company believes that
the 5-year/50,000 mile warranty extension it announced in
January 2001 adequately addresses the condition for affected
Several health insurers, including Aetna, for example, have
settled consumer lawsuits for token amounts, after the courts
refused to grant class action status to the plaintiffs. The
lawsuits were intended to obtain an overhaul of managed care
practices from the industry when they initially brought the
lawsuits, as well as billions of dollars for damages inflicted
by way of those same managed care practices, the Hartford
Courant reports.
The settlements range from $2,500 to Aetna's $20,000, and they
relate to litigation initially brought by health plan members
nationwide as far back as 1999, and later consolidated in
Miami's Federal Court.
The companies are still fighting substantial litigation brought
by doctors, also pending in US District Court in Miami. The
insurers are appealing the court's granting of class action
status to physicians last fall.
The member lawsuits, however, failed to gain class action
certification, which greatly reduced the chances of dramatic
damage awards, once plaintiffs could sue only as individuals.
Many of the plaintiffs had neither the funds nor stamina to go
forward as individuals. The suits had alleged that health plans
put profits ahead of medical need, and fail to fully disclose to
members how physicians are paid and how the plans decide what
they will cover.
"By no means do I think (these lawsuits) were a wasted effort,"
said Stephen Neuwirth, co-lead counsel for plaintiffs in the HMO
member litigation in Miami's federal court. "I think we did
some good here."
"We feel that certainly our litigation exposed some things about
the ways managed care companies handle their business," said Mr.
Neuwirth. The cases appear to have influenced health insurers
to change (some of) their practices.
Insurers, for instance, reduced the number of procedures for
which pre-approval was required. Some dropped or modified
methods used to reimburse doctors that critics believed created
incentives to skimp on care.
When the massive consumer litigation began, "the amounts of
damages at issue certainly were billions of dollars when we look
at defendants as a group," said Mr. Neuwirth. But without
class-action status, "the cost of litigating these issues on
behalf of individuals becomes very disproportionate."
The small settlements for the individual suits continue to melt
away. CIGNA plans to file court papers later this week to
settle Pickney vs. CIGNA for $5,000, in Miami. Minnesota-based
UnitedHealth Group Inc. settled member litigation for a minimal
amount, said spokesman John Penshorn, declining to give a
figure.
Illinois State Court is set to hear a motion to intervene in the
class action filed against Illini Corporation and the Illinois
Stock Transfer Company, as Rights Agent for the Company under
the Company's Shareholder Rights Agreement specific performance
of the Rights Agreement.
The suit was filed on behalf of a class of Company shareholders
and alleges that the rights agreement was triggered in April
1998, and that the rights agent has a duty under the agreement
to distribute rights certificates to the Company's shareholders
of Illini Corporation. The class has been certified. Plaintiff
seeks to recover her attorneys' fees from the Company in
addition to the other relief sought.
In January 2000, the trial court entered summary judgment in
favor of the defendants. Plaintiff appealed this ruling to the
Illinois Appellate Court. The appeals court reversed the
summary judgment for defendants and remanded the case for trial
on the issue of whether the Illini Corporation Board of
Directors acted in good faith in determining that a
shareholder's s acceptance of a gift of Illini Corporation Stock
did not trigger the rights amendment and later, in Illini
Corporation's later amendment of the Rights Agreement. The
court further ruled the plaintiff's attorneys' fees were
recoverable under the rights agreement.
After a series of unsuccessful motions filed by the plaintiff's
counsel, the Company entered a motion to remove the plaintiff's
counsel. The court removed the counsel for the plaintiff class
and appointed new counsel to represent the class.
The removed counsel filed a motion for reconsideration, which
was denied. The new counsel filed a motion for direction to
remove the class representative, which was granted on January
15, 2003. On March 7, 2003 the trial court appointed a
successor class representative.
The Company is negotiating for a settlement of the suit with the
new class representative and class counsel. The former class
representative filed a motion to opt out of the class, which was
denied. The plaintiff now filed a motion to intervene as
plaintiff in the suit. That motion is scheduled for hearing on
June 5, 2003. The Company will vigorously oppose.
Two plaintiffs objected to the settlement proposed by
International Rectifier Corporation to settle the class actions
filed against it and certain of its directors and officers in
the United States District Court for the Central District
of California.
These suits sought 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.
In August 2001, the Company reached a settlement in principle
with respect to the lawsuits. The settlement contemplated
the dismissal of all claims without any payments. The court
approved the settlement in February 2003 and notice of the
proposed settlement was distributed to class members. The court
has scheduled a hearing on May 28, 2003 to review any objections
to the settlement.
An attorney representing two individual class members filed on
April 28, 2003, objections to the proposed settlement. He also
requested a postponement of the hearing date. The Company plans
to oppose the objections and request a postponement.
Irwin Mortgage Corporation faces various lawsuits alleging that
the Company violated the federal Real Estate Settlement
Procedures Act (RESPA) relating to its payment of broker fees to
mortgage brokers.
The first suit was filed in the United States District Court for
the Northern District of Alabama. The court later certified the
suit as a class action, and the defendants appealed this to the
Court of Appeals for the 11th Circuit. The appellate court
upheld the district court's certification of a plaintiff class
and the case was remanded for further proceedings in the federal
district court. In September 2001, a second suit sought class
status and consolidation with this suit.
In November 2001, by order of the district court, the parties
filed supplemental briefs analyzing the impact of a new policy
statement from the Department of Housing and Urban Development
(HUD) that explicitly disagrees with the judicial interpretation
of RESPA by the Court of Appeals for the 11th Circuit in its
ruling upholding class certification in this case.
In March 2002, the district court granted the Company's motion
to stay proceedings in this case until the 11th Circuit decided
the three other RESPA cases originally argued before it with
this case. The second suit seeking consolidation with this one
was similarly stayed.
The 11th Circuit has now decided all of the RESPA cases pending
in that court. In one of those cases, the 11th Circuit
concluded that the trial court had abused its discretion in
certifying a class action under RESPA. Further, in that
decision, the 11th Circuit expressly recognized it was, in
effect, overruling its previous decision upholding class
certification in this case.
In March 2003, the Company filed a motion to decertify the class
and the plaintiffs filed a renewed motion for summary judgment.
If the class is not decertified and the district court finds
that the Company violated RESPA, the Company could be liable for
damages equal to three times the amount of that portion of
payments made to the mortgage brokers that is ruled unlawful.
Based on notices sent by the plaintiffs to date to potential
class members and additional notices that might be sent in this
case, the Company believes the class is not likely to exceed
32,000 borrowers who meet the class specifications.
In addition to this case and the case seeking consolidation with
it, three other lawsuits were filed against the Company in 2002
in the Circuit Court of Calhoun County, Alabama seeking class
action status and allege claims based on payments similar to
those at issue in this case. Another case filed in 2002 in the
Alabama alleges RESPA violations both similar to and different
from those in this case in connection with payments made to
mortgage brokers. In April 2003, the Company and the plaintiffs
reached an agreement in principle to settle the three cases in
Calhoun County, Alabama, for a nonmaterial amount.
Irwin Mortgage intends to defend this and the related lawsuits
vigorously and believes it has numerous defenses to the alleged
RESPA and similar violations. Irwin Mortgage further believes
that the 11th Circuit's recent RESPA decisions provide grounds
for reversal of the class certification in this case. We have
no assurance, however, that Irwin Mortgage will be successful in
defeating class certification in this case or will ultimately
prevail on the merits in this or the other cases. However, we
expect that an adverse outcome in this or the related cases
could result in substantial monetary damages that could be
material to our financial position. We have not established any
reserves for this or the related cases and are unable at this
stage of the litigation to form a reasonable estimate of
potential loss that we could suffer.
More than four years have passed since plaintiffs filed a
lawsuit stemming from a botched roof repair done at the LW
Higgins High School, in Marrero, Louisiana, which, in turn,
resulted in the plaintiffs experiencing some health problems,
The Times-Picayune reports.
A $6.1 million settlement was reached nearly a year ago, with
about $2.8 million going to more than 600 plaintiffs in the
class action, under the terms of the settlement, said attorney
James Shields Sr., who represented the plaintiffs. Attorneys
will receive about $2.5 million of the settlement. The state
court officials are reviewing individual medical records to
determine how much each client will receive. Plaintiffs are
expecting their checks by the end of the year.
The problems began when the $1.6 million project to replace the
Higgins High School roof began in 1998. During the 1998-99
school year, students and employees began complaining about
odors and dirty water leaking into the building. Students and
parents filed a class action against the Jefferson Parish School
Board and Huffine Roofing and Construction in January 1999.
One of the students, the daughter of plaintiff Anita Gauthreaux,
has suffered breathing problems, nausea and difficulty with
coordination because of exposure to certain chemicals during the
work's progress. Other students have joined the class action,
also suffering breathing problems similar to Ms. Gauthreaux's.
"It's closure from five years ago," said plaintiff Anita
Gauthreaux. "We can see the light now."
NHP Retirement Housing Partners I Ltd. asked the Delaware Court
of Chancery to dismiss the class action filed against it and its
General Partner, Capital Realty Group Senior Housing, Inc. The
suit was filed on behalf of certain holders of Pension Notes of
the Partnership. The suit alleges that the general partner:
(1) breached its fiduciary duty by failing to initiate a
lawsuit against, among others, the former general
partner and its principals in connection with the sale
of four properties by the Partnership in September
(2) failed to disclose material information and promised to
make certain distributions when it solicited consents
from the Pension Note holders in 2001 to facilitate the
sale of the Partnership's fifth property, the
Amberleigh, which sale occurred in December 2001; and
(3) failed to disclose material information in connection
with obtaining releases from the Pension Note holders
The suit also seeks a judgment against the Partnership for
failing to pay the full amount of the principal and interest
owed on the Pension Notes on December 21, 2001, the maturity
date of the Pension Notes.
On February 10, 2003, the defendants moved to dismiss the
amended suit or, alternatively, for summary judgment. Briefing
has been completed on this motion and the court should receive
it shortly. Previously, on October 15, 2002, plaintiff filed a
motion for class certification, which plaintiff is pursuing at
the present time.
The Partnership believes the allegations are without merit and
intends to defend against these claims. The Partnership is
unable at the time to estimate liability, if any, related to
this claim.
Orleans Homebuilders, Inc. and certain of its unnamed affiliates
reached a settlement for a class action filed in Burlington
County Court in New Jersey.
The lawsuit alleged, in part, that certain town homes and
condominiums designed and constructed by the Company and certain
of its affiliates did not have sufficient combustion air in the
utility rooms, thereby causing a carbon monoxide build-up in the
homes. The Township of Mount Laurel intervened as a party in
In January 2003, the Company reached a settlement of the
lawsuit. Approximately 3,600 homeowners will be given the
opportunity to have their homes inspected by the Township of
Mount Laurel to determine whether the utility room has adequate
combustion air as required by the applicable construction code
in effect at the time the home was constructed. If the
inspection reveals inadequate combustion air, the Company, at
its sole cost, will repair the home.
In addition, those homeowners given the opportunity to have
their homes inspected also will be given the opportunity to
receive a carbon monoxide detector at the Company's sole cost
and expense.
The Township of Mount Laurel will act as administrator and the
Company has agreed to pay the township for the homes inspected,
up to an aggregate of $100,000. Further, approximately 1,700
homeowners will be given a one-time opportunity to have their
gas-fired appliances inspected and cleaned at the Company's sole
cost and expense. The Company has agreed to pay plaintiffs'
attorneys' fees and costs of $445,000.
Royal Caribbean Cruises says the charges in the class action
filed against it are wrong, and that it pays more in government
taxes and fees that what it charges the passenger, The Miami
Herald reports. The lawsuit seeks class status on behalf of an
estimated 5.7 million passengers.
The lawsuit claims Royal Caribbean and its subsidiary Celebrity
Cruise Lines have charged at least a total of $150 million in
"fraudulent" taxes to passengers, which the lines pocketed as
additional revenue.
The company has countered, through its spokeswoman, Lynn
Martenstein, saying that it periodically reviews "how we assess
the taxes and fees we charge our guests . We are always very
careful that these taxes and fees are justified."
Attorney for the plaintiff passengers, Thomas Tew, whose firm
filed the lawsuit in Miami-Dade Circuit Court, said, "We don't
believe our figures are wrong. We believe the complaint speaks
for itself."
The allegations in this latest suit against the cruise lines are
similar in many ways to legal disputes in the 1990s involving
the cruise lines and how they handled port charges. In 1997,
for example, six lines agreed with Florida's attorney general
to change their pricing so "port charges" covered only
government fees and taxes for port use. The attorney general
said the lines were lumping more into port charges than was
necessary to cover dock costs, and then keeping the difference.
The new case being brought forward by the Florida attorney
general again is looking to determine whether Royal Caribbean
and Celebrity have again violated the 1997 agreement by charging
taxes to the passengers not owed to the government, but kept by
the cruise lines.
For the first time, American officials have said that mercury-
based thimerosal, used as a preservative routinely in vaccines,
is hazardous and they have accused drug companies of failing to
adequately test the product for side-effects, The Herald
(Glasgow, Scotland) reports. The recent release by the House of
Representatives report on the use of mercury-based thimerosal
and its side effects marks the first official recognition of the
dangers posed by thimerosal and paves the way for thousands of
lawsuits in the United States.
The three-year investigation by the House of Representatives was
undertaken after vaccines containing thimerosal began to be
withdrawn from the US market in 1999, without explanation, but
following concern among parents. The resultant report, entitled
Mercury in Medicine - Taking Unnecessary Risks - calls for a
conference of the "best scientific minds across America" to
uncover the cause of the massive increase in autism cases.
The report states "no amount of mercury is appropriate in any
childhood vaccine" and calls for the immediate withdrawal of the
only two vaccines containing traces of thimerosal that now
remain on the American market. The report notes that many
people believe vaccines containing mercury are linked to autism,
and the report criticizes the lack of research into a possible
link, noting that mercury poisoning results in "markedly
similar" symptoms.
The House of Representatives report says: "The possible risk
for harm from high-level exposure to thimerosal is not
theoretical but very real and documented in the medical
literature." The report criticizes the FDA decision to phase
out vaccines containing thimerosal from 1999, rather than ban
them immediately. It also condemns the lack of research into
possible links between autism and thimerosal. Such research
should begin immediately, says the report.
A spokesman for Eli Lilly said recently, "Anyone can lodge a
report with the House of Representatives. No government
organization here in the United States has indicated that
thimerosal within childhood vaccines is dangerous. No
scientific piece of evidence has shown a causal link. To
suggest otherwise is irresponsible."
The withdrawal of vaccines containing thimerosal from the US
market in 1999, is thought to be linked to a class action that
had been lodged against Eli Lilly, the main thimerosal producer,
The Herald reports. However, added The Herald, the drug
companies refused to say anything other than the withdrawal was
a precautionary measure.
The United States District Court in North Carolina set for
September 2,2003 the trial date for the class action filed
against US Airways Group, Inc., along with most of the major
domestic airlines, several national carriers and a number of
international carriers, on behalf of all United States-based
travel agents.
The complaint alleges violation of the federal antitrust laws
with respect to commission rate reductions and/or commission cap
reductions implemented by various airlines in 1997, 1998, 1999,
2001 and 2002. Plaintiffs seek unspecified damages for lost
commissions as well as injunctive relief. Discovery has now
closed and the other defendants have filed motions for summary
judgment.
US Airways Group, Inc., along with most of the major domestic,
several national and a number of international carriers, faces
class action filed on behalf of all United States-based travel
agents filed in United States District Court in the Northern
District of California.
reductions implemented by various airlines beginning in or
around September 1997, in or around October 1999, in or around
August 2001, in or around March 2002 and continuing through the
date of the filing of the complaint. Plaintiffs seek
unspecified damages for lost commissions as well as injunctive
relief, costs and attorneys' fees and other relief.
The Company believes the allegations that relate to the pre-
petition period of the Company's filing for relief under the
Bankruptcy Code are barred under the Bankruptcy Court's Order.
The Company will file to have those claims dismissed and
otherwise defend the Company's actions aggressively
US Airways Group, Inc. intends to ask for its dismissal as a
defendant in a class action filed against most of the major
domestic carriers on behalf of certain Ohio-based travel agents,
captioned as Paula Fausky d/b/a TIMELESS TRAVEL, et.al vs.
American Airlines, et.al, in the United States District Court
for the Northern District of Ohio, Eastern Division.
around 1995, in or around mid to late September of 1997,
beginning in October of 1998, beginning on October 7, 1999, and
beginning in August of 2001. Plaintiffs seek unspecified
damages for lost commissions as well as injunctive relief, costs
and attorneys' fees and other relief.
otherwise defend the Company's actions aggressively.
The Quinque Operating Company moved to file an amended class
action on behalf of itself and subclasses of gas producers,
royalty owners and state taxing authorities in State District
Court for Stevens County, Kansas, (State District Court) against
over 200 natural gas transmission companies and producers,
gatherers, and processors of natural gas, including Williston
Basin Interstate Pipeline Company and Montana-Dakota Utilities
The complaint, which was served on Williston Basin and Montana-
Dakota in September 1999, contains allegations of improper
measurement of the heating content and volume of all natural gas
measured by the defendants other than natural gas produced from
federal lands. The plaintiffs have not specified the amount
they seek to recover.
In September 2001, the defendants in this suit filed a motion to
dismiss, including a request to dismiss for lack of personal
jurisdiction, with the court. The motion to dismiss on grounds
other than lack of personal jurisdiction was denied in August
In January 2002, the non-Kansas resident defendants in this suit
filed a supplemental motion to dismiss for lack of personal
jurisdiction with the court. In September 2002, the plaintiffs
moved for certification of the case as a class action and on
April 10, 2003, the court denied the motion.
On April 22, 2003, the court stayed proceedings on all motions
pending the filing of a motion for leave to amend by the
plaintiffs. On May 12, 2003, the plaintiffs filed a motion to
file an amended class action.
Neither the Company nor Montana-Dakota were named as defendants
in the proposed amended class action petition, which is
currently pending. Although the Company's and Montana-Dakota's
arguments may be moot if the court grants plaintiffs' motion to
file an amended petition, they believe the Quinque case will
ultimately be dismissed as against them because the court lacks
personal jurisdiction over them.
Failing this, the Company and Montana-Dakota believe the
plaintiffs will not recover damages from them because
insufficient facts exist to support their allegations. The
Company and Montana-Dakota intend to vigorously contest this
suit.
The different sectors involved in asbestos lawsuits are still
far from an agreement on crucial details on the bill. Defendant
companies, insurers, groups and lawmakers have been in talks for
months for the creation of a privately financed trust fund to
pay all asbestos victims.
Last month, people from all sides said that they were close to
an agreement, although they cautioned that many details still
needed to be worked out over the structure of the trust and the
size of the payments to victims. However, in the last two weeks
negotiations seem to have stalled.
Sen. Orrin G. Hatch, the chairman of the Senate Judiciary
Committee, under a proposal, eyes a trust worth
$108,000,000,000. This measure has been popular among business
groups but has been lashed at by labor groups, which would
include $45,000,000,000 in contributions from companies that
made asbestos or used it in their products and $45,000,000,000
from insurers, as well as about $8,000,000,000 from other
asbestos trusts and $10,000,000,000 from other companies with
limited asbestos liabilities.
The trust fund "has the potential to bring fairness and
certainty to an asbestos litigation system that is currently out
of control," Leigh Ann Pusey, senior vice president of the
American Insurance Association, said in a statement. The
Asbestos Study Group, an association of about a dozen large
companies, including General Electric, that favors a trust, and
the Asbestos Alliance, a broader group of companies, also said
they generally supported the proposal by Senator Hatch.
Jon Hiatt, general counsel for the AFL-CIO, which has played an
important role in the negotiations, said in a statement that he
was "deeply disappointed" in the bill, as well as the decision
by Senator Hatch to introduce the legislation at a time when
talks were continuing. The support of the AFL-CIO is vital if a
trust is to win the votes of Democratic senators, who can block
the bill in the Senate by a filibuster.
"The Hatch bill is a step backward," Mr. Hiatt said. The
legislation would require the primary defendants and insurance
companies to contribute $90,000,000,000, the same amount that
those groups offered to pay months ago and an amount that labor
groups and many businesses said was only a starting point for
Under Mr. Hatch's draft bill, people diagnosed with asbestos-
related illnesses no longer would have to file legal claims and
prove the source of their exposures, or pay attorney fees. They
would simply submit medical diagnoses to the trust fund.
Nonsmokers with lung cancer traceable to asbestos exposure could
recover $400,000; smokers with lung cancer would collect
$50,000; those with other asbestos-related cancers would receive
$200,000; people with asbestosis that severely restricted their
breathing would get $400,000, and those with early stage
asbestosis would receive $40,000. Because asbestos causes
progressive lung diseases, people later diagnosed with more
serious illnesses could file additional claims.
People with mesothelioma, would receive $750,000 each under the
bill. Negotiators had discussed $1,000,000,000 or more, and the
current system often yields multimillion-dollar jury verdicts
and settlements.
The proposal by Senator Hatch does not contain a federal
guarantee that victims of asbestos disease will be compensated
if the trust fund is exhausted, a provision that labor views as
vital. The legislation "is merely a vehicle to relieve
businesses and insurers of hundreds of billions of dollars of
liability while significantly shortchanging the asbestos victims
of the fair compensation they are due," Mr. Hiatt said.
Still, the AFL-CIO did not explicitly vow to oppose the bill,
and people on both sides said they expected negotiations to
continue, mainly because both businesses and labor view a trust
fund, in theory, as good for both sides. Asbestos victims would
be paid faster, while businesses would avoid the risk of huge
jury verdicts. Each side would pay much less to lawyers, who
now get more than half of all the money spent on asbestos
Senator Hatch decided to introduce the bill, despite labor's
opposition, in an effort to force both sides to make their best
offers and see if a compromise is possible, people close to the
negotiations said.
3M Co. reports in its first quarter regulatory filing that the
accrued liabilities related to litigation for asbestos
respirators and masks that the company manufactured soared by
$100,000,000 to $231,000,000. The claimants charge that 3M
products, such as respirators and masks, did not protect them
from the contracting asbestos-related diseases after exposure to
asbestos dust.
3M, sees a hike in the number of claims as the plaintiffs try to
file claims before the effective date of anticipated tort reform
legislation, according to the company's report filed with the
Brian Hefferan of Pimcroft Way, Sale worked for a couple of
years at a Ciba Geigy site in Trafford Park, right across Turner
and Newall, a company that made asbestos based goods. Freda
Hefferan, his widow related how Brian would come home from work
covered in a greyish dust. She said she used to joke with him
that he didn't really work with wood, as the dust was not wood
shavings. He was an active man until he first became ill while
on holiday in the Isle of Man. His health deteriorated rapidly
and he succumbed to mesothelioma on November 21 last year.
Pathologist Dr. Hiam Ali said Mr. Hefferan's left lung was
almost completely covered by a tumor measuring up to 15
centimeters thick in places. There was also a tumor in his
right lung measuring two centimeters. The tumor also affected
his heart and lymph nodes. Samples taken from the lung and
surrounding tissue showed no signs of asbestosis. However, Dr
Ali said the tumor in the lung was in keeping with mesothelioma.
She said the absence of asbestos fibers did not exclude the
possibility of asbestos bodies in the lungs and said the cause
of death was plural mesothelioma.
"Normally a malignant mesothelioma is associated with exposure
to asbestos at some stage or another," said assistant deputy
coroner Chris Welton. "There are no fibers and there's no
asbestos means that this is not an industrial related disease."
Collins & Aikman is party to around 755 pending cases alleging
personal injury from exposure to asbestos containing materials
used in boilers manufactured before 1966 by former operations of
the Company, which were sold in 1966, as of March 31, 2003,
according to its latest annual regulatory filing.
Asbestos-containing refractory bricks lined the boilers and, in
some instances, the Company's former operations installed
asbestos-containing insulation around the boilers. These
pending cases do not include cases that have been dismissed or
are subject to agreements to dismiss due to the inability of the
plaintiffs to establish exposure to a relevant product and cases
that have been settled or are subject to settlement agreements.
Total settlement costs for these cases have been less than
$665,000 or an average of less than $8,400 per settled case.
The defense and settlement costs have been substantially covered
by primary insurance carriers under a claims handling agreement
that expires in August 2006.
The Company has primary, excess and umbrella insurance coverage
for various periods available for asbestos-related boiler and
other claims. The Company's primary carriers have agreed to
cover approximately 80% of certain defense and settlement costs
up to a limit of approximately $70,500,000 for all claims made,
subject to reservations of rights.
The excess insurance coverage, which varies in availability from
year to year, is approximately $620,000,000 in aggregate for all
claims made. Based on the age of the boilers, the nature of the
claims and settlements made to date, and the insurance coverage,
management does not believe that these cases will have a
material impact on the Company's financial condition, results of
operations or cash flows.
However, it cannot assure that the Company will not be subjected
to significant additional claims in the future, that insurance
will be available as expected or that unanticipated damages or
settlements in the future would not exceed insurance coverage.
Pfizer continues to be a part of the asbestos-related lawsuits
because of its two units, Quigley and Warner-Lambert. A total
of around 128,000 claims naming Pfizer and/or Quigley and
numerous other defendants were pending in various federal and
state courts seeking damages for alleged asbestos exposure, as
of December 31, 2002, according to the company's latest annual
report filed with the Securities and Exchange Commission.
The majority of these claims involve alleged activities of
Quigley, for which any liability is solely the responsibility of
Quigley. While Quigley continues to have insurance covering
asbestos claims, that insurance is limited and going forward
contains substantial self-insurance aspects.
Quigley has been and continues to be a separately incorporated
subsidiary of Pfizer. Quigley has conducted no active trade or
business since 1992. Its sole activity is management of its
asbestos-related claims. Warner-Lambert, on the other hand, has
agreed to indemnify the purchaser of American Optical, which
manufactured and sold respiratory protective devices and
asbestos safety clothing, since 1982.
As of December 31, 2002, there were about 103,000 claims naming
American Optical and numerous other defendants pending in
various federal and state courts seeking damages for alleged
asbestos and other exposures. Several of the insurance carriers
that provided coverage for the American Optical asbestos and
other claims have denied coverage.
Based upon available data and the company's experience in
handling asbestos claims, Pfizer believes that a substantial
portion of the plaintiffs alleging injury from Pfizer, Quigley
and American Optical products do not have any impairing medical
condition. For those claimants who do, the company believes it
has meritorious defenses.
Five lawsuits were pending against RJ Reynolds Tobacco in which
asbestos companies and/or asbestos-related trust funds allege
that they "overpaid" claims brought against them to the extent
that tobacco use, not asbestos exposure, was the cause of the
alleged personal injuries for which they paid compensation, as
of April 17, 2003, according to its first quarter regulatory
On May 24, 2001, a Mississippi state court judge dismissed all
such claims by Owens-Corning in Estate of Ezell Thomas v. RJR
Tobacco Co. Owens-Corning appealed the dismissal to the
Mississippi Supreme Court on August 15, 2001. That appeal
remains pending. A similar case, H.K. Porter Co., Inc. v.
American Tobacco Co., was pending in the US District Court for
the Eastern District of New York before Judge Weinstein.
However, on July 26, 2001, the parties stipulated to a dismissal
of the action. In Fibreboard Corp. v. R. J. Reynolds Tobacco
Co., a case pending in state court in California, Owens-Corning
and Fibreboard asserted the same claims as those asserted in the
Mississippi case. Motions to dismiss those claims have been
held in abeyance pending the final determination of the
Mississippi case.
Sears, Roebuck and Co. reports that 1,000 cases are pending
against them filed by customers who bought products that
contained asbestos for alleged health problems.
The blow came on May 8 when a New York appellate court upheld a
judge's decision that Sears is responsible for paying a
$1,500,000 jury award to Howard Plumb who died on November 4,
2001 of mesothelioma, a lung disease tied to inhalation of
asbestos fibers. Mr. Plumb, who worked for a few years as a
Sears salesman, said asbestos products he bought at Sears 50
years ago were partly responsible for his cancer. He said that
in the late 1940s and early 1950s, he bought floor tiles, boiler
insulation and other items from Sears that contained asbestos.
The jury found that Sears breached its warranty because it
advertised asbestos-containing products as safe.
A Sears spokeswoman insists that the asbestos-injury lawsuits
pending against the Hoffman Estates-based retailer are without
merit. Sears is vigorously fighting the lawsuits, and the
situation will have no effect on Sears' efforts to sell its
credit-card business, said spokeswoman Jan Drummond.
However, attorney Jordan Fox, who represented Mr. Plumb in the
New York trial, said research is under way to determine whether
Sears officials knew about asbestos hazards because Sears once
owned Allstate Corporation. Mr. Fox said he believed Allstate
would have had access to claims by people who believed their
health had been hurt by asbestos exposure. Sears spun off the
Northbrook-based insurance provider in 1995 to help fund a
retail turnaround strategy.
The Plumb verdict in September 2000 made Sears the first
retailer held liable for an asbestos-related illness. Other
cases involved companies that manufactured asbestos-containing
products. The jury assessed 98 percent of the responsibility
for Mr. Plumb's cancer to General Electric Co., which made
asbestos-containing electrical cable that Plumb said he handled
when he worked as an electrician's helper at an Alcoa plant.
The jury assessed Sears for the remaining 2 percent, or $30,000.
However, GE settled with Mr. Plumb before the jury reached its
verdict, and the judge determined Sears should pay the entire
$1,500,000. Sears appealed the ruling. The appellate court
upheld the judge's ruling by a 4-1 vote, which means Sears must
get permission from the New York Court of Appeals to appeal
Sears has not decided what it will do next. "We have not paid
the judgment, and we do not believe it is appropriate for Sears
to pay the $1.5 million," Ms. Drummond said. She said Sears was
dismissed from 52 other asbestos claims between January and
March. Of the 1,000 other complaints pending, none is at
trial, she said.
Sears is assessing each case individually, and has settled two
asbestos-related cases since January 2002 for a total of
$250,000. Ms. Drummond declined to provide specifics of the
settlements.
Viacom reports in its annual regulatory filing that as of
December 31, 2002, the Company had pending 103,800 or so
asbestos claims, as compared to around 106,000 as of December
31, 2001 and around 100,000 as of December 31, 2000.
The 2001 and 2000 numbers of claims included approximately 7,100
claims and 1,900 claims, respectively, on an inactive docket in
Baltimore which would not be counted as pending under the
Company's current methodology. In addition, the pending claim
count was reduced by approximately 24,000 claims as a result of
the Supreme Court of New York's order dated December 2002
establishing a deferred docket of claimants alleging minimal or
no impairment.
Of the claims pending as of December 31, 2002, approximately
73,900 were pending in state courts, 27,100 in federal court and
approximately 2,800 were third party claims. During 2002, the
Company received approximately 49,400 new claims and closed
approximately 18,500 claims. The Company reports claims as
closed when it becomes aware that a court has entered a
dismissal order or when the Company has reached agreement with
the claimants on the material terms of a settlement.
Settlement costs depend on the seriousness of the injuries that
form the basis of the claim, the quality of evidence supporting
the claims and other factors. To date, the Company has not been
liable for any third party claims. The Company's total costs in
2002 and 2001 for settlement and defense of asbestos claims
after insurance recoveries and net of tax benefits were
approximately $28,000,000 and $21,000,000, respectively. A
portion of such costs relates to claims settled in prior years.
increased primarily by exposure to asbestos, lung cancer, a
cancer which may be caused by various factors, one of which is
alleged to be asbestos exposure, other cancers, and conditions
that are substantially less serious, including claims brought on
behalf of individuals who are asymptomatic as to an allegedly
asbestos-related disease. The total number of asbestos claims
filed during 2002 has declined relative to 2001 primarily as a
result of a decline in claims filed on behalf of individuals who
have not identified the claimed injury or who are asymptomatic
as to an alleged asbestos-related disease. Claims identified as
cancer remain a small percentage of asbestos claims pending at
December31, 2002. In a substantial number of the pending claims,
the plaintiff has not yet identified the claimed injury.
The Company believes that its reserves and insurance are
adequate to cover its asbestos liabilities and that these
asbestos liabilities are not likely to have a material adverse
effect on its results of operations, financial position or cash
Park Ohio Holdings Corporation has been named as one of many
defendants in asbestos-related personal injury lawsuits,
according to its latest annual report filed with the Securities
The Company's cost of defending such lawsuits has not been
material to date and based upon available information,
management of the Company does not expect the Company's future
costs for asbestos-related lawsuits to have a material adverse
effect on its results of operations, liquidity or financial
condition. The Company cautions however that inherent in
management's estimates of the Company's exposure are expected
trends in claims severity, frequency and other factors which may
materially vary as claims are filed and settled or otherwise
Park-Ohio Holdings Corporation (NASDAQ: PKOH)
Net Income : $(61,200,000)
Description: Park-Ohio Holdings, through Park-Ohio Industries
and its subsidiaries, provides logistics services and makes
engineered products for the aerospace, auto, semiconductor, and
other industries. Its integrated logistics solutions unit offers
procurement and management services and supplies fasteners
(nuts, bolts, screws), fittings, and other industrial products.
The manufactured products unit makes forged and machined
products (aircraft landing gears, camshafts, crankshafts),
induction heating systems, and industrial rubber products. The
aluminum products unit makes castings for the auto industry.
Ford accounts for about 10% of sales. Chairman and CEO Edward
Crawford owns more than 25% of the company.
One of the non-operating subsidiaries of Tyler Technologies,
Swan Transportation Company, has been and is currently involved
in various claims for alleged work-related injuries resulting
from alleged exposure to silica, asbestos, and/or related
industrial dusts, raised by hundreds of former employees of a
foundry that was once owned by an affiliate of Swan and Tyler.
Tyler sold the operating assets of the foundry on December 1,
1995. As a non-operating subsidiary of Tyler, the assets of
Swan consist primarily of various insurance policies issued to
Swan during the relevant time periods and restricted cash of
$1,300,000 at December 31, 2002.
Swan tendered the defense and indemnity obligations arising from
these claims to its insurance carriers, who, prior to December
20, 2001, entered into settlement agreements with approximately
275 of the plaintiffs, each of whom agreed to release Swan,
Tyler, and its subsidiaries and affiliates from all such claims
in exchange for payments made by the insurance carriers.
On December 20, 2001, Swan filed a petition under Chapter 11 of
the U.S. Bankruptcy Code in the United States Bankruptcy Court
for the District of Delaware. The bankruptcy filing by Swan was
the result of extensive negotiations between Tyler, Swan, their
respective insurance carriers, and an ad hoc committee of
plaintiff attorneys representing substantially all of the then
known plaintiffs.
Swan filed its plan of reorganization in February 2002. The
principal features of the plan of reorganization include:
(1) the creation of a trust, which is to be funded
principally by 15 insurance carriers pursuant to
certain settlement agreements executed pre-petition
between Swan, Tyler, and such carriers;
(2) the implementation of a claims resolution procedure
pursuant to which all present and future claimants may
assert claims against such trust for alleged injuries;
(3) the issuance of certain injunctions under the federal
bankruptcy laws requiring any such claims to be
asserted against the trust and barring such claims from
being asserted, either now or in the future, against
Swan, Tyler, all of Tyler's affected affiliates, and
the insurers participating in the funding of the trust;
(4) the full and final release of each of Swan, Tyler, all
of Tyler's affected affiliates, and the insurers
participating in the funding of the trust from any and
all claims associated with the once-owned foundry by
all claimants that assert a claim against, and receive
compensation from, the trust.
The confirmation hearings on Swan's plan of reorganization were
held on December 9, 2002. The plan of reorganization received
the affirmative vote of approximately 99% of the total votes
cast. All objections to the plan were resolved prior to the
confirmation hearing, and the final confirmation order will
therefore not be subject to appeal. The confirmation order
discharges, releases, and extinguishes all of the foundry-
related obligations and liabilities of Tyler, Swan, their
affected affiliates, and the insurers participating in the
funding of the trust.
Further, the confirmation order includes the issuance of
injunctions that channel all present and future foundry-related
claims into the trust and forever bar any such claims from being
asserted, either now or in the future, against Swan, Tyler,
their affected affiliates, and the participating insurers. In
order to receive the benefits described above, we have agreed,
among other things, to transfer all of the capital stock of Swan
to the trust so that the trust can directly pursue claims
against insurers who have not participated in the funding of the
trust. In addition, we have agreed to contribute $1,500,000 in
cash to the trust, which is due as follows: $750,000 within ten
days of the confirmation order becoming a final order; $500,000
on the first anniversary of the date the confirmation order
becomes a final order; and $250,000 on the second anniversary of
the date the confirmation order becomes a final order. The
confirmation order will become a final order thirty days after
execution by both the bankruptcy and district court judges,
which is expected to occur by the end of the first quarter of
Other than ordinary course, routine litigation incidental to our
business and except as described in this Annual Report, there
are no material legal proceedings pending to which the Company
or its subsidiaries are parties or to which any of its
properties are subject.
Tyler Technologies, Inc. (NYSE: TYL)
5949 Sherry Ln., Ste. 1400
http://www.tylertechnologies.com
Revenues : $133,897,000
Liabilities : $51,189,000
Description: Tyler Technologies provides information management
software and services that help about 6,000 local government
offices improve efficiency and make their services more
accessible to the public. Tyler's software offerings include
tools for accounting, posting public records over the Internet,
tracking and managing judicial cases, recording courtroom
proceedings, and automating appraisals and assessments. The
company also offers maintenance and professional services, as
well as property appraisal services for tax jurisdictions.
Lockridge Grindal Nauen PLLP initiated a securities class action
in the United States District Court for the Eastern District of
New York, on behalf of purchasers of Allou Healthcare, Inc.
(AMEX:ALU) publicly traded securities during the period between
June 22, 1998 and April 9, 2003, inclusive.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between June 28, 1998 and April
9, 2003, thereby artificially inflating the price of Allou
securities. The complaint alleges that defendants issued a
series of materially false and misleading statements concerning
the Company's financial results.
In particular, the complaint alleges:
(1) that Allou was materially overstating its accounts
receivables by at least $78 million, thereby
overstating its revenues and earnings;
(2) that Allou was materially overstating its inventory,
thereby overstating its net worth; and
(3) as a result of the foregoing, Allou's financial
statements were not prepared in accordance with GAAP
and were therefore materially false and misleading.
On April 9, 2003, Allou announced that ``its lenders have filed
an involuntary petition for bankruptcy in the Eastern District
of New York under the provisions of chapter 11, title 11, of the
United States Code.'' Following this news, on April 9, 2003,
AMEX suspended trading in Allou's common stock.
Thereafter, press reports revealed that an outside restructuring
expert that had been retained to run Allou discovered, among
other things, that ``only $30 million of $108 million in
accounts receivable reported by Allou to its banks seemed to be
valid.'' Furthermore, on April 24, 2003, Allou announced that
it ``believes that the levels of assets collateralizing loans
were substantially overstated in recent reports submitted by the
Company to its senior lenders.
The preliminary results of the Company's investigation indicate
that inventory was overstated by approximately $35,000,000 and
that accounts receivable may be overstated by $75,000,000 to
$80,000,000, for a total overstatement of $110,000,000 to
$115,000,000. The Company has retained a forensic accounting
firm to assist with the continuing investigation of this
matter.''
For more details, contact Karen M. Hanson by Mail: 100
Washington Avenue South Suite 2200 Minneapolis, MN 55401 by
Phone: (612) 339-6900 or by E-mail: kmhanson@locklaw.com
Goodkind Labaton Rudoff & Sucharow LLP initiated a securities
class action pursuant to Section 21D(a)(3)(A)(i) of the
Securities Exchange Act of 1934, in the United States District
Court for the Central District of California on behalf of all
open market purchasers of the common stock of Avery Dennison
Corporation (NYSE:AVY) during the period July 24, 2001 through
April 14, 2003, inclusive. The named defendants are the Company
(1) Philip M. Neal, the Company's Chairman and CEO,
(2) Daniel R. O'Bryant, the Company's Chief Financial
Officer, and
(3) Michael A. Skovran, the Company's Controller and Vice
The complaint charges defendants with violations of Section
10(b) of the Securities Exchange Act of 1934 and Rule 10(b)-5
promulgated thereunder and Section 20(a) of the Exchange Act of
The complaint alleges that defendants engaged in an illegal
anti-competitive scheme with Avery's main competitor, UPM-
Kymmene (UPM), to manipulate the labelstock supply market and
that Avery's financial results were a result of defendants'
anti-competitive behavior. The complaint alleges that
defendants knew such behavior could subject the Company to
regulatory scrutiny if such anti-competitive behavior was
discovered and further, that Avery's financial results would be
materially impacted if Avery was forced to cease its improper
On April 14, 2003, the Department of Justice (DOJ) announced
that it had commenced a criminal investigation into competitive
prices in the labelstock industry, and would be serving a
subpoena on ADC in connection with that investigation.
On April 15, 2003, the DOJ, in a lawsuit filed against an ADC
competitor, alleged evidence of anticompetitive behavior by ADC
and others. On this news, ADC's stock fell $4.19, closing at
For more details, contact Emily C. Komlossy by Mail: 100 Park
Avenue, 12th Floor, New York, New York 10017-5563 by Phone:
(212) 907-0700 by E-mail: ekomlossy@glrslaw.com or visit the
firm's Website: http://www.glrslaw.com
Abbey Gardy, LLP initiated a securities class action in the
United States District Court for the District of Central
District of California (03-CV-3379) on behalf of all persons who
purchased securities of Avery Dennison Corporation (NYSE: AVY)
between July 24, 2001 and April 14, 2003 inclusive.
misrepresentations to the market during the class period thereby
artificially inflating the price of Avery securities.
The complaint charges Avery and Philip M. Neal, the Company's
Chairman and CEO, Michael A. Skovran, the Company's Controller
and VP and Daniel O'Bryant, the Company's CFO and Sr. VP with
violations of federal securities laws. The complaint alleges
that defendants engaged in an illegal anti-competitive scheme
with its leading competitor, UPM-Kymmene, OYJ (UPM), to
manipulate the labelstock supply market and that Avery's
financial results were a product of defendants' anti-competitive
The complaint further alleges that the defendants knew that its
anti-competitive behavior could possibly subject the Company to
discovered and Avery's financial results would be materially
impacted if the Company were forced to stop its anti-competitive
For more details, contact Damon Williams or Nancy Kaboolian by
Phone: (212) 889-3700 or 800-889-3701 or by E-mail:
dwilliams@abbeygardy.com or nkaboolian@abbeygardy.com
Faruqi & Faruqi LLP initiated a securities class action in the
York on behalf of all purchasers of Core Laboratories, N.V.
(NYSE:CLB) securities between May 6, 2002 and March 31, 2003,
inclusive.
The complaint charges defendants with violations of federal
securities laws by, among other things, issuing a series of
materially false and misleading press releases concerning Core
Laboratories' financial results and business prospects and/or
omitting to disclose material facts necessary to correct these
statements. Specifically, the complaint alleges that Core
Laboratories failed to disclose, among other facts, that:
(1) the Company had materially overstated its net income
and earnings per share by, among other things, issuing
duplicate invoices;
(2) that the Company had overstated its ability to collect
on certain accounts receivable; and
(3) the Company had improperly delayed the booking of
expenses and foreign exchange translation losses from
certain field locations.
As a result, the price of the Company's securities were
artificially inflated throughout the class period. On March 31,
2003, however, the Company shocked the market when it announced
it would be restating its financial results for prior 2002
quarterly operating results. Upon this revelation, Core
Laboratories' common stock fell in excess of 12% on extremely
heavy trading volume.
For more details, contact Anthony Vozzolo by Mail: 320 East 39th
Street, New York, NY 10016 by Phone: (877) 247-4292 or
(212) 983-9330 or by E-mail: Avozzolo@faruqilaw.com
Bernstein Liebhard & Lifshitz LLP initiated a securities class
action on behalf of all persons who acquired securities of Fifth
Third Bancorp (NasdaqNM:FITB) September 21, 2001 to January 31,
2003, inclusive. The case is pending in the United States
District Court for the Southern District of Ohio, Western
Division against the Company and:
(1) George A. Schaefer Jr.,
(2) Neal E. Arnold, and
(3) David J. Debrunner
The complaint charges that Fifth Third and certain of its
officers and directors violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations
to the market during the class period, thereby artificially
inflating the price of Company securities.
Specifically, the Complaint alleges that throughout the class
period, Fifth Third issued press releases and filed financial
reports with the SEC which represented that the Company had
successfully and seamlessly integrated Old Kent Financial
Corporation into its operations and was already experiencing
meaningful growth from the acquisition.
However, these statements were materially false and misleading
because they failed to disclose that the Old Kent merger
seriously strained the Company's infrastructure, causing
deficiencies in its internal controls and other business-
critical systems, which was having a material and negative
impact on Fifth Third's ability to operate and even to keep
track of its business. Rather than disclose these facts to the
public, defendants continued to tout the Company's effective
integration of acquisitions, which had been the driving force
behind its stellar growth, in order to artificially inflate its
stock price to be used as currency for new acquisitions.
The Company had outgrown its infrastructure and internal
controls, but continued to keep this fact from investors,
falsely presenting its business as stronger than ever and
promising continued growth along with investment-safety.
Finally on January 31, 2003, the Company reported in a Form 8-K
that banking regulators would likely take formal action against
the Company. Without providing details, the Company stated that
it would likely be ordered to improve its internal controls by,
among other things, adding personnel and processes and
submitting certain of its processes to third-party review.
On February 3, 2003, the first trading day following the
announcement, the price of Fifth Third common stock declined to
$52.21 per share from the closing price on January 31, 2003
close of $53.35.
For more detail, contact Ms. Linda Flood, Director of
Shareholder Relations by Mail: 10 East 40th Street, New York,
New York 10016, by Phone: (800) 217-1522 or 212-779-1414 or by
E-mail: FITB@bernlieb.com.
Pomerantz Haudek Block Grossman & Gross LLP initiated a
securities class action in the United States District Court for
the Southern District of New York against Goldman Sachs & Co.
(NYSE:GS) and its Senior Technology Analyst Matthew Janiga on
behalf of investors who purchased the common stock of Exodus
Communications, Inc. during the period from July 1, 1999 through
June 30, 2001, inclusive.
The lawsuit charges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 by issuing false
and misleading analyst reports on Exodus, a provider of internet
system and network management solutions, in a bid to win or
maintain lucrative banking and advisory work from the Company.
As a result of defendants' false and misleading statements, the
market price of Exodus common stock was artificially inflated,
maintained or stabilized during the class period.
On or about April 28, 2003, the United States Securities and
Exchange Commission (SEC) issued a complaint charging Lehman
with violating numerous rules of conduct of the National
Association of Securities Dealers, Inc. (NASD) and the New York
Stock Exchange, Inc. (NYSE), by issuing false and misleading
analyst reports on numerous companies, including RealNetworks.
The complaint describes the influence and control exerted by
Goldman Sachs' investment bankers on its supposedly independent
research analysts, and details how positive ratings and research
reports on Exodus issued by defendants to the public were
contrary to defendants' more negative assessments of the
Company's true value and prospects.
For more details, contact Andrew G. Tolan by Phone:
(888) 476-6529 / (888) 4-POMLAW or by E-mail: agtolan@pomlaw.com
Shapiro Haber & Urmy LLP initiated a securities class action
against J. Jill Group, Inc. (NasdaqNM:JILL) and certain officers
and directors on behalf of persons who purchased J. Jill
securities between February 12, 2002 and December 4, 2002,
inclusive, in the United States District Court for the District
of Massachusetts.
The complaint alleges that J. Jill Group violated section 10(b)
and 20(a) of the Securities Exchange Act, and Rule 10b-5
promulgated thereunder, by issuing numerous false and misleading
statements and/or concealing material adverse facts regarding
the Company's business, which enabled J. Jill Group insiders to
sell more than $17 million of their personally held J. Jill
Group common stock to the unsuspecting market and caused
plaintiffs and other members of the class to purchase J. Jill
Group common stock at artificially inflated prices.
For more details, contact Thomas G. Shapiro, Esq., or Liz
Hutton, Paralegal, by Mail: 75 State Street, Boston, MA 02109 by
Phone: (800) 287-8119 by Fax: (617) 439-0134, or by E-mail:
cases@shulaw.com.
The Law Offices Of Charles J. Piven, PA initiated a securities
class action on behalf of shareholders who purchased, converted,
exchanged or otherwise acquired the common stock of J. Jill
Group, Inc. (NasdaqNM:JILL) between February 12, 2002 and
The case is pending in the United States District Court for the
District of Massachusetts. The action charges that defendants
violated federal securities laws by issuing a series of
materially false and misleading statements to the market
throughout the class period which statements had the effect of
artificially inflating the market price of the Company's
For more details, contact Charles J. Piven by Mail: The World
Trade Center-Baltimore, 401 East Pratt Street, Suite 2525,
Baltimore, Maryland 21202, by Phone: 410-986-0036 or by email at
E-mail: hoffman@pivenlaw.com
action in the United States District Court for the District of
New Jersey on behalf of all persons who purchased or acquired
Pharmacia Corporation (NYSE:PHA) securities between April 17,
2000 and August 21, 2001, inclusive.
The complaint charges Pharmacia and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. The complaint alleges that according to Pharmacia, the
unique feature of Celebrex was that, unlike aspirin or
ibuprofen, it allowed Celebrex to retard pain and inflammation
without the adverse side effects of stomach malaise or
gastrointestinal bleeding.
As defendants consistently stated, this critical feature of
Celebrex, provided a tremendous market advantage because the use
of traditional Nonsteroidal Anti-inflammatory Drug (NSAIDs)
resulted in as many as 100,000 hospitalizations each year and
more than 15,000 deaths, related to gastrointestinal problems
such as ulcers and bleeding.
In order to remove the FDA's warning label, Pharmacia was
required to demonstrate that Celebrex provided an advantage over
traditional NSAIDs. Pharmacia then commissioned the "Celecoxib
Long-term Arthritis Safety Study" (the "CLASS" study) - a
clinical study to compare the gastrointestinal problems of
patients who used Celebrex to those of patients who used other
NSAIDs. Pharmacia, together with its partner Pfizer, not only
funded this study, but every one of the sixteen physicians who
performed the study were either employees of or paid consultants
for Pharmacia.
Because of its purportedly unique safety profile and its ready
use by patients, Celebrex was perceived both by the medical and
investment community as a very important product. The CLASS
data was widely circulated and reviewed. One such review
appeared in the prestigious Journal of the American Medical
Association (JAMA), on September 13, 2000. Based on a review of
the data supplied by Pharmacia, the authors of the JAMA article
also reported that patients who took Celebrex had fewer
symptomatic ulcers than those who took diclofenac or ibuprofen,
two traditional NSAIDs.
However, on August 22, 2001, The Wall Street Journal reported
that Celebrex caused higher incidence of cardiovascular
problems. The Journal reported that noted cardiologists Eric J.
Topol and Steven E. Nissen, chairman and vice chairman,
respectively, of cardiovascular medicine at the Cleveland
Clinic, issued a study on Celebrex which concluded that
"(c)urrent data would suggest that use of these so-called 'COX-
02 inhibitors' might lead to increased cardiovascular events."
Further, the Cleveland Clinic doctors concluded that Celebrex
was associated with a relatively high rate of heart attacks.
This report was also published in the less widely circulated
Journal of American Medicine at or about the same time.
On this news, Pharmacia's stock declined to below $40 by August
30, 2001, from the 45 range the stock traded at in mid-August.
For more details, contact Ms. Linda Flood, Director of
Shareholder Relations, by Mail: 10 East 40th Street, New York,
New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 or by
E-mail: PHA@bernlieb.com.
Much Shelist Freed Denenberg Ament & Rubenstein, PC initiated a
the Northern District of Illinois on behalf of purchasers of the
securities of Sara Lee Corporation (NYSE:SLE) between August 1,
2002 and April 24, 2003, inclusive.
It has been alleged that Sara Lee and certain of its officers
and directors violated the federal securities laws by issuing a
series of materially false and misleading statements to the
market, which had the effect of artificially inflating the
market price of Sara Lee's securities.
Specifically, the complaint alleges that the statements
concerning the Company's operations and prospects were
materially false and misleading because they failed to disclose:
(1) that, despite the Company Reshaping program, Sara Lee
was still burdened with numerous poorly performing
businesses and would have to reevaluate its various
businesses. Accordingly, Sara Lee did not have ``the
right mix of businesses'' in that several material
businesses were ``not growing'' or were ``in
significant decline;''
(2) that the Sara Lee's underperforming businesses were
causing the Company to experience declining results
and, as a result, Sara Lee would not be growing at the
rates represented to the market;
(3) due to a lack of proper internal or financial controls,
Sara Lee failed to identify or recognize those
businesses or brands among its portfolio of companies
that would need to be ``run dramatically differently in
the future;" and
(4) based on the foregoing, Sara Lee lacked any reasonable
basis upon which to project it would experience
``double-digit operating income increase'' for fiscal
2003 among its ``five lines of business'' or have
diluted EPS for fiscal 2003 in the range of $1.54 to
On April 24, 2003, Sara Lee shocked the market when it issued a
press release announcing its financial results for the third
quarter, the period ending March 31, 2003. The Company
announced that it was reducing earnings for fiscal 2003 to $1.50
to $1.52 per share, significantly below consensus expectations
of $1.59. In response to this announcement, the price of Sara
Lee common stock closed down $1.94 from the previous day's
ending price.
According to the complaint, during the class period, Sara Lee
insiders sold more than $23 million of their Sara Lee common
stock to the unsuspecting public.
For more details, contact Carol V. Gilden by Phone:
(800) 470-6824 or by E-mail: investorhelp@muchshelist.com
Glancy & Binkow LLP initiated a securities class action in the
Illinois on behalf of all persons who purchased securities of
Sara Lee Corporation(NYSE:SLE) between August 1, 2002 and April
24, 2003, inclusive.
The complaint charges Sara Lee and certain of its executive
officers with violations of federal securities laws. Among
other things, plaintiff claims that defendants' material
omissions and the dissemination of materially false and
misleading statements concerning the Company's business
operations and financial performance caused Sara Lee's stock
price to become artificially inflated, inflicting damages on
Sara Lee is a branded consumer packaged goods company, which
manufactures and markets products in nearly 200 countries under
such well-known name brands as Sara Lee, Jimmy Dean, Chock Full
O' Nuts, Hanes, Playtex and Bali. The complaint alleges that,
during the class period, defendants failed to disclose that
(1) despite a ``Reshaping program'' designed to improve the
Company's competitive structure, Sara Lee was burdened
with numerous poorly performing businesses, and did not
have ``the right mix of businesses'' in that several
material businesses were ``not growing'' or were ``in
significant decline'';
(2) the Company's underperforming businesses were causing
the Company to experience declining results and, as a
result, Sara Lee would not be growing at the rates
represented to the market;
(3) due to a lack of proper internal controls, Sara Lee
failed to recognize or identify those businesses or
brands among its portfolio of companies that would need
to be ``run dramatically differently in the future'';
basis upon which to project that it would experience
``double-digit operating income increases'' for fiscal
press release announcing is financial results for the period
ending March 31, 2002. The Company announced that it was
reducing earnings for fiscal 2003 to $1.50 to $1.52 per share,
significantly below consensus expectations of $1.59.
For more details, contact Michael Goldberg by Mail: 1801 Avenue
of the Stars, Suite 311, Los Angeles, California 90067, by
Phone: (310) 201-9161 or (888) 773-9224 or by E-mail:
info@glancylaw.com.
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora
Fatima Antonio and Lyndsey Resnick, Editors.


text:
Q: Why can't I add the equations of two lines to find out how many solutions the system has? How many solutions does this pair of equations have?
$3x-6y=9$
$2y-x=3$
I know now that these equations represent parallel lines and are not the same line, so there are no solutions. I can also see that if I had solved for $y$, I could have observed that they have the same slope but different intercepts and so hopefully have realized that the correct answer was "no solutions".
But I originally started out by adding the two equations, like so:
$3x-6y-9=0$
$+$
$-x +2y-3=0$
$=$
$2x-4y-12=0$
I thought I could factor out a 2, then factor the quadratic. The question asked how many solutions, and I could see that the discriminant is positive, so even though it wasn't clear what the roots were, I thought there should be two.
What is wrong with this reasoning? How should I have noticed I was on the wrong track once I had already started adding the two equations?

A: Consider what happens if you scale the second equation by $3$ first before adding:
$$
\begin{cases}
3x - 6y = 9 \\
-x + 2y = 3
\end{cases}
\implies
\begin{cases}
3x - 6y = 9 \\
-3x + 6y = 9
\end{cases}
\implies 0 = 18
$$
This is a contradiction! So no solutions exist.

A: Your issue arises from the fact that your steps are not reversible. You started off with the following two equations:
$$2y-x=3.$$
$$3x-6y=9$$
You then added them to get:
$$2x-4y=12$$
Dividing both sides by $-2$ and rearranging gives:
$$2y-x=-6.$$
Here's where you arrive at a contradiction: equating the most recent equation to the first of your two original equations gives $-6=3$, which is clearly false. Of course, I still haven't answered your question of "why is this wrong"? Basically, it all boils down to the fact that your steps are not reversible. Yes, you can add two equations together to get a new valid equation, but a solution to your new equation is by no means guaranteed to satisfy your second equation, as I demonstrated above by arriving at the contradiction $-6=3$. Because your steps are not reversible, it is good practice to always check your answers at the end of a problem by plugging them into your original equations.

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