The New York Times, "Finding Wrongs, Through the Prism of Silicon Valley"

          Seeking to mirror its aggressive pursuit of executives on Wall Street, the Justice Department is putting a new focus on Silicon Valley, pursuing managers of the technology boom who are suspected of crossing the line into securities fraud and insider trading.
          The United States attorney here is under pressure from Washington to mount prosecutions swiftly. The effort was punctuated last month by the indictment last month of Phillip E. White, the former chief executive of Informix, a database company that was based in Menlo Park, Calif., and has since been bought by I.B.M. Prosecutors assert that the company lied about its revenue, leading it to inflate the value of its stock by hundreds of millions of dollars.
          The government has also brought charges or received convictions in the last year against executives or employees at least nine high-technology companies, including Critical Path, the e-mail network company.

The Recorder, "Exxon Valdez Award Reduced -- But Only To $4B"

          On December 6, 2002, Senior U.S. District Judge H. Russel Holland of the District of Alaska reinstated a near-record punitive damages award even though the 9th U.S. Circuit Court of Appeals ruled last year that the original $5 billion verdict was excessive. Holland's award of $4 billion was a surprise to followers of the case, particularly Exxon Mobil Corp., which immediately vowed to appeal. The move could tack on several more years of litigation stemming from the infamous Exxon Valdez oil spill that happened more than 13 years ago.
          Spokesman Tom Cirigliano said Exxon Mobil was disappointed that Holland didn't issue a "Solomon-like decision that could have brought closure to this case." But plaintiffs' lawyers representing thousands of Alaskans who make their living from Prince William Sound, the site of the 11-million gallon spill, praised Holland.
          Last year, a unanimous three-judge panel ruled that the record award "must be reduced," holding that it was inconsistent with intervening Supreme Court precedents about punitive damages such as BMW of North America v. Gore, 517 U.S. 559 and Cooper Industries Inc. v. Leatherman Tool Group Inc., 121 S. Ct. 1678.
          The 9th Circuit decision in In re: Exxon Valdez, 270 F.3d 1215, was authored by 9th Circuit Judge Andrew Kleinfeld, who sits in Alaska and once served on the district court bench with Holland. Kleinfeld -- who did write that Holland did a "masterful job" with the litigation -- held that the company's conduct was not violent and did not cause any deaths. He also wrote that the award must be rationally proportional to the award of compensatory damages. But Holland and the 9th Circuit apparently disagree on what compensatory damages have been paid.
          Calling it "the most troubling aspect" of the 9th Circuit's ruling, Holland challenged the higher court's determination that prejudgment settlements cannot be counted toward the compensatory figure. "The briefing of the parties and the court's independent research suggest that authority in support of the foregoing proposition is nonexistent, and what sparse authority does exist reaches a contrary conclusion," Holland wrote.
          "This court does not understand how or why encouraging settlements should be a part of the due process analysis of a punitive damages award made in a case which went to trial. Moreover, this court thinks a contrary argument is more logical." Holland also wrote that although the jury could not consider environmental damages, "the entire fabric of Prince William Sound and Lower Cook Inlet was torn apart." That statement seemingly contradicts Kleinfeld's statement that this was merely "a case about commercial fishing." That unquantifiable harm, Holland wrote, could be used under the ratio test of BMW to "accommodate the unknowns by allowing a higher ratio to pass muster."

Note: Lieff Cabraser serves as co-counsel for the Alaska fishermen and other plaintiffs in the Exxon Valdez litigation. To read a copy of Judge Holland's order (in Adobe Acrobat format), click here.

Capitol News Service, "U.S. Urges Court of Appeal to Throw Out Slave Labor Suit"

          A class action brought by a Korean immigrant seeking compensation for himself and others who were seized by the Japanese government and forced to labor for Japanese firms during World War II should be thrown out, a Justice Department lawyer argued yesterday before this district's Court of Appeal.
           In Jeong's case, Los Angeles Superior Court Judge Peter Lichtman upheld the statute and ruled that the suit could proceed. The Court of Appeal stayed the trial court proceedings and granted an order to show cause why a writ of mandate or prohibition should not be granted.
          Attorneys for defendant Taiheyo Corporation argued that all claims for injuries suffered by Korean nationals during World War II must be addressed by the Japanese and North and South Korean governments through "special arrangements" under the 1951 San Francisco Treaty. But the appellate panel raised a number of questions, including whether the treaty is binding on Korean nationals, given that Korea was not a party, and whether the treaty implicitly bars claims in American courts.
           Claims by the defendant corporations that they were forced by the government to use slave labor as part of the war effort, Lee said, can be addressed in the trial court as affirmative defenses but do not constitute a basis for throwing out the suit.
          The fact that a ruling against a foreign company might endanger relations between the defendant's home country and the United States, he added, is no grounds for granting such companies immunity from suit. "Foreign companies are in our courts every day," he said.

Note: On January 15, 2003, the Court of Appeal ruled in favor of Mr. Jeong and ordered that case proceed.

San Francisco Volunteer Legal Services Program Celebrates Its 25th Anniversary

At a fund raising dinner, the Volunteer Legal Services Program ("VLSP") of the San Francisco Bar Association marked its 25th Anniversary, and renewed its commitment to bring about permanent change in the lives of the San Francisco Bay Areas’s most vulnerable residents. Honored at the event were Tanya Neiman, Director of the VLSP for 20 years of service, James J. Brosnahan, founder of the VLSP, and Elizabeth J. Cabraser, who received the organization's first Champion of Justice award. To learn more about the VLSP, click here.

90% of Disabled California High School Students Failed Latest Exit Exam; Lieff Cabraser Challenges Test

Sacramento, CA -- The California Department of Education revealed that more than 90% percent of the disabled students, or 26,393 students, that took the March 2002 California High School Exit Exam did not pass the test. Commencing with the Class of 2004, any California student who has not passed the exit exam will not receive a diploma. With the Oakland-based Disability Rights Advocates, Lieff Cabraser is challenging the exam as discriminatory against disabled students for denying them the opportunity to pass the exam and obtain a diploma with reasonable accommodations or modifications.

Elizabeth Cabraser named to California Daily Journal's "Top 100 Lawyers"

On September 30, 2002, the legal newspaper the California Daily Journal named Elizabeth J. Cabraser to its list of the Top 100 Lawyers, the fourth year Ms. Cabraser has received this award.
To learn more, click here.

Los Angeles Times, "Dismissal of Holocaust Case Rejected"

         A federal court Wednesday rejected efforts of Italian and Swiss insurance companies to dismiss a case by Holocaust victims and surviving family members seeking payments on Nazi-era insurance policies. Italian insurance company Assicurazioni Generali SpA and Zurich Life Insurance Co. of Switzerland sought to get a judge to dismiss the litigation, claiming that the United States was not the proper venue to decide the case.
          Attorneys for the insurance companies argued that courts in European countries in which the policies were issued should be used to resolve the case. They also said a private commission--the International Commission on Holocaust Era Insurance Claims--had been set up to deal with such issues.
          But U.S. District Judge Michael Mukasey rejected those arguments, ruling that the case could go forward in the United States. The judge also found that the ICHEIC was not an adequate alternative forum for the resolution of the plaintiffs' claims, suggesting a possible conflict of interest on grounds that the commission was financially dependent on the European insurance companies.
          "Today's decision represents a victory for the tens of thousands of persons whose parents or other relatives perished in the Holocaust, and who are the potential beneficiaries of insurance policies issued by Generali or Zurich Life," Morris Ratner, [Lieff Cabraser partner and] an attorney for the plaintiffs. Ratner said his side was seeking not only payoffs of known insurance policies from the Nazi era but a full accounting of policies held by the insurance companies during the German campaign of genocide against Jews and others during World War II. "There may be people who are heirs or beneficiaries who don't even know the policies existed," Ratner said.

Lieff Cabraser Donates Holocaust Case Legal Fees To Columbia Law School

New York, NY -- Lieff Cabraser today presented to Columbia Law School a check for $1.5 million, representing its attorneys' fees earned in the settlement of the litigation against Swiss banks for allegedly preventing Holocaust survivors and their families from reclaiming money that they deposited in the banks or that the Nazis had looted and stored in the banks. The funds will be used to endow a chair at the law school in support of its human rights legal training programs.

          Laying the groundwork for a tobacco case that would dwarf all others, a federal judge in Brooklyn, N.Y., ordered that millions of injured smokers be lumped into a nationwide class that would share a single pot of punitive damages from cigarette manufacturers. If upheld on appeal, the novel ruling late Thursday by U.S. District Judge Jack B. Weinstein could result in cigarette makers paying billions of dollars into a giant fund, to be divided by a formula among all Americans who can show proof of smoking-related injuries since 1993.
          The ruling is meant to reform what amounts to a lottery system in which a few plaintiffs may reap a windfall in damages while a greater number suffering from identical smoking-related ailments win nothing at all. No estimates have been made of the potential size of the class. But given estimates that more than 400,000 Americans die prematurely each year from smoking-related causes, it could be enormous.
          Tobacco industry lawyers said they would seek reversal of the order, and in his own ruling Weinstein suggested that the panel entertain an appeal. Widely regarded as brilliant and unconventional, the 81-year-old Weinstein is known for crafting sweeping settlements involving toxic substances such as asbestos and Agent Orange. He had long signaled his desire to create a structure for reaching a global resolution of tobacco litigation, so his ruling wasn't unexpected.
          Elizabeth J. Cabraser, a San Francisco lawyer whom Weinstein appointed lead plaintiffs' counsel, said the ruling would help tobacco victims who want to sue but can't find a lawyer to do battle with the industry. Several hundred individual claims are pending in courts around the country, but there would be more if there were lawyers willing to take them.
          The ruling "gives smokers the opportunity to hold the tobacco companies fully accountable for all of the harm their conduct and their products have done over the years," Cabraser said.
          The order establishes a class of all U.S. residents who have smoked since 1993 and been diagnosed with at least one of 16 identified diseases, including emphysema and heart disease. There is no provision for members to opt out of the class and pursue claims on their own. However, excluded from the class are nonsmokers stricken with these ailments and those whose suits against the industry have been resolved. Also excluded are class members in Engle vs. R.J. Reynolds, a Florida case in which tobacco companies were ordered to pay $144.8 billion in punitive damages to a statewide class of injured smokers. The state court verdict in July 2000 is on appeal.
          Weinstein's order sets a Jan. 20, 2003, start date for the first stage of a three-part trial. According to the plan:

• In the first phase, the jury would determine whether cigarette makers are liable and estimate the value of compensatory damages that would be owed to all members of the class. Compensatory damages wouldn't be paid out, but the amount would be used as a benchmark to set the punitive damages. The jury also would resolve the individual claims of the 14 class representatives.
• In phase two, jurors would determine whether punitive damages were warranted. If the answer was no, the case would end without a third phase.
• In phase three, jurors would decide the total punitive damages to be awarded and the amount to be allocated to each disease.

          Finally, the order says, the court would distribute punitive damages to individual class members "submitting appropriate proof." The order does not say whether the proof means first winning compensatory damages at a separate trial, or whether medical records alone would suffice. The order says punitive damages not divided among class members would be spent on medical research.

The Associated Press, Boston woman rewarded for fight to win Holocaust money

Chattanooga Times/Chattanooga Free Press, "Six months later, suits dominate Noble case"

          Six months after the first uncremated bodies were found at the Tri-State Crematory in Noble, Ga., attorneys involved in the scores of civil cases say the legal aftershocks are expected to last for years. So far, 80 lawsuits ranging across three states have been filed since the news broke on Feb. 15 of the more than 300 bodies found on the crematory grounds. The lawsuits include a far-reaching federal court case involving plaintiffs from Georgia, Tennessee and Alabama.
          Lead attorneys from both sides said they hope the federal court case, overseen by U.S. District Court Judge Harold Murphy, will set the pace for the civil suits working their way through the state systems in Georgia and Tennessee. Coordination of efforts is needed considering the size of the litigation, they said.
          Lead plaintiff attorney Elizabeth Cabraser said she hopes the schedule for depositions, evidence sharing and hearings set by Judge Murphy will be used as a model for the state-level cases. Judge Murphy said he hopes to decide whether the federal lawsuits will be granted class-action status by the end of the year, with a trial coming as early as October 2003.
           "We think that's realistic," Ms. Cabraser said. Although he called the timeline "ambitious," Robert Brinson, lead attorney for the funeral home defendants, said he hopes state court judges will take their cue from Judge Murphy, as well.
          Criminal investigators said they believe Tri-State Crematory operator Brent Marsh did not begin his alleged practice of storing bodies in burial vaults, sheds and makeshift graves on his Noble property until 1997. Lawyers in the civil suits claim the Marsh family had been mixing ashes with cement and performing other "adulterations" since the 1980s.

The Recorder, "Alsup turning up the heat in securities fraud lawsuits"

          If you're a corporate executive, U.S. District Judge William Alsup may be your worst nightmare. Through a series of increasingly striking orders, Alsup has made it known that he is hellbent on making crooked executives who benefit from corporate fraud pay, even if it means raiding their personal assets.
          "Are there any individual defendants in this case?" Alsup asked plaintiffs lawyers at one recent hearing for In re NorthPoint Securities Litigation, 01-1473. "Well, there will be no settlement approved in this case until you depose every one of them, and I don't mean just taking declarations. You have to depose them, find out where their houses are, their cars, their bank accounts, everything they've got that can be used to respond to a judgment."
          Alsup may be intent on cleaning up Silicon Valley. But whether finding all the information he can about personal assets before approving a settlement hurts or helps investors who've lost money is a different question.
          A possible outcome is the elimination of individual defendants from fraud complaints. "Other than egregious frauds, you're not going to see directors and officers named," said Wilson Sonsini Goodrich & Rosati securities defense lawyer Boris Feldman. That would reverse a trend. "[Plaintiffs lawyers] have said for a while that their institutional clients have been pushing them" to sue executives, Feldman said.

The Baltimore Sun, "Perdue settles class action suit; Poultry producer to pay employees $10 million"

          Perdue Farms Inc., the Salisbury-based poultry producer, has agreed to pay $10 million to settle a 1999 lawsuit that claimed hourly chicken processing employees were cheated out of pension benefits and required to work off the clock.
          The settlement of the class action lawsuit, which received preliminary approval yesterday from the U.S. District Court for the District of Delaware, is subject to final approval after notice has been sent to about 60,000 workers eligible to make claims. A final approval hearing is set for October, and workers could receive lost wages early next year
          The settlement follows another multimillion-dollar settlement Perdue reached in May with the U.S. Department of Labor. In that case, Perdue agreed to pay about $10 million in back wages after the government said the company had violated the Fair Labor Standards Act by failing to pay workers for time needed to put on and take off protective clothing needed to perform their jobs.
          Plaintiffs argued that not paying workers for the time it took to dress and undress in protective gear and to clean equipment at the end of the day violated federal and state wage laws. In addition, the lawsuit claimed that workers were cheated out of pension benefits because they were not given credit for all the time worked.

The Washington Post, "FDA Rebukes Maker Of Diet Drug Meridia"

          The Food and Drug Administration has told the maker of the diet drug Meridia that it violated federal regulations by failing to properly report the deaths of patients taking the drug.
          In a letter to Abbott Laboratories made public yesterday, the FDA said that information about seven deaths associated with Meridia was not reported properly to the agency, that one death was not reported at all, and that reports on three other deaths were incompletely reported.
          The FDA is reviewing whether the drug caused or contributed to those and other deaths. The letter, dated July 19, is part of an ongoing FDA examination of the potentially harmful effects of Meridia. The advocacy group Public Citizen has filed a petition with the FDA to have the drug removed from the U.S. market, and it has called for a criminal investigation of the drugmaker's adverse-reaction reports.
          The letter to Abbott said that problems with the adverse-event reporting came up in a spring inspection. "Although your firm has taken some corrective actions," the letter stated, "you have not addressed many of our concerns."
          In a statement, the company said that it "takes very seriously its responsibility for full, accurate and timely reporting of adverse events to FDA and other regulatory agencies, and it has instituted various process improvements in its reporting system to ensure it meets reporting requirements."

The Atlanta Journal and Constitution, "Heavy Legal Hitters: Several Law Firms Specialize in Pursuing Major Bias Cases; Significant Resources Necessary"

          When it comes to representing workers against their employers in class-action race bias cases, several law firms stand out. Among the firms is Oakland, California-based Saperstein, Goldstein, Demchak & Baller. It, along with San Francisco-based Lieff, Cabraser, Heimann and Bernstein, sued Home Depot on behalf of female employees and job applicants. That case resulted in a 1998 settlement for $87.5 million and changes in the Atlanta-based retailer's hiring, promotion and compensation practices.
          Many of the firms are engaged in other sorts of class-action litigation. Lieff Cabraser Heimann and Bernstein, for example, represented several states' attorneys general in winning a $206 billion settlement from the tobacco industry in 1998. Among its current cases, the firm is investigating, or suing, nearly five dozen funeral homes on behalf of bereaved families in the Tri-State Crematory case in Walker County.

Note: For an update on the Tri-State Crematory case, click here.

Class Action Reports, "Martin County Paying $3.25M For Damages in October 2000 Coal Spill"

          Martin County Coal agreed to pay $3.25 million in compensation for starting one of the nation's worst coal sludge spills in Kentucky, state officials said. The Company will pay $1.75 million in penalties, $1 million for damage to the environment and $500,000 to pay back the state for the cleanup.
           The spill occurred in October 11, 2000, when more than 300 million gallons of water and sludge broke through the bottom of the impoundment pond on a mountaintop outside Inez, Kentucky and poured into the underground coal mine portals, out into the two creeks and into the Big Sandy River.
          As a result, lawns were buried up to 7 feet deep in the molasses-like mixture, all fish were killed in two streams, and drinking water supplies were fouled along 60 miles of the Big Sandy River, AP reports. The Environmental Protection Agency called the spill one of the worst environmental disasters ever in the Southeast.
          For more information on this case, click here.

The National Journal, "Shareholder Suits Down in Early 2002"

          With huge corporate scandals making headlines almost daily, this could become a boom time for plaintiffs' securities class action firms. But so far it isn't. The plaintiffs' firms have filed fewer suits in 2002 than during the same period last year. They are facing economic and legal obstacles to recovering damages from the widely publicized corporate scandals. And, while they have added some new attorneys to their staffs, this is largely the result of a long-term growth in class action work, not a response to any wrongdoing at Enron, Global Crossing, WorldCom, Arthur Andersen or any of other companies being investigated.
           Still, with all the recent allegations of corporate wrongdoing, why haven't the numbers gone up for 2002? Part of the reason is that some firms haven't yet jumped into the fray. Houston's Susman Godfrey, for instance, hasn't filed any suits relating to the ongoing corporate scandals, but "I expect we will be involved in some way," said name partner Stephen D. Susman. Another major class action firm -- San Francisco's Lieff Cabraser Heimann & Bernstein -- has filed only in the Enron case. "We don't normally file on the heels of news reports," explained Richard M. Heimann, who heads the firm's securities practice group. "We are actively investigating 12 to 20 potential cases, and we are deciding which cases we want to be involved in and how."
          Choosing whom to sue isn't easy, because it's not enough to prove that a corporation is liable. Even if a company is found guilty of a billion-dollar fraud, shareholders in a class may recover relatively little because the assets are just not there. Attorneys are searching for deep-pocket defendants, but they are hampered by the law Congress passed in 1995. "The PSLRA makes it difficult to plead to the standards required to go after lawyers and accountants who advised malefactors," said Heimann. "For instance, it will be very difficult to plead a case against the lawyers who assisted Enron."

The New York Times, "Suits Say Wal-Mart Forces Workers to Toil Off the Clock"

          After finishing her 10 p.m. to 8 a.m. shift, Verette Richardson clocked out and was heading to her car when a Wal-Mart manager ordered her to turn around and straighten up the store's apparel department. Eager not to get on her boss's bad side, she said, she spent the next hour working unpaid, tidying racks of slacks and blouses and picking up hangers and clothes that had fallen to the floor. Other times after clocking out, she was ordered to round up shopping carts in the parking lot.
          Some days, as soon as she walked in a manager told her to rush to a cash register and start ringing up purchases, without clocking in. Sometimes, she said, she worked for three hours before clocking in. "They wanted us to do a lot of work for no pay," said Ms. Richardson, who worked from 1995 to 2000 at a Wal-Mart in southeast Kansas City. "A company that makes billions of dollars doesn't have to do that."
          Ms. Richardson and 40 other current and former Wal-Mart workers interviewed over the last four months say Wal-Mart has done just that, forcing or pressuring employees to work hours that were not recorded or paid. Federal and state laws bar employers from making hourly employees work unpaid hours. Wal-Mart's policies forbid such work. Many current and former workers and managers said an intense focus on cost cutting had created an unofficial policy that encouraged managers to request or require off-the-clock work and avoid paying overtime.
          Wal-Mart officials insist that the off-the-clock phenomenon is minimal considering that the company has 3,250 stores and a million employees in the United States. The officials say the company, based in Bentonville, Ark., has a strong policy against such work, a policy that is spelled out in the handbook distributed to every employee. But in depositions and in interviews with The New York Times, Wal-Mart employees in 18 states described these types of off-the-clock work:
          Former employees at stores in California, Louisiana, New York, Ohio, Oregon and Washington said that many evenings when their stores closed, managers locked the front door and prevented workers -- even those who had clocked out -- from leaving until everyone finished straightening the store. Workers said these lock-ins, which aim to prevent theft, forced many employees to work an hour or two unpaid and enraged parents whose school-age children worked at Wal-Mart. Wal-Mart officials acknowledged that employees were sometimes locked in but said the policy was to pay workers for every hour they were.

Note: Lieff Cabraser is representing current and former Wal-Mart employees in class action lawsuits against the company for wage and hour and employment law violations. To read more about this litigation, click here.

San Francisco Chronicle, "Fraud Squad "

          It wasn't too long ago when criminal prosecution for suspected securities fraud in the Bay Area was a rarity.
          Although Silicon Valley was already brimming with high-tech activity, the number of criminal prosecutions for fraud was at most two or three per year prior to 2000. That stood in contrast to the mounting civil class-action lawsuits by investors against local companies and executives.
          But times have changed.
           Ever since the formation of the Securities Fraud Unit in the U.S. attorney's office in San Francisco in January 2000, the number of criminal prosecutions against misguided executives and unscrupulous insider traders has jumped drastically.
          Since the unit's founding, prosecutors have brought 31 indictments in the Northern District of California, up from 10 from 1996 to 1999. Most have resulted in guilty pleas or convictions, while the rest are pending.

The Wall Street Journal, "Court Review of Home Depot No Longer Needed, Women Say"

          Some female employees who alleged discrimination at Home Depot Inc. (HD) joined the company this week in asking a federal judge in California to end court supervision of the retailer's employment practices.
          In 1997, Home Depot agreed to pay $87.5 million and establish a new hiring process to settle a class-action suit alleging discrimination against women. The company never admitted any wrongdoing in the case.
          In the class-action suit, female employees had alleged that women were funneled into cashier jobs instead of sales positions in the store aisles. This was critical because the applicants for department supervisor, assistant store manager and store manager were largely drawn from the sales floor -- not the cash register lane.
          In the motion filed this week in U.S. District Court in San Francisco, attorneys representing the employees and Home Depot said the company exceeded benchmarks for hiring women in the most recent six-month reporting period under the consent decree, which covers 10 states in the Western U.S. This agreement isn't set to expire until September 2003.

The Dallas Morning News, "Drug Makers Under Pressure; Public Anger Over Prices Helps Fuel a Tide of Lawsuits"

          From Main Street to Capitol Hill, prescription-drug buyers have a blunt message for the pharmaceutical industry: They're sick of rising prices. And their remedy is turning into a legal headache for drug makers. Citizen groups, state governments and federal regulators are piling on with lawsuits reminiscent of the initial legal challenges that confronted the tobacco industry in the 1990s.
          Bristol-Myers Squibb Co. has been sued by 29 state attorneys general, who accuse the firm of using several fraudulent tactics to keep generic versions of its cancer-fighting drug Taxol off the market. Another lawsuit accuses Astra-Zeneca PLC and Barr Laboratories of colluding to block a generic version of another cancer treatment, Tamoxifen.
          Bayer Corp. has been hit with a lawsuit over its antibiotic Cipro. And several employees of Schering-Plough Corp. have been subpoenaed to appear before a federal grand jury in Philadelphia, apparently over drug pricing. The industry's trade group, the Pharmaceutical Research and Manufacturers of America, has had little to say about the legal offensive.
          By any measure, Americans are spending a lot on prescription medications. The total hit $ 154.5 billion last year, according to the National Institute for Health Care Management. That sum -- which excludes, for example, drugs dispensed by hospitals -- is up from $ 78.9 billion in 1997.
          The lawsuits filed so far charge that the brand-name drug companies have unlawfully blocked the introduction of generic drugs. In some cases, they contend that the pharmaceutical manufacturers have paid generic-drug companies to keep their less costly products off the market.

Los Angeles Times, "R.J. Reynolds Fined for Ads Aimed at Teens"

          A San Diego judge fined R.J. Reynolds Tobacco Co. $20 million Thursday after finding that the nation's No. 2 cigarette maker was targeting teenagers by advertising Camels and other brands in magazines such as InStyle, Spin and Hot Rod.
          The fine is the first financial penalty imposed for a violation of the 1998 settlement of lawsuits against tobacco firms filed by the attorneys general of 46 states. Under that settlement, the cigarette makers pledged to pay the states $246 million over 25 years. At issue in this case was the companies' agreement to take no action, "directly or indirectly, to target youth." Although the 1998 settlement made no specific mention of magazine advertising, California Atty. Gen. Bill Lockyer charged RJR last year with breaching the agreement by placing ads in magazines popular with readers under age 18.
          San Diego County Superior Court Judge Ronald S. Prager agreed that such advertisements violated that ban, and he ordered RJR to "reduce youth exposure" to its cigarette ads and to demonstrate its compliance.
          Lockyer said the ruling would help meet one of the key goals of the tobacco litigation and settlement, which was to keep children from taking up smoking. "When hundreds of your customers die every day, the only way to stay in business is to hook new ones," he said. "But targeting children in your quest for new consumers is unlawful, shameful and will not be tolerated in California." RJR's top lawyer said the company would appeal, and he maintained that its advertising strategy complies with the settlement by avoiding any publication that draws 25% or more of its readership from youths.

Note: To read a copy of this order (in Adobe Acrobat format), click here. In the tobacco litigation that resulted in the 1998 settlement with the tobacco industry, Lieff Cabraser represented 18 cities and counties in California and jointly prosecuted the California tobacco lawsuit with the California Attorney General.

San Francisco Chronicle, "Hip Implant Settlement Okd; Sulzer To Pay $1 Billion To Patients Fitted With Defective Devices"

          Sulzer Medica agreed yesterday to a $1 billion settlement for patients who received the Swiss company's defective hip and knee implants. Many of them are Bay Area residents. The settlement, which affects about 32,000 people around the country, pays the estimated 3,500 people whose implants had to be replaced about $206,000 each, which winds up at about $160,000 each once attorney fees are taken out. Their spouses or significant others receive about $1,600 each after attorney fees.
          The majority of people who received defective implants but did not need surgery to correct the problem get about $1,000 each with no attorney fees. If it turns out they need surgery before June 5, 2003, they will be eligible for the highest level of compensation. The payments will be made during the next 6 to 18 months.
          The case stems from a recall Sulzer announced in December 2000 after discovering that machinery oil had contaminated some of the implant parts manufactured in the company's plant in Austin, Texas. While many patients were not affected by this defect, others had to have the part removed because it failed to adhere to the bone.

Chicago Tribune, "AARP Aids Lawsuits Against Drugmakers"

          The embattled pharmaceutical industry will face a powerful new foe in the growing legal assault against drugmakers by consumer groups and federal and state regulators. AARP, the nation's largest senior group, said it will become co-counsel in at least three class-action lawsuits that allege certain brand-name and generic drugmakers have kept lower cost medicines out of consumers' hands. The suits, alleging drugmakers have illegally kept less expensive generic drugs off the market, were filed in the last year by Boston-based Community Catalyst, a consumer group that has been stepping up litigation against drug companies through its coalition known as Prescription Access Litigation Project.
          With the addition of AARP, formerly known as the American Association of Retired Persons, the coalition believes it will broaden its attack given the clout of the senior group, which has more than 35 million members and is known as one of the most powerful lobbies in Washington. It is the first time AARP has entered the federal courts as co-counsel on an antitrust issue against the drug industry.
          "AARP's support adds significant new legal firepower to our litigation team, and will strengthen our capacity to take on drug companies that profit at the expense of American consumers," said Robert Restuccia, executive director of Community Catalyst.

San Francisco Chronicle, Sulzer Stalls Decision on Implant Case; Hip, Knee Patients Sued Manufacturer Over Defective Devices

          Sulzer Medica has delayed until May 31 its decision whether to accept a $1 billion settlement agreement over defective hip and knee implants. Attorneys for the maker of artificial joints, which is based in Switzerland but operates an orthopedics unit in Austin, Texas, hope to persuade a reluctant group of plaintiffs to accept the deal. In December 2000, Sulzer admitted that because of an error in the manufacturing process, trace amounts of a lubricant had contaminated artificial hips and knees used on more than 30,000 patients. About 3,500 so far have required corrective surgery.
          San Francisco attorney Richard Heimann, whose firm represents about 150 clients who needed corrective surgery, praised Sulzer's decision in the case, which is being handled in U.S. District Court in Cleveland. "They're taking a responsible step in not wishing to rush into a decision, but to take the time they need to adequately analyze the opt-out situation," he said.
          The "opt-outs" Heimann referred to are the 40 to 50 people who needed additional surgery to correct the problem caused by the defective devices but who have refused to sign on to the deal. The company fears those people may pursue individual lawsuits, which could bankrupt the company and prevent others from getting paid.

The Recorder, "Billion Dollar Deadline Right Around Corner"

          Hundreds of plaintiffs' lawyers around the country are holding their breath as they wait to learn the fate of a billion-dollar settlement in a class action over faulty artificial joints. The unusual deal was pulled together by Richard Scruggs, who has made a national reputation battling -- and beating -- big tobacco, asbestos companies and HMOs. He has switched sides to try to save the manufacturer of the artificial joints, Texas-based Sulzer Orthopedics Inc.
          The estimated 30,000 plaintiffs had until last Wednesday to opt out of the settlement, which was approved by U.S. District Judge Kate O'Malley in Cleveland on May 9. In re Inter-Op Hip Prosthesis Product Liability Litigation, No. 01-4039. May 22 is the key date, says Scruggs. That's the day that Sulzer will decide if so many plaintiffs have opted out of the deal that it's economically unfeasible. If that happens, he says, Sulzer might declare bankruptcy rather than try to fight individual suits.
          "This one's going to go down to the wire," predicts Scruggs of the Scruggs Law Firm in Pascagoula, Miss.
          About 120 plaintiffs had opted out of the deal as of Friday, say Scruggs and Eric Kennedy of Cleveland's Weisman, Goldberg & Weisman, who were among a small group of trial lawyers who hammered out the settlement. But the number of opt-outs has been continually changing. Both attorneys say they have been talking to the lawyers for the opt-outs to try to get their clients to change their minds.
          Once the number of opt-outs is settled, Sulzer will do a risk-benefit analysis of those cases to see how much it might cost the company to fight each one in court. At a time when many companies face huge liability problems, lawyers have been watching the Sulzer deal closely all over the country.
          Richard Heimann of San Francisco's Lieff Cabraser Heimann & Bernstein, another attorney who helped hammer out the new settlement, says the key to the analysis for Sulzer will not be the number of cases necessarily but rather the severity of injuries and complications to the plaintiffs who opt to go to trial instead. In addition, the company has to look at the likelihood that courts in different parts of the country would come up with widely different verdicts and damage awards, perhaps in the millions of dollars.
          About 30,000 people make up the class that received Sulzer's artificial implants. Of those, about 3,500 suffered complications and had to have the implants replaced. Heimann, who represents about 150 people who had to have knee or hip surgery again because of the faulty devices, says that the "only alternative to the deal is to declare bankruptcy," and that he was "not aware of any other settlement like this."

San Francisco Chronicle, "Eleventh Hour Tolls for Hip Plaintiffs; Tiny Fraction Could Derail Settlement"

          With more than 99 percent of plaintiffs having signed off on a $1 billion settlement over defective joint replacements and a deadline fast approaching, attorneys from both sides are hoping to persuade 132 holdouts to come on board. They predict dire consequences if the settlement with artificial-joint-maker Sulzer Medica Ltd. collapses. Continuing legal battles could drive the company into bankruptcy, the attorneys say, and nearly 30,000 other plaintiffs might never see a dime.
          Under terms of the settlement, 3,500 people who required corrective surgery for defective hip or knee replacements will receive about $206,000 each, $40, 000 of which will go to attorney fees. An additional 26,000 who received defective parts but have not needed surgery will get about $1,000 each.
          The company has until Wednesday to decide whether to proceed with the settlement, which was approved by a federal judge last week. Sulzer, based in Switzerland, said Thursday that the individuals who choose to opt out and fight for more money in court could bankrupt the company.
          If the company goes bankrupt, it's very unlikely that anyone would see any money, said Luke Ellis, an Orinda attorney whose firm represents about 35 plaintiffs, all of whom he expects to take the settlement. In addition, the threat of pending lawsuits could hinder Sulzer's ability to borrow the $425 million it needs to pay the plaintiffs, he said. Ellis described the settlement as fair. "We're convinced this is the best way to pay the most people something," he said. "It's not perfect, but this is a company that does not have enough money to pay perfect."
          Richard Heimann, in the San Francisco offices of Lieff Cabraser Heimann and Bernstein, LLP, said two of his 150 clients are refusing the offer, but he declined to discuss their cases. He said a third of his clients may be eligible for more than the settlement allows through an "extraordinary injury" fund of $100 million that has been set aside. But the amount a single patient can receive caps out at about $1 million, or $800,000 once attorney fees are taken out.

Barrons, "FTC Looking at Pharmaceutical Deals"

          America's drug companies have long enjoyed the trust of both patients and investors. But this is the year of antitrust.
          This summer, the Federal Trade Commission will release a study of the drug industry's alleged attempts to delay competition from generic drugs valued at $20 billion in annual sales, and research pipelines dry, lawyers have become as important to pharmaceutical revenues as chemists Late last month, FTC Chairman Timothy J. Muris previewed the report to a Senate committee, saying the commission indeed had found "a variety of potentially anticompetitive strategies" in use by the sellers of both branded and generic drugs.
          The financial bite of antitrust cases rarely comes from the FTC, however. Antitrust cases brought by state attorneys general, health-care insurers and class-action lawyers win the big recoveries. Private antitrust actions over nearly a dozen other drugs are pending around the country, says class action lawyer Eric B. Fastiff, with the San Francisco office of Lieff Cabraser Heimann & Bernstein. Among the drugmakers defending such private antitrust suits are Bristol-Myers, GlaxoSmithKline, Pfizer and Schering-Plough.

Kiplinger Business Forecasts, "Wave of Lawsuits Centers on Pay Rules"

          Employers increasingly are landing in court for allegedly cheating workers out of pay, making wage and hour class-action lawsuits a new hot-button issue for companies of all sorts. Although racial and sex discrimination lawsuits get more press, there are just as many wage and hour class-action claims in federal courts. And the number is sure to climb.
          Seymour combed through reports filed with the Administrative Office of the U.S. Courts and found that 79 Fair Labor Standards Act (FLSA) class-action lawsuits were filed in federal court last year, compared with 77 federal race and gender class-action claims. His survey is the closest picture available since courts don't keep track of class-action lawsuits or settlements.
           Both blue- and white-collar workers are slapping employers with class actions under the 1938 FLSA and companion state laws. Retail clerks, nurses, restaurant workers, accountants, insurance adjusters, engineers and chicken catchers are among those who have sued and, in many cases, won big settlements.

National Law Journal, "Jury Returns $165M Punitive Award"

          A California jury has returned a $165 million verdict for punitive damages-nearly 29 times the actual damages awarded-against a corporate defendant to deter fraudulent business practices, according to two members of that jury. The $170.7 million verdict on April 16 is the fourth highest of 2002, according to The National Law Journal's running tally of top 10 verdicts.
          The case involved a British company named Edsaco Ltd., which was sued for intentional fraud and conspiracy. The jury found Edsaco liable on both counts for creating five shell companies that pretended to purchase nonexistent software from a Silicon Valley firm, Scorpion Technologies Inc. Scorpion shareholders, who lost some $55 million when the fraud was exposed, brought the class action in U.S. District Court in San Francisco.

The Recorder, "'Brazen' Sham Slammed With $171M Verdict "

          After deliberating for mere hours, a federal jury Tuesday returned a $170.7 million verdict on behalf of former shareholders of an allegedly sham software company. Included in the unanimous eight-person jury's verdict is $165 million in punitive damages, hailed as a signal that post-Enron juries are going to be tough on allegations of financial fraud.
          The damages are attributable to "the absolute brazenness of the [defendants'] conduct and their utter and complete lack of remorse," said Lieff Cabraser Heimann & Bernstein partner Richard Heimann. "This was business as usual."
          The case is a successor to a shareholder suit over the collapse of Scorpion Technologies Inc., which was raided by the FBI and Securities and Exchange Commission in 1993. Criminal charges against a number of former employees ensued. The present case was brought against British company Edsaco Ltd. in 1998. Using overseas addresses, Edsaco allegedly provided shareholders and directors for phony European companies set up by Scorpion to purchase non-existent software. Such shareholders and directors can help put a company in a more favorable tax situation, among other considerations.
          Heimann will now turn his efforts to recovering the $5.7 million in compensatory damages and $165 million in punitives, which is by no means assured -- Edsaco says it is now dormant and does no business. "I think that's all bogus," Heimann said, adding that he believes the company's assets were shifted to new companies. "Now that we've got the verdict, what I'm going to do now is go after the successor companies."

Obesity, Fitness & Wellness Week, "Group Asks FDA to Ban Diet Drug Meridia"

          The consumer group Public Citizen is asking the U.S. government to ban the prescription diet drug Meridia, arguing that its risks outweigh its benefits.
          The Food and Drug Administration (FDA) reported that 25 people worldwide who were taking the drug have died although it is not known whether those deaths were related to Meridia. Sixteen of the deaths were related to heart problems. A spokeswoman for the manufacturer, Abbott Laboratories, said the company knows of 32 deaths of people taking Meridia, including 28 in this country. But Melissa Brotz said there does not appear to be a pattern suggesting the drug was to blame.
           Public Citizen petitioned the FDA to pull the drug, known chemically as sibutramine, calling it "unacceptably dangerous." The group noted that FDA's scientific advisers recommended against the initial approval because the drug had only minimal weight-loss benefits but increased blood pressure and heart rate for some patients.
           FDA spokeswoman Laura Bradbard said the agency regularly monitors "adverse events," including death, associated with drugs and will respond to the Public Citizen petition. In approving the drug in 1997, the FDA said it is "moderately effective" at helping patients lose weight. In studies, they lost about 7 to 11 more pounds than mere dieters.
           The FDA also said that Meridia did not appear to pose the risk of heart valve damage that forced it to ban the popular diet drugs Redux and fenfluramine, the "fen" in fen-phen. At the time, the FDA cautioned that because of Meridia's side effects, no one with poorly controlled hypertension, heart disease, or irregular heartbeat, or who has survived a stroke should use the drug. And it said that it is only for the seriously obese, as measured by a body mass index of 30 or greater. An example would be someone who is 5 feet, 6 inches and weighs 185 pounds.

The New York Times, "Methods Used For Marketing Arthritis Drug Are Under Fire"

          Centocor, a subsidiary of Johnson & Johnson, has been providing doctors with marketing materials that describe how they can make extra money by prescribing a new drug, a practice that health care fraud experts say may be illegal.
          Some doctors have recently raised concerns about Centocor's marketing of the new drug, Remicade, an expensive treatment for rheumatoid arthritis. ''We need to utilize these medicines based on their merits and not on their profit potential,'' said Dr. Arthur Weaver, a clinical professor of medicine at the University of Nebraska Medical Center an