Lieff Cabraser: Consumer Law Newsletter Issue No. 3

Consumer Law Newsletter:
Issue No. 3

August 5, 2000

Highlights:

Effect of $300 Million Settlement in Providian Credit Card Litigation
Rezulin Diabetes Medication Cases
Employees’ Overtime Wage Case Resolved
Significant Settlements Announced in Home Construction Products Cases

Effect of $300 Million Settlement in
Providian Credit Card Litigation

On behalf of a group of cardholders and with co-counsel, Lieff Cabraser filed a lawsuit in 1999 against Providian Financial Corporation, and other Providian companies, concerning their credit card practices. In June 2000, Providian agreed to pay an estimated $300 million to settle charges by federal and state officials that the credit card company deceived customers about its rates and fees.

After reviewing the settlement, Lieff Cabraser partner Kelly Dermody observed, "The settlement is a good start. However, it does not address the full range of Providian's aggressive sales tactics and marketing campaigns." In particular, the settlement does not address claims by Providian cardholders who have been assessed unreasonable fees on credit-line increases, charged exorbitant rates for Credit Protection or automatically enrolled in other services and programs, such as PricePro and DrivePro, without their express prior approval.

Accordingly, on behalf of cardholders, Lieff Cabraser is continuing to prosecute private consumer protection lawsuits against Providian. If you would like further information on the case or have been subjected to any of the alleged misconduct by Providian that the settlement with the federal and state officials does not address, please contact Lieff Cabraser.

Rezulin Diabetes Medication Litigation Update

Rezulin, a registered name of its manufacturer Parke-Davis, was prescribed to an estimated 500,000 patients in the United States who suffer from Type II diabetes. On March 21, 2000, the Food and Drug Administration (FDA) issued a press release announcing that it had asked that Parke-Davis remove Rezulin from the market, which Parke-Davis agreed to do. The FDA determined that severe liver toxicity was associated with the use of Rezulin, and that this risk was greater than the risks of two other drugs that offered the same benefits as Rezulin.

To date, according to press reports, the FDA has linked Rezulin use to 90 liver failures, including 63 deaths and seven non-fatal organ transplants. Press reports have also raised concerns that Rezulin use may contribute to heart failure. A number of individual and class action lawsuits have recently been filed against Parke-Davis alleging the plaintiffs' use of Rezulin caused serious bodily injury or death.

On June 7, 2000, the United States Judicial Panel on Multi-District Litigation ordered the transfer and consolidation of all of the pending federal Rezulin cases to U.S. District Court Judge Kevin T. Duffy of the Southern District of New York for coordinated pre-trial discovery and litigation purposes. This decision has no direct impact on any Rezulin cases filed in state court.

Employees' Overtime Wage Case Resolved

Lieff Cabraser represents a group of current and former non-supervisory account services employees who worked in the California advertising offices of TMP Worldwide, Inc. The suit alleges that TMP misclassified the employees as "exempt" employees and, thereby, improperly failed to pay them overtime wages that were due to them. On May 10, 2000, the Court granted preliminary approval to a settlement of the case. TMP has agreed to create a fund that will be distributed to class members who file claim forms, on a pro rata basis, in proportion to the number of weeks each claimant worked for TMP in a non-supervisory position during the class period. A hearing for final approval of the class action settlement is scheduled for August 8, 2000.

We have an active practice representing "non-exempt" or non-managerial employees who allege that they have been deprived of overtime wages. For more information on these cases please contact us.

Significant Settlements Announced in
Home Construction Products Cases

Cemwood

With co-counsel, Lieff Cabraser represents consumers in a suit against the manufacturers of a cement/fiber shingle that was allegedly defectively designed. The shingle was sold under the brand names of Cemwood Shakes, Permatek Shakes, Permatek II Shakes, Trieste Tiles, Pacific Slate, Royal Shakes, or Cascade Shakes.

On May 26, 2000, the Court granted final approval to a $105 million partial settlement of the case. For more information, including how to identify these shingles, please visit the official web site of the case at http://www.cemwoodclaims.com

Weyerhaeuser

We also serve as co-lead counsel in a nationwide class action on behalf of owners of structures on which Weyerhaeuser hardboard siding has been applied at any time from January 1, 1981 through December 31, 1999. Plaintiffs allege that the siding is inherently defective and prematurely fails when exposed to normal weather conditions.

On July 12, 2000, the Court granted preliminary approval to a nationwide global settlement of the case. Under the terms of the proposed settlement, which is still subject to final review by the Court at a hearing to be held on December 21, 2000, Weyerhaeuser has agreed to pay fully all timely, qualified claims made during a nine-year claims program. There is no cap on Weyerhaeuser's potential total liability. For further information on this case, please visit the official web site at http://www.weyerclaims.com