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Legal     1 - Duke Energy Employee Advocate
Legal - Page Six

"12 shares of Enron would get you a hotdog in Enron Field," – Russell Hardin, attorney

DOL Sues Firm and Executives Over Pension

Department of Labor – Press Release – January 4, 2002

PHILADELPHIA -- The U.S. Department of Labor has sued a Meshoppen, Pa. trucking company, Penn's Best, Inc. and corporate executives for allegedly overpaying for stock purchased from the company's president to establish an employee stock ownership plan (ESOP).

The suit, filed Dec. 21 in federal district court in Scranton, Pa. names as defendants Penn's Best, its president and sole ESOP trustee Meredith W. Ruark, and comptroller and plan committee member Mark J. Stanley.

The suit alleges that the defendants caused the plan to pay an inflated price for stock it purchased from Ruark in 1994 to establish the ESOP. On Aug. 22, 1994, the plan entered into a stock purchase agreement to buy 30 percent of the outstanding common stock, or 196,000 shares, from Ruark. The plan paid $4,103,373 or $20.94 per share. The department contends that this was far more than the plan should have paid if the stock were properly valued.

The department also is seeking a court order to remove the defendants from their positions with the plan, to permanently bar them from serving any employee benefit plan governed by the Employee Retirement Security Income Act (ERISA) and to appoint an independent fiduciary to administer the plan. Penn's Best created the pension plan in 1993 for its employees. At the end of 1997, the ESOP had total assets of approximately $3,245,607 and 284 participants.

The investigation leading to the civil lawsuit was conducted by the Philadelphia Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of federal pension law.

Chao v. Meredith W. Ruark et al
Civil Action # 3-CV01-2433

DOL Recoups $325,000 for Employees

Department of Labor – Press Release – January 4, 2002

LOUISVILLE, KY– The U.S. Department of Labor obtained a court order requiring Stock Yards Bank of Louisville, Ky., to pay $325,000 to the employee stock ownership plan (ESOP) of Building Services Unlimited, Inc., also of Louisville, for allegedly improperly causing the plan to buy the company’s common stock at an inflated price.

“This resolution sends the message that we won’t tolerate the mishandling of people’s retirement funds,” said Secretary of Labor Elaine L. Chao.

Stock Yards Bank was the trustee of the ESOP sponsored by Building Services Unlimited for its employees. The plan, established Dec. 31, 1992, covered as many as 262 participants.

The consent order and judgment, entered on Dec. 6, in federal district court in Louisville, requires the bank to restore losses suffered by the ESOP. The court action also appoints Larry Lefoldt of Lefoldt & Co., P.A., as an independent fiduciary.

The Labor Department sued the bank, Building Services Unlimited, and its owner, Maxine Mount, over a $1.35 million promissory note under which Stock Yards Bank made monthly payments from the plan to Mount in exchange for 30 percent of the company’s common stock. Mount received over $290,000 between April 1993 and October 1994 as a result of the transaction.

In addition to allegedly improperly causing the plan to buy the company’s common stock at an inflated price, the lawsuit also alleged that Stock Yards Bank and Mount violated the Employee Retirement Income Security Act (ERISA) by using the plan assets for their own benefit. Mount was previously ordered to restore $1,941,519 to the plan and was permanently barred from servicing any plan governed by federal employee benefit law.

The consent order and judgment resulted from an investigation by the Cincinnati regional office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA. Plan officials, participants, and beneficiaries can reach the Cincinnati office at (859) 578-4680 for help with any problems relating to private-sector pension and health plans.

Court Cites First Amendment Rights of Critics

Public Citizen – Press Release – January 3, 2002

WASHINGTON, D.C. -- Issuing a ruling that strongly upholds the First Amendment rights of anonymous Internet speakers, a New Jersey judge has refused an attempt by Emerson, N.J., public officials to learn who criticized them on the Internet. The superior court judge also dismissed the officials' suit against the Emerson citizen who created the Internet bulletin board devoted to public affairs in Emerson on which the citizens anonymously aired their views.

Two Emerson council members, a council candidate and the head of the local Republican Party had sued 60 John and Jane Does as well as the site's creator, claiming defamation and harassment. The officials sought information from Internet service provider VantageNet that would identify those who posted the messages. The Bergen County superior court judge, however, quashed the subpoena. The decision was made in late December but was released to the public today.

Adopting arguments advanced in an amicus brief by attorneys for Public Citizen and the American Civil Liberties Union of New Jersey (ACLU-NJ), Judge Marc Russello ruled that the plaintiffs had not met the strict tests established by New Jersey courts for a subpoena to be served to obtain the identities of anonymous Internet speakers. The court faulted the plaintiffs for not providing sufficient notice of the subpoena on the bulletin board and for not providing a sufficient basis to show that each of the allegedly defamatory statements was speech that could be the basis for a lawsuit. Also agreeing with the groups, the court extended the benefit of its ruling to all of the anonymous speakers, regardless of whether they were represented by attorneys.

"This suit is a clear attempt to intimidate the townspeople so they stop making comments about their officials," said Paul Alan Levy, an attorney for Public Citizen, which got involved in the case because it has a history of defending First Amendment rights. "The judge's decision protects citizens' rights to participate in anonymous debate about their public officials, without fear of being dragged into court."

The court also ruled that no legal action could be brought against the Web master for the allegedly defamatory statements published on the bulletin board by the anonymous posters, because a federal statute, the Communications Decency Act, places responsibility for Internet speech squarely on the speakers themselves while protecting Web masters and Internet service providers from being sued for statements made by others using their facilities.

"Steven Moldow's site, which is devoted to topics relating to local government, represents a terrific gift to the community," Levy said. "If someone like Moldow has to face the prospect of ruinous litigation from any person who is criticized on the Web site, then very few citizens would ever set up such valuable sites."

Public Citizen attorneys also participated as amicus curiae in the precedent-setting case of Dendrite v. Doe, where the New Jersey Appellate Division became the first appellate court in the country to apply First Amendment principles when setting standards for the identification of anonymous Internet speakers. Public Citizen's attorneys have represented Internet speakers in cases in California, Connecticut, Georgia, Ohio, Pennsylvania and elsewhere.

Libel Claim Against Web Site Dismissed

Employee ID Implants?

Washington Post – by Robert O'Harrow Jr. – December 24, 2001

A New Jersey surgeon has embedded under his skin tiny computer chips that can automatically transmit personal information to a scanner, a technology that his employer hopes will someday be widely used as a way to identify people.

One bioethicist called the procedure the stuff of science fiction. The chip, developed by Applied Digital Solutions of Palm Beach, Fla., is similar to that implanted in more than a million dogs, cats and other pets in recent years to track and identify them.

The new chip measures slightly smaller than a Tic Tac mint and has a miniature antenna that emits signals containing about two paragraphs worth of data when scanned by a handheld reader.

The device must undergo clinical trials and be approved by the Food and Drug Administration before it can be marketed, first to patients with other implanted medical devices, such as pacemakers.

The surgeon, who said he implanted the device in his hip and one arm in September, asked not to be named because he worries about the attention his initiative will draw. He said he decided to test the chip himself after seeing rescuers at the World Trade Center disaster site write their names and Social Security numbers on their arms so they could be identified in case they were injured or killed at the site.

Applied Digital has high hopes for the technology, in part because it is struggling financially and recently fell behind on loans from one of its major creditors. Its stock, which trades on the Nasdaq Stock Market, was as high as $3 in the past year. It closed at 38 cents yesterday.

Company officials said they hope to sell the device to patients with pacemakers, artificial hips and other implanted devices. The idea is that the chip will provide prompt and accurate medical information in the event of an emergency, they said.

The signal can contain a name, telephone number and other information. Or it can send out a code that, when linked to a database, can call up records. The scanner can read it through clothes from up to four feet away, company officials said.

Applied Digital executives said its new product also could serve as a tamper-proof form of identification. Corrections authorities have expressed interest in using the chips to better identify prisoners and parolees, officials said.

Airlines, nuclear power plants and other sensitive facilities may want to use the chips for employees, they said. Some parents may consider embedding chips in young children or elderly relatives who may not be able to say their names, addresses or telephone numbers.

"It depends on the spirit of the marketplace and the demand," said Keith Bolton, the company's vice president and chief technology officer, adding that use of the chip should be voluntary unless the law allows otherwise. "We're ready to begin."

Some medical and technology specialists said the device raises new questions about the nexus of humans and computer technology. And it could pose ethical or privacy dilemmas if implanted against someone's wishes, or if it exposes personal information to prying eyes.

Thomas Murray, president of the Hastings Center, a bioethics research institute in New York, said the chip "evokes images of science fiction."

"We need to consider carefully the broader implications," Murray said. "Alongside the possible benefits, it has the potential to be misused by forces who do not have your interests at heart."

Although the system has been in development for a couple of years, company officials said they were uneasy about implanting the chips in people until recently, fearing there might be a backlash from civil libertarians and others.

On Sept. 16, the doctor, using a local anesthetic, used a syringe-like device to insert the chips under the skin of his forearm. He followed the same procedure to implant the chip on his hip.

The chip is coated with a substance that encourages the body to hold it in place, he said. After just over two weeks, all signs of the procedure were gone. "After that, it was like nothing had happened," the physician said. "I felt it was important enough to do, that I took responsibility myself."

Airports are beginning to use similar micro-devices to improve security by tagging bags with more detailed instructions about how they're to be handled and screened. Automakers are installing the chips in keys to deter auto theft. Libraries are beginning to use the technology to track books.

Three years ago, a British cybernetics researcher had a chip temporarily implanted to allow a computer to track his movements in a university building.

"The computer has jumped off our desktops and it is insinuating itself into every corner of our lives. Now it's finding its way into our bodies," said Paul Saffo, director of the Institute for the Future in Menlo Park, Calif. "This stuff is going to happen. These guys are the start."

Employee Wins Over IBM

South African Sunday Times Metro - by Gillian Anstey - December 24, 2001

(12/2/01) - Sergio Carlos recently took on information technology giant IBM SA - and won. The former IBM salesman from Linmeyer, Joburg, took the IT company to the Commission for Conciliation, Mediation and Arbitration after he was forced to resign, and was awarded R480 000.

But Carlos's joy at the high award is tinged with sorrow - only a week after winning that battle, he discovered he had cancer.

But as with IBM, Carlos has vowed not to give in until he beats the disease.

"I'm gonna fight it . It's picked a bad customer," he said.

Carlos's problems with IBM started when the company asked the 33-year-old salesman - who earned about R500 000 a year - to explain every bit of commission he had received. Until IBM received this information, it refused to pay Carlos any commission.


When Carlos told them the information was on the company's computer system, IBM claimed it was difficult to access. Carlos got no commission for two months and he eventually resigned.

IBM argued that it was merely an "oversight" that it hadn't paid Carlos his sales commission.

But the Commission ruled that IBM's failure to pay was "deliberate" and ordered the IT giant to pay Carlos R480 000 - one of the highest awards ever for an unfair dismissal .

But despite giving it to the IT giant on the chin, Carlos said he would give up all the money to have the cancer go away. "If I could swop the money for my health, the money wouldn't be an issue.

"I have two young kids and I want to see them growing up."

Carlos's lawyer, Ian McLaren, said: "This case shows that even the littlest guy has a fair chance against a big corporation."

IBM said it was appealing the matter in the Labour Court.

Employees Win Over Ford

Associated Press – by Ed Garsten - December 20, 2001

Ford Motor Co. agreed Tuesday to pay $10.5 million to settle two class action lawsuits accusing the automaker of discriminating against older, white men in the name of diversity.

Roughly 620 current and former Ford employees could receive some of the money, plaintiffs' attorneys said. Some will get up to $100,000, minus attorney fees, depending on how long they were employed and other factors.

The reverse-discrimination lawsuits claimed that Ford's employee evaluation system favored so-called diversity candidates -- namely younger women and minorities -- and that a disproportionate number of older, white men were given low grades, costing them raises or promotions.

In settling, Ford admitted no wrongdoing.

"The company is pleased to have resolved this difficult situation with our employees and is eager to put it behind," spokesman Joe Laymon said.

Plaintiff Craig Toepfer, who retired from Ford in August, said he was satisfied with the settlement but added, "It really doesn't make up for the things that really should have happened for us."

Ford's performance evaluation system, put into place last year, was used to evaluate about 18,000 managers and supervisors, or about 5 percent of Ford's work force. Employees were graded A, B, or C. Those receiving a C could lose bonuses and raises, and two consecutive C's could mean dismissal.

Initially, at least 10 percent of employees were to be graded C, but that was lowered to 5 percent before quotas were eliminated altogether last July.

The plaintiffs claimed that before the grading program, they had received positive evaluations. But under the new system, they said, they got C's while some women and minorities with less experience or inferior work records were rated higher.

The system had been promoted by Jacques Nasser, who resigned under pressure on Oct. 30 as Ford president and chief executive. He was succeeded as chief executive by chairman William Clay Ford Jr.

Plaintiffs' attorney Glen Lenhoff said Nasser's departure was a "turning point" in efforts to settle the cases.

Both sides are due in court Thursday, where a judge is expected to give preliminary approval.

Justices to Consider Age Discrimination Case

CNN – December 14, 2001

WASHINGTON (12/3/01) -- The Supreme Court agreed Monday to decide whether older people may use a civil rights lawsuit to claim that company layoffs targeted them more than younger workers.

The justices will decide whether a 1967 age discrimination law allows the former employees of Florida Power to sue on the basis that older workers suffered a "disparate impact" of the layoffs.

The class-action lawsuit filed by former Florida Power employees who were 40 or older when fired as part of company reorganizations in the early 1990s. The workers claim they were fired because the company wanted to change its image and reduce its costs for salaries and pensions. More than 70 percent of the laid-off workers were 40 or older, the suit claimed…

Asbestos Deaths Have Not Peaked

Employee Advocate – – December 13, 2001

Former employees of many companies, including Duke Energy, have died from asbestos related illnesses. But according to the Motley Fool, the asbestos death rate has not peaked yet.

“Some experts say deaths from asbestos-related illnesses are not expected to crest until 2010.”

Asbestos related diseases can take more than 20 years to develop after exposure. So, if you have ever worked with or around asbestos, you could be a walking time bomb, and not know it.

The courts have not been letting the companies off the hook for asbestos liabilities. Most companies know the futility of taking asbestos issues to court. But, Halliburton went to court three times in the last three months, defending against asbestos claims. They lost all three cases, to the tune of about $125 million.

Libel Claim Against Web Site Dismissed

New York Law Journal - John Woods – December 13, 2001

A Web site providing news about matters of public concern is entitled to the same heightened protection against libel actions afforded to print and broadcast publications, a Manhattan Supreme Court justice has ruled.

In Banco Nacional de Mexico v. Rodriguez, 603429/00, Justice Paula J. Omansky granted a motion to dismiss a libel case against The Narco News Bulletin, an Internet Web site based in Mexico that published an account of alleged drug trafficking involving Banco Nacional director Roberto Hernández-Ramírez…

"A careful review of defendants' submissions on Narco News's Web site indicate that the Narco defendants' format is similar to a regularly published public news magazine or a newspaper except for the fact that the periodical is published 'on line' or electronically, instead of being printed on paper," Omansky wrote in her decision. "Since principles of defamation law may be applied to the Internet ... this court determines that Narco News, its Web site, and the writers who post information, are entitled to all the First Amendment protections accorded a newspaper/magazine or journalist in defamation suits ... ."

Greater Protection of Internet Speech

Greater Protection of Internet Speech

The Recorder - Jahna Berry – December 13, 2001

(8/2/01) - Justices of the California Court of Appeal may have to sort out an Alameda County Superior Court judge's groundbreaking ruling that gives sweeping libel protection to Internet users.

Last week, Judge James Richman dismissed part of a lawsuit filed by two physicians who claimed that a woman re-posted a libelous article that accused one of the doctors of stalking a Canadian journalist.

"[A]s a user of an interactive computer service, that is, a newsgroup, [the defendant] is not the publisher or speaker of [the] piece. Thus, she cannot be civilly liable for posting it on the Internet. She is immune," wrote Richman.

Internet free speech watchdogs hailed Richman's 27-page decision, which interprets key provisions of the Communications Decency Act. "The judge did not create this out of thin air," said Lee Tien, an attorney with the Electronic Frontier Foundation. "The statute specifically does give speech in interactive computer services more protection."

The court order was made against the backdrop of a bitter Internet public relations feud between alternative medicine advocates and two doctors who have campaigned against questionable medical treatments.

Barrett v. Clark, 833021-5, was filed by Stephen Barrett and Terry Polevoy, who run a network of anti-health scam Web sites and organizations, including "Quackwatch." Over time animosity boiled over between the doctors and the defendants, including Ilena Rosenthal, who runs support groups for women that were harmed by breast implants.

Among several allegations in the complaint, the physicians allege that Rosenthal posted a libelous article written by co-defendant Tim Bolen. Bolen wrote that Quackbusters intimidated Canadian officials into cutting a radio show about alternative medicine. It also claims that Polevoy stalked the journalist who organized it.

Although Richman's order tossed the Internet re-posting claim, several other defendants, including Bolen, still face libel allegations.

The doctors' attorney says the ruling gives Internet users more freedom than they would have if the words appeared in print.

"If someone sent a letter that was libelous you would not be immune," said Oakland, Calif., attorney Christopher Grell. Grell, who was also a co-plaintiff in the suit, says he is active in groups that monitor dietary supplement safety.

Someone could put libelous information on the Internet and duck court action by having someone else author it, Grell said.

"It was a ruling that Congress would have never imagined," added Grell, who plans to appeal.

Lawmakers intended that ordinary users like Rosenthal would be protected, said her attorney.

"Even if it's defamation," said Oakland lawyer Mark Goldowitz, "she is protected."

Goldowitz, who is director of the California Anti-SLAPP Project, argued that Richman should toss the libel allegation against Rosenthal because it constitutes a Strategic Lawsuit Against Public Participation.

In the fast-moving realm of Internet law, trial court rulings have become increasingly important, said Tien.

"Lower court decisions that people would normally not pay attention to, they make a difference," he said. A Pennsylvania district court judge's ruling in the Internet domain dispute, Zippo Manufacturing Co. v. Zippo Dot Com, is frequently cited in legal briefs, he said.

"Courts are less familiar with the Internet. They want to see what their brothers and sisters have done, even with things where they would have trusted their own judgment," said Tien.

Indeed, Goldowitz noted, Richman's carefully reasoned opinion -- which is much longer than the usually pithy trial court orders -- "provides a road map for the Court of Appeal."

California Court Upholds Free Speech

Legal - Page Five