/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000107.MBX C L A S S A C T I O N R E P O R T E R Friday, January 7, 2000, Vol. 2, No. 5 Headlines AMERISOURCE DISTRIBUTION: Contests Opt-outs of Antitrust Suit Re Drugs AMERISOURCE DISTRIBUTION: Says It Is Indemnified in Fen-Phen Cases CELLCO: Bell Atlantic’s SEC Filing Discloses Consumer & Employee Suits CINCINNATI BELL: Faces EECO Suits over Racial Bias at TX Retail Unit CINCINNATI BELL: Stockholders Sue in Dela. Over CBI Merger Agreement DIASENSOR COM: Faces Securities Complaint and Investigation in PA. ELITE INFORMATION: Faces Securities Suit in CA Re Proposed Merger FREEMARKETS INC: Milberg Weiss Files Securities Suit in Pennsylvania GLOBAL TIMBER: Combined Professional Discloses Securities Suit in CA HOLOCAUST VICTIMS: Bank Austria Announces Ct Approval of Settlement LASER POWER: Defends Dela. Suit Alleging Breach of Fiduciary Duty MICROSOFT CORP: National Post Reports on Brain Drain Amidst Lawsuits NETOPTIX CORP: Defends Vigorously Consolidated Securities Suit in MA. POLYPHASE CORP: Contests Securities Complaints in Nevada PROMATECH INC: Ct Denies Class Action to Enforce Trust Fund Under Lien REVENUE DEPT: Rental-car Customer in Fl Sue for Paying Tax on Surcharge RIBOZYME PHARMACEUTICALS: Rabin & Peckel Files Securities Suit in Colo. STATE COMPENSATION: Sp Ct to Review Part Of Schaefer Ambulance Case YAHOO.COM: Privacy Case Gains Velocity; CEO to Appear for Depositions ********* AMERISOURCE DISTRIBUTION: Contests Opt-outs of Antitrust Suit Re Drugs ---------------------------------------------------------------------- In November 1993, Amerisource Distribution Corp. was named a defendant, along with six other wholesale distributors and twenty-four pharmaceutical manufacturers, in a series of purported class action antitrust lawsuits brought by retail pharmacies and alleging violations of various antitrust laws stemming from the use of chargeback agreements. In addition, the Company and four other wholesale distributors were added as defendants in a series of related antitrust lawsuits brought by independent pharmacies and chain drug stores, both of which opted out of the class cases. The Company also was named a defendant in parallel suits filed in state courts in Minnesota, Alabama, Tennessee and Mississippi. The federal class actions were originally filed in the United States District Court for the Southern District of New York, but were transferred along with the individual and chain drug store cases to the United States District Court for the Northern District of Illinois for consolidated and coordinated pretrial proceedings. In essence, these lawsuits all claim that the manufacturer and wholesaler defendants have combined, contracted and conspired to fix the prices charged to retail pharmacies for prescription brand name pharmaceuticals. Specifically, plaintiffs claim that the defendants use "chargeback agreements" to give some institutional pharmacies discounts that allegedly are not made available to retail drug stores. Plaintiffs seek injunctive relief, treble damages, attorneys' fees and costs. In October 1994, the Company entered into a Judgment Sharing Agreement with the other wholesaler and pharmaceutical manufacturer defendants. Under the Judgment Sharing Agreement: (a) the manufacturer defendants agreed to reimburse the wholesaler defendants for litigation costs incurred, up to an aggregate of $9 million; and (b) if a judgment is entered against both manufacturers and wholesalers, the total exposure for joint and several liability of the Company is limited to the lesser of 1% of such judgment or $1 million. In addition, the Company has released any claims which it might have had against the manufacturers for the claims presented by the Plaintiffs in these lawsuits. Subsequent amendments to the Judgment Sharing Agreement have provided additional protection to the Company from litigation expenses in exchange for updated releases. The Judgment Sharing Agreement covers the federal court litigation as well as the cases which have been filed in various state courts. On April 4, 1996, the District Court granted the Company's motion for summary judgment in the class case. Plaintiffs subsequently appealed the Company's grant of summary judgment to the United States Seventh Circuit Court of Appeals. On August 15, 1997, the Court of Appeals reversed the District Court's order granting summary judgment in favor of the Company and the other wholesalers. The Court of Appeals also denied the Company's petition for rehearing. The Company and the other wholesalers filed a petition for a writ of certiorari to the United States Supreme Court; the petition was denied. Trial in the class case commenced in the United States District Court for the Northern District of Illinois on September 23, 1998. After a ten-week trial, the Court granted all of the defendants' motions for a directed verdict and dismissed the claims the class plaintiffs had asserted against the Company and the other wholesale distributors and the pharmaceutical manufacturers. Plaintiffs in the class case then appealed the District Court's judgment to the Seventh Circuit Court of Appeals. On June 9, 1999, the Seventh Circuit affirmed the judgment the District Court entered in favor of the Company in the class case. Plaintiffs have filed a petition for a writ of certiorari to the United States Supreme Court; that petition is pending. The state cases are proceeding. The Minnesota case settled without any payment or admission of liability by the Company. On November 29, 1999, the trial court in Alabama dismissed all of the claims asserted against the Company and the other wholesaler and manufacturer defendants in accordance with a ruling from the Alabama Supreme Court. The Mississippi and Tennessee cases remain pending, though there has been very little activity in either forum. On or about October 2, 1997, a group of retail chain drug stores and individual pharmacies, both of which had opted out of the class cases, filed a motion with the United States District Court for the Northern District of Illinois seeking to add the Company and the other wholesale distributors as defendants in their cases against the manufacturer defendants, which cases are consolidated before the same judge who presides over the class cases. This motion was granted and the Company and the other wholesale distributors have been added as defendants in those cases as well. As a result, the Company has been served with approximately 120 additional complaints on behalf of approximately 4,000 pharmacies and chain retailers. Discovery and motion practice is presently underway in all of these opt-out cases. The Company believes it has meritorious defenses to the claims asserted in these lawsuits and intends to vigorously defend itself in all of these cases. AMERISOURCE DISTRIBUTION: Says It Is Indemnified in Fen-Phen Cases ------------------------------------------------------------------ AmeriSource has been named as a defendant in four lawsuits based upon alleged injuries attributable to a category of products typically referred to as fen-phen. AmeriSource did not manufacture these products; however, prior to an FDA recall, AmeriSource did distribute these products from several of its vendors. The Company believes that it is entitled to full indemnification by its vendors with respect to these lawsuits and any other lawsuits involving these products in which AmeriSource may be named in the future. The Company believes that its insurance coverage and indemnification rights are adequate to cover any losses, if they should occur. NJ RESOURCES: Involved in Environment Contamination Re Gas, Tar, Waste ---------------------------------------------------------------------- Gas Remediation New Jersey Resources Corp. has identified eleven former manufactured gas plant (MGP) sites, dating back to the late 1800's and early 1900's, which contain contaminated residues from the former gas manufacturing operations. Ten of the eleven sites in question were acquired by NJNG in 1952. All of the gas manufacturing operations ceased at these sites at least by the mid-1950's and in some cases had been discontinued many years earlier, and all of the old gas manufacturing facilities were subsequently dismantled by NJNG or the former owners. NJNG is currently involved in administrative proceedings with the New Jersey Department of Environmental Protection (NJDEP) and local government authorities with respect to the plant sites in question, and is participating in various studies and investigations by outside consultants to determine the nature and extent of any such contaminated residues and to develop appropriate programs of remedial action, where warranted. Since October 1989, NJNG has entered into Administrative Consent Orders or Memoranda of Agreement with the NJDEP covering all eleven sites. These documents establish the procedures to be followed by NJNG in developing a final remedial clean-up plan for each site. Most of the cost of such studies and investigations is being shared under an agreement with the former owner and operator of ten of the MGP sites. Through a Remediation Rider approved by the BPU, NJNG is recovering its expenditures incurred through June 30, 1998 over a seven-year period. Costs incurred subsequent to June 30, 1998 will be reviewed annually and, subject to BPU approval, recovered over seven-year periods. In March 1995, NJNG filed a complaint in New Jersey Superior Court against various insurance carriers for declaratory judgment and for damages arising from such defendants' breach of their contractual obligations to defend and/or indemnify NJNG against liability for claims and losses (including defense costs) alleged against NJNG relating to environmental contamination at the former MGP sites and other sites. NJNG is seeking (i) a declaration of the rights, duties and liabilities of the parties under various primary and excess liability insurance policies purchased from the defendants by NJNG from 1951 through 1985, and (ii) compensatory and other damages, including costs and fees arising out of defendants' obligations under such insurance policies. The complaint was amended in July 1996 to name Kaiser-Nelson Steel & Salvage Company (Kaiser-Nelson) and its successors as additional defendants. The Company is seeking (a) a declaration of the rights, duties and liabilities of the parties under agreements with respect to claims against the Company that allege property damage caused by various substances used, handled or generated by NJNG or the predecessor in title that were removed from several of the MGP sites by Kaiser-Nelson, and (b) money damages or compensatory relief for the harm caused by Kaiser-Nelson's aforementioned actions. Discovery is proceeding in this matter. There can be no assurance as to the outcome of these proceedings. South Brunswick Asphalt, L.P. NJNG has been named as a defendant in a civil action commenced in New Jersey Superior Court by South Brunswick Asphalt, L.P. (SBA) and its affiliated companies seeking damages arising from alleged environmental contamination at three sites owned or occupied by SBA and its affiliated companies. Specifically, the suit charges that tar emulsion removed from 1979 to 1983 by an affiliate of SBA (Seal Tite Corp.) from NJNG's former gas manufacturing plant sites has been alleged by the NJDEP to constitute a hazardous waste and that the tar emulsion has contaminated the soil and ground water at the three sites in question. In February 1991, the NJDEP issued letters classifying the tar emulsion/sand and gravel mixture at each site as dry industrial waste, a non-hazardous classification. In April 1996, in a meeting with all parties to the litigation and the judge assigned to the case, the NJDEP confirmed the non-hazardous classification, which will allow for conventional disposal. In May 1997, SBA submitted applications to NJDEP for permits to allow SBA to recycle the tar emulsion/sand and gravel mixture at each site into asphalt, to be used as a paving materials. In July 1998, SBA filed an amended complaint adding NJDEP to the proceedings to facilitate the resolution of these applications. Following service of SBA's amended complaint, NJDEP filed a motion for dismissal of the amended complaint, but has not formally granted or denied SBA's permit applications. In March 1999, the court granted NJDEP's motion in part and denied NJDEP's motion in part, and directed SBA to file a more definite statement of its claims for equitable relief against NJDEP, including its request that a mandatory injunction be imposed compelling NJDEP to issue the subject permits. SBA's more definite statement of its claims has not yet been filed. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial condition or results of operations Combe Fill South Landfill NJNG has been joined as a third-party defendant in two civil actions commenced in October 1998 in the U.S. District Court for the District of New Jersey by the U.S. Environmental Protection Agency and NJDEP. These two actions seek recovery of costs expended in connection with and for continuation of the cleanup of the Combe Fill South Landfill, a Superfund site in Chester, New Jersey. The plaintiffs claim that hazardous waste NJNG is alleged to have generated was sent to the site. There are approximately 180 defendants and third-party defendants in the actions thus far. Each third-party complaint seeks damages under CERCLA Section 113 and the New Jersey Spill Act, declaratory relief holding each third-party defendant strictly liable, and contribution and indemnification under the common law of the United States and New Jersey. No specific monetary demands or scope of cleanup work have been set forth to date. NJNG is in the process of investigating the allegations, formulating its position with respect thereto and has agreed to participate in an alternate dispute resolution process encouraged by the Court. Its insurance carriers have been notified and one has agreed to assume responsibility for the legal expenses, while reserving its rights with regard to liability. NJNG is currently unable to predict the extent, if any, to which it may have cleanup or other liability with respect to these civil actions, but would seek recovery of any such costs through the ratemaking process. No assurance can be given as to the timing or extent of the ultimate recovery of any such costs. CELLCO: Bell Atlantic’s SEC Filing Discloses Consumer & Employee Suits ---------------------------------------------------------------------- Report by Bell Atlantic Corp to the Securities and Exchange Commission on Form 8-K filed as of December 27, 1999: Cellco is subject to several proceedings under lawsuits and other claims including class actions. Several consumer class action lawsuits involve allegations that Cellco breached contracts with consumers, violated certain state consumer protection laws and other statutes and defrauded customers through concealed practices of, among other things, imposing landline charges; rounding-up airtime usage to full-minute billing increments and charging for dropped calls. A commercial class action lawsuit alleges management improprieties in markets with minority partners controlled by Cellco. An employee benefits class action lawsuit alleges breach of fiduciary duty with respect to pension information provided to applicants for employment and employees of Cellco. Additional lawsuits include charges of unfair labor practices, as well as unfair trade practice claims involving Cellco's relations with certain of its agents. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, the ultimate liability with respect to these matters at December 31, 1998, cannot be ascertained, and the potential effect, if any, on the combined financial condition and results of operations of the Partnership, in the period in which these matters are resolved, may be material. CINCINNATI BELL: Faces EECO Suits over Racial Bias at TX Retail Unit -------------------------------------------------------------------- Twenty-two Equal Employment Opportunity ("EEOC") suits, alleging sexual and racial discrimination and retaliation, have been filed by employee located in the Company's Houston, Texas office of its retail operations. CINCINNATI BELL: Stockholders Sue in Dela. Over CBI Merger Agreement -------------------------------------------------------------------- On July 21, 1999, July 23, 1999 and July 27, 1999, five lawsuits were filed by the stockholders of Cincinnati Bell Inc. in the Court of Chancery of the State of Delaware relating to the Company's merger agreement with CBI. In conjunction with the merger with CBI, potential areas of concern have arisen regarding the Company's reporting under various Environmental Protection Agency ("EPA") regulations. By comparing information with CBI, potential EPA violations have been identified. The Company is in the process of inspecting its facilities over the next 60 days. If any violations are identified, the related penalties will be recorded during the fourth quarter of 1999. As the inspection process is underway, it is not possible at this time to estimate the amount of penalties, if any, that may be due. DIASENSOR COM: Faces Securities Complaint and Investigation in PA. ------------------------------------------------------------------ In April 1996, the Pennsylvania Securities Commission commenced a private investigation into Diasensor.com's sales of its common stock pursuant to its public offering in an effort to determine whether any sales were made improperly to Pennsylvania residents. The Company has been cooperating fully with the state and has provided all of the information requested. As of the date of this filing, no determinations had been made, and no orders have been issued. In May 1996, the Company, along with BICO and BICO's individual directors, including David Purdy and Fred Cooper, who are also officers and directors of Diasensor.com, was served with a federal class action lawsuit based on alleged misrepresentations and violations of federal securities laws. The action is pending in federal district court for the Western District of Pennsylvania, and remains in the pre-trial pleadings stage with the consent of all parties. No determinations as to possible liability or exposure are possible at this time, although the Company does not believe that any violations of the securities laws have occurred. In April 1998, the Company was served with a subpoena requesting documents in connection with an investigation by the U.S. Attorneys' office for the Western District of Pennsylvania. The Company has submitted various scientific, financial and contractual documents in response to such requests. ELITE INFORMATION: Faces Securities Suit in CA Re Proposed Merger ----------------------------------------------------------------- Elite Information Group Inc. (NASDAQ:ELTE) announced on January 6 that the Federal Trade Commission (FTC) has requested additional information and documentary material in connection with its review of the proposed merger between Elite and a subsidiary of Solution 6 Holdings Limited (ASX:SOH). The FTC request will result in an extension of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Elite intends to respond promptly to the FTC request. This announcement follows the announcement by Solution 6 and Elite on Dec. 15, 1999 that they had entered into a merger agreement providing for the acquisition of all outstanding shares of Elite's common stock by a Solution 6 subsidiary in a cash tender offer of U.S. $11.00 per share. Elite also announced that the San Diego office of the law firm of Milberg Weiss Bershad Hynes & Lerach LLP has filed a complaint in Los Angeles County Superior Court against Elite, its directors, and Solution 6. The complaint was filed as a purported class action on behalf of holders of Elite common stock. The complaint alleges that Elite's Board of Directors, by entering into a merger agreement with Solution 6 and its subsidiary, violated their fiduciary duties to Elite stockholders. Elite believes that the plaintiff's claims are without merit, and intends to defend the action vigorously. About Elite Elite Information Systems Inc., a wholly owned subsidiary of Elite Information Group Inc., is an international provider of a comprehensive suite of financial and practice management products, which includes integrated time and billing, general ledger and accounts payable. Elite's target markets include legal, accounting, consulting, public relations, financial services, actuarial, government, software, security, insurance, market research and systems integration. FREEMARKETS INC: Milberg Weiss Files Securities Suit in Pennsylvania -------------------------------------------------------------------- Milberg Weiss (http://www.milberg.com)announced that a class action has been commenced in the United States District Court for the Western District of Pennsylvania on behalf of purchasers of FreeMarkets, Inc. ("FreeMarkets") (Nasdaq: FMKT) securities during the period between December 10, 1999 and January 4, 2000 (the "Class Period"). If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from January 5, 2000. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@mwbhl.com The complaint charges FreeMarkets and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during 12/10/99 through 1/4/00, FreeMarkets saw its stock price soar from its Initial Public Offering ("IPO") price of $48 per share to $350 per share as FreeMarkets misrepresented the true status of its relationship with General Motors, concealing the fact that General Motors, one of FreeMarkets's largest customers, had signed an agreement with Commerce One to create an internet auction site which would result in the total evaporation of all of FreeMarkets's business from General Motors. The Individual Defendants knew that disclosure of this Commerce One agreement with General Motors in its Prospectus/Registration Statement would devastate FreeMarkets's chances of going public which allowed FreeMarkets to raise $160 million in its 12/10/99 IPO. FreeMarkets's top executives were determined to conceal the news of the Commerce One/General Motors Agreement until after FreeMarkets had gone public. In fact, the complaint alleges that the defendants knowingly concealed the fact that they were informed prior to the IPO that General Motors had entered into a contractual relationship with Commerce One which would result in the termination of its contract with General Motors in the first quarter of 2000 and provided for General Motors to take a 19% ownership stake in Commerce One. These false statements/omissions in FreeMarkets' Prospectus/Registration Statement were designed to and did allow FreeMarkets to go public and raise $160 million, which was triple the amount it planned on raising just weeks before, and caused the stock to trade in the $300-$350 range during the Class Period. As a result of the defendants' false statements/omissions, FreeMarkets's stock price traded at inflated levels during the Class Period, increasing to as high as $350 on 1/4/00 and ultimately plummeting more than $70 per share on 1/4/00 to $278-1/2 per share. Contact: William Lerach or Darren Robbins of Milberg Weiss, 800-449-4900, wsl@mwbhl.com GLOBAL TIMBER: Combined Professional Discloses Securities Suit in CA -------------------------------------------------------------------- Report by Combined Professional Services Inc. to the Securities and Exchange Commission (Conformed Submission Type 10SB12G/A), filed as of December 28, 1999 discloses the following securities lawsuit: Jose F. Garcia, individually, is the owner and holder of 60,000 shares, or 2.73% of the Company's common stock. Vilma Garcia, the wife of Jose F. Garcia, is the owner and holder of 100,000 shares, or 4.55% of the Company's common stock. Together, Mr. and Mrs. Garcia possess 160,000 shares, or 7.27% of the Company's common stock. On or about June 9, 1998, the United States Securities and Exchange Commission filed an enforcement proceeding in San Diego California against Global Timber Corporation, Stephen J. Sand, Jose F. Garcia, Jonathon Bentley-Stevens, David A. Kirk, and Pamela J. Vega. The Commission alleged that, from at least November 1995 through December 1996, Global Timber Corporation and certain officers and directors misrepresented to the public that Global Timber had the right to harvest certain timber located in the Philippines. By this misrepresentation, Global Timber grossly overstated its financial condition. The Commission asked the Federal Court to permanently enjoin the Defendants from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Commission Rule 10b-5, and impose a civil penalty against Sand, Garcia, Stevens, Kirk and Vega. Mr. Jose F. Garcia consented, without admitting or denying the allegations in the complaint, to the entry of a judgment of permanent injunction enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and imposing a civil penalty of $25,000.00. HOLOCAUST VICTIMS: Bank Austria Announces Ct Approval of Settlement ------------------------------------------------------------------- Bank Austria and its wholly owned subsidiary, Creditanstalt, announced on January 6 that United States District Court Judge Shirley Wohl Kram has approved a $40 million settlement of class-action claims brought against the banks by Holocaust survivors and other victims of Nazi persecution. In connection with the approval of the settlement by Judge Kram, Bank Austria and Creditanstalt issued the following statement reiterating their position in this matter: "Bank Austria and Creditanstalt unreservedly accept moral responsibility for the activities carried out by the Banks and/or predecessors during the Holocaust era, such as their role in the Aryanization of Jewish property, and express their profound regret for such actions. "The Banks are committed to an open and transparent review of their archives in order to lead to a greater understanding of the history of this period." Bank Austria, Austria's largest bank, was created in 1991. The claims at issue in the settlement stem from actions taken during the Nazi period by Landerbank, which in 1991 was merged into Bank Austria, and Creditanstalt, which Bank Austria acquired late in 1997. The settlement, essentially in the form approved, was presented to Judge Kram on May 26, 1999, by attorneys for Bank Austria and the plaintiffs. The settlement subsequently was amended and later endorsed by the Conference on Jewish Material Claims Against Germany, Inc., and the World Jewish Congress. "This is an historic event" said Gerhard Randa, Chairman and Chief Executive Officer of Bank Austria, "marking the first time that any of the Holocaust-related claims cases has reached a concluded settlement. We sincerely hope that the victims of the Nazi regime who are the beneficiaries of this settlement may find a measure of solace in this tangible acknowledgment of moral responsibility for the terrible events they suffered more than a half-century ago." Major features of the settlement include: * Creation of a $30 million Restitution Fund to pay claims and, from any balance remaining after the payment of all claims, to fund humanitarian projects for the assistance or remembrance of victims of Nazi persecution. * Creation of an archive of bank records for the period 1938 through 1945, when the bank was under the control of German entities, including Dresdner Bank, Deutsche Bank and the conglomerate VIAG, and official agencies of the Nazi Reich. * Assignment to the plaintiffs of all claims that Bank Austria itself might have against the present-day German government and German entities. * Releasing Bank Austria and Creditanstalt from all future claims of any sort arising from the conduct of their predecessor institutions during the period of Nazi rule in Austria. The agreement reserves up to $10 million from the total $40 million for costs of administering the settlement, including creation of the archive, costs of the historical commission, publishing the notice of settlement around the world, "on account" payment of claims that the banks have been making since October of 1998, and the plaintiffs' attorneys' fees. The $40 million settlement was recorded in Bank Austria's 1998 financial results. In a separate agreement not part of the court-ordered settlement, Bank Austria and Creditanstalt have agreed to consider funding humanitarian projects to be proposed to them by the Claims Conference specifically for the benefit of victims of Nazi persecution from Austria, up to a total of $5 million. Contact: Gerald McKelvey of Rubenstein Associates, Inc., Public Relations, 212-843-8013, for Bank Austria - Creditanstalt care of Stroock & Stroock & Lavan LLP LASER POWER: Defends Dela. Suit Alleging Breach of Fiduciary Duty ----------------------------------------------------------------- In October 1999, the Company and certain directors of the Company were sued by Kathy and George Roelofsen, Jonathan Bryrum, and Cheryl Roelofsen, in the Delaware Chancery Court (ROELOFSEN ET AL. VS. KLIMASEWSKI ET AL, Del. Ch. C.A. No. 17450NC). The complaint, which purports to be a class action, asserts claims for purported breaches of fiduciary duty in connection with the Company's rejection of an acquisition proposal by II-VI. The Company and a number of the individual defendants have moved to dismiss the complaint. The Company believes that the claims are without merit and intends to defend itself vigorously. However, there can be no assurance that the Company will prevail in these proceedings or that an outcome unfavorable to the Company in these proceedings will not materially adversely affect the Company's business, financial condition or results of operations. The Company had previously entered into indemnification contracts with each of its officers and directors, including the directors who were named defendants in the complaint. As a result, the Company is paying the expenses of the directors in defending themselves in this matter subject to reimbursement under its insurance policies. Subject to certain limited exceptions, the Company will reimburse the directors for any monetary damages assessed against the individual directors that are not covered by the Company's insurance policies. In addition, the conduct of litigation can be time-consuming and costly. There can be no assurance that these factors will not materially adversely affect the Company's business, financial condition or results of operations. MICROSOFT CORP: National Post Reports on Brain Drain Amidst Lawsuits -------------------------------------------------------------------- According to the National Post of January 6, Microsoft, once a magnet for software talent, is seeing its key people leave as antitrust attacks sap its vitality. The report says that Microsoft's chief financial officer, Greg Maffei, recently announced that he's leaving the company to join Vancouver-based Worldwide Fiber. America's loss is Canada's gain. Microsoft's stock rose 1,500% during Mr. Maffei's seven-year tenure. But beyond boosting shareholders' wealth, Mr. Maffei helped ensure the company's future growth by negotiating alliances with cable television and telecommunications firms. Reportedly, he'd been planning to quit -- he sold $ 35-million (all figures in U.S. dollars) in Microsoft stock in the past two months. Even so, he left behind more than $25-million in unexercised stock options. News of Mr. Maffei's departure caused Microsoft's market value to fall by $10.2-billion. Mr. Maffei joins a growing list of top executives who've left Microsoft in the past two years to join other firms, start their own or take leaves of absence. Pete Higgins, head of Internet operations, also quit last month. He'd been with Microsoft for 16 years, but had taken a leave of absence in 1998, as had Chris Peters, head of the office division, where 400 programmers generate more than $4-billion in annual revenues. Last June saw the departure of the company's chief technology officer, Nathan Myrold, and its director of Web-browser development, John Ludwig. The head of Microsoft's WebTV unit, Steve Perlman, left in May. Mike Murray, a senior personnel officer who hired the company's best and brightest, quit last March. Brad Silverberg, who spearheaded Windows 95, left in 1997. Media accounts of these departures rarely link them to the intensifying antitrust assault on Microsoft. President Steve Ballmer has tried to calm customers and investors, saying the company will survive due to its 'deep bench.' Microsoft's second-tier talent probably surpasses competitors' first-stringers in ability, according to National Post, which says that it unlikely for Microsoft to flourish as in the past. The paper says that the team's bench, for all its depth, remains a less talented group; the starters who created this $600-billion firm are leaving. Microsoft has been under the antitrust gun since government prosecutors targeted it in 1990. In 1994, Mr. Gates signed a consent decree, 'voluntarily' agreeing to limit his freedom and abide by government dictates. The next year, a court said Microsoft was still acting too freely. By October, 1998, the company was on trial. Last November, Judge Thomas Penfield Jackson ruled it an 'oppressive monopoly.' Now prosecutors are strong-arming Microsoft to settle the case out of court. Microsoft is the victim of a high-tech lynching, National Post says. Netscape lobbied for the antitrust assault, sending reams of complaints and documents to prosecutors. Court exhibits included e-mails, videos and computer demos. Electronic media salivates over what even Judge Jackson called a 'show trial.' Anti-Microsoft Web sites, easily accessed by Microsoft's own browser, invite visitors to give their opinion, prior to a final sentence, on how, not whether, the firm should be penalized, fined or dismantled. Prosecutors' legal briefs were written using Microsoft software. Microsoft's enemies have used the firm's own success and products to weave its noose. The report also says the response of Microsoft's top talent to this high-tech lynching has been to quit -- or appease. Aside from naming extraneous motives for their exits, the quitters are mute about the injustice of the antitrust case. Those who remain accept the premises of their lynchers and have tried to appease them. In a November letter to shareholders, Mr. Gates said his firm is 'guided by the most basic American values,' including 'serving customers' and 'giving to our communities.' The reports points out that he makes no mention of the right to life, liberty, property and the pursuit of happiness. His altruistic and collectivistic justifications say, in effect: 'Leave us free, so we can be good serfs -- to consumers, industry, and the community.' according to the report, which says that this approach not only fails to promote liberty or Microsoft's interests -- it invites slavery. The report says no one should pretend that Microsoft's brain drain is unrelated to assaults on its freedom and the visionary, dynamic and creative climate once associated with Microsoft is cooling -- not because the firm has failed in some way or has no great plan for future growth, but because, by succeeding in so many ways already, it has incurred the wrath of the envious who wield coercive power. Microsoft assailants -- whether in Silicon Valley, the media, state attorney generals' offices or the U.S. Justice Department -- seek to dismantle the company and shackle it to prevent future success. That's why brains leave. Mr. Ballmer has said that he and his colleagues 'never dreamed that competing vigorously and innovating rapidly would make us a target for lawsuits inspired by our competitors.' No 'dreaming' is required. The injustice Mr. Ballmer alludes to has been the century-long result of antitrust laws. Jack Krumholz, Microsoft's director of governmental affairs, insists that 'reasonable people can disagree over the wisdom of the government's attack on Microsoft.' He endorses Mr. Gates' view that the antitrust laws are just fine -- but don't apply here. Mr. Krumholz says an antitrust suit would be fine were it brought by consumers, not by competitors. (National Post (formerly The Financial Post) January 06, 2000) NETOPTIX CORP: Defends Vigorously Consolidated Securities Suit in MA. --------------------------------------------------------------------- The four class action lawsuits, commenced against the Company and certain of its former officers during fiscal year 1998, alleging violations of the federal securities laws, have been consolidated into a single action pending in the United States District Court for the District of Massachusetts. The plaintiffs seek damages based upon certain alleged misstatements or omissions in the Company's public announcements and filings. The Company has filed a Motion to Dismiss, to which the class plaintiffs have responded; there has been no ruling on this motion. The Company intends to continue to vigorously defend these lawsuits. POLYPHASE CORP: Contests Securities Complaints in Nevada -------------------------------------------------------- During fiscal 1997, five substantially identical complaints were filed in the United States District Court for the District of Nevada against the Company and certain of its officers and directors. The complaints each sought certification as a class action and asserted liability based on alleged misrepresentations that the plaintiffs claimed resulted in the market price of the Company's stock being artificially inflated. The defendants filed motions to dismiss in each of the lawsuits. Without certifying the cases as class actions, the District Court consolidated the cases into a single action. In June 1998, the District Court ordered the plaintiffs to file an amended complaint within thirty days, finding that their original allegations failed to state a claim under the federal securities laws. The plaintiffs then filed a motion for re-consideration of the Court's ruling. The defendants opposed that motion, and the Court denied the plaintiff's motion for reconsideration. The plaintiffs did not file an amended complaint within the specified thirty day time period, but subsequently filed an amended complaint, claiming that they were entitled to additional time within which to file an amended pleading by reason of a scheduling order issued by the Court. The defendants moved to dismiss the case on the grounds that the amended complaint was filed too late and failed to state a claim for securities fraud under applicable legal authorities. The plaintiffs have sought a stay of the Court's consideration of defendants' motion to dismiss, asserting that there is uncertainty as to the legal standards to be applied in securities fraud cases. The Court has not ruled on plaintiff's motion to stay or defendants' motion to dismiss. PROMATECH INC: Ct Denies Class Action to Enforce Trust Fund Under Lien ---------------------------------------------------------------------- Plaintiff subcontractor moved for an order certifying the class of people entitled to share in the funds received by defendant in connection with a public improvement project. Defendant was the construction monitor. Plaintiff, which had earlier filed a lien against the project, alleged that it was owed money and that defendant received money from the City that should be paid to plaintiff. One cause of action was to enforce a trust pursuant to Lien Law @ 77, which as a matter of law must be maintained as a class action. The court found that plaintiff failed to sustain its burden of demonstrating all the prerequisites for class action certification by competent proof. Thus, its motion was denied. Moreover, plaintiff had not made any showing that defendant was in possession of any funds that could be the subject of a Lien Law trust fund action. IA PART 5 Justice Stallman THE DEVELOPMENT TEAM, INC. v. PROMATECH, INC. QDS:22701920 - Plaintiff moves for an order pursuant to CPLR Article 9 certifying the class of persons in the within action entitled to share in the funds received by defendant Promatech, Inc. in connection with a public improvement. Defendants Promatech, Inc. and its president Yvette Streahle cross-move for partial summary judgment on the third and fourth causes of action in the complaint. The City has not submitted papers on this motion. This action arises out of the construction of a public improvement project known as C-138 Fire/Life Safety Systems at the Manhattan Detention Complex. Pursuant to an agreement with the City dated April 28, 1993, Promatech was the construction monitor for the project. Thereafter Promatech entered into a number of subcontracts with the various trades and professionals required to construct the project. Plaintiff was one such subcontractor and last spring, based upon work it claimed to have performed, plaintiff submitted a request for payment to Promatech. After plaintiff had submitted its request for payment, but before the City had processed it, plaintiff placed a lien on the project dated March 22, 1999 claiming it was owed approximately $ 47,000 for services provided. Thereafter, consistent with its policy, the City would not issue any payment in connection with the project since there was a lien filed against the project. The issue of the lien was finally resolved as evidenced by a Certificate of Satisfaction of Public Improvement Lien dated September 1, 1999. Since the third cause of action seeks money damages to be adjudged on the lien filed by plaintiff, and since that lien has been satisfied, plaintiff has consented to the lien's discharge as a matter of record. Thus, defendants' motion for partial summary judgment on the third cause of action in the complaint is granted on consent. See Reply Affidavit of Raymond Carile, P 25. Plaintiff's fourth cause of action is one to enforce a trust pursuant to Lien Law @ 77, which as a matter of law must be maintained as a class action. Plaintiff alleges it is owed money, and "upon information and belief" money was paid to Promatech by the City on account of its claim (Moving Affirmation, P 2) which Promatech failed to pay to plaintiff. Plaintiff further asserts that by accepting and retaining money from the City, defendants, as officers of Promatech, diverted trust funds from Promatech and other unnamed statutory beneficiaries. Defendants contend that in reality the gravamen of this trust fund action is to recover the amount of plaintiff's change orders, the validity of which has been contested by the City. In support of the cross-motion dismissing this cause of action, Streahle, president of Promatech, states that Promatech did not receive any money from the City on account of any work performed by plaintiff which was not immediately paid to plaintiff. Thus, plaintiff's allegations of a diversion of trust funds is without sufficient legal basis and would not be made sufficient if Promatech were to provide a Verified Statement as requested by plaintiff. Plaintiff moves for certification of this action as a class action based upon its fourth cause of action to enforce a trust pursuant to Lien Law @ 77. It is well-settled that class action certification is discretionary. Siegel, NY Prac. @ 142 (2d ed.). The moving party bears the burden of demonstrating that all prerequisites for class action certification have been met. In re Colt Industries Shareholder Litigation 155 AD2d 154, 159, mod. 77 NY2d 185. Plaintiff has submitted the conclusory affidavit of its attorney which simply recites that the five criteria mandated by CPLR @ 901 (a) are present: numerosity, commonality, typicality, adequacy of representation and superiority of the class action method. See Chimenti v. American Express Co., 97 AD2d 351. Since plaintiff has failed to sustain its burden by demonstrating all of the prerequisites for class action certification by competent proof, its motion is denied. Moreover, on the merits, plaintiff's motion for class action certification must be denied and partial summary judgment on the fourth cause of action must be granted. Plaintiff has failed to identify even one other member of the proposed class; thus certification must be denied. See Pesantez v. Boyle Environmental Services, 251 AD2d 11. The Court notes that the project is substantially complete and that there have not been any other liens filed against it. In sum, plaintiff has not made any showing that defendant or any of its officers, directors, partners and/or agents are or have been in possession of any funds which could be the subject of a Lien Law trust fund action. Indeed, any dispute concerning plaintiff's change orders is unique to plaintiff and the City and not susceptible to treatment in a class action. Since the failure to certify the instant action is fatal to plaintiff s action to enforce a trust pursuant to Lien Law @ 77, defendants' cross-motion for summary judgment is granted in favor of the moving defendants on the fourth cause of action. Moreover, the complaint is dismissed as against the City and John Doe 1 and 2 and Jane Doe I and 2, because they are named as parties only in those causes of action dismissed by this order, and are not parties to the remaining claim. In the Fourth Cause of Action of its complaint, plaintiff maintains that the total amount due for the work it performed, including change orders, is One Million Two Hundred and Fifty Eight Thousand Forty Three 05/100 ($ 1,258,043.05) Dollars of which it has received One Million One Hundred and Eighty Six Thousand Three Hundred and Eleven 89/100 ($ 1,186,311.89) Dollars, thus leaving a balance of Seventy One Thousand and Seven Hundred Thirty One 16/100 ($ 71,731.16) Dollars. The undisputed amount remaining, after subtracting the amount of the satisfied lien, is Twenty Three Thousand Nine Hundred Forty One 44/199 ($ 23, 941.44) Dollars. That amount apparently represents the amount of change orders which were submitted to the City on behalf of Development Team but have never been paid by the City since the City has disputed the validity of those change orders. In essence, this is a garden variety contract dispute over change orders, approximating $ 24,000, that has been exaggerated and dressed up in class action clothing. It concerns neither the type of pervasive exploitive behavior by a general contractor which Lien Law @ 77 was intended to remedy; neither does it require litigation in the Supreme Court. Thus, since the amount in controversy is apparently less than $ 25,000.00, this matter is hereby transferred to Civil Court pursuant to CPLR @ 325(d). ORDERED that plaintiff's motion for class action certification is denied and the cross-motion is granted in its entirety; the third and fourth causes of action of the complaint against defendants Promatech Inc. and Yvette Streahle and the complaint is severed and dismissed as against defendants City of New York and John Doe 1 and 2 and Jane Doe 1 and 2; and it is further ORDERED that the Clerk of the Court is directed to enter judgment accordingly; and it is further ORDERED that the remainder of the action shall continue against Promatech, Inc. only; and it is further ORDERED, that since the Civil Court of the City of New York has jurisdiction of the parties to this action and pursuant to Rule 202.13(a) of the Uniform Civil Rules for the Supreme Court and the County Court, this case bearing Index Number 602141/99 be, and hereby is, removed from this Court and transferred to the Civil Court of the City of New York, County of New York; and it is further ORDERED, that the Clerk of the New York County Supreme Court shall transfer to the Clerk of the Civil Court of the City of New York, County of New York, all papers in this action now in his possession, upon payment of proper fees, if any, and the clerk of the Civil Court of the City of New York, County of New York, upon service of a certified copy of this order upon him and upon delivery of the papers of this action to him by the clerk of the County of New York, shall issue to this action a Civil Court Index Number without the payment of any additional fees; and it is further ORDERED, that the above-entitled cause be, and it is hereby transferred to said Court, to be heard, tried and determined as if originally brought therein but subject to the provisions of CPLR 325(d). This constitutes the decision and order of the Court. Copies to all parties. (New York Law Journal December 23, 1999) REVENUE DEPT: Rental-car Customer in Fl Sue for Paying Tax on Surcharge ----------------------------------------------------------------------- Mateo of Orlando was studying the paperwork on a Ford Contour he rented in October when something strange caught his eye. Not only had Budget Rent-a-Car charged him a $2-a-day surcharge on the car, but the car rental agency on West Colonial Drive also had charged sales tax on the $2 fee. It looked to Mateo like a tax on a tax. When he rented a car a month later and was again billed for both the surcharge and the sales tax, Mateo realized it wasn't just a mistake. He called a lawyer. Mateo last month filed suit, seeking class-action status on behalf of all the rental-car customers in Florida, accusing the state Department of Revenue of overstepping its bounds in imposing the sales tax and for improperly double-taxing rental-car customers since the Legislature introduced the surcharge in 1989. Mateo's suit, which says the Revenue Department wasn't authorized to apply the sales tax to the surcharge, seeks to stop the tax and reimburse rental-car customers for the overcharge. At rates of 6 percent or 7 percent, depending on the county, sales taxes on the $2-a-day surcharge range from 12 cents to 14 cents. And it's been 10 years since the surcharge was imposed, for use on various road and transportation projects where rental-car users have an impact. That means, by Persad's calculations, that the state has collected almost $22 million in unjustified taxes. The Revenue Department doesn't see it that way. Though he wouldn't comment specifically on the state's defense of the suit, department spokesman David Bruns said the statute that created the surcharge allowed the tax. "It specifically says the surcharge is subject to all applicable taxes," he said. "We think the suit is not well grounded." Mateo's suit suggests the statute, in a question over its language, would have needed specifically to mention the sales tax for it to be applicable. And the suit goes further, charging that the Revenue Department violated the state's Constitution by interpreting the statute in the first place. Bruns said the statute's language wasn't subject to interpretation. The suit finds no fault with the surcharge itself nor with Budget Rent-a-Car. The state's official response to the suit is due later this month, and a judge would have to rule on whether the suit deserves class-action status. (The Orlando Sentinel January 6, 2000) RIBOZYME PHARMACEUTICALS: Rabin & Peckel Files Securities Suit in Colo. ----------------------------------------------------------------------- Rabin & Peckel LLP announced on January 6 that a class action complaint has been filed in the United States District Court for the District of Colorado on behalf of all persons or entities who purchased or otherwise acquired the common stock of Ribozyme Pharmaceuticals, Inc. ("Ribozyme" or the "Company") (NASDAQ:RZYM) between the close of trading on November 15, 1999 and the close of trading on November 17, 1999 inclusive (the "Class Period"). The Complaint alleges that on November 15, defendants issued a press release headlined "Colorado Pharmaceutical Co. Makes Cancer Drug History." The press release indicated that Angiozyme, one of the Company's drugs in development, "has taken an important step forward...making both clinical history and industry news" and that a press conference would be held at 11:00 a.m. on November 17 at which the Company's "CEO and President, Ralph E. Christoffersen, Ph.D. . . . will explain Angiozyme and its recent history-making leap, an achievement which may be of great significance to cancer patients everywhere." On November 16, the price of Ribozyme common stock rose as high as 22 an increase of more than 100% from its closing price of$10.0625 on November 15 before trading was suspended by NASDAQ for approximately one and one-half hours. Ribozyme issued a press release late on November 16 which indicated that Angiozyme had entered Phase I/II testing a development that the Company had twice previously indicated would take place before the end of 1999. The November 17 press conference disclosed no significant news and merely repeated what was included in the Company's press release on November 16. As the true facts came out regarding the misleading nature of the November 15 press release, the price of Ribozyme common stock dropped back to $9.3125 at the close of trading on November 17. The lawsuit seeks to recover damages suffered by investors in Ribozyme as a result of defendants' improper conduct. Contact: plaintiff's counsel, Elana M. Bourkoff, Rabin & Peckel llp, 275 Madison Avenue, New York, NY 10016, by telephone at (800) 497-8076 or (212) 682-1818, by facsimile at (212) 682-1892, by e-mail at email@rabinlaw.com or visit website at http://www.rabinlaw.com STATE COMPENSATION: Sp Ct to Review Part Of Schaefer Ambulance Case ------------------------------------------------------------------- The State Supreme Court Nov. 10 agreed to review a lower court's decision to not dismiss the Schaefer Ambulance Service Inc. action case against State Compensation Insurance Fund. This means that the high court will rule on State Fund's motion to have the case dismissed based on its argument that disputes about experience rating and reserve reporting should be settled through an administrative process rather than in civil court. This argument has been the primary defense argument in the Schaefer case and about 20 others targeting various workers' comp carriers. If the court ends up siding with State Fund, the ruling would favorably affect the insurance industry and the other cases, which contain the same or very similar allegations against a slew of insurers. Those insurer defendants could file similar motions citing the Supreme Court's decision as precedent. Hundreds of millions of dollars in damages are at stake in all the cases combined. One insurer, Fremont Compensation Insurance Co. (NYSE: FMT) earlier this year settled a similar case out of court for $25 million. Allegations in the Schaefer case and others are that the various insurers improperly accounted for medical-legal defense expenses, and accordingly drove up employers' X-Mods (experience modification factors) and along with them, premiums. Subsequent cases have focused in on other statistical methods of reporting information to the Workers' Compensation Insurance Rating Bureau, which uses claims information to calculate X-Mods for employers. The high court's decision to review the case indicates that it wants to settle the matter once and for all, according to observers and those involved in the case. "This case and others like it are an erosion of the rate-making process," says Charles Savage, in-house counsel for State Fund. "It shouldn't be the basis for a mass class action." While the Schaefer Ambulance case was filed as a class action, it has not been certified by the courts as one. Even the counsel for the plaintiff is glad that the state Supreme Court has agreed to hear the case. So far the Orange County Superior Court's decision to decline State Fund's motion for judgment on pleadings was the only bright spot for the plaintiffs in that court. The judge in that case, last spring, refused to certify the case as a class action and also dismissed Schaefer's motion to add causes of action that included violations of Business and Professions Code Section 17200 as well as allegations that State Fund over-reserved for claims, which would have inflated premium costs for Schaefer. Part of the reason those additional actions were rejected was that they are contained in an already existing class action suit, A&J Liquors v. State Fund. If the state's high court decides that State Fund's motion for judgment on its pleadings is appropriate, the lawsuit would then die. On the other hand, if it agrees with the lower court's decision to reject the motion, the case would progress, possibly to trial in Orange County Superior Court. Roxborough Pomerance has until Dec. 10 to "show cause before this court when the matter is placed on calendar, why the relief sought in the petition should not be granted," the court wrote Nov. 10. The Schaefer case and others have become a sore subject for the insurance industry, which has been forced to pay dearly in terms of attorneys' fees defending the cases. In the Schaefer case, the allegations are that State Fund included in its reporting of claims costs to the Bureau medical-legal evaluation costs. Schaefer alleges that the law requires those expenses to be classified as general defense expenses, and as such should not be charged to a policyholder's claims costs. These medical-legal expenses were incurred when medical examination reports were prepared at SCIF's request by medical experts other than a claimant's own doctor. Despite these reports being prepared in defense of employers, Schaefer contends that such improper reporting practices resulted in inflated experience modifications and artificially inflated premiums. The Schaefer Ambulance case has been bandied about in many venues since it was first in civil court in 1994. The original trial judge ordered the case remanded to the WCIRB, which, as part of its duties as statistical agent, the state rating bureau hears employer complaints about X-Mods and other rating issues. The WCIRB sided with Schaefer, agreeing with its arguments that State Fund had indeed improperly reported medical legal expenses. State Fund appealed the decision to the Department of Insurance. An administrative law judge issued a proposed decision affirming the WCIRB's decision. Insurance Commissioner Chuck Quackenbush adopted the ALJ's decision and State Fund filed a petition for reconsideration. The DOI urged State Fund and Schaefer as well as two other employers to enter into mediation to resolve the issue among themselves. Quackenbush wanted the parties to settle on credits and refunds so that the employers can be reimbursed for their overpaid premiums. Just as the parties were preparing to enter the mediation that Quackenbush had ordered, Quackenbush abruptly denied State Fund's motion for reconsideration, grinding the ordered mediation to a halt. The case was resumed this year in the Orange County court. State Fund's motion for judgment on pleadings that the case doesn't belong in the civil court system is based on State Insurance Code Section 11758: "No act done, action taken or agreement made pursuant to the authority conferred by this article shall constitute a violation of or grounds for prosecution or civil proceedings under any other law of this State heretofore or hereafter enacted which does not specifically refer to insurance." This defense was successfully used in a related case earlier this year. In the VPS Management Inc. v Pacific Rim Assurance Company. A California Court of Appeal ruled in March that the employer's grievances over the manner in which X-Mods (experience modification factors) were calculated should not be heard in the state's civil court system. VPS didn't appeal the decision to the Supreme Court, and Pacific Rim reached a settlement with VPS, which was paid in exchange for its agreement not to pursue the matter further. However, others, including Roxborough Pomerance and even the Department of Insurance wrote to the state Supreme Court urging it to depublish the decision, which it later did. Hence, the VPS decision is not citable. "VPS was a good decision in that it properly interpreted 11758," says Heywood Friedman, attorney for Pacific Rim in the case. "But in the view of the Supreme Court, VPS was perhaps not the right context for that decision." Friedman is also defense counsel in two Schaefer-related cases. (Workers' Comp Executive November 17, 1999) YAHOO.COM: Privacy Case Gains Velocity; CEO to Appear for Depositions --------------------------------------------------------------------- The following release was issued on January 6 by Chalkboardtalk.com: In a surprise move, Yahoo, Inc. adds a second law firm and dramatically increases number of attorneys to handle the barrage of legal maneuvers from Chalkboardtalk.com attorneys Larry Friedman and Joel Levin. Levin comments: "Apparently, Yahoo! is becoming aware of the gravity of this situation and they want to limit their exposure as much as possible." At a hearing in Dallas County Court No. 1 on January 4 morning, Dallas Judge David Gibson ordered expedited discovery for this case after strong opposition from Yahoo's legal counsel. The expedited discovery motion calls for Yahoo! President and CEO Jeff Mallett and Broadcast.com President and CEO Mark Cuban to appear for depositions within the next two weeks. Chalkboardtalk.com's legal counsel Larry Friedman states: "It is apparent that the issue of consumers' privacy is driving the velocity of this lawsuit. We need expedited discovery to find out what kind of information Yahoo is collecting on their subscribers from the Cookies that are attached by Yahoo to their consumers' computers. It is important to note that these Cookies are attached without the knowledge or consent of Yahoo's subscribers and it is Chalkboardtalk.com's contention the privacy statement which has been issued by Yahoo! to address this matter is misleading." Yahoo! or its subsidiaries have been subject to various legal actions including a class action lawsuit and a separate FTC complaint which resulted in a formal consent decree barring misrepresentation regarding the collection of subscriber data, identity of the party collecting such data, and the FTC order restricts the collection of personal identifying information from children. The FTC decree also ordered that consumers be notified of what information is being collected, its intended use, the third parties to whom it will be disclosed, the consumer's ability to access such information, and the consumer's ability to remove their information from the database. Chalkboardtalk.com, a Dallas based internet company which provides educational videos and video content, filed a $4 billion lawsuit on Wednesday, December 22, 1999 against Yahoo, Inc., Broadcast.com, Inc., Mark Cuban, and Todd Wagner. The lawsuit, which seeks $1 billion in actual damages and $3 billion in exemplary damages, alleges Breach of Contract, Tortious Interference with Contract, Conversion, Trespass to Personal Property, Fraud, and Civil Theft. Source: Chalkboardtalk.com Contact: Bill Simpson of Strategic Policy Group, 214-341-1289, or fax, 214-341-1730, or mobile, 214-893-5143 ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk and Peter A. Chapman, editors. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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