/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000216.MBX C L A S S A C T I O N R E P O R T E R Wednesday, February 16, 2000, Vol. 2, No. 33 Headlines ASHANTI GOLDFIELDS: Dumps CFO; Shareholders to Meet; Board to Change BLUE SQUARE: Supermarket in Israel Will Contest Suit over Water in Meat CHILDREN'S HOMES: Damning Report Prompts U.K. Lawsuit & System Overhaul COTTER CORP: 10th Cir Overturns Rule on Negligence in Uranium Mill Case DOUBLECLICK: Online Agency Fights Back Charges of Invading Privacy FORD CONSUMER: Cir Ct Says Atty. Fees Can't Be Aggregated for Fd Amount FOSTER CARE: FL Case for Children Brings Changes; May End Peacefully INMATES LITIGATION: Prisons & Phone Companies Sued for Kickback Scheme JDN REALTY: Abbey, Gardy Files Securities Suit in Georgia LEGATO SYSTEMS: Curtis Trinko Files Securities Lawsuit in CA LUCENT TECHNOLOGIES: Wechsler Harwood Files Securities Lawsuit in NJ ONYX ACCEPTANCE: Decries Merit of Investors' Lawsuit POLICY MANAGEMENT: Bernard M Gross Files Securities Lawsuit in SC SGL CARBON: Ct Rules out Ch 11 Protection; May Resolve Antitrust Claims SUNRISE INTERNATIONAL: Contests DE Securities Suit Re Merger Agreement SYKES ENTERPRISES: Lowey Dannenberg Files Securities Lawsuit in FL TOBACCO LITIGATON: Publicly Displayed Papers Show Secret Talk on Prices WAR VICTIMS: Australians Back CA Suit Vs. Japanese Firms Re Slave Labor YIELD BURNING: Lawyers for FL County & Broker Dealers Argue on Markups ********* ASHANTI GOLDFIELDS: Dumps CFO; Shareholders to Meet; Board to Change -------------------------------------------------------------------- Ashanti Goldfields Co. Ltd., which faces a securities lawsuit launched by Milberg Weiss Bershad Hynes & Lerach, as reported earlier in the CAR, ditched its chief financial officer, Mark Keatley, on February 14 as the Ghana government convened talks in Accra to seek a new board line-up for the troubled mining company. Ghana's biggest company, which lost a court battle with dissident shareholders last week, said Mr. Keatley would step down after the next annual general meeting on April 26. Disgruntled investors, led by Adryx Mining & Metals Ltd., had demanded Mr. Keatley be fired after $570-million of gold hedging losses that brought the firm to the brink of default. The company also confirmed the resignation of Richard Kwame Peprah, the Ghanaian finance minister, as chairman and said that Phillip Tarsh, its senior independent non-executive director, would take over as acting chairman. Ashanti is under mounting pressure after an Accra court ruling ordered it to hold an extraordinary shareholders' meeting -- scheduled for March 3 -- to consider demands for board changes and the sale or partial sale of assets. Both the dissident shareholders and the government say the firm has mismanaged a liquidity crisis caused by a rapid increase in gold prices last October. 'Why did management wait so long to implement solutions which they were advised of last year? Because of delay, Ashanti is currently engaged in very delicate negotations with the members of its banking syndicate,' the government said in a statement. Ashanti, which was blocked by the government from pursuing its favoured option of merging with Lonmin PLC, said the comments from the government, which holds a 20% stake and a golden share in Ashanti, were regrettable. Shares in the company, which were floated at US $20 in 1994, sank to a new low of $2 as the market fretted that its future was now hanging in the balance. Ashanti had been due to sign a $100-million (US) loan on February 10 to pay for work on the promising Geita gold project in Tanzania, in which it aims to sell a 50% stake. But that refinancing plan was thwarted by the court ruling that barred it from any new financial transactions until after the shareholders' meeting. The wrangling in court has also put back the sale of the Geita stake. Ashanti had requested binding bids from potential buyers -- thought to include Barrick Gold Corp. and AngloGold -- by Feb. 11. But on February 14 it said the timetable would have to be delayed until current uncertainties were resolved. Time is also running out, once again, on its exemption from paying margin calls on its derivatives book. Earlier this month, Ashanti's counterparty banks agreed a further rollover of the deadline, but only until Feb. 17. (National Post (formerly The Financial Post), February 15, 2000) BLUE SQUARE: Supermarket in Israel Will Contest Suit over Water in Meat ----------------------------------------------------------------------- Blue Square-Israel Ltd. (NYSE: BSI) announced on February 15 that it has received a copy of a complaint which claims to be a class action suit against a meat producer, the Company, and other major supermarket chains, including the Company's subsidiary, Blue Square Israel Properties and Investments Ltd., and others. The complaint alleges that excess water was unlawfully used in frozen meat products of the meat producer, which were retailed by Blue Square and other major supermarket chains. The damages claimed total approximately NIS 198 million. The Company is currently studying the complaint, and intends to defend itself vigorously against the charges. Blue Square is a retailer in Israel. It currently operates 165 supermarkets under different formats, each offering varying levels of service and pricing. CHILDREN'S HOMES: Damning Report Prompts U.K. Lawsuit & System Overhaul ----------------------------------------------------------------------- A massive overhaul of the care system was being set in place after the publication of a damning report into the UK's biggest child abuse scandal on February 15. The report of a public inquiry into North Wales children's homes found horrific evidence of widespread sexual and physical abuse of hundreds of youngsters in several homes over two decades. At least 12 victims have committed suicide after enduring years of systematic rapes and beatings at the hands of those who were supposed to protect them. Hundreds of former residents have now joined a class action lawsuit which is expected to result in multi-million-pound compensation settlements. The report said there was a "climate of violence" and a "cult of silence" at children's homes in the area which "shattered" the lives of hundreds of the most vulnerable youngsters. More than 200 people are criticised in the report, although just 25 have been convicted of offences against children between 1974 and 1996. And an urgent search has been ordered to track down 28 people whose whereabouts are not known and who are named in the report as being unsuitable to work with children. Every local authority, police force and voluntary organisation in the country has been given until February 17 to check past and present employment records and inform the Department of Health if any of the 28 has ever worked for them. Entitled Lost In Care, the 500,000-word report, written by former High Court judge Sir Ronald Waterhouse, included 95 conclusions and 72 recommendations. Social workers, care home staff, local authorities, police and the Welsh Office were severely criticised by Sir Ronald and the other two members of the inquiry panel. It called for the setting up of an independent children's commissioner to protect the rights of youngsters. And it recommended that every social services authority should be required to appoint a Children's Complaints Officer to deal with allegations of abuse. One of the many criticisms of the inquiry was that the people to whom the children in the homes should have been able to complain were those who were abusing them. Health Secretary Alan Milburn announced the establishment of a national Children's Rights Director to "police" independent regulation and inspection of children's homes. Mr Milburn said the key roles of the position would be to police the independent regulation and inspection of children's homes, to make sure that views of children in various settings such as children's homes and fostering agencies were given proper consideration, and to gather and act on significant evidence which might help local authorities or other providers to improve the services and support given to children. He added: "Protection of children from dangerous individuals is the top priority for social care services. We must satisfy ourselves that those people who have abused children are not in a position to do so now." The main allegations of abuse centred on the Bryn Alyn and Bryn Estyn children's homes in Clwyd, now the county of Flintshire. Deputy head of Bryn Estyn Peter Howarth was jailed for 10 years in 1994 after being convicted of sexual offences against seven boys. Housemaster Stephen Norris was jailed for a total of 10 years for sexual offences against boys at Bryn Estyn and the Cartrefle children's home, where he had previously worked. Bryn Alyn home's owner, John Allen, was jailed for six years in 1995 for sexual offences against six boys. The report said the convictions were "a mere sample" of Allen's overall offending. The inquiry heard how Peter Howarth drew up a list of "bum boys" to visit his flat every evening in their pyjamas whom he sexually assaulted. The report said: "The consequences of the abuse by Howarth on his victims were immeasurable and remain so. "Their lives were grossly poisoned by a leading authority figure in whom they should have been able to place their trust. "They felt soiled, guilty and embarrassed and were led to question their own sexual orientation. "Most of them have experienced difficulties in their sexual relationships and their relationships with children ever since and many have continued to rebel against authority. "Even more seriously, their self-respect and ability to look forward to the future has been shattered." The inquiry also heard how another Bryn Estyn worker, Paul Wilson, physically abused youngsters at the home. Witnesses told how he beat them black and blue, capsized canoes and held them underwater, terrified them when they were rock climbing by dropping the rope and leaving them dangling over the edge, and in one case knocking an injured boy's crutches from underneath him. The report said: "For very many residents Wilson caused or contributed to substantial distress and unhappiness that has lingered, in some cases, for as long as two decades." The report says "manifestly unsuitable" staff were recruited to work in the homes, and inspection and complaints procedures were "grossly inadequate". Local authorities and social services did not have effective leadership or management structures and failed the children in their care, according to the report. "The cumulative effect of social services failings ... amounted, in our judgment, to abuse of those children, and the lamentable result was that many of them emerged from care unfitted to meet the demands of adult life, without adequate continuing support and filled with resentment about their treatment in care," the report said. The Welsh Office's response to allegations of persistent abuse in children's homes was "inappropriately negative and inadequate", it added. The report also highlights poor funding, which meant low-paid and unqualified staff were employed to care for some of society's most vulnerable children. But it discounted claims that the abuse was part of an organised "paedophile ring" in the north-west of England. The report concluded: "The picture that we have given of a community home in which two of the most senior members of staff were habitually engaged in sexual abuse of many of the young residents is truly appalling." Children had complained as early as 1978 about abuse, but four damning reports in the early eighties about the state of homes in Clwyd were suppressed by the council. It was only in 1996, after a string of high-profile prosecutions of former staff at the children's homes, that the then Welsh Secretary, William Hague, ordered the public inquiry. Social worker Alison Taylor had acted as a whistleblower on the abuse as early as 1986 but her repeated calls for investigations were ignored until 1990. She told North Wales police of her concerns in 1988 but the investigation was "sluggish and shallow", the inquiry found. Ms Taylor was sacked from her job after raising concerns, but February 15's report says she is "wholly vindicated" in her role. One of the report's recommendations was that workers should be able to make complaints without fear of reprisals - and that failure of staff to report suspected or actual abuse by a colleague could be made a disciplinary offence. The report may also come in for criticism from some victims for not "naming names" in many of the allegations relating to people not charged with offences. (Press Association Newsfile, February 15, 2000) COTTER CORP: 10th Cir Overturns Rule on Negligence in Uranium Mill Case ---------------------------------------------------------------------- A federal appeals court overturned a $2.9 million judgment for a group of Canon City residents who sued the owners of a uranium mill, ruling on February 11 that a lower court erred when it said the issue of negligence had been decided in a previous trial. The 10th U.S. Circuit Court of Appeals ordered a new trial in the case, which pits 14 people from four families in the Lincoln Park neighborhood against the company they claim contaminated their property and their bodies. Lincoln Park is on the southern edge of Canon City in southern Colorado. In 1998, after testimony from witnesses who said toxic waste from the Cotter Corp. mill made its way into groundwater, gardens and homes in Lincoln Park, a U.S. District Court jury awarded the plaintiffs $1.45 million in compensatory damages and the same amount in punitive damages. The award came after the district court ruled that negligence had been established in a previous trial involving eight other Lincoln Park residents and barred Cotter from arguing the issue again. The appeals court said that was a mistake and overturned the ruling. "We believe that the jurors closed their minds to the evidence, went into the jury room and said, 'All we have to do is decide on the money," said Cotter lawyer John Watson. The appeals court also sided with Cotter on another issue, affirming the district court's rejection of the plaintiffs' claim for damages for emotional distress caused by their increased fear of cancer. The Cotter mill, which opened in 1958 and closed in 1987, produced uranium fuel for nuclear power plants. The process created dust and liquid waste that eventually contaminated the area, triggering its designation in 1984 as a Superfund site eligible for federal cleanup funds. The plaintiffs have suffered from illnesses including cancer and arthritis. One woman who did not smoke died of lung cancer, and an expert testified that handicapped rodeo rider Jack Hadley's abnormal bony body growths were caused by his mother's exposure to molybdenum while pregnant. According to the appeals court ruling, about 500 Lincoln Park residents originally sued Cotter in 1989, alleging its negligent operation of the mill damaged their health and property. Watson said the number was about 550. After class action status was denied, eight plaintiffs convinced a jury in 1994 that Cotter was negligent but did not establish that the negligence caused exposure to hazardous materials requiring future medical monitoring. They did not claim physical illness or injuries. According to Watson, three of the eight plaintiffs received no money, and the other five were awarded a total of less than $200,000. He said the 10th Circuit Court rejected an appeal in 1995 and the rest of the plaintiffs then settled. The 14 new plaintiffs - the first of four groups totaling 67 people - then sued and won the $2.9 million judgment in July 1998. Cotter appealed on several grounds, and the payment to the plaintiffs was automatically stayed pending the 10th Circuit Court's decision. According to Watson, the district judge barred the jury from hearing defense testimony about toxicity levels of water and soil samples, and claimed the jury ignored a state Health Department study that found few risks, if any, from the contamination. Lakewood-based Cotter has resumed production of uranium oxide, or yellowcake, at the mill since getting the go-ahead from the state last spring. Also last year, concern over contaminated water delayed a decision to remove Lincoln Park from the list of Superfund sites until at least 2001. (The Associated Press, February 12, 2000) DOUBLECLICK: Online Agency Fights Back Charges of Invading Privacy ------------------------------------------------------------------ Accused of invading people's privacy, the DoubleClick online advertising agency is fighting back. In a campaign announced February 14, the company portrays itself as a consumer-friendly company that goes out of its way to protect consumers' anonymity on the Web. But DoubleClick's announcement only inflamed privacy advocates, who said the effort avoids the key issue of which the ad agency is accused: linking Web information users believed was anonymous _ such as online shopping habits with a database of names and personal details. The clash underscores an increasing controversy between a marketing industry eager to harness the Internet's power to reach custom ers and those who fear the intrusion to people's confidential information, such as spending habits, health status and food preferences. The New York-based DoubleClick is the nation's largest Internet ad agency, electronically inserting advertisements on about 1,500 Web sites on behalf of online advertisers. But last fall, the company landed in hot water with privacy advocates when it bought direct marketing company Abacus for $1.7 billion. What irked them was DoubleClick's plans to cross-reference information obtained by Web ''cookie'' technology with consumer information from the Abacus marketing database. A cookie is a small file that a Web site deposits on your hard drive, often with a unique number that identifies the user's computer. The next time someone using that computer goes back to the site, the site will recognize the computer. DoubleClick, targeted in a lawsuit filed last month and a complaint filed with the Federal Trade Commission last week, stands accused of seeking to build virtual dossiers on unwitting consumers' buying habits and identities, with the intent to sell the data to advertisers who can barrage people with ads. The new DoubleClick measures include placing its own banner advertisements on Web sites, part of an ''Internet Privacy Education Campaign'' that the company says makes it easier for Web users to ''opt out'' of giving marketers confidential details about their shopping habits. The banner ads, a total of 50 million impressions, will be placed over the next few months, DoubleClick president Kevin Ryan said in a teleconference. DoubleClick also said that PricewaterhouseCoopers would start conducting independent audits of its privacy practices. The Electronic Privacy Information Center, an advocacy group based in Washington, filed the complaint last week with the Federal Trade Commission. The group also is pushing for federal legislation that would regulate the use of personal information and cookies on the Internet. It followed a similar move late last month by Harriet Judnick, a California woman who sued in Marin County Superior Court saying the cross-referencing between the DoubleClick and Abacus databases was being done without users' consent. She is seeking class-action status on behalf of all people in the state. The conflict puts DoubleClick at the vortex of a wider debate over how far businesses should go to target consumers. Privacy advocates say the notion of the Internet as a free-flowing forum for ideas and information is giving into a harsher reality: Business wants to know where you go, what you look at and, most importantly, what you're likely to buy. ''The critical issue is what will be the future advertising model for the Internet,'' said Marc Rotenberg of the Electronic Privacy Information Center. DoubleClick defends its practices, saying its ads ensure that the Web remains free for consumers to use. ''We strongly believe that effective advertising is key to keeping the Internet free to consumers ... and strongly believe that consumers want to receive information about goods and services that interest them,'' said Ryan. (AP Online, February 15, 2000) FORD CONSUMER: Cir Ct Says Atty. Fees Can't Be Aggregated for Fd Amount ----------------------------------------------------------------------- Credit life insurance purchasers' share of potential attorney's fees under Georgia's Racketeering Influenced and Corrupt Organizations Act could not be aggregated to satisfy the 75,000 amount-in-controversy jurisdictional requirement because the right to attorney's fees represented a separate and distinct interest, not a collective benefit. Darden, et al. v. Ford Consumer Finance Company Inc., et al., No. 98-9412 (11th Cir. 1/12/00). Ralph Darden and Otis Lee and Cora Ivory purchased credit life insurance from Associates Financial Life Insurance Co. in connection with their 15-year loans obtained from Ford Consumer Finance Co. Premiums were charged for the credit life insurance with a 10-year term and added into the principal amount borrowed. Thus, through Ford, the Ivorys and Darden paid the premiums in full to Associates. Claiming Ford and Associates violated Georgia law by selling and financing credit life insurance for 15-year loans without the necessary authorizations or licenses from the Georgia Department of Insurance, the consumers filed suit in the Superior Court of Fulton County, Ga. They alleged breach of legal and private duty, conversion and a violation of the state's RICO act. Jurisdiction The defendants moved to dismiss the class action and removed the case to federal court based on diversity jurisdiction. The consumers opposed the removal, contending that the amount in controversy did not exceed 75,000. Associates and Ford countered that given the consumers' demand for attorney's fees under RICO, the claims of the class could be aggregated to satisfy the amount-in-controversy requirement. The U.S. District Court for the Northern District of Georgia denied the motion to remand and granted the defendants' motion to dismiss for failure to exhaust administrative remedies under the Georgia Insurance Code. The consumers appealed the jurisdiction issue regarding the amount in controversy to the 11th U.S. Circuit Court of Appeals. They stipulated also that each class member would neither request nor accept damages in excess of 75,000, exclusive of interest, costs and attorney's fees. Circuit Judge Hull explained that the claims for compensatory damages of the individual plaintiffs could not be aggregated to establish the required amount in controversy. At least one class member must have a damage claim of greater than 75,000 for federal diversity jurisdiction, he added. Because "no one asserts that any individual Plaintiff's damage claim, added to that individual Plaintiff's share of attorneys' fees under the RICO statute would be enough to satisfy the amount in controversy," the only issue to resolve was if all of the consumers' shares of attorney's fees awarded under the state's RICO statute could be aggregated. Separate and Distinct Interest The 11th Circuit stated that for attorney's fees to be aggregated in a class action to satisfy the federal amount in controversy requirement there must be "a single title or right in which all plaintiffs have a common and undivided interest," therefore, separate and distinct claims could not be aggregated. The court looked to state law and the purpose of the attorney's fees award under Georgia's RICO statute. Georgia's RICO statute provides, "Any person who is injured by reason of any violation of Code Section 16-14-4 shall have a cause of action for three times the actual damages sustained and, where appropriate, punitive damages. Such person shall also recover attorneys' fees in the trial and appellate courts and costs of investigation and litigation reasonably incurred. The defendant or any injured person may demand a trial by jury in any civil action brought pursuant to this Code section." The 11th Circuit held that this statutory language clearly indicates that the statutory award of attorney's fees represents a separate and distinct interest awarded to compensate each injured civil plaintiff. The legislature did not intend for the award of attorney's fees to penalize a party. Because each plaintiff had a separate and distinct interest in the award of attorney's fees under Georgia law, the 11th Circuit held their share of attorney's fees could not be aggregated to satisfy the amount-in-controversy requirement. The court ruled that the consumers were only joining together in a class action to enforce their individual rights. In conclusion, the 11th Circuit ruled the District Court lacked subject matter jurisdiction and vacated that court's order denying the consumers' motion to remand. The 11th Circuit directed the District Court to remand the action to the Superior Court. (Consumer Financial Services Law Report, February 9, 2000) FOSTER CARE: FL Case for Children Brings Changes; May End Peacefully -------------------------------------------------------------------- For 16 months, the state's social services department and child advocates have wrangled over allegations that Broward County's foster children are at best ignored, at worst abused. Now it appears that the conflict laid out in a federal class-action lawsuit may be coming to a peaceful close. The Department of Children & Families has scheduled a "major announcement" related to the suit for this morning at the state Attorney General's Office in Fort Lauderdale. Both DCF Secretary Kathleen Kearney, a former Broward dependency judge, and plaintiffs' attorneys will attend, a department spokeswoman said. The Youth Law Center, a San Francisco-based nonprofit agency, filed the suit in October 1998 charging that eight of Broward County's foster children were in more danger under the state's care than they were in their allegedly abusive or neglectful homes. One plaintiff, an 11-year-old girl, was lured away from an overcrowded foster home and gang raped by three men. In March 1999, U.S. District Judge Frederico Moreno granted the suit class-action status. The suit now covers 1,400 foster children. For months, both sides have been quietly working on how to avoid a scheduled Feb. 28 trial. Plaintiffs' attorneys have said the department was underfunded, overburdened with cases and unable to provide safe, stable, appropriate placement for the county's most vulnerable children. That left children exposed to physical, sexual and emotional abuse. A month after the suit was filed, a Broward grand jury released its report on the county's child protection system. What they found appalled them: department workers buckling under a load of 40 to 50 cases each; foster homes crammed with children; rampant child-on-child abuse; distrust between the courts and the department; and an indifferent administration. Catastrophe, the grand jury said, was imminent. "There is agreement from Dependency Court Judges, District employees and other persons familiar with the child welfare system that the problems facing the Department and District Ten are so extensive and so pervasive that they threaten to collapse the entire system and that serious intervention is imperative," the report stated. The lawsuit grabbed state government's attention like nothing else could. It also prodded the local community into action. "We've always been screaming we've got a serious issue here in foster care and now it's been acknowledged that truthfully there is a problem," said Ellyn Okrent, program director at Kids in Distress, which provides shelter, foster care and counseling services to abused and neglected children. "There's been significant administration change. There's been a lot of community talk in terms of making this a priority. It has caused a lot of attention." Starting in July 1999, The Broward Sheriff's Office began taking over child abuse investigations, another Children & Families division lambasted by the grand jury for putting children at risk. They now investigate about 1,000 reports of abuse and neglect a month. Meanwhile, numerous volunteer committees made up of business leaders, government representatives and social workers have since popped up, eager to tackle the problem. They are busily working to lobby the Legislature for more money, special pilot projects and more focus on prevention programs to halt the stream of children coming into care. The department, too, has changed some of its ways. "They're trying to hold foster parents to only two children in each home," Okrent said. "They're monitoring much more closely." But while a sea change may be evident within the department's structure, problems continue to plague the system. The district's backlog of open child abuse cases has swelled from 1,000 in 1998 to 4,000 early this year. Now that department investigators are no longer taking on new cases, and volunteers have stepped forward to help, the backlog is slowly shrinking. Department officials expect to close out all their cases by July. The district still can't account for 77 children who they say have either run away or are simply missing. In 1998, it was 80. More than 30 foster children have been sexually assaulted by other foster children during the past six months. Foster care workers are still overwhelmed by cases, although the load has diminished to an average of 26 per caseworker. And the district remains woefully void of shelter space. At any given time, about 180 children need emergency shelter in Broward County. Yet the district only has 55 emergency shelter beds in both facilities and homes. Meanwhile, traumatized children plucked from their homes often wait for hours in department offices while placement workers scramble late into the night to find them a bed. A rare few with no place else to go have been forced to sleep on couches and cots in the district's assessment center, said Jim Walker, head of child welfare. Foster homes too are full, with 46 of the department's 384 homes over capacity. The rest of the 224 homes are run by private nonprofit agencies. But even with those challenges, Walker, who used to work for the state Attorney General's Office compiling reports on foster care cases, said the department is better off than it was 16 months ago. "When I look at what concerns I raised and I look at where we are at this point, I think we have come a long ways." Some say no matter what the final outcome, that is this lawsuit's legacy. "These children for the most part are silent and invisible," said Marcia Robinson Lowry with Children's Rights Inc., a national children's advocacy group. "[Changing that] requires the kind of external pressure and publicity for something to happen, for appropriations to increase, for management changes to be made." "That's one of the things the lawsuit does � provide focused, sustained pressure, hopefully used constructively." (Sun-Sentinel (Fort Lauderdale, FL), February 15, 2000) INMATES LITIGATION: Prisons & Phone Companies Sued for Kickback Scheme ---------------------------------------------------------------------- Four private prison operators in 33 states have received "commission kickbacks" from at least two companies that provide inmate telephone service, a national class-action lawsuit alleges. The suit charges that Evercom Systems of Texas and PCS America of Oklahoma, among others, conspired with the nation's largest private prison operators to establish monopolies over prison phone services. The prisons received kickbacks up to 60 percent of the gross revenue from collect calls, said Mark Donatelli, one of three attorneys that filed the suit. "The kind of money being generated by this is just unbelievable, and it bears no relation to the cost of providing phone service," Donatelli said. "It is strictly a commission kickback for providing a monopoly." The private prison operators named in the suit run more than 200 prisons in 33 states. They include Wackenhut Corrections Corp., Correctional Services Corporation, Corrections Corporation of America and Cornell Corrections. (Source: The Albuquerque Journal, published in Corrections Professional, February 11, 2000) JDN REALTY: Abbey, Gardy Files Securities Suit in Georgia --------------------------------------------------------- Abbey, Gardy & Squitieri, LLP announced on February 15 that a class action is being filed in the United States District Court for the District of Georgia on behalf of all persons who bought securities of JDN Realty Corp. during the period February 15, 1997 to February 14, 2000 (the "Class Period"). The Complaint charges JDN and certain of its officers with concealing the fact that certain officers received undisclosed compensation in connection with certain real estate transactions. Contact: oshua N. Rubin, Esq., Abbey Gardy & Squitieri, LLP., 212 East 39th Street, New York, NY 10016, Telephone: 800-889-3701 or 212-889-3700 Fax: 212-684-5191 E-mail: jrubin@a-g-s.com Web: http://www.a-g-s.com LEGATO SYSTEMS: Curtis Trinko Files Securities Lawsuit in CA ------------------------------------------------------------ The Law Offices Of Curtis V. Trinko, LLP filed a securities lawsuit in the United States District Court of the Northern District of California, on behalf of all individuals who purchased or otherwise acquired shares of Legato Systems, Inc. between the dates of October 20, 1999 and January 19, 2000, inclusive. The class action asserted claims under the federal securities laws, Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, 15 U.S.C. ss.ss. 78(j)(b), 78(t)(a), and Rule 10b-5 (17 C.F.R. ss. 240.10b-5) in connection with the issuance by Legato Systems, Inc. of a series of materially misleading financial statements and press releases concerning Legato's publicly reported revenues and earnings. The Plaintiffs allege that the statements disseminated by Legato and the Director Defendants were false and materially misleading when made by virtue of the Company's announcement on January 19, 2000 that it would restate financial results for the third and fourth quarters of fiscal year 1999. Throughout the Class Period, Legato reported artificially inflated revenues and earnings by recognizing revenue in violation of Generally Accepted Accounting Principles. Such improperly recorded revenues should not have been recorded because the earnings process was not complete. In total, the Company improperly recognized $19 million during the third and fourth quarters of 1999. In the wake of the adverse announcement of January 19, 2000, Legato's stock price plummeted as much as 48%, falling from a closing price of $53 5/8 on January 19, 2000 to as low as $28 in early trading on January 20, 2000, causing substantial damages to Plaintiff and the Class. Contact: plaintiffs' counsel, Curtis V. Trinko, of the Law Offices of Curtis V. Trinko, LLP, 16 West 46th Street, New York, New York 10017, (212) 490-9550, Joseph J. Tabacco, Jr., of Berman DeValerio & Pease, LLP, One Liberty Square, Boston, MA 02109, (617) 542-8300, or Andrew M. Schatz of Schatz & Nobel, P.C., 330 Main St., Hartford, CT 06106 (860) 493-6292. LUCENT TECHNOLOGIES: Wechsler Harwood Files Securities Lawsuit in NJ -------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP commenced a class action lawsuit in the United States District Court for the District of New Jersey on behalf of all persons who purchased the common stock of Lucent Technologies, Inc. between October 27, 1999 and January 6, 2000, inclusive. Contact: Craig Lowther, Shareholder Relations Department at Wechsler Harwood Halebian & Feffer LLP, 488 Madison Avenue, New York, New York 10022 at (toll free) 1-877-935-7400 or e-mail at clowther@whhf.com or visit website at http://www.whhf.com ONYX ACCEPTANCE: Decries Merit of Investors' Lawsuit ---------------------------------------------------- Onyx Acceptance Corp. said that a class-action lawsuit filed against the company and some officers "has no foundation and is without merit." The suit claims the company misled investors and artificially inflated its stock price. The lawsuit was filed after Onyx, a Foothill Ranch auto finance company, restated its financial results for 1996, 1997 and parts of 1998. The company attributed the restatement to an accounting change adopted to conform with new standards set by the Securities and Exchange Commission. (Los Angeles Times, February 15, 2000) POLICY MANAGEMENT: Bernard M Gross Files Securities Lawsuit in SC ----------------------------------------------------------------- The Law Offices Bernard M. Gross, P.C filed a class action lawsuit in the United States District Court for the District of South Carolina on behalf of a class consisting of all persons who purchased the common stock of Policy Management Systems Corporation from October 22, 1998 through and including February 9, 2000, inclusive. The complaint charges Policy Management Systems Corporation and certain of its officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Section 10b-5. The complaint alleges that defendants issued a series of materially false and misleading statements regarding the Company's financial condition, products, technologies and financial statements. Before the disclosure of the adverse facts described above, certain members of the Company's senior management sold their personally-held Policy Management common stock to the unsuspecting public generating proceeds of over $13 million. For additional information concerning this lawsuit, please contact Susan Gross, Esq. (susang@bernardmgross.com) or Tina Moukoulis, Esq. (Tina@bernardmgross.com) of Law Offices Bernard M. Gross, P.C., telephone at 800/849-3120 or 215/561-3600 or visit website at http://www.bernardmgross.com SGL CARBON: Ct Rules out Ch 11 Protection; May Resolve Antitrust Claims ----------------------------------------------------------------------- SGL Carbon Corp., Charlotte, N.C., said that it does not expect the U.S. Court of Appeals' recent negative decision to have an impact on the company's efforts to resolve the remaining claims in graphite electrodes antitrust litigation. The 3rd U.S. Circuit Court of Appeals ruled that SGL Carbon had not been eligible for Chapter 11 bankruptcy Protection, which it filed for in the course of the antitrust allegations. The Appea1s Court said that the company did not face immediate financial difficulty and that it had abused bankruptcy laws. SGL Carbon, the U.S. unit of SGL Carbon AG, Wiesbaden, Germany, said it expected to be out of Chapter 11 by mid-January and that it would have the remaining 4 percent of claims resolved expeditiously. Nearly two dozen U.S. steel companies filed a civil lawsuit against four producers of graphite electrodes in spring 1998. Those same producers were already the targets of U.S. and European Union price-fixing investigations and related class-action lawsuit. The companies, which in addition to SGL included UCAR International Inc., Danbury, Conn., Carbide/Graphite Group Inc., Pittsburgh and Showa Denko Carbon Inc., Ridgeville, S.C., later paid antitrust fines and agreed to numerous settlement with plaintiffs. As reported in the CAR, last month the company said that the signing of final settlements with class-action plaintiffs in antitrust litigation in the United States paved the way for its emergence from bankruptcy (AMM Online, Dec. 9). As a result of the settlement, SGL Carbon Corp. had resolved more than 96 percent of all claims in the U.S. through out-of-court settlements. After the signing of the agreement, the company obtained an order from the U.S. District Court in Wilmington, Del., authorizing the company to solicit creditor votes on its plan for bringing the Chapter 11 case to a close. The company's disclosure statement -- the information provided to creditors regarding the plan--had been approved previously. SGL Carbon manufactures, markets and distributes carbon and graphite products, principally graphite electrodes, used in electric-furnace steelmaking, and specialty graphite products. (American Metal Market, January 7, 2000) SUNRISE INTERNATIONAL: Contests DE Securities Suit Re Merger Agreement ---------------------------------------------------------------------- Sunrise International Leasing Corporation (Nasdaq: SUNL) announced on February 14, 2000 that one of its stockholders filed a complaint as a class action in the Court of Chancery for the State of Delaware against it and its directors. The complaint alleges breach of fiduciary duty by Sunrise's directors in connection with Sunrise's recently announced merger with The King Management Corporation. The complaint seeks damages and an order of the Court to Sunrise's directors to carry out their fiduciary duties. Under the terms of the merger agreement, Sunrise's stockholders will receive $5.25 per share in cash. Sunrise believes the terms of the proposed merger with The King Management Company are fair, from a financial point of view, to Sunrise and its unaffiliated stockholders and believes that the complaint is without merit. Sunrise plans to vigorously defend its position. Sunrise International Leasing Corporation was established in 1989 and is based in Golden Valley, Minn. It offers leasing options to manufacturers, distributors, resellers and to end users. Sunrise's common stock is traded on the Nasdaq National Market under the symbol "SUNL." SYKES ENTERPRISES: Lowey Dannenberg Files Securities Lawsuit in FL ------------------------------------------------------------------ Lowey Dannenberg Bemporad & Selinger, P.C. filed a securities class action lawsuit in the United States District Court for the Middle District of Florida against Sykes Enterprises, Inc. and certain of the Company's officers and directors on behalf of purchasers of Sykes common stock during the period July 26, 1999 through February 6, 2000, inclusive. Plaintiff's complaint alleges that defendants violated the federal securities laws by issuing to the investing public false and misleading financial statements and press releases which overstated Sykes' reported revenues and earnings, and misled the marketplace as to its purportedly rapid growth and prospects. On the morning of February 7, 2000, Sykes disclosed that fourth quarter 1999 results were significantly below both market expectations and its results for fourth quarter of 1998. The shortfall was due in major part to revenue recognition issues which required Sykes to delay recognizing revenues, and to restate downward its previously reported results for the second and third quarters ended June 30 and September 30, 1999. As a result, Sykes' net income for these quarters was reduced by 67%. Sykes further conceded that in light of the restatement, it expected 2000 earnings of about $1.10 per share, well short of analysts' expectations of $1.53 per share. On February 7, 2000, the market price of Sykes' common stock, which had traded as high as $51 per share during the Class Period, plunged to$14-1/4 per share, thereby culminating in a decline of more than 70% in value over a three-week period. For more inquiries concerning the above-mentioned lawsuit, please contact David Harrison, Esq. Lowey Dannenberg Bemporad & Selinger, P.C. The Gateway, 11th Floor One North Lexington Avenue White Plains, NY 10601-1714 telephone 914-997-0500 telecopier 914-997-0035 e-mail at dharrison@ldbs.com or visit website at http://www.ldbs.com TOBACCO LITIGATON: Publicly Displayed Papers Show Secret Talk on Prices ----------------------------------------------------------------------- The world's two largest tobacco companies discussed pricing and ways to share markets in Guatemala and Costa Rica, according to a February 15 report in the Financial Times. Executives from Philip Morris Cos. and British American Tobacco Co. Ltd. talked about policies to avoid ''destabilization'' of one of the markets during a 1992 meeting at a hotel outside London, the newspaper said. It cited minutes from the meeting that referred to ''good cooperation between both companies.'' The document came to light since the U.S. Justice Department filed a class-action lawsuit last week that accuses major American cigarette manufacturers of meeting secretly to illegally fix prices they charge wholesalers. The six pages of notes, marked ''secret,'' are among some 8 million pages of documents that have been displayed publicly at a depository that British American Tobacco set up in Guildford, Surrey, near London. The company put the documents on display after major tobacco companies settled lawsuits filed against them by all 50 U.S. states. Under that 1998 settlement, the companies agreed to pay states $ 246 billion for the cost of treating smoking-related illnesses. Philip Morris acknowledged that it has discussed pricing ''on a few occasions'' with BAT representatives in Latin America. ''These discussions took place only where permitted by law and often at the request of local governments,'' spokeswoman Elizabeth Cho said from the company's New York headquarters. BAT spokeswoman Jody Humble called the report ''an old story'' about a document that first surfaced in late 1998, during litigation brought against the company by the Washington state attorney general. ''These issues were looked at the time, and the review indicated that we didn't have a problem,'' she said. (AP Worldstream, February 15, 2000) WAR VICTIMS: Australians Back CA Suit Vs. Japanese Firms Re Slave Labor ----------------------------------------------------------------------- Australian prisoners of war forced to work on the infamous Burma Railway backed a class action on February 15 against Japanese companies believed to have profited from slave labour. As World War II diggers in Sydney came to lay wreaths and observe a minute's silence in memory of fallen soldiers, veterans said they would welcome the chance to hit guilty Japanese companies in the hip pocket. Among those companies named in the class action were Mitsubishi, Kawasaki and Mitsui. Melbourne law firm Glennon, Burstyner & Co is acting for the former prisoners of war. Victorian POWs were due to meet in Melbourne on February 15 to discuss the lawsuit filed in Los Angeles on December 7. Lawyer acting for the POWs, Henry Burstyner, said the action would be for millions of dollars and he expected there to be between 6,000 and 10,000 people eligible for compensation. Mr Burstyner was the first lawyer to successfully force a Swiss bank to return dormant funds to a Sydney man. Dr Rowley Richards, 83, said he had given money to help get the class action off the ground. "No amount of money they can be fined or have to pay us is going to replace 7,000 lives nor be compensation for the cruelty and starvation," Dr Richards said. "Our prime objective is to get it out in the open and make these people accountable. "Obviously, it would have been better had it happened sooner, because a lot more people would have benefited," he said. After working on the Burma Railway, Dr Richards said he was handed over as slave labor to a Japanese company in Sakato. "We had the coldest winter in 70 years, and the winter was virtually over before they provided us with any heating," he said. Reg Mahoney, a member of the Australian Eighth Division, said his two years working on the Burma Railway were hell. "We had five kilometres to walk from the camp to the railway line, then slaving for up to 16 hours a day and another five kilometres back to the camp," he related. "And my ration was a pint of rice a day," the 85-year-old said. "It was a living hell." Mr Mahoney said for years he had attempted to get some compensation for his suffering but he had been unsuccessful. He welcomed this opportunity to join the class action. "Indeed, I'll be looking to join them. "We owe it to all our mates who didn't come back. "So many died from Japanese brutality and starvation," he said. (AAP Newsfeed, February 15, 2000) YIELD BURNING: Lawyers for FL County & Broker Dealers Argue on Markups ---------------------------------------------------------------------- Lawyers in the Collier County, Fla., yield-burning class action suit squa red off on February 11 on a panel designed to help shed some light on the contentious issue for Florida public finance officials. While refusing to discuss details of the case, both the lawyer for the clerk of Collier County, who filed the suit, and the lawyer for one of the 15 broker-dealer defendants laid out their differing points of view on yield burning, which occurs when broker-dealers charge municipal issuers excessive markups when selling them Treasury securities to fund the escrow accounts associated with advance refundings. The practice was allegedly widespread in the market in the first half of the 1990s. The penalty for yield burning can be the loss of tax-exempt status for the bonds, although several federal agencies and more than a dozen brokerage firms are in negotiations aimed at reaching a "global" settlement of all federal claims. Even if the threats to the bonds' tax-exempt status is resolved, however, many of the issuers in attendance during the session at a Florida Government Finance Officers Association meeting still wanted to know whether dealers who engaged in yield burning betrayed a responsibility to the issuer. Paul Saltzman, general counsel for The Bond Market Association, the trade group of municipal broker-dealers, argued that issuers bear ultimate responsibility for what happens in their deals. "How about the issuer being responsible for the issuer's actions?" remarked Saltzman, who was also on the panel. "At some point people have got to take responsibility for their own actions." Saltzman threw himself into the thick of the debate over the merits of the different yield-burning suits, and for the most part sided with the industry perspective that sees limits on the fiduciary duties of the dealers. In addition, Saltzman reminded the audience that it's the financial adviser who is usually being paid to look out for the issuer on these matters. "An underwriter actually has an adversarial relationship," added Samuel Winer, a lawyer with Foley & Lardner in Washington, D.C., which is representing Dain Rauscher Inc. in the Collier case and also represents Everen Securities Inc. in a case pending in Chicago. In addition, Winer said the standard for reasonable markups has been tightened over the years. "The stand in the early '90s indicated that markups greatly in excess of what we're talking about now would not be criticized," he said. But Louis Gottlieb, a lawyer at Goodkind Labaton Rudoff & Sucharow in New York, which is representing the clerk of Collier County, argued that the SEC has indicated that everyone in an escrow deal bears some level of responsibility to make sure the borrower is not getting ripped off. Gottlieb referred to the shingle theory, which holds that when you hang your shingle to say you're in business, you take on a level of fiduciary duty to your clients. "There is an implied duty to reveal markups when markups are excessive," he said. However, Saltzman said that was an outdated standard, since the Supreme Court has rejected that theory. (The Bond Buyer, February 15, 2000) ********* 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. Romeo John D. Piansay, Jr., editor, Theresa Cheuk, Managing Editor. 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. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *