/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000221.MBX C L A S S A C T I O N R E P O R T E R Monday, February 21, 2000, Vol. 2, No. 36 Headlines ACCESS HEALTH, HBO: DE State Court Suitable Venue for Securities Suit ANALYTICAL SURVEYS: Stull, Stull Files Securities Lawsuit in Indiana AOL: Hagens Berman Sues in WA; Says 5.0 Upgrades to System Disaster ASBESTOS LITIGATION: NY Suit Seeks to Void GAF Asset Transfer AURA SYSTEMS: Settles CA Suit Alleging Securities Fraud '93 to '95 AURA SYSTEMS: Settles CA Suit Alleging Securities Fraud '95 to '97 AUTO FINANCING: Chase Settles for Withdrawing Money after Lease Expiry BANK ONE: Zwerling Schachter Files Securities Lawsuit in Illinois BOSTON PRISON: Thousands of Women Can Join Fed Suit over Strip-Search CAMPBELL SOUP: Berger & Montague Files Securities Lawsuit in NJ CAMPBELL SOUP: Savett Frutkin Files Securities Complaint in NJ D.C. CHILD: Baby's Death Prompts Review of Ct Receivership upon 95 Suit DOUBLECLICK: MI to Sue over User Profiling; NY and FTC Investigate H&R BLOCK: Consents to Remove Ad. on Tax Refund Anticipation Loan HMOs: Associations & Physicians in GA Sue Aetna U.S. Healthcare Re Pay INDUS INTERNATIONAL: Wolf Haldenstein Files Securities Lawsuit in CA INSO CORP: Intends to Defend Vigorously Shareholder Suit in MA INSO CORP: Wolf Haldenstein Files Securities Fraud Complaint in MA JDN REALTY: Spector, Roseman Files Securities Lawsuit in Georgia MCMORAN EXPLORATION: Contests Investors' Suit over Exploration Program MCMORAN EXPLORATION: Contests Stockholders' Suit Re Freeport Merger SOTHEBY'S HOLDINGS: Stull, Stull Files Securities Lawsuit in New York SUNSTAR HEALTHCARE: Schiffrin & Barroway Files Securities Suit in FL VALUE AMERICA: Milberg Weiss Files Securities Lawsuit in Virginia VICORP RESTAURANTS: Continues Vigorous Defense of Suits in CA Re Wages VITAMIN PRICE-FIXING: Companies Opt out of Settlement with 7 Makers WHITE CAP: Faces DE Suit Re Merger Agreement with WC Recapitalization ********* ACCESS HEALTH, HBO: DE State Court Suitable Venue for Securities Suit --------------------------------------------------------------------- The U.S. District Court for the District of Delaware has remanded a securities fraud suit alleging Access Health Inc. and HBO & Co. distributed false financial information during their merger, because the suit's equitable fraud claim falls under the "savings clause" of the Securities Litigation Uniform Standards Act of 1998 (SLUSA). Derdiger v. Tallman et al., No. 99-670 (D DE, Dec. 9, 1999). In November 1998, Access sent a proxy statement to all its shareholders, informing them of a meeting to vote on a merger agreement between Access and HBO. The agreement provided that Access would merge into an HBO subsidiary, and Access shareholders would receive 1.45 shares of HBO for each Access share. The proxy statement contained financial information about each of the companies, as well as projected information for the combined company. The proxy statement also included the Access directors' recommendation for approval of the merger. On Dec. 10, 1998, the Access shareholders approved the merger. Once the companies completed the merger, Howard Derdiger filed a securities suit on behalf of himself and all other former Access shareholders in Delaware Chancery Court. Derdiger alleged the directors of Access and HBO misrepresented material facts in the proxy statements. Count I of the complaint claimed breach of duty against the directors and the second count claimed HBO knowingly aided and abetted the directors' breach of duty. Two months later, Derdiger amended the complaint to include a third count alleging that HBO committed equitable fraud by making false statements about its financial performance in the proxy statement. HBO removed the action to federal court. Derdiger then moved to remand the case back to the Chancery Court. Upon review of the matter, the district court noted that Congress enacted SLUSA to make federal court the exclusive venue for most securities class actions and to prevent plaintiffs from evading federal law protection from abusive litigation by filing their actions in state courts. SLUSA also contains a "savings clause, " Sec. 78bb(f)(3), which allows certain securities class actions to proceed with state law claims. The district court found the savings clause required the suit to be remanded to the Chancery Court. Sec. 78bb(f)(3) allows a securities class action based on common law to remain in state court if it involves a recommendation or communication about the sale of securities. Such a communication must be "made by or on behalf of the issuer or an affiliate of the issuer to holders of equity securities of the issuer" and concerns the holders voting their securities, addressing a tender offer, or exercising stockholders' rights. The district court reasoned that the equitable fraud claim involved a communication over the sale of securities on behalf of Access' affiliate HBO in connection to the vote on the merger agreement and therefore fell within the scope of the savings clause. The district court decided to remand the class action to the Chancery Court. (Securities Litigation & Regulation Reporter, January 12, 2000) ANALYTICAL SURVEYS: Stull, Stull Files Securities Lawsuit in Indiana -------------------------------------------------------------------- The law firm of Stull, Stull & Brody filed a class action lawsuit on February 18, 2000, in the United States District Court for the District of Indiana on behalf all persons who purchased the common stock of Analytical Surveys, Inc. between January 25, 1999, and January 27, 2000. The complaint charges Analytical Surveys and certain of its senior officers with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued materially false and misleading financial statements during the Class Period. In particular, the complaint alleges that the Company's financial statements violated GAAP and other financial reporting standards by materially overstating the Company's revenues, income and earnings. For more details on this lawsuit, you may contact Tzivia Brody, Esq. of Stull, Stull and Brody, 6 East 45th Street, New York, NY 10017 by calling toll-free 1-800-337-4983, or by fax at 212/490-2022 or via e- mail at SSBNY@aol.com AOL: Hagens Berman Sues in WA; Says 5.0 Upgrades to System Disaster ------------------------------------------------------------------- According to a proposed class-action lawsuit filed on February 17, 2000, America Online (NYSE:AOL), the world's largest Internet service provider (ISP) knowingly released a version of their software that, without warning, made major changes to users' computer operating systems rendering them unstable, and in some cases, inoperable. The suit also claims that AOL software effectively barred the computer from connecting with competing ISPs. Seattle attorney Steve Berman, filed a lawsuit on behalf of Washington state under the Consumer Protection Act. The suit, filed in King County Superior Court, claims the Internet giant failed to divulge to its users that the AOL 5.0 upgrade would make dramatic changes to the users' operating systems and would interfere with the user's ability to connect to the competing ISP networks. "Users believed that when they installed AOL 5.0, they were going to get 500 free hours of faster, better Internet access," Berman said. "Instead, what they received was a Trojan Horse that corrupted their system, and effectively held them hostage to AOL as long as they wanted to connect to the Internet." According to Berman, AOL 5.0 is perhaps the most insidious way the company could force users to use AOL. "Once the software was up and running, it changes so many of the systems configurations, the average user had no hope of connecting with anyone else other than AOL. Many who tried to unwind the installation found that it was almost impossible since it affected more than 200 files." The class, if approved, would represent all AOL users in Washington State who subscribe to the service and installed AOL 5.0. According to Berman, the exact number of people affected by this is yet unknown, but could number in the tens of thousands. Contact: Hagens Berman Steve Berman, 206/623-7292 steve@hagensberman.com ASBESTOS LITIGATION: NY Suit Seeks to Void GAF Asset Transfer ------------------------------------------------------------- Asbestos personal injury claimant Harry W. Nettles has sued GAF's majority shareholder, Samuel J. Heyman, in U.S. District Court for the Southern District of New York, claiming that Heyman fraudulently transferred GAF's assets and left the company unable to pay its asbestos-related debts. Nettles v. Heyman, No. 00-CV-35 (SD NY, complaint filed Jan. 3, 2000). Nettles alleges that Heyman, who purportedly owns 96 percent of GAF's stock, transferred the stock of International Specialty Products Inc. (ISP), a GAF subsidiary, to himself and GAF's minority shareholders. In addition, Nettles alleges that this transfer stripped GAF of $593 million in assets. GAF, a holding company, has been a principal target in asbestos litigation. In 1993, GAF and other asbestos defendants formed the Center of Claims Resolution and entered into a settlement (known as the Georgine settlement) with a proposed class to resolve all claims over a 10-year period. Although the U.S. District Court for the Eastern District of Pennsylvania approved the Georgine settlement, it was overturned by the Third Circuit U.S. Court of Appeals in May. The U.S. Supreme Court agreed to review the case in November 1996, and ultimately affirmed the Third Circuit's decision in June 1997. According to Nettle's complaint, GAF held in reserve $333.8 million for the Georgine settlement. Nettle's contends not only that the reserve was a "false and unfounded estimate," but that Heyman knew that approval of the Georgine settlement was questionable. Notwithstanding this awareness, Nettles alleges that Heyman effected the transfer of ISP stock on Jan. 1, 1997. The lawsuit asserts four counts under the New York Debtor and Creditor Law for fraudulent conveyances. Nettles alleges that the transfer of ISP stock, made without fair consideration, rendered GAF insolvent and unable to pay its probable liability on existing debts. He further alleges that the transfer resulted in unreasonably small capital in the hands of GAF. Nettles contends that the transfer was made to defraud creditors and on the belief that GAF would incur debts beyond its ability to pay. The lawsuit seeks to set aside the transfer and asks for money damages in an amount equal to the ISP stock that was transferred to GAF's minority shareholders. The plaintiff also seeks punitive damages and attorneys' fees. Nettles specifically maintains that the transfer of ISP stock has left the value of GAF's assets "hopelessly insufficient" to satisfy pending and further asbestos-related claims. According to Nettles, GAF's liability for paid and pending claims filed in 1998 alone totals more than $604 million. The proposed class is defined as all holders of unliquidated claims against GAF for asbestos-related injuries and those who may hold a future claim against the company arising out of asbestos exposure prior to Jan. 1, 1997. The class is expected to exceed 150,000 members. Elihu Inselbuch, Rita C. Tobin, Peter Van N. Lockwood, and Trevor W. Swett III of Caplin & Drysdale, New York, filed the lawsuit. (See Document Section F for the complaint, published in Asbestos Litigation Reporter, January 21, 2000.) AURA SYSTEMS: Settles CA Suit Alleging Securities Fraud '93 to '95 ------------------------------------------------------------------ In May, 1995 two lawsuits naming Aura, certain of it directors and executive officers and a former officer as defendants, were filed in the United States District Court for the Central District of California, Barovich v. Aura Systems, Inc. et. al. (Case No. CV 95-3295) and Chiau v. Aura Systems, Inc. et. al. (Case No. CV 95-3296), before the Honorable Manuel Real. The complaints purported to be securities class actions on behalf of all persons who purchased common stock of Aura during the period from May 28, 1993 through January 17, 1995, inclusive. The complaints alleged that as a result of false and misleading information disseminated by the defendants, the market price of Aura's common stock was artificially inflated during the class period. The complaints were consolidated as Barovich v. Aura Systems, Inc., et. al. A settlement agreement for this proceeding was submitted to the Court on July 20, 1998, for preliminary approval, at which time the Court denied the plaintiffs' motion for approval of the settlement. On September 22, 1998, the Company and certain of its officers and directors renoticed their motion for summary judgment. Thereafter, on January 8, 1999, the plaintiffs and the defendants in the Barovich action executed a Stipulation of Settlement pursuant to which the Barovich action would be settled in return for payments by Aura and its insurer to the plaintiff's settlement class and plaintiff's attorneys in the amount of $2.8 million in cash (with $800,000 to be contributed by Aura and $2 million to be contributed by Aura's insurer, subject to a reservation of rights by the insurer against the insureds) and $1.2 million in cash or common stock, at the Company's option, to be paid by Aura. Subsequently the parties and the insurer entered into an amended settlement agreement. As amended the settlement calls for the total settlement amount of $4 million to remain the same, with the insurer contributing $1.8 million, and the remaining $2.2 million to be paid by Aura in cash over a period of three years, with accrued interest at the rate of 8% per annum. The settlement was preliminarily approved by the Court on December 6, 1999, and is subject to final confirmation by the Court on March 20, 2000. AURA SYSTEMS: Settles CA Suit Alleging Securities Fraud '95 to '97 ------------------------------------------------------------------ On April 28, 1997, a lawsuit naming Aura, certain of its directors and officers, and the Company's independent accounting firm was filed in the United States District Court for the Central District of California, Morganstein v. Aura Systems, Inc., et. al. (Case No. CV 97-3103), before the Honorable Steven Wilson. A follow-on complaint, Ratner v. Aura Systems, Inc., et. al. (Case No. CV 97-3944), was also filed and later consolidated with the Morganstein complaint. The consolidated amended complaint purports to be a securities class action on behalf of all persons who purchased common stock of Aura during the period from January 18, 1995 to April 25, 1997, inclusive. The complaint alleges that as a result of false and misleading information disseminated by the defendants, the market price of Aura's common stock was artificially inflated during the Class Period. The complaint contains allegations which assert that the company violated federal securities laws by selling Aura Common stock at discounts to the prevailing U.S. market price under Regulation S without informing Aura's shareholders or the public at large. In June, 1998, the Court entered an order staying further discovery in order to facilitate completion of settlement discussions between the parties. On October 12, 1998, the parties entered into a stipulation for settlement of all claims, subject to approval by the Court. Under the stipulation for settlement Aura agreed to pay $4.5 million in cash or stock, at Aura's option, plus 3.5 million warrants at an exercise price of $2.25. In addition, Aura's insurance carrier agreed to pay $10.5 million. The settlement was finally approved by the Court in October 1999 and was thereafter amended in December 1999 to allow Aura to defer payment of the settlement amount until April 2000 in exchange for an additional 2 million shares of Aura Common Stock, subject to certain adjustments. AUTO FINANCING: Chase Settles for Withdrawing Money after Lease Expiry ---------------------------------------------------------------------- With a single opinion, a federal judge has certified a class, approved a proposed settlement of its claims and authorized an award of about $ 88,000 in attorney fees for the lawyers who pressed a consumer-protection claim for 961 people against Chase Manhattan Auto Finance Co. U.S. District Judge Raymond J. Broderick approved the settlement, which provides that Chase will pay a total of $ 264,750 to plaintiffs who claim the company continued to make automatic lease-payment withdrawals from their bank accounts after their leases had expired. In Grier v. Chase Manhattan Automotive Finance Co., which was filed by attorneys from Smolow & Landis on Jan. 13, 1999, lead plaintiffs Linda and Thomas Grier said they entered into a lease agreement with Chase in September 1995 in Langhorne, Pa. The agreement provided that they would lease a Dodge Grand Caravan for $ 323.09 per month, for 36 months, and authorized Chase to withdraw the money directly from their bank account. The problem arose, they said, when the lease expired in September 1998 but Chase kept on taking their money and refused to refund it. The complaint alleged violations of the federal Consumer Leasing Act, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and similar laws in other states, as well as asserting that Chase's actions breached their lease agreement. Settlement negotiations began in June 1999, and in October, the parties reached a proposed agreement providing: * That Chase will change its leasing practices and its computer systems so that effective May 12, 1999, lease payments are no longer automatically withdrawn after the lease maturity date. * That Chase will pay members of the plaintiff class 100 percent of the lease payments that were withdrawn from their accounts after the lease maturity date, minus a pro rata share of attorney fees and costs awarded by the court. * That class members who received partial refunds of the disputed withdrawals will receive 100 percent of the difference between the partial refund and the amount automatically withdrawn after their leases matured, minus attorney fees. * That Chase retains the right to pursue claims for excess wear and tear and other lease charges against class members but will not set off any such charges against the payment required by the settlement. * The agreement also provides that administration costs for implementation of the settlement will be paid by Chase and that the plaintiffs' attorneys' fees and costs will be deducted from the settlement. Certification and Approval Broderick's 15-page opinion quickly disposes of the issue of class certification, finding that the proposed class satisfied Federal Rule of Civil Procedure 23(a)'s requirements of numerosity, commonality, typicality and fair and adequate representation. The judge also found that the class met the additional conditions of Rule 23(b), which provides that "any questions of law or fact common to the class [must] predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fair and efficient adjudication of the controversy[.]" In Grier, Broderick said, "the claims of the representative plaintiffs and those of the rest of the settlement class rest upon the same factual scenario and the same legal theories." Moreover, he pointed out, "the average claim amount of each individual class member is $ 274.64, an amount which is insignificant to warrant individual litigation of each claim. Therefore, a class action is a superior method of adjudicating this controversy because it concentrates a high number of significantly identical and relatively small individual claims in a single forum, thus promoting judicial economy by avoiding duplicative litigation and costs." In evaluating the fairness of the settlement, Broderick considered the factors enumerated by the 3rd Circuit Court of Appeals in Girsh v. Jepson. The judge noted that continued litigation of the matter would involve interpretation of a statute that is seldom litigated and, therefore, without much controlling precedent, which would increase the likelihood of costly appeals. He also took into account that all members of the class identified by Chase's records had been mailed a notice of the proposed settlement, and none had objected, nor had Chase's publication of the proposed settlement in major newspapers elicited any negative response. The parties had conducted substantial discovery by the time of the settlement proposal, he found, which also militated in favor of the settlement. "In summary," Broderick found, "the court believes that the settlement achieves an excellent result for all members of the settlement class." Accordingly, he granted final approval to the agreement and dismissed the action with prejudice. Finally, Broderick found $ 87,986 a third of the settlement fund to be a reasonable fee for Smolow & Landis, "in light of the skill counsel has exercised in obtaining such a favorable settlement for the class, as well as injunctive relief gained, which insures that Chase will refrain from withdrawing lease payments after the expiration of their customers' leases." (Copies of the 15-page opinion in Grier v. Chase Manhattan Automotive Finance Co., PICS NO. 00-0282, are available from The Legal Intelligencer. (The Legal Intelligencer, February 18, 2000) BANK ONE: Zwerling Schachter Files Securities Lawsuit in Illinois ----------------------------------------------------------------- Zwerling, Schachter & Zwerling, LLP filed a class action lawsuit in the United States District Court for the Northern District of Illinois, on behalf of all persons who exchanged their securities of First Chicago NBD Corp. and Bank One Corp. pursuant to the October 2, 1998 merger of First Chicago and Bank One. The complaint charges that Bank One and certain of its officers violated Section 11, 12 and 15 of the Securities Act of 1933 in connection with the October 2, 1998 merger. The claims in the lawsuit are based upon material misrepresentations and omissions in the Registration Statement and Proxy/Prospectus for the merger which caused the price of Bank One common stock to be artificially inflated at the time they were issued to former First Chicago shareholders in exchange for their First Chicago common stock. As a result, First Chicago shareholders received insufficient value when their First Chicago common stock was exchanged for Bank One common stock pursuant to the merger. Contact: Ms. Jayne C. Nykolyn at Zwerling Schachter by telephone at 800-263-7337, via e-mail at zlaw96@ix.netcom.com or visit the firm's website at http://www.zsz.com BOSTON PRISON: Thousands of Women Can Join Fd Suit over Strip-Search -------------------------------------------------------------------- A judge has cleared the way for thousands of women to join in a federal class-action lawsuit because they were illegally strip-searched in a Boston jail. Published reports of February 18 said the suit seeks millions of dollars in damages against the city of Boston and Suffolk County. U.S. District Judge Nancy Gertner on February 17 granted a motion to allow five women who brought suit to join together in a class action, opening the suit to thousands of others similarly strip-searched from 1995 to 1998. Officials estimate that during that four-year period, 4,500 women were forced to strip naked and submit to a visual full-body search by female guards. Gertner noted that the strip-search policy applied to all women brought into the county jail for pre-arraignment detention, regardless of offense. Men in the same situation were not subject to strip searches. The judge said earlier federal court rulings allowed strip searches only if guards suspect the women to be carrying drugs or weapons, or if they are charged with felonies. "These women raise serious allegations concerning the conduct of the defendants, and justice requires that their complaints be addressed promptly and efficiently," Gertner wrote. Attorney Howard Friedman, who represents the original five plaintiffs, said, "The judge is saying it's clear that they couldn't routinely strip-search prisoners at the time they were doing it," and that "you have to have a reason to conduct a strip search." One of the women, Joanne Maniscalco, was arrested for selling sausages without a permit outside the Fleet Center. Another, Denise Gasparini, was arrested and strip-searched after her children failed to return a rented video game. Friedman said he is now beginning the process of gathering the names and addresses of all women strip-searched since 1995 to tell them they are now eligible to join in the suit to seek damages. Suffolk County spokesman Gerard Lydon said officials are "obviously disappointed" and are considering an appeal. He said the blanket strip-search policy was dropped last year when it was ruled illegal. (United Press International, February 18, 2000) CAMPBELL SOUP: Berger & Montague Files Securities Lawsuit in NJ --------------------------------------------------------------- The law firm of Berger & Montague, P.C filed a class action lawsuit in the United States District Court in New Jersey on behalf of purchasers of Campbell Soup Company common stock during the period between November 18, 1997, and January 8, 1999. The complaint charges Campbell and certain of its key officers and directors with violations of the federal securities laws by, among other things, misrepresenting and/or omitting material information concerning the Company's improper recording of revenue from its condensed soup sales. As alleged in the Complaint, Campbell claimed to have "sold" product to major distributors or resellers when in actuality Campbell never shipped the product to its customers. Campbell claimed these phantom sales in order to meet Wall Street's earning estimates for the Company and therefore artificially inflate the price of Campbell's stock. On January 11, 1999, the Company announced and purported "major cost saving initiatives in supply chain operations" would result in lower soup shipments for the second quarter ending January 31, 1999. Upon the release of this news, the Company's stock price dropped from a high of $53.93 on January 8, 1999 to close at $46.37 on January 11, 1999, with over 5.9 million shares changing hands. For additional information on the above-mentioned lawsuit, please contact Sherrie R. Savett, Esq., Stuart J. Guber, Esq.,Michael Fantini, Esq. or Kimberly A. Walker, Investor Relations Manager of Berger & Montague, P.C at 1622 Locust Street, Philadelphia, PA 19103, by telephone at 888-891-2289 or 215-875-3000, by fax at 215-875-5715 or via e-mail at InvestorProtect@bm.net CAMPBELL SOUP: Savett Frutkin Files Securities Complaint in NJ -------------------------------------------------------------- Savett Frutkin Podell & Ryan, P.C. filed a class action complaint in the United States District Court for the District of New Jersey on behalf of a Class of persons who purchased the common stock of Campbell Soup Company at artificially inflated prices during the period November 18, 1997 through January 8, 1999 and who were damaged thereby. The complaint charges Campbell and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants misrepresented and/or omitted material information concerning the Company's improper recording of revenue from its condensed soup sales. As alleged in the Complaint, Campbell claimed to have sold product to major distributors or resellers when in actuality Campbell never shipped the product to its customers. These "phantom sales" artificially inflated the price of the Company's stock. Contact: Robert P. Frutkin or Barbara A. Podell of Savett Frutkin Podell & Ryan. P.C. at 800/993-3233 or via e-mail at sfprpc@op.net D.C. CHILD: Baby's Death Prompts Review of Ct Receivership upon 95 Case ----------------------------------------------------------------------- D.C. Child and Family Services has been under court supervision since 1995, when a federal judge ruled that the agency was not capable of protecting children. The decision was made after the American Civil Liberties Union sued the city in 1989 in a class-action suit called LaShawn A. v. Barry. A 23-month-old was slain last month, two weeks after a D.C. Superior Court judge ordered her removed from foster care and returned to her mother, who had been found neglectful at a trial a year earlier. The case has galvanized critics of Child and Family Services, prompting calls for a congressional investigation. Congressional lawmakers on February 17 called for an investigation of D.C. Child and Family Services, citing the "continuing dysfunction" of the agency that handled the Brianna Blackmond case. They also requested probes of two other District agencies under federal court control. Del. Eleanor Holmes Norton (D-D.C.) and Rep. Thomas M. Davis III (R-Va.) called the investigations the first step in an effort to remove the agencies from court receivership and return them to D.C. government control. The agencies were separated from government because of widespread problems, but critics say the receiverships continue to fail those they are supposed to serve, such as Brianna. "The Brianna Blackmond case demands that we begin with the foster care receiver, because the death of this child and the continuing dysfunction of the Child and Family Services Agency occurred despite court oversight," Norton said. "We're not doing an investigation of the Baby Brianna case. We're doing an investigation of a structure that allowed the death of that baby to occur. That suggests that the receivership itself may not be working." Child and Family Services will be the first agency to be examined by the General Accounting Office, an investigative arm of Congress. The GAO then will examine two others: the Commission on Mental Health, and Special Education and Juvenile Justice. The fourth city agency operating under a court monitor, the D.C. Housing Authority, is considered to be a success under its receiver and was not included in February 17's request. The lawmakers said they would hold hearings after the audits are done. "I am more than willing to work with the GAO as they conduct their review of the receivership," said Ernestine F. Jones, the receiver for Child and Family Services. "I have been working with [agency staff] and other District agencies over the past two years to address long-standing problems that exist in the District's child-welfare system. We have made significant progress, but we have a long way to go." The lead plaintiffs' attorney said she was "mystified" by calls for a GAO audit. She said Child and Family Services should remain under court supervision until it is able to function as a stand-alone agency. "The receivership is never going to end until we can make the agency perform adequately," said Marcia Robinson Lowry, executive director of Children's Rights, a group in New York that is monitoring the agency's progress. "We need a responsible turnover to the District. But they have to demonstrate a capacity to take care of children." Lowry said the city has not adequately funded the agency, resulting in high caseloads for workers and other woes. The city had agreed to add $ 30 million to the agency's $ 120 million operating budget. But five years after the court takeover, Lowry said, the city has yet to fund a "compliance" budget to reach the goals ordered by the federal judge. Last month, D.C. Mayor Anthony A. Williams (D) and Alice M. Rivlin, chairman of the D.C. financial control board, disagreed with the call for a GAO audit. They said the audit would predictably conclude that the D.C. foster care system has many problems. "This is something we can do ourselves," Williams said then. But the mayor's chief of staff, Abdusalam Omer, supported the call for a GAO investigation. He said the probe could help the mayor bring the agencies back under his control. "You don't need to be a rocket scientist to see that the Child and Family Services and mental health receiverships are not any closer to improvements," Omer said. "But once the audit is completed, it will substantiate what the advocates and others are saying: That service delivery in these receiverships is not any better. And if that's a way of bringing back the receivers to the D.C. government and holding the mayor responsible for them, let's do it." (The Washington Post, February 18, 2000) DOUBLECLICK: MI to Sue over User Profiling; NY and FTC Investigate ------------------------------------------------------------------ DoubleClick's legal woes continued as Mich. Attorney Gen. Jennifer Granholm said on February 16 her state would file complaint against online ad network for violating privacy laws. Company also is being investigated by N.Y. and FTC and faces several class action lawsuits, while Congress has begun looking at practices of it and other ad networks. Granholm said DoubleClick violated Mich. Consumer Protection Act by failing to disclose that it systematically implants "cookies," or files that track users' activities, on users' PC hard drives without their consent or knowledge. She said company then compiles personal user profiles that can be linked directly to user names, addresses and e-mail accounts. "This amounts to little more than a secret, cyber wiretap," Granholm said. She said that while consumers might expect individual Web sites to maintain data, they don't know national network is consolidating and sharing that information. She said company has 10 days to respond before facing lawsuit on behalf of state's consumers, with potential $25,000 fine for each infraction. DoubleClick Pres. Kevin Ryan said company is "confident that our business policies are consistent with our privacy statement and beneficial to consumers and advertisers." (Communications Daily, February 18, 2000) H&R BLOCK: Consents to Remove Ad. on Tax Refund Anticipation Loan ----------------------------------------------------------------- Income tax giant H&R Block consented to remove all advertising that represents their refund anticipation loan as a product that generates the "refund amount" at no extra cost. This Consent Order was filed in Federal Court, Norfolk District on February 18 by Judge Henry Coke Morgan after a hearing for a preliminary injunction brought by income tax franchisor Liberty Tax Service. The Consent Order requires that H&R Block voluntarily "Discontinue and refrain from the use of any posters, newspaper or other print advertisement, television advertisement, radio advertisement and any other advertisements, written statements or other promotional material in which they represent their Refund Anticipation Loan as a product which generates the refund amount 'or amount of your refund' at no extra charge or cost or a product which allows the customer to Spend more quality time with your refund.'" The order must be carried out within 5 business days in all market areas of the United States where the advertising in question is being used. This includes the Hampton Roads area of Virginia where Liberty Tax Service is headquartered. HMOs: Associations & Physicians in GA Sue Aetna U.S. Healthcare Re Pay ----------------------------------------------------------------------- The American Medical Association joined with Georgia physicians and the Medical Association of Georgia in filing a class action lawsuit on February 16 against Aetna U.S. Healthcare for failure to pay physician claims in a timely manner. The lawsuit filed in Fulton County Superior Court alleges: * Aetna U.S. Healthcare routinely delays payment of claims in violation of Georgia law; * Through delayed payments, Aetna U.S. Healthcare violates Aetna's contract with physicians and other providers; * Aetna U.S. Healthcare is unjustly enriched by delaying payment of claims and using the funds due physicians for Aetna's profit. Georgia's prompt pay law (O.C.G.A. Sec. 33-24.59 and 33-30-6) provides that payment for claims is due immediately upon receipt. Georgia law further provides that if the insurer fails to pay within 15 working days of receipt, a penalty of 18 percent per annum is charged unless the insurer states the reasons it has for failure to pay the claim in whole or in part and provides "a written itemization of any documents or other information needed to process the claim." And, explanations must be specific for each individual claim. "Physicians do a good job of providing quality care to their patients, but it's not done with smoke and mirrors -- it costs money to treat patients," Donald J. Palmisano, M.D., a member of the AMA Board of Trustees said. "It's time insurance companies honor their contracts and pay physicians in a timely manner so that patients can continue getting the care they deserve." The lawsuit, which seeks a judicial declaration that Aetna's conduct is illegal and an injunction preventing Aetna from continuing to delay payment of claims, is being supported by the Litigation Center of the AMA and State Medical Societies. The Center -- a partnership between the AMA and 49 state medical societies -- reviews and pursues legal matters of importance to patients and physicians. The lawsuit marks the first time that the AMA and a state medical association have been plaintiffs in litigation regarding prompt payment. "Through this lawsuit, we hope Aetna and other insurance companies understand that physicians, on behalf of their patients, are no longer willing to accept harmful business practices," said Paul Shanor, Executive Director of the Medical Association of Georgia. "Delaying payment of claims hurts Georgia's physicians by making payment for services rendered uncertain. Patients are also hurt. Some patients have lost their physicians because of Aetna's payment policies." Contact: Mike Lynch or Meg Fligg of AMA News and Information Medical Association of Georgia, 404-876-7535 INDUS INTERNATIONAL: Wolf Haldenstein Files Securities Lawsuit in CA -------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP announces the filing of a securities class action lawsuit in the United States District Court for the Northern District of California on behalf of investors who bought Indus International, Inc. stock between October 28, 1999 and January 27, 2000 The lawsuit charges Indus and certain officers of the Company, with violations of the securities laws and regulations of the United States. The lawsuit alleges that defendants issued a series of false and misleading statements during the Class Period concerning the Company's financial statements. The complaint alleges that Indus overstated its revenues for its third quarter ended September 30, 1999. The complaint further alleges that defendants' false and misleading statements artificially inflated the price of the Company's stock during the Class Period. On January 27, 2000, after the market closed, defendants stunned the investment community by announcing that Indus would restate its third quarter results. When trading resumed the Company's stock price sank to a close of $7.625 from a Class Period high of $13-5/8 per share. For more details on the above-mentioned lawsuit, you may get in touch with Michael Miske, George Peters, Gregory Nespole, Esq., Fred Taylor Isquith, Esq. or Shane T. Rowley, Esq, all of Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at 800-575-0735, via e-mail at classmember@whafh.com or visit website at http://www.whafh.com INSO CORP: Intends to Defend Vigorously Shareholder Suit in MA -------------------------------------------------------------- Inso Corporation (Nasdaq: INSO) confirmed on February 18 that a purported shareholder class action complaint has been filed against the Company and certain of its officers in the United States District Court for the District of Massachusetts. The plaintiff claims to represent purchasers of Inso common stock during the period from October 28, 1999 to February 1, 2000 and seeks unspecified damages. The complaint contains allegations that the defendants allegedly made misleading statements or omissions during the purported class period. The Company believes that the lawsuit is without merit, and intends to defend the lawsuit vigorously. INSO CORP: Wolf Haldenstein Files Securities Fraud Complaint in MA ------------------------------------------------------------------ Wolf Haldenstein Adler Freeman & Herz LLP announces on February 18 that a class action is being commenced in the United States District Court for the District of Massachusetts on behalf of purchasers of Inso Corporation (NASD:INSO) common stock during the period between October 28, 1999, and February 1, 2000. The complaint charges Inso and certain of its senior officers and directors with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's successful transition to an e-Business Internet company and failed to disclose adverse trends in the demand for the Company's products and services. Because of the issuance of a series of materially false and misleading statements the price of Inso common stock was artificially inflated during the Class Period. The action further alleges that certain insiders sold thousands of shares of inflated Inso common stock in the open market while in possession of undisclosed adverse information concerning the Company's business and earnings. Contact: Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575- 0735 (Gregory Nespole, Esq., Michael Miske via e-mail at classmember@whafh.com or whafh@aol.com or nespole@whafh.com or Gnespole@aol.com with reference made to Inso, or visit website at http://www.whafh.com JDN REALTY: Spector, Roseman Files Securities Lawsuit in Georgia ---------------------------------------------------------------- The law firm of Spector, Roseman & Kodroff, P.C. filed a class action lawsuit in the United States District Court for the Northern District of Georgia on behalf of all individual and institutional investors who purchased securities of JDN Realty Corporation from March 31, 1997 through February 14, 2000, inclusive. The complaint charges JDN Realty and certain of its officers and directors with concealing the fact that certain of the Company's executives were receiving undisclosed compensation in connection with many of its real estate development projects. As a result, the Company's financial statements were misstated and the market price of JDN Realty's stock was artificially inflated. For additional inquiry on the above-mentioned lawsuit, please contact plaintiff's counsel Robert M. Roseman of SPECTOR, ROSEMAN & KODROFF, P.C. toll free at 1-888-844-5862 or classaction@spectorandroseman.com via e-mail or visit website at http://www.spectorandroseman.com MCMORAN EXPLORATION: Contests Investors' Suit over Exploration Program ---------------------------------------------------------------------- Jacob Gottlieb v. James R. Moffett, Richard C. Adkerson, B.M. Rankin, Henry A. Kissinger, Phosphate Resource Partners Limited Partnership, McMoRan Oil & Gas Co. and IMC Global Inc., Civ. Act. No. 16393 (Del. Ch. filed May 19, 1998). On May 19, 1998, plaintiff filed an action on behalf of a purported class of plaintiffs who own depository units of Phosphate Resource Partners. The plaintiff alleges that the individual defendants breached fiduciary duties in the approval by Freeport-McMoRan, Inc., as managing partner of Phosphate Resource Partners, of the $210 million exploration program. The suit also alleges that McMoRan Oil & Gas Co. conspired with the individual defendants and aided and abetted their breach of fiduciary duty. The plaintiff also alleges that IMC Global Inc. and Freeport-McMoRan Inc. breached fiduciary duties to Phosphate Resource Partners and Phosphate Resource Partners' public unitholders. The plaintiff seeks unspecified monetary damages and other relief. The Company believes that this suit is without merit and intend to vigorously defend ourselves. MCMORAN EXPLORATION: Contests Stockholders' Suit Re Freeport Merger ------------------------------------------------------------------- Daniel W. Krasner v. James R. Moffett; Rene L. Latiolais; J. Terrell Brown; Thomas D. Clark, Jr.; B.M. Rankin, Jr.; Richard C. Adkerson; Robert M. Wohleber; Freeport-McMoRan Sulphur Inc. and McMoRan Oil & Gas Co., Civ. Act. No. 16729-NC (Del. Ch. filed Oct. 22, 1998). Gregory J. Sheffield and Moise Katz v. Richard C. Adkerson, J. Terrell Brown, Thomas D. Clark, Jr., Rene L. Latiolais, James R. Moffett, B.M. Rankin, Jr., Robert M. Wohleber and McMoRan Exploration Co., (Court of Chancery of the State of Delaware, filed December 15, 1998.) These two lawsuits were consolidated on January 13, 1999. The complaint alleges that Freeport-McMoRan Sulphur Inc.'s directors breached their fiduciary duty to Freeport-McMoRan Sulphur Inc.'s stockholders in connection with the combination of Freeport Sulphur and McMoRan Oil & Gas. The plaintiffs contend that the transaction was structured to give preference to McMoRan Oil & Gas stockholders and failed to recognize the true value of Freeport Sulphur. The plaintiffs claim that the directors failed to take actions that were necessary to obtain the true value of Freeport Sulphur such as auctioning the company to the highest bidder or evaluating Freeport Sulphur's worth as an acquisition candidate. The plaintiffs also claim that McMoRan Oil & Gas Co. knowingly aided and abetted the breaches of fiduciary duty committed by the other defendants. The plaintiffs seek injunctive relief and monetary damages. The Company believes that this suit is without merit and intend to vigorously defend this action. SOTHEBY'S HOLDINGS: Stull, Stull Files Securities Lawsuit in New York --------------------------------------------------------------------- The law firm of Stull, Stull & Brody filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of investors of Sotheby's Holdings Inc. between February 11, 1997 and January 29, 2000. The complaint charges certain officers and directors of the Company with violations of the securities laws by, among other things, misrepresenting and/or omitting material information concerning Sotheby's revenues. The complaint alleges that the defendants failed to reveal that during the Class Period, Sotheby's revenues were both reliant upon, and unsustainable at those Class Period levels in the absence of, an illegal price fixing arrangement with Christie's International PLC. The complaint further alleges that defendants' false and misleading statements artificially inflated the price of Sotheby's stock during the Class Period. For additional information on this action, please contact Tzivia Brody, Esq. at Stull, Stull and Brody by calling toll-free 1-800- 337-4983, or by e-mail at SSBNY@aol.com or by fax at 212/490-2022, or by writing to Stull, Stull and Brody, 6 East 45th Street, New York, NY 10017. SUNSTAR HEALTHCARE: Schiffrin & Barroway Files Securities Suit in FL -------------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP filed a class action lawsuit in the United States District Court for the Middle District of Florida on behalf of all purchasers of the common stock of SunStar Healthcare, Inc. from November 13, 1998 through December 14, 1999, inclusive. The complaint charges SunStar Healthcare and certain of its officers and directors with issuing false and misleading information concerning the Company's business, financial condition, earnings and future prospects. For inquiries concerning this action, please contact Stuart L. Berman, Esq. of Schiffrin & Barroway, LLP, toll free at 888/299-7706 or 610/667-7706, or via e-mail at info@sbclasslaw.com or visit website at http://www.sbclasslaw.com VALUE AMERICA: Milberg Weiss Files Securities Lawsuit in Virginia ----------------------------------------------------------------- The Law Firm of Milberg Weiss Bershad Hynes & Lerach filed a class action lawsuit on February 18, 2000, in the United States District Court for the Western District of Virginia on behalf of investors who bought Value America, Inc. stock in the April 7, 1999 Initial Public Offering or between April 7, 1999 and December 28, 1999. The complaint charges Value America and certain of its senior officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of false and misleading statements during the Class Period concerning the Company's revenues, business model and general operating condition. The complaint alleges that defendants' false and misleading statements artificially inflated the price of the Company's stock during the Class Period. The complaint further alleges that certain individual defendants took advantage of their inside knowledge of the stock's inflated price to sell significant amounts of their personal holdings and reaped large profits on the proceeds. For inquiries on the above-mentioned lawsuit, you may get in touch with Steven G. Schulman or Samuel H. Rudman of Milberg Weiss Bershad Hynes & Lerach at One Pennsylvania Plaza, 49th Floor, New York, New York 10119-0165, by telephone 1-800-320-5081 or via e-mail at endfraud@mwbhlny.com or visit website at http://www.milberg.com VICORP RESTAURANTS: Continues Vigorous Defense of Suits in CA Re Wages ---------------------------------------------------------------------- Vicorp Restaurants Inc tells investors, in its report to the SEC, that on September 28, 1998, two class actions were commenced in the Superior Court of Los Angeles County, California. The first, Kirk v. VICORP Restaurants, Inc., Case No. BC-198202, was brought by a former manager of a California Bakers Square restaurant. Allegations in the amended complaint assert violations by VICORP of California wage and hour laws and regulations concerning overtime wages. The Plaintiff is seeking class certification, injunctive relief, damages in an unspecified amount, statutory penalties, interest, costs, and attorneys' fees. The second, Schroeder v. VICORP Restaurants, Inc., Case No. BC- 198203, was brought by a former server at a California Bakers Square restaurant. The Plaintiff alleges VICORP has violated California statutes and regulations concerning the payment of wages, tip pooling, reimbursement for uniform expenses, failure to remit tips, and the improper charging of walkouts to servers. Class certification is requested, as well as injunctive relief, damages in an unspecified amount, statutory penalties, interest, costs, and attorneys' fees. On December 28, 1998, a third action was commenced in the Superior Court of Los Angeles County, California, Ontiveros v. VICORP Restaurants, Inc., Case No. BC-202962. This action was brought by a former manager of a California Bakers Square restaurant. The Plaintiff is seeking damages, statutory penalties, declaratory relief, interest, attorneys' fees, and costs for alleged violations of California statutes and regulations concerning the payment of wages. The Company believes the legal actions described above are similar to plaintiff actions recently brought against other multi-location restaurant operators in the state of California. Resolution of these matters may require a significant period of time and is subject to substantial uncertainties common to the judicial process for class actions in general. The Company believes it has not violated California statutes and regulations and has meritorious defenses to each of the claims in these actions. While the Company intends to vigorously defend against the allegations, it is possible that the Company will not prevail, or that decisions made in other similar cases may result in interpretations of the California statutes that are adverse to the Company's position. VITAMIN PRICE-FIXING: Companies Opt out of Settlement with 7 Makers ------------------------------------------------------------------- Several big plaintiffs have pulled out of a $ 1.17 bln settlement of a vitamin price-fixing case involving seven vitamin makers including Roche Holding AG, BASF AG and Rhone-Poulenc SA, who would have paid a large part of the settlement, the Wall Street Journal reported. The Journal said in its interactive edition that plaintiffs attorneys told a federal judge in Washington, DC, that more than 200 companies chose to opt out of the class of 4,000 plaintiffs in hopes of reaching their own settlements with vitamin makers or going it alone in court. In its interactive edition, the Journal said the actual award under the settlement will be less than $ 400 million. Attorneys said the companies that opted out made up 70 pct of the class in terms of volume of vitamins purchased and included mostly larger plaintiffs like Tyson Foods Inc and Quaker Oats Co. Some plaintiffs that opted out expect to receive settlements similar to the original agreement, but hope to receive them more quickly outside the class action, said Carl Nichols, an attorney with Boies, Schiller & Flexner, which represents the class. Others hope to win a better deal, the Journal said. "The people who opt out, who are willing to try the case, can get a whole lot more money," said Jim Blair, Tyson Foods' general counsel. Quaker confirmed the opt-out but declined to elaborate. A Rhone-Poulenc spokesman in the U.S. declined to comment, as did a BASF spokesman. A Roche spokesman said the company "believes the settlement agreement is fair" and said the company believes the 70 pct figure is high. "We'll consider our options," he said. (AFX European Focus, February 18, 2000) WHITE CAP: Faces DE Suit Re Merger Agreement with WC Recapitalization --------------------------------------------------------------------- White Cap Industries Inc. reports in its filing with the SEC that, on July 21, 1999, the Company entered into a Transaction Agreement with WC Recapitalization Corp., an affiliate of Leonard Green & Partners, L.P. The Transaction Agreement provides for a cash merger, whereby all of the Company's outstanding common stock will be exchanged for $16.50 per share, except that, Greg Grosch and certain other members of management will retain a portion of their stockholdings in the surviving corporation. The remainder of Management's shares will be acquired at the same price as all other shares acquired by WCRC. Subsequent to the purchase of the above referenced shares and WCRC's merger into White Cap Industries, Inc., LGP will own a controlling interest in WCI and Management will retain a portion of their stockholdings in the surviving corporation equal to approximately 16% of the total outstanding capital stock of WCI. The transaction is valued at $240 million. The debt and equity financing necessary for the transaction has been fully committed by LGP, through Green Equity Investors III, L.L.P. and affiliates of Donaldson, Lufkin & Jenrette Securities Corporation. Certain members of management will also enter into employment and stockholder agreements with WCI. The transaction and its impact on the Company is more fully described in the Company's amended proxy filing. The Company anticipates completing the transaction no later than March 31, 2000. There can be no assurance that the transactions contemplated in the Transaction Agreement will be consummated. If the Transaction Agreement is terminated, the Company could be required under certain circumstances to pay WCRC expenses associated with the transaction. The Company has incurred approximately $915,000 in fees related to the transaction through the quarter ended December 25, 1999. The costs were capitalized and included in intangible assets, in the accompanying balance sheet, pending completion of the transaction. In connection with the Transaction, three complaints (Anthony Casey v. White Cap Industries, Inc., et al case number 17329-NC, Ruth Grenning v. Greg Grosch, et al, case number 17331-NC and Tammy Newman v. White Cap Industries, Inc., et al case number 17335-NC) were filed against the Company, members of its Board of Directors and, in two cases, against Leonard Green and Partners in the Delaware Court of Chancery, Newcastle County. A consolidated amended class action complaint has been filed consolidating the three actions under the caption In re White Cap Industries, Inc. Shareholders Litigation, case number 17329. The amended complaint, filed on behalf of a purported class of the Company's stockholders, generally alleges that the Transaction is unfair and inadequate to the Company's stockholders and charges the defendants with breach of fiduciary duties. The complaint generally requests injunctive relief to prevent the consummation of the Transaction, and seeks other remedies in the event the Transaction is completed. The defendants have moved to dismiss the amended complaint. The Company tells investors there can be no assurance that it will successfully defend the allegations included in the amended complaint. Regardless of whether the Transaction is consummated or of the outcome of the lawsuit, the Company may incur significant related expenses and costs that could have an adverse effect on the Company's business and operations. Furthermore, the case could involve a substantial diversion of the time of some members of management. Accordingly, the Company is unable to estimate the impact of the outcome of any potential liabilities associated with the amended complaint. ********* 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. 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