/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000224.MBX C L A S S A C T I O N R E P O R T E R Thursday, February 24, 2000, Vol. 2, No. 39 Headlines ASBESTOS LITIGATION: W.R. Grace Sued in MT over Vermiculite Works AURORA FOODS: Goodkind Labaton Files Securities Lawsuit in California AURORA FOODS: Keller Rohrback Pursues Investigation Re Securities Fraud AURORA FOODS: Kirby, McInerney Commences Securities Lawsuit in CA AURORA FOODS: Milberg Weiss Files Securities Complaint in California CANINE SNIFF: Supreme Court Looks at Expansion Of Checkpoints for Drugs COCA COLA: Racial Bias Suit Alleges Retaliation in Manager's Dismissal COMPUSA INC: Decries Merit of Shareholder Suit in TX Re Proposed Merger DRUG PRICE-FIXING: Lawyers to Share Fee in IL Settlement Re Brand Names GATEWAY DEVELOPMENT: Settles Investors' Suit over Stock Price HITSGALORE.COM: Wins Final Dismissal of Federal Securities Lawsuit IBP, INC: Milberg Weiss Files Securities Lawsuit in Nebraska IBP, INC: Wolf Haldenstein Files Securities Lawsuit in Nebraska INSO CORPORATION: Marc S. Henzel Files Securities Lawsuit in MA JDN REALTY: James V. Bashian Files Securities Lawsuit in Georgia JDN REALTY: Wechsler Harwood Files Securities Lawsuit in Georgia NY CITY: Regulations Can't Bar Homeless from Shelter, Supreme Ct Rules SOTHEBY'S: New Chairman Says Setbacks Will Be Costly But Not Fatal STAR TELECOM: World Access Strongly Refutes Shareholder Suit Re Merger WAR VICTIMS: Japanese Firms Refute Legal Basis for Forced Labor Claims ******** ASBESTOS LITIGATION: W.R. Grace Sued in MT over Vermiculite Works ----------------------------------------------------------------- Two class action lawsuits were filed February 22 against W.R. Grace & Company in Federal District Court in Missoula, Montana. One action, brought on behalf of property owners in the Libby, Montana area, seeks remediation of properties allegedly contaminated with tremolite asbestos resulting from W.R. Grace & Company's vermiculite mining and processing practices in Libby, Montana. Kathleen Tennison et. al. v. W.R. Grace & Co. et. al., Montana District Court, Missoula Division, Case No. CV-00-36-M-DWM, assigned to the Honorable Donald W. Molloy. The second action, brought on behalf of present and former residents in Libby, Montana, seeks long-term medical diagnostic care for those exposed to tremolite asbestos. Susan Grenfell et. al. v. W.R. Grace & Co. et. al., Montana District Court, Missoula Division, Case No. CV-00-35-M-DWM, assigned to the Honorable Donald W. Molloy. Both actions ask the Court to award punitive damages to the community of Libby, Montana, an award that could be used by the Libby community for such purposes as future economic development and community renewal. The actions were brought by five law firms, including firms of national prominence in the fields of asbestos litigation, class action practice, and environmental litigation. Those firms are Lieff, Cabraser, Heimann & Bernstein, LLP, of San Francisco, California; Ness, Motley, Loadholt, Richardson & Poole, PA, of Charleston, South Carolina; Cohen, Milstein, Hausfeld & Toll, P.L.L.C., of Washington D.C. and Seattle, Washington; McGarvey, Heberling, Sullivan & McGarvey, P.C., of Kalispell, Montana; and Lukins & Annis, P.S., of Spokane, Washington. The suits allege that by 1968 Grace knew that its Libby vermiculite expanding plant was disbursing approximately seven to nine tons of tremolite-containing dust into the air in the Libby community. The suit also contends that a 1969 Grace in-house study revealed a lung disease rate of 92% in Libby workers who worked over 20 years at the mine, but that Grace did not disclose its study to the public or the medical community. The suit further contends that Grace intentionally misrepresented to doctors and to workers that tremolite had not been associated with mesothelioma, a fatal form of cancer, and concealed an internal study demonstrating an association between tremolite and mesothelioma. Grace's practices, the suits allege, have contaminated buildings, homes, and properties, requiring extensive and expensive remediation, and compelling Libby residents to obtain long-term diagnostic care ensuring early detection of tremolite asbestos caused diseases. FACT SHEET Plaintiffs: Plaintiffs in the class action seeking property remediation are Kathleen A. Tennison and L. Diane Walker. Plaintiffs in the class action seeking medical monitoring relief are Susan Grenfell and Gayla Cody. Defendants: Defendants in the class actions are W. R. Grace & Company (Delaware); W. R. Grace & Company (Connecticut); W. R. Grace & Co., an association of business entities; and Sealed Air Corporation. Court: The suits were filed February 22, 2000, in the Federal District Court of Montana, in Missoula, Montana and both were assigned to the Honorable Donald W. Molloy. The property remediation case is Kathleen Tennison et. al. v. W.R. Grace & Co. et. al., Montana District Court, Missoula Division, Case No. CV-00-36-M-DWM. The medical monitoring case is Susan Grenfell et. al. v. W.R. Grace & Co. et. al., Montana District Court, Missoula Division, Case No. CV-00-35-M-DWM. Claims: The class actions allege violation of the Montana Constitution, negligence, public and private nuisance, trespass, strict liability, concealment, misrepresentation, deceit, and claims for punitive damages. Contact Attorneys: Elizabeth J. Cabraser and Fabrice Vincent at Lieff, Cabraser, Heimann & Bernstein, LLP, in San Francisco, California; Edward Westbrook at Ness, Motley, Loadholt, Richardson & Poole, PA, in Charleston, South Carolina; Steven Toll at Cohen, Milstein, Hausfeld & Toll, in Seattle, Washington; Allan McGarvey of McGarvey, Heberling, Sullivan & McGarvey, P.C., in Kalispell, Montana; and Darrell W. Scott of Lukins & Annis, P.S., in Spokane, Washington. Source/Contact: Lieff, Cabraser, Heimann & Bernstein, LLP Elizabeth J. Cabraser Fabrice N. Vincent 275 Battery Street, 30th Floor San Francisco, CA 94111 Tel: (415) 956-1000 Fax: (415) 956-1008 E-mail: fvincent@lchb.com Lukins & Annis, P.S. Darrell W. Scott 1600 Washington Trust Financial Center 717 West Sprague Avenue Spokane, WA 99201-0466 Tel: (509) 455-9555 Fax: (509) 747-2323 E-mail: dscott@lukins.com Ness, Motley, Loadholt, Richardson & Poole, PA Edward Westbrook 28 Bridgeside Blvd. Mt. Pleasant, SC 29464 Tel: (843) 216-9113 Fax: (843) 216-9450 McGarvey, Heberling, Sullivan & McGarvey, P.C. Allan McGarvey 745 South Main Kalispell, MT 59904-5399 Tel: (406) 752-5566 Fax: (406) 752-7124 Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Steven J. Toll 999 Third Avenue, Suite 3600 Seattle, WA 98104 Tel: (206) 521-0080 Fax: (206) 521-0166 Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Richard S. Lewis 1100 New York Avenue, N.W. Washington, D.C. 20005 Tel: (202) 408-4600 Fax: (202) 408-4699 Lieff, Cabraser, Heimann & Bernstein, LLP Elizabeth J. Cabraser, 415/956-1000 Fabrice N. Vincent, 415/956-1000 fvincent@lchb.com AURORA FOODS: Goodkind Labaton Files Securities Lawsuit in California --------------------------------------------------------------------- Goodkind Labaton Rudoff & Sucharow LLP filed a class action lawsuit in the United States District Court for the Northern District of California on behalf of all persons who purchased shares of Aurora Foods Inc. common stock during the period October 27, 1999 through and including February 18, 2000. The complaint charges that Aurora Foods and certain of its former directors and officers violated Sections 10(b) and 20(a) of the Exchange Act in connection with, among other things, their dissemination of materially false and misleading statements contained in documents disseminated during the Class Period. Plaintiff alleges, inter alia, that Aurora Foods issued statements regarding the Company's financial results in the third and fourth fiscal quarters of 1999 which were materially false and misleading because the Company had improperly accounted for promotional expenses paid to retailers of the Company's food products. On February 18, 2000, the Company announced that it had formed a special committee to conduct an investigation into the Company's accounting practices relating to the accrual of trade promotion expenses in 1999, resulting in a charge or charges that would likely result in a material reduction in earnings for 1999. The Company also announced that it accepted the resignations, effective immediately, of its Chairman and Chief Executive Officer; Vice Chairman; Executive Vice President; and Chief Financial Officer and Secretary. For inquiries on the above-mentioned lawsuit, please contact at Goodkind Labaton Rudoff & Sucharow LLP, Jonathan M. Plasse, Esq. (212/907-0863) or Emily C. Komlossy, Esq. (954/630-1001), at 100 Park Avenue New York, New York 10017-5563, or call at 212/907-0700 or at email addresses: plassej@glrs.com or komlose@glrs.com or visit website at http://www.glrs.comor contact Robert S. Green, Esq. of Girard & Green, LLP at 160 Sansome Street Suite 300 San Francisco, CA 94104 by telephone at 415/981-4800. AURORA FOODS: Keller Rohrback Pursues Investigation Re Securities Fraud ----------------------------------------------------------------------- Seattle's Keller Rohrback L.L.P. is investigating securities fraud claims in connection with the recent price drop of Aurora Foods Inc. and the resignations of four top officers and directors of the Company on behalf of all persons who purchased shares of Aurora common stock between October 27, 1999 and February 18, 2000, inclusive. Defendants are alleged to have disseminated materially false and misleading statements regarding the Company's financial results in violation of the Securities Exchange Act of 1934. Specifically, the Company is alleged to have improperly accounted for promotional expenses paid to retailers of the Company's food products. In November 1999, the Company warned that fourth quarter earnings would fall below expectations. On February 10, 2000, the Company announced that the release of its fourth quarter and year-end 1999 results would be delayed because its accountants had not yet completed their audit. On February 18, 2000, Aurora announced "...the Board of Directors, after discussions with the Company's auditors, PricewaterhouseCoopers, has formed a special committee to conduct an investigation into the Company's accounting practices..." which it expects to result in "a material reduction" in 1999 earnings and possibly 2000 projections. The Company also announced "the resignations of four members of senior management." On Friday, February 18, 2000, trading in Aurora halted on the New York Stock Exchange. Today the price of Aurora's common stock declined over 53% to close at $3 3/8, after a 52 week high of $19 1/2. For concerns regarding the above-mentioned investigation, you may contact Lynn L. Sarko, Elizabeth Leland, Esq. or Jen Veitengruber of Keller Rohrback L.L.P., toll free at 800/776-6044, or via e-mail at investor@kellerrohrback.com or visit website at http://www.SeattleClassAction.com AURORA FOODS: Kirby, McInerney Commences Securities Lawsuit in CA ----------------------------------------------------------------- The law firm of Kirby, McInerney & Squire LLP commenced a class action lawsuit on behalf of all purchasers of Aurora Foods Inc. securities between April 28, 1999 and February 17, 2000 in the United States District Court for the Northern District of California. The complaint asserts claims against Aurora and certain of its officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by reason of material misrepresentations and omissions. As the complaint alleges, Aurora announced positive and growing earnings for the first three quarters of 1999, and was expected to do so for the fourth quarter and full year as well. On February 18, 2000, however, the company stunned investors by announcing that four of its top executives had resigned, that the company was investigating accounting improprieties in its 1999 financial reporting, and that to correct these improprieties the company expected to take a charge against 1999 earnings that would result in a "material reduction of earnings for 1999 and possibly a small loss for the full year". The complaint alleges that investors, who bought the shares in the company believing it to be a profitable organization, and who were suddenly told that despite all of Aurora's previous public statements the company had little or even negative 1999 earnings, bought their shares at inflated prices and were damaged through no fault of their own. For additional information on the above-mentioned lawsuit, you may contact Ira Press, Esq. or Robert Feinstein, Paralegal of KIRBY McINERNEY & SQUIRE, LLP at 830 Third Avenue 10th Floor New York, New York 10022, telephone at (212) 317-2300 or toll free (888) 529-4787 or e-mail at kms@kmslaw.com or visit website at http://www.kmslaw.com AURORA FOODS: Milberg Weiss Files Securities Complaint in California -------------------------------------------------------------------- The Law Firm of Milberg Weiss Bershad Hynes & Lerach LLP commenced a securities class action lawsuit in the United States District Court for the Northern District of California on behalf of purchasers of Aurora Foods Inc. publicly traded securities during the period between Feb. 23, 1999 and Feb. 17, 2000. The complaint charges Aurora and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Aurora produces and markets brand name food products. The Company's products include Mrs. Butterworth's and Log Cabin syrup, Duncan Hines baking mixes, Van de Kamp's and Mrs. Paul's frozen seafood, Aunt Jemima frozen breakfast products, and Celeste frozen pizza. During the Class Period, Aurora issued false financial results and made false statements about its results causing its stock to trade at artificially inflated levels. Then on Feb. 17, 2000, Aurora admitted that its 1999 results had been false, that its previously reported profit converted into a loss and that its top four officers had "resigned." On these shocking disclosures, Aurora's stock trading was halted, after last trading at $7-5/16. Then, when trading resumed on Feb. 22, 2000, Aurora's stock collapsed to $3-1/2. For additional information on this action, you may get in touch with the plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@mwbhl.com or visit its website at http://www.whhf.com CANINE SNIFF: Supreme Court Looks at Expansion Of Checkpoints for Drugs ----------------------------------------------------------------------- A decade after upholding the use of roadblocks to catch drunken drivers, the Supreme Court on February 23 agreed to decide whether adding a drug-sniffing dog to the checkpoint renders the practice unconstitutional. The justices accepted an appeal from the City of Indianapolis, where the use of drug-detection roadblocks was declared unconstitutional last year by a federal appeals court. Courts around the country have differed on the legality of this increasingly popular law-enforcement technique. In this case, Judge Richard A. Posner, writing for the United States Court of Appeals for the Seventh Circuit, in Chicago, said that in contrast to the safety rationale that justified the sobriety checkpoints, the drug-detection roadblocks appeared to be little more than "a pretext for a dragnet search for criminals." Judge Posner said the Indianapolis program "belongs to the genre of general programs of surveillance which invade privacy wholesale in order to discover evidence of crime," amounting to an unreasonable search under the Fourth Amendment. Indianapolis set up the drug roadblocks six times in 1998, stopping 1,161 cars and making 55 arrests for transporting narcotics as well as 49 arrests for other misconduct. The program was challenged in a class-action lawsuit brought by the Indiana Civil Liberties Union. In its Supreme Court appeal, Indianapolis v. Edmond, No. 99-1030, the city is arguing that the relatively high number of arrests demonstrates the program's usefulness as well as the dimension of the drug problem it was designed to attack. The city noted that the Supreme Court had ruled in 1983 that a "canine sniff" by a trained drug-detecting dog involves such a minimal intrusion that it is not a search for purposes of the Fourth Amendment, which bars unreasonable search and seizure. Consequently, the city is arguing, adding this element to a lawful roadblock could not logically result in a Fourth Amendment violation. The Supreme Court ruled in a 1990 case, Michigan v. Sitz, that a sobriety checkpoint, while constituting a seizure, was not unreasonable because the interest in public safety outweighed the minimal intrusion on a driver's time and privacy. In his opinion for the appeals court panel, in which he was joined by Judge Diane P. Wood, Judge Posner said the Michigan case stood for the principle that the general rule requiring the police to have a specific basis for stopping someone could be relaxed for a purpose other than crime detection, like public safety. "Catching crooks" was not such a purpose, he said. Dissenting in the 2-to-1 decision, Judge Frank H. Easterbrook said state and local governments should have the flexibility to choose the law-enforcement methods they preferred. "The real threat to civil liberties comes from the national government, not from law-enforcement variations that can be avoided by driving a few miles to the east or west," he said. (The New York Times, February 23, 2000) COCA COLA: Racial Bias Suit Alleges Retaliation in Manager's Dismissal ---------------------------------------------------------------------- Plaintiffs in a racial discrimination lawsuit against Coca-Cola allege a veteran African-American manager was laid off in retaliation for organizing a meeting to discuss a workplace issue with fellow black employees. Plaintiffs' attorneys said in a legal motion on February 22 that the organizer, Larry Jones, told company President Jack Stahl about the meeting at his church a day before he was laid off. But Coca-Cola spokesman Ben Deutsch said Jones' layoff had "absolutely nothing" to do with the meeting. Jones, a human resources manager who has worked for Coke since 1985, called the meeting at St. Philip A.M.E. Church in Decatur to deal with employee " apprehension and confusion" over a key issue involving the suit and planned job cuts, plaintiffs' attorneys alleged. To qualify for enhanced severance benefits, laid-off black employees have to sign a release form relinquishing their rights to share any monetary relief that could be recovered if the case becomes a class-action suit. On Feb. 12, Jones and about 150 other African-American employees, as well as plaintiffs' counsel, met at St. Philip to discuss the release form issue, plaintiffs' attorneys alleged. Jones, an associate pastor at the church, said he organized the meeting after "scores of African-American employees" approached him about the issue. Two days later, Jones informed Stahl of the meeting and asked him "to convince the company not to apply the releases to this case," the plaintiffs said in their motion. Jones claims Stahl, who also co-chairs the company's Diversity Advisory Council, told him he would communicate Jones' concerns to Coke's senior management and general counsel. On the same day as the meeting with Stahl, Jones claims he was told by a human resources director that he had nothing to worry about when additional job cuts were announced Feb. 15. But, in fact, he was laid off, along with about 500 other employees that day. "The company's overnight change of heart regarding Mr. Jones' employment ... suggests that Mr. Jones' termination was in retaliation for the meetings he had with putative class members and the objections to the releases he raised with Mr. Stahl," plaintiffs' attorneys alleged. But the company denies this allegation. "We're going to file a formal response to these claims within the next 10 business days," said Deutsch. "In it, we will make it very clear that Larry Jones' termination had absolutely nothing to do with the meeting he had at the church or any actions he took thereafter. "In this realignment process, we are treating all employees fairly and equitably with absolutely no differentiation for any reason other than the need of the business and a fair assessment of their skills and performance." The Jones incident, plaintiffs' attorneys said, is "particularly troubling" because of the company's refusal to answer their questions about the layoffs. The plaintiffs said they are trying to determine if African-Americans who have complained about discrimination or the release forms were retaliated against in the layoff process. The company denies any retaliation. "The information that plaintiffs are seeking is confidential personnel data that is not relevant because the realignment of the company and actions taken under it are not at issue in this lawsuit," Deutsch said. The plaintiffs also are asking the judge to invalidate all release forms signed between Jan. 26 and Feb. 15. On Jan. 26, the company announced it will be cutting 6,000 jobs worldwide, including 2,500 in Atlanta, this year. In Atlanta, the first round of layoffs took place on Jan. 26, with another round occurring on Feb. 15. But plaintiffs' attorneys contend that the release forms are invalid because the company failed to follow a Feb. 4 court order requiring it to clarify the terms of the release form in a memo to employees. "This memo had to be duplicated and sent to more than 1,300 affected associates," Deutsch said. "All of this happened within five business days of the court order. We don't think that's an unreasonable amount of time." The lawsuit was filed by eight current and former employees who allege that Coca-Cola has discriminated against African-Americans in pay, promotions and performance evaluations. Jones is not among the plaintiffs. Coca-Cola denies the allegations in the suit. The plaintiffs are seeking class-action status so they can represent some 2, 000 black salaried employees in the United States. Recently U.S. District Judge Richard Story ordered both sides to try to settle the case through mediation. (The Atlanta Journal and Constitution, February 23, 2000) COMPUSA INC: Decries Merit of Shareholder Suit in TX Re Proposed Merger ----------------------------------------------------------------------- Compusa Inc. discloses to its shareholders that on January 24, 2000, a complaint seeking class action status, entitled Daniel Exner V. Compusa Inc. et al., Case No. CC-00-00921-C, was filed in the County Court at Law of Dallas County, Texas by Daniel Exner, a shareholder of the Company, in connection with the proposed Merger, against the Company and all of the members of the Board of Directors of the Company. On January 23, 2000, the Company entered into a definitive merger agreement with Grupo Sanborns, S.A. de C.V. and TPC Acquisition Corp., a wholly-owned subsidiary of Grupo Sanborns, providing for the acquisition by TPC of all of the outstanding shares of common stock of the Company for $10.10 per share in cash. Under the terms of the Merger Agreement, Grupo Sanborns commenced a tender offer on February 1, 2000 to acquire all of the Common Stock that it and its affiliates do not already own (the "Tender Offer"). Grupo Sanborns currently indirectly owns approximately 14.8% of the Common Stock. The Merger Agreement has been unanimously approved by the Board of Directors of the Company. Plaintiff alleges that the individual defendants breached their fiduciary duties of loyalty and care to the Company and its stockholders by, among other things, entering into the Merger Agreement at an unfair price, failing to maximize stockholder value, and benefiting themselves at the expense of the stockholders. The complaint seeks a declaration that the individual defendants breached their duties of loyalty and care, an injunction against the Merger, unspecified monetary damages, costs and fees, and other relief. Based on currently available information, it is not possible to give an estimate of the possible loss or range of loss that might be incurred by the Company if the plaintiff in this lawsuit were to prevail in the litigation. The Company believes the plaintiff's claims are without merit and intends to vigorously defend against such charges. DRUG PRICE-FIXING: Lawyers to Share Fee in IL Settlement Re Brand Names ----------------------------------------------------------------------- Twenty law firms are set to share a staggering $175 million fee award for winning the settlement of a class action against drug manufacturers and wholesalers over their pricing practices. The huge fee award is likely one of the largest ever in a class action, and much of the money will go to the four firms that served as lead plaintiffs' counsel in the case. They include: San Francisco's Saveri & Saveri, led by Guido Saveri; Chicago's Much Shelist Freed Denenberg Ament & Rubenstein, led by Michael Freed; Chicago's Specks & Goldberg, led by Perry Goldberg; and Philadelphia's Berger & Montague, led by H. Laddie Montague Jr. "We understand that this is the highest award ever given in a class action," said Guido Saveri. "The case has been going on for six years, and no one has been paid," added Alexander Saveri, a partner at the firm. "We've been compensated appropriately, as the court indicated." A federal judge in Illinois ordered the award in In re Brand Name Prescription Drugs Antitrust Litigation, 94-897. Thousands of retail pharmacies filed the action, alleging that drug manufacturers and wholesalers conspired to overcharge them while giving substantial discounts to HMOs, hospitals and mail-order houses. In 1994, numerous suits around the country were consolidated before the U.S. District Court for the Northern District of Illinois. More than 20 manufacturers and about six wholesalers settled before the case went to trial, agreeing to pay a cash settlement of $700 million. Those involved in the settlement included Merck & Co. Inc., Pfizer Inc., American Home Products Corp., Pharmacia & Upjohn Inc., SmithKline Beecham Corp. and Hoechst Marion Roussel Inc. The court determined that the appropriate fee was 25 percent of the $700 million cash settlement. The court said that it was the second largest settlement in the history of class action litigation. The attorneys had sought a fee award of 30 percent of the settlement. Terrence Callan, a Pillsbury Madison & Sutro partner who represented defendant Rhone-Poulenc Rorer in the case, said the $175 million figure is "a fair award." Five manufacturers and five wholesalers named in the class action declined to settle. They went to court in 1998 and after a 10-week trial, U.S. District Judge Charles Kocoras issued a directed verdict in favor of the defendants. The Seventh Circuit U.S. Court of Appeals affirmed the decision last year. Kocoras also issued the award for attorneys fees to be provided by the defendants who settled. Explaining the rationale for the size of the fee, he noted that private antitrust actions are often brought following investigations or prosecutions by government officials. "This case was not marked by any governmental investigations or prosecution, leaving the development of the facts in the hands of private litigants," Kocoras wrote. "The class plaintiffs' claims were brought in the form of an industrywide antitrust conspiracy charge dating back to at least the 1980s," he said. " Because of the uncertainty of the outcome of the case and the enormous amount of work necessary to the prosecution of the charges, counsel for the class plaintiffs had to invest a great deal of time and money even while faced with the risk of non-recovery." Thus, the attorneys were entitled to a "reasonable fee," Kocoras said. (The Recorder, February 16, 2000) GATEWAY DEVELOPMENT: Settles Investors' Suit over Stock Price ------------------------------------------------------------- Gateway Development Co Inc advises their shareholders that in 1996, the company and certain of its present and former officers and directors were named as defendants in nine purported class action suits filed by certain stockholders and one purported class action suit filed by a noteholder. In 1997, the court consolidated the stockholder cases (the noteholder case was also consolidated, but only for pre-trial purposes). During 1998 the noteholder case was dismissed and during 1999 the consolidated case was also dismissed, each without prejudice. The court has given the plaintiffs the opportunity to restate their claims. The complaint filed in the consolidated cases asserts liability for the company's alleged failure to properly account for and disclose the contingent liability created by the David's litigation and by the company's alleged "deceptive business practices." The plaintiffs claim that these alleged practices led to the David's litigation and to other material contingent liabilities, caused the company to change its manner of doing business at great cost and loss of profit, and materially inflated the trading price of the company's common stock. The David's litigation being referred to involves the suit filed by David's Supermarkets, Inc. in 1993 against the company, for allegedly overcharging for products. In 1996, judgment was entered against the company for $211 million; the judgment was subsequently vacated and a new trial granted. At the end of 1996 the company had an accrual of $650,000. The company denied the plaintiff's allegations; however, the company said it paid $19.9 million to the plaintiff in April 1997 in exchange for dismissal, with prejudice, of all plaintiff's claims against the company, in order to eliminate the uncertainty and expense of protracted litigation. This resulted in a charge to first quarter 1997 earnings of $19.2 million. HITSGALORE.COM: Wins Final Dismissal of Federal Securities Lawsuit ------------------------------------------------------------------ Hitsgalore.com, Inc. (OTC Bulletin Board: HITT) announced that on February 22, 2000, District Judge Manuel L. Real of the United States District Court for the Central District of California granted the Company's motion to dismiss the Second Consolidated Amended Class Action Complaint filed against Hitsgalore.com in the action entitled In re HITSGALORE.COM, INC. SECURITIES CLASS ACTION, Case No. 99-CV-5060. "On December 20, 1999, Judge Real granted Hitsgalore.com's motion to dismiss the First Consolidated Amended Class Action Complaint, but gave plaintiffs 20 days within which to file an amended pleading," stated Daniel J. Becka of Schoeppl & Burke, P.A., the Company's attorneys. "This time, the Court dismissed the action with prejudice, meaning that the Court made a final adjudication in favor of the defendants on the merits of the plaintiffs' claims that the Company, Steve Bradford and Dorian Reed violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder," explained Mr. Becka. Mr. Becka added: "What the Court essentially did was to say that, assuming all of the facts pleaded in plaintiffs complaint to be true, plaintiffs still failed to state a cause of action for securities fraud against Hitsgalore.com and Messrs. Reed and Bradford." The first of three lawsuits that were eventually consolidated into the action described above, was filed only two days after the issuance of a Bloomberg article which falsely implied that the Company fraudulently failed to disclose in a February 1999 filing with the Securities and Exchange Commission the existence of an FTC complaint brought against Dorian Reed and others relating to Internet Business Broadcasting, Inc., an online advertising company that closed in 1997 with which Mr. Reed was associated. The Company's stock price decreased dramatically after issuance of that story. The Second Amended Complaint alleged that the defendants engaged in a "fraudulent scheme" to "artificially inflate" the price of the Company's stock by making fraudulent misrepresentations and omissions of material fact during the period February 17, 1999 through August 24, 1999. "We have denied all along that the Company ever made any fraudulent statements in its SEC filings, press releases or anywhere else," said Mr. Reed. "The final dismissal of the class action lawsuit with prejudice affirms this," Mr. Reed said. "The plaintiffs in the dismissed class action lawsuit now have three options," Daniel Becka explained. "They can either: (1) request that the Court reconsider its decision dismissing the complaint; (2) appeal the decision to the United States Court of Appeals for the Ninth Circuit; or (3) concede defeat," Dan Becka explained. "If I were them, I'd choose the third option," said Mr. Becka. "This is precisely the type of meritless lawsuit Congress sought to prohibit when it enacted the Private Securities Litigation Reform Act of 1995." IBP, INC: Milberg Weiss Files Securities Lawsuit in Nebraska ------------------------------------------------------------ Milberg Weiss Bershad Hynes & Lerach, LLP filed on February 22, 2000 a class action lawsuit in the United States District Court for the District of Nebraska on behalf of all purchasers of the securities of IBP, Inc. between March 25, 1999, and January 12, 2000, inclusive. The complaint charges IBP 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 compliance with state and federal protection laws applicable to the Company's beef and pork production facilities. Because of the issuance of a series of materially false and misleading statements the price of IBP securities was artificially inflated during the Class Period. The action further alleges that prior to the disclosure of the adverse facts described above, defendants intended to use millions of shares of artificially inflated IBP common stock as currency for a proposed corporate acquisition. Contact: at Milberg Weiss Bershad Hynes & Lerach, Steven G. Schulman or Samuel H. Rudman 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 our website at http://www.milberg.com IBP, INC: Wolf Haldenstein Files Securities Lawsuit in Nebraska --------------------------------------------------------------- The Law firm of Wolf Haldenstein Adler Freeman and Herz LLP commenced a class action lawsuit in the United States District Court for the District of Nebraska on behalf of all purchasers of IBP, Inc. securities during the period between March 25, 1999, and January 12, 2000. The complaint charges IBP 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 Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning IBP's compliance with state and federal environmental protection laws applicable to IBP's beef and pork production facilities. Because of the issuance of a series of materially false and misleading statements the price of IBP securities was artificially inflated during the Class Period. The action further alleges that prior to the disclosure of the adverse facts described above, defendants intended to use millions of shares of artificially inflated IBP common stock as currency for a proposed corporate acquisition. For more details regarding this action, please contact Gregory Nespole, Esq., Michael Miske or Brian S. Cohen, Esq 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 whafh@aol.com or nespole@whafh.com or cohen@whafh.com or Gnespole@aol.com or visit website at http://www.whafh.com INSO CORPORATION: Marc S. Henzel Files Securities Lawsuit in MA --------------------------------------------------------------- The Law Offices of Marc S. Henzel filed a class action lawsuit in the United States District Court for the District of Massachusetts on behalf of purchasers of Inso Corporation 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 Rule 10b-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. For additional information with respect to this matter, please contact Marc S. Henzel, Esq. of The Law Offices of Marc S. Henzel, 210 West Washington Square, Third Floor Philadelphia, PA 19106, by telephone at 888-643-6735 or 215-625-9999, by facsimile at 215-440- 9475, by e-mail at Mhenzel182@aol.com or visit the firm's website at http://members.aol.com/mhenzel182 JDN REALTY: James V. Bashian Files Securities Lawsuit in Georgia ---------------------------------------------------------------- The Law Offices of James V. Bashian, P.C. filed a class action lawsuit in the United States District Court for the Northern District of Georgia on behalf of those persons and entities who purchased the common stock of JDN Realty Corp. between March 31, 1997 and February 11, 2000, inclusive. The complaint charges JDN and certain of its officers and directors with violations of the Securities Exchange Act of 1934 Sections 10(b) and 20(a), and Rule 10b-5 promulgated thereunder. For concerns regarding this matter, please contact Oren Giskan, Esq. of The Law Offices of James V. Bashian, New York, by telephone at (212) 921-4110 or (800) 556-8856 or at osgiskan@aol.com via e-mail. JDN REALTY: Wechsler Harwood Files Securities Lawsuit in Georgia ---------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP filed a class action lawsuit in the United States District Court for the Northern District of Georgia, Atlanta Division, on behalf of all persons who purchased the common stock of JDN Realty Corporation between March 31, 1997 and February 11, 2000, inclusive. The complaint charges JDN and certain of its officers and directors with violations of the Securities Exchange Act of 1934. During the period of 1994-1998, all of JDN's financial statements were materially overstated and false. On February 14, 2000, the Company revealed that it would restate its financial results, thereby admitting that its financial statements between 1994 and 1998 were false and that it would delay filing its results for 1999. This revelation, according to the complaint, caused the price of JDN's securities to collapse in value, falling from $16 9/16 to $9 13/16, a one day drop of over 40%. For more information concerning this lawsuit, you may contact Shannon Cooper, Shareholder Relations Department by e-mail at scooper@whhf.com or at Wechsler Harwood Halebian & Feffer LLP, 488 Madison Avenue, New York, New York 10022 or (toll free) 1-877-935-7400 or visit its website at http://www.whhf.com NY CITY: Regulations Can't Bar Homeless from Shelter, Supreme Ct Rules ---------------------------------------------------------------------- A state court said on February 22 that the Giuliani administration could not bar single adults from shelters if they failed to meet work requirements and other welfare eligibility rules. The court said those shelter regulations, central to Mayor Rudolph W. Giuliani's policies on the homeless, violated a 1981 court decree that guaranteed homeless people the right to shelter. And the court ruled that the decree, the product of the city's own negotiated settlement, could not lawfully be changed to include the regulations, adopted four years ago by the state. Although the city vowed to appeal, the decision carries considerable weight, because it was issued by Justice Stanley L. Sklar of State Supreme Court in Manhattan, who is responsible for enforcing the city's pledge to abide by the decree. The decree is the bedrock of the city's far-reaching right to shelter, which was extended from single men to women and then to families with children through other litigation in the 1980's. February 22's decision applied only to single adults, but lawyers for the homeless said they would argue that it also should prevent the city from ejecting homeless parents from shelters and putting their children in foster care if they failed to meet the stringent welfare requirements. The Giuliani administration's efforts to impose its new eligibility rules, which are based on the four-year-old state guidelines, have been on hold while the legal challenges are considered in the court. Citing "the multitude of bureaucratic requirements" contained in the rules the city wants to impose on shelters, Justice Sklar wrote that the 1981 decree had been fashioned specifically to ensure that troubled people would at least be assured a bed in a clean, safe place. "The simple bureaucratic error which might send an individual out into the street, because he or she was unable to understand or to cooperate with these requirements," Justice Sklar wrote in his 24-page decision, "might be the error which results in that individual's death by exposure, death by violence, or death by sheer neglect. The risk is simply too great to take." Mr. Giuliani predicted that an appeals court would quickly reverse the ruling, which he described as "Justice Sklar clinging to his desire for a city of dependency." Steven Banks, the Legal Aid lawyer for the Coalition for the Homeless, said later in reply, "It's the court trying to maintain the humanity of the city." He added: "This decision today isn't about whether work is good or bad for people. It's clearly in no one's interest to have New Yorkers who suffer from mental or physical or social dysfunction on the sidewalks of the city, and that's what today's decision prevents." Lawyers for the city had argued that safeguards would distinguish between people who were capable of meeting the requirements and those who were too mentally or physically impaired to do so. But Justice Sklar found this confidence misguided and noted that the regulations did not include an exemption for those impaired by "social dysfunction," a category specifically protected by the decree. "Defendants have suggested that the change in social climate, and the demonstrably better system which has developed since 1981 to aid and shelter the homeless, constitutes a significant change in circumstances" that legally justifies modifying the decree, Justice Sklar wrote. "However, as admirable as the new system is in comparison to the old," Justice Sklar wrote, " 'socially dysfunctional' people continue to exist, and to inhabit the streets of New York in fair weather and foul, and no change in circumstance, social or otherwise, warrants that these individuals should no longer receive succor." The decision was not an easy one, Justice Sklar wrote. Among the affidavits supporting the Giuliani administration's position, he noted, were those of people passionately committed to improving the lives of the homeless, who believe that the regulations can compel some people to change their behavior and end their dependency on the shelters system. But equally compelling, the justice said, was testimony from mental health and medical experts that the difficulties of diagnosing illness and treating some of the most vulnerable people, combined with the "innumerable bureaucratic requirements" in the regulations, "will result in an explosion of homeless individuals, banished or barred from shelters, risking their health, and perhaps their lives, on the often bitterly cold, and palpably dangerous streets of a sadly indifferent city." The 1981 pact, known as the Callahan decree, was named for Robert Callahan, a hard-drinking, homeless short-order cook who was one of the original plaintiffs in a class-action lawsuit the city settled after hard-fought negotiations. He died on a street in Lower Manhattan before the decree was issued. A city lawyer, Leonard Koerner, chief assistant corporation counsel, agreed with Mr. Banks that the decision was a forceful reaffirmation of the court decree. "They won," he said of the plaintiffs. But he added, "What Sklar doesn't deal with is how do you get singles to obey the rules, including going to appointments for treatment, unless there's a stick. There is no stick, and they do not conform to normal behavior patterns." Mr. Koerner contended that the decision should not preclude the city from applying the welfare rules to homeless parents with children, because they were not included in the Callahan decree. The city has argued in papers filed with the Appellate Division that two other State Supreme Court justices, Helen E. Freedman and Elliott Wilk, lacked jurisdiction when they ruled in December that the city could not start enforcing the rules in homeless family shelters, because two higher courts had already found the rules constitutional on their face. Lawyers for the homeless have argued that the city's written plan for applying the rules demonstrates a violation of court rulings that children may not be removed from their parents for poverty or lack of housing. (The New York Times, February 23, 2000) SOTHEBY'S: New Chairman Says Setbacks Will Be Costly But Not Fatal ------------------------------------------------------------------ In the midst of its stock beating, the new chairman of Sotheby's, the beleaguered international auction house, predicted that an extensive federal antitrust investigation and various class-action lawsuits would be "expensive but not life-threatening" for the 256-year-old company. "The message has to be that the company is in sound shape and that the management team is intact except for the two top people," Michael I. Sovern, the former president of Columbia University, said in a phone interview. Mr. Sovern, who has frequently stepped into trouble-shooting situations, was named to replace Sotheby's largest shareholder, A. Alfred Taubman, as chairman at a board meeting on February 21. Resigning with Mr. Taubman was the company's president and chief executive, Diana D. Brooks, who was replaced by William F. Ruprecht, formerly in charge of the company's North and South American operations. The company and its archrival Christie's are at the center of a criminal investigation of a possible conspiracy to fix the commissions they charge buyers and sellers. The two companies, with imposing presences in New York, London and other cities, control 95 percent of the $4 billion worldwide auction business, meaning any collusion on commission rates could have easily cost their customers in the tens of millions of dollars. Mr. Sovern, virtually unknown in the art world, said he had been approached by two old friends less than a week ago to take over the chairmanship. One was Ira Milstein, a senior partner at Weil Gotschal & Manges, the Fifth Avenue law firm that Sotheby's hired to represent it in the federal investigation. The other was Henry R. Kravis, the leveraged buyout specialist, who is a Sotheby's board member and a Columbia alumnus. Mr. Sovern said he had had little time to educate himself about either Sotheby's or the art world and had not met with prosecutors. "I know the difference between a Serra and a Stella," he said. "But I'm more of a museumgoer and window shopper than art buyer." The fact that his late wife, Joan Sovern, was a sculptor gave him "at least one toe in the art world," he added. In the interview, he did mention some policy directions. He said there would be no further shake-up of management, and, he said, that while it was too early to discuss commission changes, Sotheby's "will not be underbid by Christie's." Christie's, which has turned over to prosecutors information about possible conduct relevant to the investigation, recently changed its commission structure to make it more attractive for sellers to deal with it rather than Sotheby's. The stock market did not respond well to the continuing investigation or the appointments of Mr. Sovern and Mr. Ruprecht, whose direct sales experience involved objects like expensive rugs rather than art. Sotheby's shares closed at $15.625, down 12 percent from the Friday, February 18's close of $17.75. The stock had traded as high as $42 last spring. According to the Financial Times (London) , February 23, Standard & Poor's, the international ratings agency, downgraded the company's corporate credit and loan ratings from A to BBB. "I don't know whether investors will be inspired by the new team," The New York Times quotes James M. Meyer, director of research at Janney Montgomery Scott, the Philadelphia-based investment firm. "Nobody's got experience running an auction house. This is a business of relationships, and they have to make sure they don't lose their expertise." Several analysts said it would be better for Sotheby's if Mr. Taubman, who is still on the board and who owns 22.5 percent of the outstanding shares of the company and has 63 percent of voting power on the board, sold his position in the company. Despite rumors even before the investigation heated up that he was looking to sell, Mr. Taubman denied any intention of doing so. Some analysts said, however, that such a sale would not be easy to do. "Sotheby's has a big cloud hanging over it," said one analyst who would talk only on condition of anonymity. Mr. Meyer said that the chances of Sotheby's being sold to a public company were "slim, " but that a leveraged buyout specialist might be interested in buying it on the cheap. In addition to the investigation and the lawsuits filed by buyers, sellers and shareholders, Sotheby's $40 million investment in its Internet business has been another problem for the company. Last year it started two Web sites, one with Amazon.com and the other independently, and neither one has been popular with buyers, sellers or Wall Street. But Mr. Sovern was upbeat about the investment, calling it "solid" and something that "would pay off." More pressing to art dealers who were stunned by this week's events was how the climate will affect the important spring auctions in New York and London and art prices in general, which have been robust over the last few years. "If I were a seller with a $5 million Picasso I think I might say that given the tumult and the lack of buyer's confidence I'd sit tight for another six months before I'd sell," Mr. Meyer said. "As things stand now with the investigation, it's hard to believe this is the end of the story." (The New York Times, February 23, 2000) STAR TELECOM: World Access Strongly Refutes Shareholder Suit Re Merger ---------------------------------------------------------------------- World Access, Inc. (Nasdaq: WAXS) announced that it has recently learned that on February 14, 2000 a small, unsophisticated individual shareholder of STAR Telecommunications, Inc., filed a lawsuit in Santa Barbara Superior Court seeking to block STAR's pending merger with World Access and alleging that STAR and its board of directors failed to take actions necessary to attain a higher valuation for STAR. John D. Phillips, Chairman and Chief Executive Officer of World Access, said, "The allegations in this lawsuit are completely unfounded. We have every reason to believe that this frivolous lawsuit represents the very type of shareholder strike suits instigated by class action plaintiff's lawyers that Congress has recognized as abusive. This type of suit, which is typically followed by Internet advertising, is a blatant attempt to unfairly profit from false allegations. World Access and STAR expect that this meritless litigation will not negatively impact our proposed merger. "Prior to executing our letter of intent with STAR in December, STAR had been in negotiations with several interested parties without any suitable proposals. Additionally, the announcement of our letter of intent effectively invited other prospective acquirors, although no alternative offers materialized. Prior to execution of a definitive agreement, STAR's board of directors received a fairness opinion from a leading investment bank, concluding that the proposed merger with World Access was in the best interest of STAR shareholders." WAR VICTIMS: Japanese Firms Refute Legal Basis for Forced Labor Claims ---------------------------------------------------------------------- Two major Japanese companies on February 23 insisted there was no legal basis for a huge class action filed in the United States for compensation of war-time forced labor. "It is our company's understanding that this case has been already ettled by the Japanese and US governments under the San Francisco Peace Treaty," said Mitsubishi Corp., one of the companies named. "We cannot understand why a private company is made the object of a suit with regard to a question which has been settled at government level," the trading house said in a statement. Mitsubishi Materials, a non-ferrous metal producer, said it "deeply sympathises with all victims of war including certain prisoners of war who endured horrors more than half a century ago." But it argued that the matter had been settled by the 1951 peace treaty. "That multilateral agreement provided a reparation system and provided reciprocal releases of all war-related claims of the United States and its nationals against Japan and its nationals," it said. Victims filed suit against the corporations in Los Angeles on February 22, requesting billions of dollars for the labor of thousands forced to work in China and Japan during World War II. California in 1999 passed legislation allowing World War II victims to sue until 2010 over forced labor. New York law firm Milberg Weiss Bershad Hynes and Lerach said it had filed suit against Mitsubishi and Mitsui on behalf of US former prisoners of war and Chinese-Americans who were used as forced labor. "The tens of thousands of slave laborers who suffered at the hands of Japanese corporations deserve justice," said Bill Lerach, one of the group's attorney's, in a statement. "Japanese corporations should take responsibility for these atrocities, just as German companies have finally recognized their obligation to former Nazi slave laborers." The former prisoners claim that Mitsubishi, Mitsui and other Japanese companies during World War II followed the Nazi "extermination through work" plan by forcing prisoners of war to work themselves to death. Chinese and Vietnamese civilians, along with allied soldiers, were captured and put to work in mines, factories and other facilities, in exchange for little or no pay, often being subjected to torture. But Mitsubishi Materials, while condemning wartime brutality, insisted the San Francisco Treaty still stood. "In the nearly 50 years since the treaty was signed, Congress, the US State Department and the courts have consistently confirmed that the treaty precludes suits against Japanese companies for conduct stemming from World War II," it said in the statement. The company said its claim was supported by comments from US Ambassador to Japan Thomas Foley, who this year noted in a Tokyo news conference that the treaty had put aside claims against Japan. Germany is seeking to settle claims against it from victims forced to work for the Nazis. In December, the German government and industry agreed to pay a total of 10 billion marks (about five billion dollars/euros), each paying five billion marks, to create a charitable foundation to be called "Remembrance, Responsibility, Future." (Agence France Presse, February 23, 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 * * *