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/raid1/www/Hosts/bankrupt/CAR_Public/000310.MBX C L A S S A C T I O N R E P O R T E R Friday, March 10, 2000, Vol. 2, No. 49 Headlines AMERICAN AIRLINES: Sued by Union Employees over System Re Family Leave A-PLUS PROGRAM: FL Suit Blasts Bush Plan For Schools for Discrimination BOISE CASCADE: Faces Lawsuits in DE over Proposed Acquisition of BCOP CAMERON ASHLEY: Court Issues Temporary Restraining Order Re Buyout CENDANT CORP: Rate Set in Formerly Announced Settlement of PRIDES Case CENDANT CORP: Repaid By Ex-Chairman after Resolution of Securities Suit CINAR CORP: Bernstein Liebhard Files Securities Suit in New York CINAR CORP: Shareholders in Talks with Potential Suitors COASTAL, JAVELINA: Refineries Settle Suit with Corpus Christi Residents COREL CORP: NY Ct Preliminarily OKs Securities Suit Filed in 1998 FEDERAL RESERVE: Target of D.C. Suit over Mismanagement of Pension Fund FOCUS ENHANCEMENTS: Milberg Weiss Files Securities Suit in MA FOCUS ENHANCEMENTS: Shapiro Haber Files Securities Suit in MA FOCUS ENHANCEMENTS: Stull Stull Files Securities Lawsuit in MA HERTZ GAS: Charge Fuels Suits; Claims over Concealment Given Go-ahead HMO: Lawyers, Blue Cross Haggle over Fees in Missouri Settlement HOME DEPOT: Faces Minority Employees' Lawsuit; Engages King & Spalding HORNER, TOWNSEND: Investors in The American Benefits Services Sue in CA INACOM CORP: Bernard M. Gross Files Securities Suit in Nebraska INFORMATION MANAGEMENT: Bernstein Liebhard Files Securities Suit in CT IVAX CORP: Shareholder Sues over Poison Pill in Shareholder Rights Plan LEHMAN BROTHERS: Named in NY Suits against Underwriters of IPO LEHMAN BROTHERS: Settles for '96 NJ Suit Re MobileMedia Underwriting MICHAEL COWPLAND: Corel's CEO Sued by Ontario Securities Commission MICHAEL STORES: Recalls All-purpose Lighters That Can Leak Butane PROCTER & GAMBLE: Pomerantz Haudek Files Securities Suit in Ohio PROVIDIAN FINANCIAL: Regulators Pressure to Settle Fraud Probes RETAILERS: Attorney to Sue over Gift Certificates with Expiration Dates SAFETY-KLEEN CORP: Berger & Montague Files Securities Complaint in SC SOTHEBY'S HOLDINGS: Bernard M. Gross Files Securities Suit in Michigan ST JOHN KNITS: Settles '98 Securities Fraud Suit in California ST JOHN KNITS: Trial for CA Lawsuit over Merger Set for May 2000 TOBACCO LITIGATION: Nurse's Cancer Not Caused By Smoking, Doctor Says UCAR INTERNATIONAL: Settles Securities Claims; Sues Former Parents VISX INC: Donovan Miller Files Securities Suit in California VISX INC: Lowey Dannenberg Files Securities Suit in California VISX INC: Schubert & Reed LLP Brings Securities Suit in California VISX: Lockridge Grindal Files Securities Suit in California WHEATON WARRENVILLE: Judge Won't Stop District 200 Suit Re Health Risks ********* AMERICAN AIRLINES: Sued by Union Employees over System Re Family Leave ---------------------------------------------------------------------- Steven R. Hickman, of Tulsa, Okla.'s Fraiser, Fraiser & Hickman L.L.P., has filed suit on behalf of union employees of American Airlines, charging the nation's second-largest carrier with violating the Family and Medical Leave Act (FMLA). David R. Cordell, of Tulsa's Conner & Winters, is local counsel for American, working with the Fort Worth, Texas, airline's associate general counsel, Debra Hunter Johnson. In its complaint, the Transport Workers Union of America accuses the airline of having a flawed system of reviewing family leave requests. The union argues that workers are entitled to a decision within 48 hours, yet it takes the airline more than a month to answer requests. The plaintiffs, who are seeking class action status, say that the airline's managers are not properly trained to abide by the FMLA. The suit was filed in U.S. District Court for the Northern District of Oklahoma. TWU Local 514 v. AA Inc., No. 00-CV-132H. (The National Law Journal, March 6, 2000) A-PLUS PROGRAM: FL Suit Blasts Bush Plan For Schools for Discrimination ----------------------------------------------------------------------- Two black legislators from Broward County have orchestrated a lawsuit that asks a judge to outlaw major portions of Gov. Bush's education reform plan, Sun-Sentinel (Fort Lauderdale, FL) reports. The suit targets Bush's A-Plus program that grades schools on the results of students' scores on the Florida Comprehensive Assessment Tests. State Sen. Mandy Dawson and U.S. Rep. Alcee Hastings persuaded five Broward residents to be the first plaintiffs in a class-action lawsuit filed in Broward County Circuit Court. Bush says his program, created last year, holds local educators accountable for the quality of education, according to Sun-Sentinel (Fort Lauderdale, FL). But the lawsuit contends that the program does not treat all citizens equally, violating the state and federal constitutions, the report says. Dawson, D-Fort Lauderdale, said Bush's plan is simply part of a political agenda: "Our children are prisoners of war, held hostage by political parties, in a political war. Our children, their education, their health, safety and welfare should not become casualties of our adult battles," quotes Sun-Sentinel (Fort Lauderdale, FL). The suit asks for an injunction against Bush, Education Commissioner Tom Gallagher, the state Department of Education and Comptroller Robert Milligan. At its heart, the suit contends that a school faces an unfair disadvantage if its enrollment includes students who have difficulty understanding English and don't do well on the English-only statewide tests, Sun-Sentinel (Fort Lauderdale, FL) says. That penalizes not only foreign-born students, but other students in the same school and the teachers as well, the suit contends, as mentioned in the Sun-Sentinel (Fort Lauderdale, FL) report. The prize at stake is the A-Plus plan's reward of $ 100 per student for schools that receive an A on the grading scale or schools that raise their score two letter grade. The money can be spent on programs, field trips, supplies or even teacher bonuses. "It is unjust and illegal discrimination to deny (them) from enjoying a realistic opportunity to compete for the benefit afforded a school in the School Recognition Program," the suit states according to Sun-Sentinel (Fort Lauderdale, FL). Gallagher argued that under A-Plus "limited English proficient students" are exempt from taking the tests or their scores aren't counted if they have attended Florida schools for two years or less. His spokeswoman Joanne Carrin also said students who speak limited English who have attended Florida schools more than two years can be exempted on a case-by-case basis. Dawson countered, "If they're doing it on a case-by-case basis, then how is it that your schools with 40 percent or 70 percent English proficiency problems are the ones ranked D and F?" "Is it that they aren't doing the case-by-case exemptions the way they should, or are they pulling our leg again?" The suit states that at least 69 percent of Broward schools that have 10 percent Limited English Proficient students received a D or F when the first grades were announced last summer. Also, 24 of the 43 Broward schools that failed had 10 percent or more of students who are not proficient in English. The suit was drafted by Dawson; Hastings, D-Miramar, and Mikel Jones, an attorney who also serves as Hastings' aide and has been active in minority education issues in Palm Beach County. Sun-Sentinel (Fort Lauderdale, FL) reports that the plaintiffs include a parent of a foreign-born Hispanic student, a parent of a Haitian-born student and an American-born student from a disadvantaged family. Another plaintiff is a parent of an American-born student attending an unnamed school with numerous LEP students, called "Mark Doe" in the suit. "The case of Mark Doe is a perfect example of how children are being penalized based on where they go to school, rather than how they perform. Is it Mark's fault that his is an F school?" Dawson asked. The last plaintiff is a teacher at an unnamed school. "Why should she be exempted from the bonuses that come to her peers at the A school, just because of where she works?" Dawson said. "It doesn't matter how good a teacher she is. It seems to be a matter of location rather than vocation." Proponents of Bush's plan discounted the merits of the suit. "There are those who would like to weaken our accountability program, but it's our plan to press ahead," Gallagher said. Katie Baur, spokeswoman for House Speaker John Thrasher, R-Orange Park, said, "Is it now wrong to reward hard work and success? When did good performance become a negative thing? "Their ultimate goal is to kill the A-Plus plan." Accordig to Sun-Sentinel (Fort Lauderdale, FL), the A-Plus plan is already under attack in lawsuits filed last year by a coalition of teachers, parents, school officials and civic and civil rights groups, targeting a provision giving students in failing schools a voucher that could be used to attend private school. BOISE CASCADE: Faces Lawsuits in DE over Proposed Acquisition of BCOP --------------------------------------------------------------------- While information on the lawsuits arising out of Boise Cascade Corp's former manufacture and sale of hardboard siding products is the same as previously reported in the CAR, in December 1999, the Company, as disclosed in its report to the SEC, also faces nine lawsuits arising out of the Company's proposal to acquire BCOP's outstanding minority public shares. These lawsuits were filed against the company, Boise Cascade Office Products Corporation, and BCOP's directors and all nine cases were filed in New Castle County, Delaware. The lawsuits allege, among other things, that the Company's proposal was wrongful, unfair, and harmful to BCOP public stockholders. On January 19, 2000, the court, upon stipulation of the parties, signed a consolidation order that combined the nine cases into one matter. The Company believes there are valid factual and legal defenses to these lawsuits and will vigorously defend all claims alleged by the plaintiffs. In April 1995, Boise Cascade Office Products Corporation ("BCOP"), then wholly owned subsidiary of Boise Cascade Corp, completed an initial public offering of 10,637,500 shares of common stock at a price of $12.50 per share after giving effect to a two- for-one stock split in the form of a dividend in May 1996. After the offering, Boise Cascade owned 82.7% of BCOP's outstanding common stock. At December 31, 1999, Boise Cascade Corp owned 81.1% of BCOP's outstanding common stock. In December 1999, the Company announced a proposal to acquire the minority public shares of BCOP. The Company believes the reintegration of BCOP with Boise Cascade would enhance BCOP's operating flexibility and allow management to concentrate fully on its aggressive internal growth initiatives. The Company tells investors that any recovery, or liability under pending litigation or administrative proceedings would not materially affect its financial condition or operations. CAMERON ASHLEY: Court Issues Temporary Restraining Order Re Buyout ------------------------------------------------------------------ Beginning in January 2000, shareholders of Cameron Ashley Building Products Inc. (NYSE:CAB) represented by counsel including Milberg Weiss Bershad Hynes & Lerach LLP commenced actions alleging breaches of the fiduciary duties owed by Cameron Ashley's directors to Cameron's shareholders in connection with a management-led buyout of the Company for $15.10 per share. On Feb. 25, 2000, after extensive briefing and oral argument, a Dallas County Court granted plaintiff's application to temporarily restrain Cameron and its directors from complying with certain portions of the Jan. 17, 2000 Merger Agreement between Cameron and an affiliate of several Cameron directors. The Court's order prohibits the Defendants from making any payment pursuant to the Termination Fee provision and/or proceeding with, abiding by and/or honoring the No Shop provisions which plaintiff asserted impaired the transfer of information to third party bidders and unfairly favored the management-led buyout group over other bidders. By subsequent agreement of the parties, the temporary restraining order will be extended until April 27, 2000, at which time the Court will consider a hearing on plaintiffs motion for a temporary injunction pending trial. Plaintiffs wish to encourage all interested bidders to contact Cameron director Lawrence R. Klamon and/or his counsel Locke Liddell & Sapp LLP at 214/740-8000 to discuss the submission any offers to purchase Cameron. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William S. Lerach, 800/449-4900 msl@mwbhl.com CENDANT CORP: Rate Set in Formerly Announced Settlement of PRIDES Case ---------------------------------------------------------------------- Cendant Corporation (NYSE: CD) announced the settlement rate for the new PRIDES being issued in connection with its previously announced settlement of the PRIDES class action lawsuit for persons who purchased these securities on or prior to April 15, 1998. The number of shares to be purchased by each holder of new FELINE PRIDES on settlement of each purchase contract will be 2.3036. As previously announced in a press release issued on March 18, 1999: Holders of PRIDES on April 15, 1998 whose claims were approved by the court will receive a new security -- a Right -- for each PRIDES security held on April 15, 1998. The Rights will be freely tradable from the date of distribution until their expiration on February 14, 2001. At any time during the life of the Rights, holders may (a) sell them (the Rights will be listed on the NYSE) or (b) exercise them by delivering to Bank One Trust Company, National Association, as Rights agent, three Rights together with two PRIDES. Rights may only be exercised if they are first deposited with a participant in The Depository Trust Company. Exercising Right holders will receive in exchange two new PRIDES. The 3 for 2 ratio was designed to make the value of Rights less dependent upon the availability of PRIDES in the open market. The terms of the new PRIDES will be the same as the currently outstanding PRIDES, except that the conversion rate has been revised so that the number of shares of Cendant common stock to be received upon the mandatory purchase of common stock associated with the PRIDES in February 2001 will be increased to 2.3036 shares. A Prospectus Supplement relating to the offering of the new PRIDES may be obtained by contacting the Information Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated at 212-236-3790. CENDANT CORP: Repaid By Ex-Chairman after Resolution of Securities Suit ----------------------------------------------------------------------- The Cendant Corporation's former chairman, Walter Forbes, has repaid about $2.3 million in travel- and entertainment-related expenses that the company said Mr. Forbes charged improperly, according to the New York Times. The payment comes after a Federal District Court judge ruled that he had jurisdiction to decide whether Mr. Forbes must abide by a previous agreement to reimburse the New York-based marketing and franchising company, if an audit committee concluded he owed money, the New York Times notes. Cendant is planning to use the ruling to force Mr. Forbes, who resigned in 1998, to return his $47 million severance package, according to The Wall Street Journal, which first reported the $2.3 million payment, the report says. Cendant said in court documents that Mr. Forbes improperly charged the company for personal use of a leased jet, charge card expenses and cash advances. Cendant's brands include the Century 21 and Coldwell Banker residential realty brokerage firms and Days Inn hotels, the New York Times notes. The company was formed in 1997 by the combination of Mr. Forbes's CUC International Inc. and Henry Silverman's HFS Inc., the report mentions. Shortly after the merger, the new company said accounting irregularities inflated the CUC earnings. That eventually led to an agreement in December to pay $2.83 billion to settle a class-action lawsuit accusing the company of defrauding shareholders. Those cases have been reported in the CAR. CINAR CORP: Bernstein Liebhard Files Securities Suit in New York ---------------------------------------------------------------- Bernstein Liebhard & Lifshitz, LLP announced the commencement of a securities class action lawsuit on behalf of purchasers of the common stock of CINAR Corporation (Nasdaq: CINR), between February 4, 1999 and March 6, 2000, inclusive, in the United States District Court for the Eastern District of New York. The complaint charges CINAR and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading financial statements that materially overstated the Company's revenues, income and earnings during the Class Period. The complaint alleges that the Company engaged in a scheme in which it misrepresented that scripts for television productions were written by Canadian citizens when, in fact, they were written by U.S. citizens so that the Company could obtain favorable tax credits. This allowed CINAR to inflate its financial results which caused CINAR stock to trade at artificially inflated levels throughout the Class Period. Contact: Mr. Mark Punzalan, Director of Shareholder Relations at Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, 800-217-1522 or 212-779-1414 or by e-mail at CINAR@bernlieb.com CINAR CORP: Shareholders in Talks with Potential Suitors -------------------------------------------------------- One of Cinar Corp.'s largest shareholders says he has held discussions with two Canadian entertainment companies that may be interested in buying a stake in the embattled Montreal-based animation company. The news came after Cinar announced that its total risk on the investments made without its board's approval could be as much as US $86-million. The shareholder, who did not wish to be identified, named CanWest Global Communications Corp., Corus Entertainment Inc., Nelvana Ltd. and Lions Gate Entertainment Corp. as likely bidders for Cinar. He confirmed he had held conversations with two of the companies. As of December, Cinar's largest shareholders included Fidelity Management & Research Co., with 15%; John McStay Investments, with 8%; Edgemont Asset Management, with 4.5%; and Alliance Capital Management with 4%. Roman Doroniuk, president of Lions Gate, said: 'We look at every opportunity presented to us -- making a decision is another matter.' John Cassaday, chief executive of Corus, said he has had no discussions with 'any Cinar shareholders.' Karen Fisman, an analyst with Thomson Kernaghan & Co. Ltd., said Cinar's announcement on the $86-million in investments has helped clear up some of the confusion surrounding the unauthorized funds, and likely contributed to the stock's slight recovery. Shares in Cinar climbed 24% to close at $10.35 on the Toronto Stock Exchange, one day after they plunged nearly 70%. 'It allows investors to quantify the damage, whereas before that the damage was unknown,' Ms. Fisman said. Cinar announced on March 8 it had recovered more than $35-million (US) of improperly invested funds, leaving the whereabouts of the remaining $86-million a mystery. 'We issued it [the press release] to assure investors that the worst-case scenario is exposure of $86-million,' said a Cinar spokeswoman. 'We are not saying [the money] isn't there, we aren't saying it is. We are saying this is the worst-case scenario and we are still working on it.' While analysts and shareholders seemed generally relieved the money hadn't been pledged against derivative securities, they pointed to the low share price as a sign the market had lost confidence in the company and repeated their demands the company be sold. COASTAL, JAVELINA: Refineries Pay, Ending 7-Yr Suit over Contamination ---------------------------------------------------------------------- Two refineries will pay $6 million to 3,300 Corpus Christi households in a settlement that has taken almost seven years to reach. The lawsuit alleged that the refineries were liable for air and ground contamination and damage to properties. The settlement with Coastal and Javelina marks the end of a class-action lawsuit that began more than seven years ago. The plaintiffs originally sued several refinery companies, and all but two of the defendants -- Coastal and Javelina -- settled over the past few years. The other companies will pay more than $18 million as part of those other settlements, for a total award of about $24.5 million. Coastal Corp. operates the Coastal and Javelina refineries in Corpus Christi, and those two refineries were the only defendants to go to a jury trial. The Coastal and Javelina trial started in January but ended in a mistrial two weeks later after a witness gave testimony that had been previously ruled inadmissible by a judge. The trial began again with a second jury on Feb. 17, and the settlement was reached before the jury started its deliberations, said Steve Hastings, one of about seven lawyers representing the plaintiffs. Plaintiffs' lawyers are expected to make between $5.3 million and $6 million from the settlement, with the remainder of the more than $24.5 million divided proportionately among the plaintiffs, depending on how close they live to the refineries. In earlier out-of-court settlements with refineries, Amerada Hess paid $2.2 million, Southwestern paid $6.9 million, Champlin paid $1.6 million, and OxyChem paid $575,000. Those settlements already have been distributed to the plaintiffs. (Austin American-Statesman, March 8, 2000) COREL CORP: NY Ct Preliminarily OKs Securities Suit Filed in 1998 ----------------------------------------------------------------- On or about February 23, 1998, the Company became aware that a class action lawsuit had been filed against it by named Plaintiff Great Neck Capital Appreciation Investment Partnership in the United States District Court for the Eastern District of New York. The complaint also names as co-defendants Dr. Michael C. J. Cowpland, Corel's Chairman, President and Chief Executive Officer, and Mr. Charles Norris, Corel's former Vice President, Finance and Chief Financial Officer. The complaint was filed on behalf of all persons who purchased or otherwise acquired Corel common shares between March 26, 1997 and January 20, 1998. The complaint alleges that the defendants violated various provisions of the federal securities laws, including Section 10(b) and 10(a) of the Securities Exchange Act of 1934, as amended, and Securities and Exchange Commission Rule 10b-5, by misrepresenting or failing to disclose material information about Corel's financial condition. The complaint alleges that the defendants issued false and misleading press releases and financial statements for the first three quarters of fiscal 1997. Plaintiff alleges, in part, that defendants (a) failed to disclose that they were overstating Corel's reported profits by, among other things, inflating reported revenues and earnings through improperly recognizing revenue on Java technology exchange transactions, and (b) overstated revenues and earnings by understating reserves in connection with sales to distributors who had no obligation to keep or pay for the products. The complaint also alleges that Corel insiders, including the individual co-defendants, sold common shares during the Class Period at "artificially inflated prices". The complaint seeks an unspecified amount of money damages. The Great Neck complaint was consolidated by order dated June 1, 1998 with four other previously filed complaints: Giskan, Meyer, Mangold and Hagler. Also on June 1, 1998, the court approved the plaintiff's motion for the appointment of lead plaintiff and lead counsel. The firm of Wechsler Harwood Halebian & Feffer is counsel of record. Great Neck (as lead plaintiff) filed a consolidated amended complaint on behalf of lead plaintiff and the class on September 9, 1998 (the "Consolidated Complaint"). The Consolidated Complaint references a revised Class Period (it has been filed on behalf of all persons who purchased or otherwise acquired Corel common shares between January 15, 1997 and January 20, 1998); however, plaintiffs' theories from the individual complaints (as summarized above) remain the same. On November 9, 1998, the Company filed a Motion to Dismiss the Consolidated Complaint in its entirety. On December 30, 1998, Plaintiffs filed a related Motion to strike certain documents referred to in the Company's Motion to Dismiss. Both motions were fully briefed by February 12, 1999. On June 18, 1999, the Company filed a second Motion to Dismiss on the grounds of forum non conveniens. On September 1, 1999, the parties entered into a Memorandum of Understanding and agreed in principle to settle this litigation. On January 13, 2000, the parties executed a Settlement Agreement, subject to approval of the Court. On January 14, 2000, the parties requested that the Court (a) preliminarily approve the proposed settlement; (b) schedule a final settlement hearing; and, (c) direct that notice of the proposed settlement be given to the members of the class. Corel's motions to dismiss (as described above) have been denied as moot, pending approval of the proposed settlement. On February 7, 2000, the Court preliminarily approved the proposed settlement and fixed May 12, 2000 as the date for the settlement hearing. FEDERAL RESERVE: Target of D.C. Suit over Mismanagement of Pension Fund ----------------------------------------------------------------------- Michael Bentzen, of Washington, D.C.'s Hughes & Bentzen, has filed a class action on behalf of employees of the Federal Reserve Board who allege mismanagement of their pension fund. Asst. General Counsel Katherine H. Wheatley is defending the case for the Fed. In 1985, the Fed stopped contributing to the pension fund because it already had 130% of the amount needed for future payouts. However, it never stopped deducting contributions from employee pay. While the Fed benefited from the stock market boom and a fund surplus that would eventually roll back to it, employees say, they missed the full investment opportunities of their contributions. The suit was filed on Feb. 18 in federal court in Washington, D.C. Albrecht v. Committee on Employee Benefits of the Federal Reserve Employee Benefit System, No. 1:00CV-00317. (The National Law Journal, March 6, 2000) FOCUS ENHANCEMENTS: Milberg Weiss Files Securities Suit in MA ------------------------------------------------------------- A class action lawsuit was filed on March 8, 2000, in the United States District Court for the District of Massachusetts on behalf of all persons who purchased the common stock of Focus Enhancements, Inc. (Nasdaq: FCSE "Focus") between April 29, 1999 through March 1, 2000, announced the law firm Milberg Weiss Bershad Hynes. Contact: Milberg Weiss Bershad Hynes, New York Shareholders Services Dept. 1-800-320-5081 E-Mail: endfraud@mwbhlny.com FOCUS ENHANCEMENTS: Shapiro Haber Files Securities Suit in MA ------------------------------------------------------------- A class action suit alleging securities fraud has been filed in the United States District Court for the District of Massachusetts against Focus Enhancements, Inc. (Nasdaq: FCSE) and certain of its officers and directors, by the Boston law firm Shapiro Haber & Urmy LLP. The case was filed on behalf of all persons who purchased Focus Enhancements common stock during the period April 29, 1999 through March 1, 2000, inclusive. The lawsuit, which seeks class action status, is brought for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The action charges that Focus improperly reported its financial results including revenues and income in its public filings with the Securities and Exchange Commission and in its press releases for each quarter in the fiscal year 1999. On March 1, 2000, Focus disclosed that its independent auditors had brought to the Board of Directors' attention financial controls issues relating to the fiscal year ending December 31, 1999 and prior quarters. The Board has designated a committee to investigate the matter. The Company's President and CFO have agreed to a leave of absence from the Company during the committee's review. Contact: Thomas Shapiro, Esq. or Lisa Palin, paralegal, Shapiro Haber & Urmy LLP, 75 State Street, Boston, MA 02109, 800-287-8119, fax at 617-439-0134, or e-mail at cases@shulaw.com FOCUS ENHANCEMENTS: Stull Stull Files Securities Lawsuit in MA -------------------------------------------------------------- The law firm of Stull Stull & Brody announces that a class action has been commenced in the United States District Court for the District of Massachusetts on behalf of all persons who purchased the common stock of Focus Enhancements Inc. (NASDAQ:FCSE) between April 29, 1999 and March 1, 2000, inclusive. The complaint charges Focus Enhancements and certain of its executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading financial statements for fiscal year 1999. On March 1, 2000, the Company announced that its independent auditors had informed the board that it had discovered certain irregularities relating to the Company's financial controls for fiscal 1999 and prior quarters. The Company's Board announced that it formed a committee to investigate the matter. Additionally, two of the Company's top officers were placed on leave and will cooperate with the committee's review. Contact: Tzivia Brody, Esq. at Stull Stull & Brody by calling toll free 1-800-337-4983, or by e-mail at SSBNY@aol.com, or by facsimile at 212-490-2022, or by writing to Stull Stull & Brody, 6 East 45th Street, New York, NY 10017 HERTZ GAS: Charge Fuels Suits; Claims over Concealment Given Go-ahead --------------------------------------------------------------------- San Francisco Peter Schnall rented a car and didn't fill up the gas tank before returning it, and it cost him $ 3.19 per gallon. That doesn't count the filing fees for his class action against The Hertz Corp. Schnall's suit got the go-ahead from California's 1st District Court of Appeal on March 8. The court found that Schnall's claim that Hertz unfairly and fraudulently concealed or obscured the fuel-service charge on the rental agreement constituted a cause of action under the state's Unfair Competition Law. "The fact that the per gallon rate is not disclosed in the rental agreement but only in the rental record, a small and hard-to-read document consisting for the most part of indecipherable abbreviations, may be indicative of an intent to conceal this important information," wrote Justice J. Anthony Kline in Schnall v. The Hertz Corp.. "The need for a separate document is unclear to begin with. "The suit had been thrown out on a demurrer by San Francisco Superior Court Judge David Garcia on the basis that the rental agreement unambiguously explained the various refueling options returning a car with a full tank, paying Hertz up front for a full tank of gas or paying Hertz a refueling charge.Kline, with Justices Paul Haerle and Ignazio Ruvolo concurring, concluded that Hertz's demurrer could not be sustained, as it would improperly relieve Hertz "of the need to explain and justify its conduct, or show that customers were not misled by that conduct to their detriment." Nevertheless, the justices showed little sympathy for renters who agree to return a car with a full tank but then fail to do so. Specifically, they wrote they were "unimpressed" with Schnall's argument that renters who intend to return a rental car with a full tank are often prevented from doing so by exigencies such as traffic delays they didn't anticipate. And the justices even rejected the complaint's claim that the amount of the fuel-service charge constitutes a cause of action under the Unfair Competition Law. The justices cited a section of the law they said "reflects a legislative intention to let the market, not the courts, determine the reasonableness of avoidable charges for optional services." But the justices drew the line on contract agreements that may be misconstrued by customers, saying that the "deceptive practice the complaint describes is precisely the type the UCL [Unfair Competition Law] was designed to address." The failure of a rental car company to make it clear to customers that an avoidable charge is considerably higher than the retail rate for an item or service, which in the absence of contrary information many would expect to apply, would doubtless encourage some and perhaps many customers to incur a fuel-service charge they could and would otherwise avoid," the opinion concluded. (This story originally appeared in The Recorder and was published in The Legal Intelligencer, March 9, 2000 HMO: Lawyers, Blue Cross Haggle over Fees in Missouri Settlement ---------------------------------------------------------------- Three court-appointed lawyers are asking to be paid for their work in assessing the fairness of a settlement creating the state's largest health care foundation from a suit involving Blue Cross and Blue Shield of Missouri. The lawyers are not saying publicly how much they hope to be paid, or even how many hours they worked. If the fees were based on a percentage of the settlement as they suggest, they could reap millions -- money that would come out of a fund earmarked for health care for the poor. The Attorney General's office and representatives of Blue Cross say such a percentage would be inappropriate, because the lawyers would be profiting from a settlement they were hired to review impartially. The lawyers are Robert G. Russell, a former judge now in private practice in Sedalia; Dale C. Doerhoff and James W. Gallaher, both of Jefferson City. Cole County Circuit Judge Thomas G. Brown III appointed them to conduct an impartial assessment of a settlement proposed in the Blue Cross suit. The lawyers want Brown to decide their fee. Because the fee award will be paid by Blue Cross before the insurer's assets are transferred to create the Missouri Foundation for Health, the legal bill will reduce the endowment of a foundation meant to support health services for low-income and under-served people. The three court-appointed lawyers came relatively late to the case, which started in 1994 when Blue Cross created RightChoice Managed Care Inc. as a for-profit subsidiary. Blue Cross gave Rightchoice all its profitable insurance business in exchange for 80 percent of RightChoice stock. Regulators challenged the conversion, and Brown ruled it violated Missouri non-profit laws. Having lost in the Circuit Court, Blue Cross negotiated a settlement with regulators. It offered $ 175,000 in cash and all its RightChoice stock to endow an independent foundation. Under the terms of the deal, RightChoice continues as a for-profit insurance company and insurance coverage is uninterrupted to Blue Cross and RightChoice policy holders. Brown wanted an all-cash deal. He said the settlement was unacceptable because it allowed RightChoice to control RightChoice stock owned by the foundation, its super-majority shareholder. So he appointed the three lawyers in the fall of 1998 to review the settlement. The review process stretched over 14 months and ended in January when, unable to win Brown's approval of the settlement, Blue Cross and state regulators withdrew their lawsuits from Cole County Circuit Court and announced an out-of-court settlement. The regulators, Blue Cross and lawyers representing 100 state consumer groups reached an amended agreement that loosened some restrictions on the foundation's stock and added $ 12.78 million in start-up cash to the foundation. Russell and Brown rejected the amended settlement. At March 8's closing stock price, the amended settlement was worth slightly under $ 200 million. In a fee motion filed recently with Brown's court, Doerhoff and Gallaher said it would be appropriate for them and Russell to be paid a reasonable amount based on the "percentage of benefit" they contributed to the case. The motion does not specify the benefit they claim nor does it request a set percentage of that unidentified common fund it should be drawn from. They cite case law where lawyers who worked on contingency in class action cases received up to 30 percent of a common fund derived from such suits. Blue Cross said that unlike plaintiff lawyers in class action cases, Doerhoff, Gallaher and Russell were not parties to the case and were never at risk of not being paid for their work. Doerhoff and Gallaher both declined to be interviewed for this story and Russell did not return a reporter's phone call. Their fee request is scheduled for a hearing in Brown's court April 7. Blue Cross and the Attorney General both argue that the special master added no apparent benefit to the final settlement, and the chief product of the review process was to delay the settlement and the foundation's formation. Blue Cross and the Attorney General said the three lawyers are asking Brown to determine their compensation without submitting an accounting of the hours worked, the tasks performed and their usual hourly fee. They said that without this information, there is no way for Brown to determine a fair and reasonable fee. John Ammann assistant professor and director of the Civil Clinic at St. Louis University Law School, is familiar with procedure in class action cases. He said when lawyers take a case on contingency they have an up-front fee agreement. With the court review terminated, it is late in the process for the court's lawyers to raise the prospect of a claim to a percentage of some common fund, Ammann said. "As a fellow lawyer, I don't know what's wrong with charging a fair hourly rate. These guys aren't working for minimum wage." (St. Louis Post-Dispatch, March 9, 2000) HOME DEPOT: Faces Minority Employees' Lawsuit; Engages King & Spalding ---------------------------------------------------------------------- Home Depot, which faces a racial discrimination lawsuit filed by employees at a Michigan store and investors' requests for employment data, as reported in the CAR, is a client on King & Spalding's roster, Fulton County Daily Report says. According to the Fulton County Daily Report, two labor and employment partners, John F. Wymer III, formerly head of Powell, Goldstein's employment group, and Samuel M. Matchett, have joined King & Spalding, which says that the addition of Wymer and Matchett helps the firm strengthen its representation of the retailer. The Fulton County Daily Report says that five former and current employees from the Austell, Ga. store sued the retailer in U.S. District Court, claiming it discriminated against African-American workers. The plaintiffs are seeking class status. HORNER, TOWNSEND: Investors in The American Benefits Services Sue in CA ----------------------------------------------------------------------- A class action entitled Lubin v. Horner, Townsend & Kent, Inc., et al., Civ. 00-CV-0113 L (POR) was commenced in the United States District Court for the Southern District of California, by plaintiffs Jack B. Lubin and Rosalie Lubin, Samuel N. Denyer and Betty A. Denyer on behalf of themselves and all investors in the American Benefits Services and Financial Federated Title & Trust Viatical Settlement Program during the period of January 1, 1996 through August 31, 1999. The complaint alleges that defendants illegally sold viaticated insurance policies as investment contracts and charges defendants with negligence and violating the federal securities laws, specifically Sections 12(a)(1) and 12(a)(2) of the 1933 Securities Act which prohibit the sale of unregistered securities. Among other things, the complaint alleges that during the Class Period, at least $115 million in investor monies were raised through a sales network of insurance agents, financial planners, brokers and securities sales persons and companies. Contact: plaintiffs' counsel James C. Krause, Esq., KRAUSE & KALFAYAN, 1010 Second Avenue, Suite 1750, San Diego, CA 92101, Tel: (619) 232-0331. For further information: visit website at http://www.lawyers.com/krausekalfayanor e-mail James C. Krause at: jkrause@krausekalfayan.com INACOM CORP: Bernard M. Gross Files Securities Suit in Nebraska --------------------------------------------------------------- Law Offices Bernard M. Gross gives notice that a class action lawsuit was filed on February 24, 2000, in the United States District Court for the District of Nebraska, on behalf of all persons and entities who purchased or otherwise acquired the common stock of Inacom Corporation (NYSE: ICO), between October 9, 1998 and January 4, 2000, inclusive, including those who acquired Inacom stock as a result of the stock-for-stock merger with Vanstar. The complaint charges Inacom and several of its senior officers and directors with violations of Sections 11, 12 and 15 of the Securities Act of 1933 as well as Sections 10(b), 14(a)(9) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that Inacom issued materially false and misleading statements regarding its ability to recognize growth and remain profitable in light of significant changes in manufacturers' distribution of computers, which defendants knew or recklessly disregarded. As a result of these materially false and misleading statements, among others, plaintiff alleges that the price of Inacom common stock was artificially inflated during the Class Period. Contact: Law Offices Bernard M. Gross, P.C. Susan Gross, Esq. Tina Moukoulis, Esq. 1500 Walnut Street, Suite 600 Philadelphia, PA 19102, Telephone: 800/849-3120 or 215/561-3600, E-mail: susang@bernardmgross.com or tina@bernardmgross.com Website:http://www.bernardmgross.com INFORMATION MANAGEMENT: Bernstein Liebhard Files Securities Suit in CT ---------------------------------------------------------------------- A securities class action lawsuit was commenced on behalf of purchasers of the common stock of Information Management, Inc. (Nasdaq: IMAA), between August 12, 1999 and November 18, 1999, inclusivE, in the United States District Court for the District of Connecticut. The complaint charges Information Management and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading financial statements that materially overstated the Company's revenues, income and earnings for the second quarter of 1999. As a result, Information Management stock traded at artificially inflated levels throughout the Class Period. The complaint alleges that certain Company insiders took advantage of the inflated price for the Company's stock to sell substantial amounts of their own shares to the investing public. Contact: Mark Punzalan, Director of Shareholder Relations of Bernstein Liebhard & Lifshitz, LLP, 800-217-1522 or 212-779-1414 or IMAA@bernlieb.com IVAX CORP: Shareholder Sues over Poison Pill in Shareholder Rights Plan ----------------------------------------------------------------------- Miami drug maker Ivax Corp. is being sued by one of its shareholders, who believes a new company policy takes powers away from the board of directors and could jeopardize the future value of the company. The suit seeks class-action status to represent shareholders affected by the plan. Sidney Goldfisher, a medical practitioner and shareholder, filed the complaint on March 7 in Miami-Dade Circuit Court. His attorney, Daniel Becka of Schoeppl and Burke in Boca Raton, said his client is upset over the company's 1997 decision to pass a shareholder rights plan, which is designed to prevent a hostile takeover. As part of the new plan, Ivax installed continuing directors on the board, giving them powers that Florida law only confers on regular board members, Becka says. Though current board members also happen to be continuing directors, the change is significant, he said. When it comes to selecting directors, the plan effectively deprives shareholders of the right to vote for anyone other than the incumbent directors or their successors, the complaint says. This disenfranchises shareholders, Becka said. The plan allows current continuing directors to essentially pick their successors until the term of the plan is complete, Becka said. The plan also devalues shares, the complaint charges, by depriving shareholders the opportunity to entertain reasonable takeover offers for their shares. The plan provides for what's called a poison pill. If a hostile takeover occurs, Ivax can increase the number of shares by selling off assets. A party attempting the takeover then would have to spend considerably more money buying the increased shares, making the deal more costly. Ivax reported fourth-quarter 1999 net income of $ 29.7 million on revenue of $ 196.4 million. Year-end net income was $ 70.7 million on revenue of $ 669.3 million. (Broward Daily Business Review, March 9, 2000) LEHMAN BROTHERS: Named in NY Suits against Underwriters of IPO -------------------------------------------------------------- Beginning in November, 1998, three class actions were filed in the United States District Court for the Southern District of New York against in excess of 25 underwriters of IPO securities, including LBI. Plaintiffs in these cases seek compensatory and injunctive relief for alleged violations of the antitrust laws based on the theory that the defendant underwriters fixed and maintained fees for underwriting certain IPO securities at supracompetitive levels. These lawsuits are: HAROLD GILLET, ET AL. V. GOLDMAN SACHS & CO., ET AL.; YAKOV PRAGER, ET AL. V.GOLDMAN, SACHS & CO., ET AL.; DAVID HOLZMAN, ET AL. V. GOLDMAN, SACHS & CO., ET AL. On March 15, 1999, plaintiffs filed a Consolidated Amended Complaint. LEHMAN BROTHERS: Settles for '96 NJ Suit Re MobileMedia Underwriting -------------------------------------------------------------------- LEHMAN BROTHERS INC was named as a defendant in several purported class actions filed in December, 1996 in the United States District Court for the District of New Jersey in connection with (I) a November 7, 1995 offering of common stock of MobileMedia Corporation; and (ii) a November 7, 1995 offering of 9 3/8% senior subordinated notes of MobileMedia Communications Inc. due in 2007. On November 3, 1997, a consolidated amended class action complaint was filed naming certain of MobileMedia Corporation's officers and directors and the four co-lead underwriters of these offerings, including LBI. MobileMedia filed for Chapter 11 bankruptcy protection on January 30, 1997, and therefore was not named as a defendant. The complaint alleged that the underwriters violated Sections 11 and 12 of the Securities Act. Plaintiffs sought rescission and unspecified compensatory damages. On February 7, 2000, the Court orally approved a settlement of the action and indicated that it would enter a Final Judgment and Order upon presentation by the parties. MICHAEL COWPLAND: Corel's CEO Sued by Ontario Securities Commission ------------------------------------------------------------------- On October 14, 1999, the Ontario Securities Commission filed charges against Michael Cowpland, Corel Corp's chairman, president and chief executive officer and his holding company, M.C.J.C. Holdings Inc., in the Ontario Court of Justice. The charges include four counts of violating provisions of the Ontario Securities Act related to insider trading. The Company and Michael Cowpland continue to deny all allegations by the Ontario Securities Commission. The trial of these issues is a private matter between the Ontario Securities Commission and Michael Cowpland as an individual. As such, it is not expected to affect the Company's day-to-day activities. MICHAEL STORES: Recalls All-purpose Lighters That Can Leak Butane ----------------------------------------------------------------- In cooperation with the U.S. Consumer Product Safety Commission (CPSC), Michael's Stores Inc., of Irving, Texas, is recalling about 213,000 all-purpose lighters. These lighters can leak butane when they are ignited, causing an excessive burst of flame from the tip or other areas of the lighter. This presents a risk of fire and burn injuries to consumers. Michael's Stores Inc. has received 14 reports of excessive flame, resulting in three reports of burns to consumers' hands. The recalled all-purpose lighters are refillable and contain butane. They are about 9 inches long and have a white plastic base; red, green or blue plastic handle with a black plastic trigger and on/off switch; and a metal barrel. A yellow label is affixed to the handle and reads in part, "DANGER: EXTREMELY FLAMMABLE CONTENTS UNDER PRESSURE...MADE IN CHINA." The lighters were packaged in a cardboard display sleeve under the brand name Handy Home. The brand name is not on the lighter. Michael's Stores nationwide sold the lighters from July 1998 through January 2000 for about $2. PROCTER & GAMBLE: Pomerantz Haudek Files Securities Suit in Ohio ---------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP (http://www.pomerantzlaw.com)has filed a class action suit against Procter & Gamble (NYSE: PG) and two of the Company's officers. The case was filed in the United States District Court for the Southern District of Ohio, Western Division at Cincinnati on behalf of all those who purchased the common stock of Procter & Gamble during the period between January 25, 2000 and March 6, 2000 inclusive. The Complaint charges that Procter & Gamble and its officers violated Sections 10(b) and 20 (a) of the Securities Exchange Act of 1934 by issuing a series of materially false and misleading statements during the Class Period regarding the Company's financial and operating condition, as well as its future prospects which allegedly gave the impression that the Company was experiencing successful financial growth in line with an ambitious restructuring plan. Instead, the Company was allegedly experiencing less than stellar growth due to high raw material prices, high product launch costs in Europe, delay in the approval of the drug Actonel, strong North American competition in food and beverages, and increased price competition in the Latin American laundry detergent segment, all of which was not disclosed to the public. On March 7, 2000, Procter & Gamble stunned the market when it announced that its third quarter earnings per share were 10 to 11 percent below those of a year ago, rather than the 7 to 9 percent increase it had led the market to anticipate, and that the Company expected earnings per share growth for the fiscal year to be 7 percent, compared to the 13 percent originally anticipated. The market reaction to the news was both swift and disastrous; the price of Procter & Gamble's common stock plunged approximately 31%. Contact: Andrew G. Tolan, Esq. of Pomerantz Haudek Block Grossman & Gross LLP, 888-476-6529 (888-4-POMLAW) or agtolan@pomlaw.com PROVIDIAN FINANCIAL: Regulators Pressure to Settle Fraud Probes --------------------------------------------------------------- The San Francisco district attorney's office and federal bank regulators are exploring a joint settlement of consumer fraud allegations against credit card giant Providian Financial Corp., The Chronicle has learned. The move significantly raises the ante in the high-profile case, increasing pessure on Providian to come to terms with authorities. "If you get both agencies together, the incentive is bigger to settle," said Larkspur attorney Steven Saxe, a specialist in banking law. "You can kill two birds with one stone." The allegations against the eighth-largest credit card issuer cover a broad range of issues, including levying late fees against customers who had paid on time, charging consumers for credit insurance and other products they had not ordered, and providing deceptive information about interest rates. The accusations came to light 10 months ago when the district attorney's office confirmed that it was investigating complaints against the company. Providian has said it never intentionally harmed consumers and voluntarily repaid customers who were accidentally charged improper late fees. It recently began a pay-by-phone service that allows customers to avoid the delays of the postal system. Representatives of the district attorney's office and the office of the comptroller of the currency met with Providian to explore whether joint settlement of the agencies' separate investigations of the San Francisco company might be possible, people familiar with the matter said. The meeting was said to be preliminary and did not involve negotiations to settle consumer abuse allegations against Providian. Rather, the two agencies outlined the alleged abuses their reviews had uncovered in an attempt to determine whether three-way settlement talks might be warranted, the representatives said. No follow-up meeting is scheduled yet. The comptroller of the currency's investigation of Providian is one of the first wide-ranging consumer enforcement actions by an agency that generally focuses on the financial soundness of banks. "We have previously confirmed that we are having settlement talks with the district attorney's office," Providian spokesman Konrad Alt said. The company is prohibited by law from commenting on discussions with bank regulators, he noted. Risky Procedure For Providian, the latest development is fraught with risk. Legal experts said the double-barreled enforcement action presents a greater opportunity and a greater threat than separate investigations by the office of the comptroller of the currency and the district attorney's office. On the one hand, Providian may now be able to reach a single agreement that satisfies the two most aggressive law enforcement agencies pursuing it. In addition, the agencies' combined prestige could dissuade other authorities from taking action against the company. Providian is also under investigation by the Connecticut attorney general and faces several consumer lawsuits seeking class-action status. But the San Francisco and the comptroller of the currency cases are generally viewed as the most serious legal challenges to the company. But a breakdown of talks could lead to a two-pronged legal assault, with both agencies able to impose their own sets of sanctions. The district attorney's office could bring civil or -- less likely -- criminal charges, which could lead to hefty fines, force Providian to repay damaged customers and a court-order to halt allegedly abusive practices. The office of the comptroller of the currency could force changes in policies and procedures, require reimbursements to customers and, ultimately, impose fines and oust senior executives. Common Strategy May Be Elusive Legal experts said they presumed that the two agencies are sharing the findings of their investigations to the extent the law permits. That could strengthen the hands of San Francisco prosecutors should they choose to go their own way. The allegations against Providian caused a sensation last year, prompting the company to rewrite some telemarketing scripts and other sales materials, and adopt an "enhanced customer satisfaction program" that includes a two-day grace period for receiving credit card payments. Details of previous settlement talks between Providian and the district attorney's office could not be determined. Legal experts said elements of agreements in this sort of consumer case typically include financial sanctions and halts to improper practices. Probe Began Last June The comptroller's investigation of Providian began last June as part of the its regular examination of the company. Providian issues some of its credit cards through a nationally chartered bank in New Hampshire, putting it under the agency's jurisdiction. The main mission of the comptroller's office is to protect the financial health of the banks it regulates. But, over the last year, the agency has advanced the more-expansive doctrine that customer service is a safety and soundness issue, because lawsuits and action by consumer protection agencies can cost banks money. Legal experts said the agency's investigation of Providian may be a precedent-setting case opening a wide array of consumer practices to agency scrutiny. (The San Francisco Chronicle, March 9, 2000) RETAILERS: Attorney to Sue over Gift Certificates with Expiration Dates ----------------------------------------------------------------------- Some of the nation's largest retailers are being accused of violating a 1997 state law by selling gift certificates or gift cards with expiration dates. A Santa Ana attorney said he is planning to file a lawsuit on March 9 in Orange County Superior Court on behalf of eight people who claim they purchased or received gift certificates with expiration dates. "After the expiration date , most people throw away the gift certificates without understanding the certificates are good indefinitely under California law," attorney Neil B. Fineman said. In all, more than 20 businesses, from large chains to smaller companies, are expected to be named as defendants. They include Target and J.C. Penney. It has been illegal for retailers to sell a gift certificate containing an expiration date in fine print since Jan. 1, 1997. "The reason for the law was that people were paying money for a gift certificate, so how could you have it expire?" said Tracey Weatherby, a public information officer for the California Department of Consumer Affairs. "Those who do not comply are breaking the law." Weatherby said the department has not kept statistics on the alleged violations because it has received few complaints. "It's not one of the No. 1 issues we get complaints on or even in the top 10," she said. Fineman said most of the expiration dates are printed in small letters and range from three months to two years. Some of the chains named by Fineman deny that they provide gift certificates with expiration dates. "I would presume that we are aware of the law," Target spokeswoman Carolyn Brookter said. "We don't have expiration dates." J.C. Penney is not issuing certificates with expiration dates, said spokeswoman Stephanie Brown. She could not say whether the company had issued certificates with expiration dates in the past. Fineman said some companies attempt to skirt the law by selling gift cards that may not have an expiration date but contain hidden charges. "What the holder of the card doesn't realize, unless they read the small print on the back, is that if the card is not used within a specific period of time, the store will deduct a 'nonuse service charge' each month from the card until the card is useless," he said. Fineman said he will seek an injunction to stop the retailers from continuing to enforce expiration dates and seeks to create a compensation fund for people who have discarded a gift certificate or a gift card they thought was worthless. The law was passed after similar allegations were raised earlier in the decade. In 1994, 18 retailers were named in a class-action lawsuit in San Diego County Superior Court for failing to honor gift certificates after expiration dates had elapsed. In an out-of-court settlement retailers agreed to add language stating that the gift certificates would be honored after any expiration date. The state Legislature later passed a bill prohibiting the use of expiration dates on these certificates, unless the expiration date is printed on the front of a gift certificate in at least 10-point type. Certificates for food products or charitable donations also are exempt. (Los Angeles Times, March 9, 2000) SAFETY-KLEEN CORP: Berger & Montague Files Securities Complaint in SC --------------------------------------------------------------------- The law firm of Berger & Montague, P.C. on behalf of its client, on March 8, 2000, filed a lawsuit in the United States District Court for the District of South Carolina, Columbia Division on behalf of all persons who purchased the common stock of Safety Kleen Corp. (NYSE:SK) during the period of July 7, 1998 through March 6, 2000 inclusive. The complaint charges Safety-Kleen and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading financial statements that materially overstated the Company's revenues, income and earnings during the Class Period. On March 6, 2000, Safety Kleen shocked the market by announcing in a press release that it "has initiated an internal investigation of its prior reported financial results and certain of its accounting policies and practices following receipt by the Company's Board of Directors of information alleging possible accounting irregularities that may have affected the previously reported financial results of the Company since fiscal year l998." Contact: Berger & Montague, P.C., Philadelphia Sherrie R. Savett, Esquire or Douglas M. Risen, Esquire or Kimberly A. Walker, Investor Relations Manager 215/875-3000 or 888/891-2289 Fax: 215/875-4604 Website: http://home.bm.nete-mail: InvestorProtect@bm.net SOTHEBY'S HOLDINGS: Bernard M. Gross Files Securities Suit in Michigan ---------------------------------------------------------------------- Law Offices Bernard M. Gross, P.C. gives notice that a class action complaint has been filed in the United States District Court for the Eastern District of Michigan on behalf of a Class of persons who purchased the common stock and options of Sotheby's Holdings, Inc. (NYSE: BID) at artificially inflated prices during the period February 11, 1997 through January 28, 2000 and who were damaged thereby. The Complaint charges Sotheby's and its senior officers with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants issued a series of false and misleading statements about the Company's revenues which resulted in artificially inflated stock prices during the Class Period. The complaint further alleges that defendants failed to disclose the Company's revenues were both reliant upon and unsustainable at the Class Period levels in the absence of an illegal price fixing arrangement with Christie's International PLC. Contact: Law Offices Bernard M. Gross, P.C. Susan Gross, Esq. Tina Moukoulis, Esq. 1500 Walnut Street, Suite 600 Philadelphia, PA 19102, Telephone: 800/849-3120 or 215/561-3600, E-mail: susang@bernardmgross.com or tina@bernardmgross.com Website:http://www.bernardmgross.com ST JOHN KNITS: Settles '98 Securities Fraud Suit in California -------------------------------------------------------------- On January 23, 2000 the Company reached an agreement in principle to settle a case filed in 1998 by Binary Traders, Inc. for $5 million, an amount the company's insurance carrier has agreed to pay. On October 13, 1998, Binary Traders, Inc. had filed a complaint on behalf of purchasers of publicly traded securities of St. John during the period of February 25, 1998 to August 20, 1998 against St. John, Bob Gray, and Kelly Gray in the United States District Court, Central District of California, Southern Division (Binary Traders, Inc. v. St. John Knits, Inc. et al.). The complaint, which sought class action certification, alleged that the defendants violated federal securities laws by allegedly making fraudulent statements during the Class Period and sought an unspecified amount of compensatory damages. The settlement is subject to court approval, which is expected to occur in the spring. ST JOHN KNITS: Trial for CA Lawsuit over Merger Set for May 2000 ---------------------------------------------------------------- On February 2, 1999, St. John entered into a merger agreement to be acquired by a group consisting of Vestar Capital Partners III, L.P. (Vestar) and Bob Gray, Marie Gray and Kelly Gray at an offer price of $30 per share. Pursuant to the agreement, on July 7, 1999, the Company consummated two mergers. As a result of the mergers, St. John became a wholly owned subsidiary of SJKI. The mergers were accounted for as a recapitalization. The operating results for all periods prior to the mergers consist entirely of the historical results of St. John and its subsidiaries. During fiscal 1997, the Company formed St. John Company, Ltd. in Japan to operate as a 51 percent owned subsidiary to distribute the Company's products in Japan. During fiscal 1998, the Company increased its ownership percentage to 68 percent. During fiscal 1997, the Company also formed Amen Wardy Home Stores, LLC, a 51 percent owned limited liability company. During fiscal 1999 the Company changed the name of this subsidiary to St. John Home Stores, LLC and now owns 100 percent of this entity. St. John Home operates two home furnishing stores and one outlet store. The operations of both entities are included in the accompanying consolidated financial statements. The Company is a party to six lawsuits that allege claims against some of St. John's current and former directors for breach of fiduciary duty alleged to have arisen in connection with the mergers. All of these lawsuits were filed in the Superior Court of the State of California for the County of Orange. The principal relief sought in the six actions is certification of the putative class and a rescission of the mergers, damages, and attorneys' fees in an unspecified amount. These six lawsuits were consolidated into one action on February 24, 1999. On April 15, 1999, the plaintiffs in this lawsuit filed a motion for a preliminary injunction seeking to prevent the mergers from proceeding. The preliminary injunction motion was heard by the California state court on April 28, 1999. On April 30, 1999, the court denied the plaintiffs' motion. In denying the plaintiffs' request, the court ruled that the plaintiffs had not shown a "reasonable probability" that they could succeed in proving at trial that the $30.00 per share offer in the mergers is unfair. Similarly, the court ruled that the plaintiffs were unlikely to show that the special committee of St. John's board of directors that evaluated and approved the terms of the mergers on behalf of St. John lacked independence or failed to "shop" St. John adequately to other buyers. While declining to grant the preliminary injunction, the court imposed a constructive trust which prevents the Grays from receiving in the mergers any amount for their St. John shares in excess of $30.00 per share until a full trial on the merits is held. Prior to the determination of the final terms of the stock options to be granted to the Grays after the mergers, the plaintiffs had argued that these options represent additional consideration for the Grays' St. John shares. It is the Company's belief that these employee stock options represent incentive c ompensation for the Grays' services as officers of St. John Knits International after the mergers and are not additional consideration for their St. John shares. The court also imposed a constructive trust preventing two of St. John's former directors from exercising options that were repriced by the board of directors in September 1998 until a full trial on the merits is held. It is the Company's belief that the September 1998 option repricing was not improper. The repricing was consistent with the repricing of options held by key employees of St. John, excluding the Grays. In imposing the constructive trusts, the court indicated that the plaintiffs had shown "reasonable probability" that they could succeed at trial in proving that the former St. John directors breached their fiduciary duties with respect to the repricing of the director options and the alleged preferential treatment of the Grays to the extent that the Grays receive a higher price for their shares than the public shareholders in the mergers. On January 20, 2000, the court issued a ruling denying summary judgment motions brought by both the plaintiffs and the defendants, with the exception of granting plaintiffs' motion to strike defendants' affirmative defense of ratification and also with the exception of granting the defendants' motion to dismiss plaintiffs' claim for unjust enrichment. Virtually all of the fact discovery has been completed and the court has set a May 8, 2000 trial date. On September 9, 1999, three of the plaintiffs filed another lawsuit in the Superior Court of the State of California, County of Orange, naming SJKI, Pearl Acquisition Corp., Vestar/Gray Investors LLC, SJK Acquisition, Inc., Vestar Capital Partners III, L.P., Vestar Capital Partners and Merrill Lynch, Pierce, Fenner & Smith, Inc. The plaintiffs claim that each of the defendants aided and abetted the breach of fiduciary duties alleged in their earlier actions against St. John, Bob Gray and Kelly Gray. Since the claims in this litigation are based exclusively on secondary liability and are completely contingent upon the success of the claims in the earlier action, on November 16, 1999, at the request of several defendants, the court stayed all proceedings in this litigation pending the outcome of the earlier action. The company indicates that it will contest these lawsuits vigorously if the plaintiffs elect to proceed with their actions. The company expects to incur legal and other defense costs as a result of such proceedings in an amount which it can not currently estimate. The Company believes these proceedings could involve a substantial diversion of the time of some of the members of management, and an adverse determination in, or settlement of, such litigation could involve payment of significant amounts, which could have an adverse impact on the company's business, financial condition, results of operations and cash flows. TOBACCO LITIGATION: Nurse's Cancer Not Caused By Smoking, Doctor Says --------------------------------------------------------------------- An oncologist testifying on behalf of Big Tobacco said a nurse representing all sick Florida smokers suffers from the type of cancer the jury found not to be caused by cigarettes. The tumors in each of Mary Farnan's lungs, which eventually spread to her brain, are a type of cancer referred to as non-small cell carcinoma, specifically B.A.C., Dr. Arnold S. Blaustein, of Mount Sinai Medical Center, testified on Wednesday, March 8 in Miami-Dade Circuit Court. The Miami doctor is probably the last witness who will be called to testify on behalf of Big Tobacco. At stake is a potentially industry-crippling punitive damage award of up to $ 300 billion. His testimony in the statewide class-action lawsuit against the country's five largest cigarette makers is the opposite of what several other doctors said when they were called to testify on behalf of the sick Florida smokers. A six-member jury found Big Tobacco guilty in July of engaging in "extreme and outrageous conduct" in selling and marketing their product while concealing its health hazards. Also during the trial's first phase, the jury found that tobacco produced a "defective product" that is addictive and causes cancer and other diseases. But the one type of cancer the jury did not find cigarettes responsible for was B.A.C. During this phase of the trial, the jury must decide whether the industry's actions can be linked to the lung and brain cancer that Farnan, a nurse in north Florida, suffers from, or the throat cancer that has prevented Frank Amodeo, an Orlando clockmaker, from eating or drinking during the past 12 years. Another sick smoker who was representing the class of sick Floridians, Angie Della Vecchia, died last year. If jurors find there is a link, they will be asked to determine an amount that Big Tobacco should pay to compensate Amodeo and Farnan for their illnesses. After that, the jury would be asked to decide how much the industry should pay in punitive damages to the estimated 500,000 Florida smokers who could be part of the class-action lawsuit. Under cross-examination by Stanley Rosenblatt, the lawyer for the smokers, Blaustein said he made his "clinical" diagnosis after reading Farnan's medical records. He never viewed a sample of the cancer cells from her body under a microscope, he said. The doctor also testified that it is not rare, at least at Mount Sinai, to see people who suffer from lung cancer with B.A.C. And he said he has never done any research on tobacco smoking. As he continued to try to chip away at the doctor's credibility with the jury, Rosenblatt questioned Blaustein about the $ 400 an hour the tobacco defense paid him to testify. Rosenblatt also brought up the medical malpractice trials that Blaustein testified in during the last 15 years, at least. During most of those trials, Blaustein said, he testified on behalf of the doctors or hospitals being sued. After Blaustein's testimony, the lawyers began arguing whether a deposition from a Miami psychologist, hired by Big Tobacco to examine Farnan and whether she was addicted to cigarettes, should be read into the court record. Those arguments are expected to continue this morning. The defendants are: R.J. Reynolds Tobacco Co., Philip Morris Inc., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Liggett Group Inc. and two industry groups, the Council for Tobacco Research and the Tobacco Institute. (Sun-Sentinel (Fort Lauderdale, FL), March 9, 2000) UCAR INTERNATIONAL: Settles Securities Claims; Sues Former Parents ------------------------------------------------------------------ UCAR International Inc. (NYSE:UCR), which has settled securities lawsuits and the appointment of a new director with antitrust experience to its board, announced its commencement of a lawsuit, in the U.S. District Court for the Southern District of New York, against its former parents, Mitsubishi Corporation and Union Carbide Corporation. The lawsuit is also against two of the respective representatives of Mitsubishi and Union Carbide who served on UCAR's Board of Directors at the time of their sale of 75% of UCAR to The Blackstone Group in January 1995, Hiroshi Kawamura and Robert D. Kennedy. Mr. Kennedy is still a member of UCAR's Board of Directors and the Board of Directors of Union Carbide. The January 1995 sale to The Blackstone Group was structured as a leveraged recapitalization. As a result, the purchase price consisted of dividend and stock repurchase payments made by UCAR to its former parents, with Union Carbide retaining a 25% interest in UCAR. Funding for the payments was derived primarily from approximately $1 billion of debt incurred by UCAR at that time. Union Carbide sold its remaining interest in UCAR in UCAR's IPO in August 1995. In the lawsuit, UCAR alleges, among other things: Unlawful Payments -- In January 1995, Mitsubishi and Union Carbide had knowledge of facts indicating that UCAR had engaged in illegal graphite electrode price fixing activities and that any determination of UCAR's statutory capital surplus would be overstated as a result of those activities. Certain of their representatives knew or should have known the same. Mitsubishi was indicted by the U.S. Department of Justice last month for aiding and abetting those activities. In January 1995, UCAR did not have the statutory capital surplus required to lawfully authorize the payments that UCAR made to its former parents. As a result, based on the allegations summarized above, the defendants are liable to UCAR for damages. Unjust Enrichment -- Mitsubishi and Union Carbide were unjustly enriched by receipts from their investments in UCAR. Aiding and Abetting Breach of Fiduciary Duties -- Mitsubishi and Union Carbide knowingly induced or actively and substantially assisted former senior management of UCAR to engage in illegal graphite electrode price fixing activities in breach of their fiduciary duties to UCAR. Damages -- Mitsubishi and Union Carbide are liable for more than $1.5 billion in damages, including interest. UCAR said some of their claims provide for joint and several liability; however, damages from the various claims would not generally be additive to each other. Gilbert E. Playford, Chairman and Chief Executive Officer, commented, "At the direction of our outside independent directors, we are now seeking to recover for the benefit of our stockholders the ill-gotten gains received by our former parents and all other recoveries to which UCAR may be entitled." He continued, "By far the majority of our debt was incurred to finance payments made to Mitsubishi and Union Carbide. The lawsuit is the natural progression in our strategy of proactively addressing issues arising out of the illegal graphite electrode price fixing activities. UCAR has replaced its former senior officers. We have settled virtually all of the actual and potential antitrust claims by customers in the U.S. and Canada in connection with the sale of graphite electrodes. We have also settled the securities class action and stockholder derivative lawsuits. We have resolved the antitrust investigations by the U.S. and Canadian governmental antitrust authorities as they relate to us, and we are continuing to cooperate with the European Union governmental antitrust authority in its pending investigation." Karen G. Narwold, General Counsel, Vice President and Secretary, added, "Litigation such as this lawsuit is complex. We have already invested substantial money and effort in researching and analyzing the facts and legal theories underlying this lawsuit. We believe that our claims are strong, and are confident about the ultimate outcome. Accordingly, we afforded the defendants the opportunity to settle this lawsuit in advance of filing the complaint in the interests of achieving a fair and expeditious resolution. We now intend to vigorously pursue this lawsuit to trial." Ms. Narwold continued, "Complex litigation can be lengthy and expensive. We are currently budgeting between $10 million and $20 million for legal expenses to pursue this lawsuit through trial. These expenses will be accounted as operating expenses and will be accrued as incurred. Of course, the ultimate outcome of litigation such as this lawsuit is subject to many uncertainties, both substantive and procedural, including motions to dismiss, statute of limitation and other defenses, and claims for indemnification and other counterclaims." She concluded, "It is always possible that this lawsuit could be settled at any time. As is the case with all of the litigation in which we are involved, it is our policy to not discuss litigation developments, including the status of any settlement negotiations, until they have become completed." VISX INC: Donovan Miller Files Securities Suit in California ------------------------------------------------------------ The law firm of Donovan Miller, LLC, announced that a class action lawsuit was filed in the United States District Court for the Northern District of California against VISX Inc. (Nasdaq:VISX), and certain of its Officers and Directors, on behalf of all persons who purchased VISX securities between March 1, 1999 and February 22, 2000, inclusive. The plaintiff in the case is a stock purchaser who is alleged to have sustained losses as a result of defendants' alleged violations. The Complaint alleges that, during the Class Period, VISX and the six officer defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, among other things, issuing materially false and misleading statements to the investing public about the Company's business, revenue growth and earnings expectations for fiscal 2000 relating to its Excimer Laser Systems. The Complaint further alleges that the price of VISX's shares was artificially inflated as a result of Defendants' omissions of material fact. Contact: Michael D. Donovan at Donovan Miller, LLC, 1608 Walnut Street, Suite 1400, Philadelphia, PA 19103; phone: 800/619-1677 or 215/732-6020; e-mail: mdonovan@dmlaw.com or dmlaw@erols.com Website http://www.dmlaw.com VISX INC: Lowey Dannenberg Files Securities Suit in California -------------------------------------------------------------- Lowey Dannenberg Bemporad & Selinger, P.C. announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of VISX Inc. (Nasdaq: VISX) common stock, call options and sellers of put options during the period between March 1, 1999 and Feb. 22, 2000. The complaint charges VISX and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants made false and misleading statements about the Company's business, revenue growth and earnings expectations for fiscal 2000 relating to its Excimer Laser Systems and the limited impact of competition which would allow VISX to maintain its $250 per procedure licensing fee in the United States. Plaintiff alleges defendants' statements artificially inflated the prices of VISX securities and enabled VISX insiders to sell 1.4 million VISX shares at inflated prices for $97 million in proceeds. On Feb. 22, 2000, VISX admitted it would reduce its per procedure fee to $100. This announcement caused its stock price to drop to as low as $16 and affected the prices of VISX options. Contact: Lowey Dannenberg Bemporad & Selinger, P.C. David C. Harrison or Sherrie Brown 877-777-3581 or 914-997-0500 VISX INC: Schubert & Reed LLP Brings Securities Suit in California ------------------------------------------------------------------ A class action suit alleging securities fraud was filed on March 7, 2000, in the United States District Court for the Northern District of California against VISX Inc. (Nasdaq: VISX), and VISX officers and directors, including Chairman and CEO Mark Logan, COO Elizabeth Davila, Executive VP and CFO Timothy Maier, by the San Francisco law firm Schubert & Reed LLP. The case was filed on behalf of purchasers of VISX common stock, call options and sellers of put options during the period between March 1, 1999 and Feb. 22, 2000. The complaint charges VISX and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants made false and misleading statements about the Company's business, revenue growth and earnings expectations for fiscal 2000 relating to its Excimer Laser Systems and the limited impact of competition which would allow VISX to maintain its $250 per procedure licensing fee in the United States. Plaintiff alleges defendants' statements artificially inflated the prices of VISX securities and enabled VISX insiders to sell 1.4 million VISX shares at inflated prices for $97 million in proceeds. On Feb. 2, 2000, VISX admitted it would reduce its per procedure fee to $100. This announcement caused its stock price to drop to as low as $16 and affected the prices of VISX options. Contact: Juden Justice Reed, Esq. of Schubert & Reed LLP, 415-788-4220, or fax 415-788-0161, or mail@schubert-reed.com VISX: Lockridge Grindal Files Securities Suit in California ----------------------------------------------------------- Lockridge Grindal Nauen P.L.L.P. announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of VISX Inc. ("VISX") (Nasdaq: VISX - news) common stock during the period between March 1, 1999 and February 22, 2000. The Complaint charges VISX and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants made false and misleading statements about (i) the steady and increasing revenues the installed base of VISX's Excimer Laser systems would provide to VISX, (ii) the strong procedure and equipment royalties VISX was warning, (iii) the limited impact of competition which would allow VISX to maintain its $250 per procedure licensing fee in the United States which would lead to consistent revenue growth, and (iv) VISX's continued market share domination which would result in 2000 EPS of $1.70 - 1.80. These false and misleading statements artificially inflated the price of VISX stock to a Class Period high of $103-7/8 from just $30-1/4 per share (split adjusted) at the outset of the Class Period. This upsurge in VISX's stock enabled VISX insiders to sell 1.4 million shares of their VISX stock for $97 million in proceeds. On December 10, 1999, VISX received an adverse ruling from the International Trade Commission that competitor Nidek had not infringed on VISX's patents, and its stock retreated to the $58 - $60 range. This cast doubt on VISX's competitive position and the ability to maintain its prices. However, VISX continued to represent that the $250 per procedure fee was in tact. Then, on January 19, 2000, VISX revealed a drop in 4thQ 99 revenues versus the 3rdQ 99 and exposed the problems VISX was having growing its business. On these disclosures, VISX's stock fell by 29% in one day to $32-1/4. However, it was not until February 22, 2000, that VISX admitted it would reduce its per procedure fee to $100. This announcement caused its stock price to drop to as low as $16 on huge volume on February 23, 2000. If you have questions or information regarding this action, or if you are interested in serving as a lead plaintiff in this action, you may call or write: Gregory J. Myers Lockridge Grindal Nauen P.L.L.P. 100 Washington Avenue South Suite 2200 Minneapolis, MN 55401, (612) 339-6900 gjmyers@locklaw.com WHEATON WARRENVILLE: Judge Won't Stop District 200 Suit Re Health Risks ----------------------------------------------------------------------- DuPage County Judge Hollis Webster denied a motion by defense attorneys to dismiss a lawsuit against Wheaton Warrenville School District 200. The district is being sued by parents who want the judge to permanently close Johnson School on grounds that the school poses environmental hazards that could pose health risks to occupants. "Now the case can go forward, and we can seek monetary damages on behalf of the children and their families," said attorney Tom Zimmerman, who is representing about 40 families in the class-action suit. The suit seeks $33.6 million in damages and asks that the building be permanently closed. The judge's ruling allows the case to go to a trial. District officials have vehemently denied that the 10-year-old school building is a health hazard. (Chicago Tribune, March 9, 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. 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. 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