/raid1/www/Hosts/bankrupt/CAR_Public/000428.MBX
C L A S S A C T I O N R E P O R T E R
Friday, April 28, 2000, Vol. 2, No. 83
Headlines
ARIZONA: Mental Health Plaintiffs Try to Add Hull As Defendant
AT&T: Local Carriers File Suit in VA over Service Cut-off
AUTO INSURANCE: Nationwide class status denied in Allstate suit
CHROMATICS COLOR: NY Court Dismisses Shareholders' Lawsuit
ENGINEERING ANIMATION: Contests Securities Lawsuits in Iowa
FEN-PHEN: Docplanet Reports on 47 Lawsuits Related to Personal Injury
FEN-PHEN: Pilot Monitoring Project Started In West Virginia
HOME LOANS: Abusive Practices Heard in Atlanta
HSBC HOLDINGS: 1999 Annual Report Discloses $1 Bil Japanese Suit
INMATES LITIGATION: ADA Claim Re HIV Barred by Prior Action in AL
MICROSOFT CORP: States Split on Justice Dept. Break-up Plan
ON-POINT TECHNOLOGY: Weiss & Yourman Files Securities Lawsuit
PARK PLACE: Alleged of Violating Tribe’s Rights to Develop Casino
PHYSICIAN COMPUTER: Ct OKs Pre Ch 11 Securities Suit Settlement Deal
PILGRIMS PRIDE: Defends Employees' Suit in TX over OT Pay
TOBACCO LITIGATION: BAT not planning to demerge Lawsuit Swamped B&W
TOBACCO LITIGATION: IL Ct Has No Jurisdiction over BAT for Refund
*********
ARIZONA: Mental Health Plaintiffs Try to Add Hull As Defendant
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Gov. Jane Hull went voluntarily to a judge's chambers in 1997 to promise
to deal with the needs of Arizona's mentally ill. Three years later,
plaintiffs in a successful class-action lawsuit against the state want
her next visit to be under different circumstances. In the wake of
Hull's veto of a mental health funding bill, the plaintiffs will ask
Judge Bernard J. Dougherty on Friday to add Hull as a "necessary party"
to the lawsuit. "It will make her a defendant," said Anne C. Ronan, a
lawyer for the lawsuit plaintiffs.
The Arnold vs. Sarn case has been in the courts since 1981. The
plaintiffs have won several rulings that the state has failed to provide
care promised by state law. There have been at least three settlements
or implementation plans negotiated by state officials and the plaintiffs
over the years, but no funding to make those plans happen has been
provided.
The Department of Health Services recommended last fall that Hull seek a
mid-budget spending increase of $127 million as the first step of a $356
million annual increase recommended by consultants and a state task
force. Hull did not make a special budget request, but the Legislature
appropriated $33 million anyway. Hull vetoed the appropriation, saying
that the state did not have the money. She also said she is committed to
providing additional money for mental health but that it should come
from Arizona's share of the multistate tobacco settlement. "The governor
has said repeatedly how committed she is to resolving Arnold vs. Sarn,"
said Hull spokeswoman Francie Noyes said.
Though Hull's veto precipitated the move to add her as a defendant, the
plaintiffs are not asking Dougherty to undo the veto, Ronan said.
Instead, their request is an attempt to ensure that mental health care
gets attention if special legislative sessions are called, she said.
Hull has said she may call lawmakers back to decide how to spend the
tobacco settlement money and to consider additional mental health
funding if revenues exceed forecasts. "Both of which, if handled right,
could result in significant funding for services," Ronan said.
If Hull is added the lawsuit and disregards court orders, she could be
held in contempt, Ronan said: "That's the ultimate remedy."
An attempt 10 years ago to add then-Gov. Rose Mofford as a defendant
failed because it was not then established that more money was needed or
that adding the governor was necessary to implement court orders, Ronan
said. "It's now clear, and all the other defendants agree that increased
funding needs to be provided for them to meet their obligations under
the court order," she said.
The DHS director - already a defendant to the suit - requested increased
funding, and the Legislature provided at least some of it, Ronan said:
"The governor was the sole person who frustrated the further
implementations of the court orders by the other defendants."
The lawyer said she expects Hull will fight being added to the case,
arguing that the courts do not have jurisdiction over other governmental
branches' discretionary decisions. "Where we think the situation is
different is this has been clearly established as a mandated obligation
of the executive to implement these laws," Ronan said.
The motion will be filed with a request that Dougherty act soon because
with the possibility of a special session, "we need to get this
resolved," Ronan said. (The Associated Press, April 27, 2000)
AT&T: Local Carriers File Suit in VA over Service Cut-off
---------------------------------------------------------
Fail to pay your phone bill and the company will cut off service. Simple
cause and effect. But it's not so simple when a major long distance
carrier like the AT&T Corp. refuses to pay the local carriers that link
its long distance services to individual customers.
That's why 78 local access carriers filed suit against AT&T and the
Sprint Communications Co. last Monday in the U.S. District Court for the
Eastern District of Virginia. Among the plaintiffs are Virginia
companies Net2000 Communications Inc. of Herndon, the Falls Church-based
Winstar Wireless of Virginia, and American Communications Services of
Virginia Inc.
Long distance carriers including Sprint and AT&T require what is called
the "interexchange" services of local carriers in order for their
customers to initiate and pick up long distance calls. The plaintiffs,
products of industry deregulation, typically compete with local Baby
Bells in providing this service and are commonly referred to as
Competitive Local Exchange Carriers (CLECs). They charge the long
distance carriers a tariff for their services, between three and seven
cents per minute, which is slightly higher than the per-minute rates at,
say, Bell Atlantic Inc. or Bell South.
However, the Baby Bells also generally charge a monthly fee, says
Jonathan Canis, a partner in the D.C. office of New York's Kelley Drye &
Warren who is representing the CLECs.
According to the complaint, Advamtel v. AT&T Corp., both AT&T and Sprint
balked at paying the tariffs charged by the plaintiffs. Sprint responded
by paying only what the Baby Bells charge per minute. AT&T responded by
not paying at all. The plaintiffs allege they are now owed about $ 10
million for services rendered over the last two years.
So why didn't they just cut off AT&T and Sprint? " 'Don't disrupt
service to the end user' overrules everything," says Canis. Not only is
there the certainty that the local carriers' customers will complain if
their phone service is interrupted, but a 1999 ruling by the Federal
Communications Commission laid out specific steps that must be taken if
a carrier wants to cancel a service arrangement with another carrier-all
to prevent a disruption of phone service. Kelley Drye handled that case
for the CLECs as well.
Not all 78 plaintiffs have gripes with both long distance companies.
Net2000, for example, has claims only against AT&T. And the suit is not
a class action. (Legal Times, April 24, 2000)
AUTO INSURANCE: Nationwide class status denied in Allstate suit
---------------------------------------------------------------
A Cook County Circuit Court judge on Wednesday denied certification for
a nationwide class in a lawsuit alleging Allstate Insurance Co. engaged
in fraud by encouraging third parties injured in auto accidents by
Allstate customers not to hire lawyers to resolve their claims.
A staggering number of case-by-case factual determinations would be
required to adjudicate the rights of each individual class member,"
Judge Richard A. Siebel wrote in an 11-page opinion and order.
The court has come to the finding that a nationwide class should not be
certified at this time," Siebel said during a brief court hearing today
before releasing his written decision.
Plaintiff attorneys said after the hearing that they will ask Siebel at
a May 10 status hearing to reconsider his decision to deny the
nationwide class and also to certify an Illinois class. Siebel did not
rule today on the merits of the underlying complaint, they added.
Six named plaintiffs filed a lawsuit in the Circuit Court in January
1998. The named plaintiffs are four West Virginia residents and two
Illinois residents who were involved in auto accidents with Allstate
policyholders.
The lawsuit maintains that Allstate uses a nationwide campaign,
emanating from its headquarters in Northbrook, to dissuade claimants
from hiring lawyers to handle their claims. Following the accidents, the
plaintiffs received written communications from Allstate including a
Customer Service Pledge" form, a Quality Service Pledge" form and a form
called Do I Need an Attorney," Siebel's decision said.
The lawsuit alleged that Allstate violated the Illinois Consumer Fraud
Act, engaged in the unauthorized practice of law, negligent and
fraudulent misrepresentations and breached its fiduciary duty. Allstate
has denied all of the plaintiffs' allegations.
We're trying to provide claimants with information that they can use to
make their own decision about whether they want to have a lawyer," said
Robert H. King Jr., a lawyer representing Allstate. It's up to them."
The plaintiffs' sought to certify a nationwide class, which their
attorneys say would consist of between 300,000 and 600,000 persons.
Allstate objected, contending nationwide class certification was
unnecessary because each claimant accident involves different issues.
Siebel agreed with Allstate's contentions.
The court is not satisfied that common issues of fact or law predominate
in this case," Siebel wrote. This applies especially to the negligent
misrepresentation count, the fraud count and the breach of fiduciary
duty count."
The plaintiffs also asserted that Siebel had the power and authority to
determine what constitutes the unauthorized practice of law in other
states. But Siebel disagreed.
It would be presumptive and certainly beyond this court's authority to
declare whether certain behavior constitutes the unauthorized practice
of law in any sister state absent a definitive ruling by the
authoritative tribunal of that state," Siebel wrote. Therefore, no
nationwide class will be certified on the unauthorized practice of law
count."
Siebel noted that application of the Illinois Consumer Fraud Act may be
warranted for the named plaintiffs from Illinois and potential Illinois
class members.
While a nationwide class action seeking redress under the Illinois
Consumer Fraud Act is not appropriate for certification, the court
believes that certifying a class for Illinois plaintiffs and those
potential plaintiffs injured in Illinois may be appropriate," Siebel
wrote.
Clinton A. Krislov, a lawyer for the plaintiffs, said that Siebel
basically says we can have an Illinois claim on common fraud." But King
responded, The judge's reasoning would seem to preclude an Illinois
class." King, a partner with Greenberg Traurig LLP's Chicago office
added that he was pleased by Siebel's ruling today. Chicago lawyer Kevin
M. Forde also represents Allstate.
Other attorneys for the plaintiffs are Robert L. Sklodowski of
Sklodowski, Puchalski & Reimer in Franklin Park, John J. Lowrey of
Lowrey & Smerz in Chicago, James Peterson, a West Virginia lawyer, and
Kenneth T. Goldstein of Krislov & Associates Ltd. The case is Douglas
Wayne Martin, et al. v. Allstate Insurance Co., No. 98 CH 603. (Chicago
Daily Law Bulletin, April 26, 2000)
CHROMATICS COLOR: NY Court Dismisses Shareholders' Lawsuit
----------------------------------------------------------
The United State District Court for the Southern District of New York
has dismissed a shareholders class action lawsuit filed in 1998 against
Chromatics Color Sciences International Inc. (Nasdaq: CCSI) and four of
its officers. The company announced the ruling April 27 when the
plaintiffs failed to re-plead their complaint within 30 days after the
court conditionally granted the defendants' dismissal motion on March
20, 2000.
The class action suit had alleged that the defendants artificially
inflated the price of CCSI's stock through false and misleading public
statements made between July 30, 1997 and June 9, 1998. The statements
-- nine press releases and a Form 10-K -- largely concerned the
proprietary technology and the development, marketing and distribution
plans and market size estimates for the company's ColorMate(R)
TLc-BiliTest(R) System, a pain-free, non-invasive device for monitoring
bilirubin infant jaundice in newborns.
In the dismissal ruling issued by Judge Sidney H. Stein, the court found
that, regarding each of the company's statements at issue, "plaintiffs
have either not sufficiently specified the reasons that the statements
were misleading, thereby failing to satisfy Rule9(b) and the
PSLRA(Private Securities Litigation Reform Act)'s heightened pleading
standard, or failed to specify a reason that would be actionable under
Section 10(b)."
Addressing several of the allegations of false statements, the court
said, "(E)ach of the allegedly false statements ... is a factual
statement whose truth is not in question. None of the statements were
statements of optimism or even statements about promises regarding the
future. They were factual statements about past events which included no
promises as to the future and as such, plaintiffs have not adequately
explained the basis on which the statements were false and misleading
when made."
Addressing other allegations, the court said, "truthful statements about
company policy or a course of action that is being pursued are not
actionable and do not necessarily constitute promises to maintain the
policy in the future."
ENGINEERING ANIMATION: Contests Securities Lawsuits in Iowa
-----------------------------------------------------------
Engineering Animation reports to the SEC that in February 1999, actions
were filed against the company and certain of Engineering Animation's
current and former executive officers in the United States District
Court for the Southern District of Iowa.
These actions allege that Engineering Animation violated Sections 10(b)
and 20(a) of, and Rule 10b-5 under, the Securities Exchange Act of 1934.
They allege that Engineering made false or misleading statements of
material fact about the company's accounting for in-process research and
development in connection with the Rosetta Technologies, Inc. (Rosetta)
and Sense8 Corporation (Sense8) acquisitions and our 1999 business
prospects. They seek unspecified damages. These claims are now
consolidated into one class action purporting to include individuals who
purchased the company's common stock between February 19, 1998 and April
6, 1999. The court has appointed lead plaintiffs and co-lead counsel in
the action. The court has granted in part and dismissed in part the
motion filed by the company to dismiss the plaintiffs' amended
complaint. Engineering Animation intends to oppose the action
vigorously.
In October 1999, actions were filed against the company and certain of
its current and former executive officers in the United States District
Court for the Southern District of Iowa. These actions allege that
Engineering Animation violated Sections 10(b) and 20(a) of, and Rule
10b-5 under, the Securities Exchange Act of 1934. They allege that the
company made false or misleading statements of material fact about our
financial results for the second quarter of 1999. These claims are now
consolidated into one class action purporting to include individuals who
purchased our common stock between July 29, 1999 and October 1, 1999.
The court has appointed lead plaintiffs and lead counsel in the action.
We intend to oppose the action vigorously.
FEN-PHEN: Docplanet Reports on 47 Lawsuits Related to Personal Injury
---------------------------------------------------------------------
In its report to the SEC, Docplanet Com Inc.states that QCP along with
several other entities, including the manufacturers of the drugs, has
been named as a defendant in approximately forty-seven lawsuits brought
by numerous plaintiffs relating to personal injury claims caused by the
use of phentermine and/or fenfluramine, collectively known as Phen-Fen.
FEN-PHEN: Pilot Monitoring Project Started In West Virginia
-----------------------------------------------------------
A pilot medical monitoring project has been ordered in West Virginia's
diet drug medical monitoring class action, a source told Mealey
Publications (Margaret L. Burch v. A.H. Robins Co. Inc., No.
97-C-204[1-11], W.Va. Cir., Brooke Co.; See 3/19/99, Page 7).
The source said Brooke County Circuit Court Judge Fred Risovich entered
an order early February staying the litigation pending the pilot
program.
The source said the program will provide free echocardiograms to West
Virginia users of diet drugs, interpretation of the results and a free
consultation with a doctor about the results. The costs of the pilot
project will be paid by American Home Products Corp. The cost has not
been disclosed.
The pilot program is similar to the medical monitoring proposed under
the AHP national diet drug settlement, the source said. The program will
continue through the May 1 to 5 fairness hearing for the proposed
national settlement. The results may be introduced at that hearing.
Judge Risovich's stay is separate from one issued by U.S. Senior Judge
Louis Bechtle in December prior to the start of the West Virginia class
trial. Judge Bechtle assumed jurisdiction over the case. His stay
remains in place. The source said the West Virginia trial may resume in
the fall. (Mealey's Emerging Drugs & Devices, March 17, 2000)
HOME LOANS: Abusive Practices Heard in Atlanta
----------------------------------------------
Two elderly African-American widows from Atlanta were the star witnesses
at a Wednesday forum on predatory lending practices sponsored by two
Clinton administration cabinet members.
Lucinda Ewing, 70, received a foreclosure notice this week from her
latest mortgage lender. She explained that four high-cost lenders had
flipped her debt, tacking assorted new fees on each new transaction and
driving her monthly mortgage payment from $ 300 to $ 1,026. "I have
tried to make monthly payments," Ewing told a panel headed by U.S.
Housing Secretary Andrew Cuomo. "Because the mortgage is so high, I am
having trouble paying my utility bills and buying food."
Emma Lou Sanders, 74, owed only $ 1,700 on her home mortgage when an
aggressive salesman persuaded her to take a new mortgage to pay for home
improvements. Sanders is now saddled with more than $ 23,600 in new
mortgage debt, though no one ever completed the promised improvements.
"I feel awful," said Sanders, who has trouble making her payments from
her monthly income of only $ 650. "Nobody wants to be in this
situation."
Cuomo said predatory mortgage lending has become "a national crisis . .
. with a troubling racial factor." He and U.S. Treasury Secretary
Lawrence Summers recently formed a task force to study the problem. The
group will hold forums in four other cities before issuing a report to
Congress in six weeks. "The real estate market is so hot, there is so
much equity in homes, we have created an opportunity for some to
victimize those within the market," Cuomo said. "We want predatory
lending practices stopped."
Cuomo praised ethical lending practices within the so-called "subprime"
loan industry for making money available to millions shut out of the
regular credit market because of their blemished credit. Reflecting a
national trend, subprime mortgage refinancings in Atlanta have
skyrocketed --- particularly in minority neighborhoods --- rising from
1,768 in 1994 to 11,408 in 1998. At the same time, complaints to the
Atlanta Legal Aid Society about subprime loans have shot up, too, as
have foreclosure notices.
Joe Beasley, head of Georgia's Rainbow-Push Coalition, said a class
action suit in the early 1990s helped defeat one abusive lender in
Atlanta: a subsidiary of Fleet Financial Group. "But this is a tiger, a
devious tiger," Beasley said. "We thought we ran off Fleet, but they've
circled back on us."
Regulating the subprime market issue is a ticklish political issue
because banks like Citigroup, Bank of America and First Union all own
subprime lending affiliates. The banks maintain a powerful political
lobby, which Cuomo was careful not to offend.
"This is an industry that prides itself in its integrity," Cuomo said.
"No good company would knowingly do business with any of these bad
actors."
However, Bill Brennan of the Atlanta Legal Aid Society, a national
expert on predatory lending, said virtually all subprime lenders
routinely charge exorbitant interest rates and fees, collect high
pre-payment penalties and " pack" pre-paid credit insurance into loans
secured by the borrower's home. All those practices are abusive and
should be outlawed, Brennan and other consumer advocates argue.
The industry could live with rules that ban loan flipping, new limits on
credit insurance and clear disclosure on loan fees, said Jeffrey
Zeltzer, executive director of the National Home Equity Mortgage
Association. "I am concerned about the reputational damage" caused by
the recent focus on the industry, Zeltzer said.
State Sen. Vincent Fort (D-Atlanta) said he plans to introduce
legislation in January similar to a new North Carolina law that bans
so-called "insurance packing" and other abuses.
Subprime loans are available to borrowers with credit problems who
cannot qualify for conventional loans. (The Atlanta Journal and
Constitution, April 27, 2000)
HSBC HOLDINGS: 1999 Annual Report Discloses $1 Bil Japanese Suit
---------------------------------------------------------------- A
report circulated by Bloomberg News relates that HSBC Holdings Plc,
Europe's largest bank, said it's being sued by Japanese investors for
more than $1 billion over the alleged involvement of newly acquired
Republic New York Corp. in a fraud. HSBC, detailing the litigation in
its 1999 annual report, said two of the litigants are seeking 24.4
billion yen ($229 million), with others seeking a total of $799 million.
Inclusive of punitive damages, the bank is being sued for a total of
$2.6 billion, according to the South China Morning Post.
"It is not possible to assess the outcome of these proceedings at
present," HSBC said in its report. "The Republic parties intend to
defend vigorously against the claims arising from the Princeton note
matter." Officials wouldn't comment further on the suits when quizzed by
Bloomberg. The actions are connected with an alleged fraud by Princeton
Global Management Ltd. and chairman Martin Armstrong in selling Japanese
investors promissory notes with a face value of $3 billion. Princeton
and Armstrong were customers of the futures division of Republic New
York. Some of the proceeds of the notes were supposedly invested and
traded through the accounts Princeton had with the futures arm and HSBC
said Armstrong is alleged to have caused employees of the unit to issue
statements inflating the value of these accounts, hurting investors in
the notes, $1 billion of which has yet to be repaid.
Aside from the 11 civil actions outstanding against Republic, HSBC said
it has been told by one of the defendants in the Princeton note affair,
World Nichei Securities Co. Ltd. of Japan, that it will seek to hold
Republic and its affiliates liable for any losses it incurs.
There is also a "purported" class action suit outstanding against
Republic on behalf of some investors who bought stock in Republic last
year. Details of the alleged fraud emerged last year, nearly derailing
HSBC's takeover of Republic New York and affiliate Safra Republic
Holdings SA. The takeover was delayed because of the investigation, and
Edmond Safra, Republic's founder, agreed to accept about 19 percent less
for his stakes in Republic and Safra to save the $9.9 billion sale after
the problems.
INMATES LITIGATION: ADA Claim Re HIV Barred by Prior Action in AL
-----------------------------------------------------------------
A federal District Court in Alabama dismissed an ADA class action suit
filed by and on behalf of state prisoners with HIV. The claim was barred
on res judicata grounds.
Prison inmates filed a class action suit on behalf of themselves and all
current and future inmates with HIV in the state's prison system.
Specifically, the inmates claimed the department of corrections, its
former and current commissioners, and the entity providing medical
services within the prison system violated Title II of the ADA by
segregating them from the general prison population. The inmates also
alleged cruel and unusual punishment in violation of the Eighth
Amendment. The defendants moved to dismiss.
The court barred the ADA claim on res judicata grounds. A final judgment
had been rendered by a court of competent jurisdiction - in this case,
the circuit court of appeals. Further, the plaintiffs in both cases were
identical - the description of the plaintiff class in the first action
included the members of the plaintiff class in the second action. In
addition, the defendants in the two cases were the same with the
exception of the medical service provider. However, the court found that
the current and former medical service providers were in privity with
one another since their legal interests were the same with respect to
their defenses against the inmates' claims. The court found that the
causes of action in the two claims were identical. Further, the court
determined that the only difference between the two statutes concerned
the types of defendants against whom rights may be enforced. Therefore,
the court dismissed the ADA claim. The court dismissed the Eighth
Amendment claim in part with prejudice and in part without prejudice.
Edwards v. Alabama Dept. of Corrections, 17 NDLR 160 (M.D. Ala. 2000)
(No. Civ.A. 97-T-1746-N). (Corrections Professional, April 24, 2000)
MICROSOFT CORP: States Split on Justice Dept. Break-up Plan
-----------------------------------------------------------
A majority of the 19 states suing Microsoft are expected to join the
Justice Department in seeking to split the software giant in two, but a
minority of the states are considering both more lenient and more
aggressive approaches to remedying Microsoft's antitrust wrongs.
While the Justice Department is now expected to seek a remedy that would
separate the Windows operating-system group from the rest of the
company, Ohio Attorney General Betty Montgomery (R) prefers keeping the
software company intact, according to people familiar with the
discussions. Montgomery is considering writing a dissent to the remedy
proposal being prepared by Justice officials and the majority of states,
sources said.
California, which during earlier discussions was pushing hard to break
Microsoft into three companies, appeared yesterday to be leaning toward
joining those states backing the Justice Department's plan, sources
said.
U.S. District Judge Thomas Penfield Jackson told government attorneys to
submit by tomorrow a plan to address his April 3 verdict that Microsoft
violated antitrust law by using its monopoly in personal-computer
operating systems to harm consumers and competitors and stymie
innovation that threatened Microsoft's monopoly.
Microsoft has launched a legal, political and public-affairs assault on
a breakup plan; Chief Operating Officer Bob Herbold was on Capitol Hill
yesterday lobbying lawmakers on a variety of issues, including the
antitrust remedies.
If the government, as expected, asks for a breakup tomorrow, Microsoft
likely will ask Jackson for more time to scrutinize the proposal.
Microsoft's formal reply is due next month, and a remedy hearing is set
for May 24.
The states that have been in the lead--New York, Iowa, Connecticut and
Wisconsin--are lobbying other states to join the Justice plan, sources
said. California was "80 percent on board," a source said.
Leading the group favoring a less-aggressive proposal is Montgomery, who
remains concerned that a breakup goes too far in seeking a remedy to
Microsoft's anti-competitive conduct, according to sources.
They also said another midwestern state might join Ohio in drafting an
alternative proposal. A spokesman acknowledged Montgomery's reservations
about a breakup but said no decision had been made.
Herb Hovenkamp, a University of Iowa antitrust scholar and adviser to
the government in the case, said it could hurt the government's case if
some states advocated a more limited remedy. "It would not be helpful
for them to present less than a united front," Hovenkamp said. An
industry lobbyist involved in the case said the government is working
hard to avoid a "partisan split" over remedies and suggested that
resentment toward Attorney General Janet Reno on a variety of unrelated
issues, including the Elian Gonzalez custody battle, might be fueling
dissension.
In March, sources told The Post that Kansas, Illinois, Florida and
Maryland were among states that had reservations about seeking a
breakup.
Meanwhile, a plan to divide Microsoft into three companies, which was
being advocated by a cluster of states led by California Attorney
General Bill Lockyer (D), appears to be waning. That plan would have
followed the Justice Department plan but included a third slice breaking
off the Internet properties, which themselves are significant.
Some industry officials have been lobbying states to create an Internet
group that would include the Internet Explorer browser and Microsoft
Network, the Internet service provider and Web portal more commonly
known as MSN. Many of the key assets within MSN are considered valuable
in their own right. They include CarPoint, the online automobile sales
Web page, and Microsoft HomeAdvisor, the home-buying Web page.
But the Justice Department is seeking to craft the least intrusive plan
that would solve problems outlined in Jackson's two-part verdict, people
familiar with the discussions said. The Justice plan would separate the
part of Microsoft that makes Windows operating systems, including
Windows 98 and Windows 2000, from the rest of the company, including
software applications such as Office and the Internet properties.
A federal judicial panel this week assigned dozens of class-action
antitrust lawsuits throughout the nation to a single court in Baltimore.
The suits, filed as follow-up cases to the government's lawsuit, were
assigned to U.S. District Judge J. Frederick Motz, a move that lets
Microsoft consolidate its defense. (The Washington Post, April 27, 2000)
ON-POINT TECHNOLOGY: Weiss & Yourman Files Securities Lawsuit
-------------------------------------------------------------
A class action lawsuit was filed in U.S. District Court on behalf of
purchasers of On-Point Technology Systems, Inc. (Nasdaq: ONPT, ONPTE)
common stock between August 19, 1997 and April 7, 2000. The defendants
include On-Point and certain officers and directors.
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10-b(5) by rendering
false and misleading statements and/or omissions concerning the present
and future financial condition and business prospects of the company, as
well as the financial benefits that would enure to On-Point and its
shareholders. Specifically, the defendants published false and
misleading financial statements, including financial statements that
overstated fiscal year 1997 earnings by approximately $1.4 million, or
approximately 800%, fiscal year 1997 revenues by approximately $3
million, fiscal year 1998 earnings by approximately $2.1 million, and
fiscal year 1998 revenue by approximately $1.6 million. The defendants
also failed to disclose that there were substantial operating losses for
fiscal year 1998, and that the Company's accounting practices throughout
the Class Period failed to conform with generally accepted accounting
principles.
Contact: Weiss & Yourman, Telephone: 800-437-7918, Internet:
http://www.wyca.comE-mail: wyinfo@wyca.com
PARK PLACE: Alleged of Violating Tribe’s Rights to Develop Casino
-----------------------------------------------------------------
St. Regis Mohawk members file $12 billion class action suit against Park
Place Entertainment, Arthur Goldberg and Clive Cummis. Fraud, undue
influence and tortuous interference cited in New Jersey company's
attempt to violate tribe’s rights to develop proposed Indian gaming
casino in Monticello. Suit also seeks restraining order from enforcement
of April 14 agreement and alleges anti-trust violations.
Park Place Entertainment "fraudulently induced" the St. Regis Mohawk
Council to enter into an agreement dated April 14, 2000, that would
extinguish the Tribe's rights to a proposed gaming casino at Monticello,
NY, according to a class action lawsuit filed Wednesday, April 26, 2000
on behalf of Tribal members in Tribal Court on the St. Regis Mohawk
reservation in Hogansburg, NY.
The suit alleges that Park Place falsely "represented that existing
agreements entered into or on behalf of the St. Regis Mohawk Tribe were
unenforceable and that (Park Place) would produce a St. Regis Mohawk
Casino in Sullivan County more quickly than the existing developer and
management team." For its "fraud and undue influence" in this matter the
suit seeks both compensatory and punitive damages from Park Place,
Arthur Goldberg and Clive Cummis in the amount of $4 billion.
"Park Place is attempting to deprive the people of St. Regis of
countless jobs and hundreds of millions of dollars through their illegal
and unethical conduct," said Michael Rhodes-Devey, attorney for the
plaintiffs.
In addition, the suit states that the New Jersey gaming giant "knew or
should have known that the Mohawk Tribal Council...had, as late as
November 24, 1999, executed an Amended and Restated Gaming Facility
Management Agreement with Mohawk Management LLC...(for) a proposed St.
Regis Mohawk Gambling Casino at Monticello Raceway." The Tribe is
seeking $4 billion in damages because of Park Place's "tortuous
interference with the rights of the parties to (that) agreement."
The suit seeks an additional $4 billion in damages due to further
tortuous interference stating that the defendant New Jersey company also
"knew or should have known that the same Mohawk Tribal Council, on or
about November 24, 1999, signed an Amended and Restated Gaming Facility
Development and Construction Agreement, date July 31, 1996, which was
also signed by Monticello Raceway Development Company LLC."
In addition to seeking $12 billion in compensatory and punitive damages,
the suit says that the defendant class will suffer "irreparable damage
if (Park Place) is able to reap the benefits of their unconscionable
acts." Therefore, the suit seeks to restrain and enjoin the defendants
from enforcing the terms of the April 14 agreement.
The suit also inquires whether the defendant's actions amount to an
attempt "to prevent the plaintiffs from proceeding with...conducting the
only legal gambling casino in the State of New York not on ancestral
reservation land," and asks if such actions constitute a violation of
existing anti-trust legislation.
Given the range of these issues, the complaint is also being sent to the
New Jersey Casino Gaming Control Commission in Atlantic City, the Nevada
Casino Control Commission in Carson City, the Mississippi State Gaming
Control Commission in Jackson, the National Indian Gaming Commission in
Washington, D.C., and the Office of the U.S. Attorney for Northern New
York.
Contact: Breeze & Rhodes-Devey, Slingerlands Michael Rhodes-Devey, Esq.,
(518) 439-9936
PHYSICIAN COMPUTER: Ct OKs Pre Ch 11 Securities Suit Settlement Deal
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Physician Computer Network, Inc. is a provider of information technology
to the office-based physician market. The Company's flagship practice
management software product, the PCN Health Network Information System,
is a multi-functional, advanced system which automates scheduling,
billing, financial reporting and other "back-office" functions, and
provides electronic links to payors and other parties providing services
to a physician's practice. In order to supplement its practice
management product offerings with knowledge-based clinical products and
services, in January 1996, the Company and Glaxo Wellcome, Inc. formed a
joint venture, Healthmatics G.P. (formerly Healthpoint G.P.) The
Company's interest in this venture was sold during 1998.
Beginning in 1993, the Company instituted a strategy of developing and
expanding its business by acquiring practice management software
businesses having an installed base of physician practice customers and
developing a common software platform to which such customers could
migrate over time. In execution of this strategy, the Company made a
series of acquisitions through 1998 in order to expand various software
and support services.
In 1996 and 1997, the Company sold support obligations for various
customer sites using legacy systems in order to concentrate on its three
major software platforms. In 1998, the Company announced the need to
restate financial information previously issued to the public. Instead
of the reported profits during the first three quarters of 1997, the
Company would be reporting a substantial loss and was in default of its
bank agreement. The negative effects of publicity surrounding the
Company's announcements affected operating results in 1998.
During 1998 and 1999 the Company undertook significant restructuring and
cost reduction efforts to mitigate the losses incurred in 1997. These
efforts included the sale of various noncore business assets. In
addition, at the direction of the Board of Directors, investment bankers
were retained to evaluate the strategic alternatives available to the
Company.
Subsequent to the Company's announcements in early 1998 concerning the
delay in its annual audit and its expected restatement of previously
issued reports, numerous purported class actions were filed against the
Company, certain directors and former officers. These matters were
consolidated into one action in the United States District Court for the
District of New Jersey.
Prior to the bankruptcy filing, this Securities Class Action was settled
by the Company, subject to the approval of both Federal District Court
and the Bankruptcy Court. The settlement provided for a payment of
$21.15 million plus a share of certain other proceeds. The Class
Plaintiffs also agreed that the settlement is subject to downward
adjustment risk based on the ultimate sale price of the Company. The
Bankruptcy Court approved the settlement when the Plan reorganization
was confirmed; the Federal District Court approved the settlement on
March 22, 2000.
In December 1999, immediately prior to the filing of Chapter XI, the
Company entered into an Asset Purchase Agreement with Medical Manager
Corp. for the purchase and sale of all PCN's operating assets and the
assumption of substantially all of PCN's operating liabilities.
PILGRIMS PRIDE: Defends Employees' Suit in TX over OT Pay
---------------------------------------------------------
In January of 1998, seventeen current and/or former employees of the
Company filed the case of "Octavius Anderson, et al. v. Pilgrim's Pride
Corporation" in the United States District Court for the Eastern
District of Texas, Lufkin Division ("Anderson v. Pilgrim's Pride")
claiming the Company violated requirements of the Fair Labor Standards
Act.
The suit alleges the Company failed to pay employees for all hours
worked. The suit generally alleges that employees should be paid for
time spent to put on, take off, and clean certain personal gear at the
beginning and end of their shifts and breaks and the use of a master
time card or production "line" time fails to pay employees for all time
actually worked. Plaintiffs seek to recover unpaid wages plus liquidated
damages and legal fees. Approximately 1,700 consents to join as
plaintiffs have been filed by current and/or former employees with the
court. It is anticipated that a trial date will be set in August of
2000.
The Company believes it has substantial defenses to the claims made and
intends to vigorously defend the case. However, neither the likelihood
of unfavorable outcome nor the amount of ultimate liability, if any,
with respect to this case can be determined at this time. Substantially
similar suits have been filed against four other integrated poultry
companies.
On February 9, 2000, the U.S. Department of Labor (DOL) began a
nationwide audit of wage and hour practices in the poultry industry. The
DOL expects to audit 51 poultry plants, one of which is company owned.
The DOL audit is examining pay practices relating to both processing
plant and catching crew employees and includes practices which are the
subject of Anderson v. Pilgrim's Pride discussed above.
TOBACCO LITIGATION: BAT not planning to demerge Lawsuit Swamped B&W
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British American Tobacco PLC managing director Ulrich Heuter dismissed
claims that the group will be better off demerging or selling U.S. unit
Brown & Williamson Tobacco, which is becoming swamped by litigation.
Brown & Williamson has to contribute to the $200 billion medicaid
settlement and may find itself liable to industry punitive damages of up
to $300 billion after the Engel case, which is currently being heard in
Florida.
Analysts had recently suggested that BAT might do well to cut its losses
by disposing of its U.S. assets. However, Heuter told AFX News: "The
U.S. is a leading market for the world and therefore we would like to
keep our presence there and grow in that market."
Heuter described recent legal setbacks in the U.S. as the cost of doing
business there. As well as the Engle case, which went against Brown &
Williamson and all the other tobacco majors, there has also been a
high-profile setback in the form of the Whiteley case, which was decided
earlier this year. "These are not industry-threatening claims and we
regard that the odd setback should be seen as cost of doing business in
the U.S.," he went on. The managing director said: "It is not all
one-way traffic" citing the failure of the union-backed class action in
California and grounds for appeal in the Engel case. (AFX European
Focus, April 27, 2000)
TOBACCO LITIGATION: IL Ct Has No Jurisdiction over BAT for Refund
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An Illinois appeals court has reversed a lower court's decision, finding
that Illinois cannot exercise personal jurisdiction over B.A.T.
Industries for the purpose of a class action suit to recover money spent
on tobacco products. Cleary et al. v. Philip Morris Inc. et al., No.
1-99-0525 (Ill. App. Ct., 1st Dist., Mar. 17, 2000).
B.A.T. Industries, a parent company of Brown & Williamson Tobacco Corp.
and British American Tobacco Co. Ltd., has its office in London, where
all of its 185 employees are located. B.A.T. says that it has never
conducted business in Illinois, which was unchallenged by the
plaintiffs. However, plaintiff Brian Cleary asserts that B.A.T. received
research done in the United States and kept it for the purpose of
keeping it out of discovery.
The appeals court looked at the Illinois long-arm jurisdiction first,
determining that the minimum contacts test was met by the plaintiff's
charge that the defendant committed a tortious act within the state.
Plaintiff does as much by charging that B.A.T. participated in a scheme
to conceal the true nature of tobacco and nicotine from the people of
Illinois. The panel also held that the due process requirement is met
because a party that joins a conspiracy to commit a tort in Illinois
could reasonably foresee that it might be hauled into court in Illinois
to defend itself against such charges.
The appeals court looked further into the applicable Illinois statute to
determine if the record was sufficient to support jurisdiction. The
judges relied on language from TCA International Inc. v. B&B Custom Auto
Inc., 701 N.E. 2d 105 (1998), to determine that facts averred by a
defendant must be accepted as true in the absence of a contradictory
affidavit from the plaintiff. In this instance, B.A.T. denied every
charge made by Cleary; the plaintiff failed to counter B.A.T.'s denials.
Because of Cleary's failure to respond to B.A.T.'s denials with its own
affidavits, the panel ruled that TCA required that the lower court be
reversed and that the assertion of jurisdiction over B.A.T. is improper.
In a related matter, a federal district court in New York ruled on Jan.
27, 2000, that B.A.T. must stand trial in New York's federal court under
the provisions of New York law (see Tobacco Industry LR, March 24, 2000,
P. 11). The plaintiff in that case charged B.A.T. with a conspiracy
similar to the one alleged in the Cleary case. (Tobacco Industry
Litigation Reporter, April 14, 2000)
TOBACCO LITIGATION: Philip Morris Ready for Talks on Regulation
---------------------------------------------------------------
Geoffrey C. Bible, chairman of the board and chief executive officer of
Philip Morris Companies Inc. (NYSE: MO), told an audience of
approximately 1,100 shareholders at the company's annual meeting on
Thursday April 27 that Philip Morris "came through the year in very good
shape" in a "litigation environment that has improved in significant
ways." He also reaffirmed the company's commitment to "engage in a
constructive dialogue" with the company's critics as well as the general
public.
Mr. Bible opened the meeting by noting that "while 1999 was a year of
transition," the company performed well during the year and "we are
beginning 2000 with strong momentum across all of our operating
companies." He acknowledged that "unfortunately, the performance of our
stock has not reflected this strength."
Mr. Bible attributed the company's low stock price primarily to
"investor concern about the legal challenges and societal perceptions
surrounding the domestic tobacco industry." Highlighting improvements in
the litigation environment, he cited a number of favorable legal
developments during the year, as well as the 1998 Tobacco Settlement
Agreement with the State Attorneys General, which removed a significant
source of litigation risk to the company.
Despite these successes, Mr. Bible said that two lawsuits, the Engle
class-action case in Florida and the Department of Justice suit to
recover health care costs, have "added to investor concerns." He noted
that the Engle case is now proceeding to the next phase, and that the
Department of Justice suit is one in which "we believe we have a good
chance of prevailing" if the case proceeds to trial.
Mr. Bible emphasized that Philip Morris is "ready and eager to engage in
a constructive dialogue about strong, meaningful and reasonable
regulation of cigarettes." He said that the company wants to be "at the
table and part of the process of creating a regulatory framework that is
fair for smokers, the general public and for the industry."
Mr. Bible said that the company "has made fundamental changes in the way
we relate to the public and our critics." He noted that the company
launched a nationwide advertising campaign and communications program
designed to highlight the good work of Philip Morris. He also said the
company remains committed to Youth Smoking Prevention programs
worldwide, responsible drinking and "to the letter and spirit of the
Tobacco Settlement with the State Attorneys General."
Turning to the company's business performance, Mr. Bible said,
"ultimately, we believe our stock value will be driven by our strong
earnings growth and superb business fundamentals." Bible noted that "the
excellent momentum established in 1999 was evidenced in our good
first-quarter 2000 performance." Looking ahead, he said that the
company's "businesses are robust, our infrastructure is sound, our
employees are first rate and we have the best brands anywhere."
*********
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
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Washington, DC. Theresa Cheuk, Managing Editor.
Copyright 1999. All rights reserved. ISSN 1525-2272.
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