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/raid1/www/Hosts/bankrupt/CAR_Public/000606.MBX C L A S S A C T I O N R E P O R T E R Tuesday, June 6, 2000, Vol. 2, No. 109 Headlines CHERRY CORP: Special Committee Accepts Acquisition Proposal CONSECO INC: Stull, Stull Files Securities Lawsuit in Indiana CYBER-CARE, INC: Berger & Montague Files Securities Lawsuit in Florida CYBER-CARE, INC: Donovan Miller Files Securities Lawsuit in Florida CYBER-CARE, INC: Gilman and Pastor Files Securities Suit in Florida CYBER-CARE, INC: Rabin & Peckel Files Securities Complaint in Florida MILESTONE SCIENTIFIC: Announces Securities Complaint Dismissed MINNESOTA MINING: Named in More Than 2000 Breast Implant Suits MORRA: 3rd Cir Opens Door to Suits Re NJ DYFS Liability in Foster Care MULTIVEST OPTIONS: Defunct FL Commodities Firm to Pay Legal Fees NUCLEAR PLANTS: Court Nixes Three Mile Island Plant Operators' Appeal PERFORMANCE TECHNOLOGIES: Cauley & Geller Files Securities Lawsuit in NY PERFORMANCE TECHNOLOGIES: Milberg Weiss Files Securities Suit in NY ROYAL PACKING: Must Pay Workers for Travel Time on Company Buses in CA SAIPAN SWEATSHOP: Workers ALlowed to Sue without Revealing Identities STONE & WEBSTER: Has Declared Bankruptcy, Cauley & Geller Announces TOBACCO LITIGATION: Utah Smokers Sue State to Tap into Settlement Money TOSHIBA CORP: Boycotted in China over Discrimination in Settlement YBM MAGNEX: Deloitte Blames Law Firm for Denying Money Laundering ********* CHERRY CORP: Special Committee Accepts Acquisition Proposal ----------------------------------------------------------- The Cherry Corporation (Nasdaq: CHER) announced on June 5 that it has accepted a proposal made by Peter Cherry and certain of his affiliates to acquire all of the outstanding common stock of the Company not now owned by Peter Cherry and his affiliates for $26.40 per share. Mr. Cherry and certain of his affiliates currently beneficially own about 52% of all outstanding Cherry Corporation common stock and have advised the Company's Board that they are not interested in selling their interests in the Company to a third party. Peter Cherry is the Chairman and President of the Company. The Board of Directors of the Company approved an Agreement and Plan of Merger (the "Agreement") with a corporation owned by Peter Cherry and certain of his affiliates ("Mergerco") after an independent director Special Committee determined the transaction was fair to company shareholders other than Peter Cherry and his affiliates. The Special Committee was advised by Wasserstein, Perella & Co., Inc. and legal counsel, Sidley & Austin. Pursuant to the Agreement, which contains customary conditions, Mergerco will commence as promptly as practicable a cash tender offer for any and all shares of Cherry Corporation common stock not now owned by Peter Cherry and his affiliates at a price of $26.40 net to the seller in cash, subject to the condition that the number of shares tendered when combined with those already owned by Peter Cherry and certain of his affiliates equal more than 67% of the shares of common stock issued and outstanding. No external financing will be required. Following the tender offer, Mergerco will be merged with and into The Cherry Corporation and holders of Cherry Corporation common stock (other than Peter Cherry and certain of his affiliates) will have their shares converted into the right to receive $26.40 in cash. If Mergerco acquires enough shares in the tender offer so that Peter Cherry and certain of his affiliates own more than 90% of all outstanding shares of Cherry common stock, then the merger will take place without a vote of shareholders of The Cherry Corporation immediately after the tender offer is consummated. The Cherry Corporation also announced the withdrawal of the proposal previously received from another company for the acquisition of the Company for $26.00 per share in cash and that its stockholders annual meeting previously scheduled for June 22, 2000 will be postponed pending the outcome of these transactions. As has been reported in the CAR, the Company was facing 5 class action lawsuits earlier this year in connection with the chairman’s offer. In April 2000, four class action lawsuits were filed in the Court of Chancery of the State of Delaware, alleging, inter alia, breach of fiduciary duties on the part of the directors of the Company in connection with Peter Cherry's proposal. On May 9, 2000, another class action suit was filed in Delaware Chancery Court. The Company believes these suits (which include requests for injunctions) are without merit. The Cherry Corporation manufactures proprietary and custom electrical switches, sensors, electronic keyboards and controls for the worldwide automotive, computer, and consumer and commercial markets. The company has two operating divisions in the United States and seven wholly owned subsidiaries in Germany, England, France, Australia, Czech Republic, Mexico and Hong Kong. Cherry also has 50-50 joint ventures in Japan, Hirose Cherry Precision Company Limited, and in India, TVS Cherry Limited. Additional information is available on the company's website at http://www.cherrycorp.com. CONSECO INC: Stull, Stull Files Securities Lawsuit in Indiana ------------------------------------------------------------- The law firm of Stull, Stull & Brody announces that a class action lawsuit was filed on June 2, 2000, in the United States District Court for the Southern District of Indiana on behalf all persons or entities who purchased or otherwise acquired the 6.8% notes due 6/15/2005 issued by Conseco, Inc. (NYSE:CNC) during the period from April 28, 1999 through April 5, 2000, inclusive (the "Class Period"). The complaint charges Conseco and certain of its officers and directors with violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning its subsidiary Conseco Finance, which was formerly known as Green Tree Financial Corporation ("Green Tree") and the value of Green Tree's portfolio of interest-only securities. Contact: Stull, Stull & Brody, New York Tzivia Brody, Esq. 1-800-337-4983 Fax: 212/490-2022 E-mail: SSBNY@aol.com CYBER-CARE, INC: Berger & Montague Files Securities Lawsuit in Florida ---------------------------------------------------------------------- The law firm of Berger & Montague, P.C. on behalf of its client, on June 1, 2000, filed a complaint in a lawsuit in the United States District Court for the Southern District of Florida, on behalf of all persons who purchased the common stock of Cyber-Care, Inc. (Nasdaq: CYBR) during the period of October 12, 1999 through May 24, 2000. The Complaint charge the Company and its Chief Executive Officer, Michael F. Morrell, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. During the Class Period, defendants made repeated false and misleading statements regarding the successful sales of it Internet based Electronic Housecall System ("EHC"), causing the stock to reach a Class Period high of over $37.00 per share. In May, 2000, it was revealed that the United States Food and Drug Administration was investigating Cyber-Care for violating federal rules prohibiting the sale and restricting the marketing of non-FDA approved products. In addition, many of the "customer" defendants represented as entering into contracts for the purchase of EHC units did not have anywhere near the financial stability to enter into the multi-million dollar contracts. It was also disclosed that an analyst who issued a "Strong Buy" rating for the Company and issued a price target of $52.00 per share was in fact employed by Cyber-Care's own publicity company. In response, the Company's stock has fallen below $5.00 per share. Contact: Berger & Montague, P.C., Philadelphia Carole A. Broderick, Esquire Arthur Stock, Esquire Kimberly A. Walker, Investor Relations Manager 215/875-3000 or 888/891-2289 Fax: 215/875-4604 Website: http://home.bm.net e-mail: InvestorProtect@bm.net CYBER-CARE, INC: Donovan Miller Files Securities Lawsuit in Florida ------------------------------------------------------------------- The law firm of Donovan Miller, LLC, announced on June 3 that a class action lawsuit was filed in the United States District Court for the Southern District of Florida against Cyber-Care, Inc. (Nasdaq: CYBR - news) and its Chairman and CEO, Michael F. Morrell on behalf of all persons who purchased Cyber-Care common stock between October 12, 1999 and May 12, 2000, inclusive (the "Class Period"), Case No. 00-8422. The Complaint alleges that, during the Class Period, Cyber-Care and its CEO Morrell (collectively, the "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 regarding its business and finances. In particular, the Complaint alleges that the Defendants issued press releases touting sales and customer interest in the Company's Internet Electronic Housecall System, ("EHS"), despite not having the required Food and Drug Administration approval to market and sell EHS and despite the financial inability of many of the purported customers to purchase the number of EHS indicated. The text of the specific press releases referenced in the complaint from February 26, 2000 to date can be obtained at http://biz.yahoo.com/n/c/cybr.html.Specific dates of press releases referenced in the complaint include, but are not limited to: October 12, 1999; December 10 & 20, 1999; January 13, 2000; February 4, 24 & 28, 2000; and March 21 & 22, 2000. After having traded as high as $37.00 per share during the class period, Cyber-Care's common stock fell as low as $5.60 per share after the true facts were disclosed. Contact: Donovan Miller, LLC Michael D. Donovan, 215/732-6020 Fax: 215/732-8060 http://www.dmlaw.commdonovan@dmlaw.com CYBER-CARE, INC: Gilman and Pastor Files Securities Suit in Florida ------------------------------------------------------------------- Gilman and Pastor, LLP has filed a securities class action lawsuit in the United States Court for the Southern District of Florida against CyberCare, Inc. (NasdaqNM: CYBR) and certain officers and directors of the Company on behalf of purchasers of CyberCare common stock during the period October 12, 1999 through May 19, 2000, inclusive (the "Class Period"). Plaintiff's complaint alleges that defendants violated the federal securities laws by issuing a series of false and misleading statements to the investing public concerning the business and financial operations of CyberCare. In particular, defendants misrepresented that CyberCare's Electronic Housecall ("EHC") system was "market-ready" and that the Company had received hundreds of thousands of orders for the product, when in fact, the FDA had not yet approved the EHC system for marketing or sale, any agreement to sell the system would violate FDA regulations prior to approval, and demand for EHC system consisted mainly of vague expressions of interest by entities that lacked the wherewithal to acquire the system. These misstatements are alleged to have inflated the price of CyberCare common stock purchased by investors during the Class Period. Contact: Peter Lagorio of Gilman and Pastor, LLP, 617-589-3750, petelagorio@aol.com CYBER-CARE, INC: Rabin & Peckel Files Securities Complaint in Florida --------------------------------------------------------------------- A class action complaint has been filed in the United States District Court for the Southern District of Florida on behalf of all persons or entities who purchased or otherwise acquired the common stock of Cyber-Care, Inc. (Nasdaq: CYBR) between November 4, 1999 and May 12, 2000, inclusive (the "Class Period"). The complaint charges Cyber-Care and Michael F. Morrell, its Chairman and Chief Executive Officer, with violations of the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning the successful sales of its Internet-based Electronic Housecall System (the "EHC") during the Class Period. Among other things, the complaint alleges that defendants announced substantial sales of the EHC to customers that defendants knew were without the financial means to enter into the reported purchases, that the Company announced an analyst's "Strong Buy" rating and target price of $ 52.00 per share without disclosing that the analyst was employed by Cyber-Care, and that defendants are under investigation by the FDA for premature marketing and sales of the EHC in violation of FDA rules. As a result of defendants' false and misleading statements, the price of Cyber-Care common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. Contact: Rabin & Peckel LLP, New York Joseph V. McBride, 800/497-8076 or 212/682-1818 212/682-1892 (fax) email@rabinlaw.com www.rabinlaw.com MILESTONE SCIENTIFIC: Announces Securities Complaint Dismissed -------------------------------------------------------------- Milestone Scientific, Inc. (AMEX: MS) announced on June 5 that the Class Action litigation initially commenced against Milestone, its executive officers, one outside director and several consultants in 1998 for alleged violations of the Securities Exchange Act had been dismissed with prejudice, for failure to state a claim for securities fraud. In its decision, the court also pointed out, that no further opportunity would be given to the plaintiffs to amend their complaint. Milestone Scientific Inc. is the developer, manufacturer and marketer of The Wand(R), a computer controlled injection system. MULTIVEST OPTIONS: Defunct FL Commodities Firm to Pay Legal Fees ---------------------------------------------------------------- A defunct Florida commodities marketing firm lost a Supreme Court challenge Monday to legal fees it was ordered to pay as part of a multimillion-dollar settlement with former customers. The court, without comment, rejected an appeal in which the firm argued that the legal fee was excessive because it is more than twice the amount paid to customers in the class-action case. A 1990 lawsuit accused MultiVest Options Inc., a telemarketing firm, of fraud in its sales of options on commodity futures. The lawsuit said about 20,000 customers lost more than $120 million. That same year, the federal Commodity Futures Trading Commission began legal proceedings against MultiVest that led to its shutdown. MultiVest had offices in Fort Lauderdale, Boca Raton and Newport Beach, Fla., and San Diego, Calif. In 1997, MultiVest owner James Grosfeld agreed to settle the lawsuit by creating a $40 million fund to pay customers' claims and legal fees. The agreement said up to one-third of the fund could be used for legal fees, and any other funds not paid to the customers would revert to Grosfeld. A federal judge approved the settlement and set legal fees at $13.3 million plus $2.4 million in expenses, for a total of $15.7 million. About 5,000 customers qualified for payments that averaged $1,200 per customer and totaled $6.5 million from the settlement. The remaining $17.8 million went back to Grosfeld. Grosfeld challenged the legal fee, but the 11th U.S. Circuit Court of Appeals upheld it, saying courts do not have to base legal fees on the actual amount paid to those who sue. The appeals court said the MultiVest case had been particularly long and contentious. In the appeal acted on today, Grosfeld's lawyers argued that legal fees in such cases "must be limited to a reasonable percentage of the amounts actually distributed." The lawyers noted that in 1995, Congress enacted a law setting such a limit on legal fees in private securities lawsuits. Lawyers for those who sued MultiVest said Grosfeld agreed as part of the settlement not to object to the legal fee. The case is International Precious Metals vs. Waters, 99-1560. (The Associated Press State & Local Wire, June 5, 2000) MINNESOTA MINING: Named in More Than 2000 Breast Implant Suits -------------------------------------------------------------- The company and certain other companies have been named as a defendant in a number of claims and lawsuits alleging damages for personal injuries of various types resulting from breast implants formerly manufactured by the company or a related company. The company entered the business of manufacturing breast implants in 1977 by purchasing McGhan Medical Corporation. In 1984, the company sold the business to a corporation that also was named McGhan Medical Corporation. As of March 31, 2000, the company had been named as a defendant, often with multiple co-defendants, in 2,752 lawsuits and 36 claims in various courts, all seeking damages for personal injuries from allegedly defective breast implants. These lawsuits and claims purport to represent 8,751 individual claimants. It is not yet certain how many of these lawsuits and claims involve (i) products manufactured and sold by the company, as opposed to other manufacturers, or (ii) individuals who accepted benefits under the Revised Settlement Program. The company has confirmed that 421 of the 8,751 individual claimants have opted out of the class action and have 3M Implants. The company believes that most of these lawsuits and claims will be dismissed either because the claimants did not have 3M Implants or the claimants accepted benefits under the Revised Settlement Program. The company continues to work to clarify the status of these lawsuits and claims. On December 22, 1995, the Court approved a revised class action settlement program for resolution of claims seeking damages for personal injuries from allegedly defective breast implants (the "Revised Settlement Program"). The Court ordered that, beginning after November 30, 1995, members of the plaintiff class may choose to participate in the Revised Settlement Program or opt out, which would then allow them to proceed with separate product liability actions. The company believes that approximately 90 percent of the registrants, including those claimants who filed current claims, have elected to participate in the Revised Settlement Program. It is still unknown as to what disease criteria all claimants have satisfied, and what options they have chosen. As a result, the total amount and timing of the company's prospective payments under the Revised Settlement Program cannot be determined with precision at this time. As of March 31, 2000, the company has paid $293 million into the court-administered fund as a reserve against costs of claims payable by the company under the Revised Settlement Program (including a $5 million administrative assessment). Additional payments will be made as necessary. Payments to date have been consistent with the company's estimates of the total liability for these claims. Under the Revised Settlement Program, additional opt outs are expected to be minimal since the opt-out deadline has passed for virtually all U.S. class members. The company's remaining obligations under the Revised Settlement Program are limited since most payments to Current Claimants have already been made, (ii) no additional Current Claims may be filed without court approval, and (iii) Late Registrants are limited by the terms of the Revised Settlement Program. The company's current best estimate of the amount to cover the cost and expense of the Revised Settlement Program and the cost and expense of resolving opt-out claims and recovering insurance proceeds is $1.2 billion. After subtracting payments of $1.137 billion as of March 31, 2000, for defense and other costs and settlements with litigants and claimants, the company had accrued liabilities of $63 million. The company's insurers initiated a declaratory judgment action in Ramsey County Minnesota against the company seeking adjudication of certain coverage and allocation issues. The jury trial finished on February 24, 2000. The jury returned a verdict favorable to the company by rejecting all of the insurers' remaining defenses to coverage for breast implant liabilities and costs. The court will consider additional remedies requested by the company and the insurers including eliminating, limiting or extending allocation among the insurers providing occurrence-based coverage (before 1986), pre- and post-judgment interest, attorneys' fees and further equitable relief. The company expects the court's findings and final judgment in the summer of 2000. As of March 31, 2000, the company had accrued receivables for insurance recoveries of $578 million, representing settled but yet to be paid amounts as well as amounts contested by the insurance carriers. During the first quarter of 2000, the company reached final settlement or settlement agreements in principle with a number of its occurrence carriers and received payments from several of these occurrence carriers. Various factors could affect the timing and amount of proceeds to be received under the company's various insurance policies, including (i) the timing of payments made in settlement of claims; (ii) the outcome of occurrence insurance litigation in the courts of Minnesota (as discussed above) and Texas; (iii) potential arbitration with claims-made insurers; (iv) delays in payment by insurers; and (v) the extent to which insurers may become insolvent in the future. There can be no absolute assurance that the company will collect all amounts accrued as being probable of recovery from its insurers. MORRA: 3rd Cir Opens Door to Suits Re NJ DYFS Liability in Foster Care ---------------------------------------------------------------------- The Third Circuit has recognized for the first time that the state Division of Youth and Family Services can be held liable for failing to perform the constitutional duties that it undertakes by placing a child in foster care. "Failure to perform such duties can give rise, under sufficiently culpable circumstances, to liability under (42 U.S.C.) 1983," the court said on May 19 in Nicini v. Morra, 98-5193. The ruling didn't help the plaintiff in the case, a man who was sexually assaulted and given drugs while, as a teen-ager, he was placed in foster care with a man who had been convicted years earlier of corrupting the morals of a minor. The judges, 10-1, upheld dismissal of the suit on the ground that a DYFS caseworker was, at most, negligent in failing to detect the man's criminal record and that no jury could find he had acted with deliberate indifference. But in so doing, the court answered a question that had been left open by DeShaney v. Winnebago County Dep't of Social Services, 489 U.S. 189 (1989), the U.S. Supreme Court holding that "in certain limited circumstances, the Constitution imposes upon the State affirmative duties of care and protection with respect to particular individuals," such as prisoners and involuntarily committed mental patients. Though other circuits, including the Sixth, Seventh and Eighth, had found DeShaney applicable to children placed in foster care, the closest the Third Circuit had come was its dictum, in D.R. v. Middle Bucks Area Vocational Tech. Sch., 972 F.2d 1364 (1992), that a state assumes a special responsibility for the well-being of children it places in foster care. This month's ruling states unequivocally that when the state places a child in state-regulated foster care, it "has entered into a special relationship with that child which imposes upon it certain affirmative duties." Nicini's 1995 lawsuit alleged that his substantive due process rights were violated by DYFS, its caseworker Frank Cyrus and the Department of Health and Human Services. Nicini also asserted state tort law claims against the agencies, Cyrus and Edward Morra, the abuser. A criminal background check done after Nicini left the Morra home disclosed Morra's 1977 New York conviction for corrupting the morals of a minor and distributing controlled substances to minors. The Third Circuit's en banc decision in Nicini affirmed the Oct. 29, 1997, grant of summary judgment by U.S. District Judge Jerome Simandle, which dismissed Nicini's claims against Cyrus. The District Court had previously dismissed Nicini's claims against the agencies and Cyrus in his official capacity based on Eleventh Amendment immunity, leaving only claims against Cyrus in his individual capacity and Morra. The appeal originally was argued on Jan. 26, 1999, before Judges Dolores Sloviter, Theodore McKee and Marjorie Rendell. The court sua sponte requested reargument en banc, which took place on Feb. 16 of this year. Nicini had fled his own home because of parental abuse and made repeated suicide attempts when, at the age of 15, he came under the care of DYFS and Cyrus in 1990. In October 1990, Nicini's father signed a foster care placement agreement. During the next few months, DYFS unsuccessfully placed the youth with a foster family, then one aunt and then another. Nicini ran away from the foster home and one of the aunts. While staying with the second aunt in January 1991, Nicini was admitted to a hospital psychiatric unit for depression. He ran away from the hospital and went to the home of Edward and Dolores Morra, with whom his older brother had stayed when he also experienced problems at home. On discovering Nicini's whereabouts, DYFS removed him from the household but returned him after Nicini refused to go anywhere else. Based on Cyrus' testimony, Atlantic County Family Part Judge Vincent Segal approved the placement, over the objections of Nicini's parents and an aunt. Nicini's complaint alleged that Cyrus had actual or constructive knowledge of his parents' objections, which were based on rumors that Morra "permitted illicit narcotic and alcoholic abuse by minors at his residence." It also alleged that Cyrus failed to properly investigate Morra before placing Nicini in his care. Those alleged actions violated his constitutional "right to be free from the infliction of unnecessary pain or abuse ... and the fundamental right to physical safety," Nicini contended. On placing Nicini, Cyrus performed a perpetrator check on the Morras, which would have disclosed reports or convictions for child abuse only within New Jersey. Cyrus could not remember if he asked the Morras whether they had any criminal record, but recalled that he asked Morra whether anything would prevent him from becoming a foster parent. A psychologist's affidavit submitted by Nicini stated that DYFS should have checked national police records. The District Court ruled that Nicini had a clearly established right under DeShaney "to be free from deprivation of liberty by reason of a foster care placement preceded by an investigation so lacking in thoroughness and precision that it can be said to shock the conscience." The circuit court noted that, although Nicini's father voluntarily placed him in DYFS' custody, the facts were "sufficiently analogous to a foster care placement to fall within the 'special relationship' exception to DeShaney." The lower court found no constitutional violation, based on its determination that Cyrus acted appropriately because DYFS policies required only a perpetrator check of families, like the Morras, who were not part of the foster care program. Nicini also did not show that Cyrus knew of or suspected a threat of sexual abuse in the Morra home. *The appellate court similarly found no liability, holding that Cyrus was, at most, negligent. Since more than ordinary negligence is necessary to overcome Cyrus' qualified immunity under the Tort Claims Act, N.J.S.A. 59:3-3, the suit was properly dismissed, the judges found. Defining the relevant inquiry under County of Sacramento v. Lewis, 523 U.S. 833 (1998), as whether Cyrus' conduct "'shocks the conscience' in the particular setting in which that conduct occurred," Sloviter pointed out that, in the foster care context, the standard has usually been defined as " deliberate indifference." Assistant Attorney General Mary Jacobson, who argued the appeal for Cyrus, says that the court toughened the "shocks the conscience" standard by adding the requirement of willfulness. Nicini, in her view, stands for the proposition that just because a child gets hurt doesn't mean the state is liable. The court declined to address the issue of whether constructive knowledge was sufficient basis to find deliberate indifference, assuming arguendo that it was, but holding that, in any event, there was no evidence that Cyrus "failed to perform any required duty." Though the court had requested supplemental briefing on the applicability of the alternate standard of "substantial departure from accepted professional judgment" set forth in Shaw v. Stackhouse, 920 F.2d 1135 (3d Cir. 1990), it refrained from deciding that issue because neither party argued for the standard. Joseph Grimes, who represents Nicini, says that though Stackhouse "seems like a lower standard, it gives broad discretion to decision-makers where no readily identifiable standard applies" and "is actually very difficult to prove." There was, in fact, an identifiable standard, Grimes says, which was that DYFS would perform background checks in the official foster care context but not in para-foster situations, like Nicini's. He says DYFS now requires a background check in both instances. The Third Circuit found no liability in part because Nicini did not contend Cyrus violated any DYFS policy or procedure. The majority also found no liability based on Cyrus' "consistent monitoring and oversight of the placement" and the fact that Nicini never revealed the sexual abuse until he left Morra's home. Rendell, in her dissent, agreed with the majority that mere negligence is not sufficient for a substantive due process violation. But she said that due process is contextual and quoted Lewis, that "'something more than negligence but less than intentional conduct ... is a matter for closer calls.'" As a suicidal and high-risk adolescent in need of hospitalization or intensive outpatient care, Nicini required "heightened attention," Rendell said. Grimes, a partner in Cherry Hill's Grimes & Grimes, charges that the court of appeals overstepped its role. He says it is "unprecedented for an appellate court to make the factual determination that there was no deliberate indifference." Last week, Grimes was still mulling whether to file a petition for certiorari. He says that he had not yet been able to reach Nicini, now living in Florida, to inform him of the decision. A magistrate judge in March 1998 entered a default judgment for Nicini against Morra in the amount of $1 million, split evenly between compensatory and punitive damages. Nicini, however, is unlikely to collect from Morra, who is serving a 40-year prison sentence, following his 1994 conviction for sexual assaults on Nicini and others. Marcia Robinson Lowry, director of Children's Rights Inc., a New York-based nonprofit children's advocacy group, approves of Nicini's recognition that children in foster care have substantive due process rights. Lowry's group filed its own suit against DYFS in federal court last August -- Charlie and Nadine H. v. Whitman -- alleging that the agency does not adequately protect abused and neglected children. The class action against DYFS, DYFS director Charles Venti, the Department of Health and Human Services and the governor, pending before U.S. District Judge Garrett Brown, names as plaintiffs 20 children in foster care or under DYFS supervision. Lowry sees big differences between her case and Nicini. And because "DYFS was much less involved in the harm that befell Nicini," a different result should ensue. She notes that the Morra household was not a formal foster home, unlike the class-action plaintiffs who live in approved facilities and are under DYFS' day-to-day supervision. In addition, Lowry notes, Nicini did not argue the reasonable professional standard, on which the class-action plaintiffs seek to rely. Nicini might have a beneficial impact on his case, says David Harris, a partner at Lowenstein Sandler in Roseland who is handling the class suit. Earlier this year, Brown dismissed claims on behalf of class-action claimants voluntarily placed in DYFS custody, as distinguished from those over whom DYFS asserted involuntary control. As Harris will probably bring to Judge Brown's attention, the Third Circuit drew no such distinction in Nicini. (New Jersey Law Journal, May 29, 2000) NUCLEAR PLANTS: Court Nixes Three Mile Island Plant Operators' Appeal --------------------------------------------------------------------- The Supreme Court today refused to free the Three Mile Island nuclear plant's owners from lawsuits by nearly 2,000 people who say their health problems stem from the nation's worst nuclear accident in 1979. The court, without comment, rejected an appeal in which the plant owners argued that all the lawsuits should be thrown out because a trial judge ruled against 10 people whose claims were designated as a ''test'' case. The justices also turned down a separate appeal by those 10 people, who said the judge wrongly barred most of the expert testimony offered to support their claims. During the accident at the Three Mile Island plant near Harrisburg, Pa., a combination of mechanical and human failures allowed the reactor core to lose cooling water and partially melt. Some radioactive gases were released. Almost 2,000 people sued the plant's owners, saying exposure to radiation caused health problems such as cancer and birth defects. The cases were filed separately, not as a class-action, but for administrative reasons were handled jointly by a federal judge. Ten cases were chosen to be tried first as a ''test case'' that might predict the outcome of the other cases and lead to possible settlements. U.S. District Chief Judge Sylvia H. Rambo held a pretrial hearing and determined that most of the scientific expert testimony offered by those who sued was not reliable enough to be admitted as trial evidence. As a result, Rambo ruled in 1996 that there was insufficient evidence to link the residents' health problems the radiation that leaked from the plant. She dismissed all of the nearly 2,000 cases. Last November, the 3rd U.S. Circuit Court of Appeals upheld her ruling on the expert testimony and the dismissal of the 10 cases. But the appeals court revived the rest of the lawsuits, citing those peoples' constitutional right to have their cases heard by a jury. The plant owners' Supreme Court appeal said the decision to throw out all of the cases was proper under trial judges' traditional authority to dismiss meritless claims. But the plaintiffs' lawyers said the plant owners had agreed that the outcome of the first 10 cases would not be binding on the other claims. In the other appeal acted on today, the 10 plaintiffs' lawyers said the hearing on expert testimony was too extensive and intruded on their right to have the facts decided by a jury. The plant's owners said the judge properly performed her ''gatekeeping role'' to ensure expert testimony would be reliable. The cases are General Public Utilities vs. Abrams, 99-1603, and Dolan vs. General Public Utilities, 99-1604. (AP Online, June 5, 2000) PERFORMANCE TECHNOLOGIES: Cauley & Geller Files Securities Lawsuit in NY ------------------------------------------------------------------------ The Law Firm of Cauley & Geller, LLP announced on June 5 that it has filed a class action in the United States District Court for the Northern District of New York on behalf of all individuals and institutional investors that purchased the common stock of Performance Technologies Inc. (Nasdaq:PTIX) between February 2, 2000 and May 19, 2000, inclusive (the "Class Period"). The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information about the Company's financial condition and future growth. Specifically, the complaint alleges that on April 26, 2000, the Company reported seemingly positive financial results for the first quarter of 1999, creating the impression that substantial growth would continue. However, the statement was false when made because the defendants knew, or were reckless in not knowing, that a significant shipment to a customer was delayed and two large orders were decreased for the second quarter. As a result of these false and misleading statements the Company's stock traded at artificially inflated prices during the class period. When the truth about the Company was revealed, the price of the stock dropped significantly. Contact: CAULEY & GELLER, LLP, Boca Raton Sue Null or Sharon Jackson Toll Free: 888/551-9944 E-mail: cauleypa@aol.com PERFORMANCE TECHNOLOGIES: Milberg Weiss Files Securities Suit in NY ------------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on June 2, 2000, on behalf of purchasers of the common stock of Performance Technologies Inc. (NASDAQ: PTIX) between February 2, 2000, and May 19, 2000, inclusive. A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/performancetech/ The action, numbered 2000 CV-6248T, is pending in the United States District Court for the Northern District of New York, located at 100 State Street, Rochester, NY, 14614, against defendants Performance Technologies, Donald L. Turrell (Chief Executive Officer, Chief Operating Officer, and President) Charles E. Maginness (Chairman of the Board) John M. Slusser (Director) John E. Mooney (Director) and Bernard Kozel (Director). The Honorable Michael A. Telesca is the Judge presiding over the case. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between February 2, 2000, and May 19, 2000, thereby artificially inflating the price of Performance Technologies common stock. For example, as alleged in the complaint, on April 26, 2000, the Company reported seemingly positive financial results for the first quarter of 1999 and created the impression that substantial growth would continue. The statement was false when made because defendants knew, or were reckless in not knowing, that a significant shipment to a customer was delayed, and two of the purported large orders were decreased for the second quarter. When the Company announced, on May 19, 2000, that its disappointing sales in the second fiscal 1999 quarter would cause it to miss analysts' estimates, the stock price of Performance Technologies fell $16 13/16 to $11 7/16. Contact: Milberg Weiss Bershad Hynes & Lerach, LLP Steven G. Schulman or Samuel H. Rudman 800/320-5081 Email: PerformanceTechCase@.milbergny.com ROYAL PACKING: Must Pay Workers for Travel Time on Company Buses in CA ---------------------------------------------------------------------- The California Supreme Court unanimously has ruled that under California wage law, an agricultural employer that requires its workers to travel to the fields on company buses must compensate them for the travel time. Background Royal Packing Company was an agricultural employer doing business in Monterey County. Royal required Jose Morillion and other employees to meet for work each day at specified parking lots or assembly areas. Royal then transported them in buses that it provided and paid for to the fields, where the employees actually worked. At the end of each day, Royal transported the workers back to the departure points on its buses. Royal's work rules prohibited employees from using their own transportation to get to and from the fields. Its rules further provided for disciplinary action to be taken against those employees not arriving at the departure point on time or deciding to drive personal vehicles to the place of work. Morillion, on his own behalf and on behalf of class members he represented, filed a class action against Royal for compensation for the time they spent traveling to and from the fields. The employees claimed that Royal should have paid them for the time they spent (1) assembling at the departure points; (2) riding the buses to the fields; (3) waiting for the buses at the end of the day; and (4) riding the buses back to the departure points. The time for which the employees sought compensation did not include the time they spent commuting from home to the departure points and from the departure points to home. The trial court dismissed the employees' claim, and they appealed. In upholding the trial court's judgment, the court of appeal ruled that the time the employees spent traveling was not compensable as hours worked under California law because they did not work during the required transportation time. The employees sought review from the California Supreme Court, which agreed to hear the case. California Supreme Court's decision The supreme court first described the agencies that govern employment regulations in the state of California. The Industrial Welfare Commission (IWC) is the state agency empowered to formulate regulations, known as wage orders, governing employment in California. The Department of Labor Standards Enforcement is the agency empowered to enforce California's labor laws, including IWC wage orders. The IWC has issued 15 industry and occupation wage orders. Wage Order No. 14-80 governs all persons employed in an agricultural occupation. Wage Order No. 14-80 defines "hours worked" as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." The employees argued that because they were required to travel on Royal's buses, they were "subject to the control of an employer," therefore making their compulsory travel time compensable as hours worked. They contended that the phrase "suffered or permitted to work" contained in Wage Order No. 14-80 did not limit whether time spent "subject to the control of an employer" was compensable. The supreme court agreed. According to the court, under California law, it is necessary only that the worker be subject to the control of the employer to be entitled to compensation. The court rejected Royal's argument that the employees were not under its control during the required bus trips because they could read on them or perform other personal activities such as sleeping. The court noted that permitting employees to engage in limited activities such as reading or sleeping did not allow them to use the time effectively for their own purposes. For example, during the bus rides, the employees could not drop off their children at school, stop for breakfast before work, or run other errands requiring the use of a car. Focusing on the phrase "hours worked," the court found that the employees' compulsory travel time, which included the time they spent waiting for Royal's buses to begin transporting them, was compensable. The court pointed out that Royal required the employees to meet at the departure points at a certain time to ride its buses to work, and it prohibited them from using their own cars, subjecting them to verbal warnings and lost wages if they did so. By "directing" and "commanding" them to travel between the designated departure points and the fields on its buses, Royal "controlled" them within the meaning of the term "hours worked," according to the court. The supreme court emphasized that its conclusion should not be construed as holding that all travel time to and from work, rather than compulsory travel time, is compensable. The court defined "compulsory travel time" as travel to and from a work site that an employer controls and requires. Therefore, as the court pointed out, while the time the employees spent traveling on Royal's buses to and from the fields was compensable as hours worked, the time the employees spent commuting from home to the departure points and back again was not. The court further emphasized that employers do not risk paying employees for their travel time merely by providing them with transportation. The time employees spend traveling on transportation that an employer provides but does not require its employees to use may not be compensable as hours worked. Rather, by requiring employees to take certain transportation to a work site, employers thereby subject those employees to their control by determining when, where, and how they are to travel. That travel time is compensable as hours worked, according to the California Supreme Court. Morillion v. Royal Packing Company, No. S073725, 2000 WL 306651 (Cal. S. Ct., Mar. 27, 2000). Bottom line Under California law, if a worker is subject to the control of the employer for a period of time, the worker generally is entitled to compensation for that time. (California Employment Law Monitor, MAY 1, 2000) SAIPAN SWEATSHOP: Workers ALlowed to Sue without Revealing Identities --------------------------------------------------------------------- The identities of hundreds of foreign garment workers alleging they were intimidated into working unpaid overtime on the Western Pacific island of Saipan, a U.S. Commonwealth, will remain confidential under a ruling today from a three-judge panel of the Ninth Circuit Court of Appeals in San Francisco. The ruling allows a federal lawsuit filed by the workers to move forward against 22 Saipan garment factories under the Fair Labor Standards Act, reversing an earlier lower court ruling. Clothing manufactured on Saipan is sold throughout the U.S. by many major retail chains including The Gap, Target and J.C. Penney. From the U.S. Court of Appeals for the Ninth Circuit Court Opinion: "We hold that where, as here, the named plaintiffs in a Fair Labor Standards Act collective action demonstrate that they have an objectively reasonable fear of extraordinarily severe retaliation, they may conceal their identities from defendants." "On numerous occasions, plaintiffs were interrogated about, warned against, and threatened for making complaints about their working conditions by defendants and recruiting agents. Threats ran the gamut from termination and blacklisting, to deportation, arrest, and imprisonment." "This decision represents an important step in our continuing efforts to obtain social justice for the garment workers of Saipan. As a result of today's ruling, they can utilize the American courts without fear of punishment or retaliation," said Al Meyerhoff of Milberg, Weiss, Bershad, Hynes & Lerach, another lead attorney for the plaintiffs. The workers faced the prospect of being fired by the garment factories and having to pay huge "recruitment fee" debts if their names were disclosed in the suit. "There is a legitimate and powerful fear of reprisal," continued Meyerhoff. In the original filing of the suit a year ago, the workers were listed under John and Jane Doe pseudonyms. Attorneys for the factories, attempting to force disclosure of the workers' identities, had won an earlier lower-court ruling that dismissed the claims of all workers who refused to shed their anonymity. The plaintiffs' attorneys then filed an emergency expedited appeal with the Ninth Circuit. The complaint by the workers alleges that they were forced to work "off the clock" to meet unrealistic quotas, or were required to "donate" hours to the factories, without being paid overtime for these additional hours. In many cases, workers say they must work 12-hour days, seven days a week, in unsafe, unclean conditions that flagrantly violate U.S. labor laws. They are seeking payment of all overtime and other wages due. The same group of workers has also brought a class action lawsuit in Hawaii against these same factories and some of the largest U.S. garment retailers, alleging a conspiracy to indenture the workers and subject them to working and living conditions that violate U.S. and international law. In the last five years, the Saipan garment industry has been cited more than 1,000 times for violations of the U.S. Occupational Safety and Health Administration (OSHA) standards, many of which involved the possibility of death or serious injury. The industry employs thousands of foreign workers, primarily young women from China and other Asian countries, who say they are required to sign "shadow contracts" forcing them to waive basic human rights, including the right to speak freely, to associate with others, and to have children. The workers claim they were forced to pay huge "recruitment fees" to obtain jobs in Saipan, as high as $10,000, creating an indentured status that has been illegal in the U.S. since the Civil War. Contact: Valerie Holford or Elizabeth Buchanan of Fenton Communications, 202-822-5200, for Milberg, Weiss, Bershad, Hynes & Lerach STONE & WEBSTER: Has Declared Bankruptcy, Cauley & Geller Announces ------------------------------------------------------------------- The law firm of Cauley & Geller, LLP previously announced that a class action lawsuit had been filed on behalf of all persons who purchased Stone & Webster, Inc. (Nasdaq: SWBI) securities during the period between April 27, 1999 through April 28, 2000 (the "Class Period"). On Friday, June 2, 2000, Stone & Webster announced it was declaring bankruptcy. Stone & Webster also announced that, in conjunction with this bankruptcy, Stone & Webster was selling substantially all of its assets to Jacobs Engineering Group, Inc. ("Jacobs Engineering" NYSE: JEC) for $150 million in cash. Contact: Cauley & Geller, LLP Sue Null, 1-888-551-9944 CauleyPA@aol.com TOBACCO LITIGATION: Utah Smokers Sue State to Tap into Settlement Money ----------------------------------------------------------------------- Two Utah smokers have sued Utah's chief executive and top attorney in an ongoing bid to tap into the state's $ 1 billion tobacco settlement on behalf of countless smoking-injured Utahns. The federal lawsuit, filed Thursday in Utah U.S. District Court, comes two weeks after the plaintiffs' attempts to intervene in the national tobacco company settlement were dismissed by U.S. District Judge Dee Benson. The new action asserts class action status for any Utahn with smoking-related Medicaid bills. Linda K. Villagrana and Carolyn Malm are attempting to block the state from spending its share of the tobacco settlement. They say the state originally sued various tobacco companies to recover Medicaid funds spent to treat people like themselves who had suffered illness or death due to tobacco. Because Utah's actual Medicaid expenses amount to about $ 100 million, the plaintiffs assert they are among a class of other injured smokers who deserve "substantial sums potentially reaching" the remainder of the $ 1 billion settlement. Utah officials say the lawsuit is misdirected toward defendants Attorney General Jan Graham, Gov. Mike Leavitt and three other state officials. "We did not bring suit on behalf of victims -- that's their claim and no we don't agree with that at all," Utah Solicitor General Jim Soper said Thursday. "To the extent [the plaintiffs or other Utah victims] still have damages they haven't been compensated for they can sue the tobacco companies." Plaintiffs' attorneys did not return calls Thursday, but in the lawsuit they claim that "Defendants have taken, and will in the future take, this property [the settlement] for public use without just compensation." A number of like-minded claims have been filed in courts across the country, all seeking a portion of the $ 206 billion settlement with the tobacco companies. Most of the lawsuits claim "Big Tobacco" settled various state and federal claims with a stipulation that individuals would "no longer have any legal right to pursue the tobacco companies for medical expenses arising out of their tobacco-related illnesses." That stipulation never existed, Soper said. "The most controversial aspect is that the state did not sue on behalf of injured victims, the state made its own claim for direct damages." The state has argued that its lawsuit, filed in 1996, not only pertained to the harm suffered by tobacco users served by Medicaid, but also included other claims, such as consumer fraud and civil conspiracy. However, plaintiff attorneys Brent O. Hatch, Mark F. James and Mark R. Clements, argue that "Under federal law, amounts recovered by the State in excess of actual expenditures must be paid to the injured parties and may not be used in any way by the State." (The Salt Lake Tribune, June 2, 2000) TOSHIBA CORP: Boycotted in China over Discrimination in Settlement ------------------------------------------------------------------ When Toshiba made an out-of-court settlement of $ 1.05 billion (E1.11 billion) last year to compensate US consumers for a defect in its laptop computers, the giant Japanese company may have thought that was the end of the matter. But the settlement has suddenly blown up into a crusade against Toshiba in China, where the official media has been voicing outrage that Chinese owners of the company's laptops have not been offered similar compensation. Faced with what they regard as a national affront, dealers have been taking Toshiba off the shelves as a boycott of the computer company gets under way across the country. The campaign has been laced with anti-Japanese sentiment, never far below the surface in China. More significantly, it has confronted foreign companies here with the previously unknown phenomenon of consumer activism. What began as an affair of pique could be the beginning of an era of expensive consumer litigation in the world's largest potential market. It started last week when reports began circulating on the Internet about Toshiba's settlement of the US lawsuit, alleging a defect in the floppy disk controllers of its laptops that could potentially corrupt data on floppy disks. Toshiba agreed to incorporate new floppy disk controllers in personal computers bought in the US and to provide tokens ranging in value from $ 100 to $ 225 to each purchaser. Toshiba has said its decision was not an admission of a defect with the controller, though in rare cases data could be altered or lost. No such losses have been reported by consumers, either in the US or China, and Toshiba has not offered payments to any customers outside the US, including Japan, China and Europe. It has made a free software patch available over the Internet which it says prevents the problem. What really angered the Chinese was the fact that Toshiba never told anyone in China until May about the problem or the way to fix it. A court in Beijing is now deciding on whether to allow a suit filed by three Toshiba laptop users, Zhu Guoqiang, Wu Jingsong and Yang Jinping, asking for 93,000 yuan (E10,158) in compensation, a public apology and legal costs. In the present climate it is hard to see the court refusing, and if it goes ahead hundreds of similar cases will be taken throughout China. In an angry commentary yesterday, the China Youth Daily likened Toshiba management to Japanese politicians who apologise for crimes committed by their country during the second World War, using sweet words but lacking sincerity. "It is not the first Japanese company to have this problem and will not be the last," it said. Toshiba is so worried that it sent its vice-president Masaichi Koga to Beijing to face a press conference attended by 100 hostile Chinese reporters last week. One journalist shouted: "You look down on Chinese!". The most venomous anti-Toshiba comments have been posted on Internet chat rooms, some calling Chinese people "traitors" who buy Japanese goods. Chinese lawyers have been meeting all week to consider how best to pursue Toshiba through the Chinese courts, as class action suits against foreign companies are virtually unknown in China. An expert in civil law with the National People's Congress, He Shan, said manufacturers or service providers who have cheated consumers must pay damages amounting to about double the cost of the goods or services under a 1993 law on the protection of the rights and interests of consumers. (The Irish Times, June 5, 2000) YBM MAGNEX: Deloitte Blames Law Firm for Denying Money Laundering ----------------------------------------------------------------- Deloitte & Touche LLP is blaming the Bay Street law firm of Cassels Brock & Blackwell for convincing them money laundering allegations against YBM Magnex International Inc. were untrue and they should take the company on as clients, according to one of its former auditors. Cassels Brock was the magnet manufacturer's outside counsel and Lawrence Wilder, a partner, regularly handled its affairs. David Peterson, the former Ontario premier, was the law firm's senior partner and sat on YBM's board. The U.S. auditors were aware of rumours of money laundering in the summer of 1997 as they weighed whether to accept YBM as clients, according to documents obtained from the federal courthouse in Philadelphia. YBM was being forced to sign up a Big Six auditor to get a planned $100-million share issue past the Ontario Securities Commission. Stephen Coulter, a partner at Deloitte's Philadelphia office, said in a deposition that Cassels Brock provided a letter concerning the criminal allegations. He said he concluded that YBM was not involved in laundering money, and 'certainly this letter from independent counsel was a major part of that.' YBM collapsed less than a year later on allegations it was laundering money for Russian organized crime. The key letter to Deloitte from Cassels Brock, dated June 27, 1997, was signed by a junior associate who had been a lawyer for just four months. The firm's Web site lists him as a specialist in sports and entertainment law. Nowhere in the letter did YBM's counsel directly deny rumours of money laundering -- although it is not clear exactly what questions Deloitte asked. The letter merely pegged money-laundering allegations to anonymous tips received by the OSC, and set out the steps YBM was taking to try to reassure the regulator and the underwriters that work by the previous auditors was reliable. The letter was not copied to Mr. Peterson or Mr. Wilder. Mr. Wilder had received troubling first-hand reports on YBM at least three months earlier. He had attended two meetings in March, 1997, at which the Fairfax Group, a U.S. investigative agency that had been hired by YBM, delivered disturbing findings on the company, according to court documents. YBM had formed a special committee and hired Fairfax in late 1996 after learning it was under federal investigation. Fairfax was asked to look into the possibility of links to Russian organized crime. The Fairfax agents told Mr. Wilder and YBM director Owen Mitchell, vice-president of First Marathon Securities Ltd. and chairman of the special committee, that crime figures were involved with YBM management, and that the company was under active investigation by the FBI. Fairfax also said it had been unable to confirm whether companies that were supposed to be YBM customers were real, that it had found 'a lack of inventory' and that it suspected 'possible cooked books.' None of this was disclosed in the three-page letter from Cassels Brock. Nor was Deloitte informed YBM was being investigated by the U.S. Attorney's Office, even though the full board had been informed almost a year earlier. Mr. Peterson, who is now chairman of Cassels Brock, declined any comment. Mr. Coulter's deposition marks the first time a Deloitte auditor has spoken about the YBM fiasco. Without Deloitte, which accepted the engagement and signed off on a 'high-risk' re-audit of its 1996 results, YBM would not have been able to proceed with the key share issue that propelled it into the stock market big leagues. Mr. Coulter's testimony was filed in a lawsuit brought by Jacob Bogatin, YBM's president, against Chubb Insurance Co., which held YBM's directors' and officers' liability insurance. There was a trial in U.S. District Court in December and a verdict has not yet been delivered. Mr. Bogatin is suing to require Chubb to pay his legal costs for lawsuits that were filed following an organized-crime-investigation raid on YBM's Philadelphia-area headquarters May 13, 1998. The company's stock, worth almost $650-million on the Toronto Stock Exchange that day, never traded again. Mr. Coulter's 140-page deposition shows that Cassels Brock again played a pivotal role in deciding what shareholders should be told in the final months leading up to YBM's collapse . Documents show that by March, 1998, Deloitte had become deeply troubled by a series of transactions that suggested money laundering. It notified YBM that all work on the 1997 audit was being suspended pending the results of a forensic investigation of YBM's Eastern European division, where most of the problems had surfaced. YBM shares were trading at a record high at the time and the company's stock-market value was closing in on $1-billion. Mr. Coulter said in his sworn statement that Deloitte urged YBM 'on several occasions' to consult counsel about its obligation to disclose the audit suspension and the forensic investigation. He said the auditors were so concerned about YBM's failure to do so that they warned they were prepared to resign. 'Do you know what counsel advised them with respect to their disclosure obligations?' Mr. Coulter was asked. 'Well, I'm aware that Laurie Wilder advised them,' he replied. 'Who else they may have spoken to, I don't know.' Mr. Coulter said that he had a meeting with Mr. Wilder and Harry Antes, YBM's chairman, on May 4, 1998, at which time, he said, Mr. Wilder 'indicated to me that he believed the company had an obligation not to disclose.' 'And did he explain to you why he held that belief?' Mr. Coulter was asked. 'He held that belief because he felt that, to date, the investigation had disclosed no problems and he was concerned about giving the market incorrect information.' The deposition shows Mr. Wilder eventually indicated he was willing to work on 'some kind of disclosure' acceptable to Deloitte. On May 8, YBM issued a release saying 'it is possible' Deloitte may not conclude its 1997 audit on time because it wanted to see the results of 'an independent review' of YBM's business in Eastern Europe before signing off. 'Management attributes the extensiveness of the audit to the fact that business practices in the company's major market, Eastern Europe, differ from those in North America.' Five days later, U.S. federal agents descended on YBM's Philadelphia-area headquarters in a raid that was supervised by the Organized Crime Strike Force. Shareholders have filed class-action lawsuits in Canada and the United States naming YBM's officers, directors and auditors. The OSC has also charged Mr. Wilder, Mr. Peterson, Mr. Mitchell, Mr. Bogatin and other YBM officers, directors and some underwriters with securities violations. (National Post (formerly The Financial Post), June 05, 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. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *