/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010518.MBX C L A S S A C T I O N R E P O R T E R Friday, May 18 2001, Vol. 3, No. 98 Headlines ACRES GAMING: Opts to Pay Settlement of $1.6 Million to Plaintiffs AETNA INC.: Awaits Decision on Motion to Dismiss from NY Supreme Court AMERICAN EQUITY: Milberg Weiss Files Securities Suit in W.D. Kentucky ASSICURAZIONI GENERALI: Sued over Settlement Offer to Holocaust Victims AVENUE A: Court Sets Trial of Consolidated Class Suit for June 2002 BANK OF NEW YORK: Hearing on Appeal of 2nd Amended Plaint in Sept-Oct. BARR LABORATORIES: Invmed/Apothecon Suit Continues Discovery Stage BROADVISION, INC.: Weiss & Yourman Files Class Suit Over False Claims CITGO PETROLEUM: Faces Suits in Two States for Water Contamination CROSS TIMBERS: Expects Final Approval of Settlement Pact to be Out June CYBERGUARD CORPORATION: Files Answer to 2nd Consolidated & Amended Suit FIRST USA: Suits Won't Affect Receivables of Trust Even If Found Liable FORMICA CORPORATION: Too Early to Gauge Effect of Suits In Early Stages FREEMARKETS, INC.: Weiss & Yourman Files Suit in W.D. Pennsylvania IMPERIAL CREDIT: Awaits Formal Order Granting Summary Judgment on Suit INTERNET CAPITAL: Milberg Weiss Files Class Action Suit Last Wednesday KANSAS CITY: Court Denies Plaintiff's Interlocutory Appeal On Race Suit KOS PHARMACEUTICALS: Awaits Outcome of Two-Year Appeal by Plaintiff KRYSTAL COMPANY: Anticipates Court Approval of Settlement Pact by July LIBERATE TECHNOLOGIES: Milberg Weiss Files Class Suit in S.D. New York MARINE DRILLINGS: Denies It Reduces Offshore Workers' Wages or Benefits MIRANT CORPORATION: Party to Suit that Claims It Overcharged $4 Billion NEW YORK: Proposed Settlement Pact Requires City to Pay $20-50 Million PACIFIC GULF: Files Notice of Demurrer and Demurrer to Plaintiff's Suit SONUS PHARMACEUTICALS: Settles Class Suit Using Insurance Money STEVEN MADDEN: Expects Completion of Motion to Dismiss Briefing by July TACO BELL: Studying Appeal Option After Some Verdict Favored Plaintiffs TCPI INC.: Plaintiffs Go to Appeals Court after Lower Court Junked Suit VARI-L COMPANY: Awaits Amended Complaint and Class Certification VERADO HOLDING: Court Sets Hearing on Dismissal Motion For June 20 VESTA INSURANCE: Has $110 MM Insurance To Cover Suit or Settlement Pact VULCAN MATERIALS: Discovery Has Yet To Be Scheduled in Louisiana Suit ******** ACRES GAMING: Opts to Pay Settlement of $1.6 Million to Plaintiffs ------------------------------------------------------------------ Acres Gaming Inc. has settled two related class action lawsuits filed in the U.S. District Court for the District of Nevada alleging violation of certain federal securities laws by the Company and its executive officers. The class consisted of purchasers of the Company's Common Stock during the period from March 26, 1997 to December 11, 1997. Under the terms of the settlement, the Company could elect to make cash payments amountong to $1.6 million by January 31, 2002 or issue warrants to purchase an aggregate of one million shares of the Company's Common Stock at $2.50 per share. In April 2001, the Company selected the cash payment option. AETNA INC.: Awaits Decision on Motion to Dismiss from NY Supreme Court ---------------------------------------------------------------------- Four purported shareholder class action complaints were filed in the Superior Court of Connecticut, Hartford County, alleging in substance that former Aetna Inc. and its directors breached fiduciary duties to shareholders in responding to a February 24, 2000 letter from WellPoint Health Networks, Inc. and ING America Insurance Holdings, Inc. which had invited discussions concerning a possible transaction. These actions were filed on behalf of George Schore, Michael Demetrio and Gersh Korsinsky on March 3, 2000, The Rainbow Fund on March 7, 2000, Eleanor Werbowsky on March 7, 2000, and Catherine M. Friend on March 23, 2000. On July 26, 2000, the Connecticut court ordered consolidation of the four Connecticut actions. On October 12, 2000, the plaintiffs in the four Connecticut actions withdrew their complaints. A fifth, substantially similar complaint, was filed by Barnett Stepak on behalf of a purported class of former Aetna shareholders on March 28, 2000 in the Supreme Court of New York, New York County. The complaint in the New York action seeks various forms of relief, including unspecified damages and equitable remedies. On February 9, 2001, defendants moved to dismiss that complaint. The New York litigation is in the preliminary stages. Defendants intend to defend the action vigorously. AMERICAN EQUITY: Milberg Weiss Files Securities Suit in W.D. Kentucky --------------------------------------------------------------------- Law Firm Milberg Weiss Announces Class Action Suit Against American Equity Investment Life Ins. Co., et al. The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces a class action lawsuit was filed on April 30, 2001 on behalf of purchasers of living trusts, annuities, and/or other securities from defendants during the period between May 1, 1998 and the present. The action, numbered 3:01CV-259-H, is pending in the United States District Court for the Western District of Kentucky, Louisville Division, against defendants Addison Ins. Marketing, Inc., ALMS Holdings, Inc., ALMS Ltd. LLP, American Equity Investment Life Ins. Co., Financial West Investment Group, Sentra Securities, Williams Financial Group, Terry J. Ciotti, Michael P. McIntyre, Joel L. Miller, Sidney Mondschein, David J. Noble, Victor E. Tackett, Jr., and Douglas J. Van Meter. The Complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as violations of state law, including, inter alia, intentional and negligent misrepresentation, common law fraud, breach of contract, breach of fiduciary duty, and violations of the Kentucky Deceptive Acts and Practices Law, KYS 367.710. Plaintiff alleges Defendants engaged in a wrongful scheme and course of conduct to market, based on false and misleading information, living trusts, annuities, and other securities to senior citizens and thereafter to churn the victims' investment accounts. In furtherance of the Defendants' scheme, Defendants engaged in a multi-state advertising campaign to promote their services as providers of "Living Trusts." The advertisements were false and misleading because they failed to disclose the many material disadvantages of living trusts and the fact that such trusts are ill-suited for the particular circumstances of many senior citizens. Defendants visited the homes of those individuals who responded to the advertisements and counseled them to make certain investment choices that improperly benefited Defendants and caused harm to plaintiff and the Class. For additional details, contact: Milberg Weiss Bershad Hynes & Lerach LLP, Paul D. Young and Kim Miller Levy, 800/320-5081 ASSICURAZIONI GENERALI: Sued over Settlement Offer to Holocaust Victims ----------------------------------------------------------------------- A lawyer in California filed Wednesday a class suit against Italian Insurer Assicurazioni Generali SpA for allegedly enticing Holocaust survivors to give up their legal rights to settle potentially valuable pre-World War II claims, the Reuters News Agency reported. According to lawyer William Shernoff the Italian Insurer has been sending out settlement offers that require policyholders to drop future legal claims against the firm. Shernoff alleged that the insurer deliberately failed to inform these policy holders of their rights under State laws to sue for potentially more money. ``The letters are misleading and we want to stop the process. They are attempting to get people to sign away their rights for peanuts,'' Shernoff said. The lawyer cited in his lawsuit the case of Felicia Spirer Haberfeld, an 89-year-old Holocaust-era survivor whose only daughter, parents and brother were murdered in Nazi death camps. According to Shernoff, the Haberfeld family has been trying to collect on two Generali life insurance policies since 1957. The insurance firm has only offered Haberfeld $500 each for the policies, which Shernoff said are far more valuable. ``These were two life insurance policies. Have you ever heard of a life insurance policy for $500?'' Shernoff said. The lawsuit is asking the Los Angeles Superior Court to bar Generali from sending out the settlement letters and to void any settlements brought by those letters. In addition, the lawsuit also asks the court to make previous private settlements public to let survivors know the potential value of their claims, Reuters News Agency said. AVENUE A: Court Sets Trial of Consolidated Class Suit for June 2002 ------------------------------------------------------------------- On November 20, 2000, Chance et al. v. Avenue A, Inc., plaintiffs, on behalf of themselves and all others similarly situated throughout the nation, filed a class action complaint against AVENUE A, INC. in the United States District Court for the Western District of Washington. The complaint contains the following purported claims relating to the Company's collection and use of Internet user information: (1) violation of 18 U.S.C. section 2510 et seq. (the Wiretap/Interception section of the Electronic Communications Privacy Act), (2) violation of 18 U.S.C. section 2701 et seq. (the Access to Stored Information section of the Electronic Communications Privacy Act), (3) violation of 18 U.S.C. section 1030 et seq. (the Computer Fraud and Abuse Act), (4) common law trespass to personal property, (5) common law invasion of privacy, (6) unjust enrichment, (7) violation of state consumer protection and deceptive practices statutes, and (8) declaratory judgment. The plaintiffs seek declaratory and injunctive relief as well as monetary damages and disgorgement of profits that Avenue A has received in connection with the alleged illegal practices. On April 23, 2001, plaintiffs filed a consolidated class action complaint, which contains the same claims as the original complaint and which adds claims for common law conversion and violation of RCW section 9.73.030 et seq. (the Washington Wiretap/Interception Statute). Plaintiffs have moved for class certification and the Company has filed an opposition to that motion. The Company has also filed a motion for summary judgment, requesting that the Court dismiss plaintiffs' federal claims and decline jurisdiction over plaintiffs' state claims. A trial date has been set for June 2002. BANK OF NEW YORK: Hearing on Appeal of 2nd Amended Plaint in Sept-Oct. ---------------------------------------------------------------------- On October 7, 1999, six alleged depositors of Joint Stock Bank Inkombank, a Russian bank, filed a purported class action in the United States District Court for the Southern District of New York on behalf of all depositors of Inkombank who lost their deposits when that bank collapsed in 1998. The complaint, subsequently amended twice, alleges the BANK OF NEW YORK CO., INC. and its senior officers knew about, and aided and abetted the looting of Inkombank by its principals and participated in a scheme to transfer cash improperly from Russia to various off-shore accounts and to avoid Russian customs, currency and tax laws. The amended complaint asserts causes of action for conversion and aiding and abetting conversion under New York law. In addition, the amended complaint states a claim under the Racketeer Influenced and Corrupt Organizations Act. On March 21, 2001, the court dismissed the second amended complaint without leave to replead. On April 16, 2001, plaintiffs filed a Notice of Appeal of that decision. Argument is expected on that appeal in September-October 2001. BARR LABORATORIES: Invmed/Apothecon Suit Continues Discovery Stage ------------------------------------------------------------------ In February 1998 and May 1999, Invamed, Inc., which has since been acquired by Geneva Pharmaceuticals, Inc., a division of Novartis AG, and Apothecon, Inc., a division of Bristol-Meyers Squibb, Inc., respectively, named the Company and several others as defendants in lawsuits filed in the United States District Court for the Southern District of New York, charging that the Company unlawfully blocked access to the raw material source for Warfarin Sodium. The Company believes that these suits are without merit and intends to defend its position vigorously. These actions are currently in the discovery stage. It is anticipated that this matter may take several years to be resolved but an adverse judgment could have a material adverse impact on the Company's consolidated financial statements. BROADVISION, INC.: Weiss & Yourman Files Class Suit Over False Claims --------------------------------------------------------------------- Weiss & Yourman Announces Class Action Lawsuit Filed on Behalf of All Persons Who Purchased BroadVision Common Stock Between January 26, 2001 and April 2, 2001 Weiss & Yourman announced it has filed a class action complaint on behalf of all persons who acquired BroadVision, Inc. (Nasdaq: BVSN) securities between January 26, 2001 and April 2, 2001, inclusive. The complaint charges that BroadVision, Inc. and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges BroadVision's stock price had significantly declined in late 2000 because of a reduced demand for its products. By the time the Company reported its 4thQ 00 results, defendants knew of the reduced demand and that the Company had a problem with out of control expenses. Defendants also knew BroadVision's new version of its One-to-One Enterprise product did not meet current industry standards, reducing demand for the new product and impacting BroadVision's future results. The complaint alleges that despite defendants' knowledge of these conditions, defendants continued to issue false statements about BroadVision's business and future revenues when reporting BroadVision's 4thQ 00 results. Then, on April 2, 2001, after the close of market, BroadVision announced its preliminary 1stQ 01 results, the revision of its previously reported 4thQ 00 results and a one-time charge in the 2ndQ 01. BroadVision's stock immediately declined on April 3, 2001. The complaint alleges that as a result of the defendants' conduct, plaintiff and other members of the Class suffered damages. For more information, contact: Weiss & Yourman (Los Angeles), Telephone: (800) 437-7918, Internet: www.wyca.com, E-mail: info@wyca.com CITGO PETROLEUM: Faces Suits in Two States for Water Contamination ------------------------------------------------------------------ CITGO Petroleum Corporation is among defendants to class action lawsuits in North Carolina, New York and Illinois alleging contamination of water supplies by methyl tertiary butyl ether (MTBE), a component of gasoline. These actions allege that MTBE poses public health risks and seek damages as well as remediation of the alleged contamination. These matters are in early stages of discovery. The Illinois case has been transferred to New York and consolidated with the case pending in New York. CITGO has denied all of the allegations and is pursuing its defenses. CROSS TIMBERS: Expects Final Approval of Settlement Pact to be Out June ----------------------------------------------------------------------- A lawsuit, Bishop, et al. v. Amoco Production Co., et al., was filed in May 2000 in the Third Judicial District Court in Lincoln County, Wyoming by owners of royalty and overriding royalty interests in wells located in Wyoming. The plaintiffs alleged that Cross Timbers Oil Company and the other producer defendants deducted impermissible costs of production from royalty payments that were made to the plaintiffs and other similarly situated persons, and failed to properly inform the plaintiffs and others of the deductions taken. The action was brought as a class action on behalf of all persons who own an interest in wells located in Wyoming, and to whom the defendants pay royalties and overriding royalties. The plaintiffs sought a declaratory judgment that the deductions made were impermissible and sought damages in the amount of the deductions made together with interest and attorneys' fees. The Company has reached a settlement in this action, which is subject to court approval. The Company agreed not to take similar deductions in the future and to itemize other deductions from future royalty disbursements. In a hearing in April 2001, the court provisionally certified the class and authorized notices to be mailed to potential class members. The Company expects the court will give final approval in June 2001. CYBERGUARD CORPORATION: Files Answer to 2nd Consolidated & Amended Suit ----------------------------------------------------------------------- On August 24, 1998, Cyberguard Corporation announced, among other things, that due to a review of its revenue recognition practices relating to distributors and resellers, it would restate prior financial results. After the August 24, 1998 announcement, twenty-five purported class action lawsuits were filed by alleged shareholders against the Company and certain former officers and directors. Pursuant to an order issued by the Court, these actions have been consolidated into one action, styled STEPHEN CHENEY, ET AL. V. CYBERGUARD CORPORATION, ET AL., Case No. 98-6879-CIV-Gold, in the United States District Court, Southern District of Florida. On August 23, 1999, the plaintiffs filed a Consolidated and Amended Class Action Complaint. This action seeks damages purportedly on behalf of all persons who purchased or otherwise acquired the Company's common stock during various periods from November 7, 1996 through August 24, 1998. The complaint alleges, among other things, that as a result of accounting irregularities relating to the Company's revenue recognition policies, the Company's previously issued financial statements were materially false and misleading and that the defendants knowingly or recklessly published these financial statements which caused the Company's common stock prices to rise artificially. The action alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act. Subsequently, the defendants, including the Company, filed their respective motions to dismiss the Consolidated and Amended Class Action Complaint. On July 31, 2000, the Court issued a ruling denying the Company's and Robert L. Carberry's (the Company's CEO from June 1996 through August 1998) motions to dismiss. The court granted the motions to dismiss with prejudice for defendants William D. Murray (the Company's CFO from November 1997 through August 1998), Patrick O. Wheeler (the Company's CFO from April 1996 through October 1997), C. Shelton James (the Company's former Audit Committee Chairman), and KPMG Peat Marwick LLP. On August 14, 2000, the plaintiffs filed a motion for reconsideration of that order. The Company filed an answer to the plaintiffs' Consolidated and Amended Class Action Complaint on August 24, 2000. On March 20, 2001, the Court ruled on the plaintiffs' motion for reconsideration that the previously dismissed defendants William D. Murray, Patrick O. Wheeler and C. Shelton James should not have been dismissed from the action and shall be defendants in this action under the control person liability claims under Section 20(a) of the Exchange Act, and that the plaintiffs may amend the Consolidated and Amended Class Action Complaint to bring claims against C. Shelton James under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. On April 5, 2001, the plaintiffs filed their Second Consolidated and Amended Class Action Complaint to include amended claims against C. Shelton James. On May 10, 2001, the Company filed an Answer to the Second Consolidated and Amended Class Action Complaint. FIRST USA: Suits Won't Affect Receivables of Trust Even If Found Liable ----------------------------------------------------------------------- First USA Credit Card Master Trust says in its latest regulatory filing with the Securities and Exchange Commission that the pending suits against the Company will not have any material adverse effect on its "Receivables". A number of lawsuits seeking class action certification have been filed in both state and federal courts against the Bank. These lawsuits challenge certain policies and practices of the Bank's credit card business. A few of these lawsuits have been conditionally certified as class- actions to permit settlement of the claims. The Bank has defended itself against claims in the past and intends to continue to do so in the future. "While it is impossible to predict the outcome of any of these lawsuits, the Bank believes that any liability which might result from any of these lawsuits will not have a material adverse effect on the Receivables of the Trust," the Bank said. FORMICA CORPORATION: Too Early to Gauge Effect of Suits In Early Stages ----------------------------------------------------------------------- Manufacturers of high-pressure laminate (HPL), including Formica Corporation, have been named as defendants in purported class action complaints filed in federal and certain state courts. The complaints, which all make similar allegations, allege that HPL manufacturers in the United States engaged in a contract, combination or conspiracy in restraint of trade in violation of state and federal antitrust laws and seek damages of an unspecified amount. The actions remain in their early stages. Formica Corporation intends to defend vigorously against the allegations of the complaints. The Company is unable to determine at this time if this matter will have any effect on its financial position, results of operations or cash flows. FREEMARKETS, INC.: Weiss & Yourman Files Suit in W.D. Pennsylvania ------------------------------------------------------------------ A class action lawsuit against FreeMarkets, Inc. (NASDAQ:FMKT) and its senior executives was commenced by the law firm of Weiss & Yourman in the United States District Court for the Western District of Pennsylvania on behalf of investors who purchased FreeMarkets securities between July 24, 2000 and April 23, 2001. The complaint charges defendants with violations 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 financial information, which artificially inflated the price of FreeMarkets securities during the Class Period. For further details, contact: David C. Katz, James E. Tullman and/or Mark D. Smilow, (888) 593-4771 or (212) 682-3025, via Internet electronic mail at wynyc@aol.com or by writing Weiss & Yourman, The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176. IMPERIAL CREDIT: Awaits Formal Order Granting Summary Judgment on Suit ---------------------------------------------------------------------- Imperial Credit Industries, Inc. disclosed in a regulatory document filed recently with the Securities and Exchange Commission that it has already received notice that the United States District Court for the Central District of California has granted the motion for summary judgment in the securities class action litigation identified as In re Imperial Credit Industries, Inc. Securities Litigation, Case No. CV98- 8842-SVW. The Company received the notice on May 2, 2001. The District Court has yet to issue a formal order granting the summary judgment. INTERNET CAPITAL: Milberg Weiss Files Class Action Suit Last Wednesday ---------------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit on May 16, 2001 on behalf of purchasers of the securities of Internet Capital Group, Inc. (NASDAQ:ICGE) between August 4, 1999 and December 6, 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/internetcapital/ The action, number 01 Civ. 4146, is pending in the United States District Court for the Southern District of New York against defendants Internet Capital, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancBoston Robertson Stephens, Goldman, Sachs & Co., Lehman Brothers, Inc., Walter W. Buckley, III and David D. Gathman. The complaint alleges that defendants disseminated materially false and misleading information in connection with Internet Capital's initial public offering on or about August 4, 1999 and Internet Capital's secondary offering on or about December 16, 1999 in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that the prospectuses filed in connection with the Internet Capital IPO and the Secondary Offering were materially false and misleading because they failed to disclose, among other things, that: (i) Merrill Lynch and Robertson Stephens had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Merrill Lynch and Robertson Stephens allocated to those investors material portions of the restricted number of Internet Capital shares issued in connection with the Internet Capital IPO; and (ii) Merrill Lynch and Robertson Stephens had entered into agreements with customers whereby Merrill Lynch and Robertson Stephens agreed to allocate Internet Capital shares to those customers in the Internet Capital IPO in exchange for which the customers agreed to purchase additional Internet Capital shares in the aftermarket at pre-determined prices. For more information, contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York and Steven G. Schulman or Samuel H. Rudman, 800/320-5081 internetcapitalcase@milbergNY.com Website: http://www.milberg.com KANSAS CITY: Court Denies Plaintiff's Interlocutory Appeal On Race Suit ----------------------------------------------------------------------- Patricia S. Lang, et al., on behalf of herself and all others similarly situated v. Kansas City Power and Light Company. On March 1, 2001, the United States District Court for the Western District of Missouri denied plaintiff's motion to certify a class action of African-American employees in this race discrimination case, while allowing plaintiffs to appeal this decision. The 8th Circuit Court of Appeals then denied the plaintiff's interlocutory appeal on April 10, 2001. The Company will continue to vigorously contest the claims of individual plaintiffs. In the opinion of the General Counsel, the relief sought by such individual plaintiffs will not be material to the Company's financial condition or result of operations. KOS PHARMACEUTICALS: Awaits Outcome of Two-Year Appeal by Plaintiff ------------------------------------------------------------------- On August 5, 1998, a purported class action lawsuit was filed in the United States District Court for the Northern District of Illinois, Eastern Division, against KOS PHARMACEUTICALS INC., the members of the Company's Board of Directors, certain officers of the Company, and the underwriters of the Company's October 1997 offering of shares of Common Stock. In its complaint, the plaintiff asserts, on behalf of itself and a putative class of purchasers of the Company's Common Stock during the period from July 29, 1997, through November 13, 1997, claims under: (i) sections 11, 12(a)(2) and 15 of the Securities Act of 1933; (ii) sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder; and (iii) for common law fraud, negligent misrepresentation and breach of fiduciary duty. The claims in the lawsuit relate principally to certain statements made by the Company, or certain of its representatives, concerning the efficacy, safety, sales volume and commercial viability of the Company's Niaspan product. Upon motion by the Company, the case was transferred to the United States District Court for the Southern District of Florida. The Company and the individual Kos defendants filed a motion to dismiss the complaint on January 7, 1999. On May 24, 1999, the United States District Court for the Southern District of Florida dismissed the lawsuit with prejudice. The plaintiffs filed an appeal on June 7, 1999, with the United States Circuit Court of Appeals for the 11th Circuit. The outcome of the litigation cannot yet be determined KRYSTAL COMPANY: Anticipates Court Approval of Settlement Pact by July ---------------------------------------------------------------------- On September 21, 1999, Krystal Company was named as a defendant in a lawsuit filed in the Northern District of Alabama (Michael Jones vs. The Krystal Company) alleging that the plaintiff was denied access to the restrooms in one of the Company's restaurants in violation of the Americans with Disabilities Act. The lawsuit seeks class action status on behalf of all wheelchair bound patrons of the Company's restaurants who have been denied access to restrooms. The Company and plaintiff have reached a tentative settlement of this lawsuit and have requested the court's preliminary approval of the settlement. Under the proposed class action settlement, the Company will agree to renovate all wheelchair inaccessible restrooms in Krystal-owned restaurants over a ten-year period. After notice to putative class members, a final hearing was held on May 3, 2001 for the court to consider final approval of the settlement. The Company anticipates that the court will render its final decision concerning approval of the settlement before July 2001. LIBERATE TECHNOLOGIES: Milberg Weiss Files Class Suit in S.D. New York ---------------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit on May 16, 2001, on behalf of purchasers of the securities of Liberate Technologies, Inc. (NASDAQ: LBRT) between July 28, 1999 and December 6, 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/liberate/ The action, numbered 01 Civ. 4147, is pending in the United States District Court, Southern District of New York against defendants Liberate, Credit Suisse First Boston Corp., BancBoston Robertson Stephens, Inc., Merrill, Lynch, Pierce, Fenner & Smith, Inc., Mitchell E. Kertzman and Nancy J. Hilker. The Honorable Michael B. Mukasey is the judge presiding over the case. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about July 27, 1999, Liberate commenced an initial public offering of 6, 250,000 of its shares of common stock at an offering price of $16 per share. In connection therewith, Liberate filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) Credit Suisse, BancBoston and Merrill Lynch had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Credit Suisse, BancBoston and Merrill Lynch allocated to those investors material portions of the restricted number of Liberate shares issued in connection with the Liberate IPO; and (ii) Credit Suisse, BancBoston and Merrill Lynch had entered into agreements with customers whereby Credit Suisse, BancBoston and Merrill Lynch agreed to allocate Liberate shares to those customers in the Liberate IPO in exchange for which the customers agreed to purchase additional Liberate shares in the aftermarket at pre-determined prices. For additional information, contact: Steven G. Schulman or Samuel H. Rudman One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 Phone number: (800) 320-5081 Email: liberatecase@milbergNY.com Website: http://www.milberg.com MARINE DRILLINGS: Denies It Reduces Offshore Workers' Wages or Benefits ----------------------------------------------------------------------- An offshore worker brought a class action suit against Marine Drilling Companies, Inc. and certain of its subsidiaries, and a number of offshore drilling contractors. The suit, Verdin vs. R&B Falcon Drilling USA Inc., et al Civil Action No. G-00-488 in the United States District court for the Southern District of TX, Galveston Division, was filed in August 2000. The plaintiff, previously employed by another defendant in the action, purports to be an "offshore worker" and alleges that a number of offshore drilling contractors have acted in concert to depress wages and benefits paid to their offshore employees. Plaintiff contends that this is a violation of federal and state antitrust laws and seeks an unspecified amount of treble damages, attorney's fees and costs on behalf of himself and an alleged class of offshore workers. The Company denies the allegations, however, based on information presently available the outcome of this claim could have a material adverse effect on the results of operations in the quarter the suit is resolved. MIRANT CORPORATION: Party to Suit that Claims It Overcharged $4 Billion ----------------------------------------------------------------------- Five lawsuits have been filed in the superior courts of California alleging that certain owners of electric generation facilities in California and energy marketers, including Mirant, Mirant Americas Energy Marketing, Mirant Delta, Mirant Potrero, and Southern, engaged in various unlawful and anti-competitive acts that served to manipulate wholesale power markets and inflate wholesale electricity prices in California. Three of the suits seek class action status and one of the other suits was brought by public officials on behalf of the people of California. One lawsuit alleges that, as a result of the defendants' conduct, customers paid approximately $4 billion more for electricity than they otherwise would have and seeks an award of treble damages, as well as other injunctive and equitable relief. The other suits likewise seek treble damages and equitable relief. While two of the suits name Southern as a defendant, it appears that the allegations, as they may relate to Southern and its subsidiaries, are directed to activities of subsidiaries of Mirant. One such suit names Mirant itself as a defendant. Southern has notified Mirant of its claim for indemnification for costs associated with these actions under the terms of the Master Separation Agreement that governs the separation of Mirant from Southern, and Mirant has undertaken the defense of all of the claims. The final outcome of the lawsuits cannot be determined now. NEW YORK: Proposed Settlement Pact Requires City to Pay $20-50 Million ---------------------------------------------------------------------- Nuveen New York Dividend Advantage Municipal Fund 2, a non-diversified, closed-end management investment company, disclosed in a recent regulatory filing with the Securities and Exchange Commission that the Federal district court has certified a class action against New York City with respect to violations of constitutional rights by correctional officers which may involve approximately 65,000 plaintiffs. The City and the plaintiffs' lawyers have reached a tentative settlement under which the City would be required to pay between twenty and fifty million dollars. Nuveen invests its net assets in portfolio of municipal bonds that are exempt from regular federal, New York State and New York City income taxes. PACIFIC GULF: Files Notice of Demurrer and Demurrer to Plaintiff's Suit ----------------------------------------------------------------------- On March 2, 2001, an alleged class action complaint was filed in the Superior Court of the State of California, County of Orange, naming as defendants Pacific Gulf Properties, Inc. and its Directors. The lawsuit, filed on behalf of Kenneth Garvey, alleges, among other things, breach of fiduciary duty and self-dealing relating to the Merger Agreement with FountainGlen Properties LLC and seeks to enjoin the merger. The complaint alleges the employment agreements to be received by certain members of management from FountainGlen Properties LLC pursuant to the merger are lucrative and result in more favorable treatment of management than other shareholders in the merger, and that the merger is intended to deprive the Company's shareholders of the future potential value of its properties. On May 7, 2001, the Company filed a Notice of Demurrer and Demurrer to Plaintiff's Complaint. SONUS PHARMACEUTICALS: Settles Class Suit Using Insurance Money --------------------------------------------------------------- In 1998, various class action complaints were filed in the Superior Court of Washington and in the U.S. District Court for the Western District of Washington against SONUS PHARMACEUTICALS INC. and certain of its officers and directors, alleging violations of Washington State and U.S. securities laws. In October 1998, the Company and the individual defendants moved to dismiss and stay the State Action. The claims in the State Action were subsequently re-filed in the Federal Action. In February 1999, plaintiffs filed a consolidated and amended complaint in the Federal Action, alleging violations of Washington State and U.S. securities laws. In March 1999, the Company and the individual defendants filed a motion to dismiss the consolidated amended complaint in the Federal Action. In July 1999, the Court entered an order denying in part and granting in part the motion to dismiss the complaint in the Federal Action. In November 1999, the Company filed motions for summary judgment and to stay discovery. In July 2000, with the consent of the Company's insurance carrier, the Company entered into a Memorandum of Understanding with plaintiffs to settle the Federal Action for an amount within the insurance policy limits. In November 2000, the parties filed with the Court a Stipulation of Settlement and related exhibits. On February 20, 2001, the Court approved the Stipulation of Settlement and entered an order dismissing with prejudice all claims against the defendants. STEVEN MADDEN: Expects Completion of Motion to Dismiss Briefing by July ----------------------------------------------------------------------- On or about August 9, 2000, several class action lawsuits were commenced in the United States District Court for the Eastern District of New York against Steven Madden Ltd., Steven Madden personally, and, in some of the actions, the Company's President and its Chief Financial Officer. On December 8, 2000, the court consolidated these actions and appointed a lead plaintiff and approved the plaintiff as lead counsel. On February 26, 2001, the plaintiff served a consolidated amended complaint. The amended complaint generally alleges that the Company and the individual defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by issuing false and misleading statements, and failing to disclose material adverse information relating, among other things, to certain matters and allegations concerning Madden. The plaintiff seeks an unspecified amount of damages, costs and expenses on behalf of the plaintiff and all other purchasers of the Company's common stock during the period June 21, 1997 through June 20, 2000. On April 19, 2001, all of the defendants served motions to dismiss the consolidated amended complaint. Briefing on the motions currently is scheduled to be completed by July 3, 2001. The Company believes that it has substantial defenses to the claims. The resulting liability, if any, cannot presently be determined. TACO BELL: Studying Appeal Option After Some Verdict Favored Plaintiffs ----------------------------------------------------------------------- On August 29, 1997, a class action lawsuit against Taco Bell Corp., entitled Bravo, et al. v. Taco Bell Corp., was filed in the Circuit Court of the State of Oregon of the County of Multnomah. The lawsuit was filed by two former Taco Bell shift managers purporting to represent approximately 17,000 current and former hourly employees statewide. The lawsuit alleges violations of state wage and hour laws, principally involving unpaid wages including overtime, and rest and meal period violations, and seeks an unspecified amount in damages. Under Oregon class action procedures, Taco Bell was allowed an opportunity to "cure" the unpaid wage and hour allegations by opening a claims process to all putative class members prior to certification of the class. In this cure process, Taco Bell has paid out less than $1 million. On January 26, 1999, the Court certified a class of all current and former shift managers and crew members who claim one or more of the alleged violations. A trial date of November 2, 1999 was set. However, on November 1, 1999, the Court issued a proposed order postponing the trial and establishing a pre-trial claims process. The final order regarding the claims process was entered on January 14, 2000. Taco Bell moved for certification of an immediate appeal of the Court-ordered claims process and requested a stay of the proceedings. This motion was denied on February 8, 2000. Taco Bell appealed this decision to the Supreme Court of Oregon and the Court denied Taco Bell's Writ of Mandamus on March 21, 2000. A Court-approved notice and claim form was mailed to approximately 14,500 class members on January 31, 2000. A Court ordered pre-trial claims process went forward, and hearings were held for claimants employed or previously employed in selected Taco Bell restaurants. After the initial hearings, the damage claims hearings were discontinued. Trial began on January 4, 2001. On March 9, 2001, the jury reached verdicts on the substantive issues in this matter. A number of these verdicts were in favor of the Taco Bell position; however, certain issues were decided in favor of the plaintiffs. A number of procedural issues, including possible appeals, remain to determine the ultimate damages in this matter. TCPI INC.: Plaintiffs Go to Appeals Court after Lower Court Junked Suit ----------------------------------------------------------------------- During November 1998 through January 1999, several lawsuits were filed in the United States District Court for the Southern District of Florida - Case No. 98-7334-CIV-DIMITROULEAS - against TCPI INC. and its former Chairman on behalf of various shareholders alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder. In general, plaintiffs allege the Company and its former Chairman made untrue and misleading statements in public disclosure documents and in certain press releases, articles and reports of the Company. The disclosures relate primarily to the development, clinical testing and viability of the Company's TD Glucose Monitoring System. On April 19, 1999, an Amended Consolidated Class Action Complaint was served upon the Company. On June 18, 1999, the Company filed a motion to dismiss the Amended Consolidated Class Action Complaint. On July 3, 2000, the court dismissed all claims against the Company and its former Chairman, but granted plaintiffs leave to amend their complaint on or before July 24, 2000. On July 24, 2000, plaintiffs filed a second amended complaint. On August 25, 2000, the Company filed a motion to dismiss the second amended complaint. On March 20, 2001, the Court issued a Final Order of Dismissal, dismissing with prejudice the second amended complaint. The Plaintiffs have appealed the Dismissal Order to the United States Court of Appeals for the Eleventh Circuit. VARI-L COMPANY: Awaits Amended Complaint and Class Certification ---------------------------------------------------------------- A number of private shareholder class actions alleging violations of federal securities laws were filed against Vari-L Company, Inc. in the U.S. District Court for the District of Colorado beginning in June 2000. On August 3, 2000, all of these class actions were consolidated into a single action. Lead counsel for the representatives of the putative plaintiff class have been appointed but, pursuant to the court's order the Company's obligation to respond to the complaints has been deferred until such time as the lead plaintiff files an amended complaint. As of May 10, 2001, an amended complaint has not yet been filed and a class has not been certified. VERADO HOLDING: Court Sets Hearing on Dismissal Motion For June 20 ------------------------------------------------------------------ On July 7, 2000, a purported shareholder class action complaint was filed in federal district court in Colorado alleging that Verado Holdings Inc. and various of its officers and directors and underwriters violated certain federal securities laws by misstating, and by failing to disclose, certain financial and other business information (Michael Rasner v. Donald L. Sturm, et al., Civil Action No. 00-K-1376). Ten additional complaints with similar allegations and class periods were later filed. The Securities Litigation is brought on behalf of a purported class of purchasers of the Company's stock allegedly traceable to its March 8, 2000 initial public offering. The plaintiffs in the case are seeking, among other relief, class certification, money damages, pre-judgment interest, rescission, costs and attorney's fees. The court has consolidated the individual complaints into the Rasner case. The underwriters are seeking indemnification from the Company for any damages assessed against them in this action. On November 22, 2000, the lead plaintiff group filed its Consolidated Complaint. The emphasis of the Complaint is that at the time of the IPO, the Company knew that it would exit various lines of business and had certain operational and financial issues related to certain lines of business and allegedly failed to disclose these alleged facts in the prospectus relating to the IPO. The defendants, other than the underwriters, filed a Motion to Dismiss the complaint on January 22, 2001. The underwriters also filed a Motion to Dismiss on January 22, 2001. The plaintiff group has filed responses in opposition to those motions. The defendants, other than the underwriters, submitted their reply to the plaintiffs' response on March 19, 2001 and requested the court hear oral arguments on the Motion to Dismiss. The Court granted that request and scheduled oral arguments for June 20, 2001. The plaintiff group has served us with discovery requests; however, until the court rules on the Motion to Dismiss, we need not respond to any discovery requests. The Company believes that the allegations in the complaint are without merit, and intend to vigorously defend against the claims. The Company does not believe the outcome of this action will have a material adverse effect on our financial position, results of operations or liquidity; however, litigation is inherently uncertain and there can be no assurance as to the ultimate outcome or effect of this action. VESTA INSURANCE: Has $110 MM Insurance To Cover Suit or Settlement Pact ---------------------------------------------------------------------- In March 1999, the actions filed in the United States District Court for the Northern District of Alabama against Vesta Insurance Group, Inc. were consolidated into a single action in that district and certified as a class action. Torchmark Corporation and KPMG Peat Marwick LLP, the Company's outside auditor at the time, were added as additional defendants in the consolidated class action. The consolidated amended complaint alleges violations of certain federal securities laws and seeks unspecified but potentially substantial damages. The court has denied all motions to dismiss and the class action is presently in discovery, with a trial date set for November 5, 2001. The Company says it is vigorously defending this litigation but there is no assurance of the outcome. The parties have conducted settlement discussions, but have not been successful in reaching any resolution. In a regulatory document filed at SEC, the Company claims it has several layers of directors' and officers' liability insurance coverage, the terms of which may cover all or a portion of the damages or settlement costs of the class action. These policies provide up to $100 million in insurance to cover damages or settlement costs and an additional policy provides another layer of $10 million insurance to cover any damages awarded by a court in these actions. VULCAN MATERIALS: Discovery Has Yet To Be Scheduled in Louisiana Suit --------------------------------------------------------------------- Vulcan Materials Company is named as a defendant in nine lawsuits filed in state court in Louisiana. The lawsuits claim damages for various personal injuries allegedly resulting from releases of chemicals at the Company's Geismar, Louisiana, chloralkali plant earlier this year. The suits have been filed within the past month, and some of them purport to be class actions, although no class has been certified. No discovery has taken place. Based on the information currently available to it, the Company does not believe that the ultimate resolution of these suits will have a materially adverse impact on the Company. ********* 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., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Larri-Nil G. Veloso and Lyndsey Resnick, Editors. Copyright 2001. 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. 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