/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010525.mbx C L A S S A C T I O N R E P O R T E R Friday, May 25 2001, Vol. 3, No. 103 Headlines AMERICO LIFE: Ohio Subsidiary Sued For Breach in Insurance Policy ANIKA THERAPEUTICS: Settles Securities Suits in Mass. For $1.2 Million AVON PRODUCTS: 10 Year-Old Securities Suit Goes to Trial This Year CAMBRIDGE TECHNOLOGY: Court Dismisses Securities Suit With Prejudice CASINO DATA: Board of Directors Files Answer to Shareholders Complaint CENTRAL GARDEN: Banks on $51 M Insurance to Cover Phoenix Liability CINCINNATI GAS: Former Subsidiary Corporation Files Liability Suit CLARUS CORPORATION: Shareholders File Consolidated Securities Plaint CONSECO FINANCE: Plaintiffs' Appeal With 8th Circuit Remains Pending CYMER INC.: Court Has Yet to Rule on Company's Motion to Dismiss DEPARTMENT 56: Shareholders Commence Securities Suit in Minnesota ENCAD INC.: Opts to Settle Antitrust Lawsuit in Colorado For $1.5 M EXXON MOBIL: Nearly 70,000 Gas Royalty Owners Sue Exxon FEI COMPANY: Micrion Suit Under Advisement in Appellate Court G&L REALTY: Denies Claims in Suits Filed in California And Maryland GREAT SOUTHERN: Actively Pursuing Settlement With Texas Plaintiffs GUESS? INC.: Lawsuit Filed by Managers Goes to Trial November 9 GUESS? INC.: Filing Deadline Set For Consolidated Complaint HEALTH NET: Court Cancels Certification Hearing Scheduled This Month LANDRY'S SEAFOOD: Faces Securities Suits Filed in Houston, Texas LORILLARD TOBACCO: VP Issues Response to Racketeering Lawsuit NETMANAGE INC.: Appellate Court Affirms Dismissal of Securities Suit NETWORK ASSOCIATES: $30 Million Settlement Pact Awaits Court Approval NETWORK ASSOCIATES: Motion to Consolidate Securities Suits Pending NETZERO.COM: Securities Suit Begins in S.D. New York OMEGA HEALTHCARE: Motion to Dismiss Hearing Scheduled For This Month PROVIDIAN FINANCIAL: No Response to Credit Card Suit in Pennsylvania RURAL METRO: Plaintiffs File Second Amended Complaint in AZ Court SEGUE SOFTWARE: Settlement Pact With Shareholders Awaits Court Nod SENSORMATIC ELECTRONICS: Denies Allegations False Disclosures Issued SOURCE MEDIA: Discovery of Securities Suit Continues Indefinitely STORAGE USA: Court Stays Late Fees Suit as Maryland Statute Disputed STORAGE USA: NY Supreme Court Denies State, Nationwide Certification STUDENT LOAN: Motion to Dismiss Suit in Delaware Remains Undecided SUN HEALTHCARE: $1.02 Billion Claim Filed in Bankruptcy Court TCW DW: Continues Vigorous Defense Against Florida Securities Suit UNIVERSITY OF CALIFORNIA: Sued For Mold Infestation in Housing Units ********* AMERICO LIFE: Ohio Subsidiary Sued For Breach in Insurance Policy ----------------------------------------------------------------- A regulatory document filed recently with the Securities and Exchange Commission revealed that on March 13, 2001, a purported class action lawsuit, Ernesto Cortes v. Ohio State Life Insurance Company, 11th Judicial Circuit Court, Dade County, Florida, was filed against Ohio State Life Insurance Company, a subsidiary of AMERICO LIFE, INC. The suit alleges Ohio State Life Insurance Company breached its obligations under a term life insurance policy purchased by plaintiff by failing to observe the guaranteed features of the policy. Ohio State denies the allegations and intends to defend the action vigorously. ANIKA THERAPEUTICS: Settles Securities Suits in Mass. For $1.2 Million ---------------------------------------------------------------------- Three putative class action complaints have been filed against Anika Therapeutics, Inc., J. Melville Engle, and Sean Moran, the Company's former chief financial officer, in the United States District Court for the District of Massachusetts on behalf of all purchasers of the Company's shares between April 15, 1998 and May 30, 2000. -- The first, filed on or about June 8, 2000, is captioned CASAZZA, ET AL. V. ANIKA THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11127-WGY. -- The second, filed on or about June 26, 2000, is captioned NEMETH-COSLETT, ET AL. V. ANIKA THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11257-WGY. -- The third, filed on or about August 2, 2000, is captioned ROCKEFELLER, ET AL. V. ANIKA THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11540-WGY. Each of these putative class action complaints encompasses the same class period and covers almost identical allegations. On or about August 7, 2000, David and Vivian West, alleged members of the Class, filed a motion to appoint themselves lead plaintiffs, and their law firm, lead counsel; as well as a motion for consolidation of the above cases. On or about September 13, 2000, the Court granted David and Vivian West's motions, consolidated the cases and captioned the case IN RE ANIKA THERAPEUTICS, INC. SECURITIES LITIGATION, Civil Action No. 00-11127-WGY. On or about October 30, 2000, lead plaintiffs filed a consolidated amended complaint. The complaint alleges that the Company and the individual defendants violated the federal securities laws by, INTER ALIA, making material misrepresentations and omissions in certain public disclosures during the period between April 15, 1998 and May 30, 2000. The alleged misrepresentations and omissions relate to the Company's historical revenue recognition policies and its restatement of revenues for 1998 and the first three quarters of 1999. On December 14, 2000, the Company, Engle and Moran each filed motions to dismiss the consolidated amended complaint. On January 29, 2001, plaintiffs' counsel filed oppositions to defendants' motions to dismiss. The Defendants filed reply briefs on February 12, 2001. The parties have negotiated and entered into an agreement in principle to settle the action, which sets forth the terms of the proposed settlement, subject to approval by the Court. As part of the proposed settlement, defendants would pay a total of $1.25 million into a settlement fund, which would, among other things, be used to pay authorized members of the Class. The Memorandum of Understanding and the proposed settlement will be contingent upon, among other things: (i) the parties execution of an appropriate Stipulation of Settlement, which is acceptable to the parties; (ii) conditional certification of the Class for purposes of the Settlement, (iii) Court approval of the Settlement; and (iv) dismissal of the Action with prejudice. AVON PRODUCTS: 10 Year-Old Securities Suit Goes to Trial This Year ------------------------------------------------------------------ In 1991, a class action suit was initiated against Avon Products, Inc. on behalf of certain classes of holders of Avon's Preferred Equity- Redemption Cumulative Stock. This lawsuit alleges various contract and securities law claims relating to the PERCS (which were fully redeemed that year). While it is not possible to predict the outcome of litigation, Avon has rejected the assertions in this case, believes it has meritorious defenses to the claims and is vigorously contesting this lawsuit. It is anticipated that a trial may take place in late 2001. CAMBRIDGE TECHNOLOGY: Court Dismisses Securities Suit With Prejudice -------------------------------------------------------------------- In March and April 1999, certain stockholders of Cambridge Technology Partners (Massachusetts), Inc. filed ten separate class action lawsuits against the Company and certain of its officers in the United States District Court for the District of Massachusetts. These were consolidated by the District Court. The suits alleged misrepresentations and omissions regarding Cambridge's future growth prospects and progress of Cambridge's reorganization in violation of federal securities laws. On March 30, 2001, the District Court dismissed the case in its entirety, with prejudice. CASINO DATA: Board of Directors Files Answer to Shareholders Complaint ---------------------------------------------------------------------- On January 23, 2001, Dwayne Alberts, allegedly a shareholder of Casino Data Systems, filed a purported class action complaint against the Company and the Company's Board of Directors in the District Court of Clark County in the State of Nevada, Case No. A429714IX, alleging a claim of breach of fiduciary duty arising out of the announced transaction between the Company and Aristocrat Leisure Limited. In the action, Alberts has alleged, generally, that the Board of Directors breached its fiduciary duties by taking actions designed to deter higher offers from other potential acquisitors so as to ensure Casino Data insiders receive personal benefits at the expense of Casino Data shareholders. Accordingly, the defendants timed the announcement of the merger to place an artificial cap on the price for Casino Data's stock to enable [Aristocrat] to acquire the stock at the lowest possible price and timed the announcement [of the merger agreement] to come within days before they would disclose Casino Data's fourth quarter results. Alberts is seeking class certification, declaratory relief, injunctive relief preventing the consummation of the merger and directing the defendants to exercise their fiduciary duties in the manner described by plaintiffs, attorney fees and costs, and such other and further relief as the court deems just and proper. The Company and the Board of Directors deny all of Alberts' allegations. "It is the position of the Board of Directors that they did not breach any fiduciary duties and that they took reasonable steps under the circumstances to maximize the value for the stockholders of the Company, evaluated and allowed for the possibility of entering into a merger or similar agreement with companies other than Aristocrat, solicited bids from at least two other companies, took reasonable steps to allow other potential bids to be made, and that they have in fact obtained the maximum value for the Company's shareholders under the circumstances," says a regulatory document recently filed with the Securities and Exchange Commission. The Company and the Board of Directors filed an answer to the complaint on March 8, 2001 and intend to vigorously defend themselves against the allegations. CENTRAL GARDEN: Banks on $51 MM Insurance to Cover Phoenix Liability --------------------------------------------------------------------- On August 2, 2000, a fire destroyed leased warehouse space of Central Garden & Pet Company in Phoenix, Arizona, and an adjoining warehouse space leased by a third party. The adjoining warehouse tenant, the building owner, and nearby businesses have presented claims for property damage and business interruption. Local residents have filed a purported class action lawsuit alleging claims for bodily injury and property damage as a result of the fire. In addition, the Arizona Department of Environmental Quality is monitoring the cleanup operations, and the Company, the building owner and the adjoining warehouse tenant have submitted a plan and are currently assessing whether the fire and fire suppression efforts may have caused environmental impacts to soil, groundwater and/or surface water. The United States Environmental Protection Agency has also sent the Company a request for information regarding the Phoenix fire. The overall amount of the damages to all parties caused by the fire, and the overall amount of damages which the Company may sustain as a result of the fire, have not been quantified. At the time of the fire, the Company maintained property insurance covering losses to the leased premises, the Company's inventory and equipment, and loss of business income. The Company also maintained insurance providing $51 million of coverage, without deductible, against third party liability. The Company believes this insurance coverage will be available with respect to third party claims against the Company if parties other than the Company are not found responsible. The precise amount of the damages sustained in the fire, the ultimate determination of the parties responsible and the availability of insurance coverage are likely to depend on the outcome of complex litigation, involving numerous claimants, defendants and insurance companies. CINCINNATI GAS: Former Subsidiary Corporation Files Liability Suit ------------------------------------------------------------------ A latest regulatory document of Cincinnati Gas and Electric Company filed with the Securities and Exchange Commission reveals that in January 2000, Cinergy Investments, Inc., which holds the Company's domestic non-regulated businesses and investments, sold Cinergy Resources, Inc. (CRI), a former subsidiary, to Licking Rural Electrification, Inc. doing business as The Energy Cooperative. In February 2001, Cinergy Corporation (a subsidiary), CGE and CRI were named as defendants in three class actions lawsuits. These lawsuits are in connection with Energy Cooperative's removal from the Ohio Gas Customer Choice program and the failure to deliver gas to customers. Subsequently, these class action suits were amended and consolidated into one suit. CGE has been dismissed as a defendant in the consolidated suit. On March 30, 2001, Cinergy Corporation, CGE and CII were named as defendants in a lawsuit filed by both Energy Cooperative and CRI. This lawsuit concerns any obligations or liability CII may have to Energy Cooperative following its sale of CRI. CLARUS CORPORATION: Shareholders File Consolidated Securities Plaint -------------------------------------------------------------------- Following the public announcement of Clarus Corporation on October 25, 2000, of its financial results for the third quarter, the Company and certain of its directors and officers were named as defendants in fourteen putative class action lawsuits filed in the United States District Court for the Northern District of Georgia on behalf of all purchasers of common stock of the Company during various periods beginning as early as October 20, 1999 and ending on October 25, 2000. The fourteen class action lawsuits filed against the Company were consolidated into one case, Case No. 1:00-CV-2841, pursuant to an order of the court dated November 17, 2000. On March 22, 2001, the Court entered an order appointing as the lead Plaintiffs John Nittolo, Dean Monroe, Ronald Williams, V&S Industries, Ltd., VIP World Asset Management, Ltd., Atlantic Coast Capital Management, Ltd., and T.F.M. Investment Group. Pursuant to the previous Consolidation Order of the Court, a Consolidated Amended Complaint was filed on May 14, 2001. The class action complaints allege claims against the Company and other defendants for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder with respect to alleged material misrepresentations and omissions in public filings made with the Securities and Exchange Commission and certain press releases and other public statements made by the Company and certain of its officers relating to its business, results of operations, financial condition and future prospects. As a result of which, it is alleged, the market price of the Company's common stock was artificially inflated during the class periods. The class action complaints focus on statements made concerning an account receivable from one of the Company's customers. The Company believes that it has complied with all of its obligations under the Federal securities laws and the Company intends to defend these lawsuits vigorously. CONSECO FINANCE: Plaintiffs' Appeal With 8th Circuit Remains Pending -------------------------------------------------------------------- Conseco Finance Corporation revealed in a recent regulatory document filed with the Securities and Exchange Commission that it is currently facing various related lawsuits filed in the United States District Court for the District of Minnesota. These lawsuits were generally filed as purported class actions on behalf of persons or entities who purchased common stock or options to purchase common stock of Conseco Finance during alleged class periods that generally run from February 1995 to January 1998. One action (Florida State Board of Admin. v. Green Tree Financial Corp., Case No. 98-1162) did not include class action claims. In addition to Conseco Finance, certain current and former officers and directors of Conseco Finance are named as defendants in one or more of the lawsuits. Conseco Finance and other defendants obtained an order consolidating the lawsuits seeking class action status into two actions, one of which pertains to a purported class of common stockholders (In re Green Tree Financial Corp. Stock Litig., Case No. 97-2666) and the other which pertains to a purported class action of stock option traders (In re Green Tree Financial Corp. Options Litig., Case No. 97-2679). Plaintiffs in the lawsuits assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In each case, plaintiffs allege that Conseco Finance and the other defendants violated federal securities laws by, among other things, making false and misleading statements about the current state and future prospects of Conseco Finance (particularly with respect to prepayment assumptions and performance of certain loan portfolios of Conseco Finance) which allegedly rendered Conseco Finance's financial statements false and misleading. On August 24, 1999, the United States District Court for the District of Minnesota issued an order to dismiss with prejudice all claims alleged in the lawsuits. The plaintiffs subsequently appealed the decision to the U.S. Court of Appeals for the 8th Circuit, and the appeal is currently pending. CYMER INC.: Court Has Yet to Rule on Company's Motion to Dismiss ---------------------------------------------------------------- Cymer Inc. has been named as a defendant in several putative shareholder class action lawsuits that were filed in September and October 1998 in the U.S. District Court for the Southern District of California. Certain executive officers and directors of Cymer are also named as defendants. The plaintiffs purport to represent a class of all persons who purchased Cymer's Common Stock between April 24, 1997 and September 26, 1997. The complaints allege claims under the federal securities laws. The plaintiffs allege that Cymer and the other defendants made various material misrepresentations and omissions during the Class Period. The complaints have been consolidated into a single action and a class representative has been appointed by the court. A consolidated amended complaint was filed in early August 1999. On November 5, 1999, Cymer and the other defendants filed a motion to dismiss the consolidated amended claim for failure to state a cause of action. On April 1, 2000, the court granted defendant's motion to dismiss with leave to amend the complaint by the plaintiffs. The plaintiffs filed their second amended complaint on June 5, 2000. Cymer moved to dismiss the amended complaint on August 4, 2000. On January 22, 2001, the court heard oral argument on Cymer's motion to dismiss, but has not yet decided the motion. DEPARTMENT 56: Shareholders Commence Securities Suit in Minnesota ----------------------------------------------------------------- On and following March 5, 2001 lawsuits seeking unspecified compensatory damages were filed against Department 56, Inc. and its Chairwoman and Chief Executive Officer Susan E. Engel, in the United States District Court for the District of Minnesota purportedly on behalf of the class of persons who purchased Department 56 common stock during the period February 24, 1999 through April 26, 2000. The purported class action lawsuits allege the Company and its Chairwoman violated federal securities laws by making a series of false and misleading statements concerning the Company's financial statements. The Company intends to defend these lawsuits vigorously. The Company believes it has meritorious defenses to these lawsuits. ENCAD INC.: Opts to Settle Antitrust Lawsuit in Colorado For $1.5 Mil --------------------------------------------------------------------- ENCAD INC. disclosed in a regulatory document recently filed with the Securities and Exchange Commission that it has decided to settle the antitrust lawsuit in Colorado. In November 1998, the lawsuit was filed against the Company in the U.S. District Court for the District of Colorado, alleging antitrust violations pertaining to the sales of a specified printer product. Class members sought damages caused by the allegedly faulty ink used in the printer, including the cost of the ink, the cost of the third party replacement ink, and damage to printing projects caused by the ink. The Company believed the claims were without merit and that it could have successfully defended the lawsuit. Nevertheless, the Company settled the lawsuit, believing that it was in the best interests of its stockholders. The court approved the settlement in March 2001. All of the Company's settlement obligations terminate after January 2002. The exact amount of the settlement has not been released. EXXON MOBIL: Nearly 70,000 Gas Royalty Owners Sue Exxon ------------------------------------------------------- Judge Edward C. Prado of the U.S. District Court for the Western District of Texas in San Antonio has certified a nationwide class action suit against the Exxon Mobil Corporation, which will unite nearly 70,000 gas royalty owners who allege that Exxon unfairly determined the royalties they should receive from natural gas and natural gas liquids sales. The Houston-based law firm of Fleming & Associates, L.L.P. filed the suit on behalf of the plaintiffs, who leased their mineral rights to Exxon in exchange for royalties produced from the sales of natural gas and natural gas liquids. Under the terms of the suit, royalty owners seek redress for numerous actions perpetrated upon them by Exxon. They allege that Exxon and its affiliates have engaged in a "gas value chain" scheme of operation in which Exxon allows its affiliates to produce, gather, process, transport, and market the gas, while making unreasonable and excessive profits at each stage of this chain. Meanwhile, the suit says, royalties are calculated on the transfer of the gas to Exxon's affiliates, not on the actual value of the gas received from third parties. In doing this, substantial value is shifted away from the royalty owners to Exxon. "Exxon has been skimming money off the top and leaving these royalty owners high and dry," said attorney Robert R. Herring of Fleming & Associates. "They funnel money to themselves through their affiliates, unfairly calculating the basis on which royalties should be paid, thus underpaying royalty owners. Exxon clearly has violated its contractual duty to market this gas diligently and to obtain the highest price reasonably possible. So many royalty owners across the country have been affected by these unfair practices that a class action suit is the best way to address these wrongs," he added. For further details, contact: Robert R. Herring, Jr. (Tel.) 713.621.7944, 800.654.7139 FEI COMPANY: Micrion Suit Under Advisement in Appellate Court ------------------------------------------------------------- In a recent regulatory filing with the Securities and Exchange Commission, FEI COMPANY disclosed that in conjunction with its acquisition of Micrion Corporation in August 1999, the Company assumed potential liability in connection with a 1996 class action securities suit brought against Micrion. In December 1999, the U.S. District Court for the District of Massachusetts granted the Company's renewed summary judgment motion. In January 2000, the plaintiffs appealed the decision to the U.S. Court of Appeals for the First Circuit. The appeal is pending in the First Circuit Court of Appeals, which heard oral argument in the case on December 6, 2000, and currently has the matter under advisement. The Company expects that it will be several months before the appeal is decided. The Company continues to believe the complaint to be without merit and intends to continue its vigorous defense of the claims. G&L REALTY: Denies Claims in Suits Filed in California And Maryland ------------------------------------------------------------------- Two putative shareholder class actions have been filed against G&L Realty Corporation and its directors arising out of the proposal by Daniel M. Gottlieb and Steven D. Lebowitz, the Chief Executive Officer and President, respectively, of the Company, to acquire all of the outstanding shares of the Company's common stock not currently owned by them. The first suit, Lukoff v. G&L Realty Corp. et al., case number BC 241251, was filed in the Superior Court of the State of California, County of Los Angeles, on December 4, 2000. The second suit, Abrons v. G&L Realty Corp. et al., case number 24-C-00-006109, was filed in the Circuit Court for Baltimore City, Maryland, on December 14, 2000. Both actions assert claims for breach of fiduciary duty and seek, among other things, compensatory damages and to enjoin the transaction. Defendants have filed a motion to dismiss the Abrons action on the ground that the complaint fails to state a claim. All of the Defendants, except the Company, have filed an additional motion to dismiss the Abrons action for lack of personal jurisdiction. Defendants also have filed a motion to dismiss or stay the Abrons action on grounds of forum non conveniens and comity. In the Lukoff action, Defendants have filed a demurrer to the complaint on the ground that it fails to state facts sufficient to constitute a cause of action. Defendants deny the claims. GREAT SOUTHERN: Actively Pursuing Settlement With Texas Plaintiffs ------------------------------------------------------------------ Four purported class action lawsuits against Great Southern Life Insurance Company were consolidated in May 1998 for multi-district litigation pretrial proceedings in the U.S. District Court for the Northern District of Texas (In Re Great Southern Life Insurance Company Sales Practice Litigation). These lawsuits allege deceptive sales practices in the marketing of Great Southern's whole life and universal life insurance policies and seek unspecified compensatory, punitive and/or treble damages. On March 14, 2000, the court filed an order certifying a class of all current and former owners of excess interest whole life and/or universal life policies issued from 1982 through 1997. Management is pursuing settlement of this case with plaintiffs. However, any such settlement will require court approval. GUESS? INC.: Lawsuit Filed By Managers Goes to Trial November 9 --------------------------------------------------------------- Guess? Inc. disclosed recently, in a regulatory document filed with the Securities and Exchange Commission, that a complaint was filed against the Company March 28, 2000 in San Diego County Superior Court, The case, entitled Snodgrass v. Guess? Inc. and GUESS? Retail, Inc. purports to be a class action filed on behalf of current and former store management employees in California. Plaintiffs seek overtime wages and a preliminary and permanent injunction. The parties have stipulated that a limited class composed only of visual co-managers and co-managers should be certified. The Court certified this limited class on March 16, 2001. The trial date has been set for November 9, 2001. GUESS? INC.: Filing Deadline Set For Consolidated Complaint ----------------------------------------------------------- On January 30, 2001, Guess? Inc., Maurice Marciano, Armand Marciano, Paul Marciano, and Brian Fleming were named as defendants in a securities class action entitled David Osher v. Guess? Inc., et al., filed in the United States District Court for the Central District of California. Seven additional class actions have been filed in the Central District, naming the same defendants: (i) Robert M. Nuckols v. Guess? Inc. et al., (ii) Brett Dreyfuss v. Guess? Inc. et al., (iii) Jerry Sloan v. Guess? Inc., et al., (iv) Jerry Byrd v. Guess? Inc., et al, (v) Patrick and Kristine Liska v. Guess? Inc., et al, (vi) Darrin Wegman v. Guess? Inc., et al., and (vii) Rosie Gindie v. Guess? Inc., et al. All eight complaints purport to state claims under Section 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and allege that defendants made materially false and misleading statements relating to the Company's inventory and financial condition during the class period. In Osher, Nuckols, Byrd, Wegman and Sloan, the class period is February 14, 2000 through January 26, 2001; in Dreyfuss, Liska and Gindie the class period is February 14, 2000 through November 9, 2000. On April 25, 2001, the court entered an order consolidating all of the eight class actions, captioned In re Guess, Inc. Securities Litigation. The lead plaintiff for the class is the Policeman and Fireman's Retirement System of the City of Detroit. The lead plaintiff has until June 25, 2001 to file a consolidated complaint. Defendants have 45 days after service of the consolidated complaint to file a motion to dismiss. HEALTH NET: Court Cancels Certification Hearing Scheduled This Month -------------------------------------------------------------------- Health Net, Inc. disclosed in a regulatory document recently filed with the Securities and Exchange Commission that on November 22, 1999, a complaint was filed in the United States District Court for the Southern District of Mississippi in a lawsuit entitled Pay v. Foundation Health Systems, Inc. (2:99CV329). The complaint seeks certification of a nationwide class action and alleges that cost containment measures used by the Company's health maintenance organizations, preferred provider organizations and point- of-service health plans violate provisions of the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and the federal Employee Retirement Income Security Act (ERISA). The action seeks unspecified damages and injunctive relief. The case was stayed on January 25, 2000, pending the resolution of various procedural issues involving similar actions filed against Humana Inc. On June 23, 2000, the plaintiffs filed amended complaints in a Humana action that had been consolidated pursuant to the multi- district litigation statute in the Southern District of Florida to add claims against other managed care organizations, including the Company. On October 23, 2000, the court allowed the plaintiffs to further amend the complaint against the Company to add two new named plaintiffs and withdraw the originally named plaintiff, Kerrie Pay, from the action. Consequently, this case was now be entitled Romero v. Foundation Health Systems, Inc. On October 23, 2000, the Judicial Panel on Multi-District Litigation ruled that the action originally filed against the Company in the Southern District of Mississippi should be consolidated, for purposes of pre-trial proceedings only, with other cases pending against managed care organizations in the United States District Court for the Southern District of Florida in Miami. The Company has filed a motion to dismiss the case. Briefing on the motion to dismiss has been completed and the matter is currently pending before the court. Preliminary discovery and briefing regarding the plaintiff's motion for class certification has also been completed. On April 13, 2001, the court, on its own initiative, canceled the class certification hearing that had been scheduled for May 8, 2001. The Company intends to vigorously defend the action. LANDRY'S SEAFOOD: Faces Securities Suits Filed in Houston, Texas ---------------------------------------------------------------- Landry's Seafood Restaurants, Inc. disclosed recently in a regulatory filing with the Securities and Exchange Commission, that several class action lawsuits were filed in June and July of 1999 against the Company in the United States District Court for the Southern District of Texas, Houston Division. These actions name as defendants the Company, all of its current executive officers, directors and underwriters that participated in the Company's offering of Common Stock in March 1998. Such lawsuits allege that the defendants violated Federal securities laws during certain periods while individually selling the Company's common stock. LORILLARD TOBACCO: VP Issues Response to Racketeering Lawsuit ------------------------------------------------------------- The following is the statement of Steve Watson, Vice President, External Affairs, Lorillard Tobacco Company, in response to the filing of a racketeering lawsuit against Lorillard and other cigarette manufacturers by Johnnie Cochran and Michael Hausfeld: "Although we have not yet reviewed the complaint, we believe this class action has absolutely no merit. Nationwide class actions of this nature have consistently been rejected by the courts. Lorillard is disappointed that our judicial system is once again being used as a tool to generate publicity for plaintiffs' attorneys whose real interests are strictly financial. "Lorillard has never marketed or sold its products to youth and is committed to reducing youth smoking in this country. Under the landmark Master Settlement Agreement reached in 1998 with all 50 states, we provided further assurances that teens would not have access to our advertising or our products through severe restrictions on our marketing practices. Additionally, through the MSA, we are paying more than $260 billion to the states, including $1.45 billion to fund a foundation dedicated to reducing teen smoking. "In addition, Lorillard has entered the third year of its voluntary Youth Smoking Prevention Program. This nationwide, multifaceted effort is unique in its approach and has received critical acclaim for its effectiveness. Among its components is an advertising campaign aimed at kids, 'Tobacco is Whacko if You're a Teen'; as well as a parenting program, 'Take 10,' which helps to educate adults with children on how to talk to them about not smoking. "Further, in an effort to eliminate teen access to tobacco products, Lorillard is an active and major sponsor of the 'We Card' program, which has enlisted more than 400,000 retailers across the country. The program educates and trains retail employees on how to best comply with age restriction laws and the proper method of verifying a patron's age. "At Lorillard, we are very proud of our efforts and reiterate our strong desire to significantly reduce teen smoking. At Lorillard, our position is clear -- smoking is an adult choice and kids should not smoke." NETMANAGE INC.: Appellate Court Affirms Dismissal of Securities Suit -------------------------------------------------------------------- In February 1996, a securities class action complaint, Zeid, et al. v. Kimberley, et al., Case No. C-96-20136SW, was filed in the United States District Court for the Northern District of California against Firefox Communications Inc. and certain of its former officers and directors. FTP Software, Inc. (acquired by Netmagage, Inc. in 1998) bought Firefox in July 1996. The complaint alleged that, between July 20, 1995 and January 2, 1996, the defendants violated the federal securities laws by making false or misleading statements about Firefox's operations and financial results. On May 8, 1997, the district court granted defendants' motion to dismiss without leave to amend. Plaintiffs filed a notice of appeal. Oral argument on the appeal was held on September 14, 1998. On November 1, 1999, the Court of Appeals for the Ninth Circuit issued an order vacating the judgment of the district court and remanded the case back to the district court for reconsideration in light of its recently issued landmark decision in the securities litigation case of Janas v. McCraken (In re Silicon Graphics Inc.). After remand, the Company renewed its motion to dismiss. On March 22, 2000, a hearing on the Company's motion to dismiss was held by the district court and on March 20, 2001, the Court of Appeals for the Ninth Circuit affirmed the dismissal. NETWORK ASSOCIATES: $30 Million Settlement Pact Awaits Court Approval --------------------------------------------------------------------- On April 7, 1999, a putative securities class action, captioned Knisley v. Network Associates, Inc., et al., Civil Action No. C-99-1729-SBA, was filed against the Company and several of its officers in the United States District Court for the Northern District of California. The complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and sought unspecified damages on behalf of a purported class of purchasers of common stock between January 20, 1998 and April 19, 1999. Twenty-five similar actions asserting virtually identical allegations were filed by other plaintiffs. The Court consolidated these cases and an amended complaint was filed. Defendants filed a motion to dismiss on June 6, 2000. The Court granted in part and dismissed in part the motion to dismiss. The Court allowed only plaintiffs' claims related to In-Process Research and Development to go forward and shortened the class period to April 6, 1999. Plaintiffs filed a First Amended Consolidated Complaint, and defendants filed an answer. In February 2001, the Company settled the class action. The amount of the settlement is $30 million and is being funded principally by the Company's Directors and Officers insurance carriers. The settlement is subject to court approval. NETWORK ASSOCIATES: Motion to Consolidate Securities Suits Pending ------------------------------------------------------------------ Between December 29, 2000 and February 7, 2001, Network Associates Inc. and certain of its current and former officers and directors were named in securities class action lawsuits filed in the United States District Court for the Northern District of California. The cases are captioned as follows: (i) Lukoff v. Network Associates, Inc., et al., Case No. CV-01- 0008-MEJ; (ii) Armour v. Network Associates, Inc., et al., Case No. C00-4849- EDL; (iii) Ann & Wendall Prevat. v. Network Associates, Inc., et al., Case No. C01-0007-WDB; (iv) Rizzuti v. Network Associates, et al., Case No. C-01-20008- EAI; (v) McDougald v. Network Associates, et al., Case No. CV01-20103- ADR; (vi) 539, Inc. v. Network Associates, et al., Case No. C 01 0599- MMC. The Armour, Wendel, Rizzuti, McDougald, and 539, Inc. complaints assert claims against Network Associates, William Larson and Prabhat Goyal on behalf of a putative class of persons who purchased Network Associates stock between July 19 and December 26, 2000. The Lukoff complaint asserts claims against Network Associates, William Larson, Prabhat Goyal, Leslie Denend, Virginia Gemmell, Edwin Harper and Enzo Torressi on behalf of a putative class of persons who purchased and/or acquired Network Associates stock between October 16 and December 26, 2000. All of the complaints assert causes of action and seek unspecified damages for alleged violations of Exchange Act Section 10(b)/SEC Rule 10b-5 and Exchange Act Section 20(a). In particular, the complaints allege that defendants made false and misleading statements about the Company's anticipated financial results for the fourth fiscal quarter of 2000, and that the Company's class period financial statements failed to comply with GAAP. Motions for appointment of lead plaintiff and for appointment of lead plaintiffs' lead counsel were filed on February 27, 2001. A motion for consolidation was also filed on that date. A hearing was held May 8, 2001 the result of which is unknown at this time. NETZERO.COM: Securities Suit Begins in S.D. New York ---------------------------------------------------- A class action lawsuit was filed, Wednesday, in the United States District Court for the Southern District of New York, on behalf of purchasers of NetZero.com, Inc. (NASDAQ:NZRO) common stock between September 23, 1999 and April 18, 2001, inclusive. The complaint alleges that defendants NetZero.com, Inc., Mark R. Goldston, Ronald T. Burr, James A. Armstrong, Jennifer S. Fonstad, Bill Gross, David Bohnett and Paul G. Koontz violated the federal securities laws by issuing and selling NetZero common stock pursuant to the September 23, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. The complaint alleges that, in exchange for the excessive commissions, lead underwriter The Goldman Sachs Group, Inc. and underwriters Salomon Smith Barney, Inc. and BancBoston Robertson Stephens, Inc. allocated NetZero shares to customers at the IPO price of $16.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $16.00, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of NetZero stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive NetZero's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $16.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $30.63 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the NetZero offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, contact: Tzivia Brody, Esq. at Stull, Stull & Brody by calling toll-free 1-800-337-4983, or by e-mail at SSBNY@aol.com, or by fax at 212/490-2022, or by writing to Stull, Stull & Brody, 6 East 45th Street, New York, NY 10017. OMEGA HEALTHCARE: Motion to Dismiss Hearing Scheduled For This Month -------------------------------------------------------------------- On June 20, 2000, Omega Healthcare Investors, Inc. and its chief executive officer, chief financial officer and chief operating officer were named as defendants in certain litigation brought by Ronald M. Dickerman, in his individual capacity, in the United States District Court for the Southern District of New York. In the complaint, Dickerman contends that the Company and the named executive officers violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Dickerman subsequently amended the complaint to assert his claims on behalf of an unnamed class of plaintiffs. On July 28, 2000, Benjamin LeBorys commenced a class action lawsuit making similar allegations against the Company and certain of its officers and directors in the United States District Court for the Southern District of New York. The cases have been consolidated, and LeBorys has been named lead plaintiff. The Company believes that the litigation is without merit and is defending vigorously. The Company's Motion to Dismiss was filed with the Court on February 16, 2001. The hearing on this Motion was scheduled for May 23, 2001. PROVIDIAN FINANCIAL: No Response to Credit Card Suit in Pennsylvania -------------------------------------------------------------------- In February 2001, Providian Financial Corporation was named as a defendant in a consumer class action suit entitled Ross v. VISA, U.S.A., Inc., et al., which was filed in the United States District Court for the Eastern District of Pennsylvania against VISA, MasterCard and a number of credit card issuing banks. The suit alleges that uniform foreign currency surcharges allegedly imposed by the defendants are the result of a conspiracy in restraint of trade and violate the federal antitrust laws, and that the defendant banks failed to separately identify these surcharges to their customers on their monthly statements in violation of the federal Truth-in- Lending Act. A number of similar lawsuits have since been filed in California and New York. The Company has not yet filed a response to these actions. RURAL METRO: Plaintiffs File Second Amended Complaint in AZ Court ----------------------------------------------------------------- Rural Metro Corporation disclosed in a recent regulatory filing with the Securities and Exchange Commission that Warren S. Rustand, former Chairman of the Board and Chief Executive Officer of the Company, James H. Bolin, former Vice Chairman of the Board, and Robert E. Ramsey, Jr., former Executive Vice President and former Director, have been named as defendants in two purported class action lawsuits: (i) Haskell v. Rural/Metro Corporation, et al., Civil Action No. C-328448 filed on August 25, 1998 in Pima County, Arizona Superior Court, and (ii) Ruble v. Rural/Metro Corporation, et al., CIV 98-413-TUC-JMR filed on September 2, 1998 in United States District Court for the District of Arizona. The two lawsuits, which contain virtually identical allegations, were brought on behalf of a class of persons who purchased the Company's publicly traded securities including its common stock between April 28, 1997 and June 11, 1998. Haskell v. Rural/Metro seeks unspecified damages under the Arizona Securities Act, the Arizona Consumer Fraud Act, and under Arizona common law fraud, and also seeks punitive damages, a constructive trust, and other injunctive relief. Ruble v. Rural/Metro seeks unspecified damages under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The complaints in both actions allege that between April 28, 1997 and June 11, 1998 the defendants issued certain false and misleading statements regarding certain aspects of the Company's financial status and that these statements allegedly caused common stock of the Company to be traded at artificially inflated prices. The complaints also allege that Bolin and Ramsey sold stock during this period, allegedly taking advantage of inside information that the stock prices were artificially inflated. On May 25, 1999, the Arizona state court granted the Company's request for a stay of the Haskell action until the Ruble action is finally resolved. The Company and the individual defendants moved to dismiss the Ruble action. On January 25, 2001, the Court granted the motion to dismiss, but granted the plaintiffs leave to enter another plead. On March 31, 2001, the plaintiffs filed a second amended complaint. The Company intends to defend the actions vigorously. SEGUE SOFTWARE: Settlement Pact With Shareholders Awaits Court Nod ------------------------------------------------------------------ On or about April 27, 1999, a putative class action complaint was filed in the United States District Court for the District of Massachusetts against Segue Software Inc., its Chief Executive Officer and a former Chief Financial Officer of Segue, captioned Nathan Rice v. Segue Software, Inc., et al., Civil No. 99-CV-10891-RGS. The class action complaint alleged the defendants violated the federal securities laws by making material misrepresentations and omissions in certain public disclosures during the period beginning on October 13, 1998 through April 9, 1999, inclusive. The public disclosures relate to, among other things, Segue's past and future financial performance and results. On or about May 3, 1999, another similar putative class action complaint was filed against Segue, its Chief Executive Officer and a former Chief Financial Officer of Segue in the United States District Court for the District of Massachusetts, captioned Anthony Moumouris v. Segue Software, Inc., et al., Civil No. 99-CV-10933-RGS. These cases were consolidated under the caption In Re Segue Software, Inc. Securities Litigation, Civil No. 99-CV-10891-RGS, and the plaintiffs filed a consolidated amended complaint on September 27, 1999 alleging a putative class period of July 14, 1998 through April 9, 1999, inclusive. After the court granted Segue's motion to dismiss and pending appeal of this order, Segue and the plaintiffs agreed to settle this matter. The trial court must approve the settlement. SENSORMATIC ELECTRONICS: Denies Allegations False Disclosures Issued -------------------------------------------------------------------- During April 2001, a putative shareholder class action was filed in the United States District Court for the Southern District of Florida by an alleged shareholder of Sensormatic Electronics Corporation following an announcement that corporate earnings for the third quarter of fiscal year 2001 would be below expectations. The complaint alleges, among other things, that the Company made false and misleading statements by disclosing future prospects and contracts without disclosing adverse information concerning the Company's financial results and business conditions, and that certain officers and directors of the Company sold shares during the class period. The Company believes that its public disclosures were at all times appropriate to the circumstances when made and intends to vigorously defend against this suit. SOURCE MEDIA: Discovery of Securities Suit Continues Indefinitely ----------------------------------------------------------------- On August 21, 1998, the first of fourteen class action complaints were filed against Source Media Inc. and certain of its former officers and directors in the United States District Court for the Northern District of Texas asserting violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b5 promulgated thereunder. The Court consolidated the complaints into one action entitled Hartsell et al. v. Source Media, Inc., et al., Civil Action No. 3-98-CV-1980-M. The Source Media defendants moved to dismiss the complaint on April 19, 1999. The Court denied the motion on July 16, 1999. On August 16, 1999, plaintiffs filed a related complaint against Ernst & Young LLP. The action against Ernst & Young was consolidated with the Source Media action on August 31, 1999. On November 19, 1999, Ernst & Young moved to dismiss plaintiffs' complaint and the Court granted that motion with leave to amend. Plaintiffs filed their First Amended Complaint against Ernst & Young on April 20, 2000. Ernst & Young moved to dismiss plaintiffs' First Amended Complaint, and on January 11, 2001 the Court issued an Order denying Ernst & Young's motion. In the January 11 Order, the Court required the parties to complete discovery related to the claims against Ernst & Young within 120 days. On March 26, 2001, the Court granted Ernst & Young's unopposed motion to extend that deadline by 60 days. There is currently no deadline for the completion of discovery related to claims against the Source Media defendants and no trial date has been set. Discovery related to the Ernst & Young claims is on-going. The Company believes it is adequately insured against losses from this litigation and that this case is totally without merit. The Company intends to defend itself, and its officers and directors, vigorously. STORAGE USA: Court Stays Late Fees Suit as Maryland Statute Disputed -------------------------------------------------------------------- On July 22, 1999, a purported statewide class action was filed against Storage USA, Inc. and SUSA Partnership, L.P. in the Circuit Court of Montgomery County, Maryland, under the style Ralph Grunewald v. Storage USA, Inc. and SUSA Partnership, L.P., case no. 201546V, seeking recovery of certain late fees paid by tenants and an injunction against further assessment of similar fees. The Company filed a responsive pleading on September 17, 1999, setting out its answer and affirmative defenses. The Company believes that it has defenses to the claims in the suit and intends to vigorously defend it. The Plaintiff filed a Motion for Partial Summary Judgment and a Motion for Class Certification, but before Storage USA was required to respond to these motions, the case was stayed until June 2001. The stay was entered in part because of a new statute passed by the Maryland legislature relating to late fees. The constitutionality of that statute has been challenged in an unrelated litigation not involving the Company. STORAGE USA: NY Supreme Court Denies State, Nationwide Certification -------------------------------------------------------------------- On November 15, 1999, a purported nationwide class action was filed against Storage USA, Inc. and SUSA Partnership, L.P. in the Supreme Court of the State of New York, Ulster County, under the style West 125th Street Associates, L.L.C. v. Storage USA, Inc. and SUSA Partnership, L.P., case no 99-3278, seeking the recovery of certain late and administrative fees paid by tenants and an injunction against similar fees. The Company filed a responsive pleading on January 28, 2000 and the case was transferred to New York County, case no. 401589/00. On July 6, 2000 the Plaintiff filed an Amended Complaint and a Motion for Class Certification. On February 6, 2001, the New York Supreme Court, in an oral ruling by Justice Gammerman, declined to certify either a New York or nationwide class. The ruling may be appealed by the plaintiffs. STUDENT LOAN: Motion to Dismiss Suit in Delaware Remains Undecided ------------------------------------------------------------------ Following the public announcement of Citigroup Inc.'s proposal to acquire the 20% stocks of STUDENT LOAN CORPORATION that Citigroup does not already beneficially own, in October 1999 six putative class action complaints were filed in Delaware Chancery Court against the Company and its directors (as well as Citigroup and certain subsidiaries). In November 1999, one of the six complaints was voluntarily dismissed without prejudice. In December 1999, the Delaware Chancery Court consolidated the five remaining complaints under the caption "In re The Student Loan Corp. Shareholders Litigation" and, on February 3, 2000, plaintiffs filed a consolidated amended complaint. In the consolidated amended complaint, plaintiffs allege, among other things, that because Citigroup holds a majority position (80 percent of the Company's outstanding common stock) in the Company there have been no steps taken to ascertain the Company's true value and that defendants have engaged in a series of self-dealing transactions artificially depressing the Company's stock price. The relief plaintiffs seek includes enjoining Citigroup's offer, or, if the proposed transaction is consummated, rescinding the transaction and recovering monetary damages caused by defendants' alleged breach of fiduciary duties. On February 17, 2000, Citigroup and the Special Committee of the Company's independent directors, formed to evaluate the proposal, publicly announced the termination of discussions regarding the proposal. The same day, the Company and several other defendants moved to dismiss the consolidated amended complaint for failure to state a claim. That motion has not yet been ruled upon and the action remains pending. SUN HEALTHCARE: $1.02 Billion Claim Filed in Bankruptcy Court ------------------------------------------------------------- In May 1999, a former employee of SunBridge Healthcare Corporation, a long-term care subsidiary, filed a proposed class action complaint against SunBridge in the Western District of Washington. The plaintiff sought to represent certain current and former employees of SunBridge who were allegedly not paid appropriate wages under federal and state law since May 1996. In August 1999, several former employees of SunDance Rehabilitation Corporation, another subsidiary of the Company, filed a proposed class action complaint against SunDance in the Western District of Washington. The plaintiffs sought to represent certain current and former employees of SunDance who were allegedly not paid appropriate wages under federal and state law since August 1996. The same legal counsel represents the plaintiffs in both of these actions. These lawsuits are currently stayed as a result of the Company's pending Chapter 11 cases. In June 2000, the plaintiffs in the SunBridge Action and the SunDance Action filed motions in the Bankruptcy Court seeking to certify their respective classes they seek to represent and an enlargement of the bar date for their class members. Plaintiffs filed claims in the pending Chapter 11 cases in the amount of $780.0 million in the SunDance Action and $242.0 million in the SunBridge Action, plus interest, costs and attorney fees. TCW DW: Continues Vigorous Defense Against Florida Securities Suit ------------------------------------------------------------------ Four purported class action lawsuits have been filed in the Superior Court for the State of California, County of Orange, against some of the Trustees and officers of TCW DW TERM TRUST 2002, one of its underwriters, the lead representative of its underwriters, the Investment Adviser, the Manager and other defendants (but not against the Trusts) by certain Shareholders of the Trusts and other trusts for which the defendants act in similar capacities. These plaintiffs generally allege violations of state statutory and common law in connection with the marketing of the Trusts to customers of one of the underwriters. On or about October 20, 1995, the plaintiffs filed an amended complaint consolidating these four actions. The defendants thereafter filed answers and affirmative defenses to the consolidated amended complaint. The defendants' answers deny all of the material allegations of the plaintiffs' complaint. In 1996, the plaintiffs voluntarily dismissed, without prejudice, their claims against two defendants who were Independent Trustees of the Trusts. In March 1997, all of the remaining defendants in the litigation filed motions for judgment on the pleadings, seeking dismissal of all of the claims asserted against them. The defendants' motions were fully briefed by all parties and were the subject of a hearing before the Court on April 18, 1997. In July 1997, the Court denied the motion for judgment on the pleadings. In August 1997, plaintiffs filed a motion for class certification. In their motion, the plaintiffs requested certification of a "nationwide" class of Trust purchasers. On June 1, 1998, the Court granted in part and denied in part the plaintiff's motion for class certification. The Court ruled that plaintiff's motion was "granted as to [a California] statewide class," but was "denied as to a nationwide class." On October 13, 1998, three separate class actions alleging similar claims on behalf of the residents of the states of Florida, New Jersey and New York were filed in the state courts of those states. The defendants removed the Florida action to federal court and the plaintiffs' motion to remand the action to state court was denied. Motions to dismiss were filed by the defendants in the Florida action on August 30, 1999, in the New Jersey action on July 26, 1999 and in the New York action on September 10, 1999. The New Jersey action was dismissed by the court with prejudice and no appeal was filed. The motion to dismiss the Florida action was denied on January 27, 2000 and the litigation remains pending. The Supreme Court of the State of New York dismissed the New York action with prejudice on April 25, 2000 and no appeal was filed. Certain of the defendants in these suits have asserted their right to indemnification from the Trusts. The ultimate outcome of these matters is not presently determinable, and no provision has been made in the Trusts' financial statements for the effect, if any, of such matters. UNIVERSITY OF CALIFORNIA: Sued For Mold Infestation in Housing Units -------------------------------------------------------------------- A class action lawsuit was filed Wednesday in Alameda County Superior Court on behalf of University of California, Berkeley students living in the university's married student housing that is allegedly contaminated with health endangering mold. The suit names as defendants the University of California Board of Regents and was filed by the Concord law firm of Kasdan, Simonds, Epstein & Martin. The Kasdan, Simonds firm is representing the plaintiffs, David Alexander Garcia, a UC Berkeley student, and his young son, Elias David Garcia. The suit has been filed as a class action on behalf of the two plaintiffs as representatives of the class, and alleges that more than 800 student residents of university housing have potentially been exposed to mold and/or fungi that could lead to health problems. According to the lawsuit, David and Elias Garcia "have experienced cough, congestion, runny nose, eye irritation, fevers, and breathing problems as a result of this exposure to the mold and/or fungi." "Mold is a pernicious agent that can severely affect a person's health in many different ways, and in some cases when a person's immune system is weakened, mold can cause toxic reactions," said Kenneth Kasdan, partner of the Kasdan, Simonds firm. "As identified by the U.S. Environmental Protection Agency, certain molds excrete micotoxins that have been identified as carcinogenic. "What makes this case even more egregious is that the housing where Mr. Garcia and the other Berkeley students have lived caters to families with young children. As with Elias, these children can become extremely ill from continuously living and playing in a mold-infested environment. "The university has a legal and moral responsibility to provide these students with housing that is safe and free from contamination," Kasdan added. "The problems here could be the tip of the proverbial iceberg, an iceberg made of mold." Along with compensatory and punitive damages for health problems and related medical expenses, the suit is also asking for injunctive relief from the defendants in the form of "abatement of the nuisance and medical monitoring of class members." "We believe, as does Mr. Garcia, that the university and the Regents have an undeniable responsibility to ensure that the housing they rent to students, or anyone else, is clean and healthy," Kasdan stated. "As far as we are concerned, they grossly ignored their responsibility towards Mr. Garcia and the other students who lived in this contaminated housing." The university housing cited in the suit includes at least 136 separate buildings with approximately eight living units per building. The suit also states that on-site daycare facilities for students' children are located in the same buildings and potentially are contaminated with mold. The suit alleges that during the past year, testing was performed on 55 family student housing residences in which Garcia and his family lived. Of those tested, at least 33 units had excessive amounts of air borne mold and student residents of three of the units were forced to leave their homes. "The residents of these three units were instructed to leave their personal belongings behind," the suit alleged. Following the detection of the mold, the university health services held an informational meeting with the occupants of the 33 infected residences, and subsequently held another general meeting for all residents of student family housing managed by UC Berkeley. For students who were either forced to leave their homes or elected to leave, the university reportedly offered the affected students the opportunity to go on a waiting list for more expensive housing in newer units. The suit alleges that Garcia, who was a resident of the affected student family housing complex during the past four years, subsequently "was required to and did employ physicians to examine, treat and care for himself and (his son) Elias, and did incur and will continue to incur medical and incidental expenses." Additionally, the suit alleged that Elias suffered serious physical distress, and the family incurred and will continue to incur medical and related expenses. It alleges that Elias will also be required to undergo future medical monitoring. The suit also alleges that the defendants "were required to put the premises in a condition fit for human occupation before renting them, and to repair all subsequent dilapidation's ... that rendered the premises untenable. "At the time of the rental of the premises to Plaintiffs, defendants ... so negligently owned, maintained, and repaired the premises so as to cause them to be unfit for human occupation, in that the premises substantially failed to provide effective waterproofing and weather protection, allowing for growth of mold and/or fungi, resulting in buildings, grounds and appurtenances that were not clean and sanitary or otherwise fit for human habitation. "As a proximate result of defendants' negligence and defendants' failure to repair the defective and dangerous conditions, or to have them repaired within a reasonable time or at all, Plaintiffs suffered serious emotional and physical distress. Plaintiffs were required to and did incur medical and related expenses, and suffered property damage and economic loss including but limited to, personal property." Kasdan pointed out that the Environmental Protection Agency has just released a study, "Mold Remediation in Schools and Commercial Buildings." "If the EPA is turning its attention to mold, you know the federal government has finally recognized this as a national health problem," Kasdan said. For more information, contact: Contact: Kasdan, Simonds, Epstein & Martin Ken Kasdan, 949/851-9000 ********* 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. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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