/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010530.mbx C L A S S A C T I O N R E P O R T E R Wednesday, May 30 2001, Vol. 3, No. 105 Headlines ACE CASH: Claims its 'Payday Loan' in Arkansas is Not Usurious ADVANCED LIGHTING: Faces Shareholders Lawsuit in N.D. Ohio ALLSTATE CORPORATION: Pays 104 of 11,500 Claims With $1.7 M In April ALLSTATE CORPORATION: Outcome Of Replacement Parts Suits Uncertain AUDIO VISUAL: $15 Million Settlement Deal Awaits Final Nod From Court AURA SYSTEMS: Issues 14.6 M Shares And 3.5 M Warrants as Settlement AVICI SYSTEMS: Marc Henzel Commences Securities Suit in S.D. New York CB RICHARD: Numerous Pre-conditions May Axe Delaware Suit Settlement CENTRAL POWER: Franchise Fee Litigation in Texas Goes to Trial in Oct CYLINK CORPORATION: Motion to Dismiss Securities Suit in CA Pending DIGI INTERNATIONAL: Plaintiffs' Dismissal Appeal to be Heard in June ELECTRONICS FOR: Finalizing Settlement Agreement With Plaintiffs ELECTRONICS FOR: Sued in California Over Abrupt Stock Decline in 1997 HEALTHCARE RECOVERIES: Court to Approve $3 M Settlement On June 11 HEALTH NET: Sued in CA For RICO, ERISA Violations, Among Others IMPAC MORTGAGE: Sued For Violation of Missouri's Second Loans Act INFOGRAMES INC.: Suit Blames Firm's Videogame For Columbine Shooting INTERNEURON PHARMACEUTICALS: Redux Cases May Seriously Impact Company LEARNING TREE: Awaits Final Judgment on Plaintiff's Settlement Deal MONY LIFE: Continues Battle in NY Over Single Claim Allowed By SC NATIONAL AUTO: Settles Securities Lawsuit in Ohio For $6.5 Million NETLOJIX COMMUNICATIONS: 200T Shares at $8 Each Offered to Plaintiffs NEXTEL COMMUNICATIONS: Sued Over Health Risks Pose by Wireless Phone PARTY CITY: Moves to Dismiss Suit For Failure to State Cause of Action PEOPLESOFT INC.: Expects $15 M Settlement Offer to be Approved POWERCERV CORPORATION: Asks Court to Dismiss Amended Securities Plaint PRE-PAID LEGAL: Mounting Strong Defense Against Securities Lawsuits PRODIGY COMMUNICATIONS: Outcome Of CA Appeal Too Early To Predict PRODIGY COMMUNICATIONS: Court Approves Settlement Offer in Georgia PYRAMID BREWERIES: Faces Suit For Violating Washington's Consumer Act QUINTILES TRANSNATIONAL: Subsidiary Sued by Participants in Drug Study REUNION INDUSTRIES: Stockholder Lawsuit in Early Stages of Discovery SELECT COMFORT: Class Certification Still Pending in Minnesota Case SHERWIN WILLIAMS: Faces Several Lawsuits Over its Lead-based Products SONICBLUE INC.: Insurance Carrier Says No Coverage For Company STATION CASINOS: Court Has Yet to Certify Class in Nevada Lawsuit SYMMETRICOM INC.: Plaintiff Appeals Summary Judgment to Ninth Circuit US AGGREGATES: Marc Henzel Commences Securities Suit in N.D. CA VENTRO CORPORATION: Cauley Geller Extends Period of Securities Suit WARNER COMMUNICATIONS: Faces Several Suits in US, Probes in Europe ********* ACE CASH: Claims its 'Payday Loan' in Arkansas is Not Usurious -------------------------------------------------------------- On March 22, 2001, Ace Cash Express, Inc. was served with a class- action complaint, which was filed in the state Circuit Court of Pulaski County, Arkansas in December 2000, in a lawsuit entitled Mayella Veasey, et al. v. Ace Cash Express, Inc. The plaintiff, for herself and others similarly situated, alleges the Company's deferred-presentment (also commonly known as "payday loan") transactions in Arkansas from June 15, 1999 to May 1, 2000 violated the usury laws of Arkansas. The plaintiff is represented by the same counsel that represented the plaintiffs in the previous lawsuit against the Company in Arkansas regarding deferred-presentment transactions. That previous lawsuit, which was settled by the Company in October 2000, related to the Company's deferred-presentment transactions in Arkansas through June 15, 1999, when a statute that expressly authorized such transactions, the Check Cashers Act, became effective in Arkansas. The Company believes this new lawsuit was prompted by the recent decision of the Arkansas Supreme Court to the effect that a portion of the Check Cashers Act was unconstitutional insofar as it may purport to construe or define the usury provisions of the Arkansas Constitution. That decision did not, however, address the legality of any deferred- presentment transaction effected under the Check Cashers Act. Because the Company became able to offer at its locations short-term loans made by Goleta National Bank, the Company has not entered into any deferred- presentment transactions at its locations in Arkansas since May 1, 2000. The complaint seeks damages in an amount equal to twice the amount paid by customers of deferred-presentment transactions in Arkansas during the specified 10 1/2-month period as well as reasonable attorneys' fees and costs. Because this lawsuit purports to be a class action, the amount of damages for which the Company might be responsible, even if the court upholds the plaintiffs' allegations, is necessarily uncertain. But the Company has determined that, if the court were to certify this lawsuit as a class action and if all of the plaintiff's allegations on behalf of the class were proven at trial, the damages requested from the Company (apart from attorneys' fees and costs) would be less than $1 million. Nevertheless, there has been no court hearing regarding class certification, and the Company denies all of the plaintiff's allegations. The Company believes that the deferred-presentment transactions complied with the Check Cashers Act, including the limitations on fees described in the Check Cashers Act, and that the fees received by the Company did not constitute usurious interest that would violate the Arkansas Constitution. ADVANCED LIGHTING: Faces Shareholders Lawsuit in N.D. Ohio ---------------------------------------------------------- In April and May 1999, three class action suits were filed in the United States District Court, Northern District of Ohio, by certain alleged shareholders of Advanced Lighting Technologies Inc. on behalf of themselves and purported classes consisting of Company shareholders, other than the defendants and their affiliates, who purchased stock during the period from December 30, 1997 through September 30, 1998 or various portions thereof. A First Amended Class Action Complaint, consolidating the three lawsuits, was filed on September 30, 1999, and the action is now pending before a single judge. The named defendants in the case styled In re Advanced Lighting Technologies, Inc. Securities Litigation, Master File No. 1:99CV836, pending before the United States District Court, Northern District of Ohio are the Company and its Chairman and Chief Executive Officer (CEO). The First Amended Class Action Complaint alleges generally that certain disclosures attributed to the Company contained misstatements and omissions alleged to be violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, including claims for fraud on the market arising from alleged misrepresentations and omissions with respect to the Company's financial performance and prospects and alleged violations of generally accepted accounting principles by, among other things, improperly recognizing revenue and improper inventory accounting. The Complaint seeks certification of the purported class, unspecified compensatory and punitive damages, pre-and post-judgment interest and attorneys' fees and costs. The Company and the CEO believe that these claims lack merit. The Company and its CEO filed a Motion to Dismiss the Complaint, which was denied. The case will now proceed. The Company and the CEO intend to continue to vigorously defend against these actions. ALLSTATE CORPORATION: Pays 104 of 11,500 Claims With $1.7 M In April -------------------------------------------------------------------- Allstate Corporation and plaintiffs' representatives have agreed to settle certain civil suits filed in California, including a class action, now styled Ruth Sherman et al. v. Allstate Insurance Co., (Los Angeles County Superior Court Case No. BC 187659), related to the 1994 Northridge, California earthquake. On June 11, 1999, the Court entered an order approving the class action settlement. Certain objectors to the settlement in the Sherman Class Action on August 6, 1999, appealed this order and that appeal is pending. The plaintiffs in these civil suits challenged licensing and engineering practices of certain firms that Allstate retained and alleged Allstate systematically pressured engineering firms to improperly alter their reports to reduce the loss amounts paid to some insured with earthquake claims. The settlement class in the litigation comprised approximately 11,500 Allstate insured who had homeowner claims based on losses attributable to the earthquake that were adjusted with the assistance of Allstate retained engineers. The settlement agreement calls for a review of the claims of qualifying class members, who request to participate, by independent structural/geotechnical engineers and independent claims adjusters. Depending upon the results of this independent review, participating class members may receive further payments for their claims. Approximately 3,000 members of the settlement class indicated an interest in participating in the independent review process, and it is anticipated that approximately 2,400 of these insured will be cleared for independent review pursuant to the settlement. As of April 26, 2001, the independent engineers and adjusters had conducted initial site assessments for 1307 claims as part of the independent review process, which is ongoing. Payments totaling $1,705,846 had been made on 104 claims, of which 94 are now closed. The Company has insufficient information at this time to determine its ultimate financial exposure under this class settlement. ALLSTATE CORPORATION: Outcome Of Replacement Parts Suits Uncertain ------------------------------------------------------------------ There are currently a number of state and nationwide putative class action lawsuits pending in various state and federal courts seeking actual and punitive damages from Allstate Corporation alleging breach of contract and fraud because of its specification of after-market (non-original equipment manufacturer) replacement parts in the repair of insured vehicles. To a large degree, these lawsuits mirror similar lawsuits filed against other carriers in the industry. Plaintiffs in these suits allege that after-market parts are not "of like kind and quality" as required by the insurance policies. The lawsuits are in various stages of development. The Company is vigorously defending these lawsuits. The outcome of these disputes is currently uncertain. AUDIO VISUAL: $15 Million Settlement Deal Awaits Final Nod From Court --------------------------------------------------------------------- On March 25, 1999, a purported shareholder class action was filed in the United States District Court for the Southern District of New York against Audio Visual Services Corporation and certain of its former officers and one of its former directors. On May 7, 1999, a purported shareholder class action substantially identical to the March 25th action was filed in the Southern District against the Company and the same individuals named in the March 25th action. Both lawsuits allege, among other things, that defendants misrepresented the Company's ability to integrate various companies it was acquiring and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and various rules promulgated thereunder. In November 1999, the court issued an order consolidating the lawsuits into a single action and appointing lead plaintiffs and counsel. The plaintiffs filed a consolidated amended complaint in January 2000. In February 2000, the Company filed a motion to dismiss the consolidated amended complaint. Although the Company believes it has meritorious defenses to this action, in light of the inherent uncertainties and the burden and expense of lengthy litigation, the Company reached an agreement in principle in late June, 2000, to settle the class action, which was announced on July 20, 2000. Under the agreement, all claims against the Company and the individuals named as defendants in the action will be dismissed without presumption or admission of any liability or wrongdoing. The principal terms of the settlement call for the payment to the plaintiff class of the sum of $15.0 million. The settlement amount was paid entirely by the Company's insurance carrier and was paid into an account to be administered by counsel for the plaintiffs. The terms of the settlement are subject to, among other things, court approval and execution of definitive settlement documentation. AURA SYSTEMS: Issues 14.6 M Shares And 3.5 M Warrants as Settlement ------------------------------------------------------------------- Aura Systems, Inc. revealed in a latest regulatory document filed with the Securities and Exchange Commission that at the end of Fiscal 2000, it issued 14,687,972 shares of Common Stock and 3,500,000 warrants to purchase Common Stock at $2.25 per share. This issuance is part of a court-approved settlement of a class action lawsuit. The Company did not specify in its SEC report the lawsuit for which the shares and warrants was to cover as settlement. The offering was exempt from registration pursuant to Section 3(a)(10) of the Securities Act of 1933 as the offering was the same as the terms that were approved by the U.S. District Court after a duly noticed hearing as to the fairness of such settlement. AVICI SYSTEMS: Marc Henzel Commences Securities Suit in S.D. New York --------------------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Southern District of New York, on behalf all persons who purchased the common stock of Avici Systems, Inc. (Nasdaq: AVCI) between July 28, 2000 and April 20, 2001 against Avici Systems Inc., Morgan Stanley & Co., Inc., Surya R. Panditi and Paul F. Brauneis. The complaint alleges that, Avici's July 24, 2000 Registration Statement, its July 28, 2000 Prospectus filed with the SEC in connection with its initial public offering of 7 million shares of Avici common stock, contained material misrepresentations and/or omissions in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. The misrepresentations and/or omissions alleged in the complaint detail hidden, inflated commissions paid to Morgan that were not disclosed in Avici's offering materials. Specifically, the complaint alleges that Morgan obtained excessive and undisclosed commissions from certain investors in exchange for preferential allocations of restricted Avici shares issued in the offering, and further, that Morgan also entered into buyback agreements with customers whereby Morgan allocated Avici shares in return for the customers' agreements to purchase additional Avici shares in the aftermarket at pre-determined prices, also known as "tie-in arrangements." For further details, contact: Marc S. Henzel, Esq. of The Law Offices of Marc S. Henzel, 210 West Washington Square, Third Floor Philadelphia, PA 19106, by telephone at 888-643-6735 or 215-625-9999, by facsimile at 215-440-9475, by e-mail at Mhenzel182@aol.com or visit the firm's website at http://members.aol.com/mhenzel182 CB RICHARD: Numerous Pre-conditions May Axe Delaware Suit Settlement -------------------------------------------------------------------- Between November 12, and December 6, 2000, five putative class actions were filed in the Court of Chancery of the State of Delaware in and for New Castle County by various stockholders of CB RICHARD ELLIS SERVICES, INC. against the Company, its directors and the group that has proposed to take the Company private. A similar action was also filed on November 17, 2000 in the Superior Court of the State of California in and for the County of Los Angeles. These actions all alleged that the offering price for the going private transaction was unfair and inadequate and sought injunctive relief or rescission of the transaction and, in the alternative, money damages. The five Delaware actions have been consolidated. As of February 23, 2001, the parties to the Delaware litigation entered into a memorandum of understanding in which they agreed in principle to a settlement. The memorandum provides, among other things: (i) that the defendants admit no liability or wrongdoing whatsoever; (ii) that the members of the going private group acknowledge that the pendency and prosecution of the Delaware litigation were positive contributing factors to its decision to increase the merger consideration; (iii) for the certification of a settlement class and the entry of a final judgment granting a full release of the defendants; and (iv) for attorneys' fees in an amount not to exceed $380,000. There are numerous conditions to the settlement proposed by the memorandum including the closing of the merger. The parties may not be able to complete a mutually acceptable stipulation of settlement, and, if so, the litigation will continue. In addition, no agreements have been reached with respect to any settlement of the California action. CENTRAL POWER: Franchise Fee Litigation in Texas Goes to Trial in Oct --------------------------------------------------------------------- Central Power and Light Company, an electric utility subsidiary of American Electric Power Company, Inc., has been involved in litigation regarding municipal franchise fees in Texas as a result of a class action suit filed by the City of San Juan, Texas in 1996. The City of San Juan claims CPL underpaid municipal franchise fees and seeks damage of up to $300 million plus attorney's fees. CPL filed a counterclaim for overpayment of franchise fees. During 1997, 1998 and 1999 the litigation moved procedurally through the Texas Court System and was sent to mediation without resolution. In 1999 a class notice was mailed to each of the cities served by CPL. Over 90 of the 128 cities declined to participate in the lawsuit. However, CPL has pledged that if any final, non-appealable court decision in the litigation awards a judgment against CPL for a franchise underpayment, CPL will extend the principles of that decision, with regard to any franchise underpayment, to the cities that declined to participate in the litigation. In December 1999, the court ruled that the class of plaintiffs would consist of approximately 30 cities. A trial date for October 2001 has been set. CYLINK CORPORATION: Motion to Dismiss Securities Suit in CA Pending ------------------------------------------------------------------- In 1998, Cylink Corporation filed amended Forms 10-Q for the first and second quarters of 1998 and an amended Form 10K for 1997, reflecting restated financial results for those quarters, and for the fourth quarter of 1997. Between November 6, 1998 and December 14, 1998, several securities class action complaints were filed against Cylink and certain of its current and former directors and officers in federal courts in California. These complaints allege, among other things, that Cylink's previously issued financial statements were materially false and misleading and that the defendants knew or should have known that these financial statements caused Cylink's common stock price to rise artificially. The actions variously allege violations of Section 10(b) of the Securities Exchange Act of 1934, as amended, and SEC Rule 10b-5 promulgated thereunder, and Section 20 of the Exchange Act. The securities class action lawsuits have been ordered consolidated into a single action pending in the United States District Court for the Northern District of California captioned In Re Cylink Securities Litigation, No. C98-4292 (VRW). Plaintiffs recently filed an amended consolidated complaint and the Company's motion to dismiss the complaint is pending before the Court. DIGI INTERNATIONAL: Plaintiffs' Dismissal Appeal to be Heard in June -------------------------------------------------------------------- Between January 3, 1997 and March 7, 1997, DIGI International Inc. and certain of its previous officers were named as defendants in putative securities class action lawsuits filed in the United States District Court for the District of Minnesota by 21 lead plaintiffs on behalf of an alleged class of purchasers of the Company's common stock during the period January 25, 1996 through December 23, 1996. The putative class actions were thereafter consolidated (Master File No. 97-5 DWF/RLE). The Consolidated Amended Class Action Complaint alleges that the Company and certain of its previous officers violated the federal securities laws by, among other things, misrepresenting and/or omitting material information concerning the Company's operations and financial results. On February 25, 1997, the Company and certain of its previous officers also were named as defendants in a securities lawsuit filed in the United States District Court for the District of Minnesota by the Louisiana State Employees Retirement System (Civil File No. 97-440, Master File No. 97-5 DWF/RLE). The Louisiana Amended Complaint alleges that the Company and certain of its previous officers violated the federal securities laws and state common law by, among other things, misrepresenting and/or omitting material information concerning the Company's operations and financial results. In a decision issued on May 22, 1998, the Court dismissed without leave to re-plead all claims asserted in both cases, including all claims asserted against defendant Gary L. Deaner, except for certain federal securities law claims based upon alleged misrepresentations and/or omissions relating to the accounting treatment applied to the Company's AetherWorks investment. The Court also limited the claims asserted in the Louisiana Amended Complaint to the 11,000 shares of the Company's stock held subsequent to November 14, 1996, for which the Louisiana Amended Complaint claims damages of $184,276 and seeks an award of attorneys' fees, disbursements and costs. The Consolidated Amended Complaint seeks compensatory damages of approximately $43.1 million, plus interest, against all defendants, jointly and severally, and an award of attorneys' fees, experts' fees and costs. On August 17, 2000, the Court granted defendants' motions for summary judgment and dismissed with prejudice the Consolidated Amended Complaint and the Louisiana Amended Complaint. Although the 21 lead plaintiffs in the consolidated putative class actions had previously moved for class certification, the Court dismissed the actions before ruling on that motion. On September 1, 2000, the Louisiana State Employees Retirement System filed an appeal from the Court's August 17, 2000 decision. On September 14, 2000, the 21 lead plaintiffs in the consolidated putative class actions filed an appeal from both the Court's May 22, 1998 and August 17, 2000 decisions. The two appeals have been consolidated for briefing and argument, with briefing completed in February 2001, and oral argument has been scheduled for June 11, 2001. ELECTRONICS FOR: Finalizing Settlement Agreement With Plaintiffs ---------------------------------------------------------------- On August 31, 2000, after the announcement of the merger agreement between Splash Technology Holdings, Inc. and Electronics For Imaging, Inc., a class action lawsuit was filed against Splash and its directors. The Plaintiffs, Splash and the Company have agreed in principle to enter into a settlement agreement that would resolve all outstanding disputes and dismiss the case with prejudice. The parties are currently finalizing the details of the settlement agreement. The Company and Splash deny any wrongdoing whatsoever, but agreed to the settlement to eliminate the burden and expense of further litigation. ELECTRONICS FOR: Sued in California Over Abrupt Stock Decline in 1997 --------------------------------------------------------------------- Electronics For Imaging, Inc., along with its directors and certain officers and employees, has been named in class action lawsuits filed in both the San Mateo County Superior Court and the United States District Court for the Northern District of California. The lawsuits are all related to the precipitous decline in the trading price of the Company's stock that occurred in December 1997. The Company believes the lawsuits are without merit and intends to contest them vigorously, but there can be no assurance that if damages are ultimately awarded against the Company, the litigation will not adversely affect the Company's results of operations. HEALTHCARE RECOVERIES: Court to Approve $3 M Settlement On June 11 ------------------------------------------------------------------ On March 15, 1994, a class action complaint was filed against Healthcare Recoveries Inc. in the United States District Court for the Northern District of West Virginia, Michael L. DeGarmo, et al. v. Healthcare Recoveries, Inc. The plaintiffs assert that HCRI's subrogation recovery efforts on behalf of its clients violate a number of state and federal laws, including the Fair Debt Collection Practices Act and the Racketeering Influenced and Corrupt Organizations Act. The Complaint alleges that HCRI engaged in fraudulent or negligent practices on behalf of its clients by attempting to recover, via subrogation, amounts in excess of the actual amounts paid for those services and that HCRI pursued subrogation recoveries from individuals whose health insurance plans did not specifically provide for subrogation. HCRI responded to these allegations by maintaining that the subrogation rights of its clients provide for recovery of medical treatment at the "prevailing rates" or "reasonable value" of those services and that instances in which recoveries were made or sought against individuals without specific plan language occurred due to either mistaken referrals from clients or reliance on equitable or common law subrogation rights. On March 30, 1999, the court entered an order certifying a class of all members of one HCRI client health plan located in Wheeling, West Virginia (The Health Plan of the Upper Ohio Valley) who have been subject to subrogation and/or reimbursement collection practices by HCRI. Plaintiffs, on behalf of the class as certified, demand compensatory damages, punitive damages, and treble damages under RICO, costs and reasonable attorneys' fees. On February 5, 2001, the Company announced that the parties to the DeGarmo lawsuit had agreed in principle to settle for $3 million and certain non-monetary terms primarily affecting subrogation recovery activities of one HCRI client in West Virginia. On April 4, 2001, the parties jointly filed a motion to approve the proposed settlement and on April 5, 2001 the court entered an order preliminarily approving the settlement. A fairness hearing to determine if the court will give final approval is scheduled for June 11, 2001. HEALTH NET: Sued in CA For RICO, ERISA Violations, Among Others --------------------------------------------------------------- February 22, 2001, a purported class action complaint was filed in the United States District Court for the Southern District of Florida against several managed care companies, including Health Net, Inc., on behalf of individual physicians in California who provided health care services to members of the defendants' health plans. The complaint alleges violations of RICO, ERISA, certain federal regulations, the California Business and Professions Code and certain state common law doctrines, and seeks declaratory and injunctive relief, and damages. "We intend to vigorously defend the action," says a regulatory document filed recently with the Securities and Exchange Commission. IMPAC MORTGAGE: Sued For Violation of Missouri's Second Loans Act ------------------------------------------------------------------ On September 1, 2000, a complaint captioned Michael P. and Shellie Gilmor v. Preferred Credit Corporation and Impac Funding Corporation, et. al. was filed in the United States District Court for the Western District of Missouri, Case #4-00-00795-SOW. Impac Funding Corporation is a subsidiary of IMPAC MORTGAGE HOLDINGS, INC. The plaintiffs are alleging a class action lawsuit whereby the defendants violated Missouri's Second Loans Act and Merchandising Practices Act by marketing loans and charging certain origination fees or finders' fees or mortgage broker or broker fees or closing fees and costs on second mortgage loans on residential real estate, which caused a conversion from the illegal charge of interest or closing costs or fees. The plaintiffs are also alleging a defendant class action. IFC was a purchaser of second mortgage loans originated by Preferred Credit Corporation, which the plaintiffs contend are included in this lawsuit. INFOGRAMES INC.: Suit Blames Firm's Videogame For Columbine Shooting -------------------------------------------------------------------- On April 19, 2001, a putative class action was commenced by the family of William David Sanders, a teacher murdered on April 2, 1999 in the shooting rampage committed by Eric Harris and Dyland Klebold at the Columbine High School in Jefferson County, Colorado. The action was brought against 25 defendants, including INFOGRAMES INC. and other corporations in the videogame business, companies that produced or distributed the movie The Basketball Diaries, and companies that provide allegedly obscene Internet content. The complaint alleges, with respect to the Company and other corporations in the videogame business, that Harris and Klebold were influenced by the allegedly violent content of certain videogames and that the videogame manufacturers are liable for Harris' and Klebold's conduct. The complaint seeks a minimum $15,000 for each plaintiff and up to $15 million in compensatory damages for certain plaintiffs and $5 billion in punitive damages, injunctive relief in the form of a court established "monitoring system" requiring video game companies to comply with rules and standards set by the court for marketing violent games to children. The Company has not yet been served but intends to vigorously defend this action if and when properly served. The Company believes that these complaints are without merit. INTERNEURON PHARMACEUTICALS: Redux Cases May Seriously Impact Company --------------------------------------------------------------------- On September 15, 1997, Interneuron Pharmaceuticals, Inc. and American Home Products Corp. announced a market withdrawal of the weight loss medication Redux, which was launched in June 1996. Interneuron has been named, together with other pharmaceutical companies, as a defendant in approximately 3,200 product liability legal actions, many of which purport to be class actions, in federal and state courts involving the use of Redux and other weight loss drugs. Following the dismissal and the anticipated dismissal of Interneuron as a defendant in certain cases, the Company estimates that there will be fewer than 2,000 remaining cases. The existence of such litigation, including the time and expenses associated with the litigation, may materially adversely affect the Company's business, including its ability to obtain sufficient financing to fund operations. Although the Company is unable to predict its expense, or the outcome, of any such litigation, such expense or outcome may materially adversely affect the Company's future business, results of operations and financial condition. LEARNING TREE: Awaits Final Judgment on Plaintiff's Settlement Deal ------------------------------------------------------------------- On April 16, 1998, a class action lawsuit was filed against certain officers and directors of Learning Tree International, Inc. in the Superior Court of the State of California, County of Los Angeles, (Sarah v. Collins et al., Case No. BC189499), purportedly on behalf of persons who purchased Learning Tree's Common Stock between May 8, 1997 and November 3, 1997. On June 29, 1998, a second class action lawsuit was filed by the same law firms against the same officers and directors of Learning Tree in the Superior Court of the State of California, County of Los Angeles (Guthrie v. Collins et al., Case No. BC193465), also purportedly on behalf of persons who purchased Learning Tree's Common Stock between May 8, 1997 and November 3, 1997. On August 6, 1998, a third class action lawsuit was filed by the same law firms against Learning Tree and certain officers and directors of Learning Tree in the United States District Court for the Central District of California (Schlagal v. Learning Tree International et al., Case No. 98-6384ABC), purportedly on behalf of persons who purchased Learning Tree's Common Stock between May 8, 1997 and May 13, 1998. On February 2, 2000, plaintiffs and defendants stipulated to the filing of an amended complaint in the Schlagal action which asserts the same state law claims that are contained in the Sarah and Guthrie actions. On February 7, 2000, the state court granted the parties' joint request to dismiss Sarah and Guthrie. Thus, only the amended Schlagal class action remained pending against Learning Tree, its officers and directors. The complaints in Sarah, Guthrie and Schlagal made similar allegations of misrepresentations in certain public disclosures made by Learning Tree at various times during the class period. Each complaint alleged that Learning Tree and the defendant officers and directors concealed an alleged deterioration of business early in 1997 and that several of the officers and directors realized profits by trading their shares of Learning Tree Stock while in possession of the allegedly concealed material adverse information. Each complaint sought an unspecified amount of compensatory damages and, additionally, sought attorneys' fees and other costs, interest, and other relief. In May 2000, plaintiffs and defendants executed a Stipulation of Settlement in the Schlagal Action, which was filed with the Court. The Settlement Stipulation provides, among other things, for dismissal of the Schlagal Action against all defendants. Counsel for plaintiffs provided written notice of the Settlement Stipulation to class members, giving them the opportunity to object to the Settlement Stipulation or to opt out of participation in the settlement. Only four class members opted out. On August 7, 2000, the Court gave its final approval to the Settlement Stipulation and signed and filed a Judgment that, among other things, dismissed the Schlagal action against all defendants. If the Judgment becomes final, the Settlement will have no financial impact upon the Company, its officers or its directors. MONY LIFE: Continues Battle in NY Over Single Claim Allowed By SC ----------------------------------------------------------------- Since late 1995 a number of purported class actions have been commenced in various state and federal courts against MONY Life Insurance Company of America and The Mutual Life Insurance Company of New York, alleging that it engaged in deceptive sales practices in connection with the sale of whole and universal life insurance policies from the early 1980s through the mid 1990s. Although the claims asserted in each case are not identical, they seek substantially the same relief under essentially the same theories of recovery (i.e., breach of contract, fraud, negligent misrepresentation, negligent supervision and training, breach of fiduciary duty, unjust enrichment and violation of state insurance and/or deceptive business practice laws). Plaintiffs in these cases seek primarily equitable relief (e.g., reformation, specific performance, mandatory injunctive relief prohibiting the Company from canceling policies for failure to make required premium payments, imposition of a constructive trust and creation of a claims resolution facility to adjudicate any individual issues remaining after resolution of all class-wide issues) as opposed to compensatory damages, although they also seek compensatory damages in unspecified amounts. The Company has answered the complaints in each action (except for one being voluntarily held in abeyance). The Company has denied any wrongdoing and has asserted numerous affirmative defenses. On June 7, 1996, the New York State Supreme Court certified one of those cases, Goshen v. The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (now known as DeFilippo, et al v. The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America), the first of the class actions filed, as a nationwide class consisting of all persons or entities who have, or at the time of the policy's termination had, an ownership interest in a whole or universal life insurance policy issued and sold on an alleged "vanishing premium" basis during the period January 1, 1982 to December 31, 1995. On March 27, 1997, the Company filed a motion to dismiss or, alternatively, for summary judgment on all counts of the complaint. All of the other punative class actions have been consolidated and transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the District of Massachusetts and/or are being held in abeyance pending the outcome of the Goshen case. On October 21, 1997, the New York State Supreme Court granted the Company's motion for summary judgment and dismissed all claims filed in the Goshen case. On December 20, 1999, the New York State Court of Appeals affirmed the dismissal of all but one of the claims in the Goshen case (a claim under New York's General Business Law), which has been remanded back to the New York State Supreme Court for further proceedings consistent with the opinion. The New York State Supreme Court has subsequently reaffirmed that, for purposes of the remaining New York General Business Law claim, the class is now limited to New York purchasers only, and has further held that the New York General Business Law claims of all class members whose claims accrued prior to November 29, 1992 are barred by the applicable statute of limitations. The Company intends to defend itself vigorously against the sole remaining claim. NATIONAL AUTO: Settles Securities Lawsuit in Ohio For $6.5 Million ------------------------------------------------------------------ In a recent regulatory filing with the Securities and Exchange Commission, National Auto Credit, Inc. disclosed that it has already settled early this year the class action lodged in Ohio. The Company along with certain of its former officers and directors were named as defendants in eleven purported class action lawsuits which were filed in the United States District Court for the Northern District of Ohio subsequent to the January 1998 resignation of the Company's former independent auditors, Deloitte & Touche, LLP. The actions, which were consolidated, alleged fraud and other violations of the federal securities laws and seek money damages as the result of various alleged frauds and violations of the Securities Exchange Act of 1934, including misrepresentations about the adequacy of the Company's allowance for credit losses and its loan underwriting practices. In April 2000, the Company and the class action plaintiffs' representatives reached an agreement in principle to settle the class action securities litigation. Under the terms agreed upon, the Company agreed to pay to the plaintiffs' class $6.5 million in consideration for, among other things, the release of all defendants from liability. The settlement was approved and completed in Fiscal 2001. NETLOJIX COMMUNICATIONS: 200T Shares at $8 Each Offered to Plaintiffs --------------------------------------------------------------------- On April 19, 2000, Netlojix Communications Inc. reached an agreement in principle to settle all outstanding claims under the class action lawsuit pending against NetLojix and certain of its officers. On October 4, 2000, the Company finalized the agreement with counsel for the plaintiff class to settle all outstanding claims under the class action lawsuit. This agreement received the preliminary approval of the court on November 8, 2000, and the Company thereafter paid $150,000 (including $30,000 in 2000 and $120,000 in the first quarter of 2001) for administrative costs and other settlement implementation expenses. Notice of the settlement was sent to potential class members on March 19, 2001. The court held a hearing, on May 14, 2001, to consider the entry of a final order of dismissal and approval of the settlement. If so approved, the Company will then issue for distribution to the claimant class members, and for payment of any plaintiffs attorneys' fees and litigation expenses as the court may award, a total of 232,000 shares of common stock and warrants to purchase 200,000 shares of NetLojix's common stock at an exercise price of $8.00 per share with a term of 2 years. NEXTEL COMMUNICATIONS: Sued Over Health Risks Pose by Wireless Phone -------------------------------------------------------------------- On April 19, 2001, a purported class action lawsuit was filed in the Circuit Court in Baltimore, Maryland by the Law Offices of Peter Angelos, and subsequently in other state courts in Pennsylvania and New York, alleging that wireless telephones pose a health risk to users of those telephones and that the defendants failed to disclose these risks. NEXTEL COMMUNICATIONS INC., along with numerous other companies, is defendant in these cases. Angelos' firm also participated in the filing of an amended complaint in a similar suit pending in federal court in Louisiana, in which the Company is also named. These suits seek to require the defendants to provide headsets, or reimburse the cost of headsets, for use with wireless telephones, as well as attorneys' fees and punitive damages. PARTY CITY: Moves to Dismiss Suit For Failure to State Cause of Action ---------------------------------------------------------------------- Party City Corporation has been named as a defendant in twelve class action complaints. The Company's former CEO and the former CFO and Executive Vice President of Operations have also been named as defendants. The complaints have all been filed in the United States District Court for the District of New Jersey. The complaints were filed as class actions on behalf of persons who purchased or acquired Party City common stock during various time periods between February 1998 and March 19, 1999. In February 2000, plaintiffs filed a second class action amended complaint. The second amended complaint alleges, among other things, violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks unspecified damages. The plaintiffs allege that defendants issued a series of false and misleading statements and failed to disclose material facts concerning, among other things, the Company's financial condition, adequacy of internal controls and compliance with certain loan covenants. The plaintiffs further allege that because of the issuance of a series of false and misleading statements and/or failure to disclose material facts, the price of Party City common stock was artificially inflated. Defendants have moved to dismiss the second amended complaint on the ground that it fails to state a cause of action. The Court has not yet issued a decision with respect to the motion to dismiss. PEOPLESOFT INC.: Expects $15 M Settlement Offer to be Approved -------------------------------------------------------------- Beginning on January 29, 1999, a series of class action lawsuits were filed in the United States District Court for the Northern District of California against PeopleSoft, Inc. and certain of its officers and directors, alleging violations of Section 10(b) of the Securities Exchange Act of 1934. The actions were consolidated in June 1999 under the name of the lead case Suttovia v. Duffield, et al., C 99-0472. Following appointment of lead plaintiffs under the provisions of the Private Securities Litigation Reform Act, a consolidated amended complaint was filed on December 6, 1999. The Consolidated Complaint named the Company and David Duffield, Albert Duffield, Ronald Codd, Kenneth Morris, Margaret Taylor, Aneel Bhusri, James Bozzini, Cyril Yansouni and George Still as defendants. The Consolidated Complaint purported to bring claims on behalf of all purchasers of PeopleSoft common stock during the period April 22, 1997 to January 28, 1999. The Consolidated Complaint alleged that PeopleSoft misrepresented, inter alia, the degree of market acceptance of its products, the technical capabilities of its products, the success of certain acquisitions it had made, and the anticipated financial performance of the Company in fiscal 1999. The Consolidated Complaint abandoned all of the allegations in the original complaints concerning alleged accounting improprieties, including claims of improper accounting related to the Company's write- downs for "in process research and development" in connection with various acquisitions, and improper accounting related to the Company's spin-off of Momentum Business Applications, Inc. (Momentum had been a named defendant in the original actions, but was eliminated as a defendant when the Consolidated Complaint was filed). On February 10, 2000, the defendants filed motions to dismiss the Consolidated Complaint. The motions were heard on May 4, 2000. On May 26, 2000, following post-hearing submissions, the Court entered an order: (i) dismissing all claims against defendants Albert Duffield, Kenneth Morris, Margaret Taylor, Aneel Bhusri, James Bozzini, and George Still, without leave to amend; (ii) dismissing all claims relating to the time period prior to May 27, 1998; (iii) denying the motion to dismiss as to various forward-looking statements allegedly made by the Company between May 27, 1998 and January 28, 1999; and (iv) limiting the class period for which claims may be asserted to the same time period. A First Amended Complaint was filed on June 12, 2000. The Court set a case management schedule pursuant to which the Company was required to provide discovery to plaintiffs prior to May 11, 2001. On February 16, 2001, PeopleSoft agreed to a tentative settlement of the litigation, which would result in the dismissal of all claims against the defendants in exchange for a payment of $15.0 million, all of which will be funded by the Company's Directors and Officers Liability Insurance. The Company executed a final Stipulation of Settlement on April 20, 2001, and a motion for preliminary approval of the proposed action settlement was submitted to the Court on May 4, 2001. A hearing on final approval is expected to be scheduled for August 2001. POWERCERV CORPORATION: Asks Court to Dismiss Amended Securities Plaint ---------------------------------------------------------------------- A complaint was filed on July 24, 1997, in the United States District Court for the Middle District of Florida, entitled J. Conrad Lifsey v. Harold Ross, Gerald Wicker, Marc J. Fratello, Roy E. Crippen, III, Donald B. Hebb, Jr., Thomas S. Roberts, POWERCERV CORPORATION, Alex Brown & Sons, Inc., Robertson, Stephens & Company, ABS Capital Partners, L.P., Summit Investors III, L.P. The complaint purports to be a class action on behalf of those persons who purchased shares of the Company's common stock from March 1, 1996 (the date of the Company's initial public offering of its common stock through July 24, 1996. The complaint alleges, among other things, that the defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with the Company's IPO and in its subsequent securities filings, press releases and other public statements. On March 19, 1998, Defendants filed their Motions to Dismiss this Complaint. These motions were heard by oral argument on October 30, 2000, over two and one-half years later. On January 12, 2001, the Court dismissed the complaint holding that the complaint was insufficient as a matter of law to state a claim under the relevant sections of the federal securities laws. Nonetheless, the Court, harboring substantial doubt that the plaintiffs have sufficient facts at their disposal to properly state a claim, permitted plaintiffs an opportunity to re-plead. On February 16, 2001, Plaintiffs filed an amended complaint asserting essentially the same causes of action based on the same set of factual circumstances. Defendants continue to deny any wrongdoing and in light of the Court's Order of January 12, 2001, have filed Motions to Dismiss requesting the Court to dismiss the amended complaint with prejudice. PRE-PAID LEGAL: Mounting Strong Defense Against Securities Lawsuits ------------------------------------------------------------------- Pre-Paid Legal Services, Inc. Chairman and CEO Harland Stonecipher announced last week that the company intends to mount a vigorous defense against the class action lawsuits lodged against the company. The lawsuits allege that the Company misstated its financials for the purpose of inflating its earnings and the price of its stock, thereby defrauding the public. "We do not believe that our accounting is in any way inaccurate, misleading or inappropriate. Our independent auditors, who have examined these issues at length and certified the financial statements, have reached the same basic conclusion," Stonecipher said in denying the allegations. "Moreover, the notion that we falsified the financial statements in order to inflate our earnings and stock price is both unsupportable and nonsensical," he said. "During the period at issue the Company did not sell stock. On the contrary, we made open market purchases of approximately $62.5 million worth of Pre-Paid Legal stock since April 1999. Nor did the Company's officers sell substantial portions of their personal holdings. If there had been a fraudulent scheme to inflate our earnings and stock price through false financial statements, the Company would have been by far the biggest victim of it," Stonecipher added. Pre-Paid Legal Services develops and markets legal service plans across North America. The plans provide for legal service benefits, including unlimited attorney consultation, will preparation, traffic violation defense, automobile-related criminal charges defense, letter writing, document preparation and review and a general trial defense benefit. On May 11, 2001, the Securities and Exchange Commission's Division of Corporation Finance announced that the Company's accounting for commission advance receivables does not conform to generally accepted accounting principles. The Company is currently appealing this decision to the Office of the Chief Accountant at the SEC. PRODIGY COMMUNICATIONS: Outcome Of CA Appeal Too Early To Predict ----------------------------------------------------------------- Prodigy Communications Corporation disclosed in a recent regulatory filing with the Securities and Exchange Commission that on January 10, 2000, Christa Roberts filed a class action lawsuit in the Superior Court of the State of California, County of Los Angeles, against Prodigy, AOL Time Warner, Circuit City Stores, Fry's Electronic, Microsoft and other unnamed parties. On February 7, 2000, the plaintiff filed an amended complaint naming Young H. Kim as the named plaintiff in place of Christa Roberts. The lawsuit alleges that Prodigy and the defendants engaged in false advertising, and offered incentives to consumers and entered into retail sales contracts with consumers which violated California law. The trial court dismissed the lawsuit for failure to state a cause of action and the Plaintiff appealed. Prodigy's response brief was filed in the Court of Appeals on March 30, 2001. Given the early stage of the appeal, no prediction as to its outcome can be made. PRODIGY COMMUNICATIONS: Court Approves Settlement Offer in Georgia ------------------------------------------------------------------ On February 24, 2000, Prodigy Communications Corporation was served with a summons and complaint by Carroll Wesley Chance in a class action lawsuit brought against Best Buy, Prodigy and Young America in the State Court of Richmond County, State of Georgia. The case was brought on behalf of the class of similarly situated consumers who allegedly purchased a computer at Best Buy, enrolled in the Prodigy Internet service under the incentive program, and did not receive an incentive check. The complaint alleged breach of contract, unjust enrichment, conversion and negligence. The plaintiffs sought damages not to exceed $74,900 per member of the class, including actual damages, incentives, interest, punitive damages, court costs and litigation expenses. The case settled on March 1, 2001 for payment of fees and the offer of one free month of service to class members who renewed or re-activated their accounts for a specified period of time. Prodigy notified potential class members of the settlement, and the Court has approved and finalized the Settlement. PYRAMID BREWERIES: Faces Suit For Violating Washington's Consumer Act --------------------------------------------------------------------- Pyramid Breweries Inc. is named as a defendant in a putative class action lawsuit pending in the Superior Court of Washington for King County: Jerseys All American Sports Bar v. Alaska Distributors Co., et al., No. 00-2-20485-0SEA, filed on August 3, 2000. The lawsuit purports to allege claims on behalf of all purchasers of Pyramid Hefeweizen by the keg for retail sale during the period May 1, 1999 to the present. The lawsuit alleges violations of Washington's Consumer Protection Act and a civil conspiracy related to sales of the Bavarian Hefeweizen brand at a lower price than the Pyramid Hefeweizen brand. Plaintiffs seek injunctive relief and unspecified monetary damages. Pyramid intends to defend the lawsuit vigorously. QUINTILES TRANSNATIONAL: Subsidiary Sued by Participants in Drug Study ---------------------------------------------------------------------- On January 26, 2001, a purported class action lawsuit was filed in the State Court of Richmond County, Georgia, naming Novartis Pharmaceuticals Corp., Pharmed Inc., Debra Brown, Bruce I. Diamond and Quintiles Laboratories Limited, a subsidiary of Quintiles Transnational Corporation, on behalf of 185 Alzheimer's patients who participated in drug studies involving an experimental drug manufactured by defendant Novartis and their surviving spouses. The complaint alleges claims for breach of fiduciary duty, civil conspiracy, unjust enrichment, misrepresentation, Georgia RICO violations, infliction of emotional distress, battery, negligence and loss of consortium as to class member spouses. REUNION INDUSTRIES: Stockholder Lawsuit in Early Stages of Discovery -------------------------------------------------------------------- In December 1999, a stockholder of Reunion Industries, Inc. filed a purported class-action lawsuit in Delaware Chancery Court alleging, among other things, that Reunion's public stockholders would be unfairly diluted in the merger with Chatwins Group. The lawsuit sought to prevent completion of the merger and, the merger having been completed, seeks rescission of the merger or awarding of damages. The lawsuit is in the initial stages of discovery. Reunion intends to vigorously contest the suit. SELECT COMFORT: Class Certification Still Pending in Minnesota Case ------------------------------------------------------------------- Select Comfort Corporation and certain former officers and directors were named as defendants in a class action lawsuit initially filed on June 1, 1999 on behalf of shareholders in U.S. District Court in Minnesota. The named plaintiffs, who purport to act on behalf of a class of purchasers of the Company's common stock during the period from December 4, 1998 to June 7, 1999, charge the defendants with violations of federal securities laws. The suit alleges that the Company and the named directors and officers failed to disclose or misrepresented certain information concerning the Company's business during the class period. The complaint does not specify an amount of damages claimed. The Company and the individual defendants brought a motion to dismiss all claims on November 10, 1999. A magistrate judge heard the motion on December 21, 1999. On January 27, 2000, the magistrate recommended that the claims based on Section 11 of the federal securities laws be dismissed. The magistrate recommended that the motion to dismiss be denied with respect to the claims based on Rule 10b-5 of the federal securities laws. In February 2000, both the plaintiffs and defendants formally objected to the magistrate's recommendation. The objection was made to the United States District Court in Minnesota. On May 12, 2000, the United States District Court in Minnesota adopted the recommendation of the magistrate and denied the defendants' motion to dismiss the Rule 10b-5 claims. The Court also adopted the recommendation of the magistrate and dismissed the plaintiff's Section 11 claims without prejudice and with leave to amend. On March 31, 2000, Select Comfort Corporation and certain of its former officers and directors were named as defendants in a class lawsuit filed on behalf of the Company's shareholders in U.S. District Court in Minnesota. The suit alleges claims based on Sections 11 and 12(a)(2) of the federal securities laws. The complaint does not specify an amount of damages claimed. The United States District Court Magistrate consolidated the above two class actions on July 24, 2000. On January 30, 2001, the plaintiffs made a motion to certify a class. The class certification motion is pending. Discovery relative to this motion has begun. SHERWIN WILLIAMS: Faces Several Lawsuits Over its Lead-based Products --------------------------------------------------------------------- Sherwin Williams Company disclosed in a recent regulatory document filed with the Securities and Exchange Commission that it facing several lawsuits, including purported class actions, in relation to its manufacture of lead pigments and lead-based paints. These lawsuits have been brought by the State of Rhode Islands and other government entities, seeking recovery based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practices and consumer protection laws, enterprise liability, market share liability, nuisance, unjust enrichment and other theories. The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others. The Company believes that the litigation is without merit and is vigorously defending such litigation. SONICBLUE INC.: Insurance Carrier Says No Coverage For Company -------------------------------------------------------------- Since November 1997, a number of complaints have been filed in federal and state courts seeking unspecified damages on behalf of an alleged class of persons who purchased shares of SONICblue Inc.'s common stock at various times between April 18, 1996 and November 3, 1997. The complaints name as defendants SONICblue, certain of its officers and former officers, and certain directors of SONICblue, asserting that they violated federal and state securities laws by misrepresenting and failing to disclose certain information about SONICblue's business. In addition, certain stockholders have filed derivative actions in the state courts of California and Delaware seeking recovery on behalf of SONICblue, alleging, among other things, breach of fiduciary duties by such individual defendants. The plaintiffs in the derivative action in Delaware have not taken any steps to pursue their case. The derivative cases in California State court have been consolidated, and plaintiffs have filed a consolidated amended complaint. The court has entered a stipulated order in those derivative cases suspending court proceedings and coordinating discovery in them with discovery in the class actions in California State courts. On plaintiffs' motion, the federal court has dismissed the federal class actions without prejudice. The class actions in California State court have been consolidated, and plaintiffs have filed a consolidated amended complaint. SONICblue has answered that complaint. Discovery is proceeding. On January 22, 2001, four of the insurance carriers which issued directors and officers insurance to SONICblue filed suit against all parties named as defendants in the securities litigation, claiming that the carriers have no obligation to provide coverage under the California Insurance Code. STATION CASINOS: Court Has Yet to Certify Class in Nevada Lawsuit ----------------------------------------------------------------- On April 26, 1994, a suit seeking status as a class action lawsuit was filed by plaintiff, William H. Poulos, et al., as class representative, in the United States District Court, Middle District of Florida, naming 41 manufacturers, distributors and casino operators of video poker and electronic slot machines, including Station Casinos Inc. On May 10, 1994, a lawsuit alleging substantially identical claims as filed by another plaintiff, William Ahearn, et al., as class representative, in the United States District Court, Middle District of Florida, against 48 manufacturers, distributors and casino operators of video poker and electronic slot machines, including the Company and most of the other major hotel/casino companies. The lawsuits allege that the defendants have engaged in a course of fraudulent and misleading conduct intended to induce persons to play such games based on a false belief concerning how the gaming machines operate, as well as the extent to which there is an opportunity to win. The two lawsuits have been consolidated into a single action, and have been transferred to the United States District Court for the District of Nevada. On September 26, 1995, a lawsuit alleging substantially identical claims was filed by plaintiff, Larry Schreier, et al., as class representative, in the United States District Court for the District of Nevada, naming 45 manufacturers, distributors, and casino operators of video poker and electronic slot machines, including the Company. Motions to dismiss the Poulos/Ahearn and Schreier cases were filed by defendants. On April 17, 1996, the Poulos/Ahearn lawsuits were dismissed, but plaintiffs were given leave to file Amended Complaints on or before May 31, 1996. On May 31, 1996, an Amended Complaint was filed, naming William H. Poulos, et al., as plaintiff. Defendants filed a motion to dismiss. On August 15, 1996, the Schreier lawsuit was dismissed with leave to amend. On September 27, 1996, Schreier filed an Amended Complaint. Defendants filed motions to dismiss the Amended Complaint. In December 1996, the Court consolidated the Poulos/Ahearn, the Schreier, and a third case not involving the Company and ordered all pending motions be deemed withdrawn without prejudice, including Defendants' Motions to Dismiss the Amended Complaints. The plaintiffs filed a Consolidated Amended Complaint on February 13, 1997. On or about December 19, 1997, the Court issued formal opinions granting in part and denying in part the defendants' motion to dismiss. In so doing, the Court ordered plaintiffs to file an amended complaint in accordance with the Court's orders in January of 1998. Accordingly, plaintiffs amended their complaint and filed it with the United States District Court for the District of Nevada in February 1998. The Company and all other defendants continue to deny the allegations contained in the amended complaint filed on behalf of plaintiffs. The plaintiffs are seeking compensatory, special, consequential, incidental, and punitive damages in unspecified amounts. The defendants have committed to vigorously defend all claims and allegations contained in the consolidated action. The parties have fully briefed the issues regarding class certification, which are currently pending before the court. SYMMETRICOM INC.: Plaintiff Appeals Summary Judgment to Ninth Circuit --------------------------------------------------------------------- In January 1994, a securities class action complaint was filed against Symmetricom, Inc. and certain of its former officers or directors in the United States District Court, Northern District of California. The action was filed on behalf of a putative class of purchasers of the Company's stock during the period April 6, 1993 through November 10, 1993. The complaint sought unspecified money damages and alleges that the Company and certain of its former officers or directors violated federal securities laws in connection with various public statements made during the putative class period. The Court granted summary judgment to the Company and its former officers or directors in August 2000. The plaintiff has filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit. The Company believes that the complaint is without merit, and intends to continue to defend the action vigorously if necessary. US AGGREGATES: Marc Henzel Commences Securities Suit in N.D. CA --------------------------------------------------------------- A class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of U.S. Aggregates, Inc. (NYSE: AGA) publicly traded securities during the period between April 25, 2000 and April 2, 2001. The complaint charges U.S. Aggregates and certain of its officers and directors with violations of the Securities Exchange Act of 1934. U.S. Aggregates is a producer of aggregates, which consist of crushed stone, sand and gravel, and constitute a basic construction material. Approximately two-thirds of the Company's products are used for the construction and maintenance of highways and other infrastructure projects. On April 3, 2001, U.S. Aggregates issued a press release entitled, "U.S. Aggregates, Inc. Reports Preliminary Fourth Quarter and Full Year 2000 Results; Restates Earnings for First Three Quarters of 2000; Reaches Interim Agreement With Senior Secured Lenders; Delays Filing Form 10-K for 2000; Sells Certain Construction Materials Operations in Utah," which stated in part, "The Company will restate its earnings for the first three quarters of 2000. For the first quarter, the Company will restate its net loss of $2.6 million, or $0.17 per diluted share, to a net loss of $5.1 million, or $0.34 per diluted share. For the second quarter, the Company will restate its net income of $6.8 million, or $0.45 per diluted share, to net income of $3.1 million, or $0.20 per diluted share. For the third quarter, the Company will restate its net income of $5.5 million, or $0.36 per diluted share, to net income of $1.7 million, or $0.11 per diluted share. The restatement relates primarily to the reclassification of certain capitalized items to operating expenses, the recognition of certain additional operating expenses, and the establishment of a reserve for self-insurance claims." On this news, U.S. Aggregates shares dropped to $4.30, or more than 79% lower than the Class Period high of $20-1/4. For additional information, contact: Marc S. Henzel, Esq. of The Law Offices of Marc S. Henzel, 210 West Washington Square, Third Floor Philadelphia, PA 19106, by telephone at (888) 643-6735 or (215) 625- 9999, by facsimile at (215) 440-9475, by e-mail at Mhenzel182@aol.com or visit the firm's website at http://members.aol.com/mhenzel182 VENTRO CORPORATION: Cauley Geller Extends Period of Securities Suit ------------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP filed a class action in the United States District Court for the Northern District of California on behalf of all individuals and institutional investors that purchased the common stock of Ventro Corporation (Nasdaq: VNTR) between February 15, 2000 and December 6, 2000, inclusive. The class period is being expanded to include purchases between December 13, 1999 through December 6, 2000, inclusive. The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information about the Company's financial condition and future growth potential, and as a result of these false and misleading statements the Company's stock traded at artificially inflated prices during the class period. Specifically, during the Class Period, Ventro built and operated platforms for vertical business-to-business (B2B) e-commerce marketplace companies. The complaint alleges that by December 1999, defendants knew that Ventro's existing business model did not work. Moreover, by the beginning of the Class Period it was evident to defendants that Ventro did not possess the technology to successfully compete as a marketplace. Defendants knew this would severely impair Ventro's future revenue growth. However, defendants wanted to raise additional money through debt offerings before the bottom fell out of Ventro's stock price. Thus, defendants continued to make positive but false statements about Ventro's business and future revenues. As a result, Ventro's stock traded as high as $243-1/2 per share during the Class Period. Then, on Dec. 6, 2000, Ventro announced a restructuring in which it closed down two out of three of its main B2B marketplaces. In early 2001, it was revealed that Ventro's CEO and the other defendants had realized by December 1999 that Ventro's business model of independent marketplaces didn't make sense and it was revealed that even Ventro's partners were not satisfied with Ventro's technology for operating the marketplaces. By this time Ventro's stock had declined to less than $2 per share, inflicting billions of dollars of damage on plaintiff and the Class. Defendants' misconduct has wiped out over $4 billion in market capitalization as Ventro stock has fallen 99% from its Class Period high of over $243 per share as the truth about Ventro, its operations and prospects began to reach the market. For more information, contact: CAULEY GELLER BOWMAN & COATES, LLP, Client Relations Department: Jackie Addison, Sue Null or Charlie Gastineau, P.O. Box 25438 Little Rock, AR 72221-5438 Toll Free: 1-888- 551-9944 E-mail: info@classlawyer.com WARNER COMMUNICATIONS: Faces Several Suits in US, Probes in Europe ------------------------------------------------------------------ Warner Communications Inc. is subject to a number of state and federal class action lawsuits as well as an action brought by a number of state Attorneys General alleging unlawful horizontal and vertical agreements to fix the prices of compact discs by the major record companies. Although WCI believes that, as to each of these actions, the cases have no merit, adverse jury verdicts could result in a material loss. Two competition investigations also are currently pending in Europe. WCI is cooperating in these investigations, but is unable to predict their outcomes given their current status. ********* 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. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *