/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010531.mbx C L A S S A C T I O N R E P O R T E R Thursday, May 31 2001, Vol. 3, No. 106 Headlines ADELPHIA COMMUNICATIONS: Faces Subscriber Suits in PA And MS AEGIS COMMUNICATIONS: Faces Two Shareholders' Lawsuits in Dallas ALLSTATE CORPORATION: Multi-state Action Certif'd in Auto Policy Suit ALLSTATE CORPORATION: One Class Certified in Medical Bill Review Suit AMERICREDIT CORPORATION: Sued Over Loan Pricing Structures In CA ANALYTICAL SURVEYS: Settles Suit For $4 M and 1.25 Million Shares APPLERA CORPORATION: Faces Lawsuits Over Public Offering BNL FINANCIAL: Trial Slated For Arkansas Securities Suit BURNHAM PACIFIC: Plaintiffs' Appeal on Dismissal Still Pending BURNHAM PACIFIC: $1.9 M Settlement in California Awaits Court Nod CEC ENTERTAINMENT: Class Remains Uncertified in California Lawsuit COLUMBIA LABORATORIES: Court Dismisses Securities Suit in S.D. Florida CORTLAND BANCORP: Sixth Circuit Appeals Court Upholds Prior Ruling DENTSPLY INTERNATIONAL: Four New Private Party Actions Consolidated EXXON MOBIL: To Appeal Nationwide Certification Uniting 70T Plaintiffs FORD MOTOR: Asks Firestone To Defray $3B Cost For Latest Tire Recall FORTUNE BRANDS: Faces 17 Smoking And Health-related Suits GAYLORD CONTAINER: Class Discovery In Pennsylvania Lawsuit Complete GLOBALSTAR TELECOMMUNICATIONS: Faces 19 Securities Suits in S.D. NY INSO CORPORATION: Milberg Weiss Dismisses Securities Suit in Mass MICROSOFT CORPORATION: Two Employment Discrimination Suits Ahead MICROSOFT CORPORATION: Fielding Several Overcharge Action Lawsuits MID ATLANTIC: Maintains Operation's Validity Under MD Subrogation Law NABORS INDUSTRIES: Expects Final Approval Of Settlement By 3rd Q NABORS INDUSTRIES: Subsidiaries Suits Reach Preliminary Settlement NAHC INC.: Discovery Of Pennsylvania Securities Lawsuit Stayed NEW FOCUS: Finkelstein & Krinsk Files Securities Suit In N.D. CA PACKAGING CORPORATION: Plaintiffs' Motion To Classify Still Undecided PARADYNE NETWORKS: Intends To File Motion To Dismiss By End Of May PRODIGY COMMUNICATIONS: Faces Suit In Florida For Breach Of Contract PRODIGY COMMUNICATIONS: Certification Decision Pending RALSTON PURINA: Motion To Dismiss Lawsuit In Missouri Still Pending READ-RITE: State Court Cancels Claim Based On Res Judicata Doctrine READ-RITE: Plaintiffs In Federal Lawsuits File Notices Of Appeal SILICON GRAPHICS: No Ruling on Plaintiffs' Voluntary Dismissal SILICON GRAPHICS: Settlement Document For CT Suit Nearly Complete SOTHEBY'S HOLDINGS: Shells Out $206M to Settle Antitrust Suit SOTHEBY'S HOLDINGS: Court Dismisses International Antitrust Litigation TOBACCO LITIGATION: Tobacco Makers Sued Over Ads Aimed at Children UST LIQUIDATING: Court Dismisses Derivative Action in Los Angeles ********* ADELPHIA COMMUNICATIONS: Faces Subscriber Suits in PA And MS ------------------------------------------------------------ Adelphia Communications Corporation and certain subsidiaries are defendants in several putative subscriber class action suits in state courts in Pennsylvania and Mississippi initiated during 1999, the Company bared in a regulatory document filed with the SEC. The suits all challenge the propriety of late fees charged by the subsidiaries to customers who fail to pay for services in a timely manner. The suits seek injunctive relief and various formulations of damages under various claimed causes of action under various bodies of state law. These actions are in various stages of defense and are being defended vigorously. The outcome of these matters cannot be predicted at this time. In May 2000, Adelphia settled similar litigation in the state courts of Vermont. AEGIS COMMUNICATIONS: Faces Two Shareholders' Lawsuits in Dallas ---------------------------------------------------------------- On March 2, 2001, two putative shareholder class actions were filed in the County Court of Dallas County Court at Law No. 2 against Aegis Communications Group, Inc. and certain of its current and former directors for breach of fiduciary duty arising out of the Questor-led acquisition group's proposed acquisition of all the outstanding shares of Common Stock not already owned by them. On March 1, 2001, the Company received an offer from an acquisition group made up of its principal shareholders for the purchase of all of the outstanding shares of Common Stock not already owned by the acquisition group at a price of $1.00 per share in cash. Questor Partners Fund II, L.P. and certain affiliated funds are leading the acquisition group and are expected to fund the transaction. The actions allege that the proposal is inadequate, and seek equitable relief, including an order enjoining the proposed acquisition and attorneys' fees and other costs. The Board has appointed a special committee of independent directors to consider the proposal, and the Company and the other defendants believe that the actions are without merit. ALLSTATE CORPORATION: Multi-state Action Certif'd in Auto Policy Suit --------------------------------------------------------------------- Allstate Corporation has pending several state and nationwide class action lawsuits in various state and federal courts seeking actual and punitive damages, alleging breach of contract and fraud for failing to pay inherent diminished value to insured under a collision, comprehensive, or uninsured motorist property damage provision of an auto policy. To a large degree, these lawsuits mirror similar lawsuits filed against other carriers in the industry. Plaintiffs define inherent diminished value as the difference between the market value of the insured automobile before an accident and the market value after repair. Plaintiffs allege that they are entitled to the payment of inherent diminished value under the terms of the contract. These lawsuits are in various stages of development. A class has been certified in only one case, a multi-state class action. The Company is vigorously defending these lawsuits. ALLSTATE CORPORATION: One Class Certified in Medical Bill Review Suit --------------------------------------------------------------------- There are a number of state and nationwide class action lawsuits pending in various state courts challenging the legal propriety of Allstate's medical bill review processes on a number of grounds, including, among other things, the manner in which Allstate determines reasonableness and necessity. Only one statewide class action has been certified, on a conditional basis. These lawsuits, which to a large degree mirror similar lawsuits filed against other carriers in the industry, allege these processes result in a breach of the insurance policy as well as fraud. The Company denies those allegations and is vigorously defending both its processes and these lawsuits. The outcome of these disputes is currently uncertain. AMERICREDIT CORPORATION: Sued Over Loan Pricing Structures In CA ---------------------------------------------------------------- AmeriCredit Corporation is a defendant in a class action complaint pending in Superior Court in the State of California. The suit claims that certain loan pricing structures used by the Company violate various California laws. This lawsuit previously included multiple other banks and finance companies as co-defendants. However, in a ruling during the quarter ended March 31, 2001, the Court severed the claims into separate cases against each defendant. In the opinion of management, this lawsuit is without merit and the Company intends to defend vigorously. ANALYTICAL SURVEYS: Settles Suit For $4 M and 1.25 Million Shares ----------------------------------------------------------------- Analytical Surveys, Inc. has been named as a defendant in a consolidated putative securities class action alleging a misstatement or omission of material facts concerning the Company's operations and financial results. On April 4, 2001, the Company entered into an agreement in principle to settle this lawsuit against the Company and certain of its directors and former officers. The proposed settlement provides for the dismissal of the lawsuit in its entirety against all defendants and the establishment of a settlement fund of $4 million, of which the Company is contributing $100,000 of cash, and approximately 1,256,000 shares of the Company's common stock for the class of open market purchasers of the Company's shares between January 25, 1999 and March 7, 2000, inclusive. The Company's insurance carrier is contributing the remaining $3.9 million of cash. The agreement in principle with the plaintiffs is subject to various conditions, including execution of a Memorandum of Understanding and Stipulation of Settlement, preliminary approval by the Court, notice to the class and final approval by the Court after a hearing. The Company's cost of this settlement is estimated at $748,000 based on the cash contribution, and the value of the common shares on the date of the agreement in principle. APPLERA CORPORATION: Faces Lawsuits Over Public Offering -------------------------------------------------------- Applera Corporation is subject to a purported class action lawsuit relating to its 2000 offering of shares of Applera Corporation - Celera Genomics Group Common Stock, which may be expensive and time consuming. Applera Corporation and certain of its officers have been served in five lawsuits purportedly on behalf of purchasers of Applera Corporation - Celera Genomics Group Common Stock in Applera Corporation's follow-on public offering of Applera Corporation - Celera Genomics Group Common Stock completed on March 6, 2000. All of these lawsuits have been consolidated into a single case. In the offering, Applera Corporation sold an aggregate of approximately 4.4 million shares of Applera Corporation - Celera Genomics Group Common Stock at a public offering price of $225 per share. The complaints in these lawsuits generally allege that the prospectus used in connection with the offering contained inaccurate and misleading statements in violation of federal securities laws. Although Applera Corporation believes the asserted claims are without merit and intends to defend the case vigorously, the outcome of this or any other litigation is inherently uncertain. BNL FINANCIAL: Trial Slated For Arkansas Securities Suit -------------------------------------------------------- On April 30, 1996, Myra Jo Pearson and Paul Pearson filed a class action complaint in the Circuit Court of Pulaski County, Arkansas (3rd Division) naming BNL Financial Corporation, BNL Equity Corporation and several officers of the Company, as defendants. The plaintiffs have alleged that the defendants violated the Arkansas Securities Act in several respects in connection with the public offerings of securities made by United Arkansas Corporation (now known as BNL Equity Corporation) during the period from January 1989 until May, 1992 On March 3, 1998, the plaintiffs filed a Second Amended Class Action Complaint in which they dropped certain claims, including allegations of common law fraud, fraudulent concealment, tolling of the statute of limitations, and the request for punitive damages. Discovery is underway and the matter is set for trial October 15, 2001. The Company continues to believe strongly that the case is without merit. BURNHAM PACIFIC: Plaintiffs' Appeal on Dismissal Still Pending -------------------------------------------------------------- On June 23, 1999, a class action lawsuit was filed in the Superior Court of the State of California, County of San Diego, against Burnham Pacific Properties, Inc. and its Board of Directors. The complaint was purportedly filed on behalf of the public stockholders of the Company and alleges that the Board of Directors and the Company violated their fiduciary duties by adopting a shareholder rights agreement, responding to a proposal from Schottenstein Stores Corporation and certain of its affiliates inappropriately, and adopting severance and other compensatory arrangements. On June 12, 2000 the Court dismissed the complaint, and denied plaintiffs' request for leave to amend. Counsel for plaintiffs appealed the Court's dismissal of the lawsuit. The Company believes that the appeal was without merit. BURNHAM PACIFIC: $1.9 M Settlement in California Awaits Court Nod ----------------------------------------------------------------- On February 7, 2000, a derivative lawsuit was filed in the Superior Court of the State of California, County of San Diego, by a purported stockholder, asserting claims on behalf of Burnham Pacific Properties, Inc. On May 2, 2000, the plaintiff filed an amended complaint. The amended complaint contains claims similar to those asserted in the pending class action lawsuit described above. It names as defendants the Company's Board of Directors and certain of its current and former officers. It also names the Company as a nominal defendant. On November 8, 2000, plaintiff filed its Second Amended Derivative Complaint. The Company believes that the plaintiff did not comply with the requirements for bringing a derivative action, and filed a motion asking the Court to dismiss the suit. That motion is stayed pending a prospective settlement. On August 9, 2000, a complaint was also filed in the Superior Court of the State of California, County of San Diego. The suit was purportedly brought on behalf of the Company as a derivative action and simultaneously on behalf of the Company's stockholders as a class action. The complaint appears to raise similar issues to those raised by the previously filed class action and derivative lawsuits described above. In February 2001, the parties reached an agreement in principle providing for the settlement of the three actions filed in the Superior Court of the State of California, County of San Diego, and all claims that could have been asserted in these actions. Under the proposed settlement, the Company has agreed to certain restrictions regarding the composition of its Board of Directors and disposal of its assets. The Company has agreed to pay the $1.9 Million in attorneys' fees to plaintiffs' counsel (of which insurers will cover $1.75 Million) following the Court's issuance of an order approving the proposed settlement. The settlement is subject to negotiation, execution of a formal stipulation of settlement and Court approval. CEC ENTERTAINMENT: Class Remains Uncertified in California Lawsuit ------------------------------------------------------------------ On June 2, 2000, a purported class action lawsuit against CEC Entertainment, Inc., entitled Freddy Gavarrete, et al. v. CEC Entertainment, Inc., Chuck E. Cheese, et al., Cause No. 00-08132 FMC (RZx), was filed in the Superior Court of the State of California in the County of Los Angeles. On July 27, 2000, the lawsuit was removed to the United States District Court for the Central District of California. One former restaurant manager purporting to represent restaurant managers of the Company in California from 1996 to the present filed the lawsuit. No class of plaintiffs has been certified in this lawsuit. The lawsuit alleges violations of state wage and hour laws involving unpaid overtime wages and seeks an unspecified amount in damages. The Company believes the lawsuit is without merit and intends to vigorously defend it. COLUMBIA LABORATORIES: Court Dismisses Securities Suit in S.D. Florida ---------------------------------------------------------------------- In June and July 2000, six class action lawsuits were filed in the United States District Court for the Southern District of Florida purportedly on behalf of purchasers of the common stock of Columbia Laboratories, Inc. during the period from November 8, 1999 to June 9, 2000, the Company revealed in a recent regulatory filing with SEC. These lawsuits were later combined into one. The complaints allege, among other things, that the Company and William Bologna, David Weinberg and Norman Meier made materially misleading statements and omissions about the likely prospects for two of the Company's products in violation of the federal securities law. On May 9, 2001, the complaint was dismissed with prejudice. CORTLAND BANCORP: Sixth Circuit Appeals Court Upholds Prior Ruling ------------------------------------------------------------------ Cortland Savings and Banking Company, a subsidiary bank of Cortland Bancorp Inc., was name a defendant in a class action lawsuit, entitled Frank Slentz, et al. v. Cortland Savings and Banking Company, involving purchased interests in two campgrounds. On October 20, 1997 the judge presiding over this case filed a judgment entry dismissing all claims against the Bank without prejudice. The plaintiffs appealed the judgment. On March 2, 1999, the United States Court of Appeals for the Sixth Circuit affirmed the decision of the district court to grant summary judgment in favor of the defendant Bank. The plaintiffs have the right to appeal to the United States Supreme Court. Plaintiffs have also filed a similar suit in the Common Pleas Court of Trumbull County. DENTSPLY INTERNATIONAL: Four New Private Party Actions Consolidated ------------------------------------------------------------------- In June 1995, the Antitrust Division of the United States Department of Justice initiated an antitrust investigation regarding the policies and conduct undertaken by the Trubyte Division of Dentsply International Inc. with respect to the distribution of artificial teeth and related products. On January 5, 1999 the Department of Justice filed a complaint against the Company in the U.S. District Court in Wilmington, Delaware alleging that the Company's tooth distribution practices violate the antitrust laws and seeking an order for the Company to discontinue its practices. Three follow on private class action suits on behalf of dentists, laboratories and denture patients in seventeen states, respectively, who purchased Trubyte teeth or products containing Trubyte teeth were filed and transferred to the U.S. District Court in Wilmington, Delaware. These cases have been assigned to the same judge who is handling the Department of Justice action. The class action filed on behalf of the dentists has been dismissed by the plaintiffs. The private party suits seek damages in an unspecified amount. The Company filed motions for summary judgment in all of the above cases. These motions were argued December 8, 2000. In March the Court issued a decision on Dentsply's Motions. The Court denied the Motion for Summary Judgment regarding the Department of Justice action, granted the Motion on the lack of standing of the patient class action and granted the Motion on lack of standing of the laboratory class action to pursue damage claims. These decisions mean that the Department of Justice case will proceed, the patient class action is dismissed and the laboratory class action cannot pursue damage claims in the current litigation. Since that time, in an attempt to avoid the effect of the Court's ruling, the attorneys for the laboratory class action have filed a new complaint naming Dentsply and its dealers as co-conspirators with respect to Dentsply's distribution policy. Four private party class actions on behalf of indirect purchasers have been filed in California. These cases are based on allegations similar to those in the Department of Justice case. In response to the Company's motion, these cases have been consolidated in one Judicial District in Los Angeles. It is the Company's position that the conduct and activities of the Trubyte Division do not violate the antitrust laws. EXXON MOBIL: To Appeal Nationwide Certification Uniting 70T Plaintiffs ---------------------------------------------------------------------- Exxon Mobil Corp. announced last week it plans to appeal a federal judge's decision to certify a nationwide class action lawsuit uniting nearly 70,000 gas royalty owners against the world's largest oil company, the Reuters News Agency reported. ``We feel the judge's decision to certify a class of (substantially) all of Exxon Mobil's royalty owners who are located in multiple states is inappropriate. We will appeal to the Fifth Circuit Court in New Orleans,'' Exxon Mobil spokeswoman Suzanne McCarron told Reuters. Judge Edward Prado of the U.S. District Court for the Western District of Texas in San Antonio certified last week the suit, which alleges that starting 1999 the company unfairly determined the payments royalty holders should receive from natural gas and natural gas liquids sales. Fleming & Associates L.L.P., a firm based in Houston, 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 from their wells, Reuters said. Royalty owners 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 the chain, the news agency said. 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, the suit says. ``They funnel money to themselves through their affiliates, unfairly calculating the basis on which royalties should be paid, thus underpaying royalty owners,'' lead attorney Robert Herring said in a statement. ``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,'' Herring added. FORD MOTOR: Asks Firestone To Defray $3B Cost For Latest Tire Recall -------------------------------------------------------------------- Newsweek has learned that Ford Motor Company may ask Firestone to help foot the $3 billion cost of a tire recall Ford announced last week to replace all 13 million Firestone Wilderness AT tires on its Explorer and Expedition SUVs and its F-150 Ranger pickups. Ford claims it has new evidence to show there are more problems with the tires, but Firestone dismisses the recall as a "fruitless exercise," Newsweek reports in the June 4 issue. Sources on Capitol Hill tell Newsweek that Ford CEO Jacques Nasser is considering asking Firestone to help pay for the cost of the latest recall and floated the notion to several Congressmen. A Ford spokesman said reimbursement by Firestone "is not on our agenda at this time." But Nasser sent a letter to his counterpart at Firestone, John Lampe, last Tuesday, asking that the companies "work cooperatively" on the recall, report Detroit Bureau Chief Keith Naughton and Investigative Correspondent Mark Hosenball. But Lampe dismissed the recall saying: "Why replace good tires with good tires?" And Congressional sources tell Newsweek that Ford's current recall is not justified, according to preliminary findings from a year-long federal probe into Firestone tires. They say the evidence of tire flaws provided to federal investigators by Ford and Firestone is not serious enough to trigger a government-ordered recall. More than 700 injuries and 174 deaths have now been linked to Firestone tires shedding their tread at high speeds, mainly while mounted on Ford Explorers, America's top selling sport-utility vehicle. Last summer the two companies jointly initiated a recall of 6.5 million tires that had been implicated in the rollovers. Ford is facing hundreds of wrongful death lawsuits, including a huge federal class-action suit. By initiating the latest recall, lawyers say Ford is hoping to impress future juries and head off hundreds of millions of dollars in punitive damages in court. The stakes are also high for Firestone. Some plaintiff lawyers say the tire company has been urging settlements by warning that its U.S. operations could go bankrupt. A Firestone spokeswoman countered, "the company has a sound financial base that's sufficient to weather the current situation." Firestone executives are also trying to attack the motives of Ford, until now its largest customer. "They are trying to divert attention away from the Explorer and trying to convince people this is only a tire issue," Lampe says. "Rollovers are a vehicle issue, and that's got to be addressed." FORTUNE BRANDS: Faces 17 Smoking And Health-related Suits --------------------------------------------------------- "As of May 1, 2001, there were approximately 17 purported smoking and health class actions pending in which Registrant (Fortune Brands Inc.) has been named as one of the defendants, compared with approximately 18 such cases on March 21, 2001, as reported by Registrant in its Annual Report on Form 10-K for the fiscal year ended December 31, 2000," the Company noted in its latest regulatory filing with SEC. The Company provided no further details or developments on any of the cases. GAYLORD CONTAINER: Class Discovery In Pennsylvania Lawsuit Complete ------------------------------------------------------------------- On May 18 and May 24, 1999, Gaylord Container Corporation was named in lawsuits consolidated in the Federal District Court for the Eastern District of Pennsylvania alleging civil violations of Section 1 of the Sherman Act. The complaints, both putative class actions, allege that during the period October 1, 1993, through November 30, 1995, the Company agreed with nine other manufacturers of linerboard to raise or maintain prices. According to the complaints, the purpose and effect of the alleged conspiracy was to artificially increase prices of corrugated sheets and corrugated boxes sold to customers. Treble damages and attorney fees are sought. Motions to dismiss the complaints were denied, and class discovery is complete. After investigation of the facts, the Company believes the allegations are without merit and is vigorously defending itself. GLOBALSTAR TELECOMMUNICATIONS: Faces 19 Securities Suits in S.D. NY ------------------------------------------------------------------- On February 28, 2001, plaintiff Eric Eismann filed a purported class action complaint against Globalstar Telecommunications Ltd. in the United States District Court for the Southern District of New York. The other defendants named in the complaint are Loral Space & Communications Ltd. and Bernard Schwartz, the Chief Executive Officer of Globalstar. The complaint alleges that (a) GTL and Mr. Schwartz violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by making material misstatements or failing to state material facts about GTL's business and prospects; and (b) that Loral and Mr. Schwartz are secondarily liable for these alleged misstatements and omissions under Section 20(a) of the Exchange Act as alleged "controlling persons" of GTL. The class of plaintiffs on whose behalf this lawsuit has allegedly been asserted consists of all buyers of GTL common stock from December 6, 1999, through October 27, 2000, excluding the defendants, officers and directors of GTL, and certain persons affiliated therewith. The following plaintiffs have filed eighteen additional purported class action complaints in the United States District Court for the Southern District of New York: (i) Chaim Kraus on March 2 (ii) L.A. Murphy on March 2 (iii) Eddie Maiorino on March 6 (iv) Damon Davis on March 7 (v) Iskander Batyrev on March 7 (vi) Shelly Garfinkel on March 9 (vii) Sequoia Land Development and Phil Sigel on March 16 (viii) Michael Ceasar as Trustee for Howard Gunty Profit Sharing Plan on March 21 (ix) Colin Barry on March 21 (x) James D. Atlas on March 22 (xi) Lawrence Phillips on March 23 (xii) Kent A. Hillemeir on March 28 (xiii) Sarah Harman on March 28 (xiv) Pablo Lozza on April 2 (xv) Joseph and Eudice Meyers on April 3 (xvi) The 60223 Trust on April 11 (xvii) Antonio and Lucia Maddalena on April 27 (xviii) Chaim Troman on May 1 These complaints allege claims against GTL, Loral, and Mr. Schwartz (and, in the case of the Sequoia, Atlas and Meyers complaints, two additional individual defendants, Messrs. Navarra and DeBlasio) that are substantially identical to those set forth in the Eismann action. The classes of plaintiffs on whose behalf these lawsuits have been allegedly asserted are: (i) with respect to the Kraus, Davis, Maiorino, Batyrev, Ceasar, Phillips, Hillemeir, Harman and The 60223 Trust actions, buyers of GTL common stock in the period from December 6, 1999, through October 27, 2000; (ii) with respect to the Murphy, Barry and Troman actions, buyers of GTL securities in the period from December 6, 1999, through October 27, 2000; (iii) with respect to the Sequoia/Sigel, Atlas and Meyers actions, buyers of GTL common stock in the period from December 6, 1999, through July 19, 2000; (iv) with respect to the Garfinkel and Lozza actions, buyers of GTL debt securities in the period from December 6, 1999, through October 27, 2000; and (v) with respect to the Maddalena action, buyers of GTL securities in the period from October 11, 1999 through October 27, 2000. GTL believes that it has meritorious defenses to these actions and intends to pursue them vigorously. INSO CORPORATION: Milberg Weiss Dismisses Securities Suit in Mass. ------------------------------------------------------------------ Milberg Weiss has dropped voluntarily the case entitled, In re Inso Corp. Securities Litigation, Case No. 00-10305-GAO (D. Mass.), filed in the United States District Court for the District of Massachusetts. This case was filed on behalf of all persons who purchased the common stock of Inso Corporation (Nasdaq:EBTI) during the period between October 28, 1999 and February 1, 2000, inclusive. The Complaint had charged Inso and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Complaint alleged that defendants' false and misleading statements concerning Inso's present and future financial performance artificially inflated the price of Inso's stock to a Class Period high of $41.00. After further investigating this matter, Lead Plaintiffs and their counsel concluded that the Complaint should be voluntarily dismissed with prejudice. Accordingly, pursuant to Federal Rule of Civil Procedure 41(a)(1), Lead Plaintiffs notified defendants of their intent, and defendants agreed to the dismissal, with each side bearing its own costs. No consideration has been exchanged, and neither Lead Plaintiffs nor their counsel will receive any compensation or reimbursement of expenses. For further information, contact: Sanford Dumain, Esq. of Milberg Weiss Bershad Hynes & Lerach LLP, at 800/320-5081 or Insocase@milbergNY.com. MICROSOFT CORPORATION: Two Employment Discrimination Suits Ahead ---------------------------------------------------------------- Two purported class action employment discrimination cases are pending against Microsoft Corporation: (i) Donaldson v. Microsoft, a class case consolidating three separately filed class action complaints filed in October 2000 and February 2001 in Federal court in Seattle, Washington, and (ii) Jackson v. Microsoft, an amendment to an existing case alleging class claims filed on January 3, 2001 in Federal court in Washington, D.C. Microsoft's motion to transfer the Jackson case to Federal court in Seattle was granted on May 3, 2001. The Donaldson plaintiffs purport to represent a nationwide class of current and former African American and female salaried Microsoft employees and seek injunctive relief, an unspecified amount of compensatory and punitive damages, and attorneys' fees. The Jackson plaintiffs purport to represent a nationwide class of current and former African American Microsoft employees and seek injunctive relief, $5 billion in compensatory and punitive damages, and attorneys' fees. Both cases allege that Microsoft's compensation, evaluation and promotion policies are discriminatory with respect to the plaintiffs in violation of Title VII of the 1964 Civil Rights Act and 42 U.S.C. (S) 1981. Microsoft denies the allegations and is vigorously defending both cases. MICROSOFT CORPORATION: Fielding Several Overcharge Action Lawsuits ------------------------------------------------------------------ A large number of overcharge class action lawsuits have been initiated against Microsoft Corporation, according to the latest regulatory document the Company filed with the Securities and Exchange Commission. These cases allege that Microsoft has competed unfairly and unlawfully monopolized alleged markets for operating systems and certain software applications and seek to recover alleged overcharges that the complaints contend Microsoft charged for these products. Microsoft believes the claims are without merit and is vigorously defending the cases. To date, Microsoft has won dismissals of all claims for damages by indirect purchasers under federal law and in 14 separate state court proceedings. Claims on behalf of foreign purchasers have also been dismissed. Plaintiffs have appealed most of these rulings. MID ATLANTIC: Maintains Operation's Validity Under MD Subrogation Law --------------------------------------------------------------------- In September 2000, Mid Atlantic Medical Services, Inc. and other health maintenance organizations operating in Maryland were served with similar class action suits challenging the constitutionality of the law, which allows the Company to subrogate against other insurance companies. The Company's action was filed in the Circuit Court for Montgomery County, Maryland, which recently ruled in another case that is now on appeal to the Maryland Court of Appeals that the subrogation law was constitutional. The Company believes that its operations with respect to the law are valid. However, the Company is not able to predict, at this time, the ultimate outcome of this action. NABORS INDUSTRIES: Expects Final Approval Of Settlement By 3rd Q ---------------------------------------------------------------- Nabors Industries, Inc. disclosed recently in a regulatory filing with SEC that in the class action lawsuit arising out of the initial public offering of Bayard Drilling Technologies, Inc. (prior to Bayard being acquired by Nabors), Yuan v. Bayard Drilling Technologies, Inc., et al., the parties have signed an agreement to settle the lawsuit, and the court has granted preliminary approval to the settlement. The settlement is subject to final approval by the court, which is expected during the third quarter. The settlement amounts to be paid by Bayard (either directly or as a result of its indemnification obligations) are not material to Bayard or Nabors. In the event the settlement is not finalized, Nabors and Bayard continue to believe the allegations in this lawsuit are without merit and Bayard will defend vigorously the claims brought against it. NABORS INDUSTRIES: Subsidiaries Suits Reach Preliminary Settlement ------------------------------------------------------------------ Nabors Industries, Inc. also disclosed in the regulatory document that the Company has already reached a preliminary settlement in the Verdin v. R&B Falcon Drilling USA, Inc., et al., Civil Action No. G-00-488, filed in the United States District Court for the Southern District of Texas, Galveston Division. The settlement is under negotiations in order to reach a mutually acceptable settlement document. The final settlement will need court approval. The class action lawsuit was filed against the offshore drilling subsidiaries of the Company alleging, among other things, conspiracy to depress wages and benefits paid to its offshore employees. The settlement amounts to be paid by Nabors' subsidiaries are not material to such subsidiaries or Nabors. In the event the settlement is not finalized, Nabors continues to believe the allegations in this lawsuit are without merit and Nabors' subsidiaries will defend vigorously the claims brought against them. NAHC INC.: Discovery Of Pennsylvania Securities Lawsuit Stayed -------------------------------------------------------------- NAHC Inc. is a principal party to a purported class action case, entitled BRADY V. NAHC, INC., ET AL., filed in the United States District Court for the Eastern District of Pennsylvania, the Company bared in a regulatory document filed with the Securities and Exchange Commission. This purported class action is filed on behalf of all persons who purchased the common stock of NAHC during the period between April 5, 1999 through and including November 22, 1999. Five similar actions have been filed in the Eastern District of Pennsylvania, including one that alleges a class period from May 20, 1998 through November 22, 1999. They have been consolidated into a single action. PricewaterhouseCoopers LLP is named as a defendant in one of the cases. The case is subject to the provisions of the Private Securities Litigation Reform Act of 1995. The defendants have filed a motion to dismiss. Under the PSLRA, discovery is stayed until the motion to dismiss is resolved. The Plaintiffs asserted that the Company and certain of its directors and officers violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 by making false and misleading statements and omissions regarding the prospects of NAHC's business and NAHC's liquidation value and by failing to timely disclose the impact of the Balanced Budget Act of 1997 on the long term care services business. The Plaintiffs allege that these statements and omissions artificially inflated the value of the Company's stock during the class period. The Plaintiffs also assert a violation of Section 14(a) of the Exchange Act and Rule 14a-9 against the Company and individual Defendants as well as against Wasserstein Perella & Co. in connection with the Company's proxy statements dated August 13, 1999, as amended through September 10, 1999. The Plaintiffs allege that the Defendants were negligent in disseminating the proxy statements, which allegedly contained materially false and misleading statements. Wasserstein Perella & Co. has notified the Company that it will seek indemnification from the Company in connection with this action, pursuant to its engagement agreement with the Company. NEW FOCUS: Finkelstein & Krinsk Files Securities Suit In N.D. CA ---------------------------------------------------------------- Finkelstein & Krinsk filed a class action in the United States District Court for the Northern District of California on behalf of all purchasers of New Focus, Inc. (NASDAQ:NUFO) common stock during the period between October 25, 2000 and March 5, 2001. The complaint charges that New Focus and certain of its officers and directors violated the securities laws by providing materially false and misleading information about the Company's financial condition and future growth potential. As a result of these false statements, New Focus's stock traded at artificially inflated prices during the class period. Specifically, the complaint alleges that New Focus disseminated misleading statements designed to conceal the Company's deteriorating financial condition and declining demand for its products. This was done to allow certain officers and directors to sell or arrange the sale of over $61 million of New Focus common stock they personally owned. For more information, contact: Finkelstein & Krinsk, Jeffrey R. Krinsk Esq. or Arthur L. Shingler Est. Toll-free 877/493-5366 or 619/238-1333 PACKAGING CORPORATION: Plaintiffs' Motion To Classify Still Undecided --------------------------------------------------------------------- On May 14, 1999, Packaging Corporation of America was named as a defendant in a Consolidated Class Action Complaint that alleged a civil violation of Section 1 of the Sherman Act. The suit, captioned WINOFF INDUSTRIES, INC. V. STONE CONTAINER CORPORATION, MDL No. 1261 (E.D. Pa.), names PCA as a defendant based solely on the allegation that PCA is a successor to the interests of Tenneco Packaging Inc. and Tenneco Inc., both of which were also named as defendants in the suit, along with nine other linerboard manufacturers. The complaint alleges that the defendants, during the period from October 1, 1993 through November 30, 1995, conspired to limit the supply of linerboard, and that the purpose and effect of the alleged conspiracy was artificially to increase prices of corrugated containers. The plaintiffs have moved to certify a class of all persons in the United States who purchased corrugated containers directly from any defendant during the above period, and seek treble damages and attorneys' fees on behalf of the purported class. The Court has yet to rule on the plaintiffs' motion for class certification, and the case is currently set for trial in June 2002. PARADYNE NETWORKS: Intends To File Motion To Dismiss By End Of May ------------------------------------------------------------------ Following a press release by Paradyne Networks, Inc. on September 28, 2000 regarding contemplated third quarter results, several securities class action suits against Paradyne; Andrew May, Paradyne's Chief Executive Officer and President at the time; Patrick Murphy, Paradyne's Chief Financial Officer and Senior Vice President; and Thomas Epley, Paradyne's Chairman of the Board were filed in October 2000 in the United States District Court for the Middle District of Florida, Tampa Division. Sean E. Belanger, the current President and Chief Executive Officer and a director was added as a Defendant in the litigation in April 2001. These actions were later consolidated into one case and the Court appointed Frank Gruttadauria and Larry Spitcaufsky as the lead plaintiffs and the law firms of Milberg Weiss Bershad Hynes & Lerach LLP and Barrack Rodos & Bacine as the lead counsel. The Amended Consolidated Complaint alleges violations by the Defendants of the securities anti-fraud provisions of the federal securities laws, specifically Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. It further alleges that the individual Defendants are liable under Section 20(a) of the Securities Exchange Act as "control persons of Paradyne". The plaintiffs purport to represent a class of investors during a purported class period of September 28, 1999 through September 28, 2000 and allege, in effect, that the Defendants during that time, through material misrepresentations and omissions, fraudulently or recklessly inflated the market price of Paradyne's stock by allegedly erroneously reporting that Paradyne was performing well, that its inventories were properly stated, and that its customer base and product demand were solid. The Defendants believe the claims are without merit and intend to vigorously defend them, although they cannot predict the outcome. The Defendants intend to file a motion to dismiss the Amended Consolidated Complaint by end of May this year. PRODIGY COMMUNICATIONS: Faces Suit In Florida For Breach Of Contract -------------------------------------------------------------------- On March 31, 2000, Giovanni R. Viana filed a class action lawsuit against Prodigy Communications Corporation in the 11th Judicial Circuit Court for Dade County, Florida, according to a recent regulatory document filed with the Securities and Exchange Commission. This class action lawsuit arises out of the Best Buy mail-in incentive program. The plaintiff alleges Prodigy violated Florida's Unfair Trade Practices Act when it represented it would provide incentives and allegedly failed to do so. In addition, the complaint contains a breach of contract claim for failure to pay the incentives. The plaintiff seeks damages under the breach of contract claim not to exceed $75,000 per member of the class, as well as actual damages plus attorneys' fees and litigation costs. Given the early stage of this litigation, no prediction as to its outcome can be made. PRODIGY COMMUNICATIONS: Certification Decision Pending ------------------------------------------------------ On June 20, 2000, Saul Kaufman filed a purported class action lawsuit against Prodigy in the Circuit Court for Cook County, Illinois, alleging he was "locked out" of his service during the migration from Web America, a company acquired by Prodigy in March 2000, to Prodigy. Kaufman is not allowed to conduct "fact" discovery until the Judge decides whether to certify this case as a class action. Prodigy expects a decision on class certification during the summer of 2001 and makes no predictions as to the outcome of this litigation. Prodigy made a demand on Web America, through its parent company, for indemnification pursuant to a written agreement between the parties. Web America has not yet responded. RALSTON PURINA: Motion To Dismiss Lawsuit In Missouri Still Pending ------------------------------------------------------------------- On January 17, 2001, an action entitled Hack, et al. v. Banks, et al., was filed in the St. Louis County Circuit Court for the State of Missouri, naming Ralston Purina Company, the directors of the Company and Nestle S.A. as defendants. The action alleges that the directors of the Company breached their fiduciary duties with respect to the proposed merger between the Company and Nestle. The plaintiffs seek to certify the matter as a class action and seek unspecified compensatory damages, an injunction against the transaction, and rescission in the event the transaction is completed. The action is in an early stage, and no discovery has been conducted. The Company and its directors have filed a motion to dismiss, which has not yet been ruled upon. Based upon a review of the complaint, the Company believes that it and its directors have meritorious defenses to the allegations. READ-RITE: State Court Cancels Claim Based On Res Judicata Doctrine ------------------------------------------------------------------- On December 11, 1996, a purported class action complaint was filed in the Superior Court of the State of California, Santa Clara County, by Joan D. Ferrari and Mark S. Goldman against Read-Rite Corporation and certain of its officers and directors, alleging that the defendants made false and misleading statements concerning the Company's business condition and prospects and seeking an unspecified amount of damages. On May 16, 1997, the court sustained the demurrer of certain defendants to the entire complaint, and sustained the demurrer of the remaining defendants to certain causes of action. The remaining causes of action in the Ferrari State Action allege violation of the California Corporations Code. On July 7, 1997, the remaining defendants answered the complaint. On November 14, 2000, the remaining defendants filed a motion for judgment on the pleadings seeking to use the federal action's final judgment to extinguish the state claims under the doctrine of res judicata. A hearing on that motion occurred on January 22, 2001 and on April 20, 2001, the court entered an order granting that motion. Given that order, the plaintiffs have 30 days to appeal this decision. READ-RITE: Plaintiffs In Federal Lawsuits File Notices Of Appeal ---------------------------------------------------------------- On January 16, 1997 and May 19, 1997, two supposed class action complaints were filed in the United States District Court for the Northern District of California against Read-Rite Corporation and certain of its officers and directors by Ferrari and Goldman and by James C. Nevius and William Molair, respectively. Both complaints alleged that the defendants made false and misleading statements concerning the Company's business condition and prospects and alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 and sought an unspecified amount of damages. On December 22, 1997, the Court consolidated the Ferrari Federal Action and the Nevius Federal Action. On October 13, 2000, the court ordered that the Ferrari Plaintiffs' and Nevius Plaintiffs' complaints be dismissed without leave to amend and that both actions be dismissed with prejudice. The Nevius Plaintiffs and Ferrari Plaintiffs filed notices of appeal on October 27, 2000 and November 9, 2000, respectively SILICON GRAPHICS: No Ruling on Plaintiffs' Voluntary Dismissal ---------------------------------------------------------------- Silicon Graphics Inc. recently disclosed in a regulatory filing with the Securities and Exchange Commission that it is presently defending putative securities class action lawsuits filed in the U.S. District Court for the Northern District of California and in California Superior Court for the County of Santa Clara. The case in the district court was filed in December 1997, while the suit in the Superior Court was lodged in January 1998. The cases allege that SGI and certain of its officers made material misrepresentations and omissions during the period from July to October 1997. The U.S. District Court is considering plaintiffs' motion for a voluntary dismissal of the case without prejudice and defendants' motion for partial summary judgment. Discovery is proceeding in the California Superior Court case. SILICON GRAPHICS: Settlement Document For CT Suit Nearly Complete ----------------------------------------------------------------- Silicon Graphics Inc. is also defending a securities class action lawsuit involving Alias Research, Inc., which the Company acquired in June 1995. The Alias case, which was filed in 1991 in the U.S. District Court for the District of Connecticut, alleges that Alias and a former officer and director made material misrepresentations and omissions during the period from May 1991 to April 1992. The case was remanded to the U.S. District Court. In December, the District Court granted Plaintiffs' motion to amend their Complaint and the case remains in the discovery phase. In April 2001, Plaintiffs and Defendant reached an understanding that resolves this litigation. The actual settlement document has not been completed. Court approval of the settlement is required. The terms of the settlement will not have a material adverse impact on SGI's financial condition or operating results. SOTHEBY'S HOLDINGS: Shells Out $206M to Settle Antitrust Suit ------------------------------------------------------------- A number of private civil complaints, styled as class action complaints, were filed against Sotheby's Holdings Inc. alleging violation of federal and state antitrust laws based upon alleged agreements between Christie's and the Company regarding commissions charged to purchasers and sellers of property in the United States and elsewhere. In addition, several shareholder class action complaints were filed against the Company and certain of its directors and officers, alleging failure to disclose the alleged agreements and their impact on the Company's financial condition and results of operations. A number of shareholder derivative suits were filed against the directors of the Company based on allegations related to the foregoing lawsuits and investigations. Included in the lawsuits described above are more than fifty purported class action lawsuits that were filed against the Company and/or its wholly-owned subsidiary, Sotheby's, Inc., beginning January 30, 2000, alleging violations of the federal antitrust laws in connection with auctions in the United States. Christie's International, PLC and Christie's Inc. were also named as defendants in these actions. All of these federal antitrust actions are currently pending in the United States District Court for the Southern District of New York. On February 23, 2000, the United States District Court for the Southern District of New York entered an order consolidating all of the actions theretofore filed in that court. Pursuant to the court's consolidation Order, plaintiffs filed a consolidated complaint on March 15, 2000, captioned In Re Auction Houses Antitrust Litigation, No. 00 Civ. 0648. The consolidated complaint was brought on behalf of individuals that purchased and/or sold items auctioned by defendants during the period of January 1, 1993 through February 7, 2000. On September 24, 2000, the Company agreed to settle the U.S. Antitrust Litigation, subject to court approval. On April 20, 2001, the Court approved an amended settlement agreement. Under the Amended Settlement Agreement, the Company has deposited into an escrow account for the benefit of members of the class (a) $206 million in cash and (b) vendor's commission discount certificates with a fair market value of not less than $50 million and a face value of $62.5 million. Of these amounts, $156 million in cash was funded by A. Alfred Taubman, holder of approximately 13.2 million shares of the Company's Class B Common Stock, the Company's former Chairman and a co-defendant in the U.S. Antitrust Litigation. The vendor's commission discount certificates may be used to pay vendor's commissions and certain other sale charges at Sotheby's or Christie's during the five years after their issuance and will be redeemable for cash at the end of four years. The Company entered into the Amended Settlement Agreement without any admission of liability. The time for filing a notice of appeal of the court's order approving the settlement has not yet run. SOTHEBY'S HOLDINGS: Court Dismisses International Antitrust Litigation ---------------------------------------------------------------------- Three other purported class action lawsuits were filed in the United States District Court for the Southern District of New York against Sotheby's Holdings Inc. and its wholly-owned subsidiary, Sotheby's, Inc., beginning in August 2000, alleging violations of the federal antitrust laws and international law, on behalf of purchasers and sellers in auctions conducted outside the United States. Christie's was also named as a defendant in these actions. The complaints in these actions contained allegations identical to the complaints in the U.S. Antitrust Litigation but were considered separately from the U.S. Antitrust Litigation. On October 30, 2000, plaintiffs filed a consolidated amended complaint in the International Antitrust Litigation. On January 30, 2001, the court granted the Company's motion to dismiss the International Antitrust Litigation on the grounds of lack of jurisdiction over auctions held by the Company and its subsidiaries outside of the United States. On February 13, 2001, the plaintiffs filed a motion seeking reconsideration of the court's decision, and on February 15, 2001, the court entered an order denying plaintiffs' request for reconsideration. Plaintiffs have filed a notice of appeal of the court's decision. TOBACCO LITIGATION: Tobacco Makers Sued Over Ads Aimed at Children ------------------------------------------------------------------ Two lawyers recently filed a lawsuit in the U.S. District Court in Washington, accusing five big tobacco companies of targeting children with advertising that deceived them about the dangers of cigarettes. Attorney Johnnie Cochran and class-action lawyer Michael Hausfeld have filed suit against cigarette makers, claiming the companies violated federal racketeering laws by conspiring to entice children to smoke, the Wall Street Journal reported in its online edition last week. Defendants in the suit are Philip Morris, R.J. Reynolds Tobacco Holdings Inc.'s R.J. Reynolds Tobacco Co. unit, British American Tobacco and its Brown & Williamson Corp. unit, Loews Corp.'s Lorillard Tobacco Co. unit and Vector Group Ltd.'s Liggett Group unit, the paper said. The suit also names two now-defunct industry trade groups, the Tobacco Institute and the Council for Tobacco Research, the paper said. The lawyers are asking for class-action status on behalf of millions of people who started smoking before turning 18. The suit seeks to recover the money spent on cigarettes by underage smokers or, alternatively, the profits that the tobacco companies earned from sales to children, the paper said. Tobacco-industry lawyers has attacked the suit and denied that cigarette makers had marketed their products to children. UST LIQUIDATING: Court Dismisses Derivative Action in Los Angeles ----------------------------------------------------------------- On June 8, 2000, a class action complaint was filed by Stourbridge Investments Ltd. against UST Liquidating Corporation, Barry S. Rosenstein, Marc A. Weisman, Dan R. Cook, Danaher Corporation, Buyer and RSP Capital, L.L.C. alleging breach of fiduciary duty in connection with the transactions completed by a definitive purchase agreement selling assets to Veeder-Root Service Company. On August 24, 2000, the complaint was amended to include the allegation of corporate waste, and change the name of plaintiffs and defendants. Specifically, Joseph Dilillo and David L. Timmons replaced Stourbridge Investments Ltd. as the named plaintiffs, and David Shapiro, Michael Lerner, Sagaponack Partners, Ltd, Sagaponack International Partners, L.P. and Sagaponack International Holdings, LLC have been added as named defendants. In addition, plaintiffs filed a motion for a Preliminary Injunction on August 25, 2000. Defendants' filed their opposition to this Motion on September 8, 2000, and the Plaintiffs filed their reply to Defendants' opposition on September 13, 2000. The preliminary injunction hearing was held on September 18, 2000 in Los Angeles Superior Court and the motion for a Preliminary Injunction was denied in all respects. The Company, Barry Rosenstein, Marc Weisman and RSP Capital LLC have filed a demurer to plaintiffs' first amended complaint contending that plaintiffs have failed to state a valid cause of action. The demurrer asserts that plaintiffs' direct claim on behalf of individual shareholders is barred as a matter of law because they cannot pursue a claim on behalf of the Company. The demurrer further asserts that plaintiffs lack standing to pursue their derivative claim, or second cause of action, because they have not complied with the statutory procedures for filing a derivative action on behalf of the Company; namely they did not make a demand on the Board, and they did not demonstrate that such a demand would be futile. At a hearing on October 11, 2000, the defendants' demurrer was granted. The defendants had approximately 60 days to file a notice of appeal with respect to the granting of defendants' demurrer. As by order dated January 22, 2001, the plaintiffs' derivative action was dismissed in its entirety. ********* 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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