/raid1/www/Hosts/bankrupt/CAR_Public/011002.mbx
C L A S S A C T I O N R E P O R T E R
Tuesday, October 2, 2001, Vol. 3, No. 192
Headlines
ASIA PULP: Rabin Peckel Files NY Suit Alleging Securities Violations
AVANEX CORPORATION: Bernstein Liebhard Files S.D. NY Securities Suit
BRITISH GEOLOGICAL: Faces Suit For Failure To Test Poisoned Water
CALIFORNIA: Parties Hope For November Settlement Of Student Fees Suit
CALIFORNIA: Judge Inclined To Grant Class Certification in ACLU Suit
CLARENT CORPORATION: Berger Montague Lodges Securities Suit in N.D.CA
COBALT GROUP: Plaintiffs File Amended And Consolidated Securities Suit
DU PONT: New Findings on Pompton Lakes Contamination Could Affect Suit
ELCOR CORPORATION: Faces Suits Over Defective Shingles In NJ, AL
EXTREME NETWORKS: Denies Allegations in Multiple NY Securities Suits
GREATER GLASGOW: Diptheria Vaccine Complications Suit May Spawn Others
INFOGRAMES INC.: Asks Court To Dismiss Columbine High Murders Suit
INTERNET SECURITY: Berger Montague Commences N.D. GA Securities Suit
INVESTMENT FIRMS: FL Senior Citizens Sue For Annuities Fraud
NEBRASKA: Woman Sues Welfare Agency Over Education Policy Limits
PRINCIPAL FINANCIAL: Will Proceed With IPO Despite Securities Suit
RAMBUS INC.: Pomerantz Haudek Announces Lead Plaintiff Deadline
SAFEGUARD SCIENTIFICS: Beatie Osborn Initiates PA Securities Suit
VANDERBURGH COUNTY: Inmates Allege Rights Violations, Discrimination
VARI-L COMPANY: Initiates Settlement Discussions In CO Securities Suit
WASHINGTON: Settles Suit In Part, Awards Foster Children $100T Each
*********
ASIA PULP: Rabin Peckel Files NY Suit Alleging Securities Violations
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The Law Firm of Rabin & Peckel filed a securities class action suit in
the United States District Court on behalf of all persons or entities
who purchased Asia Pulp & Paper Co Ltd (formerly NYSE: PAP) common
stock during the period from December 17, 1998 through and including
April 4, 2001.
The complaint charges that the Company and certain of its officers and
directors violated Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series
of material misrepresentations to the market between December 17, 1998
and April 4, 2001, thereby artificially inflating the price of Asia
Pulp & Paper securities.
The complaint alleges that the Company issued press releases and filed
financial statements which failed to disclose, among other things, that
the Company had entered into two swap contracts involving Indonesian
rupiah/US dollar and Japanese yen/US dollar swaps.
On April 4, 2001, the Company finally disclosed that it was in default
of $220 million of swap contracts that had not been disclosed on its
financial statements for fiscal years 1997 to 2000. The stunning
announcement followed a steady stream of news reports that the Company
was facing a strong decline in its business and, as a result, was
unable to service its debt. The Company raised hundreds of millions of
dollars in much needed capital through the issuance of bonds and a
secondary offering of its American Depositary Shares.
For more details, contact Rekha M. Carozza or Maurice Pesso by Mail:
Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016 by Phone:
(800) 497-8076 or (212) 682-1818 by Fax: at (212) 682-1892, or by E-
mail: email@rabinlaw.com.
AVANEX CORPORATION: Bernstein Liebhard Files S.D. NY Securities Suit
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Bernstein Liebhard and Lifshitz, LLP initiated a securities class
action lawsuit on behalf all persons who acquired Avanex Corporation
(NASDAQ: AVNX) securities between February 3, 2000 and December 6,
2000. The case is pending in the United States District Court for the
Southern District of New York.
Named as defendants in the complaint are underwriters of Avanex's
initial public offering:
(1) Morgan Stanley & Co. Incorporated,
(2) FleetBoston Robertson Stephens Inc.,
(3) Lehman Brothers Inc. and
(4) U.S. Bancorp Piper Jaffray Inc.
The complaint charges defendants with violations of the Securities
Exchange Act of 1934 for issuing a Registration Statement and
Prospectus that contained materially false and misleading information
and failed to disclose material information.
The Prospectus was issued in connection with Avanex's initial public
offering of six million shares of common stock at $36.00 per share that
was commenced on or about February 3, 2000.
The complaint alleges that the Prospectus was false and misleading
because it failed to disclose:
(i) the Underwriter Defendants' agreement with certain investors
to provide them with significant amounts of restricted Avanex
shares in the IPO in exchange for exorbitant and undisclosed
commissions; and
(ii) the agreement between the Underwriter Defendants and certain
of its customers whereby the Underwriter Defendants would
allocate shares in the IPO to those customers in exchange for
the customers' agreement to purchase Avanex shares in the
aftermarket at pre-determined prices.
For more information, contact Ms. Linda Flood by Mail: 10 East 40th
Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-
1414 by E-mail: AVNX@bernlieb.com or visit the firm's Website:
www.bernlieb.com
BRITISH GEOLOGICAL: Faces Suit For Failure To Test Poisoned Water
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The British Geological Survey (BGS) faces the world's largest ever
class action involving millions of people over claims that the
environmental organization failed to spot deadly poisons during crucial
water testing in Bangladesh.
The suit alleges that BGS failed to test for arsenic in Bangladeshi
groundwater in a 1992 visit, endangering up to 77 million people.
The London-based firm Leigh Day, which is representing hundreds of
Bangladeshi villagers, claims that, if experts from the BGS had tested
for arsenic when they visited Bangladesh in 1992, thousands of people
could have been saved from serious illnesses.
The origins of the current water-contamination crisis in Bangladesh
stretch back to the late Seventies and Eighties when more than four
million tube wells were sunk to dissuade people from using polluted
surface water that was causing widespread disease. At the forefront of
the project were leading aid agencies, including the UN Children's Fund
(Unicef).
Professor Mahmuder Rahman from the Dhaka Community Hospital is among
those who now believe that, in addition to the BGS, Unicef must take
responsibility for the potential disaster.
'It was a mistake that they didn't look for arsenic when they
prescribed underground water. Somebody has to take responsibility, and
compensate these people."
Despite this, Unicef said they did not test for arsenic in the `70s and
80's because they did not expect to find it in the water. Bangladesh
Unicef representative Shahida Azfar said they tested only for known
contaminants. 'You don't test for something you don't expect to find.
We are very sorry about what has happened.'
Three years before the BGS study of water quality in Bangladesh, the
environmental organization published findings on 'routine' tests for
arsenic in groundwater in the UK.
Professor John McArthur, a leading geoscientist from University College
London, said that following the UK tests the BGS should have tested for
arsenic in Bangladesh. 'They did a country-wide test in the UK, they
included arsenic in that country-wide test - so why they didn't do it
in Bangladesh is a mystery.'
The BGS refused to comment last week on the case but said in a brief
statement the organization 'had nothing to hide' and always worked to
the highest professional standards in Bangladesh, Vietnam and
elsewhere.
CALIFORNIA:Parties Hope For November Settlement Of Student Fees Suit
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Los Angeles Superior Court Judge Ann Kough has ordered the Pasadena
school officials of the Pasadena Unified School District to halt the
collection of fees for extracurricular activities, according to a
recent report by the Los Angeles Times.
Attorneys for both the school district and for the three parents who
filed the lawsuit, challenging the fees as unconstitutional, agreed to
the order issued by Judge Kough, and hope to reach a final settlement
by November 14th.
Judge Kough's order forbids the district from from charging for 15
items, including identification cards, student organizers, pep squad
uniforms and marching band fees. The Judge's order still allows for
collection of fees permissible under the state's Education Code; for
example, field trips and textbooks. Thousands of current and former
Pasadena students could be eligible for reimbursement, and district
officials expect a final settlement will cost more than $219,000.
Education lawyers say what made the Pasadena case unusual was the
parents' call for reimbursement. That issue was never raised in the
1984 case of Hartzell vs. Connell, which found that extracurricular
activities, such as band and cheerleading, are part of the educational
program that have to be provided free, according to Roger Wolfertz,
deputy general counsel of the Department of Education. Plaintiff Rene
Amy said fees are hard on families in a district where two-thirds of
the students qualify for government food aid.
Attorneys said they hope to reach a final settlement by November 14.
CALIFORNIA: Judge Inclined To Grant Class Certification in ACLU Suit
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Judge Peter Busch of the San Francisco County Superior Court recently
said he is inclined to grant class-action status in the case of
Williams vs. California, a lawsuit filed by the American Civil
Liberties Union.
The suit accuses the state of failing to properly oversee an education
system rife with problems including inadequate teachers, lack of
textbooks and shabby school conditions.
Although the lawsuit names 18 school districts, Judge Busch, according
to a recent Associated Press report, is likely to approve expanding the
suit to cover perhaps all of California's 1,100 school districts and
their 5.8 million students.
"My inclination at this point is to certify the class," said Judge
Busch in a 90-minute hearing, adding that his final decision on the
proposed class action suit is due soon.
Governor Gray Davis, earlier in the case, had asked the judge to
dismiss the ACLU's case, on the grounds that the school districts and
their locally elected boards, not the state, are ultimately responsible
for ensuring equal educational opportunities for all children.
Judge Busch summed up the ACLU's case, when he said in his refusal of
the state's request for dismissal: " This case is exclusively about the
state's system of oversight and that system's alleged inadequacies and
failures. The lawsuit is aimed at ensuring a system that will either
prevent or discover and correct such deficiencies from going forward."
CLARENT CORPORATION: Berger Montague Lodges Securities Suit in N.D.CA
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The law firm of Berger & Montague, P.C. filed a class action suit on
behalf of an investor against Clarent Corporation (Nasdaq:CLRN), and
certain officers and directors, in the United States District Court for
the Northern District of California on behalf of all persons or
entities who purchased Company securities during the period from April
19, 2001 through Sept. 4, 2001, inclusive.
The complaint alleges that defendant Clarent and certain of its
officers and directors violated Section 10(b) and 20(a) of the
Securities Exchange Act of l934, and Rule 10b-5 promulgated thereunder.
The complaint alleges that defendants made materially false and
misleading representations regarding the Company's revenues and
earnings for the first and second quarters of fiscal year 2001, which
artificially inflated the price of Company stock.
On Sept. 4, 2001, prior to the opening of trading, the Company issued a
press release announcing that it had commenced an "Investigation of
Potential Overstatement of Historical Revenues; [and that it] Places
Three Executives on Administrative Leave." According to the press
release, the Company stated that "it has discovered information
suggesting that the Company's previously reported revenues for the
first and second quarters of fiscal 2001 may have been materially
overstated. The Company's Board of Directors has formed a special
committee to investigate a number of transactions that place in
question the Company's historical financial results."
The press release continued that the "Company anticipates that its
first quarter 2001 revenues, as released on April 19, 2001, and its
second quarter 2001 revenues, as released on July 19, 2001, will be
reduced and the related net losses will increase upon conclusion of
this review. The related period balance sheets will also be adjusted;
in particular, the Company believes that there will be a material
reduction in cash and increase in other assets as of June 30, 2001."
Finally, the Company disclosed that Jerry Chang, Matthew Chang and
Kevin Chang were being placed on administrative leave.
Trading in Company stock, which traded as high as $14.24 per share
during the class period, was halted by Nasdaq pending release of
further news by the Company, and remains halted.
For more information, contact Todd S. Collins, Jacob A. Goldberg,
Kimberly A. Walker by Mail: 1622 Locust Street, Philadelphia, PA 19103
by Phone: (888) 891-2289 or (215) 875-3000 by Fax: (215) 875-5715 by E-
mail: InvestorProtect@bm.net or visit the firm's Website:
www.bergermontague.com
COBALT GROUP: Plaintiffs File Amended And Consolidated Securities Suit
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Plaintiffs in the securities suits against The Cobalt Group, Inc. filed
an amended and consolidated complaint early last month.
The consolidated suit arose from three purported class action lawsuits
filed last June 4, 2001 following the execution of a merger with Cobalt
Acquisition Corporation, a wholly-owned subsidiary of Warburg, Pincus
Equity Partners, L.P. On July 12, 2001, the defendants filed a Joint
Motion to Consolidate the three purported class action shareholder
lawsuits, which was granted.
The amended and consolidated suits names as defendants:
(1) Warburg Pincus,
(2) John W.P. Holt,
(3) Mark T. Koulogeorge,
(4) Geoffrey T. Barker,
(5) J.D. Power, III,
(6) Ernest H. Pomerantz,
(7) Joseph P. Landy,
(8) Howard A. Tullman and
(9) the Company.
The plaintiffs' amended and consolidated complaint alleges that the
defendants breached their fiduciary duty, including allegations:
(i) that the proposed merger consideration is grossly unfair and
inadequate,
(ii) that the defendants engaged in unfair dealing by allegedly
timing the merger proposal to take advantage of the
allegedly depressed market value of Cobalt's common stock,
(iii) that the defendants allegedly timed the announcement of the
proposed transaction to place an artificial lid on the market
price of Cobalt's common stock,
(iv) that the defendants have access to internal financial
information about Cobalt to which the plaintiffs are not privy
and
(v) that the continuing shareholders allegedly have conflicts of
interest and as a result, allegedly acted to better their own
interests at the expense of the unaffiliated shareholders.
The suit further alleged breach of duty of candor, including
allegations that the defendants failed to adequately disclose all of
the material factors relating to the proposed merger and aiding and
abetting breach of fiduciary duty.
The Company expressed confidence that despite the uncertainty of
pending litigation, the suits will not have a materially adverse effect
on the Company's financial position or operations.
DU PONT: New Findings on Pompton Lakes Contamination Could Affect Suit
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Scientists investigating for lawyers in the environmental class action
suit against Du Pont Chemicals told more than 300 Pompton Lakes
residents that contamination in their town could be worse than that
depicted in the movie, "Erin Brockovich." "Erin Brockovich" told the
real-life story of a group of residents from a small California town
who suffered from a variety of illnesses. They sued a local chemical
manufacturer and settled for more than $300 million.
The four scientists, including a physician, a cancer specialist, a
hydrogeologist, and a toxicologist said the cancer rate was 16 times
more than the national average among borough residents ages 18 to 65.
"Some of the reasons you are having the health problems you have is
because of the contamination," said Dr. James Dahlgren, a physician at
UCLA, who studied medical records of borough residents. "Something's
going on in Pompton Lakes that's causing a higher incidence of cancer."
About 1,600 families in Pompton Lakes joined the class action suit four
years ago against Du Pont, saying that pollution from the Company
caused health problems in family members and lowered property value.
A trial is scheduled to begin in early April in Superior Court in
Paterson.
In 1997, Du Pont and 427 Pompton Lakes residents and former residents
agreed on a $38.5 million settlement in a separate case.
State Department of Environmental Protection officials have said the
chemicals found in a municipal well, lead, zinc, mercury, and members
of the chloroethylene and chloroethane families, all meet drinking
water safety standards set by the government. Chloroethylenes are
believed to cause liver or gastrointestinal problems. Chloroethanes are
known to be carcinogenic. The explosives manufacturing plant, which
opened in 1902, closed in 1994. Executives at the Wilmington, Del.,
corporation maintain that the drinking water in Pompton Lakes is safe.
They have said municipal wells are too far from a plume of
contamination to be affected by it.
Some Pompton Lakes residents who attended the meeting said they have
been living with this for a long time. "It's a lot that we already know
about," said Angelo Ingallinesi, a Pompton Lakes homeowner since 1974.
"We heard about the other lawsuit. We know people here who are sick
when they've been perfectly healthy." Virginia Docherty, who grew up
in a house on the Du Pont site, agreed. "Everyone on my mother's side
has had cancer, and most of them worked there," she said. "I hope this
will get them to clean up the town."
ELCOR CORPORATION: Faces Suits Over Defective Shingles In NJ, AL
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Construction products manufacturer Elcor Corporation faces two class
action suits in New Jersey and Alabama relating to their asphalt
shingles.
The first suit was filed last year by Wedgewood Knolls Condominium
Association in the United States District Court in Newark, New Jersey
against the Company and its subsidiary, Elk Corporation. The suit has
since been amended to name only Elk Corporation of Texas and Elk
Corporation of Alabama.
The purported nationwide class would include purchasers or current
owners of buildings with certain Elk asphalt shingles installed between
January 1, 1980 and present. The suit alleges, among other things, that
the shingles were uniformly defective and that the Company breached
implied and written warranties on behalf of the plaintiff and the
purported class.
The second suit was filed by an individual homeowner in June in the
Judicial District of Hartford, Connecticut and makes allegations and
claims similar to those in the first suit.
The Company has denied the claims asserted in both actions.
EXTREME NETWORKS: Denies Allegations in Multiple NY Securities Suits
--------------------------------------------------------------------
Extreme Networks, Inc. vehemently denied allegations in multiple
securities suits pending in the U.S. District Court for the Southern
District of New York relating to their initial public offering.
The suits commenced in July 2001 and were filed on behalf of all
persons who purchased our common stock from November 17, 1999 through
December 6, 2000.
The suits name as defendants, the Company, certain of their present and
former officers and underwriters of their initial public offering:
(1) Morgan Stanley & Co., Incorporated,
(2) BancBoston Robertson Stephens, Inc., and
(3) Lehman Brothers Inc.
The suit alleges violations of Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder.
On or about April 8, 1999, the Company commenced an initial
public offering of 7 million of its shares of common stock at an
offering price of $17 per share. In connection therewith, the Company
filed a registration statement, which incorporated a prospectus, with
the SEC.
The complaint alleges that the Prospectus was materially false and
misleading because it failed to disclose, among other things, that:
(1) the underwriters had agreed to allow certain customers to
purchase shares in the offering in exchange for excess
commissions paid to the underwriters; and
(2) the underwriters had arranged for certain customers to
purchase additional shares in the aftermarket at pre-
determined prices.
The Company labeled the suits without merit as it believes that the
suits are part of the wave of securities actions against companies who
made their initial public offerings in the last two years.
GREATER GLASGOW: Diptheria Vaccine Complications Suit May Spawn Others
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Greater Glasgow Primary Care NHS Trust might face a slew of class
action suits since the family of a nine-year-old girl who was left
brain damaged after a company administered a diptheria vaccination sued
the company for millions of pounds.
Dr Abdunaser El Ayeb has issued a High Court claim against Greater
Glasgow Primary Care NHS Trust for administering an allegedly defective
vaccination of dipheria, pertussis and tetanus (DPT) to his baby
daughter in 1992.
A doctor employed by the trust, and two companies believed most likely
to have made the vaccine, are also being sued. The case is expected to
reach trial early next year.
According to Peter Todd, attorney for El Ayeb and other families who
believe their children were damaged by the vaccine is considering a
class action, if the first complaint is successful.
El Ayab's daughter, Worood, was given the vaccine at Woodside health
centre in Maryhill, Glasgow, when she was 10 weeks old. Within hours,
she slipped into a deep sleep and suffered a seizure. She now has
epilepsy and cannot talk, feed or clothe herself.
"Before the vaccination, she was a perfectly healthy girl and almost
straight away afterwards, I watched her condition deteriorate in front
of my eyes. I am convinced this was due to the vaccination," he said.
However, such a link has not been scientifically proven. Compensation
is available under the 1979 Vaccine Damage Payments Act for defective
medication. Two years ago, the Barras family from west Glasgow received
o30,000 compensation after their daughter was brain damaged after being
injected with a defective vaccination. Hundreds of families have been
unable to prove that the vaccination was, in fact, responsible. In
Scotland, there are more than 60 families believed to have been
affected by disability as a result of the vaccine.
DPT, a triple vaccination, is given to babies, normally at two, three
and four months of age. It consists of dead bacteria and inactive
toxins, which stimulate a baby's immune system to fight the diseases.
However, despite full medical backing for the vaccine, there are fears
that in some cases the immune system may be too weak to fight off the
injected bacteria.
The element of the vaccine known as pertussis or, more commonly,
whooping cough, is particularly complex and has previously been linked
with a rise in childhood asthma.
There is also a growing anxiety that combined vaccines such as DPT are
responsible for a dramatic increase in late-onset autism among
children. Recent research published by Cambridge University revealed
that autism rates are 15 times higher than previously estimated.
But, some experts believe combined vaccinations may be beneficial. In
both Britain and the U.S., for example, scientists are investigating a
possible link between early DPT vaccinations and a decreased risk of
suffering from Sudden Infant Death Syndrome (SIDS), otherwise known as
"crib death".
INFOGRAMES INC.: Asks Court To Dismiss Columbine High Murders Suit
------------------------------------------------------------------
Video game producer Infogrames, Inc. has moved for the dismissal of a
class action suit in Colorado, which alleges the Company produced
products that influenced the young men responsible for the 1999
Columbine High School massacre.
The family of William David Sanders, a teacher murdered in the April 2,
1999 shooting rampage committed by Eric Harris and Dyland Klebold at
the Columbine High School in Jefferson County, Colorado, commenced the
suit in April of this year.
The action was brought against 25 defendants, including the Company
and:
(1) other corporations in the videogame business, especially
distributors of "Doom" and other violent video games,
(2) companies that produced or distributed the movie "The
Basketball Diaries", and
(3) companies that provide allegedly obscene internet content.
The complaint alleges 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 plaintiffs have yet to oppose the Company's motion to dismiss the
suit.
INTERNET SECURITY: Berger Montague Commences N.D. GA Securities Suit
--------------------------------------------------------------------
The law firm of Berger & Montague, P.C. filed a class action suit on
behalf of an investor against Internet Security Systems, Inc. (Nasdaq:
ISSX) and certain officers and directors in the United States District
Court for the Northern District of Georgia.
The suit was filed on behalf of all persons or entities that purchased
Internet Security Systems, Inc. securities during the period from April
1, 2001 through and including July 2, 2001, inclusive. The complaint
alleges that defendant and certain of its officers and directors
violated Section 10(b) and 20 (a) of the Securities Exchange Act of
l934, and Rule 10b-5 promulgated thereunder. The complaint alleges that
defendants made materially false and misleading representations
regarding the Company's revenues and earnings for the first and second
quarters of fiscal year 2001 which artificially inflated the price of
Internet Security Systems, Inc. stock. The complaint specifically
alleges that on April 18, 2001, the Company reported its 23rd
consecutive quarter of growth. For the first quarter of 2001, it
claimed revenues in excess of $61 million and net income of $6.5
million or $0.15 per share.
The Company claimed that the company's "financial performance continued
to show strength and our solid execution and focus on expense control
enabled us to meet our profit guidance provided at the beginning of the
quarter."
The Company claimed on April 18, 2001 that its guidance for the second
quarter ending June 30, 2001 was to produce revenues between $65 and
$67 million and earnings in the range of $0.15 per diluted share, even
though defendants knew they could not achieve these numbers. The
Company also claimed that "the public can continue to rely on the
expectations published in its earnings release and web site as being
its current expectations on matters covered, unless the Company
publishes a notice stating otherwise."
On July 2, 2001, after the quarter had ended, the Company issued a
press release in which it stated that the management expected revenues
in the range of $50- $52 million, not $64-$67 million. Management also
said it expected a loss per diluted share of between $0.00 to $0.02,
rather than earnings of $0.15 to $0.16. Class members who had bought
the stock during the class period when the Company told them they could
rely on their guidance, found that before 9 a.m. on July 3, 2001, the
price of Company stock was already down by 41.6%.
Just after the July 18, 2001 press conference in which the Company
released its actual numbers, and admitted that it had over hired and
over indulged on fringe benefits, travel and entertainment, the Company
laid off 12% of its work force. The plaintiffs allege this confirmed
what its executives had known or recklessly disregarded throughout the
class period, that the company had too many employees and greater
expenses than it could afford, given its level of sales.
For more information, contact Sherrie R. Savett, Carole A. Broderick,
Elizabeth W. Fox or Kimberly A. Walker by Mail: 1622 Locust Street,
Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax:
215-875-5715 by E-mail: InvestorProtect@bm.net or visit the firm's
Website: http://www.bergermontague.com
INVESTMENT FIRMS: FL Senior Citizens Sue For Annuities Fraud
------------------------------------------------------------
Two Midwestern companies were slapped with a class action suit in
Orange County Circuit court, accusing them of tricking senior citizens
into buying annuities that wouldn't mature until beyond their life
expectancies.
The lawsuit seeks more than $75 million in damages from American Equity
Investment Life Insurance Company, of West Des Moines, Iowa, and
Creative Marketing International Corp., of Shawnee, Kan.
According to the complaint, 73-year-old Charles Strube, of Windemere,
was persuaded by an American Equity agent to cash in more than $800,000
of his annuity contracts in order to purchase so-called "risk-free"
annuities.
Fine print disclosed, however, that the annuities wouldn't vest until
Strube was 95, and he was subjected to penalties and forfeitures for
cashing in his old policies, the lawsuit said.
The complaint claims American Equity and Creative Marketing
purposefully designed their product to be deceptively similar to the
popular "variable annuity," but crafted it in such a way to avoid
compliance with the requirements of federal securities laws.
A spokeswoman for American Equity said the company had not heard of the
lawsuit and would not comment.
Creative Marketing's Chief Financial Officer, Will Moneymaker, also
said his company wasn't aware of the lawsuit and declined comment.
For more information, contact Heinrich, Gordon, Hargrove, Weihe and
James, P.A., counsel for the plaintiffs by accessing their Website:
www.heinrichgordon.com
NEBRASKA: Woman Sues Welfare Agency Over Education Policy Limits
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The State of Nebraska faces a purported class action suit in Lancaster
County District Court, claiming the education policy of the state
Health and Human Services System does not concur with the state's
welfare reform act.
24-year old single mother and welfare client, Tanya Walters, filed the
suit, alleging that state policy allowing only education programs that
can be completed in two years or less, circumvents the intent of the
reform act.
At the core of the lawsuit is an employment program requiring people
receiving state assistance to enter into a work contract aimed at
making the client financially self-sufficient in two years.
Thus, the contract can include finishing high school, substance abuse
treatment, job search or even earning a degree in a two-year program.
Attending college, however, is generally a four-year commitment.
The lawsuit asks the court to require Health and Human Services to
modify its policy of allowing only two-year education programs; and the
lawsuit also asks the court to allow those denied the chance to take a
four-year program to renegotiate their contracts with the state.
Walters, who had worked in a manufacturing plant, decided she needed a
degree to support her two children. "I think it's ridiculous that my
country doesn't want to help me better myself, which would help my
children."
Walters refused to sign her work contract, and the state ended her
assistance. But a temporary injunction obtained by her attorneys will
allow her to continue getting benefits while the case is pending.
In a similar case, argued by the Appleseed Center and the state before
Lancaster District Judge John Colborn, the judge ruled that it was
possible for clients to become employable with the education they would
receive in just two years of college. He ordered the case remanded
back to the department.
Rumbaugh said the state decided to appeal the case because it would be
too difficult to decide at the outset of a contract whether a person
would be self-sufficient two years later.
PRINCIPAL FINANCIAL: Will Proceed With IPO Despite Securities Suit
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The Principal Financial Group will proceed with its initial public
offering within 30 days, as planned, even if an Illinois woman
challenged the company's allocation method to decide how many shares
policyholders will receive.
The lawsuit filed in federal court in Rockford on Thursday by Esther
Gayman claims that Principal's share allocation method was unfair to
many policyholders. The allocation method used by the Company gives
each policyholder a fixed allocation of 100 shares, but customers can
receive additional shares based on their policy's past and future
contributions to surplus.
The lawsuit says the Company should consider only past contributions to
surplus. It also contends that group policyholders, businesses that
provide insurance for employees, receive too many shares. Gayman has
requested a jury trial and requests declaratory relief and damages.
The Company has slightly lowered the expected price range for its
initial public offering, disclosing in the SEC filing that it expects
shares to sell for $17 to $20 per share. The earlier estimate was
$18.50 to $20.50. The Company plans to sell 100 million shares to the
public. At the new price, the sale would raise up to $2 billion. The
exact issuing price will be determined when the sale occurs.
The Company is converting from a mutual insurance company to a publicly
traded company. Company policyholders were given a choice of receiving
stock or cash. Money raised in the IPO will pay off policyholders who
chose cash, and to pay restructuring costs.
Principal declined to comment on the lawsuit, saying it had not
received it yet.
RAMBUS INC.: Pomerantz Haudek Announces Lead Plaintiff Deadline
---------------------------------------------------------------
Pomerantz Haudek Block Grossman & Gross LLP, which has filed a class
action lawsuit against Rambus, Inc. (Nasdaq: RMBS) and certain of its
officials, on behalf of investors who purchased the securities of
Rambus during the period between January 18, 2000 through May 9, 2001,
inclusive. The firm announced that shareholders have until Tuesday
October 9, 2001 to seek appointment by the Court as one of the lead
plaintiffs in this action.
The lawsuit charges the Company and certain of its officials with
issuing misstatements about the Company's patents and related licensing
agreements and concealing that patents were obtained by deceptive
means, including the Company's misuse of facts that it had learned at
meetings of an industry standards-setting group.
On May 9, 2001, investors learned the truth of these misrepresentations
when a jury in a patent infringement suit filed by the Company against
one of its competitors, Infineon Technologies AG, determined that the
Company's patents in question were obtained fraudulently, resulting in
a $3.5 million punitive Judgment. Company stock, which had traded as
high as $127 in June 2000, plummeted during the litigation and closed
at $12.80 on the day of the verdict.
In addition, prior to the disclosure of defendants' misconduct, and at
times when the Company's stock price was materially inflated by
defendants' misleading statements, it is alleged most of the individual
defendants sold over $110 million worth of their Company stock in
public markets and thereby benefited from their wrongdoing.
For more information, contact Andrew G. Tolan by Phone: 888-476-6529
(or (888) 4-POMLAW (toll free) or by E-mail: agtolan@pomlaw.com. Those
who inquire by e-mail are encouraged to include their mailing address
and telephone number. You can also visit the firm's Website:
www.pomerantzlaw.com
SAFEGUARD SCIENTIFICS: Beatie Osborn Initiates PA Securities Suit
-----------------------------------------------------------------
Beatie and Osborn, LLP filed a class action lawsuit June 26, 2001, in
the United States District Court, Eastern District of
Pennsylvania on behalf of all shareholders of Safeguard Scientifics,
Inc. (NYSE: SFE) who purchased Safeguard's common stock between
December 1, 1999 and December 5, 2000. The suit alleges that defendants
Safeguard and Warren V. Musser violated the federal securities laws
during the class period.
Specifically, the complaint alleges that defendants failed to disclose
the fact that defendant Musser had pledged substantially all of his
Safeguard shares as collateral to secure margin trading in his personal
brokerage accounts. When defendant Musser's investments declined in
value, he received margin calls from his brokers and was forced to
liquidate his Safeguard stock, causing the price of Safeguard's shares
to decline significantly.
The Plaintiff alleges that the defendants' failure to disclose the
pledge, coupled with their subsequent efforts to conceal the
consequences of several margin calls, violated the federal securities
laws.
For further details, contact Eduard Korsinsky or Ben Coleman by Mail:
521 Fifth Avenue, 34th Floor, New York, New York 10175 by Phone: 800-
891-6305 (toll-free) or 212-888-9000 by Fax: 212-888-9664 or by E-mail:
clientrelations@bandolaw.com
VANDERBURGH COUNTY: Inmates Allege Rights Violations, Discrimination
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Fifteen women inmates have sued the Vanderburgh County Jail, claiming
they have been denied the care, facilities and privileges commonly
given to male inmates.
The suit alleges that the county and its jail officials violated the
constitutional and civil rights of female prisoners by the
discriminatory treatment.
Allegations are contained in an "amended complaint," from a suit
originally filed in December 1999. The original suit had been moribund
until a judge appointed legal counsel for the plaintiffs.
The suit names as defendants:
(1) Sheriff Brad Ellsworth,
(2) Chief Deputy Eric Williams,
(3) Capt. Gary O'Risky and
(4) the Vanderburgh County Commissioners.
O'Risky is the officer directly responsible for jail administration.
Allegations cover a period beginning Jan. 1, 1999, the day Ellsworth
took office.
Jail officials are accused in part of denying trustee positions to
women and "arbitrarily and capriciously" denying them visits with their
children. The suit says jail officials failed to provide females with
equal medical treatment, isolation from inmates with communicable
diseases, sick bay and medications.
The suit makes numerous allegations, including:
(i) Denying women physical examinations, gynecological care and
response to sick calls.
(ii) Allowing "unqualified and unsupervised jail personnel to make
medical decisions in response to female inmate complaints."
(iii) Denying women clean, sanitary bedding and uniforms, sometimes
furnishing them "uniforms stained with the blood of others."
(iv) Denying female inmates sufficient "toilet paper, soap,
cleaning supplies and disinfectant" to maintain sanitation.
(v) Exposing female prisoners "to infection and unnecessary risks
of disease" by denying them adequate feminine hygiene
supplies, and to "unhealthy and unsanitary conditions" from
"raw sewage and odors" entering into their cells.
(vi) Denying women medical treatment "for vaginal infections, lice,
scabies and crabs resulting from the unsanitary conditions."
(vii) Failing to screen incoming new inmates for communicable
diseases and failing to delouse or treat them before they were
admitted to the plaintiffs' cell block.
(viii) Denying female prisoners privacy when using the toilet.
The treatment described in the suit "is continuing," according to the
complaint.
Ellsworth vehemently denied the allegations saying that if he was a
lawyer, "I'd be embarrassed to have my name on that lawsuit."
Attorneys Michael Macer and Jeff Shoulders brought the suit in the
names of 15 plaintiffs and on behalf of "similarly situated" female
inmates who have been held in the county lockup.
County Attorney Philip Hayes said the county's legal position on the
suit just filed in U.S. District Court in Evansville has not changed
from the 1999 filing. "We believe the complaint ... is not legally
certifiable as a class action. We will look at the new allegations,
(but) it doesn't appear the county will change its position."
Hayes said he believes the remedies sought in the 1999 filing "have
already taken place administratively."
VARI-L COMPANY: Initiates Settlement Discussions In CO Securities Suit
----------------------------------------------------------------------
Vari-L Company, Inc. commences settlement discussions with plaintiffs
in the consolidated class action suit pending in the United States
District Court for the District of Colorado.
The consolidated suit arose from a number of private shareholder class
actions alleging violations of federal securities laws were filed
against the Company beginning in June 2000. On August 30, 2000, all of
these class actions were consolidated into a single action, Rasner v.
Vari-L Company, Inc., et. al.
The suit was filed on behalf of persons who purchased shares of the
Company's stock between 1997 and sometime in 2000 and names as
defendants, the Company and:
(1) David G. Sherman, the Company's former President and Chief
Executive Officer;
(3) Joseph H. Kiser, the Company's Chief Scientific Officer and
former Chairman;
(4) Jon L. Clark, the Company's former Chief Financial Officer,
and
(5) Derek L. Bailey, the Company's former Executive Vice President
of Sales and Marketing.
The suit alleges that the Company's financial statements for the years
1997, 1998 and 1999 did not conform to generally accepted accounting
principles and were materially false and misleading. The complaint also
alleges violations of Section 10(b) of the Securities Exchange Act of
1934 and seeks to impose "control person" liability on the individual
defendants pursuant to Section 20(a) of the Exchange Act.
The Company stated in a disclosure to the Securities and Exchange
Commission that there is no assurance yet that a settlement acceptable
to both parties will be reached despite ongoing discussions.
WASHINGTON: Settles Suit In Part, Awards Foster Children $100T Each
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The Washington State Department of Social and Health Services partially
settled a class action relating to the state's child welfare system by
awarding thirteen foster children $100,000 each.
The 13 children were plaintiffs in a class-action lawsuit filed in
Whatcom County Superior Court in Bellingham that aims to reform the
state's child welfare system. The settlement, which awards each child
$100,000, does not affect other aspects of the lawsuit, which is set to
go to trial on Oct. 15. The settlement marked the first time that a
state agency awarded damages to foster children whose primary claim is
that they were psychologically harmed by being constantly moved among
families. One of the 13 children had been moved 35 times. Twelve had
been separated from their siblings by DSHS.
Filed by Bellingham attorney Tim Farris, the remaining lawsuit
essentially seeks to put the state's entire foster care system on
trial. Witnesses are expected to include current and former state
officials, mental-health experts and foster parents.
If the plaintiffs are successful, remedies may include forcing the
state to operate more therapeutic group homes and training foster
parents to handle kids with behavioral problems.
In the department's defense against the suit, the state Attorney's
General's Office has contended that the court doesn't have proper
jurisdiction in the case because the DSHS budget is decided by the
Legislature. State officials would not comment about the future of the
case. Children's Administration official, Rosie Oreskovich, released a
statement saying the settlement was the right thing to do. "The
department believes this agreement is in the best interest of the 13
foster children and in the best interest of the taxpayers. Prolonging
this portion of the litigation for several months would not be in the
best interest of either."
If successful, the lawsuit could place the state's child-welfare system
under the oversight of Whatcom County Superior Court Judge David
Nichols.
Similar lawsuits in other states have prompted positive change, said
Bill Grimm, attorney with the Oakland, Calif.-based National Center for
Youth Law. Under review of a federal judge, authorities in Arkansas
improved mental-health assessments of children and the response time to
complaints of child abuse.
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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. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
Copyright 2001. All rights reserved. ISSN 1525-2272.
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