/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/011019.mbx C L A S S A C T I O N R E P O R T E R Friday, October 19, 2001, Vol. 3, No. 205 Headlines AMEDISYS INC.: Mark McNair Commences Securities Suit in M.D. Louisiana CARESCIENCE INC.: Milberg Weiss Initiates Securities Suit in E.D. PA CITIFINANCIAL INC: Client Files Suit For Violations of Lending Act CLARENT CORPORATION: Stull Stull Commences Securities Suit in N.D. CA CLARENT CORPORATION: Cauley Geller Initiates N.D. CA Securities Suit DOUBLECLICK INC.: Marc Henzel Initiates Securities Suit in S.D. NY HAYES LAMMERZ: Berger Montague Commences Securities Suit in E.D. MI IBP INC.: Faruqi Faruqi Initiates Securities Suit in Delaware Court INTERNET SECURITY: Levy Levy Commences Securities Suit In N.D. GA KOREA: Top Execs Ask Gov't To Delay Securities Class Action System NAVISITE INC.: Bernstein Leibhard Initiates Securities Suit In S.D. NY NEW YORK: Rochester Families Present Case V. State in Appeals Court ONYX SOFTWARE: Marc Henzel Commences Securities Suit in W.D. WA ONYX SOFTWARE: Mark McNair Raises Securities Suit in W.D. Washington ORTHODONTIC CENTERS: Faruqi Faruqi Commences E.D. LA Securities Suit QWEST COMMUNICATIONS: Marc Henzel Initiates Colorado Securities Suit RJ REYNOLDS: Iowa Court Denies Class Certification in Tobacco Suit SHOPKO STORES: Levy Levy Commences Securities Suit in E.D. Wisconsin SHOPKO STORES: Faruqi Faruqi Commences Securities Suit in E.D. WI SHOPKO STORES: Lowey Dannenberg Commences Securities Suit in E.D. WI ST. CLOUD: Professors File Anti-Semitism, Discrimination Suit STREAMEDIA COMMUNICATIONS: Marc Henzel Files S.D. NY Securities Suit WAL-MART STORES: Female Employee Sues Over Contraceptive Insurance ********* AMEDISYS INC.: Mark McNair Commences Securities Suit in M.D. Louisiana ---------------------------------------------------------------------- The Law Office of Mark McNair initiated a securities class action on behalf of purchasers of Amedisys, Inc. (OTC BB: AMED) securities between March 1, 2001 and June 13, 2001 April 19, 2001. The suit, filed in the United States District Court for the Middle District of Louisiana, against defendants: (1) Amedisys, Inc. (2) William F. Borne, (3) Larry R. Graham, and (4) John M. Joffrion The complaint alleges that defendants violated federal securities laws by issuing a series of materially false and misleading statements concerning the Company's publicly reported revenues and earnings. During the Class Period, the Company touted positive financial results and profitable net service revenue in connection with its home health nursing services. Shareholders purport, however, that Amedisys improperly recognized net services revenue in the fourth quarter of 2000 and the first quarter of 2001 in violation of GAAP. On June 13, 2001, Amedisys issued a press release announcing that its previously announced financial results were incorrect. Specifically, the Company announced that discrepancies in the Medicare Prospective Payment System resulted in a negative adjustment to net services revenue of between $4 and $7 million. As a result, the Company's stock price plummeted almost 60% to close at $4.10 per share on June 13, 2001. For more information, contact Mark McNair by Mail: 1819 Pennsylvania Avenue, NW Suite 550, Washington D.C. 20006 by Phone: 877-511-4717 by fax: 202-872-4718 or visit the firm's Website: www.justice4investors.com CARESCIENCE INC.: Milberg Weiss Initiates Securities Suit in E.D. PA -------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP commenced a class action lawsuit on behalf of purchasers of Carescience, Inc. (NASDAQ:CARE) common stocks between June 29, 2000 and November 1, 2000, inclusive. The suit is pending in the United States District Court for the Eastern District of Pennsylvania against the Company and officers: (1) David J. Brailer, (2) Steven Bell, and (3) Ronald Paulus The Complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading prospectus and registration statement. The complaint alleges that the prospectus was materially false and misleading because, among other things, it misrepresented and omitted to disclose material facts concerning two of the Company's products. The prospectus highlighted Careleader.com and Caresense.com, which were expected to significantly contribute to the Company's future performance, and provided detailed descriptions of their features, including an anticipated rollout date in 2001. The complaint alleges that these statements were materially false and misleading because they failed to disclose that, given the environment for Internet-based health applications, the Company's Careleader.com and Caresense.com products, which were in development and not complete, would no longer be economically feasible to continue developing. Accordingly, the further development of those products would have to be abandoned and the sales the Company expected from those products would not be realized. In November 2000, the Company announced that it was revising its revenue estimates for 2001, in part, because of its decision to discontinue its Careleader.com and Caresense.com products. In response to this announcement, the price of the Company's common stock dropped to $1.6875 per share. For more details, contact Steven G. Schulman or Samuel H. Rudman by Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: (800) 320-5081 by E-mail: Caresciencecase@milbergNY.com or visit the firm's Website: www.milberg.com CITIFINANCIAL INC: Client Files Suit For Violations of Lending Act ------------------------------------------------------------------ CitiFinancial Inc. faces a class action suit in the U.S. District Court in Baltimore for allegedly violating the Truth in Lending Act. Frederick County resident Rose Ray filed the suit on behalf of other borrowers when the Company failed to provide financial statements after she took out a $12,000 personal loan. The Company allegedly did not provide details of the loan until Ray signed the contract. This did not give her time to talk to other financial institutions to determine if she could get a better deal elsewhere in violation of the Lending Act, according to the suit. Scott C. Borison, an attorney representing Ray, said many consumers do not know their rights under the Truth in Lending Act, therefore, some lenders do not provide the best available terms. He alleged that "CitiFinancial has not been providing any numbers until the ink is dry on the loan." Mary Louise Preis, the Commissioner of Financial Regulation, said her office has not heard of this case, but that Truth in Lending laws do apply to lenders working in Maryland. "The branch manager has testified that she does not provide any borrowers with any disclosures until they sign a loan agreement," according to the suit. The Company has yet to respond to the allegations in the suit, as spokesman Keith Anderson could not be reached for comment. CLARENT CORPORATION: Stull Stull Commences Securities Suit in N.D. CA --------------------------------------------------------------------- Stull, Stull and Brody initiated a securities class action suit on behalf of purchasers of Clarent Corporation (NASDAQ:CLRN) common stock between April 19, 2001 and September 4, 2001, inclusive. The suit was filed in United States District Court for the Northern District of California, against the Company and certain of its officers and directors and asserts violations of the Securities Act of 1934. The suit alleges the defendants issued materially false and misleading financial statements concerning Clarent's financial accounting and/or its internal controls for the first and second quarters of this year. The complaint alleges that on September 4, 2001, Clarent issued a press release stating, among other things, that Clarent "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. In addition, the Company now believes its revenues for the second half of fiscal 2001 and for fiscal 2002 will be substantially below previously anticipated levels, and that the related losses will be significantly larger than expected. For more information, contact Marc L. Godino by Phone: 888-388-4605 by E-mail: mgodino@secfraud.com or visit the firm's Website: www.secfraud.com. CLARENT CORPORATION: Cauley Geller Initiates N.D. CA Securities Suit -------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP commenced a securities class action on behalf of purchasers of Clarent Corp. (NASDAQ:CLRN) publicly traded securities during the period between April 20, 2001 and August 31, 2001, inclusive. The complaint, filed in the United States District Court for the Northern District of California, charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. In September 2001, the Company announced that: (1) it had discovered information suggesting that its previously reported revenues for the first and second quarters of fiscal 2001 may have been materially overstated; and (2) the Company's Board of Directors was forming a special committee to investigate a number of transactions that placed in question the Company's historical financial results. The Company also stated that its first quarter 2001 revenues, as release on April 19, 2001, and its second quarter 2001 revenues, as release on July 19, 2001, will be reduced and the related net losses will increase upon conclusion of the review. In addition, the Company anticipates that its revenues for the second half of fiscal 2001 and for fiscal 2002 will be substantially below previously anticipated levels, and that the related losses will be significantly larger than expected. The Company also announced that several of its officers had been placed on administrative leave. On this news trading halted at $5.37. For more information, contact Jackie Addison, Sue Null or Charlie Gastineau by Mail: P.O. Box 25438 Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 (toll-free) or visit the firm's Website: www.classlawyer.com DOUBLECLICK INC.: Marc Henzel Initiates Securities Suit in S.D. NY ------------------------------------------------------------------ The Law Office of Marc S. Henzel commenced a securities class action lawsuit on behalf of purchasers of DoubleClick, Inc. (NASDAQ:DCLK) securities between February 23, 1998 and May 2, 2001. The suit was filed in the United States District Court for the Southern District of New York against: (1) DoubleClick, Inc., (2) Goldman Sachs & Co., (3) Kevin J. O'Connor, (4) Kevin P. Ryan, (5) Dwight A. Merriman, (6) Stephen R. Collins, (7) David N. Strohm, (8) Mark E. Nunnelly, (9) W. Grant Gregory and (10) Donald Peppers The suit alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. The defendants allegedly filed a registration statement and prospectus that contained materially misleading or false information with regard to the Company's initial public offering of 3.5 million shares of common stock. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202 Bala Cynwyd, PA 19004 by Phone: (610) 660-8000 or (888) 643-6735 by Fax: (610) 660-8080 by E-mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 HAYES LAMMERZ: Berger Montague Commences Securities Suit in E.D. MI ------------------------------------------------------------------- Berger & Montague, P.C filed a class action today on behalf of purchasers of Hayes Lemmerz International, Inc. (NYSE:HAZ) securities from June 8, 2000 through September 5, 2001, inclusive. The suit is pending in the United States District Court for the Eastern District of Michigan, Southern Division. The complaint alleges that the company violated the federal securities laws by issuing a series of material misrepresentations to the market concerning its financial results for fiscal 2000 and the first quarter of fiscal 2001. Specifically, the reported net loss of $41.8 million for fiscal 2000 was understated by at least 31% and was actually $56.4 million for that fiscal year period. Net loss for the first quarter of fiscal 2001, which was previously reported as $7.6 million, was understated by a staggering 350% and was actually $34.7 million for the quarter. At the end of the Class Period, the Company announced that they would restate its financial statements for 2000 and the first quarter of 2001 to increase reported losses by the foregoing amounts. The Company stated that its investigation relating to these financial misrepresentations would continue and that additional restatements/ adjustments may be necessary. Also, as a result of these restatements, the Company revealed that it was in breach of certain financial covenants under its senior credit facility. In September 2001, when this adverse information was disclosed, the stock was halted from trading and opened the following day at $2.10 per share. This represented a 50% decline from the prior day's trading price of $4.15 per share and more than a 90% decline from the $20 per share Hayes stock had been trading at during the class period. For more information, contact Carole A. Broderick, Elizabeth 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: www.investorprotect.com IBP INC.: Faruqi Faruqi Initiates Securities Suit in Delaware Court ------------------------------------------------------------------- Faruqi and Faruqi commenced a securities class action suit on behalf of all sellers of IBP, Inc. (NYSE: IBP) common stock between March 29, 2001 and June 15, 2001, inclusive. The suit, filed in the United States District Court for the District of Delaware, charged the Company with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that on March 29, 2001, Tyson Foods, Inc. announced it was terminating the proposed merger between Tyson and IBP. Tyson was allegedly inappropriately induced to enter into the merger agreement by relying upon misleading information furnished by the Company concerning an SEC comment letter and the financial results at a Company subsidiary. Immediately following Tyson's announcement, the price of the Company's common stock plummeted in after-hours trading from $22.79 to $14.89 per share, a 35 % decline. For more information, contact Anthony Vozzolo by Mail: 320 East 39th Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E-mail: avozz@faruqilaw.com or Srowley@faruqilaw.com or visit the firm's Website: www.faruqilaw.com INTERNET SECURITY: Levy Levy Commences Securities Suit In N.D. GA ------------------------------------------------------------------ Levy and Levy P.C. initiated a securities class action suit on behalf of purchasers of Internet Security Systems (NASDAQ:ISSX) between April 5, 2001 and July 2, 2001, inclusive. The suit is pending in the United States District Court for the Northern District of Georgia against the Company and certain of its officers. The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the class period that artificially inflated the Company's securities. The complaint also alleges that: (1) during this period of artificial inflation, Company insiders took advantage of their insider status to sell thousands of their own shares of Company stock at artificially high prices for proceeds of over $18 million; (2) the Company further took advantage of the artificially inflated share prices by using ISSX stock as currency to make acquisitions In July 2001, defendants revealed that rather than achieving revenues of $64-67 million for the second quarter as they had led investors to expect, the Company's revenues were actually in the $50-52 million range. Instead of earning $0.15 to $0.16 per share, the Company would actually suffer losses of up to $0.02 per share and ultimately, losses of $0.13 per share for the quarter. As a result of these announcements, the Company's stock fell by more than 40% in one day, thus causing damages to class members. For more information, contact Stephen G. Levy by Mail: One Stamford Plaza, 263 Tresser Blvd., 9th Floor, Stamford, CT 06901 and 245 Park Avenue, 39th Floor, New York, NY 10167 by Phone: 866-338-3674 (toll free), 203-564-1920, or 212-792-4343 by E-mail: LLNYCT@aol.com or visit the firm's Website: www.levylawfirm.com KOREA: Top Execs Ask Gov't To Delay Securities Class Action System ------------------------------------------------------------------ Korea's top 50 corporations urged the government to delay the introduction of a securities-related class action system, saying that it might undermine the nation's economy. Earlier, the Ministry of Finance and Economy and the Ministry of Justice drafted a securities class action bill to be presented to the National Assembly this month and to be implemented in April. In a joint statement, ranking executives said that the introduction of the system would adversely affect business and result in serious fallout in corporate competitiveness and external credit standing. The enforcement of the system would further heighten managerial uncertainties, already exacerbated by the U.S. war on terrorism and its devastating impact on the already fragile global economy. "A rush of lawsuits by minority shareholders would trigger unnecessary conflicts for managerial controls and destabilize corporate management and sales,' the statement said. The businessmen raised concerns over possible abuses of the new system, explaining that ambiguous criteria regarding window dressing, false stock-market disclosures and share-price manipulation would pose particularly serious problems. The statement called for a more careful approach, saying that the system ".would allow lawsuit representatives and ill-intentioned brokers to take the bigger profits." 84 Korea Stock Exchange-listed firms will be affected under the class action bill meant to eradicate managerial irregularities, such as false market disclosures, share price manipulations and doctoring of accounting books. A class action suit against a company grants all investors equal compensation whenever one wins a legal battle against a concern or managers for irregular actions that caused them to suffer financial losses. NAVISITE INC.: Bernstein Leibhard Initiates Securities Suit In S.D. NY ---------------------------------------------------------------------- Bernstein Liebhard and Lifshitz LLP commenced a securities class action lawsuit on behalf all persons who acquired NaviSite, Inc. (NASDAQ: NAVI) securities between October 22, 1999 and December 6, 2000. The case is pending in the United States District Court for the Southern District of New York and names as defendants: (1) the Company, (2) Joel B. Rosen, (3) Kenneth W. Hale, (4) BancBoston Robertson Stephens, Inc. The complaint charges defendants with violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The defendants allegedly issued a registration statement and prospectus that contained material misrepresentations and/or omissions in connection with the Company's initial public offering of 5,500,000 shares of common stock at $14.00 per share. The complaint further alleges that the prospectus was false and misleading because it failed to disclose, among other things, that: (i) the underwriter had solicited and received excessive and undisclosed commissions from certain investors in exchange for which they allocated to those investors material portions of the restricted number of shares issued in connection with the IPO; and (ii) the underwriter had entered into agreements with customers whereby they agreed to allocate Company shares to those customers in the IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, contact Ms. Linda Flood, Director of Shareholder Relations by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E-mail: NAVI@bernlieb.com or visit the firm's Website: www.bernlieb.com NEW YORK: Rochester Families Present Case V. State in Appeals Court -------------------------------------------------------------------- The Greater Rochester Area Coalition for Education (GRACE) and state lawyers presented their case yesterday before the Appellate Division of the New York State Supreme Court. GRACE originally sued the state in September 1998, saying that Rochester schools failed to provide sound, basic education because of the 90% city poverty rate and poor academic performance. The State Supreme Court threw out the suit, but allowed them to proceed with their argument that various state laws violate the state's equal protection clause and the federal Civil Rights Act of 1964. That decision was appealed, which led to yesterday's hearing. State assistant attorney general Jane Conrad expressed satisfaction at the way the hearing turned out, saying ".the judges seemed engaged in the arguments, interested in the legal issues and appreciative of the issues before them." GRACE attorneys expect the Appellate Division's ruling will be appealed to the Court of Appeals in Albany, which would be heard sometime next year. Bryan Hetherington, one of the GRACE attorneys opines, "The reason kids are not succeeding is because the state of New York has concentrated all the kids in the city of Rochester." "It's much harder to educate low-income kids. We're asking the state commissioner of education to come up with a plan to de-concentrate poverty." ONYX SOFTWARE: Marc Henzel Commences Securities Suit in W.D. WA --------------------------------------------------------------- The Law Office of Marc S. Henzel initiated a securities class action on behalf of purchasers of Onyx Software Corp. (Nasdaq: ONXS) publicly traded securities, including those who purchased stock pursuant to Onyx's secondary stock offering in February 2001, during the period between Jan. 10, 2001 and April 3, 2001. The suit, filed in the United States District Court for the Western District of Washington, charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company is a supplier of customer relationship management enterprise applications that are designed to connect a company's sales, marketing and service organizations with customers, prospects and partners. In January 2001, the Company announced the acquisition of Revenue Lab and, after the close of the market, hosted a conference call to discuss the acquisition and the Company's business and prospects. Later, the Company reported favorable, but false, financial results. The Company allegedly made misleading statements about its business and issued false and misleading financial results, causing its stock to be artificially inflated. As a result of this inflation, the Company was able to complete a secondary offering of 2.5 million shares at $13.50 per share, raising net proceeds of $31.5 million on Feb. 7, 2001. Just weeks after this offering was completed, the Company revealed that its 1st Quarter 2001 results would be much lower than the market was led to expect with revenues of only $26-$27 million and a large loss. The stock dropped below $3 per share on this news. Later, after the market closed, defendants revealed that the Company's 4th Quarter 2000 results had been materially misstated and would have to be restated. After this announcement, the Company's stock price dropped to as low as $3.70 on Aug. 13, 2001 compared to the class period high of $17.25. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202 Bala Cynwyd, PA 19004 by Phone: (610)660-8000 or (888) 643-6735 by Fax: (610) 660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 ONYX SOFTWARE: Mark McNair Raises Securities Suit in W.D. Washington -------------------------------------------------------------------- The Law Office of Mark McNair commenced a securities class action on behalf of purchasers of Onyx Software Corporation (Nasdaq: ONXS) common stock between January 30, 2001 and July 24, 2001, including those who participated in the company's February 2001 stock offering. The suit, filed in the United States District Court for the Western District of Washington, charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that the Company filed false and misleading financial results for the fourth quarter and year-end 2000 and used those false numbers in documents filed with the Securities and Exchange Commission in relation to its February 2001 stock offering. The lawsuit maintains that the deception allowed the Company to issue 2,500,000 shares of stock at an inflated price of $13.50 per share. After news of the deception came to light, Company stock fell as low as $3.42 a share, down from a class period high of $16.50 a share. For more information, contact Mark McNair by Mail: 1819 Pennsylvania Avenue, NW Suite 550, Washington D.C. 20006 by Phone: 877-511-4717 by fax: 202-872-4718 or visit the firm's Website: www.justice4investors.com ORTHODONTIC CENTERS: Faruqi Faruqi Commences E.D. LA Securities Suit -------------------------------------------------------------------- Faruqi and Faruqi LLP initiated a securities class action suit on behalf of all purchasers of Orthodontic Centers of America, Inc. (NYS: OCA) securities between April 27, 2000 and March 15, 2001, inclusive. The suit, filed in the United States District Court for the Eastern District of Louisiana, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5. The defendants allegedly issued a series of false and misleading press releases concerning the Company's financial condition and improperly recognized revenues in violation of Generally Accepted Accounting Principles (GAAP). As a result, the price of the Company's common stock was artificially inflated throughout the class period, reaching as high as $35.313 per share. This allowed defendants to collectively sell or propose to sell millions of dollars worth of shares in personally held Company Stock. However, in March 2001, the Company disclosed that as a result of an SEC inquiry, they must change its revenue recognition policy to conform with GAAP. In response, the Company's stock price plummeted approximately 20% in inter-day trading on heavy trading volume. For further details, contact Anthony Vozzolo by Mail: 320 East 39th Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E-mail: avozz@faruqilaw.com or visit the firm's Website: www.faruqilaw.com QWEST COMMUNICATIONS: Marc Henzel Initiates Colorado Securities Suit -------------------------------------------------------------------- The Law Office of Marc S. Henzel lodged a securities class action on behalf of purchasers of Qwest Communications International Inc. (NYSE: Q) publicly traded securities during the period between March 22, 2001 and July 23, 2001. The suit, filed in the United States District Court for the District of Colorado, charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The defendants allegedly appeared at a UBS Warburg-hosted senior management meeting where they falsely claimed that they would legitimately achieve 1st Quarter 2001 and Fiscal Year 2001 earnings per share of $0.11 and $0.59, respectively. In April 2001, the Company reported its financial results for 1st Quarter 2001, including revenue growth of 12% and EBITA growth of 16%. Subsequent to these statements, the Company's stock price increased, trading as high as $41.83 on April 2001. In fact, the Company's results and its statements regarding those results as well as the statements regarding the success of the integration with U.S. West Inc. and the company's strong expense controls were materially false and misleading due to: (1) the company's improper valuation of KPNQwest in violation of Generally Accepted Accounting Principles (as the value of its investment in KPNQwest had already declined months earlier); (2) the Company's 1st Quarter 2001 earnings were better than expectations primarily due to its change in the discount rate to calculate its pension obligations, increasing their 1st Quarter 2001 results by at least $0.03; (3) the Company's earnings were better than expectations due to defendants' failure to properly "write-down" the value of their holdings in KPNQwest, which was materially overstated as a result; (4) the Company's earnings were increased by $0.01-$0.02 due to its aggressive use of capitalization to classify tens of millions of dollars of interest and software development costs as assets rather than expenses, which would contribute to decreased earnings in future quarters; (5) there was no way the Company's future earnings would be nearly as strong as represented due in part to the accounting manipulations defendants engaged in which would adversely affect future results, as expenses were being deferred to future quarters and years; and (6) the Company's selling, general and administrative expenses were only 22% of sales, not due to tight expense controls as represented, but to improper classification of SG&A expenses as cost of sales Subsequently, the Company admitted that its classification of costs had been incorrect such that cost of sales had been overstated and SG&A expenses had been understated. As a result of defendants' issuance of alleged material and misleading statements (including a false 1st Quarter 2001 financial statement), Company stock traded as high as $41.83 per share. The individual defendants took advantage of this inflation, selling 1,255,000 shares of their stock for proceeds of $49.5 million. Ultimately, the Company conceded that it recorded a write-down of over $3.1 billion, primarily related to its ownership in KPNQwest. Upon this admission/revelation, Qwest's shares dropped once again, trading below $27. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202 Bala Cynwyd, PA 19004 by Phone: (610) 660-8000 or (888) 643-6735 by Fax: (610) 660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 RJ REYNOLDS: Iowa Court Denies Class Certification in Tobacco Suit ------------------------------------------------------------------ The U.S. District Court for the Southern District of Iowa denied class action certification in the lawsuit filed against R.J. Reynolds Tobacco Company and other tobacco giants. The Iowa lawsuit was filed by the estates of Mary I. Mahoney and Allen A. Davis on behalf of Iowa residents who smoked cigarettes designed, manufactured, marketed and sold by the tobacco companies who now have, or have died from, lung cancer. Other defendants in the Iowa case included: (1) Philip Morris, Inc., (2) Brown and Williamson Tobacco Corporation, (3) British American Tobacco Co., Ltd, (4) Lorillard Tobacco Company and (5) U.S. Smokeless Tobacco Company Thomas F. McKim, assistant general counsel for Reynolds Tobacco, hailed the decision saying, "The court's decision to deny class certification in this case is very sensible, and consistent with the facts of the case and the law." He further asserted that the decision continues the trend of courts determining that class actions are not an appropriate way to deal with smoking-and-health lawsuits. "This decision and many other similar rulings show that most courts recognize that a class action by smokers claiming damages for alleged injuries should not be certified." To date, federal courts have unanimously rejected tobacco class actions, and, with the exception of just a handful of cases, including Engle (Florida), Scott (Louisiana) and Blankenship (West Virginia), state courts have done the same. SHOPKO STORES: Levy Levy Commences Securities Suit in E.D. Wisconsin -------------------------------------------------------------------- Levy and Levy P.C. initiated a securities class action suit on behalf of purchasers of the securities of ShopKo Stores, Inc. (NYSE:SKO) between March 9, 2000 and November 9, 2000, inclusive. The suit was filed in the U.S. District Court for the Eastern District of Wisconsin against the Company and certain of its officers and/or directors. The Complaint alleges violations Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The defendants allegedly issued a series of material misrepresentations to the market between March 9, 2000 and November 9, 2000, thereby artificially inflating the price of ShopKo securities. Throughout the class period, defendants issued statements concerning the integration of Pamida Holding Corp., the Company's financial results and the Company's prospects. These statements were reportedly false and misleading because they failed to disclose that the Company was experiencing significant shipping and inventory control problems at Pamida's distributions centers. In November 2000, the Company issued a press release announcing its earnings for the third quarter of 2000 reporting a loss of ($0.23) per share, far below the $.02 to $.07 per share previously represented by the Company. The press release revealed that the Company was experiencing problems at Pamida's distribution centers and that those problems accounted for the Company's reduced earnings. For more information, contact Stephen G. Levy by Mail: One Stamford Plaza, 263 Tresser Blvd., 9th Floor, Stamford, CT 06901 and 245 Park Avenue, 39th Floor, New York, NY 10167 by Phone: 866-338-3674 (toll free), 203-564-1920, or 212-792-4343 by E-mail: LLNYCT@aol.com or visit the firm's Website: www.levylawfirm.com SHOPKO STORES: Faruqi Faruqi Commences Securities Suit in E.D. WI ----------------------------------------------------------------- Faruqi and Faruqi initiated a securities class action lawsuit of Wisconsin on behalf of all purchasers of ShopKo Stores, Inc. (NYSE: SKO) securities between March 9, 2000 and November 9, 2000, inclusive. The suit, filed in the United States District Court for the Eastern District of Wisconsin, charges defendants with violations of federal securities laws. The defendants allegedly issued a series of materially false and misleading press releases concerning ShopKo's integration of Pamida Holding Corp., ShopKo's financial results and business prospects. Specifically, the defendants allegedly failed to disclose that the consolidation of Pamida's distribution centers was extremely problematic and that the Company was experiencing significant shipping and inventory control problems. As a result, the price of the Company's common stock was artificially inflated throughout the class period. For more information, contact Anthony Vozzolo by Mail: 320 East 39th Street New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E-mail: Avozz@faruqilaw.com or visit the firm's Website: www.faruqilaw.com SHOPKO STORES: Lowey Dannenberg Commences Securities Suit in E.D. WI -------------------------------------------------------------------- Lowey Dannenberg Bemporad & Selinger, P.C. lodged a class action on behalf of purchasers ShopKo Stores, Inc. (NYSE:SKO) securities from March 9, 2000 through and including November 9, 2000. The class action is pending in the United States District Court for the Eastern District of Wisconsin against the Company and their Chief Executive Officer William J. Podany. The defendants allegedly violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing materially false and misleading statements between March 9, 2000 and November 9, 2000. These statements artificially inflated the price of ShopKo securities. Specifically, defendants touted the positive integration of the Company's new acquisition, Pamida Holding Corp., which accounted for more than 200 discount stores during the class period. In fact, as later admitted by defendant Podany, the Company was experiencing significant shipping and inventory control problems at Pamida's distribution centers. On November 9, 2000, the Company reported a loss of $0.23 per share for the third quarter of 2000 - far below the $.02 to $.07 gain previously represented by the Company. The Company also revealed that it was experiencing problems at Pamida's distribution centers which had contributed to the Company's reduced earnings during the class period. For more details, contact Richard Bemporad or David Harrison by Mail: The Gateway, 11th Floor One North Lexington Avenue White Plains, NY 10601-1714 by Phone: 877-777-3581 (toll free) by E-mail: ldbs@westnet.com or visit the firm's Website: www.ldbs.com ST. CLOUD: Professors File Anti-Semitism, Discrimination Suit ---------------------------------------------------------------- Three professors sued St. Cloud State University in Minneapolis alleging discrimination and anti-Semitism. The suit asserts that: (1) the university denied the plaintiffs promotions and equal pay; (2) department administrators disparage classes taught by Jewish professors; and (3) that they were not given full credit for former teaching experience Lawyer for the plaintiffs Judy Schermer said it was time to fix the problem after ".there have been decades of anti-Semitism at St. Cloud State." 20 of the 750 faculty members and 20 of the 16,500 students in the university openly identify themselves as Jewish. A university-commissioned report by the Jewish Community Relations Council of Minnesota and the Dakotas concluded in July that the university exhibited a "strong perception" of anti-Semitism. History professor Arie Zmora was allegedly denied an interview for a tenure-track position after giving a lecture on the Holocaust. The school has said the search committee felt Zmora didn't have the highest qualifications of all the candidates for the tenured position. History professor Laurinda Stryker claims a recommendation for her non- retention was in retaliation for speaking out against the discrimination. University President Roy Saigo denied the allegations, claiming that when concerns are raised, the university acted on them. He further asserted that the July report was based on anecdotal evidence. The university and the Minnesota State Colleges and University system said in a joint statement that they are reviewing the suit and do not intend to comment on its merit. STREAMEDIA COMMUNICATIONS: Marc Henzel Files S.D. NY Securities Suit -------------------------------------------------------------------- The Law Offices of Marc S. Henzel raised a securities class action lawsuit on behalf of all purchasers of Streamedia Communications Inc. (NASDAQ:SMIL) publicly traded common stock during the period beginning the date of the initial public offering on December 22, 1999 through June 1, 2001. The suit was commenced in the United States District Court for the Southern District of New York. The complaint names the Company, certain of its officers and directors, as well as each of the underwriters of their initial public offering (IPO) as defendants. The complaint alleges that the prospectus authored by defendants misrepresented the true state of the Company's business at the time of the IPO. Specifically, the complaint alleges that the Company did not have any of the Internet broadcasting and other technical capabilities that were described in the prospectus. Furthermore, the complaint alleges that the Company had not developed any programming or content for distribution and did not have any licensees or distributors for its claimed programming at the time of the IPO. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202 Bala Cynwyd, PA 19004 by Phone: (610) 660-8000 or (888) 643-6735 by Fax: (610) 660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 WAL-MART STORES: Female Employee Sues Over Contraceptive Insurance ------------------------------------------------------------------ A 22-year-old female employee sued giant retailer Wal-Mart Stores, Inc. alleging that the Company discriminates against female workers by excluding contraceptive coverage from its health insurance plan. Lisa Smith Mauldin filed the case in the U.S. District Court for the District of Atlanta. Mauldin, a Dallas, Ga. resident, has worked for Wal-Mart since 1996 and earns about $12 an hour. Her prescription contraceptives cost her about $30 a month. "Women are feeling the brunt of these policies" because men don't receive prescription contraceptives, says Janine Pollack of law firm Milberg Weiss Bershad Hynes & Lerach. Wal-Mart spokesman Rob Philips said, in an interview with USA Today, that the Company's priority is to provide affordable health care coverage to as many associates as possible. "This means that some things are not covered, like prescription contraceptives," he reiterated. The case is the latest to tackle the issue since the Equal Employment Opportunity Commission ruled in December that employers risk violating Title VII of the Civil Rights Act if they fail to cover contraceptives but pay for other prescription drugs. Coverage mandates are generally opposed by employers and the insurance industry, who say they will raise health care costs. Opponents also question whether employees who don't use prescription birth control should subsidize those who do through higher premiums. About 90% of HMOs provide contraceptive coverage, but just over half of traditional indemnity-type insurance plans do so. "This particular health care coverage is preventive care that saves money in the end," says Judy Appelbaum of the National Women's Law Center, which successfully brought a similar lawsuit against a Seattle pharmacy last year. ********* 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. 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. 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