/raid1/www/Hosts/bankrupt/CAR_Public/011129.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, November 29, 2001, Vol. 3, No. 233
Headlines
AGILENT TECHNOLOGIES: Lovell Stewart Files Securities Suit in S.D. NY
AMERICA ONLINE: Appellate Court Allows Consumer Fraud Suit To Proceed
BRAUN CONSULTING: Bernstein Liebhard Files Securities Suit in S.D. NY
CANADA: Same-Sex Couples File Suit To Claim $400M Survivor Benefits
CONOCO INC.: Shareholder Sues To Block Phillips Petroleum Merger in DE
ECI TELECOM: Securities Suit Dismissed Without Prejudice in E.D. VA
ENRON CORPORATION: Law Firms Mobilize As Investors Sue Over Losses
EXFO ELECTRO: Bernstein Liebhard Commences Securities Suit in S.D. NY
FOUNDRY NETWORKS: Lovell Stewart Commences Securities Suit in S.D. NY
K-TEL INTERNATIONAL: Awaits Ruling As Appellate Court Wraps Up Review
LIFESCAN INC.: Settles For $45M Suit Due To Defective Diabetes Meter
LOGON AMERICA: Bernstein Liebhard Commences Securities Suit in S.D. NY
LONG JOHN: Charged By Former Employee of Labor Standards Act Violations
METRICOM INC.: Stull Stull Commences Securities Suit in N.D. California
MICROSOFT CORPORATION: Hearing For $1B Antitrust Settlement Proceeds
PFIZER INC: First Rezulin Trial Commences In Texas Federal Court
RAVISENT TECHNOLOGIES: Bernstein Liebhard Files Securities Suit in NY
SIRIUS SATELLITE: Wolf Haldenstein Initiates Securities Suit in Vermont
STARMEDIA NETWORKS: Bernard Gross Commences Securities Suit in S.D. NY
STARMEDIA NETWORKS: Wechsler Harwood Lodges Securities Suit in S.D. NY
TEMPLETON ASSET: Settles Investment Fund Fraud Suit For $8.5 Million
WINK COMMUNICATIONS: Lovell Stewart Lodges Securities Suit in S.D. NY
*Auction To Determine Lead Counsel In Class Actions: Lauded But Risky
*********
AGILENT TECHNOLOGIES: Lovell Stewart Files Securities Suit in S.D. NY
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Lovell & Stewart LLP lodged a securities class action on behalf of all
persons and entities who purchased, converted, exchanged or otherwise
acquired the common stock of Agilent Technologies, Inc. (NYSE:A)
between November 17, 1999 and December 6, 2000, inclusive. The lawsuit
asserts claims under Section 11, 12 and 15 of the Securities Act of
1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated by the SEC thereunder and seeks to
recover damages.
The action is pending in the U.S. District Court for the Southern
District of New York against:
(1) the Company,
(2) certain of its officers and directors,
(3) Morgan Stanley Dean Witter & Co., Inc.,
(4) The Goldman Sachs Group, Inc.,
(5) Credit Suisse First Boston Corp.,
(6) Merrill Lynch, Pierce, Fenner & Smith, Inc.,
(7) Salomon Smith Barney, Inc.,
(8) Bear, Stearns & Co., Inc.,
(9) JP Morgan Chase & Co., Inc.,
(10) Lehman Brothers, Inc.,
(11) SG Cowen Securities Corp.,
(12) FleetBoston Robertson Stephens, Inc., and
(13) Chase H&Q (formerly known as Hambrecht & Quist LLC)
The suit alleges that the defendants violated the federal securities
laws by issuing and selling Company stock pursuant to the initial
public offering without disclosing to investors that several of the
underwriters of the IPO had solicited and received excessive and
undisclosed commissions from certain investors. In exchange for the
excessive commissions, the defendants allegedly allocated Company
shares to customers at the IPO price of $30.00 per share. To receive
the allocations at $30.00, the defendant underwriters' brokerage
customers had to agree to purchase additional shares in the aftermarket
at progressively higher prices. The requirement that customers make
additional purchases at progressively higher prices as the price of
Company stock rocketed upward was intended to drive Company share price
up to artificially high levels. This artificial price inflation, the
complaint alleges, enabled both the defendant underwriters and their
customers to reap enormous profits by buying Company stock at the
$30.00 IPO price and then selling it later for a profit at inflated
aftermarket prices, which rose as high as $50.00 during its first day
of trading.
Rather than allowing their customers to keep their profits from the
IPO, the complaint alleges, the defendant underwriters required their
customers to "kick back" some of their profits in the form of secret
commissions. These secret commission payments were sometimes calculated
after the fact based on how much profit each investor had made from his
or her IPO stock allocation.
The complaint further alleges that defendants violated the Securities
Act of 1933 because the Prospectus distributed to investors and the
Registration Statement filed with the SEC in order to gain regulatory
approval for the Company offering, contained material misstatements
regarding the commissions that the defendant underwriters would derive
from the IPO and failed to disclose the additional commissions and
"laddering" scheme discussed above.
For more information, contact Lovell & Stewart by Phone: 212.608.1900
or visit the firm's Website: http://www.lovellstewart.com
AMERICA ONLINE: Appellate Court Allows Consumer Fraud Suit To Proceed
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The 11th Circuit Court of Appeals has allowed a lawsuit against America
Online to remain a class action, denying the Company's appeal of a
Florida federal court's decision granting certifying the suit.
Plaintiffs Marguerite Miles and Patricia Colclasure filed the suit on
behalf of America Online customers who received long-distance access
fees from 1996 to the present, and alleges the Company lured customers
with deceptive advertising.
The suit alleges that the Company lured subscribers to sign on with
them by offering several hours of free Internet access, or unlimited
access to the Internet for about $19.95 a month. The customers then
give their telephone number and select a number from a list of access
numbers to connect to them to the Internet. The suit further alleges
that the Company failed to properly inform consumers that the access
numbers they called to connect with the Internet might be long-distance
calls. This caused unsuspecting customers to rack up hundreds of
dollars on long distance telephone bills.
Attorney for the plaintiffs, Lance Harke, called the deal "inadequate".
Saying "it puts the burden on the consumer." The suit asserts that the
Company lacked sufficient local access numbers and configured computers
to access Internet service. According to a Miami Herald report, the
Company's disclaimer says the company is not responsible for additional
charges if a long-distance phone number is chosen. Harke said that
people should contact their telephone company to make sure the number
they've selected is in their calling plan. He added, "They don't
provide the information to consumers that we contend they should and
that their competitors do."
It is unclear how many will be affected by the suit. Harke said that
the Company turned over 4,700 written complaints about the phone
charges and told the Miami Herald that "tens of thousands" of America
Online customers nationwide could have been affected.
America Online spokesman Nicholas Graham said "We have thousands of
access numbers across the country. We offer access numbers in all 50
states." He added the Company makes it perfectly clear that some
Internet access telephone numbers it provides might result in a long-
distance charge for consumers. He told the Herald that geography is
not the only factor in determining whether a telephone number is
considered local or long-distance. He asserts that it also had
something to do with the "calling plan" customers have. Because of the
wide variety of long-distance plans that are available, the company
can't tell which telephone numbers might result in long-distance
charges for its customers.
Tampa Federal Judge James Moody Jr. certified the suit in August, a
decision that the Company appealed with the 11th Circuit Court of
Appeal in Atlanta. In a statement, America Online said "We disagree
with the court's decision and are reviewing our legal options." Mr.
Harke said his next step is to ask for a trial date.
BRAUN CONSULTING: Bernstein Liebhard Files Securities Suit in S.D. NY
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Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf of purchasers of the securities of Braun Consulting, Inc.
(Nasdaq: BRNC) between August 10, 1999 and December 6, 2000, inclusive
in the against the Company, certain of its officers and its
underwriters including:
(1) Credit Suisse First Boston;
(2) FleetBoston Robertson Stephens;
(3) JP Morgan Chase & Co.;
(4) Lehman Brothers Holdings; and
(5) Salomon Smith Barney Holdings.
The suit alleges 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.
In August 1999, Braun commenced an initial public offering of 4 million
of its shares of common stock, at an offering price of $7.00 per share.
In connection therewith, the Company filed a registration statement,
which incorporated a prospectus with the SEC. The complaint further
alleges that the prospectus was materially false and misleading because
it failed to disclose, among other things, that:
(i) the underwriters on the offering had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which those underwriters allocated to those
investors material portions of the restricted number of IPO
shares issued in connection with the IPO; and
(ii) the underwriters had entered into agreements with customers
whereby the underwriters agreed to allocate 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 details, contact Fred Taylor Isquith, Thomas Burt, Gustavo
Bruckner, Michael Miske, George Peters or Derek Behnke by Mail: 270
Madison Avenue, New York, New York 10016 by Phone: 800.575.0735 by E-
mail: classmember@whafh.com or visit the company's Website:
http://www.whafh.com.All e-mail correspondence should make reference
to BRAUN.
CANADA: Same-Sex Couples File Suit To Claim $400M Survivor Benefits
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Gay and lesbian spouses have commenced two class actions in Toronto and
Vancouver to seek $400 million in outstanding survivor benefits from
the Canada Pension Plan, according to a Toronto Star Online report.
The suits were filed on behalf of all gays and lesbians whose partners
died before January 1,1998 retroactive to April 17, 1985, the day
equality guarantees were enshrined in the Canadian Charter of Rights
and Freedoms. The suit asserts the plan was discriminating against
same-sex partners when it imposed the January 1 cut-off date upon
introducing Bill C-23 which granted rights to same-sex couples.
Gays and lesbians were excluded from survivor benefits until May 1999,
when the Canada Supreme Court ruled as unconstitutional, Ontario's
limiting the term "spouse" to apply only to heterosexual couples. The
decision paved the way for a revamp of federal and provincial laws.
Ottawa amended 68 statutes including the Pension and Income Tax Acts.
According to David Elliot, attorney for the plaintiffs, the January 1,
1998 cut-off date "was imposed on same-sex couples on a purely
arbitrary basis and without any legal justification." He said the
issue of retroactive benefits is a critical one for the gay community,
since lesbians typically earn less than couples with a male wage
earner, while gay men have spent the last 15 years battling the AIDS
epidemic.
Attorney Patricia LeFebour says working gays and lesbians deserve
benefits since they have paid into the plan in the same way all working
Canadians do. "The government does not discriminate when it collects
the money; it only discriminates in paying the benefit." Department
of Justice spokesman Patrick Charette said the statement of claim had
not yet been received in Ottawa. He said the government felt it was
being generous by allowing claimants whose partners had died after
January 1, 1998 to claim benefits. He said "normally, when you change a
law, you change it from that moment on, not retroactively.The
government made some commitments to be as generous as possible, which
is why we decided to impose a sort of retroactivity to the law."
CONOCO INC.: Shareholder Sues To Block Phillips Petroleum Merger in DE
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Conoco Inc. (NYSE:COCB) faces a class action filed by a shareholder in
Delaware Chancery Court, seeking to block an impending merger with
Phillips Petroleum Co., where Company stock would be swapped for 0.4677
share of Phillips, or $24.30 based on Phillip's November 16 closing
price.
Shareholder Michael Iorio denounced the merger, saying it "enriches
Conoco management at the expense of the Conoco public stockholders
without an appropriate process to maximize the sale price of Conoco."
He wants all alternatives explored to see if a better deal were
available for shareholders and contends that:
(1) shareholders should be protected by a collar on the share
price; and
(2) the Company directors have a fiduciary duty to conduct "an
appropriate market check" and fully investigate alternatives.
The suit seeks unspecified damages to the class as a result of the
wrongful conduct of the directors.
ECI TELECOM: Securities Suit Dismissed Without Prejudice in E.D. VA
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The United States District Court for the Eastern District of Virginia
dismissed without prejudice the securities class action against Israeli
digital telecommunications firm ECI Telecom (NasdaqNM:ECIL), saying the
plaintiffs failed to prove the defendants "possessed the requisite
state of mind for a securities fraud action."
The suit, filed on behalf of shareholders who purchased Company
securities between May 2, 2000 through February 14, 2001, inclusive,
charges the Company and three of its top officials with issuing
materially false and misleading information about the Company's
financial condition and prospects. It also alleges that the defendants
reported materially inflated financial results for the Company's three
quarters of fiscal 2000 and provided materially misleading guidance
concerning its results for the fourth quarter of fiscal 2000. This
caused Company stock to decline by 71%. The plaintiffs have until
December 21, 2001, to lodge an appeal against the ruling, and until
December 3, 2002, to file an amended complaint.
ENRON CORPORATION: Law Firms Mobilize As Investors Sue Over Losses
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Law firms are mobilizing to file lawsuits on behalf of investors who
sustained losses when the stock of energy giant, Enron Corporation,
crashed last month, the Austin American-Statesman reported recently.
The lawyers have either filed lawsuits for investors in federal court
in Houston or are soliciting investors looking to recoup their losses,
including those who bought the stock as far back as 1998.
Enron has disclosed losses and huge debts because of questionable
deals with partnerships run by its Chief Financial Officer, and
restated its earnings back to 1997, admitting its profits were almost
$600 million less than it had reported. These events prompted the
Securities and Exchange Commission to institute an investigation.
Several of the lawsuits accuse Enron's executives, board members and
its auditors of failing to disclose information to investors. Others
go further, accusing the company's leadership of engaging in a scheme
to inflate the stock price for their own benefit and committing fraud.
Some of the suits also accuse company insiders of wrongly benefiting
from selling their stock before the price began to fall, selling 3.7
million shares of their Enron stock worth $434 million.
The law firms are jockeying to become the lead lawyer for investors,
which means controlling the case and getting the biggest cut of fees
and winnings. "This is being viewed as being one of the big, big
prizes," said Patrick McGurn, vice president at Institutional
Shareholder Services. "Everybody's courting the institutional
investors on this, to be lead plaintiff in potential litigation."
He added "There is an absolute feeding frenzy going on in the water
around the company. The law firms usually present in securities
class actions are again present." The list includes:
(1) Milberg Weiss Bershad Hynes & Lerach, in California;
(2) Cauley Geller Bowman & Coates, based in Little Rock,
Arkansas;
(3) Cohen, Milstein, Hausfeld & Toll, Washington, D.C.; and
(4) Schoengold & Sporn, P.C., New York City.
Among the plaintiffs are several large institutional investors, such as
JP Morgan Chase & Co., which manages a stock fund for the State of
Texas' employee retirement plan. The workers' plan estimates it lost
more than two-thirds of its $10 million investment in Enron.
The Company declined recently to comment on the lawsuits but some have
questioned whether it might be forced to pay out so much to settle
the cases. This could derail the purchase of the Company by Dynegy
Inc. Dynegy has even set aside as much as $3.5 billion to cover
shareholder suits against the Company. However, Dynegy can back out of
the deal if the costs are higher, according to Bloomberg News and the
trade publication Petroleum Finance Week.
David O'Reilly, Chief Executive Officer of Chevron Texaco Inc., which
is a major stockholder in Dynegy and is helping back the purchase, has
told Wall Street analysts that the lawsuits are the biggest obstacle to
the deal. Chevron Texaco is "paying particular attention to the
litigation risk," although "we still think it's a good deal for Dynegy
and an even better deal for Chevron Texaco," Bloomberg quoted O'Reilly
as saying.
It could take years for the lawsuits to be resolved, but lawyers say
that few securities cases ever go to trial. About one-third of the
lawsuits are dismissed before getting to the discovery stage. About
90 percent of the time, companies settle the suits that make it beyond
discovery because jury verdicts and awards are too unpredictable.
EXFO ELECTRO: Bernstein Liebhard Commences Securities Suit in S.D. NY
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Bernstein Liebhard and Lifshitz, LLP initiated a securities class
action on behalf of purchasers of the securities of EXFO Electro
Optical Engineering, Inc. (NASDAQ: EXFO) between June 29, 2000 and
December 6, 2000, inclusive. The suit is pending in the United States
District Court, Southern District of New York against the Company and:
(1) Merrill Lynch, Pierce, Fenner & Smith, Inc.,
(2) RBC Dominion Securities, Inc.,
(3) Wit SoundView Corporation,
(4) CIBC World Markets, Inc.,
(5) Germain Lamonde, and
(6) Pierre Plamondon
The complaint alleges 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.
In June 2000, EXFO commenced a public offering of 7,000,000 of its
shares of common stock, at an offering price of $26 per share and filed
a registration statement with the SEC in connection with the offering,
which incorporated a prospectus. The suit further alleges that the
prospectus was materially false and misleading because it failed to
disclose that:
(i) the underwriter defendants had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which the underwriter defendants allocated to
those investors material portions of the restricted number of
Company shares issued in connection with the offering; and
(ii) the underwriter defendants had entered into agreements with
customers whereby they agreed to allocate shares to those
customers in the offering 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: EXFO@bernlieb.com or
visit the firm's Website: www.bernlieb.com
FOUNDRY NETWORKS: Lovell Stewart Commences Securities Suit in S.D. NY
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Lovell & Stewart, LLP initiated a securities class action on behalf of
all persons and entities who purchased, converted, exchanged or
otherwise acquired the common stock of Foundry Networks, Inc.
(NasdaqNM:FDRY) between September 27, 1999 and December 6, 2000,
inclusive.
The suit is pending in the U.S. District Court for the Southern
District of New York and asserts claims under Section 11, 12 and 15 of
the Securities Act of 1933 and Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,
against the Company, certain of its officers and:
(1) Deutsche Bank Alex. Brown, Inc.,
(2) Merrill Lynch Pierce Fenner & Smith, Inc.,
(3) JP Morgan Chase & Co.,
(4) FleetBoston Robertson Stephens, Inc.
(5) Donaldson, Lufkin & Jenrette Securities Corp.,
(6) The Goldman Sachs Group, Inc.,
(7) Chase H&Q (formerly known as Hambrecht & Quist LLC), and
(8) Lehman Brothers, Inc.
The suit alleges that Foundry and certain of its officers at the time
of its IPO violated the federal securities laws by issuing and selling
Company common stock pursuant to the initial public offering without
disclosing to investors that several of the underwriters of the IPO had
solicited and received excessive and undisclosed commissions from
certain investors. In exchange for the excessive commissions, the
complaint alleges, the underwriters allocated Company shares to
customers at the IPO price of $12.50 per share. To receive the
allocations at $12.50, the defendant underwriters' brokerage customers
had to agree to purchase additional shares in the aftermarket at
progressively higher prices. The requirement that customers make
additional purchases at progressively higher prices as the price of
Company stock rocketed upward was intended to drive Company share price
up to artificially high levels.
This artificial price inflation, the complaint alleges, enabled both
the defendant underwriters and their customers to reap enormous profits
by buying Company stock at the $12.50 IPO price and then selling it
later for a profit at inflated aftermarket prices. Stock rose as high
as $83.28 during its first day of trading. Rather than allowing their
customers to keep their profits from the IPO, the complaint alleges,
the defendant underwriters required their customers to "kick back" some
of their profits in the form of secret commissions. These secret
commission payments were sometimes calculated after the fact based on
how much profit each investor had made from his or her IPO stock
allocation.
The complaint further alleges that defendants violated the Securities
Act of 1933 because the prospectus distributed to investors and the
registration statement filed with the SEC in order to gain regulatory
approval for the offering contained material misstatements regarding
the commissions that the defendant underwriters would derive from the
IPO and failed to disclose the additional commissions and "laddering"
scheme discussed above.
For more information, contact Christopher Lovell, Victor E. Stewart,
Christopher J. Gray by Phone: 212.608.1900 by E-mail: sklovell@aol.com
K-TEL INTERNATIONAL: Awaits Ruling As Appellate Court Wraps Up Review
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Record company K-tel International, Inc. says the three-year-old case
filed against it is nearing conclusion as an appellate court wrapped up
its review on the dismissal of the case in the lower court last month.
According to a K-tel disclosure filed recently with the Securities and
Exchange Commission, the company is just waiting for the decision of
the appellate court.
This case stems from 23 separate class action suits filed in November
1998, but was later on consolidated and transferred to the U.S.
District Court, Minnesota. Plaintiffs are challenging the accuracy of
certain public disclosures made by K-tel regarding its financial
condition between May 1998 and November 1998. Plaintiffs assert claims
under the federal securities laws and seek damages in an unspecified
amount as well as costs, including attorneys' fees and any other relief
the Court deems just and proper.
In July last year, K-tel moved to dismiss the complaint, which was
subsequently granted by the district court. The Court also barred
further actions by the plaintiffs and denied plaintiffs' request to
amend the complaint in order to re-file the complaint in the future.
Plaintiffs thereafter appealed the decision.
K-tel International produces and markets pre-recorded music (primarily
compilations) that it creates with music from more than 35,000 titles
it owns or licenses from third parties.
LIFESCAN INC.: Settles For $45M Suit Due To Defective Diabetes Meter
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Johnson and Johnson subsidiary Lifescan Inc. reached a $45 million
settlement in a consumer class action alleging that its Surestep
diabetes monitors were defective. The Company did not admit liability
in the settlement and said it was pleased to resolve the matter and
focus its attention on serving its customers.
The suit, filed on behalf of as many as 400,000 diabetics who bought
the monitors before August 1997, alleges that defects caused the
monitor to occasionally display an error message rather than a warning
that blood glucose levels were dangerously high or show readings below
the actual level. The firm paid $60 million last year to the
government to settle charges it knew about the device's problems.
However, it failed to disclose them before putting the meter on the
market in 1996. A San Jose Federal Court is expected to approve the
settlement soon.
LOGON AMERICA: Bernstein Liebhard Commences Securities Suit in S.D. NY
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Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf all persons who acquired Log On America, Inc. (NYSE: LOAX)
securities between April 22, 1999 through November 20, 2000 in the
United States District Court for the District of Rhode Island. The suit
lodges allegations against the Company, David R. Paolo and Kenneth M.
Cornell, who are officers and/or directors of Log On America. The
complaint charges defendants with violations of sections 10(b) and
20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder.
The complaint alleges that during the class period, defendants issued
to the investing public false and misleading information that
materially misstated the Company's condition and prospects. Moreover,
the Company failed to disclose material information necessary to make
its prior statements not misleading. Specifically, throughout the
class period, defendants issued multiple press releases and other
public statements that indicated that Log On America was successfully
fulfilling its ambitious business plan of increasing its customer base
and service offerings through internal growth and numerous
acquisitions.
As a result of defendants' alleged representations, Logon America's
common stock was artificially inflated to as high as $35 per share
during the class period. However, defendants positive statements about
the Company throughout the class period were materially false and
misleading because defendants misrepresented and failed to disclose:
(1) that the revenues the Company was generating from its customer
base, which was predominantly consumer-focused, were not
sufficient to offset the extensive capital costs that the
Company was incurring in order to build out its network and
provision its products;
(2) that the Company's "growth-by-acquisition" strategy was not
meeting with success as the Company had acquired a collection
of disparate businesses which it was unable to effectively
integrate into its existing business;
(3) that the Company was experiencing weakening demand for its
products and services and was attempting to transition into
different markets in order to reinvigorate its sales growth;
and
(4) that as a result of the foregoing adverse factors, the Company
would not be profitable in the near-term, if at all, and would
have to completely restructure its operations and slash costs.
For more details, 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 or by E-mail: LOAX.BB@bernlieb.com
or visit the firm's Website: http://www.bernlieb.com
LONG JOHN: Charged By Former Employee of Labor Standards Act Violations
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Seafood restaurant Long John Silver's faces a class action lawsuit
filed by a former employee alleging the Company made some employees
exempt from overtime pay and forced then to personally cover losses.
The suit, filed in the U.S. District Court in Nashville, alleges that
the Company deliberately violated federal labor laws, engaging in a
"centralized, widespread pattern and practice of (federal labor law)
violations which has the effect of undermining and avoiding the
overtime pay provisions.on a systemic, corporate-wide basis."
The Company allegedly employed a restaurant General Manager and
Assistant restaurant General Manager at each of its facilities and
classified them as "executives", therefore making them exempt from
overtime requirements of the federal Fair Labor Standards Act.
Forrest Ragsdale, a senior vice president and general legal counsel for
Yorkshire Global Restaurants, the Lexington, Ky.-based parent company
of Long John Silver's and A&W restaurants, said Tuesday he had not seen
a copy of the lawsuit and could not comment, according to a Washington
Post report.
METRICOM INC.: Stull Stull Commences Securities Suit in N.D. California
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Stull Stull and Brody initiated a securities class action in the United
States District Court for the Northern District of California, on
behalf of those who purchased or otherwise acquired the securities of
Metricom, Inc. (formerly Nasdaq:MCOM) (currently OTC:MCOMQ) between
June 21, 1999 and July 2, 2001, inclusive. The suit alleges that
defendants violated Sections 11, 12, and 15 and the Securities Act of
1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and Rule 10b-5 promulgated thereunder, by issuing a series of
false and misleading statements, which artificially inflated the price
of Company securities.
Specifically, the suit alleges that certain defendants, beginning in
June 1999, issued statements concerning Metricom's business, financial
results and operations that failed to disclose or only partially
disclosed three material agreements with MCI WorldCom, Inc. In
February 2000, the Company closed a secondary public offering of 5
million shares of its common stock, at a price to the public of $87 per
share. Many of the material terms of the MCI agreements were not
revealed to investors prior to the offering. In addition, certain
defendants allegedly disseminated materially false and misleading
statements that manipulated and artificially inflated the Company's
common stock price. These knowingly false and misleading statements
drove Company stock from $11.06 per share near the beginning of the
class period to as high as $109.50 per share on January 28, 2000 just
prior to the offering.
In July 2001, Metricom filed a voluntary petition for bankruptcy
relief. The Company's bankruptcy filings disclosed that contingent
claims, including those owed to MCI, approached almost $700 million
with total debts exceeding $1 billion.
For more information, contact Timothy J. Burke by Phone: 888.388.4605
(toll-free) by E-mail: tburke@secfraud.com or visit the firm's Website:
http://www.secfraud.com
MICROSOFT CORPORATION: Hearing For $1B Antitrust Settlement Proceeds
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Educators, lawyers, and rival Apple Computer presented their arguments
against Microsoft Corporation's proposed settlement to hundreds of
antitrust class actions alleging the Company abused its monopoly power
and overcharged customers for software. The parties presented their
arguments before Baltimore Federal Court Judge J. Frederick Motz, in
reaction to the proposed settlement which will provide $1 billion worth
of cash, computers, software and training to the nation's poorest
schools.
Apple Computer opposes the settlement. Apple CEO Steve Jobs asserts in
court filings "We're baffled that a settlement imposed against
Microsoft for breaking the law should allow, even encourage, them to
unfairly make inroads into education, one of the few markets left where
they don't have monopoly power."
Educators say the settlement will not do much to help poor schools and
its needs, but will allow the Company to cement their competitive
advantage in schools. Mississippi Technology Director Helen Soule says
that she admires the concept behind the settlement, "If structured
properly, the settlement could really have far-reaching positive
effects on the students of the United States." However, she prefers
that Microsoft fund existing technology plans that states, districts
and schools have spent the last five years to create. "I would much
rather that they be able to implement those plans with some sort of
Microsoft funding, rather than be given specific things that they don't
necessarily need."
Harvard Graduate School lecturer Glenn Kleiman was more
straightforward, saying "Microsoft is trying to pull a fast one
here.They are saying that they are providing $1 billion plus of
resources, but it's being done in a way that's self-serving to
Microsoft." Educators also expressed concerns that the proposal would
provide schools with second-rate, refurbished computers. They also
believe that although the settlement provides computers and technology,
the schools might not have enough money to keep them running.
Private consultant Linda Roberts fears the settlement "will perpetuate
and institutionalize the digital divide between our affluent schools
and our poor schools," according to Digitalmass.com. She said the
five-year program will provide some resources but like many charitable
donations not the follow-through needed to make the programs effective.
Mark East, worldwide General Manager of Microsoft's Education Solutions
said the actual settlement "is made up of a basket of resources.The
software component is just one of the elements." The Company also
denies that it is cementing its competitive edge, saying the deal
allows schools to choose to spend money on training and resources for
non-Microsoft products. However, Microsoft concedes that those who go
with Microsoft products will be given more resources, such as free
software. The Company further denies that the settlement might not
provide enough "follow-through" to be effective, noting that the
settlement proposed the establishment of an independent foundation to
oversee the agreement and follow through after the five-year period is
up.
Michael Hausfeld, one of the plaintiffs' lawyers in favor of the
settlement, says it would help close the gap between affluent students,
who generally have easy access to technology, and poor students, who do
not. He added that if consumers pursued their claim against Microsoft
and eventually won the case, they would stand to recover as little as
$6 each, before the deduction of court costs. He asserts, "We clearly
have a choice: We can spend several years, and a great deal of money,
fighting the private antitrust cases in the courts for a few dollars
benefit per claimant, or we can force Microsoft to assist economically
challenged children now."
Judge Motz earlier told a courtroom filled with more than 100
spectators, many of them lawyers involved in the case, that he did not
know how he might rule, according to a Wired News report. "I have no
idea what I am going to do," Motz said. "I want to hear from
everybody."
PFIZER INC: First Rezulin Trial Commences In Texas Federal Court
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Trial for the Rezulin class action against pharmaceutical giant Pfizer
Inc. is proceeding in Texas federal court. The suit was filed on
behalf of Norma Culberson, who died last year at age 58 after taking
the diabetes drug Rezulin. Culberson took medication and insulin shots
to control her diabetes, with only partial success. She started taking
Rezulin in November 1997 after her doctor prescribed it to her. Two
years later, she started vomiting and feeling ill; she was hospitalized
until her death in January 2000.
Rand Nolen, the Houston attorney representing Culberson's two
daughters, Laura Mercado and Penny Litzman, said blood tests in October
1999 showed that she had high liver enzyme levels, a sign of possible
liver failure. He explained that when she was hospitalized the
following month, she was treated for a buildup of bile in her liver.
Her death certificate noted liver disease. The suit alleges that the
drug, Rezulin, destroyed Culberson's liver and led to her death.
In March 2000, Rezulin was taken off the market after the U.S. Food and
Drug Administration linked it to at least 90 cases of liver failure,
including 63 deaths. The recall spawned 4,200 individual suits against
the Company, as well as 88 class-action lawsuits in state and federal
courts. The Culberson case is the first one to go to trial. Many
Rezulin cases are being consolidated in federal court in New York,
where depositions aren't due until next summer, meaning it could be a
year or longer before they are resolved.
The Company contends that Culberson died, not because of Rezulin, but
because of her previous kidney disease. Pfizer attorney Jay Mayesh
told Ann Arbor News that she started having problems with her kidneys
after she had Rezulin for 1 1/2 years. Because of this, Culberson
started began weekly dialysis. Only after that did she develop liver
problems, Mayesh said. "When your kidneys fail, everything else starts
to go," he said. "Toward the end of her life her other kidney went into
failure and she become a dialysis patient. Eventually that is what
killed her." Mayesh also asserted Rezulin helped Culberson, who
couldn't take other diabetes drugs because of previous kidney problems.
"She was a Rezulin poster child.Before the introduction of Rezulin she
was out of luck. She would have gone the road to a death by diabetes."
RAVISENT TECHNOLOGIES: Bernstein Liebhard Files Securities Suit in NY
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Bernstein Liebhard and Lifshitz LLP commenced a securities class action
on behalf of purchasers of the securities of Ravisent Technologies,
Inc. (NASDAQ: RVST) between July 15, 1999 and December 6, 2000,
inclusive. The suit is pending in the United States District Court,
Southern District of New York against the Company and:
(1) Bear, Stearns & Co., Inc.,
(2) SG Cowen Securities Corporation,
(3) Volpe Brown Whelan & Company, LLC,
(4) Francis E. J. Wilde, and
(5) Jason C. Liu.
The complaint alleges 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.
In July 1999, Ravisent commenced a public offering of 5,000,000 of its
shares of common stock, at an offering price of $12 per share. The
Company filed a registration statement with the SEC in connection with
the offering, which incorporated a prospectus. The suit further alleges
that the prospectus was materially false and misleading because it
failed to disclose, among other things, that:
(i) the underwriter defendants had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which the underwriter defendants allocated to
those investors material portions of the restricted number of
shares issued in connection with the offering; and
(ii) the underwriter defendants had entered into agreements with
customers whereby they agreed to allocate shares to those
customers in the offering 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: RVST@bernlieb.com or
visit the firm's Website: http://www.bernlieb.com
SIRIUS SATELLITE: Wolf Haldenstein Initiates Securities Suit in Vermont
-----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP commenced a securities class
action in the United States District Court for the District of Vermont
on behalf of all purchasers of the securities of Sirius Satellite
Radio, Inc. (NASDAQ:SIRI), formerly known as CD Radio, Inc., between
February 17, 2000 and April 2, 2001, inclusive against the Company and:
(1) David Margolese, Chief Executive Officer and Chairman,
(2) Robert D. Briskman, Executive Vice President and Director, and
(3) Patrick L. Donnelly, Senior Vice President, General Counsel
and Secretary
The suit alleges that defendants violated sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5, promulgated
thereunder, by failing to disclose facts known to them, or recklessly
disregarded by them, which demonstrated that the announced commercial
launch dates for the Company's satellites required for its service,
published throughout the class period, were impossibly ambitious.
Defendants knew, or recklessly disregarded, that it would be impossible
for the Company to offer its service commercially by the end of 2000,
as initially disclosed, or early in 2001, as subsequently disclosed.
The suit further alleges that at all times during the class period
defendants issued materially false and misleading statements and press
releases concerning when the Company's service would be commercially
available, which caused the market price of its common stock to be
artificially inflated. When the truth about the Company's business was
revealed to the public, the price of Company stock dropped
precipitously.
For more information, contact Fred Taylor Isquity, Gregory M. Nespole,
Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison
Avenue, New York, New York 10016 by Phone: 800.575.0735 by E-mail:
classmember@whafh.com or visit the firm's Website:
http://www.whafh.com.All e-mail correspondence should make reference
to Sirius.
STARMEDIA NETWORKS: Bernard Gross Commences Securities Suit in S.D. NY
----------------------------------------------------------------------
Bernard M. Gross PC initiated a securities class action on behalf all
persons who acquired StarMedia Network, Inc. (Nasdaq: STRM) securities
between April 11, 2000 and November 19, 2001 in the United States
District Court for the Southern District of New York.
The suit charges the Company and executive officers Fernando J.
Espuelas and Steven J. Heller with violations of sections 10(b) and
20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The suit also alleges that during the class period,
defendants issued to the investing public false and misleading
financial statements and press releases concerning the Company's
publicly reported revenues, earnings and net income. Moreover, the
Company failed to disclose material information necessary to make its
prior statements not misleading.
On November 19, 2001, StarMedia shocked the investing community by
announcing that it was restating its previously reported financial
results for fiscal year 2000 and the first two quarters of fiscal 2001,
due to accounting errors and improper accounting practices at two of
the Company's Mexican subsidiaries, AdNet S.A. de C.V. and StarMedia
Mexico, S.A. de C.V. As a result of these improper accounting
practices, the Company's reported revenues and earnings were overstated
by at least $10 million. Additionally, the Company announced that its
Chief Financial Officer had resigned. These disclosures contradicted
much of the information provided by defendants to the market during the
class period concerning its financial results. In response, Nasdaq
halted trading in StarMedia's shares.
For more information, contact Susan Gross or Deborah Gross by Mail:
1515 Locust Street, 2nd Floor Philadelphia, PA 19102 by Phone:
866.561.3600(toll-free) by E-mail: susang@bernardmgross.com or
deborahg@bernardmgross.com or visit the firm's Website:
http://www.bernardmgross.com
STARMEDIA NETWORKS: Wechsler Harwood Lodges Securities Suit in S.D. NY
----------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP commenced a securities class
action in the United States District Court for the Southern District of
New York on behalf of all purchasers of StarMedia Network, Inc.
securities between April 11, 2000 and November 19, 2001, inclusive
against the Company and:
(1) Fernando J. Espuelas, co-founder of the Company, former Chief
Executive Officer, and former Chairman of the Board of
Directors; and
(2) Steven J. Heller, former Chief Financial Officer
The suit charges that defendants 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 during the class period concerning the Company's financial
performance. The suit also alleges that StarMedia reported artificially
inflated financial results in press releases and filings made with the
SEC by improperly recognizing revenue in violation of generally
accepted accounting principles (GAAP). Specifically, the complaint
alleges that two of the Company's primary subsidiaries, AdNet S.A. de
C.V. and StarMedia Mexico, S.A. de C.V, had engaged in improper
accounting practices which had the effect of materially overstating its
reported revenues and earnings by at least $10 million.
On November 19, 2001, StarMedia issued a press release announcing that
based on the "preliminary" results of an internal investigation into
its accounting practices, it expects to restate its financial
statements for fiscal year 2000 and the first two quarters of 2001 and
that those financial statements should not be relied upon. The Company
further reported that its Chief Financial Officer had "resigned."
Immediately following the announcement of the restatement, the NASDAQ
Stock Market halted trading in Company stock, pending the receipt of
additional information from the Company. Company stock last traded at
$0.38 per share, 98.5% lower than the class high of $25.50, reached on
April 11, 2000.
For more information, contact Wechsler Harwood Halebian & Feffer LLP by
Mail: 488 Madison Avenue 8th Floor New York, New York 10022 or by
Phone: 877.935.7400 (Toll Free)
TEMPLETON ASSET: Settles Investment Fund Fraud Suit For $8.5 Million
--------------------------------------------------------------------
Templeton Asset Management Ltd. reached an $8.5 million settlement in a
class action suit claiming the Company mismanaged the Templeton Vietnam
Opportunities Fund, causing it to fail to meet its goal of 65% Vietnam
investments in 1997. The suit further alleged that embarrassed
managers didn't liquidate as planned and went on to invest in long-term
Thai investments just before Asian markets collapsed and lost more than
$40 million in three months, according to investors. The lawsuit also
claimed the fund was improperly controlled by a board of insiders.
Templeton denied any wrongdoing in the suit. Investors' attorneys said
they opted for a settlement because pretrial rulings increased the risk
that shareholders would not recover any money. A Federal Judge
yesterday gave preliminary approval to the settlement. At least $2
million of the settlement will go into the fund itself if the plan is
given final approval in April, according to a Florida Times-Union
report.
WINK COMMUNICATIONS: Lovell Stewart Lodges Securities Suit in S.D. NY
---------------------------------------------------------------------
Lovell & Stewart LLP commenced a securities class action on behalf of
all persons and entities who purchased, converted, exchanged or
otherwise acquired the common stock of Wink Communications
(NasdaqNM:WINK) between August 18, 1999 and December 6, 2000,
inclusive. The suit asserts claims under Section 11, 12 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder
and seeks to recover damages.
The action is pending in the U.S. District Court for the Southern
District of New York against the Company, certain of its officers and
directors, and:
(1) Donaldson, Lufkin & Jenrette Securities Corp.,
(2) Deutsche Bank Alex. Brown,
(3) Bear, Stearns & Co., Inc.,
(4) FleetBoston Robertson Stephens, Inc.,
(5) The Goldman Sachs Group, Inc.,
(6) Chase H&Q (formerly known as Hambrecht & Quist LLC),
(7) Lehman Brothers, Inc.,
(8) JP Morgan Chase & Co. and
(9) Salomon Smith Barney, Inc.
The suit alleges that the defendants at the time of its IPO violated
the federal securities laws by issuing and selling Company stock,
pursuant to the initial public offering, without disclosing to
investors that several of the underwriters of the IPO had solicited and
received excessive and undisclosed commissions from certain investors.
In exchange for the excessive commissions, the complaint alleges, the
defendants allocated Company shares to customers at the IPO price of
$16.00 per share. To receive the allocations at $16.00, the defendant
underwriters' brokerage customers had to agree to purchase additional
shares in the aftermarket at progressively higher prices. The
requirement that customers make additional purchases at progressively
higher prices as the price of Company stock rocketed upward was
intended to drive Company share price up to artificially high levels.
This artificial price inflation, the complaint alleges, enabled both
the defendant underwriters and their customers to reap enormous profits
by buying Company stock at the $16.00 IPO price and then selling it
later for a profit at inflated aftermarket prices. The stock rose as
high as $36.00 during its first day of trading. Rather than allowing
their customers to keep their profits from the IPO, the complaint
alleges, the defendant underwriters required their customers to "kick
back" some of their profits in the form of secret commissions. These
secret commission payments were sometimes calculated after the fact
based on how much profit each investor had made from his or her IPO
stock allocation.
The complaint further alleges that defendants violated the Securities
Act of 1933 because the prospectus distributed to investors and the
registration statement filed with the SEC in order to gain regulatory
approval for the offering contained material misstatements regarding
the commissions that the underwriters would derive from the IPO and
failed to disclose the additional commissions and "laddering" scheme
discussed above.
For more information, contact Lovell and Stewart by Phone: 212.608.1900
or visit the firm's Website: http://www.lovellstewart.com
*Auction To Determine Lead Counsel In Class Actions: Lauded But Risky
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In the summer of 1998, with 15 law firms seeking to represent investors
who lost billions in a class action against Cendant Corporation,
Newark's U.S. District Court Judge William Walls held a sort of silent
auction, according to the Newark, New Jersey Star-Ledger. Cendant is
the owner of brands such as Avis and Howard Johnson's.
The idea was unique and promising. A qualified law firm would make an
offer stating the amount of fees to be taken from the total pot of
money awarded to the shareholders and the firm with the lowest offer
would get the case. To be selected class counsel is a coveted position
that often comes with a tab worth tens of million in fees. The concept
was lauded as an innovation that would save money and time. "It seems
as though the auction method may be the in-thing in this and
in future years," said Judge Walls during an early Cendant proceeding.
Three years later, the Cendant case has become the poster child for the
case against using competitive bids. The company settled with its
shareholders for $2.83 billion almost two years ago. However, the
attorneys' fees, the possible problem the bidding process was supposed
to address, are still under review. A recent court ruling found that
the winning bid gave the attorneys $70 million more in fees than they
deserved. The lowest bid was not low enough, the Court concluded.
A report commissioned by the Third U.S. Circuit Court of Appeals,
largely because of the Cendant case, was presented recently at that
Court's Judicial Conference in Philadelphia. Lawyers, academics, and
jurists from around the country gathered for its presentation. The
report concludes that auctioning is a questionable practice and
should be used rarely, if ever. "Auctioning class counsel represents a
creative and energetic approach," the task force writes. "However, the
risks and complications.counsel against its use." Those risks, the
task force contends, include the chance that people could end up with
less qualified attorneys, and it means a judge will have to evaluate
the merits of the case before it even begins, in an effort to determine
if the proposals (of attorneys fees) are fair.
The report is not legally binding, but it is expected to generate
contentious debate within the legal community. Many experts in
class-action law say it will influence how judges around the country
select attorneys and set fees in class-action suits. They predict the
report essentially will halt the use of auctions. "As a practical
matter, this is the death knell of the auction idea," said John
Gibbons, a Newark attorney and former chief judge of the Third Circuit.
Meanwhile, proponents of competitive bidding say the technique
preserves the heart of what class action suits are supposed to do:
vindicate the rights and get the most money for people who might
otherwise go unprotected if they did not band together. U.S. District
Court Judge Milton Shadur, who sits in Chicago and is one of the few
judges around the country to use the method, conceded that option
bidding is not a panacea but it is a viable option, he said, that
should not be dismissed. "It's not formulaic.You have to think about
it. You have to apply it. You have to deal with it. It's not like
falling off a log, and that may be a disincentive, but to say that you
have to throw the baby out with the bath water, I think, is salacious,"
said Judge Shadur.
In a high-profile price-rigging case, involving Sotheby's and
Christie's, the bidding process meant that the bilked art buyers got to
keep the vast majority of the $537 million settlement, and the lawyers
got a single digit percentage. In every instance where the bidding
process was used, attorneys collected between six and 21 percent of the
total. That is considerably less than the typical one-third
compensation rate, according to a study by the Federal Judicial Center.
Nonetheless, critics contend that the bid system is saturated with
problems and should not be entertained any longer. The biggest problem
with the auction system is that it means the judge in the case must get
very familiar with the facts before it is tried and attempt to make
some advance decision about how much the case is worth.
Additionally, detractors contend that no time is really saved at the
beginning, because the judge is still always required to review how
much lawyers will get in fees at the conclusion of the case. "There is
no reason to believe the judge can't do exactly the same thing at the
end (of a non-auction) case," said Gregory Joseph, a New York City
attorney, who served as co-chair of the task force. "No method of
selection is beyond criticism," the task force wrote. "None assures the
`right' amount of compensation to counsel, none
guarantees maximum recovery for class members."
*********
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-
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Information contained herein is obtained from sources believed to be
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