/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/011217.mbx C L A S S A C T I O N R E P O R T E R Monday, December 17, 2001, Vol. 3, No. 245 Headlines ADAMS GOLF: DE Court Dismisses Suit For Federal Securities Violations AGENT ORANGE: Appeals Court Reinstates Vietnam Veterans' Suits AGILE SOFTWARE: Securities Suits in S.D. New York Just "Part Of Trend" AMERICAN AIRLINES: Sued For Denying Attendant Infertility Treatment CALIFORNIA: Orange County Jails Allegedly Violate Overcrowding Edict CAMPBELL SOUP: Securities Suit In NJ Alleges Accounting Irregularities CANDY RECALL: FDA Recalls Gel Candies For Potential Choking Hazard COMBINED INSURANCE: Faces Sexual Harassment, Discrimination Suit in IL ENRON CORPORATION: Alfred Yates Commences Securities Suit in S.D. TX FLEETWOOD ENTERPRISES: Appeals Certification of Fraud Suit In Texas HSBC HOLDINGS: Providing Japanese Firms $6.74M To Settle Fraud Suit LEGAL NOTICE: Leo Desmond Announces Class Periods In Securities Suits LEGAL NOTICE: Wechsler Harwood Sets Class Periods For Securities Suits NETSOLVE INC.: Schiffrin Barroway Commences Securities Suit in S.D. NY ONLINE GROCERS: Peapod, Stop & Shop To Settle Pricing Suit For $300,000 PINNACLE HOLDINGS: Lead Law Firms To File Amended Securities Suit in FL QWEST COMMUNICATIONS: Sued For Unauthorized Long Distance Switching RHODE ISLAND: Sewer Line Installation Lawsuit Hearing Set SAGENT TECHNOLOGIES: Alfred Yates Commences Securities Suit in N.D. CA SRI SURGICAL: Stull Stull Initiates Securities Suit in M.D. Florida STAPLES INC.: Settles Consolidated Suit V. Stock Reclassification in DE TRAVELERS INSURANCE: Settles Overtime Suit in California For $2.5M UGLY DUCKLING: Agrees To Settle Suit V. Chairman's Shares Purchase XO COMMUNICATIONS: Green Fauth Initiates Securities Suit in E.D. VA ********* ADAMS GOLF: DE Court Dismisses Suit For Federal Securities Violations --------------------------------------------------------------------- The United States District Court for the District of Delaware dismissed the federal securities class action filed against Adams Golf (NASDAQ:ADGO) and certain of its officers and directors in June 1999, saying that plaintiffs, a small group of stockholders, failed to plead any facts supporting their claim that the Company or its officers and directors violated the federal securities laws. The consolidated suit arose from seven suits alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with the Company's IPO. In particular, the complaints allege that the Company's prospectus, which became effective July 9, 1998, was materially false and misleading in at least two areas. Plaintiffs allege that the prospectus failed to disclose that unauthorized distribution of the Company's products (gray market sales) allegedly threatened the Company's long-term profits. Plaintiffs also allege that the prospectus failed to disclose that the golf equipment industry suffered from an oversupply of inventory at the retail level, which had an adverse impact on the Company's sales. On May 17, 2000, these cases were consolidated into one amended complaint, and a lead plaintiff was appointed. The plaintiffs are seeking unspecified amounts of compensatory damages, interests and costs, including legal fees. Company Chairman Barney Adams praised the decision, saying "Needless to say, we're very pleased with this favorable ruling.We have maintained all along that the complaint was completely without merit and in its first look at the lawsuit, the Court agreed. While the case is not over due to the plaintiffs' right to potentially file an amended complaint or appeal, this is nevertheless a significant victory for Adams Golf." AGENT ORANGE: Appeals Court Reinstates Vietnam Veterans' Suits -------------------------------------------------------------- The US Second Circuit Court of Appeals has reversed a federal court's decision barring Agent Orange personal injury class actions, saying the decision violated the due process rights of Vietnam-era veterans who learned after 1994 that they may have claims against manufacturers of the defoliant. The decision affects two suits filed in 1998. Joe Isaacson filed the first suit. He served in Vietnam from 1968 to 1969 and was diagnosed with non-Hodgkins lymphoma in 1996. Daniel Stephenson filed the second suit after he contracted multiple myeloma, a bone marrow cancer, in 1999 and served in Vietnam from 1965 to 1970. Both men seek to recover damages for their diseases, which they claim were caused by exposure to Agent Orange, from the manufacturers. Both actions were transferred to the United States District Court for the Eastern District of New York. They were subsequently dismissed. The court held that a $180 million national Agent Orange class action settlement reached by the parties in 1984 (and approved by the court in 1985) precluded the actions, because the earlier settlement specifically provided that no compensation was payable for conditions that first manifested after 1994. The Federal Court also decided the settlement fund from that class action was completely exhausted in 1997, and the court closed the fund on September 27, 1997. Reversing this decision, the Federal Appeals Court held that it was unconstitutional to eliminate compensation for plaintiffs who did not even learn of their injuries until after the 1994 cut-off date. The two actions will now continue in the Eastern District of New York. AGILE SOFTWARE: Securities Suits in S.D. New York Just "Part Of Trend" --------------------------------------------------------------------- Agile Software vehemently denied allegations in a securities class action commenced in October 2001 in the United States District Court for the Southern District of New York. The lawsuit was filed against the Company, several of its officers and directors, and its underwriters on behalf of common stock purchasers who participated in the Company's August 19, 1999 initial public offering. The plaintiffs allege that the Company's prospectus, incorporated in the registration statement on Form S-1 filed with the Securities and Exchange Commission, was materially false and misleading. The plaintiffs also allege the prospectus failed to disclose, among other things, that the underwriters required several investors who wanted large allocations of initial public offering securities to pay undisclosed and excessive compensation in the form of increased brokerage commissions. The investors were also allegedly required to agree to buy shares of Agile's securities after the initial public offering was completed at predetermined prices as a precondition to obtaining initial public offering allocations. Further, because of these alleged arrangements, the Company's post- initial public offering stock price was artificially inflated. As a result of the alleged omissions in the prospectus and the purported inflation of the Company's stock price, the plaintiffs claim violations of Sections 11 the Securities Act. These actions have been or will probably be consolidated with other actions involving similar or identical allegations against more that 263 other issuers, more than 40 underwriters, and more than 1000 individuals. Agile expects the suit to be consolidated, and said the suit is part of the present trend of suing hundreds of companies offering IPOs. AMERICAN AIRLINES: Sued For Denying Attendant Infertility Treatment -------------------------------------------------------------------- An American Airlines flight attended filed a class action against the Company in Los Angeles federal court, charging the Company with gender discrimination for allegedly paying for Viagra pills for its male employees but denying women employees health benefits to pay for birth control pills, pap smears or infertility treatment. Martina Alexander, 36, was reportedly told by the Company that her need for infertility treatment would not be covered by the American's standard medical plan. According to the lawsuit, the Company wrote a letter to Ms. Alexander in 1999 saying that her health plan was designed to cover expenses "medically necessary to sustain life. That is why pap smears, birth control pills and infertility treatment are not covered.Drugs to treat impotence, such as Viagra, are covered." According to a Reuters report, the lawsuit alleges that the failure of the American Airlines to provide their female employees with infertility treatment while providing Viagra constituted both pregnancy and sex discrimination. It further argues failure to provide infertility treatment is sex discrimination and a violation of the disabilities act because reproduction is a "major life activity." Ms. Alexander's lawyer, Gloria Allred, told Reuters "The suggestion that Viagra is `medically necessary to sustain life' is absurd. To our knowledge no man has ever died because he couldn't get an erection. However, many women have died because of cervical cancer, which might have been detected by a pap smear." Ms. Allred said she would seek the court's permission to pursue the case as a class action on behalf of all female employees of American Airlines who may have been denied health insurance for infertility, pap smears and contraceptive drugs and devices. She said it was too early to say how many individuals might be covered by such a class action. American Airlines has denied the allegations in the suit, calling them "absolutely baseless" and false. Company spokeswoman Andrea Rader asserted that the company's health plans offer employees a wide variety of coverage, to both men and women. In an interview with Reuters, she said "The health plans are gender neutral as far as we are concerned.The notion that any female employee has been denied health coverage is simply not true." CALIFORNIA: Orange County Jails Allegedly Violate Overcrowding Edict -------------------------------------------------------------------- Orange County Sheriff's jailers routinely violate a federal court order by forcing inmates to sit and sleep on the floor when booked into custody, according to the class action that has been filed by civil rights attorney Richard P. Herman, the Los Angeles Times recently reported. Mr. Herman added these allegations to a pending lawsuit he previously filed, that accuses the sheriff's officials of holding inmates beyond their release dates. If true, the allegations amount to a violation of a landmark court order that limits overcrowding in Orange County's jails. Mr. Herman was one of the lawyers involved in that landmark 1970s settlement of a federal lawsuit centering on crowding in the county's jails. Jail crowding had been a major problem in Orange County for decades. In 1978, a federal order was issued, stating that the county must strictly limit how many inmates are housed at its facilities - even if that means releasing some inmates before their terms are complete. Assistant Sheriff Rocky Hewitt, who runs the jails, disputed the claim. Jail policies on the number of inmates allowed in each cell adhere strictly to the court order, he said, adding that supervisors will, however, look into the allegations. CAMPBELL SOUP: Securities Suit In NJ Alleges Accounting Irregularities ---------------------------------------------------------------------- The Campbell Soup Company faces a consolidated class action in the United States District Court for the District of New Jersey, alleging violations of federal securities laws. The suit names as defendants the Company and certain of its officers and was filed on behalf of purchasers of the Company's stock between September 8,1997 and January 8,1999. The consolidated suit arose from ten shareholder actions alleging, among other things, that the defendants misrepresented the Company's financial condition during the class period. The defendants allegedly failed to disclose shipping and revenue recognition practices in connection with the sale of certain company products at the end of the Campbell's fiscal quarters in violation of Section 10 (b) and 20 (a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The Company stated in a disclosure to the Securities and Exchange Commission its belief that the action is without merit and its intention to defend the case vigorously. CANDY RECALL: FDA Recalls Gel Candies For Potential Choking Hazard ------------------------------------------------------------------ The US Food and Drug Administration (FDA) recalled approximately 16,000 packages of "konjac" mini-cup gel candies because they are a potential choking hazard. The candy, distributed nationwide to retail establishments, is sold under the names of Mother's Pride and NATA, and the label describes the product as a mini-fruit bite. The candy comes in small sealed plastic cups that contain gelatin with or without a chunk of fruit. These candies contain the ingredient "konjac" (also known as conjac, konnyaku, yam flour, or glucomannan). The Consumer Product Safety Commission and the Food and Drug Administration consider this type of candy to pose a serious choking risk, particularly to infants, children and the elderly. Local authorities have reported three children's deaths from choking in the United States associated with this type of jelly candy. There have also been reports of deaths in other countries. Each jelly cup is about the size of a single-serve coffee creamer. The jelly cups are in a plastic bag or plastic jar. The flavors sold are mango, assorted fruit and lychee. Some of the candy bears warning labels, suggesting that children under age three should not eat it. The FDA contacted Budget Promotions, the distributor recalling this product, when it learned that the firm had distributed the mini-cup gel candies. The firm is cooperating with the FDA and is voluntarily recalling this product. For more information, contact the Company by Phone: 281.495.9887. COMBINED INSURANCE: Faces Sexual Harassment, Discrimination Suit in IL ---------------------------------------------------------------------- Ten current and former female employees of Combined Insurance Company of America filed a nationwide class action in Illinois Federal Court today alleging a pattern or practice of sexual harassment and sex discrimination. The suit alleges that the Company condones and encourages a culture of sexual harassment and oppression. According to the plaintiffs' allegations, the Company harassed them in ways ranging from verbal taunting to a gang rape. The management, which is predominantly male, is charged with tolerating and often participating in the harassment. The Company allegedly retaliated against women who complained about the harassment, either by further harassing them or forcing them out of the company. The suit also alleges that the Company discriminates against women in hiring, pay and promotions. Male managers allegedly graded female job applicants by their appearance and body type and used demeaning physical descriptions like "great legs," "nice tits," and "great ass" to rate female candidates. One plaintiff claims she was directed not to hire women with children. According to plaintiffs, the Company regularly promoted less qualified men to upper management positions. Another plaintiff claims she was passed over for a promotion in favor of a man she had far outperformed. The Company told her it had not even interviewed her because she is a mother and presumably could not travel. Other women claim to have received promotions only to encounter a glass ceiling. The women allege that the Company has caused them to suffer physical, emotional and economic injuries and seek damages and injunctive relief on behalf of themselves and all other women who have similarly suffered. The law firms of Meites, Mulder, Burger & Mollica of Chicago, Illinois and Benassi & Benassi of Peoria, Illinois represent the women. ENRON CORPORATION: Alfred Yates Commences Securities Suit in S.D. TX -------------------------------------------------------------------- The Law Firm of Alfred G. Yates initiates a securities class action in the United States District Court for the Southern District of Texas on behalf of purchasers of Enron Corporation (NYSE:ENE) publicly traded securities during the period between October 19, 1998 and November 27, 2001. The suit charges certain of the Company's officers and directors and its auditors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The suit alleges that during the class period, defendants engaged in massive insider trading while issuing false financial statements and making false and misleading statements about the Company's purportedly "record" results and strong operating performance. As a result of these false statements, the Company's stock traded as high as $90.75, allowing defendants to sell 17.3 million of their own shares for proceeds of $1.1 billion. Beginning in late 2001, it was revealed that the Company would be incurring losses of $1 billion for certain of its divisions and that ot would be restating its results for 1997, 1998, 1999 and 2000, and the first two quarters of 2001, to correct for errors which had inflated its net income by $591 million in those years. The impact of the restatement was enormous. Upon these disclosures, Company stock dropped to as low as $8.20 before closing at $8.41 on November 8, 2001, some 91% below the Class Period high of $90.75. Then, on November 28, 2001, it was revealed that the attempted acquisition of the Company by Dynegy Inc. would be scuttled. Thereafter, Company debt was cut to junk bond status and its stock dropped to just $0.26 per share. Then, on December 2, 2001, the Company filed for Chapter 11 bankruptcy protection. For further details, contact Alfred G. Yates Jr by Mail: 519 Allegheny Building, 429 Forbes Avenue, Pittsburgh, Pennsylvania 15219 by Phone: 800.391.5164 (toll-free) by Fax: 412.471.1033 or by E-mail: yateslaw@aol.com. FLEETWOOD ENTERPRISES: Appeals Certification of Fraud Suit In Texas ------------------------------------------------------------------- Fleetwood Enterprises, Inc. appealed a federal court decision granting certification to a class action complaint filed on behalf of purchasers of the Company's Class A motor homes for the model years 1994-1999. The suit was commenced in April 1999, and is pending in the U. S. District Court for the Western District of Texas, San Antonio Division. The suit asserts claims with respect to: (1) breach of express and implied warranties; (2) negligent misrepresentation; (3) fraudulent concealment; and (4) violation of various state statutes in connection with the ability of such motor homes to tow an automobile or other vehicle or cargo. In September 2001, the court certified a class of Texas residents who purchased a subject motor home from a Texas dealer and who still own the motor home. The Company promptly appealed this certification to the Fifth Circuit Court of Appeals. The Company expects that a hearing on this matter will be scheduled within eight or nine months and continues to deny the material allegations in the complaint. HSBC HOLDINGS: Providing Japanese Firms $6.74M To Settle Fraud Suit -------------------------------------------------------------------- HSBC Holdings PLC and subsidiary Republic New York Securities Corp. is preparing to pay about 85 billion yen ($6.74 million) to settle a class action filed by several Japanese firms for losses incurred from the default of corporate bonds issued in the early 1990s, Nihon Keizai Shimbun reported. The suit was commenced in 1999 after US authorities investigated Cresvale International, who sold Princeton Bonds from Princeton Economics International Ltd. to Japanese firms. Some of the bonds guaranteed principal and interest payments, while others promised a high return of several tens of percentage points, the newpaper said. The authorities investigated Cresvale for fraud, and arrested Martin Armstrong, chairman of Princeton Economics, for fraud. According to Nihon Kezai Shimbun, Companies, including Alps Electric, Amada, Santen Pharmaceutical and Gun-ei Chemical Industry, are expected to receive the offer for the money to settle the class-action suit. LEGAL NOTICE: Leo Desmond Announces Class Periods In Securities Suits --------------------------------------------------------------------- The Law Office of Leo W. Desmond (http://www.SecuritiesAttorney.com) announced that securities actions requesting class action certification have been initiated in various courts alleging violations of federal and/or state securities laws on behalf of purchasers of these securities for the class periods: Noven Pharmaceuticals, Inc. (Nasdaq:NOVN) 3/27/01 to 11/01/01 Nesco, Inc. (Nasdaq:NESC) 4/26/00 to 8/16/01 Lexmark International, Inc. (NYSE:LXK) 3/20/01 to 10/22/01 SRI Surgical Express Inc. (Nasdaq:STRC) 7/23/01 to 11/27/01 No class has yet been certified in the above actions. For further details, contact Leo Desmond by Mail: 2161 Palm Beach Lakes Blvd., Suite 204, West Palm Beach, Florida 33409 by Phone: 888.337.6663 by E- mail: Info@SecuritiesAttorney.com or visit the firm's Website: http://www.SecuritiesAttorney.com. LEGAL NOTICE: Wechsler Harwood Sets Class Periods For Securities Suits ---------------------------------------------------------------------- Wechsler Harwood Halebian and Feffer LLP announces the class periods in the securities suits against these companies and the lead plaintiff deadlines: CORPORATION CLASS PERIOD DUE DATE XOMA, LTD. 5/24/01-10/04/01 1/14/02 (Nasdaq:XOMA) STARMEDIA NETWORK 2/21/01-11/19/01 1/22/02 (Nasdaq:STRM) ENRON, INC. 11/17/98-11/08/01 12/21/01 (NYSE:ENE) DJ ORTHOPEDICS as of the IPO date 1/25/02 (NYSE:DJO) of 11/25/01 For more information, contact Craig Lowther by Mail: 488 Madison Avenue, New York, New York 10022 by Phone: 877.935.7400 by E-mail: clowther@whhf.com or visit the firm's Website: http://www.whhf.com NETSOLVE INC.: Schiffrin Barroway Commences Securities Suit in S.D. NY ---------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action on behalf of purchasers of the common stock of Netsolve, Inc. (NASDAQ:NTSL) between September 29, 1999 and December 6, 2000, inclusive in the United States District Court, Southern District of New York against the Company, certain of its officers and its underwriters. 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 September 29, 1999, the Company commenced an initial public offering of 3,700,000 of its shares of common stock, at an offering price of $13 per share. In connection therewith, the Company filed a registration statement, which incorporated a prospectus with the SEC. The suit further alleges that the prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the underwriters had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriters allocated to those investors material portions of the restricted number of Company 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 information, contact Marc A. Topaz or Stuart L. Berman by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1.888.299.7706 (toll free) or 1.610.667.7706 by E-mail: info@sbclasslaw.com ONLINE GROCERS: Peapod, Stop & Shop To Settle Pricing Suit For $300,000 ----------------------------------------------------------------------- The online grocer Peapod Inc. and its partner, Stop & Shop Supermarket Cos., recently agreed to pay $300,000 in restitution, fines and legal fees to settle charges in a class-action lawsuit that the companies misled customers about pricing policies, The Boston Globe reported. As part of the settlement with Attorney General Thomas F. Reilly, the companies agreed to pay 5,700 Peapod customers about $4 for every $1 they were allegedly overcharged between February 1 and September 4, 1999. The grocers also agreed to pay $50,000 in civil penalties and administrative costs and about $50,000 in fees to the law firm of Cohen & Fierman, which filed the class-action lawsuit. The pricing discrepancy came to light in August 1999 in The Globe. Peapod, which had been advertising that prices of its home- delivered groceries were the same as those at the supplying Stop & Shop store, started charging as much as 10 percent more in February 1999 without disclosing the change. At the time, the online grocery business was fiercely competitive. Peapod offered free delivery on orders over $60. Since then, nearly every online grocer in the area has gone out of business. Peapod, the lone survivor, now charges a delivery fee. "Peapod's 5,700 home-delivery shoppers believed they were buying groceries at the same prices they would pay at Stop & Shop," Mr. Reilly said. "We want to make sure that when consumers use Peapod they get the prices advertised." Both Companies issued their own statement, denying all allegations of wrongdoing and blaming the pricing discrepancy on internal miscommunication. "Peapod and Stop & Shop did not intend to confuse Peapod customers, and we apologize for any misunderstanding," said Marc van Gelder, the Company's President. As soon as the pricing discrepancy was pointed out to Peapod, the company removed from its Web site a statement saying, "You'll get the same Stop & Shop prices." Peapod said that sometimes its prices are higher than at Stop & Shop, sometimes lower, and sometimes the same. PINNACLE HOLDINGS: Lead Law Firms To File Amended Securities Suit in FL ----------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP and Schiffrin & Barroway, LLP, who were appointed lead counsel in the securities fraud action against Pinnacle Holdings, Inc., (NASDAQ:BIGT) pending in Tampa federal court, will seek leave to amend their class action complaint to include new allegations relating to the Company's recent disclosure. The Company disclosed on December 13, 2001, that its previously announced forbearance agreement entered into on November 16, 2001 with lenders under its senior credit facility had been extended to February 6, 2002. During such period, Company lenders have agreed not to exercise remedies available to them as a result of its non-compliance with certain covenants under its senior credit facility. The suit alleges that the Company engaged in accounting fraud in order to maintain compliance with its loan agreements. The amendment would expand the class period, and would run from June 29, 1999 through December 13, 2001. On December 13, 2001, the Company announced in a press release that the its lenders chose not to exercise remedies available to them as a result of the Company's non-compliance with certain covenants under certain senior credit facilities and instead extended the loan period to February 6, 2002. The Company further disclosed that it will be continuing to attempt to renegotiate portions of their senior credit facility to waive current non-compliance with certain covenants under the credit facility as of September 30, 2001 and to establish new financial covenants for the future. For more information, visit Milberg Weiss' Website: http://www.milberg.comor contact Schiffrin and Barroway by e-mail: info@sbclasslaw.com QWEST COMMUNICATIONS: Sued For Unauthorized Long Distance Switching ------------------------------------------------------------------- Qwest Communications faces a class action filed in the United States District Court for the District of Connecticut on behalf of customers who were the victims of unauthorized intrastate or interstate long- distance carrier switching by the Company. The suit alleges that the company violated the Connecticut Unfair Trade Practices Act and the Racketeer Influenced and Corrupt Organizations (RICO) Act, as a result of switching the consumers to its long-distance service without their consent. The consumers allege the Company engaged in a practice known as "slamming", in which residents are unaware that their long-distance carrier has been switched without their permission. The action maintains that Qwest relied on customer permissions obtained by independent contractors that were either false or altogether absent in order to submit unauthorized long-distance carrier change orders to local telephone companies. Additionally, the consumers claim that the customer permissions obtained by the Company from the contractors included forged signatures, misspelled signatures, wrong names, incorrect middle initials and outdated addresses. In addition, the consumers allege that when they resisted payment for unauthorized service or long-distance carrier switching charges, Qwest threatened them with collection action and damage to their credit standing and refused to return the consumers to their previous long- distance carriers. In June 2001, the Company filed a motion to dismiss the suit, which the trial court denied. RHODE ISLAND: Sewer Line Installation Lawsuit Hearing Set --------------------------------------------------------- Trial in the class action brought by residents of Cumberland, Rhode Island against the City is expected to commence in spring, the plaintiffs lawyer, Michael Horan revealed in a pretrial conference was held recently in Providence Superior Court. The suit alleges that the sewer assessments groups of residents in various neighborhoods are being charged for recent sewer line installation in their neighborhoods are unfair and discriminatory, The Providence Journal recently reported. The cost, the lawsuit states, should be spread throughout the town. Five indiviudals or families are named as plaintiffs in the suit, but Mr. Horan has filed the lawsuit as a class action. The sewer fees have affected 476 residents. "What we are trying to show is that the sewer assessments haven't been properly appropriated, that it's illegal and discriminatory," Mr. Horan said. The lawsuit is another chapter in a long, complicated story regarding the recent installation of sewer lines in the town. To address a gap in funding of the projects uncovered a few years ago, town officials raised sewer-assessment fees for neighborhoods through which the new sewer lines ran. Because this was done, residents in those neighborhoods say they are paying too much for installation of the sewer lines, and that the cost should be shared by all residents of the town. Homeowners were charged sewer assessment fees determined in two different ways. Most had to pay $49 per linear foot of lot frontage at their homes, with the cost spread over a period of 20 years. Others, however, were charged more, which is what first drew town officials' attention to the matter. It seems that the town later calculated that it had undercharged the residents, because the amount the $49 per linear foot assessment would have raised was not enough to pay the debt for the projects. That's when the Town Council raised the assessment rate to $79 per linear foot, over the objections of residents and others, including Council President Jeffrey J. Mutter. One argument that the residents have put forward is that the sewer line built near Highland Corporate Park was installed specifically to attract business there. However, all the neighborhoods involved in the sewer projects are being asked to pay for its installation, they say. These residents say the town, as a whole, should take on the responsibility of paying for the sewer line since the entire town benefits from the additional property taxes brought in by businesses. SAGENT TECHNOLOGIES: Alfred Yates Commences Securities Suit in N.D. CA ---------------------------------------------------------------------- Alfred G. Yates initiated a securities class action in the United States District Court for the Northern District of California on behalf of purchasers of Sagent Technology, Inc. (Nasdaq: SGNT) (Nasdaq: SGNTE) publicly traded securities during the period between May 11, 2001 and November 28, 2001. The suit alleges that during the class period, defendants caused Company shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, the Company was able to complete a private placement offering of 9.1 million shares, raising net proceeds of $16.8 million on August 1, 2001. On November 15, 2001, just months after this offering was completed, the Company revealed that its 3rd quarter 2001 results, and possibly other quarters, were false when issued. The stock dropped below $.70 per share on this news. Then, on November 28, 2001, after the market closed, defendants revealed that the Company's 1st to 3rd quarter 2001 results had been materially misstated and would have to be restated. For more information, contact Alfred G. Yates by Mail: 519 Allegheny Building, 429 Forbes Avenue, Pittsburgh Pennsylvania 15219 by Phone: 800.391.5164 (toll-free) by Fax: 412.471.1033 or by E-mail: yateslaw@aol.com. All e-mail correspondence should indicate your mailing address. SRI SURGICAL: Stull Stull Initiates Securities Suit in M.D. Florida ------------------------------------------------------------------- Stull Stull and Brody commenced a securities class action in the United States District Court for the Middle District of Florida, Tampa Division, on behalf of purchasers of the securities of SRI Surgical Express Inc. (NASDAQ:STRC) between July 23, 2001 and November 27, 2001, inclusive. The complaint asserts claims against the Company, Richard Isel and James T. Boosales for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between July 23, 2001 and November 27, 2001. Specifically, on July 23, 2001 SRI issued a press release announcing financial results for the second quarter of 2001, which reflected an increase in earnings and revenues from the second quarter of 2000. The press release attributed the seemingly positive results to processing and delivery efficiencies and a supposedly lucrative contract with Health Trust Purchasing Group (HGP). These results were incorporated into the Company's financial statements on Form 10-Q, filed with the Securities and Exchange Commission on July 26, 2001. In October 2001, the Company issued a press release announcing record revenues for its third quarter of 2001, which the Company attributed, in part, to the HGP contract. These statements are alleged to be materially false and misleading because the Company's business was being negatively impacted by the HGP contract and the Company's seemingly impressive growth was achieved, in part, through improper revenue recognition. In November 2001, SRI issued another press release announcing that: (1) it would restate its earnings and revenues for the third quarter of 2001 because certain revenues should not properly have been recognized in that quarter; (2) the Company's financial performance, as restated, did not meet analysts' expectations for the third quarter; and (3) the Company would not meet analysts' expectations for the fourth quarter of 2001 due to increased sales and administrative expenses and startup costs associated with new businesses. In response to the announcement, the price of Company stock plummeted by 40%, to close at $14.63 per share on November 28, 2001. For more information, contact Tzivia Brody by Mail: 6 East 45th St, New York NY 10017 by Phone: 1.800.337.4983 (toll-free) by Fax: 212.490.2022 or by E-mail: SSBNY@aol.com STAPLES INC.: Settles Consolidated Suit V. Stock Reclassification in DE ----------------------------------------------------------------------- Staples Inc. settled a consolidated class action filed in March, 2001, in Delaware Chancery Court by Staples RD stockholders against the Company and each of its directors. The suit arose from twelve complaints opposing the Company's proposal to reclassify the Staples.com and Staples RD series of common stock into a single class of common stock. The suits alleged that the proposed reclassification violated Delaware General Corporation Law, Staple's contractual obligations, and the fiduciary duties of the Company's directors and moved for a preliminary injunction to prevent a stockholder vote, previously scheduled for June 11, 2001, on the reclassification proposal. After holding a hearing on the motion, the Court decided that the vote could proceed when the Company set a new record date for the vote and made additional disclosures regarding the methodology used by the Board and Board-retained outside investment bankers when recommending the valuation of the Staples.com stock for the purposes of the reclassification. The Company and the plaintiffs settled the lawsuit in June 2001. Under the settlement, the Company agreed to: (1) set a new record date; (2) amend the proxy statement in accordance with the court's opinion; and (3) pay the fees and expenses for the attorneys representing the stockholder group. After setting a new record date of July 6, 2001 and adding information to the proxy statement related to the value of Staples.com Stock, the Company mailed the proxy statement and called a stockholders meeting in August 27, 2001 to vote on the reclassification. Also in July, the court ordered final settlement approval. Company stockholders also approved the reclassification. TRAVELERS INSURANCE: Settles Overtime Suit in California For $2.5M ------------------------------------------------------------------ Travelers Insurance Company agreed to settle for $2.5 million a class action that it failed to pay many classes of employees the overtime compensation required under California law. The suit was filed on behalf of employees who were employed between February 26, 1997, and July 30, 2001, as: (1) senior technical specialists, (2) technical specialists, (3) return to work case managers, (4) medical team leaders, (5) medical case managers, (6) investigative case managers, (7) auto technical specialists, (8) auto claim representatives, (9) claim representatives, (10) claim resolution specialists, (11) critical claims specialists, or (12) special investigative unit investigators Under the settlement, each week during the covered time period that the Company employed a person in one of the designated positions counts as a "compensable work week." The amount payable per compensable work week will be determined by dividing the total number of weeks worked by all employees in all the designated positions during the covered time period into the net settlement amount, which is the gross settlement amount less attorneys fees and expenses. Then, the settlement fund will be further divided by awarding each covered employee "units" based on whether the employee regularly worked overtime during the time period involved. Each employee will receive one "unit" for each week worked (in one of the designated positions during the time period involved) if the employee did not regularly work overtime. An employee will receive four "units" for each week worked (in one of the designated positions during the time period involved) if the employee did regularly work overtime. The settlement will not be effective until it is given final approval. A hearing on the matter is set for January 14, 2002. UGLY DUCKLING: Agrees To Settle Suit V. Chairman's Shares Purchase ------------------------------------------------------------------ Ugly Duckling Corporation entered an agreement to settle for an undisclosed amount the securities class actions pending against the Company and Chairman Ernest Garcia in the Court of Chancery for the State of Delaware in New Castle County. The suits challenged the offer of Mr. Garcia to purchase all of the outstanding shares of the Company at an increased cash price of $3.53 net per share. The first suit was a shareholder derivative complaint alleging that the Company's current directors breached fiduciary duties owed to the Company in connection with certain transactions between the Company and Mr. Garcia and various entities controlled by Mr. Garcia. The suit was later amended to include claims on behalf of all persons who own stock and their successors in interest. The amended complaint alleged that the Company's current directors breached fiduciary duties in connection with the proposed acquisition by Mr. Garcia of all of the outstanding Common Stock not owned by him. Five additional and separate purported shareholder class action complaints were filed in April 2001 in the same court, uniformly alleging that the Company, and its directors, breached fiduciary duties in connection with the transactions entered into, or proposed by Mr. Garcia relating to his offer. All of these cases were consolidated in June 2001. In November 2001, the plaintiffs amended the complaint in the consolidated action. The amended suit re-alleged the derivative claims asserted in the original complaint. It also added claims alleging that Mr. Garcia, as majority shareholder, breached his fiduciary duties to the Company's minority shareholders by attempting to eliminate their interests for unfair and inadequate consideration. The amended suit further alleged that the director defendants breached their fiduciary duties by providing substantial assistance in this plan and scheme. On November 27, 2001, Mr. Garcia and his legal advisors met with the plaintiffs' counsel to discuss resolution of the consolidated action. The parties bargained at length and, on November 29, 2001, after numerous discussions, reached an agreement in principle to settle the action, subject to certain conditions. Early this month, Mr. Garcia and the Company reached an agreement in principle with plaintiffs to settle all pending stockholder litigation in Delaware. The agreement is subject to the approval of the Delaware Court of Chancery. XO COMMUNICATIONS: Green Fauth Initiates Securities Suit in E.D. VA ------------------------------------------------------------------- Green Fauth & Jigarjian LLP commenced a securities class action on behalf of all persons who owned XO Communications (NASDAQ: XOXO) common stock as of November 29, 2001 and all persons who purchased XO equity securities from April 2, 2001 through November 29, 2001 in the United States District Court for the Eastern District of Virginia. According to the investors, XO insider Forstmann Little & Co., through its representative on the Board of Directors, Sandra J. Horbach, entered into a transaction with the Company and Telefonos de Mexico S.A. de C.V. that will transfer XO control to Forstmann Little at the expense of the Company's common stockholders. Common stockholders have been told they will lose their entire equity stake in the Company because of this transaction. Daniel F. Akerson, Company Chairman of the Board and Chief Executive Officer, who is also former general partner of Forstmann Little, is named as a defendant in the action along with Forstmann Little and the other Company directors. According to the suit, the defendants were quoted over the last year as stating that the Company had over a billion dollars in cash available and was funded well into 2002 and 2003. Shareholders who purchased the common stock of the Company or continued to hold their common stock in light of these representations were understandably quite surprised when it announced a rush transaction in which common stockholders' equity stake in the Company would be "restructured" out of existence, as they indicate in their complaint. The suit asserts claims for breach of fiduciary duty by the Company's board of directors, aiding and abetting that breach of fiduciary duty by Forstmann Little, and for violations of the federal securities law by certain Company directors. For further information, contact Robert S. Green, Gordon M. Fauth, Jr., Robert A. Jigarjian by Phone: 415.477.6700 or by E-mail: gfj@classcounsel.com ********* 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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