/raid1/www/Hosts/bankrupt/CAR_Public/020110.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, January 10, 2002, Vol. 4, No. 7
Headlines
ARROW FINANCIAL: NY Court Certifies Suit For Collection Act Violations
CALIFORNIA: San Diego City Charged With ADA, Employment Act Violations
WASHINGTON DC: Police Department, Towing Companies Face Fraud Suit
GREAT BRITAIN: Nuclear Test Veterans' Deaths Necessitate Swift Filing
MAYFLOWER TRANSIT: Faces Multiple Suits Over Unfair Lending Practices
MICROSOFT CORPORATION: Federal Judge Refuses To Delay Remedy Hearings
MORTGAGE BROKERS: Homebuyers Consider Suit Over Yield Spread Premiums
NATIONWIDE FINANCIAL: Faces Suit For "Abusive" Revenue Sharing Practice
NORTHWEST AIRLINES: Islamic Group Demands Apology For Racial Profiling
PACIFIC GAS: Court To Decide Where To Hear "Erin Brockovich" Claims
PENNSYLVANIA: Police Department Seeks Lifting Of Federal Oversight
TRU-HEAT CORPORATION: Recalls 142,000 Spa Heaters For Fire Hazard
Securities Fraud
HARNISCHFEGER INDUSTRIES: Worker Contests Investors' $10M Settlement
HOMESTORE.COM: Marc Henzel Lodges Securities Suit in C.D. California
HOMESTORE.COM: Scott Scott Commences Securities Suit in C.D. California
IMCLONE SYSTEMS: Asserts No Wrongdoing In Erbitrux FDA Application
IMCLONE SYSTEMS: Cauley Geller, Klayman Toskes File Suit in S.D. NY
IMCLONE SYSTEMS: Bernstein Liebhard Lodges Securities Suit in S.D. NY
IMCLONE SYSTEMS: Shapiro Haber Initiates Securities Suit in S.D. NY
IMCLONE SYSTEMS: Milberg Weiss Lodges Securities Suit in S.D. New York
RICA FOODS: Abbey Gardy Commences Securities Suit in S.D. Florida
RENT-A-CENTER INC.: Cauley Geller Commences Securities Suit in E.D. TX
WALT DISNEY: Faces Amended Suit Over Former Exec's Separation Package
WARNER LAMBERT: Appeals Court Reinstates Two Securities Suits in NJ
*********
ARROW FINANCIAL: NY Court Certifies Suit For Collection Act Violations
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The New York trial court has certified a class action brought against
Arrow Financial Services by consumers alleging the company violated a
federal statute, the Fair Debt Collection Practices Act (FDCPA), by
using unfair, deceptive and illegal debt collection methods. The class,
numbering approximately 5,000, consists of consumers who reside in the
State of New York and who received a debt collection letter from the
Company after May 16, 2000.
The suit alleges that the Company, a debt collection agency that
attempts to collect over $1.5 billion annually, mailed collection
letters to New York State residents which violated the FDCPA by
threatening to take actions that could not legally be taken.
In particular, the consumers maintain that the Arrow's form collection
letters threaten an investigation into sources of income, savings and
checking accounts, verification of employment, automobile and real
estate ownership and personal assets. The suit further asserts that,
because the FDCPA only allows a debt collector to communicate with
consumers, creditors and credit reporting agencies, the statute
prohibits the Company from taking the investigative actions that it
threatened. The suit asserts the letters violate a section of the act
prohibiting debt collectors from threatening to take actions that they
cannot legally take.
CALIFORNIA: San Diego City Charged With ADA, Employment Act Violations
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The City of San Diego, its retirement system and the San Diego Unified
Port District faces a class action filed by Harbor Police sergeant
Elizabeth Kulka, alleging violations of California's Fair Employment
and Housing Act and the federal Americans With Disabilities Act.
The suit alleges the defendants violated the above acts by denying
retirement benefits due to mental disability. Port employees and most
city workers hired after Sept. 3, 1982, cannot obtain retirement
benefits on the basis of a mental disability. Benefits are granted on
the basis of physical disabilities, however.
Bill Farrar, President of the San Diego Police Officers Association,
said the City stopped granting retirements based on mental disabilities
in 1981. According to a SignOnSanDiego report, the City reinstated the
benefits on a trial basis two years ago, but only to police officers
who have been violently attacked and subsequently deemed mentally
incapable of doing their job.
Ms. Kulka was hired by the Harbor Police in August 1989, and asserts
that from 1993 to 1998, she experienced sexual harassment and
discrimination. Ms. Kulka alleges she received birth-control
information through interoffice mail and at home, she was signed up for
subscriptions to magazines, and signed up for a dating service, the
application for which stated she was "sexually active." To cope with
the stress and anxiety brought about by the alleged harassment, Ms.
Kulka took anti-psychotropic drugs since 1997. She also filed a sexual
harassment complaint with the Equal Employment Opportunity Commission
(EEOC).
During investigations relating to the lawsuit, officials discovered she
was taking medication and became concerned that she was taking these
drugs while carrying a firearm. Ms. Kulka was placed on involuntary
paid administrative leave.
SignOnSanDiego reports that Ms. Kulka agreed to mediate the complaint
and the leave of absence, but when the mediation broke down, Edi
Holderman later told Kulka that such benefits had not been available to
city or port employees since the crash in 1978 of a PSA jetliner in
North Park.
Attorney for the plaintiff, Scott Toothacre says "I have a sheriff's
deputy in Orange County who retired on partial-mental, partial-physical
disability. Our police officers and emergency workers down here can't
get it." He added he is still not sure how large the covered class
will be, but could range from 700 employees to many thousands of city
and port employees.
Port district officials declined comment, saying they had yet to be
served with the lawsuit, according to a SignOnSanDiego report.
WASHINGTON DC: Police Department, Towing Companies Face Fraud Suit
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Two Washington D.C. residents commenced a class action suit against the
Washington DC police for participating in a scheme in which police
officers and towing companies collaborate to illegally confiscate cars
and charge victims grossly excessive storage fees. The suit also names
these towing companies as defendants:
(1) R&R Towing and Recovery,
(2) Farco Towing Company,
(3) Abe's Towing Inc.,
(4) Towing By Trip Inc.,
(5) Perry's Towing and Storage,
(6) Wisconsin Avenue Sunoco Inc. and
(7) Precision Towing Inc.
Plaintiffs Robert Snowder and Jeffrey Schroeder allege that police and
towing companies have repeatedly engaged in deceptive and unfair
practices by not following existing regulations concerning how a
vehicle may be towed and when an owner must be notified that his
vehicle has been impounded. Earlier, the Washington Times published a
report on the towing scandal in August last year, after an
investigation by Washington D.C.'s Inspector General.
According to the plaintiffs' lawyer, Phillip Friedman, "We're trying to
reclaim the thousands and thousands of dollars taken from D.C.
residents in towing scams.The bottom line is either the towing operator
is removing a vehicle without police authorization or the police have
failed to fulfill their statutory obligations to notify the vehicle
owner."
Mr. Snowder related his experiences last year when his car was stolen.
The car was allegedly recovered within days, but he wasn't informed for
more than two months, and after the impound lot wanted him to pay
$1,700 to release his car. He complained, but paid the fee after his
complaint got nowhere.
Police spokesman, Anthony O'Leary, told the Washington Times that the
District's statute for impounding vehicles (Title 18 of the D.C.
Municipal Code, Regulation 2421.2) is not specific about how much time
the city has to notify the owner. The statute reads: "It is the duty
of the Police or the Department of Public Works to notify the owner of
the vehicle as soon as practical."
Gary Perry, owner of Perry's Towing and Storage, said his towing
company operates under an informal agreement with the D.C. police. "We
are on the DC police rotation. It goes by alphabetical order, and
whoever is available for a traffic accident or stolen car or whatever,
gets the call." He added, "I would need to know specifically what they
are suing for, and why, but I don't know what it could be about."
GREAT BRITAIN: Nuclear Test Veterans' Deaths Necessitate Swift Filing
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New Zealand nuclear test veterans announced recently that they will
rush to lodge their compensation claim against Great Britain in a
British court within three months' time. Veterans Association
Chairman, Roy Sefton, said the matter has become urgent, because key
witnesses in the case are dying, the Associated Press recently
reported.
The Association is seeking compensation for local servicemen exposed to
British nuclear bomb tests in the 1950s. Up to 550 New Zealand sailors
were involved in Operation Grapple, at the Christmas and Malden Islands
in 1957 and 1958 while serving aboard the New Zealand navy vessels
Pukaki and Rotoiti. Others were exposed to British tests conducted on
the Australian mainland.
Great Britain has rejected liability for any health problems the men
and their families may have suffered as a result of their exposures.
Mr. Sefton has said that the association wants its British lawyers to
file the proceedings before May, unless a settlement is reached over
the veterans' claims. "There's a real sense of urgency," he said.
"The very people we want to be able to be present as witnesses are
dying as time goes by."
The association's local barrister, Gordon Paine, said that it is
essential that the issue of urgency is highlighted to the British legal
team. "It can be hard when you're on the other side of the world to
appreciate that your clients may be dying," he said.
The veterans believe that a settlement outside court is still possible.
While the British government has huge resources to fight a prolonged
court battle, Mr. Paine said that a loss in court for the government
could set far-reaching precedents for a whole new range of class
actions. Britain may prefer to settle in order to avoid that
situation, he added.
MAYFLOWER TRANSIT: Faces Multiple Suits Over Unfair Lending Practices
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A Missouri trial court granted class action certification to two suits
brought against motor carrier Mayflower Transit, Inc. by truck owner-
operators alleging that the carrier violated state laws and federal
truth-in-lending regulations under the Motor Carrier Act.
In one class action, the owner-operators claim that the Company failed
to return cash deposits and fuel tax deductions within the allotted 45-
day time period. The other suit alleges that the Company overcharges
the owner-operators on insurance premiums. Both class actions include
at least 1,000 individuals.
Truck owner-operators are independent contractors who lease their
equipment and services to motor carriers, such as the Company, who in
turn contract with shippers to transport merchandise. The class in the
first action consists of:
(1) all independent truck owner-operators who entered into
regulated leases with the Company, or
(2) an agent of the company, and who paid money into a cash
deposit account or had state fuel tax credits withheld by the
Company that was not rebated to them within the proper time
period.
The class in the second action consists of:
(i) all independent owner-operators who entered into federally
regulated leases with the Company, or
(ii) an agent of the company, in order to obtain insurance policies
and who were overcharged for the insurance
When owner-operators enter into a lease with a carrier, a portion of
their compensation is held in cash deposit accounts which, among other
things, serve to repay advances and to cover repairs, state permit
costs and license fees. The first class action alleges that, although
these cash deposit accounts should be returned within 45 days after the
expiration of the lease agreement, the Company has had the unlawful use
of large sums of money by delaying the return of the deposits to the
owner-operators.
In addition, the first suit claims that the Company's method of
applying fuel tax credit results in a similar unlawful delay in
returning funds to truck owner-operators, and maintains that this
conduct violates truth-in-leasing regulations and Indiana's law of
conversion.
The second class action stems from the purchase of insurance policies
by owner-operators through their lease agreements. An estimated 90% of
operators purchase bobtail, physical damage, and workers compensation
insurance through the lease agreements, while 20% purchase medical,
dental, life and disability insurance. The owner-operators paid for
their policies by paying premiums to the Company, which in turn paid
premiums to the insurance companies, with the understanding that any
overpayment by the owner-operators would be returned to them.
The suit alleges that the Company paid less for the insurance premiums
than was charged to the owner-operators and the difference was not
returned, and maintains that by overcharging for insurance, the Company
violated federal lease regulations.
The two class actions are currently consolidated for purposes of
discovery, and it appears likely they eventually will be fully
consolidated into one class action.
MICROSOFT CORPORATION: Federal Judge Refuses To Delay Remedy Hearings
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US Federal Judge Colleen Kollar-Kottelly refused to delay hearings on
what sanctions should be imposed on software giant Microsoft
Corporation (MSFT.O) for violations of antitrust laws, paving the way
for remedy hearings to begin on March 11, 2002.
Last year, the Company reached an agreement with the Justice Department
that gives computer makers more freedom to load software from its
competitors. Nine states signed on to the settlement, however nine
other states rejected the settlement, saying it did not go far enough
in preventing the Company from committing further antitrust violations
in the future in other markets.
The dissenting states, California, Iowa, Connecticut, Kansas, Florida,
Massachusetts, West Virginia, Utah, Minnesota and the District of
Columbia, drafted their own proposal, asking for:
(1) timely and broad-based computer code sharing;
(2) mandatory distribution of Java;
(3) a version of Microsoft's Internet Explorer browser available
as open source; and
(4) tougher enforcement, including naming a special master with
substantial authority.
The Company then asked for a delay, saying that the penalties proposed
by the states differ significantly from the company's settlement with
the Justice Department and therefore the company needs an extra four
months to sift through millions of documents, a claim that Judge
Kollar-Kotelly rejected. She asserted "The schedule is still workable
and I'm expecting the parties to adhere to it."
The ruling allows the remedy hearings to remain on a parallel track
with separate hearings on the settlement with the Justice Department.
The timing of the hearings is important, legal analysts say.
Endorsement of the settlement, far in advance of hearings on further
remedies, would make the dissenting states' effort to get stronger
sanctions much more difficult.
Judge Kollar-Kotelly said she would hold another hearing in February to
review progress in the case. She also ordered the two sides to spell
out which issues were still in dispute in a joint report due February.
Microsoft spokesman Jim Desler declined to comment on the Judge's
decision to deny the delay request, according to an Associated Press
report.
MORTGAGE BROKERS: Homebuyers Consider Suit Over Yield Spread Premiums
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Homebuyers are contemplating filing a class action against abusive
mortgage brokers over their practice, often not disclosed to borrowers,
of receiving special incentive fees from lenders and passing them on to
consumers.
In a hearing last week, Sen. Paul Sarbanes, D-Md., revealed that the
practice can be abusive and can cost consumers thousands of dollars,
according to Associated Press. Single mother Beatrice Hiers struggled
to buy a home in Fort Washington, Maryland and relied on a mortgage
broker to find a good deal for her. She ended up paying a higher
interest rate than what she qualified for while the broker collected
$10,800 in fees, including $4,538.87 from the lender for getting the
higher rate.
Mr. Sarbanes said minority homebuyers like Ms. Hiers are hit especially
hard. The fees often "are used to pad the profits of mortgage brokers,
without regard to any services they may provide to borrowers."
Mr. Sarbanes also mentioned that the Department of Housing and Urban
Development issued a policy statement in October clarifying when the
fees from lenders to brokers are legal and urging that borrowers'
complaints about them be handled individually rather than in class
action lawsuits. The federal agency plans to propose rules regarding
the fees by the end of the month. He said that this policy statement
"will open the door to new and ongoing abuses of low- and moderate-
income homebuyers and owners" by steering them to higher interest loans
without their knowledge.
Two women also described similar experiences with mortgage brokers and
fees in the hearing. A Virginia woman, Rita Herrod, got a home loan in
May 2000 for just under $85,000 and paid $6,600 in fees to the broker,
who she said also got a "secret kickback" from the lender of $3,304.
Susan M. Johnson, of Cottage Grove, Minnesota, said the $1,620 fee paid
by the lender to the broker "was really paid by us, since it was tied
to an inflated interest rate on our loan."
Joseph Falk, President of the National Association of Mortgage Brokers,
countered this in his testimony saying that the special fees, known as
yield spread premiums, are appropriate when properly disclosed to
borrowers and properly used. He added that it is important to consumers
that their use continue "without the threat of class-action litigation
that could seriously impede the efficient functioning of the market and
damage the economy."
NATIONWIDE FINANCIAL: Faces Suit For "Abusive" Revenue Sharing Practice
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Participants in Nationwide Financial Servicies Inc. mutual funds have
commenced a class action in Connecticut federal court alleging the
401(k) provider may have been pocketing lucrative fees from mutual fund
firms, an industry-wide practice known as revenue sharing, that amount
to nothing more than "kickbacks" for business.
The suit states that mutual fund companies are acting illegally if they
charge administrative fees and rebate part of them to the company
managing a 401(k) plan, regardless of how widespread the practice. Many
believe the Company's actions are causes for concern because it targets
small businesses with its 401(k) offerings.
Roger L. Mandel, one of the attorneys for the plaintiffs, says "I don't
care if 1,000 people run a red light, it's still illegal."
Nationwide has vehemently denied the charges. In a statement, the
Company asserted, "We have every reason to believe we have conducted
our business in an appropriate manner and that our practices are in
line with the standard industry practice."
Federal Judge Christopher F. Droney is expected to rule shortly at the
Company's request on a motion to dismiss the case. The ruling will be
crucial, because if the judge allows the case to go forward, it could
lead to a major precedent, as it's the first time a court would rule on
the legality of revenue sharing.
However, the suit has to overcome a significant hurdle, based on a
novel theory that plaintiffs are entitled to relief because the Company
has a fiduciary responsibility to them under the landmark Employee
Retirement Income Security Act (ERISA).
The Company asserts, "This is an unprecedented legal claim. We believe
the plaintiff's lawyers are trying to stretch the Erisa law beyond its
recognized boundaries. Therefore we are asking that the case be
dismissed."
The Company is counting on the fact that, with the exception of The
Vanguard Group of Malvern, Pennsylvania, virtually every mutual fund
company engages in revenue sharing. The practice occurs when a fund
company charges 12(b)-1 management or administrative fees to 401(k)
plan participants and rebates a portion of the fee to the company
serving the plan.
NORTHWEST AIRLINES: Islamic Group Demands Apology For Racial Profiling
----------------------------------------------------------------------
The Council on American-Islamic Relations has asked Northwest Airlines
to apologize for "religious harassment" after it received dozens of
complaints charging the airline of racial profiling during searches at
airports since the September 11 terrorist attacks.
The latest case involved a 17-year-old Muslim high school student who
was forced to remove her head scarf at an airport security checkpoint
on her way to visit relatives in Alexandria, Virginia on December
18,2001. The council said, in a letter to the airline, that the
incident was an example of religious harassment and an equivalent of a
public strip search.
Council spokesman Hodan Hassan asserts in the letter "For a Muslim
woman to be forced to take off her headscarf in public is a violation
of rights.These women believe covering their hair in public, essential
to being modest, is a mandate from God."
It was not the first case of alleged profiling at the airline since the
terrorist attack. On Christmas Day, an Arab-American member of the
Secret Service security detail was removed from an American Airlines
flight after a pilot questioned his identity, according to an
Associated Press report. The Company has not commented on the issue.
PACIFIC GAS: Court To Decide Where To Hear "Erin Brockovich" Claims
-------------------------------------------------------------------
The Bankruptcy Court is expected to rule this week on where 1,250
personal injury claims in the celebrated "Erin Brockovich" class action
against Pacific Gas and Electric Company, should be heard. Bankruptcy
Judge Dennis Montali will decide if the claims should be transferred to
San Francisco Federal Court, as sought by the Company or in Los Angeles
State Court.
The claims stem from 15 class action suits filed on behalf of people
seeking $500 million compensation for personal injuries and health
problems relating to the pollution of drinking water in areas near the
Company's stations in Kettleman and Topock, California.
The suits allege that the Company pumped chromium 6, a chemical
allegedly responsible for serious diseases such as cancer, into the
plaintiffs' water. The Company admitted that they used chromium in
their operations but denied that it caused any health problems. The
company quit using the element in 1966 and in the early 1980s bought
about 12 houses in the area and began treating the ground water to
remove the chromium.
Erin Brockovich stumbled onto the case while working as a novice legal
secretary and convinced her boss to revive the suit. The case went to
arbitration before a panel of retired judges, who awarded the first
batch of 39 plaintiffs 121 million. The Company later filed for
bankruptcy, and agreed to settle the suits for $333 million without
admitting wrongdoing.
Company lawyers say bankruptcy law requires that personal injury and
wrongful death claims be moved to a U.S. district court, "ensuring that
the claims are dealt with uniformly and as expeditiously as possible,"
but plaintiffs' lawyers say that a shift in venue would unfairly delay
a decision.
PENNSYLVANIA: Police Department Seeks Lifting Of Federal Oversight
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Pittsburgh's city officials are attempting to end federal oversight of
the police department, saying that procedures have been overhauled
since the officers were accused of violating suspects' civil rights,
according to a recent Associated Press report. Susan Malie, an
attorney for the city, said that she hopes to have the consent decree,
which was negotiated with the US Department of Justice, lifted in
April.
The City is still engaged in resolving 43 trials involving 54
plaintiffs from the class action out of which the consent decree
evolved. The trials, which allege various forms of abuse by the
Pittsburgh police, are scheduled to begin April 22.
The City agreed to the consent decree in 1997 after allegations of
beatings and false arrests. The agreement, among other things,
required documentation of all traffic stops and arrests, a computerized
system to track officers' behavior and training in cultural diversity,
integrity and ethics. A court-appointed auditor reported in August
that police have met all the decree requirements, except one, since the
fall of 1999. The exception involves the understaffing at the
civilian-run Office of Municipal Investigations, which handles citizen
complaints against the police.
Witold Walczak, Executive Director of the Pittsburgh chapter of the
American Civil Liberties Union, which filed the suit that led to the
decree, said he would oppose attempts to lift the agreement. He called
investigation of civilian complaints, the one requirement of the decree
still not satisfied, "the linchpin of the entire reform process."
TRU-HEAT CORPORATION: Recalls 142,000 Spa Heaters For Fire Hazard
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TruHeat Corporation is cooperating with the US Consumer Product Safety
Commission (CPSC) by voluntarily recalling about 142,000 spa heaters
sold with Hot Springr and Tiger Riverr spas. The spa heaters have an
internal electrical connection that can overheat and ignite the heater
and spa, posing a fire hazard.
The Company has received 192 reports of the heaters on these spas
failing, and 22 reports of these incidents resulting in fire damage
outside the heater or spa. No injuries have been reported.
These are No-Faultr 6000 model spa heaters sold with Hot Springr and
Tiger Riverr spas. The spa brand name is written on the control panel.
The spa heater brand name and model number are on a label on the side
of the heater. The spa heater is located behind a removable panel on
the front of the spa. Read the owner's manual for instructions on
turning off power to the spa before accessing the spa heater. This
recall only includes spas installed in 220-volt applications.
Independent spa dealers nationwide sold spas with these heaters from
January 1997 through January 2001. The price for these spas is between
$4,000 and $9,000.
For more information, call the TruHeat Response Hotline: (800) 858-2122
between 8 am and 8 pm ET.
Securities Fraud
HARNISCHFEGER INDUSTRIES: Worker Contests Investors' $10M Settlement
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A lawyer representing an employee of Harnischfeger Industries has
objected to the $10 million settlement of a class action investment
fraud lawsuit brought against the Company, according to a recent report
by The Milwaukee Journal Sentinel.
The employee, John Kling, recently filed a lawsuit against Fidelity
Management Trust Company, as well as certain former Harnischfeger
directors and officials, in US District Court in Massachusetts, for
breach of fiduciary duty in conjunction with the handling of the
company's employee savings plan, when the company's stock price
plummeted prior to its bankruptcy filing in 1999.
In a recent hearing in US District Court in Milwaukee, Mr. Kling's
attorney, Thomas Mason, said that the settlement of the class action,
brought by Great Neck Capital, contains "overly broad" language that
could jeopardize the Fidelity case, which centers on the decline of
the value of shares that employees acquired through the Company's
employee savings plan. However, Company lawyers said the language
contained in the class-action settlement was standard language
customarily included in class action investment fraud cases such as the
Company's case.
Judge Lynn Adelman said he would not rule on the matter or issue an
order finalizing the $10.15 million settlement until he had reviewed
detailed arguments to be presented by both sides in the coming weeks.
The case against Harnischfeger alleged that it artificially inflated
its stock price by overstating profits from a project in Indonesia to
build a papermaking machine for Asia Pulp & Paper Ltd. Investors lost
millions when the company's stock price sank after the company
announced that its Beloit Corporation subsidiary would take a $192
million charge, including $155 million for cost overruns on the Asia
Pulp & Paper project.
The Company, now known as Joy Global Corporation, filed for bankruptcy
in 1999 and sold off Beloit to Valmet Corporation, now known as Metso
Corporation. Metso is based in Helsinki, Finland.
In Federal Court in Massachusetts, lawyers for Mr. Kling claim that
Fidelity had owned a 12 percent stake in the Company, but sold three
million of its five million shares of stock between January 31 and
October 31, 1998. At the same time, "Fidelity never disclosed to
Harnischfeger employees that it had determined that Harnischfeger
common stock was no longer a prudent investment or that it had bailed
out of its own very substantial holdings of Harnischfeger stock," the
Massachusetts complaint says.
Fidelity has not filed a response to Mr. Kling's suit. Jenny Engle, a
spokeswoman for Fidelity, said recently that although the Company
served as a directed trustee of the Company's savings plan for the its
employees, Fidelity "didn't have discretionary authority over the
assets invested in this plan."
Under the proposed settlement of the Milwaukee suit, shareholders who
bought stock from November 20, 1997 through August 26, 1998, would
receive $10.15 million. The settlement includes $1 million from
Pricewaterhouse Coopers, Harnischfeger's accountant and a defendant in
a separate suit, plus $9.15 million from the Company.
Under a complex formula, investors who bought Company stock would be
eligible to receive $1.70 to $4.12 per share, depending on when they
bought and sold the stock in 1997 and 1998. Investors who bought
stock before November 20, 1997, or after August 26, 1998, are not
involved in the class action and would not be eligible to receive any
of the settlement.
Investors who receive any portion of the settlement must sign a release
waiving their right to sue the Company. That release was the reason
the Company, which emerged from bankruptcy last year as Joy Global,
agreed to pay the $9.15 million, Company attorney John Hartmann said.
"We did not want to pay that much", but the company agreed to pay that
in order to receive assurances that settling this case would put the
litigation stemming from the bankruptcy behind it.
Thomas Mason, Mr. Kling's lawyer said that the language in the
settlement was so broad that it could prevent any suits relating to the
employee savings plan, even though the employee savings plan was never
a part of the suit filed in Milwaukee.
HOMESTORE.COM: Marc Henzel Lodges Securities Suit in C.D. California
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Central District of
California on behalf of purchasers of Homestore.com, Inc. (Nasdaq:
HOMS) common stock during the period between July 20, 2000 and December
21, 2001.
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. In July 2000
(after the close of the market), the Company issued a release of its
positive 2nd Quarter 2000 results, causing its stock price to soar by
more than $7 (or 25%) the following trading day. The complaint alleges
that as part of their effort to boost the price of the Company's stock,
defendants misrepresented the Company's true prospects in an effort to
conceal its improper acts until they were able to sell at least $16
million of their own stock.
In order to overstate revenues and assets in 2nd, 3rd, 4th Quarter 2000
and 1st, 2nd and 3rd Quarter 2000, the Company violated generally
accepted accounting principles and SEC rules by engaging in improper
"roundtrip" transactions. These transactions had the effect of
dramatically overstating revenues and assets. This came to an end
(though unbeknownst to the public) in the Company's 3rd Quarter 2001 as
the its main roundtrip partner stopped doing these transactions with
the Company.
Following the release of Homestore.com's 3rd Quarter 2001 results, the
Company also slashed its revenue projections for 2002 from $563 million
to $375-$425 million as a result of a material decline in its business
with its main "roundtrip" partner. On this news the Company's shares
plummeted by more than 50% the following trading day.
Then, on December 21, 2001 (after the close of the market), the Company
partially admitted that its past accounting for its prior results was
inaccurate. On this news the Company's shares were halted and have not
traded since. Then, on January 2, 2002, defendants admitted that the
Company's revenue for 2001 had been overstated by as much as $95
million. The defendants also admitted that additional material
restatements may follow.
For more information, contact Marc S. Henzel by Mail: 273 Montgomery
Ave, Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 888-643-6735 or
610-660-8000 by Fax: 610-660-8080 by E-mail: Mhenzel182@aol.com or
visit the firm's Website: http://members.aol.com/mhenzel182.
HOMESTORE.COM: Scott Scott Commences Securities Suit in C.D. California
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Scott + Scott LLC initiated a securities class action in the United
States District Court for the Central District of California on behalf
of purchasers of Homestore.com, Inc. (Nasdaq: HOMS) common stock during
the period between July 20, 2000 and December 21, 2001, inclusive.
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. In July 2000
(after the close of the market), the Company issued a release of its
positive 2Q 00 results, causing its stock price to soar by more than $7
(or 25%) the following trading day.
The suit alleges that as part of their effort to boost the price of
Company stock, defendants misrepresented Homestore.com's true prospects
in an effort to conceal its improper acts until they were able to sell
at least $16 million of their own stock. In order to overstate revenues
and assets in 2nd, 3rd and 4th Quarter 2000 and 1st, 2nd and 3rd
Quarter 2001, the Company allegedly violated generally accepted
accounting principles and SEC rules by engaging in improper
transactions. These transactions had the effect of dramatically
overstating revenues and assets.
Following the release of the Company's 3rd Quarter 2001 results, the
Company also slashed its revenue projections for 2002 from $563 million
to $375-$425 million as a result of a material decline in its business
with its main partner. On this news the Company's shares dropped by
more than 50% the following trading day. Then, on December 21, 2001
(after the close of the market), the Company partially admitted that
its past accounting for its prior results was inaccurate. On this news
the Company's shares were halted. Trading resumed on Monday, January 7,
2002 at a price well below where the stock traded during the class
period.
For more information, contact David R. Scott or Neil Rothstein by
Phone: 800-404-7770 by E-mail: scottlaw@scott-scott.com or visit the
firm's Website: http://www.scott-scott.com
IMCLONE SYSTEMS: Asserts No Wrongdoing In Erbitrux FDA Application
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Imclone Systems, Inc. said that it did not mislead its shareholders
relating to its "Fast Track" application to market its much anticipated
colon cancer drug Erbitux. Several securities class actions have been
filed against Imclone in the US District Court for the Southern
District of New York alleging otherwise.
According to the suits, the Company had issued several press releases
regarding the "successful progress" of its application for approval of
Erbitux and the positive impact that the drug's approval would have on
the Company's revenues. However, in late December 2001, the Company
revealed that the US Food and Drug Administration refused to accept its
application, because it was "deficient and defective." Last week, The
Cancer Letter published parts of a document from the FDA, citing the
reasons why the FDA could not review the Company's application.
The revelations have lead to the Company's shares plunging from a high
of $73.83 in early December to $55.25 by December 28, to $36.85 this
week. Analysts have also downgraded shares of the Company.
Shareholders lost a total of $650 million.
Analyst Jason Zhang of Stephens, Inc. told Associated Press, "As
analysts we are trained to be skeptical.But I think in this case we are
little bit surprised." The analysts said they first believed that the
Company simply had problems with documentation, when it revealed the
problem to analysts last December 31.
The problem was also supposed to be remedied in part by the experience
of Bristol-Myers Squibb Co., which four months ago invested $1 billion
for a 20 percent stake in the Company. The drug manufacturing giant
also agreed to pay the Company another $1 billion in three installments
upon the achievement of certain milestones of the Erbitux development
and approval process. In exchange, Bristol-Myers gets to share Eribitux
revenues with the Company.
Chief Executive Harlan Waksal asserts the Company was "forthcoming" in
its revelations to its shareholders. During the December 31 conference
call, "We made very clear this was a refusal-to-file letter. It's the
most dramatic letter you can get from the agency."
Mr. Waksal still expects the FDA to approve the cancer drug once the
company addresses all the agency's issues. According to the newsletter,
the FDA said ImClone's key clinical trial was not "adequate and well
controlled."
He states "This is a bump in the road and we plan to overcome this."
However, he declined to say when he expects FDA approval. Before
receiving the FDA letter last month, the company had hoped for approval
by the middle of this year. Both Mr. Waksal and a spokeswoman for
Bristol-Myers Squibb refused to comment on the suits, according to an
Associated Press report.
IMCLONE SYSTEMS: Cauley Geller, Klayman Toskes File Suit in S.D. NY
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Cauley Geller Bowman & Coates, LLP and Klayman & Toskes, P.A. initiated
a securities class action in the United States District Court for the
Southern District of New York on behalf of purchasers of ImClone
Systems, Inc. (Nasdaq: IMCL) publicly traded securities during the
period between June 28, 2001 and December 28, 2001, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing a series of material misrepresentations to the
market during the class period, thereby artificially inflating the
price of the Company's publicly traded securities.
Throughout the class period, defendants issued multiple press releases
highlighting the successful progress of its "Fast-Track" application to
the US Food and Drug Administration (FDA) for approval of IMC-C225, its
blockbuster drug used for the treatment of colorectal cancer and also
known as Erbitux, and the positive impact that the drug's approval
would have on the Company's revenues.
As alleged in the Complaint, these statements were materially false and
misleading because, among other things:
(1) defendants failed to comply with the FDA's requirements for
filing the "Fast Track" application for approval of Erbitux;
and
(2) as such, defendants knew, or should have known, that their
deficient application would be rejected and would thus
negatively impact the Company's future earnings.
The suit further alleges that defendants filed their application,
despite lacking the skill and expertise to make a proper filing, in
order to convince Bristol-Myers Squibb Co. to purchase at least $1
billion in Company stock, of which approximately $150 million was
tendered by insiders, including the individual defendants, and to
convince Bristol-Myers to make an additional $1 billion cash investment
in the Company.
On December 28, 2001, the Company disclosed that the FDA had refused to
accept its deficient and defective application for approval of Erbitux,
confirming almost two weeks of speculation that had already driven down
the price of Company stock by 21%, from a class period high of $73.83
per share on December 5, 2001 to $55.25 per share at the close of
regular trading on December 28, 2001.
Immediately following this shocking revelation, however, Company shares
dropped precipitously, falling $5.25 per share in after hours trading,
or 9.5%, to close that session at $50 per share. On December 31, 2001,
shares continued to trade lower, and closed at $46.46 per share.
For more information, contact Jackie Addison, Sue Null or Shelly
Nicholson by Phone: P.O. Box 25438, Little Rock, AR 72221-5438 by
Phone: 1-888-551-9944 by E-mail: info@classlawyer.com or visit the
firm's Website: http://www.classlawyer.com
IMCLONE SYSTEMS: Bernstein Liebhard Lodges Securities Suit in S.D. NY
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Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf of all persons who acquired ImClone Systems, Inc. (NASDAQ:
IMCL) securities between May 12, 2001 and January 4, 2002, inclusive in
the United States District Court for the Southern District of New York
against the Company, and executives Samuel D. Waksal, and Harlan W.
Waksal.
The suit alleges that defendants made materially false and misleading
statements about the efficacy of Erbitux, the Company's new
"blockbuster" drug for the treatment of cancer and the progress of its
application for the Food and Drug Administration's (FDA) approval of
Erbitux.
Among other things, defendants misrepresented during the class period
that its Phase II test results for Erbitux were strongly confirmatory
of its primary endpoint (tumor regression). The foregoing
representations were materially misleading because, among other things,
the Company had failed to document that patients in the Phase II test
had failed to experience tumor regression after chemotherapy (which was
a requirement of the Phase II protocol).
In reliance on the truth and accuracy of defendants' public statements,
Company shares traded as high as $75.45 per share during the class
period. On December 28, 2001, the Company shocked the market by issuing
a press release that disclosed that the FDA had rejected its filing of
a Biologics License Application (BLA) for Erbitux. The first trading
day after the issuance of the press release, on December 31, 2001,
Company shares plummeted $11.15, or 20%, to $44.10.
On January 4, 2002, the Cancer Letter revealed the true contents of the
FDA's December 28, 2001 letter, including the fact that the Company was
repeatedly informed about the problems with the clinical trials by the
FDA during the class period. After these additional facts were
disclosed, the Company fell further to open on January 7, 2002 at
$34.96 per share.
For more information, contact Ms. Linda Flood by Mail: 10 East 40th
Street, New York, New York 10016 by Phone: 800-217-1522 or 212-779-1414
or by E-mail: IMCL@bernlieb.com.
IMCLONE SYSTEMS: Shapiro Haber Initiates Securities Suit in S.D. NY
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Shapiro Haber & Urmy LLP filed a securities class action against
ImClone Systems, Inc. (NASDAQ: IMCL), its President and its Chief
Operating Officer in the United States District Court for the Southern
District of New York. The action alleges that the defendants
misrepresented and concealed material facts concerning the Company's
critical new drug application and that insiders sold over $100 million
of Company stock before the true facts were revealed.
The suit, filed on behalf of all persons who purchased the Company's
common stock during the period from May 12, 2001 through January 4,
2002, alleges that defendants made materially false and misleading
statements about the progress of its application for the Food and Drug
Administration's (FDA) approval of Erbitux while concealing the facts
that there were protocol violations with the Company's pivotal trial
for Erbitux and the pivotal trial was not "adequate and well
controlled."
The suit alleges that the Company's CEO and its Chief Operating Officer
took advantage of its misrepresentations by selling over $100 million
of stock at $70 per share before the true facts were disclosed.
On December 28, 2001, the Company shocked the market by issuing a press
release that disclosed that the FDA had rejected its filing of a
Biologics License Application for Erbitux. Company shares plummeted
20%, to $44.10 on this disclosure.
On January 4, 2002, an industry publication reported that the FDA
rejected the application because of protocol violations and lack of
controls. Significantly, the publication also disclosed that the FDA
repeatedly informed ImClone about problems concerning the clinical
trials by the FDA. After these additional facts were disclosed, Company
shares fell further, closing on January 7, 2002 at $35.83 per share.
For more information, contact Thomas G. Shapiro or Liz Hutton by Mail:
75 State Street, Boston, MA 02109 by Phone: 800-287-8119 by Fax: 617-
439-0134 or by E-mail: cases@shulaw.com.
IMCLONE SYSTEMS: Milberg Weiss Lodges Securities Suit in S.D. New York
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Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action on behalf of purchasers of the securities of ImClone Systems,
Inc. (NASDAQ: IMCL) between June 28, 2001 and December 28, 2001,
inclusive in the United States District Court, Southern District of New
York against the Company and:
(1) Samuel D. Waksal,
(2) Harlan W. Waksal,
(3) Robert F. Goldhammer,
(4) John Mendelsohn,
(5) William R. Miller,
(6) Paul B. Kopperl,
(7) David M. Kies and
(8) Richard Barth
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 issuing materially false and misleading statements to
the market. Throughout the class period, defendants issued multiple
press releases highlighting the successful progress of its "Fast-Track"
application to the US Food and Drug Administration (FDA) for approval
of IMC-C225, its blockbuster drug used for the treatment of colorectal
cancer and also known as Erbitux, and the positive impact that the
drug's approval would have on the Company's revenues.
As alleged in the suit, these statements were materially false and
misleading because, among other things:
(i) defendants failed to comply with the FDA's requirements for
filing the "Fast Track" application for approval of Erbitux;
and
(ii) as such, defendants knew, or should have known, that their
deficient application would be rejected and would thus
negatively impact the Company's future earnings.
The suit further alleges that defendants filed their application,
despite lacking the skill and expertise to make a proper filing, in
order to convince Bristol-Myers Squibb Co. to purchase at least $1
billion in Company stock, of which approximately $150 million was
tendered by insiders, including the individual defendants, and to
convince Bristol-Myers to make an additional $1 billion cash investment
in the Company.
On December 28, 2001, the Company disclosed that the FDA had refused to
accept its deficient and defective application for approval of Erbitux,
confirming almost two weeks of speculation that had already driven down
the price of the Company's stock by 21%, from a class period high of
$73.83 per share on December 5, 2001 to $55.25 per share at the close
of regular trading on December 28, 2001.
Immediately following this shocking revelation, however, Company shares
dropped precipitously, falling $5.25 per share in after hours trading,
or 9.5%, to close that session at $50 per share. On December 31, 2001,
shares continued to trade lower, and closed at $46.46 per share.
For further details, contact Steven G. Schulman or Samuel H. Rudman by
Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by
Phone: 800-320-5081 by E-mail: ImClonecase@milbergNY.com or visit the
firm's Website: http://www.milberg.com
RICA FOODS: Abbey Gardy Commences Securities Suit in S.D. Florida
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Abbey Gardy LLP initiated a securities class action on behalf of all
persons who acquired Rica Foods, Inc. (Amex: RCF) common stock between
January 16, 2001 and December 28, 2001 in the United States District
Court for the Southern District of Florida. Named as defendants in the
complaint are the Company and:
(1) Calixto Chaves, Chairman and CEO,
(2) Randall Piedra, CFO and
(3) Jose Pablo Chaves, COO.
The suit charges defendants with violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The suit alleges, among other things that throughout the
class period defendants filed documents with the SEC, which failed to
disclose that the Company was not in compliance with the credit
agreement entered into with Pacific Life Insurance Company on January
16, 2001.
The suit alleges that defendants knew that the Company's SEC filings
were false and misleading and that defendants' misrepresentations
caused the price of the Company's common stock to be artificially
inflated throughout the class period.
For more information, contact Nancy Kaboolian by Phone: 800-889-3701 by
E-mail: JHass@abbeygardy.com or visit the firm's Website:
http://www.abbeygardy.com
RENT-A-CENTER INC.: Cauley Geller Commences Securities Suit in E.D. TX
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Cauley Geller Bowman & Coates LLP initiated a securities class action
in the United States District Court for the Eastern District of Texas,
Texarkana Division on behalf of purchasers of Rent-A-Center Inc.
(Nasdaq:RCII) publicly traded securities during the period between
April 25, 2001 and October 8, 2001 inclusive.
The suit charges the Company and certain of its officers and directors
with issuing a series of material misrepresentations to the market
during the class period, thereby artificially inflating the price of
the Company publicly traded securities. For example, in April 2001, the
Company issued a press release announcing record results for the first
quarter of 2001 and highlighting its resilience in a weakening economy.
The representations in the press release were, according to the
allegations of the complaint, materially false and misleading because
the Company did not disclose that its expenses were rising dramatically
as it attempted to combat weakening demand with deep discounts and
promotions.
While in possession of this adverse non-public information, the Company
completed a secondary offering of 3,200,000 shares of its common stock
at $42.50 per share on May 25, 2001. Defendant J. Ernest Talley
(Chairman and CEO until October 8, 2001) sold 1,700,000 Rent-A-Center
shares in the secondary offering, grossing over $72 million, and
defendant Mark E. Speese (Director until October 8, 2001, thereafter
Chairman and CEO) sold 500,000 shares, grossing over $72 million.
Then, on May 31, 2001, defendant Talley sold an additional 1,955,000
shares of Company stock at $40.38 per share, grossing over $78 million.
Subsequently, on October 8, 2001, only five months after the secondary
offering, the Company issued a press release announcing that earnings
for the third and fourth quarter of 2001 would be significantly less
than the Company's previous guidance to the market, due to rising
expenses. In response to this announcement, Company stock price dropped
by 19% in one day on heavy trading volume.
For more information, contact Jackie Addison, Sue Null or Shelly
Nicholson by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
1-888-551-9944 by E-mail: info@classlawyer.com or visit the firm's
Website: http://www.classlawyer.com
WALT DISNEY: Faces Amended Suit Over Former Exec's Separation Package
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Shareholders of The Walt Disney Co. (DIS.N) filed an amended
shareholders suit in Delaware Chancery Court, reviving a 1997 complaint
alleging the entertainment giant acted inappropriately in relation to
the controversial $140 million severance payout to former president
Michael Ovitz.
The suit was filed after Michael Ovitz resigned from the Company.
According to a Reuters report, Mr. Ovitz was known as a powerful
Hollywood executive in the early 1990s, by virtue of his place at the
top of talent agency, Creative Artists Agency (CAA). The Company hired
him away from CAA to be the No. 2 executive under Company Chairman
Michael Eisner, but he never gained a strong foothold at Disney and
resigned after a year. At the time, Mr. Ovitz received a $38.9 M cash
package as well as options for 3 million Disney shares which, depending
on the performance of the Company's shares over time, could have been
valued as high as $100 million, according to SEC documents.
The suit was dismissed, and then upheld by an appellate court. In
2000, the Delaware Supreme Court struck down the ruling, paving the way
for the filing of an amended complaint. Attorney for the plaintiffs,
Steven Schulman of Milberg Weiss Bershad Hynes and Lerach, said
shareholders then sought new Disney documents, leading to last week's
complaint.
The amended suit contains new allegations of improper actions by the
Company's Board of Directors, and asserts that Chairman Eisner put his
friendship with Mr. Ovitz above that of shareholder interests. The suit
alleges that the Company's Board of Directors at that time failed to
properly analyze Mr. Ovitz's employment agreement and should have hired
a compensation expert to review the contract. Disney's compensation
committee allegedly "spent an extremely minimal and negligible amount
of time, probably as little as ten minutes, considering the terms" of
the contract.
The court papers further allege Mr. Eisner wrote letters to Mr. Ovitz
that demonstrate "Eisner put his personal friendship with Ovitz, and
his desire to keep this friendship intact, and to avoid his
embarrassment, above his fiduciary duties owed to Disney."
Mr. Schulman says, "We think allegations in second amended complaint
are very strong and illustrate a board that failed to perform
properly."
A Disney spokesperson, however, expressed confidence that the Company
will win the case, according to a Reuters report. "The facts of this
case are no different from when it was first filed and dismissed. We
have every confidence that we will again prevail," she said.
WARNER LAMBERT: Appeals Court Reinstates Two Securities Suits in NJ
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The US 3rd Circuit Court of Appeals reinstated the class action against
Warner-Lambert Company and American Home Products Corporation relating
to their failed merger, saying the suits were improperly dismissed.
The suits were commenced after Warner-Lambert agreed to a $70 billion
merger with American Home Products in November 1999. The merger failed
to push through, when Warner-Lambert lost a hostile takeover to Prizer.
The attempt ended with Prizer acquiring Warner Lambert for $116
million.
The suits charged both Company Directors of breaching their fiduciary
duties to stockholders. Both suits assert that Warner-Lambert's former
directors had a duty to negotiate with Pfizer before accepting the
American Home Products offer, and further alleges that Warner-Lambert
shouldn't have agreed to pay American Home Products $2 billion if it
terminated the agreement.
Newark Federal Court Judge Katherine Sweeney Hayden dismissed the
suits, saying that the shareholders should pursue them in Delaware
State Court, but the appeals court said Judge Hayden abused her
discretion and applied the wrong legal standard. The appeals court
remanded the suits back to the US District Court in Newark, New Jersey.
Plaintiffs' attorney, Richard Brualdi, said, "We're pleased that our
clients will be able to pursue their litigation in the federal court."
*********
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 2002. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to be
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