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/raid1/www/Hosts/bankrupt/CAR_Public/020117.mbx C L A S S A C T I O N R E P O R T E R Thursday, January 17, 2002, Vol. 4, No. 11 Headlines CHINA: Lawyers Encourage Former Forced Laborers To Pursue Class Action CONNECTICUT: State Employee To File Suit Over Insurance Company Stock COOPER TIRE: Consumer Group Challenges Unfair Consumer Suit Settlement DELTA PINE: Faces Suit For Defective Seeds in South Carolina Courts DELTA PINE: Alabama Court Dismisses Without Prejudice Antitrust Suit EMPLOYEE DISPUTES: EEOC Allowed To Pursue Claims Despite Arbitration FEDERAL EXPRESS: Consumers Sue For Late Deliveries During 1997 Strike ILLINOIS: Firefighters Union Sues City For Uncollected Pension Benefits SOCIAL SECURITY: Agrees To Settle Black Employees Discrimination Suit TELEVISION WRITERS: AARP Joins Television Writers' Discrimination Suit TOBACCO LITIGATION: States Failing To Use Funds To Fight Tobacco Use TOWING COMPANIES: Illegal Impounding Fees Suit Draws New Plaintiffs UNITED STATES: Sued For Denying Russian Green Card Lottery Applicants Securities Fraud AMAZON.COM: Firm Gets Extension To File Securities Suit Dismissal CORAM HEALTHCARE: Plaintiffs Amend Securities Suit For The Third Time CORNING INC.: Milberg Weiss Initiates Securities Suit in W.D. New York ENRON CORPORATION: Gottesdiener Firm Reveals 401(K) Lockdown Emails GUANGXIA INDUSTRY: China's Supreme Court Halts Securities Suit Filing HEWLETT PACKARD: Officers Face Suit Arising From Compaq Merger in CA IMCLONE SYSTEMS: Pomerantz Haudek Commences Securities Suit in S.D. NY ORACLE CORPORATION: Asks CA Court To Dismiss Securities Fraud Suit OVERHILL CORPORATION: Nevada Court Allows Spin-off Despite Pending Suit SUPREMA SPECIALTIES: Abbey Gardy Lodges Securities Suit in New Jersey ********* CHINA: Lawyers Encourage Former Forced Laborers To Pursue Class Action ---------------------------------------------------------------------- Chinese lawyers are advising former forced wartime laborers to pursue their claims against Japan as a class action rather than individually. Zia Miachun, lawyer for forced laborer, Shen Wenbao, told the People's Daily "Many forced laborers are currently stating different compensation claims, which lead to discrepancies in their civil actions." The All-China Lawyers Association, the largest representative body for the nation's attorneys, is considering setting up an agency coordinating the cases of Chinese forced workers, Mr. Zhu added. "The agency can research all compensation claims that are relevant in the light of Japan's wartime atrocities, ranging from comfort women, forced laborers, victims of germ warfare to massacre survivors." The now 74-year-old Shen Wenbao was forced to work in a Japanese coal mine in 1944 during WWII, when he was only 16 years old. Together with 351 other Chinese workers, Mr. Shen was forced to toil 16 hours a day and any sign of fatigue was met with a crack of a whip or a kick from Japanese supervisors. He is among the group of over 40,000 Chinese forced laborers, most of them teenagers or in their 20s, taken by force to work as coolies in Japan during the war. Mr. Zhu said he has not decided whether to file the case in the United States, China or Japan. CONNECTICUT: State Employee To File Suit Over Insurance Company Stock --------------------------------------------------------------------- A Connecticut public defender will file a class action later this week, against the state of Connecticut and the Anthem Insurance Companies, on behalf of all Anthem-insured state employees, claiming that the millions of dollars given to the state when the company went public actually belongs to state employees, the Associated Press recently reported. In November, state officials announced Connecticut would receive 1.7 million shares of the Company's stock because the state held policies with the company for state employees' health insurance plans and the HUSKY plan for uninsured children. Governor John G. Rowland called the stock, worth at least $80 million, "much needed revenue in very difficult economic times." The state's shares came from a process called de-mutualization, by which policyholders, determined to be "statutory members" of the mutual company, are given stock in the public company. Plaintiff Ronald Gold, a public defender who represents people charged with capital felony, contends that state employees, not the state, are the statutory members, and are therefore entitled to the stock or cash for it, said E. J. Robbin, Mr. Gold's attorney. Mr. Gold began looking into the de-mutualization agreement after hearing from Anthem-insured people working in the private sector who were receiving stock or money under the process, Mr. Robbin said. Lauren Green-Caldwell, a spokeswoman for Indianapolis-based Company, said that people have been receiving stock through the conversion process. However, one term of the Company's 1997 merger with the Connecticut company that insured state employees is, that policies held before the merger keep their original terms, she said. Before 1997, policies in Connecticut considered the group the statutory member, not the individuals, Ms. Green-Caldwell said. The state has held its policy for at least 40 years, according to the state treasurer's office. State Attorney General Richard Blumenthal said that his office will review the claims that employees should receive part of the demutualization proceeds, and will also consult with the Governor and state legislature. Governor Rowland has seen the lawsuit and has no comment on it, said spokesman Dean Pagani for the Governor. COOPER TIRE: Consumer Group Challenges Unfair Consumer Suit Settlement ---------------------------------------------------------------------- Washington-based consumer group Public Citizen challenged the $64 million agreement proposed by Cooper Tire and Rubber Company to settle 32 state suits and 17 federal cases, accusing the Company of using certain materials and procedures in its process of manufacturing steel- belted radial tires, rendering a portion of the tires unsafe. Under the tentative settlement, the Company will not give cash awards to the plaintiffs but instead will institute: (1) a five-year program offering a free replacement tire against separations for all steel-belted radial tires produced by the Company from 1985 through 2001; (2) some modifications to final inspections; and (3) a consumer education program to promote tire safety Public Citizen alleges that the settlement allows class action lawyers to collect more money than consumers. These lawyers are allegedly due to collect around $30 million. In court filings, the group asserts, " that sum to be grossly out of proportion to the meager remedy that would be afforded members of the class." Lawyers Bruce Kaster, Jerry Kelly, and Paul Byrd also criticized the Company and the class lawyers for giving consumers little or nothing. According to their statements, the class lawyers "have produced a settlement plan which offers little, if anything in the way of tangible benefits." Mr. Kaster's objection says the settlement serves "the interests of Cooper Tire & Rubber Company in avoiding responsibility for its misconduct." DELTA PINE: Faces Suit For Defective Seeds in South Carolina Courts ------------------------------------------------------------------- Delta and Pine Land Company faces three class actions pending in the South Carolina State and Federal Courts alleging that certain seed acquired from the Company which contained the Roundup Readyr gene and/or the Bollgardr gene did not perform as the farmers had anticipated. One suit was commenced in November 1999 in the Beaufort Division of the United States District Court, District of South Carolina, while the remaining two cases were filed in the Court of Common Pleas of Hampton County, South Carolina. All the suits also named as defendants chemical giant Monsanto Corporation, who developed the technology for the seeds, and various retail seed suppliers. The two state suits were removed to the United States District Court for the District of South Carolina but were subsequently remanded to the state court in which they were filed. Of these cases, one filed in Hampton County and the other filed in the United States District Court seek class action treatment for all purchasers of certain D&PL varieties which contain the Monsanto technology. The Company and Monsanto are continuing to investigate the claims to determine the cause or causes of the alleged problem. Pursuant to the terms of the Roundup Readyr and the Bollgardr Agreement between the Company and Monsanto, the Company has a right to be contractually indemnified against all claims arising out of the failure of Monsanto's gene technology. The Company will not have a right to indemnification, however, from Monsanto for any claim involving varietal characteristics separate from or in addition to the failure of the Monsanto technology and such claims are contained in each of these lawsuits. DELTA PINE: Alabama Court Dismisses Without Prejudice Antitrust Suit -------------------------------------------------------------------- The United States District Court for the Northern District of Alabama dismissed without prejudice the class action against Delta and Pine Land Corporation alleging violations of federal antitrust laws. The suit was commenced in May 2000 by several farmers and a seller of farm supplies the Company, Monsanto Corporation and D&M International, LLC, a joint venture of Monsanto and the Company. The suit alleges that defendants have: (1) unlawfully attempted to monopolize the US cotton seed and herbicide market in violation of ss. 2 of the Sherman Antitrust Act; (2) monopolized the US cotton seed and herbicide market in violation of ss. 2 of the Sherman Act; (3) conspired to unreasonably restrain trade in the US cotton seed and herbicide market in violation of ss. 1 of the Sherman Act; and (4) engaged in unlawful tying of cotton seed and herbicide in violation of ss. 3 of the Clayton Act. In July 2000, the Company answered the complaint and in October 2000, moved for dismissal of the action on the grounds that plaintiffs had Failed to allege any conduct or action by the Company that violates the federal antitrust laws. In December 2001, the Court, acting on the recommendation of the Magistrate Judge, granted the Company's motions to dismiss the complaint without prejudice. On January 7, 2002, plaintiffs filed an amended complaint against Monsanto and the Company. EMPLOYEE DISPUTES: EEOC Allowed To Pursue Claims Despite Arbitration -------------------------------------------------------------------- The US Supreme Court allowed the Equal Employment Opportunity Commission (EEOC) to continue obtaining relief for employee discrimination even if that employee agrees to arbitrate employment- related disputes with his employer. In a 6-3 vote, the Court reversed an appellate court ruling and sided with the agency, which argued it still should be allowed to obtain victim-specific relief, including back pay, reinstatement and damages. The appellate court had earlier ruled that the EEOC could not seek relief on behalf of workers covered by arbitration agreements. The case in focus involved Eric Baker, a former Waffle House employee who had a seizure disorder and was fired in 1994 from the chain's South Carolina branch. According to a Reuters report, Mr. Baker filed a complaint with the EEOC alleging his discharge violated the Americans with Disabilities Act. He did not submit a claim for arbitration. The agency then brought its own enforcement action against the restaurant, alleging it engaged in unlawful employment practices on the basis of disability and seeking appropriate relief for Mr. Baker. Waffle House countered, saying the case should be decided in arbitration, not in the courts. Supreme Court Justice John Paul Stevens said in his ruling, an agreement between an employer and employee to arbitrate employment- related disputes does not bar the EEOC from pursuing relief in an enforcement action under the disabilities law. Chief Justice William Rehnquist and Justices Antonin Scalia and Clarence Thomas dissented. Thomas said the Court's ruling conflicts with the federal arbitration law, "I can only conclude that its decision today is rooted in some notion that employment discrimination claims should be treated differently from other claims in the context of arbitration." FEDERAL EXPRESS: Consumers Sue For Late Deliveries During 1997 Strike --------------------------------------------------------------------- The United States District Court in San Diego, California has certified as a class action the lawsuit pending against Federal Express Corporation, over late deliveries during the 1997 Teamsters strike at United Parcel Service, Inc. The Company's customers filed the suit, alleging they were entitled to a full refund of shipping charges pursuant to the Company's money-back guarantee, regardless of whether they gave timely notice of their claim. The court has dismissed claims relating to all but the first eight days of the strike. The plaintiffs' claims relating to those eight days are still pending. Notices were sent to the class members in early November 2001. Certain members of the class had until December 28, 2001 to decline to participate in the case, while other members have until January 18, 2002 to opt out. ILLINOIS: Firefighters Union Sues City For Uncollected Pension Benefits ----------------------------------------------------------------------- The City of Chicago faces a class action filed by Local 2 of the Chicago Fire Fighters Union in the Cook County Circuit Court, charging the City and the trustees of the Firemen's Annuity and Benefit Fund of shortchanging the pension benefits of nearly 1,400 union members. The suit alleges that that pension fund officials have refused to accept contributions, both from the city and more than 1,300 firefighters who are cross-trained to perform emergency medical services, on the additional pay that each receives for undergoing the extra training, according to a Chicago Tribune report. The suit further alleges that the City made insufficient pension contributions on behalf of the fire department's 60 ambulance commanders. The union says uncollected contributions for the firefighters and ambulance commanders have reached $1.5 million. The union has also filed an unfair labor practice charge with the Illinois Labor Relations Board alleging that the city has failed to bargain in good faith on pension issues during contract negotiations. City and union officials have been involved in often-acrimonious negotiations on a new pact, according to the Chicago Tribune. SOCIAL SECURITY: Agrees To Settle Black Employees Discrimination Suit --------------------------------------------------------------------- The Social Security Administration has agreed to settle a discrimination class action filed by 2,200 black male employees alleging the agency discriminated against them in promotions and pay because of their race and sex, the Baltimore Sun reported. The suit was filed on behalf of 2,200 black men who have worked at the agency since the lawsuit was filed, and includes those who have left the agency. In any given year, about 800 black men work at the agency headquarters out of 10,000. The suit alleges that black men were overlooked for promotions and kept at low-grade jobs despite good performances, and were likely to be disciplined more than were other workers. Agency officials have denied this and emphasized that in 1999 black men made up more than 10% of the agency's most senior executives. In 1999, the Equal Employment Opportunity Commission (EEOC) ruled that they could jointly pursue their complaint as a class-action lawsuit. The employees were ready to go to trial but a judge convinced the parties to settle. Details of the settlement, which the plaintiffs' attorneys say is for a "significant" amount of money, will be announced in a conference. As part of the deal, the agency has agreed to install a committee of SSA employees to oversee the promotion process. The committee will monitor the process for four years. TELEVISION WRITERS: AARP Joins Television Writers' Discrimination Suit ---------------------------------------------------------------------- The AARP Foundation joined the age discrimination class action filed against major broadcasting corporations, studios and talent agencies by 51 television writers in the United States District Court for the Central District of California. The suit, charges that the 50 defendants have systematically "gray listed" the writers, freezing them out in hiring in violation of federal and state age discrimination laws in hiring and referrals. The defendants include: (1) National Broadcasting Company, (2) American Broadcasting Company, Inc., (3) CBS Broadcasting, Inc., (4) Fox Broadcasting Company, (5) Universal Television, Inc., (6) Viacom, Inc., (7) Warner Brothers Television, (8) DreamWorks SKG TV LLC, and (9) the William Morris Agency, Inc. Lead plaintiff and two-time Emmy winner Tracy Keenan Wynn, 56, according to the complaint, has been unable to find employment over the past five years because of pervasive age discrimination in the industry. Wynn is the son of the actor Keenan Wynn and grandson of Ed Wynn. Tom Osborne, attorney with the AARP Foundation, said "The relentless industry-wide discrimination against talented long-time writers is worthy of a prime-time TV drama.It has been almost standard operating procedure that the networks and studios hire only young writers as the industry pursues younger audiences. The talent of experienced writers has become very disposable." The suit further asserts, "Older writers, as a class, have been robbed of their right to participate in their chosen profession, have suffered severe emotional distress and loss of self worth, and have seen their incomes dramatically reduced to the point where many have been required to sell their homes, deplete their retirement savings and file for bankruptcy." According to the suit, the TV industry's age bias is indicated in these statistics from the Writers Guild of America: (i) During the 1997-1998 broadcast season, 3l percent of all writers in the Guild were over 50, but they held only five percent of the jobs for episodic comedy shows; (ii) Between 1987 and 1998, the employment rate for writers in their forties fell from 53% to 46%. For writers in their fifties, the rate dropped from 48% to 32%. For those in their sixties, it shrank from 40% to 19%. The suit alleges that the companies have discriminated against the writers in violation of the federal Age Discrimination in Employment Act (ADEA), state and local age discrimination laws and provisions of the collective bargaining agreement between the Writers Guild of America and the television industry. For more information, contact Suzanne Miller or Nancy Thompson by Phone: 916-556-3010 or 202-434-2560 or visit the Website: http://www.aarp.org TOBACCO LITIGATION: States Failing To Use Funds To Fight Tobacco Use -------------------------------------------------------------------- A study released by several consumer groups revealed that state officials are using the money from a $246 billion national tobacco settlement to plug budget holes rather than fund anti-smoking programs, according to a Reuters report. The report, undertaken by the Campaign for Tobacco-Free Kids along with the American Cancer Society, the American Heart Association and the American Lung Association, criticized states for failing to use the 1998 legal settlement money to combat tobacco use. "These are penny- wise, pound-foolish decisions that ignore the conclusive evidence that tobacco prevention programs not only reduce smoking and save lives but also save far more than they cost by reducing smoking-caused health care expenditures," the report said. The report named Florida and Tennessee as prime examples, saying that funding for a highly successful $37.3 million program in Florida was reduced by 20% last month. It also revealed that only five states, Arizona, Maine, Massachusetts, Mississippi and Minnesota were complying with the minimum level recommended by the Center for Disease Control and Prevention. The report puts the annual cost of treating tobacco-related diseases at more than $89 billion. Feeling the economic pinch, states have used the funds for other purposes. Florida, for example, was hit by a travel slump after the September 11 attacks and efforts to raise taxes in Tennessee were met by protesters who broke windows at the Governor's office in July. The report said tobacco use accounts for 400,000 deaths annually in the U.S., more than AIDS, alcohol, car accidents, murders, suicides, illegal drugs and fires combined. According to a Reuters report, under the 1998 settlement, tobacco companies agreed to pay 46 states $206 billion over 25 years. Four other states settled tobacco lawsuits separately for a total of $40 billion over 25 years. TOWING COMPANIES: Illegal Impounding Fees Suit Draws New Plaintiffs ------------------------------------------------------------------- More than 60 people have expressed interest in joining the class action against the Washington DC police and seven of the city's licensed towing companies filed by two DC residents over excessive impound fees paid by unsuspecting motorists. Lawyer Philip Friedman, who filed the suit for plaintiffs Robert Snowder and Jeffrey Schroeder, says the phone has not stopped ringing, after the Washington Times published an article on the suit exposing a car-towing scam apparently targeting out-of-state drivers. The office of DC Inspector General Charles C. Maddox uncovered the scheme, which was promptly reported in August by the Washington Times. The scheme involved a conspiracy between police officers and towing companies to illegally confiscate cars and charge victims excessive storage fees. Mr. Friedman told the Washington Times, that in calls to his office, "a recurrent pattern that seems to be showing up is that people with out- of-state license plates seem to be getting nabbed.Most of them recover their cars within a couple of days, but they get charged very high fees." Maryland resident John James called Mr. Friedman and informed him that he already filed a separate lawsuit in Washington DC Small Claims court against Platinum Towing Corporation, a company not named in the class action. Mr. James' 1988 Jeep Cherokee was stolen in front of his home in early October, an incident he immediately reported to Prince George's County police department. The department told him to call them if they didn't contact him. When he called the department six weeks later, he was informed his jeep was recovered a day after he reported it stolen. When asked why it took them so long to contact him, DC Police said it was a civil matter and referred him to Platinum Towing. Platinum Towing charged him $850 to get it back. Mr. James says he told them he needed a few days to get the money, but when he appeared with the cash, he was informed his vehicle had been sent to the junkyard because it sat on the lot for too long. "I've never been treated so wrongfully," Mr. James said. "Shouldn't they have notified me with a letter or something?" DC police Commander Joe Griffith told The Times that if a stolen vehicle is recovered "the officer should make every effort to notify the owner." The class action suit named as defendants only seven of the city's 185 private towing companies because "those were the ones we had solid preliminary evidence against." However, others could be added to the list as the case develops. The suit contends that police and towing companies have engaged in deceptive and unfair practices by not following regulations on how a vehicle can be towed and when an owner must be notified that a vehicle has been impounded. UNITED STATES: Sued For Denying Russian Green Card Lottery Applicants --------------------------------------------------------------------- The US State Department and the US Embassy faces a complaint filed by an American attorney on behalf of nine Russians who were denied immigration visas because their consular officials accused them of fraud, the Moscow Times reported. The Russians were granted interviews in the United States' "Green Card Lottery," a diversity immigrant program, which gives citizens of designated countries the chance to receive permanent US residency. During the interviews, consular officers asked the applicants to sign a piece of paper then verify the signature by comparing it to signatures on other documents and on the application form. A State Department guideline mandates that the program deny visas to applicants who win interviews if the applicant fails to prove in the interview that he signed his original application. Attorney Kenneth White filed the suit in the US District Court for the District of Columbia last month, saying that the consular officers were not qualified to make such assessment of the signatures. The suit also alleges that the signature guideline is arbitrary and an "abuse of discretion, thereby violating the Administrative Procedures Act. The suit asks the State Department to let expert forensic examiners at the Immigration and Naturalization Services in Washington examine the signatures. Mr. White is the owner of a small Moscow law firm specializing in immigration law. Last year, he submitted sample signatures from Green Card Winners in 2000 and 2001 and requested that the consulate hand over copies of those taken at the interview to him and to forensic experts at the INS for analysis. The embassy refused to do both, he said. On September 26, four days before the deadline for issuing immigrant visas, the embassy notified White the six appeals had been denied without mentioning results of the INS analysis. In October, the embassy's visa section refused to share the results with White. A spokesman for the US Embassy said the embassy cannot comment on ongoing court cases. Securities Fraud AMAZON.COM: Firm Gets Extension To File Securities Suit Dismissal ----------------------------------------------------------------- During the busy holiday season, Amazon.com's lawyers filed a motion for an extension of the time permitted the company to file to dismiss the bondholders' class-action lawsuit. Seattle Federal Court Judge Robert Lasnik granted the extension, giving the Company until January 31 to file for dismissal, Barrons recently reported. It appears that the "e-tailer" and the bondholders have been busy trying to hammer out a settlement. "The parties continue to be engaged in early, voluntary and non-binding discussions concerning the possible resolution of the claims in this lawsuit and wish to continue pursuing these discussions in good faith," court filings state. Telephone calls to the lead plaintiff and its lawyers were not returned and an Company spokesman also did not call back. The bondholders' lawsuit is different from the usual shareholders' suits in that the plaintiffs are suing for "negligence" as opposed to "fraud." One of the things this means is that the burden of proof is lower for the bondholders' lawyers. If the case does end in a negotiated settlement, the public may never know how strong the case really was except by virtue of the terms of the settlement. However, even the terms can, if the parties so choose, be kept confidential. The original lead plaintiff, Sagamore Hill Capital Management, a Connecticut hedge fund, withdrew from the suit and was replaced by still another Connecticut hedge fund, Argent Classic Convertible Arbitrage. In addition, all of the investment banks and brokerage firms named in the filing were dropped from the lawsuit, including Morgan Stanley Dean Witter and Suisse First Boston. No clear reasons, says Barrons, have been given for Sagamore's withdrawal from the lawsuit. The limited partnership runs a market- neutral hedge fund known for convertible arbitrage. At the time of the original legal filing, Morgan Stanley, which is known for its convertible bond underwriting, was Sagamore's prime broker. There is yet another legal deadline looming for Amazon this month. The company and other defendants, including Morgan Stanley and its Internet analyst Mary Meeker, must file their motion to dismiss the shareholders' class action by the end of this week. CORAM HEALTHCARE: Plaintiffs Amend Securities Suit For The Third Time --------------------------------------------------------------------- Plaintiffs in the class action against Coram Healthcare Corporation filed a third amended complaint in the United States District Court for the Third District of New Jersey, eliminating references in the suit to the Company's assets. The suit was originally filed in November 2000, alleging that certain current and former officers and directors of Coram HealthCare Corporation and the company's principal lenders, Cerberus Partners, L.P., Foothill Capital Corporation and Goldman Sachs & Co., implemented a scheme to perpetrate a fraud upon the stock market regarding the Company's common stock. The scheme was undertaken in order to artificially depress the trading price of such shares, and create the false impression that the stockholders equity was decreasing in value and was ultimately worthless. The plaintiffs allege that members of the class sustained total investment losses of $50 million or more. A second amended complaint was filed in March 2001, which removed a number of the Company's current and former officers and directors as defendants. The claims against Goldman Sachs and Foothill have also been dismissed. CORNING INC.: Milberg Weiss Initiates Securities Suit in W.D. New York ---------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the common stock or zero coupon convertible debentures of Corning, Inc. (NASDAQ: GLW) pursuant to a prospectus dated November 3, 2000. The suit is pending in the United States District Court, Western District of New York against the Company and: (1) Roger A. Ackerman, (2) Katherine A. Asbeck and (3) James B. Flaws The suit alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading registration statement and prospectus in connection with the Company's offering of common stock and debentures in November 2000. Specifically, the complaint alleges that the prospectus was materially false and misleading, among other reasons, because: (i) it stated that demand for the Company's products was robust; (ii) it omitted to disclose that the Company was amassing hundreds of millions of dollars of obsolete inventory that would have to be written-off; and (iii) given the foregoing, the projection of 25% earnings growth in 2001, contained in the prospectus, was lacking in a reasonable basis at all times. In July 2001, the Company announced it was taking a $5.1 billion charge primarily related to two recent acquisitions, that it would also write- off $300 million in excess and obsolete inventory, and that it would cut 1,000 jobs and close three plants. The Company also reported a massive second-quarter loss of $4.76 billion, or $5.13 per share. Company shares closed that day at $13.77, down 80% from the offering price. For more information, 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: corningcase@milbergNY.com or visit the firm's Website: http://www.milberg.com ENRON CORPORATION: Gottesdiener Firm Reveals 401(K) Lockdown Emails --------------------------------------------------------------------- The Gottesdiener Law Firm revealed two e-mails that fallen energy giant Enron Corporation sent workers this past fall concerning the "lockdown" of the company's 401(k) Plan. The law firm stated that the e-mails show the Company's "callous disregard" for its employees. A class action has been filed in the United States District Court in Texas against the Company, its top officials, and accounting firm Arthur Andersen to recover some $1 billion of the Company employees' retirement savings. According to the firm, many employees were in the midst of losing their life savings and their jobs during the "lockdown," which prevented them from selling their shares of Company stock between October 26, 2001 and November 13, 2001, while the Company spiraled into bankruptcy. According to the Company, the lockdown was administratively necessary for the company to proceed with a desired change of the 401(k) Plan's trustee and record keeper. However, the suit disputes that any lockdown was necessary to change service providers, and further alleges that, even if necessary, it should have been postponed to allow employees, who had more than 60% of their account savings in Company stock, to sell their stock and salvage some of their investment. The just-released e-mails, according to Eli Gottesdiener, lawyer for the plaintiffs, reveal two fundamental problems with the way Company executives handled the lockdown. First, the e-mails show that the Company "arrogantly dismissed the concerns of employees who had been imploring them to delay the lockdown." Second, they also show that the Company issued false information about the lockdown, leading many workers to believe that the lockdown began a week earlier than it did and causing them to miss the opportunity to sell their stock when it was still selling for around $30 a share. By the time the lockdown was finally lifted, on November 13, 2001, the price of Company stock had plummeted to under $10 a share. The first e-mail was issued the night of October 25, 2001, just before the imposition of the lockdown the next day. Mr. Gottesdiener explained that the Company issued the email because it was being besieged by workers, begging that the lockdown be postponed to allow them time to sell their shares. The e-mail twice acknowledged workers' complaints, saying, "We understand that you are concerned about the timing" of the lockdown and "We understand your concerns." However, the Company said, it was going ahead with the lockdown as planned anyway for its own administrative convenience, saying, "We have been working with Hewitt (the new record keeper) and Northern Trust (the old record keeper) since July." Mr. Gottesdiener asserts, "In translation, this says: `We know that many of you have all of your savings in Company stock and want to sell it to salvage what you can, but we simply can't be bothered - we've been working on this transition since July and it would be too much trouble to postpone it." The second e-mail was issued on September 27, 2001 and was the Company's initial announcement to employees about the lockdown. The problem here was that the information contained in the e-mail was "simply false." The e-mail told employees that the lockdown, which the Company euphemistically termed a "transition", would begin on October 19th, and not October 26th. "To ensure that records and individual accounts are converted accurately," the e-mail said, "a transition period of approximately one-month will begin Oct. 19.During the transition period, participants are not able to transfer funds among investment options or request a withdrawal." Mr. Gottesdiener asserts that last statement was false, "In fact, workers could have sold their Enron stock between October 19th and October 26th. During just that week, right after the Company issued its dramatic 3rd Quarter statement and the SEC opened its investigation, the stock lost half of its value." He added that many workers did not sell during that week based on the Company's statement that they could not do so. "Where were Ken Lay and other top Company officials all while this was going on? The answer seems to be: On the phone to the Bush administration asking for a bailout," he asked. Mr. Gottesdiener's reference was to the fact that while the Company was refusing workers' calls to postpone the lockdown, Chairman Kenneth L. Lay and other top officials, who personally made tens of millions of dollars from selling off their Company stock, were telling Bush administration officials that without some form of government assistance, the Company was looking at bankruptcy. "Enron's arrogance in refusing to delay the lockdown, knowing what it knew, is simply stunning. From the beginning to the end of the lockdown, October 26th-November 13th, the stock lost another third of its value," Mr. Gottesdiener explained. "We are obviously pursuing all this in court but the pension laws have to be strengthened to prevent this type of victimization of workers in the future." For more information, contact Eli Gottesdiener by Phone: 202-243-1000 or 202-246-9590 (mobile) or visit the Websites: http://www.gottesdienerlaw.comor http://www.enronsuit.com/or contact Jamie Diaferia of Infinite Public Relations by Phone: 212-787-4588 or by E-mail: jdiaferia@infinitepr.com GUANGXIA INDUSTRY: China's Supreme Court Halts Securities Suit Filing --------------------------------------------------------------------- Shareholders of Guangxia (Yinchuan) Industry Company will be unable to start a securities class action against the Company for fraudulent information disclosures, even after China's Supreme People's court allowed such cases to be tried, according to a China Daily report. Lawyer for the plaintiffs, Yan Yiming said the Supreme Court set a precondition for the suit, saying plaintiffs still need to wait until the punishment imposed by the China Securities Regulatory Commission on the company is published. The Court temporarily froze all securities-related suits in September in order to draw up judicial guidelines for the case. Vice President of the Court Li Guogang asserts that although the Supreme People's Court will now allow courts to hear civil cases involving listed companies that have lied in their information disclosure, they will still not be able to hear cases against firms found to be involved in market rigging and insider trading. He added investors will be able to file lawsuits separately or in groups, but will not be able to launch class action suits. HEWLETT PACKARD: Officers Face Suit Arising From Compaq Merger in CA -------------------------------------------------------------------- Directors and officers of the Hewlett Packard Company face a securities class action commenced in the United States District Court for the Northern District of California, relating to their merger with Compaq Computers, Inc. The suits, originally filed in December in the Superior Court of California, County of Santa Clara, allege that the defendants breached their fiduciary duties to the Company's shareowners by failing to conduct reasonable due diligence into the propriety of the merger and by filing with the Securities and Exchange Commission a false and misleading registration statement on Form S-4 and preliminary joint proxy statement/prospectus forming a part thereof in connection with the merger. The defendants later removed the case to the Federal Court on December 19, 2001. In a disclosure to the Securities and Exchange Commission, the Company labeled the suit "without merit" and stated its intent to vigorously defend the case. IMCLONE SYSTEMS: Pomerantz Haudek Commences Securities Suit in S.D. NY ---------------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP initiated a securities class action against ImClone Systems, Inc. (Nasdaq:IMCL) on behalf of all those who purchased the Company's common stock during the period between April 3, 2001 through January 4, 2002, inclusive, in the United States District Court for the Southern District of New York. The suit also names as defendants: (1) Samuel D. Waksal, President & Chief Executive Officer, (2) Harlan W. Waksal, Executive Vice President & Chief Operating Officer, and (3) Robert F. Goldhammer, Chairman The Complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In particular, it is alleged that during the class period, defendants issued materially false and misleading statements concerning the progress of the Company's Phase II clinical study of IMC-C225, also known as Erbitux, for the treatment of colorectal cancer, and the likelihood that the US Food and Drug Administration (FDA) would accept for filing the Company's rolling Biologics License Application (BLA) for the drug product. As alleged in the suit, these statements were materially false and misleading because, among other things, defendants failed to comply with the FDA's requests for specific data regarding the efficacy of Erbitux, thereby rendering the application unacceptable. On December 28, 2001, after the close of the market, the Company disclosed that the FDA had refused to accept its BLA for Erbitux, a highly unusual event. Usually FDA refusal only occurs when the application is facially flawed, or otherwise indicates that the data presented was inadequate to support consideration for approval. However, the Company downplayed this event claiming that the FDA had merely requested "additional information." Thereafter, on January 7, 2002, a Washington D.C. based newsletter, "The Cancer Letter," reported far more serious and numerous problems with the Company's application after obtaining a copy of the FDA's letter reflecting its decision to "refuse to file" (RTF). The RTF revealed that the Company had been forewarned more than a year earlier about FDA concerns regarding the combined use of Erbitux with another approved, but toxic, chemotherapy drug product, CPT-11, and that the FDA had demanded that the Company demonstrate that CPT-11 was "necessary to achieve the clinical" effectiveness of Erbitux, a material fact that defendants had concealed from investors. Immediately following the disclosures on December 28, 2001 and January 7, 2002, the price of Company stock plummeted from over $55 per share to less than $36 per share, a loss of nearly 40%. In addition, while class members lost millions of dollars from their purchases of Company stock, the individual defendants reaped over $136 million from their sales of Company stock at inflated prices. For more details, contact Andrew G. Tolan by Phone: 888-476-6529 or 888-4-POMLAW by E-mail: agtolan@pomlaw.com or visit the firm's Website: http://www.pomerantzlaw.com ORACLE CORPORATION: Asks CA Court To Dismiss Securities Fraud Suit ------------------------------------------------------------------ Oracle Corporation asked the United States District Court for the Northern District of California to dismiss a consolidated and amended securities class action filed against the Company and its Chief Executive Officer for alleged federal securities violations. Several class actions were commenced in March 2001, and brought on behalf of purchasers of the Company's stock during the period December 15, 2000 through March 1, 2001. The suits uniformly alleged that the defendants made false and misleading statements about the Company's actual and expected financial performance and the performance of certain of its applications products, while certain individual defendants were selling Company stock. The suit further alleges that certain individual defendants sold Company stock while in possession of material non-public information. In June 2001 the Court consolidated the class actions into a single action and appointed lead plaintiff and class counsel. A consolidated amended complaint was then filed in August 2001 adding the Chief Financial Officer and an Executive Vice President as defendants. Oracle moved to dismiss the consolidated action and a hearing was held on the motion to dismiss on December 18, 2001. The Court has not yet issued its opinion. The Company believes that it has meritorious defenses against these actions and intends to vigorously defend against the suits. OVERHILL CORPORATION: Nevada Court Allows Spin-off Despite Pending Suit ----------------------------------------------------------------------- The United States District Court for the District of Nevada allowed Overhill Corporation to spin-off its Overhill Farms unit, despite opposition from plaintiffs in a securities class action pending against the Company. Five securities suits were commenced in 1997 against the Company and certain of its officers and directors, alleging that the defendants made certain misrepresentations that allegedly resulted in the artificial inflation of the Company's stock price. Without certifying the cases as class actions, the court consolidated the cases into a single action. In March 2000, the court dismissed the plaintiffs' claims against one of the Company's officers and directors and restricted the plaintiffs from pursuing a number of their claims against the other defendants. The Court also granted the remaining defendants leave to file motions for summary judgment. Motions for summary judgment were then filed and in November 2000, in a lengthy decision addressing the plaintiffs' claims against each of the remaining defendants, the Court granted the motions for summary judgment, thereby disposing of all of the claims asserted by the plaintiffs. The plaintiffs then filed a motion for rehearing, which the Court denied in March 2001. The plaintiffs then filed an appeal in the United States Court of Appeals for the Ninth Circuit. Both sides have filed appellate briefs, but oral argument in the Court of Appeals has not yet occurred. Recently, the plaintiffs requested the Ninth Circuit to enjoin the Company's proposed spin-off of Overhill Farms, which the Appellate Court denied. The Court also directed them to address their request to the Federal Court. The plaintiffs thereafter filed an application with the Federal Court, which restrained the spin-off for a few days until a hearing could be conducted with respect to the proposed spin-off. Following a hearing at which counsel for all parties appeared, the District Court dissolved its temporary restraining order, thereby allowing the Company to proceed with the proposed spin-off. The plaintiffs have not yet appealed the most recent decision by the District Court. SUPREMA SPECIALTIES: Abbey Gardy Lodges Securities Suit in New Jersey --------------------------------------------------------------------- Abbey Gardy LLP initiated a securities class action on behalf of all persons who acquired Suprema Specialties, Inc. (Nasdaq: CHEZ) common stock between August 15, 2001 and December 21, 2001, in the United States District Court for the District of New Jersey. Named as defendants are the Company and: (1) Mark Cocchiola, Chairman and Chief Executive Officer, (2) Steven Venechanos, Chief Financial Officer and Secretary, (3) Marco Cocchiola, director, (4) Rudolph Acosta, director, (5) Paul Desocia, director, and (6) Barry Rutcofsky, director 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 knowingly or recklessly disseminate materially false and misleading statements regarding the Company's financial condition. The following statements, among others, are alleged to have been materially deceptive: (i) August 15, 2001, press release announcing the Company's 2001 year-end financial results; (ii) 2001 Form 10-K filed with the SEC on September 28, 2001; (iii) the Company's registration statement filed with the SEC on November 6, 2001 for the public offering of over 4 million shares of stock at $12.75 of which 500,000 shares were sold by, among others, Mr. Cocchiola and Mr. Venechanos; (iv) the Company's Form 10-Q for its first quarter ended September 30, 2001. In each of its SEC filing, the Company assured the public that its financials were in conformity with generally accepted accounting principles (GAAP). The complaint alleged that the Company's financial statements were not in conformity with GAAP. On December 21, 2001 the Company announced the resignation of defendant Venechanos, its CFO and disclosed that it had launched an investigation into the Company's prior reported financial results. In response to this report the NASDAQ halted trading of Company stock. The suit further alleges 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 or Jennifer Haas by Phone: 1-800-889-3701 by E-mail: JHaas@abbeygardy.com or nkaboolian@abbeygardy.com or visit the firm's Website: http://www.abbeygardy.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 2002. 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *