/raid1/www/Hosts/bankrupt/CAR_Public/020130.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, January 30, 2002, Vol. 4, No. 21
Headlines
ANTHEM INC.: IN State Court Certifies Physicians' Suit Over Payments
ARKANSAS: Mentally Ill Inmates Ask Court Intervention in Health Suit
ARVIDA REALTY: Sued For Premiums Paid To "Unauthorized" Insurance Firm
CALIFORNIA: Too Early For LBCUR to Declare Victory, City Officials Say
CALIFORNIA: Deaf Students Sue University Over Inadequate Services
CANADIAN PACIFIC: ND Residents Sue For Injuries Due To Train Accident
FLORIDA: Resident Files Suit Over "Unfair" Phone Service Rate Increase
GENERAL ELECTRIC: Sued For Racial Discrimination in PA Electric Plant
JAPAN: $7.4M Settlement Reached In Hansen's Disease Patients' Suit
LANE HOME: Recalls 6.5 Million Cedar Chests Due To Defective Locks
PT MANDARA: Residents of PIK Complex To File Suit Over "Annual" Floods
SUPERIOR BANK: Officials Face Suit For Misleading Depositors in Chicago
UNITED STATES: Speculation Surrounds Radar-Related Suit Participation
VEHICLE RECALL: General Motors, Mercedes Recalls Thousands of Vehicles
Securities Fraud
APPLICA INCORPORATED: $11M Securities Suit Settlement Reached S.D. FL
DJ ORTHOPEDICS: Pomerantz Haudek Commences Securities Suit in S.D. CA
ENRON CORPORATION: Employees Sue To Recover Retirement Fund Losses
ENRON CORPORATION: County Mulls Joining Suit Over Pension Fund Losses
HOMESTORE.COM: Berger Montague Commences Securities Suit in C.D. CA
IMCLONE SYSTEMS: Berman DeValerio Commences Securities Suit in S.D. NY
IMCLONE SYSTEMS: Kaplan Fox Expands Securities Suit in S.D. New York
IMCLONE SYSTEMS: Cohen Milstein Commences Securities Suit in S.D. NY
INFONET SERVICES: Marc Henzel Lodges Securities Suit in C.D. California
PDI INC.: Berger Montague Commences Securities Fraud Suit in New Jersey
PDI INC.: Cauley Geller Commences Securities Fraud Suit in New Jersey
TALX CORPORATION: Schiffrin Barroway Files Securities Suit in E.D. MI
TALX CORPORATION: Cauley Geller Commences Securities Suit in E.D. MI
*********
ANTHEM INC.: IN State Court Certifies Physicians' Suit Over Payments
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Marion Superior Court Judge Robyn L. Moberly has granted class action
status to a lawsuit filed against Anthem Inc. for its practice of not
paying doctors and other health care providers directly if they aren't
on a preferred providers' list, according to an Indianapolis Star
report.
Physicians William Lewis and Darryl L. Fortson filed the seven-year-old
suit, alleging they lost money when the Company dropped them from its
list of preferred providers and began sending insurance reimbursement
checks to their patients, instead of to the doctors. Attorney for the
plaintiffs David Cutshaw asserts the patients cashed the Anthem checks
and didn't pay the doctors. He told the Indianapolis Star, "It greatly
affected our clients' practice. They lost a lot of money. It greatly
impacts the patient-physician relationship."
He added that the ruling could allow potentially thousands of Indiana
doctors and other providers to join the suit, if they can show their
patients didn't turn over Anthem insurance payments to cover medical
bills.
The Company will appeal the decision, said spokeswoman Deborah New.
She added the Company's contracts allow it to pay its policyholders
directly when their doctors aren't in its doctor network. She added
the Company took Lewis off its preferred provider list after State
medical regulators restricted his license. Fortson was removed from the
list at the same time, she said, because he practiced with Lewis, who
is his uncle.
ARKANSAS: Mentally Ill Inmates Ask Court Intervention in Health Suit
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Plaintiffs representing Arkansas' mentally ill jail inmates in a class
action against the State's Department of Health services presented
their arguments before US District Judge Stephen reasoning, asking him
to intervene to improve the inmates' conditions.
The suit was filed by the American Civil Liberties Union on behalf of
more than 80 inmates who have yet to be convicted of crimes and are
awaiting admittance to the State hospital. The suit alleges that the
State failed to provide the inmates with adequate access to mental
health care. The suit asks Judge Reasoner to declare the State's
mental health system "unconstitutional" and to order the state
Department of Human Services to come up with a plan to accommodate all
the inmates who are under Court order to go to the State Hospital.
Attorney for the plaintiffs Bettina Brownstein said in oral arguments
before the Court, that almost all that testified over the inmates' lack
of access to mental health care needed the judge's help. She added
that without his intervention, "they feared that nothing would change,
that nothing would be done."
According to a Times Record report, testimony during trial showed that
many mentally ill inmates wait nine months to a year before there is
room at the State Hospital, the only facility in the state available
for in-patient evaluations and treatment of inmates. Only 64 beds in
the State Hospital are set aside for those accused of crimes or found
not guilty by reason of insanity. Witnesses further said that the
inmates suffer greatly while they wait in jail and often have to be
isolated for their own safety. One eats his own flesh, while others
drink their own urine, witnesses said.
The hearing was held to determine whether Richard Hill, Director of the
State's Division of Mental Health Services, could be held liable for
lack of room at the State Hospital for inpatient evaluations and
treatment. The suit named Mr. Hill as a defendant in his official and
individual capacities, but Ms. Brownstein and fellow attorney, Paul
James dropped him in his individual capacity after Judge Reasoner said
he had problems with it.
Attorney for the State, Jay Wills argued that the Judge has no
jurisdiction to find the State liable for providing services. Instead,
the counties are responsible for providing mental health care to
inmates residing in their jails, the Times Record reported.
Judge Reasoner said that he would take the suit under advisement and
issue a ruling as soon as possible.
ARVIDA REALTY: Sued For Premiums Paid To "Unauthorized" Insurance Firm
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Milberg Weiss Bershad Hynes and Lerach initiated a class action in Palm
Beach County Circuit Court against Arvida Realty Services on behalf of
the Company's real estate agents who enrolled in a now-defunct health
insurance plan the Company offered all of its Florida realtors.
Former Company realtors, Annette and Michael Farenga, and Ellis Jackson
filed the suit, alleging that the Company offered discount health
insurance coverage to all of its Florida realtors through Employers
Mutual, LLC, a Carson City, Nevada insurer. The plan was attractive to
the Company's realtors because it offered lower-than-market premiums
with a wide range of physicians to choose from.
In August 2001, however, Florida's Department of Insurance issued an
Immediate Final Order under which it found that Employers Mutual, LLC
was not licensed or authorized to sell health insurance in the State of
Florida. Despite the Commissioner's public findings, however, the
Company continued to advise its realtors to send their insurance
premiums to Employers Mutual LLC. To date, insurance commissioners in
seven states have issued cease and desist orders against Employers
Mutual.
The plaintiffs later learned that Thomas Dillon, the court-appointed
Independent Fiduciary overseeing Employers Mutual terminated their
health insurance coverage. Annette Farenga said in a statement, "Now we
have no coverage. Many of us dropped our previous health insurance plan
because we thought the Arvida-sponsored plan through Employers Mutual
was triple-A rated and half the price. I'm outraged at what has
happened."
Attorney for the plaintiffs, Kenneth Vianale, also stated that
Employers Mutual contracted with First Coast Premier, an insurance
brokerage, to find companies like Arvida that had thousands of
employees who might be eager to switch to a new low-cost medical plan.
According to Mr. Vianale, "Arvida did little or no due diligence on
Employers Mutual before it offered the plan to its realtors. Even a
minimal background check by Arvida would have disclosed that Employers
Mutual was not licensed to offer a multiple employer welfare
arrangement in Florida like the one Employers Mutual offered."
For more information, contact Kenneth J. Vianale by Phone:
(561) 361-5000 by Fax: (561) 367-8400 or visit the firm's Website:
http://www.milberg.com
CALIFORNIA: Too Early For LBCUR to Declare Victory, City Officials Say
----------------------------------------------------------------------
Long Beach City officials say it's premature for plaintiffs in the
class action filed against the City challenging its natural gas rates
to declare a victory in the suit, despite the fact that Los Angeles
Superior Court Judge Charles W. McCoy, Jr. rejected the City's motion
to dismiss the suit.
The lawsuit was commenced on behalf of Long Beach residents, by
Citizens for Utility Reform (LBCUR) and alleges that natural gas rate
hikes imposed in December 2000 were excessive and illegal. The lawsuit
further argues that the city's gas department collected $38 million in
excess of prevailing local rates, violating the city's own charter
rules designed to protect residents against excessive gas costs.
The Court offered a split decision on the City's motion. According to
a Press-Telegram report, Judge McCoy sided with LBCUR saying the suit
can move forward on the claims that the City's rates were not
comparable to nearby utilities. However, the Judge sided with the City
on other issues, saying that the City Charter doesn't specify how much
money should be put in reserves. LBCUR has 30 days to respond to the
Judge's ruling on the reserves issue. If the group does not make any
amendments to have the claims reconsidered, the claims will be
dismissed.
Deputy City Attorney Carol Shaw told Press-Telegram that the Judge's
ruling is a preliminary decision in the case, which will still proceed
on several levels. An upcoming ruling, for instance, will determine if
the suit qualifies as a class action suit.
CALIFORNIA: Deaf Students Sue University Over Inadequate Services
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A group of current and former deaf students has sued the University of
California (UC), charging the Berkeley and Davis campuses with
providing inadequate services for the hearing-impaired, The San
Francisco Chronicle recently reported. The suit, filed in Alameda
County Superior Court, said the campuses have not furnished deaf
students with interpreters or rendered other services in a timely
fashion, or not at all, in violation of the Americans with Disabilities
Act.
The state lawsuit is similar to a federal class action filed by the
plaintiffs in 1999, and scheduled to go to trial in June in the US
District Court in San Francisco.
"They require the deaf students to jump through a significant number of
hoops that hearing students don't have to jump through," Todd
Schneider, a San Francisco attorney representing the plaintiffs, said
yesterday.
The state lawsuit mentions aspiring medical-school student, Shazia
Siddiqi, 21, who graduated from UC Berkeley earlier this month, who
said the University did not provide her with sign-language interpreters
who could understand complicated science courses. Emily Alexander, a
student at UC Berkeley's Boalt Hall School of Law, said the University
denied her requests for interpreters for nonacademic events.
The lawsuit noted further the alleged failure by UC Berkeley to
accommodate Megan Jones, who is deaf and blind, with effective
assistants, a state of affairs which has led to "tremendous emotional
and physical stress."
"We do not believe the plaintiffs' claims have merit and we are
defending the lawsuit," University counsel Jeff Blair said of the
federal lawsuit. He has not seen the state lawsuit, but he did
acknowledge, however, that "certain students from time to time may have
a complaint about a particular service." However, he insisted that
the University is serving its disabled students in compliance with the
law.
CANADIAN PACIFIC: ND Residents Sue For Injuries Due To Train Accident
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Residents of Minot, North Dakota have filed a suit in Bismarck Federal
Court against the Canadian Pacific Railway after a 112-car train
derailed and spilled anhydrous ammonia, putting the City under a cloud
of poisonous gas last week, The Globe and Mail reported.
Minot residents, Trina Mehl, Jason Olsen and Susan Olsen, filed the
suit on behalf of other residents, alleging the Company was negligent
in failing to properly maintain its train and track. The accident
occurred on January 18, 2002, when 31 train cars derailed and spilled
an estimated 240,000 gallons of fertilizer onto the track. One person
was killed and 400 people were treated for burns and breathing problems
after the accident.
The US National Transportation Safety Board has begun its investigation
into whether a section of the track separated before the derailment.
Investigator Ted Turpin told the Globe and Mail that it was too soon to
say what caused the wreck. He said, however, that investigators found
that wheels on the CPR locomotive and several other cars that passed
over the section of rail had damage consistent with striking something.
The rail also showed signs of damage at the connection point and metal
bars used to connect sections of track were found broken after the
derailment. He stated "Those splice bars, they were broken vertically,
up and down, through the point where the rails would butt together."
Damaged portions have been sent to a laboratory in Washington, D.C.,
for analysis.
"We haven't actually seen anything yet from the law firm, and we can't
comment on anything that's before the Court," said Darcie Park, a CPR
spokeswoman.
FLORIDA: Resident Files Suit Over "Unfair" Phone Service Rate Increase
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A Florida resident commenced a purported class action against wireless
company Alltel Communications in Gadsden County Circuit Court, accusing
the Company of unfair and deceptive sales practices on behalf of the
Company's customers in Florida.
Matt Moraca, 28, chose to subscribe to the Company's wireless services
last year, after determining it was the best deal around. His one-year
contract allowed him unlimited minutes in four counties for $49.95 a
month. Three months later, the Company raised its rates by $10 a month,
roughly 20%. Mr. Moraca said, in an interview with the Tampa Tribune,
"I was extremely angry.It seemed pretty absurd to me." He claimed the
across-the-board rate increase was a bait and switch.
Mr. Moraca's attorney Les Garringer, of James Hoyer Newcomer and
Smiljanich, said, "The company lures you in because they say, `We've
got these great bargains for you.Unbeknownst to the customer, they
don't have a contract at all. That strikes me as kind of unfair."
The Company reportedly told Mr. Moraca it could raise prices, because
the service contract's fine print states that, "we may change these
terms and conditions at any time if we give you advance notice of the
changes." Mr. Moraca admitted the Company sent him a letter about the
increase, but is continuing with the suit, telling the Tribune, "My
biggest concern is future increases and how many there could be, and at
what intervals.I don't know who else can stop something like that."
Company spokeswoman Ellie Babb said the Company does not comment on
pending litigation.
GENERAL ELECTRIC: Sued For Racial Discrimination in PA Electric Plant
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General Electric Company faces a racial bias class action filed in
Philadelphia Federal Court by seven African-American employees of the
Company, alleging discriminatory incidents at the Company's Southwest
Philadelphia plant that allegedly culminated in its expected closing,
according to the Philadelphia Business Journal.
The suit, which also names the employees' union Local 119 as defendant,
alleges incidents of racial incidents at the plant, which makes
electric breakers and control systems for generators and turbines and
employs 216 people. The plaintiffs allegedly experienced disparate job
opportunities and violations of civil rights. The plaintiffs
additionally claimed that they were harassed and were retaliated
against by the Company and union officials after they filed grievances
with the Equal Employment Opportunity Commission (EEOC).
The suit mentions incidents ranging from racist words being etched into
the floor, graffiti, and the display of Adolf Hitler posters to nooses
and white workers wearing swastikas, according to the Philadelphia
Business Journal. The Company and Local 119, an affiliate of the
International Union of Electronic, Electrical, Salaried, Machine and
Furniture Workers, allegedly ignored these events.
Human Resource Manager, Michael Haus, allegedly took no action to
investigate the incidents, which began in 1997. It was only early last
year that an investigation commenced.
The Company and union officials have denied the allegations. They also
refuted the claim that the Company is closing the plant following
several years of complaints over racist behavior, according to the
Journal.
JAPAN: $7.4M Settlement Reached In Hansen's Disease Patients' Suit
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The Japanese government forged an agreement to compensate former
Hansen's disease patients who were not confined to leprosariums and
family members of those who died of the disease, marking the end of
several class actions commenced in the Kumamoto District Court.
The suit was filed last year to challenge the government's past policy
isolating leprosy patients. The Court later ordered the state to pay
$1.8 billion dollars in compensation, a decision that Prime Minister
Junichiro Koizumi surprisingly decided not to appeal.
Health, Labor and Welfare Minister Chikara Sakaguchi and Kazumi Sogano
signed the agreement last Monday at the Health, Labor and Welfare
Ministry. The settlement will be formalized Wednesday at the district
court.
Under the settlement, the government issued apologies for inflicting
severe pain and anguish upon current and former Hansen's disease
patients, including those who were not confined in leprosariums, by
seriously violating their human rights in such ways as forcing them
into isolation. According to the Daily Yoimuri, the agreement also
stipulates that compensation be paid to patients not confined in
leprosariums because they were unable to receive sufficient treatment
outside such institutions before 1996, when the Leprosy Prevention Law
was abolished.
Compensation amounting to 5 million yen ($37,378.20) and 7 million yen
($52,461.90) will be paid to patients not confined in leprosariums,
depending on when they were infected with the disease. Between 5.5
million yen ($41,220.10) and 14 million yen ($104,923) will be paid to
the family members of deceased patients, depending on when they died.
The total comes to about 1 billion yen (approximately US$ 7.4 million).
LANE HOME: Recalls 6.5 Million Cedar Chests Due To Defective Locks
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Lane Home Furnishings recalled approximately 6.5 million cedar chests
made between 1912 and 1987 last week after discovering that the locks
on the chests were not childproof. Company president and chief
executive Tom Fox said that the locks are automatically engaged when
the lid is closed, according to an Associated Press report.
Mr. Foy adds, "We're focusing our search for these specific chests
because we're offering owners a new, safer lock free-of-charge.The new
locks, which have been installed on all Lane chests since 1987, must be
latched manually from outside the chest." He added that the
replacement locks are nearly identical to the old ones in appearance
and are easy to replace by removing the existing screws and installing
the new lock and new screws.
The Company will ship a new lock to consumers. About 12 million cedar
chests using the old locks were sold over the 75-year period. The
Company estimates 6.5 million of these chests still exist.
PT MANDARA: Residents of PIK Complex To File Suit Over "Annual" Floods
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Indonesian developer PT Mandara Permai faces a potential class action
from families living around the Pantai Indah Kapuk (PIK) luxury housing
complex, alleging the Company and Jakarta's administration are
responsible for causing the annual floods in four sub-districts since
the housing complex was built in 1992, the Jakarta Post reports.
The complex was erected after the Ministry of Forestry allowed the
Company to develop the 831.63 hectares of protected forest to create
the residential complex. The public and environmentalists opposed the
development, saying it would cause environmental damage to the swamp,
which also functioned as a water catchment area and nature reserve.
After the complex was set up, four subdistricts in Penjaringan, North
Jakarta, Kapuk Muara, Tegal Alur, Muara Angke and Teluk Gong, have
endured annual floods.
Rino Subagyo of the Indonesian Center for Environmental Law (ICEL) told
the Jakarta Post, that the victims ".deserve this level of compensation
as they have suffered not only material, but also nonmaterial losses."
He added that the public, with the support of the nongovernmental
organizations ICEL, the Jakarta Legal Aid Institute (LBH Jakarta), the
Indonesian Forum for Environment (Walhi) and the Jakarta Social
Institute (ISJ), intended to file the class action within a month. The
proponents of the suit have already collected over 100 signature from
local people to support the suit.
The suit will assert claims under the environmental law issued in 1997
and the Civilian Code, Article 1365, which specifies that compensation
was payable to those who suffer losses due to particular activities.
Director of Walhi's Jakarta Chapter Ahmad Safruddin asserts that the
public also suffered nonmaterial losses, including the deterioration of
environmental quality, which has negatively affected the local
residents' health.
SUPERIOR BANK: Officials Face Suit For Misleading Depositors in Chicago
-----------------------------------------------------------------------
Officers and directors of Superior Bank face a class action lawsuit
filed in Chicago Circuit Court by its under-insured depositors,
alleging violations of the Illinois Consumer Fraud and Deceptive
Business Practices act.
Superior Bank was placed into receivership on July 27, 2001. At the
time the bank was closed, the suit alleges that it had about $49
million in uninsured or underinsured deposits held by 1,000 depositors.
The bank's officers allegedly violated the above acts by knowingly or
recklessly participating in or assisting in misinforming the Bank's
employees of the requirements of FDIC insurance coverage. This resulted
in depositors being misled as to the insured status of their deposits.
The plaintiffs were misled into believing that by using different
account names, each account would be insured up to $100,000 and that
special accounts, such as IRA's, were fully insured no matter the
amount deposited.
Attorney for the plaintiffs, Clinton Krislov said in a statement,
"People place their money in banks believing they are safe and insured.
But Superior Bank was not safe and many deposits were not insured. Some
of these deposits were placed in short term CD's planning to be used as
down payments on homes or for retirement. Those plans have been
shattered."
He added, "The loss of these funds has been devastating and spreading
any FDIC payoff over a period of years is simply inadequate. These
people put their trust and faith in the safety and security of a
federally insured bank and that trust and faith was abused. We hope to
be able to recovery the funds lost and have those funds back in
depositors' hands as soon as possible."
For more information, contact Clinton Krislov by Phone: 312-606-0500 or
by E-mail: clint@krislovlaw.com or miker@krislovlaw.com.
UNITED STATES: Speculation Surrounds Radar-Related Suit Participation
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American soldiers who claim to have developed cancer as a result of
performing maintenance work on radar equipment may take part in a class
action against radar manufacturers, according to Reuters Health.
German soldiers are planning to file a suit against radar systems
manufacturers Raytheon Corporation (Hawk radar), Western Electric (Nike
radar) and Lockheed Martin (Starfighter radar). An earlier Class
Action Reporter story mentions that around 1,868 German soldiers filed
claims with the German Defense Ministry, alleging that working on radar
systems have caused them to suffer from leukemia, lymphatic tumors or
testicular cancers.
Defense Ministry Special Representative, Ulrich Birkenheier stated that
of these complaints, decisions have been reached in 143. Of the 143
decisions, only 5 soldiers were found to have developed cancer after
working on radioactive equipment, while the other 138 soldiers did not
suffer disabilities from working on radar equipment.
Law professor Anthony Sebok said that there was a chance that former
American soldiers might take part in the suit, but declined to say how
many former soldiers had made the claims. He told Reuters Health "It
is not a large number right now." He said that lawyers are still
researching the potentially explosive issue, and more information will
be available by the end of February, adding "If I told you now, it
could be information that could be obsolete in a week."
Mr. Sebok is acting as a paid consultant to Reiner Geulen, a Berlin-
based attorney who plans to file the German class action in March.
Geulen represents 730 clients and intends to seek damages from the
German government of between 75,000 and 500,000 euros per case.
Mr. Sebok said he is working with Mr. Geulen to determine the
feasibility of the former German soldiers filing class action suits in
US courts against the US manufacturers of the radar systems and to help
find a team of lawyers who would handle such a potentially high-profile
and controversial case, according to a Reuters Health report.
Mr. Geulen told Reuters a decision had already been made to file a
class action suit in the US against radar manufacturers on behalf of
German soldiers, as well as soldiers who had served in the UK and Greek
armies. Former US soldiers also might be included in that suit, he
said.
VEHICLE RECALL: General Motors, Mercedes Recalls Thousands of Vehicles
----------------------------------------------------------------------
Automobile manufacturers General Motors Corporation and Mercedes Benz
USA are recalling thousands of their vehicles after discovering
operation hazards, according to an Associated Press report.
General Motors Corporation is recalling 546,000 2000 and 2001 models of
its Chevrolet Blazer, GMC Jimmy and Oldsmobile Bravada, after reports
that the brake and hazard lights could fail. The Company said it was
aware of two crashes involving the vehicles, but no injuries have been
reported.
Mercedes-Benz USA, on the other hand, is recalling 65,000 1998 and 1999
C Class cars after owners complained of exploding batteries. The
Company has asked owners of these vehicles to bring them to dealers so
they can check the battery fluid. If the fluid is too low, it can
expose electric plates and ignite gases inside. The Company has
received about five reports of the car's battery exploding, with one
report of injury caused by spraying acid and battery fragments.
Mercedes-Benz has instructed their dealers to put warning labels in the
owner's manual and engine compartment, saying the battery should be
checked during every tune-up. Company spokesman Fred Heiler told
Associated Press, "We're not necessarily going to be replacing them, in
fact in most cases we won't be.There is nothing wrong with the battery
if it is maintained correctly."
The recalls ended investigations by the National Highway Traffic Safety
Administration into the problems, and were included in the agency's
report released last week.
Mercedes-Benz and GM will make free repairs at their dealerships.
Securities Fraud
APPLICA INCORPORATED: $11M Securities Suit Settlement Reached S.D. FL
---------------------------------------------------------------------
Applica Incorporated (NYSE: APN) reached an agreement in principle to
settle the securities class action filed in 1998 against it and certain
of its officers in the United States District Court for the Southern
District of Florida and related derivative claims for approximately $11
million in cash.
The Company has taken non-recurring charges of approximately $1 million
in the fourth quarter of 2001 for expenses related to the litigation.
All other amounts related to the settlement of the litigation are
expected be covered under the Company's insurance policies.
David M. Friedson, Chairman and Chief Executive Officer, asserts, "Our
decision to settle this litigation is strictly a business
decision.Although we strongly believe that the plaintiffs' case was
without merit and we would ultimately prevail in court, the opportunity
to put this behind us and remove the lingering uncertainty and
potential distractions to our management team is the sensible thing to
do for our company and its shareholders."
Under the terms of the securities litigation settlement, all claims
against the Company and all other defendants will be dismissed without
any admission of liability or wrongdoing. Settlement is subject to
final documentation and court approval. Details regarding the
shareholder litigation settlement will be communicated to potential
class members prior to final court approval.
Applica Incorporated manufactures, markets and distributes a broad
range of branded and private-label small electric consumer goods.
DJ ORTHOPEDICS: Pomerantz Haudek Commences Securities Suit in S.D. CA
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Pomerantz Haudek Block Grossman & Gross LLP initiated a securities
class action against DJ Orthopedics, Inc. (NYSE: DJO) on behalf of all
persons or entities who purchased the Company's common stock pursuant
or traceable to a registration statement/prospectus dated November 14,
2001. The suit was filed in the United States District Court for the
Southern District of California. The suit names as defendants:
(1) Leslie H. Cross, President and Chief Executive Officer,
(2) Cyril Talbot III, Senior Vice President of Finance and Chief
Financial Officer
(3) Charles T. Orsatti, Chairman,
(4) Goldman Sachs & Co.,
(5) JP Morgan Securities Inc.,
(6) UBS Warburg LLC,
(7) US Bancorp Piper Jaffray Inc., and
(8) First Union Securities, Inc.
The suit alleges that DJ Orthopedics, a global orthopedic sports
medicine company, the individual defendants, and the underwriter
defendants, violated Sections 11, 12(a)(2) and 15 of the Securities Act
of 1933. On November 15, 2001, DJ Orthopedics completed an initial
public offering (IPO) of 9 million shares of stock at $17 per share for
total proceeds of $153 million. In the prospectus, the defendants
represented that the Company was dependent, in part, on international
sales to fuel its revenue growth and profitability.
The suit alleges that the statements in the prospectus were false and
misleading because the offering price contained in the prospectus was
artificially inflated as it was based in material part on the Company's
earnings estimates for the fourth quarter ended December 31, 2001.
The suit charges that prior to the IPO, defendants knew that the
Company would not achieve its 4th Quarter earnings estimates due to a
slowdown in international sales and that such a decline should have
been disclosed in the prospectus.
Moreover, it is alleged that this information was disclosed selectively
to certain of the underwriting defendants who, as a result of the
change in the Company's 4th Quarter projections, declined to support or
otherwise purchase the shares in the "after market" and advised their
institutional clients of the negative change, some of whom withdrew
from the offering.
Contrary to the representations in the prospectus and obligations of
the defendants, the prospectus omitted material facts, rendering it
false and misleading. As a result of this news, the price of the
Company's shares fell, closing at $15.25 per share, more than a 10%
drop from the offering price. The following day, shares fell another
$1.05 to close at $14.20.
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.pomlaw.com
ENRON CORPORATION: Employees Sue To Recover Retirement Fund Losses
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More than 400 current and former employees of energy giant Enron
Corporation commenced a class action in Houston Federal Court, asking a
jury to "make good" the losses in their 401(k) retirement accounts,
according to an AFX report. The suit names as defendants:
(1) Kenneth Lay, former chairman, who is said to have gained $101
million in profit from the sale of the Company's stock;
(2) Jeffrey Skilling, former CEO, who allegedly received $67
million from share sales;
(3) Andrew Fastow, former CFO, believed to have received $30.4
million in share sales;
(4) Northern Trust Company, the employees' retirement plan
trustee;
(5) Arthur Andersen LLP, company auditor.
The suit charges the defendants with encouraging the employees to buy
Company shares without informing them of the Company's troubled
financial status. A statement about the suit further said, "The
defendants placed restrictions on the employees' ability to sell the
stock in their 401(k) plans, resulting in millions of dollars in losses
when financial irregularities at Enron came to light."
Randy McClanahan, attorney for the plaintiffs said in a statement,
"Enron executives were profiting from an elaborate shell game, using
the hard-earned retirement savings of their loyal employees.We plan to
show that the people running Enron's 401(k) retirement plan disregarded
the very employees that federal law requires they protect."
ENRON CORPORATION: County Mulls Joining Suit Over Pension Fund Losses
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Genesee County in Michigan plans to join a class action suit being
organized by several states against energy giant Enron Corporation,
after its' employees pension system lost around $370,000 with the
biggest bankruptcy in US history.
The County wants to join the suit to recover the money they lost from
the retirement system, in which 1,400 active employees and 1,250
retirees participate. According to the Flint Journal, the County sold
the shares after the Company's stock started plummeting but before the
Company publicly acknowledged it overstated profits and declared
bankruptcy on Dec. 2. By that time, Enron's stock price had fallen to
less than $1 a share, from about $83 a year before.
County Controller Leonard Smorch said the losses were not as grave
compared to other retirement funds. Mr. Smorch told the Flint Journal
"We're lucky because our asset allocation is so diversified.Our (loss)
is peanuts compared to some." The county's losses were just a fraction
of a percent of the retirement fund's total asset value of $420
million, meaning there will be little or no effect on retirees.
County Commissioner John W. Northrup, D-Flint, said the County's losses
were high enough to merit joining the class action. He told the Flint
Journal, "it should be a pretty straightforward position."
Several states are joining a class-action lawsuit to win back some
money from the once-giant energy trading company. At least $1 billion
has been lost just from the state retirement funds of teachers,
firefighters and other public employees.
HOMESTORE.COM: Berger Montague Commences Securities Suit in C.D. CA
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Berger & Montague, PC initiated a securities class action against
Homestore.com, Inc. (Nasdaq:HOMS) and certain of its principal officers
and directors in the United States District Court for the Central
District of California on behalf of all purchasers of the Company's
stock between July 20, 2000 and December 21, 2001, inclusive.
The suit alleges that defendants violated Section 10(b) and 20(a) of
the Securities and Exchange Act of l934 by issuing a series of
materially false and misleading statements about the Company's
financial results for part of 2000 and the first three quarters of
2001.
More specifically, on December 21, 2001, after the close of the market,
the Company admitted that its past accounting for its prior results was
inaccurate, and that it would have to restate certain of its financial
statements. 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
Company stated that an internal investigation revealed that between $54
million and $95 million of barter transactions during the first three
quarters of 2001 were booked incorrectly as advertising transactions.
The restatement could amount to as much as 27 percent of Homestore's
revenue during the first three quarters of 2001. The defendants also
admitted that "additional material restatements" may follow, including
restatements of financial results for 2000.
The suit alleges that, as a result of these false and misleading
statements, the price of the Company's common stock was artificially
inflated throughout the class period, causing plaintiff and other
members of the class to suffer damages.
For more information, contact Sherrie R. Savett, Michael T. Fantini or
Kimberly A. Walker by Mail: 1622 Locust Street, Philadelphia, PA 19103
by Phone: 888-891-2289 or 215-875-3000 by Fax: 215-875-5715 by E-mail:
InvestorProtect@bm.net or visit the firm's Website:
http://www.bergermontague.com
IMCLONE SYSTEMS: Berman DeValerio Commences Securities Suit in S.D. NY
----------------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt and Pucillo initiated a securities
class action against ImClone Systems, Inc. (NASDAQ:IMCL) and two of its
top officers claiming they misled investors about experimental cancer
drug, Erbitux, in the US District Court for the Southern District of
New York, seeks damages for violations of federal securities laws on
behalf of all investors who bought the Company's stock between April
26, 2001 and January 7, 2002.
The lawsuit accuses the Company, a biopharmaceutical company
headquartered in New York, of artificially inflating its stock price by
making false and misleading statements about Erbitux, a cancer
treatment the company was developing.
On January 25, 2002, the Company disclosed that it had received
inquiries from the US Securities and Exchange Commission, the US
Justice Department and the Subcommittee on Oversight and Investigations
of the Committee on Energy and Commerce of the United States House of
Representatives.
The suit alleges that, during the class period, the Company publicly
and repeatedly touted Erbitux as a breakthrough drug that would become
"one of the important new drugs in the history of oncology." According
to the complaint, the defendants conditioned the market to believe that
Erbitux was effective in reducing cancer and that its application for
regulatory approval was progressing smoothly. Getting the US Food and
Drug Administration (FDA) to approve Erbitux quickly was vital to the
company because several competitors were racing to develop rival
treatments.
In fact, the complaint maintains, the defendants made the positive
statements about Erbitux knowing or recklessly disregarding that they
had failed to submit documentation that the FDA had previously told
them was necessary for it to accept the application. Finally, on
December 28, 2001, the company announced that the FDA had refused to
even review its application for approval.
The Company's announcement and the emergence of other details about its
deception sent its share price tumbling, according to the lawsuit.
For more information, contact Alicia M. Duff or Michael G. Lange by
Mail: One Liberty Square, Boston, MA 02109 by Phone: (800) 516-9926 by
E-mail: law@bermanesq.com or visit the firm's Website:
www.bermanesq.com.
IMCLONE SYSTEMS: Kaplan Fox Expands Securities Suit in S.D. New York
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Kaplan Fox and Kilsheimer LLP expanded the class period in the
securities class action against ImClone Systems, Inc. (Nasdaq:IMCL) and
certain of the Company's officers and directors in the United States
District Court for the Southern District of New York. The suit is now
brought on behalf of all persons or entities who purchased the
Company's common stock between May 12, 2001 and January 18, 2002,
inclusive.
The suit names as defendants 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 charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. The complaint
alleges that during the class period defendants made false and
misleading statements about, among other things:
(i) the progress of the Company's Fast-Track application with the
FDA for approval to market Erbitux, the Company's new
"blockbuster" drug for the treatment of colorectal cancer;
(ii) how closely the Company was working with the FDA to assure
that the Erbitux application would be approved during the
first quarter of 2002; and
(iii) the positive impact that Erbitux's approval would have on the
Company's revenues for fiscal 2002 and 2003.
The suit alleges that it was false and misleading for defendants to
represent that the Company had presented the evidence necessary to
allow the FDA to accept its Erbitux application when they knew the
application did not comply with the stated expectations of the FDA.
The Company shocked the market when, on December 28, 2001, it announced
that the FDA had declined to accept its Fast-Track application to
market Erbitux. The price of Company stock fell sharply again on
January 9, 2002, when executives admitted that the Company had
submitted a faulty application for Erbitux. As a result of the
defendants' false and misleading statements during the class period,
the price of the Company's common stock traded at artificially inflated
prices.
For more information, contact Frederic S. Fox, Jonathan K. Levine or
Christine Fox by Mail: 805 Third Avenue, 22nd Floor, New York, NY 10022
by Phone: (800) 290-1952 or (212) 687-1980 by Fax: (212) 687-7714 by E-
mail: mail@kaplanfox.com or visit the firm's Website:
http://www.kaplanfox.com
IMCLONE SYSTEMS: Cohen Milstein Commences Securities Suit in S.D. NY
--------------------------------------------------------------------
Cohen Milstein Hausfeld & Toll, PLLC initiated a securities class
action in the United States District Court for the Southern District of
New York, on behalf of purchasers of the securities of ImClone Systems,
Inc. (NASDAQ:IMCL) during the period of May 14, 2001 through and
including January 9, 2002.
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 made many
statements touting the progress of its "Fast-Track" application to the
US Food and Drug Administration (FDA) for approval of IMC-C225
(commonly known as Erbitux), its potentially blockbuster drug used for
the treatment of colorectal cancer, and the substantial revenues the
Company would achieve once the drug was approved by the FDA.
As alleged in the suit, 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;
(2) defendants knew, or were reckless in not knowing, that their
deficient application would be rejected and would thus
negatively impact the Company's future earnings; and
(3) defendants knew, or were reckless in not knowing, of the
potentially serious flaws in their prior test results and
testing procedures, which would prevent or delay the Company's
approval by the FDA.
The suit further alleges that high-ranking Company insiders, including
the Chairman of the Board, CEO and COO, sold almost $150 million worth
of their own holdings during the class period.
On December 28, 2001, the Company disclosed that the FDA had refused to
accept its flawed application for approval of Erbitux. The basis for
the FDA's rejection was not fully known until January 4, 2002, when a
third party newsletter revealed that the FDA had serious concerns about
ImClone's prior test results. In a January 10, 2002 LA Times article,
it was reported that the Company's Chief Executive and Chairman
acknowledged that the Company had "screwed up" the application and that
the Company might have to conduct new trials. These disclosures drove
down the Company's stock from a class period high of $73.83 per share
on December 5, 2001 to $50 per share after the December 28 revelation
to $31.85 at the close of trading on January 9, 2002.
For further details, contact Andrew N. Friedman or Katrina Jurgill by
Mail: 1100 New York Avenue, NW West Tower, Suite 500 Washington, DC
20005 by Phone: 888-240-0775 or 202-408-4600 by E-mail:
afriedman@cmht.com or kjurgill@cmht.com or visit the firm's Website:
http://www.cmht.com
INFONET SERVICES: Marc Henzel Lodges Securities Suit in C.D. California
-----------------------------------------------------------------------
The Law Offices of Marc S. Henzel commenced a securities class action
in the United States District Court for the Central District of
California on behalf of purchasers of Infonet Services Corporation
(NYSE: IN) securities during the period between December 16, 1999 and
July 31, 2001, including those who purchased their shares pursuant to
the December 16, 1999 initial public offering (IPO).
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. The suit
alleges that from December 16, 1999 through July 31, 2001, Infonet saw
its stock price soar from its IPO price of $21 per share to as high as
$32.93 per share as the Company misrepresented the true status of its
AT&T-Unisource Communications Services N.V. (AUCS) business, concealing
the fact that:
(1) the Company would be required to migrate the customer before
offering new services, which required, among other things,
reconnecting each customer to a new platform, a time-
consuming, complicated and expensive process;
(2) the complexity of migration (from company "X" to Infonet)
caused massive disruption to the Company's ability to "upsell"
its new products; and
(3) the Company's AUCS business required massive upgrades, both in
its financial data and billing systems, preventing the Company
from billing its customers on a monthly basis and delaying the
recognition of material revenue for 1-1/2 years until the
upgrades could be completed.
The individual defendants knew that disclosure of these problems with
its AUCS business would devastate the Company's chances of going public
which allowed it to raise $1.1 billion in its December 16, 1999 IPO.
The Company's top executives were determined to conceal the news of the
problems associated with its AUCS business. As a result of the
defendants' false statements/omissions, the Company's stock traded at
inflated levels during the class period, increasing to as high as
$32.93 on March 3, 2000. Company shares began to fall as defendants
partially revealed the status of its AUCS business, tumbling to $3.55
on August 1, 2001.
For more details, 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.
PDI INC.: Berger Montague Commences Securities Fraud Suit in New Jersey
-----------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against PDI,
Inc. (Nasdaq: PDII) and two of its principal officers in the United
States District Court for the District of New Jersey, on behalf of all
persons or entities who purchased the Company's securities during the
period from May 22, 2001 through November 12, 2001.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and SEC Rule 10b-5 by making false
and misleading statements regarding the financial effects of:
(1) the Company's contract with Novartis for promotion of a
hypertension drug, and
(2) termination of its contract with GlaxoSmithKline (GSK) for the
exclusive distribution of an antibiotic.
Among other things, defendants told investors that the Novartis
contract would produce earnings of $0.25 per share in the fourth
quarter of 2001 and that despite impending generic competition for the
GSK antibiotic, the GSK contract would, at worse, produce earnings of
$0.35-$0.40 in the fourth quarter of 2001, and $0.30 per share in 2002.
The defendants also stated that if the $0.30 per share earnings
contribution from the GSK contract was not assured, the Company would
cancel the contract.
The suit alleges that these statements were materially false and
misleading because, among other things:
(i) earnings from the Novartis contract would remain unprofitable
until the Company completed marketing activities which, as the
Company's experience demonstrated, could not be completed
until well into the fourth quarter of 2001; and
(ii) undisclosed minimum purchase requirements of the GSK contract
were such that the contract could not produce earnings at or
near $0.30 per share in 2002, that the Company would be forced
to terminate the contract, which would result in tens of
millions of dollars of losses in the fourth quarter of 2001,
and no earnings from that contract in 2002.
In November 2001, the Company surprised the market by issuing a press
release that contrary to its prior representations, the Company
suffered a loss of $17.3 million and $1.24 per share in the third
quarter of 2001, and expected further losses in the fourth quarter. In
the November 12 press release and a November 13 conference call, the
Company revealed that these losses were due to the need to terminate
the GSK contract and the fact that marketing activities for the
Novartis contract had not been and would not be completed soon enough
for that contract to produce earnings in the fourth quarter of 2001.
For more information, contact Sherrie R. Savett, Carole A. Broderick,
or Kimberly A. Walker by Mail: 1622 Locust Street Philadelphia, PA
19103 by Phone: (888) 891-2289 or (215) 875-3000 by Fax: (215) 875-5715
by E-mail: InvestorProtect@bm.net or visit the firm's Website:
http://www.bergermontague.com
PDI INC.: Cauley Geller Commences Securities Fraud Suit in New Jersey
---------------------------------------------------------------------
Cauley Geller Bowman & Coates LLP initiated a securities class action
in the United States District Court for the District of New Jersey on
behalf of purchasers of PDI, Inc. (Nasdaq: PDII) publicly traded
securities during the period between May 22, 2001 and November 12,
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.
For example, as alleged in the complaint, in May 2001, the Company held
a conference call regarding a previously announced agreement with
Novartis AG, under which the Company would market and sell Novartis'
Lotensin and Lotrel, two hypertension medications. During the
conference call, defendants represented that they expect the Novartis
contract to add $0.25 per share to the Company's fourth quarter of 2001
results. According to the complaint, that statement was materially
false and misleading because defendants knew, or were reckless in not
knowing, that the Company's marketing program would not be fully
underway until well into the fourth quarter and that therefore, the
agreement could not contribute materially to the Company's fourth
quarter of 2001 performance.
In addition, according to the complaint, the Company materially misled
the investing public to the true impact that the introduction of
generic competition for Ceftin - a drug which the Company was
distributing under contract with GlaxoSmithKline PLC - would have on
its business. In particular, the complaint alleges that defendants
represented, in an August 23, 2001 conference call, that the Company
expected Ceftin to contribute $0.30-$0.40 earnings per share to the
fourth quarter of 2001, even if a generic form of Ceftin was introduced
during that time. According to the complaint, the statements were
materially false and misleading because defendants knew, or were
reckless in not knowing, that Ceftin could not contribute $0.30 per
share to fourth quarter 2001 earnings.
On November 12, 2001, the Company issued a press release announcing a
net loss of $17.3 million, or $1.24 for the third quarter of 2001,
including a $24 million charge as reserves for expenses associated with
the Ceftin contract, which the Company announced would be terminated
shortly. In addition, the Company announced that the Lotensin program
will be completed late in the fourth quarter and would not contribute
materially to its 2001 earnings. On November 13, 2001, defendants held
a conference call revealing that Ceftin would not contribute any profit
to the fourth quarter of 2001. In reaction to the news, the price of
the Company's common stock plummeted from a $29 per share close on
November 12, 2001 to close at $18.35 per share - a drop of 35%.
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 or by E-mail: info@classlawyer.com
TALX CORPORATION: Schiffrin Barroway Files Securities Suit in E.D. MI
---------------------------------------------------------------------
Schiffrin and Barroway LLP initiated a securities class action in the
United States District Court for the Eastern District of Missouri on
behalf of all purchasers of the common stock of TALX Corporation
(NASDAQ:TALX) from July 18, 2001 and October 1, 2001, inclusive.
The suit charges the Company, certain of its officers and directors and
its underwriters with violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934. In August 2001, the Company completed
a secondary offering of 3.245 million shares of its stock (including
over-allotments, and also including the sale of 253,000 shares by the
Company's CEO), raising gross proceeds of approximately $100 million
for the Company, pursuant to a registration statement and prospectus
dated August 2, 2001.
The suit alleges that the registration statement/prospectus was false
and materially misleading for these reasons:
(1) Defendants had failed to disclose that the Company had
improperly capitalized significant amounts of software related
to the Company's customer premised systems line of business,
which assets were already substantially impaired and which
would have to be written off in the near term;
(2) Defendants failed to properly account for the true value of
the Company's inventory, such that the overstated value of its
impaired inventory would have to be written down in the near
term;
(3) Defendants misrepresented that the Company's business was
expanding, when it was not, and at which time defendants were
already planning on reducing staff and closing offices;
(4) Defendants were already planning to take at least $2.8 million
in write-offs; and
(5) the outsourced benefits enrollment business was not operating
according to the expectations that had been promoted by
defendants, and this line of business was not a significant
growth-driver as represented by the Company.
The suit further alleges that, throughout the class period, defendants
hid the same factors improperly disclosed in the Company's secondary
offering registration statement/prospectus from the Company's public
shareholders. Defendants misled investors and analysts by issuing a
series of false and materially misleading public statements designed to
and which did artificially inflate the value of Company shares. This
inflation allowed the Company and its CEO to reap almost $100 million
from the sale of stock.
On October 1, 2001, weeks after defendants had sold almost $100 million
worth of Company stock and used over $11 million in Company stock to
acquire Ti3, that defendants issued a press release which revealed that
the Company's fiscal 2002 earnings would be only $0.58-$0.62, excluding
charges, on revenues of less than $50 million and that second quarter
fiscal 2002 revenues would be less than $12 million. The Company also
announced it would recognize charges of $2.8 million to write off
capitalized software costs, inventory and to close offices.
As a result of defendants' shocking disclosures, Company stock declined
to less than $17 per share, compared to the class period high of $34.28
per share, representing a loss to investors of over 50% of the value of
their TALX investment by the end of the class period.
For more information, contact Marc A. Topaz or Stuart L. Berman by
Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
1-888-299-7706 (toll free) or 1-610-667-7706 by E-mail:
info@sbclasslaw.com or visit the firm's Website:
http://www.sbclasslaw.com
TALX CORPORATION: Cauley Geller Commences Securities Suit in E.D. MI
--------------------------------------------------------------------
Cauley Geller Bowman & Coates LLP initiated a securities class action
in the United States District Court for the Eastern District of
Missouri on behalf of purchasers of TALX Corporation (NASDAQ:TALX)
common stock during the period between July 18, 2001 and October 1,
2001, inclusive.
The suit charges the Company and certain of its officers and directors
and its underwriters with violations of the Securities Act of 1933 and
the Securities Exchange Act of 1934. In August 2001, the Company
completed a secondary offering of 3.245 million shares of its stock
(including over-allotments, and also including the sale of 253,000
shares by the Company's CEO), raising gross proceeds of approximately
$100 million for the Company, pursuant to a registration statement and
prospectus dated August 2, 2001.
The suit alleges that the registration statement/prospectus was false
and materially misleading for the following reasons:
(1) Defendants had failed to disclose that the Company had
improperly capitalized significant amounts of software related
to the Company's customer premised systems line of business,
which assets were already substantially impaired and which
would have to be written off in the near term;
(2) Defendants failed to properly account for the true value of
the Company's inventory, such that the overstated value of its
impaired inventory would have to be written down in the near
term;
(3) Defendants misrepresented that the Company's business was
expanding, when it was not, and at which time defendants were
already planning on reducing staff and closing offices;
(4) Defendants were already planning to take at least $2.8 million
in write-offs; and
(5) The outsourced benefits enrollment business was not operating
according to the expectations that had been promoted by
defendants, and this line of business was not a significant
growth-driver as represented by the Company.
The suit further alleges that, throughout the class period, the
defendants hid the same factors not properly disclosed in the Company's
secondary offering registration statement/prospectus from its public
shareholders. Defendants misled investors and analysts by issuing a
series of false and materially misleading public statements which were
designed to and which did, as alleged in the complaint, artificially
inflate the value of the Company's shares. This inflation allowed the
Company and its CEO to reap almost $100 million from the sale of stock.
Then, in October 2001, weeks after defendants had sold almost $100
million worth of Company stock and used over $11 million in Company
stock to acquire Ti3, defendants issued a press release which revealed
that the Company's fiscal 2002 earnings would be only $0.58-$0.62,
excluding charges, on revenues of less than $40 million and that second
quarter fiscal 2002 revenues would be less than $12 million. The
Company also announced that it would recognize charges of $2.8 million
to write off capitalized software costs, inventory and to close
offices.
As a result of defendants' shocking disclosures, Company stock declined
to less than $17 per share, compared to the class period high of $34.28
per share, representing a loss to investors of over 50% of the value of
their TALX investment by the end of the class period.
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
*********
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.
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