/raid1/www/Hosts/bankrupt/CAR_Public/020529.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, May 29, 2002, Vol. 4, No. 105
Headlines
ABBEY PARKLAWN: Ten Families Sue Funeral Home Over Corpse Mistreatment
AMERICAN MEDICAL: Court Renders Unfavorable Judgment in Insurance Suit
AVENTIS PASTEUR: Canadians Sue Over Children's Alleged Vaccine Damages
CALIFORNIA: Energy Users Sue Power Producers For Manipulating Market
CATHOLIC CHURCH: Prominent Lawyer to File Sex Abuse Suit V. Dioceses
CIMARRON MANUFACTURED: MN Park Residents Sue Over New Utility Fees
COMCAST CORPORATION: Faces Suit Over Recording Customer Web Browsing
ECKERD PHARMACY: Settles For $9M Partially Filled Prescriptions Suit
FLORIDA: Judge Weighs Constitutionality of State Vote Ban For Ex-Felons
FLORIDA: Judge Labels State Canker Eradication Law "Unconstitutional"
HARLEY DAVIDSON: Consumers File Second Suit Over Cam Bearing Warranty
JAPAN: Bataan Death March Survivors Seek Reparations For Atrocities
JUNK FOOD: Suit Over Altered Labeling Might Encourage Similar Suits
LIFEPOINT HOSPITALS: Mounting Vigorous Defense V. Accessibility Suit
PENNSYLVANIA: Federal Oversight Not Enough To Remedy Racial Bias
RANGE RESOURCES: Suit Over Gas Royalties Remanded To NY State Court
Securities Fraud
ADELPHIA COMMUNICATIONS: Spector Roseman Amends Securities Suit in PA
ALLIED CAPITAL: Charles Piven Commences Securities Suit in S.D. NY
AVON PRODUCTS: NY Court Yet To Decide in Ten Year Old Securities Suit
BLUE MARTINI: Faces Consolidated Suit, Derivative Suit in NY Courts
CARESCIENCE INC.: Faces Suit For Securities Act Violations in E.D. PA
CLARENT CORPORATION: Faces Suits For Securities Violations in S.D. NY
CLARENT CORPORATION: CA Court Orders Securities Suits Consolidated
CLARENT CORPORATION: Faces Shareholder Derivative Suits in DE, CA
CMS ENERGY: Berger & Montague Commences Securities Fraud Suit in MI
COMPUTER ASSOCIATES: Marc Henzel Commences Securities Fraud Suit in NY
CORNING INC.: NY Court Yet To Rule on Summary Judgment Motion
CORNING INC.: Labels "Without Merit" Pending Securities Suits in NY
CUMULUS MEDIA: WI Court Preliminarily Approves $13M Suit Settlement
DUKE ENERGY: Charles Piven Commences Securities Fraud Suit in S.D. NY
DYNEGY INC.: Berger & Montague Commences Securities Fraud Suit in TX
EDISON SCHOOLS: Spector Roseman Expands Securities Suit in S.D. NY
HERBALIFE INTERNATIONAL: Mounting Vigorous Defense V. Suit in Nevada
JP MORGAN: Marc Henzel Commences Securities Fraud Suit in S.D. NY
MATRIXONE INC.: Plaintiffs File Consolidated Securities Suit in S.D. NY
PEREGRINE SYSTEMS: Spector Roseman Expands Securities Suit in S.D. CA
RELIANT RESOURCES: Berger & Montague Lodges Securities Suit in S.D. TX
SALOMON SMITH: Spector Roseman Commences Securities Suit in S.D. NY
SEITEL INC.: Berger & Montague Commences Securities Fraud Suit in TX
WESTPOINT STEVENS: Will Ask GA Court To Dismiss Securities Fraud Suit
*********
ABBEY PARKLAWN: Ten Families Sue Funeral Home Over Corpse Mistreatment
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Ten families are suing the Abbey Parklawn Home & Memory Gardens in
Dunedin, Florida, charging the funeral director, Scott M. Daley with
the mishandling of corpses, taking items from the dead bodies and
leaving cremated remains of at least 100 people in his garage, the
Associated Press Newswires reports.
Scott Daley has denied the allegations against the funeral home, the
St. Petersburg Times reports. The claims have been turned over to the
state attorney's office, and the sheriff's office is investigating
whether crimes have been committed.
Abbey Parklawn was hired by Pinellas County to cremate and bury the
county's poor and unclaimed dead bodies. Last year, the county
canceled its $175,000-a-year contract with the Company after several
bodies were buried in a single grave.
Former employees of Abbey Parklawn and families of bodies handled by
the business have made sworn statements alleging the funeral home
mishandled client bodies. For example, Dawn Alley, Mr. Daley's former
employee and past girlfriend said in her deposition that Mr. Daley was
"nonchalant" when it came to dealing with the dead. He would often
take jewelry, clothes and other belongings from the bodies after their
arrival, she said. He is also accused of leaving the remains of at
least 100 people in his garage, where his cat was allowed to use it as
a litter box.
Other accusations against Abbey Parklawn and its employees in sworn
statements include:
(1) bodies were left stacked up in the funeral homes coolers for
days. The state requires bodies be refrigerated within 24
hours. Employees described situations where several bodies
were left in piles outside coolers;
(2) Wayne DeaKyne, 54, the cremator at Abbey Parklawn, would
routinely cremate more than one body at a time and return the
remains of several people to a single family without their
knowledge. He also kept a collection of gold teeth from the
bodies in a can;
Abbey Parklawn is now run by the state by a newly appointed director.
Mark Riposta said the funeral home is running smoothly and has passed
several inspections since he took over as director in January. Mr.
Riposta said many of the allegations against Abbey Parklawn are
exaggerated.
The federal government began a review of state laws after a Georgia
crematory operator allegedly passed off cement powder and dirt as
ashes. Authorities have discovered more than 300 corpses that were
dumped in pits, left in sheds and stacked in vaults at Tri-State
Crematory.
In Florida, several families are suing cemetery company Menorah
Gardens, claiming their loved ones were dug up, dumped in the woods,
buried in the wrong graves or buried in vaults on top of each other
instead of side by side as the families had paid for.
In that case, two South Florida lawyers suing the cemetery chain will
as a judge to combine the lawsuits of more than 1,000 clients in a
class action.
AMERICAN MEDICAL: Court Renders Unfavorable Judgment in Insurance Suit
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A Florida state court rendered a judgment against the American Medical
Security Group, Inc., in a class action alleging the Company did not
follow Florida law when it discontinued writing certain health
insurance policies and offered new policies in 1998.
The suit claims that the Company:
(1) wrongfully terminated policies;
(2) improperly notified insured persons of conversion rights; and
(3) charged improper premiums for the new policies.
Plaintiffs also alleged that the Company's renewal rating methodology
violates Florida law.
A bench trial on the liability issues of the case was held in March
2002. On April 24, 2002, a judgment was rendered against the Company.
The damages portion of the lawsuit is expected to be heard before a
jury later this year.
Management believes the Company acted in compliance with applicable
Florida law with regard to the discontinuance and replacement of
insurance policies and with regard to its renewal rating practices.
AVENTIS PASTEUR: Canadians Sue Over Children's Alleged Vaccine Damages
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A lawsuit has been launched on behalf of families from across Canada,
who contend their children were damaged by the vaccines that were
supposed to protect them, The Associated Press has reported. The
lawsuit seeks certification from the court as a class action.
David Klein, a Vancouver class-action lawyer, filed suit in Ontario
Supreme Court against pharmaceutical giant Aventis Pasteur on behalf of
100 families from Ontario, Manitoba, Alberta and Saskatchewan. The
families claim their children went from being healthy, active toddlers
to having severe neurological disorders such as autism. Mr. Klein has
not yet received a statement of defense from the drug company.
Keean West is the nine-year-old autistic boy named in the lawsuit to
represent the other claimants. The lawsuit alleges that he was a
happy, healthy two-year-old until he received at least three shots of
the Diptheria Pertussis Tetanus vaccine.
The lawsuit, which claims $1 billion in compensation and a further $250
million in punitive damages, blames thimerosal, an ethyl-mercury
derivative used to preserve the vaccines. The suit says mercury is
particularly toxic to infants and that the parents were never told it
was used in the vaccines.
CALIFORNIA: Energy Users Sue Power Producers For Manipulating Market
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Revelations about fallen energy giant Enron Corporation's inner
workings have sparked a new round of lawsuits in California against the
major US power producers accused of "gaming" California's energy
market, the San Jose Mercury News reports.
Three recent complaints seeking class action status have been filed
against the power companies, including Mirant, Duke, Dynegy and
Calpine, that sold energy into the California market during the energy
crisis.
El Super Burrito, a Millbrae restaurant, filed a lawsuit in San Mateo
County Superior Court last week on behalf of itself and other
ratepayers. It joins a similar suit filed in San Francisco Superior
Court by San Rafael-based Century Theatres on behalf of all California
electricity users. A third suit was filed in San Mateo County Superior
Court by Pastorino & Son Nursery in Half Moon Bay.
All three complaints contend that the energy firms unfairly manipulated
electricity prices.
Bruce Simon, a Burlingame attorney representing Pastorino & Son
Nursery, said he is working to coordinate these new post-Enron
complaints in San Francisco and keep them separate from a group of
earlier complaints that have been consolidated before a judge in San
Diego. Coming after many revelations about abuses and irregularities
at Enron, these latest three cases of manipulation are based on known
practices, Mr. Simon said.
The group of earlier lawsuits awaits trial in San Diego. The group
includes a complaint filed last year on behalf of taxpayers by the city
of San Francisco, and one filed last year by Lt. Gov. Cruz Bustamante.
San Diego consumer attorney Mike Aguirre, who is part of a team
representing the city of San Francisco and Lt. Gov. Bustamante, said
his team is in the discovery period and is combing through company
records. The trial is not likely to start until next summer, he said.
Mr. Aguirre said the investigation indicates that many of the power
producers engaged in gaming tactics similar to those in the "smoking
gun" Enron memos. The memos outlined trading strategies with code
names like "Death Star" and "Get Shorty" that involved tricks such as
creating phantom congestion on transmission lines or sending power out
of California, then selling it back into the state to avoid federal
price caps.
CATHOLIC CHURCH: Prominent Lawyer to File Sex Abuse Suit V. Dioceses
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Robert Treadway, the lawyer who won a record $2.4 million settlement
last week from the Urban County Government in the Ron Berry sex abuse
case, says he preparing a similar case against the Roman Catholic
Church, The Lexington Herald Leader has reported.
Mr. Treadway said that he plans to file a class action against the
Catholic dioceses of Lexington and Covington. The lawsuit will accuse
the dioceses of "lack of supervision of priests" who allegedly
committed sex abuse, he said. Two church spokesmen, Tom Shaughnessy of
Lexington and Tim Fitzgerald of Covington, said their dioceses had no
comment.
Mr. Treadway said that he has six clients who have told him to proceed
with the case. He said he is talking with other alleged victims and
their families, but declined to identify any current or potential
clients.
Speaking of any similarities with the proposed class action and the
Berry case, Mr. Treadway said the new lawsuit will be like the Berry
case - in which 17 men said they were sexually abused as boys by Ron
Berry, the former head of Micro-City Government, a county youth program
in two respects. It will be a class action "on behalf of victims known
and unknown" and it will be a "John Doe" case because the plaintiffs
will be identified by numbers, and their names will be sealed in a
court record.
Mr. Treadway also said that the lawsuit will not contain details of
alleged incidents or names of accused priests. However, the details
and the priests' names will be given to the dioceses in a confidential
document, he said.
Mr. Treadway also said he is pursuing the case because clients have
asked him to do so. He emphasized the importance of placing
responsibility with the superiors of the Catholic Church. "I'm a
devout Episcopalian, but I respect the Roman Catholic Church. But the
Roman Catholic Church did not start dealing with this situation until
they had to start paying money in other cities."
CIMARRON MANUFACTURED: MN Park Residents Sue Over New Utility Fees
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Eleven residents of Cimarron Manufactured Home Park filed a class
action against the park's owners, alleging their new water bills are a
violation of their lease agreements, which include utilities, the St.
Paul Pioneer Press reports. If their bid to be certified for class
action status is approved, more than 400 residents of this park in Lake
Elmo could be involved.
The residents claim that their water bills, which have cost as much as
$87.18 in one month, constitute a substantial modification of their
leases. Plaintiffs' attorneys say that laws intended to level the
playing field between tenants and park owners prevent the owners from
substantially modifying leases.
An attorney for the defendant owner said that laws allow amending
leases for utilities, and that Chateau Communities Inc. met or exceeded
what was required of the Company when it switched Cimarron to meters.
The defendant's attorney noted that the average bill is approximately
$30 per month.
This civil suit is at least the second claim filed recently in
Minnesota, where experts say park owners increasingly are seeking to
bill residents separately for utilities. The suit may reflect a
learning curve among residents, some of whom are becoming increasingly
organized as they push for changes.
An earlier case is a park in East Bethel in Anoka County, which
resulted in an injunction against Bethel Properties Inc., preventing
the Company from charging residents for water and sewer usage under
existing leases. The facts (of the East Bethel case) are markedly
different from Cimarron, said John Bonner, attorney for Chateau
Communities Inc., owner of Cimarron.
Metering is the fairest way to treat all residents, Mr. Bonner said.
Some residents use up to 45,000 gallons a month, and that was before
gardening season kicked in, said a Chateau agent.
"People have lived in these parks so long and are starting to get fed
up with their treatment," said Maren Olson, a community organizer with
the All Parks Alliance for Change, a nonprofit tenants union for
manufactured home park residents in Minnesota. Park owners are paying
attention, Ms. Olson said. "These lawsuits will be an important
deciding factor for a lot of park owners as to whether they will
install water meters."
COMCAST CORPORATION: Faces Suit Over Recording Customer Web Browsing
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Comcast Corporation, the nation's third largest cable company, is being
sued in Michigan federal court, over charges that it violated a federal
privacy law when it recorded the Web browsing activities of each of its
one million high-speed Internet subscribers, Associated Press Newswires
reports.
Lawyer Steven Goren of Bingham Farms, Michigan, filed a class action
against the Company and its cable subsidiary, on behalf of Jeffrey
Klimas of Royal Oak, Michigan. Mr. Goren, who predicted "months or
Years" of litigation, is seeking attorney's fees plus damages of at
least $100 per day for every Company subscriber during the period from
December to February, when the Company pledged to stop the practice.
The Company said that it respects the privacy of its Internet
subscribers and "has not in any way compromised their privacy or linked
Internet usage data to personally identifying information about any
specific subscriber." The Company said the lawsuit was "without merit"
and intends to defend itself vigorously.
The Associated Press reported in early February that the Company had
started recording each customer's visit to Web sites as part of a
technology overhaul to save money and speed up its network. The
Company, a day later, pledged to stop immediately.
Mr. Goren argues that the Company violated the 1984 Cable Act, which
prohibits companies from collecting personal information from customers
without obtaining "prior written or electronic consent." The act was
originally intended to protect the privacy of cable TV customers.
Rep. Edward Markey, a ranking Democrat on the House Commerce
subcommittee on telecommunications and the Internet, raised similar
questions about possible violations of the 1984 law, writing in his
letter that he was concerned about "the nature and extent of any
transgressions of the law that may have resulted in consumer privacy
being compromised." Rep. Markey later commended the Company for
reversing the practice.
The Company has said that customers must agree to its subscriber and
privacy policies, which give the Company permission to review usage
information "in aggregate form" to improve its network speeds.
The 1984 law allows cable operators to collect private information if
it can show it needs the information to operate its service, but
outside experts, including the vendor whose powerful software Comcast
was using, said the Company was recording more information about the
online activities of customers than necessary for the technology
enhancements.
ECKERD PHARMACY: Settles For $9M Partially Filled Prescriptions Suit
--------------------------------------------------------------------
The Eckerd Pharmacy Chain agreed to settle lawsuits regarding
partially-filled prescriptions for $9 million, which will be shared by
the federal government and the 18 states where it operates, according
to a recent report by The Miami Herald. Tami Alderman, a spokeswoman
for the Clearwater-based chain, said it was not clear how much of the
money will go to Florida.
The suits concerned the Company's handling of prescriptions for
medicines where its stores had low inventories. The Company would
partially fill the prescriptions and ask the customers to return later
for the rest. It would bill the insurer for the full amount.
However, many customers never did return for the rest, and the paid-for
pills would ultimately be sold to someone else.
The practice resulted in a criminal lawsuit by the federal government
in 1995, which was settled with a $1.7 million fine. The present
settlement of $9 million represents the settlement of the civil
litigation related to the case.
The Company says it now gives customers a three-day dosage of medicines
that are low in inventory and bills customers when the prescription has
been delivered in full. The Company still faces private litigation
over its prescription practices, however. Earlier this year, a lawsuit
filed in Broward Circuit Court alleged the drugstore chain charged
Shirley Minsky for a 3-milliliter supply of medical eye drops but
dispensed only 2.5 milliliters.
The suit, which seeks class action status, alleges the example
represents a policy of "rounding up," which it claims has bilked the
Company's customers of more than $100 million.
FLORIDA: Judge Weighs Constitutionality of State Vote Ban For Ex-Felons
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A federal judge will decide whether Florida's policy of denying the
right to vote to all ex-felons is constitutional, or whether he should
hold a trial to determine whether the voting ban intentionally
discriminates against blacks, the Sout Florida Sun-Sentinel reported
recently.
Lawyers for tens of thousands of ex-felons barred from voting in
Florida asked Federal Judge James Lawrence King for a trial so they can
try to prove the ban was designed a century ago to dilute the black
vote. Lawyers for the state countered, however, that the law barring
felons from voting is, and always has been, based solely on their
"contempt for the law" and should be declared constitutional on its
face. The Judge, wondering aloud whether his decision might affect the
upcoming election, said he would try to rule as "promptly as I can."
The three-hour hearing was a critical one for civil rights advocates
who filed the class action against Gov. Jeb Bush and the Florida
Cabinet two months before the 2000 presidential election, placing a
glaring spotlight on problems with Florida's electoral system.
Under Florida law, all former felons are barred from voting unless they
apply for, and receive, restoration of their voting rights from the
Governor and the Cabinet. Many ex-offenders, however, are not even
eligible to apply. They include people convicted of certain crimes, or
those who owe court-ordered restitution.
Nancy Northup of the Brennan Center for Justice in New York argued that
such monetary restrictions on regaining civil rights amount to a poll
tax. She also contended that Florida originally adopted the ban during
the Civil War era to discriminate against newly freed slaves, and that
a complex set of social and historical factors continues that
discrimination today.
She noted that blacks make up only 14 percent of Florida's population,
but 48 percent of those convicted. The result, she said, is that
blacks make up a disproportionate number of the estimated 600,000
Floridians barred from voting.
David Thompson, representing the executive clemency board, countered
that Florida's sentencing guidelines, which calculate sentences based
on the seriousness of the crime and prior record, assures that the
justice system is "race neutral."
However, even in states where there has been "compelling evidence of
racial bias," Mr. Thompson said, the courts have ruled that the
criminal justice system, not the disenfranchisement provision, is
flawed. That is because ex-felons are denied the right to vote, not
because of their race, but because of their criminal conduct. "Those
who violate the laws forfeit the right to engage in making laws," he
said.
FLORIDA: Judge Labels State Canker Eradication Law "Unconstitutional"
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Broward County Circuit Court judge J. Leonard Fleet, struck down
Florida's canker-eradication law as unconstitutional on Friday,
providing another last-minute rescue to South Florida's remaining
citrus trees, the South Florida Sun-Sentinel reported recently.
The suit brought by citrus tree owners within Miami-Dade County,
Broward County and Boca Raton, sought a ruling on the constitutionality
of the law which authorizes the cutting of healthy trees within a
certain radius of an infected tree, as well as other relief.
Using blistering language that invoked the revolt by American colonists
against the British, Judge Fleet said the canker-eradication law
"returned this state to a period in time when the rights of an
individual were at the mercy and whim of royalty." He said the Florida
law, which would permit the state to cut down all healthy trees within
1,900 feet of a tree infected by the canker disease, violates the
Florida Constitution and the Fourth Amendment to the US Constitution.
The measure, signed into effect in March, by Gov. Jeb Bush, "serves as
nothing more than the payment of lip service to the fundamental
property rights" of citrus tree owners, the judge said.
Judge Fleet took an hour to read his criticism of the Department of
Agriculture and the State Legislature, which he said passed the bill
while ignoring profound constitutional and scientific questions. Judge
Fleet's ruling came in response to a request by homeowners for a
preliminary injunction against further cutting, as the full challenge
to the eradication program moves through the courts. A preliminary
hearing scheduled to last only a few hours ballooned into a three-week
mini-trial covering most of the ground expected to be the subject of
the trial.
In addition to declaring the law unconstitutional, Judge Fleet rejected
the scientific basis for cutting all healthy trees within 1,900 feet of
an infected tree, and said the state must compensate tree owners for
any non-infected trees they lose to the eradication program.
Judge Fleet also sharply criticized the law's provision that would
allow the Department of Agriculture to obtain vague, countywide
warrants to search properties for canker infection. He ordered the
department to obtain specific warrants "so as to leave no discretion"
to the agents looking for signs of canker. He also ordered that any
warrants be carried out by law enforcement officers, not the department
or its contractors.
Responses to the Judge's ruling were varied. Officials at the
Department of Agriculture predicted that the disease would continue to
spread unabated. The state, which was stunned, plans to appeal
immediately, and all sides expect the long legal fight to continue.
In Tallahassee, the governor denounced the ruling, saying it would
allow the canker disease to infect more trees. The governor said that
every time a judge delays the cutting of trees, the canker spreads, and
then even more trees have to be cut down. "It increases the costs and
creates a problem that can imperil the (citrus fruit) industry."
Citrus canker is a bacterial disease that causes fruit to become
discolored and drop early. It does not affect humans or animals.
Lawyers for the state argued that the disease is spread by wind and
rain, and that unless infected and exposed trees are cut down, citrus
canker will ultimately threaten Florida's citrus industry.
Barry Silver, an attorney representing homeowners in Palm Beach County,
said he has scheduled a June 3 hearing before Judge Fleet on a motion
to extend his ruling through the rest of Palm Beach County.
HARLEY DAVIDSON: Consumers File Second Suit Over Cam Bearing Warranty
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Harley Davidson, Inc. faces a second consumer class action filed in
Milwaukee County, Wisconsin State Court, relating to the warranty for
an alleged defective rear cam bearing for 1999 and early-2000 model
year Harley Davidson motorcycles.
The first suit was commenced in June 2001, after the Company, by its
own initiative, notified each motorcycle owner equipped with these Twin
Cam 88 and Twin Cam 88B engines that it was extending the warranty for
a rear cam bearing to 5 years or 50,000 miles.
The suit alleged that this cam bearing is defective and asserts various
legal theories. The complaint sought unspecified compensatory and
punitive damages for affected owners, an order compelling the Company
to repair the engines and other relief.
The Company filed a motion to dismiss the amended complaint and on
February 27, 2002, the court granted the motion. The amended complaint
was dismissed in its entirety. An appeal has been filed and is
currently pending in the Wisconsin Court of Appeals.
On April 12, 2002, the second suit was filed, relating to this cam
bearing issue and asserting different legal theories than in the first
action.
The Company intends to vigorously oppose nationwide class certification
and defend the action, including filing a motion to dismiss. The
Company believes that the warranty extension it announced in January
2001 adequately addresses the condition for affected owners.
JAPAN: Bataan Death March Survivors Seek Reparations For Atrocities
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With the 60th anniversary of the Bataan Death March being observed this
spring, new attention is being paid to one of the most horrific
episodes of World War II, during which many atrocities were inflicted
upon American prisoners of war by Japanese soldiers, The Lexington
Herald Leader reports. There is a growing movement among Bataan
veterans to force the Japanese to apologize and compensate them, using
the vehicle of lawsuits being pursued in both US and Japanese courts.
A forerunner of lawsuits to come is the one being brought by Mel Rosen,
lead plaintiff in a $1 trillion class action against Japan filed in
September of last year, in federal court in Chicago. "Everything the
Japanese did to us was deliberate, inhuman, brutal, calculated and
racist," said the 83-year-old retired army colonel, now living in Falls
Church, Virginia. Mr. Rosen added that the lawsuit he has filed is
being pursued for symbolic, not monetary, reasons.
Legislation that would allow survivors to sue Japanese corporations
that allegedly enslaved American POWs during World War II was
introduced last year in the House and Senate. A House resolution with
more than 225 co-sponsors will be pushed forward in coming weeks.
Marching for days in terrible heat, beaten and deprived of food and
water, an estimated 7,000 to 10,000 of the 78,000 Americans and
Filipinos who surrendered to the Japanese died during the march. Over
the next three years, those who survived were kept in horribly
debilitating conditions, exposed to diseases, and forced into slave
labor. Of the 12,000 Americans taken prisoner at Bataan, only 4,000
were alive by the end of the war, according to authorities on the
subject.
JUNK FOOD: Suit Over Altered Labeling Might Encourage Similar Suits
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A $50 million class action, launched against a food manufacturer called
Pirate's Booty has created concerns that obese Americans may now seek
damages for being overweight. The civil action seeks damages for those
who have put on weight or had to spend extra time at the gym because of
the mislabeling of the fat content of a supposedly healthful snack.
New York Newsday columnist, Meredith Berkman filed the suit. She had
been feeding her two-year-old daughter a supposedly low-fat puffed rice
snack called Pirate's Booty. One day she noticed that the fat content
listed on the label had suddenly more than doubled, meaning what she
had been led to believe was a healthful snack was not much different
from junk food.
Ms. Berkman launched the suit seeking $50 million for "emotional
distress and nutritional damage," on behalf of those who may have been
misled. The lawsuit also claims damages for all those who have put on
weight or had to spend more time at the gym.
"To me, this is about truth in labeling, which can be a life-and-death
issue," said Ms. Berkman. "I have always said that if we win any
damages, they will go to charity."
The food's manufacturer, Robert's American Gourmet Foods, has recalled
the Pirate's Booty labeled with a low fat content, but has yet to
respond to the suit. Ms. Berkman says she sees the action as being
strictly about mislabeling, but in the food and restaurant business her
ironic claims of distress because of weight gain are ringing alarm
bells.
"These actions are the precursors of things to come," said Mike Burita,
of the Center for Consumer Freedom, which represents the food and
restaurant industry. The CCF is warning members on its website, "The
lawsuits are coming, and Big Food is slated to become the next Big
Tobacco."
Mr. Burita said, "Our group has been tracking activist groups that are
talking about `fat taxes' and restricting the marketing of certain
foods."
However, not everyone is convinced that such class actions will
succeed. Morgan Downey of the American Obesity Association, said
yesterday that while he had great admiration for the ingenuity of trial
lawyers, he thought that they had "a high bar to get across."
LIFEPOINT HOSPITALS: Mounting Vigorous Defense V. Accessibility Suit
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Lifepoint Hospitals, Inc. intends to vigorously defend against the
class action filed against each of its hospitals in the United States
District Court for the Eastern District of Tennessee, alleging
violations of the Americans with Disabilities Act (ADA).
Disability rights group Access Now, Inc. filed the suit alleging non-
compliance with the accessibility guidelines under the ADA. The
lawsuit, filed in the United States District Court for the Eastern
District of Tennessee, seeks injunctive relief requiring facility
modification, where necessary, to meet the Americans with Disabilities
Act guidelines, along with attorneys' fees and costs.
In January 2002, the Court certified the class action and issued a
scheduling order that requires the parties to complete discovery and
inspection for approximately six facilities per year.
PENNSYLVANIA: Federal Oversight Not Enough To Remedy Racial Bias
----------------------------------------------------------------
Pittsburgh officials and police maintain that they have fulfilled the
requirements of the five-year-old agreement with federal officials,
stemming from a 1996 class action accusing the city, its highest
officials and 75 officers of condoning a pervasive pattern of abuse.
The agreement, which avoided a possible federal takeover, required the
department to revamp oversight, training and supervision. Among its
reforms were a computerized system to track officers' behavior,
requirements that officers document all traffic stops and annual
training in cultural diversity, integrity and ethics.
However, the criminal justice think tank, the Vera Institute of
Justice, in its preliminary report, has said that federal supervision
has improved the Pittsburgh police department, but has done little to
remedy complaints by rank-and-file officers or mistrust of the
department among blacks.
Vera, a New York-based nonprofit, was hired by the Department of
Justice to report the success of reforms begun in 1997. Vera said
oversight had improved the department but may be hampered by lingering
pessimism among officers and blacks.
"The fact that negative perceptions of the police . persist in a
significant segment of the community makes it that much harder for the
(police) bureau to fulfill its mission," the report says. Among the
report's findings were:
(1) disciplinary reports against officers have dropped since 1997;
(2) citizen complaints against police have remained steady; and
(3) early warning system to spot problem officers seems to be
working.
However, the report also highlighted a shortcoming mention by civil
rights activists and a court-appointed auditor, citing the backlog at
the city's Office of Municipal Investigations, which was created as
part of the agreement to handle citizen complaints against the police.
The backlog was 194 cases two weeks ago. Civil rights groups oppose
the city's attempts to end federal oversight before the backlog is
reduced.
"We came to Pittsburgh to try to abstract lessons for police
administrators; we are not trying to tell anybody what to do," said
Robert C. Harris, the report's lead researcher, to the Pittsburgh Post
Gazette.
"The message seemed to be that there is still work to be done and that
the momentum created by the decree should not fade," the report said.
RANGE RESOURCES: Suit Over Gas Royalties Remanded To NY State Court
-------------------------------------------------------------------
The class action filed against Range Resources Corporation has been
remanded to New York State Court. The suit was commenced in February
2000, and also named the Company's joint venture partner Great Lakes
Energy Partners, LLC as defendant.
The suit alleges that:
(1) gas was sold to affiliates and gas marketers at low prices;
(2) inappropriate post production expenses reduced proceeds to the
royalty owners; and
(3) improper accounting was performed for the royalty owners'
share of gas.
The action sought proper accounting, the difference in prices paid and
the highest obtainable prices, punitive damages and attorneys' fees.
While the outcome of the suit is uncertain, the Company believes it
will be resolved without material adverse effect on its financial
position or results of operations.
Securities Fraud
ADELPHIA COMMUNICATIONS: Spector Roseman Amends Securities Suit in PA
---------------------------------------------------------------------
Spector, Roseman & Kodroff, PC amended the securities class action it
filed on behalf of its clients and investors of the securities of
Adelphia Communications Corporation (Nasdaq:ADLAE) in the period from
April 2, 2001 through April 1, 2002, inclusive. The action is pending
in the United States District Court, Eastern District of Pennsylvania,
against the Company, CFO Timothy Rigas and President, CEO and Chairman,
John J. Rigas.
The suit will be amended to include allegations of recent events
disclosed to the public, which include that:
(1) the debt incurred by the Rigas family is $3.1 billion, not
$2.3 billion as previously reported by the company, and that
the company is liable for $2.5 billion; and
(2) an investigation, as reported in The Wall Street Journal, has
uncovered a vast network of business relationships between the
Company and the Rigas family which is exposing "one of the
largest cases of inside dealings ever seen at a public
company," and which has revealed a complex cash-management
system between the Company and the Rigas family which funded
personal loans and various transactions by the family.
For example, the Company guaranteed loans to help fund a professional
hockey team, build a PGA-quality golf course, and buy timber rights on
a parcel of land in Coudersport, PA without disclosing the funding to
the Company's Board. In its Buffalo cable systems, the Company ran
free advertisements for Rigas-owned businesses and an independent film
venture produced by a member of the Rigas family.
Also according to The Wall Street Journal, investigators are looking
into payments made into a New York-based venture run by Peter Venetis,
son-in-law of President, CEO and Chairman John J. Rigas. Company stock
resumed trading on the Nasdaq market May 23, 2002, as its shares fell
54% in heavy trading to $2.62 from $5.69.
For more details, contact Robert M. Roseman by Phone: 888-844-5862 by
E-mail: classaction@srk-law.com or visit the firm's Website:
http://www.srk-law.com
ALLIED CAPITAL: Charles Piven Commences Securities Suit in S.D. NY
------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Allied Capital Corp.
(NYSE:ALD) securities between November 14, 2001 and May 16, 2002,
inclusive, in the United States District Court for the Southern
District of New York. The suit names as defendants the Company,
William L. Walton, Penni F. Roll, and Company auditors, Arthur
Andersen, LLP.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements and/or
omissions of material facts in its public filings with the Securities
and Exchange Commission which statements and/or omissions of material
facts had the effect of artificially inflating the market price of the
Company's securities throughout the class period.
For more details, contact Charles J. Piven by Mail: 401 East Pratt
Street, Suite 2525, Baltimore, Maryland 21202 by Phone: 410-986-0036 or
by E-mail: hoffman@pivenlaw.com
AVON PRODUCTS: NY Court Yet To Decide in Ten Year Old Securities Suit
---------------------------------------------------------------------
The United States District Court for the Southern District of New York
reserved judgment in a ten-year-old class action against Avon Products,
Inc. after a trial concluded late last year.
The suit was commenced in 1991 on behalf of certain classes of holders
of the Company's Preferred Equity-Redemption Cumulative Stock (PERCS).
Plaintiffs allege various contract and securities law claims
related to the PERCS, which were fully redeemed in 1991, and seek
aggregate damages of approximately $145.0, plus interest.
The Company believes it presented meritorious defenses to the claims
asserted. However, it is not possible to predict the outcome of
litigation and it is reasonably possible that the trial, and any
possible appeal, could be decided unfavorably.
BLUE MARTINI: Faces Consolidated Suit, Derivative Suit in NY Courts
-------------------------------------------------------------------
Blue Martini Software, Inc. faces a consolidated class action pending
in the United States District Court for the Southern District of New
York, charging the Company, certain of its officers and directors, and
the underwriters of its initial public offering (IPO) with violations
of federal securities laws.
The Company's IPO registration statement and prospectus allegedly
contained untrue statements of material fact or omitted material facts
regarding the compensation to be received by, and the stock allocation
practices of, the IPO underwriters.
Similar complaints were filed in the same Court against hundreds of
other public companies that conducted IPOs of their common stock since
the mid-1990s. All of these IPO-related lawsuits were consolidated for
pretrial purposes before Federal Judge Shira Scheindlin of the Southern
District of New York. Judge Scheindlin held an initial case management
conference in September 2001, at which time she ordered, among other
things, that the time for all defendants in the IPO lawsuits to respond
to any complaint be postponed until further order of the court. Thus,
the Company has not been required to answer any of the complaints, and
no discovery has been served on it.
In accordance with Judge Scheindlin's orders at further status
conferences in March and April 2002, the appointed lead plaintiffs'
counsel filed amended, consolidated complaints in the IPO lawsuits on
April 19, 2002. However, Judge Scheindlin does not expect any of the
defendants to file motions to dismiss the amended, consolidated
complaints until at least summer of 2002.
In May 2002, a shareholder derivative complaint was filed in the
Superior Court of the State of California, County of San Mateo,
derivatively on behalf of the Company. The suit names as defendants
the Company (as a nominal defendant), certain of its officers and
directors, and Goldman Sachs, the managing underwriter of its initial
public offering (IPO).
The suit alleges that the defendants breached fiduciary and other
duties, were negligent, and were unjustly enriched because the IPO
price of the Company's stock allegedly was set too low.
The Company believes that the suits are without merit and intends to
defend against them vigorously.
CARESCIENCE INC.: Faces Suit For Securities Act Violations in E.D. PA
---------------------------------------------------------------------
Carescience, Inc. faces a consolidated securities class action pending
in the United States District Court for the Eastern District of
Pennsylvania on behalf of purchasers of the Company's common stock
between June 29,2000 and November 1,2000.
The suit is the result of several complaints filed with the court
beginning in October 2001, alleging violations of the federal
securities laws, including Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933 by issuing a materially false and misleading
prospectus and registration statement with respect to the initial
public offering of the Company's common stock.
Specifically, the consolidated suit alleges, among other things, that
the Company's prospectus and registration statement misrepresented and
omitted to disclose material facts concerning two of its prospective
products and its planned disposition of the offering proceeds.
Although the Company cannot predict the ultimate outcome of the case or
estimate the range of any potential loss that may be incurred in the
litigation, the Company believes the lawsuits are frivolous and without
merit. The Company strenuously denies all allegations of wrongdoing
asserted by plaintiffs, and intends to vigorously defend against the
suit.
CLARENT CORPORATION: Faces Suits For Securities Violations in S.D. NY
---------------------------------------------------------------------
Clarent Corporation faces several securities class actions pending in
the United States District Court for the Southern District of New York,
on behalf of all purchasers of the Company's common stock between July
1, 1999 and December 6, 2000.
The suits uniformly allege that the Company, certain of its officers
and directors and the underwriters of its initial public offering (IPO)
violated the federal securities laws because the Company's IPO
registration statement and prospectus purportedly contained untrue
statements of material fact or omitted material facts regarding the
compensation to be received by, and the stock allocation practices of,
the IPO underwriters. The plaintiffs further allege that the
prospectus relating to the Company's secondary offering was false and
misleading for the same reasons.
The Company said the suits against it were similar to hundreds of
complaints were filed in the same court against hundreds of other
public companies that conducted IPOs of their common stock since the
late 1990s.
In August 2001, the suits were consolidated with other similar suits
against other companies for pretrial purposes before Federal Judge
Shira Scheindlin of the Southern District of New York. Judge
Scheindlin held an initial case management conference on September 7,
2001, at which time she ordered, among other things, that the time for
all defendants to respond to any complaint be postponed until further
order of the court. Thus, the Company has not been required to answer
any of the complaints, and no discovery has been served on the Company.
In accordance with Judge Scheindlin's orders at further status
conferences in March and April 2002, the lead plaintiffs' counsel filed
amended, consolidated complaints in the IPO Lawsuits on April 19, 2002.
However, Judge Scheindlin does not expect any of the defendants to file
motions to dismiss the amended, consolidated complaints until at least
summer of 2002.
CLARENT CORPORATION: CA Court Orders Securities Suits Consolidated
------------------------------------------------------------------
The United States District Court for the Northern District of
California ordered consolidated a series of securities class actions
commenced in September 2001 against the Company and certain of its
current and former executive officers and directors.
The plaintiffs in the suits allege, among other things, violations of
the Securities Exchange Act of 1934, as amended, due to the filing
with the SEC of allegedly false financial statements concerning
the Company's results of operations for the second, third and fourth
quarters of 2000, and the first and second quarters of 2001.
A consolidated complaint has not yet been filed. No discovery has
taken place and no trial date has been set. The Company intends to
vigorously defend against the suits.
CLARENT CORPORATION: Faces Shareholder Derivative Suits in DE, CA
-----------------------------------------------------------------
Clarent Corporation faces two shareholder derivative suits filed in
Delaware and California Courts, on behalf of the Company. The suit
names certain of the Company's current and former officers and
directors as defendants and alleges several claims:
(1) breach of fiduciary duties,
(2) corporate waste,
(3) abuse of control,
(4) unjust enrichment,
(5) usurpation of corporate opportunities and
(6) mismanagement
One of the suits is pending in the Delaware Chancery Court and one in
California Superior Court. The suits arose from, among other things:
(i) the Company's reporting of allegedly false financial
statements concerning the Company's results of operations for
the second, third and fourth quarters of 2000 and the first
and second quarters of 2001;
(ii) the Company's alleged failure to disclose information
regarding its operations; and
(iii) the defendants' alleged failure to implement and maintain
adequate internal financial controls.
The plaintiff in the California action has commenced discovery against
the defendants. However, the Company is seeking a protective order
relating to certain of the discovery requests. Discovery has not
commenced in the Delaware action.
On March 23, 2002, the Company's Board of Directors formed a special
litigation committee of the Board of Directors to investigate the
plaintiffs' allegations. No trial date has been set in either action.
CMS ENERGY: Berger & Montague Commences Securities Fraud Suit in MI
-------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against CMS
Energy Corporation (NYSE:CMS) and certain of its principal officers and
directors in the United States District Court for the Eastern District
of Michigan on behalf of all persons or entities who purchased the
publicly traded securities of the Company between August 3, 2000 and
May 10, 2002.
The suit charges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between August 3, 2000 and May 10, 2002.
According to the complaint, the Company had, admittedly, throughout the
class period, improperly recognized $4.4 billion in revenues by
engaging in transactions lacking any economic substance using what are
known as "round-trip" trading transactions. The improperly recognized
revenues were, according to the complaint, reported in the Company's
quarterly and annual press releases and in financial filings with the
Securities and Exchange Commission (SEC) throughout the class period.
On May 9, 2002, The Wall Street Journal reported that the Company had
engaged in round trip trades with Dynegy, Inc. On May 10, 2002, the
Company announced that the SEC was investigating the propriety of its
"round-trip" trading practices. On May 13, 2002, Reliant Resources,
Inc. disclosed that it had also engaged in round trip trades with the
Company.
In response to the announcements, the Company's common stock price
collapsed, falling from a high of $20.06 on May 10, 2002 to a low of
$15.72 on May 13, 2002, a drop of more than 21% on extremely heavy
trading volume.
For more details, contact Sherrie R. Savett, Barbara A. Podell, Robin
Switzenbaum 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
COMPUTER ASSOCIATES: Marc Henzel Commences Securities Fraud Suit in NY
----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Eastern District of New
York on behalf of purchasers of Computer Associates, Inc. (NYSE: CA)
securities between May 28, 1999, and February 25, 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.
Specifically, beginning prior to May, 1999, the Company falsely
indicated that it had penetrated the distributed systems market when,
in fact, it was giving away its distributed system software free, or at
nominal additional cost, to customers who were also extending mainframe
software licenses, and attributed large portions of the resulting
revenue to the non-mainframe products.
Also, beginning prior to May 1999, and ending in October 2000, when the
Company extended a license during its term, it recognized revenue for
the entire new license. Until June 2000, when the Company began using
new auditors, it did not "back out" the revenue from the unexpired
portion of the old license, double-counting this revenue.
After June 2000, the Company began backing out this figure in an
obscure line item, but never disclosed that this caused revenue to be
overstated by more than one hundred million dollars each quarter prior
June 2000.
Defendants in order to hide a severe drop in revenue as measured by
generally accepted accounting principles (GAAP), announced a "new
business model," which they represented involved offering more flexible
licensing terms to customers.
In fact, the "new business model" was a cover to institute new, non-
GAAP compliant accounting (which the Company called "pro forma, pro
rata"), and to obscure the fact that the switch from long-term licenses
to flexible subscriptions was not a pro-active move, but a symptom of
the obsolescence of the Company's main product line.
While the stated goal of the "new business model" was to provide
customers more flexible terms, the real purpose was to cover up the
fact that the Company could no longer get many of their mainframe
customers to purchase the long-term mainframe software licenses which
have been the Company's mainstay.
After the announcement of the "new business model" in October 2000, the
Company issued press releases heralding moderate growth, though the
GAAP figures showed a revenue decrease of nearly sixty percent.
The "pro forma, pro rata" method counted revenue from old license sales
in current and future periods, using old revenues to buttress the
current, deteriorating sales. Defendants have attempted to have their
cake and eat it, too: in a strong economy, CA recognized all the
revenue from its sales immediately, even double-counting some revenue,
showing impressive numbers. Now, in a sagging economy, they have
obscured the real loss of sales by changing to a method of accounting
so back-loaded that it does not conform to GAAP.
The "pro forma, pro rata" method also did not make the distinctions
between product and service revenue required by GAAP, obscuring the
distinction and further hiding the deterioration in sales.
CA has continued to report its GAAP figures, as it is required by the
Securities and Exchange Commission (SEC) to do. Incredibly, defendants
have falsely stated that the GAAP figures are not reflective of the
Company's financial position, and that the "pro forma, pro rata"
figures do accurately reflect the Company's financial position.
The Company's true condition, however, is shown by the conduct of
defendants during the class period. After announcing the "new business
model" but before reporting under it for the first time, and contrary
to the Company's representations that the rosy picture created by the
"pro forma, pro rata" figures was an accurate portrayal of the
Company's position, the defendants engineered a clandestine, firm-wide
layoff, hiding the terminations as individual performance-based
firings. They fired possibly as many as a thousand employees with no
severance package, and continue to deny that the firings were a layoff,
even though executives involved in the layoff have confirmed it to the
New York Times (as reported on March 20, 2001).
More recently, the Company was forced to withdraw a planned debt
offering after Moody's questioned the quality of the Company's credit.
As a result, CA admits, it was forced to draw down $600 million on one
credit line to pay another.
The desperate cost-cutting by secret layoff, use of its new
unrecognized accounting just when its revenue has dropped sharply, and
the use of credit lines to service existing debt, demonstrate that
defendants are keenly aware of the precarious financial condition of
the Company, and have deliberately mislead the investing public.
The misleading picture the Company has presented has not gone
unquestioned. On February 22, 2002, the Company confirmed that it was
aware that both the Securities Exchange Commission and the Federal
Bureau of Investigation were investigating the Company's accounting for
civil, and in the case of the FBI, criminal violations. News of the
criminal and civil probes, which began to surface on February 20,
caused investors to flee the stock, which fell from a February 19
closing price of $25.31 to a February 22 close of $15.99, a drop of
36.8%.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
CORNING INC.: NY Court Yet To Rule on Summary Judgment Motion
-------------------------------------------------------------
Corning, Inc.'s motion for summary judgment in the securities class
action against it is still pending in the United States District Court
for the Southern District of New York.
The suit was filed on behalf of purchasers of Company stock in the
period from June 14, 1989, to January 13, 1992, who allegedly purchased
at inflated prices due to the non-disclosure or concealment of material
information and were damaged when the Company's stock price declined in
January 1992 after the Food and Drug Administration (FDA) requested a
moratorium on Dow Corning's sale of silicone gel implants.
The Company's motion requests that all claims against it be dismissed.
Plaintiffs requested the opportunity to take depositions before
responding to the motion for summary judgment. The discovery process
is continuing and the court has set no schedule to address the still
pending summary judgment motion.
The Company intends to continue to defend this action vigorously.
Based upon the information developed to date and recognizing that the
outcome of litigation is uncertain, management believes that the
likelihood of a materially adverse verdict is remote.
CORNING INC.: Labels "Without Merit" Pending Securities Suits in NY
-------------------------------------------------------------------
Corning, Inc. intends to vigorously defend against several securities
class actions commenced since in December 2001 against it and three of
its officers and directors in the United States District Court for the
Western District of New York, alleging violations of federal securities
laws.
Four suits were filed in connection with the Company's November 2000
offering of $2.7 billion zero coupon convertible debentures, due
November 2015 and 30 million shares of common stock.
In addition, the Company and the same three officers and directors were
named and served in 10 lawsuits alleging selective disclosures and non-
disclosures that allegedly inflated the price of the Company's Common
Stock in the period from September 2000 through June 2001.
The plaintiffs in these actions seek to represent classes of purchasers
of Company stock in all or part of the period indicated.
Another lawsuit has been filed by a participant in the Company's
Investment Plan for Salaried Employees, purportedly as a class action
on behalf of participants in the Plan who purchased or held Company
stock in a Plan account.
The Company has not yet answered these lawsuits and there has been no
determination if they will proceed as a class action or who will be
lead counsel for plaintiffs. Management is prepared to defend these
lawsuits vigorously and, recognizing that the outcome of litigation is
uncertain, believes it has strong defenses to the claims alleged in the
complaints.
CUMULUS MEDIA: WI Court Preliminarily Approves $13M Suit Settlement
-------------------------------------------------------------------
The United States District Court for the Eastern District of Wisconsin
preliminarily approved the US$13 million settlement proposed by Cumulus
Media, Inc. to settle the securities class action filed against it on
behalf of purchasers of the Company's stock from October 26,1998 to
March 16,2000 inclusive, including purchasers of the Company's stock
issued in secondary offerings on July 22,1999 or November 18,1999.
The suit alleges, among other things, violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, and Sections 11 and 12(a) of the Securities Act of 1933.
Under the settlement, the plaintiffs agreed to dismiss each claim
against the Company and the other defendants in consideration of $13.0
million and the issuance of 240,000 shares of the Company's Class A
Common Stock.
A hearing to obtain final Court approval of the settlement is scheduled
for May 16, 2002. The cash portion of the settlement was deposited in
an escrow account in November 2001 pursuant to the terms of the
settlement. The 240,000 shares of Class A Common Stock will be issued
by the Company and, with the cash portion, will be distributed to the
class members after final court approval of the settlement, all of
which is expected to occur in the second quarter of 2002.
DUKE ENERGY: Charles Piven Commences Securities Fraud Suit in S.D. NY
---------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Duke Energy Corp.
(NYSE:DUK) securities between April 2, 2001 and May 17, 2002,
inclusive, in the United States District Court for the Southern
District of New York, against the Company, certain of its officers and
directors, and the Company's accounting firm, Deloitte & Touche, LLP.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements and/or
omissions of material facts in the Company's public filings with the
Securities and Exchange Commission which statements and/or omissions of
material facts had the effect of artificially inflating the market
price of the Company's securities throughout the class period.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
DYNEGY INC.: Berger & Montague Commences Securities Fraud Suit in TX
--------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against
Dynegy, Inc. (NYSE:DYN) and certain of its principal officers and
directors in the United States District Court for the Southern District
of Texas on behalf of all persons or entities who purchased publicly
traded Company securities between April 17, 2001 and April 24, 2002.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
complaint alleges that the Company and its top officers inflated the
price of the Company's stock in order to sell almost $500 million in
stock to the investing public.
The defendants knew that concealing the Company's true vehicle, Project
Alpha, for creating cash flow from operations and the true impact it
would have on the Company provided the only way that they could foster
the perception in the business community that the Company was not
"Enron Corp.," i.e., the only way the Company could post the revenue
and earnings per share growth claimed by defendants.
Prior to the class period, the individual defendants realized that many
of their complicated deals to generate reported net income did not
generate cash flow. The defendants knew that investors would
eventually discover this discrepancy and the Company's stock price
would collapse.
To prevent this, the Company classified what was essentially a loan
from CitiGroup Inc. as an operating activity rather than as a financing
activity as required by generally accepted accounting principles. The
defendants' wrongful course of business:
(1) artificially inflated the price of Dynegy's stock during the
class period;
(2) deceived the investing public, including plaintiff and other
class members, into acquiring Dynegy's securities at
artificially inflated prices;
(3) allowed the individual defendants to extract millions of
dollars in bonuses for creating the appearance of the
Company's phenomenal cash flow from operations growth; and
(4) allowed the Company to sell nearly half a billion dollars of
its own securities to the unsuspecting public.
For more details, contact Sherrie R. Savett, Stuart J. Guber 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
EDISON SCHOOLS: Spector Roseman Expands Securities Suit in S.D. NY
------------------------------------------------------------------
Spector, Roseman & Kodroff, PC expanded the securities class action
pending in the United States District Court for the Southern District
of New York on behalf of Edison Schools investors (NASDAQ:EDSN) to
include investors who purchased Edison securities in the period from
November 11, 1999 to May 14, 2002, inclusive. The new suit names as
defendants the Company:
(1) Chris Whittle,
(2) Christopher Cerf,
(3) Adam Field, and
(4) PricewaterhouseCoopers, the Company's auditors
The suit alleges that the defendants made material misrepresentations
and omissions of material facts concerning the company's financial
condition and business performance during the relevant time.
According to the complaint, the defendants knew or recklessly
disregarded that the Company was overstating revenues, among other
things. In February 2002, it was revealed that the Company was
improperly recognizing revenue.
On May 14, 2002, the Company announced that it had been the subject of
an SEC investigation concerning its improper accounting and revenue
recognition. In addition, the Company announced that it had entered
into a settlement with the SEC, pursuant to which the Company would
reclassify its revenues for numerous prior reporting periods, thereby
acknowledging that prior financial statements were false and
misleading.
For more details, contact Robert M. Roseman by Phone: 888-844-5862 by
E-mail: classaction@srk-law.com or visit the firm's Website:
http://www.srk-law.com
HERBALIFE INTERNATIONAL: Mounting Vigorous Defense V. Suit in Nevada
--------------------------------------------------------------------
Herbalife International, Inc. faces another securities class action
pending in the District Court of Clark County in the State of Nevada,
naming the Company, its board of directors, and one former director as
defendants.
Harbor Finance Partners, an alleged Company stockholder, filed the suit
in April 2002, alleging a claim of breach of fiduciary duty arising out
of the announced merger transaction between the Company and WH
Holdings, a subsidiary of Whitney & Co., LLC.
The Company has yet to respond to the suit. Plaintiff's counsel has
indicated that the plaintiff intends to seek expedited discovery and to
file a motion for some form of preliminary relief in connection with
the announced merger transaction.
The Company denies the allegations and intends to vigorously defend
these charges in litigation. However, an adverse result in this
litigation could have a material adverse effect on the Company's
financial condition and operating results.
JP MORGAN: Marc Henzel Commences Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Southern District of New
York on behalf of a class consisting of all persons who purchased
securities of J.P. Morgan Chase & Co., Inc. (NYSE: JPM) between
November 28, 2001 and January 28, 2002, inclusive.
The suit charges the Company with violations of federal securities
laws. Among other things, plaintiff claims that defendant's material
omissions and the dissemination of materially false and misleading
statements caused Company stock price to become artificially inflated,
inflicting enormous damages on investors.
More specifically, on the first day of the class period, the Company
recklessly issued a public statement, which did not fully disclose its
risk and loss exposure related to its transactions and dealings with
the Enron Corporation, the company notorious for its financial
collapse.
At the time, the Company listed its total exposure in this regard at
approximately $900 million. The Company later announced that, in fact,
its total Enron related exposure was actually about $2.6 billion, or
almost three times the earlier figure. Shortly thereafter, the Company
wrote down $1.13 billion in non-performing assets, specifically related
to losses generated by its dealings with Enron.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
MATRIXONE INC.: Plaintiffs File Consolidated Securities Suit in S.D. NY
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MatrixOne, Inc. faces an amended consolidated securities class action
filed in the United States District Court for the Southern District of
New York in April 2002, superseding five virtually identical complaints
that had been filed from July 24, 2001 to September 5, 2001.
The suit names as defendants the Company, two of its officers, and
certain underwriters involved in the Company's initial public offering
of common stock, and was brought on behalf of purchasers of the
Company's common stock during the period from February 29, 2000 to
December 6, 2000.
The suit asserts, among other things, that the Company's IPO prospectus
and registration statement violated federal securities laws because
they contained material misrepresentations and/or omissions regarding
the conduct of the Company's IPO underwriters in allocating shares to
the underwriters' customers. The suit further contends that the
Company and the two named officers engaged in fraudulent practices with
respect to this underwriters' conduct.
The Company states that the suit is very similar to hundreds of
lawsuits filed against over three hundred other publicly traded
companies in connection with the underwriting of their initial public
offerings. The Company believes that the allegations in the complaint
are without merit and intends to contest them vigorously.
PEREGRINE SYSTEMS: Spector Roseman Expands Securities Suit in S.D. CA
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Spector, Roseman & Kodroff, PC expanded the previous securities class
action it filed on behalf of Peregrine Systems, Inc. investors
(Nasdaq:PRGN) to include investors who purchased Company securities in
the period from July 19, 2000 to May 3, 2002, inclusive. The action is
pending in the United States District Court, Southern District of
California against the Company and certain of its officers and
directors.
The complaint alleges that the defendants violated section 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder by making materially false and misleading
statements regarding the Company's revenues and income.
Before the market opened on Monday, May 6, 2002, the Company shocked
the market by announcing that its board of directors had authorized an
internal investigation into accounting inaccuracies, totaling as much
as $100 million. The Company disclosed that these transactions and
other accounting matters to be investigated may impact financial
results for periods in fiscal 2002 and prior. Simultaneously the board
of directors announced that the Company's Chairman of the Board and
Chief Executive Officer and its Chief Financial Officer had both
resigned all of their positions with the Company.
For more details, contact Robert M. Roseman by Phone: 888-844-5862 by
E-mail: classaction@srk-law.com or visit the firm's Website:
http://www.srk-law.com
RELIANT RESOURCES: Berger & Montague Lodges Securities Suit in S.D. TX
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Berger & Montague, PC initiated a securities class action against
Reliant Resources, Inc. (NYSE:RRI) and certain of its principal
officers and directors in the United States District Court for the
Southern District of Texas on behalf of all persons or entities who
purchased the Company's stock on or traceable to the Company's initial
public offering of 52 million common shares at $30 per share on May 1,
2001 (IPO).
The suit alleges claims arising under Sections 11 and 15 of the
Securities Act of 1933, 15 U.S.C. Section 77(k) and, on behalf of a
class of the purchasers of Company common stock on or traceable to the
initial public offering of 52 million common shares at $30 per share on
May 1, 2001 (IPO), pursuant to a Registration Statement and Prospectus
dated May 1, 2001.
Part of the Company's business involved wholesale energy trading. On
May 13, 2002, the Company disclosed that it had been conducting "round-
trip" trades in which it bought and sold power in simultaneous trades
at the same price and amount. This conduct manipulated the market for
energy by making the market appear more active than it was and by
making the Company's business appear more substantial than it actually
was. Such trades were conducted solely to generate volume in order to
make the Company appear to be a bigger player in the wholesale energy
market and achieve a higher ranking in the quarterly sales rankings of
power traders.
The Federal Energy Regulatory Commission (FERC) requires wholesale
electricity marketers to file quarterly reports of transactions,
including the size, location and names of their trading partners, which
reports are used by trade publications to compile rankings of top
traders. A high ranking indicated that the Company was well equipped
to handle large transactions, to attract more traders and to win long-
term supply contracts with large utility customers.
Energy traders sought out a high ranking because it made them a more
desirable business partner. The Company ranked second on the list of
power marketers in the fourth quarter of 2001, but without the "round-
trip" trades, which it admitted totaled 78 million megawatt hours in
2001, or 1/5 of reported volume, it would have only ranked seventh.
The "round-trip" or phantom trades improperly inflated the Company's
revenues by approximately 10% during the period from 1999 through 2001.
The Company admitted that it engaged in "round-trip" trades of 30
million megawatt hours (MWH) in 1999 or approximately 26% of the 112
million MWH reported in the Prospectus for the year ended December 31,
1999, and 30 million MWH in 2000 or approximately 14% of the 201
million MWH reported in the Prospectus for the year ended December 31,
2000.
The prospectus contained materially false and misleading
representations of the volume of the Company's energy trading as well
as its revenues.
When the Company's participation in the "round-trip" trades was finally
disclosed, the price of Company stock dropped to a low of $8.43 on May
14, 2002.
For more details, contact Sherrie R. Savett, Barbara A. Podell 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
SALOMON SMITH: Spector Roseman Commences Securities Suit in S.D. NY
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Spector, Roseman & Kodroff, PC initiated a securities class action in
the United States District Court for the Southern District of New York
on behalf of purchasers of WorldCom, Inc. (Nasdaq:WCOM) common stock
between May 15, 1999 and April 21, 2002 inclusive, against Salomon
Smith Barney, Inc. and its well known telecommunication analyst Jack
Grubman for violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934.
Spector, Roseman & Kodroff, PC is involved in several similar suits
against Merrill Lynch and its Internet analyst Henry Blodget.
The suit alleges that defendants violated sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated
thereunder, by the issuance of analyst reports regarding WorldCom which
recommended the purchase of WorldCom common stock and which set price
targets for WorldCom common stock without any reasonable factual basis.
When issuing their WorldCom reports, defendants failed to disclose
significant, material conflicts of interest which they had, in light of
their use of Mr. Grubman's reputation and his WorldCom analyst reports,
to obtain investment banking business for Salomon.
For more details, contact Robert M. Roseman by Phone: 888-844-5862 by
E-mail: classaction@srk-law.com or visit the firm's Website:
http://www.srk-law.com
SEITEL INC.: Berger & Montague Commences Securities Fraud Suit in TX
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Berger & Montague, PC initiated a securities class action against
Seitel, Inc. (NYSE:SEI) and certain of its principal officers and
directors in the United States District Court for the Southern District
of Texas on behalf of all persons or entities who purchased the
publicly traded securities of the Company between May 5, 2000 and May
3, 2002.
According to the complaint, the Company and the individual defendants
materially misrepresented the Company's financial results for year
fiscal 2000 and the first three quarters of fiscal 2001 by improperly
recognizing revenues.
Most of the improper revenue, the complaint alleges, was attributable
to the Company's undisclosed practice of recording revenue for the
licensing of its seismic data and other geophysical information before
delivering data to customers and prior to the customers determining
which data they intended to license. The practice ran afoul of
generally accepted accounting principles and artificially inflated the
Company's stock price during the class period, the complaint says.
The complaint alleges that the defendants were motivated to commit the
accounting fraud in order to earn commissions and bonuses, which were
tied to the Company's revenues and earnings. The complaint claims the
defendants, while in possession of undisclosed adverse information
about the Company, engaged in over $10.6 million of illegal insider
stock sales during the class period.
On April 1, the Company announced that it was restating its financial
results for the year 2000 and the first three quarters of 2001. The
restatement reduced reported revenue by 15% in 2000 and 30% during the
first three quarters of 2001. It also turned what had purportedly been
profits during those periods into losses, the lawsuit states.
After the Company further detailed the restatements on May 3, 2002, the
company's stock price plunged to $5.16 per share by the next trading
day, more than 77% below the class period, high of $23.03 per share,
the complaint says.
For more details, contact Sherrie R. Savett, Stuart J. Guber 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
WESTPOINT STEVENS: Will Ask GA Court To Dismiss Securities Fraud Suit
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Westpoint Stevens, Inc. plans to ask the United States District Court
for the Northern District of Georgia this week to dismiss the
consolidated securities class action pending against it and certain of
its officers and directors, alleging violations of federal securities
laws.
The consolidated suit alleges that, during from February 10, 1999 to
October 10, 2000, the defendants caused false and misleading statements
to be issued regarding, inter alia, alleged overcapacity and excessive
inventories of the Company's towel-related products and customer demand
for such products.
The suit refers to the Company's press releases and quarterly and
annual reports on Securities Exchange Commission Forms 10-Q and 10-K,
which discuss the Company's results and forecasts for the Fiscal years
1999 and 2000.
Plaintiffs allege that these press releases and public filings were
false and misleading because they failed to disclose that the Company
allegedly knew sales would be adversely affected in future quarters and
years. Plaintiffs also allege in general terms that the Company
materially overstated revenues by making premature shipments of
products.
The suit asserts claims against all defendants under Section 10(b) of
the Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and
against the Company and one of its directors as "controlling persons"
under 20(a) of the Exchange Act.
The Company also faces a shareholder derivative action filed against
certain of the Company's directors and officers in the Superior Court
of Fulton County, Georgia. The suit alleges that the named individuals
breached their fiduciary duties by acting in bad faith and wasting
corporate assets., and asserts claims under Georgia Code Ann. 14-2-740
to 14-2-747, and 14-2-831. The claims are based on the same, or
similar facts that are alleged in the federal suit.
The Company believes that the allegations in the suits are without
merit and intends to contest the actions vigorously, on behalf of its
officers and directors.
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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
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Copyright 2002. All rights reserved. ISSN 1525-2272.
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