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C L A S S A C T I O N R E P O R T E R
Monday, July 29, 2002, Vol. 4, No. 148
Headlines
ADELPHIA COMMUNICATIONS: Sues John Rigas, Ex-Board Members, Executives
AMR CORPORATION: Suit Filed in 1999 Remains Uncertified as "Class" Suit
AMR CORPORATION: Two More Adverse Rulings Will Impact Firm Materially
AMR CORPORATION: Plaintiffs in N.C. Suit Move for Class Certification
AMR CORPORATION: Travel Agencies' Airline Suit Awaits Certification
AT&T: Attorney General Asserts Supremacy of State Laws Over Firm
BRIO(r) CORPORATION: Recalls 3,000 Choking-hazard Pull-along Snails
CHECKERS DRIVE-IN: Judgment in 1994 Shareholders Suits Still Pending
CORNING INCORPORATED: 1992 Securities Suit Still in Discovery Stage
CORNING INCORPORATED: Vigorously Defending Securities Suit in New York
CORNING INCORPORATED: Claims No Direct Link to PCC's Asbestos Liability
ENRON CORPORATION: J.P. Morgan CEO Says Bank Acted Properly in Deals
ERIE INDEMNITY: Court Certifies Suit vs. Insurers Using Non-OEM Parts
FEDEX CORPORATION: US$68M Adverse Ruling Appeal Likely in California
FEDEX CORPORATION: Illinois Lawsuit Raps Firm for Fuel Surcharge
IDAHO: Idaho Residents Ask Court For Temporary Ban on Grass Burning
LAURI(r) INC.: Asks Buyers to Return Toddler Activity Sets, Puzzles
MEDTRONIC INC.: Lawsuits in CA, DE Won't Have Adverse Material Impact
PRE-PAID LEGAL: Plaintiffs Appeal Adverse Ruling in Oklahoma Lawsuit
PRE-PAID LEGAL: Moves for Dismissal of Securities Derivative Suit
PRE-PAID LEGAL: Alabama Lawsuits Dismissed, But Others Remain Pending
PRE-PAID LEGAL: Faces Suit in Oklahoma That Claims Nationwide Class
PRE-PAID LEGAL: Sales Associates Bring Putative Class Suit in Oklahoma
PRE-PAID LEGAL: Moving for Dismissal in Case Before W.D. Oklahoma
RADIO FLYER: Defective Steering Wheel Causes Recall of 59,000 Toy Cars
RAFFLES TOWN: Plaintiffs Produce Club Letters To Bolster Case
SMALL WORLD: Recalls 880 "Sort & See" Toys, To Refund Buyers
TEXAS: Appeals Court Awards State Medicaid Case Victory
* Thailand to Enact New Class Action Law to Better Protect Shareholders
New Securities Fraud Cases
AMERICAN EXPRESS: Wechsler Harwood Bares Filing of Suit in S.D. NY
CITIGROUP INC.: Bernstein Liebhard Files Enron-related Suit in S.D. NY
CROSS MEDIA: Cauley Geller Commences Securities Suit S.D. New York
EL PASO: Kirby McInerney Lodges Securities Fraud Suit in S.D. Texas
EL PASO: Weiss & Yourman Commences Independent Suit in S.D. Texas
HPL TECHNOLOGIES: Milberg Weiss Files Securities Suit in ND California
KNIGHT TRADING: Bernstein Liebhard Begins Securities Suit in New Jersey
PEMSTAR INC.: Charles Piven Initiates Shareholders Suit in Minnesota
VIVENDI UNIVERSAL: Lovell & Stewart Bares Filing of Suit in S.D. NY
VIVENDI UNIVERSAL: Leo Desmond Initiates Securities Suit in S.D. NY
VIVENDI UNIVERSAL: Weiss & Yourman Files Securities Suit in S.D. NY
*********
ADELPHIA COMMUNICATIONS: Sues John Rigas, Ex-Board Members, Executives
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Adelphia Communications Corporation (OTC: ADELQ) announced last week
that it has filed suit against John Rigas, the Company's founder and
Former Chairman; his three sons, Tim, Michael and James Rigas, who are
former Board members and company executives; his son-in-law, Peter
Venetis, who was a member of the Board at the Company; former Vice
President of Finance, James Brown, and former Assistant Treasurer
Michael Mulcahey.
Also named in the lawsuit were Doris Rigas, wife of John Rigas; Ellen
Rigas Venetis, daughter of John Rigas; and 20 companies controlled by
the family.
Filed Wednesday last week in bankruptcy court in Southern District of
New York, the Company's lawsuit charges the Defendants with violation
of the Racketeer Influenced and Corrupt Organizations Act, breach of
fiduciary duties, waste of corporate assets, abuse of control, breach
of contract, unjust enrichment, fraudulent conveyance, and conversion
of corporate assets.
The lawsuit states, "The Rigas Family Directors, together with the
other defendants, are responsible for one of the largest cases of
corporate looting and self-dealing in American corporate history."
The Rigas Family Directors John, Tim, Michael, and James Rigas held a
majority of Adelphia's voting stock, and together with John's son-in-
law, Peter Venetis, formed a majority on Adelphia's Board of Directors.
John, Tim, Michael, and James Rigas also held all of the Company's
senior executive positions. James Brown was Adelphia's Vice President
of Finance and Michael Mulcahey was a Vice President of Adelphia and
its Assistant Treasurer.
Specific Charges
The lawsuit brought by the firm of Boies Schiller and Flexner of
Armonk, charges:
(1) The Rigas Family Directors' actions benefited their own self-
interest at the expense of the Company and its shareholders
and did so without disclosing their conduct to the independent
members of Adelphia's Board of Directors, Adelphia's
shareholders or the public. They caused Adelphia to file
financial statements and press releases they knew were false
and misleading, and failed to reveal their multiple
undisclosed and unapproved acts of self-dealing and
misrepresentation.
(2) Rigas Management manipulated the Company's books and records
so that its quarterly metrics would meet or exceed Wall
Street's expectations, thus inflating the price of the
Company's publicly traded stock.
(3) The Rigas Management commingled Adelphia funds with funds from
entities in which the Rigas Management or other Rigas family
members maintained a controlling interest, causing Adelphia to
dole out hundreds of millions of dollars to fund non-corporate
projects ranging from personal loans to real estate
transactions, including the purchase of Manhattan apartments
for personal use and land for a private golf course, making
cash advances to the Rigas-controlled Buffalo Sabres hockey
team, and providing millions of dollars to members of the
Rigas Family so that they could satisfy margin calls on their
stock holdings.
(4) The Rigas Management regularly conducted their business
activities with the sole purpose of benefiting themselves at
the expense of Adelphia and used Adelphia's line of credit to
make purchases that conferred no benefit upon Adelphia and
that instead unjustly enriched the Rigas Family Directors and
other Rigas family members.
(5) The Rigas Management created a complicated network of private
partnerships for the Rigas Family Entities(1), which was used
as a tool in engaging in their fraudulent and self-dealing
schemes.
Using Adelphia's Cash Management System, the Rigas Management simply
made "journal entries" to transfer funds between and among Adelphia and
one or more of the Rigas Family Entities so that the transactions would
appear to be economically beneficial to the Company, when in fact, they
only further burdened Adelphia with more debt while permitting the
Rigas Management to acquire multi-million dollar assets at little, if
any, personal cost.
According to the lawsuit, "The Rigas Management's off-the-books and
self-dealing transactions, as well as Defendants' false and misleading
statements and conduct, resulted in massive damages and loss in market
capitalization of well over a billion dollars."
The RICO charges brought by the Company permit the recovery of three
times the damages proved for the violations.
Adelphia Chairman and interim CEO, Erland Kailbourne issued this
statement:
"The purpose of this lawsuit is to recover damages from the Rigas
family and their controlled entities for their massive self-dealing and
misconduct. These members of the Rigas family deliberately acted with
the purpose of benefiting themselves at the expense of Adelphia, its
employees, investors and the 3,500 local communities we serve."
He added, "Meanwhile, the independent directors and the new Adelphia
management team is working diligently to repair the damage done by the
Rigas family and their accomplices and will continue its investigation
and pursuit of other claims against those responsible."
New management team working diligently to rehabilitate Company
The independent directors and the new management of Adelphia are
focused on taking significant action to restore the Company's
reputation and credibility, to maximize the value of the Company for
its stakeholders, and to provide uninterrupted quality cable, high
speed Internet and other services to more than 5.7 million customers
nationwide. Adelphia voluntarily filed for Chapter 11 protection in
June in order to begin a financial restructuring while ensuring its
ability to serve millions of customers across the nation. Since that
filing, Adelphia has been granted access to $500 million of a $1.5
billion Debtor in Possession (DIP) financing facility. These funds --
along with the significant cash flow the Company continues to generate
-- are enabling Adelphia to continue to operate smoothly and provide
quality cable programming. The funds also allow the Company to resume
its schedule of nationwide technological upgrades necessary to offer
digital cable, high-speed Internet access and other enhanced services.
About Adelphia
Adelphia Communications Corporation, with headquarters in Coudersport,
Pennsylvania, is the sixth-largest cable television company in the
country.
The "Rigas Family Entities" include Defendants Coudersport Television
Cable Company, Coudersport Theatre, Dobaire Designs, Dorellenic, Doris
Holdings, L.P., NCAA Holdings, Inc., Illiad Holdings, Inc., Eleni
Interiors, Inc., ErgoArts, Inc., Highland 2000, L.P., Highland
Holdings, Highland Prestige Georgia, Inc., Highland Video Associates,
L.P., Hilton Head Communications L.P., Niagara Frontier Hockey, L.P.,
SongCatcher Films, L.L.C., Wending Creek 3656, L.L.C., Wending Creek
Farms, Inc., and XYZ Company Nos. 1-15.
For more information, contact Eric Andrus by Phone: 877-496-6704
ALDERWOODS GROUP: Louisiana State Court Approves Undisclosed Settlement
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Since July 2000, ten lawsuits have been filed against Security
Industrial Insurance Company, subsequently renamed Security Plan Life
Insurance Company, a subsidiary of Alderwoods Group, Inc., and various
other unrelated insurance companies asserting similar claims and
seeking class action certification.
Except as described in this paragraph, the complaints in each of the
lawsuits are almost identical. Plaintiffs allege that the defendants
sold life insurance products to plaintiffs and other African Americans
without disclosing that premiums paid would likely exceed the face
value of the policies, and that plaintiffs paid higher premiums than
Caucasian policyholders and received proportionately lower death
benefits. The plaintiffs sought, among other things, injunctive relief,
equitable relief, restitution, disgorgement, increased death benefits,
premium refunds (in one case, with interest), costs and attorney fees.
In several of the cases, Security Industrial filed a motion to dismiss
all claims for failure to state a cause of action and/or for summary
judgment.
In December 2000, nine of the cases were transferred to the Judicial
Panel on Multidistrict Litigation in the United States District
Court for the Eastern District of Louisiana for consolidation for
administrative purposes, where they were assigned to Judge Martin L.C.
Feldman as IN RE INDUSTRIAL LIFE INSURANCE LITIGATION, MDL No. 1382.
The tenth case was pending in state court in Ascension Parish,
Louisiana (the Louisiana State Court).
On January 9, 2002, the Louisiana State Court gave final approval to a
class-action settlement with respect to the claims in the ten lawsuits.
The Louisiana State Court's final approval determined such settlement
to be fair, reasonable and adequate for the class, which was certified
by such court for settlement purposes only. The settlement provides
agreed-upon amounts of compensation to class members in exchange for a
release of all pending and future claims they may have against the
Company and certain of its affiliates.
The Company has recorded a provision for the agreed-upon amounts of
compensation and related costs with respect to these lawsuits within
the Company's interim consolidated financial statements. Although the
Company believes such provision is adequate, there can be no assurance
that actual payments with respect to these claims will not exceed such
provision.
Alderwoods Group is the world's No.2 funeral services company, behind
Service Corporation International (SCI). The company (formerly called
The Loewen Group) owns or operates about 920 funeral homes and some 275
cemeteries in the US, Canada, and the UK. Most of its sales come from
funeral services, which include collection of remains, death
registration, embalming, and caskets. Alderwoods has grown through
acquisitions, buying funeral homes in clusters or in one geographic
area and preserving their local identities. However, the acquisitions
overwhelmed Alderwoods with debt, leading it to seek bankruptcy
protection in order to reorganize.
AMR CORPORATION: Suit Filed in 1999 Remains Uncertified as "Class" Suit
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On July 26, 1999, a class action lawsuit was filed, and in November
1999 an amended complaint was filed, against AMR Corporation, American
Airlines, Inc., AMR Eagle Holding Corporation, Airlines Reporting
Corporation, and the Sabre Group Holdings, Inc. in the United States
District Court for the Central District of California, Western Division
(Westways World Travel, Inc. v. AMR Corp., et al.).
The lawsuit alleges that requiring travel agencies to pay debit memos
to American for violations of American's fare rules (by customers of
the agencies) (1) breaches the Agent Reporting Agreement between
American and AMR Eagle and the plaintiffs, (2) constitutes unjust
enrichment, and (3) violates the Racketeer Influenced and Corrupt
Organizations Act of 1970 (RICO).
The as yet uncertified class includes all travel agencies who have been
or will be required to pay monies to American for debit memos for fare
rules violations from July 26, 1995 to the present. The plaintiffs
seek to enjoin American from enforcing the pricing rules in question
and to recover the amounts paid for debit memos, plus treble damages,
attorneys' fees, and costs. The Company intends to vigorously defend
the lawsuit.
Although the Company believes that the litigation is without merit, an
adverse court decision could impose restrictions on the Company's
relationships with travel agencies which restrictions could have an
adverse impact on the Company.
AMR Corporation's main subsidiary, American Airlines, is the US's No.2
air carrier based on revenue passenger miles (behind United Airlines).
With a fleet of more than 800 jetliners and hubs in Chicago,
Dallas/Fort Worth, Miami, and San Juan, Puerto Rico, American Airlines
serves about 160 destinations in the Americas, Europe, and the Pacific
Rim (some through code-sharing). The carrier has expanded by absorbing
the assets of TWA. With British Airways, American Airlines leads the
Oneworld global marketing alliance. AMR's regional feeder subsidiary,
American Eagle, has been aggressive in rolling out regional jet
service.
AMR CORPORATION: Two More Adverse Rulings Will Impact Firm Materially
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Between May 14, 1999 and June 7, 1999, seven class action lawsuits were
filed against AMR Corporation, American Airlines, Inc., and AMR Eagle
Holding Corporation in the United States District Court in Wichita,
Kansas seeking treble damages under federal and state antitrust laws,
as well as injunctive relief and attorneys' fees (King v. AMR Corp., et
al.; Smith v. AMR Corp., et al.; Team Electric v. AMR Corp., et al.;
Warren v. AMR Corp., et al.; Whittier v. AMR Corp., et al.; Wright v.
AMR Corp., et al.; and Youngdahl v. AMR Corp., et al.).
Collectively, these lawsuits allege that American unlawfully
monopolized or attempted to monopolize airline passenger service to and
from DFW by increasing service when new competitors began flying to
DFW, and by matching these new competitors' fares. Two of the suits
(Smith and Wright) also allege that American unlawfully monopolized or
attempted to monopolize airline passenger service to and from DFW by
offering discounted fares to corporate purchasers, by offering a
frequent flyer program, by imposing certain conditions on the use and
availability of certain fares, and by offering override commissions to
travel agents.
The suits propose to certify several classes of consumers, the broadest
of which is all persons who purchased tickets for air travel on
American into or out of DFW from 1995 to the present. On November 10,
1999, the District Court stayed all of these actions pending
developments in the case brought by the Department of Justice.
As a result, to date no class has been certified. The Company intends
to defend these lawsuits vigorously. One or more final adverse court
decisions imposing restrictions on the Company's ability to respond to
competitors or awarding substantial money damages would have an adverse
impact on the Company.
AMR CORPORATION: Plaintiffs in N.C. Suit Move for Class Certification
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On May 17, 2002, the named plaintiffs in Hall, et al. v. United
Airlines, et al., No. 7:00 CV 123-BR(1), pending in the United States
District Court for the Eastern District of North Carolina, filed an
amended complaint alleging that between 1995 and the present, American
and the other defendant airlines conspired to reduce commissions paid
to U.S.-based travel agents in violation of Section 1 of the Sherman
Act.
The named plaintiffs seek to certify a nationwide class of travel
agents, but no class has yet been certified. American is vigorously
defending the lawsuit. Trial is set for April 29, 2003. A final
adverse court decision awarding substantial money damages or placing
restrictions on the Company's commission policies or practices would
have an adverse impact on the Company.
AMR CORPORATION: Travel Agencies' Airline Suit Awaits Certification
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On April 26, 2002, six travel agencies filed an action in the United
States District Court for the Central District of California against
American, United Air Lines, Delta Air Lines, and Orbitz, LLC, alleging
that American and the other defendants:
(i) conspired to prevent travel agents from acting as effective
competitors in the distribution of airline tickets to
passengers in violation of Section 1 of the Sherman Act; and
(ii) conspired to monopolize the distribution of common carrier
air travel between airports in the United States in violation
of Section 2 of the Sherman Act.
The named plaintiffs seek to certify a nationwide class of travel
agents, but no class has yet been certified. American is vigorously
defending the lawsuit, which is styled Albany Travel Co., et al. v.
Orbitz, LLC, et al., No. 02-3459 (ER) (AJW)x.
A final adverse court decision awarding substantial money damages or
placing restrictions on the Company's commission policies or practices
would have an adverse impact on the Company.
AT&T: Attorney General Asserts Supremacy of State Laws Over Firm
----------------------------------------------------------------
Attorney General J. Joseph Curran, Jr. of the state of Maryland has
filed an amicus curiae brief on behalf of 27 states and Puerto Rico, in
a case on appeal before the U.S. Ninth Circuit Court of Appeals, the M2
Presswire reported recently.
The brief, in the matter of a federal court case AT&T v. Ting, makes
the argument that AT&T must comply with state contract and consumer
protection laws. AT&T is arguing that the Federal Communications Act
preempts state contract and consumer protection laws, so the company
should not have to comply with those laws in its long-distance customer
service contracts.
"We believe that, in this newly deregulated market, consumers must have
access to the protections provided by state contract and consumer
protection laws," the Attorney General contends in his brief.
The legal implication of the Attorney General's argument is that the
Federal Communications Act does not carry the intention to pre-empt
state contract and consumer protection laws as to communications
entities, even though the federal legislature has chosen to regulate
(or deregulate) communications within the various states.
AT&T v. Ting began as a class-action lawsuit that was filed in federal
district court in California. The plaintiffs claim that several of the
provisions of AT&T's service agreement violated California consumer
protections and contract laws. Some of the provisions complained of
were a waiver of consumer rights; limits to AT&T's liability; and an
arbitration provision. The district court found for the plaintiffs on
most of the issues. At the district court level, and again on appeal,
AT&T has argued that it does not have to comply with state laws.
The Attorney General states in his brief: "This case is about AT&T's
attempt to have the best of two worlds: the freedom of a deregulated
market and the protections afforded carriers in a tariffed system, and
the right to unilaterally limit contractual rights and remedies of its
customers."
BRIO(r) CORPORATION: Recalls 3,000 Choking-hazard Pull-along Snails
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In cooperation with the U.S. Consumer Product Safety Commission (CPSC),
BRIO(r) Corp., of Germantown, Wis., a subsidiary of BRIO AB of Sweden,
and Small World Toys of Culver City, Calif., are voluntarily recalling
about 3,000 Plan Toys pull-along snails. The eyes on the pull toy can
detach, posing a choking hazard to young children.
CPSC, BRIO(r) and Small World Toys are not aware of any incidents or
injuries involving the pull toy. This recall is being conducted to
prevent the possibility of injury.
The recalled Plan Toys pull-along snail is a bright green, yellow and
red wooden pull toy. The snail measures 10-inches long and 4-inches
high and is pulled by a nylon string attached to the underside of the
toy. On the snail head are two yellow protruding pegs that extend about
1- inch from the body. The pegs are painted black and white to depict
eyeballs. A stamp on the bottom of the head displays the Plan Toys logo
and the words "Made in Thailand."
Specialty toy stores, Internet retailers and mail order catalogs sold
the recalled pull-along snails nationwide from June 2001 through June
2002 for about $15.
Consumers should take these pull toys away from children immediately
and call BRIO(r) for a refund. For more information, consumers can
contact BRIO(r) at 888-274-6869 between 8:30 a.m. and 5 p.m. CT Monday
through Friday or visit the firm's Web site at http://www.briotoy.com
Consumers should return the recalled pull toys to BRIO Corp., SAFETY
RECALL - Snail, N120 W18485 Freistadt Road, Germantown, Wis. 53022.
CHECKERS DRIVE-IN: Judgment in 1994 Shareholders Suits Still Pending
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In January and February 1994, two putative class action lawsuits were
filed, purportedly on behalf of the stockholders of Rally's, in the
United States District Court for the Western District of Kentucky,
Louisville division, against Rally's, Burt Sugarman and Giant Group,
Ltd. and certain of Rally's former officers and directors and its
auditors. The cases were subsequently consolidated under the case name
Jonathan Mittman et. al. vs. Rally's Hamburgers,Inc., et. al.
The complaints allege that the defendants violated the Securities
Exchange Act of 1934, among other claims, by issuing inaccurate public
statements about Rally's in order to arbitrarily inflate the price of
its common stock. The plaintiffs seek compensatory and other damages,
and costs and expenses associated with the litigation.
On April 15, 1994, Rally's filed a motion to dismiss and a motion to
strike. On April 5, 1995, the Court struck certain provisions of the
complaint but otherwise denied Rally's motion to dismiss. In addition,
the Court denied plaintiffs' motion for class certification; the
plaintiffs renewed this motion, and despite opposition by the
defendants, the Court granted such motion for class certification on
April 16, 1996, certifying a class from July 20, 1992 to September 29,
1993.
Motions for Summary Judgment were filed by the parties in September
2000, and rulings by the Court are pending. The defendants deny all
wrongdoing and intend to defend themselves vigorously in this matter.
Management is unable to predict the outcome of this matter at the
present time or whether or not certain available insurance coverages
will apply; however, if the Company is found to be liable, such a
result may have a material adverse impact on the Company's financial
condition and results of operations.
Checkers Drive-In Restaurants, Inc. is the largest double drive-thru
restaurant chain in the United States. The Company develops, produces,
owns, operates, and franchises quick service "double drive-thru"
restaurants under the two brand names "Checkers" and "Rally's
Hamburgers". The restaurants are designed to provide fast and efficient
automobile-oriented service and appeal to customers of all ages.
The double drive-thru concept allows Checkers and Rally's Hamburgers to
capitalize on the fact that approximately fifty percent (50%) of all
quick-service food business is drive-thru. Customers can also enjoy a
1950's flashback with walk-up ordering and outdoor dining in the
outside picnic area at most locations.
Checkers Drive-In Restaurants, Inc. and its Franchisees own and operate
796 restaurants comprised of approximately 407 Checkers restaurants
located primarily in the Southeastern United States, and approximately
389 Rally's Hamburgers restaurants located primarily in the Midwestern
United States.
Checkers Drive-In Restaurants, Inc. is headquartered in Tampa, Florida
and is publicly traded on the NASDAQ stock market under the symbol:
CHKR
CORNING INCORPORATED: 1992 Securities Suit Still in Discovery Stage
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A federal securities class action lawsuit was filed in 1992 against
Corning Incorporated and certain individual defendants by a class of
purchasers of Corning stock who allege misrepresentations and omissions
of material facts relative to the silicone gel breast implant business
conducted by Dow Corning.
This action is pending in the United States District Court for the
Southern District of New York. The class consists of those purchasers
of Corning 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. No amount of damages is
specified in the complaint.
In 1997, the Court dismissed the individual defendants from the case.
In December 1998, Corning filed a motion for summary judgment
requesting 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. Corning 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," the company said
in documents recently filed with the Securities and Exchange
Commission.
CORNING INCORPORATED: Vigorously Defending Securities Suit in New York
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From December 2001 through April 2002, Corning Incorporated and three
of its officers and directors were named defendants and served in four
different lawsuits alleging violations of the U.S. securities laws in
connection with Corning's November 2000 offering of $2.7 billion zero
coupon convertible debentures, due November 2015 and 30 million shares
of common stock.
These lawsuits are pending in the United States District Court for the
Western District of New York and seek class action status. In
addition, the Company and the same three officers and directors were
named and served in ten lawsuits alleging selective disclosures and
non-disclosures that allegedly inflated the price of Corning's Common
Stock in the period from September 2000 through June 2001. The
plaintiffs in these actions seek to represent classes of purchasers of
Corning's 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 Corning
stock in a Plan account. Corning 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," the
company said in a latest disclosure with the Securities and Exchange
Commission.
CORNING INCORPORATED: Claims No Direct Link to PCC's Asbestos Liability
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Corning Incorporated and PPG Industries, Inc. (PPG) each own 50% of the
capital stock of Pittsburgh Corning Corporation (PCC). PCC and several
other defendants, including PPG and Corning, have been named in
numerous lawsuits involving claims alleging personal injury from
exposure to asbestos.
On April 16, 2000, PCC filed for Chapter 11 reorganization in the
United States Bankruptcy Court for the Western District of
Pennsylvania. As of the bankruptcy filing, PCC had in excess of
140,000 open claims and now has in excess of 240,000 open claims.
In the bankruptcy court, PCC in April 2000 obtained a preliminary
injunction against the prosecution of asbestos actions against its two
shareholders to afford the parties a period of time (the Injunction
Period) in which to negotiate a plan of reorganization for PCC.
On May 14, 2002, PPG announced that it had agreed with several other
parties, including certain of its insurance carriers and
representatives of current and future asbestos claimants, on the terms
of a settlement arrangement relating to asbestos claims against PPG and
PCC. This settlement would be incorporated in a plan of reorganization
for PCC, and would be subject to a favorable vote by 75% of the
asbestos claimants voting on the PCC reorganization plan, and approval
by the Bankruptcy Court.
According to its announcement, PPG would make contributions to a trust
under the reorganization plan consisting of:
(i) cash payments by PPG's participating insurance carriers of
approximately $1.7 billion over a 21 year period;
(ii) the assignment of rights to certain proceeds of policies by
certain insurance carriers not participating in the
settlement;
(iii) PPG's shares in PCC and Pittsburgh Corning Europe, a Belgian
corporation;
(iv) 1,388,889 shares of PPG's common stock; and
(v) cash payments from PPG of approximately $998 million over 21
years.
PPG announced on July 18, 2002, that it recorded a charge in its second
quarter results of $495 million after-tax related to this settlement.
The Injunction Period has been extended as to Corning until July 31,
2002. Under the terms of the Bankruptcy Court's Order, Corning will
have 90 days following expiration of the Injunction Period to seek
removal and transfer of stayed cases that have not been resolved
through a plan of reorganization.
At the time PCC filed for bankruptcy protection, there were
approximately 12,400 claims pending against Corning alleging various
theories of liability based on exposure to PCC's asbestos products.
Although the outcome of litigation and the bankruptcy case is
uncertain, management believes that the separate corporate status of
PCC will continue to be upheld and that Corning has strong legal
defenses to any claims of direct liability arising from PCC's asbestos
products.
After PPG announced its settlement, negotiations between
representatives of the asbestos claimants and Corning became more
intensive but failed to produce a settlement. In Corning's
negotiations with the asbestos claimants, the range of negotiations has
been framed by demands translating into approximately $400 million to
$500 million in net present value (inclusive of insurance), which is
significantly lower than that reflected in the PPG settlement.
"These negotiations have been difficult, and no assurances can be
offered that a settlement can be concluded within this range," Corning
admitted in its latest disclosure with the Securities and Exchange
Commission.
ENRON CORPORATION: J.P. Morgan CEO Says Bank Acted Properly in Deals
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J.P. Morgan Chase & Co. Chief Executive William Harrison believes the
bank acted "properly and with integrity" in all of its dealings with
Enron Corp.
Senate investigators last Tuesday accused J.P. Morgan and Citigroup
Inc. of helping Enron hide debt and, instead, show boosted cash flow in
its financial statement before collapsing and filing bankruptcy last
year.
At the Senate hearing, J.P. Morgan Chase and Citigroup officials
defended themselves against investigators' charges that they helped
Enron accumulate an estimated $5 billion in arrangements that were
effectively hidden debt.
"We have not assisted Enron, or any other company, in misrepresenting
the facts," said Mr. Harrison in a conference call with the investment
community and media.
Mr. Harrison, along with Marc Shapiro, a Morgan Chase vice chairman,
said, on the call, that the arrangements known as prepaid contracts,
are a valid, widespread financial tool, and that those in question were
fully accounted for and appeared on Enron's balance sheet as trading
liabilities.
"The fact of the matter is that it is an accounting convention. They
are not funded debt, they are trading assets or liabilities," Mr.
Harrison was quoted by the Associated Press as saying. "They were
disclosed, we knew what they were, and anyone looking at Enron's
balance sheet would see it was a trading liability."
The executives also insured investors that the company's fundamentals
remain solid and would personally be in the market buying shares.
Their attempts to calm Wall Street seem to have helped stem the stock's
swoon.
Nonetheless, investors and analysts questioned J.P. Morgan's executives
about an e-mail uncovered in the congressional investigation, from a
J.P. Morgan executive to colleagues, that implied the company knew
Enron was using the transactions to mask debts as trades.
"What counts is whether it (the e-mail) was accurate or not, and it was
not an accurate characterization," Mr. Shapiro said. "We do hundreds
of thousands of e-mails a day, and it is always possible to take one
phrase out of an e-mail and hang a lot on that. These prepays started
in 1992, and this e-mail was [written] in 1998."
The 1998 e-mail said, according to a report from The San Francisco
Chronicle, that "Enron loves these deals as they are able to hide
funded debt from their equity analysts, because they (at the very
least) book it as deferred rev or (better yet) bury it in their trading
liabilities."
Meanwhile Citigroup has been hit with a purported class-action lawsuit
in New York federal district court. The legal firm of Lovell & Stewart
has filed a lawsuit on behalf of all persons who acquired Citigroup
common shares between July 14, 1999, and July 23, 2002.
The lawsuit alleges that during that time, Citigroup Chairman and Chief
Executive Sanford Weill and Chief Financial Officer Todd Thomson
misrepresented a 1999 transaction with Enron that was structured as a
commodity trade but really served as a loan, in order to help Enron
keep $125 million in debt off its books. The lawsuit seeks unspecified
damages.
ERIE INDEMNITY: Court Certifies Suit vs. Insurers Using Non-OEM Parts
---------------------------------------------------------------------
In February 2000 a civil class action lawsuit, Brenda L. Foultz v. Erie
Insurance Exchange and Erie Insurance Company, was filed against EIC
and the Exchange in Philadelphia, Pennsylvania. The Exchange issued an
automobile insurance policy to the Plaintiff.
The class action complaint alleges that the Plaintiff was involved in
an accident and that her insured vehicle was damaged in the accident.
The Complaint alleges that the Exchange acted improperly when it used
non-original equipment manufacturer (non-OEM) parts in repairing the
damage to the Plaintiff's vehicle. In March 2002, the courts granted
the Plaintiff's motion to move this suit to Class Certification.
The Exchange and EIC are seeking to appeal the certification of the
class. In addition, the Erie Insurance Group has joined, as additional
defendants in the class action lawsuit, other non-OEM manufacturers and
distributors of crash parts.
Although it is too early to assess the probable outcome or the amount
of damages of this civil class action lawsuit, the Company believes the
Exchange and EIC have meritorious legal and factual defenses to this
lawsuit and these defenses will be vigorously pursued. As such, no
liability has been established by the Company or any of the companies
in the Group to date for this lawsuit. The Company's exposure to
liability arising from this litigation is limited to the 5.5% share of
the Group's underwriting results under the intercompany pooling
agreement.
Like other members of the insurance industry, the Company is the target
of an increasing number of class action lawsuits like the one described
above as well as other types of litigation. This litigation is based on
a variety of issues including insurance and claim settlement practices.
The Company assesses the likelihood of any adverse outcomes to these
matters as well as potential ranges of probable losses. There can be no
assurance that actual outcomes will not differ from those assessments.
FEDEX CORPORATION: US$68M Adverse Ruling Appeal Likely in California
--------------------------------------------------------------------
A class action lawsuit is pending in Federal District Court in San
Diego, California against FedEx Express generally alleging that
customers who had late deliveries during the 1997 Teamsters strike at
United Parcel Service were entitled to a full refund of shipping
charges pursuant to our money-back guarantee, regardless of whether
they gave timely notice of their claim.
At the hearing on the plaintiffs' motion for summary judgment, the
court ruled against FedEx Express. The judgment totaled approximately
$68 million, including interest and fees for the plaintiffs' attorney.
"We plan to appeal to the 9th Circuit Court of Appeals. No accrual has
been recorded as we believe the case is without merit and it is
probable we will prevail upon appeal," FedEx Corp. noted in its latest
disclosure with the Securities and Exchange Commission.
FedEx is the world's No.1 express transport firm, delivering some 3
million packages daily. It operates four other subsidiaries, which
include FedEx Ground, FedEx Custom Critical, FedEx Freight and FedEx
Trade Networks.
FEDEX CORPORATION: Illinois Lawsuit Raps Firm for Fuel Surcharge
----------------------------------------------------------------
A class action lawsuit is pending in Illinois state court against FedEx
Express generally alleging that FedEx Express imposed a fuel surcharge
in a manner that is not consistent with the terms and conditions of its
contracts with customers.
"We are presently attempting to negotiate a settlement. If a
settlement is not reached and approved, a trial date will be set for
sometime in 2003," FedEx said in its latest SEC disclosure.
"Although settlement discussions have occurred, the amount of loss (if
any) is not currently estimable. We have denied any liability with
respect to these claims and intend to vigorously defend ourselves in
these cases," the disclosure read.
IDAHO: Idaho Residents Ask Court For Temporary Ban on Grass Burning
-------------------------------------------------------------------
A group of Idaho residents today asked the Idaho state court to order
an immediate ban against grass burning while a recently filed class-
action lawsuit works its way through the court system.
The motion is the first legal salvo by the group since they filed the
lawsuit on June 10 in Idaho state court, claiming that the smoke
produced by the grass fires causes serious health risks, especially to
those with respiratory conditions including asthma and cystic fibrosis.
The motion, filed on behalf of the named plaintiffs by Seattle attorney
Steve Berman, asks the court to grant an immediate temporary
restraining order and schedule a court date to hear arguments for an
injunction, which would remain in place until the conclusion.
According to Mr. Berman, the suit takes a significantly different legal
approach than a federal court case that was dismissed earlier this
month. In that case, US District Court Judge Edward Lodge said the
federal law the case was brought under was not applicable.
"Our case is based on state law, which we believe does a better job at
addressing the problems caused by the burnings than federal law," Mr.
Berman said.
The suit, filed against the state of Idaho and 79 grass farmers and
seed companies, calls for an immediate end to grass burning. The suit
also calls for the creation of a medical monitoring and education
programs to protect Idaho residents confronted with grass burning smoke
every August and September.
The suit alleges that Idaho's burn policy, which allows grass-seed
farmers to burn in excess of 20,000 acres every year, lags far behind
other states -- including neighboring Washington -- which have
effectively outlawed grass burning altogether.
The suit cites a number of cases in which the smoke cause dramatic
health effects, including the case of Alex H., a 10-year-old girl
suffering from cystic fibrosis. According to the suit, Alex cannot
tolerate even a minimal level of smoke pollution and according to
medical experts, she suffers life-shortening pulmonary injury each time
she breathes smoke from the burning fields.
According to the suit, the Idaho Department of Environmental Quality
received more than 1,700 complaints during August and September of
2001. Experts have noted that exposure to even minimal levels of
pollutants results in increased numbers of emergency room visits and
hospitalizations, increased doctor visits, increased school and work
absences, and decreased physical activities for individuals afflicted
with cystic fibrosis, chronic heart disease or inflammatory airwave
diseases, according to the complaint.
Seeking protection for those most affected by the grass burning
pollutants, the suit represents individuals with cystic fibrosis,
chronic heart disease or a medically diagnosed inflammatory airwave
disease such as asthma or chronic bronchitis who live in Kootenai,
Bonner, Benewah and Spokane Counties, as well as other areas.
Copies of the full complaint and motion for injunction can be found at
http://www.hagens-berman.com.
For further details, contact Hagens Berman or Steve Berman by Phone:
206-623-7292 by e-mail: steve@hagens-berman.com You may also contact
Firmani & Associates by Phone: 206-443-9357 or by e-mail:
mark@firmani.com
LAURI(r) INC.: Asks Buyers to Return Toddler Activity Sets, Puzzles
-------------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission (CPSC),
Lauri(r) Inc. of Phillips-Avon, Maine, is voluntarily recalling about
110,000 "Toddler Tote" toddler activity sets and about 11,000 "Familiar
Things" toddler puzzles. The dog puzzle included with both of these
products and the rubber handle on the box of the activity set can tear
apart into small pieces and pose a choking hazard to small children.
CPSC and Lauri Inc. have not received any reports of incidents or
injuries with these puzzles or handles. This recall is being conducted
to prevent the possibility of injury.
The "Toddler Tote" travel activity sets have three animal puzzles,
seven stacker pegs of various colors, a geometric shapes puzzle and
four basic shape mini-puzzles. All the contents are packaged in a blue
box with a rubber handle that acts as a carrying tote. The 9-inch
square box has "Lauri" and "LR-2116" written on it.
The puzzle set is called "Familiar Things." It is a boxed set of
12 two-piece puzzles. The puzzles include cut-outs of fish, planes,
boats and cars. The purple box has "First Puzzles for Little Ones" and
"LR-2113" written on it.
Specialty toy stores, web retailers and school supply catalogs sold the
recalled puzzle and activity sets from January 1999 to July 2002.
Toddler Totes were sold for about $15 and Familiar Things were sold for
about $20.
Consumers should take these toys away from children immediately and
call Lauri for free replacement pieces. For more information, contact
Lauri toll-free at 800-451-0520 between 8 a.m. and 5 p.m. ETMonday
through Friday.
MEDTRONIC INC.: Lawsuits in CA, DE Won't Have Adverse Material Impact
---------------------------------------------------------------------
In June 2001, MiniMedInc. and its directors were named in a putative
class action lawsuit filed in the Superior Court of the State of
California for the County of Los Angeles. The plaintiffs purport to
represent a class of stockholders of MiniMed asserting claims in
connection with Medtronic's acquisition of MiniMed, alleging violation
of fiduciary duties owed by MiniMed and its directors to the MiniMed
stockholders.
Among other things, the complaint sought preliminary and permanent
injunctive relief to prevent completion of the acquisition. In August
2001, the Court denied the plaintiffs' request for injunctive relief to
prevent completion of the acquisition.
In December 2001, VidaMed,Inc. and its directors were named in a
putative class action suit in the Court of Chancery of the State of
Delaware for the County of Newcastle.
The plaintiffs purport to represent a class of shareholders of VidaMed
asserting claims in connection with our acquisition of VidaMed,
alleging that VidaMed and its directors violated various fiduciary
duties to the VidaMed shareholders.
"We believe that we have meritorious defenses against the above claims
and intend to vigorously contest them. The outcomes of the litigation
matters discussed above are not considered probable or cannot be
reasonably estimated. Accordingly, we have recorded no reserves
regarding these matters on our financial statements as of April 26,
2002," Medtronic said in its latest disclosure with the Securities and
Exchange Commission.
"We record a liability when a loss is known or considered probable and
the amount can be reasonably estimated. If a loss is not probable or a
probable loss cannot be reasonably estimated, a liability is not
recorded. While it is not possible to predict the outcome of the
actions discussed above, we believe that costs associated with them
will not have a material adverse impact on our financial position or
liquidity, but may be material to the consolidated results of
operations of any one period," the SEC document said.
Medtronic is the world leader in medical technology providing lifelong
solutions for people with chronic disease. It offers products,
therapies and services that enhance or extend the lives of millions of
people. Each year, 2.5 million patients benefit from Medtronic's
technology, used to treat conditions such as heart disease,
neurological disorders, and vascular illnesses.
About half of the company's sales come from defibrillators and
pacemakers, including devices for slow or rapid heartbeats. Subsidiary
Medtronic Sofamor Danek makes spinal implant devices and drug delivery
systems, and Medtronic Xomed makes surgical tools for ear, nose, and
throat specialists.
Other divisions include Medtronic Vascular (catheters and stents) and
Cardiac Surgery Technologies (mechanical and tissue heart valves).
Medtronic is increasing its Internet presence through a partnership
with WebMD and an e-commerce venture with such partners as Johnson &
Johnson and GE Medical.
PRE-PAID LEGAL: Plaintiffs Appeal Adverse Ruling in Oklahoma Lawsuit
--------------------------------------------------------------------
Pre-paid Legal Services, Inc. and various of its executive officers
have been named as defendants in a putative securities class action
originally filed in the United States District Court for the Western
District of Oklahoma in early 2001 seeking unspecified damages on the
basis of allegations that the it issued false and misleading financial
information, primarily related to the method the Company used to
account for commission advance receivables from sales associates.
On March 5, 2002, the Court granted the Company's motion to dismiss the
complaint, with prejudice, and entered a judgment in favor of the
defendants. Plaintiffs thereafter filed a motion requesting
reconsideration of the dismissal, which was denied. The plaintiffs
have appealed the judgment and the order denying their motion to
reconsider the judgment to the Tenth Circuit Court of Appeals, and the
Pre-Paid defendants will respond according to the schedule set by the
appellate court.
"The ultimate outcome of this case is not determinable," the company
said in a recent disclosure with the Securities and Exchange
Commission.
PRE-PAID LEGAL: Moves for Dismissal of Securities Derivative Suit
-----------------------------------------------------------------
On June 7, 2001 and August 3, 2001, shareholder derivative actions were
filed by alleged shareholders, Bruce A. Hansen and Donna L. Hansen, and
Roger Strykowski, respectively, against all of the directors of Pre-
paid Legal Services, Inc. seeking unspecified actual and punitive
damages on behalf of the Company based on allegations of breach of
fiduciary duty, corporate waste and mismanagement by the defendant
directors.
On March 1, 2002, plaintiffs filed a consolidated amended derivative
complaint. The amended complaint alleges that the defendant directors
caused the Company to violate generally accepted accounting principles
and federal securities laws by improperly capitalizing commission
expenses, caused the Company to allegedly pay increased salaries and
bonuses based upon financial performance which was allegedly improperly
inflated, and caused the Company to expend significant dollars in
connection with the defense of its accounting policy, including cost
incurred in connection with the defense of the securities class action,
and in connection with the repurchase of its own shares on the open
market at allegedly artificially inflated prices.
This derivative action is related to the putative securities class
action, which has been dismissed with prejudice. The defendants have
moved to dismiss the consolidated amended derivative complaint. The
Company anticipates that briefing on this motion will be completed in
August 2002.
The case is in the preliminary stages and the ultimate outcome is not
determinable.
PRE-PAID LEGAL: Alabama Lawsuits Dismissed, But Others Remain Pending
---------------------------------------------------------------------
Beginning in the second quarter of 2001 and through June 30, 2002,
multiple lawsuits were filed against Pre-paid Legal Services, Inc.,
certain officers, employees, sales associates and other defendants in
various Alabama and Mississippi state courts by current or former
members seeking unspecified actual and punitive damages for alleged
breach of contract, fraud and various other claims in connection with
the sale of memberships.
As of June 30, 2002, the Company was aware of 22 separate lawsuits
involving approximately 115 plaintiffs that have been filed in multiple
counties in Alabama, and nine separate lawsuits involving approximately
416 plaintiffs in multiple counties in Mississippi.
The Mississippi lawsuits also name the Company's provider attorney in
Mississippi as a defendant. A complaint has also been filed on behalf
of the Mississippi plaintiffs and others with the Attorney General of
Mississippi and the Company has responded to a request for information
from the Attorney General. Additional suits of a similar nature have
been threatened.
In January 2002, one of the law firms representing individual
plaintiffs in some of those Alabama suits filed a putative class action
on behalf of all Alabama residents purchasing memberships seeking
damages and injunctive relief based on alleged failures to provide
coverage under the memberships. The class action allegations of that
suit have been dismissed with prejudice and the claims of the two
individuals are all that remain in that suit.
Another Alabama member suit was dismissed with prejudice by the Pre-
Paid member who brought the suit due to her attorney's assessment of
the merits of the case.
In Mississippi, the Company has filed a lawsuit in the United States
District Court for the Southern District of Mississippi in which the
Company seeks to compel arbitration of the various Mississippi claims
under the Federal Arbitration Act and the terms of the Company's
membership agreements. These cases are all in various stages of
litigation, and the ultimate outcome of any particular case is not
determinable.
PRE-PAID LEGAL: Faces Suit in Oklahoma That Claims Nationwide Class
-------------------------------------------------------------------
On April 19, 2002, counsel in certain of the above-referenced Alabama
suits also filed a similar suit against Pre-paid Legal Services, Inc.
and certain of its officers in the District Court of Creek County,
Oklahoma on behalf of Jeff and Jana Weller individually and doing
business as Hi-Tech Auto making similar allegations relating to the
Company's memberships and seeking unspecified damages on behalf of a
"nationwide" class.
The Company has filed various preliminary motions in this case, all of
which were pending as of June 30, 2002. The case is in the preliminary
stages and the ultimate outcome is not determinable.
PRE-PAID LEGAL: Sales Associates Bring Putative Class Suit in Oklahoma
----------------------------------------------------------------------
On June 29, 2001, an action was filed against the Pre-paid Legal
Services, Inc. in the District Court of Canadian County, Oklahoma. In
the second quarter of 2002, the petition was amended to add five
additional named plaintiffs and to add and drop certain claims.
This action is a putative class action brought by Gina Kotwitz, George
Kotwitz, Rick Coker, Richard Starke, Jeff Turnipseed and Aaron Bouren
on behalf of all sales associates of the Company. The amended petition
seeks injunctive and declaratory relief, with such other damages as the
court deems appropriate, for alleged violations of the Oklahoma Uniform
Consumer Credit Code and seeks injunctive and declaratory relief
regarding the enforcement of certain contract provisions with sales
associates. The case is in the preliminary stages and the ultimate
outcome is not determinable.
PRE-PAID LEGAL: Moving for Dismissal in Case Before W.D. Oklahoma
-----------------------------------------------------------------
On March 1, 2002, an action was filed in the United States District
Court for the Western District of Oklahoma by Caroline Sandler, Robert
Schweikert, Sal Corrente, Richard Jarvis and Vincent Jefferson against
Pre-paid Legal Services, Inc. and certain executive officers.
This action is putative class action seeking unspecified damages filed
on behalf of all sales associates of the Company and alleges that the
marketing plan offered by the Company constitutes a security under the
Securities Act of 1933 and seeks remedies for failure to register the
marketing plan as a security and for violations of the anti-fraud
provisions of the Securities Act of 1933 and the Securities Exchange
Act of 1934 in connection with representations alleged to have been
made in connection with the marketing plan.
The complaint also alleges violations of the Oklahoma Securities Act,
the Oklahoma Business Opportunities Sales Act, breach of contract,
breach of duty of good faith and fair dealing and unjust enrichment and
violation of the Oklahoma Consumer Protection Act and negligent
supervision.
This case is subject to the Private Litigation Securities Reform Act.
Pursuant to the Act, the Court has approved the named plaintiffs and
counsel and an amended complaint is required to be filed on or before
August 2, 2002. The Company expects to file a motion to dismiss.
RADIO FLYER: Defective Steering Wheel Causes Recall of 59,000 Toy Cars
----------------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission (CPSC),
Radio Flyer Inc., of Chicago, Ill., is voluntarily recalling to replace
the steering wheel on about 59,000 Model 8 Roadsters manufactured
before January 2002. A child can pull the horn from the steering wheel,
and a small part inside poses a choking hazard to young children.
Radio Flyer has received 19 reports of horns detaching from the
steering wheel. No injuries have been reported. This recall is being
conducted to prevent the possibility of injuries.
The Model 8 Roadster is about 26- inches long with a red steel body and
a red rubber horn on a black steering wheel. The words "Radio Flyer"
and the number "8" appear on both sides of the riding toy. Roadsters
included in this recall have a date of manufacture of 12/2001 or
earlier and have a "horn symbol" embossed on the red rubber horn. A
label with the date of manufacture is located on the bottom of the
Roadster. The label has the letters "MD" followed by a date code that
represents the month and year of manufacture (for example, MD 12/2001
is for a manufacture date of December 2001).
Toy stores, discount stores, catalogues and web retailers sold the
Model 8 Roadsters nationwide between January 2001 and July 2002 for
about $70.
Consumers should take these Roadsters from young children immediately
and contact Redwagons to order a replacement steering wheel. Consumers
can contact Redwagons at 800-708-9246 between 8:30 a.m. and 5 p.m. CT
Monday through Friday or visit Radio Flyer's web site at
http://www.radioflyer.comand complete an order form. For more
information, consumers can contact Radio Flyer at 800-621-7613 between
8 a.m. and 5 p.m. CT Monday through Friday.
Model 8 Roadsters manufactured after January 2002 are not involved in
this recall. Model 8 Roadsters with a star embossed on the horn, even
if manufactured in 2001, have been re-designed and are not included in
this recall.
RAFFLES TOWN: Plaintiffs Produce Club Letters To Bolster Case
-------------------------------------------------------------
Some members of Raffles Town Club (RTC) were told by the club,
following delays to its completion that it would be finished just as
depicted in its membership brochure, the plaintiffs' lawyer in the
class-action suit said during a recent day in court, the Business Times
(Singapore) reported.
Senior counsel Molly Lim, representing 4,895 RTC members in a lawsuit
against the club, produced in court several letters sent to members
between late 1998 and early 2000, of which one was signed by RTC's
legal manager at the time, Brendan Don.
The letters were sent to people who had asked why the club had not been
completed by late 1998, and to some who were late in paying membership
fee installments. A letter dated January 31, 2000, and signed by Mr.
Don sought members' "kind understanding that we have not failed in our
contractual obligation to our members."
The letter said delays in the club's opening were due to unforeseen
technical difficulties, and added: "We have promised to deliver the
club and we will do so. All our members can rest assured, and have our
unqualified assurance, that we will deliver the club as depicted in our
membership brochures."
RTC was opened in March 2000.
Another letter, sent in September 1998 and signed by RTC's marketing
communications manager Jennifer Wee-Almodiel said: "On behalf of RTC
Ltd., we would like to state that it is our every intention to deliver
up to members a club with a standard and quality of lifestyle as
depicted in our membership brochures."
The letters were presented by Ms. Lim as evidence yesterday as she
cross-examined RTC's current legal adviser Francis Lee, who testified
as the first defense witness. Mr. Lee, who became RTC's legal adviser
in August 2001, said in his affidavit that it is RTC's case that its
membership application form and the letter of acceptance sent to
members formed a contract between the parties, and that the contractual
terms were in these two documents as well as in RTC's rules and
regulations. He said letters of invitation to join the club, as well as
its brochure and question-and-answer sheet, constituted "nothing more
than advertisements."
Under cross-examination, Mr. Lee said he was not aware of the letters
produced by Ms. Lim.
The plaintiffs, who have sued the club on the grounds of
misrepresentation and/or breach of contract, claim that in late 1996,
they were misled into joining the club by statements made in its
brochure that it would be exclusive and premier. They also claim that
these statements constitute part of the membership contract.
The case before High Court Judge S. Rajendran continues.
SMALL WORLD: Recalls 880 "Sort & See" Toys, To Refund Buyers
------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission (CPSC),
Small World Toys of Culver City, Calif., is voluntarily recalling about
880 sorter toys. The plastic windows on the "see-inside" sorting blocks
can break, causing the beads inside to be released. This presents a
choking hazard to children.
Small World has received one report of a sorter block breaking. No
injuries have been reported.
The recalled "Sort & See" sorting box is made of hardwood and comes
with eight shaped blocks of various colors. Each block is filled with
beads that are visible through plastic windows. The wooden box has a
clear plastic top and cutouts on two sides that correspond with the
shapes of the blocks. The words "Ryan's Room" is printed on one side of
the sorter box.
Toy stores sold the sorters nationwide from May 2002 through June 2002
for about $20.
Consumers should take the recalled shape sorters away from children
immediately and return the toys to the store where purchased for a
refund. For more information, consumers can contact Small World Toys
toll-free at 800-421-4153 between 8:30 a.m. to 4:30 p.m. PT Monday
through Friday or visit the firm's web site at
http://www.smallworldtoys.com
TEXAS: Appeals Court Awards State Medicaid Case Victory
-------------------------------------------------------
In a major victory for the state of Texas, the 5th U.S. Court of
Appeals ruled recently in a class-action lawsuit filed on behalf of
poor children that Texas is providing adequate health care for children
enrolled in Medicaid.
According to the Associated Press Newswires, the appeals court threw
out an August 2000 order by U.S. District Judge William Wayne Justice
that had strongly criticized Texas' administration of the government
health care program. The lower court ruling stated that Texas did not
adequately provide dental care, regular checkups, transportation to
doctors or information about what services are available to children in
Medicaid, despite a 1996 agreement in which the state promised to make
major improvements.
The lawsuit also claimed the state had not enrolled enough dentists in
the Medicaid program, because reimbursement rates are too low; and,
moreover, that ill children were not treated in a reasonable amount of
time as federal law requires.
Texas has increased participation in the program by making
improvements, including spending more money on outreach than any other
state in the nation and adding workers, the appeals court said; adding
that the plaintiffs and Judge Justice unrealistically expected Texas to
provide complete health care for every eligible child at all times.
"Perfect compliance with such a complex set of requirements is
practically impossible, and we will not infer congressional intent that
a state achieve the impossible," the appeals court wrote.
The federal court cannot require the state to follow the 1996
agreement, because it asks the state to do things not required by
federal law, the three-judge appeals panel ruled. Texas may not have
reached every eligible child, but officials never denied requested
services and the state provided care for at least the minimum number
required under federal law, the opinion said.
The lawsuit centers on the federal Early and Periodic Screening,
Diagnosis and Treatment Program, known in Texas as the Texas Health
Steps. The program is supposed to provide poor children with
comprehensive and periodic checkups, including evaluations on the
child's development, nutritional status, vision, dental status and
hearing.
* Thailand to Enact New Class Action Law to Better Protect Shareholders
-----------------------------------------------------------------------
Thailand's government is giving new impetus to efforts to boost good
corporate governance, not only with a view of attracting more local and
foreign investment in the stock market, but also toward uplifting the
confidence of current investors in the companies in which they hold
equity, the Associated Press Newswire said recently.
The Thai government in its pronouncements on the subject of corporate
governance evidences the understanding that such confidence will have
to be built on effective legislation enacted by the government and
integrated into the corporate structures by corporate governing bodies
committed to the principles of good corporate governance.
Deputy Commerce Minister Suvarn Valaisathien said the campaign to boost
good corporate governance will focus on stricter enforcement of
existing laws as well as new bills imposing stricter controls and
penalties.
"We have to enforce the many laws and rules we already have in a way
that makes investors feel comfortable about our capital market," the
Dow Jones Newswires quoted Mr. Valaisathien as saying.
Thai regulators started to implement stricter good governance rules
after the 1997 financial crisis, but the recent accounting scandals in
the United States have given their efforts a fresh importance,
according to the Minister.
A new Class Action Act is now being prepared by the Securities and
Exchange Commission, said the Deputy Minister, aimed at enabling groups
of retail shareholders to sue companies and their managements. He
added that legislation now in the works includes a revision of the
Public Company Act and the Securities and Exchange Act that would
reinforce shareholders' rights as well as the role and responsibilities
of directors.
"At this point, I think the enforcement of existing laws is most
important," said the Deputy Minister, adding that efficient enforcement
initially will require better coordination among the Securities and
Exchange Commission, police and the judicial system.
Too many cases, he said, have been left unresolved because of
insufficient training of police and prosecutors and their lack of
understanding of what is at stake. Lobbying by vested interests has
been an important factor hindering enforcement, he concluded.
New Securities Fraud Cases
AMERICAN EXPRESS: Wechsler Harwood Bares Filing of Suit in S.D. NY
------------------------------------------------------------------
The law firm of Wechsler Harwood Halebian & Feffer LLP filed a class
action lawsuit on July 25, 2002 on behalf of all persons who purchased
or acquired the common stock of American Express Company (NYSE:AXP)
between July 18, 1999 and July 17, 2001, inclusive in the United States
District Court for the Southern District of New York.
The lawsuit asserts claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC
thereunder and seeks to recover damages. Any member of the class may
move the Court to be named lead plaintiff. If you wish to serve as lead
plaintiff, you must move the Court no later than September 16, 2002. In
order to be appointed lead plaintiff, the Court must determine, among
other things, that the class member's claim is typical of the claims of
other class members, and that the class member will adequately
represent the class. Under certain circumstances, one or more class
members may together serve as "lead plaintiff." Your ability to share
in any recovery is not, however, affected by whether or not you serve
as a lead plaintiff.
Specifically, the complaint alleges that American Express and certain
of its officers and directors made misstatements and omissions of
material fact, including failing to disclose that American Express was
investing in a risky portfolio of high-yield or "junk" bonds with
ratings as low as "single-B" that carried the potential for substantial
losses if default rates in the junk bond market increased, failing to
disclose the true extent of American Express's total exposure as a
result of the foregoing after American Express wrote down $182 million
of its junk bond portfolio in April 2001, and failing to disclose that
American Express was taking a substantial and unnecessary risk by
investing in high-yield securities involving complex risk factors that
American Express management and personnel did not fully comprehend.
The complaint further alleges that after the full truth regarding
American Express's unnecessarily risky and imprudent investment
strategy began to become known to the market on July 18, 2001 when
American Express announced a surprise charge against earnings of $826
million, its third consecutive write-down of high-yield or "junk"
bonds, American Express stock traded as low as $37.17, down from a
class period high of over $62.00.
For further information, contact Wechsler Harwood Halebian & Feffer LLP
by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by
Phone: 877-935-7400 (toll free) or e-mail Ramon Pinion, Wechsler
Harwood Shareholder Relations Department: rpinioniv@whhf.com
CITIGROUP INC.: Bernstein Liebhard Files Enron-related Suit in S.D. NY
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A securities class action lawsuit was commenced on behalf of all
persons who purchased or acquired Citigroup Inc. (NYSE: C) securities
between July 24, 1999 and July 23, 2002. A copy of the complaint is
available from the Court or from Bernstein Liebhard & Lifshitz, LLP.
The action is pending in the United States District Court, Southern
District of New York. The complaint alleges that during the class
period, Citigroup Inc., Sanford I. Weill, its Chairman and Chief
Executive Officer, and Todd Thomson, its Chief Financial Officer, made
misrepresentations and/or omissions of material fact, including failing
to disclose that Citigroup misrepresented a 1999 transaction with Enron
that was structured as commodity trade but served the same purpose as a
loan to help Enron keep $125 million in debt off of its books,
affirmatively misrepresenting Citigroup's potential Enron-related
exposure in its 2001 Annual Report and elsewhere, and failing to
disclose the true extent of Citigroup's potential legal liability
arising out of its "structured finance" dealings with Enron.
The complaint alleges that when Wall Street learned about the foregoing
on July 23, 2002 after executives of Citigroup and J.P. Morgan Chase
testified before the U.S. Senate regarding the transactions at issue,
Citigroup stock plummeted $5.04 or 15.73% to close at $27.00, less than
half its class period high.
For more details, contact Ms. Linda Flood, Director of Shareholder
Relations, at Bernstein Liebhard & Lifshitz, LLP at 10 East 40th
Street, New York, New York 10016, (800) 217-1522 or 212-779-1414 or by
e-mail: C@bernlieb.com
CROSS MEDIA: Cauley Geller Commences Securities Suit S.D. New York
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The Law Firm of Cauley Geller Bowman & Coates, LLP announced late last
week that a class action has been filed in the United States District
Court for the Southern District of New York on behalf of purchasers of
Cross Media Marketing Corporation (Amex: XMM) common stock during the
period between November 5, 2001 and July 11, 2002, inclusive
The complaint charges Cross Media Marketing Corporation and certain of
its officers and directors with issuing false and misleading statements
concerning its business and financial condition. Specifically,
defendants issued numerous press releases during the Class Period,
which touted the Company's performance and represented that revenues
and earnings were increasing. The truth regarding Cross Media was not
fully disclosed until July 12, 2002, when defendants finally revealed
that Cross Media would have a loss for the second quarter of 2002, and
that revenues for the year would be significantly less than previously
predicted. Cross Media stock dropped to $2.71 per share from $4.88 the
previous day. The defendants had, prior to that date, among other
things misrepresented the impact and nature of FTC proceedings brought
against the Company and others.
For further information, contact CAULEY GELLER BOWMAN & COATES, LLP,
Investor Relations Department: Jackie Addison, Sue Null or Ellie Baker
by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
888-551-9944 (toll free) or by e-mail: info@classlawyer.com
EL PASO: Kirby McInerney Lodges Securities Fraud Suit in S.D. Texas
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The law firm of Kirby McInerney & Squire, LLP has commenced a class
action lawsuit on behalf of all purchasers of El Paso Corp. (NYSE:EP)
common stock during the period from July 25, 2001 through May 29, 2002.
The action, pending in the United States District Court for the
Southern District of Texas, seeks to recover losses suffered by such
investors.
EL PASO: Weiss & Yourman Commences Independent Suit in S.D. Texas
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A class action lawsuit against El Paso Corporation (NYSE:EP), and
certain of its officers and directors was commenced in the United
States District Court for the Southern District of Texas, Houston
Division on behalf of purchasers of El Paso securities.
The Complaint charges El Paso and certain of its officers and directors
with violations of federal securities laws. Among other things,
plaintiff claims that defendants' material omissions and the
dissemination of materially false and misleading statements regarding
the nature of El Paso's trading practices and revenues caused El Paso's
stock price to become artificially inflated, inflicting damages on
investors.
For additional information, contact James E. Tullman, David C. Katz
and/or Mark D. Smilow by Phone: 888-593-4771 or 212-682-3025 by e-
mail: info@wynyc.com or by Mail: Weiss & Yourman, The French Building,
551 Fifth Avenue, Suite 1600, New York, New York 10176
HPL TECHNOLOGIES: Milberg Weiss Files Securities Suit in ND California
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Milberg Weiss announced late last week that a class action has been
commenced in the United States District Court for the Northern District
of California on behalf of purchasers of HPL Technologies, Inc.
(NASDAQ:HPLA) common stock during the period between July 31, 2001 and
July 18, 2002.
The complaint charges HPL and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. HPL is a
provider of yield optimization software solutions to enable
semiconductor companies to enhance efficiency in the production
process. On July 31, 2001, HPL completed its initial public offering of
6.9 million shares (including the overallotment) at $11.00 per share,
raising net proceeds of $69.1 million. The IPO was accomplished
pursuant to a Prospectus and Registration Statement filed with the SEC.
These documents represented that the Company recognized revenue on
sales to distributors only when the distributors sold the software
license or services to their customers. Later, HPL reported favorable
financial results for the 1stQ, 2ndQ, 3rdQ and 4thQ of F02.
The complaint alleges that as a result of HPL's favorable but false
financials and false and misleading statements, its stock traded as
high as $17.85 per share. Defendants took advantage of this inflation,
selling 85,500 shares of their individual holdings. Then, on July 19,
2002, before the markets opened, HPL shocked the market with news that
it was investigating accounting irregularities with respect to revenue
recognition on shipments to distributors in prior quarters that its CEO
had been fired and its CFO had been reassigned. On this news, HPL's
stock collapsed 72% to as low as $4 per share, before trading was
halted.
For more details, contact Milberg Weiss Bershad Hynes & Lerach LLP
through William Lerach by Phone: 800/449-4900 or by e-mail:
wsl@milberg.com
KNIGHT TRADING: Bernstein Liebhard Begins Securities Suit in New Jersey
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A securities class action lawsuit was commenced on behalf of all
persons who purchased or acquired Knight Trading Group, Inc. (Nasdaq:
NITE) securities between February 29, 2000 and June 3, 2002.
The action is pending in the United States District Court, District of
New Jersey. The Complaint 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 a series of material
misrepresentations to the market between February 29, 2000 and June 3,
2002, thereby artificially inflating the price of Knight securities.
The complaint alleges that throughout the Class Period, defendants
issued statements regarding the Company's financial performance and
trading practices. As alleged in the complaint, these statements were
materially false and misleading because they failed to disclose and/or
misrepresented, among other things:
(i) that Knight traders were engaging in an elaborate system of
trading-rule violations known as "front-running," in which
customer orders were delayed while defendants' traders made
purchases in the same stocks ordered by customers, thereby
benefiting themselves at the expense of the customer; and
(ii) that the Company's front-running practices subjected the
Company to the heightened risk that it would be sanctioned by
the National Association of Securities Dealers (NASD).
On June 3, 2002, the last day of the Class Period, the Company
disclosed that its trading practices were being investigated by both
the United States Securities and Exchange Commission and the NASD.
Following this announcement, on June 4, 2002, when the market opened
for trading, shares of Knight plummeted 28% from the previous day's
close.
For additional information, contact Ms. Linda Flood, Director of
Shareholder Relations, at Bernstein Liebhard & Lifshitz, LLP, 10 East
40th Street, New York, New York 10016, (800) 217-1522 or 212-779-1414
or by e-mail: NITE@bernlieb.com .
PEMSTAR INC.: Charles Piven Initiates Shareholders Suit in Minnesota
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Law Offices Of Charles J. Piven, P.A. announced Thursday last week that
a securities class action has been commenced on behalf of shareholders
who acquired PEMSTAR, Inc. (Nasdaq: PMTR) securities between June 8,
2001 and May 3, 2002, inclusive.
The case is pending in the United States District Court for the
District of Minnesota, against defendants PEMSTAR and certain of its
officers and directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the Class Period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more information, contact the Law Offices Of Charles J. Piven, P.A.
by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite
2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by
Phone: 410-986-0036
VIVENDI UNIVERSAL: Lovell & Stewart Bares Filing of Suit in S.D. NY
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The law firm of Lovell & Stewart, LLP filed a class action lawsuit on
July 25, 2002 on behalf of all persons who purchased, converted,
exchanged or otherwise acquired the American Depositary Shares of
Vivendi Universal, SA (NYSE:V) between April 23, 2001 and July 1, 2002,
inclusive.
The lawsuit asserts claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC
thereunder and the common law and seeks to recover damages. Any member
of the class may move the Court to be named lead plaintiff. If you wish
to serve as lead plaintiff, you must move the Court no later than
September 16, 2002.
The action, Clark v. Vivendi Universal, SA, et al., is pending in the
U.S. District Court for the Southern District of New York (500 Pearl
Street, New York, New York), Docket No. 02-CV-5919 (JFK) and has been
assigned to the Hon. John F. Keenan, U.S. District Judge.
The complaint alleges that during the class period, Vivendi, Jean-Marie
Messier, its Chairman and Chief Executive Officer, and Guillaume
Hannezo, its Chief Financial Officer, made misrepresentations and/or
omissions of material fact, including misstating Vivendi's earnings in
its public filings with the SEC and elsewhere as a result of failing to
record write-downs of goodwill and other intangible assets associated
with, inter alia, the merger among Vivendi, Seagram and Canal+ long
after it had become apparent that such assets were being carried at
values vastly higher than their true values, failing to disclose that
the exchange ratio for the merger between MP3.com, Inc. and Vivendi was
distorted due to artificial inflation in the price of Vivendi American
Depositary Shares, and failing to disclose that Vivendi had significant
off-balance-sheet liabilities in the form of its undisclosed sale of
put options on tens of millions of dollars worth of Vivendi shares
during 2001 in order to pay for stock options it awarded to executives.
The complaint alleges that when Vivendi followed its announcement on
April 29, 2002 of a reported net loss of 17.01 billion euros (or over
$15 billion) for the first quarter of 2002 with the announcement on
April 30, 2002 that Vivendi had incurred an off-balance-sheet put-
option liability to enrich its own executives' pay packages, Vivendi
ADSes sank to a 52-week low of $26.78 on May 7, 2002, down from a class
period high of $60.26 on August 2, 2001.
For additional details, contact Lovell & Stewart, LLP, New York through
Christopher Lovell 212-608-1900 or Christopher J. Gray 212-608-1900 or
e-mail the firm at classaction@lovellstewart.com
VIVENDI UNIVERSAL: Leo Desmond Initiates Securities Suit in S.D. NY
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The Law Offices of Leo W. Desmond filed recently a securities class
action on behalf of shareholders who acquired Vivendi Universal, S.A.
(NYSE:V) securities between February 11, 2002 and July 2, 2002,
inclusive.
The case is pending in the United States District Court for the
Southern District of New York against Vivendi Universal and Jean-Marie
Messier.
It is alleged that defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10(b)(5) promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market throughout the Class Period which statements
had the effect of artificially inflating the market price of the
Company's securities.
For more details, contact the Law Offices of Leo W. Desmond by Mail:
2161 Palm Beach Lakes Blvd., Suite 204, West Palm Beach, Florida 33409,
by Phone: 888-337-6663 (toll free) by e-mail:
Info@SecuritiesAttorney.com or by visiting its Web site:
http://www.SecuritiesAttorney.com
VIVENDI UNIVERSAL: Weiss & Yourman Files Securities Suit in S.D. NY
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A class action lawsuit against Vivendi Universal (NYSE:V) and Jean-
Marie Messier was commenced in the United States District Court for the
Southern District of New York on behalf of purchasers of Vivendi
securities.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the Class Period that had the effect of artificially inflating the
market price of the Company's securities. It alleges a scheme to
conceal the severity of Vivendi's liquidity problems and cash crisis.
French authorities are investigating whether there was timely
disclosure of the Company's true financial condition.
For more information, contact James E. Tullman, David C. Katz and/or
Mark D. Smilow by Phone: 888-593-4771 or 212-682-3025 by e-mail:
info@wynyc.com or by Mail: Weiss & Yourman, The French Building, 551
Fifth Avenue, Suite 1600, New York, New York 10176
*********
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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