/raid1/www/Hosts/bankrupt/CAR_Public/020807.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, August 7, 2002, Vol. 4, No. 155
Headlines
ABERDEEN ASSET: Investors Lawsuit Over Collapsed Trust Fund Likely
ASARCO INC.: EPA Investigating Soil Contamination in El Paso Smelter
BAE SYSTEMS: Saudi Arabian Workers File Suit For Labor Law Violations
CANADA: Livent Investors May Be Compensated for 1996 Stock Purchases
CANADA: Man Files Sex Abuse Suit Against British Columbia Government
CATHOLIC CHURCH: Bishop Says Geoghan Settlement Considered Preliminary
DONNELLY CORPORATION: Mounting Vigorous Defense V. Investor Suit in MI
FEIST PUBLICATIONS: Families Sue Over Incorrect Phone Book Listings
IDAHO: Coeur d'Alene Bluegrass Burning Arguments Planned This Week
MCDONALD'S CORPORATION: Vegetarian, Religious Groups Want Payout Share
MIRANT CORPORATION: SEC Starts Probe On Announced Accounting Mistakes
SHELL OIL: Agrees To Settle For $28 Million MTBE Contamination Suit
UNITED STATES: Ex-Braceros Protest While Lawsuit Moves Through Courts
UNITED STATES: Haitians Stage Protests While Appealing Dismissed Suit
WASHINGTON: Deputies Say Overtime Pay Routinely Late By Weeks, Months
XCEL ENERGY: Shareholders Sue, Alleging False Financials Misled Them
*Overtime Wage Legislation Scrutinized As Number of Suits Increases
New Securities Fraud Cases
AMERADA HESS: Schiffrin & Barroway Commences Securities Suit in NJ
AMERADA HESS: Cauley Geller Commences Securities Suit in New Jersey
CITIGROUP INC.: Schiffrin & Barroway Commences Securities Suit in NY
ECLIPSYS CORPORATION: Marc Henzel Commences Securities Suit in S.D. FL
EXELON CORP.: Marc Henzel Commences Securities Fraud Suit in N.D. IL
GREAT ATLANTIC: Marc Henzel Commences Securities Suit in New Jersey
HPL TECHNOLOGIES: Milberg Weiss Commences Securities Suit in N.D. CA
JOHNSON & JOHNSON: Cauley Geller Launches Securities Suit in New Jersey
MERCK & CO.: Spector Roseman Commences Securities Suit in New Jersey
NICOR INC.: Marc Henzel Commences Securities Fraud Suit in N.D. IL
REHABCARE GROUP: Marc Henzel Commences Securities Fraud Suit in E.D. MO
RIVERSTONE NETWORKS: Bernstein Liebhard Commences Securities Suit in CA
SALOMON SMITH: Finkelstein Thompson Lodges Securities Fraud Suit in DC
SONUS NETWORKS: Wolf Haldenstein Commences Securities Suit in MA Court
SYMBOL TECHNOLOGIES: Marc Henzel Commences Securities Suit in E.D. NY
TEXTRON INC.: Marc Henzel Commences Securities Fraud Suit in RI Court
XCEL ENERGY: Berger & Montague Launches Securities Fraud Suit in MN
*********
ABERDEEN ASSET: Investors Lawsuit Over Collapsed Trust Fund Likely
------------------------------------------------------------------
Aberdeen Asset Management faces a potential class action to be filed by
London solicitor Leon Kaye on behalf of the investors who lost money
when one of its trusts called the Aberdeen High Income Trust collapsed,
icWales.com reported.
The Trust warned investors earlier this week that it was unlikely they
would get any money back after it went into receivership. The suit
will attempt to recover some of the investors' money.
The solicitor claims that Aberdeen High Income Trust, a split capital
investment trust, was a high-risk investment but was not marketed as
such. It added that because the trust came under the umbrella of
Aberdeen Asset Management, the fund manager and any other holding
company could be pursued for compensation as the promoter of the fund,
icWales.com reported.
Leon Kaye has already set up an action group called Split to try to get
compensation for people who have lost money in split capital trusts.
ASARCO INC.: EPA Investigating Soil Contamination in El Paso Smelter
--------------------------------------------------------------------
The Environmental Protection Agency (EPA) plans to clear away topsoil
from 45 west El Paso, Texas yards due to potentially dangerous levels
of lead and arsenic. The EPA is investigating whether a 100-year-old
copper smelter operated by Asarco, Inc. is responsible for the
contamination, the Associated Press reported.
EPA Spokesman David Bary told AP that the agency plans to check another
1,000 locations for potential contamination, and hopes to determine by
the end of this month how many areas are contaminated.
The Texas Department of Health and the Federal Agency for Toxic
Substances and Disease Registry analyzed surface soil samples taken
from nearly 200 locations and concluded that lead and arsenic at some
of them could be potentially hazardous to children, according to AP.
However, the report said there was no immediate danger and that
ingesting small amounts of the soil did not significantly increase
cancer risks.
The EPA asked the Company to conduct sampling, but the Company refused.
It said it already was involved in a process, started in 1999 and
approved by the EPA, to test for contamination and potential threats,
AP reported.
Asarco officials say thousands of samples taken around the plant show
that there is no threat. "They're saying it's a public health threat
without proving it's a public health threat," said Plant Environmental
Manager Lairy Johnson.
Many homeowners were expected to attend a meeting Monday night where
officials were to discuss plans for the area.
BAE SYSTEMS: Saudi Arabian Workers File Suit For Labor Law Violations
---------------------------------------------------------------------
BAe Systems faces a class action in a Saudi Arabia labor court,
alleging Britain's largest defense contractor of violating the
country's labor laws, the Middle East Newsline reported.
The suit was filed on behalf of 497 Saudi Arabian employees, alleging
that the Company was forcing them to sign an annual contract that
allows the Company the right to reduce salaries for Saudi employees in
2003. The contract further revises the other terms of their
employment. The Company allegedly threatened anyone who refused to
sign with dismissal.
The Company is the prime contractor of the Al Yamama, the estimated $8
billion project to sell British aircraft and other systems to the
kingdom, and has operated in Saudi Arabia for about 30 years, the
Middle East Newsline reported.
CANADA: Livent Investors May Be Compensated for 1996 Stock Purchases
--------------------------------------------------------------------
Investors who bought shares in defunct Livent Inc., in a 1996 offering,
finally may get back some of their money, The Globe and Mail reported.
A settlement has been reached in a US class action surrounding Livent's
collapse.
According to published notices, the settlement involves former Livent
directors contributing US$750,000, of which lawyers will receive
US$250,000. The remainder will be split among shareholders.
A hearing to approve the settlement is scheduled.
CANADA: Man Files Sex Abuse Suit Against British Columbia Government
--------------------------------------------------------------------
Lawyers for a man who said he was regularly sexually abused at
Woodlands, a now-closed residential facility for the mentally
handicapped, recently filed a lawsuit in British Columbia Supreme
Court, The Globe and Mail reported.
The suit, which names only the British Columbia government, could
become a class action, said the attorney who represents the plaintiff.
The plaintiff lived at the facility while a teenager from 1972 to 1975.
Woodlands opened in New Westminster in 1878 as the Provincial Asylum
for the Insane. It closed in 1996.
CATHOLIC CHURCH: Bishop Says Geoghan Settlement Considered Preliminary
----------------------------------------------------------------------
The Archdiocese of Boston's former head of administration Bishop Robert
Banks denied signing the US$30 million settlement with alleged sexual
abuse victims of defrocked priest Fr. John Geoghan, the Associated
Press reported.
The Archdiocese initially agreed to the settlement, but later withdrew
in May this year, saying that it could not afford it. Lawyers for the
86 victims are asking the court to compel the archdiocese to stick to
the settlement. Earlier, Cardinal Bernard Law testified that he never
considered the agreement a final deal because it required the
signatures of both victims and the archdiocese's finance committee,
according to an earlier Class Action Reporter story. Bishop Banks
echoed this statement, saying he considered the settlement
"preliminary," in a court hearing on the settlement.
Bishop Banks was called by archdiocese lawyer Wilson Rogers Jr. and
said he understood the agreement to be a "draft" and "very
preliminary," according to an Associated Press report. "My
understanding was that Mr. Rogers was going to come out to Green Bay
and explain to me in greater detail any final settlement before I would
sign on," he said.
DONNELLY CORPORATION: Mounting Vigorous Defense V. Investor Suit in MI
----------------------------------------------------------------------
Donnelly Corporation (NYSE: DON) faces a class action filed in the
Oakland County, Michigan Circuit Court against the Company, its
directors, Magna International Inc. and Magna Mirrors Acquisition Corp.
The suit was filed as a purported class action on behalf of holders of
Donnelly common stock.
The suit alleges that the Company's Board of Directors, by entering
into the merger agreement, dated as of June 25, 2002, with Magna and a
subsidiary of Magna, violated their fiduciary duties to Donnelly
shareholders and that Magna aided and abetted such breach.
The complaint also alleges that the draft prospectus/proxy statement
filed with the Securities and Exchange Commission in connection with
the proposed merger fails to provide all material information
concerning the proposed transaction.
The Company believes that plaintiffs' claims are completely without
merit, and intends to defend the action vigorously.
FEIST PUBLICATIONS: Families Sue Over Incorrect Phone Book Listings
-------------------------------------------------------------------
Two families are suing Feist Publications Inc. after their phone
numbers were incorrectly listed under the category "Abortion Provider,"
Associated Press Newswires reports. Attorneys say they will pursue a
class action if more problems are discovered.
Martha Black of Prairie Village and her son, Carl Black, filed the
lawsuit in Johnson County District Court, in Kansas. In the Feist
Directory, the name of Martha Black's deceased husband, who was a
doctor, is listed with the address where she and her son now live.
Carl Black was also listed wrongly. He is a legal consultant and child
advocate, and his number was included under the "Pet Grooming"
category.
"Said statement is false and was false when made, because plaintiff
Carl Black is not and never has done business as a pet groomer or any
other related business," according to the lawsuit. The false listings
have tended to expose the Blacks to "hatred, contempt and/or ridicule"
and are "highly offensive to a reasonable person."
The suit also alleges that the Company was negligent in its supervision
of the employees responsible for the false listings. The lawsuit does
not specify the amount of damages being sought. The suit was amended
recently to include another couple whose number was listed in the
"Abortion Provider" category, attorney Dan Ross said.
Errors in the Kansas City area directory that the Company began
distributing in June, also include the listing of a legal consultant as
a pet groomer. These errors, among others, were discovered when the
company was reviewing the work of an employee assigned the task of
checking the accuracy of listing obtained from local telephone service
providers, said Roger Carvalho, marketing director for Feist
Publications in Wichita.
IDAHO: Coeur d'Alene Bluegrass Burning Arguments Planned This Week
------------------------------------------------------------------
Arguments in favor of and opposing field burning in Northern Idaho are
scheduled for August 7, 2002 in First District Court in Coeur D'Alene,
Idaho. First District Judge John Mitchell has scheduled a hearing for
9 am Friday to hear arguments over a request for a restraining order
and temporary injunction to prohibit field burning, the CDA Press
reports.
Bluegrass farmers practice field burning to enhance the next year's
field crop. Opponents of the practice say it is a threat to public
health, tourism and the quality of life in North Idaho. Washington
already banned the practice, while some North Idaho farmers have
voluntarily given it up.
Steve Berman, a Seattle-based class-action attorney, filed the suit
against 79 farmers, seed companies and the state of Idaho on behalf of
Hope Mayor Bud Moon and others who claim to suffer breathing
difficulties because of field smoke, the CDA Press reports.
Linda Clovis, spokeswoman for the North Idaho Farmers Association, told
the CDA Press the scheduled hearing won't put added pressure on farmers
to burn before the court date. "I think we have a good case, and our
attorneys are doing a good job," Ms. Clovis said. "I'm sure once the
facts are presented the right side will win."
MCDONALD'S CORPORATION: Vegetarian, Religious Groups Want Payout Share
----------------------------------------------------------------------
Animal rights and Muslim groups say they want a piece of the $10
million that McDonald's has agreed to pay for mislabeling its french
fries as vegetarian, Associated Press Newswires report.
McDonald's has apologized for telling customers for a decade that its
fries were cooked in 100 percent vegetable oil, when in fact its raw
potatoes were first seasoned with beef extract. However, getting
McDonald's to agree to the multimillion-dollar payout may have been the
easy part.
The fast-food giant announced in May that it would pay the money to
settle a class action brought by three vegetarians in Seattle,
including two Hindus who don't eat meat for religious reasons.
Amidst the furor of the groups vying for a share of the settlement
monies, August 22, has been scheduled as the date for a judge in
Chicago to rule on the final distribution of the money. About 2,000
objections to the settlement have been filed with the court, not
unusual in a case with 16 million potential plaintiffs, the attorneys
say.
Under the terms of the preliminary deal, the company will pay $10
million to organizations that support vegetarianism and $2.4 million in
legal fees.
More than 100 organizations, from a Pennsylvania cow sanctuary to a
yoga meditation center, have applied for part of the settlement. Most
will not get any money because they are not mainstream vegetarian
groups, attorneys said.
That has many crying, "foul." Animal-rights activists say they are
being excluded from the settlement because they are more outspoken than
vegetarian groups in their criticism of McDonald's. "If I were
McDonald's, I would give the money to the most benign, least effective
organizations out there," said Matthew Ball, one of two employees at
Vegan Outreach in Chicago.
The more than six million Muslims in North America "must be recognized
as an offended party," said Abdul Malik Mujahid, head of Sound Vision,
which sells Islamic educational materials on the Internet. "Everyone
has a right to know what they are eating." Thus, the Muslims want to
be included along with the Hindus, Sikhs and Jews originally named in
the settlement, says the Seattle Times.
Harish Bharti of Seattle, the lead attorney in the case, says he agrees
with the complaining groups. The four other attorneys representing
vegetarians and Hindus in the class-action lawsuit are "joining hands
with McDonald's" to craft a settlement that excludes deserving
organizations, Mr. Bharti said.
"This whole settlement is a sham," said Mr. Bharti, a Hindu and
vegetarian. "In a case that is about deceiving consumers, the lawyers
should not be engaging in the same deceptive practices." The other
lawyers have denied the allegations.
"We wanted groups that would have the most effect on the most people,"
said Chicago attorney James Latturner. Los Angeles attorney Kevin
Roddy said the settlement agreement directs the two sides to work
together to come up with a final proposal for the court, "that's how
cases are settled," he said.
In July, Mr. Bharti asked the Chicago judge overseeing the settlement
negotiations to remove the lawyers from decisions about which groups
will receive the money. Mr. Bharti charged that the plaintiffs'
attorneys were representing McDonald's interests more than those of
their own clients. Under the preliminary agreement, the attorneys will
divide $2.5 million, no matter who receives the $10 million, the
Seattle Times points out.
The judge will rule on Mr. Bharti's motion on August 22, at which time
he rules on final distribution of the money, as well. It was Mr.
Bharti who sued McDonald's in May 2001, on behalf of US vegetarians,
saying the company had deliberately misled customers who don't eat meat
products by using beef tallow in its fries and hash browns long after
making a widely publicized 1990 pledge to cook them in vegetable oil.
McDonald's has admitted to using beef extract, not beef tallow.
MIRANT CORPORATION: SEC Starts Probe On Announced Accounting Mistakes
---------------------------------------------------------------------
The United States Securities and Exchange Commission (SEC) is
conducting an informal inquiry into energy trader Mirant Corporation's
accounting practices, the Associated Press reports.
Last week, the Company stated that it might have overstated the value
of certain assets and a liability in 2001. The accounting
overstatement related to a debt of $100 million, $85 million in natural
gas inventory and $68 million the company expected to collect. Company
executives said they were investigating and that any restatement
related to the accounting error is not expected to affect 2002
earnings.
The Company said the SEC review was not a surprise. "When companies
report accounting issues, informal inquiries from the SEC usually
follow, especially in this day and age," Doug Miller, senior vice
president and general counsel for the Atlanta-based company, said in a
statement, AP reports.
For its inquiry, the SEC has requested additional information about the
Company's recently disclosed shareholder litigation, any round-trip
trades entered into by or on behalf of the company, and the Federal
Energy and Regulatory Commission's investigation into energy-trading
practices in the western United States.
SHELL OIL: Agrees To Settle For $28 Million MTBE Contamination Suit
-------------------------------------------------------------------
Shell Oil Co. agreed to settle for US$28 million, a landmark lawsuit
relating to water contamination by gasoline additive methyl tertiary
butyl ether (MTBE), Reuters reports. The case could set a precedent
for dozens of similar suits around the country.
"We determined this was the most appropriate action at this time to
cease protracted litigation costs, future litigation and appellate
costs," said Shell spokesman Cameron Smyth. The 11-month trial against
MTBE producers, oil refiners and gasoline retailers started last
September, with most defendants settling out-of-court before jury
deliberations, Reuters reports.
In April, a San Francisco jury ruled against the remaining refiners
Shell and Tosco Corp., now part of Phillips Petroleum Co, ) and
the Lyondell Chemical Co. The jury found MTBE-blended gasoline to be
"a defective product," and that Lyondell and Shell acted maliciously by
withholding information about MTBE's potential hazards, according to
Reuters. Lyondell, the world's largest producer of MTBE, or methyl
tertiary butyl ether, settled out of court for $4 million on July 24.
UNITED STATES: Ex-Braceros Protest While Lawsuit Moves Through Courts
---------------------------------------------------------------------
Former Mexican braceros and their supporters recently held a rally at
US District Court and Wells Fargo Bank headquarters in San Francisco,
demanding the payment of wages earned almost 60 years ago, The San
Francisco Chronicle reports.
During World War II, the United States and Mexico agreed to withhold 10
percent of the farm workers' wages when they were recruited to replace
American workers fighting the war, until they returned to Mexico.
A vast number never received the withheld wages, say the laborers, who
have filed a class action against the bank and the two governments to
recover an estimated $500 million in wages and interest never received
by the braceros, who grew and harvested food for Americans at home so
other Americans could fight the battles of World War II.
UNITED STATES: Haitians Stage Protests While Appealing Dismissed Suit
---------------------------------------------------------------------
A passing cabby pumped his fist, another motorist honked rhythmically
as a sudden burst of music roused 200 protesters denouncing the
government's treatment of Haitian asylum seekers, the South Florida
Sun-Sentinel reports.
The Haitians are claiming their due process rights have been violated
in the asylum-seeking process. The day after federal authorities
deported 25 Haitians, union activists and Haitians turned out to call
for the freedom of dozens of detained Haitian asylum-seekers.
Of the 25 migrants deported, 21 were among the close to 200 whose
overloaded boat ran aground in Miami in December, setting off fears
among government officials of a coming mass Haitian exodus. These
fears inspired a new policy toward Haitian asylum-seekers; expedite the
initial review and appeal processes and deport quickly.
Generally, upon arrival in the United States, the Haitians had been
released after an initial interview establishing that they have a
credible fear of persecution should they be returned to Haiti.
Usually, there were attorneys appointed to represent them during their
hearings and to help them fill out asylum applications that require
detailed responses to the questions in English. Instead, members of
the group of 200 were being processed and removed quickly, according to
Cheryl Little, executive director of the Florida Immigrant Advocacy
Center.
Ms. Little said that the advocacy center has filed appeals from the May
ruling dismissing the class action, which the center filed in March,
claiming the asylum-seekers due process is being denied. The
government has admitted that the change in policy toward Haitian
immigration was designed to stem a mass Haitian exodus from their
island home in the Caribbean Sea.
WASHINGTON: Deputies Say Overtime Pay Routinely Late By Weeks, Months
---------------------------------------------------------------------
King County, Washington, is defending itself against a lawsuit by
sheriff's deputies who allege that their overtime pay routinely shows
up on paychecks weeks, even months, late, The News Tribune (Tacoma, WA)
reported.
Chris Vick, a lawyer for the deputies, filed the lawsuit, on behalf of
four deputies, and the lawsuit asks the court to authorize a class
action. Under a class action, a victory for the four plaintiffs would
result in compensation for all affected King County deputies - as many
as 688.
The Sheriff's spokesman Sgt. Cameron Webster said that the sheriff's
office does not comment on lawsuits.
In court filings, the county made this official response, "King County
only admits that the four named plaintiffs receive a paycheck on the
5th and 20th of each month. As no specific facts are alleged in the
Complaint, defendant King County lacks information sufficient to form a
belief as to the truth of the statement that `wage payments have been
and remain unpaid' and therefore denies the same." Mr. Vick said that
they were having some difficulty getting payroll records out of the
county that will help them determine what the county might owe if the
case becomes a class action.
Delayed overtime pay was a hot and recurring issue at union meetings
even before the lawsuit was filed. Minutes from the March 13, 2002,
meeting of the King County Police Officers Guild board of directors
refer to the "large volume of complaints received in regard to the
continual delayed payment of overtime."
XCEL ENERGY: Shareholders Sue, Alleging False Financials Misled Them
--------------------------------------------------------------------
Two Xcel Energy shareholders have sued the Company, alleging they were
misled about its financial problems, the Rocky Mountain News reports.
The Company is the parent company of Public Service Co. of Colorado,
which serves about 70 percent of the state's power and natural gas
customers.
Shareholders Max Bruckner and Stephen Herod charge that the Company's
top officers issued "false and misleading" statements about the
Minneapolis-based Company's business practices and financial condition
from January 3, 2001, to July 26, 2002. Several law firms, including
Milberg, Weiss Bershad Hynes & Lerach of New York, lead counsel in the
class action against Enron and Arthur Andersen, filed the lawsuit and
are seeking court approval to make the claim a class action.
"We are seeking to represent a whole class and we think we have a valid
case," said lead attorney Garrett Blanchfield of Reinhardt and Anderson
of St. Paul, Minnesota. "But it is very early on in the litigation -
it could take a year for a judge's decision."
Gary R. Johnson, general counsel for the Company, said the Company was
not surprised by the lawsuit, "since suits like this are fairly typical
in situations when a company's stock price declines significantly." If
deemed a class action, the decision or settlement in the case could
affect "hundreds or thousands" of people, plaintiff lawyers claim.
Some of the misrepresentations which the lawsuit allege were made about
the Company for the past 18 months, causing the Company's stock price
to be "artificially inflated" during the class period are:
(1) Public Service Co.'s round-trip energy trades with Reliant
Energy in 1999 and 2000;
(2) the NRG Energy-Xcel "cross-default" provisions with lenders
that dictate if subsidiary NRG goes into default, the Company
loses credit lines worth $800 million;
(3) failure to disclose NRG's grave liquidity and credit problems;
and
(4) the Company's lack of necessary internal controls to
adequately monitor its power trading activities.
*Overtime Wage Legislation Scrutinized As Number of Suits Increases
-------------------------------------------------------------------
The case of Radio Shack store manager Omar Belazi describes the plight
of workers who are categorized as having professional jobs, not subject
to overtime pay. Mr. Belazi logged 65-hour weeks, vacuuming the floor,
cleaning the bathroom, surrendering his Sundays to hit sales targets.
A growing number of workers like Mr. Belazi are demanding more from
their employers. The result is a flood of employees' lawsuits, many in
arguably only "professional" jobs, who accuse their companies of
cheating them out of overtime pay, the Deseret News reports.
This surge in claims, some resulting in multimillion-dollar
settlements, reflects the maturation of a long-simmering debate over
overtime pay and who is entitled to it. In part, that debate reflects
the fact that Americans are working more hours, longer than their
counterparts in every other industrialized country, and that employers
are trying stretch productivity. There have been many changes in job
titles and their associated responsibilities.
With manufacturing jobs dwindling, more workers now work for service-
industry employers who pay salaries and bestowed with hard-to-define
titles like "analyst," "manager" and "administrator."
Federal law says employers do not have to pay overtime to salaried
workers in executive, administrative or professional jobs. However,
the law, the Fair Labor Standards Act, which has undergone only limited
revision since the 1970s, relies on some outdated salary figures and
terminology that leaves room for broad interpretation. California,
which has become a hotbed of overtime battles, has a law that grants
overtime pay to a broader group of workers.
Radio Shack agreed in July to pay $29.9 million to settle a lawsuit led
by Mr. Belazi on behalf of 1,300 current and former store managers.
The workers contended they were owed overtime because the company made
virtually all managerial decisions at higher levels and mandated that
they spend most of their hours as salesmen.
Radio Shack is the most recent in a series of large settlements in
California. This spring, Starbucks agreed to pay a group of California
store managers $18 million to settle an overtime suit. SBC Pacific
Bell agreed last December to pay a group of engineers $35 million.
While this is "the cause of action du jour" in California, it takes
other forms in other places. Elsewhere, drug-store chain Eckerd Corp.
paid $8 million last year to settle a lawsuit brought by a pair of
former pharmacists at a store in Moss Bluff, Louisiana, on behalf of
1,100 others.
The lawsuit accused Eckerd of docking the druggists' supposedly fixed
salary if they worked less than 40 hours, but the company would not pay
them more when they worked beyond their scheduled shifts, the workers
said. "How can you tell me I am a salaried employee if I have to sign
a timesheet?" asked Kevin Soileau, one of the pharmacists who filed the
lawsuit.
Eckerd denied liability, saying it settled merely to avoid the expense
of a lengthier court battle. Other pharmacy operators, including
Long's and Wal-Mart, have been similarly sued in recent years.
More recently, a federal judge in Minnesota, ruled that more than 2,000
"loan originators" for Conseco Finance Corporation, who sell financing
by telephone, were entitled to overtime pay, even though federal law
exempts retailers from having to pay some workers overtime, as for
example, largely unsupervised "outside sales" workers. The Minnesota
court ruled that the Conseco workers, who earned a base salary plus
commissions, fell outside the exemption.
Other lawsuits accuse companies of deliberately depriving hourly
workers of overtime pay by forcing them to work off the clock. For
example, a pair of sales assistants at Credit Suisse Boston in Miami,
secretaries to the firm's stockbrokers, sued last year. The workers
accuse the company of having an "unwritten rule" against overtime pay,
exemplified by managers who told workers long hours were "the nature of
the business." Credit Suisse declined to comment on the lawsuit.
Wal-Mart Stores Inc. is fighting 38 different state and federal
lawsuits filed by hourly workers in 30 states, accusing the company of
systematically forcing them to work long hours off the clock. Wal-Mart
settled another such suit in Colorado two years ago, reportedly for $50
million. The terms of the settlement were confidential, and the
company will only say that the actual amount is far less than has been
reported.
"The instances alleged are isolated and infrequent and we have a policy
that allows us to pay hundreds of thousands of associates properly
every day," Wal-Mart spokesman Bill Wertz said. However, those suits
are hardly the only ones out there.
Last year, workers filed 79 federal collective-action lawsuits seeking
overtime pay, surpassing for the first time class actions against
employers for job discrimination, according to a recent report to the
American Bar Association. Labor advocates and lawyers for workers say
the lawsuit show that the Fair Labor Standards Act and the state labor
laws remain vital in protecting workers.
Employers argue that outdated labor laws have become a weapon for
attorneys to win undeserved overtime pay for already highly paid
employees. The law "was put in place to make sure that workers at the
low-end of the pay scale are paid a fair day's wage for a fair day's
pay (work), and it has gotten away from that," said Timothy Bartl,
assistant general counsel for the Labor Policy Association, which
lobbies on behalf of corporate personnel officers.
Employers may soon get part of what they are after. The Department of
Labor (DOL) is pledging to update regulations to clarify which workers
are covered by the law and focus its protection on those in low-wage
jobs.
The DOL said it wants to work more closely with employers to help them
understand the law, including giving them copies of the Field
Operations handbook the DOL's Wage & Hour Division uses to investigate
companies. The Department rejects criticism that the government is
easing up on employers who don't pay overtime.
"It is important to take good faith employers and make sure they know
what the law is and what they need to do to comply with it," said Tammy
McCutcheon, administrator of the department's wage and hour division.
"We have not backed off enforcement a single step." She points to
actions like DOL's lawsuit in May against Tyson Foods Inc. for refusing
to pay workers for time spent putting on and taking off work clothing
and protective gear.
New Securities Fraud Cases
AMERADA HESS: Schiffrin & Barroway Commences Securities Suit in NJ
------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the District of New Jersey on behalf
of all purchasers of the common stock of Amerada Hess Corp. (NYSE: AHC)
common stock during the period between February 9, 2001 and July 11,
2001, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, the complaint alleges
that beginning in early 2001, the Company began secret discussions to
acquire Triton Energy Limited (Triton), in order to obtain needed
additional oil reserves and to significantly boost the Company's crude
oil production.
However, it immediately became clear to Amerada Hess' top insiders that
due to the demands of Triton's CEO and Triton's controlling shareholder
that if Amerada Hess was to acquire Triton, Amerada Hess would have to
pay an extremely high price of over $3 billion for Triton, a price in
excess of what standard valuation approaches would justify for Triton.
Moreover, this price would represent a very substantial premium over
Triton's stock trading price and a price that would require Amerada
Hess to borrow billions of dollars to finance the purchase of Triton.
Without disclosing these discussions and negotiations or Amerada Hess'
decision to offer to pay over $3 billion to acquire Triton, the top
insiders at Amerada Hess who were involved in, or aware of, the details
concerning the proposed acquisition of Triton, sold off huge amounts of
their Amerada Hess stock to avoid the losses they knew they would
suffer from the sharp decline in Amerada Hess' stock which they knew
would occur when the Triton acquisition was disclosed.
Consequently, these insiders profited from the artificial inflation in
the price of Amerada Hess' stock that persisted while they failed to
disclose material information about the proposed Triton acquisition.
By not disclosing that defendants were actively negotiating for the
acquisition of Triton, the individual defendants violated their duty to
"abstain" or "disclose" under the 1934 Act and pursued a scheme to
defraud and course of business that operated as a fraud or deceit on
purchasers of Amerada Hess stock by selling off over 1.3 million of
their Amerada Hess shares at as high as $90 per share for proceeds of
$119 million.
On July 10, 2001, after the individual defendants had completed their
stock sales, Amerada Hess disclosed it was acquiring Triton for $3.2
billion ($45 per share), which represented a 50% premium over Triton's
July 9,2001, closing price of $29-29/32. Amerada Hess stock fell from
$81-11/16 on July 9, 2001 to $77 on July 10,2001, to $74 per share on
July 12, 2001, and to $70-19/32 per share on July 18, 2001, a
cumulative decline of well over 13% in just seven trading sessions.
By September 26, 2001, just weeks after Amerada Hess completed the
Triton deal and disclosed it had to borrow $2.5 billion to finance the
transaction, Amerada Hess' stock fell to $59-3/32 compared to its class
period high of $90-13/32 in 5/01, a 34% decline.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
AMERADA HESS: Cauley Geller Commences Securities Suit in New Jersey
-------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of New Jersey on
behalf of purchasers of Amerada Hess Corp. (NYSE: AHC) common stock
during the period between February 9, 2001 and July 11, 2001,
inclusive.
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 beginning in early 2001, the Company began
secret discussions to acquire Triton Energy Limited, in order to obtain
needed additional oil reserves and to significantly boost the Company's
crude oil production.
However, it immediately became clear to the Company's top insiders that
due to the demands of Triton's CEO and Triton's controlling shareholder
that if Amerada Hess was to acquire Triton, Amerada Hess would have to
pay an extremely high price of over $3 billion for Triton, a price in
excess of what standard valuation approaches would justify for Triton,
a price that would represent a very substantial premium over Triton's
stock trading price and a price that would require Amerada Hess to
borrow billions of dollars to finance the purchase of Triton.
Without disclosing these discussions and negotiations or Amerada Hess'
decision to offer to pay over $3 billion to acquire Triton, the top
insiders at Amerada Hess who were involved in, or aware of, the details
concerning the proposed acquisition of Triton, sold off huge amounts of
their Amerada Hess stock to avoid the losses they knew they would
suffer from the sharp decline in Amerada Hess' stock which they knew
would occur when the Triton acquisition was disclosed, and thus profit
from the artificial inflation in the price of Amerada Hess' stock that
persisted while they failed to disclose material information about the
proposed Triton acquisition.
By not disclosing that defendants were actively negotiating for the
acquisition of Triton, the Individual Defendants violated their duty to
"abstain" or "disclose" under the 1934 Act and pursued a scheme to
defraud and course of business that operated as a fraud or deceit on
purchasers of Amerada Hess stock by selling off over 1.3 million of
their Amerada Hess shares at as high as $90 per share for proceeds of
$119 million.
On July 10, 2001, after the individual defendants had completed their
stock sales, Amerada Hess disclosed it was acquiring Triton for $3.2
billion, $45 per share, a very large, over 50%, premium over Triton's
July 9, 2001 closing price of $29-29/32. Amerada Hess stock fell from
$81-11/16 on July 9,2001 to $77 on July 10,2001; to $74 per share on
July 12, 2001; and to $70-19/32 per share on July 18, 2001, a
cumulative decline of well over 13% in just seven trading sessions.
By September 26, 2001, just weeks after Amerada Hess completed the
Triton deal and disclosed it had had to borrow $2.5 billion to finance
the transaction, Amerada Hess' stock fell to $59-3/32 compared to its
class period high of $90-13/32 in 5/01, a 34% decline.
For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@classlawyer.com or visit the firm's Website:
http://www.classlawyer.com
CITIGROUP INC.: Schiffrin & Barroway Commences Securities Suit in NY
--------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of New York on
behalf of all purchasers of the common stock of Citigroup Inc. (NYSE:
C) securities between July 24, 1999 and July 23, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, the complaint alleges
that during the class period, the Company, 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 the Company 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 the Company's
potential Enron-related exposure in its 2001 Annual Report and
elsewhere, and failing to disclose the true extent of its 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 the Company and JP Morgan Chase
testified before the US 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 Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
ECLIPSYS CORPORATION: Marc Henzel Commences Securities Suit in S.D. FL
----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, Southern District of Florida on
behalf of purchasers of the securities of Eclipsys Corporation (Nasdaq:
ECLP) between July 23, 2001 and June 27, 2002, inclusive. The suit
names as defendants the Company and:
(1) Robert Joseph Colletti,
(2) Harvey J. Wilson and
(3) John T. Patton
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between July 23, 2001 and June 27, 2002, thereby artificially
inflating the price of Company securities.
As alleged in the complaint, defendants issued highly positive press
releases regarding the Company's addition of new contracts for its
information technology, in an effort to create the impression that
Eclipsys' revenues were growing and the Company was well positioned to
generate strong profitability. However:
(i) during a six-week period in July to August 2001, insiders sold
more than $9.5 million worth of Eclipsys stock at or near the
stock's two year highs; and
(ii) unbeknownst to the investing public, although the defendants
were aware that new-sales bookings had slowed considerably and
expenditures in research and development and marketing and
distribution had accelerated, the Company failed to timely
disclose these facts to the public in any of Eclipsys' public
filings with the Securities and Exchange Commission or press
releases.
On June 27, 2002, defendants issued a press release announcing that
results for the second quarter of 2002 would fall short of the
Company's previous statements. The Company announced it would report a
net loss in the range of $0.07 to $0.10 per share. Trading price of
Company stock dropped nearly 50% in response to this.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
EXELON CORP.: Marc Henzel Commences Securities Fraud Suit in N.D. IL
--------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Northern District of
Illinois, Eastern Division, on behalf of purchasers of the securities
of Exelon Corporation, (NYSE: EXC) between April 24, 2001 and September
27, 2001 inclusive. The suit is pending against:
(1) Corbin A. McNeill, Jr. (Co-CEO and Chairman),
(2) John W. Rowe (Co-CEO and President) and
(3) Ruth Ann Gillis (CFO)
The complaint 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 April 24, 2001 and September 27, 2001.
The complaint alleges that the Company repeatedly issued statements
concerning the strength of its operations and repeatedly assured the
market that it would meet or beat its $4.50 per share earnings figure
for 2001.
The complaint alleges that these statements were materially false and
misleading because they failed to disclose, among other things:
(i) that the investments in telecommunications companies held by
the Company's Enterprises segment were plummeting in value at
a rapid pace. Accordingly, Enterprises could not and would
not meaningfully contribute to the Company's results and, in
fact, the Company was carrying tens of millions of dollars of
impaired investments on its financial statements; and
(ii) that InfraSource, the Company's infrastructure subsidiary, was
experiencing declining demand for its products as its primary
customers, telecommunications companies, were facing severe
industry-wide problems, such as mounting debt and over-
capacity, and were significantly cutting back on their capital
expenditures.
On September 27, 2001, the Company issued a press release announcing
that it would not meet its earnings commitment of $4.50 for 2001,
blaming the economy, poor weather and write-downs for failed
investments made by the Enterprises unit. In reaction to the
announcement, the Company's common stock price plunged by 22%, falling
to a low of $38.85 per share on September 27, 2001, after closing at
$50.45 the previous day, on extremely heavy trading volume.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
GREAT ATLANTIC: Marc Henzel Commences Securities Suit in New Jersey
-------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, District of New Jersey, on behalf
of purchasers of the securities of Great Atlantic & Pacific Tea
Company, Inc. (NYSE: GAP) between November 15, 2001 and May 28, 2002,
inclusive. The suit is pending against the Company and:
(1) Christian W.E. Haub,
(2) Elizabeth Culligan,
(3) Fred Corrado,
(4) Mitchell Goldstein and
(5) Kenneth A. Uhl
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 a series of material misrepresentations to the
market between November 15, 2001 and May 28, 2002, thereby artificially
inflating the price of Company securities.
Throughout the class period, as alleged in the complaint, defendants
issued statements regarding the Company's quarterly and annual
financial performance and filed reports confirming such performance
with the United States Securities and Exchange Commission (SEC).
The complaint alleges that these statements were materially false and
misleading because, among other things:
(i) the Company was employing improper accounting practices
regarding the recognition of vendor allowances and the
accounting of inventory in certain of its regions for fiscal
year 2001 in violation of Generally Accepted Accounting
Principles. As a result, the Company's operating results
were materially misrepresented and overstated; and
(ii) based on the foregoing, defendants' statements concerning the
prospects of the Company were lacking in a reasonable basis at
all times.
On May 28, 2002, the last day of the class period, the Company
announced that it would delay the filing of its annual report with the
SEC while it conducted an accounting review which will most likely
result in a charge to earnings. The accounting review will focus on
the appropriate timing for the recognition of vendor allowances and the
accounting of inventory in certain of the Company's regions for fiscal
year 2001.
The Company further noted that a substantial portion of any charge the
Company will take will reverse credits which were recognized
prematurely as reductions of cost of merchandise sold, and that portion
will therefore be recognized in periods subsequent to fiscal 2001 as
reductions of cost of merchandise sold.
Following this disclosure, Company stock fell $4.03 per share, or
approximately 16%, to close on May 28, 2002 at $21.070 per share.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
HPL TECHNOLOGIES: Milberg Weiss Commences Securities Suit in N.D. CA
--------------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action in the United States District Court for the Northern District of
California on behalf of purchasers of HPL Technologies, Inc. (Nasdaq:
HPLAE) common stock during the period between July 31, 2001 and July
18, 2002.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
Company is a provider of yield optimization software solutions to
enable semiconductor companies to enhance efficiency in the production
process.
On July 31, 2001, the Company completed its initial public offering
(IPO) 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, the Company reported
favorable financial results for the 1stQ, 2ndQ, 3rdQ and 4thQ of F02.
The complaint alleges that as a result of the Company'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, the Company 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, the Company's stock collapsed 72%
to as low as $4 per share, before trading was halted.
For more details, contact William Lerach or Darren Robbins by Phone:
800-449-4900 by E-mail: wsl@milberg.com or visit the firm's Website:
http://www.milberg.com/cases/hpl
JOHNSON & JOHNSON: Cauley Geller Launches Securities Suit in New Jersey
-----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of New Jersey on
behalf of purchasers of Johnson & Johnson (NYSE: JNJ) common stock
during the period between April 16, 2002 and July 18, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, the complaint alleges
that in the Company's press release and during the earnings conference
call held that day, defendants repeatedly attributed the Company's
financial performance to the success of EPREX, stating, for example,
that, "This amazing product has delivered consistent double-digit
growth over the past five years. And in the first quarter of this
year, we hit a record sales level of a billion dollars."
Moreover, defendants discussed the reported incidences of PRCA and
assured investors that EPREX "continues to be a trusted brand that
people are using," and that Johnson & Johnson was "working very closely
with . the experts, as well as health authorities in understanding
(PRCA), why it occurs. And we're doing whatever we can to understand
the risk and mitigate it."
Defendants' statements during the class period, however, were
materially false and misleading because defendants knew but failed to
disclose that by April 2002, the US Food and Drug Administration's
Office of Criminal Investigation, spurred on by the increasing number
of cases of PRCA in EPREX patients, sought a stay of a qui tam
(whistleblower) action in order to investigate the allegations
regarding the Company's EPREX manufacturing facility located in Puerto
Rico.
The whistleblower action was filed in March 2000 by Hector Arce, a
former employee at the Company's EPREX factory. Mr. Arce contends in
the lawsuit that he was pressured to falsify data to cover up
manufacturing lapses at the EPREX manufacturing facility, and then was
suspended a few days before an expected interview with FDA inspectors.
This information, which defendants failed to disclose, was information
a reasonable investor would have wanted to know - especially as the
reported incidences of PRCA continued to climb during the class period
- considering EPREX, and its U.S. version, PROCRIT, accounted for over
10% of the Company's revenues in 2001 and was projected to account for
11% of revenues in 2002.
The true facts concerning the existence of the criminal investigation
of the Company and the allegations of the qui tam action were first
revealed in The New York Times on July 19, 2002. That same day, the
Company admitted that it was aware of the criminal investigation since
April 2002. Once the foregoing information was revealed, Company
shares fell $7.88 per share to close on July 19, 2002, at $41.85, a
fall of 16%.
For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
or by E-mail: info@classlawyer.com or visit the firm's Website:
http://www.classlawyer.com
MERCK & CO.: Spector Roseman Commences Securities Suit in New Jersey
--------------------------------------------------------------------
Spector, Roseman & Kodroff, PC initiated a securities class action in
the United States District Court for the New Jersey on behalf of
purchasers of the stock Merck & Company, Inc. (NYSE:MRK) securities
during the period from July 1, 1999 through and including June 21,
2002.
The complaint alleges that Merck and certain of its officers and
directors violated the federal securities laws. The complaint alleges,
among other things, that during the class period defendants overstated
Merck's revenues. The Company's operations are comprised of two
reportable segments: Merck Pharmaceutical and Merck's wholly owned
subsidiary, Merck-Medco Managed Care, LLC (Merck-Medco).
Since Merck acquired Merck-Medco in 1993 and throughout the class
period, Merck and Merck-Medco have falsely inflated their reported
revenues by billions of dollars, in violation of Generally Accepted
Accounting Principles (GAAP). During the class period, Merck-Medco's
revenues have made up over 50% of Merck's total revenues. Merck-Medco
revenues are purportedly derived from the filling and managing
prescriptions and health management programs. Consumers who are
members of pharmacy benefits plans and purchase prescriptions must make
a co-payment directly to the pharmacy.
To artificially boost Merck-Medco's apparent sales, defendants included
consumer co-payments for prescription drugs in its revenues, contrary
to the revenue recognition practices of two of Merck-Medco's biggest
competitors and in violation of GAAP. As a result, Merck-Medco and
Merck overstated the companies' total economic activity, making it look
more successful than it was in reality.
According to a June 21, 2002 article in The Wall Street Journal,
neither company bills for the co-payments, gets billed for them, or
otherwise comes into contact with them. The Wall Street Journal
reported that Merck has not disclosed the actual co-payments charged
and estimated that Merck and Merck-Medco may have artificially inflated
their 2001 revenues by as much as $4.6 billion.
As a result of defendants' false and misleading statements, investors
were damaged by purchasing Merck's common stock at artificially
inflated levels during the class period.
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.spectorandroseman.com
NICOR INC.: Marc Henzel Commences Securities Fraud Suit in N.D. IL
------------------------------------------------------------------
The Law Offices of Marc Henzel initiated a securities class action in
the United States District Court for the Northern District of Illinois
against Nicor Inc. (NYSE: GAS) and two of the Company's senior officers
on behalf of investors who purchased or otherwise acquired the
Company's securities during the period from January 24, 2002 through
July 18, 2002, inclusive.
The lawsuit charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 by issuing false and misleading
financial statements and press releases concerning the Company's
publicly reported earnings.
After the market closed on July 18, 2002, the Company issued a press
release announcing it may restate prior results in response to
improprieties at its gas business. The Company indicated that the
Illinois Commerce Commission and other governmental agencies are
investigating allegations that the gas distribution business acted
improperly in connection with a performance-based rate program.
Also according to the press release, reported results for the six
months ended June 30, 2002 were negatively impacted by accounting
irregularities at a retail energy marketing joint venture which is 50%
owned by the Company and 50% owned by Dynegy Inc.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
REHABCARE GROUP: Marc Henzel Commences Securities Fraud Suit in E.D. MO
-----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Eastern District of
Missouri on behalf of purchasers of the securities of RehabCare Group,
Inc. (NYSE: RHB) between February 7, 2001 and January 21,2002
inclusive. The suit names as defendants the Company and:
(1) H. Edwin Trusheim (Chairman of the Board) and
(2) Alan C. Henderson (CEO, President and Director)
The complaint 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 February 7, 2001 and January 21, 2002.
The complaint alleges that, among other things, defendants issued a
series of materially false and misleading statements concerning the
Company's supplemental staffing division. The complaint alleges these
statements were materially false and misleading because they failed to
disclose that the supplemental staffing division was experiencing
serious operational problems with information systems critical for
matching supply with demand and poor employee training and retention
and that its revenues and earnings were declining as a result.
On January 21, 2002, the Company issued a press release announcing that
earnings for its fourth quarter 2001 would be less than half than they
had reiterated in late October and that the Company would take a charge
of $8.5 to $9.5 million, $3 million of which was for a reorganization
of the staffing division. In reaction to the Company's disclosure, as
alleged in the complaint, the price of the Company's common stock
plummeted by 25% over one trading day on heavy volume, falling from
$25.21 per share to $18.70 per share.
Prior to the disclosure of the adverse facts described above, as
alleged in the complaint, the Company completed a secondary offering of
common stock, raising $50 million for the Company and more than $8
million for Company insiders. In addition, Company insiders also sold
$4,568,209 worth of the Company's common stock during the class period
at artificially inflated prices.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
RIVERSTONE NETWORKS: Bernstein Liebhard Commences Securities Suit in CA
-----------------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class action
on behalf of all persons who purchased or acquired Riverstone Networks,
Inc. (NASDAQ: RSTN) securities between August 20, 2001 and June 5,
2002.
The action, pending in the United States District Court for the
Northern District of California, charges that defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10-b(5).
The action alleges that defendants issued a series of false and
misleading statements concerning the Company's financial condition and
sales. Specifically, defendants misled the investing community
concerning the true effect that the downturn in telecom spending had
upon the Company.
For more details, contact Ms. Linda Flood, Director of Shareholder
Relations by Mail: 10 East 40th Street, New York, New York 10016 by
Phone: 800-217-1522 or 212-779-1414 by E-mail: RSTN@bernlieb.com or
visit the firm's Website: http://www.bernlieb.com.
SALOMON SMITH: Finkelstein Thompson Lodges Securities Fraud Suit in DC
----------------------------------------------------------------------
Finkelstein, Thompson & Loughran initiated a securities class action
against Salomon Smith Barney, Inc. and its telecommunications analyst
Jack Grubman, on behalf of purchasers of Winstar Communications, Inc.
securities between August 1, 1999 and April 17, 2001, inclusive.
The suit, filed in the United States District Court for the District of
Columbia, alleges that Salomon and Mr. Grubman violated the federal
securities laws by knowingly issuing false and misleading analyst
reports regarding Winstar during the class period.
The suit alleges that the defendants failed to disclose a significant
conflict of interest between their investment banking and research
departments. Specifically, the suit alleges that Salomon and Mr.
Grubman issued very favorable analyst reports regarding Winstar to the
public when they allegedly knew that the positive recommendations were
unwarranted and false.
The suit further alleges that, unbeknownst to the investing public,
Salomon's buy recommendations and price targets for Winstar were driven
by its efforts to attract lucrative investment banking business rather
than by Winstar's fundamental merits.
For more details, contact Conor R. Crowley or Donald J. Enright by
Phone: 202-337-8000 by E-mail: crc@ftllaw.com or dje@ftllaw.com.
SONUS NETWORKS: Wolf Haldenstein Commences Securities Suit in MA Court
----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the District of
Massachusetts, on behalf of purchasers of the securities of Sonus
Networks, Inc. (Nasdaq: SONS) between December 11, 2000 and January 16,
2002, inclusive, against the Company and certain of its officers and
directors.
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.
During the class period, defendants made numerous announcements, which
touted the Company's financial successes and illustrated the Company's
achievement in obtaining and expanding new products, which would be
presented to existing and potential clients.
The suit alleges that these reports were materially false and
misleading because they omitted and/or distorted several unfavorable
facts, such as some products that the Company asserted being sold to
Qwest Communications International, Inc. (Qwest) would not be
operational in Qwest's timeframe and as a result Qwest would need to
acquire products from competitor Nortel.
It is further alleged that the Company's highlighted transaction with
Qwest, a client that supplied over 10% of the Company's first quarter
2001 revenues, was in fact an agreement whereby it was necessary that
the Company had to consent to purchase a $20 million Irrevocable Right
of Use (IRUs) from Qwest in a trade for a $20 million order from Qwest.
Another problem was that the Company's products were not carrier class
since they lacked 99.999% availability, were deficient in voice quality
compared to circuit-switched networks and did not have advanced network
management and configuration capacities, though defendants claimed the
opposite. As a result of these, and other problems, the Company would
not report revenues of $195 million in 2001.
On January 16, 2002, the Company announced its true fourth quarter and
year-end 2001 results and disclosed that revenues for the year were
only $173 million, as opposed to class period assessments exceeding
$200 million.
For more details, contact Fred Taylor Isquith, Gregory M. Nespole,
Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison
Avenue, New York, New York 10016 by Phone: 800-575-0735 by E-mail:
classmember@whafh.com or visit the firm's Website:
http://www.whafh.com. All e-mail correspondence should make reference
to Sonus.
SYMBOL TECHNOLOGIES: Marc Henzel Commences Securities Suit in E.D. 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 the common stock of Symbol
Technologies, Inc. (NYSE: SBL) between October 19, 2000 and February
13, 2002, inclusive, against the Company and certain of its officers.
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.
Specifically, the complaint alleges that defendants engaged in conduct
which effectively increased the Company's reported revenue and profits,
by:
(1) SBL booked as profit in the third quarter 2000 a one-time
royalty payment in excess of $10 million, enabling the Company
to make its third quarter projections;
(2) SBL used expenses associated with its acquisition of Telxon to
mask the fact that its sales were declining; and
(3) SBL booked as having shipped in the first quarter of 2001 more
than $40 million in inventory that included side provisions
allowing customers to delay payments or return merchandise, or
included products that "never left the warehouse."
The Company subsequently had a second-quarter 2001 inventory write-down
of $67.1 million after tax.
On February 13, 2002, Newsday, Inc. reported that the Company had
engaged in the above-described accounting practices, received an
inquiry letter from the Securities and Exchange Commission, and had
hired accounting and consulting firm KPMG to review its sales process.
The next day, the Company announced it was lowering its outlook for
2002 earnings and that its Chief Executive Officer would retire in May
2002.
In response to the Newsday article and the Company's announcements, the
price of Company stock plunged more than 53% from an opening price of
$14.15 on February 14, 2002 to a low of $6.60 on February 15, 2002 on
unusually heavy trading volume.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
TEXTRON INC.: Marc Henzel Commences Securities Fraud Suit in RI Court
---------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, District of Rhode Island, on
behalf of purchasers of the securities of Textron, Inc. (NYSE: TXT)
between October 19, 2000 and September 26, 2001, inclusive.
The action, is pending against the Company and:
(1) Lewis B. Campbell,
(2) John A. Janitz,
(3) Theodore R. French and
(4) Terry D. Stinson
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 a series of material misrepresentations to the
market between October 19, 2000 and September 26, 2001, thereby
artificially inflating the price of Company securities.
The complaint alleges that, throughout the class period, the Company
failed to disclose that the V-22 Osprey, a military aircraft that it
was manufacturing, suffered from structural defects that required that
it be substantially redesigned which would delay full-scale production
of the Osprey for years and cost hundreds of millions of dollars in
excess of the costs allocated to the project for the purpose of
calculating profit and loss.
On September 26, 2001, as alleged in the complaint, the Company issued
a press release over the Business Wire in which it reduced its guidance
for the third and fourth quarters of 2001, and announced that it
expected a third-quarter loss of $0.25 per share, compared to the
consensus forecast of earnings of $0.71 cents per share.
The complaint alleges that the Company attempted to blame its poor
performance on "the slowdown in the U.S. economy" and "the impact of
events on September 11." However, as alleged in the complaint, the
Company was also forced to admit that its reduced earnings were
resulting from "a number of significant adjustments at Bell Helicopter
and other Textron businesses," including a special charge of
approximately $0.52 per share resulting from "stretched out production
schedules and additional costs to make design changes in the V-22 and
H-1 government programs." In the same press release, the Company
announced the abrupt departures of Mr. Janitz as Textron Chief
Operating Officer, and Mr. Stinson as Chief Executive Officer of Bell
Helicopter.
On this news, Company shares dropped to a year-low price of $33.04 per
share, down 23% from the previous day's closing price of $43, on
relatively heavy trading volume of 4,393,200 shares traded.
For more information, contact Marc 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 or by E-mail: mhenzel182@aol.com
XCEL ENERGY: Berger & Montague Launches Securities Fraud Suit in MN
-------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against Xcel
Energy, Inc. (NYSE: XEL) and certain of its principal officers and
directors in the United States District Court for the District of
Minnesota on behalf of all persons or entities who purchased the
Company's securities between January 31, 2001 and July 26, 2002,
inclusive.
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 a series of material misrepresentations to the
market between January 31, 2001 and July 26, 2002, thereby artificially
inflating the price of the Company's securities.
Throughout the class period, as alleged in the suit, defendants issued
numerous statements and filed quarterly and annual reports with the
Securities & Exchange Commission (SEC) which described the Company's
financial performance and the financial performance of NRG Energy, Inc.
(NRG), the Company's majority-owned subsidiary.
As alleged in the suit, these statements were materially false and
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(1) that the Company had engaged in "round-trip" energy trades
that provided no economic benefit for the Company;
(2) that the Company's and NRG's credit agreements with lenders
contained cross-default provisions and covenants, the result
of which was that in the event of a default by NRG, among
other adverse effects, the Company would lose access to $800
million in credit;
(3) that the Company lacked the necessary internal controls to
adequately monitor the trading of its power; and
(4) that as a result, the value of the Company's revenues and
financial results were materially overstated at all relevant
times.
After the close of the market on July 25, 2002, the Company issued a
press release announcing its financial results for the second quarter,
the period ended June 30, 2002, and disclosed that its earnings had
declined and that it was revising its earnings expectations for fiscal
2002.
In a conference call the very next day, defendants finally disclosed
the true extent of the Company's liquidity and credit difficulties and
its management's inability to effectively remedy such difficulties
stemming from the operations of NRG.
As reported in several business articles dated July 26, 2002, analysts
were horrified to learn that the liquidity and credit difficulties
extended to the Company itself under the "cross-collateral default"
provisions the Company and NRG had entered into with lenders.
Market reaction to these revelations was swift and brutal. On July 26,
2002, Company stock closed at $7.55, a more than 36% one-day decline,
on extremely heavy trading volume. Subsequently, on July 28, 2002,
defendants disclosed that the Company had received subpoenas from the
SEC and CFTC regarding Xcel's engaging in "round-trip" or "wash"
transactions, which involve the simultaneous buying and trading of
power at the same price and same amount and provide no economic benefit
to the Company.
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
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
Copyright 2002. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic re-
mailing and photocopying) is strictly prohibited without prior written
permission of the publishers.
Information contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The CAR subscription rate is $575 for six months delivered via e-mail.
Additional e-mail subscriptions for members of the same firm for the
term of the initial subscription or balance thereof are $25 each. For
subscription information, contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *