/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020815.mbx C L A S S A C T I O N R E P O R T E R Thursday, August 15, 2002, Vol. 4, No. 161 Headlines CATHOLIC CHURCH: Sex Abuse Claims, Losses Hit LA Archdiocese Budget CITIGROUP INC.: Asks TX Court To Dismiss Two Securities Fraud Suits DOMINION TELECOM: Moves To Dismiss Trespass, Unjust Enrichment Suit EXELON CORPORATION: Court Grants Motion Consolidating Securities Suits FLORIDA: Santa Rosa Island Residents File Suit To Stop Levy Of Taxes FORD MOTOR: Agrees To Settle Claims Over Excessive Late-Payment Charges IOWA: Public Employees Pension Plan Hires Firm To Track Securities KOS PHARMACEUTICALS: Appeals Court Upholds Dismissal of Securities Suit LEXENT INC.: Discovery Yet To Commence in Securities Suit in S.D. NY MASSACHUSETTS BAY: Disabled Riders Sue To Seek Access Improvements MILBERG WEISS: KANSAS: Kansas Fund Manager Files Suit Alleging Fraud NCR CORPORATION: Will Establish $9 Million Reserve For Settlement Costs NEW ORLEANS: Orleans Parish District Attorney Sued Over Office Mold NUCLEAR FUELS: Black Workers Allege Radiation Exposure Intentional PAYPAL INC.: CA Consumer Fraud Lawsuit Over Online Accounts Dismissed PAYPAL INC.: Sued For Electronic Fund Transfer Act Violations in CA PAYPAL INC.: Faces Consumer Fraud Lawsuit Over Accounts in CA Court PAYPAL INC.: Faces Suit For Violations of Consumer Laws in N.D. CA SHURGARD STORAGE: Faces Consumer Suit Over Storage Units in CA Court SLAVERY REPARATIONS: Supporters Holding August 17 Washington D.C. Rally TELLABS INC.: Mounting Vigorous Defense V. Securities Suits in N.D. IL TEXAS: 2,500 Mission Residents Dispute Pesticide Chemical Levels Study WEST CORPORATION: CA Court Dismisses Telemarketing Fraud Consumer Suit *Investors Seek Their Due In Court, Suits Pending v. CMS Show Trend New Securities Fraud Cases AON CORPORATION: Mark McNair Commences Securities Fraud Suit in N.D. IL CHARTER COMMUNICATIONS: Wechsler Harwood Lodges Securities Suit in CA CHARTER COMMUNICATIONS: Stull Stull Initiates Securities Suit in MO MSC INDUSTRIAL: Mark McNair Commences Securities Fraud Suit in E.D. NY SEEBEYOND TECHNOLOGY: Schiffrin & Barroway Lodges Securities Suit in CA VIVENDI UNIVERSAL: Berger & Montague Commences Securities Suit in NY ********* CATHOLIC CHURCH: Sex Abuse Claims, Losses Hit LA Archdiocese Budget ------------------------------------------------------------------- The Roman Catholic Archdiocese of Los Angeles has been hit so hard by stock market losses and the prospect of settling sexual abuse claims that it plans to cut its budgets for ministry and education by as much as 30 percent and leave some jobs unfilled, the Associated Press Newswires reports. "We are in 2 1/2 years of not just zero return but minus return," Cardinal Roger M. Mahony told the Los Angeles Times. "We not only did not get a dollar, but we lost huge amounts of money . I am very alarmed." Archdiocese spokesman Tod Tamberg said the nation's largest archdiocese still does not have a budget and has not reported unspecified losses from the stock market. Mr. Tamberg said he does not know whether there will be layoffs, though personnel costs have been contained through attrition. Meanwhile, the archdiocese is expected to subsidize its new $200 million Cathedral of Our Lady of Angels and conference center for several years to meet operational costs, the Los Angeles Times reports. The cathedral will be dedicated September 2, but the celebrations will be scaled back with only soft drinks, not lunch, served at the ceremony. Cardinal Mahony said endowments that support scholarships for Catholic elementary and high school students and for St. John's Seminary in Camarillo, as well as archdiocesan operational costs, have been particularly hard hit by the stock market's decline. Mr. Tamberg could not determine how much money the archdiocese has lost in the stock market. In the past, the archdiocese's annual operating budget has been about $500 million, according to past statements by church officials. The archdiocese has about 300 employees, according to a Dun & Bradstreet report. The archdiocese's financial records are not open to the public because it is a nonprofit religious institution. So far, the Los Angeles archdiocese's payments to sexual abuse victims have totaled about $3.5 million, most of it covered by insurance, Mr. Tamberg said. That amount does not include any future settlements or lawsuits, including a class action filed last month on behalf of 50 alleged victims against the archdiocese. CITIGROUP INC.: Asks TX Court To Dismiss Two Securities Fraud Suits ------------------------------------------------------------------- Citigroup Inc. asked the United States District Court for the Southern District of Texas to dismiss two consolidated securities class actions relating to its transactions with fallen energy trader Enron Corporation. One of the suits also name as defendants prominent firm Salomon Smith Barney, Inc. (SSB), along with commercial and/or investment banks, certain current and former Enron officers and directors, lawyers and accountants. One action, brought on behalf of individuals who purchased Enron securities (NEWBY, ET AL. V. ENRON CORP., ET AL.), alleges violations of Sections 11 and 15 of the Securities Act of 1933, as amended, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The other action, brought on behalf of current and former Enron employees (TITTLE, ET AL. V. ENRON CORP., ET AL.), alleges violations of the: (1) Employment Retirement Income Security Act of 1974, as amended (ERISA), (2) Racketeer Influenced and Corrupt Organizations Act (RICO), (3) negligence and (4) civil conspiracy The Company intends to defend against these suits vigorously and said that it will fully cooperate with investigations pertaining to this matter in a disclosure to the United States Securities and Exchange Commission. DOMINION TELECOM: Moves To Dismiss Trespass, Unjust Enrichment Suit ------------------------------------------------------------------- Dominion Telecom, Inc. faces a class action filed by two North Carolina landowners in the United States District Court in Richmond, Virginia. The suit, which also names Virginia Electric and Power Company (Virginia Power) as defendant, was filed on behalf of all owners of land in North Carolina and Virginia, other than public streets or highways, that underlies Virginia Power's electric transmission lines and on or in which fiber optic cable has been installed." The plaintiffs claim that Virginia Power and Dominion Telecom strung fiber-optic cable across their land, along a Virginia Power electric transmission corridor without paying compensation. The plaintiffs are seeking damages for trespass and "unjust enrichment" as well as punitive damages from Virginia Power and Dominion Telecom. In July 2002, Virginia Power and Dominion Telecom filed a motion to dismiss the complaint. Virginia Power and Dominion Telecom disagree with the premises and allegations of the complaint, and intend to contest liability. The outcome of the proceeding, including an estimate as to any potential loss, cannot be predicted at this time. EXELON CORPORATION: Court Grants Motion Consolidating Securities Suits ---------------------------------------------------------------------- The United States District Court for the Northern District of Illinois granted Exelon Corporation's motion consolidating six virtually identical securities class actions charging the Company with federal securities violations. The suits, filed on behalf of purchasers of the Company's stock securities between April 24, 2001 and September 27, 2001, inclusive, allege that the Company violated federal securities laws by issuing a series of materially false and misleading statements relating to its 2001 earnings expectations during the class period. The court also stayed discovery indefinitely. A lead plaintiff has not been selected. The Company believes the lawsuit is without merit and is vigorously contesting this matter. FLORIDA: Santa Rosa Island Residents File Suit To Stop Levy Of Taxes -------------------------------------------------------------------- Homeowners and businesses in two beach communities on Santa Rosa Island in the Florida Panhandle pay no real property taxes, but that could change, the Associated Press Newswires reports. Seven Namarre Beach residents are suing to stop Santa Rosa County Appraiser Gregory Brown from taxing them. The case also would set a precedent for Pensacola Beach in neighboring Escambia County. The court case may be delayed while the plaintiffs appeal Circuit Judge Michael Allen's decision. He refused to make the lawsuit a class action. Another motion is pending from the county to dismiss the lawsuit. Millions of dollars are at stake. Both barrier island communities are on property deeded to Escambia by the federal government in 1947. No taxes have been levied since then because the land is public property, although occupied by private interests. Escambia, unable to sell the island property under terms of the federal deed, leased lots at Pensacola Beach to private individuals and businesses for period of up to 99 years, with options to renew. Escambia then leased Navarre Beach to Santa Rosa County in 1956 for $100 a year, Santa Rosa, in turn, has subleased to individuals an businesses. Many leaseholders pay rental fees that are laughably low by today's standards, but they contend they had been promised they never would be taxed. An earlier lawsuit ended in 1987, with a ruling in favor of five Pensacola Beach leaseholders who had challenged attempts by Escambia County to levy a property tax. Mr. Brown, the Santa Rosa County Property Appraiser, has come up with a different tactic. He is not assessing the land, just the buildings and other structures. He contends a state attorney general's opinion supports that approach. "I think it's fair," said Mr. Brown. However, leaseholders say it is unfair to say they are getting a free ride. They point out that their lease fees pay for such services as police and fire protection and mosquito control. The fees, however, pale in comparison to what the counties and their school boards would receive from the property taxes. They don't share in the lease fees. In Santa Rosa, for example, the lease fees total just more than $1 million. The tax would add $3.8 million. Escambia gets $5.1 million in lease fees, while the tax would generate about $10 million. FORD MOTOR: Agrees To Settle Claims Over Excessive Late-Payment Charges ----------------------------------------------------------------------- Ford Motor Company tentatively settled a class action filed by lease customers who alleged they were charged excessive penalties for making late payments, the Associated Press Newswires reports. The Company has agreed to pay as much as $80 million to 1.8 million lease customers, and about $7 million in legal fees, the company reported in a filing with the Securities and Exchange Commission. "We are adequately reserved. We will take no hit on the bottom line over this," Company spokeswoman Melinda Wilson said recently. Ms. Wilson said that the Company still believed that there was noting excessive about its late fees, which were 7.5 percent of the monthly lease payment or $50, whichever was less. The instant class action grew out of a lawsuit filed in California in the mid-1990s and a second suit filed later in Maryland, which subsequently were consolidated. The settlement is on a claims-made basis, meaning that only those who put in a claim for compensation will get it. Ms. Wilson said letters were sent out last month to those affected. A hearing for final approval of the settlement is scheduled for September 20, the Company said. IOWA: Public Employees Pension Plan Hires Firm To Track Securities ------------------------------------------------------------------ The Iowa Public Employees' Retirement System (IPERS) has hired Barack, Rodos & Bacine, a Philadelphia-based firm specializing in securities litigation, to track IPERS' interests in securities lawsuits, according to a report by Associated Press Newswires. IPERS wants to be sure that it benefits from any class action litigation with which it should file a claim. The choice was announced recently by Mollie Anderson, director of the Iowa Department of Personnel and acting chief executive officer of IPERS. "We have lots and lots of securities in lots of different places and some of them are subject to class-action lawsuits," said Kelly Lovell, deputy general counsel for IPERS. "We are hiring a firm to keep track of securities litigation involving these securities. We want to make sure that the proof of claim gets filed for IPERS and that we get the money that is coming to us." IPERS, which has more than $14 billion in investments, once held as much as $30 million in WorldCom stock and bonds before last month's, WorldCom bankruptcy and about $2 million in the Enron collapse. Fund managers want to make sure they benefit from any class actions filed in such cases. "The main thing we want to do is not leave any money lying on the table because we did not have a claim filed in a timely way," said Kelly Lovell. Kelly Lovell said that Barrack, Rodos & Bacine was chosen because the firm had the best system for tracking cases from the filing of the lawsuit through the resolution. "We will be posting on our Web site fairly soon what they find. We'll know all the lawsuits that we are in and at what stage." KOS PHARMACEUTICALS: Appeals Court Upholds Dismissal of Securities Suit ----------------------------------------------------------------------- The 11th Circuit Court of Appeals upheld the dismissal of a securities class action filed against Kos Pharmaceuticals, Inc., the members of its Board of Directors, certain of its officers and the underwriters of the Company's October 1997 offering of common stock. The suit, filed initially in the United States District Court for the Northern District of Illinois, on behalf of purchasers of the Company's Common Stock during the period from July 29, 1997, through November 13, 1997, claims under: (1) sections 11, 12(a)(2) and 15 of the Securities Act of 1933, (2) sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder; and (3) for common law fraud, negligent misrepresentation and breach of fiduciary duty. The claims in the lawsuit relate principally to certain statements made by the Company, or certain of its representatives, concerning the efficacy, safety, sales volume and commercial viability of the Niaspan product. Upon the Company's motion, the case was transferred to the United States District Court for the Southern District of Florida. The Company filed a motion to dismiss the complaint against the Company and the individual defendants on January 7, 1999. On May 24, 1999, the United States District Court for the Southern District of Florida dismissed the lawsuit with prejudice. The plaintiffs filed an appeal with the United States Circuit Court of Appeals for the 11th Circuit. The appeals court later affirmed the district court's dismissal of the plaintiff's claims with prejudice. LEXENT INC.: Discovery Yet To Commence in Securities Suit in S.D. NY -------------------------------------------------------------------- Discovery has not commenced in the securities class action pending in the United States District Court for the Southern District of New York against Lexent, Inc., certain of its senior executives and its underwriters. The complaint alleges that the registration statement and prospectus relating to the Company's initial public offering contained material misrepresentations and/or omissions in that those documents did not disclose that: (1) certain underwriters had solicited and received undisclosed fees and commissions and other economic benefits from some investors in connection with the distribution of the Company's stock in the initial public offering; and (2) certain underwriters had entered into arrangements with some investors that were designed to distort and/or inflate the market price for the Company's stock in the aftermarket following the initial public offering. The suit against the Company and its executives is part of a number of initial public offering securities claims against multiple issuers and underwriters presently pending before Judge Shira Scheindlin of the Southern District of New York. The Company believes that the claims against it and its senior executives are without merit, and the Company intends to defend itself and its senior executives vigorously. Management currently believes that the resolution of this litigation will not have a material adverse impact on the Company's financial position or the results of operations, although the ultimate outcome of this matter cannot be determined at this time. MASSACHUSETTS BAY: Disabled Riders Sue To Seek Access Improvements ------------------------------------------------------------------ Disabled train and bus riders filed a federal class action against the Massachusetts Bay Transportation Authority, seeking repairs and improvements instead of monetary damages, Associated Press Newswires reports. The suit, filed in the US District Court in Boston, claims bus drivers pass disabled riders by on the street, and that equipment meant to help them, such as elevators and bus wheelchair lifts, is often in disrepair. The plaintiffs allege elevators at MBTA stations are often broken or contaminated by human waste. "This case is about common decency and the way we treat disabled people," the plaintiffs' attorney, Taramattie Doucette, told the Boston Herald. "The MBTA has made empty promises to these people over the years, but hasn't come through with concrete results." Blind riders said the bus drivers fail to make announcements and don't pull close enough to the curb. Wheelchair-bound riders complain that bus drivers pass them by, and that the gap between the cars and the platform makes it difficult to board the MBTA's subway trains. Those using scooters or wheelchairs said elevators are filthy if they work at all. MBTA General Manager Michael Mulhern acknowledged there are problems, but said they are being addressed. Mr. Mulhern said, "We take these allegations seriously and we are doing a tremendous amount of work on the situation. We have a focused plan in motion and want a chance to tell the story in the courtroom." MILBERG WEISS: KANSAS: Kansas Fund Manager Files Suit Alleging Fraud -------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach, noted for its securities class actions, has been sued by a Kansas hedge fund manager, according to a report by The Kansas City Star. The plaintiff, James Loeffelbein, of Bucyrus, Kansas, alleges the law firm misled him when it said it was agreeing to represent him in a fraud action against one-time Wall Street high flier, Rare Medium Group Inc. Instead, Mr. Loeffelbein asserts, the firm used him "to coattail onto an existing class action," against Rare Medium in Delaware, so it could make a quick fee "with nothing more than some negotiations." Mr. Loeffelbein is represented by Overland Park lawyers Loren Moll and Louis Cohen of Caldwell & Moll. "Milberg Weiss wanted to become the "lead counsel" in the class action so it could control the case, manage the outcome (usually a settlement) and get the largest share of the attorney fees in the case," Mr. Loeffelbein alleges in a lawsuit filed in Johnson County District Court. Mr. Loeffelbein and associated investors owned or controlled more than one-million shares of Rare Medium. Mr. Loeffelbein says he discovered that Milberg Weiss only agreed to represent him because the firm knew that the best way to become lead counsel was to file an action on behalf of members of the class who owned or controlled the most shares. Milberg Weiss was indeed appointed lead counsel and the class action was settled in April. The settlement "was of no significant benefit to the Rare Medium stockholders, but resulted in the payment of legal fees to Milberg Weiss of approximately $1.1 million." Besides suing Milberg Weiss, the lawsuit also names as defendants Rare Medium Group, which used to be a Web site designer, and three top Rare Medium executives. Mr. Loeffelbein claims that Rare Medium and the executives issued false and misleading information about the company, whose stock sold for $52 a share in April 2000, but by August 2000. the price had plummeted to 25 cents. NCR CORPORATION: Will Establish $9 Million Reserve For Settlement Costs ----------------------------------------------------------------------- NCR Corporation will establish a $9 million pretax reserve to pay its share of costs resulting from an out-of-court settlement of class actions reached by Lucent Technologies, Inc. last week, the Wall Street Journal reports. The lawsuits claimed AT&T Corporation's phone-equipment business, now part of Lucent, engaged in misleading actions regarding the leasing of telephones following the 1984 breakup of AT&T. Although NCR was not named in the lawsuits, the Company said it will pay part of the $350 million settlement, this liability being in accordance with the terms of the divestiture agreement accompanying the spin-off of NCR and Lucent from AT&T. The Company says it does not know the dollars amount of its liability, but it will not exceed three percent of the settlement. The Company, a maker of electronic cash registers, bank-teller machines and computer systems, said it will adjust its second-quarter results to reflect the charge when it files its quarterly statement this week. Including the $9 million pretax reserve, the Company said it will report net income of $25 million, or 25 cents a share, compared with $32 million, or 32 cents a share, reported July 25. NEW ORLEANS: Orleans Parish District Attorney Sued Over Office Mold ------------------------------------------------------------------- Orleans Parish District Attorney Harold Connick faces a suit filed by about 40 of his own employees who claim he is making them work in unhealthy conditions at the Plaza Tower office building, court records show, the Associate Press Newswires reports. Mr. Connick is being sued in his official capacity as part of a proposed class action against the owners of the 44-storey office building. A late October hearing is scheduled to determine whether the class action will be certified. The building is now virtually empty after employees began complaining of leaks, which resulted in mold and other building problems. Mr. Connick maintained two floors in the building for the district attorney's child support department. State workers in the building also have filed suit against both the building owners and their employers, the Department of Health and Hospitals and the Department of Social Services. The state workers have sought class action status, and the presiding judge has combined the suits filed by the state workers and Mr. Connick's employees. The lawsuit's goal is to persuade the presiding judge to allow attorneys to seek damages from the personal assets of executives running or owning corporations that have owned or managed the building. Attorneys representing the plaintiffs allege that owners of the building "kept moving this property among themselves in an attempt to thwart liability," said Madro Bandaries, the plaintiffs' attorney. The leases are worth about $10 million to the owners of the building. Citing health concerns for workers, the state signed a $14 million, five-year lease for a recently renovated Central Business District office tower about the same age as the 32-year-old Plaza Tower. NUCLEAR FUELS: Black Workers Allege Radiation Exposure Intentional ------------------------------------------------------------------ British Nuclear Fuels (BNFL) is being sued, at one of its American plants, by black workers who claim they were deliberately assigned to jobs that exposed them to almost twice as much radiation as their white colleagues in an environment of "hostile racism," according to The Independent (London). Black workers at the Westinghouse Savannah River Company (WSRC), a company in which BNFL has a major financial stake, say they found nooses left in their lockers, racist graffiti scrawled on lavatory walls and heard parts of the plant referred to as the "coon area." The black workers claim they were constantly overlooked for promotion, despite being better qualified than their white colleagues. The revelation of the lawsuits, involving 32 plaintiffs seeking hundreds of thousands of dollars, will be of considerable embarrassment to BNFL, which says it is strictly opposed to racism. Last night, MPs, trade union leaders and anti-racism campaigners called for the government-owned company to launch an immediate investigation. In the United States, workers at the South Carolina plant asked BNFL to intervene and settle the claims. Labor MP Alan Simpson said, "It cannot be acceptable under any circumstances for a British company to be involved in any way in these practices . No one is suggesting BNFL was responsible for this, but they have rebranded themselves as a clean-up company and they ought to clean up their own house first." The allegations focus on the Savannah River Site, a former nuclear weapons production facility, which now reprocesses nuclear waste in Aiken, South Carolina. The US Department of Energy-owned site, in which BNFL has a 40 percent economic interest, was found by the US equal opportunities watchdog, the EEOC, to have a "racially hostile work environment." However, the lawsuits go further, claiming black workers were deliberately placed in jobs with greater risk of exposure to radiation. This is based on a report by Dr. Jim Ruttenber, an expert in the evaluation of toxic exposure in the workplace. Using the WSRC's own data, he concluded that blacks were routinely placed in jobs with, on average, 80 percent more radiation, than were whites. The lawsuits date from 1997 when a New York Lawyer Ivan Smith tried to bring a class action for 99 workers. Mr. Smith said that when he visited the site he was subjected to a hit-and-run attack, and told, "Nigger, get out." The court ruled against the class action and 62 plaintiffs settled with WSRC. The remaining cases are to return to court in October. PAYPAL INC.: CA Consumer Fraud Lawsuit Over Online Accounts Dismissed --------------------------------------------------------------------- The class action pending against Paypal, Inc., filed on behalf of a purported class of users whose accounts have been restricted by the Company, has been dismissed. The suit claims that the Company has restricted funds or user accounts in a manner that breaches the Company's User Agreement provisions on account restrictions, that constitutes an unlawful, unfair or fraudulent business practice under California law, and that constitutes a conversion of the users' funds. The plaintiffs sought an order awarding: (1) actual and compensatory damages, (2) restitution or other equitable relief, (3) punitive damages as to any conversion of users' funds, (4) an injunction preventing the Company from continuing to convert funds or to engage in the alleged unlawful, unfair or fraudulent practices regarding account restrictions, (5) plaintiffs' costs incurred in the litigation, including attorney's fees, and pre- and post-judgment interest, and (6) such other relief as the court may deem proper. The Company believes its policies and procedures regarding account restrictions are appropriate and are an important part of its risk management system. On March 18, 2002, the Company removed the case from Superior Court in Santa Clara County to the United States District Court for the Northern District of California. On April 1, 2002, plaintiffs filed a motion to remand the case back to Superior Court. On June 11, 2002, the Company received notice of dismissal of this suit. PAYPAL INC.: Sued For Electronic Fund Transfer Act Violations in CA ------------------------------------------------------------------- Paypal, Inc. faces a class action pending in the US District Court for the Northern District of California, San Jose Division, on behalf of a purported class of customers who use their PayPal account primarily for personal, family or household purposes. The suit alleges that the Company has violated the Electronic Fund Transfer Act, and seeks an order awarding: (1) actual and compensatory damages, (2) restitution and other equitable relief as the court deems proper, (3) treble damages and penalties under the Electronic Fund Transfer Act, (4) an injunction preventing the Company from continuing to convert the remaining funds in the plaintiffs' accounts, (5) plaintiffs' costs incurred in the litigation, including attorney's fees, and pre- and post-judgment interest, and (6) such other relief as the court may deem just and proper. The Company believes it has meritorious defenses to the suit and will contest it vigorously. However, the ultimate resolution of this suit could have a material adverse effect on the Company's financial condition and results of operations and cash flows. PAYPAL INC.: Faces Consumer Fraud Lawsuit Over Accounts in CA Court ------------------------------------------------------------------- Paypal, Inc. faces a class action filed in the Superior Court of the State of California in Santa Clara County, on behalf of a purported class of all persons who hold or held PayPal accounts: (1) that the Company restricted in their entirety, even though suspected frauds only implicate a portion of the funds in the accounts; (2) that the Company restricted without any reasonable ground to suspect user fraud or other justifiable basis; or (3) from which the Company deducted funds without justification, without completing an investigation, or without providing the user with the written results of the investigation within three business days of completing the investigation. The suit claims that the Company has restricted funds or user accounts in a manner that breaches the Company's User Agreement provisions on account restrictions, that constitutes an unlawful, unfair or fraudulent business practice under California law, and that constitutes a conversion of the users' funds. The Company intends to vigorously defend against this suit. PAYPAL INC.: Faces Suit For Violations of Consumer Laws in N.D. CA ------------------------------------------------------------------ Paypal, Inc. faces a class action filed in the United States District Court for the Northern District of California, San Jose Division, on behalf of a purported class of all persons who, at any time since the launch of the PayPal service in October 1999, have opened an account with the Company or had money electronically transferred from or to an account with another financial institution in connection with a PayPal transaction. The suit claims that the Company has: (1) violated the Electronic Fund Transfer Act by, among other things, failing to conduct a good faith and timely investigation of errors reported by customers, failing to provisionally credit amounts alleged to be in error within ten business days, and failing to provide a telephone number and address readily available to the consumer for reporting unauthorized transactions; (2) converted funds of class members to the Company's own use through unlawful conduct; (3) transferred or retained from class members monies that the Company had no right to retain; (4) unjustly retained monies belonging to the class members; and (5) been negligent in not making dispute resolution information readily available for customers, making it difficult for customers to resolve disputes with the Company in an efficient and appropriate manner, and failing to establish and maintain adequate procedures concerning the transfer of funds. The suit also claims that the alleged actions constitute unlawful, unfair, fraudulent and deceptive business practices under California law. On May 1, 2002, the plaintiffs filed an amended complaint, dropping one of the three named plaintiffs and added in causes of action under the California Consumers Legal Remedies Act. On May 10, 2002, the plaintiffs filed a motion for certification of their proposed plaintiff class. The Company believes it has meritorious defenses to the suit and will contest it vigorously. However, the ultimate resolution of these matters could have a material adverse effect on the Company's financial condition and results of operations and cash flows. SHURGARD STORAGE: Faces Consumer Suit Over Storage Units in CA Court -------------------------------------------------------------------- Shurgard Storage Centers, Inc. faces a class action filed in the Superior Court of California for Orange County, alleging that the Company misrepresented the size of its storage units. The suit seeks class action status and seeks damages, injunctive relief and declaratory relief against the Company under California statutory and common law relating to: (1) consumer protection, (2) unfair competition, (3) fraud and deceit and (4) negligent misrepresentation The Company does not currently believe that the outcome of this litigation will have a material adverse effect on its financial position or results of operations. However, the Company cannot presently determine the potential total damages, if any, or the ultimate outcome of the litigation. The Company intends to vigorously defend this action. SLAVERY REPARATIONS: Supporters Holding August 17 Washington D.C. Rally ----------------------------------------------------------------------- Supporters of slavery reparations are preparing for a weekend rally in Washington, DC, a city, which they point out, was built in part by slaves hauling sandstone blocks and sawing lumber, the Associated Press Newswires reports. Organizers say the Millions for Reparations rally on Washington's National Mall on Saturday, August 17, will be an important demonstration of the broad support that reparations enjoy among US blacks. "It is our contention that millions of black people in America support the idea of reparations for black people, and thousands of those millions will be in Washington," said Conrad Worrill, national chairman of the National Black United Front. The reparations effort has gathered steam this year, with class actions seeking compensation for the unpaid labor of enslaved blacks, filed this spring against insurance companies, railroads and banks. The Reparations Coordinating Committee, a group of prominent black attorneys and scholars, is also working on a separate lawsuit against the United States government, which it plans to file later this year. Organizers say the rally's populist flavor will complement the other reparations efforts in the legal area. "It is the masses of people on the ground that change things, that make history," said Viola Plummer, co-chair of the rally and chairwoman of the December 12th Movement, a black human rights group. "What the Reparations Coordinating Committee is doing is amassing research and information in order to bring lawsuits. You can't have one without the other." The rally's leadership comes from less-familiar sources in the civil rights movement. Major names, such as the Rev. Jesse Jackson, the Rev. Al Sharpton, National Urban League President Hugh Price and Kweisi Mfume, president of the NAACP, are not expected to attend. Rep. John Conyers, a Michigan Democrat, who has proposed, for the last 13 years, a commission to study the institution of slavery, does plan to attend. Many Blacks allege they still suffer from the vestiges of slavery, as demonstrated by present-day gaps between blacks and whites in everything from health to education to the criminal justice system, reparations backers say. However, some conservative blacks do not support the movement, saying it depicts blacks as victims. TELLABS INC.: Mounting Vigorous Defense V. Securities Suits in N.D. IL ---------------------------------------------------------------------- Tellabs, Inc. faces several securities class actions filed in the United States District Court for the Northern District of Illinois on behalf of purchasers of the Company's common stock between December 11,2000 and June 19,2001. The suits name as defendants the Company and: (1) Michael J. Birck, Chairman and Chief Executive, (2) Richard C. Notebaert, former Chief Executive, 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 December 11, 2000 and June 19, 2001. The Company believes these claims are without merit and intends to defend the actions vigorously. TEXAS: 2,500 Mission Residents Dispute Pesticide Chemical Levels Study ---------------------------------------------------------------------- About 2,500 residents of Mission, Texas dispute state findings that chemical levels near former pesticide businesses there were insufficient to pose a danger to residents, The Fort Worth Star- Telegram reports. Three years ago, the plaintiffs banded together and sued. The most recent version of their petition accuses 35 large companies of polluting or inadequately cleaning three sites laden with pesticides in this town of 50,000 known for its citrus industry. Their class action cites each of the chemical and pharmaceutical companies as a producer of the ingredients used by the Haye-Sammons pesticide plant before it closed in 1972. Pesticides were first brought into Mission by rail in the mid-1940s. Not long after, the town's south side was rife with sickness, misery and death. Last week, the Texas Natural Resource Conservation Commission released results of testing on 48 properties in Mission near former pesticide businesses. Seventeen sites indicated various levels of chemicals such as toxaphene, dieldrin, heptachlor epoxide and DDT. However, the commission says none are at a level high enough to pose a danger to residents. All of these chemicals could cause liver, kidney or nervous system damage in higher concentrations. The commission vowed to fund and perform the estimated $500,000 cleanup of the 17 sites on which they located chemicals. Edinburg lawyer Ramon Garcia told the Express-News that "the Rio Grande Valley was not that populated in the mid-1940s when the Hayes-Sammons chemical company moved into Mission and set up a warehouse on the tracks to receive and store pesticides. There were a lot of vacant areas where companies could have located. But for whatever reason, they located in the heart of Mission, which was predominantly Mexican-American." Mr. Garcia, who is known for winning large judgments, is representing plaintiffs in their class action. Attorneys for the defendants said the plaintiffs' case is severely flawed. "They have yet to produce any evidence that anything my clients produced or sold has caused them any injury," said Robert Newman, a Houston lawyer defending four of the defendants, Allied Chemical Corp., Aventis Pharmaceutical, FMC Corp. and Maxus Energy Corp. All are alleged to be product suppliers of Hayes-Sammons. WEST CORPORATION: CA Court Dismisses Telemarketing Fraud Consumer Suit ---------------------------------------------------------------------- The United States District Court, Southern District of California dismissed the consumer class action pending against West Corporation. The suit also names as defendants: (1) West Telemarketing Corporation, (2) Memberworks Incorporated, (3) MWI Essentials, (4) MWI Leisure Advantage, (5) MWI Home & Garden, (6) MWI Connections and (7) MWI Valuemax The complaint alleges that class members were sold club memberships by misleading means or billed for club memberships they did not purchase as a part of an upsell offer after ordering another product. The plaintiff asserts four separate claims. The plaintiff claims the defendants mailed unordered merchandise to the plaintiff and the similarly situated class members in violation of 39 USC ss. 3009. The plaintiff has also asserted claims for conversion, unjust enrichment and fraud. The purported class is composed of all persons in the United States who, after calling a telephone number to inquire about or purchase another product: (1) were sent a membership kit in the mail; (2) were charged for a Memberworks membership program; and (3) were customers of a joint venture between Memberworks and the Company or were wholesale customers of the Company. The Company filed a motion to dismiss for lack of personal jurisdiction, which was denied. The Company then joined with Memberworks on a motion to dismiss on various other grounds, which the court granted on July 12, 2002. *Investors Seek Their Due In Court, Suits Pending v. CMS Show Trend ------------------------------------------------------------------- The fallout from the latest corporate scandals will likely be dealt with in court, as plaintiff attorneys sign up irate investors by the dozens, the Detroit Free Press reports. Companies like CMS Energy Corp., Qwest Communications International Inc., WorldCom Inc. and Xerox Corp. are finding out the hard way that cutting financial corners and engaging in dubious transactions to artificially boost revenues is a mistake. CMS, Michigan's largest power company, is facing at least a half dozen lawsuits after revealing that it engaged in bogus energy trades that padded its 2000 and 2001 revenues. The revelation caused the Company's stock to plunge 40 per cent. Since January 2, Company stock has lost 69 percent of its value. The lawsuits allege CMS violated securities laws by engaging in the so- called round-trip energy trades, which intentionally misled investors. Round-trip trades, which are not illegal in themselves, involve buying electricity from another company at a set price, then selling it back to that company at the same price. "We are suing them for failure to disclose material accounting violations to the investing public," said David Scott, managing partner of Scott & Scott LLP, a Connecticut law firm that represents dozens of Company shareholders. "We are bringing the suit, which has received class action status, on behalf of all purchasers of securities of CMS during that time." State and federal regulators are now looking into how some of these recent corporate scandals were allowed to happen - and why those who direct policy-making felt "free" to engage in accounting practices they knew were fundamental wrongdoings. Following the disclosures in January of massive accounting irregularities at Enron Corp., a steady spate of revelation has stunned much of the investing public and caught many federal agencies off their guard. "It is true that at the end of every bull market, the amount of corporate fraud tends to increase," said Charles Neimeier, chief counsel of the US Securities and Exchange Commission's Financial Fraud Task Force. "But this period is unique, because of the size of the companies that are implicated in these schemes. For the last several years, the number of reporting failures has increased sharply." Over the last three months, several Fortune 500 corporations have been forced to wipe away billions of dollars in previously reported revenue that they booked using accounting loopholes. Among the developments: (1) WorldCom restated $3.9 billion in revenue and filed for bankruptcy. It has more recently revealed another $3.3 billion of hidden debt; (2) Qwest Communications International acknowledged misreporting $1.16 billion in sales and will restate results from 1999 to 2001; (3) Xerox acknowledged $6.4 billion in phantom sales and paid a $10 million fine; (4) Adelphia Communications filed for bankruptcy protection in May and said it will restate earnings for the last three years. Former chief executive John Rigas is arrested on charges of stealing hundred of millions of dollars from the company; (5) CMS told investors $5.3 billion of earlier-stated revenues came from round-trip trades, for which, ultimately, if properly posted on the books, there would be neither debit nor revenue. In the case of Dearborn-based CMS, the round-trip energy trades, 13 in all, were the vehicles that eventually got Michigan's largest power company into trouble. As a result, the company is facing several investor lawsuits for artificially inflating their stock values, which plaintiffs claim the company knew it was doing and intended to do. The investors charge in the complaints that defendants CMS violated several sections of the Securities Act of 1934 by issuing a series of materially false and misleading statements to the market between August 3, 2000, and May 10, 2002. "We have seen this kind of behavior before- it shakes the fundamental core of the market," said David Scott, the investors' attorney. "Everybody is scared that tomorrow will bring a new problem. What we are seeing is that companies for the last five years have engaged in aggressive (and misleading) efforts to keep up stock prices, because CEOs are highly compensated for doing so." Meanwhile, the head of the US Federal Energy Regulatory Commission said recently that he would support legislation to ban round-trip trading of electricity. "We are alarmed that this kind of thing could be so widespread," said SEC's Mr. Neimeier. "There is no industry that is immune from having this happen. Once you start down the path of tweaking your results, it is almost impossible to stop." A recent study by Weiss Ratings, Inc., found questionable accounting methods resulted in close to $1.3 trillion in lost shareholder value at 33 major companies from January 2001 to June 2002. The report is entitled "The Worsening Crisis of Confidence on Wall Street: The Role of Auditing Firms." The study demonstrates how some major auditing firms failed to warn shareholders of obvious problems that let to the latest financial implosions. "We have a responsibility to society to present fair financial information," said Alan Reinstein, an accounting professor at Wayne State University. "That is the auditor's sole responsibility, and when we walk away from that responsibility, I have serious concerns about our profession." In an effort to try to restore confidence in markets and punish rogue corporations and accounting firms for engaging in illegal activity, Congress has approved and President Bush has signed legislation that is aimed at cracking down on fraud. The new law calls for severe criminal penalties including prison time for individuals who engage in corporate fraud and document shredding. The new law also establishes an independent board to oversee the accounting industry. The measure would limit the amount of consulting work accounting firms do with companies whose books they audit. In addition, personal loans from companies to their top officials would be banned. "The accounting profession has been self-regulated for almost a hundred years," said Mr. Reinstein. "If we don't get our act in order, the wholesale regulation of our industry may come sooner than people think." New Securities Fraud Cases AON CORPORATION: Mark McNair Commences Securities Fraud Suit in N.D. IL ----------------------------------------------------------------------- The Law Office Of Mark McNair initiated a securities class action on behalf of shareholders who acquired Aon Corporation (NYSE:AOC) between May 4, 1999 and August 6, 2002, inclusive, in the United States District Court for the Northern District of Illinois against the Company and certain of its officers and directors. The action charges that defendant 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 details, contact Mark McNair by Mail: 1101 30th St. N.W. Suite 500, Washington, DC 20007 by Phone: 877-511-4717 or 202-872-4717 or by E-mail: mcnair@justice4investors.com. CHARTER COMMUNICATIONS: Wechsler Harwood Lodges Securities Suit in CA --------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP initiated a securities class action in the United States District Court for the Central District of California on behalf all persons who purchased or acquired Charter Communications, Inc. (Nasdaq:CHTR) securities between November 9, 1999 through July 17, 2002, inclusive against the Company and certain of its officers. The complaint asserts claims for violation of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 against Charter Communications, as well as its Chief Executive and Chief Financial Officers. The alleged violations, according to the complaint, stem from materially false and misleading statements made by the defendants during the class period that materially misrepresented Charter Communications' financial performance; thereby causing Company securities to trade at artificially-inflated prices. The complaint alleges that defendants: (1) overstated Charter's revenue; (2) failed to account appropriately for installation costs; and (3) artificially inflated the reported number of subscribers for the Company's basic cable services. On July 18, 2002, when a Merrill Lynch analyst expressed concerns about potentially misleading accounting practices, Charter's stock fell more than 13%. A subsequent article in Forbes discusses a Credit Suisse First Boston report that further amplifies these concerns and describes how Charter handles the impact of "churn" -- labor and advertising costs -- on the Company's balance sheet, by improperly capitalizing approximately 30% of its installation labor costs over an extended time period. For more details, contact Craig Lowther by Mail: 488 Madison Avenue, 8th Floor New York, New York 10022 by Phone: 877-935-7400 or by E-mail: clowther@whhf.com CHARTER COMMUNICATIONS: Stull Stull Initiates Securities Suit in MO ------------------------------------------------------------------- Stull Stull & Brody initiated a securities class action in the United States District Court for the Eastern District of Missouri, on behalf of all purchasers of the common stock of Charter Communications, Inc. (NASDAQ:CHTR) between November 9, 1999 and July 17, 2002, inclusive against the Company and certain of its officers and directors. The complaint charges defendants with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that defendants' material omissions and the dissemination of materially false and misleading statements regarding the nature of Charter's revenue and earnings caused Charter's stock price to become artificially inflated, inflicting damages on investors. The suit alleges that defendants overstated Charter's revenue, failed to appropriately account for installation costs and artificially inflated the number of subscribers for the Company's basic cable services. On July 18, 2002, when a Merrill Lynch, Co. analyst expressed concerns about potentially misleading accounting practices, Charter's stock fell more than 13%. Additionally, a subsequent article in Forbes discusses a Credit Suisse First Boston report that further amplifies these concerns and describes how Charter handles the impact of "churn" - labor and advertising costs - on the Company's balance sheet, by improperly capitalizing approximately 30% of its installation labor costs over an extended time period. For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New York, NY 10017 by Phone: 800-337-4983 by Fax: 212-490-2022 or by E- mail: SSBNY@aol.com MSC INDUSTRIAL: Mark McNair Commences Securities Fraud Suit in E.D. NY ---------------------------------------------------------------------- The Law Office Of Mark McNair initiated a securities class action on behalf of shareholders who acquired MSC Industrial Direct Co. Inc. (NYSE:MSM) securities between November 4, 1999 and August 5, 2002, inclusive, in the United States District Court for the Eastern District of New York against the Company and certain of its officers and directors. The action charges that defendant 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 Mark McNair by Mail: 1101 30th St. NW Suite 500, Washington, DC 20007 by Phone: 877-511-4717 or 202-872-4717 or by E-mail: mcnair@justice4investors.com. SEEBEYOND TECHNOLOGY: Schiffrin & Barroway Lodges Securities Suit in CA ----------------------------------------------------------------------- Schiffrin & Barroway LLP initiated a securities class action against SeeBeyond Technology Corp. (Nasdaq:SBYN) claiming that the company misled investors about its business and financial condition, in the US District Court for the Central District of California. The suit seeks damages for violations of federal securities laws on behalf of all investors who bought Company securities between December 10, 2001 and April 22, 2002. The complaint alleges that the Company made positive but false statements about its results and business, while concealing material adverse information about customers pushing out orders. As a result, Company stock traded at artificially inflated levels, permitting defendants to complete a secondary public offering of 8.5 million shares (plus 1.2 million of an over allotment) for proceeds of $82 million, including 2 million shares sold by the Company's CEO. Immediately before the offering, the Company announced its 4thQ 01 results, which met analyst expectations. Defendants represented that the Company had met the numbers without pulling in sales from the 1stQ 02 such that 1stQ 02 results would be favorable as well. The Company indicated it had good visibility into 1stQ 02 results and forecast revenues of more than $44 million for that quarter. For more details, contact the Shareholder Relations Manager by Phone: 888-299-7706 (toll free)/610-822-2221 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com VIVENDI UNIVERSAL: Berger & Montague Commences Securities Suit in NY -------------------------------------------------------------------- Berger & Montague, PC initiated a securities class action against Vivendi Universal, SA (NYSE: V) and certain of its principal officers and director in the United States District Court for the Southern District of New York on behalf of all persons or entities who purchased Company securities between April 23, 2001 and July 2, 2002. 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. Prior to and during the class period, defendant Jean-Marie Messier took Vivendi on an acquisition binge that, according to published reports, resulted in the Company amassing approximately $18 billion in debt as he turned the Company from a water concern into an entertainment powerhouse. During the class period, defendants made misrepresentations and/or omissions of material fact, including the following: (1) misstating the Company's cash position and ability to service its debt obligations; (2) misstating the Company'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; (3) 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 (ADSs); (4) Affirmatively misstating the value of goodwill and other intangible assets associated with, inter alia, the merger among Vivendi, Seagram and Canal+ by carrying such assets at the cost of acquiring them long after it had become apparent that Vivendi had overpaid to acquire such assets; and (5) 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. During the class period, defendants' false statements artificially inflated Vivendi ADSs to as high as $68.80 per ADS. Defendants reported favorable, but misleading, financial results to the market and represented that Vivendi was not as susceptible to economic problems as competitors and that the Company had the "highest resiliency and lowest sensitivity to recessionary environment." The defendants also represented that Vivendi was successfully implementing recent mergers, which were being reorganized quickly to generate synergies. These positive but false statements allowed the Company to complete additional acquisitions in its $100 billion buying spree between 1998 and 2001. Late in June 2002, news leaked from Vivendi that its debt was at alarming levels, causing Vivendi's ADSs to decline in price from $28 to $20. Vivendi's ordinary shares declined in similar fashion. Nonetheless, Messier reassured the market that liquidity was not a problem. However, as ratings agencies continued to downgrade the Company's debt, the ADSs continued to decline. On July 2, 2002, Vivendi's debt was downgraded again and the Company was in danger of default. On July 3, 2002, Messier was forced to resign. Vivendi ADSs collapsed upon these revelations, falling to $15-21/32 on July 3, 2002, on huge volume of 8 million shares. This collapse wiped out billions of dollars in Vivendi shareholder value, compared to the end of 2001. Later, on July 9, 2002, Bloomberg reported that the Commission des Operations de Bourse was reviewing statements released by Vivendi to ensure "they abide by our rules." The regulators had raided Vivendi's Paris headquarters as part of an investigation into whether Vivendi had disclosed relevant information to investors in the prior 18 months. For more details, contact Sherrie R. Savett, Carole A. Broderick, Barbara A. Podell or Kimberly A. Walker by Mail: 1622 Locust Street, Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax: 215-875-5715 by E-mail: InvestorProtect@bm.net or visit the firm's Website: http://www.bergermontague.com ********* 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 * * *