/raid1/www/Hosts/bankrupt/CAR_Public/020822.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, August 22, 2002, Vol. 4, No. 166
Headlines
ALLERGAN INC.: Faces Antitrust Suit over Generic Versions of Alphagan
ALLERGAN INC.: Awaits JPML Ruling on Suit Over Average Wholesale Prices
APARTHEID REPARATIONS: DaimlerChrysler Named As Defendant in Lawsuit
ARCTIC CAT: Voluntarily Recalls 45T ATVs Due To Injury, Accident Hazard
BLACK & DECKER: Recalls 6,100 Table Saws Due To Electrocution Hazard
BLACK & DECKER: Recalls 950,000 Cordless Drills Due To Fire Hazard
CALIFORNIA: Ephedra Sale Ban To Minors Likely, Suit Demands Warnings
GLAXOSMITHKLINE: Federal Court Orders Certain Paxil TV Ads Withdrawn
GREAT LAKES: Discovery, Trial For Consolidated Antitrust Suit Set 2003
HARMONIC INC.: CA Court Yet To Decide on Dismissal of Securities Suit
ICT GROUP: Agrees To Settle Suit For Securities Violations in E.D. PA
ICT GROUP: Trial in West Virginia Wage Suit Scheduled For March 2003
IPALCO ENTERPRISES: Asks Court To Dismiss Breach of Fiduciary Duty Suit
LUCENT TECHNOLOGIES: NJ Court Refuses To Dismiss Securities Fraud Suit
LUCENT TECHNOLOGIES: Faces Suit Over ERISA Violations in New Jersey
LUCENT TECHNOLOGIES: Faces Several Suits Over Winstar Stock in NY, NJ
LUCENT TECHNOLOGIES: Agrees To Settle IL Suit Over Telephone Leases
MAXIM PHARMACEUTICALS: Asks CA Court To Dismiss Securities Fraud Suit
SIMON TRANSPORTATION: Plaintiffs Appeal Dismissal of Securities Suit
SLAVERY REPARATIONS: African-Americans Gather To Demand Reparation
TERRORIST ATTACK: Canadians Join September 11 Lawsuit Against Saudis
TERRORIST ATTACK: Defendants Label 9/11 Victims' Suit As "Blackmail"
UTAH: Utah Activists Consider Lawsuit To End Secret Polygamy Practices
New Securities Fraud Cases
AMERICAN EXPRESS: Rabin & Peckel Commences Securities Suit in S.D. NY
ANDRX CORPORATION: Schiffrin & Barroway Commences Securities Suit in FL
AON CORPORATION: Cauley Geller Commences Securities Suit in N.D. IL
BAXTER INTERNATIONAL: Bernard Gross Launches Securities Suit in N.D. IL
BELLSOUTH CORPORATION: Schiffrin & Barroway Files Securities Suit in GA
BELLSOUTH CORPORATION: Holzer & Holzer Lodges Securities Suit in GA
BELLSOUTH CORPORATION: Charles Piven Files Securities Suit in N.D. GA
CAPITAL ONE: Wechsler Harwood Commences Securities Suit in E.D. VA
CITIGROUP INC.: Schatz & Nobel Commences Securities Fraud Suit in NY
CORRPRO COMPANIES: Bernstein Liebhard Lodges Securities Suit in E.D. OH
DUANE READE: Bernard Gross Commences Securities Fraud Suit in S.D. NY
FLEXTRONICS INTERNATIONAL: Much Shelist Files Securities Suit in NY
INTERPUBLIC GROUP: Charles Piven Commences Securities Suit in S.D. NY
INTERPUBLIC GROUP: Bernstein Liebhard Launches Securities Suit in NY
JOHNSON & JOHNSON: Schatz & Nobel Commences Securities Fraud Suit in NJ
JOHNSON & JOHNSON: Schiffrin & Barroway Lodges Securities Suit in NJ
MERRILL LYNCH: Stull Stull Commences Securities Fraud Suit in S.D. NY
MSC INDUSTRIAL: Schiffrin & Barroway Lodges Securities Suit in E.D. NY
SUPERVALU INC.: Bernstein Liebhard Launches Securities Suit in MN Court
*********
ALLERGAN INC.: Faces Antitrust Suit over Generic Versions of Alphagan
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Allergan, Inc. faces several class actions pending in the United States
District Court in California, alleging that the Company violated the
Sherman Act and the antitrust and/or unfair business competition
statutes of various states and the District of Columbia by preventing
generic versions of Alphagan from entering the United States market.
The Company's s responses to the complaints are due in August 2002.
The ultimate outcome of any pending litigation or claims cannot be
ascertained at this time. In view of the unpredictable nature of such
matters, no assurances can be given regarding the outcome of the
litigation in which the Company is a party or the impact on the Company
of an adverse ruling in litigation.
ALLERGAN INC.: Awaits JPML Ruling on Suit Over Average Wholesale Prices
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Allergan, Inc. awaits a ruling from the Judicial Panel on Multidistrict
Litigation (JPML) relating to a class action filed against it by the
Teamsters Health & Welfare Fund of Philadelphia in the United States
District Court in Pennsylvania.
The lawsuit contends that 10 pharmaceutical companies, including the
Company, violated the Racketeering Influenced and Corrupt Organization
Act (RICO) by implementing fraudulent marketing and sales schemes to
substantially increase and/or maintain the sale of their pharmaceutical
products which are administered directly by doctors and other medical
providers by deliberately overstating the average wholesale prices for
their products.
The ruling from the JPML will determine whether or not the case will be
consolidated with the pending "Citizens for Consumer Justice, etc. v.
Abbott Laboratories, Inc., Allergan, Inc., etc." class action and
related cases to which the Company is not a party.
APARTHEID REPARATIONS: DaimlerChrysler Named As Defendant in Lawsuit
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A multibillion-dollar lawsuit brought by South African apartheid
victims against many multinational corporations and banks also will
target US-German automaker DaimlerChrysler, a lawyer in the case told a
German newspaper, according to a recent report by Agence France-Presse.
John Ngcebetsha, a Johannesburg-based lawyer working with US attorney
Edward Fagan on the class-action lawsuit, told the Welt am Sonntag that
DaimleryChrysler could expect to receive papers in the case, which
accuses foreign companies of helping prop up the former white-minority
regime.
Daimler-Benz, which merged with Chrysler in 1998, is accused of
breaking the arms embargo against South Africa in 1977, by delivering
Unimog all-terrain military transport vehicles to the army and police,
knowing they would be used to oppress the blacks of South Africa.
A US federal court, on August 9, began a preliminary hearing in the
class action, which has been filed against companies including US-based
Citigroup and IBM, Swiss banks UBS and Credit Suisse and Germany's
Commerzbank and Deutsche Bank.
The companies have claimed that the lawsuit is unfounded under
international law and say that the economic situation would have been
much more severe for average South Africans under apartheid if they,
the companies, had not invested in the country.
ARCTIC CAT: Voluntarily Recalls 45T ATVs Due To Injury, Accident Hazard
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Arctic Cat, Inc. is cooperating with with the US Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 45,000 all-
terrain vehicles (ATVs). The ball joints on the front suspension of
these ATVs can fail, resulting in a loss of control. This can cause
the ATV to overturn, posing a risk of serious injury or death to
riders.
The Company has received 73 reports of broken front suspensions, 10 of
which resulted in injuries to riders, including a shoulder rotator cuff
injury, and bumps and bruises.
The recalled 2002 model ATVs are either red or green. They have the
brand name "Arctic Cat" written on both sides of the vehicle. The
recall includes the following ATV model names:
(1) 250,
(2) 300,
(3) 300 Massey Ferguson,
(4) 375,
(5) 400,
(6) 400 i,
(7) 500,
(8) TBX 500 and
(9) 500i
Consumers should have their ATV's model name and 13-digit model number
available when they call or visit the firm's web site to determine if
an ATV is included in the recall. The model name is located on the
front of the ATVs, just below the speedometer. The model number is
included in the registration materials received at the time of
purchase.
Arctic Cat dealerships nationwide sold these ATVs from June 2001
through June 12, 2002 for between $4,000 and $6,500.
For more details, contact the Company by Phone: 800-210-5941 (toll-
free) between 8 am and 5 pm CT Monday through Friday or visit the
firm's Website: http://www.arctic-cat.com.
BLACK & DECKER: Recalls 6,100 Table Saws Due To Electrocution Hazard
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Black & Decker (US), Inc. is cooperating with the US Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 6,100 table
saws. The motor housing on the saw may crack, posing a risk of
electric shock to consumers. The Company has not received any reports
of injuries. This recall to repair is being conducted to prevent the
occurrence of injuries.
The recall involves 10-inch table saws, made in Taiwan, with the model
number BT2500 and dates codes 200128-CT through 200148-CT. The model
number and date codes are located on a name plate on the front panel
above the power switch. The saw is grey with an orange front panel.
The name "Black & Decker" is located on the lower right hand portion of
the front panel.
Home centers and hardware stores nationwide sold the table saws
from August 2001 through April 2002 for about $400.
For more details, contact the Company by Phone: 866-357-0324 between 8
am and 4:30 pm ET Monday through Friday or visit the firm's Website:
http://www.blackanddecker.com
BLACK & DECKER: Recalls 950,000 Cordless Drills Due To Fire Hazard
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Black & Decker (US), Inc. is cooperating with the US Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 950,000
cordless drill/drivers. The drill's switch can malfunction and
overheat, posing the possibility of a fire hazard to consumers. The
Company has received 45 reports of drill switches overheating, causing
two minor burns.
The recalled cordless drill/drivers are orange and bear the word
"Firestorm" or jade and bear the words "Quantum Pro." The
drill/drivers have the following model numbers and date codes:
(1) 14.4 volt Firestorm; Model: CD632; Date Code: 990852 thru
20005052;
(2) 14.4 volt Firestorm; Model: HP532; Date Code: 990152 thru
20001652;
(3) 14.4 volt Firestorm; Model: FS1442; Date Code: 20002252 thru
20011852;
(4) 14.4 volt Quantum Pro; Model: Q145; Date Code: 990252 thru
20001152;
(5) 15.6 volt Firestorm; Model: FS1560; Date Code: 993752 thru
20000752;
(6) 18 volt Firestorm; Model: FS1802; Date Code: 20002452 thru
20010652;
(7) 18 volt Firestorm; Model: HP932; Date Code: 990152 thru
20012452;
(8) 18 volt Quantum Pro; Model: Q185; Date Code: 990252 thru
20011052
The model numbers are located on the name plate on the side of the
drill and the dates codes are located on the bottom of the handle where
the battery is inserted (remove battery to locate date code). These
drill/drivers were manufactured in China.
Home centers and hardware stores throughout the U.S., Puerto Rico
and Canada sold the drill/drivers from March 1999 through December 2001
for between $50 and $200. The drill/drivers were sold separately and
as part of various tool kits.
For more details, contact the Company by Phone: 866-821-5444 between 8
am and 4:30 pm ET Monday through Friday or visit the firm's Website:
http://www.blackanddecker.com.
CALIFORNIA: Ephedra Sale Ban To Minors Likely, Suit Demands Warnings
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California Governor Gray Davis, who has received $175,000 in campaign
donations from Metabolife International, the maker of an ephedra
containing, weight-loss product, said recently that he will sign
legislation that bans the sale of ephedra products to minors, the New
York Daily News reports.
A San Diego woman has filed a class action in California Superior Court
that would require Metabolife to post notices where ephedra is sold,
warning customers that the product can cause death, heart problems,
mental illness, epilepsy and other injuries.
The class action was filed in the wake of an announcement by the US
Department of Justice that it was launching a criminal investigation
into allegations that Metabolife has covered up thousands of reports
from consumers about health problems linked to drug product ephedra.
The Justice Department said it was conducting an investigation to
determine whether company executives lied to federal regulators when
they said they had never received complaints about the product.
Court records from lawsuits filed against the company show Metabolife
has received many complaints about the product, according to Justice
Department officials, although Michael Ellis, a former company
president, told the Food and Drug Administration, in 1998, that the
company "never received one notice from a consumer that any serious,
adverse health event has occurred because of the ingestion of
Mebabolife 356.
"The companies that are selling and manufacturing these products are
irresponsible because they do not follow up on adverse event reports,"
said lawyer Todd Macaluso, who is representing plaintiff Jean K.
Hargis, a 42-year-old San Diego woman who suffered a massive cranial
hemorrhage after taking an ephedra product. "They have an affirmative
duty to check out these complaints."
GLAXOSMITHKLINE: Federal Court Orders Certain Paxil TV Ads Withdrawn
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A federal judge ordered GlaxoSmithKline, the makers of Paxil, a popular
anti-depressant, to pull all television commercials nationwide that
claim the drug is "non-habit forming," reports the Associated Press
Newswires. Affect of the ruling on a current class action relating to
adverse reactions from the drug will need to be studied and an October
7 hearing has been scheduled to decide whether the lawsuit should be
converted to a nationwide class action.
US District Court Judge Mariana Pfaelzer ruled that the ads were
"misleading and created inaccurate expectations about the ease of
withdrawal from the drug." Judge Pfaelzer found that in other
countries labels on the drug warn of adverse reactions when use of the
drug is discontinued. Company attorneys are appealing the ruling.
The ruling has come about one year after a class action was filed in
Los Angeles on behalf of 35 patients who claimed symptoms such as
nausea, fever and "electric zaps" to their bodies. The lawsuit's lead
attorney, Karen Barth, said the company changed its labeling on
December 14, but continued to run commercials and distribute brochures
stating Paxil "may cause mild, usually temporary side effects in some
individuals."
The company's ads also stated that "Paxil has been studied both in
short-term and long-term use and is not associated with dependence and
addiction."
Judge Pfaelzer said that removing the TV commercials "can only help
patients make a more informed decision by forcing them to discuss the
possibility of withdrawal symptoms and addictive qualities with their
physicians."
GREAT LAKES: Discovery, Trial For Consolidated Antitrust Suit Set 2003
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The United States District Court for the Southern District of Indiana
set for 2003 the discovery and trial schedule for the consolidated
class actions pending against Great Lakes Chemical Corporation.
The suit seeks treble damages and claims that the Company conspired
with others in violation of the antitrust laws regarding the pricing of
bromine and brominated products.
Over the Company's opposition, the court certified a class of direct
purchasers of brominated diphenyl oxides and their blends,
tetrabromobisphenol A and its derivatives and all methyl bromide
products in the United States between January 1, 1995 and April 30,
1998.
The Company then filed an application for an interlocutory appeal of
the certification order in the Seventh Circuit Court of Appeals, but
the appeals court denied the application. The Company has continued to
defend the federal litigation, and the district court has set a
discovery and trial schedule under which the cases would not be tried,
at the earliest, until 2003.
HARMONIC INC.: CA Court Yet To Decide on Dismissal of Securities Suit
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The United States District Court for the Northern District of
California has yet to decide on the motions for dismissal of the
shareholder derivative action filed against Harmonic, Inc.
The suit, originally filed against its then-current directors in the
Superior Court for the County of Santa Clara, claims that the
defendants breached their fiduciary duties by, among other things,
causing the Company to violate federal securities laws.
All deadlines in this action have been stayed pending resolution of the
motions to dismiss the securities actions. At an April 2002 case
management conference, the court continued the conference until June 7,
2002. The court stated the parties need not appear if no decision on
the motions to dismiss the securities action had been issued by that
date. Because no decision on those motions has been issued, the June
7, 2002 status conference was not held, and no further conference has
been scheduled.
ICT GROUP: Agrees To Settle Suit For Securities Violations in E.D. PA
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ICT Group, Inc. agreed to settle the securities class action pending on
behalf of a class of Company shareholders, in the United States
District Court for the Eastern District of Pennsylvania.
The suit alleges that the Company and certain of its directors violated
the federal securities laws, and seeks compensatory and other damages,
including rescission of stock purchases made by the plaintiff and other
class members in connection with the Company's initial public offering
effective June 14, 1996.
The Company then filed a motion to dismiss the suit, which the court
granted, giving leave to plaintiff to file an amended complaint on
narrow accounting allegations. The plaintiffs then filed an amended
suit purporting to bring negligence claims in connection with the
Company's initial public offering.
The court again dismissed the case without prejudice, directing that
the case remain in status quo, that the statute of limitations be
tolled and that the parties continue with discovery and advise the
court if assistance by the court is needed.
Since that time the defendants filed a motion for summary judgment
seeking to have the case dismissed on the grounds that there is no
material issue of fact. Plaintiffs filed a response in opposition to
defendant's motion and also filed a motion to have the matter certified
as a class action.
In September 2000, the court entered orders dismissing the defendant's
motion for summary judgment and plaintiff's motion for class
certification without prejudice, with leave to re-file such motions
upon the completion of discovery.
The Company and the plaintiffs have reached an agreement in principle
to settle this litigation. The finalization of the proposed settlement
is subject to, among other things, the parties agreeing upon and
executing a definitive settlement agreement having mutually agreeable
terms and conditions.
In addition, as with any class action litigation, any settlement
agreement among the parties is not final until approved by the court.
If approved, the settlement amount would be covered in full by the
Company's insurance.
ICT GROUP: Trial in West Virginia Wage Suit Scheduled For March 2003
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Trial in the class action filed against ICT Group, Inc. in the Circuit
Court of Berkley County, West Virginia has been set for March 2003.
The suit was filed on behalf of all current and former hourly employees
of the Company's facility in Martinsburg, West Virginia alleging that
the Company had violated the West Virginia Wage Payment and Collection
Act with respect to certain of the Company's pay practices. The
allegations included:
(1) failure to pay promised signing and incentive bonuses and wage
increases, and
(2) failure to compensate employees for short breaks or
"transition" periods of less than 20 minutes and improper
deductions for the cost of purchasing telephone headsets.
The complaint also included a count for fraud, alleging that the
failure to pay for short break and transition time violated specific
representations made by the Company to its employees.
The court certified the class and discovery commenced. In 2001,
plaintiffs' counsel filed a motion to expand the class to include all
current and former hourly employees at all four of the Company's West
Virginia facilities and to add twelve current and former executives of
the Company. The court granted plaintiffs' request.
The Company filed a response denying liability and asserting numerous
defenses. The Company is vigorously defending the suit, which is now
in the discovery process. Plaintiffs have moved for summary judgment
on their claims for failure to pay for short breaks and transition
time. Discovery is expected to be completed by the end of December
2002 with a scheduled trial date in March 2003
IPALCO ENTERPRISES: Asks Court To Dismiss Breach of Fiduciary Duty Suit
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IPALCO Enterprises, Inc. asked the United States District Court for the
Southern District of Indiana to dismiss the class action filed against
it and certain of its former officers.
The suit alleges breaches of fiduciary duty stemming from declines in
the prices of The AES Corporation and IPALCO stock held by certain of
IPALCO's benefit plans seeking compensation for alleged overpayment for
the purchase of IPALCO stock, plus interest. The plaintiffs have
amended their complaint to eliminate allegations relating to benefit
plans other than the IPALCO Thrift Plan.
The Company believes that this suit is without merit. While the
Company cannot predict the outcome, it does not believe that the suit
will have a material adverse effect on its financial condition, results
of operations or liquidity.
LUCENT TECHNOLOGIES: NJ Court Refuses To Dismiss Securities Fraud Suit
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The United States District Court in New Jersey denied Lucent
Technologies, Inc.'s motion for dismissal of the consolidated
securities class action pending against the Company and certain of its
former officers.
Specifically, the complaint alleges, among other things, that beginning
in late October 1999, the Company and certain of its officers
misrepresented the Company's financial condition and failed to disclose
material facts that would have an adverse impact on the Company's
future earnings and prospects for growth.
The suit is proceeding with discovery. The Company intends to defend
this action vigorously, as stated in a disclosure to the Securities and
Exchange Commission.
LUCENT TECHNOLOGIES: Faces Suit Over ERISA Violations in New Jersey
-------------------------------------------------------------------
Lucent Technologies, Inc. faces a class action filed under the Employee
Retirement Income Security Act (ERISA) in the United States District
Court in New Jersey. Two actions were initially filed, but the court
dismissed the other suit.
The first suit was filed in July 2001, under ERISA alleging, among
other things, that the Company and certain unnamed officers breached
their fiduciary duties with respect to the Company's employee savings
plans. The suit claims that the defendants were aware that Company
stock was inappropriate for retirement investment and continued to
offer such stock as a plan investment option.
In August 2001, a separate purported class action complaint was filed
under ERISA alleging, among other things, that the Company breached its
fiduciary duties with respect to its employee benefit and compensation
plans by offering Company stock as an investment to employees
participating in the plans despite the fact that the Company allegedly
knew it was experiencing significant business problems.
The August action was dismissed without prejudice on June 12, 2002,
while the July action is in the discovery stage. The Company is
defending the action vigorously.
LUCENT TECHNOLOGIES: Faces Several Suits Over Winstar Stock in NY, NJ
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Lucent Technologies, Inc. faces two securities class actions, filed on
behalf of purchasers of the common stock of Winstar Communications,
Inc., which filed for bankruptcy in April 2001.
The first suit was commenced in March 2002 in the United States
District Court for the Southern District of New York. The suit names
as defendants against Winstar's several former officers and
directors, Winstar's outside auditors, and the Company. The second
suit was commenced in April 2002 in New Jersey state court against the
Company. The plaintiffs in the New Jersey case are institutional
investors, many of which are affiliated with each other, that purchased
the common stock of Winstar.
In both actions, the plaintiffs claim that the Company caused or
contributed to money lost by the plaintiffs in connection with their
investments in Winstar stock. In the New York action, the plaintiffs
claim that the Company violated federal securities laws in connection
with plaintiffs' purchases of Winstar stock. The Company has moved to
dismiss the claims in the New York action during June 2002.
In the New Jersey action, the plaintiffs claim that the Company
committed, in connection with the plaintiffs' purchases of Winstar
stock:
(1) common law fraud,
(2) negligent misrepresentation,
(3) conspiracy to commit fraud and
(4) aiding and abetting fraud
Both cases are in the early stages, and the Company intends to defend
the cases vigorously.
LUCENT TECHNOLOGIES: Agrees To Settle IL Suit Over Telephone Leases
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Lucent Technologies, Inc. reached a settlement in the class action
filed against it and AT& in Illinois state court, on behalf of present
and former customers based on a claim that the AT&T Consumer Products
business (which became part of Lucent in 1996) and Lucent had defrauded
and misled customers who leased telephones, resulting in payments in
excess of the cost to purchase the telephones.
Similar consumer class actions pending in various state courts have
been stayed pending the outcome of the Sparks case and, in July 2001,
the Illinois court certified a nationwide class of plaintiffs.
The Company filed pretrial motions for, among other things,
decertification of the class and summary judgment in the Company's
favor. On July 29, 2002, the judge denied the Company's motions, and
set trial to begin on August 5, 2002.
After extensive negotiations subsequent to the Company's July 23, 2002
earnings release, a settlement proposal was submitted to the court on
August 9, 2002, to settle the litigation for up to $300 in cash plus
pre-paid calling cards redeemable for minutes of long distance service.
The settlement will be reviewed by the court and must be approved
before the settlement becomes final.
The Company and AT&T deny they have defrauded or misled their
customers, but have decided to settle this matter to avoid the
uncertainty of litigation and the diversion of resources and personnel
that the continuation of pursuing this matter would require.
The class claimants will apply for reimbursement from the settlement
fund, and will be required to demonstrate their entitlement through a
claims form to be provided to a claims administrator.
MAXIM PHARMACEUTICALS: Asks CA Court To Dismiss Securities Fraud Suit
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Maxim Pharmaceuticals, Inc. asked the United States District Court for
the Southern District of California to dismiss the consolidated
securities class action filed on behalf of a class of Company
stockholders.
The suit charged the Company and several of its officers of violations
of federal securities laws related to declines in the Company's stock
price. The suit alleges claims in connection with various alleged
statements and omissions to the public and to the securities markets
relating to the Company's drug candidate, Ceplene.
In December 2001, the Company filed a motion to dismiss the suit, which
the court granted but gave the plaintiff 30 days to file an amended
complaint. In May 2002, the plaintiff filed an amended complaint,
which the Company asked the court to dismiss.
A hearing on the motion to dismiss the amended complaint is scheduled
to take place on August 26, 2002.
SIMON TRANSPORTATION: Plaintiffs Appeal Dismissal of Securities Suit
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The United States Tenth Circuit Court of Appeal heard oral arguments on
the appeal of the dismissal of the securities class action against
Simon Transportation Services, Inc. and certain of its former officers
and directors.
The suit was initially filed in the United States District Court for
the District of Utah, alleging that the defendants made material
misrepresentations and omissions during the period February 13, 1997
through April 2, 1998 in violation of Sections 11, 12(2) and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The court later dismissed the case with prejudice, a decision which the
plaintiffs appealed. The court has not yet reached a decision on this
matter. The Company intends to vigorously defend this action.
SLAVERY REPARATIONS: African-Americans Gather To Demand Reparation
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Thousands of black Americans gathered on Washington's National Mall
last week to mark the 115th anniversary of Marcus Garvey's birth, in a
rally of support for reparation payments to blacks whose ancestors were
slaves and suffered segregation in the United States, Agence
France-Presse reports.
"We are a few thousand. We are here to ask for reparations now!"
declared Stephanie Middler, one of the event's organizers, nonetheless
noting that she had hoped for a better turnout.
The rally near the Capitol building assembled various organizations
tied to the black community, including the National Coalition of Blacks
for Reparations in America (N'COBRA), the Nation of Islam, led by Louis
Farrakhan and the New Black Panther Party.
"No Justice, No Peace," the demonstrators chanted from behind a
security cordon. "Agitate, educate, organize, resist," the crowd
added, pumping their fists at the sky. A small group of white
Americans joined in the rally. "Solidarity is the word," shouted
Ferrell Winfree, who traveled from Atlanta, Georgia, for the event.
Members of the Black Panthers, sporting black berets, displayed
photographs of lynchings, showing slaves hanged from tree branches or
with their backs lacerated from whip lashings. "This is the work of
the devil. And the devil is the white man," declared one of the
demonstrators.
Marcus Garvey, a Jamaican-born black nationalist leader in the United
States, founded the Universal Negro Improvement Association. His
newspaper, Negro World, advocated an independent black economy within
the framework of white capitalism.
Last March, black Americans filed the first legal challenge against
businesses they believe benefited from slavery. Plaintiffs are asking
for an independent panel of historians and seeking reimbursement and
damages.
The class action estimated the worth of uncompensated labor at US$1.4
trillion, in the first of what could be a barrage of lawsuits targeting
insurance company Aetna, railroad CSX and financial services firm
FleetBoston.
Plaintiffs' lawyers include Edward Fagan, who helped Holocaust
survivors bring highly publicized suits against Swiss banks, and German
companies that used forced and slave labor in World War II. The
lawyers said their case heralded the start of a wave of lawsuits.
TERRORIST ATTACK: Canadians Join September 11 Lawsuit Against Saudis
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The families of several Canadians killed during the September 11
attacks have joined the class action recently filed in Washington
against a long list of Saudi citizens and Muslim charities alleged to
be involved in financing terrorism, according to court documents and a
report by the National Post.
Twenty-four Canadians were killed when Islamic terrorists slammed
planes into the World Trade Center in New York and the Pentagon in
Washington, D.C. and crashed a fourth plane in Pennsylvania.
Six hundred family members are launching the suit, the first civil case
to go after the mostly Saudi-run charities, banks and companies
suspected of moving money to Osama bin Laden and his network of Islamic
terrorist groups.
"The case will rest on the premise that those who finance terrorist
organizations are liable for the damages done by them," according to a
statement issued by the South Carolina law firm of Ness Motley, which
is handling the case. The lawsuit aims to bankrupt all those who
finance terrorism.
"By taking vigorous legal action against the financial sponsors of
terror, the plaintiffs will force the sponsors of terror into the light
and subject them to the rule of law," says the lawsuit's complaint.
The lawsuit seeks damages of $1 trillion for the wrongful death,
conspiracy, the aiding and abetting, among other acts, engaged in by
the defendants. The lawsuit further seeks "treble damages for the
intentional death and injury of plaintiffs by reason of international
terrorism, as well as treble attorneys' fees, plus punitive damages, to
prevent the defendants from ever again committing such acts."
The massive international investigation launched following the World
Trade Center and Pentagon attacks has uncovered evidence that al-Qaeda
and its affiliated extremist groups have been bankrolled in part by
wealthy Saudis.
US authorities believe Islamic terrorists have been able to collect and
move money internationally by using a network of businesses and
charities, some with offices in the United States and Canada.
"The individuals, banks, corporations and Islamic charities used by the
terrorists to perpetuate the atrocities on 9/11 can and must be held
accountable under the tort law system, which has been expanded to
encompass anti-terrorism," the Ness Motley law firm statement said.
TERRORIST ATTACK: Defendants Label 9/11 Victims' Suit As "Blackmail"
--------------------------------------------------------------------
A US$1 trillion lawsuit recently filed in Washington, D.C. against
Saudi groups linked to Osama bin Laden, was dismissed by defendants,
for the most part, as "blackmail" and "extortion," according to the
National Post.
The class action was filed last week by American and Canadian families
who lost loved ones in the Sept. 11 attacks. The charges were met with
anger, denial and accusations of ulterior motives from those named as
defendants.
"This is an act to extort Saudi money deposited in the United States
and a way of meddling in the region," said an official at Al Rajhi
Investment and Development Corp., one of several Saudi banks named in
the lawsuit.
The Al-Madinah newspaper branded the case "financial and political
blackmail . by skilled lawyers who are fabricating evidence in an
environment that is hostile to Arab culture and values."
Fifteen of the 19 hijackers who crashed jetliners into the World Trade
Center Towers were Saudi citizens, as is Osama bin Laden.
Investigators have found links to prominent Saudi individuals and
groups, as well as to a Canadian charity and three Muslim organizations
with offices in Ontario and Quebec.
UTAH: Utah Activists Consider Lawsuit To End Secret Polygamy Practices
----------------------------------------------------------------------
Activist groups from Utah, Arizona and Canada are considering a class
action seeking to combat polygamy, as practiced by the Church of the
Latter-Day Saints in Utah, the Miami Herald reports.
It has been two years since Utah's Legislature appointed a full-time
investigator to root out crimes associated with polygamy but, aside
from last year's high-profile prosecution and imprisonment of
polygamist Tom Green, no other cases have been brought to court, The
Miami Herald states.
Tom Green, 54, was sentenced last year to five years in prison for
bigamy and for failing to repay thousands of dollars of welfare
payments which his family improperly had received. He will be
sentenced again on August 27 for child rape. In 1986, he married a
13 year-old girl.
The activist groups also intend to gather material for a report they
intend to forward to the United Nations Commission on Human Rights.
They charge that the state of Utah has not done enough to stamp out
"Utah's dirty little secret," and that, consequently, inaction is
allowing child abuse, welfare fraud and sexual assault to continue.
The activists also have recruited former "sister wives" to help build
the class action against the polygamous religious group that arranges
marriages of girls as young as 13. Since polygamy, as a tenet of the
Church of Latter-day Saints, was outlawed in 1890, wives are usually
sealed to their husbands in a religious ceremony.
The activists charge that Utah's polygamy investigator merely has
provided political cover for the state, which has little interest in
delving into such a highly sensitive issue.
Colorado City and Hildale, Utah, are polygamous communities that
straddle the states' borders, and it is estimated that 40,000
polygamists are living in the western United States and Canada.
Officials say that investigating closed societies is difficult and that
women and girls seldom come forward to report abuse. Ron Barton,
Utah's polygamy investigator acknowledges that he does not have much to
show for two years' work. Mr. Barton investigated Tom Green, who
eventually was sentenced and imprisoned. It was the first conviction of
its kind in Utah in 50 years.
Mr. Barton says that his eyes have been opened to the community's
problems, including children's sexual molestation, incest, underage
marriages, and spousal abuse. Women and children, he said, are the
primary victims.
Aside from appointing a polygamy czar, the Utah legislature has done
little to indicate there is a political will to deal with the issue.
Jay Beswick, one of the organizers of the activist meeting, said, "I
don't think Utah can really tackle this problem without outside help.
They can't do it themselves because everyone is too connected to
polygamy."
About 70 percent of Utah is Mormon and more than 90 percent of the
state's elected officials are church members.
New Securities Fraud Cases
AMERICAN EXPRESS: Rabin & Peckel Commences Securities Suit in S.D. NY
---------------------------------------------------------------------
Rabin & Peckel LLP initiated a securities class action in the United
States District Court for the Southern District of New York, on behalf
of all persons or entities who purchased securities of American Express
Company (NYSE:AXP) between July 18, 1999 through July 17, 2001, both
dates inclusive. The suit names as defendants the Company and:
(1) Kenneth I. Chenault,
(2) Richard Karl Goeltz,
(3) Daniel T. Henry,
(4) Harvey Golub,
(5) David R. Hubers,
(6) Gary L. Crittenden, and
(7) James M. Cracchiolo
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 July 26, 1999 and July 17, 2001, thereby artificially
inflating the price of Company shares.
The complaint alleges that, throughout the class period, defendants
issued numerous statements and filed quarterly and annual reports with
the SEC which described the Company's increasing earnings and financial
performance. As alleged in the complaint, these statements were
materially false and misleading because they failed to disclose and/or
misrepresented the following adverse facts, among others:
(i) that the Company had made disproportionately large investments
in certain speculative high-yield securities. Indeed, in 1997
and 1998, the Company increased its investments in high-yield
securities to 10-12% of its portfolio of investments, well
beyond the industry norm of 7%;
(ii) that the Company's increased investments in certain
speculative high-yield securities exposed the Company's
investment portfolio to substantial risk in the event default
rates in the junk bond market increased;
(iii) that the Company lacked the internal controls necessary to
monitor its portfolio of high-yield securities such that it
was unable to take decisive action should its investments turn
against it; and
(iv) that as a result of the foregoing, defendants' statements
concerning the Company's financial performance and future
prospects were materially false and misleading at all relevant
times.
On July 18, 2001, before the market opened for trading, the Company
issued a press release announcing that its earnings for the second
quarter of 2001, the period ending June 30, 2001, would most likely
decline 76% from its earnings in the same period of the prior year, in
part, because of an $826 million pre-tax charge to recognize
"additional write-downs in the high- yield portfolio at American
Express Financial Advisors (AEFA) and losses associated with
rebalancing the portfolio towards lower-risk securities."
In a conference call following this announcement, Mr. Chenault
explained that the Company had increased its investments in high-risk
junk bonds in 1997 and 1998 to between 10% and 12% of its portfolio and
would now be scaling it back to 7%, which is the industry average.
For more details, contact Eric J. Belfi or Sharon Lee by Phone:
800-497-8076, 212-682-1818 by Fax: 212-682-1892 by E-mail:
email@rabinlaw.com or visit the firm's Website:
http://www.rabinlaw.com.
ANDRX CORPORATION: Schiffrin & Barroway Commences Securities Suit in FL
-----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of Florida on
behalf of all purchasers of the common stock of Andrx Corporation
(NYSE: ADRX) between February 10, 2000 and August 12, 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 the Company:
(1) engaged in improper accounting practices which had the effect
of materially overstating its reported earnings and
understating its losses;
(2) issued materially false and misleading financial statements
not prepared in accordance with GAAP; and
(3) lacked proper accounting controls and revenue recognition
practices at its subsidiaries and which permitted its
employees to commit accounting improprieties for a period of
over three years.
On August 12, 2002, the Company announced that, as a result of its
internal audit process, management has learned that an employee at one
of its subsidiaries appears to have altered certain accounting records
pertaining to accounts receivable balances and aging relating to its
pharmaceutical and distribution operations, thereby potentially
affecting the Company's allowance for doubtful accounts.
Based upon its investigation, it appears that the Company's previously
announced net accounts receivable of $103.6 million as of June 30,
2002, may have been overstated by as much as $15 million relating to
the period from January 1, 1999 to date.
As a result of these accounting improprieties, the Company would be
required to restate earnings for prior years and/or account for these
misstatements as a charge in the current period. In the aftermarket
trading on the date of the announcement of the accounting
irregularities, Company stock declined by 16% or $3.57 per share, from
$23.32 to $19.75.
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
AON CORPORATION: Cauley Geller Commences Securities Suit in N.D. IL
-------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Northern District of
Illinois on behalf of purchasers of Aon Corporation (NYSE: AOC) common
stock during the period between May 4, 1999 and August 6, 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 defendants issued numerous statements and filed quarterly and
annual reports with the SEC which described the Company's earnings and
financial performance.
The complaint alleges that these statements were materially false and
misleading because they failed to disclose and/or misrepresented these
adverse facts, among others:
(1) that the Company had materially overstated its net income by
$27 million in 1999, by $24 million in 2000 and by $5 million
in the first quarter of 2002;
(2) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(3) that as a result, the value of the Company's net income and
financial results were materially overstated at all relevant
times.
On August 7, 2002, before the market opened for trading, the Company
shocked the market when it announced, among other things, that:
(i) it had failed to meet analysts' expectations on its earnings
for the second quarter by a wide margin;
(ii) because of the slumping financial markets, it had canceled a
spinoff of its insurance underwriting businesses to
shareholders; and
(iii) the SEC had began an investigation of its accounting and was
questioning several items in the Company's accounts, including
the reporting of investment write-downs, the timing of some
costs and a reinsurance recoverable item and the decision not
to consolidate certain special purpose vehicles.
The Company also stated that, if the SEC says it is necessary, it will
have to restate its earnings for the past three years, and reduce its
net income by $27 million in 1999, by $24 million in 2000 and by $5
million in the first quarter of 2002.
Following this report, shares of the Company fell $6.43 per share to
close at $14.77 per share, a one-day decline of 30.3%, on volume of
more than 20 million shares traded, or more than twenty times the
average daily volume.
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@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com
BAXTER INTERNATIONAL: Bernard Gross Launches Securities Suit in N.D. IL
-----------------------------------------------------------------------
Bernard M. Gross, PC initiated a securities class action in the United
States District Court for the Northern District of Illinois, Eastern
Division on behalf of all persons and entities who purchased or
otherwise acquired the common stock of Baxter International Inc.
(NYSE:BAX) between January 24, 2002 and July 18, 2002.
The suit charges the Company, Harry M. Jansen Kraemer, Jr, Chief
Executive Officer and Chairman of the Board, and Brian P. Anderson,
Chief Financial Officer and Senior Vice President, with violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder by the SEC, by issuing a series of
materially false and misleading statements to the market during the
class period.
As alleged in the suit, throughout the class period, defendants made
statements highlighting the Company's strong revenue and earnings
growth and assuring the market that its business, including the Renal
division, was growing successfully and that it would meet its financial
performance targets for 2002, with growth being driven by double digit
sales growth in the Medication delivery and BioScience segments and
with sales in the Renal unit in the high-single digits (compared with
3% sales growth in 2001).
On July 18, 2002, the last day of the class period, the Company shocked
the market when it reported its second quarter 2002 results. Sales in
the quarter rose only 8%, to $2.02 billion. Sales of BioScience grew
only 7%, rather than the "mid-teens", while the Renal unit experienced
a decline of 1%, instead of the "high-single-digit" growth promised by
the Company.
The Company's net earnings of $253 million, or $0.42 per share,
declined by 21% for the first quarter of 2001 after the Company
reported a $551 million charge for in-process research and development
of its second quarter acquisition of Fusion Medical and a $70 million
impairment charge reflecting a decline in the value of certain of the
Company's investments.
In response to this announcement, the price of the Company's common
stock plummeted, by 36.5%, falling from a $43.41 per share on July 17,
2002, to close at $32 per share on July 18, on extremely heavy trading
volume.
For more details, contact Deborah R. Gross or Susan Gross by Phone:
866-561-3600 or visit the firm's Website: http://www.bernardmgross.com
BELLSOUTH CORPORATION: Schiffrin & Barroway Files Securities Suit in GA
-----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Northern District of Georgia on
behalf of all purchasers of the common stock of BellSouth Corporation
(NYSE: BLS) between January 22, 2001 and July 19, 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 defendants reported quarter after quarter of "record" financial
results and financial growth despite a rapidly deteriorating market for
telecommunications companies.
However, unbeknownst to the investing public:
(1) the Company had been recognizing advertising and publishing
revenues, purportedly in connection with the performance of
services for customers who had not been billed and that $163
million of this revenue was required to be reversed;
(2) Generally Accepted Accounting Principles were violated because
the transactions with "phantom customers" were not complete
and there was not an "appropriate provision for uncollectible
accounts."
On July 22, 2002, defendants revealed that the Company's earnings had
dropped by 67% for the second quarter of 2002, missing Wall Street
estimates. The Company revealed that weak economic conditions in
Central and Latin America had been, and were continuing to have a
material, adverse impact on the Company's earnings and profitability.
In response to the Company's July 22, 2002 revelation, Company stock
dropped by more than 18% to $22 per share. Company executives, privy
to the truth regarding the Company's financial condition, did not share
in these losses, having sold millions of dollars of Company stock.
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
BELLSOUTH CORPORATION: Holzer & Holzer Lodges Securities Suit in GA
-------------------------------------------------------------------
Holzer & Holzer initiated a securities class action in the United
States District Court for the Northern District of Georgia on behalf of
purchasers of BellSouth Corporation, (NYSE:BLS) securities between
January 22, 2001 and July 19, 2002, inclusive.
The complaint alleges that defendants violated the Securities Exchange
Act of 1934, and Rule 10b-5 promulgated thereunder by artificially
inflating the price of Company securities during the class period
through a series of material misrepresentations.
Specifically, the complaint alleges that defendants reported quarter
after quarter of "record" financial results and growth despite a
deteriorating market for telecommunications companies. The complaint
alleges that the Company had been recognizing advertising and
publishing revenues, purportedly in connection with the performance of
services for customers who had not been billed (phantom customers), and
that $163 million of this revenue was required to be reversed, thus
violating Generally Accepted Accounting Principles.
The complaint alleges that on July 22, 2002, defendants revealed that
the Company's earnings had dropped by 67% for the second quarter of
2002. The complaint alleges that the Company revealed that weak
economic conditions in Central and Latin America had been, and were
continuing to have a material, adverse impact on the Company's earnings
and profitability.
The complaint alleges that in response to the Company's July 22, 2002
revelation, Company stock dropped by more than 18% to $22 per share.
The complaint alleges that Company executives, privy to the truth
regarding BellSouth's financial condition, did not share in these
losses, having sold millions of dollars of Company stock.
For more details, contact Michael I. Fistel, Jr. by Phone: 404-847-0085
if in Atlanta or 888-508-6832 if outside Atlanta or by E-mail:
michaelfisteljr@msn.com
BELLSOUTH CORPORATION: Charles Piven Files Securities Suit in N.D. GA
---------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired BellSouth Corporation
(NYSE:BLS) securities between January 22, 2001 and July 19, 2002,
inclusive, in the United States District Court, Northern District of
Georgia against the Company and:
(1) F. Duane Ackerman,
(2) W. Patrick Shannon and
(3) Ronald M. Dykes
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of Company securities during
the class period.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
CAPITAL ONE: Wechsler Harwood Commences Securities Suit in E.D. VA
------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action on behalf of all persons who purchased, exchanged or otherwise
acquired the common stock of Capital One Financial Corp. (NYSE:COF)
between January 15, 2002 and July 16, 2002 inclusive in the United
States District Court for the Eastern District of Virginia against the
Company and:
(1) Richard D. Fairbank, CEO and Chairman,
(2) Nigel W. Morris, President and COO and
(3) David M. Willey
The lawsuit asserts claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC
thereunder and seeks to recover damages.
Specifically, the complaint alleges that the Company issued numerous
press releases regarding its performance during the class period which
represented that the Company was experiencing quarter after quarter of
record earnings and revenue growth while maintaining "stringent risk
management practices" and adequate loan loss reserves.
The complaint further alleges that these, and other, representations
were materially false and misleading because they failed to disclose
that the Company was in violation of federal guidelines regarding
adequate levels of capitalization and loan loss reserves and that it
was not effectively managing its rapid growth.
On July 16, 2002, the Company revealed that it had entered into an
agreement with regulators, which required the Company to boost reserves
by $247 million in the second quarter of 2002, tie-up additional
capital and institute infrastructure reforms in order to deal
adequately with its high rate of growth, especially in the subprime
market.
In reaction to the announcement, Company stock plummeted by 39%,
falling from a $50.60 per share close on July 16 to $30.48 per share by
the close of July 17, on extremely heavy trading volume.
During the class period, as alleged in the complaint, Company insiders,
including Mr. Willey, profited by selling a total of over $8.2 million
in Company common stock at artificially inflated prices and the Company
undertook a convertible debt offering for $650 million on April 19,
2002.
For more details, contact David Leifer by Mail: 488 Madison Avenue, 8th
Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
dleifer@whhf.com or visit the firm's Website: http://www.whhf.com
CITIGROUP INC.: Schatz & Nobel Commences Securities Fraud Suit in NY
--------------------------------------------------------------------
Schatz & Nobel PC initiated a securities class action in the United
States District Court for the Southern District of New York on behalf
of all those who purchased or otherwise acquired the publicly traded
securities of Citigroup, Inc. (NYSE: C) between July 24, 1999 and July
23, 2002, inclusive.
The suit alleges that the Company and two top corporate officers
violated securities laws by issuing materially false and misleading
statements concerning the Company's exposure to Enron Corporation
related liabilities.
For example, the Company failed to disclose and/or misrepresented the
nature of a 1999 transaction between it and Enron that was structured
as a commodity trade but which served the purpose of a loan, helping
Enron to keep $125 million in debt off of its books. When the market
learned of the Company's potential Enron related liability following
testimony by Company executives before Congress on July, 23, 2002,
Company stock fell dramatically - at one point falling to $25.05 per
share, a three year low.
For more details, contact Nancy A. Kulesa by Phone: 800-797-5499 by E-
mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net
CORRPRO COMPANIES: Bernstein Liebhard Lodges Securities Suit in E.D. OH
-----------------------------------------------------------------------
Bernstein Liebhard & Lifshitz, LLP initiated a securities class action
on behalf of all persons who purchased or acquired Corrpro Companies,
Inc. (AMEX: CO) securities between April 1, 2000 and March 20, 2002, in
the United States District Court for the Eastern District of Ohio.
The suti 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 materially false and misleading
statements concerning the Company's financial results that had the
effect of artificially inflating the price of Company common stock
during the class period.
Specifically, on March 20, 2002, the Company announced that it had
discovered accounting irregularities causing the Company's consolidated
operating income before taxes through December 31, 2001 to be inflated
by between $4.5 and $5.3 million. In addition, the Company announced
that as a result of these "irregularities," it is expected to have to
take a charge to pre-tax earnings in the Company's fiscal fourth
quarter ending March 31, 2002 of between $5.3 and $6.7 million.
The irregularities are alleged to have occurred at the Company's
Australian subsidiary and appear to date back to at least calendar year
2000. The Company "expects" that it will have to restate its audited
financial statements for the March 31, 2001 fiscal year as well as
unaudited financial results for the first nine months through December
31, 2001 of its fiscal year ending March 31, 2002.
The Company also admitted that, due to the irregularities and likely
restatement, it will be in default under the financial covenants of its
senior secured credit agreement and its senior note facility. Upon
default, its lenders may accelerate repayment of principal which could
have a material adverse impact on the Company's liquidity, its
financial position and/or its ability to operate as a going concern.
The Company also announced that it had replaced its CFO, the fourth CFO
the Company had employed in the past three years.
For more details, contact Linda Flood by Mail: 10 East 40th Street, New
York, New York 10016 by Phone: 800-217-1522 or 212-779-1414 by E-mail
at CO@bernlieb.com or visit the firm's Website:
http://www.bernlieb.com.
DUANE READE: Bernard Gross Commences Securities Fraud Suit in S.D. NY
---------------------------------------------------------------------
Bernard M. Gross, PC initiated a securities class action in the United
States District Court for the Southern District of New York, on behalf
of all persons and entities who purchased or otherwise acquired the
common stock of Duane Reade, Inc. (NYSE:DRD) between April 25, 2002 and
July 24, 2002, inclusive.
The complaint charges the Company and Anthony J. Cuti, Chairman of the
Board of Directors and Chief Executive Officer with violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and
Rule 10b-5, by issuing a series of materially false and misleading
statements to the market during the class period.
On April 25, 2002, the start of the class period, defendants issued the
Company's First Quarter 2002 earnings new release for the quarter
ending March 31, 2002. The Company reported recorded first quarter
sales and earnings results as: net sales increased 12.5% to $305.8
million and net income was $5.3 million, or $0.22 per diluted share,
before a previously disclosed one-time non-cash charge, compared to net
income of $2.6 million, or $0.14 per diluted share, in the prior year
period.
With respect to the slight decline in gross profit margin for the
quarter, defendants stated in the news release that it was "primarily
attributable to the temporary dampening of front-end sales in the post
September 11 period and also due to a $0.4 million LIFO provision in
the period." Additionally, defendants misled the public by presenting
a very positive outlook for the second quarter projecting that the
Company would earn between $0.40 to $0.44 cents per share.
Suddenly, on July 25, 2002, defendants issued a news release announcing
that the Company's second quarter profits had plummeted by more than
half because the Company had failed to disclose previously that:
(1) in connection with the "$218 convertible notes offering,"
which was completed in April 2002, had incurred expenses of
$7.7 million, after tax, which expenses would sharply reduce
Company profits in the second quarter of 2002 and cause the
Company to report earnings significantly lower than the level
defendants told the market to expect;
(2) had sharply lowered prices in their stores commencing in April
2002 and planned to continue such program throughout the
second quarter in an effort to increase revenues, knowing that
this would cause reduced profit margins in the second quarter;
(3) was experiencing increased "shrink," primarily due to
increased theft and vendor errors, which would further erode
profits in the second quarter of 2002;
(4) was experiencing an increase in sales of generic drugs as a
percentage of total drug sales, which sales were at lower
prices than sales of branded equivalents;
(5) was experiencing a fall-off in higher margin items, including
cosmetics, snacks, jewelry and toys;
(6) had embarked on a program, beginning in April 2002 when
defendants learned that they would receive $9 million in
business interruption insurance proceeds from the claims
submitted in the aftermath of September 11, to spend
approximately $5.0 million in the second quarter on product
promotions due to lost vendor promotional allowances; and
(7) had embarked on a program, beginning in April 2002 when
defendants learned that they would receive $9 million in
business interruption insurance proceeds from the claims
submitted in the aftermath of September 11, to open in the
second quarter five additional stores to the number of new
stores originally planned to be opened during the second
quarter which, together with the three additional unplanned
stores opened in the first quarter of 2002, would cause the
Company to incur additional costs of $1.5 million, including
$800,000 in store pre-opening expenses, in the second quarter
of 2002.
In response to the surprise negative announcement on July 25, 2002, the
price of the Company's common stock dropped precipitously, falling from
a closing price of $23.55 per share on July 24, 2002 to a closing price
of $14.60 per share on July 25, 2002, decline of approximately 38%, on
volume of 5.4 million shares traded, compared to average trading volume
of 321,000 shares for the previous five trading days.
For more details, contact Deborah R. Gross or Susan Gross by Phone:
866-561-3600 or visit the firm's Website: http://www.bernardmgross.com
FLEXTRONICS INTERNATIONAL: Much Shelist Files Securities Suit in NY
-------------------------------------------------------------------
Much Shelist Freed Denenberg Ament & Rubenstein, PC initiated a
securities class action against Flextronics International Ltd.
(Nasdaq:FLEX) and certain of its officers and directors in the United
States District Court for the Southern District of New York. The
lawsuit is on behalf of all persons and entities who purchased the
Company's securities between October 2, 2001 and June 4, 2002,
inclusive. The suit names as defendants the Company and:
(1) Michael E. Marks, Chief Executive Officer,
(2) Michael McNamara, President of American Operations, and
(3) Robert R. B. Dykes, Chief Financial Officer
The defendants allegedly 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.
According to the allegations, the Company failed to disclose that its
business and operations were being adversely affected by a host of
negative factors, including, but not limited to:
(i) the Company was experiencing declining sales as its business
began to be affected by adverse market forces. Throughout the
class period, defendants repeatedly emphasized that the
Company was not being affected by the slowdown in the US or
global economy, when, in fact, it was;
(ii) Throughout the class period, many of the Company's customers
were experiencing severe financial difficulty, making it
highly foreseeable that they would not be able to complete
anticipated sales, causing the Company to suffer a decline in
its revenues. At all times throughout the class period,
defendants lacked a reasonable basis upon which to publish
and/or affirm the revenue guidance they provided to analysts
and investors; and
(iii) Defendants had purposely and/or recklessly under-reported the
amount of financing needed to complete the Company's
restructuring and over-stated the status of the completion of
this reorganization, as well as made false statements
concerning the Company's financial and operational condition
because it was critical that defendants raise cash by selling
more equity during the upcoming months.
On June 4, 2002, the last day of the class period, defendants shocked
the market when they finally revealed that the restructuring, which was
purportedly paid for in October 2001 and substantially completed
thereafter, was still far from complete. Defendants admitted that
there were at least an additional $150 million in restructuring charges
that they had to record. Defendants also stated that they could not
possibly meet the Company's previous earnings and revenue forecasts for
its first fiscal quarter 2003.
In response to the announcement, the Company's common stock fell from
$12.32 per share to as low as $9.50 per share, a decline of almost 23%,
on tremendous volume of 47 million Company shares traded.
For more details, contact Carol V. Gilden by Phone: 800-470-6824 or by
E-mail: investorhelp@muchshelist.com
INTERPUBLIC GROUP: Charles Piven Commences Securities Suit in S.D. NY
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The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired The Interpublic Group of
Companies, Inc. (NYSE:IPG) securities between October 28, 1997 through
and including August 13, 2002, inclusive, in the United States District
Court For The Southern District Of New York against the Company and:
(1) John J. Dooner, Jr.,
(2) Philip H. Geier, Jr.,
(3) Sean F. Orr,
(4) Frederick Molz,
(5) Eugene P. Beard,
(6) Richard P. Sneeder, Jr.,
(7) David I. C. Weatherseed and
(8) Joseph M. Studley
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of Company securities during
the class period.
For more details, contact Charles J. Piven, PA by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
INTERPUBLIC GROUP: Bernstein Liebhard Launches Securities Suit in NY
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Bernstein Liebhard & Lifshitz, LLP initiated a securities class action
in the United States District Court for the Southern District of New
York on behalf of all persons who purchased or acquired the common
stock of The Interpublic Group of Companies, Inc. (NYSE: IPG) between
October 28, 1997 and August 13, 2002, inclusive. The suit names as
defendants the Company and:
(1) John J. Dooner, Jr.,
(2) Philip H. Geier, Jr.,
(3) Sean F. Orr,
(4) Frederick Molz,
(5) Eugene P. Beard,
(6) Richard P. Sneeder, Jr.,
(7) David I. C. Weatherseed, and
(8) Joseph M. Studley
The defendants allegedly 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 28, 1997 and August 13, 2002, thereby artificially
inflating the price of Company securities.
Throughout the class period, as alleged in the complaint, defendants
issued numerous statements and filed quarterly and annual reports with
the SEC that described the Company's increasing net income and
financial performance.
As alleged in the complaint, these statements were materially false and
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(i) that, throughout the class period, the Company was overstating
its net income by failing to expense certain charges which
should have been expensed;
(ii) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(iii) that as a result, the value of the Company's net income and
financial results were materially overstated at all relevant
times.
On August 5, 2002, the Company announced that it would be rescheduling
the release of its second quarter 2002 earnings "to accommodate the
Audit Committee of its Board of Directors," which was interpreted by
the market to potentially involve the Company's accounting.
In response to the uncertainty surrounding Defendants' announcement,
investors sold off Interpublic stock, which dropped in price $4.69 per
share, or 23.8%, to close at $14.99 per share.
On August 13, 2002, the last day of the class period, the nature of the
Company's delay of its second quarter 2002 earnings release became
evident when the Company announced, among other things, that it had
"identified $68.5 million of charges, principally in Europe, which had
not been properly expensed," which will cause the company to restate
its previously issued financial statements going back to 1997 and
prior.
For more details, contact Linda Flood by Mail: 10 East 40th Street, New
York, New York 10016 by Phone: 800-217-1522 or 212-779-1414 by E-mail:
IPG@bernlieb.com or visit the firm's Website: http://www.bernlieb.com.
JOHNSON & JOHNSON: Schatz & Nobel Commences Securities Fraud Suit in NJ
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Schatz & Nobel, PC initiated a securities class action in the United
States District Court for the District of New Jersey on behalf of all
those who purchased or otherwise acquired the publicly traded
securities of Johnson & Johnson (NYSE: JNJ) between April 16, 2002 and
July 18, 2002, inclusive.
The suit alleges that the Company, a broadly based manufacturer of
healthcare products, and three top corporate officers issued materially
false and misleading statements concerning problems related to its
manufacture of the drug EPREX.
The suit alleges the Company failed to disclose a qui tam action
initiated by a former Company employee wherein he alleged he was
pressured to cover up manufacturing lapses at the Company's EPREX
manufacturing facility in Puerto Rico.
The suit also alleges the Company failed to disclose the existence of
an FDA criminal investigation into EPREX manufacturing problems. When
the market learned these facts following a July 19, 2002, New York
Times article, the price of Company stock collapsed, falling $7.88 per
share or 16%.
For more details, contact Nancy A. Kulesa by Phone: 800-797-5499 by E-
mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net
JOHNSON & JOHNSON: Schiffrin & Barroway Lodges Securities Suit in NJ
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Schiffrin & Barroway LLP initiated a securities class action charging
Johnson & Johnson (NYSE:JNJ) misled investors about its business and
financial condition, in the US District Court for the District of New
Jersey on behalf of all investors who bought Company securities between
April 16, 2002 and July 18, 2002.
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 Johnson & Johnson and the allegations of the qui tam action were
first revealed in The New York Times on July 19, 2002. That same day,
Johnson & Johnson admitted that it was aware of the criminal
investigation since April 2002. Once the foregoing information was
revealed, Johnson & Johnson shares fell $7.88 per share to close on
July 19, 2002, at $41.85, a fall of 16%.
For more details, contact the Shareholder Relations Manager by Phone:
888-299-7706 (toll free) or 610-822-2221 or by E-mail:
info@sbclasslaw.com
MERRILL LYNCH: Stull Stull Commences Securities Fraud Suit in S.D. NY
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Stull Stull & Brody initiated a securities class action in the United
States District Court for the Southern District of New York, on behalf
of purchasers of Merrill Lynch Internet HOLDRS depository receipts
(Internet HOLDRS) issued by the Merrill Lynch Internet HOLDRS/(SM)
Trust (the Trust) (AMEX:HHH) between September 22, 1999 and April 26,
2002, inclusive. The suit names as defendants:
(1) Merrill Lynch & Co., Inc.,
(2) Merrill Lynch Pierce, Fenner & Smith,
(3) the Trust and
(4) signatories of the Registration Statement and Prospectus
issued on behalf of the Trust.
The complaint alleges that defendants violated Sections 11, 12(a)(2),
and 15 of the Securities Act of 1933 by issuing a series of false and
misleading statements, and omissions of material fact in the
Registration Statement, which included a Prospectus, issued in
connection with the initial public offering of the Internet HOLDRS
depository receipts.
The Internet HOLDRS depository receipts are "basket securities." Each
Internet HOLDRS depository receipt represents an undivided beneficial
ownership in the Internet companies specified in the Prospectus. Thus,
the price of the Internet HOLDRS is directly related to and moved with
the price of the Underlying Securities.
As alleged, the Prospectus was false and misleading and/or failed to
disclose certain information concerning the Underlying Securities.
Specifically, the complaint alleges that the Prospectus failed to
disclose that during the class period the stock prices of Internet
companies covered by Merrill Lynch, which included many of the
Underlying Securities, were artificially inflated as a result of
Merrill Lynch's analyst reports and stock ratings that did not set
forth the true opinions held by those analysts of the subject Internet
companies.
Also alleged not to have been disclosed in the Prospectus is that
Merrill Lynch's Internet group analysts, often under pressure from the
Merrill Lynch's investment bankers, were initiating, continuing and/or
manipulating research coverage to maintain and attract investment
banking business.
The complaint's allegations are based, in part, on information from the
investigation of Merrill Lynch and its Internet group analysts
conducted by the New York State Attorney General.
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: Schiffrin & Barroway Lodges Securities Suit in E.D. NY
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Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Eastern District of New York on
behalf of all purchasers of the common stock of MSC Industrial Direct
Co., Inc. (NYSE: MSM) between November 4, 1999 and August 5, 2002,
inclusive. The suit names as defendants the Company and:
(1) Mitchell Jacobson,
(2) Sidney Jacobson,
(3) Shelley Boxer,
(4) Charles Boehlke,
(5) David Sandler,
(6) James Schroeder,
(7) Dennis Kelly,
(8) Raymond Langton,
(9) Roger Fradin and
(10) Philip Peller
The complaint alleges that defendants issued materially false and
misleading financial statements and press releases concerning the
Company's revenues, income and earnings per share during the class
period in violation of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
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
SUPERVALU INC.: Bernstein Liebhard Launches Securities Suit in MN Court
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Bernstein Liebhard & Lifshitz LLP initiated a securities class action
on behalf of all persons who purchased or acquired Supervalu, Inc.
(NYSE: SVU) securities between July 29, 1999 and June 25, 2002, a well
as former shareholders of Richfood Holdings, inc. who exchanged their
shares for the Company's common stock, in the United States District
Court for the District of Minnesota.
The complaint charges the Company with issuing false and misleading
statements concerning its business and financial condition in violation
of the federal securities laws. Specifically, the complaint alleges
that defendants issued statements regarding its annual financial
performance that were materially false and misleading because, among
other things:
(1) the Company was employing improper accounting practices
regarding the cost of goods sold for at least the past four
years in violation of Generally Accepted Accounting
Principles. As a result, the Company announced on June 26,
2002 that it expects $21 million in additional expenses; and
(2) based on the foregoing, defendant's statements concerning the
financial condition of Supervalu were lacking in a reasonable
basis at all times.
The impact of these announcements was immediately felt in the market.
Company shares fell sharply following the Company's statements on June
26, 2002. Company stock closed on June 26, 2002, at $21.95 down
approximately $6.11, or 22%. Subsequently, on July 1, 2002, five days
after the Company disclosed the existence of its internal
investigation, the Company did in fact restate its financial statements
for previous years.
For more details, contact 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 or by E-mail: SVU@bernlieb.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
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Antonio and Lyndsey Resnick, Editors.
Copyright 2002. All rights reserved. ISSN 1525-2272.
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