/raid1/www/Hosts/bankrupt/CAR_Public/020823.mbx
C L A S S A C T I O N R E P O R T E R
Friday, August 23, 2002, Vol. 4, No. 167
Headlines
ADAMS GOLF: Opposing Plaintiffs' Motion To File Amended Securities Suit
BAUSCH & LOMB: Asks NY Court To Dismiss Consolidated Securities Suit
CELL PATHWAYS: Agrees To Settle 11 Securities Fraud Suits in E.D. PA
CORVIS CORPORATION: Asks NY Court To Dismiss Securities Fraud Suit
GENERAL ELECTRIC: Employees File Lawsuit For Labor Law Violations in OH
GOLDEN STATE: Reaches Agreement To Settle Securities Suit in CA Court
ICR SERVICES: Agrees To Settle AL Consumer Lawsuits For $5.5 Million
ORAPHARMA INC.: Asks NY Court To Dismiss Consolidated Securities Suit
PACIFICARE HEALTH: Plaintiffs Appeal Dismissal of Securities Suit in CA
PACIFICARE HEALTH: CA Supreme Court Allows Review of State Court Ruling
TECHNICAL OLYMPIC: Agrees To Settle Suit Over Newmark, Engle Merger
TEXACO: Amazon Indians Lose Appeal to Reinstate Toxic-Dumping Suit
UNITED STATES: Court Certifies Religious Discrimination Suit V. Navy
US LIQUIDS: Trial in Securities Fraud Suit Set April 2003 in S.D. TX
US LIQUIDS: Trial in Shareholder Derivative Suit Set For February 2003
WILLIAMS COMMUNICATIONS: Court Dismisses Suit Over Fiber Optic Cables
Asbestos Alert
CH ENERGY: Settled 137 Lawsuits, Faces 1,303 Active Asbestos Cases
DOW CHEMICAL: Sets Asbestos Litigation Estimates at US$270 Million
GOODRICH CORPORATION: Covering $8M Asbestos Payments for Subsidiaries
HARSCO CORPORATION: 1,500 New Claims Arrive in First Quarter, 2002
WR GRACE: Ordered to Pay $2.75M for Health Care Benefits in Settlement
New Securities Fraud Cases
AMERICAN EXPRESS: Wechsler Harwood Commences Securities Suit in S.D. NY
ANDRX CORPORATION: Spector Roseman Commences Securities Suit in S.D. FL
AOL TIME: Wechsler Harwood Commences Securities Fraud Suit in S.D. NY
BELLSOUTH CORPORATION: Cauley Geller Commences Securities Suit in GA
BELLSOUTH CORPORATION: Weiss & Yourman Launches Securities Suit in GA
HOUSEHOLD INTERNATIONAL: Kaplan Fox Commences Securities Suit in IL
HPL TECHNOLOGIES: Wechsler Harwood Launches Securities Suit in N.D. CA
INTERPUBLIC GROUP: Kirby McInerney Commences Securities Suit in S.D. NY
MERRILL LYNCH: Kirby McInerney Commences Securities Suit in S.D. NY
MSC INDUSTRIAL: Milberg Weiss Commences Securities Suit in E.D. NY
MSC INDUSTRIAL: Cauley Geller Commences Securities Suit in E.D. NY
PERKINELMER INC.: Wechsler Harwood Commences Securities Suit in S.D. NY
UNIROYAL TECHNOLOGIES: Wechsler Harwood Lodges Securities Suit in FL
VIVENDI UNIVERSAL: Wechsler Harwood Commences Securities Suit in NY
*********
ADAMS GOLF: Opposing Plaintiffs' Motion To File Amended Securities Suit
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Adams Golf, Inc. is vigorously opposing the plaintiffs' move seeking
permission to file an amended securities class action against the
Company in the United States District Court for the District of
Delaware.
Beginning in June 1999, the first of seven class actions was filed
against the Company, certain of its current and former officers and
directors, and the three underwriters of the Company's initial public
offering (IPO). The suits alleged violations of Sections 11, 12(a)(2)
and 15 of the Securities Act of 1933, as amended, in connection with
the Company's IPO.
In particular, the complaints alleged that the Company's prospectus,
which became effective July 9, 1998, was materially false and
misleading in at least two areas. Plaintiffs alleged that the
prospectus failed to disclose that unauthorized distribution of the
Company's products (gray market sales) allegedly threatened the
Company's long-term profits. Plaintiffs also alleged that the
prospectus failed to disclose that the golf equipment industry suffered
from an oversupply of inventory at the retail level, which had an
adverse impact on the Company's sales.
In May 2000, these cases were consolidated into one amended complaint,
and a lead plaintiff was appointed. In December 2001, the United
States District Court for the District of Delaware dismissed the
consolidated, amended complaint citing the plaintiffs failed to plead
any facts supporting their claim that the Company or its officers and
directors violated the federal securities laws.
In January 2002, the plaintiffs filed a motion for leave to file an
amended complaint. In the motion, plaintiffs allege that, if given
another opportunity, they would be able to amend the original causes of
action to state actionable claims. The Company filed an opposition to
the plaintiffs' motion and is awaiting a response from the court.
BAUSCH & LOMB: Asks NY Court To Dismiss Consolidated Securities Suit
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Bausch & Lomb, Inc. asked the United States District Court for the
Western District of New York to dismiss the consolidated securities
class actions pending against it and:
(1) Stephen C. McCluski, Chief Financial Officer,
(2) William M. Carpenter, former Chairman and Chief Executive
Officer, and
(3) Carl E. Sassano, former President
The suit alleges that the value of the Company's stock was inflated
artificially by alleged false and misleading statements about expected
financial results. The plaintiffs seek to represent a class of
shareholders who purchased Company common stock between January 27,
2000 and August 24, 2000.
The Company intends to defend itself vigorously against these claims,
but cannot at this time estimate with any certainty the impact of these
claims on its financial position.
CELL PATHWAYS: Agrees To Settle 11 Securities Fraud Suits in E.D. PA
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Cell Pathways, Inc. agreed to settle eleven securities class actions
pending in the United States District Court for the Eastern District of
Pennsylvania against the Company and certain of its officers and
directors.
The suits allege that the Company and its officers made false and
misleading statements about the Company's drug candidate, Aptosyn(r),
which caused artificial inflation of the Company's stock price during
the class period of October 27, 1999 to September 22, 2000, when the
Company announced that the FDA had informed the Company that it would
be receiving a "not approvable" letter for its new drug application for
Aptosyn(R).
In February 2002, a stipulation of settlement was agreed to and
submitted to the court. Pursuant to this stipulation of settlement,
the Company's insurance carrier has paid $2 million into escrow and the
Company has issued 1.7 million shares into escrow.
On June 6, 2002, the court entered an order certifying the class for
settlement purposes, approving the notice of class action certification
and proposed settlement, and setting a hearing for September 6, 2002 to
determine whether the settlement should be approved and, if so, how the
settlement fund should be allocated, what the attorneys' fees should be
and how other matters related to the settlement should be handled.
CORVIS CORPORATION: Asks NY Court To Dismiss Securities Fraud Suit
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Corvis Corporation asked the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class action filed on behalf of all persons who purchased Company stock
between July 28, 2000 and the filing of the complaints.
The suit names as defendants the Company, its directors and officers
who signed the registration statement in connection with the Company'
IPO, and certain of the underwriters that participated in the Company's
IPO.
The suit alleges that the registration statement and prospectus
relating to the Company's IPO contained material misrepresentations
and/or omissions in that those documents did not disclose:
(1) that certain of the 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 common stock in the IPO; and
(2) that certain of the underwriters had entered into arrangements
with some investors that were designed to distort and/or
inflate the market price for the Company's common stock in the
aftermarket following the IPO.
In October 2001, the court appointed an executive committee of six
plaintiffs' law firms to coordinate their claims and function as lead
counsel. A group of underwriter defendants also moved for the judge's
recusal, which the judge denied.
In December 2001, the moving underwriter defendants filed a petition
for writ of mandamus seeking the disqualification of the judge in the
United States Court of Appeals for the Second Circuit. On April 1,
2002, the Second Circuit denied the moving underwriter defendants'
application for a writ of mandamus seeking the judge's recusal from
this action.
On April 19, 2002, plaintiffs filed a consolidated amended suit. A
conference was later held at which the court set a briefing schedule
for the filing of motions to dismiss the amended complaints. On July
1, 2002, the underwriter defendants filed their motion to dismiss the
amended suit, and on July 15, 2002, the issuer defendants filed their
motion to dismiss the amended suit. The briefing on the motions to
dismiss is scheduled for completion by the end of September 2002. No
discovery has occurred.
GENERAL ELECTRIC: Employees File Lawsuit For Labor Law Violations in OH
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A group of General Electric (NYSE:GE) employees working in the
Company's aircraft engine division (GEAE) filed a class action claiming
that the Company violated federal and state labor laws by
systematically misclassifying managers and other employees as salaried
professionals while treating them as hourly wage earners to avoid
paying overtime and other benefits.
Filed on behalf of the plaintiffs by Steve Berman, managing partner of
the Seattle law firm Hagens Berman, in United States District Court in
the southern district of Ohio, the suit seeks awards of back pay,
liquidated damages and statutory damages to all proposed class members.
According to the suit, GEAE treats certain managers as salaried
employees under the federal and state wage and hour laws even though
they do not qualify for such exemption. The suit also contends that
GEAE's employment policy requires each employee to work a forty-hour
workweek for a fixed salary, but when the managers work less than forty
hours a week they are reprimanded.
GEAE also enforces a policy in which these employees are subject to
salary deductions for absences, including part-day absences, from work.
According to the suit, these deductions are automatically made from
either the employees paid time off or directly from pay, a practice not
consistent with their exempt status.
The complaint also details cases in which exempt employees are required
to record any tardiness, and full or partial-day absences, allegedly
for record-keeping purposes only, yet the computer system automatically
deducts this time from their vacation time or their salary, the suit
alleges. The suit contends that these improper deductions are
reimbursed, but only after employees bring the matter to GEAE's
attention.
The suit also claims that employees are expected to work overtime hours
but GEAE fails to compensate them for that time stating that they are
classified as exempt employees under the Act and therefore not eligible
for overtime pay. In some instances, these employees are randomly
selected to receive "planned overtime" compensation but are paid
straight time rather than one and one-half times their wage rate.
The proposed class includes all current and former salaried managers
employed by GEAE. GEAE is a subsidiary of the publicly held General
Electric Company with its headquarters located in Cincinnati, Ohio.
For more details, contact Steve Berman of Hagens Berman by Phone: 206-
623-7292 by E-mail: steve@hagens-berman.com or visit the firm's
Website: http://www.hagens-berman.com
GOLDEN STATE: Reaches Agreement To Settle Securities Suit in CA Court
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Golden State Bancorp, Inc. agreed to settle the consolidated securities
class actions, relating to a proposed merger with Mercury Merger Sub, a
wholly owned subsidiary of Citigroup, whereby the Company will be
merged with and into Mercury with Mercury as the surviving company.
The first suit, captioned Tolwin v. Ford, CGC-02-408282, was filed on
May 23, 2002 on behalf of all stockholders of Golden State in the
Superior Court of the State of California against the Company and:
(1) Gerald J. Ford,
(2) Ronald O. Perelman, and
(3) unidentified others in connection with the merger
The complaint alleges that Mr. Ford and Mr. Perelman violated their
fiduciary duties to the stockholders of Golden State by agreeing to
vote their shares in favor of the merger without first soliciting
competing bids for the Company.
The complaint also alleges, among other things, that the merger is the
product of unfair dealing and inadequate procedural safeguards, and is
also unfair to Company stockholders because the merger consideration
fails to adequately compensate stockholders given the rising value of
the Company's stock, its financial condition, the advantages gained by
Citigroup as a result of the merger and California Federal's position
as one of California's largest depository institutions.
In June 2002, the Tolwin complaint was amended to add as defendants the
Company's directors. The amended complaint makes allegations similar to
those in the original Tolwin complaint, and also alleges, among other
things, that Mr. Perelman, Mr. Ford and Mr. Gittis structured the
merger to inure to their own financial benefit rather than that of all
Company stockholders.
The second class action captioned, Liu vs. Golden State Bancorp
Inc., CGC-02-408330, and the third purported class action captioned
ETP, Inc. v. Ford et al., CGC-02-408306 were filed on May 24, 2002 in
the Superior Court of the State of California against the Company,
fifteen members of the Company's board and unidentified others.
The complaints allege, among other things, that the defendant directors
of the Company breached their fiduciary duties in connection with the
proposed acquisition by Citigroup by, among other things:
(i) failing to implement a sales process designed to maximize
shareholder values;
(ii) agreeing to an unfair and wholly inadequate price; and
(iii) agreeing to terms in the merger agreement which fail to
protect Company shareholders from a substantial decline in the
value of the Company's common stock.
The Company believes that it has meritorious defenses to each of the
claims made in these suits. In July 2002, the three lawsuits were
consolidated with the Tolwin amended complaint as the operative
complaint in the consolidation order.
On August 12, 2002, the Company reached an agreement in principle to
settle these stockholder suits. The merger agreement currently
provides that the Company will pay to Citigroup in specified scenarios,
a termination fee that ranges from US$117.5 million to US$235 million,
depending on the circumstances.
In connection with the proposed settlement, Citigroup has agreed,
effective immediately, to reduce the amount of this termination fee by
US$75 million (to a range of $42.5 million to $160 million). Other
than the reduction of the termination fee referred to above, the
proposed settlement is subject to court approval. The other terms of
the merger agreement are not affected by the proposed settlement.
ICR SERVICES: Agrees To Settle AL Consumer Lawsuits For $5.5 Million
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Credit repair service ICR Services, Inc. will reimburse customers
US$5.5 million to settle alleged violations of federal regulations
governing credit consulting, the Associated Press Newswires reports.
The Company is settling the two-year-old federal class action filed in
Birmingham, Alabama, claiming the Company violated the Credit Repair
Organization Act, which restricts the service to nonprofit
organizations. The Company sold its credit repair division a year ago
to National Credit Education and Review, a nonprofit company.
The settlement agreement requires the Company to refund 42 percent of
the money paid by consumers for credit repair services and provide free
credit counseling by an independent group. US District Court Judge
U.W. Clemon estimated the settlement will cost The Company $5.5 million
to satisfy the 18,000 people who filed claims in the case.
James D. Smith, a Tuscaloosa, Alabama attorney who filed the class
action, said that the Company never provided a real service to more
than 144,000 clients nationwide.
ORAPHARMA INC.: Asks NY Court To Dismiss Consolidated Securities Suit
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Orapharma, Inc. requested the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class action pending against it, certain of its officers and certain
underwriters of its initial public offering.
The complaint alleged, among other things, violations of Sections 11
and 12 of the Securities Act of 1933 and Rule 10b-5 promulgated under
the Securities Exchange Act of 1934, based on allegedly material
misstatements and/or omissions in the prospectus for the Company's
initial public offering concerning the commissions received by the
offering underwriters, as well as failure to disclose the existence of
purported agreements by the underwriters with some of the purchasers in
such offering to buy additional shares of the Company subsequently in
the open market at pre-determined prices.
In April 2002, the plaintiffs filed and served a consolidated, amended
complaint against the Company, incorporating by reference allegations
common to all defendants in this and similar cases against other
companies.
In addition to reiterating the claims and damage theories described
above, the plaintiffs added allegations regarding manipulation and/or
material omissions arising from alleged touting by the underwriters'
analysts of the stocks of issuers, including the Company, with whom the
underwriters were conducting initial public offerings.
In June and July 2002, all defendants filed motions to dismiss all the
consolidated, amended complaints on numerous bases.
The Company intends to defend these actions vigorously. The Company
cannot predict the ultimate outcome of the litigation. An unfavorable
outcome in litigation could materially and adversely affect the
Company's business, financial condition and results of operations.
PACIFICARE HEALTH: Plaintiffs Appeal Dismissal of Securities Suit in CA
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Plaintiffs in the class action pending against Pacificare Health
Systems, Inc. filed an appeal of the United States District Court for
the Central District of California's dismissal of the suit.
The suit was commenced in November 2000, against the Company, and
several of its present and former directors and executive officers.
The suit relates to the period between October 27, 1999 and October 10,
2000 and primarily alleges that the Company made false projections
about its financial performance in 2000.
On April 18, 2002, the court dismissed the suit with prejudice. The
Company intends to vigorously defend against the suit.
PACIFICARE HEALTH: CA Supreme Court Allows Review of State Court Ruling
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The California Supreme Court has yet to set a date for oral arguments
in Pacificare Health Systems, Inc.'s appeal of the San Francisco
Superior Court's refusal of arbitration for a class action filed
against the Company and its California subsidiary.
The suit, commenced in November 1999 in San Francisco Superior Court,
relates to the period from November 2, 1995 to the present and purports
to be filed on behalf of all enrollees in the Company's health care
plans operating in California other than Medicare and Medicaid
enrollees. The amended complaint alleges that the Company has:
(1) engaged in unfair business acts in violation of California
law;
(2) engaged in false, deceptive and misleading advertising in
violation of California law;
(3) violated the California Consumer Legal Remedies Act; and
(4) received unjust payments as a result of its conduct
The Company moved to compel arbitration and but the Superior Court
denied the motion. The Company then filed an appeal from this
denial, and the Court of Appeal affirmed the Superior Court's decision.
Thereafter, the Company filed a petition asking the California Supreme
Court to review the Court of Appeal's decision, and the California
Supreme Court granted the petition. No date for oral argument before
the California Supreme Court has been set.
The Company denies all material allegations in the amended complaint
and intend to defend the action vigorously.
TECHNICAL OLYMPIC: Agrees To Settle Suit Over Newmark, Engle Merger
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Technical Olympic USA, Inc. agreed to settle two class actions filed in
the District Court, Clark County, Nevada and in the 80th Judicial
District Court of Harris County, Texas, relating to the prior merger of
Engle Holdings Corp. with and into Newmark Homes Corp, resulting in the
Company. The suits both challenged the merger as a breach of fiduciary
duty. In addition, two interveners filed interventions in the Texas
class action.
In March 2002, the Company reached an agreement in principle for the
settlement of the class actions and interventions. Under the terms of
the settlement, the Company has agreed to pay the plaintiffs'
attorneys' fees and expenses in an amount not to exceed $350 in the
aggregate. The settlement is subject to a number of conditions,
including:
(1) the closing of the merger,
(2) providing notice to the class,
(3) conducting confirmatory discovery,
(4) executing a definitive settlement agreement and
(5) obtaining final approval by the court
The merger closed on June 25, 2002, and the Company is now in the
process of finalizing and implementing the settlement. After payments
made by its insurance provider, the Company anticipates being obligated
to pay $160 in connection with the settlement of this litigation.
TEXACO: Amazon Indians Lose Appeal to Reinstate Toxic-Dumping Suit
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Rainforest Indians of Ecuador and Peru lost an appeal aimed at
reinstating a nine-year-old litigation against Texaco that alleges the
Company's toxic dumping devastated their environment and exposed
residents to cancer-causing pollutants, the Reuters English News
Service reports.
The US Second Circuit Court of Appeals affirmed the trial court's
ruling, which dismissed two class actions on grounds that the United
States was not the proper place for the litigation, and that Ecuador
would be a more convenient location.
The Company is headquartered in White Plains, New York, which is within
the Second Circuit's venue. The company is now known as Chevron Texaco
Corp. after merging with Chevron last year.
The plaintiffs had filed their suits in Manhattan federal court,
seeking some $1 billion in damages. The Second Circuit said that:
(1) all the plaintiffs live in Ecuador or Peru;
(2) they sustained their alleged injuries there; and
(3) their relevant medical and property records are also located
in those countries.
"If these cases proceeded to trial, it also would be onerous for a New
York Court to manage the translation difficulties arising from cases
with 55,000 putative class members of different indigenous groups
speaking various dialects," the court said.
"In addition, it would be far more feasible for an Ecuadorian court to
view the polluted areas in question than for a New York Court to do
so," the appeals panel stated.
The ruling marked the second time the appeals court had considered
whether Manhattan was the proper location for the litigation filed
there in 1993 and 1994 by residents of the Oriente region of Ecuador
and residents of Peru who live downstream from Ecuador's Oriente
region.
The plaintiffs alleged that a Texaco subsidiary dumped an estimated 30
billion gallons of toxic waste into their environment while extracting
oil from the Ecuadorean Amazon between 1964 and 1992. They alleged
that instead of pumping the substances back into emptied wells, the
Texaco subsidiary dumped them into local rivers, directly into
landfills or spread them on the local dirt roads.
The plaintiffs also alleged that the Ecuadorean Pipeline, constructed
by Texaco, leaked large amounts of petroleum into the environment. The
Indians alleged that they and their families suffered various injuries,
including poisoning and development of precancerous growths.
Although Texaco denied the allegations made in the lawsuits, the merits
of the cases were never decided by the trial or appeal courts.
Instead, arguments focused on where the cases should be heard. Joseph
Kohn, one of the lawyers representing the Indians, told Reuters that
the legal team is evaluating the ruling to determine whether to pursue
further appeals.
"We do think the court made it clear that if the courts in Ecuador do
not hear the cases, they will be heard in the United States," said Mr.
Kohn of Philadelphia's Kohn Swift & Graf. "One way or another, our
clients will get the merits heard in court."
The trial court originally dismissed the suits in 1996 and 1997 on
grounds that Ecuador would be the better venue for the lawsuits.
However, in 1998, the Second Circuit did send the cases back to the
trial court for further consideration. However, the trial court again
dismissed the cases last year and the Indians appealed.
UNITED STATES: Court Certifies Religious Discrimination Suit V. Navy
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A group of Protestant chaplains suing the Navy over alleged religious
discrimination can represent hundreds of current and former chaplains
who may have been harmed, a court has ruled, the Associated Press
Newswires reports.
While it was based on legal procedure and not the merits of the
discrimination claims, the ruling is a boost to a pair of lawsuits
accusing the Navy of favoring certain Christian denominations over
others.
The lawsuits claim that the Navy Chaplain Corps favors chaplains who
are Roman Catholic or from mainstream Protestant denominations over
those from evangelical Protestant faiths. Some evangelical Navy
chaplains say they have been passed over for promotions, harassed by
their supervisors or forced out of the military. The Rev. Robert
Adair, a Baptist minister in Columbia, Tenn., who served 17 years as a
chaplain, is among the plaintiffs in the lawsuit.
Monday's ruling by US District Judge Ricardo Urbina means that lawyers
for the Protestant chaplains suing the Navy can represent a class of
all similarly situated Protestant chaplains. The Navy had argued
against making the lawsuits a class action, a move that could lead to a
broader and costlier settlement or judgment.
Arthur A. Schulcz, one of the chaplains' lawyers, said Tuesday that
between 700 and 1,000 current and former chaplains could be covered by
the lawsuit.
The Navy has about 850 chaplains to provide religious services to
members of both the Navy and the Marine Corps. The Navy divides its
Christian chaplains into three categories - Roman Catholics, liturgical
Protestants and non-liturgical Protestants.
Liturgical Protestant denominations are those such Presbyterian and
Lutheran, which follow a set mode of worship, or liturgy. Non-
liturgical denominations, such as Baptists and other Pentecostals do
not follow a set liturgy.
The chaplains suing the Navy say the service improperly sets aside a
third of its chaplain slots for each category, although many more
sailors identify themselves as members of non-liturgical faiths.
US LIQUIDS: Trial in Securities Fraud Suit Set April 2003 in S.D. TX
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Trial in the consolidated securities class action pending against US
Liquids, Inc. and certain of its officers is set for April 14,2003 in
the United States District Court for the Southern District of Texas,
Houston Division.
The consolidated suit alleges violations of Sections 11, 12(a)(2) and
15 of the Securities Act of 1933 on behalf of purchasers of the
Company's common stock in the Company's March 1999 public offering and
violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder on behalf of purchasers
of the Company's common stock during the period beginning on May 12,
1998 and ending on August 25, 1999.
The plaintiffs generally allege that the defendants made false and
misleading statements and failed to disclose allegedly material
information regarding the operations of the Company's Detroit facility
and the Company's financial condition in the prospectus relating to the
March 1999 stock offering and in certain other public filings and
announcements made by the Company.
In January 2001, the court dismissed the claims asserted by the
plaintiffs under Sections 10(b) and 20(a) and Rule 10b-5 of the
Exchange Act and in April 2002 the court dismissed the claims asserted
by the plaintiffs under Section 12(a)(2) of the Securities Act.
Accordingly, the lawsuit is proceeding only with respect to the claims
asserted under Sections 11 and 15 of the Securities Act.
In June 2002, the court determined that two individuals designated by
the plaintiffs are adequate class representatives for plaintiffs' claim
under Section 11 of the Securities Act and instructed the plaintiffs to
submit an amended class definition for such claim.
The Company anticipates that an order will be entered shortly defining
the plaintiff class as all persons who purchased or otherwise acquired
Company common stock pursuant or traceable to the Company's March 1999
stock offering.
US LIQUIDS: Trial in Shareholder Derivative Suit Set For February 2003
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Trial in the shareholder derivative suit filed against certain
of the officers and directors of US Liquids, Inc. in connection with
the operation of the Company's Detroit facility is set for February
2003.
The plaintiff purports to allege derivative claims on behalf of the
Company against the officers and directors for alleged breaches of
fiduciary duty resulting from their oversight of the Company's affairs.
The lawsuit names the Company as a nominal defendant and seeks
compensatory and punitive damages on behalf of the Company, interest,
equitable and/or injunctive relief, costs and such other relief as the
court deems proper.
The Company believes that the stockholder derivative action was not
properly brought and has filed a motion to dismiss this action in order
to allow the Board of Directors to consider whether such litigation is
in the best interest of the Company and its stockholders.
No ruling has yet been made by the court on the motion to dismiss.
WILLIAMS COMMUNICATIONS: Court Dismisses Suit Over Fiber Optic Cables
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The United States District Court for the District of Oregon dismissed
several class actions against Williams Communications Group, Inc. and
other major telecommunications companies, based on allegations that the
defendants installed portions of its fiber-optic cable without all
necessary landowner consents.
These allegations relate to use of rights of way licensed by railroads,
state departments of transportation and others controlling pre-existing
right-of-way corridors. The putative members of the class in each suit
are those owning the land underlying or adjoining the right-of-way
corridors.
Before the dismissal, the Company and other major carriers were seeking
to settle the class actions. In January 2002, the plaintiffs and
defendants jointly asked the court to approve a settlement, which would
have settled the majority of the claims in the class actions referenced
above. However, the case was dismissed on July 12, 2002, creating
significant uncertainty regarding the ultimate resolution of this
matter.
Asbestos Alert
CH ENERGY: Settled 137 Lawsuits, Faces 1,303 Active Asbestos Cases
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Utility holding company CH Energy Group Inc. says that there are 1,303
asbestos cases against it that remain pending at May 3, about half of
the 2,864 total number of cases brought against it. Of the 1,561 cases
no longer pending, 1,424 have been dismissed or discontinued. The
company has settled 137 cases.
The company says it is unable to assess the validity of the remaining
asbestos lawsuits; accordingly, it cannot determine the ultimate
liability relating to the cases. But based on its experience in
settling and in obtaining dismissals of asbestos cases, the company
believes that the cost to be incurred in connection with the remaining
lawsuits will not have a material adverse effect on its financial
position.
COMPANY PROFILE
CH Energy Group, Inc. (NYSE: CHG)
284 South Ave.
Poughkeepsie, NY 12601-4879
Phone: 845-452-2000
Fax: 845-486-5415
Web site: http://www.chenergygroup.com
Employees : 902
Revenue : $197,138,000
Net Income : $19,442,000
Assets : $1,273,754,000
Liabilities : $400,072,000
No. of Asbestos Cases : 1,303
(For the quarter ended March 31, 2002)
Business Description: CH Energy Group, Inc. (Energy Group) is the
holding company of Central Hudson and CH Services and its subsidiaries.
Central Hudson owns Phoenix Development Company, Inc. CH Services'
subsidiaries are Central Hudson Enterprises Corporation; SCASCO, Inc.;
Prime Industrial Energy Services, Inc.; CH Resources, Inc.; CH Syracuse
Properties, Inc.; CH Niagara Properties, Inc.; Griffith Energy
Services, Inc.; and Greene Point Development Corporation. Energy
Group's operating segments are the regulated electric and gas
operations of Central Hudson and the activities of the subsidiaries of
CH Services. The Company operates in the Northeast and mid-Atlantic
regions of the United States.
DOW CHEMICAL: Sets Asbestos Litigation Estimates at US$270 Million
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Dow Chemical Co., which provides chemical, plastic and agricultural
products and services to consumer markets, says that it has accumulated
litigation costs for pending asbestos cases totaled $270 million at
March 31, of which $258 million may be recovered from its insurers.
The Midland, Michigan-based Company says that while it is impossible to
determine the outcome of the asbestos litigation, it believes that the
ultimate outcome of all known and future claims, after provisions for
insurance, will not have a material adverse effect on its financial
position.
The Company is facing thousands of asbestos-related suits filed over
the past three decades. The suits allege personal injury resulting
from exposure to asbestos-containing products and frequently seek both
general and punitive damages, often in very large amounts.
COMPANY PROFILE
Dow Chemical Co. (NYSE:DOW)
2030 Dow Center
Midland, MI 48674
Phone: 989-636-1000
Fax: 989-636-1830
Toll Free: 800-422-8193
http://www.dow.com
Web site: http://www.dow.com
Employees : 52,689
Revenue : $6,262,000,000
Net Income : $105,000,000
Assets : $35,351,000,000
Liabilities : $25,506,000,000
Total Known Asbestos Claims : $270,000,000
(For the quarter ended March 31, 2002)
Business Description: The Dow Chemical Company is engaged in the
manufacture and sale of chemicals, plastic materials, agricultural and
other specialized products and services. Dow is a science and
technology company that provides chemical, plastic and agricultural
products and services to many essential consumer markets. The Company
serves customers in more than 170 countries and a wide range of markets
that are vital to human progress, including food, transportation,
health and medicine, personal and home care and building and
construction, among others. The Company has 208 manufacturing sites in
38 countries, and supplies more than 3,200 products.
GOODRICH CORPORATION: Covering $8M Asbestos Payments for Subsidiaries
---------------------------------------------------------------------
Goodrich Corporation, a worldwide supplier of aircraft products and
services to the aerospace industry, expects to set aside $8 million to
$9 million during 2002 to cover payments for asbestos settlements
related to claims against two units of its Coltec Inc. subsidiary.
The Charlotte, North Carolina-based Company says asbestos settlements
of Garlock Sealing Technologies LLC and Anchor Packing Co., a unit of
Coltec Industries Inc., exceed the amount that they could otherwise
have recovered from their insurers. The amount of insurance available
to cover claims paid by Garlock is limited to $80 million a year,
covering both settlements and reimbursements of legal fees. The limit
automatically increases 8 percent every three years. The Company says
it is negotiating to raise the annual limit.
As of March 31, Garlock had available $987 million of insurance
coverage, of which $128 million is allocated to claims that have been
paid by Garlock and submitted to its insurance companies for
reimbursement and $144 million committed to claim settlements not yet
paid by Garlock. There was $715 million that remained available for
coverage of future claims.
COMPANY PROFILE
Goodrich Corporation (NYSE: GR)
4 Coliseum Centre, 2730 W. Tyvola Rd.
Charlotte, NC 28217-4578
Phone: 704-423-7000
Fax: 704-423-7100
Web site: http://www.goodrich.com
Employees : 19,200
Revenue : $4,184,500,000
Net Income : $289,200,000
Assets : $4,638,100,000
Liabilities : $3,276,700,000
No. of Asbestos Cases : 98,500*
Estimated Asbestos Liabilities : $204,800,000*
Insurance Recoveries : $337,200,000*
(For the year ended December 31, 2001. *As of March 31, 2002)
Business Description: Goodrich Corp. is a worldwide supplier of
aerospace components, systems and services serving the commercial,
military, regional, business and general aviation markets. The
company's major products include aircraft engine nacelle and pylon
systems, aircraft landing gear, wheels and brakes, sensors and sensor-
based systems, fuel measurement and management systems, flight
attendant and cockpit seats, aircraft evacuation slides and rafts,
optical and electro-optical systems, space applications, ice protection
systems and collision warning systems. Maintenance, repair and overhaul
services on commercial airframes and components are also provided. In
August 2001, Goodrich sold its Electronic Materials Division to
Sumitomo Bakelite Co., Ltd. In February 2001, the Company divested its
Performance Materials (PM) segment, and completed the sale of its PM
segment to an investor group led by AEA Investors, Inc.
HARSCO CORPORATION: 1,500 New Claims Arrive in First Quarter, 2002
------------------------------------------------------------------
Harsco Corp., a diversified, multinational provider of industrial
services and engineered products, will vigorously defend against 21,150
open personal-injury claims filed against it, 1,500 of which are new
asbestos cases received for the quarter ended March 31, 2002.
The Camp Hill, Pennsylvania-based company says it intends to fight the
cases, which it shrugs off as "without merit." About 400 asbestos
cases against the Company have been either thrown out by the court or
did not proceed to trial.
The Company has not paid any settlement amounts of all but two cases in
which it paid less than $10,000 through an insurer. The company's
insurance carrier is paying for all legal costs and expenses in the
asbestos litigation. The company says it has liability insurance
coverage available under various primary and excess policies that it
believes will any liability that might ultimately be incurred on the
claims.
The company says it has never been a producer, manufacturer or
processor of asbestos fibers and that any component within its product
which might be alleged to cause asbestos exposure would have been
purchased from a supplier.
COMPANY PROFILE
Harsco Corporation (NYSE: HSC)
350 Poplar Church Rd.
Camp Hill, PA 17011
Phone: 717-763-7064
Fax: 717-763-6424
Web site: http://www.harsco.com
Employees : 18,700
Revenue : $2,107,111,000
Net Income : $71,725,000
Assets : $2,090,766,000
Liabilities : $1,404,593,000
No. of Asbestos Cases : 21,250
(For the year ended December 31, 2001)
Business Description: Harsco Corp. is a diversified, multinational
provider of industrial services and engineered products. The company's
operations fall into three operating segments: Infrastructure, Mill
Services and Gas and Fluid Control. The company has over 400 locations
in 40 countries, including the United States. The principal lines of
business are scaffolding, forming and shoring and other access services
to the worldwide industrial maintenance, civil engineering and non-
residential construction markets; outsourced, onsite mill services that
are provided to steel and non-ferrous metal producers in over 30
countries; railway track maintenance services and equipment that are
provided to railroad customers worldwide, gas control and containment
products for customers worldwide, and several other lines of business,
including, but not limited to, industrial grating products, industrial
pipe fittings, industrial abrasives and roofing granules.
WR GRACE: Ordered to Pay $2.75M for Health Care Benefits in Settlement
----------------------------------------------------------------------
WR Grace and Co. was ordered recently to pay $2.75 million to cover
community health benefits as part of a settlement with the US
Environmental Protection Agency for denying access for cleanup
operations in Libby, Montana.
From 1963 to 1990, the Company owned and operated a vermiculite mine in
Libby that has since been blamed for hundreds of illnesses and at least
200 deaths caused by exposure to asbestos that contaminated the
vermiculite ore.
Under the consent decree, issued in US District Court in Missoula, the
Company is also required to pay $71,000 in penalties to the federal
government. Since 2000, the Company has operated a medical program for
people who have been diagnosed with asbestos-related diseases connected
to its Libby mine.
In response to a sharply increasing number of asbestos-related, the
Company and 61 of its United States subsidiaries and affiliates filed
for Chapter 11 bankruptcy on April 2, 2001.
COMPANY PROFILE
W. R. Grace & Co. (NYSE: GRA)
7500 Grace Dr.
Columbia, MD 21044-4098
Phone: 410-531-4000
Fax: 410-531-4367
Web site: http://www.grace.com
Employees : 6,400
Revenue : $1,757,200,000
Net Income : $78,600,000
Assets : $2,717,000,000
Liabilities : $2,858,700,000
Estimated Asbestos Liabilities : $996,300,000
No. of Asbestos Cases : 65,656
Asbestos Insurance Coverage : $577,100,000
(For the year ended December 31, 2001)
Business Description: W. R. Grace & Co., through its subsidiaries, is a
specialty chemicals and materials company. Grace operates in the
following two business segments: Davison Chemicals (Davison), which
involves the manufacturing of catalysts and silica-based products; and
Performance Chemicals, which involves the production of specialty
construction chemicals, specialty building materials and sealants, and
coatings for packaging. On April 2, 2001, the Company and 61 of its
United States subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code
(Chapter 11) in the United States Bankruptcy Court for the District of
Delaware. Under Chapter 11, Grace is operating its businesses as
debtor-in-possession under court protection from its creditors and
claimants, while using the Chapter 11 process to develop and implement
a plan for addressing the asbestos-related claims against it.
New Securities Fraud Cases
AMERICAN EXPRESS: Wechsler Harwood Commences Securities Suit in S.D. NY
-----------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action on behalf of all persons who purchased or acquired the common
stock of American Express Company (NYSE:AXP) between July 18, 1999 and
July 17, 2001, inclusive in the United States District Court for the
Southern District of New York.
The lawsuit asserts claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC
thereunder and seeks to recover damages. Specifically, the complaint
alleges that the Company and certain of its officers and directors made
misstatements and omissions of material fact, including failing to
disclose that:
(1) the Company was investing in a risky portfolio of high-yield
or "junk" bonds with ratings as low as "single-B" that carried
the potential for substantial losses if default rates in the
junk bond market increased;
(2) the true extent of the Company's total exposure as a result of
the foregoing after the Company wrote down $182 million of its
junk bond portfolio in April 2001; and
(3) the Company was taking a substantial and unnecessary risk by
investing in high-yield securities involving complex risk
factors that Company management and personnel did not fully
comprehend.
The complaint further alleges that after the full truth regarding the
Company's unnecessarily risky and imprudent investment strategy began
to become known to the market on July 18, 2001 when the Company
announced a surprise charge against earnings of $826 million, its third
consecutive write-down of high-yield or "junk" bonds, Company stock
traded as low as $37.17, down from a class period high of over $62.00.
For more details, contact Ramon Pinion by Mail: 488 Madison Avenue, 8th
Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
rpinioniv@whhf.com or visit the firm's Website: http://www.whhf.com
ANDRX CORPORATION: Spector Roseman Commences Securities Suit in S.D. FL
-----------------------------------------------------------------------
Spector, Roseman & Kodroff, PC initiated a securities class action in
the United States District Court Southern District of Florida against
on behalf of purchasers of the stock of Andrx Corporation (NYSE: ADRX)
during the period from February 10, 2000 through August 12, 2002,
inclusive, against the Company and:
(1) Elliot Hahn, Ph.D,
(2) Angelo C. Malahias and
(3) Alan P. Cohen
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between February 10, 2000 and August 12, 2002, thereby
artificially inflating the price of Company securities. The complaint
alleges that the Company:
(i) engaged in improper accounting practices which had the effect
of materially overstating its reported earnings and
understating its losses;
(ii) issued materially false and misleading financial statements
not prepared in accordance with GAAP; and
(iii) 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 Robert Roseman by Phone: (888) 844-5862 or
visit the firm's Website: http://www.srk-law.com
AOL TIME: Wechsler Harwood Commences Securities Fraud Suit in S.D. NY
---------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of purchasers of AOL Time Warner, Inc. (NYSE:AOL)
between April 18, 2001 and April 24, 2002, inclusive against the
Company and certain of its officers.
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 April 18, 2001 and April 24, 2002, thereby artificially
inflating the price of Company securities.
As alleged in the complaint, defendants issued numerous materially
false and misleading statements concerning the Company, the synergies
derived from the merger of America Online Inc. and Time Warner, Inc.
and the Company's prospects and earnings projections. The complaint
alleges that these statements were materially false and misleading
because they failed to disclose:
(1) that the merger was not generating the synergies as
represented by defendants;
(2) that the Company was experiencing declining advertising
revenues; and
(3) that the Company had failed to properly write down the value
of more than $50 billion of goodwill, thereby artificially
inflating its reported financial results and rendering its
published financial statements materially false and misleading
and in violation of Generally Accepted Accounting Principles.
On April 24, 2002, the last day of the class period, AOL Time Warner
issued a press release announcing its financial results for the first
quarter of 2002, and revealed that it would be taking a one-time, non-
cash charge that reduced the carrying value of the Company's goodwill
by approximately $54 billion.
Following this announcement, Company stock closed at $19.30 per share,
a decline of more than 66% from a class period high of $56.60 per
share. During the class period, prior to the disclosure of the true
facts about the Company, Company insiders sold their personal holdings
of AOL Time Warner common stock to the unsuspecting public for proceeds
in excess of $250 million.
For more details, contact Craig Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
clowther@whhf.com or visit the firm's Website: http://www.whhf.com
BELLSOUTH CORPORATION: Cauley Geller Commences Securities Suit in GA
--------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP 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)
publicly traded securities during the period 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 BellSouth 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 BellSouth stock.
For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
or by E-mail: info@cauleygeller.com
BELLSOUTH CORPORATION: Weiss & Yourman Launches Securities Suit in GA
---------------------------------------------------------------------
Weiss & Yourman initiated a securities class action against Bellsouth
Corporation (NYSE:BLS), and certain of its officers and directors in
the United States District Court for the Northern District of Georgia,
Atlanta Division, on behalf of purchasers of Company securities,
between January 22, 2001 and July 19, 2002.
The complaint charges the defendants with violations of the Securities
Exchange Act of 1934. The complaint alleges that defendants issued
false and misleading statements, which artificially inflated the stock.
For more details, contact James E. Tullman, David C. Katz, and/or Mark
D. Smilow by Mail: The French Building, 551 Fifth Avenue, Suite 1600,
New York, New York 10017 by Phone: 888-593-4771 or 212-682-3025 by E-
mail: info@wynyc.com
HOUSEHOLD INTERNATIONAL: Kaplan Fox Commences Securities Suit in IL
-------------------------------------------------------------------
Kaplan Fox & Kilsheimer LLP initiated a securities class action against
Household International, Inc. (Nasdaq: HI), certain of its officers and
directors, and Arthur Andersen, LLP, in the United States District
Court for the Northern District of Illinois. This suit is brought on
behalf of all persons and entities who purchased or otherwise acquired
Company securities between October 23, 1997 and August 14, 2002,
inclusive.
The complaint alleges that defendants violated the federal securities
laws by issuing a series of materially false and misleading statements
regarding the Company's business, operations and future prospects.
The class period begins on October 23, 1997 the date on which the
Company announced its third-quarter 1997 results, and ends on August
14, 2002, the day the Company announced it would restate its prior
eight years financials, because it had overstated its net income by
$386 million during that period.
Specifically, the Company said it would revise the way it had accounted
for its MasterCard/Visa co-branding and affinity card relationships, as
well as a credit-card marketing agreement with a third party.
As a result of the defendants' false and misleading statements, Company
securities traded at artificially high levels during the class period.
For more details, contact Frederic S. Fox or Shelley Thompson by Mail:
805 Third Avenue, 22nd Floor, New York, NY 10022 by Phone: 800-290-1952
or 212-687-1980 by Fax: 212-687-7714 by E-mail: mail@kaplanfox.com or
visit the firm's Website: http://www.kaplanfox.com
HPL TECHNOLOGIES: Wechsler Harwood Launches Securities Suit in N.D. CA
----------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action in the United States District Court for the Northern District of
California on behalf of purchasers of HPL Technologies, Inc.
(Nasdaq:HPLA) securities between July 31, 2001 and July 18, 2002,
inclusive against the Company and certain of its officers.
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, and Sections 11, 12(a)(2) and 15 of the Securities Act of
1933 by issuing a series of material misrepresentations to the market
during the class period, thereby artificially inflating the price of
Company securities.
The suit further alleges that the Company and certain of its officers
and directors with issuing false and misleading statements concerning
its business and financial condition. Specifically, on July 31, 2001,
HPL completed its initial public offering (IPO) of 6.9 million shares
(including the over allotment) at $11.00 per share, raising net
proceeds of $69.1 million.
The IPO was accomplished pursuant to a Prospectus and Registration
Statement filed with the SEC. These documents represented that the
Company recognized revenue on sales to distributors only when the
distributors sold the software license or services to their customers.
Later, the Company reported favorable financial results for the 1stQ,
2ndQ, 3rdQ and 4thQ of F02.
The suit further alleges that as a result of the Company's favorable
but false financials and false and misleading statements, its stock
traded as high as $17.85 per share. Defendants took advantage of this
inflation, selling 85,500 shares of their individual holdings.
On July 19, 2002, before the markets opened, the Company shocked the
market with news that it was investigating accounting irregularities
with respect to revenue recognition on shipments to distributors in
prior quarters that its CEO had been fired and its CFO had been
reassigned.
On this news, Company stock collapsed 72% to as low as $4 per share,
before trading was halted.
For more details, contact Craig Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
clowther@whhf.com or visit the firm's Website: http://www.whhf.com
INTERPUBLIC GROUP: Kirby McInerney Commences Securities Suit in S.D. NY
-----------------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a securities class action in
the United States District Court for the Southern District of New York
on behalf of all purchasers of the Interpublic Group, Inc. (NYSE:IPG)
common stock during the period from October 28, 1997 to August 13,
2002.
The action charges the Company, and eight of its senior officers and
directors, with violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The violations, as the complaint
alleges, stem from the issuance of allegedly false financial statements
during the class period, which had the effect, during the class period,
of artificially inflating the price of Company shares. The individual
defendants and other Company insiders received $100 million from
selling Company shares at inflated prices during the class period.
During the class period, as the complaint alleges and as Company
admitted on August 13, 2002, the Company's publicly issued financial
results were, in fact, false and misleading. On August 5, 2002, the
Company announced that it would be delaying the release of its second
quarter 2002 earnings "to accommodate the Audit Committee of its Board
of Directors". The market correctly interpreted this statement as the
first step in the revelation of "accounting irregularities". Company
shares fell 23.86% in one day, losing $4.69 per share to close at
$14.99 per share.
On August 13, 2002, the Company announced that it had "identified $68.5
million of charges, principally in Europe, which had not been properly
expensed". In order to correct the improper expensing, the Company
announced that it would restate its previously issued financial
statements going back to 1997.
For more details, contact Ira M. Press or Orie Braun by Mail: 830 Third
Avenue, 10th Floor, New York, New York 10022 by Phone: 212-317-2300 or
888-529-4787 by E-Mail: obraun@kmslaw.com or visit the firm's Website:
http://www.kmslaw.com
MERRILL LYNCH: Kirby McInerney Commences Securities Suit in S.D. NY
-------------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a securities class action in
the United States District Court for the Southern District of New York
on behalf all persons who purchased the common stock of Merrill Lynch &
Co., Inc. (NYSE:MER), in the period between July 3, 1999 and April 8,
2002. The suit names as defendants:
(1) Merrill Lynch & Co., Inc.,
(2) Merrill Lynch, Pierce, Fenner & Smith, Inc.,
(3) David H. Komansky, Chairman and Chief Executive Officer
during the class period, and
(4) Henry Blodget, former Senior Internet and e-commerce analyst
The suit charges the defendants with violations of Section 10(b) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
The action further charges Komansky with violation of Section 20(a) of
the 1934 Act. The violations stem from the materially false and
misleading statements made by the defendants during the class period
that misrepresented the quality of Merrill Lynch's securities analysts
and caused Merrill Lynch's stock to trade at artificially inflated
prices.
The complaint alleges that during the class period, Merrill Lynch
publicly touted the objectivity and integrity of its securities
analysts. In fact, the complaint alleges, many of the analysts'
recommendations were simply part of a quid pro quo offered by Merrill
Lynch in an effort to obtain lucrative investment banking business from
the companies it covered.
As a result, the complaint alleges, Merrill Lynch's shares traded at
inflated prices. When evidence of conflicts and other misconduct by
Merrill Lynch's analysts were revealed by New York Attorney General
Eliot Spitzer on April 8, 2002, Merrill Lynch's shares lost nearly 30%
of their value, falling from $53.45 per share on April 8 to close below
$38.00 a few weeks later.
For more details, contact Ira M. Press or Orie Braun by Mail: 830 Third
Avenue, 10th Floor, New York, New York 10022 by Phone: 212-317-2300 or
888-529-4787 by E-Mail: obraun@kmslaw.com or visit the firm's Website:
http://www.kmslaw.com
MSC INDUSTRIAL: Milberg Weiss Commences Securities Suit in E.D. NY
------------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action lawsuit on behalf of purchasers of the securities of MSC
Industrial Direct Co. Inc. (NYSE: MSM) between January 11, 1999 and
August 5, 2002, inclusive, in the United States District Court, Eastern
District of New York against the Company and:
(1) Mitchell Jacobson,
(2) Sidney Jacobson,
(3) Shelley M. Boxer,
(4) Charles Boehlke,
(5) David Sandler and
(6) James Schroeder
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between January 11, 1999 and August 5, 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 which 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 these adverse facts, among others:
(i) that the Company had materially overstated its net income by
approximately $8.3 million over the past four years;
(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 last day of the class period, with one minute
remaining before the closing bell, the Company shocked the market when
it announced that it "has discovered incorrect accounting entries
associated with inventory purchases that overstated net income by
approximately $8.3 million over the past four years. The incorrect
entries resulted in the understatement of cost of goods sold and
accounts payable and occurred primarily in fiscal 1999 and fiscal 2000.
As a result, the Company intends to restate its financial statements
for fiscal years 1999, 2000, 2001 and year-to-date 2002."
According to the press release, the specific impact that the
restatement will have will be to reduce previously reported net income
by approximately $2.8 million in fiscal 1999, $4.2 million in fiscal
2000, $0.9 million in fiscal 2001, and $0.4 million in fiscal 2002.
Following this report, Company shares fell $4.99 per share to close at
$10.51 per share, a one-day decline of 32%, on volume of more than 3.95
million shares traded, or more than twenty-six times the average daily
volume.
For more details, contact Steven G. Schulman or Samuel H. Rudman by
Mail: One Pennsylvania Plaza, 49th fl. New York, NY 10119-0165 by
Phone: 800-320-5081 by E-mail: MSC Industrialcase@milbergNY.com or
visit the firm's Website: http://www.milberg.com
MSC INDUSTRIAL: Cauley Geller Commences Securities Suit in E.D. NY
------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Eastern District of New
York on behalf of purchasers of MSC Industrial Direct Co. (NYSE: MSM)
common stock during the period between January 11, 1999 and August 5,
2002, inclusive, against the Company and:
(1) Mitchell Jacobson,
(2) Sidney Jacobson,
(3) Shelley M. Boxer,
(4) Charles Boehlke,
(5) David Sandler and
(6) James Schroeder
The suit alleges the defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between January 11, 1999 and August 5, 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 which 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 these adverse facts, among others:
(i) that the Company had materially overstated its net income by
approximately $8.3 million over the past four years;
(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 last day of the class period, with one minute
remaining before the closing bell, the Company shocked the market when
it announced that it "has discovered incorrect accounting entries
associated with inventory purchases that overstated net income by
approximately $8.3 million over the past four years. The incorrect
entries resulted in the understatement of cost of goods sold and
accounts payable and occurred primarily in fiscal 1999 and fiscal 2000.
As a result, the Company intends to restate its financial statements
for fiscal years 1999, 2000, 2001 and year- to-date 2002."
According to the press release, the specific impact that the
restatement will have will be to reduce previously reported net income
by approximately $2.8 million in fiscal 1999, $4.2 million in fiscal
2000, $0.9 million in fiscal 2001, and $0.4 million in fiscal 2002.
Following this report, Company shares fell $4.99 per share to close at
$10.51 per share, a one-day decline of 32%, on volume of more than 3.95
million shares traded, or more than twenty-six 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
or by E-mail: info@cauleygeller.com
PERKINELMER INC.: Wechsler Harwood Commences Securities Suit in S.D. NY
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Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action on behalf of purchasers of the securities of PerkinElmer, Inc.
(NYSE:PKI) between July 15, 2001 and April 11, 2002, inclusive, in the
United States District Court for the Southern District of New York.
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 during the class period. During the class
period, the individual defendants and other Company insiders sold
595,000 shares of Company common stock, reaping gross proceeds in
excess of $18.4 million.
According to the complaint, the Company issued numerous press releases
during the class period which represented that:
(1) the Company 's revenues and earnings would continue to
increase;
(2) the Company's transformation into a provider of health-related
products and services was proceeding successfully; and
(3) the Company would meet its financial performance targets for
2002.
The complaint alleges, however, that these and other representations
were materially false and misleading because they failed to disclose
that:
(i) the Company was experiencing a decline in the demand for its
products, especially at its Optoeletronics division;
(ii) the Company was carrying tens of millions of dollars of
obsolete inventory on its books; and
(iii) the Company's expenses were soaring due to numerous
acquisitions and divestitures it had undertaken.
On March 1, 2002, the Company issued a press release revealing that
2002 first quarter revenues and earnings would be materially less than
what the Company had represented only three weeks earlier. In reaction
to the announcement, the price of the Company's common stock plummeted
by 31%.
However, the full truth regarding the Company's business was not fully
disclosed until April 11, 2002, when the Company issued a press release
revealing that its reported earnings would break even, instead of
meeting the previously projected target of $0.16 - $0.17 earnings per
share that the Company reported on March 1, 2002.
In reaction to this announcement, Company stock plummeted by another
28%, falling from $16.70 per share on April 10, 2002 to $12.04, on
extremely heavy trading volume.
For more details, contact Patricia Guiteau by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
pguiteau@whhf.com or visit the firm's Website: http://www.whhf.com
UNIROYAL TECHNOLOGIES: Wechsler Harwood Lodges Securities Suit in FL
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Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action in the United States District Court for the Middle District of
Florida on behalf of purchasers of Uniroyal Technology Corp.
(Nasdaq:UTCI) between February 8, 2000 and May 13, 2002, inclusive
against the Company and certain of its officers.
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between February 8, 2000 and May 13, 2002.
According to the complaint, defendants issued a series of press
releases touting its financial stability and its acquisition of
Sterling Semiconductor, while strategically positioning the Company to
increase its participation in the explosive compound semiconductor
industry via internal growth.
However, unbeknownst to the investing public that purchased Company
stock during the class period:
(1) the Company was not a financially stable company;
(2) its acquisition of Sterling was not lucrative at all; and
(3) it was not strategically positioning the Company to increase
its participation in the explosive compound semiconductor
industry via acquisition and internal growth.
If not for the Company's financial support, Sterling would probably
have been forced to seek protection under the bankruptcy laws. Sterling
was a development stage company and not, as defendants touted, "a
leading developer of silicon carbide technology and materials."
Moreover, in order to materially inflate the Company net worth and
further foster the illusion of growth, defendants agreed to pay an
inflated price for Sterling with materially overvalued stock serving as
currency.
On December 31, 2001, eighteen months after having acquired Sterling in
exchange for stock, with a purported value of more than $40 million,
the Company shocked the market by announcing that it recorded a write-
down of Sterling goodwill of approximately $9,816,000.
On January 2, 2002, Company stock closed at $1.69 down from $3.20 the
previous day and substantially down from its class period high of
$71.125 reached on February 23, 2000.
For more details, contact Craig Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
clowther@whhf.com or visit the firm's Website: http://www.whhf.com
VIVENDI UNIVERSAL: Wechsler Harwood Commences Securities Suit in NY
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Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf all persons who purchased or acquired Vivendi
Universal, S.A. (NYSE:V) (Paris Bourse:EX FP) securities between the
period of April 23, 2001 and July 2, 2002, inclusive against the
Company and certain of its officers and directors.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of Company securities.
Prior to and during the class period, defendant Jean-Marie Messier took
the Company on an acquisition binge that, according to published
reports, resulted in the Company amassing approximately $18 billion in
debt as he attempted to turn the Company from a water concern into an
entertainment powerhouse.
During the class period, defendants made misrepresentations and/or
omissions of material fact, including:
(1) Misstating Vivendi's cash position and ability to service its
debt obligations;
(2) Misstating Vivendi's earnings in its public filings with the
SEC and elsewhere as a result of failing to record write-downs
of goodwill and other intangible assets associated with, inter
alia, the merger among Vivendi, Seagram and Canal+ long after
it had become apparent that such assets were being carried at
values vastly higher than their true values;
(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 Receipts (ADRs);
(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 Company ADRs to as high as $68.80 per ADR. Defendants
reported favorable, but misleading, financial results to the market and
represented that the Company 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 ADRs to decline in price from $28
to $20. Vivendi's ordinary shares declined in similar fashion.
Nonetheless, Mr. Messier reassured the market that liquidity was not a
problem. However, as ratings agencies continued to downgrade the
Company's debt, the ADRs 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, Mr. Messier was forced to resign.
Vivendi ADRs 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 News 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 Craig Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
clowther@whhf.com or visit the firm's Website: http://www.whhf.com
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S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
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
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