/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020903.mbx C L A S S A C T I O N R E P O R T E R Tuesday, September 3, 2002, Vol. 4, No. 174 Headlines APARTHEID LITIGATION: Former Judge To Lead Apartheid Lawsuit Team ASK JEEVES: Faces Shareholder Derivative Suit Pending In CA State Court AT&T CORP.: Denial Of Services To Minority, Poor Areas Alleged In Suit BROADCOM CORPORATION: CA Court Refuses To Dismiss Securities Fraud Suit BSQUARE INC.: Plaintiffs File Amended Securities Fraud Suit in S.D. NY CABLEVISION SYSTEMS: Faces Suits Over Rainbow Media Stock Swap in DE CALIFORNIA: Jury Returns $5M Verdicts v. Cemetery For Faulty Burials CONSECO INC.: Shareholder Files Suit Over Accounting Irregularities CSX TRANSPORTATION: Claimants Get Settlements Over Chemical Fire Suit ENRON CORP: Workers Get Severance Pay Under $29 Million Agreement GEORGIA: Inmate Of Old Jail Files Suit Seeking To Open Unused New Jail IMMERSION CORPORATION: Asks NY Court To Dismiss Securities Fraud Suit JAPAN: Health Ministry Denies Error, Liability In Hepatitis C Scandal MENORAH GARDENS: Hearings Over Suit Class Certification Continue METLIFE INC.: Reaches Agreement To Settle Racial Discrimination Suit MICROSOFT CORP.: May Be Ordered To Add Java Programming To Windows NATIONAL AUSTRALIA: Denies Any Role in Enron Account Manipulations PDI INC.: Asking NJ Court To Dismiss Consolidated Securities Fraud Suit SAGENT TECHNOLOGY: Asks NY Court To Strike Portions of Securities Suit SAGENT TECHNOLOGY: CA Court Sustains Motion To Dismiss Securities Suit SECURITIES LITIGATION: Regulators Look For Evidence Of Analysts' Roles SLAVE REPARATIONS: About 60,000 Russians Get Compensation From Germany VIRGINIA: City, Residents Ask Assistance From Court-Appointed Mediator TERAYON COMMUNICATIONS: CA Court Refuses To Dismiss Securities Suit WELLS FARGO: Mexican Group Calls For Bank Boycott Over Back-Wages Claim New Securities Fraud Cases FIRST HORIZON: Milberg Weiss Commences Securities Fraud Suit in N.D. GA RIVERSTONE NETWORKS: Glancy & Binkow Lodges Securities Suit in N.D. CA SALOMON SMITH: Beatie Osborn Commences Securities Fraud Suit in S.D. NY ********* APARTHEID LITIGATION: Former Judge To Lead Apartheid Lawsuit Team ----------------------------------------------------------------- A former judge who headed the investigation into South Africa's apartheid atrocities is to lead a team suing foreign corporations for allegedly helping finance the violent regime, a US lawyer said recently, according to Reuters English News Service. Lawyer Edward Fagan said Dumisa Ntsebeza was flying to the United States with him to lead the legal action. "He (Ntsebeza) is now coming to the United States to assume the leadership of the apartheid cases," Mr. Fagan told reporters at London's Heathrow airport as the pair were about to board a plane to New York. Mr. Ntsebeza retired as a judge of the South African Labour Court earlier this week, thus freeing himself to take an active part in the campaign for massive compensation for apartheid victims. He was the chief investigator in Archbishop Desmond Tutu's Truth and Reconciliation Commission, which probed apartheid's history and recorded hundreds of human rights violations, mainly against blacks, but was not empowered to award financial reparations to the victims. Lawyers, churches and civic groups in South Africa had been lobbying for greater involvement by Mr. Ntsebeza in the moves to bring a class action against the companies, which would mean that all victims, not just the named plaintiffs, could receive damages if the case were successful. Mr. Fagan, who has spearheaded the case so far, said he planned to issue lawsuits against another 31 companies, but did not identify them. He said they would be issued in stages over the coming weeks, but all would be filed by October 13. Asked what evidence the lawsuits would be based on, Mr. Fagan said, "They are based on unfair labor claims, they are based on profiteering . human rights violations. They will be filed all across the country in the United States." The class action he already has filed against some Swiss banks, US- based Citigroup, German banks and against IBM Computer Co., alleges the banks provided funds to prop up the apartheid government between 1985 and 1993, at a time when the regime was running out of cash because of the sanctions imposed by the United Nations. Millions of black South Africans lost their homes, tens of thousands were tortured and jailed for their political beliefs and thousands more were killed in clashes with apartheid police or were assassinated by government death squads. ASK JEEVES: Faces Shareholder Derivative Suit Pending In CA State Court ----------------------------------------------------------------------- Ask Jeeves, Inc. faces a shareholder derivative suit filed in the Superior Court of California, County of Alameda, asserting claims against the officers and directors at the time of the Company's initial public offering (IPO). The suit also names as defendants Morgan Stanley & Co., Inc., and FleetBoston Robertson Stephens, the underwriters of the Company's IPO. The complaint alleges breach of fiduciary duty, negligence and unjust enrichment of the named officers and directors, for acquiescing and/or conspiring with the underwriter defendants in underpricing the IPO. The Company is aware that similar allegations have been made in other derivative lawsuits involving issuers that have also been sued in the Southern District of New York securities class action cases. Based upon the Company's understanding of the facts, it believes that the complaint is deficient. However, an unfavorable outcome could have a material adverse effect on its operating results and financial position. AT&T CORP.: Denial Of Services To Minority, Poor Areas Alleged In Suit ---------------------------------------------------------------------- An official in South Florida's Broward County said her community has been concerned about AT&T's failure to bring high-speed internet service to less affluent areas, one of the central allegations in a class action for discrimination filed against AT&T Corp. this past week, according to a report by AFX News. The lawsuit alleges that AT&T and its broadband division denied high- speed broadband services to minority and poor neighborhoods, as well as overcharging for services elsewhere. "A good majority of the low- income areas had yet to be rebuilt," said Leslie Stout, an official in Broward County's office of information technology. "Looking at what area of the county had not been rebuilt (for broadband) caused us great concern." In July, AT&T Broadband reached an agreement with Broward County to bring broadband service to all unincorporated areas of the county by 2004, Ms. Stout said. The class action alleges that AT&T Broadband Services hold several franchises in Broward County where only one percent of eligible African American households have access to high-speed broadband internet service as opposed to 100 percent of eligible white households. Richard Greenfield, co-counsel on the suit, said those statistics had been leaked to the law firm by AT&T Broadband employees. Broward County officials could not confirm or refute those figures, but did say most non-affluent households in the county were not upgraded. The lawsuit accuses AT&T of "electronic redlining," meaning drawing a red line on a map around areas they would not upgrade. The lawsuit was filed in the Miami federal court on behalf of Gwen Hudson and Cynthia Martin, two residents of Broward County who are the lead plaintiffs in the case. A hearing is scheduled to consider an emergency injunction to stop the merger of AT&T with Comcast (Broward county commissioners had made the AT&T broadband build-out a condition for approval of the transfer of AT&T's cable franchise license to Comcast. The build-out never happened). Additionally, Mr. Greenfield is requesting an expedited discovery of evidence. His team will ask the judge to order AT&T to turn over requested documents within two weeks. "We are going after the documents we know are there that will show that AT&T is not providing equal access to the minority community," Mr. Greenfield said. "We understand from reliable sources that AT&T has retained counsel who are going in and doing an Arthur Andersen with the files." Marc Cooper, head of research at the Consumer Federation of America, said accusations of redlining have been made against cable companies in South Florida for years. Mr. Cooper confirmed that US telecommunications law does prohibit discrimination, citing the very first line of the Telecommunications Act of 1934, the basis of all modern telecommunications law. The first line states that the purpose of the act is to make telecommunications services available "to all people of the United States without discrimination." BROADCOM CORPORATION: CA Court Refuses To Dismiss Securities Fraud Suit ----------------------------------------------------------------------- The United States District Court for the Central District of California will not dismiss the consolidated securities class action pending against Broadcom Corporation, its Chief Executive Officer, Chief Technical Officer and Chief Financial Officer. The consolidated suit arose from thirty-one lawsuits, alleging violations of the Securities Exchange Act of 1934. The suit was filed on behalf of all persons who purchased the Company's public securities, or bought or sold options on the Company's stock, between July 31, 2000 and February 26, 2001 and alleges claims under Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 promulgated thereunder, an earlier Class Action Reporter story states. The Company filed a motion to dismiss the plaintiffs' consolidated complaint under the Private Securities Litigation Reform Act of 1995 and Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, and that motion was granted by the district court in March 2002. The court granted plaintiffs leave to file a second amended complaint and plaintiffs filed a second amended complaint in April 2002. In May 2002 the Company filed a motion to dismiss the second amended complaint, which motion was denied in July 2002. The Company's answer to the seconded amended complaint is due in September 2002. The Company believes the allegations in the purported consolidated shareholder class action are without merit and is defending the action vigorously. From March through June 2001, the Company, its directors, Chief Financial Officer and other officers, were sued in five purported shareholder derivative actions based upon the same general set of alleged facts and circumstances as in the purported shareholder class action. Four of these actions were filed in the Superior Court of the State of California for the County of Orange, and by order of the court these four actions were consolidated into a single action. One purported derivative action was filed in the United States District Court for the Central District of California. The parties have stipulated that the federal case will be stayed while the consolidated derivative lawsuit proceeds in the California Superior Court. In March 2002 the plaintiffs filed their consolidated amended complaint in the state action. The Company and individual defendants filed a demurrer to the state action in April 2002, which the court overruled in May 2002. The Company and the individual defendants applied to the Court of Appeal for a writ of mandate compelling the Superior Court to reconsider its ruling. In August 2002 the Court of Appeal denied the writ application and the Company filed a petition for review with the Supreme Court. The Company filed an answer to the complaint denying the plaintiffs' allegations in August 2002. The Company believes the allegations in these purported derivative actions are also without merit and is defending the actions vigorously. BSQUARE INC.: Plaintiffs File Amended Securities Fraud Suit in S.D. NY ---------------------------------------------------------------------- Plaintiffs in the securities class action pending against Bsquare, Inc. filed an amended complaint in the United States District Court for the Southern District of New York. The suit, which also names as defendants certain of the Company's current and former officers and directors, and the underwriters of the Company's initial public offering, purports to filed on behalf of purchasers of the Company's common stock during the period from October 19, 1999 to December 6, 2000. The suit alleges that the underwriter defendants agreed to allocate stock in the Company's initial public offering to certain investors in exchange for excessive and undisclosed commissions and agreements by those investors to make additional purchases of stock in the aftermarket at pre-determined prices. The suit also alleges that the prospectus for the Company's initial public offering was false and misleading in violation of the securities laws because it did not disclose these arrangements. The litigation is being coordinated with over 300 nearly-identical actions filed against other companies. It is not yet clear when the Company will be required to respond to the amended complaint. The Company intends to defend these actions vigorously. However, due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of the litigation. CABLEVISION SYSTEMS: Faces Suits Over Rainbow Media Stock Swap in DE -------------------------------------------------------------------- Cablevision Systems Corporation faces several securities class actions pending in the Delaware Chancery Court. The suits, which also name the Company's directors as defendants, allege breach of fiduciary duties and breach of contract with respect to the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group common stock. The suits were filed on behalf of all holders of publicly traded shares of Rainbow Media Group tracking stock, and seeks to: (1) enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY Group common stock; (2) enjoin any sales of "RMG assets," or, in the alternative, award rescissory damages; (3) if the exchange is completed, rescind it or award rescissory damages; (4) award compensatory damages; and (5) award costs and disbursements. The Company believes the claims are without merit and intends to vigorously contest the lawsuits. CALIFORNIA: Jury Returns $5M Verdicts v. Cemetery For Faulty Burials -------------------------------------------------------------------- A jury in Bellflower, California, has returned $5 million in verdicts against a Compton cemetery for burying bodies alongside a roadway after staging fake graveside services on a nearby grass plot, a plaintiffs' attorney said, according to an Associated Press Newswires report. More than 250 verdicts were handed down earlier this week in a class action filed against Angeles Abbey Memorial Park. The awards ranged from $1,000 to $125,000 depending on the relationships between the plaintiffs and the deceased, Santa Ana attorney Amador Corona said. The cemetery moved a roadway and buried bodies in a dirt area that had been covered by asphalt, Mr. Corona said. Confusion over the new configuration of the roadway allowed motorists to drive over the dirt burial sites, the lawyer said. Several of the plaintiffs claimed they had been misled to believe that their relatives were being buried in the grassy area where interment services had been held. After the lawsuit was filed, the dirt area was sodded and marked to indicate the graves, Mr. Corona said. A telephone call to Scott Cox, an attorney for the cemetery, was not immediately returned. CONSECO INC.: Shareholder Files Suit Over Accounting Irregularities ------------------------------------------------------------------- A Conseco, Inc. shareholder has filed a class action accusing the Company of misleading investors about its financial condition, reports the Associated Press Newswires. The lawsuit filed in federal court in Indianapolis alleges that the Company violated the Securities and Exchange Act through "material omissions" and "misleading statements" regarding its overall liquidity since releasing its third-quarter earnings last October. Among other allegations, the 41-page complaint claims that the Company failed to disclose write-offs in its manufactured home loan portfolio third-quarter report and painted a "rosy picture" during a November 2001 investors conference in midtown Manhattan. The result, said attorney Lionel Z. Glancy of Los Angeles-based Glancy & Binkow LLP, was that the Company's stock price remained "artificially inflated" until earlier this month, when the company announced it was entering restructuring talks with creditors in an effort to avoid bankruptcy. Mr. Glancy's law firm was one of two that filed the lawsuit on behalf of Carolyn L. Porter of suburban Los Angeles. The lawsuit was filed on behalf of all public investors who bought the Company's common stock between October 30, 2001, and July 15. It also names as defendants Chief Executive Officer Gary C. Wendt, Chief Operating Officer William J. Shea and former Chief Financial Officer Charles B. Chokel. Mr. Glancy said attorneys plan to seek "substantial" monetary damages from the Company as well as attorneys, accountants and experts' fees. CSX TRANSPORTATION: Claimants Get Settlements Over Chemical Fire Suit --------------------------------------------------------------------- The first of more than 9,000 people in a class action over a 1987 chemical tank fire, are collecting their share of a $220 million partial settlement, the Associated Press Newswires reports. Attorneys said each claimant is getting an average of $10,000. They have been told to come to the New Orleans Arena to pick up their checks. The amounts are similar to another payout two years ago. The current batch of checks is financed by settlement of claims against the Company, one of nine companies that a Civil District Court jury found liable for the chemical tank fire. The Company owns the switching track where the parked tank car leaked the cancer-causing chemical butadiene on the night of September 13, 1987, before erupting in flames, spewing noxious smoke and ash, and forcing nearby residents to evacuate. Checks that the plaintiffs received in 2000, were underwritten from a $215 million settlement reached with six other companies they sued. Negotiations are under way to reach settlements with the remaining two defendant companies. ENRON CORP: Workers Get Severance Pay Under $29 Million Agreement ----------------------------------------------------------------- Under a $29 million deal recently approved by US Bankruptcy Judge Arthur Gonzalez in New York, 4,200 former Enron employees will receive up to $13,500 each in severance pay, according to a report by USA Today. "This gives them a beacon of hope," says Richard Rathvon, co-chair of the Enron Employment-Related Issues Committee, which worked with the AFL-CIO and Jesse Jackson's Rainbow Push coalition to negotiate the deal with Enron over the past six months. "It is a big relief for everyone," says Deborah Perrotta, a former Enron administrative assistant. "It is not as much as we wanted, but it is better than nothing." The money will give a big boost to Ms. Perrotta, who lost $40,000 on Enron stock in her company 401(k) account and other mutual funds. The severance agreement does not block the former employees from taking part in the ongoing class actions against Enron on behalf of the shareholders and 401(k) participants. The former workers also may get part of $85 million in retention bonuses paid to Enron executives around the same time that Enron filed for bankruptcy reorganization in winter. The employees' committee plans to argue for that money in bankruptcy court. Judge Gonzalez postponed a ruling on the fate of $12 million that former Enron executive Michael Kopper agreed to give up as part of his recent plea bargain with federal prosecutors. Mr. Kopper pleaded guilty last week to fraud and money laundering, and he agreed to surrender the $12 million to the Justice Department and the Securities and Exchange Commission, which hopes to return the money to investors. However, creditors in the Enron bankruptcy case sued Mr. Kopper laying claim to the $12 million. Judge Gonzalez issued a temporary restraining order, stopping transfer of the funds, and extended application of this order to September 16. The Justice Department and the SEC, believing that the bankruptcy court lacks jurisdiction over criminal cases, hope to move the creditors' lawsuit against Mr. Kopper into the US District Court in New York. GEORGIA: Inmate Of Old Jail Files Suit Seeking To Open Unused New Jail ---------------------------------------------------------------------- A McIntosh County, Georgia inmate has filed a federal lawsuit seeking to close the current county jail and open the new $4 million detention center that was completed in February but has remained empty due to political infighting, Associated Press Newswires reports. In a recently filed class action, in US District Court, Douglas W. Alexander, an attorney represent Lee Stuart Guest and all other inmates, asked that the old 24-bed jail be closed immediately. The lawsuit claims, among other things, that the jail is overcrowded, filthy and bug-infested. Meanwhile, the new 61-bed jail remains vacant because McIntosh County Sheriff Charles Jones and county commissioners cannot agree over staffing. Sheriff Jones says he cannot safely operate the new jail without 16 additional jailers. The county commission has said it would hire four, with the Sheriff reassigning members of his current staff to the new jail. Sheriff Jones said he had not seen the lawsuit and could not comment. Mr. Alexander has long been an advocate of prisoner and inmate rights. Other lawsuits he has filed in federal court resulted in a new jail in Glynn County and the closing of the Charlton County jail. "While the defendants bicker over staffing and funding issues, a brand new state- of-the-art facility remains unoccupied - the citizens of McIntosh County bear the cost of maintaining this new facility as well as housing prisoners in other south Georgia counties," says the lawsuit. County commissioners sued first, asking the court to force the sheriff to occupy the new jail. The judge, Senior Superior Court Judge A. Blenn Taylor Jr. dismissed the case but offered to mediate the matter. Next, the Sheriff filed his own suit August 16, four days before county commission election, seeking an order compelling commissioners to provide him with enough money to hire 16 new staff members. No due date set for a hearing. In a separate petition for an injunction, Mr. Alexander asserted that Mr. Jones may have seized enough money through the county's forfeiture contraband program to hire additional staff. IMMERSION CORPORATION: Asks NY Court To Dismiss Securities Fraud Suit --------------------------------------------------------------------- Immersion Corporation asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against the Company and: (1) Louis Rosenberg, former CEO, President and Chairman of the Company, (2) Victor Viegas, CFO, (3) Bruce Schena, former Chief Technology Officer, and Director, and (4) certain underwriters of the Company's November 12, 1999 initial public offering The suit, filed on behalf of all persons who purchased the Company's common stock from November 12, 1999 through December 6, 2000, alleges violations of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, on the grounds that the prospectus incorporated in the registration statement for the Company's initial public offering failed to disclose, among other things, that: (1) the underwriter had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriter allocated to those investors material portions of the shares of the Company's stock sold in the offering; and (2) the underwriter had entered into agreements with customers whereby the underwriter agreed to allocate shares of the Company's stock sold in the offering to those customers in exchange for which the customers agreed to purchase additional shares of the Company's stock in the aftermarket at pre- determined prices. The Company and certain individual defendants were served with the complaint, but after the 120 day period for service allowed by the Federal Rules of Civil Procedure had elapsed. The lawsuit has been consolidated for pretrial purposes with similar lawsuits to more than 300 other initial public offerings conducted in 1999 and 2000 before the Honorable Judge Shira A. Scheindlin. The defendants' time to respond to the complaints has been stayed pending a plan for further coordination. In April 2002, plaintiffs electronically served amended complaints in most of the cases. The plaintiffs also indicated that they would file amended complaints in the cases against the Company and certain other issuers after their pending motions for appointment of lead plaintiffs were granted. On July 15, 2002, the Company filed a motion for dismissal of the suit, case, and the Company expects such motion to be heard prior to year- end. JAPAN: Health Ministry Denies Error, Liability In Hepatitis C Scandal --------------------------------------------------------------------- Japan's Health Ministry virtually denied the state was at fault in its response to dealing with hepatitis C infections in the 1980s from tainted blood products, instead laying the blame on the products' maker, the defunct Green Cross Corp., the Kyodo News reports. Analysts of the situation say that people who contracted the illness are expected to move toward class actions against the state. An estimated two million people were infected with hepatitis C across Japan, and medical experts say they were mainly infected through tainted blood products. In an investigation report released recently, the Health, Labor and Welfare Ministry admitted inadequate information gathering as it failed to learn about a 1977 US ban on unheated hepatitis-tainted blood products. As a result, it failed to ban such products until mass hepatitis infections came to light in Aomori Prefecture, northeastern Japan, in April 1987. Meanwhile, the report, based on information from some 1,300 former Green Cross employees and related documents, strongly criticized Green Cross for underreporting infections after they came to light. Green Cross was criticized for only beginning to voluntarily recall the tainted products, blood-clotting fibrinogen drugs, in 1987, after eight cases of hepatitis infection from the agents surfaced in 1986 - 1987. Lawyers pushing for the state to be held legally responsible, said the ministry investigation was of limited value as a third party was not involved. The delay in reporting such infections was behind the delay in the government's action on the heated blood products, recalled in June 1988. MENORAH GARDENS: Hearings Over Suit Class Certification Continue ---------------------------------------------------------------- The grim hearings in Judge J. Leonard Fleet's courtroom continue in the case of the moved, discarded and otherwise desecrated bodies by Menorah Gardens Cemetery staff. The deceased's families must now present or sit through macabre testimony, Associated Press Newswires reports. The hearings, relating to the events at the Palm Beach cemetery, are being conducted by Judge Fleet so that he may determine whether the 1,400 families should be allowed to pursue their lawsuit against Houston-based Service Corporation International as a single class action or, instead, press their claims as individuals. The number of bodies involved is a key issue. Therefore, reason exists for the grim testimony taken from witnesses, such as gravediggers and landscape personnel, to support the most serious allegations in the lawsuit that bodies were dug up with backhoes to make room for fresh burials, and the old bones ended up in a wooded heap used for fill dirt. Another witness, a family member relates how her father's body was located, "The coffin was broken up when they found it - it was broken, it was filled with swamp water, and it was a mess." Company officials paint an image of a rogue crew, about whose acts they knew nothing, but who were fired, when the company was informed of events at Menorah Gardens. Family attorneys say SCI knew about the seriously crowded conditions and about the actions taken to relieve the crowding and make way for fresh burials. METLIFE INC.: Reaches Agreement To Settle Racial Discrimination Suit -------------------------------------------------------------------- A federal judge signed and made public a settlement under which MetLife, Inc. agreed to give nonwhite customers as much as $160 million in compensation for allegedly charging them higher rates for life insurance and discriminating in other ways for much of the 20th century, according to a report by the Wall Street Journal. The settlement will cover an estimated 1.8 million policies issued to African Americans and other nonwhites from 1901 through 1972. It covers individuals who were sold "substandard" policies because of race, which carried higher premiums and paid less in benefits than policies sold to whites. It also is meant to compensate nonwhites whom records showed were required to undergo medical exams and detailed background checks before buying policies, while whites were not. In cases, where policyholders have died, family members will receive compensation. US District Judge Harold Baer, Jr. in Manhattan signed the preliminary settlement. It covers both a class action on behalf of African American policyholders and an investigation of MetLife by the New York State Insurance Department, MetLife's home-state regulator. Other states are due to review the settlement and are considered likely to sign on to it. The class action part of the settlement requires final approval after a public "fairness" hearing before the judge, scheduled for February 2003. The Company did not officially admit wrongdoing in the settlement. The investigation and settlement followed two front-page articles in The Wall Street Journal, during 2000 and 2001, which detailed MetLife's disparate treatment of whites and nonwhites. The Company disclosed in February that it had set aside a $250 million reserve to cover the expected costs of a settlement, including legal fees and other expenses. The legal fees of the policyholders have not yet been determined and will be in addition to the $160 million settlement. The settlement will give policyholders a combination of cash and term life insurance, depending on individual circumstances. Some of the policies at issue were very small, but the settlement fixes a minimum payment of $10 per policy. There will be wide variations in size of payouts depending on category of policies, but the average payment ranges from $20 to $892, depending on the type and age of the policies. Due to the intervention of the New York life insurance department, the settlement for policyholders is substantially better than the terms tentatively agreed to during December 2001, people involved in the talks said. MICROSOFT CORP.: May Be Ordered To Add Java Programming To Windows ------------------------------------------------------------------ US District Judge J. Frederick Motz is overseeing the lawsuits brought by Sun Microsystems and AOL Time Warner's Netscape Communications unit seeking billions of dollars in antitrust damages from Microsoft Corp., the world's largest software company. These suits have been combined with more than 100 proposed class actions that accuse Microsoft of using its monopoly to overcharge consumers for Windows. During a recent hearing on the lawsuits, Judge Motz said he will consider ordering Microsoft to include Sun Microsystems' Java programming language in Windows, which powers 95 percent of the world's PCs, according to a report by The Seattle Times. The judge said he will hold a December 3 hearing on Sun's request. Sun, which makes software for servers that power corporate computer networks, says Microsoft is using its Windows monopoly on personal- computer operating systems to gain control of the market for delivering services, such as banking or pay movies over the Internet. Such "Web services" include programs that enable cellphone users to send and receive e-mail. Sun's lawyer, Lloyd Day Jr., told Judge Motz the order is needed to prevent Microsoft from dominating the market for Web services. "This is a very important matter; it urgently needs to be decided," Mr. Day told the judge. "Every day, every week, developers are making decisions" on whether to write programs with Java or Microsoft's new .Net language for Internet applications. Judge Motz said issuing such an order "would be a rather profound act that would change the whole nature of the market." "There are serious allegations that irreparable harm might be suffered. I have an obligation to take it seriously," Judge Motz said during the hearing. Programs written in Java can run on any operating system, and Mr. Day argued that including Java in Windows would make rival operating systems more popular with consumers. NATIONAL AUSTRALIA: Denies Any Role in Enron Account Manipulations ------------------------------------------------------------------ National Australia Bank (NAB), which owns Yorkshire, Clydesdale and Northern banks in the United Kingdom, denied reports that it had assisted former energy giant Enron Corp. in the manipulating of its accounts, according to a recent report by the Daily Mail. The Australian bank said it had been a relatively minor member of a loan syndicate known as Firefly. The bank said further that it had provided four percent of the total finance, strictly on an interim basis, to facilitate Enron's purchase of Brazil's Elektro. The Bank added that the loan had been approved in February 1999, and has since been repaid in full, and that no claim or class action has been made against it. Details of the Bank's alleged involvement in Firefly only came to light after hundreds of documents were released recently by a congressional committee investigating the Enron scandal. Among the documents was an internal memo from financial service company Citicorp group, allegedly naming NAB as a member of two groups of lenders. According to one report on Firefly, Robert Roach the chief investigator for the U.S. Congressional investigation, said, "The evidence is that Enron would not have been able to engage in the extent of accounting deceptions it did were it not for the active participation of major financial institutions willing to go along with, and even expand upon, Enron's activities." PDI INC.: Asking NJ Court To Dismiss Consolidated Securities Fraud Suit ----------------------------------------------------------------------- PDI, Inc. intends to ask the United States District Court for the District of New Jersey to dismiss the consolidated securities class action pending against it, its chief executive officer, and its chief financial officer. The suit alleges violations of the Securities Exchange Act of 1934, and Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 promulgated thereunder. The suit was filed on behalf of all persons who purchased the Company's common stock between May 22, 2001 and November 12, 2001. The essence of the allegations in the consolidated and amended complaint is that the defendants intentionally or recklessly made false or misleading public statements and omissions concerning the Company's financial condition and prospects with respect to its marketing of Ceftin in connection with the October 2000 distribution agreement with GlaxoSmithKline, as well as its marketing of Lotensin in connection with the May 2001 distribution agreement with Novartis Pharmaceuticals Corp. The Company has not yet answered the consolidated and amended complaint and intends to file a motion to dismiss under the Private Securities Litigation Reform Act of 1995 and Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Discovery has not yet commenced in the consolidated action. The Company believes that the allegations in this purported securities class action are without merit. SAGENT TECHNOLOGY: Asks NY Court To Strike Portions of Securities Suit ---------------------------------------------------------------------- Sagent Technology, Inc. asked the United States District Court for the Southern District of New York to strike several portions of the amended consolidated securities class action filed on behalf of the individual investors who purchased Company's stock between October 21, 1999 and April 18, 2000. The suit alleges that the Company misrepresented its prospects for 1999 and the first quarter of 2000. The original consolidated suit was filed in April 2001. The Company moved to dismiss the suit, which the court granted on September 28, 2001, but gave the plaintiffs leave to amend the complaint. On December 28, 2001, the class plaintiffs filed a second amended complaint, which the Company again moved to dismiss. The hearing on the Company's motion was held on June 3, 2002. On June 5, 2002, the court issued an order granting in part and denying in part the Company's motion to dismiss the second amended complaint. Thereafter, the plaintiffs filed a third amended complaint. The Company has moved to strike certain portions of that complaint on the grounds that those particular allegations were dismissed by the court from the prior complaint. The court heard this motion in August 26, 2002, but has yet to release a ruling. The Company will answer the complaint following the court's ruling on that motion. Because certain claims survived the motion to dismiss the prior complaint, and the discovery stay is no longer in effect for those allegations, the parties are engaging in discovery. SAGENT TECHNOLOGY: CA Court Sustains Motion To Dismiss Securities Suit ---------------------------------------------------------------------- The Superior Court of California for the County of Santa Clara sustained Sagent Technology, Inc.'s motion to dismiss the consolidated shareholder derivative suit filed against certain of the Company's present and former officers and directors as defendants. The principal allegation of the suit is that the defendants breached their fiduciary duties to the Company through the dissemination of allegedly misleading and inaccurate information and other allegations. The Company filed a motion to dismiss one of the suits, on the grounds that, among other things, the plaintiff had failed to make a pre-suit demand on the board of directors as required by Delaware law. The officer and director defendants joined in that motion, and also moved to dismiss on the grounds that the complaint fails to allege the asserted causes of action against the individual defendants. The court heard oral arguments on the defendants' motion to dismiss the suit in January 2002. On March 1, 2002, the court issued an order sustaining the Company's motion to dismiss, granting the plaintiff leave to amend the complaint. The plaintiffs filed an amended complaint in April 2002, which the Company and the individual defendants each a filed motion to dismiss. The Court heard oral argument on July 9, 2002 and thereafter sustained the motions to dismiss, holding that the nominal plaintiff did not have standing to litigate the complaint where he had failed to make a pre- suit demand on the Company's Board of Directors as required by Delaware law. The plaintiffs have not filed an amended complaint to date. SECURITIES LITIGATION: Regulators Look For Evidence Of Analysts' Roles ---------------------------------------------------------------------- Regulators from more than 40 states are sifting through mounds of Wall Street's e-mails, employee evaluations and other internal documents in their attempt to dissect the role of the stock analysts in the technology and telecom bubble, the Reuters English News Service reports. The regulators plan to publicize the material regularly to enable class action lawyers to seek redress for injured investors. They are hoping that the documents will provide a window into the analysts' activities, and whether financial companies routinely used favorable stock recommendations to win lucrative investment banking business. While loath to tip their hand, many regulators suggest action against Wall Street firms will materialize in the near future. The measure would resemble the New York Attorney General Eliot Spitzer's probe into and settlement with Merrill Lynch & Co. this past spring. In fact, some regulators say they favor similar public releases of potentially embarrassing material to enable class-action lawyers to seek redress on behalf of injured investors. They have plenty of material to work from. "We are still looking at thousands and thousands of pages of documents," said Joseph Borg, President of the North American Securities Administrators Association and Alabama's director of securities. "We could be seeing literally millions of pages." Most of the about 44 states involved in the Wall Street inquiry have formed into teams, with each team focusing on a top investment bank. Bear Stearns, for example, is being probed by a New Jersey regulator, with support from Delaware, Hawaii, Maine, Pennsylvania and Vermont. Lehman Brothers is being investigated by an Alabama regulator, with the assistance of Georgia, Indiana and Mississippi. A steering committee of a dozen or so states, chaired by California, New York and New Jersey is overseeing the probe. The regulators dismiss the suggestion they are trying to beat the Securities and Exchange Commission to the punch or that they want to impose industry rules apart from the Commission. Actually, said Tanya Solov, Illinois' director of Illinois' securities department, "we are not engaged in a race with other regulators." "Rather, the states are holding regular teleconferences with the SEC, NASD and NYSE," Joseph Borg said. SLAVE REPARATIONS: About 60,000 Russians Get Compensation From Germany ---------------------------------------------------------------------- About 60,000 Russians have received compensation for forced and slave labor under the Nazi regime, for a total of more than $57.1 million (EUR58 million), the head of the reconciliation fund said, according to a report by Associated Press Newswires. Natalia Malysheva told ITAR-Tass news agency that about 500,000 applications under the fund had been filed this year, of which 190,000 had been evaluated. Compensation has been denied by Germany in about 10 percent of the cases, she said. The payments are being made in installments, and those who worked in concentration camps as so-called slave laborers are due to receive more than others who worked as forced laborers under other circumstances. German government and industry set up the $5 billion fund for former Nazi laborers in 2000, under pressure from class actions, and most of those expected to benefit are now living in central and eastern Europe. Payments to victims in Russia have suffered repeated hang-ups, including disputes over whether the payments would be taxed and delays in getting lists of recipients. Ms. Malysheva said the payments were now "coming regularly; nobody holds back any money." VIRGINIA: City, Residents Ask Assistance From Court-Appointed Mediator ---------------------------------------------------------------------- The city of Portsmouth and the residents of Fairwood Homes are hoping a court-appointed mediator will help resolve their legal dispute over relocation assistance and other issues, involved in their class action, The Virginian-Pilot and The Ledger-Star (Norfolk, Va.) report. The city of Portsmouth and the Portsmouth Redevelopment and Housing Authority filed a motion asking for a stay of proceedings while a court-appointed magistrate judge helps mediate their settlement efforts. US District Judge Raymond Jackson entered the order, and a hearing with the magistrate judge will be held very soon. In late May, residents were given 30 days to vacate the housing complex of Fairwood Homes. The owners have allowed extension, however, with the latest deadline being set for the end of the month. Lawyers for residents filed suit in June seeking financial relocation assistance and unspecified punitive damages. Lawyers also sought to force the city to replace the blighted neighborhood with new housing that would serve low-income residents. The class action also names the owners of the complex, Portsmouth Partners of Virginia, the city's Industrial Development Authority, and Empowerment 2010, the nonprofit agency that oversees spending of the federal grant awarded to Portsmouth and Norfolk. Samuel Meekins, an attorney for the owners, said he objects to the mediation. "Relocation obligations are municipal obligations, and making us engage in settlement obligations to pay someone else's debt is not going to work," he said. The US Department of Housing and Urban Assistance determined that residents are entitled to such assistance. The lawsuit was filed as a class action that could potentially include residents back to the mid-1990s, when the city purchased a portion of Fairwood Homes for redevelopment. How many residents would be included is one of the issues that would need to be negotiated, said Julie Nepveu, an attorney with the Washington-based Lawyers' Committee for Civil Rights Under Law. The attorney speculated it could be from 600 to 1,100 families. TERAYON COMMUNICATIONS: CA Court Refuses To Dismiss Securities Suit ------------------------------------------------------------------- The United States District Court for the Northern District of California refused to dismiss the consolidated securities class action pending against Terayon Communication Systems, Inc. Several suits were filed in April 2000 against the Company and certain of its officers and directors, on behalf of purchasers of the Company's securities between February 2, 2000 and April 11, 2000. The suits alleged that the defendants had violated the federal securities laws by issuing materially false and misleading statements and failing to disclose material information regarding the Company's technology. These suits were later consolidated, with the consolidated suit containing factual allegations nearly identical to those in the original lawsuits, but asserting claims on behalf of purchasers of the Company's securities between November 15, 1999 and April 11, 2000. In October, 2000, defendants moved to dismiss the consolidated suit. In March 2001, after defendants' motion had been fully briefed and argued, the court issued an order granting in part defendants' motion and giving plaintiffs leave to file an amended complaint. In April 2001, plaintiffs filed their first amended consolidated class action complaint. The defendants again moved to dismiss this new complaint. On March 29, 2002, the court denied the defendants' motion to dismiss. The parties are now in the discovery process. The Company considers the lawsuits to be without merit and intends to defend vigorously against these allegations. However, the litigation could prove to be costly and time consuming to defend, and there can be no assurances about the eventual outcome. WELLS FARGO: Mexican Group Calls For Bank Boycott Over Back-Wages Claim ----------------------------------------------------------------------- A coalition of Mexican immigrants has called for a boycott of Wells Fargo banks to support Mexican laborers who claim money deducted from the wages they earned working on American farms and railroads during World War II, is still owed them, reports Associated Press Newswires. Members of the Council of Presidents of Mexican Federations of Los Angeles also protested in front of a Wells Fargo bank in downtown Los Angeles recently. They urged people not to sign for new accounts with the bank, and to close current accounts. Wells Fargo, responsible for transferring workers' withheld wages to a Mexican bank, could owe the workers millions in back wages, said Guadalupe Gomez, council president. "They need to tell the people where their money went; we need to get the documentation," said Martha Jimenez, a spokeswoman for one of the groups, the Zacatecas Federation. Wells Fargo spokesman Larry Haeg said, "We believe we completely fulfilled our responsibility to transfer the money. We never held the savings account or checks of any individual braceros." The workers include more than 300,000 Mexicans who came to the United States between 1942 and 1949 to harvest crops and maintain railroad tracks as guest workers. Called "braceros" after the Spanish word for arm, they came to this country under an agreement between the United States and Mexico, aimed at filling labor shortages caused by World War II. Under the agreement, 10 percent of each worker's wages was to be withheld and transferred, via US and Mexican banks, into individual savings funds set up for each bracero. However, many of the braceros say they never received that money when they returned to Mexico. The workers filed a class action in San Francisco in March 2001, seeking repayment of the money deducted from their paychecks, plus interest. Although the lawsuit did not specify the amount, advocates estimated it at $500 million. The council of presidents launched the boycott by setting fire to Wells Fargo debit cards in front of the Mexican consulate in Los Angeles after hearing that a judge rejected the lawsuit by the workers. US District Court Judge Charles Breyer wrote that he did "not doubt that many braceros never received the savings fund withholdings to which they were entitled. The court is sympathetic to the braceros' situation." However, Judge Breyer concluded in the ruling that the braceros were not entitled to any relief from the Mexican or American governments, or from Wells Fargo, in a United States court of law. New Securities Fraud Cases FIRST HORIZON: Milberg Weiss Commences Securities Fraud Suit in N.D. GA ----------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the securities of First Horizon Pharmaceutical Corporation (Nasdaq: FHRX) between April 24, 2002 through July 2, 2002, inclusive. The action is pending in the United States District Court, Northern District of Georgia against the Company and: (1) Mahendra G. Shah, (2) John N. Kapoor, (3) Balaji Venkataraman, (4) Jon S. Saxe, (5) Pierre Lapalme, (6) Jerry N. Ellis, (7) Banc of America Securities LLC, (8) JP Morgan Thomas Weisel Partners LLC, and (9) Lasalle Capital Markets 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, and sections 11, 12(a)(2) and 15 of the Securities Act of 1933, by issuing a series of materially false and misleading statements to the market. On April 24, 2002, First Horizon completed a public offering of securities, selling 6.5 million shares of common stock at an offering price of $21.75 per share, pursuant to a Prospectus declared effective by the SEC on April 18, 2002. The Company failed to disclose material information in the Prospectus relating to two products, Tanafed Suspension (a pediatric liquid and allergy product) and Prenate GT (a prescription prenatal vitamin). The Company touted the market for these products highly in its Prospectus. However, the market for these products was severely declining and defendants had flooded wholesalers with Prenate GT inventory in the first quarter of 2002 in order to report strong sales prior to the secondary offering. Belatedly, defendants disclosed that due to price erosion arising from generic competition, First Horizon's products had not been widely accepted by the market. In addition, sales growth from the Company's newly acquired "Sular" drug line had failed to yield strong results, and a promised redeployment of First Horizon's sales force similarly failed to boost First Horizon's bottom line. As a result of the Company's misrepresentations, First Horizon investors have sustained tremendous losses, and stand to lose much more as the Company's financial condition continues to decline. On July 2, 2002, the Company shocked the market by revealing that for the second quarter of 2002, the Company expected to report revenues of between $25 and $26 million, and earnings per share between $0.00 and $0.02, excluding a $2.2 million debt write-off. For the full year, First Horizon revised its guidance to $0.34 a share, a far cry from its earlier guidance of $0.56 to $0.57 a share. A July 2, 2002 press release attributed the massive shortfall mainly to "greater than expected erosion of sales in the second quarter" of Tanafed and Prenate GT, as well as "distraction" arising out of a sales force "realignment." In response to the Company's devastating news concerning the lack of acceptance of two of the Company's key products, First Horizon's stock price plummeted by an astonishing 81% or by $14.74 to $3.51, on volumes of 16.4 million shares, about 30 times the daily average. 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 or contact Kenneth Vianale or Tara Isaacson by Mail: The Plaza 5355 Town Center Road Suite 900 Boca Raton, FL 33486 by Phone: 561-361-5000 by E-mail: FirstHorizonCase@milbergNY.com or visit the firm's Website: http://www.milberg.com RIVERSTONE NETWORKS: Glancy & Binkow Lodges Securities Suit in N.D. CA ---------------------------------------------------------------------- Glancy & Binkow LLP initiated a securities class action in the United States District Court for the Northern District of California on behalf of all persons who purchased securities of Riverstone Networks, Inc. (Nasdaq:RSTN) between August 10, 2001 and June 5, 2002, inclusive. The suit charges the Company and certain of its officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and the dissemination of materially false and misleading statements regarding the nature of the Company's financial condition and sales caused its stock price to become artificially inflated, inflicting damages on investors. The suit alleges that defendants misled the investing community concerning the true effect that the downturn in telecom spending had upon the Company and its financial viability. On February 28, 2002, the Company shocked the market when it announced: (1) revenues for the fourth quarter ending March 2, 2002, would be approximately $50 to $54 million, instead of the projected $65 million; (2) that the Company would reduce its expenses, including workforce reductions, by 10 percent; (3) that it expects to take charges in the fourth quarter totaling approximately $26 million to $30 million, consisting of asset impairments, write downs in equity investments, charges related to discontinued products and costs associated with workforce reductions; and (4) the Days Sales Outstanding, an important financial indicator showing the average time it takes customers to pay their bills increased to 75.7 days. As a direct result, the price of Riverstone stock dropped from $7.59 to $3.82, a 49% drop from the class period high of $21.10. On June 5, 2002, Riverstone announced a further decline in sales of 40%. This information further depressed Riverstone common stock, which sank an additional 21%, from $3.30 per share on June 5, 2002 to $2.61 on June 6, 2002. For more details, contact Michael Goldberg by Mail: 1801 Avenue of the Stars, Suite 311, Los Angeles, California 90067 by Phone: 310-201-9161 or 888-773-9224 or by E-mail: info@glancylaw.com. SALOMON SMITH: Beatie Osborn Commences Securities Fraud Suit in S.D. NY ----------------------------------------------------------------------- Beatie and Osborn LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf of individuals who purchased Rhythms NetConnections, Inc. (NYSE: RTHM) common stock during the period between April 7, 1999 and August 2, 2001. The complaint alleges that Merrill Lynch & Co., Inc., Salomon Smith Barney Inc., Jack Grubman, Mark Kastan and Kenneth Hoexter urged investors to purchase Rhythms stock when defendants knew or should have known that such purchases were not a good investment. The complaint alleges that defendants issued "Buy" recommendations about Rhythms without any rational economic basis, failed to disclose that they were issuing "Buy" recommendations to obtain investment banking business and concealed significant, material conflicts of interests that prevented them from providing independent objective analysis. For more details, contact Eduard Korsinsky or Benjamin D. Coleman by Mail: 521 Fifth Avenue, 34th Floor New York, New York 10175 by Phone: 800-891-6305 by Fax: 212-888-9664 by E-mail: clientrelations@bandolaw.com or visit the firm's Website: http://www.bandolaw.com ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. 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