/raid1/www/Hosts/bankrupt/CAR_Public/021009.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, October 9, 2002, Vol. 4, No. 200
Headlines
AUTOMOBILE INSURANCE: IL Court Ruling Agreeing To Hear Appeal Welcomed
CASELLA WASTE: September Settlement Conference For Lawsuit Held in NJ
CHICO'S FAS: Plaintiffs File Amended Overtime Wage Lawsuit in CA Court
CRYOLIFE INC.: Faces Several Suits For Securities Fraud in N.D. GA
DRYVIT SYSTEMS: TN Court Preliminarily Approves EIFS Suits Settlement
FLEETWOOD ENTERPRISES: Oral Arguments on Certification Set for November
FLEETWOOD ENTERPRISES: Sued For Fraud Relating to Motor Homes in CA
FORD MOTOR: Federal Agency Ends Crown Victoria Review, No Defects Found
HOUSING INDUSTRY: Court Rules Against Yield-Spread Premium Challenge
LASER VISION: Asks TX Court To Dismiss Suit Over Securities Losses
MAJOR LEAGUE SOCCER: High Court Refuses To Intervene in Antitrust Suit
NEW ENGLAND: Faces Suit For Unsolicited Advertisements in SC Court
NVIDIA CORPORATION: CA Court Orders Securities Fraud Suits Consolidated
OFFICEMAX INC.: Plaintiffs Appeal Dismissal of Securities Fraud Suit
PETCO ANIMAL: Discovery Nears End in Overtime Wage Lawsuit in CA Court
RISK MANAGEMENT: Peanut Growers Consider Breach of Contract Lawsuit
STUDENT TESTING: Tobacco Random Testing Raises Rights Groups' Ire
SYMMETRICOM INC.: Court Grants Summary Judgment in Securities Suit
TIPPINGPOINT TECHNOLOGIES: Labels "Without Merit" Securities Suit in NY
TOBACCO LITIGATION: Next Chapter Of Legal Battle Slated For Louisiana
UNITED STATES: Forest Service Crew Faces Charges of Sexual Harassment
VARI-L COMPANY: Signs MOU To Settle Consolidated Securities Suit in CO
WEIDER NUTRITION: Faces Suits Over Andostenedione Product in FL, IL
WORLD WRESTLING: Asks NY Court To Dismiss Suit For Securities Fraud
*Federal Trade Commission Questions Legal Fees For Class Action Suits
New Securities Fraud Cases
AON CORPORATION: Marc Henzel Commences Securities Fraud Suit in N.D. IL
AVISTA CORPORATION: Marc Henzel Commences Securities Suit in E.D. WA
ASIA GLOBAL: Green & Jigarjian Commences Securities Fraud Suit in CA
CONSECO INC.: Wechsler Harwood Commences Securities Suit in S.D. IN
CROSS MEDIA: Marc Henzel Commences Securities Fraud Suit in S.D. NY
CUTTER & BUCK: Marc Henzel Commences Securities Fraud Suit in W.D. WA
ELECTRONIC DATA: Marc Henzel Commences Securities Fraud Suit in S.D. NY
INTERPUBLIC GROUP: Goodkind Labaton Lodges Securities Suit in S.D. NY
MARTHA STEWART: Marc Henzel Launches Securities Suit in S.D. NY
MERRILL LYNCH: Rabin & Peckel Commences Securities Fraud Suit in NY
NTL INC.: Marc Henzel Begins Securities Suit in S.D. New York
SALOMON SMITH: Beatie Osborn Commences Securities Fraud Suit in S.D. NY
TEXTRON INC.: Marc Henzel Commences Securities Fraud Suit in RI Court
VODAFONE PLC: Alfred Yates Commences Securities Fraud Suit in S.D. NY
VODAFONE PLC: Stull Stull Commences Securities Fraud Suit in S.D. NY
*********
AUTOMOBILE INSURANCE: IL Court Ruling Agreeing To Hear Appeal Welcomed
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The Illinois Supreme Court agreed to hear an appeal of a lower court's
ruling in the Avery V. State Farm class action relating to the use of
auto replacement parts. Industry observers welcomed the decision,
hoping for a reversal and restoration of competition to the auto
replacement parts business.
"We hope the Illinois Supreme Court decides that applying Illinois law
to the rest of the nation is improper," Robert Hurns, counsel for the
National Association of Independent Insurers (NAII) told Property and
Casualty.
The suit was filed in Illinois three years ago, relating to State
Farm's use of auto replacement parts in auto repairs, which the
plaintiffs claimed were inferior. The lower court awarded the 4.7
million policyholders $1.2 billion in damages, an unprecedented
settlement that has had a chilling effect on the use of competitive
parts, which insurers use to hold down repair costs and premiums.
Mr. Hurns pointed out that the lawsuit was driven by the plaintiff's
bar, according to Property and Casualty. "It's no coincidence that
Madison County, which heard the original class-action suit, made it to
the No. 4 position on American Tort Reform Association's `judicial
hellholes' list," he noted.
"Because of the many variables involved, parts issues should be dealt
with on a case-by-case basis, not en masse in a class-action lawsuit,"
Mr. Hurns said. "We hope the Illinois Supreme Court's eventual position
will discourage similar questionable lawsuits from being heard in the
courts."
CASELLA WASTE: September Settlement Conference For Lawsuit Held in NJ
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A settlement conference for the securities class action pending against
Casella Waste Systems, Inc. was held on September 20, 2002 in the
United States District Court, District of New Jersey. The suit relates
to the Company's acquisition of KTI, and names as defendants the
Company and:
(1) KTI,
(2) Ross Pirasteh,
(3) Martin J. Sergi, and
(4) Paul A. Garrett
The complaint, filed on behalf of all shareholders who purchased KTI
common stock from January 1, 1998 through April 14, 1999, alleged that
the defendants made unspecified misrepresentations regarding KTI's
financial condition during the class period in violation of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended.
The suit was later amended, changing the class period covered by the
complaint to the period including August 15, 1998 through April 14,
1999. The Company then filed a motion to dismiss the suit. On October
1, 2001, the court partially granted the motion, dismissing the
Company, but not KTI or the individual defendants.
The Company is defending the claims against the remaining defendants.
CHICO'S FAS: Plaintiffs File Amended Overtime Wage Lawsuit in CA Court
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Plaintiffs in the overtime wage class action pending against Chico's
FAS, Inc. filed an amended suit in the Superior Court for the State of
California for the County of Orange.
The suit was originally filed against the Company on behalf of all
Company assistant store managers, sales associates and hourly employees
in California from September 21, 1997 to the present. The Company
responded by seeking to dismiss the complaint and strike selected
claims in order to either eliminate the litigation or gain greater
clarity as to the basis for the plaintiff's action.
In response, the plaintiff filed an amended complaint on February 15,
2002, which differs in a number of material respects from the original
complaint. The amended complaint alleges that the Company failed to
pay overtime wages and failed to provide rest breaks and meal periods.
The Company is actively investigating the merits of this action and
believes that the merits of this action do not warrant class action
status and that it has certain defenses to the claims. Discovery is
proceeding as planned.
The Company intends to vigorously defend the action, including
contesting the certification of the action as a class action.
Nevertheless, an unfavorable outcome in this matter could have a
material adverse effect on its financial condition, and any change in
its labor practices that may be required as a result of this litigation
could have a negative impact on our ongoing results of operations.
CRYOLIFE INC.: Faces Several Suits For Securities Fraud in N.D. GA
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Cryolife, Inc. faces several securities class actions commenced since
July 2002 in the United States District Court for the Northern District
of Georgia, on behalf of purchasers of the Company's stock from August
2000 through August 2002.
The suits charge the Company and certain of its officers with violating
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 throughout the class
period, which statements had the effect of artificially inflating the
market price of the Company's securities.
The principal allegations of the complaints are that the Company
failed to disclose its alleged lack of compliance with certain FDA
regulations regarding the handling and processing of certain tissues
and other product safety matters.
The Company believes these cases will be consolidated into one putative
suit. The Company believes the claims made in the lawsuits are without
merit and intends to vigorously defend against these claims.
Management has retained the services of the Atlanta based law firm of
King & Spalding to defend the Company.
DRYVIT SYSTEMS: TN Court Preliminarily Approves EIFS Suits Settlement
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The Jefferson County, Tennessee court preliminarily approved a
nationwide settlement of the class action pending against Dryvit
Systems, Inc., over its exterior insulated finish systems (EIFS), which
is used in buildings and homes.
The Tennessee suit is an attempted state-wide class action which seeks
various types of damages on behalf of all similarly situated persons
who paid for the purchase of a Dryvit EIFS-clad structure in the State
of Tennessee during the period beginning November 14, 1990 to the date
of the complaint.
On April 8, 2002, the judge in the Posey case signed a preliminary
approval order for a nationwide class action settlement of a
substantial portion of Dryvit's residential EIFS litigation. The
proposed class covers all persons in any state (other than North
Carolina) who own a one- or two-family residential dwelling or
townhouse clad with Dryvit EIFS installed after January 1, 1989.
Nationwide notice to all eligible class members began on or about June
13, 2002. A fairness hearing was set for October 1, 2002, to seek
final court approval of the proposed settlement. If there is not an
excessive number of opt outs by the September 3, 2002 deadline, and the
court grants final approval of the settlement at the fairness hearing,
the settlement will result in the dismissal of all other pending
attempted state class actions.
As previously reported, the Company is a defendant in other attempted
state class actions including cases filed in Madison County, Illinois,
and in Mobile County, Alabama.
FLEETWOOD ENTERPRISES: Oral Arguments on Certification Set for November
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Oral arguments on the appeal of the class certification of the suit
filed against Fleetwood Enterprises, Inc. is set for November 4,2002 in
the United States Fifth Circuit Court of Appeals.
The suit, filed on behalf of purchasers of the Company's Class A motor
homes for the model years 1994-1999, was commenced in April 1999 in the
United State District Court for the Western District of Texas, San
Antonio Division. The suit asserts claims with respect to:
(1) breach of express and implied warranties;
(2) negligent misrepresentation;
(3) fraudulent concealment; and
(4) violation of various state statutes in connection with the
ability of such motor homes to tow an automobile or other
vehicle or cargo.
In September 2001, the court certified a class of Texas residents who
purchased a subject motor home from a Texas dealer and who still own
the motor home. The Company promptly appealed this certification to the
Fifth Circuit Court of Appeals, according to an earlier Class Action
Reporter story.
The Company continues to deny the material allegations in the complaint
while asserting a vigorous defense to that end. It is not possible at
this time to properly assess the risk of an adverse verdict or the
magnitude of possible exposure.
FLEETWOOD ENTERPRISES: Sued For Fraud Relating to Motor Homes in CA
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Fleetwood Enterprises, Inc. faces a class action pending in the Los
Angeles, California, Superior Court, Central District, alleging fraud
and misrepresentation in the marketing of the Company's motor homes
from model years 1994 through 2000.
The complaint contends that the Company misrepresented the towing
capacities of its motor homes without informing consumers of the need
for auxiliary brakes on the towed vehicle, and seeks a variety of
damages and injunctive relief.
The Company denies the allegations in the complaint and expects to
provide a vigorous defense. However, it is not possible at this time
to properly assess the risk of an adverse verdict or the magnitude of
possible exposure.
FORD MOTOR: Federal Agency Ends Crown Victoria Review, No Defects Found
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In a victory for Ford Motor Co., federal regulators recently closed a
10-month investigation into the automaker's Crown Victoria police
cruise without finding a defect responsible for a handful of highly
publicized gas tank fires, The Detroit News reports.
Nonetheless, in Texas, Ford still faces a class action, filed on behalf
of that state's cities and counties seeking a recall. David Perry, a
Corpus Christi lawyer handling the class action, who represents the
families of the police officers killed in Crown Victoria accidents,
said his cases will go forward. Similar legal efforts are under way
in Ohio and elsewhere, along with a number of product liability suits
against Ford.
The decision by the National Highway Traffic Safety Administration
(NHTSA), while not a complete exoneration, could blunt the safety
controversy surrounding America's most popular police car.
Over the past three years, Ford has faced intensifying criticism from
police agencies and safety advocates who say the location of the Crown
Victoria's body frame and gas tank render it prone to deadly fires in
rear-end crashes. In the past two decades, 12 officers have been
killed when a Crown Victoria gas tank ruptured and caught fire, often
after being struck in the rear in a high-speed crash.
NHTSA's Office of Defect Investigation, however, determined that the
Crown Victoria police car exceeds federal standards for fuel system
safety and found the rate of fires was no greater than with Chevrolet
Caprice police cars, which GM dropped after 1996.
Safety advocates criticized NHTSA's decision to close the investigation
as another failure by the government to protect the public. "This
decision is going to mean more deaths on the highways," said Clarence
Ditlow, executive director of the Center for Auto Safety in Washington,
D.C.
"It's a NHTSA attempt to whitewash the situation for Ford. But this
does not absolve Ford. NHTSA may be saving Ford $200 million in
recalls, but inevitably it will cost them more in punitive damages,"
said Mr. Ditlow.
In a summary of its report, NHTSA said the Crown Victoria meets federal
standards that require a vehicle to withstand a rear-end crash at 30
mph without leaking fuel. The agency noted that the car did not leak
fuel during a test at 50 mph conducted by Ford.
NHTSA's decision comes less than a week after Ford agreed to pay for
the installation of shields around the gas tanks on some 350,000 Crown
Victoria police cars in order to reduce fire risk after a rear-end
crash. Ford also will provide a special container to hold sharp
objects in the trunk that could puncture the gas tank. Ford also will
set up a Web site for police communication about avoiding punctures and
accidents.
HOUSING INDUSTRY: Court Rules Against Yield-Spread Premium Challenge
--------------------------------------------------------------------
A federal court has dealt what may be the fatal blow to a nationwide
legal challenge against controversial fees collected by mortgage
brokers in connection with home loan settlements, The San Diego Union-
Tribune reports. However, how does one wanting to buy or refinance a
home challenge a fee called a yield-spread premium one believes
violates the law? The answer may have to be that this month's
precedent-setting decision by the 11th US Circuit Court of Appeals
effectively removed one of the most powerful legal tools available to
consumers; class-action lawsuits.
The fees are known as "yield-spread premiums." Lenders routinely pay
them to mortgage brokers for delivering loans that carry higher rates
than the "par" or standard rates offered by the lender. Though
commonplace features in home purchase and refinancing transactions,
yield-spread premiums have a Jekyll and Hyde reputation.
In some instances, the fees are integral parts of arrangements, whereby
a borrower agrees to pay a higher note rate in exchange for the broker
paying all or some of the closing costs. Such deals can be especially
helpful to moderate-income and first-time buyers who may not have cash
on hand to pay the required closing costs.
However, there is a dark side. When a broker leads an unsuspecting
buyer into a mortgage with a higher than necessary interest rate and
receives thousands of dollars from the lender for doing nothing but
that, the borrower is being abused. More to the point, the lender and
broker are violating federal law, which prohibits kickbacks and fees
where no settlement-related services are rendered to the consumer.
The 11th Circuit Court of Appeals initially accepted guidelines laid
down by the Department of Housing and Urban Development (HUD). In a
policy statement last year, HUD said the only way to gauge the legality
of a yield-spread premium is to examine whether goods and services were
provided to the consumer by the mortgage broker, and then to evaluate
whether the "total compensation paid to the broker is reasonably
related" to the total value of the goods and services provided in the
transaction.
HUD had issued its guidelines in the wake of an explosion of yield-
spread class-action filings in federal courts across the country.
Upwards of 200 lawsuits alleged yield-spread premium abuses by dozens
of mortgage companies and banks. Most of the cases were brought by
trial attorneys who specialize in consumer class action litigation and
do their work on a contingency fee basis.
The stakes in these cases were staggering. Large and prominent
national lenders were the targets of many of the class actions. The
number of potentially affected consumers ran into the hundreds of
thousands, and the mortgage industry estimated the potential payout
liability exceeded $100 billion.
Under federal rules, giant classes of plaintiffs must be "certified"
before any action can proceed. One of the key tests for certification
is that the alleged wrongdoing suffered by all class members must be
roughly similar. An example would be a product with a design defect
that caused similar injuries to hundreds of consumers.
Prior to HUD's policy statement last year, some consumer advocates
believed the agency's rules would support class action certifications.
After all, if thousands of borrowers were lured into high-rate
mortgages by brokers who received large fees from lenders, were not
their financial injuries of a similar nature? As indicated, hundreds
of class actions were filed.
The 11th Circuit did in fact certify one class action. Known as
Culpepper v. Irwin Mortgage Corp., it was based on that very rationale
espoused by the consumer advocates, prior to the HUD policy statement.
However, recently, in cases involving First Union Mortgage Corp.,
BankAmerica Corp. and Reliastar Mortgage Corp., the same court reversed
field and said HUD's policy or guidelines deserves "deference" and
should be followed.
This is a troubling conclusion, since the HUD guidelines give their
guidance only in instances when the consumer has paid a higher fee to
the broker or accepted a higher mortgage interest rate and also has
received some value in goods and services.
However, the guidelines do not mention the instances when "a broker
leads an unsuspecting buyer into a mortgage with a higher than
necessary interest rate and receives thousands of dollars from the
lender for doing nothing but that."
LASER VISION: Asks TX Court To Dismiss Suit Over Securities Losses
------------------------------------------------------------------
Laser Vision Centers, Inc. asked the United States District Court for
the Southern District of Texas, Houston Division, to dismiss a
securities class action against it.
The suit seeks damages for losses incurred in trading in the Company's
stock and options in the period from November 1999 to December 2001,
and alleges that the plaintiffs were given false and misleading
information by the Company's Director of Investor Relations.
The Company believes that the claims of the plaintiffs are without
merit and intends to vigorously defend the suit.
MAJOR LEAGUE SOCCER: High Court Refuses To Intervene in Antitrust Suit
----------------------------------------------------------------------
The United States Supreme Court refused to intervene in an antitrust
class action filed by a group of Major League Soccer players, accusing
the league of being an illegal monopoly, the Associated Press reports.
The suit accused the league with conspiring with the US Soccer
Federation to create a monopoly by blocking other leagues and
depressing salaries. The decision is the players' third straight
defeat, after losing in a jury trial and a federal appeals court.
The high court last reviewed a sports-related case in 2001, when
justices ruled that disabled golfer Casey Martin may use a cart to ride
in PGA Tour events. The jury in the soccer case found that the league
was not a monopoly because it competed with professional leagues in
Europe and Latin America and with minor leagues in the United States,
the Associated Press reports.
NEW ENGLAND: Faces Suit For Unsolicited Advertisements in SC Court
------------------------------------------------------------------
New England Business Services, Inc. faces a class action pending in the
Court of Common Pleas of the Ninth Judicial Circuit in and for
Charleston County, South Carolina. The named plaintiff in the lawsuit
seeks to represent a class consisting of all persons who allegedly
received facsimiles containing unsolicited advertising from the Company
in violation of the Telephone Consumer Protection Act of 1991 (the
TCPA).
The plaintiff is seeking statutory damages in the amount of $500.00 per
individual violation, which amount can be trebled to $1,500.00 for each
violation found to have been "willful and knowing." The plaintiff is
also seeking injunctive relief with respect to further violations of
the TCPA and attorneys' fees and costs.
The Company believes that it has valid defenses to the claims asserted
in the complaint.
NVIDIA CORPORATION: CA Court Orders Securities Fraud Suits Consolidated
-----------------------------------------------------------------------
The United States District Court for the Northern District of
California ordered consolidated the securities class actions pending
against NVIDIA Corporation and certain of its officers, alleging
violations of the federal securities laws, arising out of the Company's
announcement on February 14, 2002 of an internal investigation of
certain accounting matters.
Approximately 13 similar actions were filed in the Northern District of
California, alleging claims in connection with various alleged
statements and omissions to the public and to the securities markets
and seek damages together with interest and reimbursement of costs and
expenses of the litigation.
Additionally, three related derivative actions were filed against the
Company, certain of its executive officers, directors and its
independent auditors, KPMG LLP, in California Superior Court and in
Delaware Chancery Court. The two related derivative actions filed in
California Superior Court have been consolidated. The derivative
actions also seek disgorgement of alleged profits from insider trading
by officers and directors. These suits are in the preliminary stages.
The Company is unable to predict the ultimate outcome of the suits.
There can be no assurance the Company will be successful in defending
the suits and if the Company is unsuccessful the Company may be subject
to significant damages. Even if the Company is successful, defending
the suits is likely to be expensive and may divert management's
attention from other business concerns and harm the Company's business.
OFFICEMAX INC.: Plaintiffs Appeal Dismissal of Securities Fraud Suit
--------------------------------------------------------------------
Plaintiffs in the consolidated securities class action against
Officemax, Inc. filed a notice of appeal of the United States District
Court for the Northern District of Ohio, Easter Division's ruling
dismissing the suit.
The suit involves claims against the Company and certain of its
officers and directors for violations of the federal securities laws
for allegedly making false and misleading statements that served to
artificially inflate the value of the Company's stock and/or relating
to the Company's shareholder rights plan.
On March 27, 2002, the court granted the Company's motion to dismiss
all claims against it and its officers. The plaintiffs then filed a
motion requesting the court to reconsider its dismissal of these cases,
which motion was denied by the court on July 26, 2002. On August 26,
2002, plaintiffs filed a notice of appeal of the court's July 26, 2002
order and the court's March 27, 2002 order.
PETCO ANIMAL: Discovery Nears End in Overtime Wage Lawsuit in CA Court
----------------------------------------------------------------------
Discovery is nearing completion in the overtime wage class action
pending against Petco Animal Supplies, Inc. in the Superior Court of
California for the County of San Diego.
The suit was originally filed in the Superior Court of California for
the County of Los Angeles on behalf of all current and former employees
who worked as salaried managers or assistant managers in the Company's
stores in the state of California at any time between July 30, 1997 and
the present.
The complaint alleges that the individual plaintiffs and the purported
class members worked hours for which they were entitled to receive, but
did not receive, overtime compensation under California law, and that
they were classified as "exempt" store management employees but were
forced to work more than 50% of their time in non-exempt tasks. The
complaint alleges violations of the California Labor Code and the
California Business and Professions Code.
The Company has answered the complaint, and is contesting the
certification of the action as a class action. If successful, this
litigation could have a material adverse effect on the Company's
financial condition, and any required change in the Company's labor
practices could have a negative impact on its results of operations.
RISK MANAGEMENT: Peanut Growers Consider Breach of Contract Lawsuit
-------------------------------------------------------------------
Peanut farmers in Virginia-Carolina region are considering filing a
class action against the Risk Management Agency for breach of contract,
the Southeast Farm Press reports. The issue at hand relates to an
almost 15-cents-per-pound drop in the guaranteed risk protection price
from January, when producers signed crop insurance contracts, to May
13, 2002, when the new farm bill became law, says Bob Sutter, CEO of
the North Carolina Peanut Growers Association.
Farm growers have already met with an attorney over the initiation of
the suit, while organizers are collating an information list of
producers who would either be interested in receiving information about
the lawsuit or being party to it.
"The concept of the government entering into a contract and then
unilaterally changing the contract is what we're talking about here."
Mr. Sutter said at the 49th annual meeting of the Peanut Growers
Cooperative Marketing Association in Williamston, NC, according to a
Southeast Farm Press report. "The feeling of the producers and the
lawyer is that this is a contract issue."
STUDENT TESTING: Tobacco Random Testing Raises Rights Groups' Ire
-----------------------------------------------------------------
Several schools around the country are administering urine tests to
teenagers to find out whether they have been smoking or using tobacco,
raising opposition from the American Civil Liberties Union (ACLU) and
civil rights groups, who believe such testing violates the students'
rights.
In Lockney, Texas, a federal judge recently struck down the district's
testing of all students for the use of drugs, alcohol and tobacco, the
Associated Press reports. However, the United States Supreme Court
affirmed in June random testing of students involved in extracurricular
activities.
Random testing advocates say smoking in the boys' room is a ticket to
more serious drug use. "Some addicted drug users look back to
cigarettes as the start of it all," Jeff McAlpin, director of marketing
for EDPM, a Birmingham drug-testing company, told AP.
Testing students for drugs have become an accepted practice in schools
in recent years, and the Supreme Court decision has given the campaign
a boost. In Alabama, where the legal age for purchasing and smoking
tobacco products is 19, about a dozen districts, mostly in the
Birmingham area, test for nicotine along with alcohol and several
illegal drugs, including marijuana, AP reports.
Alabama's Hoover school system randomly tested 679 of its 1,500
athletes for drug use this past school year. Fourteen high school
students tested positive, 12 of them for tobacco.
Elsewhere around the country, schools in Blackford County, Ind., test
for tobacco use in athletes, participants in other extracurricular
activities, and students who take driver's education or apply for
parking permits, AP reports.
"Tobacco does and will affect a larger majority of the students than
alcohol or drugs," Gloria Spizey, the county's coordinator for Safe and
Drug-Free Schools told AP. "Tobacco use can be devastating. We felt it
needed to stand with the other drugs."
Shawn Heller, executive director of Students for Sensible Drug Policy
in Washington, told AP tobacco use by teen-agers is a major problem,
but testing for it is just another step in the invasion of students'
privacy. "We're making schools like prisons," he said.
SYMMETRICOM INC.: Court Grants Summary Judgment in Securities Suit
------------------------------------------------------------------
The United States Court of Appeals for the Ninth Circuit ruled in favor
of Symmetricom, Inc. by granting summary judgment in the securities
class action filed on behalf of purchasers of the Company's stock from
April 6,1993 through November 10,1993.
The suit was originally filed in the United States District Court,
Northern District of California, against the Company and certain of its
former officers or directors. The suit alleges that the defendants
violated federal securities laws in connection with various public
statements made during the putative class period.
The court granted summary judgment in the Company's favor in August
2000. The plaintiff then filed a notice of appeal to the appeals
court. On May 30, 2002 summary judgment was granted in the Company's
favor.
However, the Company believes that it is possible that the plaintiffs
may move to reconsider or appeal to the Supreme Court. The Company
believes that this complaint is without merit and will continue to
defend the action vigorously.
TIPPINGPOINT TECHNOLOGIES: Labels "Without Merit" Securities Suit in NY
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Tippingpoint Technologies, Inc. faces a securities class action pending
in the United States District Court for the Southern District of New
York. The suit names as defendants the Company, two of its current and
former officers and directors, as well as the managing underwriters in
the Company's initial public offering (IPO).
The lawsuit, which is part of a consolidated action that includes over
200 similar actions, alleges that the defendants participated in a
scheme to manipulate the initial public offering and subsequent market
price of the Company's common stock, by the underwriters requiring
certain of their customers to purchase stock in the Company's IPO as a
condition to being allocated shares in the initial public offerings of
other companies.
The purported plaintiff class for the lawsuit is comprised of all
persons who purchased the Company's common stock from March 17, 2000
through December 6, 2000. The suit seeks rescission of the purchase
prices paid by purchasers of shares of the Company's common stock.
The Company believes that the lawsuit is without merit.
TOBACCO LITIGATION: Next Chapter Of Legal Battle Slated For Louisiana
---------------------------------------------------------------------
Cigarette makers have learned that their legal woes did not end when
they agreed to a US$206 billion settlement with the states' attorneys
general four year ago. In fact, their next courtroom battle, which was
scheduled to begin Monday, in state civil court in New Orleans, where a
group of smokers are asking the tobacco industry to pay for quit-
smoking programs and for medical monitoring for still-healthy smokers,
will begin instead on October 22, the Associated Press Newswires
reports.
The trial has been delayed until the 22nd while the two sides await
final rulings by the Louisiana Supreme Court on various issues,
including whether the tobacco companies are entitled to put on evidence
that smokers are responsible for their own health problems.
There is no estimate of how much a loss would cost the industry,
although the costs involved in a similar, unsuccessful lawsuit in West
Virginia, which asked only for medical monitoring for a much-smaller
group, was estimated at hundreds of millions of dollars. The trial in
New Orleans is expected to take six months to a year, and it is also
expected that whichever side loses will appeal.
Unlike most lawsuits filed against the industry, the Louisiana case
does not seek individual damages for the smokers. However, it is
geared along a long-running legal claim by smokers, that the industry
manipulated the nicotine level of cigarettes to keep smokers addicted,
an allegation that the cigarette makers deny. Once the trial begins,
jurors will hear evidence from both sides, on this issue.
The 1998 settlement of $206 billion, made with 46 states, is the
biggest payout by the industry so far. However, judgments are piling
up on some fronts:
(1) in Florida, the industry is appealing a $145 billion judgment
in favor of Florida smokers;
(2) in 2001, a jury in Los Angeles, awarded $3 billion in punitive
damages to a terminally ill smoker. The judge cut the amount
to $100 million. Two other sick smokers got awards totaling
$48.2 million. Those cases are being appealed;
(3) in Kansas City, Missouri, a federal judge, in June, awarded
$15 million in punitive damages to a former smoker who lost
both legs to a circulatory disorder he claimed was caused by
smoking.
The industry may have run into a bit of legal good fortune in
California, where a class action accuses tobacco companies of
improperly marketing to teenagers and asks that the cigarette-makers
pay up to $2 billion dollars in damages. However, the judge in the
case has said that such advertising may be protected by the First
Amendment.
UNITED STATES: Forest Service Crew Faces Charges of Sexual Harassment
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The United States Forest Service takes a special pride in its Hotshots
teams, a special crew of forest fighters who are part of an elite
national fire-fighting force. However, the group located in Santa
Barbara County in California, is presently at the center of something
about which the federal agency is not so proud, a charge of sexual
harassment, the Los Angeles Times reports.
The 20 members of the special crew of forest firefighter Hotshots are
barracked in mountains east of Santa Barbara. 19 men and one woman are
based at the Los Prietos Ranger Station in the Los Padres National
Forest. They travel the country wherever needed, fighting fires 12
hours a day for weeks at a time and sleeping on the ground. They go as
far as Colorado and New Mexico, usually in trucks called "crew
buggies."
In the latest in a long series of sexual harassment controversies, the
Forest Service is trying to figure out what to do about numerous photos
of scantily clad women plastered inside the Santa Barbara team's two
crew carriers.
A complaint was officially lodged recently with local supervisors and
reported to the state's highest forest officials. The charge was
backed up with photographic evidence secretly taken, and Forest Service
critics saw it as a final proof of what they have been saying for
years.
The critics say the top management of the Forest Service has turned a
blind eye to sexual harassment for too long. Worse, the critics
charge, the agency has taken a punitive approach to anybody who
complains about it, the Los Angeles Times reports.
Lesa Donnelly has worked for the Forest Service for 14 years. Now,
under the terms of a class action settled last year, she is one of
three monitors tracking the agency's approach to sexual harassment
claims involving female Forest Service employees in California.
"The pictures have given us tangible evidence of what we have been
saying for years. The tone is set by management, and there are sexual
harassment issues all over California," Ms. Donnelly said. "But the
Los Padres National Forest has one of the biggest problems, and
management simply has not done its job."
Ms. Donnelly said that Hotshots groups throughout the country are doing
a wonderful job, but the Los Prietos Hotshots are not professional.
"They have brought shame on the entire Forest Service," she added.
After the complaint was filed against the Los Prietos Hotshots, Jack A.
Blackwell, California's top Forest Service official, announced what
many in the agency's management ranks consider a tough response.
Repeating earlier statements that the Forest Service has a zero-
tolerance policy toward sexual harassment, Mr. Blackwell called the
photos offensive and added that "this behavior is intolerable." Then
Mr. Blackwell ordered one-hour sessions for all 8,300 permanent and
temporary Forest Service personnel at the 18 national forests in
California "to ensure that all employees understand the zero-tolerance
policy." About 33 percent of the group attending the sessions is
female.
According to Ms. Donnelly, nobody on the Hotshots crew at Los Prietos
had objected to the photos, including the one female member. However,
Mr. Blackwell said that was not the issue, and he ordered all agency
managers to report back by the end of the week that no inappropriate
material existed anywhere. Mr. Blackwell defined inappropriate
material as "pictures of nude or scantily clad people, magazines and
books with such pictures or with sexually explicit information, or
inappropriate objects."
None of this flurry of activity has been very persuasive to Ms.
Donnelly, the court's monitor. She speculated that both the words and
actions were aimed at US District Judge Lowell Jensen in Oakland, who
is monitoring the class action settlement approved last year, in order
to make sure that all sides act in good faith.
Ms. Donnelly said, "He (Mr. Blackwell) is not doing anything to work
with us to get the supervisors to really take this seriously. At Los
Prietos (at a training session), one supervisor started off by telling
everybody that she knew they all worked hard and played hard. That
wasn't the tone to take. It was a way of winking and saying I don't
really care."
In Ms. Donnelly's opinion, the Hotshots at Los Prietos should be
disbanded and management officials disciplined or replaced. "They
really think they are the hottest thing around, and they act like they
are a bunch of frat boys. They also have started intimidating people
since this controversy started. I am going to ask Forest Service
officials in Washington that they be removed for the safety of the
people they think are talking about them."
The Forest Service announced that it has hired an outside investigative
contractor to determine exactly what happened at Los Prietos. A
typical punishment for a first offense in such a case could be a letter
of reprimand or a 30-day suspension, one official said.
VARI-L COMPANY: Signs MOU To Settle Consolidated Securities Suit in CO
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Vari-L Company, Inc. (OTC Bulletin Board: VARL) signed a memorandum of
understanding (MOU) to settle the consolidated securities class action
pending against it and certain of its officers and directors in the
United States District Court for the District of Colorado.
The suit, filed on behalf of purchasers of the Company's common stock
between December 17, 1997 and July 6, 2000, inclusive, charges the
Company and certain of its officers, with violations of the federal
securities laws by issuing materially false and misleading financial
statements.
Under the terms of the MOU, which is subject to court approval and
other contingencies, the Company will issue two million shares of
common stock, pay $250,000 in cash and assign rights to potential
proceeds from its liability insurance coverage.
Chuck Bland, president and CEO, said the proposed settlement, coupled
with the Company's previously announced resolution of the SEC
investigation, will enable the Company to return its full attention to
building shareholder value.
"We are pleased with the terms of the proposed settlement, which we
believe are in the best interests of our current and former
shareholders as well as the Company itself," Mr. Bland said.
WEIDER NUTRITION: Faces Suits Over Andostenedione Product in FL, IL
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Weider Nutrition International, Inc. was named as a defendant, along
with other dietary supplement companies, in several class actions
pending in Florida and Illinois state courts.
The suits allege that androstenedione and other purportedly similar
products were sold by defendants in violation of certain statutes and
utilizing false and misleading claims and advertising. The suits
charge the Company with committing fraud because andro does not work
and are being filed on behalf of all people who have bought andro
products from the companies.
The suits further assert that the Companies claimed their andro
products "are effective at promoting muscle growth, are legal and are
proven to be effective," according to an earlier Class Action Reporter
story.
The Company has received indication that similar lawsuits may be filed
in other states. The Company disputes the allegations and will oppose
the lawsuits. Discovery has not yet commenced.
WORLD WRESTLING: Asks NY Court To Dismiss Suit For Securities Fraud
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World Wrestling Entertainment, Inc. asked the United States District
Court for the Southern District of New York to dismiss the securities
class action pending against it and:
(1) Bear, Stearns & Co., Inc.,
(2) Merrill Lynch, Pierce, Fenner & Smith, Incorporated,
(3) Credit Suisse First Boston Corporation,
(4) WIT Capital Corporation,
(5) Donaldson, Lufkin & Jenrette Securities Corporation,
(6) Chase H & Q (Hambrecht & Quist LLC),
(7) Vincent K. McMahon,
(8) Linda E. McMahon and
(9) August J. Liguori
The suit alleges, inter alia:
(i) claims under Section 11 of the Securities Act against all
defendants,
(ii) claims under Section 12(2) of the Securities Act against the
underwriter defendants,
(iii) claims under Section 15 of the Securities Act against the
Company and the individual defendants,
(iv) claims under Section 10(b) of the Exchange Act and Rule
10(b)(5) against all defendants, and
(v) claims under Section 20(a) of the Exchange Act against the
individual defendants
According to the allegations of the suit, the underwriter defendants
allegedly engaged in manipulative practices by, pre-selling allotments
of shares of the Company's stock in return for undisclosed, excessive
commissions from the purchasers and/or entering into after-market tie-
in arrangements which allegedly artificially inflated the Company's
stock price. The plaintiff further alleges that the Company knew or
should have known of such unlawful practices.
The Company denies all allegations against it, believes that it has
meritorious defenses to plaintiffs' claims. The Company understands
that nearly 1,000 suits with similar claims and/or allegations have
been filed over the past couple of years against companies which have
gone public in that general time period. All of these claims have been
consolidated before the same judge in the United States District Court
for the Southern District of New York.
The Company is a part of a motion to dismiss filed on behalf of all
issuers on July 15, 2002. The Company cannot at this time predict the
likely outcome of this litigation.
*Federal Trade Commission Questions Legal Fees For Class Action Suits
---------------------------------------------------------------------
The Federal Trade Commission (FTC), one of the federal government's
watchdog consumer protection agencies, has begun to challenge the size
of legal fees claimed by lawyers in some of the class actions ended by
settlement, according to a report appearing in Barron's.
Ameritech, for example, had agreed to settle a class action that
charged the Company had misled consumers in its promotion of voice-mail
service. The $5 monthly fee was clearly disclosed, but the plaintiffs
claimed that the Company levied additional fees for every call using
voice mail on consumers who did not have unlimited local calling. The
settlement would have offered consumers one month of speed-dialing
free, and then would have billed them for future months unless they
called to cancel. The attorneys sought a $971,000 in a settlement
which was more advantageous to the company. The FTC has challenged the
fee.
In another case, the FTC convinced the judge that private litigators
had relied on work the FTC had done, coming along later just to claim a
large legal fee. The judge reduced the fee from $5.1 million to $2.4
million.
In a third case, however, the judge rejected the FTC's argument and
held that a $1.2 million fee was not excessive for a $5 million
settlement, even though it would not leave enough to compensate the
nominal plaintiffs.
New Securities Fraud Cases
AON CORPORATION: Marc Henzel Commences Securities Fraud Suit in N.D. IL
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, Northern District of Illinois,
Eastern Division on behalf of purchasers of the securities of Aon
Corporation (NYSE: AOC) between May 4, 1999 and August 6, 2002,
inclusive. The action, is pending against the Company, Patrick G. Ryan
and Harvey N. Medvin.
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 May 4, 1999 and August 6, 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 earnings and financial
performance. The complaint alleges that these statements were
materially false and misleading because they failed to disclose and/or
misrepresented the following adverse facts, among others:
(1) that the Company had materially overstated its net income by
$27 million in 1999, by $24 million in 2000 and by $5 million
in the first quarter of 2002;
(2) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(3) that as a result, the value of the Company's net income and
financial results were materially overstated at all relevant
times.
On August 7, 2002, before the market opened for trading, the Company
shocked the market when it announced, among other things, that:
(i) it had failed to meet analysts' expectations on its earnings
for the second quarter by a wide margin;
(ii) because of the slumping financial markets, it had canceled a
spinoff of its insurance underwriting businesses to
shareholders; and
(iii) the SEC had began an investigation of its accounting and was
questioning several items in the Company's accounts, including
the reporting of investment write-downs, the timing of some
costs and a reinsurance recoverable item and the decision not
to consolidate certain special purpose vehicles.
The Company also stated that, if the SEC says it is necessary, it will
have to restate its earnings for the past three years, and reduce its
net income by $27 million in 1999, by $24 million in 2000 and by $5
million in the first quarter of 2002.
Following this report, shares of the Company fell $6.43 per share to
close at $14.77 per share, a one-day decline of 30.3%, on volume of
more than 20 million shares traded, or more than twenty times the
average daily volume.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
AVISTA CORPORATION: Marc Henzel Commences Securities Suit in E.D. WA
--------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
on behalf of all persons who purchased, converted, exchanged or
otherwise acquired the common stock of Avista Corp. (NYSE:AVA) between
November 23, 1999 and August 13, 2002, inclusive.
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, and is pending in the US
District Court for the Eastern District of Washington.
According to the complaint, defendants made misstatements of material
facts and omitted to state material facts in their public statements
and elsewhere, including failing to disclose that:
(1) the Company was engaged in highly risky energy trading
activities with Enron and PG&E involving so-called "Ricochet"
or "megawatt laundering" trades in which the Company acted as
a middleman between Enron and PG&E so that Enron could evade
California's caps on electric power prices and charge
California artificially high prices for electricity,
(2) the Company routinely acted as a middleman between affiliates
such as Enron and PG&E in order to facilitate transactions to
proceed which would have been prohibited under federal rules
if the affiliates had engaged in them without an intermediary;
and
(3) the Company was and is exposed to substantial contingent legal
liabilities as a result of the foregoing, including the
threatened revocation of its license to trade electric power
on the wholesale markets, or market-based rate authority, by
the Federal Energy Regulatory Commission.
The complaint alleges that on August 14, 2002, after the Federal Energy
Regulatory Commission announced that it may take formal enforcement
action on charges that the Company helped manipulate California power
prices during 2000, Company stock tumbled 11.85 percent, and on
September 17, 2002 Company stock traded at as low as $11.10 per share,
down from its class period high of $67.55.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
ASIA GLOBAL: Green & Jigarjian Commences Securities Fraud Suit in CA
--------------------------------------------------------------------
Green & Jigarjian LLP initiated a securities class action in United
States District Court for the Central District of California, Western
Division (Los Angeles) on behalf of investors in the publicly traded
common stock of Asia Global Crossing Ltd. (ASGXF).
The suit alleges that the managers of Asia Global Crossing Ltd. and
Global Crossing Ltd. hid the declining financial conditions of both of
the jointly-managed companies from Asia Global Crossing's investors.
The suit alleges that defendants falsely represented to the investing
public that Global Crossing would be able to provide its subsidiary
Asia Global Crossing with a $400 million dollar line of credit, and
that the value of Asia Global's hard assets - primarily composed of its
cable lines and transmission equipment - had not been significantly
affected by the worldwide glut of fiberoptic capacity.
The action is brought on behalf of a Class of all persons who purchased
Asia Global Crossing, Ltd. stock between October 6, 2001 and January
28, 2002.
For more details, contact Robert S. Green or Robert A. Jigarjian by
Phone: 415-477-6700 by E-mail: gj@classcounsel.com or visit the firm's
Website: http://www.classcounsel.com.
CONSECO INC.: Wechsler Harwood Commences Securities Suit in S.D. IN
-------------------------------------------------------------------
Wechsler Harwood LLP initiated a securities class action in the United
States District Court for the Southern District of Indiana on behalf
all persons who purchased or acquired Conseco, Inc. (NYSE:CNC)
(OTCBB:CNCE) securities between the period of October 30, 2001 and July
15, 2002, inclusive.
The suit charges the Company and certain of its officers and directors
with violations of sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and rule 10b-5 of the Securities and Exchange Commission.
Among other things, plaintiff claims that defendants disseminated a
series of materially false and misleading statements regarding problems
with the Company's liquidity and manufactured-homes financing business.
The disclosure on the last day of the class period that the Company
would miss certain bond payments caused the price of Company stock to
drop 11.5%. The suit charges that defendants were in possession of
materially adverse information about the Company's liquidity problems
and manufactured-homes financing business but failed to fully disclose
the information to investors, causing its stock price to become
artificially inflated, inflicting damages on investors.
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@whesq.com or visit the firm's Website: http://www.whesq.com
CROSS MEDIA: Marc Henzel Commences Securities Fraud Suit in S.D. NY
-------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Southern District of New
York, on behalf of all persons and entities who purchased or otherwise
acquired the common stock of Cross Media Marketing Corporation (ASE:
XMM) between November 5, 2001 through July 11, 2002, inclusive. The
action, is pending against the Company and Ronald Altbach.
The complaint charges the Company and Ronald Altbach, Chief Executive
Officer and Chairman of the Board of Directors, with violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and
Rule 10b-5, by issuing a series of materially false and misleading
statements to the market during the class period.
On November 5, 2001, the start of the class period, the Company
announced that it expected both revenues and earnings for 2002 to
increase in excess of 50 percent. Defendants continued to issue
numerous press releases during the class period which touted the
Company's performance and represented that revenues and earnings were
increasing.
Additionally, defendants misrepresented the impact and nature of the
FTC proceedings brought against the Company and others. The material
misstatements and omissions had the cause and effect of creating in the
market an unrealistically positive assessment of the Company and its
business, finances and operations, thus causing the Company's common
stock to be overvalued and artificially inflated at all relevant times.
The truth regarding the Company was not fully disclosed until July 12,
2002, when defendants finally revealed that the Company would have a
loss for the second quarter of 2002 and that revenues for the year
would be significantly less than previously predicted.
In reactions to the July 12 news release and conference call, the
common stock price of the Company dropped drastically, from $6.54 on
July 10, to $4.88 on July 11, to $2.71 on July 12.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
CUTTER & BUCK: Marc Henzel Commences Securities Fraud Suit in W.D. WA
---------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Western District of
Washington on behalf of purchasers of Cutter & Buck, Inc. (NASDAQ:
CBUKE) publicly traded securities during the period between June 23,
2000 and August 12, 2002.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
Company designs and markets upscale men's and women's sportswear and
outerwear under the Cutter & Buck brand. The Company sells its products
primarily through golf pro shops and resorts, corporate accounts,
specialty retail, and Company-owned retail stores.
The complaint alleges that during the class period, defendants caused
Company shares to trade at artificially inflated levels through the
issuance of false and misleading financial statements.
On August 12, 2002, the Company issued a press release entitled,
"Cutter & Buck Announces Discovery of Accounting Irregularities in
Fiscal Years 2000 and 2001; Reports Resignation of Chief Financial
Officer; Announces Preliminary First Quarter Fiscal Year 2003 Operating
Results." On this news, the stock dropped to below $4 per share on
volume of more than 468,000 shares.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
ELECTRONIC DATA: Marc Henzel Commences Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
on behalf of all persons who purchased, converted, exchanged or
otherwise acquired the common stock of Electronic Data Systems Corp.
(NYSE:EDS) between September 7, 1999 and September 24, 2002, inclusive.
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. The action, is pending in the
US District Court for the Southern District of New York.
According to the complaint, defendants made misstatements of material
facts and omitted to state material facts in their public statements
and elsewhere, including:
(1) failing to disclose that the Company's backbone revenue from
its Information Solutions IT outsourcing business is highly
susceptible to interruption due to terms in its service
contracts that enable its customers to unilaterally suspend
discretionary spending on IT outsourcing;
(2) affirmatively misrepresenting the predictability of its future
cash flows by touting the anticipated revenue that EDS would
supposedly receive from its IT outsourcing service contracts
with customers without disclosing that payments under such
contracts were not guaranteed; and
(3) failing to disclose that EDS faced significant potential
threats to its liquidity if its share price fell because of
put-option and other obligations that ultimately obligated EDS
to in effect buy back a total of 5.44 million shares of EDS
stock at fixed prices averaging over $60.00 per share.
The complaint alleges that after Wall Street began to learn about the
foregoing on September 18, 2002 after executives of EDS warned that a
lack of new revenues would wipe out more than $0.60 per share of its Q3
earnings target of $0.74, the price of EDS stock plummeted to a 52-week
low of $20, down from a class period high of $72.45.
The complaint alleges that after further revelations regarding EDS's
put-option and other liabilities emerged in the wake of the foregoing
disclosures, EDS's share price tumbled even further, reaching an
intraday low of $10.09 on September 24, 2002.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
INTERPUBLIC GROUP: Goodkind Labaton Lodges Securities Suit in S.D. NY
---------------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP initiated a securities class
action in the United States District Court for the Southern District of
New York, on behalf of all open market purchasers of the common stock
of The InterPublic Group of Companies, Inc. during the period of August
14, 1997 and August 13, 2002. The suit names as defendants the Company
and:
(1) Philip H. Geier,
(2) Eugene P. Beard,
(3) John J. Dooner, Jr.,
(4) Sean F. Orr,
(5) Frederick Molz,
(6) Richard P. Sneeder, Jr.,
(7) David I.C. Weatherseed and
(8) Joseph M. Studley
The suit charges defendants with violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated thereunder
and Section 20(a) of the Exchange Act of 1934. The Company is a
holding company for advertising and specialized marketing and
communication services companies.
As alleged in the complaint, during the period between August 14, 1997
and August 13, 2002, the Company repeatedly misrepresented to its
shareholders the financial results of the Company, and published
earnings and income figures that were overstated. On August 5, 2002,
the Company announced it would be rescheduling the release of its
second quarter 2002 earnings to accommodate the Audit Committee of its
Board of Directors.
Then on August 13, 2002, the Company disclosed it had previously
delayed the release of its second quarter 2002 earnings because, among
other things, it had identified $68.5 million of charges, which has not
been properly expensed, and which would cause the Company to restate
its previously issued financial statements going back to 1997 and
perhaps even earlier.
Furthermore, Mr. Dooner acknowledged the Company had flawed internal
controls and he identified an accounting issue that merited further
review. Following news of the delayed release of the Company's second
quarter 2002 earnings figures, the Company's stock price fell $4.69 per
share, or 23.8%. During the class period, individual defendants sold
Company stock for millions of dollars.
For more details, contact Desiree Morris by Mail: 100 Park Avenue, 12th
Floor, New York NY 10017-5563 by Phone: 212-907-0712 or 212-907-0700 by
E-mail: dmorris@glrslaw.com or visit the firm's Website:
http://www.glrslaw.com
MARTHA STEWART: Marc Henzel Launches Securities Suit in S.D. NY
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Southern District of New
York, on behalf of purchasers of the securities of Martha Stewart
Living Omnimedia, Inc. (NYSE: MSO) between January 8, 2002 and July 24,
2002 inclusive. The action is pending against the Company and the
following directors and/or officers of the Company:
(1) Martha Stewart (founder, Chairman and CEO),
(2) Sharon L. Patrick (President, Chief Operating Officer and
director),
(3) Dora Braschi Cardinal (Executive Vice President- Print
Production),
(4) Gael Towey (Executive Vice President and Creative Director),
(5) Gregory R. Blatt (Executive Vice President- Business Affairs,
Secretary and General Counsel),
(6) Lauren Podlach Stanich (Executive Vice President, President,
Publishing),
(7) Margaret Roach (Executive Vice President, Editor-in-Chief),
(8) Suzanne Sobel (Executive Vice President-Advertising Sales),
(9) John L. Doerr (director from 7/99 through early 2002), and
(10) venture capital firm Kleiner Perkins Caufield & Byers
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 January 8, 2002 and July 24, 2002.
Among other things, the complaint alleges that Ms. Stewart sold 100% of
her personally held common stock of ImClone, Inc. based on insider
information obtained from Samuel Waksal, ImClone's CEO and a personal
friend of Ms. Stewart's.
The complaint further alleges that the insider information allowed
Stewart to sell all of her 4,000 shares of ImClone common stock on
December 27, 2001, one day before devastatingly-negative news regarding
ImClone was publicly disclosed for the first time, sending the price of
ImClone common stock plummeting.
On January 18, 2002, the complaint charges, the Securities and Exchange
Commission, Justice Department and U.S. House Energy and Commerce
Committee began investigating whether Mr. Waksal had warned certain of
his relatives and friends of the negative developments prior to the
public disclosure of such developments, allowing them to avoid the
massive losses resulting from the subsequent public disclosure.
According to the complaint, despite knowing of her illicit insider-
sales and the foreseeability that the government's investigations would
uncover her wrongdoing and have a materially adverse impact on MSLO's
business (which depended in large part on Ms. Stewart's reputation and
public image), Ms. Stewart failed to disclose her activities to the
public.
Instead, the complaint alleges, Ms. Stewart, along with the other
defendants, sold a total of $79 million in MSLO common stock, with many
defendants selling nearly all of their MSLO common stock. As alleged
in the complaint, the public first learned of Ms. Stewart's complicity
in the high-profile ImClone scandal on June 6, 2002, with the
publication of a media report, setting-off a precipitous decline in
MSLO's stock price.
The impact of Stewart's involvement in the ImClone scandal on MSLO's
business was, according to the complaint, not known to the public until
July 24, 2002, when the Company announced that the circumstances were
negatively impacting its revenues and earnings, causing MSLO to slash
earnings estimates for the third quarter of 2002 by half and reducing
guidance for the entire-year 2002. On July 24, the price of MSLO common
stock dropped to below $7.50 per share, a 60% drop in one month.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
MERRILL LYNCH: Rabin & Peckel Commences Securities Fraud Suit in NY
-------------------------------------------------------------------
Rabin & Peckel LLP initiated a securities class action in the United
States District Court for the Southern District of New York, on behalf
of all persons or entities who purchased or otherwise acquired
securities of Inktomi Corporation (Nasdaq:INKT) between June 10, 1998
and April 3, 2001, both dates inclusive. The suit names as defendants:
(1) Merrill Lynch & Co., Inc.,
(2) Morgan Stanley Dean Witter & Co., Inc.,
(3) Henry Blodget, and
(4) Mary Meeker
The complaint charges the defendants with issuing misleading analyst
reports about Inktomi. Specifically, the complaint alleges that
defendants:
(i) issued and maintained "Buy" recommendations about Inktomi
without any rational economic basis;
(ii) failed to disclose that they were issuing and maintaining
"Buy" recommendations to obtain investment banking business;
and
(iii) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eric J. Belfi or Sharon Lee by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: 800-497-8076 or
212-682-1818 by Fax: 212-682-1892, by E-mail at email@rabinlaw.com, or
visit the firm's Website: http://www.rabinlaw.com
NTL INC.: Marc Henzel Begins Securities Suit in S.D. New York
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, Southern District of New York on
behalf of purchasers of the securities of NTL, Inc. (NYSE: NLI) between
August 9, 2000 and November 29, 2001, inclusive. The suit is pending
against the Company and:
(1) George S. Blumenthal,
(2) J. Barclay Knapp,
(3) Steven Carter and
(4) John F. Gregg
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 August 9, 2000 and November 29, 2002, thereby
artificially inflating the price of NTL securities.
The complaint alleges that, throughout the Class Period, defendants
issued a series of materially false and misleading statements which
failed to disclose, among other things:
(i) that the Company was unable to effectively integrate its
acquisitions and, as a result was experiencing substantial
difficulties in operating its business;
(ii) that the Company was not fully funded until 2003, and as a
result of its massive debt burden would necessarily have to
restructure its debt;
(iii) that the Company was underreporting churn rates by failing to
report terminations and by continuing to bill customers for
accounts which they had terminated, thereby creating the false
impression that the Company was retaining customers longer and
that migrations were decreasing; and
(iv) that the Company was improperly delaying the writedown of
billions of dollars of impaired assets, thereby artificially
inflating the Company's operating results.
Indeed, after the end of the class period, NTL announced that it would
write off over $11 billion of goodwill and other asset impairments
prior to reporting fourth quarter financial results, which would result
in an astounding loss per share for the fourth quarter 2001 of $46.46
per share.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
SALOMON SMITH: Beatie Osborn Commences Securities Fraud Suit in S.D. NY
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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 Metromedia Fibre Network, Inc. (NASDAQ:
MFNX) common stock during the period between November 25, 1997 and July
25, 2001.
The complaint alleges that Salomon Smith Barney Inc. and Jack Grubman
urged investors to purchase Metromedia stock when it knew or should
have known that such purchases were not a good investment. The
complaint alleges that defendant:
(1) issued "Buy" recommendations about Metromedia without any
rational economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) 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
TEXTRON INC.: Marc Henzel Commences Securities Fraud Suit in RI Court
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, District of Rhode Island, on
behalf of purchasers of the securities of Textron, Inc. (NYSE: TXT)
between October 19, 2000 and September 26, 2001, inclusive. The
action, is pending against the Company and:
(1) Lewis B. Campbell,
(2) John A. Janitz,
(3) Theodore R. French and
(4) Terry D. Stinson
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between October 19, 2000 and September 26, 2001, thereby
artificially inflating the price of Company securities.
The complaint alleges that, throughout the class period, the Company
failed to disclose that the V-22 Osprey, a military aircraft that it
was manufacturing, suffered from structural defects that required that
it be substantially redesigned which would delay full-scale production
of the Osprey for years and cost hundreds of millions of dollars in
excess of the costs allocated to the project for the purpose of
calculating profit and loss.
On September 26, 2001, as alleged in the complaint, the Company issued
a press release over the Business Wire in which it reduced its guidance
for the third and fourth quarters of 2001, and announced that it
expected a third-quarter loss of $0.25 per share, compared to the
consensus forecast of earnings of $0.71 cents per share.
The complaint alleges that the Company attempted to blame its poor
performance on "the slowdown in the U.S. economy" and "the impact of
events on September 11." However, as alleged in the complaint, the
Company was also forced to admit that its reduced earnings were
resulting from "a number of significant adjustments at Bell Helicopter
and other Textron businesses," including a special charge of
approximately $0.52 per share resulting from "stretched out production
schedules and additional costs to make design changes in the V-22 and
H-1 government programs." In the same press release, the Company
announced the abrupt departures of Mr. Janitz as Textron Chief
Operating Officer, and Mr. Stinson as Chief Executive Officer of Bell
Helicopter.
On this news, Textron shares dropped to a year-low price of $33.04 per
share, down 23% from the previous day's closing price of $43, on
relatively heavy trading volume of 4,393,200 shares traded.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
VODAFONE PLC: Alfred Yates Commences Securities Fraud Suit in S.D. NY
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Alfred G. Yates, Jr. initiated a securities class action in the United
States District Court for the Southern District of New York on behalf
of purchasers of the securities of Vodafone Group plc (NYSE: VOD)
between March 7, 2001 and May 28, 2002, inclusive.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between March 7, 2001 and May 28, 2002, thereby artificially
inflating the price of Company securities.
The complaint alleges that, throughout the class period, defendants
issued numerous statements which highlighted the Company's strong
financial performance and growth and reassured investors that the
Company maintained a "solid balance sheet."
As alleged in the complaint, these statements were materially false and
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(1) that the Company was improperly delaying the write-down of
billions of dollars of goodwill and impaired assets, thereby
artificially inflating the Company's reported financial
results. In fact, despite defendants' claims that the Company
had a "solid balance sheet," when the Company finally did
write-off the value of its impaired assets and goodwill, the
Company obliterated all profits for 2001 and 2002;
(2) that the Company had grossly overpaid for the numerous
acquisitions it had made in prior years; and
(3) based on the foregoing, defendants' representation that the
Company would continue to maintain its "record of delivering
outstanding performance" was lacking in a reasonable basis.
On May 28, 2002, the last day of the class period, the Company
announced its financial results for the fiscal year 2002, the period
ending March 31, 2002, which included massive write downs for goodwill
of approximately (pound) 13.47 billion and exceptional items and
operating costs of (pound) 5.4 billion and exceptional non-operating
costs of (pound) 865 million.
At the end of the class period, the price of Company ADRs closed at
$15.19 per ADR, as compared to a class period high of $33.26 per ADR.
For more details, contact Alfred G. Yates by Mail: 519 Allegheny
Building 429 Forbes Avenue, Pittsburgh, Pennsylvania by Phone: 1-800-
391-5164 or 412-391-5164 or by E-mail: yateslaw@aol.com.
VODAFONE PLC: Stull Stull Commences Securities Fraud Suit in S.D. NY
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Stull Stull & Brody initiated a securities class action in the United
States District Court for the Southern District of New York, on behalf
of all purchasers of the securities of Vodafone Group PLC (NYSE:VOD)
between March 7, 2001 and May 28, 2002, inclusive, against the Company
and:
(1) Ian MacLaurin,
(2) Chris Gent,
(3) Julian Horn-Smith and
(4) Ken Hydon
The complaint alleges that defendants violated the federal securities
laws by issuing a series of material misrepresentations to the market
during the class period, thereby artificially inflating the price of
Company securities.
Specifically, the complaint alleges that throughout the class period,
defendants issued numerous statements which highlighted the Company's
strong financial performance and growth and reassured investors that
the Company maintained a "solid balance sheet."
As alleged in the complaint, these statements were materially false and
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(i) that the Company was improperly delaying the write-down of
billions of dollars of goodwill and impaired assets, thereby
artificially inflating the Company's reported financial
results. In fact, despite defendants' claims that the Company
had a "solid balance sheet," when the Company finally did
write-off the value of its impaired assets and goodwill, the
Company obliterated all profits for 2001 and 2002;
(ii) that the Company had grossly overpaid for the numerous
acquisitions it had made in prior years; and
(iii) based on the foregoing, defendants' representation that the
Company would continue to maintain its "record of delivering
outstanding performance" was lacking in a reasonable basis.
On May 28, 2002, the last day of the class period, the Company
announced its financial results for the fiscal year 2002, the period
ending March 31, 2002, which included massive write downs for goodwill
of approximately (pound) 13.47 billion and exceptional items and
operating costs of (pound) 5.4 billion and exceptional non-operating
costs of (pound) 865 million.
At the end of the class period, the price of Vodafone ADRs closed at
$15.19 per ADR, as compared to a class period high of $33.26 per ADR.
For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New
York NY 10017 by Phone: 1-800-337-4983 by Fax: 212-490-2022 or by E-
mail: SSBNY@aol.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.
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