/raid1/www/Hosts/bankrupt/CAR_Public/021112.mbx
C L A S S A C T I O N R E P O R T E R
Tuesday, November 12, 2002, Vol. 4, No. 224
Headlines
AK STEEL: Court Refuses To Dismiss Suit for Securities Act Violations
APW LTD.: WI Securities Fraud Lawsuits Stayed Due To Chapter 11 Filing
BELLSOUTH CORPORATION: Builds Diversity After Filing of Race Bias Suit
CH ROBINSON: Employees Commence Suit Over Failure To Pay Overtime Wages
FLEMING COMPANIES: Faces Suits For Securities Act Violations in E.D. TX
FLORIDA: Miami City Approves $14M Settlement Over Parking Surcharge
H&R BLOCK: Opposes Judge's Plan Requiring It to Pay Borrowers $75M
HMO LITIGATION: Landmark Case Will Decide Critical Healthcare Issues
HOUSEHOLD INTERNATIONAL: Judge Allows Consumer Fraud Lawsuit To Proceed
ILLINOIS: Village OKs Payouts To Hispanic Motorists Over Race Profiling
INSPIRE INSURANCE: Plaintiffs Appeal Dismissal of TX Securities Suit
INTEL CORPORATION: CA Court Overturns Ruling Granting Summary Judgment
INTEL CORPORATION: CA Court Dismisses Consolidated Securities Lawsuit
INTEL CORPORATION: Consumer Suit Alleges Ads, Statements Misleading
JUNIPER NETWORKS: Asks NY Court To Dismiss Consolidated Securities Suit
KEYSPAN CORPORATION: Asks NY Court To Dismiss Securities Fraud Suits
LIGHTPATH TECHNOLOGIES: TX Court Upholds Securities Suit Judgment
MICROSOFT CORPORATION: Moves To Implement Court-Ordered Antitrust Rules
MIRANT CORPORATION: Asks Federal Court To Dismiss Consumer Fraud Suits
MIRANT CORPORATION: MDL Panel Transfers 7 Rate Suits To S.D. CA
OKLAHOMA: Sales Tax Approval To Fund New Jail Slows Suit Over Old Jail
OM GROUP: Shareholder Commences Lawsuit Over Alleged False Statements
SEACHANGE INTERNATIONAL: Inaccuracies Alleged in Securities Suit in MA
TELECOMS COMPANIES: Judge Okays Settlement In Phone Lease Rates Suit
UNITED STATES: Former Airport Screeners Commence Discrimination Suit
UNUMPROVIDENT CORP.: Handling of Insurance Claims Attracts Scrutiny
WAL-MART STORES: Judge Asked To Grant Class Certification To Wage Suit
WAL-MART STORES: Loss Prevention Agents File Overtime Wage Suit in TX
XEROX CORPORATION: CT Court Allows Plaintiff To File Third Amended Suit
XEROX CORPORATION: Appeals IL Court's Ruling on Damages For ERISA Suit
New Securities Fraud Cases
ALLEGHENY ENERGY: Cauley Geller Files Securities Fraud Suit in S.D. NY
BROADWING INC.: Schiffrin & Barroway Lodges Securities Suit in Ohio
H&R BLOCK: Abbey Gardy Initiates Securities Fraud Suit in S.D. New York
NUI CORPORATION: Schiffrin & Barroway Lodges Securities Suit in NJ
RETEK INC.: Cauley Geller Commences Securities Fraud Suit in MN Court
RETEK INC.: Lockridge Grindal Lodges Securities Fraud Suit in MN Court
SYNCOR INTERNATIONAL: Abbey Gardy Commences Securities Suit in C.D. CA
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AK STEEL: Court Refuses To Dismiss Suit for Securities Act Violations
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The United States District Court for the Southern District Court of
Ohio refused to dismiss the class action filed against AK Steel
Holdings Corporation, alleging violations of federal securities laws.
The suit was commenced in April 2000 by Bernard Fidel and others
against the Company and certain of its directors and officers, alleging
material misstatements and omissions in public disclosure about its
business and operations.
In October 2000, the defendants filed a motion to dismiss the action.
On September 27, 2002, the court issued a ruling denying that motion.
The timeframe for discovery has not yet commenced and no trial date has
been set. The defendants intend to contest this matter vigorously.
APW LTD.: WI Securities Fraud Lawsuits Stayed Due To Chapter 11 Filing
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The securities class actions against APW Ltd. have been stayed
following the Company's Chapter 11 Bankruptcy filing.
The Company, as well as one current and one former executive, have been
sued in the suits, which are pending in the United States District
Court for the Eastern District of Wisconsin in connection with alleged
violations of federal securities laws which preceded a drop in the
price of its common stock ending on March 20, 2001.
The complaints for all three suits allege violations of the federal
securities laws and seek certification of a plaintiff class consisting
of all purchasers of the Company's common stock between September 26,
2000 and March 20, 2001, inclusive.
As a result of the Company's Chapter 11 filing, the suits against APW
Ltd., the Bermuda holding company, are stayed automatically by the
Bankruptcy Code and, absent further order of the Bankruptcy Court, no
party may take any action to recover on pre-petition claims against APW
Ltd., the Bermuda holding company.
BELLSOUTH CORPORATION: Builds Diversity After Filing of Race Bias Suit
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BellSouth Corporation is trying to build a racial and cultural
diversity program, an endeavor it undertook amid the company's defense
against a race discrimination lawsuit filed by five African-American
employees, reports the Atlanta Journal-Constitution. The suit could be
broadened to become a class action covering as many as 20,000 BellSouth
workers.
Valencia Adams was appointed BellSouth's chief diversity officer on
November 1. She says that one of the ways she measures diversity in a
company is by determining employee satisfaction. Ms. Adams described
some of the components of the program she is trying to build at
BellSouth. "We provide a forum for employees to talk to senior
management. We share information about the business and we take
questions," she said.
Ms. Adams said that the program supports employee networking groups for
African-Americans, Hispanics, gays and lesbians. Such groups deal with
issues relevant to each of these groups, but they also are open to
everyone. Ms. Adams said further that one of the goals of the program
is to allow the issues to come forth from employees to management, and
to be solutions-driven as well.
CH ROBINSON: Employees Commence Suit Over Failure To Pay Overtime Wages
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Current and former employees of C.H. Robinson Worldwide Inc. recently
filed a lawsuit in federal court, accusing the large transportation
freight company of failing to pay overtime wages, Associated Press
reports.
The plaintiffs allege that nearly all of the Eden Prairie, Minnesota-
based company's sales force have been mischaracterized as exempt in
order to deprive them of overtime wages for working more than 40 hours
a week. Seymour Mansfield, lead counsel for the plaintiffs, said more
than 2,000 current and former employees could become part of the
lawsuit, if they join as part of a class action.
According to the complaint, Robinson, a company with $3 billion in
revenues, has failed to pay its sales force overtime for many years
even though the employees were required to come in early, stay late,
often work on weekends and be on call round the clock outside of
regular work hours.
"Robinson will aggressively defend against the lawsuit," said Laura
Gillund, vice president of human resources.
Last month, 14 women filed another federal lawsuit, accusing Robinson
of gender discrimination, saying the company created a "flagrantly
hostile" work environment and routinely denied women promotions,
equitable salaries and overtime pay.
Plaintiffs' attorney is seeking class-action status for the gender bias
lawsuit, which numbers more than 1,000 former and current employees as
plaintiffs.
FLEMING COMPANIES: Faces Suits For Securities Act Violations in E.D. TX
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Fleming Companies, Inc. faces several securities class actions filed in
the United States District Court for the Eastern District of Texas.
The suits, which also name certain of the Company's officers as
defendants, were filed on behalf of purchasers of the Company's common
stock during the period between May 9, 2001 and September 4, 2002,
inclusive, according to an earlier Class Action Reporter story.
The suits collectively raise various categories of claims:
(1) the Company allegedly issued false and misleading positive
statements, including statements about its price impact retail
supermarkets;
(2) the Company allegedly issued financial results which
improperly included certain income from vendor deductions; and
(3) other alleged accounting irregularities
In addition, one related derivative lawsuit has been filed on behalf of
the Company against certain of its officers and the members of its
Board of Directors in the United States District Court for the Eastern
District of Texas. This complaint alleges a breach of fiduciary duty
in connection with the claims described above.
The litigation could have a material adverse effect on the Company's
financial obligations and operations. The Company intends to
vigorously oppose the suits.
FLORIDA: Miami City Approves $14M Settlement Over Parking Surcharge
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The city of Miami in Florida has taken a first step toward the final
approval in court of a settlement of a class action that would entitle
hundreds, and perhaps thousands, of drivers to refunds for payment of a
20 percent parking surcharge, The Miami Herald reports. That first
step taken was Miami's own preliminary approval of the agreement which
settled the lawsuit brought against it by people who argued the
surcharge was illegal.
The Parking Network, the city agency administering the tax, has written
a letter to all parking lot and garage operators, telling them that
once the legal settlement gets court approval, the public will be given
clear instructions on how to get refunds.
"The settlement agreement permits users (of the city parking
facilities) who have paid the surcharge to an operator from September
1, 1999, through September 30, 2002, to request a refund of surcharge
amounts paid," says the letter. People would need to present receipts
to prove that they had paid the tax.
Notice of the procedure to request a refund will be advertised in The
Miami Herald and posted on the Parking Network's website, after the
court's final approval. The date when this might be expected is not
clear.
The parking surcharge was introduced in 1999 when the city was in
financial trouble. It brought in about $15 million a year.
H&R BLOCK: Opposes Judge's Plan Requiring It to Pay Borrowers $75M
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Lender H&R Block has responded vigorously to an announcement by Texas
Judge J. Manuel Banales in Kleberg County that he will order the
Company to repay $75 million for committing a "clear and serious
violation of duty" by receiving undisclosed fees for loans to clients
in Texas who expected tax refunds, the Associated Press Newswires
reports.
Judge Banales announced his plans in a letter to the attorneys in the
class action, one of several the Company faces over the "refund
anticipation loans."
Judge Banales wrote that the Company should have disclosed the fees
because it had a fiduciary duty to its customers, meaning it is
supposed to look out for their financial best interests. Therefore,
Block committed a "clear and serious violation of duty," Judge Banales
wrote, adding that the conduct was "intentional, willful and
deliberate." The judge's letter did not explain his reasoning.
The Company vigorously denied that it owes a fiduciary duty to tax
customers. "The company is shocked and outraged at this ruling," Block
chairmand and chief executive officer Mark A. Ernst said during a
conference call to explain the planned ruling to investors. "We are
now evaluating all of our options, including an immediate appeal. We
believe that this ruling violates Texas law."
The loans are made for a steep fee to taxpayers who expect a refund.
The Texas lawsuit, like several others around the nation, claims the
Company failed to disclose a "license fee" paid to it by the lending
bank. Plaintiffs have characterized the fee as a kickback to the
Company. The Texas lawsuit covers Texas customers who got the loans
from 1992 to 1996. The Company began disclosing the fees after 1996.
The fees totaled just $3.5 million. However, Judge Banales said the
Company should also forfeit separate fees charged for tax preparation
and electronic filing, which totaled $74.9 in Texas during the class
period covered by the class-action lawsuit.
The Company's general counsel James H. Ingraham said that no court has
ever said Block owes a fiduciary duty to its clients. He said courts
in several other states, including Missouri, have specifically said in
similar cases that the Company does not owe a fiduciary duty to its
clients.
This is a tricky argument for the Company, because the company is also
trying to do more financial planning, besides tax preparation. Mr.
Ernst said he does not think the company's claim that it did not owe a
fiduciary duty to customers will scare customers away from trusting
Block with their money.
HMO LITIGATION: Landmark Case Will Decide Critical Healthcare Issues
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The question of who makes the medical decisions relating to the
patients, a doctor or an insurance company, lies at the heart of a
landmark case before the federal appeals court in Atlanta, the Atlanta
Journal-Constitution reports. The high-stakes legal battle pits
hundreds of thousands of doctors against the nation's largest HMOs,
with millions of consumers/patients in the middle.
In a decision expected any day, the 11th US Circuit Court of Appeals
will decide whether to hear an appeal from the HMOs seeking to throw
out a class action against the HMOs, brought by more than 600,000
doctors nationwide. However, if the court declines to take the case,
the lower court's stands and the managed care companies must stand
trial next spring against a lawsuit involving billions of claims,
billions of dollars and millions of patients.
Legal experts say if the class action case is allowed to proceed, it
may force the HMOs to settle the dispute and change the way health care
is delivered nationwide. The HMOs say if they are forced to pay out
hundreds of millions of dollars in settlements, it would further
increase the escalating cost of health care.
In their lawsuit, the doctors allege that the HMOs have engaged in a
racketeering conspiracy by illegally delaying and denying reimbursement
of health care costs. They also accuse the HMOs, including some with
the largest enrollments in the country, of fraudulently rejecting
expensive but necessary treatments.
"One of our goals is to allow medical necessity decisions to be made by
doctors, rather than computers and claims adjusters," said Atlanta
lawyer Ken Canfield, who represents the Medical Association of Georgia
and four Georgia doctors, who are among the lead plaintiffs in the HMO
litigation.
Mr. Canfield said the doctors want a court-ordered injunction that
halts the claims processing practices used by the HMOs. While the
lawsuit asks for unspecified money damages, it also seeks "to change
the health care delivery system to make it fairer, more rational and
more responsive to the needs of patients," Mr. Canfield said.
The HMOs counter that there already are mechanisms in place that
provide for doctors and the insurers to resolve their payment disputes.
They further contend that it is the doctors who have improperly jacked
up the claims they charge for office visits and medical treatments.
The case has the potential of forcing the HMOs to abandon "cost-
containment principles that have kept health insurance affordable for
many Americans over the past two decades," said the organizations'
appeal, recently filed with the 11th Circuit Court of Appeals. It adds
that the class action "threatens to precipitate a major upheaval in the
nation's health care system."
Emory University law professor David Bederman said the stakes for both
sides are enormous and are likely to turn on the class certification
issue before the Atlanta appeals court. "Your settlement power as a
plaintiff increases greatly once you are a class," Professor Bederman
said. "That is why the HMOs are fighting tooth and nail on this. Once
the defendants have to fight a large, unified class, they know their
liability exposure skyrockets."
Now the doctors have joined together through their medical associations
in Georgia, California, Louisiana, Texas and elsewhere, in a national
class action overseen by a federal judge in Miami.
"We are hearing in deafening unison, complaints that the HMOs
manipulate their computer software; they lie about ever receiving
legitimate claims; and they hold claims for excessive periods of time
to make money on the float," said Archie Lamb of Birmingham, the lead
attorney for the doctors. "And that is just the tip of the iceberg."
David Cook, executive director of the Medical Association of Georgia,
said doctors spend so much time disputing HMO claims that they do not
have enough time for their patients. These disputes involve the HMOs'
denial of payments for medical procedures doctors believe to be
necessary as well as the denial or downgrading of reimbursements after
claims are filed, Mr. Cook said. The whole system, as practiced by the
HMOs, discourages the doctor from ordering for his patient the care he
needs.
The epic lawsuit, pitting one segment of the U.S. economy against the
other, encompasses billions of claims submitted by more than 600,000
doctors since 1990. The processing of these claims has generated
paperwork and electronic data that is "many times the volume of the
entire Library of Congress," the HMOs' court motion said.
Defendants in the case include Aetna, Anthem, CIGNA, Coventry Health
Care, Health Net, Humana, PacifiCare Health Systems, Prudential
Insurance, United Health Group and WellPoint Health Networks Inc.
The HMOs are asking the 11th Circuit to reverse a ruling issued in
September by US District Judge Federico Moreno of Miami, who certified
the class action on behalf of the doctors. In his decision, Judge
Moreno said the plaintiff doctors "have done more than just allege
a common scheme; they have demonstrated facts which support its
existence."
Judge Moreno noted that the HMOs meet together in trade groups and
other industry organizations "specifically to discuss and develop
common plans regarding the processing of provider claims." Judge
Moreno also found that the HMOs uniformly require physicians to use the
type of claim forms and that the HMOs use the same type of computer
software in processing them. All these give the HMOs the ability, in
common, to manipulate billing codes and "delay and wrongfully deny
payments (in common)," Judge Moreno found.
Jeffrey Klein, one of the lead defense lawyers in the case, said the
HMOs are hopeful the 11th Circuit will agree that such a large-scale
case is unmanageable.
Victor Schwartz, general counsel of the American Tort Reform
Association, said that if the class action is allowed to proceed,
pretrial discovery, the legal fact-finding process where defendants
must disclose documents to plaintiffs, could prove "so massive and
costly that defendants may settle cases they could win on the merits."
Atlanta lawyer Michael Terry said "the 11th Circuit is known as one of
the most anti-class-action circuit courts in the country. It is now a
conservative Southern court."
In the meantime, Judge Moreno, a Miami judge appointed by former
President George Bush, recently signed an order denying a request by
the HMOs to halt pretrial discovery while the 11th Circuit Court of
Appeals considers whether to hear the appeal.
HOUSEHOLD INTERNATIONAL: Judge Allows Consumer Fraud Lawsuit To Proceed
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A federal judge in Seattle has cleared the way for a potential class
action to proceed against the subsidiaries of Household International,
one of the country's biggest lenders to people with bad credit, the
Associated Press Newswires reports.
US District Judge Robert Lasnik recently threw out as "unconscionable
and unenforceable" an arbitration clause signed by thousands of
Washington borrowers that was intended to prevent them from challenging
in court the terms of their home loans.
Judge Lasnik's 25-page ruling means that the lawsuit may go forward
against the subsidiaries of suburban Chicago-based Household
International, including Household Finance, Household Realty and
Beneficial Mortgage.
The decision focused on an "arbitration rider" that most borrowers had
to sign to get their loans. The rider was intended to make them use
private arbitration services, rather than going to court, to contest
terms of their loans.
Federal law general provides that the courts must enforce arbitration
agreements. However, Wenatchee lawyer Robert Parlette argued that the
Company's arbitration clause was invalid under state law. The judge
ruled that the arbitration rider's sections prohibiting class action
challenges, requiring confidentiality and imposing costs on borrowers
added up to a one-sided bargain that grossly favored Household.
Judge Lasnik said that if the same arbitration terms had been included
in a contract between Household and a commercial entity, he probably
would have ruled differently. "However, the consumer nature of the
transactions at issue magnifies the impermissible effects," Judge
Lasnik wrote. "The totality of the circumstances has established a
fundamental unfairness which makes the arbitration rider unconscionable
and unenforceable under Washington law."
The ruling comes less than a month after the attorneys general for 44
states, including the state of Washington, announced a settlement with
Household that calls for distribution of $484 million in restitution to
borrowers hurt by predatory lending practices. Those practices include
misrepresenting loan terms and failing to disclose important
information to the consumers.
The settlement does not affect private lawsuits, such as that brought
by attorney Robert Parlette, which allege fraud, negligent
misrepresentation and emotional distress, among other claims, and seek
unspecified monetary damages and attorneys' fees. Similar lawsuits are
pending in at least four other states.
Mr. Parlette called Judge Lasnik's decision a "huge victory for
consumers in general and Household borrowers in particular." Mr.
Parlette will seek to have the lawsuit certified as a class action
later this year or early next year.
Judge Lasnik's ruling was the second time this year that a federal
judge has ruled against the Company over its arbitration rider. Judge
Lasnik cited the ruling made in July by Oakland, California US District
Judge Claudia Wilken in a similar prospective class action.
Craig Streem, Household International spokesman, could not say whether
Household would appeal.
ILLINOIS: Village OKs Payouts To Hispanic Motorists Over Race Profiling
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The village of Mount Prospect has agreed to pay as many as 3,000
Hispanic motorists up to $225 each to settle claims that its Police
Department targeted Hispanic drivers in 1998 and 1999, the Chicago
Tribune reports.
The settlement, which must be approved by a federal judge, could cost
the village hundreds of dollars, depending on how many drivers make
claims. However, it allows Mt. Prospect to close the book on an
uncomfortable chapter in its recent history, when the village faced
four federal lawsuits alleging ethnic profiling in traffic stops.
During this period, the US Department of Justice also opened an
inquiry into the profiling claims, which has not been resolved.
The village's attorney, James Sotos, said recently that the village
maintains that its officers did not pull over drivers based on
ethnicity. He said the settlement, which was submitted last Thursday
to US District Judge James Zagel, was much cheaper than going
to trial on the class action.
In the late 1990s, Mt. Prospect police officers filed three separate
discrimination lawsuits against the village, each of which asserted the
police department engaged in ethnic profiling. Then Mt. Prospect
resident Hiram Romero filed suit in federal court, saying police
stopped and ticketed him without justification in April 1999.
Mr. Romero and two other plaintiffs filed the lawsuit as a class
action, seeking to represent other Hispanic drivers they allege also
were stopped on the basis of their ethnic background.
The two sides are to appear before Judge Zagel on Wednesday to seek
preliminary approval. If all drivers come forward to claim the maximum
amount, the village could pay more than $800,000. However, said
village attorney James Sotos that is highly unlikely.
INSPIRE INSURANCE: Plaintiffs Appeal Dismissal of TX Securities Suit
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Plaintiffs in the securities class action against INSpire Insurance
Solutions, Inc. appealed the United States District Court for the
Northern District of Texas' ruling dismissing the suit without
prejudice.
The suit was filed on behalf of all purchasers of the Company's common
stock during the period between January 28, 1998 and October 14, 1999.
The named defendants include the Company, certain officers and
directors of the Company, and Millers Insurance.
The complaint alleged violations under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder
by making false and misleading statements and failing to disclose
material facts necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
The Company, together with the other defendants, filed a motion to
dismiss, which the court granted in March 2001. As a result, an order
was entered dismissing the case without prejudice and giving the
plaintiffs leave to amend their lawsuit. In June 2001, this suit was
refiled. This matter was dismissed with prejudice and without the
right to re-plead in April 2002. The plaintiffs have appealed the
matter to the United States Court of Appeals for the Fifth Circuit.
INTEL CORPORATION: CA Court Overturns Ruling Granting Summary Judgment
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The United States District Court for the Northern District of
California overturned its ruling granting Intel Corporation's motion
for summary judgment in the securities class action pending against it
in connection with its acquisition of DSP Communications, Inc.
The suit alleges violations of the Securities Exchange Act of 1934 and
SEC Rule 14d-10. The complaint alleged that Intel and CWC (the
Company's wholly owned subsidiary at the time) agreed to pay certain
DSP insiders additional consideration of $15.6 million not offered or
paid to other stockholders.
The alleged purpose of this payment to the insiders was to obtain DSP
insiders' endorsement of the Company's tender offer in violation of the
anti-discrimination provision of Section 14(d)(7) and Rule 14d-10. The
plaintiffs seek unspecified damages for the class, and unspecified
costs and expenses.
In July 2002, the court granted the Company's motion for summary
judgment, but in October 2002, vacated the summary judgment. Limited
discovery is now proceeding. The Company disputes the plaintiff's
claims and intends to defend the lawsuit vigorously.
INTEL CORPORATION: CA Court Dismisses Consolidated Securities Lawsuit
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The United States District Court for the Northern District of
California dismissed without prejudice the consolidated securities
class action pending against Intel Corporation, alleging alleging
violations of the Securities Exchange Act of 1934.
The complaint alleges that purchasers of Company stock between July 19,
2000 and September 29, 2000 were misled by false and misleading
statements by the Company and certain of its officers and directors
concerning the Company's business and financial condition.
On October 22, 2002, the court dismissed the complaint and gave the
plaintiffs thirty days to file a second amended complaint.
In addition, various plaintiffs filed stockholder derivative complaints
in California Superior Court and Delaware Chancery Court against the
Company's directors and certain officers, alleging that they mismanaged
the company and otherwise breached their fiduciary obligations to the
company.
In May 2002, the California Superior Court sustained the Company's
demurrer to the California complaint and granted plaintiffs leave to
file an amended complaint. The Company's demurrer to the amended
complaint is pending before the Court.
All complaints seek unspecified damages. The Company disputes all
plaintiffs' claims in all actions and intends to defend the lawsuits
vigorously.
INTEL CORPORATION: Consumer Suit Alleges Ads, Statements Misleading
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Intel Corporation was named as a defendant in a consumer class action
filed in June 2002 in the Third Judicial Circuit Court, Madison County,
Illinois. The suit also names as defendants:
(1) Hewlett-Packard Co.,
(2) HPDirect, Inc. and
(3) Gateway Inc.
The suit alleges that defendants' advertisements and statements misled
the public by suppressing and concealing the alleged material fact that
systems that use the Intel Pentium 4 processor are less powerful and
slower than systems using the Intel Pentium III processor and a
competitor's processors. The plaintiffs claim that their lawsuit
should be treated as a nationwide class action.
The Company disputes the plaintiffs' claims.
JUNIPER NETWORKS: Asks NY Court To Dismiss Consolidated Securities Suit
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Juniper Networks, Inc. asked the United States District Court for the
Southern District of New York to dismiss a consolidated securities
class action pending against the Company and:
(1) Goldman Sachs Group, Inc.,
(2) Credit Suisse First Boston Corporation,
(3) Fleetboston Robertson Stephens, Inc.,
(4) Royal Bank of Canada (Dain Rauscher Wessels),
(5) SG Cowen Securities Corporation,
(6) UBS Warburg LLC (Warburg Dillon Read LLC),
(7) Chase (Hambrecht & Quist LLC),
(8) J.P. Morgan Chase & Co.,
(9) Lehman Brothers, Inc.,
(10) Salomon Smith Barney, Inc.,
(11) Merrill Lynch, Pierce, Fenner & Smith, Incorporated, and
(12) certain of the Company's officers
The suit, filed on behalf of purchasers of the Company's common stock
in the Company's initial public offering in June 1999 and its secondary
offering in September 1999, alleges that the prospectus pursuant to
which shares of common stock were sold in the Company's initial public
offering and its subsequent secondary offering contained certain false
and misleading statements or omissions regarding the practices of the
underwriters with respect to their allocation of shares of common stock
in these offerings and their receipt of commissions from customers
related to such allocations.
In September 2002, the defendants moved to dismiss the amended
complaint. The plaintiffs allege that the defendants made false and
misleading statements, assert claims for violations of the federal
securities laws and seek unspecified compensatory damages and other
relief.
In August 2002, a consolidated amended shareholder derivative complaint
purportedly filed on behalf of the Company, was filed in the Superior
Court of the State of California, County of Santa Clara. The complaint
alleges that certain of the Company's officers and directors breached
their fiduciary duties to the Company by engaging in alleged wrongful
conduct including conduct complained of in the securities litigation
described above. The complaint also purports to assert claims against
a Juniper investor. The Company is named solely as a nominal defendant
against whom the plaintiff seeks no recovery.
In October 2002, the Company as a nominal defendant and the individual
defendants filed demurrers to the consolidated amended shareholder
derivative complaint.
The Company believes the claim is without merit.
KEYSPAN CORPORATION: Asks NY Court To Dismiss Securities Fraud Suits
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KeySpan Corporation asked the United States District Court for the
Eastern District of New York to dismiss the securities class action
filed against it and certain of its officers and directors.
The lawsuits allege, among other things, violations of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, as amended, in
connection with disclosures relating to or following the acquisition of
the Roy Kay companies by KeySpan Services, Inc., a KeySpan subsidiary.
Finally, in October 2001, a shareholder's derivative action was
commenced in the same court against certain officers and directors of
the Company, alleging, among other things, breaches of fiduciary duty,
violations of the New York Business Corporation Law and violations of
Section 20(a) of the Exchange Act. In addition, a second derivative
action has been commenced asserting similar allegations.
On November 1, 2002, the Company filed a motion to dismiss the class
actions. The Company is unable to determine the outcome of these
proceedings and what effect, if any, such outcome will have on the
Company's financial condition, results of operations or cash flows.
LIGHTPATH TECHNOLOGIES: TX Court Upholds Securities Suit Judgment
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Texas state court refused to reconsider their ruling granting Lightpath
Technologies, Inc.'s motion for summary judgment in the class action
filed in June 2000 by a small group of holders of the Company's Class E
common stock.
The suit alleges that the actions of the Company, and certain named
individuals, leading up to and surrounding the Company's 1995 proxy
statement constitute:
(1) fraud,
(2) negligent misrepresentation,
(3) fraudulent inducement,
(4) breach of fiduciary duty and
(5) civil conspiracy
In general, the suit alleges misrepresentations and omissions in
connection with a request from the Company that its shareholders
consent to a recapitalization, resulting in a 5.5 to 1 reverse stock
split and the issuance of certain Class E Common Stock.
The suit further alleges that, as a result of the defendants' actions,
they were induced to consent to the Company's recapitalization. During
the first quarter of fiscal 2002, the Texas court granted a motion for
summary judgment filed by the Company.
The Company is in the process of seeking to have the two remaining
named individuals dismissed from the action. The Company believes the
allegations underlying the suit have no basis in fact and that this
lawsuit is without merit. The Company has retained counsel and is
vigorously defending against these claims.
MICROSOFT CORPORATION: Moves To Implement Court-Ordered Antitrust Rules
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Moving swiftly to follow a federal judge's order, Microsoft Corporation
announced recently that it had appointed a three-member committee of
its board to make sure that the Company carries out court-ordered
antitrust rules, according to a report by The New York Times.
The compliance committee will be led by James I. Cash, a professor at
the Harvard Business School, who joined the Microsoft board last year.
The other two members of the board committee are Raymond Gillmartin,
chairman and chief executive of Merck and Ann McLaughlin, Korologos, a
former secretary of labor during the Reagan administration.
The computer giant won a significant victory a week ago in its long-
running antitrust case when a federal judge approved most of the Bush
administration's settlement with the Company, a settlement joined in by
nine states that also had sued Microsoft. In thus approving the
government's settlement offer, Judge Colleen Kollar-Kotelly did reject
a call from nine dissenting states for stronger sanctions against the
Company.
Yet, there was something more added to the approval in that Judge
Kollar-Kotelly did alter the government's settlement proposal in
places. One change was to replace the proposed three-member committee
of technical experts, who had been described in the agreement as the
overseers of compliance with the so-called Bush settlement. The judge
insisted that the oversight group be, instead, the outside members of
the Microsoft board.
With that change, Judge Kollar-Kotelly placed the responsibility for
carrying out the consent decree squarely on the shoulders of the board.
She had given Microsoft one month from November 1, when she had issued
her ruling, to establish the committee. The Company took only one
week.
The Company's swift move to comply, some legal experts said, may have
been intended to send a message to the court - and to the nine
dissenting states who are still weighing whether to appeal Judge
Kollar-Kotelly's decision - that "it (Microsoft) wants to do everything
it can to show it is complying promptly and completely to retain her
confidence," as Andrew I. Gavil, a professor at the Howard University
Law School, expressed the prevailing opinion.
Judge Kollar-Kotelly will have continuing jurisdiction over compliance
with the consent decree, whose provisions remain in force for five
years. The decree requires Microsoft to share some technical
information with industry partners and rivals, and to make sure its
contracts and corporate behavior do not stifle competition.
In a recent statement, Mr. Cash, who will head up the compliance
committee, said that his committee "will take its responsibilities very
seriously, and that it is committed to meeting the obligations" in the
consent decree.
Microsoft Chairman Bill Gates said, "Microsoft has moved rapidly to
fulfill our responsibilities here. We recognize that we will be
closely scrutinized by the government and our competitors. We will
devote all the time, energy and resources needed to meet our new
obligations."
MIRANT CORPORATION: Asks Federal Court To Dismiss Consumer Fraud Suits
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Mirant Corporation and other power companies in California have asked
the United States District Court for the Southern District of
California to dismiss six class actions filed against them. The suits
are:
(1) People of the State of California v. Dynegy, et al. - Superior
Court of California - San Francisco County;
(2) Gordon v. Reliant Energy, Inc., et al. - Superior Court of
California - San Diego County;
(3) Hendricks v. Dynegy Power Marketing, et al. - Superior Court
of California - San Diego County;
(4) Sweetwater Authority, et al. v. Dynegy, Inc., et al. Superior
Court of California - San Diego County;
(5) Pier 23 Restaurant v. PG&E Energy, et al. - Superior Court of
California - San Francisco County;
(6) Bustamante, et al. v. Dynegy, Inc., et al. - Superior Court of
California - Los Angeles County
Three of these suits seek class action status, while two of the suits
are brought on behalf of all citizens of California. One lawsuit
alleges that, as a result of the defendants' conduct, customers paid
approximately $4 billion more for electricity than they otherwise
would have and seeks an award of treble damages as well as other
injunctive and equitable relief.
One lawsuit also names certain of Mirant's officers individually as
defendants and alleges that the state had to spend more than $6 billion
purchasing electricity and that if an injunction is not issued, the
state will be required to spend more than $150 million per day
purchasing electricity. The other suits likewise seek treble damages
and equitable relief. One such suit names Mirant Corporation itself as
a defendant.
These six suits were coordinated for purposes of pretrial proceedings
before the Superior Court for San Diego County. In the spring of 2002,
two of the defendants filed cross claims against other market
participants who were not parties to the actions. Some of those
crossclaim defendants then removed the six coordinated cases to the
United States District Court for the Southern District of California.
The plaintiffs have filed motions seeking to have the actions remanded
to the California state court, and the defendants have filed motions
to have the claims dismissed.
MIRANT CORPORATION: MDL Panel Transfers 7 Rate Suits To S.D. CA
----------------------------------------------------------------
The Federal Judicial Panel on Multi-District Litigation ordered seven
rate payer lawsuits pending against Mirant Corporation, several of its
subsidiaries, and certain energy marketers in California to be
transferred to the United States District Court for the Southern
District of California.
Seven suits were filed between April 23, 2002 and May 24, 2002 alleging
that certain owners of electric generation facilities in California, as
well as certain energy marketers, engaged in various unlawful and
fraudulent business acts that served to manipulate wholesale markets
and inflate wholesale electricity prices in California. The suits are
related to events in the California wholesale electricity market
occurring over the last three years.
Each of the complaints alleges violation of California's Unfair
Competition Act. One of the suits also alleges violation of
California's anti-trust statute. The suits are as follows:
(1) T&E Pastorino Nursery, et al. v. Duke Energy Trading and
Marketing, LLC, et al., - Superior Court of California - San
Mateo County,
(2) RDJ Farms, Inc., et al. v. Allegheny Energy Supply Company,
LLC, et al., - Superior Court of California - San Joaquin
County,
(3) Century Theatres, Inc., et al. v. Allegheny Energy Supply
Company, LLC, et al. - Superior Court of California - San
Francisco County,
(4) El Super Burrito, Inc., et al., v. Allegheny Energy Supply
Company, LLC, et al. - Superior Court of California - San
Mateo County,
(5) Leo's Day and Night Pharmacy, et al., v. Duke Energy Trading
and Marketing, LLC, et al. - Superior Court of California -
San Francisco County,
(6) J&M Karsant Family Limited Partnership, et. Al v. Duke Energy
Trading and Marketing, LLC, et al. - Superior Court of
California - Alameda County,
(7) Bronco Don Holdings, LLP, et al. v. Duke Energy Trading and
Marketing, LLC, et al., - Superior Court of California - San
Francisco County
Each of the seven cases has been removed by the defendants to United
States District Courts in California. The RDJ Farms suit was removed
to the United States District Court for the Eastern District of
California, and the other six cases were removed to the United States
District Court for the Northern District of California.
On October 11, 2002, the Federal Judicial Panel on Multidistrict
litigation ordered the seven rate payer suits filed between April 23,
2002 and May 24, 2002 to be transferred to the United States District
Court for the Southern District of California and consolidated for
purposes of pretrial proceedings with the six rate payer suits already
pending before that court.
OKLAHOMA: Sales Tax Approval To Fund New Jail Slows Suit Over Old Jail
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Voters' approval of the sales tax to fund construction of a new
Garfield County, Oklahoma, jail appears to have slowed the class action
against the present problem-ridden old jail, the Associated Press
Newswires reports.
Attorney Stephen Jones, who represents the inmates in the class action,
said he did not think the plaintiffs or Attorney General Drew
Edmondson, who filed a lawsuit to close the jail November 27, intend to
push for the 68-year-old jail's closure now.
Instead, now that funding for a new jail is assured, the situation has
changed. Charles Price, spokesman for the attorney general's office,
said that the concerned parties are going to get together to create a
new plan of action and discuss how state standards can be maintained in
the old jail while the new one is built.
The class action, filed by the inmates March 25, alleges conditions in
the jail violate inmates' constitutional rights under the Fifth, Eighth
and Fourteenth Amendments, which protect against cruel and unusual
punishment and guarantee due process and equal protection under the
law.
A bench trial is set for April 2003, but Stephen Jones said it may not
happen. Mr. Jones said he intends to leave the lawsuit on file in US
District Court in Oklahoma City, but will not activate it, unless there
are further problems with the jail.
Meanwhile, Sheriff William Winchester is trying to implement some of
the changes officials from the US Department of Justice required the
county to make during their two visits to the old jail.
OM GROUP: Shareholder Commences Lawsuit Over Alleged False Statements
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A shareholder recently filed a lawsuit against OM Group, a special
chemicals maker whose shares plummeted in value after it admitted its
sales projections were unrealistic, according to a report by Associated
Press Newswires.
Henry Rischitelli asked the US District Court to make the lawsuit a
class action on behalf of anyone who owned shares of the Cleveland
company from April 25 this year through October 30 this year. The
lawsuit, which asked for unspecified damages, said the company "failed
to disclose adverse facts," and tried to deceive buyers of OM stock.
OM's first-quarter results, released April 25, said the company saw
"improving conditions in most our businesses, with nickel and cobalt
metal prices higher than in the first quarter." According to the
lawsuit, the alleged deception was motivated by Chairman James P.
Mooney's "huge margin loss secured by his OMG stock." Ninety percent
of his personal wealth was invested in OM stock.
Greg Griffith, the company's director of investor relations, said OM
"stands behind it statements to its shareholders and the investing
public." Mr. Griffith said company attorneys would offer a more
detailed response to the lawsuit at "the appropriate time and the
appropriate venue."
OM's stock value dropped 71 percent on October 29, the day after it
announced that it had been unrealistic about its market expectations.
OM said it would take a write-off of cobalt inventory. Mr. Rischitelli
said he had purchased 3,000 OM shares this year for prices ranging from
$54.73 to $30.67. He sold 3,000 shares for $10.06 per share, for a
loss of almost $100,000.
SEACHANGE INTERNATIONAL: Inaccuracies Alleged in Securities Suit in MA
----------------------------------------------------------------------
SeaChange International, Inc. (Nasdaq: SEAC) faces a securities class
action filed in the United States District Court for the District of
Massachusetts against it, its directors and certain of its officers.
The complaint in that case alleges that the Registration Statement and
Prospectus issued by the Company in connection with its secondary stock
offering completed in January 2002 contained statements that were
materially inaccurate.
The Company believes that the allegations are without merit.
TELECOMS COMPANIES: Judge Okays Settlement In Phone Lease Rates Suit
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A Madison County judge recently gave final approval to a $350 million
settlement in a class action against AT&T and Lucent, the Belleville
News-Democrat (IL) reports. The attorneys for the class will get $80
million of the settlement for legal fees and about $4 million for
expenses.
The lawsuit involves customers being billed to lease telephones at what
the plaintiff attorney claimed was an exorbitant rate. The plaintiff
attorneys, led by Stephen Tillery of Belleville, claimed that most
customers did not even know they were paying to lease the phones.
Circuit Judge Andy Matoesian approved the settlement after hearing
arguments from a few objectors, all of them attorneys. Five lawyers,
whom Mr. Tillery described as "professional objectors" to class action
settlements argued against the settlement during a hearing before the
judge. Lawyers objected to the settlement, because:
(1) It does not provide enough compensation for customers.
Customers can get $15, $40 or $80, based in part on how long
they paid to lease their phones;
(2) The fee for the plaintiff attorneys is too high;
(3) Part of the settlement -- $50 million worth of 30-minute
calling cards -- is being donated to charities;
(4) a notice of the lawsuit settlement was not published in
Spanish;
(5) the notice did not fully explain that participating in the
lawsuit would bar plaintiffs from trying to get additional
compensation from the defendants for leasing phones;
(6) Consumers should be compensated automatically, using the
defendants' records, instead of having to make claims.
The objectors included John L. Pentz of Sudbury, Massachusetts, who
operates a group called Class Action Fairness from his home. Mr. Pentz
objected on behalf of the estate of his late grandmother, who, Mr.
Pentz said, was charged to lease a phone. Mr. Pentz said he would not
be surprised if the fee awarded to plaintiff attorneys exceeds the
claims paid to class members.
Mr.Tillery said Mr. Pentz "makes a living objecting to settlements and
asking for money. I will never pay him ever." Objectors like Mr.
Pentz try to stall settlements until attorneys agree to pay him, said
Mr. Tillery.
Mr. Tillery addressed, during the hearing, the objections put forth by
Mr. Pentz. Mr. Tillery argued that the settlement is adequate for
customers because even though the class consists of about 29 million
people, most of them dropped their phone leases in the early stages.
He said the average loss was $6.49 for people who are eligible for $15
settlements.
Anyone dissatisfied with the settlement can opt out of the lawsuit and
pursue a claim on his own, said Mr. Tillery. Additionally, said Mr.
Tillery, experts predicted the defendants might not be able to pay a
much larger judgment, and thus the case could have gotten mired in
bankruptcy court.
Forty-four lawyers from four law firms worked on the plaintiffs' case,
many of them on a full-time basis, said Mr. Tillery. The case, filed
in 1996, generated 956 boxes of documents that were turned over to two
companies as evidence. Rulings in the case were appealed numerous
times, and more than 250 depositions were taken in more than 30 states.
The biggest expense for the plaintiff attorneys was $2.1 million in
fees for expert witnesses, including a former director of the Federal
Communications Commission, Mr. Tillery said.
Mr. Tillery said he negotiated the $50 million in calling cards to
charities because he expects there will be some class members who do
not submit claims - an estimated 11 percent of the eligible consumers
have died. "There is no reason a donation charities cannot serve as a
benefit to class members," said Mr. Tillery. The deadline to make a
claim is in January, said Mr. Tillery, and there has been no
determination of how many claims have been submitted so far.
Mr. Tillery said that an expert on notifying consumers in class action
classes determined that only one percent of the class members speak
Spanish. As for whether members of the class knew they were giving up
the right to seek additional money, Mr. Tillery said the notice clearly
states that if consumers join in the class, they are participating in a
settlement; the average person, he said, understands that a settlement
means additional claims cannot be pursued.
It is not possible to automatically reimburse every consumer because,
in most cases, the records are not available, Mr. Tillery said. AT&T
sold the phone-leasing business to Lucent, which sold it to another
company.
Judge Matoesian, in approving the settlement, said that there has been
a "phenomenal" amount of work put into the case, and the attorney fee
is "reasonable in this type of complex litigation."
UNITED STATES: Former Airport Screeners Commence Discrimination Suit
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A group of former Portland International Airport screeners have filed a
federal lawsuit claiming they were not given a fair chance at testing
for the new, federalized screening jobs, the Associated Press Newswires
reports. Congress last year required that all airport screeners become
federalized employees.
The lawsuit, which asks the court to certify it as a class action, was
filed recently in US District Court in Portland, and claims,
additionally, that some former screeners were discriminated against on
the basis of their gender, race and age. Screeners who were women and
minorities were failed by testers at a higher rate than white male
screeners the lawsuit alleges.
The suit further alleges that transportation officials also
discriminated against former screeners who were older than 45. The
lawsuit asks the court to require immediate retesting of all former
screeners for the new jobs and the hiring of all who pass the required
test.
Former screeners have made similar complaints in Los Angeles, Salt Lake
City, Cincinnati, Orlando, Florida and other cities, said Don S.
Willner, the Portland attorney who filed the case.
The six named plaintiffs worked for Huntleigh USA, which employed 337
Portland International Airport screeners before November 2001, when
Congress required that all screeners be federal employees. It was one
of several measures designed to improve airport security after
terrorists with box cutters passed through security, hijacked airplanes
and crashed them into the World Trade Center and the Pentagon during
the September 11, 2001 terror attacks.
Former transportation officials promised to give preference to
experienced Huntleigh employees who passed the test, but hired new
screeners before testing the former ones, says the lawsuit. When
Huntleigh screeners were tested, the suit says, most of the jobs were
filled.
UNUMPROVIDENT CORP.: Handling of Insurance Claims Attracts Scrutiny
-------------------------------------------------------------------
It is a big dilemma for insurance investors: Do you buy the stock of
an insurer because it saves money by being tough on claims? Or, should
you sell because those claims practices draw the plaintiffs lawyers
like flies to the sugar bowl? That claims conundrum is hanging over
the stock of UnumProvident Corp., the nation's largest disability-
income insurer, The Wall Street Journal reports.
The manner in which the company, headquartered in Chattanooga,
Tennessee, handles claims is being scrutinized by Georgia insurance
regulators. Some former UnumProvident employees, in sworn statements
now part of policyholder and wrongful-dismissal lawsuits pending
against the company, allege that the Company is overzealous in denying
claims. The Company maintains that it pays all legitimate claims, and
that the critics have distorted its approach, which is geared toward
getting employees back to work.
The critics include a doctor who used to count among the 100 physicians
that the company boasts, in marketing materials, are in-house to
evaluate claims. In a lawsuit, filed this summer in a Tennessee state
court, alleging wrongful dismissal, Dr. Patrick Fergal McSharry
contends that one duty of the in-house doctors is to rubber-stamp claim
denials. Many decisions on claims are made by low-level staffers, with
doctors sometimes feeling pressure to validate these decisions,
regardless of the medical evidence, the lawsuit contends.
In an interview, Dr. McSharry, who worked at the Company from November
2000, until January of this year, maintains that the front-line claims
consultants know they can advance their careers by showing a "knack for
denying claims."
The Georgia Insurance Department has been conducting an investigation
of UnumProvident for nearly two years, with a report expected by year
end. Insurance Commissioner John Oxendine says, "There are areas of
concern, and they deal with claims handling." He notes that while the
number of complaints the department received about UnumProvident was
not high, the company's response to the department's queries "gave my
staff the feeling that something might not be the way it should be."
Mr. Oxendine then said, "The preliminary results (of the investigation)
indicate that my staff was accurate with its gut feeling."
More potentially bad news arrived recently, when a lawsuit seeking
class-action status was filed in federal court in New York, accusing
Unum of improper claims practices. "The unfolding evidence of
UnumProvident's scheme is staggering," the lawsuit contends. An Unum
spokesman says the company "questions the potential class status, in
that these claims are handled individually," adding that it
(UnumProvident) believes "wholeheartedly in the integrity of our
claims-management process."
UnumProvident investors, while wary of expensive litigation and
regulatory action, appear to take comfort in the company's approach to
claims. For example, Edgar Wachenheim III, chairman of Greenhaven
Associates Inc., a big holder of Unum shares, said, "If Unum did not
have lawsuits against it, I don't think the people handling claims
would be doing their jobs."
However, if Georgia's Insurance Department comes out with a negative
report, it could spark probes in other states, says Kevin Hennosy, a
Kansas City, Missouri, consumer advocate. If the scrutiny compels Unum
to use a more lenient claims regimen, says The Wall Street Journal, its
bottom line could be hit. Insurance companies set up reserves to cover
claims to be paid in the future, in part by using their experience as a
guide. So, such changes in regimen could prompt a charge against
earnings to boost their reserves in order to cover an anticipated
increase in successful claims.
A Company spokesman says that of the 400,000 claims it received last
year, fewer than two percent of claimants were determined not to be
disabled. UnumProvident, which paid $3.6 billion in claims last year,
also points to statistics compiled by regulators showing fewer
complaints against it, in relation to its size, than other disability-
income insurers.
In the lawsuit filed last Monday, attorneys for the four named
plaintiffs allege that UnumProvident established targets "for cost-
savings to be attained through the denial of claims," and gave high-
dollar claims "greater consideration for termination." The lawsuit
also states that claims specialists' "ability to terminate claims"
impacted their likelihood of being promoted. Dr. McSharry's lawsuit
claims that "medical advisors were encouraged to use language in their
reports that could be used to support denials."
Ralph Mohney, UnumProvident's claims director, says no financial goals
are set by claims units, although they do submit estimates of payments.
The company says the estimates are not shared with claims personnel and
that high-dollar claims receive no greater scrutiny.
Mr. Mohney also says that no bonuses have been paid to claims handlers
based on claims denials, although claims handlers could be rewarded for
skill and "success in getting someone back to work." He rejects
suggestions that the in-house physicians are coached to word reports in
such a way as to support denials.
WAL-MART STORES: Judge Asked To Grant Class Certification To Wage Suit
----------------------------------------------------------------------
Chief Circuit Judge Leopold Borrello, in Saginaw County, Michigan, is
hearing arguments on whether a lawsuit accusing Wal-Mart Stores, Inc.
of a number of wrongful practices in relation to its employees, should
be granted class action status, a move that would expand the lawsuit to
include all residents of Michigan who have worked for the retailer
since 1995, according to a report by Associated Press Newswires.
The lawsuit accuses the Company of routinely giving its employees work
it knows they cannot complete within their scheduled shifts, and then
pressuring them to stay to complete their work through intimidation and
threats of discharge or demotion. The lawsuit was filed on behalf of
seven former Wal-Mart employees from around the state, each seeking at
least $75,000 in damages.
Attorneys already have identified about 100 current and former Michigan
employees who have experienced wage abuse, said Saginaw attorney Joseph
Scorsone, who represents the plaintiff employees. If Judge Borrello
grants class action status to the lawsuit, up to 95,000 people who have
worked for Wal-Mart in Michigan, since September 1995, could be
included as plaintiffs, said Mr. Scorsone.
A certification hearing before Judge Borrello began last Tuesday.
Judge Borrello plans to issue his decision a little more than two weeks
after that. Similar suits are pending in 29 states, as labor lawyers
take on the world's largest retailer and union leaders are trying to
organize its work force.
"Wal-Mart's scheme is getting more work from employees than they
actually paid for," said attorney G. Stephan Long, who is working with
Scorsone. "It is a widespread abuse that exists because of policies
and procedures throughout the United States."
A lawyer representing Wal-Mart said during his opening statement that
it is against company policy for any manager to require or tolerate
work done while employees are clocked out for rest or lunch breaks, as
Mr. Scorsone alleges.
It was conceded, however, that, in isolated cases, the company did not
pay employees who inadvertently failed to follow the company's
procedures, by Birmingham attorney Eric J. Pelton. On the other hand,
in many instances, workers who missed breaks received them later in
their shifts or ended their shifts earlier, Mr. Pelton said.
WAL-MART STORES: Loss Prevention Agents File Overtime Wage Suit in TX
---------------------------------------------------------------------
According to the United Food and Commercial Workers International
Union, Wal-Mart Loss Prevention agents have a clear mission - to
prevent losses, but a lawsuit filed recently in federal court for the
Eastern District Court of Texas charges the Company with stealing time
and money from the very workers assigned to root out theft.
Loss Prevention associates in Tyler, TX, are fighting back with a class
action claiming the retail giant has a "pattern and practice" of
failing to pay Loss Prevention associates for all of the time the
Company requires them to work. Federal law requires employers to pay
workers time and a half for all hours above 40 worked in a week.
The plaintiffs, Michael Mitchell and Robert Weaver, claim Wal-Mart
fails to maintain records of all hours worked by Loss Prevention
associates, much less compensate them for the extra hours. The ironic
twist to their case is that, among their duties, Loss Prevention
workers are charged with enforcing the company's policy prohibiting
off-the-clock work.
Some of the unpaid overtime worked by the two plaintiffs was spent
installing surveillance equipment at management's direction to monitor
the employees' union activities. These workers are also responsible
for preventing theft and overall store security.
If the suit is successful, the Company could be forced to pay workers
back wages for all unpaid overtime for the past three years, and the
court could double that award as liquidated damages.
For more details, contact lawyer Michael Ace by Phone: 903-593-3001
XEROX CORPORATION: CT Court Allows Plaintiff To File Third Amended Suit
-----------------------------------------------------------------------
The United States District Court for the District of Connecticut
endorsed plaintiffs motion to file a third consolidated amended
securities class action against Xerox Corporation, rendering the
Company's motion to dismiss the second consolidated amended suit, as
moot.
The suit was initially filed on behalf of purchasers of the Company's
common stock and/or bonds from February 17,1998 through June 28,2002
and names as defendant the Company and:
(1) KPMG LLP,
(2) Paul A. Allaire,
(3) G. Richard Thoman,
(4) Anne M. Mulcahy,
(5) Barry D. Romeril,
(6) Gregory Tayler and
(7) Philip Fishbach
The suit sets forth two claims:
(i) one alleging that each of the Company, KPMG, and the
individual defendants violated Section 10(b) of the 1934 Act
and SEC Rule 10b-5 thereunder; and
(ii) one alleging that the individual defendants are also allegedly
liable as "controlling persons" of the Company pursuant to
Section 20(a) of the 1934 Act
Plaintiffs claim that the defendants participated in a fraudulent
scheme that operated as a fraud and deceit on purchasers of the
Company's common stock and bonds by disseminating materially false and
misleading statements and/or concealing material adverse facts relating
to various of the Company's accounting and reporting practices and
financial condition.
The plaintiffs further allege that this scheme deceived the investing
public regarding the true state of the Company's financial condition
and caused the plaintiffs and other members of the alleged class to
purchase the Company's common stock and bonds at artificially inflated
prices, and prompted a SEC investigation that led to the April 11, 2002
settlement which, among other things, required the Company to pay a $10
penalty and restate its financials for the years 1997 - 2000 (including
restatement of financials previously corrected in an earlier
restatement which plaintiffs contend was improper).
The individual defendants and the Company deny any wrongdoing. Based
on the stage of the litigation, it is not possible to estimate the
amount of loss or range of possible loss that might result from an
adverse judgment or a settlement of this matter, the Company stated in
a disclosure to the Securities and Exchange Commission (SEC).
XEROX CORPORATION: Appeals IL Court's Ruling on Damages For ERISA Suit
----------------------------------------------------------------------
Xerox Corporation's Retirement Income Guarantee Plan (RIGP) appealed
the United States District Court for the Southern District of Illinois'
ruling on liability and damages in a class action filed on behalf of
over 25,000 persons who received lump sum distributions from RIGP after
January 1,1990.
The RIGP represents the primary US pension plan for salaried employees.
The suit alleges violations of the ERISA, claiming that the lump sum
distributions were improperly calculated.
On July 3, 2001 the court granted the plaintiffs' motion for summary
judgment, finding the lump sum calculations violated ERISA. Although
the damages sought were not specified in the complaint, the plaintiffs
submitted papers in December 2001 claiming $284 million in damages.
On September 30, 2002, the court entered a final judgment on damages,
stating it would adopt plaintiffs' methodology for calculating such
damages. RIGP denies any wrongdoing and filed its notice of appeal
with respect to the court's rulings.
The Company believes, based on advice of legal counsel it is probable
that the judgment will be overturned, but cannot estimate the amount of
liability it will incur in the litigation.
New Securities Fraud Cases
ALLEGHENY ENERGY: Cauley Geller Files Securities Fraud Suit in S.D. NY
----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Southern District of New
York, on behalf of purchasers of the common stock of Allegheny Energy,
Inc. (NYSE: AYE) during the period between April 23, 2001 and October
8, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, the complaint alleges
that, on March 16, 2001, Allegheny Energy's subsidiary, Allegheny
Energy Supply Company, LLC (Allegheny Energy Supply), announced that it
had completed its acquisition of Global Energy Markets (G.E.M.) from
Merrill Lynch & Co., Inc. (Merrill Lynch).
The complaint further alleges that the Company made false and
misleading statements during the class period, in that it failed to
state that its revenues (and revenue guidance) materially depended upon
illusory, revenue creating, "wash transactions" with Enron, and other
deceptive energy trading practices. At no point did Allegheny Energy
disclose to the investing public that:
(1) the surge in its revenues was attributable to G.E.M.'s
practice of engaging in deceptive and illusory trades; and
(2) that after the Enron story broke, Allegheny Energy could no
longer engage in these deceptive trading practices as
successfully, and that revenues would drop as a result.
On September 25, 2002, the Company sued Merrill Lynch for fraud and
breach of contract related to the G.E.M. acquisition. In that lawsuit,
Allegheny Energy alleged that it overpaid for G.E.M. because the unit's
financial reports had been inflated by sham trades involving Enron.
The Company admitted that G.E.M. engaged in a significant amount of
wash or round trip energy trades with Enron, and perhaps others. The
Company further admitted that the effect of those trades was to
artificially inflate revenues, trading volumes and growth rate.
The Company's September 25, 2002 admissions set a chain of events in
motion, which would result in the Company's stock's tumble from a high
of $12.85 on September 25, 2002, to $3.80 on October 8, 2002, a drop of
$9.05, or 70%.
On October 1, 2002, Moody's downgraded Allegheny Energy's credit to
junk status. In a press release, the Company reassured investors that
this would not trigger any default or prepayment of the firm's debt. A
week later, on October 8, 2002, the Company announced that it was in
technical default under its credit agreements.
For more details, contact Jackie Addison, Heather Gann or Sue Null by
Phone: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
888-551-9944 by E-mail: info@cauleygeller.com or visit the firm's
Website: http://www.cauleygeller.com
BROADWING INC.: Schiffrin & Barroway Lodges Securities Suit in Ohio
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Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of Ohio on
behalf of all purchasers of the common stock of Broadwing, Inc. (NYSE:
BRW) between January 17, 2001, and May 20, 2002, inclusive.
The complaint charges the Company and certain of its past and present
officers and directors with issuing false and misleading statements
during the class period that failed to disclose that the Company:
(1) was severely undercapitalized with insufficient cash from
operations to service its massive debt;
(2) inflated revenue through the use of undisclosed IRU sales and
purported swap transactions; and
(3) failed to write-down goodwill recorded in connection with the
acquisition of Broadwing Communications.
The full truth was not disclosed until Broadwing filed its Form 10-Q,
for the quarter ended March 31, 2002 and analysts, on May 20, 2002,
expressed their concern about Broadwing's financial results. As a
result on May 21, 2002, Broadwing's share price plummeted 30%.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
H&R BLOCK: Abbey Gardy Initiates Securities Fraud Suit in S.D. New York
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Abbey Gardy, LLP commenced a securities class action in the United
States District Court for the Southern District of New York on behalf
of all persons who purchased securities of H&R Block, Inc. (NYSE:HRB)
between November 8, 1997 and November 1, 2002, inclusive, against the
Company and:
(1) Mark A. Ernst,
(2) Frank J. Cotroneo,
(3) Frank L. Salizzoni,
(4) Matthew A. Engel,
(5) Cheryl L. Givens,
(6) Ozzie Wenich, and
(7) Partick D. Petrie
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 during the class period thereby artificially inflating the price
of Company securities.
For more details, contact Nancy Kaboolian by Phone: 800-889-3701 or by
E-mail: nkaboolian@abbeygardy.com
NUI CORPORATION: Schiffrin & Barroway Lodges Securities Suit in NJ
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Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the District of New Jersey on behalf
of all purchasers of the common stock of NUI Corporation (NYSE: NUI)
between November 8, 2001 and October 17, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, the complaint alleges
that the Company issued materially false and misleading statements
regarding the Company's businesses, and current and future financial
prospects.
As alleged in the complaint, these statements were materially false and
misleading because they failed to disclose, among other things, that:
(1) NUI was having and would continue to have significant
increases in fixed costs for the build up of its
telecommunications business due to the ongoing expansion of
the business, including the offering of new products during FY
2002;
(2) NUI was experiencing a tremendous increase in the costs of
self-insuring NUI's medical and health benefit programs due to
the large increase in the number and dollar value of claims
being filed and NUI failed to add the proper amounts to NUI's
reserves for these claims in order to increase NUI's reported
quarterly earnings;
(3) due to the worsening of the economy throughout the Class
Period, NUI was experiencing a sharp increase in bad debts as
customers could not afford to pay their bills, and defendants
failed to timely and properly increase the reserve for bad
debts carried on NUI's financial statements; and
(4) NUI was experiencing a steep decline in the value of its
pension plan assets, which would require NUI to accrue
significant pension expenses in FY 2003, instead of recording
a pension credit as it had done in the previous eight years.
On October 18, 2002, defendants shocked the market when they announced
that NUI's earnings for FY 2002 would be far below their prior
guidance, in part because of increased fixed cost expenses for its
telecommunications business, accruals for pension expenses, and
increases to the reserves for medical and health benefit claims.
Following this announcement, NUI's shares fell $9.27 per share, or
approximately 49%, to close at $10.90 per share.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
RETEK INC.: Cauley Geller Commences Securities Fraud Suit in MN Court
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Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of Minnesota, on
behalf of purchasers of the common stock of Retek Inc. (Nasdaq: RETK)
during the period between October 17, 2001 and July 8, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. The Company is a leading provider of
software solutions and services to the retail industry.
In April 2000, the Company announced that it had formed an alliance
with IBM to develop a partnership to develop a merchandising solution
for the food and drug segment of the retail market. Specifically, the
complaint alleges that the defendants continuously led the market to
believe not only that the alliance was fully intact but also that the
alliance was on track to generate revenues of more than $1 billion for
the two companies for the year 2003.
Defendants, however, concealed that not only was the $1 billion
prospect a fallacy, but that throughout the class period the so-called
alliance was in shambles. The Company wanted access to IBM's
consulting deals and IBM wanted the Company to change its software
applications so that they ran on IBM's platform, not Oracle's.
By October 2001, defendants realized that the conversion would be too
costly in the short run and delayed the full conversion to IBM
platforms, including the most critical, a merchandising product for
large-scale retail operations.
The complaint further alleges that by the beginning of the class
period, many of the Company's projects (IBM) were faltering and its new
products (Retek 10), which were scheduled to boast earnings, were
riddled with bugs. Moreover, one of the Company's joint ventures,
PerformanceRetail Inc. (PRI), was hemorrhaging nearly $200,000 of the
Company's monies per month.
Finally, the defendants' projections were not only stale but actually
false when made as the defendants knew or made a conscious decision to
ignore the fact that circumstances underlying those projections (i.e.,
problems with Retek 10, the IBM alliance, PRI, an eroding customer
base) actually compelled the conclusion that the Company could not
possibly achieve the projections.
For more details, contact Jackie Addison, Heather Gann or Sue Null by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com
RETEK INC.: Lockridge Grindal Lodges Securities Fraud Suit in MN Court
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Lockridge Grindal Nauen PLLP initiated a securities class action in the
United States District Court for the District of Minnesota on behalf of
purchasers of Retek Inc. (Nasdaq:RETK) securities during the period
between October 17, 2001 and July 8, 2002.
The complaint charges the Company, a leading provider of software
solutions and services to the retail industry, and certain of its
officers and directors with violations of the Securities Exchange Act
of 1934.
Specifically, the complaint alleges that the Company and certain of its
officers and directors deceived the investing public regarding Retek's
business, operations, management and the intrinsic value of Retek
common stock, in order to enable insiders to sell at least 500,000
shares of Retek common stock worth more than $12 million at
artificially inflated prices while causing plaintiff and other members
of the class or purchase Retek securities at artificially inflated
prices.
The complaint further alleges that:
(1) the Company's software or license customers were extending
their procurement processes by asking for pilot projects
before signing agreements, a practice that added weeks - - and
sometimes months - - to the process toward reaching final
agreements;
(2) the Company's highly hyped "alliance" with IBM resulted in no
material sales during the class period and in no benefit to
the Company;
(3) millions of dollars of the defendants' projections were
attributable to transactions which defendants knew had little
chance of ever being completed; and
(4) the Company's products were slow in developing and often did
not work properly once in the hands of the customer.
For more details, contact Karen M. Hanson by Mail: 100 Washington
Avenue South Suite 2200 Minneapolis, MN 55401 by Phone: 612-339-6900 or
by E-mail: kmhanson@locklaw.com or contact Gregory J. Myers by Mail:
100 Washington Avenue South Suite 2200 Minneapolis, MN 55401 by Phone:
612-339-6900 or by E-mail: gjmyers@locklaw.com
SYNCOR INTERNATIONAL: Abbey Gardy Commences Securities Suit in C.D. CA
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Abbey Gardy, LLP initiated a securities class action in the United
States District Court for the Central District of California on behalf
of all persons who purchased securities of the Syncor International
Corp. (Nasdaq:SCOR) between April 25, 2001 and November 5, 2002
inclusive against the Company and:
(1) Monty Fu, Chairman of the Board,
(2) Robert G. Funari, President and Chief Executive Officer,
(3) Moses Fu, Director of Syncor Overseas Ltd. and
(4) William Forester, Chief Financial Officer and Sr. Vice
President of the Company
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 during the class period thereby artificially inflating the price
of Syncor securities.
The Complaint alleges that, among others, the following press releases
and SEC filings were materially false and misleading: April 25, 2001,
press release, the March 31, 2001 Form10-Q, July 24, 2001 press
release, June 30, 2001 Form 10-Q, October 24, 2001 press release,
September 30, 2001 Form 10-Q, February 20, 2002 press release, 2001 10-
K, April 24, 2002 press release, March 31, 2002 Form 10-Q, July 30,
2002,press release, October 11, 2002 press release.
These press releases and public filings were materially false and
misleading in that they failed to disclose that throughout the class
period, the Company's Chairman of the Board and the director of its
Asian division were making illegal payments to Syncor's overseas
customers.
Before the market opened on November 6, 2002, the Company shocked the
market by announcing that it was conducting an internal investigation
into illegal payments to its overseas customers and had contacted the
Justice Department and the Securities Exchange Commission, and that its
previously announced acquisition by Cardinal Health, Inc. was in doubt.
As a result of this news, Syncor's stock price dropped sharply in pre-
market trading to $22.50 per share, down $13.42 per share from its
previous closing price of $35.92, and NASDAQ halted trading of Syncor's
stock pending a satisfactory response to its request for additional
information from the Company. When trading resumed the price of
Syncor's stock dropped $8.52 to $27.
For more details, contact Nancy Kaboolian by Phone: 800-889-3701 or by
E-mail: Nkaboolian@abbeygardy.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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