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/raid1/www/Hosts/bankrupt/CAR_Public/021128.mbx C L A S S A C T I O N R E P O R T E R Thursday, November 28, 2002, Vol. 4, No. 235 Headlines AMERICAN TOBACCO: High Court Grants Certiorari in Tobacco Suit ANICOM INC.: SEC Revokes Common, Series C Preferred Stock Listing BOEING CO.: Appellate Court Nullifies $15M Settlement CATHOLIC CHURCH: Sex-Abuse Documents Turned Over on Court's Order CENDANT CORP.: Chase Wins Ruling To Take a Stab At Settlement Fund CHARTER COMMUNICATIONS: Judge Delays Ruling On Overcharging Suit CIBC WOOD GUNDY: Court Grants Class Certification to Lawsuit CIGNA HEALTHCARE: Pact Reached with Physicians to End Lawsuits CITIGROUP INC.: NY Court Names Lead Plaintiff in Securities Suit DELAWARE FOODS: Fear of Listeria Contamination Spurs Ham Recall DELTA & PINE: Disenchanted Farmers File Lawsuit Over Seed Variety EQUITY RESIDENTIAL: Suit Seeks Halt to 60-Day Penalty for Tenants EUNO FINE CHEMICALS: Judge Approves $6.5M Settlement Deal FIRST VIRTUAL COMMUNICATIONS: SEC Issues Cease and Desist Order LUCENT TECHNOLOGIES: Court Grants Arbitration Plea in Lewis Tree Suit LUCENT TECHNOLOGIES: NY Court Rejects Contract-Breach Claim PCORDER.COM: Class Representatives Uninformed, Judge Says PEERLESS: Court Tosses Fraud Suit on Plaintiffs' Voluntary Dismissal QWEST COMMUNICATIONS: CO Court Rejects Emergency Motion for TRO RECALL CHECKLIST: Shoppers Told to "Check it Twice" for Recalled Toys SPRINT CORP.: Securities Fraud Lawsuit Survives Dismissal ST. PAUL COMPANIES: Shareholders Claim Fraud in Handling Asbestos Case TROY GROUP: Lawsuit Charges Officers of Fiduciary Breach New Securities Fraud Cases AOL TIME WARNER: Rabin & Peckel Launches Securities Suit in S.D. NY LOOKSMART LTD.: Rabin & Peckel LLP Commences Fraud Suit in S.D. NY OM GROUP: Scott + Scott Files Securities Fraud Suit in N.D. OH PAINEWEBBER INC.: Seeger Weiss Files Securities Fraud Suit in NJ SCHERING-PLOUGH CORP.: Berger & Montague Commences Fraud Suit in NJ SEARS, ROEBUCK: Much Shelist Launches Securities Suit in N.D. IL SYNCOR INTERNATIONAL: Milberg Weiss Files Fraud Suit in C.D. CA XO COMMUNICATIONS: Lovell Stewart Files Fraud Suit in S.D. NY ********* AMERICAN TOBACCO: High Court Grants Certiorari in Tobacco Suit -------------------------------------------------------------- The Supreme Court of Louisiana court found that the lower courts acted prematurely in considering the applicability of comparative fault principles to the claims of plaintiffs Gloria Scott and others before adjudication relating to the liability for damages of The American Tobacco Co. Inc. and others in their tobacco class action litigation. The High Court vacated the Court of Appeal, Fourth Circuit, Parish of Orleans, Louisiana and the Louisiana trial court's rulings regarding comparative fault and the court of appeals' judgment regarding the trial court's pre-trial order and the trial court's Judgment on Motion for Notice of Fundamental Trial Issues and Reasons for Judgment and remanded the case. The court stated that whether principles of comparative fault were applicable to plaintiffs' claim for medical monitoring and/or cessation programs for Louisiana residents who are or were smokers of defendants' cigarettes and whether individual claimants' injuries were caused in part by their own conduct did not have to be determined until defendants' liability was established. The court concluded that Phase I of the trial should be conducted for the sole purpose of determining defendants' liability for damages. After liability has been tried, the trial court could formulate a plan for subsequent phases of the trial in which subclasses might be formed and individualized issues, such as comparative fault and prescription, might be addressed. ANICOM INC.: SEC Revokes Common, Series C Preferred Stock Listing ----------------------------------------------------------------- The Securities and Exchange Commission issued an Order on Tuesday, revoking the registration of Anicom Inc.'s common stock and Series C preferred stock because the company has failed to file an annual report on Form 10-K since December 31, 1999, and quarterly report on Form 10-Q since March 31, 2000. Anicom, formerly a national distributor of wire and cable products based in Rosemont, Illinois, filed for bankruptcy under Chapter 11 in January 2000, just six months after announcing that it would restate its financial statements for 1998, 1999, and the first quarter of 2000. The SEC issued the Order after determining it would accept Anicom's offer to settle a public administrative proceeding brought under Section 120) of the Securities Exchange Act of 1934.In its offer, Anicom agreed to consent, without admitting or denying liability, to the commission'sOrder, which found that it was necessary and appropriate for the protection of investors to revoke the registration of Anicom's common stock and Series C preferred stock.The Order took effect immediately upon issuance. BOEING CO.: Appellate Court Nullifies $15M Settlement ----------------------------------------------------- A federal appeals court Tuesday threw out a $15 million settlement in a class-action case accusing Boeing Co. of discriminating against about 15,000 black employees, the Associated Press reports. The 9th U.S. Circuit Court of Appeals objected to the $4 million in attorneys' fees under the 1999 settlement, and the large disparity in the payments provided to the employees. The settlement covered two class-action suits brought on behalf of former and current Boeing employees. The lawsuits accused the world's No. 1 maker of passenger jets of discriminating against blacks when it came to promotions, harassing them and retaliating against them when they complained. Boeing admitted no wrongdoing but agreed to spend $15 million to compensate the workers and set up programs to fight discrimination. When a federal judge approved the deal in 1999, the Rev. Jesse Jackson and several Boeing employees objected, arguing that the settlement was inadequate because it did not provide enough money for some and did not go far enough to prevent further bias.The appeals panel, ruling 2-1, agreed the deal was unsatisfactory. Circuit Judge Marsha Berzon said there was no justification for some employees receiving 16 times more than others. The court also found that the $3.85 million in attorneys' fees was unjustified and could have led attorneys for the plaintiffs to undermine their own clients. Alan Epstein, a Philadelphia lawyer representing about 2,000 Boeing workers who objected to the 1999 deal, said the decision means the case will have to be litigated or a new settlement approved. CATHOLIC CHURCH: Sex-Abuse Documents Turned Over on Court's Order ----------------------------------------------------------------- A judge on Monday denied the Roman Catholic Archdiocese of Boston's effort to keep secret thousands of pages of personnel files covering 65 priests accused of sexual misconduct, Reuters reports. Superior Court Judge Constance Sweeney's ruling means the documents could be made public as early as next week, possibly fanning the flames of the clergy sexual abuse scandal that has engulfed the church in the United States this year. Sweeney's ruling came as lawyers for alleged sexual abuse victims met with attorneys for the archdiocese to try to settle hundreds of lawsuits against the church. Lawyers for alleged victims of Father Paul Shanley have been trying since August to obtain the personnel files to prove a central claim in their lawsuits: that the archdiocese routinely protected and reassigned priests accused of sexually abusing children. The archdiocese, acting under an order from Sweeney, turned over the roughly 11,000 pages of documents to plaintiffs' attorneys on Friday. But as it handed over the files, the church filed a related motion seeking to shield them from the public. In Monday's ruling, Sweeney barely hid her anger over what she perceived as delaying tactics by the archdiocese. "The sense of desperation inherent in the motion is not in any manner supported by cogently articulated facts or law," Sweeney said as she denied the archdiocese's motion. "If the tone of this endorsement is harsh, so be it. The court simply will not be toyed with," she added. David Thomas, an attorney representing more than 200 alleged clergy sexual abuse victims, welcomed the judge's ruling, which he said would allow him and his colleagues to begin releasing them to the public as early as next week. Thomas said he had already seen some of the files and that they support the plaintiffs' arguments. "Generally the documents show what we've alleged in our complaints: that there is a pattern and practice within the archdiocese of protecting alleged child abusers and negligently handling the allegations," he told Reuters. The pending release of the documents fueled speculation the archdiocese might try harder to reach a global settlement of clergy sexual abuse lawsuits. But Mitchell Garabedian, a plaintiffs' attorney who met with the archdiocese's lawyers and a mediator at a Boston hotel on Monday to discuss a possible settlement, said he was not optimistic. "I didn't see the light at the end of the tunnel after today's talks," Garabedian said after the 4-1/2-hour meeting ended."I firmly believe we have to proceed with litigation and if a settlement happens along the way, so be it," he added. Boston Cardinal Bernard Law has repeatedly apologized for his handling of accused pedophile priests but has refused to step down, angering some parishioners. The scandal in Boston mirrored those in other parts of the United States, as bishops and other archbishops faced anger from the Catholic laity over the shuffling of pedophile priests from parish to parish as sexual abuse continued over decades.The anger bolstereda new policy of "zero tolerance" from American bishops. This policy has been questioned by the Vatican and is under review. CENDANT CORP.: Chase Wins Ruling To Take a Stab At Settlement Fund ------------------------------------------------------------------ The United States Court of Appeals for the Third Circuit reversed the judgment of the United States District Court for the District of New Jersey and concluded that the district court's ruling in favor of Cendant Corp. did not represent a sound exercise of judicial discretion. The ruling stemmed from an appeal by Chase National Manhattan Bank. The bank was late in filing documents confirming its right to participate in the distribution of a fund created to settle a class action involving fraud by the employees of Cendant Corp. Cendant moved to dismiss all late cured claims and the United States District Court for the District of New Jersey rejected the late filings of Chase. Chase appealed. The appellate court stated that, although the record supported the district court's view that Chase carelessly and inefficiently handled its serious responsibilities, Cendant was not prejudiced by the delay, and the district court was not hindered in any substantial degree. The court noted that Chase's lack of diligence in following the progress of the district court's proceedings was far from commendable, but did not amount to a lack of good faith. CHARTER COMMUNICATIONS: Judge Delays Ruling On Overcharging Suit ---------------------------------------------------------------- A judge's decision could pave the way for a class-action lawsuit by more than 100,000 South Carolina customers Charter cable is accused of intentionally overcharging. If the cable television giant is found liable, it could cost the company millions in damages and reduced future revenue, lawyers associated with the case said. Two Charter customers, Nikki Nicholls and Geraldine Barber, both of Spartanburg, and two former Charter employees filed affidavits with a Spartanburg County court, asking that their complaint be expanded into a class-action suit. On Monday Spartanburg County circuit court Judge Don Beatty said that he would take the request under advisement before deciding if the case warrants class-action status. The plaintiffs' attorneys said that about 111,000 Charter customers, including their clients, were told they needed digital cable boxes but that the switch would not entail an extra cost.However, those customers' bills went up by $3 per month after the switch.In addition, the attorneys said that 107,000 customers were charged a $2.95 monthly wire-maintenance fee. The affidavits said that the fee was added without the customers' request and provided no benefit because Charter already provided the same service to other customers at no extra charge. Former service technicians Bryan Alverson and Eugene Williams said in their affidavits that they were told to give customers analog boxes even if they had cable-ready televisions. They said that they were later given financial incentives to replace those analog boxes with digital ones and that they were told not to tell customers the digital boxes would cost more. Charter has more than 246,000 customers in South Carolina who get cable television and internet service from the company.A company spokeswoman said that the allegations are untrue and that no class-action is warranted. "Charter always keeps the customer and the value of our products in mind as we do business," Charter spokeswoman Deborah Seidel told News 4. "I think as we move forward, the allegations made by the plaintiffs' attorneys will be proven to be not true." Attorneys on both sides said they don't know how long the ruling will take. CIBC WOOD GUNDY: Court Grants Class Certification to Lawsuit ------------------------------------------------------------ The United States District Court for the Southern District of New York granted plaintiffs, Dorian King and Diane King's motion for class certification against defendants, CIBC Wood Gundy and CIBC Oppenheimer, for allegedly concealing and misrepresenting material information about Senior Unsecured Notes due in 2004. The district court stated that plaintiffs satisfied all four class certification requirements of Fed. R. Civ. P. 23(a) by showing that: (1) the 106 institutional investors for plaintiffs' class were too numerous that it made joinder of all members impracticable; (2) the putative class members' claims shared common questions of fact and law; (3) the claims of the putative class representatives were typical of those of the entire putative class; and (4) the putative class members would be adequately represented in the litigation. In addition, the court found that questions of law or fact common to the members of the class predominated over questions affecting only individual members and that a class action was superior to other available methods for the fair and efficient adjudication of this case. CIGNA HEALTHCARE: Pact Reached with Physicians to End Lawsuits -------------------------------------------------------------- CIGNA HealthCare announced Tuesday that it has reached an agreement to resolve bill payment claims brought on behalf of physicians and other health care providers in state and federal courts. As part of the agreement, CIGNA HealthCare will be implementing certain changes in its practices and procedures that will make it easier for doctors to do business with the company. The changes are part of an agreement CIGNA HealthCare has reached with parties bringing claims on behalf of physicians and other health care providers in Kaiser v. CIGNA, a national class action lawsuit. That lawsuit, which was filed initially in a state court in Madison Co., Ill., was recently removed to federal court, where the settlement agreement was filed Tuesday. The court must hold a hearing and approve the agreement before it can become final. If approved by the federal court, the agreement will encompass most of the claims, brought on behalf of health care providers, asserted in other state and federal jurisdictions, including the cases consolidated in federal court in Miami. In conjunction with the agreement, CIGNA Corp. expects to recognize an after-tax charge in the fourth quarter of 2002 of approximately $50 million to $65 million. The estimated charge reflects insurance recoveries that CIGNA expects to receive. No significant amounts will be paid out until the settlement becomes final, which is expected in mid- 2003. "We have been working to improve our relationships with physicians and other health care providers over the past several years," said W. Allen Schaffer, M.D., CIGNA HealthCare senior vice president and chief medical officer. "During this period, we have made numerous changes, including streamlining utilization management and other processes, discontinuing many referral requirements, and improving communications with providers, all of which ultimately benefits our members. The agreement we are announcing today continues that process." As part of the agreement, CIGNA HealthCare will: 1. Post on its Web site additional explanations of its claim coding and other payment policies; 2. Establish an e-mail procedure that will enable providers to make minquiries regarding fee schedules and to obtain claim coding information; 3. Appoint a third-party administrator to review certain claims that were denied since January 1, 1996, to determine whether they should be paid; 4. Establish a $10 million "prompt pay fund" to compensate providers for claims that have been processed outside of the company's timeliness standards; 5. No longer require providers to submit copies of their medical records to obtain payment for office visits occurring on the same day as separately billed surgeries or other procedures; and 6. Pay interest on fully documented claims that are not paid within 30 days in those locations in which interest payments are not required by law. "We are making accommodations in our business practices that will ease administrative burdens for physicians. This, in turn, will strengthen our business by improving our working relationships with those we count on to provide quality care to our members and customers. This agreement also enables us to use, in much more productive ways, resources we otherwise would have devoted to litigation," said Patrick E. Welch, president of CIGNA HealthCare. CIGNA continues to believe that its claims processing actions over the years have been appropriate and is not acknowledging any liability or wrongdoing by entering into the agreement. CIGNA representatives will discuss the agreement on a call that will take place at 8:30 a.m. EST on Wednesday, November 27, 2002. The call-in numbers for the conference call are as follows: 1-877-282-2315 (Domestic) 1-703-871-3016 (International) 1-888-266-2081 (Domestic Replay) 1-703-925-2533 (International Replay) CIGNA Corp. (NYSE: CI) and its subsidiaries constitute one of the largest investor-owned employee benefits organizations in the United States. Its subsidiaries are major providers of employee benefits offered through the workplace, including health care products and services; group life, accident and disability insurance; retirement products and services; and investment management. CITIGROUP INC.: NY Court Names Lead Plaintiff in Securities Suit ---------------------------------------------------------------- The United States District Court for the Southern District of New York granted plaintiffs the Pompano Beach Police & Firefighters' Retirement System's motion for consolidation and appointment as lead plaintiff in a series of putative securities class actions against Citigroup Inc. The suits alleged that Citigroup Inc. misrepresented a 1999 transaction with the Enron Corp., affirmatively misrepresented Citigroup's potential Enron-related exposure in a 2001 annual report and failed to disclose the true extent of Citigroup's potential legal liability arising out of its structured finance deals with Enron. The court found that Pompano incurred the largest financial losses of any lead plaintiff movant and was otherwise adequate and typical. As such, Pompano was presumptively the most adequate plaintiff. The court denied plaintiffs G.M.O. Pelican Fund, Stanley Holt, William Mayo, Khusal Mehta, Karen Picciano and Jerry Robertson's motion for appointment as co-lead plaintiff During the class period, Pompano's members purchased Citigroup securities on the open market at prices alleged to have been artificially inflated by the materially false and misleading statements issued by defendants and thereby suffered damages. Pompano satisfied the adequacy of representation element, as there was no indication or evidence of a conflict of interest between Pompano and the purported class, Pompano obtained qualified and experienced counsel and Pompano had a significant interest in the outcome of the litigation so as to ensure its vigorous prosecution. The court denied Robertson's motion for appointment as co-lead counsel because it did not rebut the presumption that Pompano was an adequate class representative. Lastly, the court approved Pompano's selection of Milberg Weiss Bershad Hynes & Lerach LLP as lead counsel, finding that it had substantial experience and success in prosecuting securities fraud actions, rendering it capable of serving as lead counsel. DELAWARE FOODS: Fear of Listeria Contamination Spurs Ham Recall --------------------------------------------------------------- Delaware Foods Inc., a Muncie, Ind., establishment, is voluntarily recalling approximately 95 pounds of ready-to-eat ham that may be contaminated with Listeria monocytogenes, the U.S. Department of Agriculture's Food Safety and Inspection Service announced Tuesday. The problem was discovered through routine FSIS microbiological testing. The products subject to recall are: 5 or 10-lb. packages of "DELA BRAND, WATER ADDED SLICED BONELESS HAM, FULLY COOKED" bearing the package code "6515;" 5 to 13.5-lb. packages of "DELA BRAND, WATER ADDED, SLICED CHEF HAM, SMOKED - FULLY COOKED - BONELESS" bearing the package code "6515A;" and, 10-lb. packages of "DELA BRAND, WATER ADDED, SALAD DICED HAM 1/4"X1/4", FULLY COOKED," bearing the package code "1516." Each package also bears the establishment code "EST. 2084" inside the USDA seal of inspection.The ham was produced on Sept. 30 and Oct. 1 and distributed to hotels, restaurants, and institutions in Indiana. "We want consumers to be aware of the recall because of the potential for foodborne illness," said Dr. Garry L. McKee, FSIS administrator. "Diners may also wish to ask if their meals contain the products." Consumption of food contaminated with Listeria monocytogenes can cause listeriosis, an uncommon but potentially fatal disease. Healthy people rarely contract listeriosis. Listeriosis can cause high fever, severe headache, neck stiffness and nausea. Listeriosis can also cause miscarriages and stillbirths, as well as serious and sometimes fatal infections in those with weak immune systems infants, the frail or elderly and persons with chronic disease, with HIV infection, or taking chemotherapy. Consumers with questions about the recall may contact Kevin Mitchell, production manager, Delaware Foods Inc., at (765) 284-1406. Media with questions about the recall may contact Shirley Shaw, owner, Delaware Foods Inc., at (765) 284-1406. DELTA & PINE: Disenchanted Farmers File Lawsuit Over Seed Variety ----------------------------------------------------------------- Delta & Pine Land Co announced that three lawsuits were filed July 29, 2002, in the Court of Common Pleas of Hampton County, South Carolina under which the plaintiffs allege, among other things, that certain seed acquired from D&PL which contained the Roundup Ready gene and/or the Bollgard gene did not perform as the farmer had anticipated.One of those cases was removed to United States District Court for the District of South Carolina, Beaufort Division, where it is presently pending. The same type of lawsuit was also filed against Monsanto and various retail seed suppliers in the State of South Carolina. One lawsuit was filed November 15, 1999, in the Beaufort Division of the United States District Court, District of South Carolina; two of the other cases were filed on November 15, 1999, in the Court of Common Pleas of Hampton County, South Carolina. The two 1999 state court lawsuits were removed to the United States District Court for the District of South Carolina but were subsequently remanded back to the state court in which they were filed. These lawsuits also include varietal claims aimed solely at D&PL. One of the 1999 cases filed in Hampton County as well as the 1999 case filed in the United States District Court seek class action treatment for all purchasers of certain D&PL varieties which contain the Monsanto technology. D&PL and Monsanto are continuing to investigate the claims to determine the cause or causes of the alleged problem. Pursuant to the terms of the Roundup Ready Agreement and the Bollgard Agreement between D&PL and Monsanto, D&PL has a right to be contractually indemnified against all claims arising out of the failure of Monsanto's gene technology. D&PL will not have a right to indemnification, however, from Monsanto for any claim involving varietal characteristics separate from or in addition to the failure of the Monsanto technology and such claims are contained in each of these lawsuits. EQUITY RESIDENTIAL: Suit Seeks Halt to 60-Day Penalty for Tenants ----------------------------------------------------------------- The law firms of Babbitt, Johnson, Osborne & LeClainche, P.A., a West Palm Beach trial law firm, and consumer lawyer Rod Tennyson have filed a massive consumer class action on behalf of tenants against the largest owner of apartment buildings in the United States. The 19-page suit accuses Equity Residential of violating Florida law by: 1. Unlawfully charging tenants an extra 60 days' rent plus a one-month "lease fulfillment fee" for early termination, 2. Charging an extra two months' rent for tenants who stayed through their lease term but failed to give 60 days' notice. 3. Failing to give tenants copies of their prospective leases, and engaging in hard-nosed collection tactics. Equity Residential, based in Chicago, is America's number one apartment company, a member of the S&P 500, and a real estate investment trust traded on the New York Stock Exchange under the symbol EQR (NYSE:EQR). It owns more than 1,000 properties across 36 states, with 225,000 apartment units. Of these, 184 apartment rental properties are in Florida, with 33,000 units. According to its web site, Equity Residential has properties in most major metropolitan areas in the state, including Miami, Fort Lauderdale, West Palm Beach, Orlando, Jacksonville, Tampa-St. Petersburg, Fort Myers, Daytona Beach, the Space Coast, Key West, Tallahassee, Gainesville and Northwest Florida. In five years, Equity's revenues have trebled to $2.1 billion, and its net income has nearly tripled to $473 million. Its assets have nearly doubled to $13 billion, before depreciation. "Hard-nosed tactics may help make this landlord a successful corporate conglomerate, but they are illegal in the State of Florida," said Rod Tennyson, a West Palm Beach consumer lawyer representing the tenants. "Tenants in this state who terminate early are required to only pay rent for the days the property goes unrented. You shouldn't have to pay any extra penalty." The company markets heavily to people in their 20s, and uses a nationally standardized system for collections, credit checks and inquiries. Tammy Yates, 24, a recent graduate of the University of Central Florida then starting a teaching job, signed her 12-month lease at Mission Bay Apartments near the campus east of Orlando in August 2001. With little credit experience, she found the detailed credit application daunting and got her parents to co-sign the lease for a well-appointed $870-a- month apartment to share with a graduate student roommate. She paid on time, was a good tenant, and decided to move at the end of her 12-month lease. She went to the office to turn in the key. "They said: 'By the way, you owe an extra 60 days rent'," Yates said. "It was quite a surprise. It wasn't rent I owed; it was a penalty fee. The only notice they gave was a sticky note on the door that I didn't see. My roommate said she hadn't seen it, either. Maybe it blew away. It was on the first floor and outside. Nothing in the mail. They said my phone had been disconnected. I had disconnected a week earlier but left the forwarding number on the message. Obviously, they didn't try very hard to reach me." "Regular annual tenants suffer enough with the illegal 60-day charge," said Joseph R. Johnson of Babbitt Johnson. "But those who terminate early pay an extra 30-day penalty, so they pay the equivalent of 90 days." The suit asks for the company to stop the 60-day penalty for all tenants and 30-day "lease fulfillment" penalty for those who terminate early, and provide relief for all tenants in the class. It seeks relief under: CHAPTER 559, Part VI of the Consumer Collection Practices Act, as an unenforceable obligation, and CHAPTER 501, PART II of the Florida Deceptive and Unfair Trade Practices Act. "This is a great opportunity for Florida's new Attorney General Charlie Crist to side with tenants around the state and demonstrate that this law has teeth," said Joseph Johnson of Babbitt Johnson. "These are the very protections state attorneys general are there to enforce." EUNO FINE CHEMICALS: Judge Approves $6.5M Settlement Deal --------------------------------------------------------- A federal judge has approved a $6.5 settlement against a Japanese chemical company accused of fixing sorbates prices, ending four years of litigation on behalf of purchasers of the widely used food preservative. The settlement by Ueno Fine Chemicals Industry, Ltd. brought to $96.5 million the amount purchasers recovered from six international sorbates producers, said Berman DeValerio Pease Tabacco Burt & Pucillo, a law firm representing plaintiffs. "We are pleased that we were able to return to class members the money they were overcharged," said Joseph J. Tabacco, Jr., managing partner of Berman DeValerio's San Francisco office. "We were able to negotiate a very substantial settlement, despite an extraordinarily longstanding and secretive conspiracy." Judge Maxine M. Chesney signed the order Nov. 15. The class action covered anyone who directly purchased various sorbates additives from 1979 through the end of 1997. Berman DeValerio chaired the executive committee representing plaintiffs in the case. Plaintiffs charged the six defendants, one U.S. producer, a German company and four Japanese manufacturers, with meeting secretly for nearly 20 years to set prices in violation of federal antitrust laws. The group eventually controlled some 95% of the international market for sorbates, including sorbic acid and potassium sorbate. The other defendants in the case were Hoechst A.G. of Germany; Eastman Chemical Company of the United States; and Nippon Gohsei Industries, Ltd., Daicel Chemical Industries, Ltd., and Chisso Corporation of Japan. FIRST VIRTUAL COMMUNICATIONS: SEC Issues Cease and Desist Order --------------------------------------------------------------- The Securities and Exchange Commission ordered First Virtual Communications Inc. on Tuesday to cease and desist from violating the anti-fraud and record-keeping provisions of the federal securities laws. The commission's order found that FVC materially overstated its revenues and earnings for nthe fourth quarter and year end December 1998 in a January 28, 1999, press release by improperly recognizing revenue from sales with various return rights.FVC, without admitting or denying the commission's findings, consented to the order to cease and desist. Since 1993, FVC, a Silicon Valley technology company, headquartered in Santa Clara, California, has engineered and manufactured video- conferencing products and, through independent distributors, marketed and sold these products to the ultimate customer. FVC's common stock traded on Nasdaq's National Market from April 1998 through August 8, 2002, when it started trading on Nasdaq's small cap market. The commission's order found that FVC had granted its largest distributor various return rights on $5.9 million in sales. For FVC to recognize revenue on the sales with various return rights, Generally Accepted Accounting Principles required that FVC must have been reasonably able to estimate the amount of future returns. The order found that FVC had no reasonable basis for estimating the future returns and, therefore, should not have recognized revenue on the $5.9 million in sales. These actions, the order states, caused FVC to overstate its fourth quarter revenue by 114% and annual revenue by 16% and announce annual earnings of $1.1 million instead of a loss of $2 million. In April 1999, FVC correctly reported its financial results in a press release and an annual report on Form 10-K. FREEBORN & PETERS: Lower Court Reversed in Class Certification Issue -------------------------------------------------------------------- The Colorado Court of Appeals reversed the judgment of the City and County of Denver District Court and held that the presumption that a general partnership interest was not a security was not applicable to a limited partnership interest in Colorado. The trial court misconstrued the applicable law when it determined whether the interests were securities for the purpose of assessing whether the individual questions predominated over the common ones for class certification. In finding that the trial court also erred in ruling that fault would have to be apportioned among the defendants, Lawson M. Kerster and the law firm of Freeborn & Peters, and the settling defendants, the appellate court concluded that apportionment was not required because plaintiffs, Penelope Toothman, Robert Mosbarger, Marvin Nevonen and others' claims were premised on a theory of concerted activity. The court also concluded that, contrary to defendants' arguments, the issue of partial certification was sufficiently raised and preserved for appeal. LUCENT TECHNOLOGIES: Court Grants Arbitration Plea in Lewis Tree Suit --------------------------------------------------------------------- The United States District Court for the Southern District of New York granted defendants Lucent Technologies Inc. and others' motion to compel arbitration in a purported class action brought by plaintiff Lewis Tree Service Inc. and others. The plaintiffs alleged that defendants sold them Y2K defective telecommunications equipment. The court held that plaintiffs' claims, based on the New Jersey Consumer Fraud Act, were subject to arbitration because: (1) plaintiffs had agreed to arbitrate, pursuant to a Business Product Purchase Agreement; and (2) precedent indicated that there was a presumption that statutory claims were subject to arbitration. The court concluded that the Purchase Agreement was not an unenforceable adhesion contract. The court found no evidence that plaintiffs were subject to any economic compulsion to contract, and plaintiffs were sophisticated purchasers. In fact, a plaintiffs' executive, responsible for the purchase of the equipment at issue, acknowledged that he had read and understood the agreement's terms and conditions and had consulted his attorney. The court also found that defendants' filing of their motion to compel arbitration after discovery was timely. The court stated that defendants were forced to wait until after discovery because plaintiffs had raised baseless arguments that the Purchase Agreement did not cover their contractual relationship with defendants. Additionally, plaintiffs provided no evidence that defendants' filing of the motion after discovery was prejudicial to plaintiffs. LUCENT TECHNOLOGIES: NY Court Rejects Contract-Breach Claim ------------------------------------------------------------ The United States District Court for the Southern District of New York granted in part, and denied in part defendant Lucent Technologies' motion for summary judgment in a purported class action brought by Lewis Tree Service Inc. and others on behalf of purchasers of allegedly Y2K defective telecommunication equipment sold by defendants. The court, applying New Jersey law, pursuant to the parties' Business Product Purchase Agreement, concluded that plaintiffs could not prevail on their breach of implied warranties of merchantability and fitness and breach of express warranty claims because the Purchase Agreement disclaimed liability for those claims. The court rejected plaintiffs' contention that the agreement was an adhesion contract, finding that there was no compulsion requiring plaintiffs to contract. The court further found that all plaintiff contract-related claims were time barred, as the Purchase Agreement required that all claims be brought within 12 months of the signing of the agreement. Regarding the common law fraud claim, the court found that the claim could not be dismissed as time barred. The court rejected defendants' contention that plaintiffs had been put on constructive notice in February of 1997 regarding the Y2K problems by defendants' disclosure of the problems on their website, and that the statute of limitations began to run then. The court stated that it could not find as a matter of law that defendants' disclosures satisfied Internet Readiness and Disclosure Act's requirements. PCORDER.COM: Class Representatives Uninformed, Judge Says --------------------------------------------------------- A federal judge in Austin, Texas has refused to certify a class action securities fraud suit stemming from the initial public stock offering for internet company pcOrder.com because he found the candidates for class representatives lacked standing and/or competency and the proposed lead counsel suffered from conflicts of interest.He questioned whether the prospective lead counsel were "truly concerned about their clients interests" since they had kept them in the dark. Plaintiff Jerry Krim filed one of many shareholder suits against pcOrder.com, its directors, its investment bankers and its parent company, Trilogy Software Inc. alleging violations of Sections 11 and 15 of the Securities Act of 1933 in connection with pcOrder's March 1999 initial public offering and a secondary offering nine months later. Generally, they charged that they lost tens of millions of dollars because pcOrder falsely claimed to have a viable business plan, the ability to report accurate financial information and freedom from competition from parent Trilogy Software. However, Krim did not seek the job of class representative in the Texas litigation and most of the plaintiffs who were initially in the lead role withdrew. Several shareholders came forward to take the class representative position, but the court found fault with their standing as shareholders or their competency to carry out the job. He disqualified two applicants because they could not prove that their stock was issued in the IPO or the secondary offering. Although they need not prove that they themselves bought the stock during the IPO, they must show that the stock they own was issued at that time, not that it was probably issued then, the court held. It said the applicants who did have standing to sue would make unacceptable class representatives because they knew virtually nothing about the claims of the suit and the plaintiffs they would champion. The court blamed that condition in part on the law firms that sought the lead counsel position. He said they had failed to inform their clients about their case or the parallel cases where those attorneys represented plaintiffs making similar claims against pcOrder and its directors. "Furthermore, counsel participated in a full week of settlement negotiations with defendants, who offered to settle all lawsuits against pcOrder.com," the court noted. "Although unsuccessful, the negotiations demonstrate the problematic nature of counsel's multiple representations in negotiations." The court noted that while it might, at a later date, be in the best interest of one group of plaintiffs to settle all claims, it might well be decidedly against the best interests of another group to settle at that point; moreover, it would be difficult or impossible for the attorneys to juggle their responsibilities to be both candid and protective of the rights of the various groups. In light of the fact that the prospective lead counsel failed to disclose their involvement in other lawsuits and negotiations and failed to prepare their clients for deposition in this case, the court refused to appoint the applicants to the lead counsel spot. It also denied the motion to certify the class. "If counsel were truly concerned with their clients' interests, they would have offered to withdraw from all potentially conflicting representations, not just the ones with the least amount of money to be made," the judge concluded. PEERLESS: Court Tosses Fraud Suit on Plaintiffs' Voluntary Dismissal -------------------------------------------------------------------- The United States District Court for the Southern District of California dismissed on November 12 a shareholder class against suit filed against Peerless Systems Corp. (Nasdaq:PRLS), the company announced Wednesday. The court's order does not preclude the plaintiffs from pursuing separate claims. A shareholder class action lawsuit was filed on August 28, 2000 against Peerless, a provider of imaging and networking systems to the digital document markets, and two of its former officers in the United States District Court for the Southern District of California. Plaintiffs submitted a voluntary dismissal of the action against the company and its former officers. No consideration has been provided by the company or its former officers, and each side is to bear its own costs, a news release issued by the company said. "It is with great pleasure that I can announce that the lawsuit has been dismissed," said Howard J. Nellor, President and Chief Executive Officer of Peerless Systems. "We are delighted with this result and can now devote all of our resources to aggressively moving forward with our corporate objectives." QWEST COMMUNICATIONS: CO Court Rejects Emergency Motion for TRO --------------------------------------------------------------- The United States District Court for the District of Colorado, in a securities litigation class action suit against Qwest Communications International Inc., denied lead plaintiffs' emergency motion for a temporary restraining order to freeze the proceeds of defendants Joseph P. Nacchio and Philip F. Anschutz's alleged insider trading in Qwest stock. The district court found that plaintiffs did not satisfy all of the four key factors that must be proven pursuant to Fed R. Civ. P. 65 in order to support a claim for a TRO or preliminary injunction. Although the court assumed that plaintiffs had a substantial likelihood of success, plaintiffs did not present any allegations or evidence establishing the risk of irreparable injury. Furthermore, the court could not conclude that the threatened injury to plaintiffs outweighed whatever damage the proposed injunction might cause defendants. The court declined to address public interest factors. However, plaintiffs were permitted to submit a supplement to their motion if they developed additional evidence. RECALL CHECKLIST: Shoppers Told to "Check it Twice" for Recalled Toys --------------------------------------------------------------------- The U.S. ConsumerProduct Safety Commission warned holiday shoppers on Tuesday about dangerous toys that may have been purchased earlier this year but have since been recalled. The U.S. Consumer Product Safety Commission issued a checklist of recalled children's products including Gearbox Pedal Cars with lead- laden paint and Air Powered Rockets by Estes Industries that have caused reports of eye injuries. "We've made our list and want consumers to check it twice," said safety commission chairman Hal Stratton in a statement. Other items the commission worries might still find their way into children's' stockings this year, despite recalls, include Firestormer and Skyblazer toy planes by Spin Master Toys. The plastic air intake chamber can burst, causing cuts. Checklist of recalled children's products: * Gearbox Pedal Cars (75,000) distributed by Alpha International Inc. The paint on some of these pedal cars contains high lead levels. CPSC standards ban toys and other children's products containing high levels of lead.Young children could ingest the lead from the car's paint coating, presenting a lead poisoning hazard.Call Alpha International at (800) 368-6367 to receive a replacement car or return the product to the place where purchased to receive a full refund. * Air Powered Rockets (140,000) distributed by Estes Industries.The rockets' foam tips can break off exposing sharp edges that can cause face lacerations or eye injuries.The rocket system also has a weak pump handle that can break during use, posing a risk of hand lacerations.Estes and CPSC have received 16 reports of rocket tips breaking off.Six children were struck in the face by the rockets, including two who suffered detached retinas and four who suffered cuts requiring stitches.There were 68 reports of broken pump handles, including 6 hand lacerations.Call Estes Industries toll- free at (800) 576-5811 to get a replacement rocket, or visit www.estesrockets.com * Firestormer and Skyblazer toy air-powered planes (137,000)distributed by Spin Master Toys.The plastic air intake chamber of the air- powered toy planes can burst, throwing plastic pieces, posing a laceration, bruise and abrasion hazard to consumers.Spin Master Toys received seven reports of Firestormer planes bursting, including four reports of injuries (chest abrasion, cut leg, bruised shoulder, and ringing in the ears) to children.There have been no reports involving the Skyblazer planes.Call Spin Master Toys at (800) 622- 8339 to get a free replacement plane, or visit www.spinmaster.com * Animal Toy Sponges (280,000) distributed by Dollar Tree Stores.The eyes on the toys can detach, posing a choking hazard to young children. CPSC and Dollar Tree Stores received one report of an eye coming off. Return the toy sponge animals to the store where purchased for a full refund.Call Dollar Tree Stores at (800) 876- 8077 or visit www.dollartree.com * Stuffed Polyester Pool Animals (310,000) distributed by Dollar Tree Stores. The seams can separate exposing the polyester stuffing and foam beads. The foam beads pose a choking hazard to young children. CPSC and Dollar Tree Stores have received one report of the seam ripping, exposing the polyester stuffing and a plastic bag containing foam beads. Return the stuffed animals to the store where purchased for a full refund.Call Dollar Tree Stores at (800) 876-8077 or visit www.dollartree.com * Cotton Candy Machine (188,000) distributed by Rose Art Industries. The electric motor on the cotton candy machine can jam and overheat, posing a fire hazard.The heating unit can be activated without the spinner in place, presenting a risk of burn to consumers.CPSC and Rose Art have received 225 reports of the machines overheating. There have been three reports of fire, one resulting in an estimated $2,000 in property damage.CPSC received a report of two unconfirmed minor injuries.Call Rose Art at (888) 262-4474 for a free replacement motor unit.Visit www.roseart.com * Baby Walkers that can fall down stairs (2 brands totaling 53,500 units). Oriental International Trading Company distributed 3500 such walkers, and Bikepro distributed 50,000.The walkers will fit through a standard doorway and are not designed to stop at the edge of a step. Babies using these walkers can be seriously injured or killed if they fall down stairs.Return the baby walkers to the store where purchased for a full refund.Call Oriental International Trading Company at (866) 666-9868 or visit www.bike-stroller.com. For Bikepro walkers call Bikepro at (800) 261-2559. * Toy Tracks on Activity Center (152,000) distributed by Graco Children's Products.The toy track can break, presenting a cut or pinch hazard and exposed small parts pose a choking hazard to young children. Graco received 11 reports of the toy tracks breaking.Four children received minor scratches and one child's finger was pinched. Call Graco to receive a free replacement track at (800) 673-0392 or visit www.gracobaby.com Other Hazardous Products: * Playpens that can collapse (5 brands totaling more than 1,500,000 units) and entrap a child in the V-shape folded top rails.The top rails must be turned to set up the playpen.CPSC is aware of 15 deaths to children when the top rails of playpens collapsed.A new industry standard requires that the top rails of these playpens automatically lock into place when the playpen is fully set up.CPSC obtained voluntary recalls of the following playpens with top rails that people had to turn into place when setting up the playpen: Evenflo "Happy Camper," "Happy Cabana," and "Kiddie Camper;" Century "Fold-N-Go" Models 10-710 and 10-810; Baby Trend "Home and Roam" and "Baby Express;" and Kolcraft "Playskool Travel-Lite Model."CPSC also issued a safety warning about "All Our Kids" Models 742 and 762 playpens imported by a firm that is out of business. * Lane Cedar Chests (12 million) distributed by Lane Co.The cedar chest lids automatically latch shut when closed, posing a suffocation hazard to children.Twelve children suffocated inside the chests. New locks, used since 1987, will prevent entrapments because they do not automatically latch shut.No Lane cedar chests manufactured since 1987 pose this safety hazard.Contact Lane to get new free locks (easy to install at home) to prevent entrapments, (888) 856- 8758 or www.newlock.net * Old Chest Freezers (made between 1945 and 1970) have heavy lids that latch.Children can suffocate in old chest freezers (and in other products with heavy lids that latch).CPSC knows of 27 deaths between 1980 and 1999 in old chest freezers.Destroy the old freezer, take the door off, or remove the latch.Call (202) 872-5955 or http://aham.org/freezer_safety/freezer_safety.cfm SPRINT CORP.: Securities Fraud Lawsuit Survives Dismissal --------------------------------------------------------- A federal judge in Kansas has permitted a securities fraud class action against Sprint Corp. to proceed based on one allegedly false statement regarding its merger with WorldCom. The plaintiffs, who are Sprint stockholders, assert that the company issued the misleadingly optimistic statement so management could benefit through the vesting of $1.7 billion in stock options. The lawsuit arose out of four allegedly false statements made by Sprint in advance of its proposed merger, which was ultimately blocked by regulators as anti-competitive. At the time, the companies were the top two providers of Internet "backbone" services in the world and among the top three long distance telecommunications providers in the United States. The complaint alleges that Sprint managers had "secretly" modified the "change-in-control" provision of the company's long-term stock option plan so that options would vest if Sprint's stockholders approved a merger in which Sprint was not the surviving entity. Thereafter, management allegedly issued optimistic statements to gain stockholder approval of the proposed merger with WorldCom, which they knew would be blocked by regulators, the shareholders assert. The complaint also accused Sprint of issuing false and misleading information regarding its financial performance to inflate stock prices. As a result, the shareholders lost billions of dollars when prices rose and then fell, they said. U.S. District Judge Carlos Murguia found that merely packaging an allegedly false or misleading statement as a belief or opinion does not automatically insulate the speaker from liability. However, such statements must be "material" to be actionable. The judge dismissed most of the company's optimistic statements as mere "puffery" but found materiality in four statements issued after corporate managers were told that the Justice Department was unlikely to approve the merger, that the Federal Communications Commission was suspending its investigation (a very negative development), and that European regulators had serious concerns about the merger. Optimistic statements issued after these developments omitted any mention of them. The general risk disclosures issued in the joint proxy statement seven weeks earlier did not immunize the statements against liability under the "bespeaks caution" doctrine, Judge Murguia said. Moreover, the statements did not fall within "safe harbor" provision of the Private Securities Litigation Reform Act because they were not accompanied by "meaningful cautionary statements," he added. The court found scienter, or fraudulent intent, based on the strong motive alleged, enabling Sprint managers to exercise $1.7 billion in previously unexercisable stock options. However, only one of the four statements deemed to be "material" was made prior to shareholder approval of the merger; therefore, that statement alone was actionable, Judge Murguia said. Finally, there was causation, because the Sprint shares were allegedly artificially inflated due to the materially misleading statements and then fell 15 percent when the truth about the merger became known. Individuals and entities who purchased Sprint stock before the Justice Department blocked the merger were permitted to sue, and the proposed class period for the suit is Oct. 4, 1999, through Sept. 19, 2000. ST. PAUL COMPANIES: Shareholders Claim Fraud in Handling Asbestos Case ---------------------------------------------------------------------- For the second time in a month, the St. Paul Companies Inc. has been sued by shareholders claiming fraud and misrepresentation in the firm's handling of a $1 billion asbestos-claim settlement, according to a report by the Star Tribune (Mpls./St.Paul). The lawsuit, which is seeking class-action status, is nearly identical to the one filed two weeks ago by Pennsylvania attorneys who claim that St. Paul did not disclose the seriousness of a claim by California distributor Western MacArthur, until the company announced its decision to settle for $980 million in June. The latest suit, filed by the law firm of Spector, Roseman & Kodroff in Philadelphia, accuses the St. Paul of learning the magnitude of the claim in March but failing to notify shareholders until June.The company had set aside only $367 million in preparation for the claim. The $980 million settlement resulted in a higher-than-expected $380 million charge to second-quarter earnings.The St. Paul's stock dropped from a high of $50 in May to $23 after the news.The complaint names the company, CEO Jay Fishman and CFO Thomas Bradley.St Paul officials have vowed to fight the suit. The Western MacArthur case stemmed from claims made against Baltimore-based USF&G before the St. Paul Companies bought USF&G in 1998. USF&G insured Western Asbestos in 1961, and the lawsuit settled this summer was meant to force the St. Paul to pay claims against Western. The settlement is awaiting bankruptcy court approval in California. If the settlement is approved, however, it could trigger a mountain of new claims. Hundreds of contractors sued Western MacArthur's parent firm last week. TROY GROUP: Lawsuit Charges Officers of Fiduciary Breach -------------------------------------------------------- TROY Group Inc. (NASDAQ: TROYE) announced that it and its directors have been sued in Orange County Superior Court. The complaint seeks, among other things, injunctive relief against the defendants declaring that the action may be properly maintained as a class action, declaring that the directors breached their fiduciary duties by entering into an acquisition agreement with the Dirk family, enjoining the defendants from consummating such acquisition unless the Company adopts and implements a process to obtain the highest possible price for stockholders, and directing the directors to exercise their fiduciary duties to obtain a transaction that is in the best interests of the stockholders.The Company believes that the lawsuit is completely without merit. As previously announced, a Special Committee of the Board has been formed and is currently working with its financial advisor to evaluate a proposal by the Dirk family to purchase the outstanding shares of the Company that the family does not already own. However, no price or other terms have been agreed to, and there can be no assurance that the parties will be able to reach agreement on the terms for any such acquisition. New Securities Fraud Cases AOL TIME WARNER: Rabin & Peckel Launches Securities Suit in S.D. NY ------------------------------------------------------------------- A class action Complaint has been filed in the United States District Court for the Southern District of New York, case number 02 Civ. 9411, on behalf of all persons or entities who purchased or otherwise acquired AOL Time Warner securities (NYSE:AOL) January 12, 2001 through September 3, 2002, inclusive. Credit Suisse First Boston and Jamie Kiggen are named as defendants in the complaint. The complaint alleges that the defendants violated section 10(b) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission. In particular, the complaint alleges that defendants issued and maintained "Buy" and "Attractive" recommendations on AOL securities without any rational economic basis; failed to disclose that they were issuing and maintaining these recommendations to obtain investment banking business; and concealed significant, material conflicts of interest that prevented them from providing independent objective analysis. The Complaint alleges that as a result of these false and misleading statements and omissions of material fact, the price of AOL securities were artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. For more details, please contact plaintiff's counsel, Eric J. Belfi or Sharon Lee, Rabin & Peckel LLP, by Mail: 275 Madison Avenue, New York, NY 10016, by Phone: 800-497-8076 or 212-682-1818, by Fax: 212-682-1892, or by E-mail: email@rabinlaw.com. LOOKSMART LTD.: Rabin & Peckel LLP Commences Fraud Suit in S.D. NY ------------------------------------------------------------------- A class action complaint has been filed in the United States District Court for the Southern District of New York, civil action number 02-CV- 9368, on behalf of all persons or entities who purchased or otherwise acquired LookSmart Ltd. securities (NASDAQ:LOOK) between May 25, 2000 and June 25, 2001, both dates inclusive. Merrill Lynch & Co. Inc. and Henry Blodget are named as defendants in the complaint. The complaint charges defendants Merrill Lynch and Blodget with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued analyst reports concerning LookSmart that recommended the purchase of LookSmart common stock and that set price targets for LookSmart common stock, which were materially false and misleading and lacked any reasonable factual basis. In particular, it is alleged that defendants failed to disclose significant material conflicts of interest, which resulted from the use by defendant Merrill Lynch of defendant Blodget's reputation and ability to issue favorable analyst reports, to obtain investment banking business for Merrill Lynch. It is also alleged that defendants, in issuing their LookSmart analyst reports, in which they recommended the purchase of LookSmart securities, failed to disclose material, non- public, adverse information, which they possessed about LookSmart. Throughout the Class Period, defendants maintained an "Accumulate/Buy" or "Neutral/Buy" recommendation on LookSmart stock in order to obtain and support lucrative financial deals for Merrill Lynch. For more details, contact plaintiff's counsel, Eric J. Belfi or Sharon Lee by Mail: Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016, by Phone: 800-497-8076 or 212-682-1818, by Fax: 212-682-1892, or by E- mail: email@rabinlaw.com. OM GROUP: Scott + Scott Files Securities Fraud Suit in N.D. OH --------------------------------------------------------------- Scott + Scott LLC announces that a class action has been commenced in the United States District Court for the Northern District of Ohio on behalf of purchasers of OM Group Inc. publicly traded securities during the period between July 30, 2002 and Oct. 30, 2002. The complaint charges OM Group and certain of its officers and directors with violations of the Securities Exchange Act of 1934. OM Group produces and markets metal-based specialty chemicals and related materials. The complaint alleges that during the Class Period, defendants made false statements about the company's business and prospects. After reporting somewhat disappointing 2ndQ 02 results, defendants told investors that its business was strong and all the indicators were for a good second half. As a result, OM Group stock continued to trade above US$50 per share. On September 19, 2002, OM Group warned the 3rdQ 02 results would be slightly lower than prior statements, but that results would still be significantly higher than in the prior year. Then, on October 29, 2002, OM Group announced a huge loss, an inventory write-down and a future restructuring. OM Group stock dropped to as low as US$8.60 per share on volume of US$22 million shares. Later, on October 31, 2002, it was disclosed that OM Group's Chief Executive Officer had sold all his holdings to cover a margin call on some 710,000 shares on OM Group stock, which he had used as collateral for a huge loan. On this news, the stock dropped even further to as low as US$6.12 per share. Plaintiff seeks to recover damages on behalf of all purchasers of OM Group publicly traded securities during the Class Period. Fore more details, contact Scott + Scott LLC by Phone: +1-800-404-7770, or by E-mail: nrothstein@scott-scott.com. PAINEWEBBER INC.: Seeger Weiss Files Securities Fraud Suit in NJ ---------------------------------------------------------------- Seeger Weiss LLP announced that on November 22, 2002, a class action lawsuit was filed in the United States District Court for the District of New Jersey on behalf of all customers of PaineWebber Inc. who purchased shares of the common stock of Qualcomm Inc. during the period December 29, 1999, through January 17, 2002, inclusive. The Amended Complaint charges that PaineWebber violated Section 10(b) of the Securities Exchange Act of 1934, as well as SEC Rule 10b-5 promulgated thereunder. Specifically, the Amended Complaint alleges that defendant knowingly or recklessly issued a series of materially false statements and misleading analyst reports concerning the stock of Qualcomm Inc. Plaintiff alleges that defendant deliberately made unsubstantiated positive recommendations of Qualcomm stock in order to attract investment banking and retail customer business. Furthermore, defendant failed to disclose the true motivation for its recommendations to its customers who relied on PaineWebber for investment advice.Plaintiff seeks to recover damages on behalf of all class members. For more details, contact David R. Buchanan, Esq., or Michael S. Farkas, Esq., by Mail: Seeger Weiss LLP, One William Street, New York, New York 10004, by Phone: 212-584-0700 or by E-mail: dbuchanan@seegerweiss.com, mfarkas@seegerweiss.com; or Thomas R. Grady, Esq., or Susan R. Healy, Esq., by Mail: Grady & Associates LPA, 720 Fifth Avenue South, Suite 200, Naples, Florida 34102, by Phone: 239-261-6555 or by E-mail: trgrady@gradylaw.com, shealy@gradylaw.com. SCHERING-PLOUGH CORP.: Berger & Montague Commences Fraud Suit in NJ ------------------------------------------------------------------- On November 25, 2002, the law firm of Berger & Montague P.C. filed a class action suit against Schering-Plough Corp. (NYSE: SGP), Putnam Investment Management LLC and Schering's Chairman, President and Chief Executive Officer in the United States District Court for the District of New Jersey on behalf of all persons or entities who purchased Schering securities from early in the afternoon of October 1, 2002 through the close of trading on October 3, 2002. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission by privately disclosing material adverse information to selected persons, who sold Schering stock while in possession of such inside information. On October 1, 2002, Schering's Chairman, Chief Executive Officer and President privately warned managers of Putnam, adviser to a number of mutual funds that were one of Schering's largest investors, that Schering's earnings in 2003 and 2004 would be far below forecasts. At an analyst meeting closed to the press on October 3, 2002, Kogan advised those present that Schering's fiscal 2003 and 2004 earnings would be "terrible," and stated that analysts' forecasts for Schering were too high. At 10:44 p.m. on October 3, 2002, Schering finally advised the public about its expected earnings shortfall, but only after Putnam and others sold their Schering stock while in possession of material, adverse, inside information in amounts more than triple the previous three-day average daily volume. As a result of the selective disclosure by defendants of adverse, material, non-public information to Putnam and others, they were able to sell enormous amounts of Schering stock before the general public received such information, thereby enabling them to benefit from the receipt of their inside information to the detriment of plaintiff and the Class. From the time Putnam first learned of the material inside information through the close of the market on October 4, 2002, Schering stock plunged from $21.80 per share to as low as $16.10 per share, a drop of over 25%. For more details, contact Sherrie R. Savett, Esq., or Barbara A. Podell, Esq, or Kimberly A. Walker, Investor Relations Manager, by Phone: 888-891-2289 or 215-875-3000, or by Fax: 215-875-5715 or by E- mail:InvestorProtect@bm.net. SEARS, ROEBUCK: Much Shelist Launches Securities Suit in N.D. IL ---------------------------------------------------------------- Much Shelist Freed Denenberg Ament & Rubenstein, P.C. announces that it has sued Sears, Roebuck & Co. (NYSE:S) and certain of its officers and directors in the United States District Court for the Northern District of Illinois, Eastern Division. The shareholder lawsuit is on behalf of all persons and entities who purchased Sears securities during the period January 17, 2002 through October 17, 2002, inclusive. The complaint alleges that Sears; Alan Lacy (CEO, President and Chairman), Glenn Richter (CFO from October 4, 2002, Senior V.P., Finance since inception of Class Period), Paul J. Liska (CFO until October 4, 2002) and Thomas E. Bergmann (Chief Accounting Officer), violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market during the Class Period. These alleged misstatements had the effect of artificially inflating the price of Sears securities. The complaint states that the defendants, throughout the Class Period, represented that Sears was growing its earnings strongly, driven by its Credit and Financial Products segment and that it would achieve earnings growth of 22% in 2002 over 2001.In addition, in each of its press releases and SEC reports filed during the Class Period, Sears reported its provisions for uncollectible accounts and in, its 2001 annual report represented that such reserves were "adequate." These, and other statements were allegedly false and misleading because, in that they did not disclose that the Company's risk for uncollectible accounts had increased materially throughout the Class Period and, in addition, that Sears was under-reserving for its uncollectible accounts which inflated its earnings and balance sheet, the complaint said. On October 17, 2002, Sears reported in a press release that it will grow its 2002 earnings by 15%, rather than the 22% it reaffirmed as recently as ten days previously, because of a "$222 million increase in the domestic provision for uncollectible accounts." In addition, according to the press release, earnings for the third quarter were 26% less than the previous year. In reaction to the press release, the price of Sears common stock plummeted, falling 32%, from an October 16 close of $33.95 per share to close at $23.15 per share on October 17, on extremely heavy trading volume. Plaintiff seeks to recover damages on behalf of all those who purchased Sears securities during the Class Period (January 17, 2002 through October 17, 2002). For more details, contact Carol V. Gilden or Michael E. Moskovitz by Mail: Much Shelist Freed Denenberg Ament & Rubenstein, P.C., by Phone: toll-free number 800-470-6824, or by E-mail: investorhelp@muchshelist.com. SYNCOR INTERNATIONAL: Milberg Weiss Files Fraud Suit in C.D. CA --------------------------------------------------------------- Milberg Weiss Tuesday announced that a class action has been commenced, on behalf of an institutional investor, in the United States District Court for the Central District of California on behalf of purchasers of Syncor International Corp. (NASDAQ:SCOR) publicly traded securities during the period between April 24, 2000 and November 5, 2002.The complaint charges Syncor and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants caused Syncor's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements, particularly about the Company's improving international operations. As a result of this inflation, defendants were able to sell 333,500 shares of their Syncor stock for proceeds of $8.56 million. Later, Syncor was hoping to be acquired by Cardinal Health Inc.. Unknown to investors, defendants were engaging in an illegal payment scheme which was the actual reason for the supposed improvement in international operations. It was during due diligence by Cardinal that the illegal payments were uncovered and defendants realized the activity could no longer be concealed.On November 6, 2002, before the markets opened, the Company issued a press release announcing an investigation into payments to customers. The press release stated in part: "Syncor International Corporation announced that a committee of outside directors, together with special outside counsel, has been investigating the propriety of certain payments made by overseas subsidiaries to customers in several foreign countries, including Taiwan and China. To date, the investigation indicates that some of the payments made to state-owned and private healthcare facilities may have violated foreign and U.S. law, including the Foreign Corrupt Practices Act." Trading in Syncor stock was immediately halted after the announcement. When trading resumed, the stock dropped below $27.40 per share, from $35.92 the prior day. Plaintiff seeks to recover damages on behalf of all purchasers of Syncor publicly traded securities during the Class Period. Syncor provides high technology health care services concentrating on nuclear pharmacy services, medical imaging, niche manufacturing and radiotherapy. For more details, contact plaintiff's counsel, William Lerach or Darren Robbins, by Phone: 800-449-4900, or by E-mail: wsl@milberg.com. XO COMMUNICATIONS: Lovell Stewart Files Fraud Suit in S.D. NY ------------------------------------------------------------- The law firm of Lovell Stewart Halebian LLP filed a class action lawsuit on November 13, 2002 on behalf of all persons who purchased, converted, exchanged or otherwise acquired the securities of XO Communications Inc. (OTC BB:XOXOQ.OB, formerly NasdaqNM:XOXO) between October 11, 1997 and November 1, 2001, inclusive. The lawsuit is related to a group of actions brought against Jack Grubman and Salomon Smith Barney. In one of the related actions involving Global Crossing securities, in which the Court has not yet appointed a lead plaintiff, Lovell Stewart Halebian represents the investor with the largest financial interest in the litigation (with almost $130 million in losses) and the presumptive lead plaintiff. The action, Sullivan v. Salomon Smith Barney Inc., et ano., is pending in the U.S. District Court for the Southern District of New York (500 Pearl Street, New York, New York), Docket No. 02-CV-9056 and 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 the common law and seeks to recover damages. The complaint alleges that during the class period Salomon Smith Barney, Inc. and Jack Grubman, Salomon Smith Barney's lead telecommunications analyst, made misrepresentations and omissions of material fact, including recommending XO Communications and setting price targets for XO Communications stock without any reasonable basis, failing to disclose nonpublic information that defendants possessed about XO Communications, and failing to disclose that defendants maintained a "buy" recommendation on XO Communications in order to obtain and support lucrative investment banking engagements for Salomon Smith Barney. The complaint alleges that the foregoing harmed investors by causing the market price of XO Communications securities to be artificially inflated during the class period. For more details, contact John Halebian or Christopher J. Gray by Phone: (212) 608-1900, or by E-mail: info@lshllp.com. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C.Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002.All rights reserved.ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each.For subscription information, contact Christopher Beard at 240/629-3300. * * *End of Transmission* * *