/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/021203.mbx C L A S S A C T I O N R E P O R T E R Tuesday, December 3, 2002, Vol. 4, No. 239 Headlines AMC ENTERTAINMENT: Ruling States Theaters Violated Disabilities Act ARKANSAS: Mothers Rally At Capitol In Effort to End Child-Support Delays BOEING CO.: Appeals Court Rejects Settlement of Discrimination Lawsuit CALIFORNIA: Top Securities Regulator Says Wall Street Fines Too Low CALIFORNIA: Investors Seek Share Of Stockbrokers' Stock Fraud Penalties CALIPER TECHNOLOGIES: NY Court Dismisses Officers From Securities Suit CCC INFORMATION: Faces Several Suits Over Total Loss Valuation Services CORNELL COMPANIES: Faces Consolidated Securities Fraud Suit in S.D. TX DAOU SYSTEMS: CA Court Dismisses With Prejudice Securities Fraud Suit DRIVETIME AUTOMOTIVE: Consumer Fraud Suit Alleges Overcharges ECHOSTAR COMMUNICATIONS: Fairness Hearing For Settlement Set March 2003 ECHOSTAR COMMUNICATIONS: Plaintiffs Appeal CA Summary Judgment Ruling ECHOSTAR COMMUNICATIONS: Court Hears Arguments for Suit Certification ECHOSTAR COMMUNICATIONS: Plaintiffs Appeal Dismissal of Retailer Suit ELECTRONIC DATA: To Ask TX Court To Consolidate Securities Fraud Suits HARNISCHFEGER INDUSTRIES: Ruling Gives Workers Part of Suit Settlement HMO LITIGATION: Doctors' Objections May Scuttle Cigna Suit Settlement K-MART CORPORATION: Investors Commence Securities Suit Against Auditors MAINE: Lawyer Criticizes State Mental Hospital's Clean Bill Of Health MGM GRAND: Judge Denies Class Certification For Discrimination Lawsuit NEW YORK: City Parks Workers Allege Past Racial Bias By Ex-Commissioner SHIPPING INDUSTRY: Dockworkers, Shipping Companies Forge Labor Pact SPANISH BROADCASTING: Asks NY Court To Dismiss Securities Fraud Lawsuit SYKES ENTERPRISES: To Settle Consolidated Securities Suit For $30M UNITED STATES: Lawsuit Purposes To Block All US Deportation To Somalia UNITED STATES: Black Farmers End Takeover of USDA Building In Louisiana UTAH: Services Dept Shows Statistical Work Picture, Fails To Meet Goals WESTELL TECHNOLOGIES: Enters Settlement Discussions For Securities Suit WYOMING: Judge Orders State Penitentiary Officials To Protect Inmates *Top Lawyer Says Investors Should Also Target Bankers, Not Just Firms New Securities Fraud Cases AES CORPORATION: Marc Henzel Commences Securities Fraud Suit in E.D. VA ANSWERTHINK INC.: Marc Henzel Launches Securities Fraud Suit in S.D. FL BROADWING INC.: Marc Henzel Commences Securities Fraud Suit in S.D. OH SEARS ROEBUCK: Marc Henzel Commences Securities Fraud Suit in N.D. TX ********* AMC ENTERTAINMENT: Ruling States Theaters Violated Disabilities Act ------------------------------------------------------------------- AMC Entertainment Inc.'s stadium-style theaters deprive moviegoers in wheelchairs a comfortable view of the screen in violation of the Americans With Disabilities Act, a federal judge ruled, the Los Angeles Times reports. US District Judge Florence-Marie Cooper in Los Angeles sided with the United States, which sued the nation's second-largest publicly traded movie theater chain, on behalf of disabled persons, for violating the Americans With Disabilities Act. The ruling marks the first time a theater has lost a disabilities act challenge to stadium-style theaters, which have become the industry standard.Patrons in wheelchairs complain that their designated seating is too close to the screen, forcing them to crane their necks. Apparently the judge also thought this was a discomfort which could be eliminated by a remedy not unreasonably burdensome. ARKANSAS: Mothers Rally At Capitol In Effort To End Child-Support Delays ------------------------------------------------------------------------ Instead of spending Thanksgiving at the family dinner table, some Arkansas mothers rallied at the state Capitol to draw attention to their child-support concerns, The Commercial Appeal (Memphis, TN) reports. Among these were plaintiffs in a class action against state officials. The women plaintiffs are suing over delays in child-support payments. Thousands of support checks were slowed when the state switched to a new computer system in July 2001, and took on about 50,000 new support cases as this was happening.Theresa Caldwell, an attorney for the plaintiffs, and other rally organizers distributed turkey pot-pies and milk on the steps of the state Capitol. The federal judge who granted the case class action status in September, said the child-support office was trying to address the plaintiffs' needs and had made substantial progress. However, Cassandra Meyer, a mother of three children, said she just this year began receiving some support payments.She said many women find it impossible to cut through the red tape involved in getting support payments.She said the feeling exists that "you cannot fight the system, that the system is set in stone, that there is no point in making waves or that they are just going to give you more of a hassle." BOEING CO.: Appeals Court Rejects Settlement of Discrimination Lawsuit ---------------------------------------------------------------------- A federal appeals court threw out a $15 million settlement of a class- action racial discrimination suit against Boeing Co., saying there was no justification for the $4 million in lawyers' fees or for the substantial disparity in payments among plaintiffs, the Los Angeles Times reports.The ruling forces the Company to reopen negotiations that could lead to a more costly settlement or even a trial. The settlement would have allowed Boeing a relatively inexpensive resolution to a lawsuit on behalf of 15,000 black workers.It alleged widespread harassment and discrimination in promotions at Boeing plants across the country, including Long Beach. A three-judge panel of the US Ninth Circuit Court of Appeals voted 2 to 1 to send the Boeing case back to US District Court in Seattle.If a new settlement cannot be reached, the case could go back to trial, said lawyers familiar with the case and with civil procedure. A lawyer for more than 200 black Boeing workers said the group wants to see a new settlement that involves substantially more money, which is distributed more fairly and forces the company to change its promotion practices. A Boeing spokesman said the Company could not comment on the ruling because its lawyers were still reviewing it. CALIFORNIA: Top Securities Regulator Says Wall Street Fines Too Low ------------------------------------------------------------------- California's top securities regulator said the fines being sought from brokerages in a proposed settlement over analyst conflicts of interest are far too low.It was the first time an official has publicly broken ranks with his counterparts on how much Wall Street should be penalized for its alleged bull-market wrongdoings, the Los Angeles Times reported. Demetrios A. Boutris, commissioner of the state's Department of Corporations, said every firm should pay at least $100 million to resolve multiple investigations of whether stock analysts gave out tainted advice in the late 1990s. State and federal regulators are demanding fines in talks aimed at reaching a "global" settlement with a dozen investment banks.The bulk of the firms are being asked to pay $25 million to $100 million, sources said.Citigroup Inc. and Credit Suisse First Boston would have to pay considerably larger fines. The proposed fines let firms "think they can justify their bad behaviour as simply the cost of doing business," Mr. Boutris said."Bad behavior should be punished.And the fines should reflect that punishment." CALIFORNIA: Investors Seek Share Of Stockbrokers' Stock Fraud Penalties ----------------------------------------------------------------------- Securities regulators and Wall Street firms still are haggling over how much brokerages should pay for the sins of the 1990s bull market, but questions are being raised about whether small investors who lost billions when the bubble burst will see any of that money, the Los Angeles Times reports. If the major brokerages are forced to pay fines to settle charges that their analysts' recommendations were tainted by conflicts of interest, investors believe they should receive some of the money."It would be great to get some of my money back," said George Wolfberg, a retired Los Angeles city budget supervisor."If there is a restitution fund, the money should go to people who were harmed by the bad behavior of the Wall Street analysts." State and federal officials are negotiating with a dozen Wall Street investment banks to settle probes of stock analyst conduct during the 1990s bull market.The firms, including Citigroup Inc.'s Salomon Smith Barney unit, Bear Stearns Cos. and Credit Suisse First Boston, are expected to agree to pay $1 billion or more in fines to avoid battles with the regulators.They would pay an additional $1 billion to fund an effort to distribute independent research. What should be done with the money, whether to return it to aggrieved investors or pad the coffers of cash-strapped governments, is becoming a highly charged issue. Paying restitution to investors is critical, some experts contend, because it could be the only way for many people to recoup any of their stock market losses.Such a payback, however, would cover only a sliver of each investor's losses, according to James Newman, executive director of Securities Class Action Services, which follows class actions. Still, said Mr. Newman, "If you get a check in the mail for a few hundred dollars well, it's better that investors get something." However, regulators in many states, which collectively would receive about half the money paid by the Wall Street firms, plan to keep it rather than hand it to investors. A possible exception could be New York, where Attorney General Eliot Spitzer has indicated that he would be amenable to reimbursing investors.After Mr. Spitzer reached a deal with Merrill Lynch & Co. this year that required the firm to pay a $100 million penalty, he was criticized for not giving those funds to investors.However, the temptation to keep the money is sure to be strong among state governments grappling with budget deficits. However, budget issues aside, setting up a restitution fund would be a logistical nightmare, some state officials say.Theoretically, everyone who owned stocks, even those who invested indirectly through 401(k) accounts, could claim to be eligible.What's more, it would be difficult to determine how much investors relied on analyst advice when buying stocks. At least one lawmaker says shareholders deserve the money.Rep. Richard H. Baker (R-La.) plans to introduce a bill next year to force states to pay funds collected in actions against brokerages to investors.Rep. Baker chairs the House subcommittee on capital markets. State governments are only part of the equation.Federal regulators would get about half of any Wall Street settlement, and it is unclear what the fate of that money would be. A major securities reform law passed this summer allows the Securities and Exchange Commission to create restitution funds for investors. However, the agency is not required to do so, explained John Coffee, a Columbia University Law Professor.Under the law, said Professor Coffee, the settlement would have to establish a "disgorgement" fund in which firms gave back illicit profits.Civil fines then could be added to the disgorgement pot, he said. The restitution fund has taken on added significance because of uncertainty about how investors would fare in the class actions that have been filed against brokerages.State regulators say the best way to help shareholders would be to release detailed findings of brokerage wrongdoing as part of a settlement with the Wall Street firms. Investors could then use that material in the class actions. Investors historically have received only a fraction of their losses in class actions, however.Since 1990, the average securities class action has been settled for 12 cents on every dollar in claimed losses, according to National Economic Research Associates Inc., a White Plains, New York, consulting firm.That excludes attorneys' fees which can lop 30 percent or more off a settlement. CALIPER TECHNOLOGIES: NY Court Dismisses Officers From Securities Suit ---------------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed without prejudice Caliper Technologies, Inc.'s officers and directors from the consolidated securities class action pending on behalf of its shareholders. Several suits were filed in June 2001, against the Company and: (1) David V. Milligan, (2) Daniel L. Kisner and (3) James L. Knighton The suits were later consolidated, and the consolidated suit alleged claims against the defendants under Sections 11 and 15 of the Securities Act of 1933, and under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder. The consolidated lawsuit also names certain underwriters of the Company's December 1999 initial public offering of common stock.The suit alleges that these underwriters charged excessive, undisclosed commissions to investors and entered into improper agreements with investors relating to aftermarket transactions. Similar suits were launched against other issuers of public offerings in the Southern District of New York, and all suits (including the one against the Company) have been consolidated for pre-trial purposes under Judge Shira Scheindlin. The Company and the other issuers named as defendants in the lawsuits moved on July 15, 2002 to dismiss all claims on multiple grounds.By stipulation and order dated October 9, 2002, the claims against Mr. Milligan, Mr. Kisner and Mr. Knighton were dismissed without prejudice. Based on current information, the Company believes that the claims alleged against it are without merit. CCC INFORMATION: Faces Several Suits Over Total Loss Valuation Services ----------------------------------------------------------------------- CCC Information Services Group, Inc. faces several class and individual actions raising issues regarding the use of the Company's Total Loss valuation service by its insurance company customers.Many of these suits are brought by the same group or groups of plaintiffs' lawyers: (1) BEARDEN v. CCC INFORMATION SERVICES INC., Civil Action No. 01CV22114 (Superior Court of Floyd County, Georgia) - the court granted the Company's motion to dismiss amended suit. (2) BARBER v. STATE AUTO INSURANCE CO., SONNY J. SMITH, EVERS AND ASSOCIATES, INC., BRIAN SIGMON, CCC INFORMATION SERVICES INC., and TIM GAINER, Case No. CV-02-B-0531-X (United States District Court for the Northern District of Alabama) - the plaintiff has filed an appeal from the district court's April 26, 2002, order dismissing plaintiff's claims against the Company with prejudice.Plaintiff's appeal is fully briefed and pending before the United States Court of Appeals for the Eleventh Circuit. (3) STEPHENS v. THE PROGRESSIVE CORP., PROGRESSIVE PREFERRED INS. CO. and CCC INFORMATION SERVICES INC., No. 99 CH 15557 (Circuit Court of Cook County, Illinois)- the plaintiff filed a notice of appeal from the circuit court's June 28, 2002, order dismissing the plaintiff's claims with prejudice. Plaintiff's appeal is pending before the Illinois Appellate Court for the First District. (4) ALVAREZ-FLORES v. AMERICAN FINANCIAL GROUP, INC., ATLANTA CASUALTY CO., and CCC INFORMATION SERVICES INC., No. 99 CH 15032 (Circuit Court of Cook County, Illinois) - on October 3, 2002, the plaintiff filed a second amended complaint.The plaintiff's first amended complaint had been dismissed on June 28, 2002, for failure to state a claim for relief. (5) WHITWORTH v. NATIONWIDE MUTUAL INS. CO. and CCC INFORMATION SERVICES INC., Case No. CVH-0806980 (Court of Common Pleas, Franklin County, Ohio) - on November 1, 2002, the court granted final approval of the class action settlement. Pursuant to the settlement, the claims asserted in WHITWORTH have been dismissed. (6) CCC INFORMATION SERVICES INC. v. SUPERIOR INSURANCE GROUP, INC., Case No. 01L6337 (Circuit Court of Cook County, Illinois) - the settlement has been finalized, and the action was dismissed in its entirety on October 22, 2002. The Company denies the suits' allegations. Due to the numerous legal and factual issues that must be resolved during the course of litigation, the Company is unable to predict the ultimate outcome of any of these actions. CORNELL COMPANIES: Faces Consolidated Securities Fraud Suit in S.D. TX ---------------------------------------------------------------------- Cornell Companies, Inc. faces a consolidated securities class action pending in the United States District Court for the Southern District of Texas, Houston Division on behalf of purchasers of the Company's common stock between March 6,2001 and March 5,2002.The suit also names as defendants, Steven W. Logan, and John L. Hendrix.The Company believes that it has good defenses to each of the plaintiffs' claims. The lawsuits involve disclosures made concerning two prior transactions executed by the Company, the August 2001 sale leaseback transaction and the 2000 synthetic lease transaction.The plaintiffs in these actions allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated under Section 10(b) of the Exchange Act, and/or Section 20(a) of the Exchange Act. DAOU SYSTEMS: CA Court Dismisses With Prejudice Securities Fraud Suit --------------------------------------------------------------------- The United States District Court for the Southern District of California dismissed with prejudice the securities class action pending against Daou Systems, Inc. Several suits were commenced against the Company and certain of its officers and directors alleging that the Company improperly used the "percentage-of-completion" accounting method for revenue recognition. Claims are pleaded under both the 1933 Securities Act (relating to the Company's initial public offering) and Section 10b of the 1934 Securities Act.The complaint was brought on behalf of a purported class of investors who purchased the Company's common stock between February 13, 1997 and October 28, 1998, but it does not allege specific damage amounts. The Company asked the court to dismiss the suit, and the court granted this motion in March 2002.However, the court also extended to the plaintiffs the opportunity to file an amended Complaint.The plaintiffs filed their third amended suit on May 16, 2002, to which the Company responded with another motion to dismiss, challenging the legal sufficiency of the allegations.On October 15, 2002, the court granted that motion, this time with prejudice. In October 1998, two separate complaints were filed in the Superior Court of San Diego County, California.These state court complaints mirror the allegations set forth in the federal complaints.They also assert claims for common law fraud and the violation of certain California statutes.As with their federal counterparts, they do not allege specific damage amounts. On April 1, 1999, a consolidated amended suit was filed on behalf of the same state court plaintiffs, and this new complaint alleges the same factual basis as is asserted in the federal litigation.The state litigation pleads claims for fraud and violations of certain California Corporation Code provisions.By stipulation of the parties and order of the court, this state court litigation was stayed pending the outcome of the motion to dismiss the federal lawsuits. Now that the federal court has granted the motion, the plaintiffs are determining whether to appeal and how to proceed with the state court litigation.The Company believes that the allegations set forth in the federal and state complaints are without merit, and the Company intends to defend against these lawsuits vigorously.No assurance as to the outcome of this matter can be given, however, and an unfavorable resolution of this matter could have a material adverse effect on the Company's business, results of operations, and financial condition. DRIVETIME AUTOMOTIVE: Consumer Fraud Suit Alleges Overcharges ------------------------------------------------------------- Drivetime Automotive Group, Inc. faces a class action pending in the 192nd Judicial District Court in Dallas County, Texas, which also names as defendants Ugly Duckling Car Sales, now dba DriveTime, and Ugly Duckling Credit Corporation, now known as DriveTime Credit Corporation. A group of law firms in Texas have sued a large number of Dallas county auto dealers (including the Company) alleging the auto dealers have charged customers interest on deferred sales taxes and overcharged in the sale and financing of customers. It is the Company's understanding more lawsuits have been filed in other Texas counties.The Company believes the claims against it are without merit. ECHOSTAR COMMUNICATIONS: Fairness Hearing For Settlement Set March 2003 ----------------------------------------------------------------------- The fairness hearing for the settlement of the consumer fraud class action pending against EchoStar Communications has been set for March 7, 2003 in the California State Superior Court for Alameda County. The suit, relating to late fees, alleges unlawful, unfair and fraudulent business practices in violation of California Business and Professions Code Section 17200 et seq., false and misleading advertising in violation of California Business and Professions Code Section 17500, and violation of the California Consumer Legal Remedies Act. During September 2001, the Company filed an answer denying all material allegations of the complaint, and the court entered an Order Pursuant to Stipulation for a provisional certification of the class, for an orderly exchange of information and for mediation.The provisional Order specifies that the class will be de-certified upon notice if mediation does not resolve the dispute. A settlement was reached with plaintiff's counsel and the court issued its preliminary approval of the settlement on October 18, 2002. If the settlement is not approved, the Company intends to deny all liability and to vigorously defend the lawsuit.The settlement confirms that the late fee charged by the Company is appropriate and will not change. ECHOSTAR COMMUNICATIONS: Plaintiffs Appeal CA Summary Judgment Ruling --------------------------------------------------------------------- Plaintiffs intend to appeal the California State Superior Court for Los Angeles County's ruling granting EchoStar Communication's motion for summary judgment in the class action pending against them, relating to the use of terms such as "crystal clear digital video," "CD-quality audio," and "on-screen program guide," and with respect to the number of channels available in various programming packages. The complaint alleges: (1) breach of express warranty, (2) violation of the California Consumer Legal Remedies Act, (3) violation of the Civil Code Sections 1750, et seq., and (4) violation of the California Business & Professions Code Sections 17500 & 17200 A hearing on the plaintiffs' motion for class certification and the Company's motion for summary judgment was held on June 28, 2002.At the hearing, the court issued a preliminary ruling denying the plaintiffs' motion for class certification.However, before issuing a final ruling on class certification, the court granted the Company's motion for summary judgment with respect to all of the plaintiffs' claims. The plaintiffs filed a Notice of Appeal of the court's ruling, but it is too early to make an assessment of the probable outcome of the appeal or to determine the extent of any potential liability or damages. ECHOSTAR COMMUNICATIONS: Court Hears Arguments for Suit Certification --------------------------------------------------------------------- The Arapahoe County District Court in the State of Colorado heard arguments for class certification for a consumer suit filed against EchoStar Communications on behalf of certain of the Company's satellite hardware retailers. The suit is one of two separate lawsuits filed in October 2000 in the Arapahoe County District Court in the State of Colorado and the United States District Court for the District of Colorado, respectively, by Air Communication & Satellite, Inc. and John DeJong, et al. on behalf of themselves and a class of persons similarly situated. The plaintiffs are requesting the courts to declare certain provisions of, and changes to, alleged agreements between us and the retailers invalid and unenforceable, and to award damages for lost incentives and payments, charge backs, and other compensation. The United States District Court for the District of Colorado stayed the federal lawsuit to allow the parties to pursue a comprehensive adjudication of their dispute in the Arapahoe County State Court.John DeJong, d/b/a Nexwave, and Joseph Kelley, d/b/a Keltronics, subsequently intervened in the Arapahoe County Court action as plaintiffs and proposed class representatives. The Company intends to assert a variety of counterclaims in its defense. It is too early to make an assessment of the probable outcome of the litigation or to determine the extent of any potential liability or damages. ECHOSTAR COMMUNICATIONS: Plaintiffs Appeal Dismissal of Retailer Suit --------------------------------------------------------------------- Plaintiffs plan to appeal the United States District Court for the Eastern District of Texas' ruling denying its motion for reconsideration of the dismissal of the retailer class action filed against EchoStar Communications. The suit was filed on behalf of a nationwide class of sellers, installers, and servicers of satellite equipment who contract with the Company and who allege that the Company: (1) charged back certain fees paid by members of the class to professional installers in violation of contractual terms; (2) manipulated the accounts of subscribers to deny payments to class members; and (3) misrepresented, to class members, who owns certain equipment related to the provision of satellite television service. During September 2001, the court granted the Company's motion to dismiss for lack of personal jurisdiction.The plaintiff moved for reconsideration of the court's order dismissing the case and the court denied the motion.The plaintiff then filed a notice of appeal of the court's decision. It is too early for the Company to make an assessment of the probable outcome of the appeal or to determine the extent of any potential liability or damages. ELECTRONIC DATA: To Ask TX Court To Consolidate Securities Fraud Suits ---------------------------------------------------------------------- Electronic Data Systems, Inc. intends to file a motion consolidating several securities class actions filed against it and certain of its officers are defendants in numerous (in excess of twenty) from September 2002 through November 2002 in response to: (1) the Company's September 18, 2002 earnings pre-announcement, (2) publicity about certain equity hedging transactions that it had entered into, and (3) the drop in the price of the Company's common stock The cases, filed in the United States District Court for the Eastern District of Texas, allege violations of various federal securities laws and common law fraud based upon purported misstatements and/or omissions of material facts regarding the Company's financial condition. In addition, three purported class action suits have been filed on behalf of participants in the Company's 401(k) Plan against the Company, certain of its current and former officers and, in one of the cases, its directors, alleging the defendants breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) and made misrepresentations to the class regarding the value of Company shares. In addition, the Company has recently been served with two derivative complaints filed by shareholders in the District Court of Collin County, Texas against its directors and certain officers and naming the Company as a nominal defendant. The actions allege breach of fiduciary duties, abuse of control and gross mismanagement based upon purported misstatements and/or omissions of material facts regarding the Company's financial condition similar to those raised in the purported class actions described above. As these actions are in the earliest stages, the Company is not able to determine the actual impact on its consolidated financial statements; however, the Company does not expect the impact to be material. HARNISCHFEGER INDUSTRIES: Ruling Gives Workers Part of Suit Settlement ---------------------------------------------------------------------- A $10 million settlement of securities fraud lawsuits should include almost 1,000 Harnischfeger Industries workers who lost money when the company stock plan's value fell, a federal judge has ruled, according to a report by Associated Press Newswires.These workers had objected to last fall's settlement between the company and investors' lawyers because, they say, it excluded them. The revised settlement, made final by US District Judge Lynn Adelman in Milwaukee, means the workers will receive at least part of the $6.77 million that will remain from the $10 million once lawyers who brought the class action are paid.The workers include both salaried and hourly employees in 1997 and 1998, at the company, which is a maker of mining equipment. The settlement of $10 million means the Company avoids going to trial on allegations of financial fraud that started after cost overruns and earnings restatements sent the Company into bankruptcy in 1999.The lawsuit alleged that the Company artificially inflated its stock price by overstating profits from long-term projects at Indonesian papermaking plants. Judge Adelman concluded that the $10 million amount was both substantial and fair, but criticized the original settlement because employees should have received notice that a settlement affecting them was imminent. Under the original settlement, wrote Judge Adelman, "the plan participants would have had no voice at all in the settlement proceedings, despite having a substantial stake in the settlement. Under such circumstances how could I reasonably have approved the settlement as being fair?" This decision also keeps alive a separate lawsuit filed in federal court in Boston against Fidelity Management and Research Corp. of Massachusetts.In the Boston lawsuit, Fidelity Management, the manager of the Company's 401 (k) plan, was accused of breaching its fiduciary duty by not warning employees about the risk of investing heavily in the company.The suit seeks $13 million in damages. The Company emerged from bankruptcy last year under the new corporate name of Joy Global Inc.A representative of the Company's law firm said the company would not comment on the case. HMO LITIGATION: Doctors' Objections May Scuttle Cigna Suit Settlement --------------------------------------------------------------------- Cigna Corp., which was rocked by an $887 million third-quarter loss, hopes a proposed class-action settlement will resolve litigation alleging the insurance company underpaid doctors by the way it processed claims, the Centre Daily Times (Canada) reported. However, doctors in a competing class action plan to object to the agreement, saying it does not adequately address their concerns about health-care rationing, the physician-patient relationship and other issues. "It (the settlement proposed to doctors' group #1) certainly does not come close to creating a new relationship between health plans and physicians, which is sorely needed," said Dr. Jack Lewin, chief executive officer of the California Medical Association.The second group is one of five state associations involved in a larger lawsuit in federal court in Florida, that consolidates suits filed across the country against Cigna and several other insurers. An emergency hearing has been set for next week in that case to discuss the proposed agreement, which is designed to resolve all pending suits against Cigna.The controversial settlement came about in Illinois, where Cigna and plaintiffs in a three-year-old state class action (group #1) moved the case to federal court on one day and won preliminary approval of the settlement a day later. The company expects to take a $50 million to $65 million charge for the fourth quarter to settle the litigation claims, and said its own insurers might pay an additional sum.Lawyers in the Illinois case believe the claims could reach $200 million.The proposed settlement would cover more than 600,000 doctors, hospitals, clinics and suppliers around the country, company officials said. As part of the agreement, Connecticut-based Cigna HealthCare, a division of Philadelphia-based Cigna, will post on its Web site additional explanations of its claim coding and other payment policies, appoint a third-party administrator to review certain claims that were denied since January 1, 1996 and establish a $10 million "prompt pay fund" for doctors whose payments were tardy. K-MART CORPORATION: Investors Commence Securities Suit Against Auditors ----------------------------------------------------------------------- A shareholders group is suing Kmart Corporation's auditor PricewaterhouseCoopers, accusing it of looking the other way as the century-old retailer careened toward financial collapse, the Aberdeen American News reported.The lawsuit is seeking class action certification. In its claim, recently filed in federal court in Detroit, the lawsuit asserts Pricewaterhouse Coopers received millions of dollars in consulting fees from Kmart and had a longstanding relationship with Kmart, which is based in Troy, Michigan.As a result, the lawsuit says, PricewaterhouseCoopers either should have known the Company was sliding into insolvency or chose to "recklessly disregard" the facts about the Company's finances.The shareholders group is identified as D.E.&J. Limited Partnership and also names several former Kmart executives. PricewaterhouseCoopers says the lawsuit is groundless and has asked US District Judge Gerald Rosen to dismiss it.The auditing firm says it can be held responsible only for its opinions on Kmart's 2000 and 2001 financial statements, and that the lawsuit fails to allege that those opinions were false and misleading. Troy lawyer Powell Miller, who filed the lawsuit, says that PricewaterhouseCooper did not do its job as a watchdog."Investors rely on auditors to make sure the financial statements are reliable so people can have confidence in those statements when they make an investment," the plaintiffs' lawyer said recently."It was crucial for them to raise the red flag, so the problems would have come to light so much sooner." Mr. Miller's lawsuit is believed to be the first to try to pin on its auditor some of the blame for the Kmart debacle, which has wiped out more than $3 billion in equity and cost 22,000 employees their jobs. Joseph Whall, a forensic accountant in Auburn Hills, Michigan, says he expects many similar lawsuits to be filed by shareholders against the accounting industry in the wake of the year's corporate scandals. Questionable and fraudulent accounting practices are blamed for hiding problems at many of the troubled companies. MAINE: Lawyer Criticizes State Mental Hospital's Clean Bill Of Health --------------------------------------------------------------------- The Augusta Mental Health Institute (AMHI) has received the federal certification that qualifies it for more than $16 million in Medicaid and Medicare funds, the Associated Press Newswires reported. However, Peter Darvin, attorney for about 4,000 past and present AMHI patients that brought a class action in 1990, said the state has repeatedly failed to meet the terms of the consent decree stemming from the lawsuit. The consent decree ordered the state to make widespread changes in its mental health care system.A Superior Court trial that opened in late October will determine the future of the consent decree.The decree requires individual treatment plans for patients, outlines rights of the mentally ill to have input into their own care, and requires development of a comprehensive system of community-based care. However, at the same time, Commissioner Lynn Duby of the Department of Behavioral and Developmental Services said that AMHI has passed a mental health compliance survey, a three-day evaluation that determines whether hospitals meet criteria for proper patient care. Testifying recently in Kennebec County Superior Court, on whether the consent decree's goals have been met, Commissioner Duby told Justice Nancy Mills that the state has significantly improved its services to the mentally ill under the administration of Governor Angus King. Last March, construction began on a new 92-bed psychiatric hospital that will replace AMHI.The Riverview Psychiatric Center is scheduled to be completed in August 2003 and begin accepting patients three months later. MGM GRAND: Judge Denies Class Certification For Discrimination Lawsuit ---------------------------------------------------------------------- A judge has denied a request by black MGM Grand Detroit Casino workers that he grant class action status to lawsuits that allege the Casino's black workers were discriminated against by management, the Associated Press Newswires reports. Fifteen workers initiated the lawsuit, but it was expected that as many as 350 current and former MGM workers would join a class action, The Detroit News reports. "The case, if certified as a class action, would degenerate into 350 individual trials,"Wayne County Circuit Judge Susan Borman wrote in a 29-page opinion recently."The class would not be manageable."The casino's liability hinges on individual decisions supervisors and "the unique circumstances surrounding those decisions," Judge Borman wrote. The ruling means the plaintiffs might have to pursue their cases individually in court, said the plaintiffs' lawyer Lynn Shecter, who has filed a motion asking Judge Borman to reconsider her decision. NEW YORK: City Parks Workers Allege Past Racial Bias By Ex-Commissioner ----------------------------------------------------------------------- Detailed allegations that former Parks and Recreation Department Commissioner Henry Stern made racially derogatory remarks and tolerated offensive symbols during his tenure have been filed in US District Court in Manhattan, according to The Record (Bergen County, NJ). The newly detailed allegations are part of a discrimination lawsuit filed last year by black and Hispanic Parks Department employees charging that the city agency denied minorities raises and promotions and failed to enforce laws designed to promote equal employment opportunity. The court papers allege that Mr. Stern tolerated three hangman's nooses that were displayed on Parks Department property over the past seven years.The papers say that Mr. Stern had a noose removed that was hung in a Parks Department building in Staten Island in 1998.In addition, Daniel Weizmann, a former Parks Department employee, said in an affidavit that he once overheard Mr. Stern say "in substance that former Mayor David Dinkins had ruined the city by giving too many blacks handouts, and there was a mentality among minorities that they deserved handouts." The new filing is part of a request by the lawsuit's 11 plaintiffs that the judge broaden the private suit into a class action that would include more than 1,000 current and former black and Hispanic employees. The plaintiffs are seeking changes in the Parks Department's practices as well as punitive and compensatory damages. Mr. Stern previously has denied discriminating against department employees and failing to promote minorities.Mr. Stern was appointed in 1984 by Mayor Edward Koch.He served until 1990 and was reappointed in 1994 by Mayor Rudolph Giuliani.He left city government this year. SHIPPING INDUSTRY: Dockworkers, Shipping Companies Forge Labor Pact ------------------------------------------------------------------- The longshore union and shipping companies ended months of acrimony and costly showdowns that rippled through the national economy by agreeing on a labor contract covering all US commercial ports on the West Coast, the Los Angeles Times reported.The agreement, which must be ratified by union members, was reached about one month before the expiration of a federal injunction that kept the ports operating. Details of the six-year contract were sketchy, but it was clear that both sides gave deeply while winning important concessions.The Pacific Maritime Association, which represents about 80 shipping lines and terminal operators, came away with the right to implement labor-saving technology, such as computer systems that allow cargo lists to flow directly into terminals, rather than being retyped by union clerks. Those systems and other new equipment will speed cargo movement while eliminating hundreds of high-wage clerical jobs. The International Longshore and Warehouse Union's 10,500 members won substantial increases in their pension and held on to fully paid family health insurance, with large premium increases being absorbed by the employers. SPANISH BROADCASTING: Asks NY Court To Dismiss Securities Fraud Lawsuit ----------------------------------------------------------------------- Spanish Broadcasting Systems, Inc. asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against it on behalf of purchasers who acquired shares of its Class A common stock pursuant to the registration statement and prospectus relating to the Company's initial public offering which closed on November 2, 1999. The lawsuit was filed against the Company, eight underwriters of the IPO and/or their successors-in-interest, two members of our senior management team, one of which is our Chairman of the Board of Directors, and an additional director. The class action complaint alleges violations of the federal securities laws, specifically that the Prospectus contained materially false and misleading statements based on alleged misstatements and/or omissions of material facts relating to underwriting commissions.The complaint also alleges Rule 10b-5 violations by the Underwriters and SBS, but not by the Individuals.In addition, the complaint alleges violations of Section 15 of the Securities Act and Section 20(a) of the Exchange Act by the Individuals. The claims being made under the complaint are similar to claims currently being made in over 300 class action suits filed against companies with recent initial public offerings and their underwriters. All of these suits, including the one involving the Company, have been assigned for consolidated pretrial purposes to one judge. Motions to dismiss the complaints covering issues common among all issuer defendants in the consolidated cases and issues common among all underwriter defendants in the consolidated cases have been fully briefed and were argued on November 1, 2002.Discovery has been stayed pending decision on the motions to dismiss. SYKES ENTERPRISES: To Settle Consolidated Securities Suit For $30M ------------------------------------------------------------------ Sykes Enterprises, Inc. has agreed to settle the consolidated securities class action pending against the Company in the United States District Court for the Middle District of Florida, Tampa Division, on behalf of purchasers of the Company's common stock during the period from July 27, 1998 through September 18, 2000. The consolidated action claims violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.Among other things, the consolidated action alleges that during 2000, 1999 and 1998, the Company and certain of its officers made materially false statements concerning the Company's condition and its future prospects. The consolidated complaint also claims that certain of the Company's quarterly financial statements during 1999 and 1998 were not prepared in accordance with generally accepted accounting principles.The consolidated action seeks compensatory and other damages, and costs and expenses associated with the litigation. Although the Company denies the plaintiff's allegations and has defended the action vigorously, due to the extremely high costs and risks of litigation, as well as the drain on management time and attention, the Company has agreed to a settlement of the lawsuit with the plaintiffs. The settlement, which remains subject to court approval, will result in a cash payment of approximately $30.0 million.Insurance amounts, after payment of litigation expenses, are expected to cover approximately $16.2 million of the settlement and the Company will pay the remaining amount of approximately $13.8 million. Although the parties anticipate court approval of the settlement, such result is not assured.In the event the court does not approve the settlement, the settlement will be set aside and the lawsuit will proceed.Should the lawsuit proceed, the Company cannot predict the outcome or the impact this action may have on the Company. UNITED STATES: Lawsuit Purposes To Block All US Deportation To Somalia ---------------------------------------------------------------------- Advocates who helped five Somalis avoid deportation this month, are seeking to block all US deportations to Somali, the famine and war ravaged nation in East Africa, the Associated Press Newswires reports. A lawsuit filed in US District Court in Seattle, seeking class action status, contends that deporting Somalis violates Immigration and Naturalization Service statutes, because the country does not have a functioning government and therefore cannot agree to accept deportees, the Seattle Post-Intelligencer reports.The lawsuit also claims that the practice violates international law and treaties, like the United Nations Convention against Torture. INS officials say the policy is lawful because Somalis are not required to present travel documents to enter that country, which means deportees are not rejected.Garrison Courtney, an INS spokesman in Seattle, said the US government has a responsibility to deport non-citizens who have committed certain crimes, do not show up for court-ordered deportation and those who have final orders of deportation. The Hate Free Zone Campaign of Washington assembled a team of lawyers from Perkins Coie, one of the Northwest's largest law firms.The attorneys agreed to handle the case at no charge.The lawsuit was filed on behalf of Somalis facing final orders of deportation. Karol Brown, one of the attorneys working on the case, said lawyers have not yet received a response to a request that the INS voluntarily cease deportations of Somalis. US District Judge Marsha Pechman in Seattle recently granted a temporary restraining order barring the INS from deporting five Somali men.Three had been convicted of drug, drunken driving or assault charges.The other two had been denied asylum; one of them was granted an asylum appeal and released from detention this week. Attorneys for the men cited a Minnesota case earlier this year in which a judge ordered immigration officials not to deport a Somali convicted of assault, because Somalia lacked a government to accept him.That ruling is being appealed in the Eighth US Circuit Court of Appeals. The INS contends that Somali nationals deserve no special treatment if immigration courts deny their asylum cases or if they break the law. Just because someone is a refugee or is seeking asylum does not make them immune from the laws.However, Pramila Jayapal, executive director of the Hate Free Zone Campaign says that "These people are innocent victims of the administration's unwarranted crackdown on immigrants post-September 11; they have no links to terrorists whatsoever." Ms. Jayapal has learned of at least 35 Somalis in detention outside Washington state, including Minnesota, Louisiana, Texas and Utah.Mr. Courtney says that, "Until the law changes, we have to go with what's on the books These are not decisions we make locally; we follow a protocol that is set nationally." UNITED STATES: Black Farmers End Takeover of USDA Building In Louisiana ----------------------------------------------------------------------- A group of black farmers recently ended a four-day takeover of a small federal farm building in Northeast Louisiana and set their sights on more protests to demand an end to discrimination, Associated Press Newswires reported. The Black Farmers and Agriculturalist Association claims local officials are racially biased in handing out federal loans, even as the US Department of Agriculture (USDA) pays more than $600 million to settle a discrimination lawsuit by black farmers. "We are not going to stop until it (USDA) starts treating us right," Thomas Burrell, the association's president, said by phone recently. About 60 farmers peacefully took over the Oak Grove USDA office last Monday and held it through Thanksgiving night.Police were at the building throughout the takeover, Mr. Burrell said. The group, with about 2,000 members of mostly Southern farmers, held similar protests on July 1 in Brownsville, Tennessee, and September 9, in Star City, Arkansas.Top federal agricultural officials agreed to meet the group on December 14, to discuss ways to channel more loans to black farmers.Federal officials have acknowledged shortcomings in the loan system, but said it has been reformed since the black farmers' lawsuit was settled in 1999. Washington officials have been criticized for failing to change the way local boards oversee farm loans.Some farmers say the local boards are rife with racism and cronyism.Local farmers elected to county committees hold power over which of their competitors and friends get government assistance. Allegations of discrimination come from sources other than the black farmers.Agriculture officials also face lawsuits claiming discrimination against women, Hispanics and American Indians. Thomas Burrell has said that USDA need to set up a task force to handle minorities' loan applications.His group also is asking that the Bush Administration nominate an assistant secretary of civil rights in the Agriculture Department.Mr. Burrell noted that such an office has not been set up, "but interestingly enough the Farm Bill made provisions for this position," Mr. Burrell said. Many farmers proclaim the prejudice they encounter when they try to negotiate their way through the loan process; for example, John Hughes, a 64-year-old cattle and horse farmer in Eutaw, Alabama, who took part in the Louisiana protest, says he can count on the fingers of one hand, how many black farmers have been able to get any kind of sizeable loan with which to operate to operate. More than 21,000 claims were filed initially in the class action which was settled in 1999.Payments were approved in about 60 percent of those cases to more than 13,000 black farmers, according to agriculture officials.Most farmers applied through the simpler of two procedures, which entitled them to $50,000, plus $12,500 to cover taxes on that money, and forgiveness of certain debts. An additional 69,000 discrimination claims came in after the deadline in the settlement and were accepted for consideration.About half those claims were denied, about half remain under consideration and about 1,000 moved forward, officials said in September. At that pace of consideration of loans and the percentage of denials, there are no surprises in the statistics quoted by Thomas Burrell, president of the Black Farmers and Agriculturalist Association.He estimated there are fewer than 10,000 black farmers in the United States, half the number of farmers in 1982.In 1920, Mr. Burrell said the Census counts showed there were 925,000 black farmers, about 10 percent of the nation's total. UTAH: Services Dept Shows Statistical Work Picture, Fails To Meet Goals ----------------------------------------------------------------------- Utah's Division of Child and Family Services (DCFS) has compiled a by- the-numbers look at the past 12 months of its activity in order to comply more quickly and succinctly to the nearly constant requests from legislators, the public, the federal court, division spokeswoman Carol Sisco said recently, the Deseret News reports. "It is not an attempt to judge what we do," said Ms. Sisco, "but just to get an independent bottom line look at what the activity has been during the past year." The information, in longer form, said Ms. Sisco, will be included in upcoming discussions next month by attorneys who will be reworking a settlement in a landmark lawsuit in 1993.The state was accused of neglecting and even endangering some of the children taken into state custody in child-abuse cases. US District Judge Tena Campbell last week ordered attorneys in the case to come up with a new compromise settlement.The Oakland-based National Center for Youth Law, which filed the 1993 class-action lawsuit that resulted in the consent decree that placed Utah's DCFS under court oversight, continues to complain that despite an earlier settlement agreement, the state is not making significant progress in improving the child welfare system.DCFS attorneys maintain that progress is being made, but that its efforts are being hamstrung by funding restrictions and cutbacks by the Legislature. DCFS told Judge Campbell in court that its high turnover rate, 34 percent for caseworkers, and its lack of veteran staff who can adequately train new caseworkers according to the lawsuit settlement agreement, are the biggest barriers to implementing an agreement. WESTELL TECHNOLOGIES: Enters Settlement Discussions For Securities Suit ----------------------------------------------------------------------- Westell Technologies, Inc. is engaged in settlement discussions for the securities class action pending against it and certain of its officers and directors in the United States District Court for the Northern District of Illinois. This case is a consolidation of eleven class action cases generally alleging that the defendants violated the antifraud provisions of the federal securities laws by allegedly issuing material false and misleading statements and/or allegedly omitting material facts necessary to make the statements made not misleading, thereby allegedly inflating the price of Company stock for certain time periods. The case claims that, in 2000, certain of the Company's officers allegedly reassured analysts that Company sales were on track to meet forecasts for the second quarter of fiscal 2001, when they knew that the Company was experiencing a substantial shortfall in second quarter modem sales due to decreased orders from a major customer, SBC Communications, Inc. The parties are engaged in discovery and settlement negotiations. The case is set for trial on November 3, 2003. WYOMING: Judge Orders State Penitentiary Officials To Protect Inmates --------------------------------------------------------------------- Wyoming State Penitentiary officials clearly failed to protect inmates from assaults by other prisoners, a federal judge ruled, and he gave the state 21 days to come up with a remedial plan. US District Judge Clarence A. Brimmer said "a code of silence" among state penitentiary staff is tantamount to "deliberate indifference" to the welfare of prisoners and therefore unconstitutional.Judge Brimmer issued a temporary injunction against Department of Corrections Director Judith Uphoff and other prison officials named in a class action filed by the American Civil Liberties Union on behalf of one Brad Skinner and other inmates. Mr. Skinner claimed he was beaten on November 4, 1999, and suffered severe spinal injuries and other major injuries.He was hospitalized and then spent five weeks in the prison infirmary. During a recent hearing, Stephen Pevur, an attorney for the ACLU, asked Judge Brimmer to order the Wyoming Corrections Department to ensure the safety of all present and future inmates.Mr. Pevur said the assault on Mr. Skinner was one of 100 to 300 that had occurred at the Rawlins prison over the last six years.He also claimed the assault reflect "deliberate indifference by prison administration in violation of the Eighth Amendment to the US Constitution." In his order, issued subsequent to the hearing, Judge Brimmer agreed. The judge found the defendants were required to conduct "serious incident review" investigations of inmate assault.Only three of the investigations were conducted.However, these three investigations revealed "serious institutional deficiencies and staff error," Judge Brimmer wrote. Judge Brimmer added that new policies that have been drafted and adopted since the murder of one of the inmates in March 2000, "are meaningless if they are not followed... Up to this point, there is simply no evidence that such good faith supervision, training and enforcement efforts are under way," Judge Brimmer concluded.He ordered both the plaintiff and defendants to file a remedial plan with the court within 21 days. *Top Lawyer Says Investors Should Also Target Bankers, Not Just Firms --------------------------------------------------------------------- William Lerach, a noted lawyer who brings numerous lawsuits for investors, has his own thinking about whom to sue to get money for investors harmed by corporate misconduct, reports the New York Times News Service. Mr. Lerach advises that investors' attorneys should forget about filing class actions against the corporations.In this season of corporate corruption, Mr. Lerach reasons the Wall Street firms have a lot more cash available than the scandal-ridden, financially squeezed companies like WorldCom. Instead of suing in federal court, which is Mr. Lerach's usual forum for class actions against the corporation defendant, he is now filing his claims against the Wall Street firms in state court, which are more friendly to the class action.Instead of shareholders, he is filing claims on behalf of individual bondholders, generally institutional investors who lost tens of millions of dollars. The strategy, which is also being pursued by a few less well-known lawyers, is to skirt laws intended to make it harder for investors to prevail in court and, maybe, come up with more money for clients, from the deep-pocketed firms that underwrite the corporate bonds. "I told my clients that your chances of real recovery of meaningful money is on the bonds," Mr. Lerach said in an interview."It so outweighs any speculative hope of recovery on the stock.I said concentrate on the bonds and worry about the stocks later." In the case of WorldCom, where this new legal approach is on display, Mr. Lerach's clients are large pension funds with billions of dollars in losses, like the California state employees pension fund known as Calpers, the California state teachers pension fund, the Los Angeles employees retirement system; a dozen California counties and pension funds for public employees in West Virginia, Illinois and the state of Washington.Other lawyers are pursuing similar claims on behalf of Ohio. For WorldCom bondholders, the appeal is clear.Besides the advantage of trying their case before a hometown jury, the threshold for succeeding is lower and cases can move through state courts more swiftly. Defendants, like the Wall Street firms named in the WorldCom case, need not be shown to have committed fraud, which can be hard to prove. Instead, they can be found liable on a lower standard, that they simply issued misleading financial statements when they underwrote some $20 billion in WorldCom bonds between 1998 and 2001. WorldCom is under bankruptcy court protection, so it cannot be sued. Its auditor Arthur Andersen, is all but defunct.WorldCom directors and officers have only minimal insurance, around $100 million, small by the standards of this case.That left the bond underwriters in Mr. Lerach's sights. Among those he is zeroing in on are Citigroup, J.P. Morgan, Lehman Brothers, NationsBanc Montgomery Securities, Credit Suisse First Boston, Deutsche Bank, Bank of America, ABN/AMRO, Goldman Sachs and UBS Warburg. In a solicitation being circulated by Mr. Lerach to his clients, he describes this group as being "gigantic global financial institutions with significant resources" and says he hopes to recover $1.5 billion to $3 billion from them for WorldCom bondholders. "We believe we have devised a unique strategy in the WorldCom situation to provide a maximum return for those funds that suffered the bulk of their losses on purchases of WorldCom bonds," Mr. Lerach wrote in the letter to potential clients, according to the New York Times News Service report. The boldness of Mr. Lerach's pitch matches his distinct, often dramatic approach to the practice of law.Mr. Lerach is best remembered for lugging a carton of shredded Enron documents outside a Houston courthouse, an image splashed across network news broadcasts. On the state level, Mr. Lerach's new favorite venue, laws may vary, but in general, state courts are considered more favorable for investors. In California, where the biggest cases have been filed, a jury needs to vote only 9 to 3 to prevail; in federal court, unanimous consent is needed. Cases can move more swiftly through state courts, since there are no time-consuming battles among attorneys over who will be named lead attorney for class actions.Moreover, the rules of discovery are often more favorable to plaintiffs on the state level, and some states like Texas and Mississippi, have reputations for strong pro-investor sentiments. Mr. Lerach's new approach is part of an evolution in investor litigation strategy.After the 1995 Private Securities Litigation Reform Act of 1995 made it more difficult for investors to bring class actions in federal court, Mr. Lerach and others began to file class actions in state courts. That route, however, was shut off by Congress in 1998, when it passed the Securities Litigation Uniform Standards Act, which said all shareholder class-action suits had to be filed in federal court.So to stay on the state level, Mr. Lerach is filing cases client by client. He does not stand to win as much in fees, but he said he believes that he has a greater chance of winning.Those who have lost money in WorldCom bonds clearly think this strategy might work -- including the state of Ohio, whose three pension funds lost $136 million. "If we want to recover money for our state, we have to go where the money is," said Joseph Case, director of public affairs for the Ohio Attorney General's office, which thereupon decided to opt out of a class-action suit against WorldCom."Why waste our resources in actions that may not be profitable for us?" said Jay Eisenhoffer, an attorney in Wilmington, Delaware. "We public funds are not going to sit here like a bunch of mushrooms," said Alan Cleveland a corporate governance expert and legal counsel for theNew Hampshire Retirement System, which is not involved in the WorldCom litigation."We are in for a hard march here.This won't be pretty and it is not painless.It is easier to get convicted of a capital crime than to bring securities litigation.But the investment bankers involved will have to pay." Mr. Lerach is bringing his claims in state courts under a little-known section of the Federal 1933 Securities Act allowing investors to bring securities cases against third parties, the bankers or accountants, for instance, on the state level without having to prove fraud; just that misleading statements were issued in the course of underwritings. Mr. Lerach has said, in his solicitation to clients, that in WorldCom's case, the numbers do not add up for investors, even if they were to prevail in a class-action shareholder suit.He noted that the size of investor claims against WorldCom total around $60 billion, while a reasonable settlement might bring investors $200 million to $300 million.In boldface type, the solicitation says that this would mean "a very small net recovery to each class member." Joseph Grundfest, a securities law expert at Stanford University Law School, is one of those watching to see whether Lerach's approach will pay off. "All of these strategies can be understood in terms of profit maximization," Professor Grundset said."It is a question of how each participant in the process can make as much money as possible.That's the way litigation works.There are efforts by the plaintiffs to expand the number of deep pockets that can be held liable and by the deep pockets to prevent themselves from becoming enmeshed in litigation. It's a big issue and it boils down to this:Who can be held legally liable, and under what theory?" New Securities Fraud Cases AES CORPORATION: Marc Henzel Commences Securities Fraud Suit in E.D. VA ----------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Eastern District of Virginia on behalf of all purchasers of the common stock of AES Corporation (NYSE: AES) between April 26, 2001 and February 14, 2002, inclusive. The complaint charges AES Corporation and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition.Specifically, the complaint alleges defendants issued numerous statements which highlighted the Company's strong financial performance, specifically its business operations in the United Kingdom. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the United Kingdom adopted a new framework for the pricing of energy that undermined the Company's ability to achieve profitability in its United Kingdom activities, and as a result, the Company would experience a rapid decline in its U.K. financial operations; (2) the adoption of NETA (New Energy Arrangements) in the United Kingdom caused the Company's Fifoots utility operations to operate at a loss, as expected; defendants, however, continuously touted AES's United Kingdom operations as profitable; (3) that in the first quarter of 2001, Fifoots had an after-tax loss of $11 million; and (4) that the Company's United Kingdom operations were severely impaired as a result of new pricing arrangements adopted there and that the Company lacked adequate long-term contracts to avoid a rapid decline in its United Kingdom operations as a result of the new pricing arrangements. On February 14, 2002, AES shocked the market by announcing that it had ceased operations at its Fifoots Point power station in the United Kingdom because of "sliding wholesale electricity prices."The price of the Company's stock dropped precipitously in inordinate trading volume when the Company, for the first time, announced that it was experiencing problems in its Fifoots Point power plant in the United Kingdom and as a result the plant would be closed. In response to the news, AES plummeted over 25% on February 15, 2002 after the truth concerning AES's Fifoots Point plant and future prospects were finally revealed, dropping from $9.50 per share on February 14, 2002, to $7.00 per share on February 15, 2002 -- on enormous trading volumes of 29,962,400 (far greater than the Company's average trading volume of 3.3 million shares). For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by E-Mail: mhenzel182@aol.com ANSWERTHINK INC.: Marc Henzel Launches Securities Fraud Suit in S.D. FL ----------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court, Southern District of Florida, on behalf of purchasers of the securities of Answerthink, Inc. (Nasdaq: ANSR) between October 17, 2000 and April 25, 2002, inclusive.The action, is pending against the Company: (1) John F. Brennan, (2) Ted A. Fernandez, (3) Allan R. Frank, (4) Edmund R. Miller, (5) William Kessinger and (6) Bruce Rauner 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.As alleged in the complaint, throughout the class period, defendants issues a series of false and misleading statements announcing "record" financial results. In violation of Generally Accepted Accounting Principles (GAAP), the complaint alleges, defendants failed to disclose that the "record" results included revenues recognized from transactions with related parties who were near-bankruptcy and lacked the financial means to finalize the sales. Specifically, in order to boost reported revenues and earnings during the third and fourth quarters of 2000, the Company recognized approximately $16.7 million of revenue in connection with various transactions with related parties who were either facing imminent bankruptcy or were otherwise unable to survive as a going concern and remit the full $16.7 million as promised. As a result, the complaint alleges, defendants were able to report artificially inflated results which permitted Mr. Fernandez and Mr. Frank to receive performance-based bonuses and allowed certain of the defendants to sell stock at inflated prices.Ultimately, more than $6 million of receivables and worthless stock in one of the related party companies, which was received as partial payment, was written off through a charge to earnings. On February 7, 2002, when defendants were no longer able to include these illusory revenues in their financial results, the Company reported a huge drop in revenues.As a result, Company investors who purchased stock in reliance on the integrity of defendants' statements and publicly-filed financial reports have sustained tremendous losses. Answerthink stock, which traded at $18 per share on October 17, 2000, dramatically declined and traded at only $1.98 per share on November 13, 2002. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by E-Mail: mhenzel182@aol.com BROADWING INC.: Marc Henzel Commences Securities Fraud Suit in S.D. OH ---------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court, Southern District of Ohio, Western Division, on behalf of purchasers of the securities of Broadwing, Inc. (NYSE: BRW) between January 17, 2001 and May 20, 2002, inclusive. The action, is pending against the Company, Richard G. Ellenberger and Kevin W. Mooney. The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 17, 2001 and May 20, 2002 thereby artificially inflating the price of Company securities. As alleged in the complaint, the Company, together with its consolidated subsidiaries, purported to be a full-service, local and national provider of data and voice communications services.Throughout the class period, as alleged in the complaint, defendants represented to investors that: (1) the Company's business was strong; (2) it had unique attributes that set it apart from its competitors in the industry and that immunized it from the adverse effects of the industry-wide downturn and related "bandwidth glut"; (3) the Company was successfully achieving strong financial results and executing on its business plan; and (4) the Company's goodwill asset was reasonably valued at $2.2 billion. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose, among other things, that: (i) the Company was not increasing its revenue by winning over new customers with unique and superior service offerings but rather through the use of one-time transactions with other carriers and sham swap transactions that had no economic substance; (ii) Broadwing's broadband revenue flow was extraordinarily unreliable because it was derived in large part from its competitors who were themselves vulnerable to the telecommunications industry downturn; and (iii) the Company's reported goodwill and shareholder equity were grossly over-valued. On May 20, 2002, the truth emerged that a material portion of Broadwing's revenue was derived from one-transactions with its competitors.Broadwing's share price plummeted 30% on these reports and related concerns about the quality of Broadwing's revenue reporting and liquidity, to close at $3.70 down $1.58 from the previous days closing price of $5.28 For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by E-Mail: mhenzel182@aol.com SEARS ROEBUCK: Marc Henzel Commences Securities Fraud Suit in N.D. TX --------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United states District Court for the Northern District of Illinois, on behalf of purchasers of the securities of Sears, Roebuck & Co. (NYSE: S) between January 17, 2002 to October 17, 2002, inclusive.The action, is pending against the Company and: (1) Alan Lacy (CEO, President and Chairman), (2) Glenn Richter (CFO from October 4, 2002, Senior V.P., Finance since inception of Class Period), (3) Paul J. Liska (CFO until October 4, 2002) and (4) Thomas E. Bergmann (Chief Accounting Officer) The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between January 17, 2002 to October 17, 2002. According to the complaint, 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 detailed in the complaint, were allegedly false and misleading because, according to the complaint, 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. 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. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 or by E-Mail: mhenzel182@aol.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* * *