/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/021205.mbx C L A S S A C T I O N R E P O R T E R Thursday, December 5, 2002, Vol. 4, No. 241 Headlines ACLARA BIOSCIENCES: Asks NY Court To Dismiss Securities Fraud Lawsuit AMERICAN ELECTRIC: OH Suits Allege "Round Trip Trades" Skewed Reports BELL CANADA: Court Approves Settlement Claims Identification Process BROADCOM CORPORATION: Negotiates Schedule For Amended Securities Suit BROADCOM CORPORATION: Asks CA Court To Dismiss Securities Fraud Lawsuit BSQUARE CORPORATION: Asks NY Court To Dismiss Amended Securities Suit CABLEVISION NY: Asks DE Court To Dismiss Suit V. Rainbow Group Merger CELL PATHWAYS: PA Court Grants Approval To Securities Suit Settlement CUMULUS MEDIA: WI Court Grants Approval To Securities Suit Settlement DOUBLECLICK INC.: Officers, Directors Dismissed From Securities Suit DOUBLECLICK INC.: IL Court Dismisses Without Prejudice Consumer Lawsuit DOV PHARMACEUTICALS: Court Consolidates Suits For Securities Violations EBAY INC.: Merger With PayPal Reaps Rash of CA, DE, NY Suits INDIAN FUNDS: Bush Government Wants High Court To Limit Rights To Sue INFOSPACE INC.: JPMDL Orders Transfer of Securities Lawsuit To NY Court INFOSPACE INC.: Asks WA Court To Dismiss Shareholder Derivative Lawsuit INTEGRATED INFORMATION: Court Dismisses Officers From Securities Suit ITXC CORPORATION: NY Court Dismisses Officers, Directors From Lawsuit MASSACHUSETTS: Auto Buyer Files Suit V. Dealer Over Glass-Etching Fee MICROSOFT CORPORATION: Battles Various Antitrust Claims In MD Court MICROSOFT CORPORATION: West Virginia To Join Antitrust Settlement Fight OCEANIC USA: Recalls 24T Stage Regulators For Drowning, Accident Hazard PAYPAL INC.: Faces Two Lawsuits Over Anti-Fraud Program in CA Courts PDI INC.: To Ask NJ Court To Dismiss Consolidated Securities Fraud Suit SAGENT TECHNOLOGY: Discovery Commences in Securities Fraud Suit in CA SAGENT TECHNOLOGY: CA State Court Upholds Dismissal of Derivative Suit SUPREME COURT: Agrees To Consider Limits On Inmate Visitation Rights UNITED STATES: Justice Dept, Workers' Union Agree On Special-Rate Pay UNITED STATES: Court To Decide on Limits for Reservation Site Searches VITRIA TECHNOLOGY: NY Court Dismisses Officers, Directors From Lawsuit VODAFONE PLC: UK, US Law Firms To Commence Suit In US For UK Investors *Prominent Lawyer Melvyn Weiss Evaluates Legal Achievements, Exploits New Securities Fraud Cases CREDIT SUISSE: Weiss & Yourman Commences Securities Lawsuit in S.D. NY FOOTSTAR INC.: Schiffrin & Barroway Files Securities Lawsuit in S.D. NY TRANSACTION SYSTEM: Schiffrin & Barroway Launches Securities Suit in NE ********* ACLARA BIOSCIENCES: Asks NY Court To Dismiss Securities Fraud Lawsuit --------------------------------------------------------------------- ACLARA Biosciences, Inc. asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against it, certain of its current or former officers and directors, and several of the underwriters involved in the Company's initial public offering (IPO). This suit is brought on behalf of a purported class of purchasers of the Company's common stock from the time of the Company's IPO (March 20, 2000) through December 6, 2000. The central allegation in this action is that the underwriters in the Company IPO solicited and received undisclosed commissions from, and entered into undisclosed arrangements with, certain investors who purchased Company stock in the IPO and the after-market. The complaint also alleges that the Company defendants violated the federal securities laws by failing to disclose in the IPO prospectus that the underwriters had engaged in these allegedly undisclosed arrangements. More than 300 issuers have been named in similar lawsuits. In July 2002, an omnibus motion to dismiss all complaints against issuers and individual defendants affiliated with issuers (including the Company defendants) was filed by the entire group of issuer defendants in these similar actions. Plaintiffs opposed that motion, which is now fully submitted and is pending before the court. The Company believes it has meritorious defenses against this suit. However, the Company could be forced to incur significant expenses in the litigation, and in the event there is an adverse outcome, its business could be harmed. AMERICAN ELECTRIC: OH Suits Allege "Round Trip Trades" Skewed Reports --------------------------------------------------------------------- American Electric Power Company, Inc. faces several securities class actions filed on behalf of purchasers of the Company's securities between April 24, 2002 and October 9, 2002, inclusive, in the United States District Court, Southern District of Ohio, Eastern Division. The suit also names as defendants E. Linn Draper, Jr. and Susan Tomasky. The suits claim that the Company failed to disclose that alleged "round trip" trades resulted in an overstatement of revenues and that the Company failed to disclose that the Company traders falsely reported energy prices to trade publications that publish gas price indices. The suits allege 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 April 24, 2001 and October 9, 2002, thereby artificially inflating the price of AEP securities, an earlier Class Action Reporter story states. The time period within which others may file to attempt to become lead plaintiff will end in late December 2002. BELL CANADA: Court Approves Settlement Claims Identification Process -------------------------------------------------------------------- Bell Canada International (BCI) has disclosed that the Ontario Superior Court of Justice has approved a claims identification process for BCI at a recent hearing, held in Toronto, according to a report by Canada Stockwatch. BCI is operating under a court-supervised plan of arrangement to dispose of its remaining assets, settle all claims against the Company and make a final distribution to stakeholders. At the hearing, the court also ruled on certain procedural steps with respect to the class action filed by certain former holders of BCI's 6.75 percent convertible unsecured subordinated debentures. In accordance with an agreement reached between the parties to this lawsuit, the court has ordered that this lawsuit be certified as a class action within the meaning of applicable legislation. The certification order does not constitute a decision on the merits of the class action, and the Company continues to be of the view that the allegations contained in the lawsuit are without merit and intends to vigorously defend its position. As part of the agreement among the parties, the plaintiffs in the class action have abandoned their claim for punitive damages. The statement of claim originating the lawsuit sought $30 million in punitive damages. The plaintiffs also have agreed to the dismissal of the class action as against BMO Nesbitt Burns Inc., one of the original defendants in the proceeding. The claims identification process establishes a procedure by which all claims against BCI will be identified within a specified period. This period will begin following the court's decision with respect to the certification as a class action of the lawsuit filed by Wilfred Shaw, a BCI shareholder. This certification decision is expected in the first quarter of 2003. BCI intends to contest the certification of Mr. Shaw's action. Following the period for the identification of claims, it is expected that the court, upon the advice of Ernst & Young Inc., the monitor under BCI's plan of arrangement, will make further orders with respect to the timing, determination and resolution of the identified claims. In connection with the plan of arrangement, Ernst & Young, from time to time, will file monitor reports with the court containing financial and other information regarding BCI. BROADCOM CORPORATION: Negotiates Schedule For Amended Securities Suit --------------------------------------------------------------------- Broadcom Corporation is negotiating a litigation schedule in the consolidated securities class action filed against in the United States District Court for the Central District of California. The suit charges the Company, its Chief Executive Officer, Chief Technical Officer and Chief Financial Officer with violations of the Securities Exchange Act of 1934, as amended. The Company filed a motion to dismiss the plaintiffs' consolidated complaint under the Private Securities Litigation Reform Act of 1995 and Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, and that motion was granted by the court in March 2002. The court granted plaintiffs leave to file a second amended complaint and plaintiffs filed a second amended complaint in April 2002. In May 2002 the Company filed a motion to dismiss the second amended complaint, which motion was denied in July 2002. The Company answered the seconded amended complaint in September 2002. The parties are currently negotiating a litigation schedule pursuant to Rule 26 of the Federal Rules of Civil Procedure, including timelines for plaintiffs' filing of a motion for class certification and for discovery. The Company believes the allegations in the purported consolidated shareholder class action are without merit and is defending the action vigorously. BROADCOM CORPORATION: Asks CA Court To Dismiss Securities Fraud Lawsuit ----------------------------------------------------------------------- Broadcom Corporation asked the United States District Court for the Central District of California to dismiss the securities class action filed against the Company and: (1) its Chief Executive Officer, (2) its Chief Technical Officer, and (3) its Chief Financial Officer The suit was initially commenced in February 2002 in the Superior Court of the State of California for the County of Orange, and later moved to federal court. The suit purports to assert claims for violations of the California Corporations Code, and intentional and negligent misrepresentation, and seeks rescission of plaintiffs' alleged purchases of the Company's stock. Plaintiffs filed a motion to remand the case back to state court, which the court denied in May 2002. The Company subsequently filed a motion to dismiss this complaint. Upon the filing of the Company's motion, the plaintiffs voluntarily dismissed all of their state law claims and requested that the federal court allow them 60 days leave to amend the complaint to plead federal law claims only, which the Company did not oppose and which the court granted. Plaintiffs filed an amended complaint, pleading claims under federal law, in August 2002. The Company has filed a motion to dismiss this complaint, and the hearing is scheduled for January 2003. The Company believes the allegations in this lawsuit are also without merit. BSQUARE CORPORATION: Asks NY Court To Dismiss Amended Securities Suit --------------------------------------------------------------------- BSquare Corporation asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against it, certain of its current and former officers and directors and the underwriters of the Company's initial public offering. The suit, filed on behalf of purchasers of the Company's common stock during the period from October 19, 1999 to December 6, 2000, alleges that the underwriter defendants agreed to allocate stock in the Company's initial public offering to certain investors in exchange for excessive and undisclosed commissions and agreements by those investors to make additional purchases of stock in the aftermarket at pre- determined prices. Plaintiffs allege that the prospectus for the Company's initial public offering was false and misleading in violation of the securities laws because it did not disclose these arrangements. The litigation is being coordinated with over 300 nearly identical actions filed against other companies. On October 9, 2002, the court dismissed the individual defendants from the case without prejudice based upon Stipulations of Dismissal filed by the plaintiffs and the individual defendants. On July 15, 2002, the Company moved to dismiss all claims against it and the individual defendants. The court has not ruled on this motion. The Company intends to defend this action vigorously. However, due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of the litigation. CABLEVISION NY: Asks DE Court To Dismiss Suit V. Rainbow Group Merger --------------------------------------------------------------------- Cablevision NY Group, Inc. asked the Delaware Chancery Court to dismiss the consolidated class action charging it with breach of fiduciary duties and breach of contract with respect to the exchange of the Rainbow Media Group tracking stock for the Company's common stock, on behalf of all holders of publicly traded shares of Rainbow Media Group tracking stock. The suit seeks to: (1) enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY Group common stock; (2) enjoin any sales of "Rainbow Media Group assets", or, in the alternative, award rescissory damages; (3) if the exchange is completed, rescind it or award rescissory damages; (4) award compensatory damages; and (5) award costs and disbursements. In October 3, 2002, the Company filed a motion to dismiss the consolidated action. The Company believes the claims are without merit. CELL PATHWAYS: PA Court Grants Approval To Securities Suit Settlement --------------------------------------------------------------------- The United States District Court for the Eastern District of Pennsylvania granted final approval to the settlement of the securities class actions pending against Cell Pathways, Inc. and certain of its officers and directors. In March, April and May of 2001, eleven stockholder class actions were filed, alleging that the Company and its officers made false and misleading statements about the Company's drug candidate, Aptosyn(R), which caused artificial inflation of the Company's stock price during the class period of October 27, 1999 to September 22, 2000, when the Company announced that the FDA had informed the Company that it would be receiving a "not approvable" letter for its new drug application for Aptosyn(R). In February 2002, a stipulation of settlement was agreed to. Pursuant to this stipulation of settlement, and following a preliminary order by the court, the Company's insurance carrier paid $2.0 million into escrow and the Company issued 1.7 million shares into escrow. On September 23, 2002, following a hearing, the Court entered a final order approving the settlement and dismissing the action at which time the $2.0 million and 1.7 million shares were released from escrow. The time to appeal therefore has expired. CUMULUS MEDIA: WI Court Grants Approval To Securities Suit Settlement --------------------------------------------------------------------- The United States District Court for the Eastern District of Wisconsin granted final approval to a settlement of the securities class action filed against Cumulus Media, Inc., certain of its present and former directors and officers and certain underwriters of the Company's stock. The suit, filed on behalf of persons who purchased or acquired the Company's common stock during various time periods between October 26, 1998 and March 16, 2000, alleges, among other things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and Sections 11 and 12(a) of the Securities Act of 1933. Specifically, plaintiffs alleged that defendants issued false and misleading statements and failed to disclose material facts concerning, among other things, the Company's financial condition, given the restatement on March 16, 2000 of the Company's results for the first three quarters of 1999. On May 20, 2002, the Court approved a Stipulation and Agreement of Settlement pursuant to which plaintiffs agreed to dismiss each claim against the Company and the other defendants in consideration of $13 million and the issuance of 240,000 shares of the Company's Class A Common Stock. Upon Court approval of the Stipulation of Settlement Agreement, a measurement date was reached with respect to the Company's Class A common stock to be issued under the settlement, and the stock portion of the settlement liability will no longer be adjusted each reporting period for changes in the fair value of the Company's Class A common stock. The Company had previously funded the $13 million cash portion of the settlement on November 30, 2001, all of which is held in an escrow account maintained by a settlement agent appointed by the Court. Of the $13 million funded cash portion of the settlement, $7.3 million was provided under the Company's preexisting insurance coverage. The Company has no access to the cash portion of the settlement being held by the settlement agent. As such, the cash maintained by the settlement agent has been classified as restricted cash and an offsetting liability due to the class members is included as a part of accounts payable and other accrued expenses in the accompanying consolidated balance sheets. The restricted cash asset and offsetting settlement liability will be eliminated when the cash is distributed from the escrow account to the settlement class members, which the Company expects to occur in late 2002 or early 2003. Of the 240,000 shares of Class A common stock to be issued under the settlement, 60,000 shares were issued in June 2002 and the remaining 180,000 shares are expected to be issued in late 2002 or early 2003. DOUBLECLICK INC.: Officers, Directors Dismissed From Securities Suit -------------------------------------------------------------------- DoubleClick, Inc. faces a consolidated amended securities class action pending in the United States District Court for the Southern District of New York, alleging violations of the federal securities laws in connection with the Company's follow-on offerings. The suit also names as defendants some of the Company's officers and directors and certain underwriters of the Company's follow-on offerings. In October 2002, the action was dismissed against the named officers and directors without prejudice. However, claims against the Company remain. The Company intends to dispute these allegations. DOUBLECLICK INC.: IL Court Dismisses Without Prejudice Consumer Lawsuit ----------------------------------------------------------------------- The State Court for Cook County, Illinois dismissed with prejudice the class action brought by the Illinois State Attorney against Doubleclick, Inc., pursuant to a settlement agreement between the parties. The suit concerns Internet user privacy and data collection and other business practices. Under the agreement, the online-advertising technology company agreed to continue to post a privacy policy that discloses its data-collection practices and will work to make sure its Web sites comply with its privacy policies. The Company will retain a third-party firm to conduct compliance reviews. Also, the Company, New York, agreed to develop a tool, called a "cookie viewer," to help consumers track how ads are served to them, according to an earlier Class Action Reporter story. The Company said the settlement, which did not constitute an admission of wrongdoing, resolves all state investigations outstanding into its consumer-privacy policies. The company previously, in March, had settled a series of class actions with plaintiffs whose Web surfing habits were being collected, as well as settling in the same month, a Federal Trade Commission lawsuit against the Company. DOV PHARMACEUTICALS: Court Consolidates Suits For Securities Violations ----------------------------------------------------------------------- The United States District Court for the Southern District of New York consolidated the securities class actions pending against DOV Pharmaceuticals, Inc, certain of the Company's officers and directors and certain of the underwriters in the Company's April 25,2002 initial public offering of 5,000,000 shares of its common stock. From April 29, 2002, a number of class action lawsuits were filed in the United States District Court for the Southern District of New York and the United States District Court for the District of New Jersey. The complaints that have been served allege violations of Sections 11, 12 and 15 of the Securities Act of 1933 as well as 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, based upon the Company's alleged failure to disclose the filing of a revised registration statement and prospectus for the Company's initial public offering reflecting changes to the 1999 financial statements of the Company's joint venture with Elan Corporation, plc, DOV (Bermuda), Ltd. These class actions were brought on behalf of purchasers of the Company's common stock in or traceable to the Company's initial public offering and sought money damages or rescission. On July 29, 2002, Judge Robert W. Sweet consolidated before him the lawsuits filed in the Southern District of New York and appointed lead plaintiffs and approved the selection of counsel for the lead plaintiffs. On August 16, 2002 Judge Sweet consolidated before him the lawsuits filed in the United States District Court for the District Court of New Jersey with the lawsuits filed in the Southern District. The deadline for the filing of a consolidated complaint has not yet expired. Defendants' time to respond has been extended pending the filing of a consolidated complaint. The Company believes that it has meritorious defenses to the claims alleged in the class actions and intends to vigorously defend against the claims. However, litigation is inherently uncertain and the Company cannot give assurances as to the ultimate outcome or effect of these actions. If the plaintiffs in these actions were to prevail, such an outcome could have a material adverse effect on the Company's financial condition, results of operations and liquidity. EBAY INC.: Merger With PayPal Reaps Rash of CA, DE, NY Suits ------------------------------------------------------------- eBay, Inc. faces several class action complaints filed following announcement of the Company's merger with PayPal, Inc. Three were filed in the Court of Chancery in the State of Delaware in and for New Castle County, while two were commenced in the Superior Court of the State of California, County of Santa Clara, by alleged PayPal stockholders. The Company believes that each of the lawsuits is without merit. These complaints name the Company, PayPal and each member of Paypal's board of directors, alleging, among other things, that the Company controlled PayPal prior to the execution of their merger agreement. The defendants allegedly breached fiduciary duties they owed to PayPal's stockholders in connection with PayPal entering into the merger agreement and the exchange ratio in the merger is unfair and inadequate. The plaintiffs seek, among other things, an award of unspecified compensatory damages. INDIAN FUNDS: Bush Government Wants High Court To Limit Rights To Sue --------------------------------------------------------------------- The Bush Administration has asked the US Supreme Court to limit lawsuits filed by American Indian tribes contending the Interior Department failed to protect tribal resources, the Associated Press Newswires reports. Otherwise, the government, which manages 56 million acres of land for the benefit of the tribes, could be subject to a mountain of lawsuits, argued assistant solicitor Gregory G. Garre. "That would be an enormous potential liability that there is no indication Congress ever intended to assume," he said. Specifically, Mr. Garre said the court should reverse two appeals court rulings that found the government liable for damages for violating implied responsibilities to the tribes. In one, the Navajo Nation alleges a former Interior secretary colluded with a coal company to deny the tribe tens of millions of dollars in royalties from coal mined from Navajo land. In the other, the White Mountain Apache Tribe of Arizona contends that the Interior Department should pay to repair historic buildings Congress allowed the government to use on condition that they be given to the tribe when the government does not need them. Appeals courts have said the government was liable for damages as high as $600 million in the Navajo case and $14 million in the White Mountain case. The government's responsibility to act as a trustee and protect the interests of American Indian tribes is a cornerstone of Indian law based on treaties with tribes and recognized by Congress and courts for 170 years. That could be redefined by the current cases, said David Getches, a professor specializing in Indian law at the University of Colorado. Professor Getches said Indian tribes prevail in the current Supreme Court about one-fifth of the time, less than any other group. The cases could also affect other breach of trust cases, including a class action filed in Washington, D.C., alleging that the government squandered tens of billions of dollars in royalties from land owned by 350,000 American Indians nationwide. In the Navajo case, the tribe had sought in 1984 to renegotiate a 20- year-old coal lease with Peabody Energy, raising the royalty from less than one percent to 20 percent of proceeds. Interior Department studies said the increase was appropriate. An assistant secretary was about to set the royalties at 20 percent, but then-Interior Secretary Donald Hodel blocked the adjustment after meeting with a friend who had been hired by Peabody as a lobbyist. The tribe later settled for a 12.5 percent royalty. Navajo attorney Paul E. Frye said Mr. Hodel "colluded with Peabody to swindle the Navajo Nation, "a violation of his trust obligation." However, Justice Antonin Scalia said the secretary is only obliged to make sure the royalty rate is higher than the minimum set by law. Justice Scalia also seemed equally unswayed by the White Mountain arguments that the Interior Department should be responsible for upkeep on the old Fort Apache buildings that Congress had arranged to be given to the tribe once the government was through with its use of them. Millions have been spent repairing the buildings, but an estimate $8 million in work remains, including fixing basketball-sized holes in the ceilin of one building, said White Montain Apache attorney Robert C. Brauchli. Mr. Garre argued for the government that Congress did not direct the government to maintain the buildings. But Justices Sandra Day O'Connor and John Paul Stevens questioned if that meant the government could destroy them without consequences. "I would have thought there might well be a duty for the United States government here acting as a trustee not to lay waste to the property," said Justice O'Connor, an Arizona native. Mr. Garre replied that if the buildings were destroyed, the tribe could sue, but could not claim damages because the government failed to meet its trust duties. INFOSPACE INC.: JPMDL Orders Transfer of Securities Lawsuit To NY Court ----------------------------------------------------------------------- The Judicial Panel on Multidistrict Litigation ordered the consolidated securities class action pending against Infospace, Inc. to be transferred to the United States District Court for the Southern District of New York. The first suit was commenced in June 2001 in the United States District Court for the Western District of Washington, alleging that the Company and its chief executive officer made false and misleading statements about the Company's business and prospects during the period between January 26, 2000 and January 30, 2001. The complaint alleges violations of the federal securities laws and does not specify the amount of damages sought. Subsequently, other similar complaints were filed, and these suits were later consolidated. In April 2002, the Company filed a motion to dismiss the complaint for failure to state a claim. On April 11, 2002, plaintiffs filed a motion for leave of the Court to amend the consolidated complaint to add Merrill Lynch & Co., Inc. and one of its analysts as defendants, which the court granted. The amended complaint was filed on May 9, 2002. On July 2, 2002, the Company filed a new motion to dismiss the amended complaint for failure to state a claim. Merrill Lynch and its analyst moved for transfer of this case to the Southern District of New York to be consolidated with the various cases pending against them. The Company opposed that motion and sought, with Merrill Lynch's support, a severance and transfer of only plaintiff's claims against Merrill Lynch to New York. Plaintiffs sought to have the case (including the claims against Merrill Lynch) remain in the Western District of Washington. On October 11, 2002, the Multidistrict Litigation Panel issued an order transferring the case to the Southern District of New York for pre- trial proceedings to be consolidated with the other various claims pending against Merrill Lynch. The Company's management believes the Company has meritorious defenses to plaintiffs' claims against the Company and its management, but litigation is inherently uncertain and the Company may not prevail in this matter. INFOSPACE INC.: Asks WA Court To Dismiss Shareholder Derivative Lawsuit ----------------------------------------------------------------------- Infospace, Inc. asked the Superior Court of Washington for King County to dismiss the shareholder derivative complaint pending against certain of the Company's current and former officers and directors of the Company and entities related to several of the individual defendants. The Company is named as a "nominal defendant." The complaint alleges that certain defendants breached their fiduciary duties to the Company and were unjustly enriched by engaging in insider trading, and also alleges that certain defendants breached their fiduciary duties in connection with the Go2Net and Prio mergers and that one defendant converted the Company's assets to his personal use. Various equitable remedies are requested in the complaint, including disgorgement, restitution, accounting and imposition of a constructive trust, and the complaint also seeks monetary damages. As stated, the complaint is derivative in nature and does not seek monetary damages from, or the imposition of equitable remedies on, the Company. The Company has entered into indemnification agreements in the ordinary course of business with officers and directors and may be obligated throughout the pendency of this action to advance payment of legal fees and costs incurred by the defendant officers and directors pursuant to the Company's obligations under the indemnification agreements and applicable Delaware law. The special litigation committee of the Company's Board of Directors (SLC), with the assistance of independent legal counsel, has investigated the complaint, and on March 22, 2002 filed a motion to terminate this derivative action. Plaintiff took discovery with respect to that motion. The motion has been fully briefed by both the SLC and the plaintiff, and a hearing on that motion is presently scheduled for November 15, 2002. INTEGRATED INFORMATION: Court Dismisses Officers From Securities Suit --------------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed without prejudice Integrated Information, Inc.'s current and former officers and defendants as defendants in the consolidated securities class action pending against them, the Company and the members of the underwriting syndicate involved in the Company's initial public offering. The suit has been transferred to Judge Shira Scheindlin for coordination with more than 300 similar cases. The suit generally alleges that: (1) the Underwriter Defendants allocated shares of the Company's initial public offering to their customers in exchange for higher than standard commissions on transactions in other securities; (2) the Underwriter Defendants allocated shares of the Company's initial public offering to their customers in exchange for the customers' agreement to purchase additional shares of the Company's common stock in the after-market at pre-determined prices; (3) the Company and the Individual Defendants violated section 10(b) of the Securities Exchange Act of 1934 and/or section 11 of the Securities Act of 1933; and (4) the Individual Defendants violated section 20 of the Securities Exchange Act of 1934 and/or section 15 of the Securities Act of 1933. In July 2002, the Company, as part of the group of issuers of shares named in the consolidated litigation and the individual defendants, filed a motion to dismiss the consolidated amended complaints. The underwriter defendants filed motions to dismiss as well. Also in July 2002, the plaintiffs offered to dismiss the individual defendants, without prejudice, in exchange for a Reservation of Rights and Tolling Agreement from each individual defendant. All of the individual defendants in the lawsuit have entered into such an agreement. On November 1, 2002, Judge Scheindlin heard oral arguments on the motions to dismiss. Due to the inherent uncertainties of litigation and because the litigation is at a preliminary stage, the Company cannot accurately predict the ultimate outcome of the motions or the hearing on the motions. The Company believes that the claims against it are unfounded and without merit. ITXC CORPORATION: NY Court Dismisses Officers, Directors From Lawsuit --------------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed ITXC Corporation's officers and directors from the consolidated securities class action pending against them and the Company. The suit alleges, among other things, that, in connection with the Company's public offerings of securities, its Prospectus did not disclose certain alleged practices involving its underwriters and their customers. The Company is one of hundreds of companies named in substantially identical lawsuits. All of these cases have been consolidated for pretrial purposes before Judge Shira Scheindlin in the Southern District of New York. Motions to dismiss the cases are now pending. All of the individual defendants who had been named as defendants in the Company's case have now been dismissed from the proceeding without prejudice, pursuant to a stipulation with the plaintiffs. These actions are in the early stages and the Company has not yet determined if there is any potential material impact on its financial position or operations. Management believes that the Company and its officers/directors did not engage in any improper or illegal conduct and intends to defend these actions vigorously. MASSACHUSETTS: Auto Buyer Files Suit V. Dealer Over Glass-Etching Fee --------------------------------------------------------------------- Stuart Horowitz of Taunton bought a new Kia Sephia from dealer Ernie Boch and claims his salesman insisted on including a $145 glass-etching fee in the price of the car, The Boston Globe reports. The fee, in fact, was preprinted on the purchase and sale agreement. It covered the cost of etching a vehicle identification number on each window, a practice that deters thieves and qualified Mr. Horowitz for a 15 percent discount on his comprehensive auto insurance coverage. The fee also enrolled the vehicle in a five-year warranty program that would pay Mr. Horowitz $2,500 if his car was stolen and not recovered. "Essentially, I was told it was a mandatory fee whether I wanted it or not." said Mr. Horowitz. Mr. Horowitz contacted a Boston law firm, and although the class action has been dragging on, some interesting numbers turned up in court documents. The dealership sold 495 cars from mid-1998 to mid-1999, and 87 percent of those deals included the glass-etching service. The records also indicate that the Boch dealership kept $120.50 from the $145, with $18.50 going to a company for the warranty, $6 to the salesman for commission. Boch's share for the glass-etching is uncommonly high, given that the Massachusetts Auto Theft Strike Force has been etching windows as a public service for years for $10. Gary Klein, an attorney with the law firm of Grant & Roddy, which represents Mr. Horowitz, is seeking class action status for Mr. Horowitz's lawsuit, from the Norfolk Superior Court. However, Boch officials and attorney say the lawsuit has no merit. They acknowledge the glass-etching service and fee were preprinted on the purchase and sale agreements, but they say the service was negotiable like other aspects of the car deal. "It's all negotiation," said Howard Cooper, an attorney with Todd & Weld, who is representing Mr. Boch. "It (the glass etching) was being given away in an overwhelming number of cases." MICROSOFT CORPORATION: Battles Various Antitrust Claims In MD Court ------------------------------------------------------------------- Attorneys for Microsoft Corporation have converged on the United States District Court in Baltimore, Maryland. Having recently won court endorsement of an antitrust settlement with the federal government and a group of states, lawyers for Microsoft are due to present arguments before US District Judge J. Frederick Motz in Baltimore, in a battle against an antitrust lawsuit filed by rival Sun Microsystems Inc. (Sun), Reuters English News Service reports. Sun has asked Judge Motz to order Microsoft to include Sun's Java programming language in the Windows XP operating system. Judge Motz also is overseeing a number of other actions against Microsoft, class- action attorneys are suing on behalf of customers. Sun's antitrust lawsuit is one of several filed by AOL Time Warner unit, Netscape Communications, Be Inc. and Burst.com. The private antitrust lawsuits were filed in the wake of Microsoft's long-running antitrust fight with the federal government. Sun filed its antitrust lawsuit in March, after a federal appeals court upheld a lower court ruling that Microsoft had broken US antitrust laws and illegally maintained its monopoly over personal computer operating systems. Santa Clara, California-based Sun is seeking more than $1 billion in damages, claiming Microsoft impeded the use of its Java software platform. Sun's Java software is a computer language designed to run on different operating systems, not just on Microsoft's dominant Windows platform. Java is generally considered a competitor with Microsoft's .NET Internet services strategy. Microsoft has argued that it was forced to drop Java because of legal problems stemming from another lawsuit that Sun had filed against the company. MICROSOFT CORPORATION: West Virginia To Join Antitrust Settlement Fight ----------------------------------------------------------------------- West Virginia's attorney general said recently that the state will join Massachusetts in appealing a judge's decision to endorse a settlement of the Microsoft Corp. antitrust case, according to a report by Reuters English News Service. West Virginia Attorney General Darrell McGraw filed a notice, on Monday, in federal court in Washington, that the state will challege the decision by US District Judge Colleen Kollar-Kotelly to approve the settlement. In a statement, Attorney General McGraw said the state will join the appeal because the settlement, negotiated between Microsoft and the US Justice Department last year, does not go far enough to end all of Microsoft's illegal practices. "No reputable government should plead poverty and allow an adjudicated lawbreaker to retain its ill-gotten gains," Mr. McGraw said. Massachusetts filed notice Friday that it would appeal the decision. The District of Columbia and seven other states, California, Connecticut, Iowa, Florida, Kansas, Minnesota and Utah, said they would not appeal. Instead, these jurisdictions said they will focus on ensuring that Microsoft complies with the November 1 ruling by Judge Kollar-Kotelly. Microsoft is still defending itself against dozens of class action lawsuits around the country that were filed in the wake of the government antitrust lawsuit. The company also faces civil antitrust suits filed by rivals such as Sun Microsystems Inc. and AOL Time Warner unit Netscape Communications. Federal Judge Frederick Motz in Baltimore is scheduled to hear opening arguments in the Sun lawsuit, which seeks to force Microsoft to include Sun's Java programming language in Windows XP. The settlement approved by Judge Kollar-Kotelly includes giving computer makers greater freedom to feature rival software on their machines by allowing them to hide some Microsoft icons on the Windows desktop. The appeals court ruled in June 2001, that Microsoft had illegally maintained the Windows operating system monopoly, but rejected the trial court's proposal to break the company into two parts. The case was then referred to Judge Kollar-Kotelly to determine the appropriate remedies in the case. She heard 32 days of testimony to determine what sanctions should be imposed on Microsoft. During the remedy hearings, the attorneys for the states argued that the antitrust sanctions should be designed to stop the company from using Windows to crush competition in the markets for emerging technologies, such as server software and handheld computers. In her November 1 ruling, Judge Kollar-Kotelly rejected nearly all the demands for stronger sanctions. OCEANIC USA: Recalls 24T Stage Regulators For Drowning, Accident Hazard ----------------------------------------------------------------------- Oceanic USA is cooperating with the US Consumer Product Safety by voluntarily is recalling about 24,700 Oceanic CDX first stage regulators used for scuba diving. Extreme vibration can occur within these CDX regulators, which can cause an air leakage underwater. Divers could run out of air and drown. The Company has received six reports of noise or vibration accompanied by air leakage. No injuries have been reported. Oceanic CDX first stage regulators subject to the recall have serial numbers 9200001 to 9205622, 9800013 to 9801711, 0200001 to 0213294, 0D0001 to 0D3046, or 9D0001 to 9D3273. The serial number is stamped into the side of the body of the regulator. The regulators have the name "OCEANIC" written on the rubber boot of the first stage. These CDX regulators were sold with the second stage regulators named Alpha 7, Delta 3, Gamma 2, and Zeta. Authorized Oceanic dealers sold these regulator sets worldwide from May 1999 through October 2002 for between $330 to $640, depending on the second stage. For more information, contact the Company by Mail: 2002 Davis St., San Leandro, CA 94577 by Phone: (866) 723-2642 between 8 a.m. and 5 p.m. PT Monday through Friday by E-mail: service@oceanicusa.com or visit the firm's Website: http://www.OceanicWorldWide.com PAYPAL INC.: Faces Two Lawsuits Over Anti-Fraud Program in CA Courts -------------------------------------------------------------------- PayPal, Inc. faces two class actions in California state and federal court relating to its practice of restricting customer accounts. The first suit, commenced in February 2002 in California state court, alleges that its restriction of customer accounts and failure to promptly unrestrict legitimate accounts violates state consumer protection law and is an unfair business practice and a breach of PayPal's User Agreement. This action was re-filed with a different named plaintiff on June 6, 2002. On March 12, 2002, the Company was sued in the United States District Court for the Northern District of California. The suit alleges that its restrictions of customer accounts and failure to promptly unrestrict legitimate accounts violates federal and state consumer protection and unfair business practice law. The court has denied the Company's motion to compel individual arbitration as required by the PayPal User Agreement and has invalidated that provision of the User Agreement. The Company is defending itself vigorously, but if it is unable to prevail in these lawsuits, it may have to change its anti-fraud operations in a manner that will harm its business and pay substantial damages. Even if its defense is successful, the litigation could damage PayPal's reputation, could require significant management time, will be costly and could require changes to its customer service and operations that could increase its costs and decrease the effectiveness of its anti-fraud program. PDI INC.: To Ask NJ Court To Dismiss Consolidated Securities Fraud Suit ----------------------------------------------------------------------- PDI, Inc. intends to ask the United States District Court for the District of New Jersey to dismiss the consolidated securities class action pending against it, its chief executive officer, and its chief financial officer. The suit alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The suit was filed on behalf of all persons who purchased the Company's common stock between May 22, 2001 and November 12, 2001. The essence of the allegations in the first consolidated suit is that the defendants intentionally or recklessly made false or misleading public statements and omissions concerning the Company's financial condition and prospects with respect to its marketing of Ceftin in connection with the October 2000 distribution agreement with GSK, as well as its marketing of Lotensin in connection with the May 2001 distribution agreement with Novartis Pharmaceuticals Corp. On October 31, 2002, the lead plaintiffs filed a motion for leave to file a second consolidated and amended complaint, which would supersede the first consolidated suit. The proposed second consolidated amended complaint names the Company, its chief executive officer, and its chief financial officer as defendants, purports to state claims against them on behalf of all persons who purchased the Company's common stock between May 22, 2001 and August 12, 2002 and seeks money damages in unspecified amounts and litigation expenses including attorneys' and experts' fees. The essence of the allegations in the proposed second consolidated and amended complaint is that the defendants intentionally or recklessly made false or misleading public statements and omissions concerning the Company's financial condition and prospects with respect to its marketing of Ceftin in connection with the October 2000 distribution agreement with GSK, its marketing of Lotensin in connection with the May 2001 distribution agreement with Novartis Pharmaceuticals Corp., as well as its marketing of Evista in connection with the October 2001 distribution agreement with Eli Lilly. The Company believes that it is likely that the court will grant the motion for leave to file a second amended and consolidated complaint and, if granted, intends to file a motion to dismiss under the Private Securities Litigation Reform Act of 1995 and Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Discovery has not yet commenced in the consolidated action. The Company believes that the allegations in this securities class action are without merit. SAGENT TECHNOLOGY: Discovery Commences in Securities Fraud Suit in CA --------------------------------------------------------------------- Discovery has commenced in the consolidated securities class action filed against Sagent Technology, Inc. in the United States District Court for the Northern District of California. Several suits were commenced from October 20, 2000 to November 27, 2000, on behalf of the individual investors who purchased Company common stock between October 21, 1999 and April 18, 2000. The claims allege that the Company misrepresented its prospects for 1999 and the first quarter of 2000. Thereafter, the court consolidated the complaints and selected a lead plaintiff and counsel. The Company filed a motion to dismiss the consolidated amended complaint, which the court granted. However, the court gave the plaintiffs leave to amend the complaint. In December 2001, the plaintiffs filed a second amended complaint. The Company then filed a motion to dismiss that complaint on February 15, 2002. The hearing on the motion was held on June 3, 2002. On June 5, 2002, the court issued an order granting in part and denying in part the Company's motion to dismiss the second amended complaint. Thereafter, the plaintiffs filed a third amended complaint. The Company has moved to strike certain portions of that complaint on the grounds that those particular allegations were dismissed by the court from the prior complaint. On August 26, 2002, the court sustained the Company's motion to strike certain portions of the complaint. Because certain claims survived the motion to dismiss the prior complaint, and the discovery stay is no longer in effect for those allegations, the parties are engaging in discovery. SAGENT TECHNOLOGY: CA State Court Upholds Dismissal of Derivative Suit ----------------------------------------------------------------------- The Superior Court of California for the County of San Mateo sustained the dismissal of the shareholder derivative lawsuit against Sagent Technology, Inc. and its present and former officers and directors. On November 17, 2000, the first derivative lawsuit, labeled the "Fanucci Complaint" was filed by a purported Company shareholder in the Superior Court of California for the County of San Mateo. On February 9, 2001, a second derivative lawsuit was filed in the Superior Court of California for the County of Santa Clara (the "Hu Complaint"). The complaints name certain of the Company's present and former officers and directors as defendants. The Hu Complaint also names an investment bank retained by the Company and an employee of that investment bank as defendants. The Company has also been named as a nominal defendant in each complaint. The principal allegation of the complaints is that the defendants breached their fiduciary duties to the Company through the dissemination of allegedly misleading and inaccurate information and other allegations. In July 2001, the two cases were coordinated for pretrial purposes in the Superior Court of California for the County of Santa Clara. The Company filed a motion to dismiss the Fanucci suit, on the grounds that, among other things, the plaintiff had failed to make a pre-suit demand on the board of directors as required by Delaware law. The officer and director defendants joined in that motion, and also moved to dismiss on the grounds that the complaint fails to allege the asserted causes of action against the individual defendants. Similar motions were filed concerning the Hu Complaint. The parties agreed to stay the Hu Complaint indefinitely, pending the outcome of the Fanucci matter, and the court entered an order staying the Hu Complaint on January 11, 2002. Thereafter, on January 16, 2002, the Fanucci plaintiff filed a motion to transfer and/or remand that case back to the Superior Court for San Mateo County where it was originally filed. The court heard oral arguments on the defendants' motion to dismiss the Fanucci Complaint, and the plaintiffs' transfer motion on January 28, 2002. On March 1, 2002, the court issued an order sustaining the Company's motion to dismiss, granting the plaintiff leave to amend the complaint, denying the plaintiff's motion to transfer and/or remand the Fanucci case to San Mateo County, and ordering the Company to produce a limited quantity of documents to the plaintiff. The Fanucci plaintiff filed an amended complaint in April 2002. The Company and the individual defendants each filed a motion to dismiss to that complaint. The Court heard oral argument on July 9, 2002 and thereafter sustained the motions to dismiss, holding that the nominal plaintiff did not have standing to litigate the complaint where he had failed to make a pre-suit demand on the Company's Board of Directors as required by Delaware law. The plaintiffs have not filed an amended complaint to date. SUPREME COURT: Agrees To Consider Limits On Inmate Visitation Rights -------------------------------------------------------------------- The Supreme Court said Monday it will decide if inmates have constitutional rights to jailhouse visits from young relatives and others, in a case that could have far-reaching implications for prisons around the country, the Associated Press Newswires reports. The class action is significant in its impact because there are 1.4 million inmates in state and federal prisons. The High Court over the years has upheld restrictions on books, packages and visitors at prisons. Justices will consider whether Michigan went too far in banning visits by some children and former prisoners, and stripping visitation privileges from drug-using inmates. An appeals court sided with inmates, ruling, among other things, earlier this year, that imprisonment does not erase a person's First Amendment right to associate with others. Michigan and 11 other states argued that the rules should be reinstated. States and the federal government have varying regulations for inmate visits, so the court's ultimate decision will clarify what the law allows nationwide. The lawyer for the Michigan inmates argued that Michigan had the harshest visitation rules in the country, allowing someone to permanently lose the right to see family members or friends after two drug or alcohol infractions. "This unique and extraordinarily harsh punishment has a devastating effect on prisoners and their families," attorney Deborah LaBelle told justices in a filing. Justices must weigh Michigan authorities' ability to control their prisons against the rights of inmates. States usually win in such cases. Michigan's rules ban visits from prisoners' minor relatives, like brothers and sisters and nieces and nephews. Children and grandchildren are allowed to come to the prison, unless parental rights have been terminated. Michigan Attorney General Jennifer Granholm told the court that the rules were changed because of many visitation problems, including the molestation of a child during a visit. Michigan's rules were imposed in 1995 and challenged by a group of inmates. The Cincinnati-based Sixth Circuit Court of Appeals found, when the case reached its forum, that the ban on visitors is cruel and unusual punishment. The Court said, "Under our Constitution, even those lawfully imprisoned for serious crimes retain some basic constitutional rights. In the present case, the regulations fall below minimum standards of decency owed by a civilized society to those it has incarcerated." During argument before the High Court, Colorado Attorney General Ken Salazar, in support of the state of Michigan's position, told the Court that the appeals court decision "is potentially disruptive to prison management across the country." He said limits on visitation are needed to encourage good behavior and control contraband, which can be brought in by visitors. Michigan rules also prohibit former prisoners who are not immediate family from visiting. Prisoners who violate the department's drug abuse policies twice may be visited only by attorneys and clergy. The class action did not challenge other visitation rules, including a limit on monthly visits, regulations on times and dates of visits. UNITED STATES: Justice Dept, Workers' Union Agree On Special-Rate Pay ---------------------------------------------------------------------- The special-rate back pay class action, which gives new meaning to the term 'long-running,' has taken a big step forward, The Washington Post reports. However, the finish line still remains far ahead. "This case has been a marathon," said general counsel Gregory O'Duden, of the National Treasury Employees Union (NTEU), to Judge Nancy B. Firestone of the US Court of Federal Claims, during a recent hearing on a proposed settlement in the lawsuit. The class action dates to a 1982 policy, affecting employees receiving special-rate pay, which is the higher pay provided employees in certain hard-to-fill positions. The union and the government battled through three rounds in federal district court and two in federal appeals court. The union prevailed and now the two are in the claims court. NTEU and the Justice Department asked the court to approve the proposed settlement, in which the government agreed to pay more than $173 million to cover back pay, interest and lost retirement benefits. "We were able to achieve a settlement and create a structure to give class members what they deserve," Justice Department attorney Judry Subar told the court. About 212,000 employees were in the special-rate category from 1982 through 1988, but the back pay would go only to those whose raises were improperly capped during that time. According to NTEU, that should be about 129,000 individuals. Many of them have left the government, retired or died. The typical award to the special-raters or their estates, would range from $1,000 to $3,000, but in some circumstances, much larger awards would be made. NTEU estimates that 50 people stand to receive more than $50,000. Judge Firestone said, "My hope and desire is to conclude . before the Christmas holiday. People have waited a great deal of time to learn whether they are going to be compensated." If Judge Firestone approves the settlement, the government would have 60 days after her order becomes final to pay the money into the settlement fund. Letters would then go to class members stating the amounts they would receive. Nine months after the final approval, special-raters would start receiving their payments. That means checks would start going out in late 2003. In some cases, it might take longer. Some class members could challenge certain information used to calculate their payments. Disputes also could arise over membership in the class, ownership of money due to deceased beneficiaries and other administrative issues. UNITED STATES: Court To Decide on Limits for Reservation Site Searches ---------------------------------------------------------------------- The High Court has agreed to decide whether police officers can, under the law, search tribal businesses for evidence of criminal activities off the reservation, according to a report by the Associated Press Newswires. The issue is significant for a number of reasons, among them being that a forced search for evidence under such circumstances could be the source for many class actions for wrongful search. The case was brought by Inyo County, California, and a dozen other states, after the Bishop Paiute Tribe resisted search warrants for records of three casino employees, who the county said were falsely claiming welfare benefits. The Ninth US Circuit Court of Appeals agreed with the tribe. In June 2001, the Supreme Court said state authorities may enter an Indian reservation to investigate or prosecute off-reservation violations of state law. The case is Inyo County v. Paiute-Shoshone Indians, 02-281. VITRIA TECHNOLOGY: NY Court Dismisses Officers, Directors From Lawsuit ---------------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed Vitria Technology, Inc.'s officers and directors from the consolidated securities class action filed against them, the Company and the underwriters of the Company's initial public offering. The plaintiffs allege that the defendants violated the federal securities laws because the Company's IPO registration statement and prospectus contained untrue statements of material fact or omitted material facts regarding the compensation to be received by, and the stock allocation practices of, the IPO underwriters. Similar complaints were filed in the same court beginning in January 2001 against numerous public companies that first sold their common stock publicly since the mid-1990s. The Company believes that this lawsuit is without merit and intends to defend against it vigorously. On August 8, 2001, all of these IPO-related lawsuits were consolidated for pretrial purposes before United States Judge Shira Scheindlin of the Southern District of New York. Judge Scheindlin held an initial case management conference on September 7, 2001, at which time she ordered, among other things, that the time for all defendants to respond to any complaint be postponed until further order of the court. Thus, neither the Company nor any of its officers or directors has been required to answer the complaint, and no discovery has been served on them. In July 2002, defendants then filed a global motion to dismiss the IPO- related lawsuits. Subsequent settlement discussions between the parties have resulted in an agreement by the plaintiffs to dismiss the named individual officers and directors of the Company who were named as defendants in the IPO-related lawsuit. Judge Scheindlin entered a court order detailing this dismissal on October 9, 2002. Oral arguments on issuers' motion to dismiss the complaints were held on November 1, 2002. As of the date of this filing, the court has not yet ruled on this motion. VODAFONE PLC: UK, US Law Firms To Commence Suit In US For UK Investors ---------------------------------------------------------------------- Class Law, the high-profile UK legal firm, has joined forces with Milberg Weiss Bershad Hynes & Lerach of the United States to bring a lawsuit against Vodafone PLC on behalf of UK investors, The Times of London reports. The cases comes as suing companies on behalf of aggrieved UK investors is becoming big business. That said, the United States is still the preferred venue for bringing such actions because the legal system tends to favor litigants. So, UK firms such as Class Law are teaming up with their American counterparts such as Milberg Weiss to enable UK investors to launch suits on the American side of the Atlantic. Class Law says it so far has taken on 20 British Vodafone shareholders, who will join the US action that alleges that the mobile telephone company issued "material misrepresentations" to investors between March 7, 2001 and May 28, 2002. Investors allege that Vodafone was "improperly delaying goodwill writedowns" and overpaid for acquisitions. The Company pledges to fight the case. Although the introduction of the Group Litigation Order in 2000, clarified the operation of class action, or group, lawsuits in Britain, it is still much more difficult to bring successful actions in the UK. In the UK, litigants must sign up to an action, through a Group Litigation Order, before it is set in motion. In the UK, cases are heard before a judge. Judges tend to be more conservative than the US juries, which hear equivalent actions and have more sympathy with the plaintiffs. Costs are also an issue for UK solicitors. For example, an attempt by the law firm Leigh Day & Co., to take on big tobacco companies on behalf of former smokers in the UK floundered because of the risk of losing and having to pay the companies' costs. The firm sought GBP10 million of insurance cover, but the cheapest quote for a premium was GBP4 million. Given that the costs already had mushroomed to GBP15 million, the firm was forced to call off the action. This is not a problem in the United States. If the people bringing the suit win, their lawyers are paid by taking a substantial cut of the damages, which helps them to build fighting funds for future cases. If they lose, however, they do not have to meet the costs of the company they are suing, unlike in the UK where the winner takes all. British lawyers attribute the rise in class action in the UK to the increased publicity given to financial scandals and a growing appetite among investors to fight for compensation. *Prominent Lawyer Melvyn Weiss Evaluates Legal Achievements, Exploits --------------------------------------------------------------------- For 37 years Melvyn Weiss of top law firm Milberg Weiss Bershad Hynes & Lerach has ruled the class action courtroom. His name alone casts uneasiness into the hearts of the sternest executives and investment bankers, The Times of London reports. In the past two years alone his reputation has served him well, bringing his firm the lion's share of the surge in class actions. His victories are fabled. He won $800 million for investors who lost their shirts in Michael Milken's junk bond scandal, more than $2 billion for policyholders in Prudential Insurance of the United States and $775 million for investors in Washington Public Power Supply Systems. Mr. Weiss even claimed the first securities fraud victory against a big accountancy firm when he defeated Touche Ross in 1972 and won $2 million for the plaintiffs. "That was an awful lot of money in those days," the quietly spoken New Yorker remembers with a grin. In 2001, a record-breaking year for fraud class actions, the firm was involved in as many as 70 percent of all cases. Mr. Weiss loathes the Wall Street culture that seeks to divert shareholders' funds to executive directors by way of options and bonuses. In fact, he blames that very culture for the explosion of the fraud cases. He expounds a convincing theory about the circumstances that led to corporate America's decline into a seemingly endless spiral of fraud. "Historically, there were two types of corporate leader. The first type were the entrepreneurs, the founders, and because they were founders they had big blocks of stock and became mega-rich," Mr. Weiss says. "Then you have the second type, whom I characterize as the interim caretakers of other people's money. These people traditionally paid well, but not nearly as well as the entrepreneurs." Then along came the merger and acquisition era, which Mr. Weiss believes was permitted as a result of Mr. Milken's transformation of junk bonds into a commodity. "Wall Street taught some of these interim caretakers how to also become mega rich with golden parachutes and the like," Mr. Weiss says. "But when that whole industry collapsed because of accounting frauds, Wall Street had to find new ways to keep its engines going, so to speak. And other corporate managers who missed the gravy train were saying, 'How can I cash in?' So they came up with the creation of the stock option." Mr. Weiss believes that corporate executives colluded with bankers and accountants and lawyers to create layers of illusion surrounding companies and their financial results to make sure that the bottom line kept growing and the options kept paying. Then in 1995, Congress changed the law to make it more difficult to bring securities fraud litigation, with an added clause to protect Wall Street advisers. "The CEO needs someone to protect him from himself and the outside directors need someone to protect them from the CEO," Mr. Weiss says. "So you have watchdogs -- the accountants, the lawyers, the bankers. But if they don't feel threatened that they can be held accountable, then the CEO has the upper hand and they become weaker." The Private Securities Litigation Act of 1995, reversed a law of more than 60 years' standing to rule that so-called aiders and abetters of wrongdoing in a securities fraud case could not be held liable under federal law. "So when you take all this together you have a recipe for disaster," Mr. Weiss concludes with a sigh of resignation. However, he believes that some of the actions of the investment bankers accused of IPO spinning, and of the auditors in the big corporate bankruptcies, were terrible enough to make them into prime suspects, rather than the aiders and abetters that they claim to be. Investors affected by the likes of Enron and WorldCom could have a long time to wait for a settlement. "Look at Exxon Valdez: that has been 12 years. Lawyers have retired, even died, without seeing a result," Mr. Weiss says. "Enron should be a little quicker; at least I hope so." New Securities Fraud Cases CREDIT SUISSE: Weiss & Yourman Commences Securities Lawsuit in S.D. NY ---------------------------------------------------------------------- Weiss & Yourman initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of all persons or entities who purchased or otherwise acquired Agilent Technologies, Inc. securities (NYSE:A) between December 13, 1999 and September 9, 2002, inclusive. Named as defendants are Credit Suisse First Boston (CSFB) and Elliot Rogers, the analyst responsible for covering Agilent. The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued false and misleading statements which artificially inflated the price of Agilent stock. The complaint alleges that CSFB issued analyst reports regarding Agilent that recommended the purchase of the Company's common stock. However, such analyst reports were false and misleading because they conflicted with defendants' internally expressed negative opinions regarding Agilent and failed to disclose that CSFB's coverage and ratings of Agilent were not independent and objective, but instead were a biased marketing tool for CSFB to maintain and enhance its investment banking business with Agilent. Throughout the class period, CSFB, maintained "Buy" or "Hold" recommendations on Agilent in order to obtain and support lucrative financial deals for CSFB. Indeed, defendants' conduct was so brazen that this system of false ratings was internally dubbed the "Agilent Two-Step" at CSFB. As a result of CSFB's false and misleading conduct, Agilent common stock traded at artificially inflated levels during the class period. For more details, contact Mark D. Smilow, David C. Katz, and/or James E. Tullman by Mail: The French Building, 551 Fifth Avenue, Suite 16000, New York, NY 10176 by Phone: (888) 593-4771 or (212) 682-3025 or by E- mail: info@wynyc.com FOOTSTAR INC.: Schiffrin & Barroway Files Securities Lawsuit in S.D. NY ----------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf of all purchasers of the common stock of Footstar, Inc. (NYSE:FTS) between February 8, 2002 and November 12, 2002, inclusive. The complaint charges the Company and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that throughout the class period, as alleged in the complaint, defendants issued numerous statements and filed quarterly reports and an annual report with the SEC which described the Company's increasing revenues and financial performance. 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, since at least 2001, the Company had cumulatively understated its accounts payable by approximately $35 million; (2) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (3) that as a result, the value of the Company's balance sheet and financial results were materially overstated at all relevant times. On November 13, 2002, the Company shocked the market by announcing that it had "discovered discrepancies in the reporting of its account payable balances," following management's review of the account reconciliation processes of its accounts payable balances. Specifically, defendants had cumulatively understated the Company's accounts payable balances in its athletic segment by approximately $35 million. As a result, the Company announced that it will likely be restating its financial statements for the first nine months of 2002 and prior periods, with a significant portion of the discrepancies affecting fiscal year 2001 and earlier. Following this announcement, shares of the Company fell $1.25, or almost 20%, to close at $5.05, after hitting an intraday low of $3.30, on volume of 2,137,700 shares traded, or almost six times Footstar's average daily trading volume. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com TRANSACTION SYSTEM: Schiffrin & Barroway Launches Securities Suit in NE ----------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the District of Nebraska on behalf of all purchasers of the common stock of Transaction Systems Architects, Inc. (Nasdaq:TSAIE) between January 21, 1999 and November 18, 2002, inclusive. The suit charges that during the class period, Transaction Systems Architects and certain of its officers and directors issued and/or failed to correct false and misleading financial statements and press releases concerning the Company's publicly reported revenues and earnings directed to the investing public. Specifically: (1) the Company's software license revenues and net income for 1999, 2000, 2001 and for the ninth-month period ended June 30, 2002 have been seriously overstated; (2) the Company lacked sufficient internal controls and therefore was unable to understand its true financial standing; (3) because of these problems, the value of the Company's balance sheet and income statement were materially overstated at all relevant times. On August 14, 2002, the Company shocked the market and revealed that management was reviewing several transactions involving the Company's customers that occurred during fiscal 1999 and 2000, to determine whether they had been accounted for appropriately. The Company announced that it would conduct a re-audit of the financial statements for fiscal years 1999, 2000 and 2001. In response to the news, the Company's shares plummeted more than 20%, falling $2.22 per share (from the previous day's closing price of $10.72 per share), to $8.50 per share on August 15, 2002. On November 19, 2002, the Company confirmed that in the course of the review of its financial statements, the Company identified certain accounting adjustments that will result in the restatements of the Company's financial statements for fiscal 1999, 2000 and 2001, as well as the restatements of previously announced 2002 quarterly results because it improperly recognized revenue in conjunction with its software licensing arrangements. As a result, previously reported Company's software license revenues and net income will decrease substantially in fiscal 1999, 2000 and 2001. The Company said that these adjustments may be material. Further, the Company announced that as a result of these adjustments, it is not possible to complete the re-audit prior to the November 29, 2002, deadline allowed by NASDAQ. The Company requested an extension from NASDAQ until December 31, 2002 to complete the re-audit process. After the market digested the November 19, 2002 announcement, TSA's shares fell to a low of $ 6.50, closing on November 20th at $7.35. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 or by E-mail: info@sbclasslaw.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 * * *