/raid1/www/Hosts/bankrupt/CAR_Public/021212.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, December 12, 2002, Vol. 4, No. 245
Headlines
ALABAMA: State Welfare Programs Should Meet Compliance by 2003
ALLIED CAPITAL: Plaintiffs File Consolidated Securities Suit in S.D. NY
ALPHARMA INC.: Plaintiffs Appeal Court's Dismissal of Securities Suit
AON CORPORATION: Plaintiffs File Consolidated Securities Lawsuit in IL
ARKANSAS: Judge Considers Enjoining Practices That Short-change Parents
BRITISH AMERICAN: Wins Retrial In Key Australian Smokers' Injury Suit
CALIFORNIA: Supreme Court Says Window Makers Liable For Leaks in Homes
CITIZENS INC.: TX Court Certifies Lawsuit Over Life Insurance Policies
CONNECTICUT: Layoffs At Welfare Department Could Possibly Violate Order
DELTA AIRLINES: Trial in Travel Agents' Antitrust Suit Set April 2003
DELTA AIRLINES: Faces Travel Agents Lawsuit Over Base Commissions in NY
DOW CHEMICAL: Trial Judge Erred In Dividing Implant Suit Into Phases
EL PASO: Trial in Natural Gas Antitrust Suit Set September 2003 in CA
EL PASO: Plaintiffs Ask KS Court To Grant Class Certification To Suit
FIRST UNION: Asks NY Court To Dismiss Suit Opposing Sale of Securities
HANGER ORTHOPEDIC: Plaintiffs Appeal Dismissal of MD Securities Lawsuit
HECLA MINING: Idaho State Court Dismisses Coeur d'Alene River Lawsuit
HOPEMAN BROTHERS: High Court Dismisses Effort To Block Asbestos Suits
HUBBLE HOMES: Idaho Homeowners Commence Suit Over Construction Defects
HUFFY CORPORATION: Negotiates For Settlement of CA Employee Wage Suits
IPALCO ENTERPRISES: Asks IN Court To Dismiss Suit For ERISA Violations
IPALCO ENTERPRISES: Investors File Securities Fraud Lawsuit in IN Court
K-TEL INTERNATIONAL: Appeals Court Refuses Rehearing on Suit Dismissal
MEDCO HEALTH: Agrees To Settle Lawsuit Alleging It Favored Merck & Co.
OMNICOM GROUP: Faces Several Suits For Securities Act Violations in NY
PACIFIC CAPITAL: Faces Investor Lawsuit Over Lost Funds in Reed Slatkin
PINNACLE ENTERTAINMENT: Plaintiffs To Appeal Class Certification Denial
PREDICTIVE SYSTEMS: Asks NY Court To Dismiss Securities Fraud Lawsuit
SIERRA PACIFIC: Investors File Suit To Oppose Nevada Power Acquisition
TELAXIS COMMUNICATIONS: Court Dismisses Officers, Directors From Suit
TENFOLD CORPORATION: UT Court Grants Final Approval to Suit Settlement
TERAFORCE TECHNOLOGY: Trial in Securities Fraud Suit Set For April 2003
WASHINGTON: Seattle Federal Judge Bars Somali Deportations Nationwide
WESTMINSTER CAPITAL: DE Court Denies Motion For Expedited Proceedings
*Business Titan, Environmental Activist, Faces Asbestos Involvement
New Securities Fraud Cases
800AMERICA.COM: Charles Piven Launches Securities Fraud Suit in S.D. NY
COLE NATIONAL: Charles Piven Commences Securities Fraud Suit in N.D. OH
NUI CORPORATION: Bernstein Liebhard Lodges Securities Suit in NJ Court
RETEK INC.: Marc Henzel Commences Securities Fraud Lawsuit in MN Court
TRANSACTION SYSTEMS: Cauley Geller Launches Securities Fraud Suit in NE
*********
ALABAMA: State Welfare Programs Should Meet Compliance by 2003
--------------------------------------------------------------
The state of Alabama's human resource commissioner, William Fuller,
expects to have child welfare programs in all 67 Alabama counties in
compliance with court-ordered standards in 2003, 15 years after an
eight-year-old foster child filed a class action against the state over
its broken-down system, Associated Press Newswires reports.
In 1988, the eight-year-old boy, identified in court records only by
his initials "R.C.," filed a class action against the state, contending
that:
(1) overloaded social workers were months behind in investigating
complaints about abuse and neglect;
(2) foster children were bounced from home to home; and
(3) that efforts were not made to keep families intact.
The state settled the case by agreeing to meet court-ordered standards,
including the hiring of more staff. Additionally, Governor Donald
Siegelman promised in 1999, to have all counties in compliance by
October 1, 2002, a goal that was not met.
So far, 48 of Alabama's 67 counties have been certified by a federal
judge as meeting the court's standards. Twelve more are seeking
federal court approval, and seven still have work to do to meet court-
ordered standards.
Commissioner of Human Resources Fuller said that those seven counties
should be able to complete the improvements in six to nine months. The
Department of Human Resources' attorney and the lead attorney for the
foster children signed a report last week that was given to the federal
judge handling the case. They agreed to continue to work together.
James Tucker, an attorney for the foster children, said the state's
Department of Human Resources is working in good faith, even though it
missed the October 1 deadline, and the report to the federal judge
reflects this, Mr. Tucker said.
Mr. Tucker said the case has taken so long because of erratic state
funding. Substantial progress has been made in the last two years due
to a dramatic increase in federal funding. That has enabled the
department to add 335 child welfare workers in the last 1-1/2 years,
bringing the total to 1,561. When the case began in 1988, the agency
had fewer than 1,000 child welfare workers.
The annual budget for child welfare services has grown to $275 million,
Mr. Tucker said. He added that this amount is about $100 million more
than experts predicted when the case began.
ALLIED CAPITAL: Plaintiffs File Consolidated Securities Suit in S.D. NY
-----------------------------------------------------------------------
Plaintiffs in the securities class actions against Allied Capital
Corporation filed a consolidated suit in the United States District
Court for the Southern District of New York. The suit also names as
defendants the Company and certain of its directors and officers.
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 specifically alleges, among other things, that the Company
purportedly misstated the value of certain portfolio investments in its
financial statements, which allegedly resulted in the purchase of its
common stock by purported class members at artificially inflated
prices. Several of the complaints also alleged state law claims for
common law fraud. The complaints sought compensatory and other
damages, and costs and expenses associated with the litigation.
The Company believes that the lawsuit is without merit. While the
Company does not expect these matters to materially affect its
financial condition or results of operations, there can be no assurance
as to whether any such pending litigation will have a material adverse
effect on its financial condition or results of operations in any
future reporting period.
ALPHARMA INC.: Plaintiffs Appeal Court's Dismissal of Securities Suit
---------------------------------------------------------------------
Plaintiffs in the securities class action pending against Alpharma,
Inc. appealed a lower court's dismissal of the suit in the United
States Third Circuit Court of Appeals.
The suit was filed in the United States District Court for the District
of New Jersey, on behalf of all persons who acquired the Company's
securities between April 28, 1999 and October 30, 2000. The Company is
named as a defendant along with two of its board members, one of whom
is an officer, and two of its former officers.
The suit alleges that, among other things, the plaintiffs were damaged
when they acquired the Company's securities because, of:
(1) alleged irregularities in the Company's animal health business
in Brazil;
(2) allegedly improper revenue recognition practices and
(3) the October 2000 revision of its financial results for 1999
and 2000.
The Company's previously issued financial statements were materially
false and misleading, thereby artificially inflating the price of the
Company's securities. The complaint alleges violations of Sections
10(b), 20(a) and Rule 10b-5 of the Securities and Exchange Act of 1934.
The plaintiffs seek damages in unspecified amounts.
The Company moved to dismiss the complaint on legal grounds and the
court granted its motion with prejudice. The plaintiffs filed a motion
for reconsideration with the court and the court affirmed its earlier
dismissal.
Based upon the facts as presently known, the Company does not believe
that it is likely that the suit will result in liability which will be
material to the Company's financial position.
AON CORPORATION: Plaintiffs File Consolidated Securities Lawsuit in IL
----------------------------------------------------------------------
Aon Corporation faces a consolidated securities class actions pending
in the United States District Court in the Northern District of
Illinois, Eastern Division, on behalf of purchasers of the Company's
common stock between May 4, 1999 and August 6, 2002. The suit also
names as defendants:
(1) Patrick G. Ryan, Chairman and Chief Executive Officer, and
(2) Harvey N. Medvin, Executive Vice President and 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 under such
Act relating to the Company's press release issued on August 7, 2002.
The plaintiff seeks, among other things, class action certification,
compensatory damages in an unspecified amount and an award of costs and
expenses, including counsel fees.
ARKANSAS: Judge Considers Enjoining Practices That Short-change Parents
----------------------------------------------------------------------
Custodial parents whose child support checks were delayed for weeks in
2001, after the state implemented a flawed new payment system, recently
asked a federal judge to ban state practices, which they say still
shortchange them, the Associated Press Newswires reports.
Plaintiffs in the class action contend in court briefs that, until this
fall, the state deducted money for bad checks and agency errors from
the child support payments sent to the custodial parents, thereby
shortchanging the recipients. US District Judge James Moody did not
immediately issue an order requesting an injunction for these acts.
The practices, which the plaintiffs describe, violate federal rules
requiring distribution to recipients first and recovery from the
source, plaintiffs' attorney Theresa Caldwell said. She said the state
halted the practice October 29.
Before then, "Instead of getting their court-ordered payment, maybe
$100 a month, they may be getting $75, or in some cases, the state may
take it all," Ms. Caldwell said. "Recipients have the right to get
their support paid them first. They have that federal right."
In July 2001, the state Office of Child Support Enforcement took on
about 50,000 more cases from the counties, as mandated by the federal
government. At the same time, it switched to a new computer system.
The changes caused weeks of delays for some recipients, and certainly
inconveniences for almost every child-support recipient, said OCSE
Administrator Daniel McDonald.
Mr. McDonald said that the state now is following the rules and has
informed parents about how it manages their money. Judge Moody said
that in granting the case class action status in September, the child-
support office was trying to address the plaintiffs' needs and had made
substantial progress.
BRITISH AMERICAN: Wins Retrial In Key Australian Smokers' Injury Suit
---------------------------------------------------------------------
British American Tobacco (BAT), the company behind Lucky Strike and
Dunhill cigarettes, has won an appeal against a key decision to award
$700,000 (Pounds 250,000) in damages to an Australian grandmother who
recently died of lung cancer, The Times of London reports. The ruling,
which had been expected to open the way for more lawsuits from cancer
sufferers, was overturned after the Court of Appeals in Melbourne
upheld the Company's appeal.
The court ruled against a decision of the Supreme Court of Victoria to
award compensation to Rolah McCabe, which had made her the first
Australian smoker to win compensation from a major tobacco company.
The appeals court ordered a retrial.
At the original trial, Ms. McCabe sought compensation for medical
costs, loss of income and pain and suffering. The initial decision in
her favor came after it emerged that BAT had shredded documents which
were "likely to be of importance" in litigation against the company.
Internal memos at BAT, the world's second largest tobacco group, showed
that it had employed a policy of systematically destroying redundant
documents that might "harm or embarrass" the company. Internal memos
at BAT, the world's second largest tobacco group, showed that it had
employed a policy of systematically destroying redundant documents that
might "harm or embarrass" the company. Justice Geoffrey Eames, the
judge who first ruled against BAT, said at the time, "I am entirely
satisfied that (BAT policy) was to provide a means of destroying
damaging documents under the cover of an apparently innocent house-
keeping arrangement."
The documents included child smoking studies and other research papers
into the health risks of smoking, such as the addictive qualities of
cigarettes, which could have been used in the case brought by Ms.
McCabe.
However, the appeal court ruled that the trial judge had "erred in
holding that (BAT's) defense should be struck out because the defendant
had embarked upon the wholesale destruction of documents before the
commencement of proceedings, for the purpose of denying the plaintiff a
fair trial." The appeal court also absolved Clayton Utz, the Sydney
law firm representing BAT, from accusations that it helped to think up
a strategy for destroying documents.
Although a retrial has been ordered, the death of Ms. McCabe, the Times
of London reported, will pose difficulty for the procedure.
Nonetheless, Peter Gordon, Ms. McCabe's lawyer from the class action
firm Slater & Gordon, indicated readiness to fight on at the higher
level of the federal High Court. Mr. Gordon said, "I want to emphasize
our absolute determination to carry this fight to justice in the High
Court. We will not rest in our endeavors until justice is done."
BAT, which produced 807 billion cigarettes in 2001, said it was too
early to say how its successful appeal might affect any future legal
action tied to the McCabe case. Since the original ruling against BAT,
the US Department of Justice has asked to see evidence used in the case
as part of its wider investigation into BAT's shredding policy.
CALIFORNIA: Supreme Court Says Window Makers Liable For Leaks in Homes
----------------------------------------------------------------------
Manufacturers of defective windows in mass-produced homes are
responsible for the property damage caused by these windows, the
state's Supreme Court ruled recently, The San Francisco Chronicle
reports.
In a six to one decision, the court said that residents of two San
Diego housing developments, who claimed leaky windows damaged their
homes, did not have to prove that the alleged defects were caused by
the manufacturers' negligence or rely on the warranty, which has
expired.
The class action, which has not yet gone to trial, contends that
windows made by Viking Industries and T.M. Cobb, leaked, allowing water
to seep into the wall cavity, damaging baseboards, carpets and
drywalls. The lawsuit was filed on behalf of several hundred residents
of the two developments, which were built in 1988. The homeowners'
lawyer said he would seek to convert the suit into a statewide class
action on behalf of thousands of homeowners with similar windows.
The issue before the state's Supreme Court was what did the plaintiffs
have to prove. The plaintiffs claimed that the windows in mass-
produced homes are covered by "strict liability," a doctrine pioneered
by the California court in 1963, and later adopted nationwide. It
requires makers, designers and distributors of defective products to
pay for the injuries they cause, without forcing consumers to prove
what went wrong or who was to blame.
Justice Joyce Kennard, speaking for the majority opinion, observed that
the goals of strict liability are to compensate victims, encourage
better and safer products, and assign liability fairly to those who can
share the costs.
Justice Kennard said those purposes can be served by holding a maker of
defective windows responsible for the damage they cause. Manufacturers
of components, such as windows, "may be in the best position to insure
product safety" and can adjust their costs as they deal with others
contributing to the overall enterprise, said Justice Kennard.
CITIZENS INC.: TX Court Certifies Lawsuit Over Life Insurance Policies
----------------------------------------------------------------------
The Travis County, Texas District Court granted class certification to
a lawsuit filed in 1999 against Citizens, Inc. and:
(1) Citizens Insurance Company of America,
(2) Negocios Savoy, S.A.,
(3) Harold E. Riley, and
(4) Mark A. Oliver
The suit alleges that life insurance policies sold to certain non-US
residents by Citizens Insurance Company of America are securities and
were sold in violation of the registration provisions of the Texas
securities laws. The suit seeks class action status naming as a class
all non-US residents who made premium payments since August 1996 and
assigned policy dividends to a trust for the purchase of Citizens, Inc.
Class A common stock. The remedy sought is rescission of the insurance
premium payments.
An appeal of the class action certification by the district court has
been made to the Texas Court of Appeals. Litigation counsel and
defendants believe that the district court ruling is significantly in
error and that there are substantial grounds for reversal. During the
time of the appeal, the district court proceedings will be stayed.
The Company is unable to determine the potential magnitude of the
claims in the event of a final class action certification and the
plaintiffs prevailing in the substantive action.
CONNECTICUT: Layoffs At Welfare Department Could Possibly Violate Order
-----------------------------------------------------------------------
The state of Connecticut could be back in federal court as a result of
some layoffs at the state Department of Children and Families (DCF),
Associated Press Newswires reports. Child advocates say a handful of
the layoffs, announced last Friday, affect staff positions that were
created under court orders stemming from a 1989 lawsuit.
The department has been under a consent decree for 11 years because of
a class action that alleged the state had violated federal laws by not
adequately protecting children in its care. Shelly Geballe, of the
group Connecticut Voices for Children, based in New Haven, worked on
the consent decree for the plaintiffs.
Lawyers for the plaintiffs "will have to go back into court and fight
this," Ms. Geballe told the Journal Inquirer of Manchester. Martha
Stone, an attorney for the plaintiffs, agreed that the layoffs could be
a violation and said she would "take a careful look at the list and
raise any concerns with the court monitor."
Seventy-four DCF "support staff" were given layoff notices, including
six social work case aides. Ms. Geballe said that social work case
aides arrange visits between parents and their children in DCF
reunification programs.
Senator Donald E. Williams, D-Killingly, co-chairman of the Select
Committee on Children, said haste has meant waste. "There are a number
of problems with the proposed budget cuts, and part of the problem is
that the governor asked for layoffs on a very tight time table."
Senator Williams said it does not appear that there was much of an
effort to ensure that the layoffs did not hurt programs. "This is a
short term solution that appears to be in violation of the consent
decree, and if it is, we'll be required to fill those positions and
bear the expense," Senator Williams said.
DELTA AIRLINES: Trial in Travel Agents' Antitrust Suit Set April 2003
---------------------------------------------------------------------
Trial in the antitrust class action pending against Delta Airlines,
Inc. and other airlines is set to commenced in April 29,2003 in the
United States District Court for the Eastern District of North Carolina
on behalf of all travel agents in the United States which sold tickets
from September 1, 1997 to the present on any of the defendant airlines.
The lawsuit alleges that the Company and the other airline defendants
conspired to fix travel agent commissions in violation of Section 1 of
the Sherman Act. In September 2002, the court granted plaintiffs'
motion for class action certification. Similar litigation alleging
violations under Canadian competition law is pending against the
Company and other airlines in Canada.
DELTA AIRLINES: Faces Travel Agents Lawsuit Over Base Commissions in NY
-----------------------------------------------------------------------
Delta Airlines was named as one of the defendants in a class action
filed in the United States District Court for the Southern District of
New York on behalf of an alleged nationwide class of US travel agents.
The suit also names as defendants:
(1) American Airlines,
(2) Continental Airlines,
(3) Northwest Airlines,
(4) United Air Lines and
(5) JetBlue Airways
JetBlue was later dismissed from the case. The lawsuit alleges that the
defendants breached their contracts with and their duties of good faith
and fair dealing to US travel agencies when these airlines discontinued
the payment of published base commissions to US travel agencies at
various times beginning in March 2002. The plaintiffs seek unspecified
damages, as well as declaratory and injunctive relief.
Similar litigation involving contract claims alleged under the agency
agreements applicable to Canadian travel agents is pending against the
Company and other airlines in Canada.
DOW CHEMICAL: Trial Judge Erred In Dividing Implant Suit Into Phases
--------------------------------------------------------------------
A state appeals court has thrown out a jury's finding that Dow Chemical
Co. plotted to hide dangers about silicone breast implants, Associated
Press Newswires reports. The Fourth Circuit Court of Appeal recently
found that the trial judge erred in the way she divided the once class
action into various phases in 1997.
"They said it was an incorrect procedural vehicle to go through," said
attorney Richard Root of New Orleans, who handled the case on appeal
for the plaintiffs. "They did not say the jury's verdict (in itself)
was wrong."
The case once involved 1,800 women claiming damage from Dow Corning
Corp., which manufactured the breast implants. Dow Corning filed for
bankruptcy reorganization in 1995. Dow Chemical is half-owner of Dow
Corning - both are based in Midland, Michigan.
Mr. Root said it was unclear what would happen to the Louisiana
plaintiffs, but he did say they likely would have to either join a Dow
Corning settlement fund, or continue their suits through a litigation
fund. The Louisiana plaintiffs have not decided whether to appeal the
Fourth Circuit's ruling to the Louisiana Supreme Court, Mr. Root said.
At the end of the trial's first phase, in which the jury found that Dow
Chemical had hidden its knowledge of implant dangers, State District
Judge Yada Magee, acting on a ruling from the Louisiana Supreme Court,
issued during the trial, decertified the class, leaving the eight
original plaintiffs. However, Judge Magee said the jury's finding
against Dow Chemical would apply to all 1,800 women who had been
members of the former class. The Fourth Circuit Court of Appeal also
reversed that ruling.
On the procedural question, the Fourth Circuit said that Judge Magee
should have tried the issue of whether Dow Chemical's alleged conduct
harmed the plaintiffs in the initial phase, instead of having that
determined during the second phase, which was never heard. Dow
Chemical always has said that it did not develop, test or manufacture
the breast implants. The Company earlier was dismissed from about
4,000 implant cases.
Most of the claims against Dow Corning and Dow Chemical were settled in
a $3.2 billion agreement that became part of Dow Corning's bankruptcy
reorganization.
EL PASO: Trial in Natural Gas Antitrust Suit Set September 2003 in CA
---------------------------------------------------------------------
Trial in the consolidated class action pending against El Paso Natural
Gas Company is set for September 2003 in California State Court.
The suit contends that the Company acted improperly to limit the
construction of new pipeline capacity to California and/or to
manipulate the price of natural gas sold into the California
marketplace. Specifically, the plaintiffs argue that the Company's
conduct:
(1) violates California's antitrust statute (Cartwright Act),
(2) constitutes unfair and unlawful business practices prohibited
by California statutes, and
(3) amounts to a violation of California's common law restrictions
against monopolization.
In general, the plaintiffs are seeking:
(i) declaratory and injunctive relief regarding allegedly
anticompetitive actions,
(ii) restitution, including treble damages,
(iii) disgorgement of profits,
(iv) prejudgment and post-judgment interest,
(v) costs of prosecuting the actions and
(vi) attorney's fees
The lawsuits are at the preliminary pleading stages. At this time, the
Company's legal exposure related to these lawsuits and claims is not
determinable.
EL PASO: Plaintiffs Ask KS Court To Grant Class Certification To Suit
---------------------------------------------------------------------
Plaintiffs in the lawsuit pending against El Paso Natural Gas Company
and a number of its affiliates asked the District Court of Stevens
County, Kansas to certify the suit as a class action.
The suit alleges that the defendants mismeasured natural gas volumes
and heating content of natural gas on non-federal and non-Native
American lands. The plaintiff in this case seeks certification of a
nationwide class of gas working interest owners and gas royalty owners
to recover royalties that the plaintiff contends these owners should
have received had the volume and heating value of natural gas produced
from their properties been differently measured, analyzed, calculated
and reported.
No monetary relief has been specified in this case. The Company has
filed its response to the motion for certification.
FIRST UNION: Asks NY Court To Dismiss Suit Opposing Sale of Securities
----------------------------------------------------------------------
The First Union Real Estate Equity and Mortgage Investments asked the
Supreme Court of New York in New York County to dismiss the securities
class action pending on behalf of a purported holder of the Trust's
convertible preferred shares.
Among the allegations made by the plaintiff is that the proposed
transaction with Gotham Golf Corporation was approved by the Trust's
Board of Trustees in violation of fiduciary duties owed to the holders
of the Trust's convertible preferred shares. The suit seeks, among
other things, unspecified damages, an injunction of the proposed
transaction and the court's certification of the lawsuit as a class
action. Named as defendants in the lawsuit were the Trust, its five
trustees and Gotham Partners, LP.
The Trust and the other defendants filed a motion to dismiss the
lawsuit. An oral argument on the motion to dismiss was held on July
15, 2002. Discovery on the case has been stayed pending the decision
of the court, which has not issued a decision on the motion.
The Trust regards the lawsuit as being without merit and does not
believe that the suit will preclude or materially delay the completion
of the proposed transaction.
HANGER ORTHOPEDIC: Plaintiffs Appeal Dismissal of MD Securities Lawsuit
-----------------------------------------------------------------------
Plaintiffs in the securities class action filed against Hanger
Orthopedic Group, Inc. appealed the United States District Court for
the District of Maryland's decision dismissing the suit for failure to
comply with statutory requirements.
The suit was commenced on behalf of all purchasers of the Company's
common stock from November 8, 1999 through and including January 6,
2000 and also names as defendants:
(1) Ivan R. Sabel, Chairman of the Board and Chief Executive
Officer (and then President), and
(2) Richard A. Stein, former Chief Financial Officer, Secretary
and Treasurer
The complaint alleges that during the above period of time, the
defendants violated Section 10(b) and 20(a) of the Securities Exchange
Act of 1934 by, among other things, knowingly or recklessly making
material misrepresentations concerning the Company's financial results
for the quarter ended September 30, 1999, and the progress of the
Company's efforts to integrate the recently-acquired operations of
NovaCare O&P. The complaint further alleges that by making those
material misrepresentations, the defendants artificially inflated the
price of the Company's common stock.
On November 5, 2002, plaintiffs filed a notice of appeal to the United
States Court of Appeals for the Fourth Circuit. The Company believes
that the allegations have no merit.
HECLA MINING: Idaho State Court Dismisses Coeur d'Alene River Lawsuit
---------------------------------------------------------------------
The Idaho District Court, County of Kootenai dismissed the class action
filed against Hecla Mining Company, seeking recovery for alleged
damages to or loss of natural resources located in the Coeur d'Alene
River Basin in northern Idaho. The suit seeks certification of three
plaintiff classes of Coeur d'Alene Basin residents and current and
former property owners to pursue three types of relief:
(1) various medical monitoring programs,
(2) a real property remediation and restoration programs,
(3) damages for diminution in property value, and
(4) other damages and costs
On April 23, 2002, the Company filed a motion with the court to dismiss
the claims for relief relating to the medical monitoring programs and
the remediation and restoration programs. At a hearing before the
court on the Company's and other defendants' motions held October 16,
2002, the court struck the complaint filed by the plaintiffs in January
2002 and instructed the plaintiffs they have 60 days to re-file the
complaint limiting the relief requested by the plaintiffs to wholly
private damages they may have incurred from their claims of trespass
and nuisance.
The court dismissed the medical monitoring claim as a separate cause of
action and stated that any requested remedy that encroached upon the
EPA's clean up in the Silver Valley would be precluded by another
lawsuit. The Company believes the suit is subject to challenge on a
number of bases and intends to vigorously defend itself in this
litigation.
HOPEMAN BROTHERS: High Court Dismisses Effort To Block Asbestos Suits
---------------------------------------------------------------------
The United States Supreme Court recently turned away another bid by a
company to stop an asbestos related class action, thus allowing trial
proceedings in Virginia to continue, the Dow Business News reports.
Privately held Hopeman Brothers Inc., one of several companies on trial
in Newport News, Virginia, had appealed to the nation's highest court
to stop the trial set to begin in late October. The lawsuit has about
1,300 plaintiffs. Besides Hopeman Brothers, companies named in the
lawsuit include Dow Chemical Co.'s Union Carbide unit.
Hopeman Brothers, a Waynesboro, Virginia, maker of boat interiors,
objected to the way asbestos claims were consolidated for trial. In an
earlier case, Mobil v. Adkins, which the Supreme Court rejected earlier
this year, the same argument was made, and rejected by the Supreme
Court.
"As is becoming a disturbing trend in this country, these states have
singled out asbestos litigation as a special branch of the law where
customary rights and fundamental legal principles do not apply,"
attorneys for Hopeman Brothers said in the High Court appeal.
Like other asbestos lawsuits proceeding around the country, this appeal
drew support of corporate groups seeking to stem a wave of asbestos
lawsuits in the nation's courts. The Coalition For Asbestos Justice
Inc., Chamber of Commerce and other groups, urged the Supreme Court to
take the case for review. "Mass aggregations of asbestos claims raise
serious constitutional due process problems," the groups said in their
motion to file a friend-of-the-court brief.
The Court of Virginia rejected the companies' appeal to stop the lower-
court trial in September. "Petitioner failed to establish a clear and
specific legal right to be enforced," Virginia's high court said. The
case is Hopeman Brothers v. Acker, No. 02-520.
HUBBLE HOMES: Idaho Homeowners Commence Suit Over Construction Defects
----------------------------------------------------------------------
A group of homeowners yesterday filed a proposed class action lawsuit,
claiming that more than 127 homes built in Boise-area Leo Rosecreek
subdivision are so riddled with construction defects that many of the
dwellings are uninhabitable.
Filed in Idaho District Court, the suit states that Hubble Homes -
formerly known as Cherry Lane Homes - and Hubble Engineering overlooked
or ignored obvious drainage issues with the building site, which has
left the homeowners with crawlspaces filled with stagnant water
prompting mold and fungus growth throughout the structures, as well as
damaging the homes' structural stability.
If approved as a class action, the suit would represent at least 50
homeowners, whose losses range from $50,000 to more than $200,000 each,
pegging total losses as high as $10 million. Under Idaho law, the
plaintiffs have the option to ask the court for punitive damages as
well.
"Many of the homeowners have been fighting to get Hubble to fix these
horribly flawed conditions," said Steve Berman, the attorney
representing the plaintiffs. "The builders have turned a deaf ear to
the homeowners, leaving them with this lawsuit as the path of last
resort.
"We intend to show that the defendants knew there was a groundwater
issue with the development area but ignored the issues," Mr. Berman
added. "Further, we will introduce evidence that Hubble continued to
tout new homes to buyers even when complaints regarding the groundwater
were flooding in."
According to the complaint, Hubble Engineering began developing the
lots within Leo Rosecreek 18 months before the final plat map was
approved by Ada County, or the City of Boise. Cherry Creek Homes began
selling lot in the development on June 15, 1998.
Mr. Berman added that in some cases, the stagnant water and flooding
was so severe that the homeowners have moved from their homes. "The
damage is so profound that the residents are concerned with the health
and well-being of their family and have literally packed up and moved
out. These people concluded it is better to move out than live in a
human-sized petri dish full of fungus and mold."
The proposed class action, once approved, would include every purchaser
of real estate within the Leo Rosecreek Subdivision No. 1 and 2, from
June 15, 1998 to the present or those who purchased property from
Hubble Homes within those subdivisions. The suit cites:
(1) violations of the Idaho Consumer Protection Act,
(2) breach of implied warranty and habitability,
(3) breach of expressed warranty,
(4) breach of contract,
(5) negligence,
(6) misfeasance and
(7) nuisance among other charges
For more details, contact Steve Berman of Hagens Berman by Phone:
(206) 623-7292 or by E-mail: steve@hagens-berman.com
HUFFY CORPORATION: Negotiates For Settlement of CA Employee Wage Suits
----------------------------------------------------------------------
Huffy Corporation entered mediation sessions for the two class actions
involving its former subsidiary, Washington Inventory Service (WIS),
which was acquired from the Company by WIS Holdings Corporation on
November 3, 2000. The two cases are:
(1) Perez v. Washington Inventory Service, filed in the Los
Angeles, California Superior Court, and
(2) Miranda v. Washington Inventory Service, filed in the United
States District Court for the Central District of California
Both cases were filed on behalf of current and former WIS employees by
the same plaintiffs' counsel and involve alleged violations by WIS of
different aspects of state and federal wage and hour laws. The Perez
case has been certified as a class action, and the plaintiffs are
seeking class action certification in the Miranda case.
The Company is not a named defendant in the Perez case but is a named
defendant in the Miranda case. The Company is potentially obligated to
indemnify WIS Holdings Corporation for some portion of any liability it
or WIS incurs in both cases.
A settlement mediation session in the Perez case had ended without
resolution of that case. The Company further reported that it could
not then predict the likely outcome of either case, or the materiality
of the outcome to it under its indemnity obligations to WIS Holdings
Corporation and WIS.
During the week of November 4, 2002 a series of communications among
the interested parties' counsel, including Company counsel, took place,
culminating in face-to-face settlement negotiations. These
negotiations were preliminary in nature, in anticipation of a formal
mediation session scheduled to occur on November 18, 2002, any results
of which will in turn be subject to a reasonableness hearing and formal
court approval.
However, based on progress made in these preliminary negotiations, as
of November 8, 2002, the Company believes that its obligation to
indemnify WIS Holdings Corp. and/or WIS is likely to be material in
amount. However, at this time, the Company is not able to reasonably
estimate the range of possible losses and in accordance with accounting
principles generally accepted in the United States of America.
IPALCO ENTERPRISES: Asks IN Court To Dismiss Suit For ERISA Violations
----------------------------------------------------------------------
IPALCO Enterprises, Inc. asked the United States District Court for the
Southern District of Indiana to dismiss the class action pending
against it and certain of its former officers and directors, alleging
violations of the Employee Retirement Income Security Act (ERISA).
The suit asserts that the former members of the Company's pension
committee for the thrift plan breached their fiduciary duties to the
plaintiffs under ERISA by investing assets of the thrift plan in the
Company's common stock prior to the acquisition of the Company by the
AES Corporation.
The motion remains pending before the court. The Company cannot give
any assurance that the court will rule in their favor.
IPALCO ENTERPRISES: Investors File Securities Fraud Lawsuit in IN Court
-----------------------------------------------------------------------
IPALCO Enterprises and certain of its former officers and directors
faces a class action filed in the United States District Court for the
Southern District of Indiana in connection with the Company's
acquisition by The AES Corporation.
The lawsuit purports to be filed on behalf of all persons who exchanged
their shares of Company Stock for shares of AES common stock. The
complaint alleges violations of Section 11 of the Securities Act,
Sections 10(b), 14(a) and 20(a) of the Exchange Act and Rules 10b-5 and
14a-9.
The Company believes that it has meritorious defenses to the suit.
While it cannot predict the outcome, it does not believe that the suit
will have a material adverse effect on its financial condition, results
of operations or liquidity.
K-TEL INTERNATIONAL: Appeals Court Refuses Rehearing on Suit Dismissal
----------------------------------------------------------------------
The Eighth Circuit Court of Appeals denied the petition for rehearing
of a lower court decision's dismissal of a consolidated securities
class action pending against K-tel International, Inc.
The consolidated suit, filed in the United States District Court for
the District of Minnesota, challenges the accuracy of certain public
disclosures made by the Company regarding its financial condition
during the period from May 1998 through November 1998. The plaintiffs
assert claims under the federal securities laws and seek damages in an
unspecified amount as well as costs, including attorneys' fees and any
other relief the Court deems just and proper.
The Company moved to dismiss the complaint, and on July 31, 2000, the
court granted the Company's motion to dismiss. The court also barred
further actions by the plaintiffs and denied plaintiffs' request to
amend the complaint in order to re-file the complaint in the future.
The plaintiffs appealed to the United States Court of Appeals for the
Eighth Circuit, and the appeals court heard the matter in October 2001.
On August 7, 2002 the appeals court, in a two to one decision, denied
the plaintiffs appeal. On August 20, 2002 the plaintiffs applied for a
rehearing by the full court of appeals. On October 2, 2002, the court
denied the petition for rehearing.
MEDCO HEALTH: Agrees To Settle Lawsuit Alleging It Favored Merck & Co.
---------------------------------------------------------------------
Medco Health Solutions Inc., the pharmacy benefits unit of Merck & Co.,
agreed recently to pay $42.5 million to settle a series of class
actions alleging it favored Merck Drugs, the Associated Press Newswires
reports.
In March, Merck, of Whitehouse Station, New Jersey, disclosed it was
facing several class actions, including one filed by a Northwest
Airlines Corp. plan participant. The Northwest complaint and seven
plaintiffs from six other pharmacy benefit plans managed by Medco,
alleged that Merck used Medco to increase the market share. The
Company said plaintiffs agreed to the settlement in five of the six
initial lawsuits.
In addition to the cash compensation of $42.5 million, the Company
voluntarily agreed to modify certain of the business processes in
pharmacy health care services. The proposed settlement requires the
approval of the US District Court for the Southern District of New
York.
OMNICOM GROUP: Faces Several Suits For Securities Act Violations in NY
----------------------------------------------------------------------
Omnicom Group, Inc. faces several class action filed in the United
States District Court for the Southern District of New York on behalf
of purchasers of the Company's common shares during the period from
April 25,2000 to June 11,2002. The suit also names as defendants
certain of the Company's senior executives.
The suits uniformly allege, among other things, that the Company's
press releases and SEC filings during the alleged class period
contained materially false and misleading statements or omitted to
state material information.
In addition to the suits, a shareholder derivative action was filed on
June 28, 2002 by a plaintiff stockholder, purportedly on the Company's
behalf alleging:
(1) breaches of fiduciary duty,
(2) disclosure failures,
(3) abuse of control and
(4) gross mismanagement
The derivative suit relates to the formation of Seneca Investments LLC,
including as a result of open-market sales of the Company's common
shares by the Company's chairman and two former employee directors.
The complaint seeks the imposition of a constructive trust on profits
received in the stock sales, an unspecified amount of money damages and
attorneys' fees and other costs and are expected to be consolidated and
a lead plaintiff appointed in accordance with applicable procedures.
A motion has been filed to dismiss this action. Subsequently, the
parties agreed to stay further proceedings in this case pending
additional developments in the federal lawsuits.
Management presently expects that the matters referred to above will
not individually or in the aggregate have a material adverse effect on
the Company's financial position or results of operations. However,
the outcome of any of these matters is inherently uncertain and may be
affected by future events. Accordingly, there can be no assurance as
to the ultimate effect of these matters.
PACIFIC CAPITAL: Faces Investor Lawsuit Over Lost Funds in Reed Slatkin
-----------------------------------------------------------------------
Pacific Capital Bancorporation faces a class action filed on behalf of
persons who lost funds from their Individual Retirement Accounts (IRAs)
which were invested with Reed Slatkin, in the United States District
Court in Los Angeles, California.
Mr. Slatkin has pled guilty to having operated a fraudulent Ponzi
scheme which defrauded hundreds of investors. The Company is the
custodian of approximately 30 self-directed IRA accounts. The
participants of the accounts specifically directed the Trust Division
of the Company to invest their IRA funds in a limited partnership
operated by Mr. Slatkin. The participants each signed a written
investment direction in which they directed the Company to invest their
funds in the Slatkin limited partnership, stated that they had verified
the security of the investment and the financial strength of the
partnership, and held the Company harmless from any and all claims or
loss resulting from the investment.
The plaintiffs are seeking compensation from the Company for the loss
of funds that were invested in the Slatkin limited partnership at their
direction. The Company believes that there is no merit to the claims
made in this action and intends to vigorously defend itself.
PINNACLE ENTERTAINMENT: Plaintiffs To Appeal Class Certification Denial
-----------------------------------------------------------------------
The United States Ninth Circuit Court of Appeals allowed plaintiffs in
the class action against Pinnacle Entertainment to appeal a lower
court's ruling denying the motion to certify the suit as a class
action.
The suit was initially filed in April 1994, in the United States
District Court, Middle District of Florida (Poulos lawsuit), naming as
defendants 41 manufacturers, distributors and casino operators of video
poker and electronic slot machines, including the Company. The lawsuit
alleges that the defendants have engaged in a course of fraudulent and
misleading conduct intended to induce people to play such games based
on false beliefs concerning the operation of the gaming machines and
the extent to which there is an opportunity to win. The suit alleges:
(1) violations of the Racketeer Influenced and Corrupt
Organization Act (RICO),
(2) common law fraud,
(3) unjust enrichment and
(4) negligent misrepresentation
In May 1994, a second class action was filed in the United States
District Court, Middle District of Florida (the Ahern Lawsuit), naming
as defendants the same defendants who were named in the Poulos Lawsuit
and adding as defendants the owners of certain casino operations in
Puerto Rico and the Bahamas, who were not named as defendants in the
Poulos Lawsuit.
The claims in the Ahern Lawsuit are identical to the claims in the
Poulos Lawsuit. Because of the similarity of parties and claims, the
Poulos Lawsuit and Ahern Lawsuit were consolidated into one case file
in the United States District Court, Middle District of Florida.
In December 1994 a motion by the defendants for change of venue was
granted, transferring the case to the United States District Court for
the District of Nevada, in Las Vegas. In an order dated April 17,
1996, the court granted motions to dismiss filed by the Company and
other defendants and dismissed the suit without prejudice.
The plaintiffs then filed an amended complaint in May 1996 seeking
damages against the Company and other defendants in excess of $1
billion and punitive damages for the same claims as in the first two
lawsuits.
At a December 1996 status conference, the Poulos/Ahern Lawsuit was
consolidated with two other class action lawsuits (one on behalf of a
smaller, more defined class of plaintiffs and one against additional
defendants) involving allegations substantially identical to those in
the Poulos/Ahern Lawsuit and all pending motions in the consolidated
suits were deemed withdrawn without prejudice.
The plaintiffs in the suit then filed a consolidated amended complaint
on February 14, 1997, which the defendants moved to dismiss. In
December 1997, the court granted the defendants' motion to dismiss
certain allegations in the RICO claim, but denied the motion as to the
remainder of such claim. The court also granted the defendants' motion
to strike certain parts of the consolidated amended complaint and
denied the defendants' remaining motions to dismiss and to stay or
abstain. The court also permitted the plaintiffs to substitute one of
the class representatives.
In January 1998, the plaintiffs filed a second consolidated amended
complaint containing claims nearly identical to those in the previously
dismissed complaints. The defendants answered, denying the substantive
allegations of the second consolidated amended complaint. The
magistrate judge granted the defendants' motion to bifurcate discovery
into "class" and "merits" phases. "Class" discovery was completed on
July 17, 1998. The magistrate judge recommended denial of the
plaintiffs' motion to compel further discovery from the defendants, and
the court affirmed in part.
"Merits" discovery is stayed until the court decides the motion for
class certification filed by the plaintiffs on March 18, 1998, which
motion the defendants opposed. In January 2001, the plaintiffs filed a
supplement to their motion for class certification. On March 29, 2001,
defendants filed their response to plaintiffs' supplement to motion for
class certification. The hearing on plaintiffs' motion for class
certification was held November 15, 2001.
At a March 27, 2002 status conference, the court lifted the stay on
discovery allowing the parties to conduct limited discovery on the
manufacturers and casinos where the named plaintiffs played. During
the status conference, the presiding judge also indicated that he
was withdrawing from the case and that the case will be reassigned to
one of the three new judges in the District of Nevada. Such
reassignment has not yet occurred.
On June 21, 2002, the court denied Plaintiffs' motion for class
certification. On July 11, 2002, the Plaintiffs filed a petition for
permission to appeal the court's denial of the plaintiffs' motion for
class certification.
PREDICTIVE SYSTEMS: Asks NY Court To Dismiss Securities Fraud Lawsuit
---------------------------------------------------------------------
Predictive 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, four investment banks that underwrote
the Company's initial public offering, and three of the Company's
former officers and directors.
The complaint filed against the Company generally alleged that the
underwriters obtained excessive and undisclosed commissions from
customers who received allocations of shares in the Company's initial
and secondary public offerings and that the underwriters maintained
artificially inflated prices in the after market through "tie-in"
arrangements, which required customers to buy additional shares of the
Company's stock at pre-determined prices in excess of the offering
prices.
The complaint further alleged that the Company and certain of its
officers and directors violated Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933 because the Company's registration statement did
not disclose the underwriters' purported misconduct. On April 20,
2002, the plaintiffs amended their complaint, abandoning the Section
12(a)(2) claim, but alleging violations of Sections 10(b) and 20(a) of
the Securities Exchange Act, and of Rule 10b-5 promulgated thereunder.
This action has been coordinated with over three hundred virtually
identical actions against other companies and the investment banks that
underwrote their initial public offerings. On July 15, 2002, the
Company and the three former officers and directors joined a motion to
dismiss filed on behalf of the issuer defendants. The Company believes
that the allegations against it are without merit and intends to defend
the case vigorously.
SIERRA PACIFIC: Investors File Suit To Oppose Nevada Power Acquisition
----------------------------------------------------------------------
Sierra Pacific Resources, Inc. faces a class action filed by two
individuals in the District Court for Clark County, Nevada, on behalf
of themselves and all holders of securities of Sierra Pacific
Resources, against the Company and its directors named individually.
The lawsuit alleges that the defendants violated their fiduciary duties
to the security holders as a result of the Company's response to
letters from the Southern Nevada Water Authority (SNWA) in which SNWA
stated that it was prepared to enter into negotiations to acquire the
Nevada Power Company's (NPC) assets and assume certain of NPC's
indebtedness.
The lawsuit, which seeks certification as a class action, requests
that the court:
(1) declare that the directors have breached their fiduciary
duties;
(2) enjoin the defendants to undertake all reasonable efforts to
maximize shareholder value including mandating due
consideration of the SNWA proposal;
(3) order the defendants to permit a stockholders' committee to
ensure a fair procedure in connection with any disposition or
retention of assets; and
(4) if SNWA's purported offer is withdrawn due to the actions or
inactions of the defendants, to award compensatory and/or
punitive damages in an unspecified amount against the
defendants.
Although the Company and its directors intend to vigorously defend
against the lawsuit, it cannot predict the outcome at this time.
TELAXIS COMMUNICATIONS: Court Dismisses Officers, Directors From Suit
---------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed Telaxis Communications, Inc.'s officers and directors from
the consolidated securities class action filed against them, the
Company and one or more of the underwriters in the Company's initial
public offering.
The amended complaint alleges, among other things, violations of the
registration and antifraud provisions of the federal securities laws
due to alleged statements in and omissions from our initial public
offering registration statement concerning the underwriters' alleged
activities in connection with the underwriting of Company shares to the
public.
These lawsuits against the Company have been assigned along with
approximately 1,000 other lawsuits making substantially similar
allegations against approximately 300 other publicly-traded companies
and their public offering underwriters to a single federal judge in the
US District Court for the Southern District of New York for
consolidated pre-trial purposes.
On July 15, 2002, the Company, together with the other issuers named as
defendants in these coordinated proceedings, filed a collective motion
to dismiss the consolidated amended complaints on various legal grounds
common to all or most of the issuer defendants. This motion is
currently pending.
In October 2002, all claims against the Company's directors and
officers who had been parties to these lawsuits were dismissed without
prejudice. The Company denies any liability and intends to vigorously
defend the allegations against it.
TENFOLD CORPORATION: UT Court Grants Final Approval to Suit Settlement
----------------------------------------------------------------------
The United States District Court for the District of Utah approved the
final settlement of the consolidated securities class action against
TenFold Corporation (OTC Bulletin Board: TENF) and certain of its
former and current officers and directors, and dismissed the lawsuit
with prejudice.
The Company signed a Memorandum of Understanding for the settlement of
these matters on August 28, 2002. The settlement provides for a
payment by Company insurers for the benefit of a class of Company
shareholders and does not constitute an admission of any wrongdoing by
the Company or the individual defendants.
"We are grateful for the Court's approval of the parties' settlement,"
said Alan K. Flake, General Counsel for TenFold Corporation. "We are
very pleased to have this matter now concluded."
"We continue to sharpen our focus on the company's future and our
strategic goal of emerging as a growth technology company," added Dr.
Nancy M. Harvey, TenFold's President and CEO.
TERAFORCE TECHNOLOGY: Trial in Securities Fraud Suit Set For April 2003
-----------------------------------------------------------------------
Trial in the securities class action pending against Teraforce
Technology Corporation is set to commence on April 7,2003 in the United
States District Court for the Northern District of Texas.
The suit was filed on behalf of all persons and entities who purchased
the Company's common stock during the period between February 24, 1998
and November 17, 1998. The named defendants include the Company and
certain former and present officers and directors of the Company.
The complaint alleges that the defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder by making false and misleading statements concerning the
Company's reported financial results during the period, primarily
relating to revenue recognition, asset impairment and capitalization
issues. The plaintiffs seek monetary damages, interest, costs and
expenses.
In March 2001, the Company moved to dismiss the suit, but the court
denied the motion. Since that date discovery has been proceeding and
is essentially completed. The plaintiffs' motion for class
certification and the Company's opposition to that motion are currently
pending before the court. The Company believes the case is without
merit.
WASHINGTON: Seattle Federal Judge Bars Somali Deportations Nationwide
---------------------------------------------------------------------
A federal judge from Seattle, Washington granted a nationwide temporary
restraining order to bar the Immigration and Naturalization Service
(INS) from deporting Somalis to their war-torn homeland, the Associated
Press Newswires reports. The ruling effectively halts the imminent
deportation of at least 39 Somalis in INS detention across the country.
US District Judge Marsha Pechman found that the Somalis likely would
face great bodily harm if sent back to their East African homeland, a
country that has been without a central government since a civil war
began in 1991.
Maine is among the states that have seen an influx of Somalis in recent
years. Most have settled in Portland and Lewiston. The Mayor of
Lewiston recently created a stir by calling on Somalis to halt their
migration to the city because its ability to absorb them had reached
its limit.
The District Court in Minnesota already had ruled in a case there, that
deportations to Somalia without acceptance by a functioning government
were unlawful, said lawyer Karol Brown, representing four Somalis held
in Seattle. Ms. Brown added that federal courts in the Eastern and
Western Districts of Louisiana had issued temporary restraining orders
in local cases in which Somalis faced imminent deportation.
Garrison Courtney, an INS spokesman in Seattle, said earlier that the
US government has a responsibility to deport non-citizens who have
committed certain crimes, who do not show up for court-ordered
deportation as well as those who have final orders of deportation.
Ms. Brown said the Seattle lawsuit, as amended last week, seeks to
represent all Somalis in similar jeopardy of deportation nationwide,
although the case has not yet been certified as a class action by Judge
Pechman.
"Also, based on the evidence, it was plain that without a nationwide
TRO (temporary restraining order), the INS would continue to deport
people to Somalia," Ms. Brown said.
Judge Pechman gave the government until December 16, to file an
additional brief, with a reply from the Somalis' lawyers due by January
10. Ms. Brown said that Judge Pechman indicated she would schedule
another hearing on the merits of the case sometime after January 10.
Ms. Brown also said that Judge Pechman's ruling "literally means the
difference between life and death for our clients and for others who
are similarly situated."
A lawsuit filed in Seattle in late November contended that sending
Somalis back to their famine-and war-ravaged country violated INS
statutes, because the country lacks a functioning government and
therefore cannot agree to accept deportees. The same lawsuit also
alleged that the policy of return, as practiced, violated international
law and treaties such as the United Nations Convention Against Torture.
The INS officials said that the policy they were following was lawful,
because Somalis are not required to present travel documents to enter
Somali, which means deportees are not rejected.
The Seattle case initially involved five Somali men. Three had been
convicted of drug, drunken driving or assault charges. The other two
had been denied asylum, one of them later won an asylum appeal and was
released from detention.
WESTMINSTER CAPITAL: DE Court Denies Motion For Expedited Proceedings
---------------------------------------------------------------------
The Delaware Court of Chancery for New Castle County refused
plaintiffs' motion for expedited proceedings in a class action filed
against Westminster Capital, Inc. and each member of its board of
directors by a Company stockholder.
The lawsuit was filed in response to the Company's tender offer to
purchase any and all outstanding shares of its common stock at a price
of $2.80 per share. The plaintiff brought this action individually and
as a purported class action on behalf of all stockholders of the
Company.
The complaint, as subsequently amended, alleges that the Company and
the members of the Company's board of directors have breached their
fiduciary duties to the Company's stockholders. Specifically the
complaint alleges:
(1) Company shareholders were being denied the opportunity to make
a fully informed judgment on a major corporate transaction in
which they had to select among their options to hold or tender
their stock;
(2) the tender offer was structured in such a way that it was
coercive; and
(3) the tender offer benefited the fiduciaries at the expense of
the Company's public shareholders
On May 8, 2002, the Delaware Court of Chancery denied the motion for
expedited proceedings filed by the plaintiff and refused to schedule a
hearing on the plaintiffs' motion for a preliminary injunction, which
sought to enjoin the Company's tender offer. The litigation is still
pending. The Corporation and the other defendants believe that the
allegations raised in the complaint are without merit.
*Business Titan, Environmental Activist, Faces Asbestos Involvement
-------------------------------------------------------------------
Swiss billionaire Stephan Schmidheiny has spent a decade prodding
fellow industrialists to account for their companies' environmental
costs. Now he is being called to account for the deadly legacy in his
own family's factories around the world, The Wall Street Journal Europe
reports.
A prosecutor in neighboring Italy is investigating the 55-year-old
businessman for "negligent homicide," after the alleged asbestos
related deaths of Italians who worked in a Schmidheiny factory in
Italy. If charged and convicted, Mr. Schmidheiny, under Italian law
could face a maximum of 12 years in prison for putting workers at risk.
The possibility of criminal charges has shocked many who know Mr.
Schmidheiny as a thoughtful environmental benefactor. He gained
international stature by mobilizing corporate support for the 1992
Earth Summit in Rio de Janeiro. He has promoted GrupoNueva, his
cluster of Latin American building-products and forestry companies, as
a model of environmentally sound capitalism. He has become one of the
most generous philanthropists in Latin America.
However, the story is more complicated. A close look shows that Mr.
Schmidheiny has steered a middle path between his environmental beliefs
and his business interests. It has taken him more than a decade, until
1990, to shed most, but not all of his family's asbestos operations.
He was hampered, in part, it seems, by resistance from foreign partners
and his own father.
By European standards, however, Mr. Schmidheiny has acted early. After
a series of seminal studies in the 1960s identified exposure to
asbestos as a potentially fatal health risk, American companies
generally stopped using it by the early 1980. Most of Europe, however,
has been much slower to drop it. Asbestos was widely used in building
materials in Europe.
One reason for the lag is that Europe did not see the kind of mass-
injury lawsuits filed on behalf of American asbestos victims since the
1970s. Legal systems only recently became receptive to such actions.
Many European countries are only now coming to grips with what people
here are calling an "asbestos epidemic."
Eternit, the Schmidheiny family's factory, used asbestos in
manufacturing roofing, pipes, even flower pots. At least 45 of its
former employees in the Niederurnen factory have died of mesothelioma,
a form of lung cancer. All told, thousands of people have been exposed
to asbestos in plants in Europe, the Middle East, Africa and Latin
America, in which the Schmidheiny family once held ownership interest.
Additionally, the prosecutor in Turin, Italy, Raffaele Guariniello,
says he has reports of at least 22 asbestos-related deaths of Italian
ex-Eternit workers, and the prosecutor says he does not know whether
that number is among the 45 acknowledged by the company. He does not
believe Mr. Schmidheiny's efforts to phase out asbestos exonerate him,
since 1990 was too late. "If judges knew about the dangers before
then, certainly the owners of the factory knew about the dangers," said
Mr. Guariniello.
In 1974, Mr. Schmidheiny went to Sweden, shortly after that country
became one of the first to ban asbestos. Eternit had to shut down its
operations there. We thought it was crazy, said Mr. Schmidheiny, then
a business executive, but after meeting with scientists, union leaders
and politicians, he changed his mind: He did not want to be associated
with a substance that could be harmful to the workers.
At first, when he took over the management of the main Eternit
operating company in 1976, he sought a technological fix. However,
alternatives were found either to be too expensive or to be of too low
a quality. Eternit continued, therefore, to use asbestos through the
end of the 1980s, long after it was widely known to be a serious health
danger. Even then, Mr. Schmidheiny made an exception for pipe
production. Explaining his gradual approach, he said the asbestos
problem was something to be managed and monitored.
Mr. Schmidheiny sold Eternit's Swiss operations in 1989. In other
countries, where suitable alternatives could not be found, he simply
shut down some wholly owned operations using asbestos, such as those in
Italy. However, in many cases, in which the Schmidheiny stake was less
than 40 percent, he could only sell the interest and cut all ties,
leaving behind functioning factories in which the owners continued to
use asbestos for years. In each such sale, Mr. Schmidheiny says that
he transferred the company's entire interest, including all potential
legal liability, to the buyers.
The disengagement from asbestos dented the Schmidheiny fortune, but it
was rebuilt with successful investments in the 1990s in many
activities: a Zurich-based engineering company; Union Bank of
Switzerland, forerunner to UBS AG; and the Swiss food giant, Nestle SA.
Mr. Schmidheiny after his exit from asbestos, developed the confidence
to prod fellow industrialists to risk change. He was chief liaison to
business at the United Nations environmental conference in Rio de
Janeiro, and subsequently led the formation of the World Business
Council on Sustainable Development, under whose auspices, about 160
chief executives have embraced, at least nominally, the notion of "eco-
efficiency," which means that protecting the environment by using
energy more efficiently can boost profits.
With the drive to assess blame for asbestos accelerating, Mr.
Schmidheiny finds himself under the harsh scrutiny of hindsight. Some
5,000 Europeans a year are dying of asbestos-related diseases, and the
annual count is still rising, according to a 1999 study by the London
School of Hygiene and Tropical Medicine. Liability lawsuits concerning
current and former Schmidheiny employees are beginning to appear around
the world, since the asbestos-related diseases usually develop slowly
over the years.
In France, an appeals court in February opened the way for what could
be thousands of claims by former employees of an Eternit joint venture
and other companies, who were exposed to asbestos from the 1970s
through the 1990s. Even though France banned the substance only in
1997, the court ruled that companies that knew, or should have known,
about asbestos dangers can be held liable for their "faute inexcuable,"
or inexcusable failure, to protect workers.
In South Africa, a separate class action has been filed on behalf of
former employees of Everite Ltd., a cement company in which Eternit
held a minority stake until 1992. Earlier this year, Everite
acknowledged that 68 employess have died from asbestos-related diseases
since the 1940s.
Neither Eternit, Mr. Schmidheiny nor any of his currently owned
companies were named in the French or South African suits. He says it
is not his responsibility to compensate the injured workers in cases
where the Schmidheinys sold off their interests to a solvent company
capable of taking care of things. Workers can make their claims
against the companies that have acquired Mr. Schmidheiny's stakes.
However, Mr. Schmidheiny's present company has promised to address the
claims of individual workers, with no place to turn, "on a humanitarian
basis."
The threat of criminal sanction is another matter. The prosecutor in
Turin, Mr. Guariniello, launched his investigation of Mr. Schmidheiny
in September 2001, after receiving reports of mesothelioma deaths among
Italians who had returned home after working for Eternit in
Switzerland. The prosecutor says he has been hampered by the refusal
of Eternit and the Swiss workers-insurance agency to turn over health
records and personnel files. The company says it has responded
properly, and the issue is now before the Swiss courts.
Still, Mr. Schmidheiny says that the asbestos controversy has
reinforced his desire to lower his public profile and turn over many of
his leadership positions to others. For the UN's 10-year follow-up to
the Rio Conference in September, he co-wrote a book about corporate
environmental initiatives, entitled, "Walking the Talk." However, he
left it to his fellow authors, DuPont Co. CEO Charles Holliday Jr. and
Philip Watts, Chairman of Royal Dutch/Shell Group, to launch the book
at the conference in Johannesburg, which Mr. Schmidheiny skipped
altogether.
"I would hate to see the value of what I am doing jeopardized by some
allegations," he said.
New Securities Fraud Cases
800AMERICA.COM: Charles Piven Launches Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of 800America.com, Inc. (Other
OTC:ACCO) between January 17, 2001 and November 13, 2002, inclusive.
The case is pending in the United States District Court for the
Southern District of New York against the Company and three individual
defendants.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
COLE NATIONAL: Charles Piven Commences Securities Fraud Suit in N.D. OH
-----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of Cole National Corporation
(NYSE:CNJ) between March 23, 1999 and November 26, 2002, inclusive.
The case is pending in the United States District Court for the
Northern District of Ohio, Eastern Division, against the Company and
certain of its officers and directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
NUI CORPORATION: Bernstein Liebhard Lodges Securities Suit in NJ Court
----------------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class action
in the United States District Court for the District of New Jersey, on
behalf of all persons who purchased or acquired NUI Corporation
(NYSE:NUI) common stock between November 8, 2001 and October 17, 2002,
inclusive.
The suit alleges the Company 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.
For more details, contact Ms. Linda Flood, Director of Shareholder
Relations by Mail: 10 East 40th Street, New York, New York 10016 by
Phone: (800) 217-1522 or (212) 779-1414 or by E-mail: NUI@bernlieb.com.
RETEK INC.: Marc Henzel Commences Securities Fraud Lawsuit in MN Court
----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the District of Minnesota on
behalf of purchasers of Retek Inc. (NASDAQ:RETK) securities during the
period between October 17, 2001 and July 8, 2002.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
Company is a leading provider of software solutions and services to the
retail industry. In April 2000, the Company announced that it had
formed an alliance with IBM to develop a partnership to develop a
merchandising solution for the food and drug segment of the retail
market.
The complaint alleges that the defendants continuously led the market
to believe not only that the alliance was fully intact but also that
the alliance was on track to generate revenues of more than $1 billion
for the two companies for the year 2003.
Defendants, however, concealed that not only was the $1 billion
prospect a fallacy, but that throughout the class period the so-called
alliance was in shambles. The Company wanted access to IBM's
consulting deals and IBM wanted Retek to change its software
applications so that they ran on IBM's platform, not Oracle's.
By October 2001, defendants realized that the conversion would be too
costly in the short run and delayed the full conversion to IBM
platforms, including the most critical, a merchandising product for
large-scale retail operations.
The complaint further alleges that by the beginning of the class
period, many of the Company's projects (IBM) were faltering and its new
products (Retek 10), which were scheduled to boast earnings, were
riddled with bugs. Moreover, one of the Company's joint ventures,
PerformanceRetail Inc. (PRI), was hemorrhaging nearly $200,000 of the
Company's monies per month.
Finally, the defendants' projections were not only stale but actually
false when made as the defendants knew or made a conscious decision to
ignore the fact that circumstances underlying those projections (i.e.,
problems with Retek 10, the IBM alliance, PRI, an eroding customer
base) actually compelled the conclusion that the Company could not
possibly achieve the projections.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave,
Suite 202 Bala Cynwyd, PA 19004-2808, by Phone: (888) 643-6735 or
(610) 660-8000 by Fax: (610) 660-8080 by E-mail: Mhenzel182@aol.com or
visit the firm's Website: http://members.aol.com/mhenzel182.
TRANSACTION SYSTEMS: Cauley Geller Launches Securities Fraud Suit in NE
-----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of Nebraska on
behalf of purchasers of Transaction Systems Architects, Inc. (Nasdaq:
TSAIE) publicly traded securities during the period between January 21,
1999 and November 18, 2002, inclusive.
The suit charges that during the class period, the Company 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; and
(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,
Transaction Systems Architects' shares fell to a low of $ 6.50, closing
on November 20th at $7.35.
For more details, contact Jackie Addison, Heather Gann or Sue Null by
Phone: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-
9944 by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.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 * * *