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C L A S S A C T I O N R E P O R T E R
Thursday, February 27, 2003, Vol. 5, No. 41
Headlines
AHOLD: Sued Over Financial Accounts Restatements, Stock Price Plunge
AUTO INSURERS: Canadian Firms Commence Three Deductible Fees Suits
BAYER AG: Enters Talks To Settle Another 500 Lawsuits Related To Baycol
CABLE & WIRELESS: Three UK Institutions Join US Securities Fraud Suit
ESSO: Lawyers To Review Decision in Consumer Suit Before Filing Appeal
H&R BLOCK: Lawyers Ask Court To Give Half of Attorneys' Fees To Clients
HOME SHOPPING: FL Court Grants Certification For TV Producers' Lawsuit
JEWEL-OSCO: IL State Court Throws Out Milk Consumer Antitrust Lawsuit
MCDONALD'S CORPORATION: Court Delays Pact Over Plaintiffs' Tax Status
QUINTILES TRANSNATIONAL: NC Court Consolidates Suits Against Stock Sale
QWEST COMMUNICATIONS: Four Executives Indicted For Inflating Revenues
RHODE ISLAND: Victims Seeing Lawyers For Possible Personal Injury Suits
RR DONNELLEY: Appeals Court Overturns Certification For Race Bias Suit
RR DONNELLEY: Agrees To Settle Several Age Discrimination Suits in IL
SAWTEK INC.: Labels "Without Merit" Securities Fraud Lawsuit in M.D. FL
SECURITIES LITIGATION: Document To Show Analyst Conflicts of Interest
SECURITIES LITIGATION: Wall Street Firms to Incur $1-3B in Damages
THIMEROSAL LITIGATION: BC Consumers Lodge Two Lawsuits V. Drug Firms
WALT DISNEY CO: Dealt Legal Setback In Winnie The Pooh Royalties Case
*Lawyer Says Class Actions Protect Public V. "Bad Business Practices"
New Securities Fraud Cases
ARIBA INC.: Scott + Scott Commences Securities Fraud Lawsuit in N.D. CA
CLEARONE COMMUNICATIONS: Scott + Scott Commences Securities Suit in UT
LEXENT INC.: William Rand Launches Securities Fraud Lawsuit in DE Court
ROYAL AHOLD: Wolf Popper Commences Securities Fraud Lawsuit in S.D. NY
ROYAL AHOLD: Schiffrin & Barroway Lodges Securities Lawsuit in S.D. NY
ROYAL AHOLD: Schoengold & Sporn Commences Securities Lawsuit in S.D. NY
ROYAL AHOLD: Berger & Montague Commences Securities Lawsuit in E.D. VA
ROYAL AHOLD: Cauley Geller Commences Securities Fraud Suit in S.D. NY
ROYAL AHOLD: Wolf Haldenstein Launches Securities Fraud Suit in S.D. NY
ROYAL AHOLD: Cohen Milstein To File Securities Fraud Lawsuit in E.D. VA
*********
AHOLD: Sued Over Financial Accounts Restatements, Stock Price Plunge
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Netherlands-based retailer Ahold faces a securities class action filed
in the United States District Court for the Eastern District of
Virginia on behalf shareholders who lost money when the Company sold
its stocks, Reuters reports.
The Company's share value plunged this week after the Company revealed
the resignations of its chief executive officer and chief financial
officer. Earlier, the Company announced that it would restate its
financial accounts going back to 2000 and that its Columbia, Maryland-
based unit U.S. Foodservice, the No. 2 U.S. food service distributor
behind Sysco Corp. SYY.N, may have inflated operating profit by more
than $500 million. The Company, which owns the U.S. grocery chains
Giant, Bi-Lo and Stop & Shop, also said it investigating the legality
of certain transactions at its Argentine unit, Disco. Law firm Cohen
Milstein Hausfeld and Toll PLLC filed the suit.
A company spokesman in the Netherlands said Ahold had not yet seen the
suit and would not comment at present, Reuters states.
AUTO INSURERS: Canadian Firms Commence Three Deductible Fees Suits
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Lawyers in Calgary, Toronto and Vancouver, BC filed three separate
lawsuits against COSECO Insurance Company, Commercial Union Assurance
Company Limited/CGU International Insurance PLC and Guarantee Company
of North America. Car owners who held policies with the insurers may
be eligible for a refund of their insurance deductible as a result of
their vehicle being written off. Each lawsuit seeks damages in the
amount of $50 million.
The three firms previously filed cases against:
(1) Trafalgar Insurance Company,
(2) Personal Insurance Company,
(3) Lloyds Underwriters,
(4) Zenith Insurance Company, and
(5) a number of others.
McNally Cuming (Calgary), Koskie Minsky (Toronto) and Klein Lyons
(Vancouver and Toronto) have filed the lawsuits against the insurers on
a joint basis. The claims allege that the insurers retained the
salvage obtained from the vehicles, but did not pay the car owners the
actual cash value of the vehicle, having withheld the deductible. An
Ontario Court of Appeal ruling states that car owners must be paid the
actual cash value of their car, not the actual cash value less the
deductible.
For more details, contact Bill McNally of McNally Cuming by Phone:
403-261-1555 or contact Kirk Baert of Koskie Minsky by Phone:
416-977-8353 or contact David Klein of Klein Lyons by Phone:
604-874-7171
BAYER AG: Enters Talks To Settle Another 500 Lawsuits Related To Baycol
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Bayer AG has entered talks to settle another 500 suits filed relating
to its anti-cholesterol drug Lipobay (sold in the US as Baycol), which
was withdrawn in 2001, after it was linked to dozens of deaths, the
Associated Press reports.
The suits involve plaintiffs who developed a rare muscle-wasting
syndrome called rhabdomyolysis, Dow Jones Newswires quoted Bayer
attorney Philip Beck as saying Tuesday. Most of them made a full
recovery, said Mr. Beck.
The Company has continuously denied the allegations in the suits,
calling them "groundless." It has already settled about 450 cases out
of the more than 7,000 suits filed against it in the United States.
A report by The New York Times over the weekend stated that executives
at Bayer were aware the drug was causing illness and death long before
it was pulled off the market. In response, Mr. Beck said the Company
monitored doctors' reports on Baycol, shared them with regulators and
repeatedly added to the written warnings on the drug's label.
Mr. Beck told AP that the Company believed that Baycol was safe when
prescribed according to the instructions. He said the company took the
drug off the market because doctors were not using it as directed.
CABLE & WIRELESS: Three UK Institutions Join US Securities Fraud Suit
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Three undisclosed UK institutional investors joined a US class action
against Cable & Wireless, its directors and its auditors KPMG LLP, the
Accountancy Age reports. The lead plaintiffs in the action are the
West Virginia Investment Management Board and State Universities
Retirement System of Illinois.
UK group Class Law represents the UK investors in the suit filed in the
West Virginia courts. Class Law believes the suit could set a precedent
as it is one of the first times UK shareholders are involved in a US
class action. The suit alleges C&W failed to disclose a potential a
GBP1.5 billion tax liability on its sale of One2One and "billions of
dollars worth of property lease commitments." Plaintiffs seek
compensation for losses on investments in C&W.
Cable & Wireless faces several suits filed on behalf of purchasers of
its publicly traded securities between the period of August 6, 1999 and
December 6, 2002, in the United States District Court in New York, an
earlier Class Action Reporter story states.
Cable announced, in an August 6, 1999 press release that it had agreed
to sell One 2 One, a British based mobile telecommunications operator,
to Deutsche Telekom. The announced terms of the agreement detailed that
Deutsche Telekom would pay 6.9 billion pounds sterling in cash for 100%
of the equity ownership interest in One 2 One. Additionally, Deutsche
Telekom would provide for the repayment of 237 million pounds of
shareholder loans, and would assume nearly 1.5 billion pounds of third-
party debt.
The complaint alleges that those statements were materially false and
misleading because they failed to reveal that an essential term of the
One 2 One deal was a 1.5 billion pounds tax indemnification clause
agreed to by Cable, and specifically, a trigger clause, involving a
future downgrade of Cable's long-term debt rating below a predetermined
level, which would trigger a 1.5 billion pounds cash commitment on
behalf of Cable.
ESSO: Lawyers To Review Decision in Consumer Suit Before Filing Appeal
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Lawyers acting on behalf of consumers who filed a multimillion dollar
class action against energy giant ESSO, say they will review the
court's decision before considering an appeal, ABC News Online reports.
Victoria Supreme Court, Australia Judge William Gilliard rejected the
suit against Exxon-Mobil's Australian arm by 1.5 million gas consumers
seeking compensation, because they were without gas supplies following
an explosion at the company's Longford plant, on September 25, 1998, in
which two men were killed, an earlier Class Action Reporter story
states.
Esso was not liable for "purely economic losses" sustained by gas
consumers and businesses during the statewide halt to gas supplies,
Justice Gillard wrote. Purely economic losses are revenue losses a
business might have suffered.
The court's decision did say that two companies could make claims for
property damage and left open the possibility that other firms can sue
for losses that occurred during the two weeks following the blast that
they were without gas supplies.
The ruling means thousands of businesses, ex-workers and domestic users
who experienced financial hardship during the gas supply crisis cannot
claim compensation.
ESSO's Australian Chairman Robert Olsen has welcomed the decision. "I
think many companies will be pleased with the outcome," he said, ABC
News reported.
Lawyer Bernard Murphy for the claimants says it is too early to
consider an appeal. "We've got to read the judgment and will then make
that decision," he told ABC News.
H&R BLOCK: Lawyers Ask Court To Give Half of Attorneys' Fees To Clients
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Lawyers for the plaintiffs in the class action against H&R Block in
Texas Federal Court filed a motion asking to have $26 million of their
possible US$49 million in legal fees allocated for their clients, the
American City Business Journal reports.
A Wall Street Journal report said the Company has objected to the
lawyer's request, but Bob Schneider, an H&R Block spokesman, denied
this, saying that the company opposes any changes to the settlement
terms in the case. The plaintiffs' lawyers request to give some of
their fees to the plaintiffs doesn't constitute a change in settlement
terms from Block's perspective, Mr. Schneider told the American City
Business Journals.
The Company entered the settlement in November 2002, in suits filed
relating to the refund anticipation loans Block provided to consumers
in the late 1990s. The high-interest loans, made to Block customers in
advance of their income tax refunds, have led to more than 20 lawsuits
around the country. The company denies liability in the Texas case and
similar cases in other states, including Maryland, New York, Illinois
and Alabama.
The Wall Street Journal article reported that the Company may fear the
lawyers' move will affect the settlement of a similar class-action
lawsuit in Chicago. A judge is expected to rule soon on an appeal of
Block's $25 million settlement of that suit.
HOME SHOPPING: FL Court Grants Certification For TV Producers' Lawsuit
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The United States District Court in Tampa, Florida granted class
certification to a lawsuit filed against the Home Shopping Network by
former television producers, the Tampa Tribune reports.
The producers sued the Company, alleging that the company wrongfully
failed to pay them overtime. Current and former producers, who worked
for Home Shopping Network, America's Store or Home Shopping Network en
Espanol between December 2000 and December 2002 are affected. The law
firm Burr & Smith of Tampa is handling the case.
A spokesman for the Company told the Tribune that HSN does not comment
on pending litigation.
JEWEL-OSCO: IL State Court Throws Out Milk Consumer Antitrust Lawsuit
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Illinois Circuit Court Judge John Morrissey dismissed a consumer class
action against retailers Jewel and Dominick's, alleging the two stores
conspired to fix the price of milk sold in their stores, over a four-
year period beginning in the summer of 1996.
The suit alleged that so closely aligned were the chains' pricing
structures for the staple, whenever one changed milk prices, the other
would match it within days, an earlier Class Action Reporter story
stats. Plaintiffs' lawyers estimated consumers were overcharged $51
million to $125 million over the four-year period, although attorneys
for the grocery stores disputed the figures. At one point a gallon of
premium milk was $3.69 in both chains.
Judge Morrissey in his ruling stated that the plaintiffs had failed to
prove their allegation of a price fixing agreement, finding instead
that Jewel and Dominick's were "competitors, not conspirators." After a
thorough examination of the case, Judge Morrissey ruled that there were
"no facts directly demonstrating conspiracy or liability."
Pete Van Helden, President of Jewel-Osco commenting on the Court's
decision said in a statement, "This ruling reaffirms our high ethical
standards and sound business practices. In the wake of this lawsuit, we
pledge to continue to provide our customers with the quality, service
and commitment that have become our hallmark for the past 100 years."
MCDONALD'S CORPORATION: Court Delays Pact Over Plaintiffs' Tax Status
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Cook County, Illinois Judge Richard Siebel asked attorneys for the
plaintiffs in a class action against fast food giant McDonald's
Corporation to clarify the tax-exempt status of some of the vegetarian
plaintiffs, the Associated Press reports.
The settlement was for several lawsuits filed in Illinois, California,
New Jersey, Texas and Washington, on behalf of customers who ate french
fries cooked in beef-flavored oil in the 1990s, believing them to be
fried in vegetable oil. The suit charged the Company with deceiving
people who don't eat meat for personal or religious reasons.
The Company later agreed to settle the litigation last year, agreeing
to pay $10 million, 60 percent of which will be given to vegetarian
groups, 20 percent to Hindu and Sikh groups, 10 percent to children's
nutrition and hunger-relief efforts and 10 percent to promoting
understanding of Kosher practices, AP states.
Judge Siebel asked plaintiffs' attorneys to determine the tax-exempt
status of some groups and find out whether others affiliated with tax-
exempt groups intend to seek the status for themselves. He set a new
hearing date to award grants March 25. Groups whose status is in limbo
include the Islamic Food and Nutrition Council of America and the Hindu
Student Council.
Some vegetarian groups are protesting some of the proposed awards.
Chicago attorney Michael Hyman, representing a group of objectors
including Baskin-Robbins heir and EarthSave International founder John
Robbins, said he worries about the outcome because Siebel did not ask
questions about the groups' agendas, the Associated Press reports.
"He's made up his mind, it sounds like," Mr. Hyman said. He said his
clients may appeal the award.
QUINTILES TRANSNATIONAL: NC Court Consolidates Suits Against Stock Sale
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The North Carolina Business Court consolidated seven securities class
actions filed by shareholders seeking to enjoin the consummation of a
transaction proposed by Pharma Services Company, a newly formed company
wholly owned by Dennis B. Gillings, Ph.D., to acquire all of the
Company's outstanding shares for US$11.25 per share in cash.
The suits were initially filed in October 2002 in the Superior Court,
Durham County, North Carolina, and later transferred to the North
Carolina Business Court. The lawsuits name as defendants Dr. Gillings,
other members of the Company's Board of Directors, the company and, in
some cases, Pharma Services Company. The complaints allege, among
other things, that the directors breached their fiduciary duties with
respect to the proposal.
On November 11, 2002, a special committee of the Company's Board of
Directors announced its rejection of the proposal by Pharma Services
Company and its intention to investigate strategic alternatives
available to the Company for purposes of enhancing shareholder value,
including the possibility of a sale of the Company and alternatives
that would keep the Company independent and publicly owned.
On January 6, 2003, the court entered a case management order
consolidating all seven lawsuits for all purposes and staying the
lawsuits until March 29, 2003 or until the Company provide notice of a
change-of-control transaction involving it. Based upon the Company's
preliminary review, it believes the lawsuits are without merit and
intends to defend them vigorously.
QWEST COMMUNICATIONS: Four Executives Indicted For Inflating Revenues
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Four Qwest Communications International, Inc. executives were indicted
by US prosecutors on 12 counts of allegedly scheming to inflate the
firm's revenue, Reuters reports. Named in the indictment were:
(1) Grant Graham, former chief financial officer for the Company's
global business unit;
(2) Bryan Treadway, a former assistant controller at the Company;
(3) Thomas Hall, a former senior vice president for government and
educational solutions group within the global business unit;
and
(4) John Walker, a former vice president in that same group
The defendants allegedly devised a scheme to falsely recognize more
than $33 million in additional revenue for the second quarter of 2001,
a quarter for which Qwest was experiencing weak sales, Reuters reports.
"The defendants allegedly sought to fill a gap in revenue by the
company's global business unit by immediately reporting millions of
dollars from a purchase order with the Arizona school facilities board
in violation of SEC rules," the Justice Department said.
The Company faces several investor class actions in Colorado Federal
Court, alleging violations of federal securities laws. Separately, the
US Securities and Exchange Commission (SEC) filed a lawsuit in Denver,
Colorado, against seven former and one current executive at Qwest
accusing them of "a fraudulent scheme orchestrated to meet at all costs
Qwest's predictions of double-digit revenue growth," Reuters states. A
company spokesman had no immediate comment on the SEC filing.
RHODE ISLAND: Victims Seeing Lawyers For Possible Personal Injury Suits
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Two lawyers are already talking to victims of last week's nightclub
fire in Providence, Rhode Island, to discuss the possibility of filing
class action and personal injury suits, the Boston Herald reports.
Last week, 85 people were killed and 160 were injured when a fire
erupted in the Station nightclub, during a concert featuring 80's hard
rock band, Great White. The tragedy occurred during the band's first
set, when giant pyrotechnic sparklers on the stage shot up and ignited
the ceiling above the crowd. The fire quickly spread through the low-
ceilinged building, filling it with thick black smoke. The entire club
was engulfed in flames within three minutes. Many of the customers
thought the flames were part of the act, an earlier Class Action
Reporter story states.
Kenneth B. Moll, a Chicago lawyer who figured prominently on lawsuits
relating to big tobacco, Bridgestone/Firestone tires and Fen-Phen diet
drugs, told the Herald he was working on behalf of about five victims.
"I was shocked to find we'd received inquires as early as last Friday,"
he said. Mr. Moll is also working to bring suit in the Chicago E2
nightclub stampede that killed 21 people earlier this month.
Providence personal injury lawyer John Calvino also received numerous
telephone calls over the possibility of filing suits. He expects to
bring cases on behalf of some injured and killed in the fire. He said
that survivors and families may be entitled to "millions and millions"
of dollars.
Walter Castle Jr. of North Kingston is among those considering
retaining Mr. Calvino. Mr. Castle said he was near the stage when the
flames started, and escaped through an exit near the stage, but his
lungs were burned as he was overtaken by smoke. "All I really want is
my medical (expenses) and my mental anguish taken care of," Mr. Castle,
29, told the Herald. "I want to hold both parties liable for this," he
said, referring to club owners and the band.
A preliminary investigation by Mr. Moll revealed that the club had a $1
million insurance policy. Mr. Calvino said he didn't know any
insurance policy details related to the club's owners, Jeffrey and
Michael Derderian. He said most venues that size might have a policy
worth between $1 million and $5 million.
Lawyers say they'll look for evidence of negligence by club owners, the
band, its management company, the building owners and others. "I have
a feeling the town of West Warwick is certainly going to come into it
as a defendant," Mr. Calvino told the Herald.
Mr. Moll said he favors a class action suit, while Mr. Calvino expects
individual cases might be brought, even if a judge consolidates them
later.
RR DONNELLEY: Appeals Court Overturns Certification For Race Bias Suit
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The United States Seventh Circuit of Appeals overturned a ruling
granting class certification to a lawsuit brought against RR Donnelley
& Sons Company, on behalf of its current and former African-American
employees. The court held that a two year statute of limitations
applies to the claims filed under Section 1981 of the Civil Rights Act.
One suit was initially filed in November 1996, alleging that the
company racially discriminated against them in violation of Section
1981 of the Civil Rights Act of 1871, as amended, and the US
Constitution. The complaint seeks declaratory and injunctive relief,
and asks for actual, compensatory, consequential and punitive damages
in an amount not less than $500 million.
Although plaintiffs sought nationwide class certification, most of the
specific factual assertions of the complaint relate to the closing by
the company of its Chicago catalog operations in 1993. Other general
claims brought by certain named individuals relate to other company
locations.
In June 1998, another class action was filed against the company in
federal district court in Chicago on behalf of current and former
African-American employees, alleging that the company racially
discriminated against them in violation of Title VII of the Civil
Rights Act of 1964. While making many of the same general
discrimination claims contained in the first complaint, the plaintiffs
also claim retaliation by the company for the filing of discrimination
charges or otherwise complaining of race discrimination.
On April 6, 2001, in an amended opinion, the district court judge in
the two cases certified three plaintiff classes in the actions:
(1) a class consisting of African-American employees discharged in
connection with the shutdown of the Chicago catalog
operations;
(2) a class consisting of African-American employees of the
Chicago catalog operations after November 1992 who were other
than permanent employees; and
(3) a class consisting of African-Americans subjected to an
allegedly hostile working environment at the Chicago catalog
operations, the Chicago Financial, Pontiac or Dwight,
Illinois, manufacturing operations.
The judge also consolidated the two cases for pretrial purposes.
The court of appeals remanded the case for further proceedings
consistent with its opinion, and denied plaintiffs' petition for
rehearing. Absent the trial court's adoption of plaintiffs' theories
tolling the statute of limitations, the ruling of the court of appeals,
unless reversed on appeal, will bar the claims of the classes in the
first suit.
RR DONNELLEY: Agrees To Settle Several Age Discrimination Suits in IL
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R.R. Donnelley & Sons Co. agreed to settle several class actions
charging it with age discrimination upon the closing of its Chicago
catalog operations, in the United States District Court in Chicago,
Illinois.
The first suit was filed in December 18, 1995, entitled Gerlib, et al.
v. R.R. Donnelley & Sons Co. The suit alleges that older workers were
discriminated against in selection for termination upon the closing of
the Chicago catalog operations. The suit also alleged that the company
violated the Employee Retirement Income Security Act (ERISA) in
determining benefits payable under its Retirement Benefit and
Separation Pay Plans to retiring or terminated employees. The
complaint sought recalculation of pension benefits and separation pay
due plaintiffs since their termination dates, as well as actual damages
for, and reinstatement to correct, the alleged discrimination. On
August 14, 1997, the court certified classes in both the age
discrimination and ERISA claims limited to certain former employees of
the Chicago catalog operations.
In December 28, 2000, another purported class action was brought
against the company and certain of its benefit plans in federal
district court in Chicago on behalf of certain former employees of the
Chicago catalog operations. The suit alleged that enhanced pension
benefits were not paid to plaintiffs and that plaintiffs are being
required to contribute to the costs of retiree medical coverage, both
allegedly in violation of plan documents and ERISA. The complaint
sought recalculation of pension benefits due plaintiffs since their
retirement dates, reimbursement of any amounts paid by plaintiffs for
medical coverage, interest on the foregoing amounts, as well as a
declaration as to the benefits due plaintiffs in the future.
The suits raised many of the same claims for recalculation of benefits
due employees and are before the same district court judge. In an
order dated October 26, 2001, further clarified in an order dated
January 25, 2002, the district court judge ruled that permanent
employees who were eligible and elected to receive special augmented
separation pay in conjunction with the closure of the Chicago catalog
operations were not eligible to also receive regular separation pay,
and that employees other than those considered permanent employees at
the date of closure were not eligible to receive special augmented
separation pay.
In the same order, the judge ruled that under the terms of the
company's plans, permanent employees who were eligible and elected to
receive enhanced retirement benefits were also entitled to receive
regular separation pay. In an order dated June 11, 2002, the district
court judge found that employees who were otherwise not eligible to
receive enhanced retirement benefits at the date of closure of the
Chicago catalog operations but whose combined age and service equaled
75 years or more at the date of their termination were entitled to
receive enhanced retirement benefits, and that employees of the Chicago
catalog operations in 1994 who were in surplus occupations were
entitled to receive enhanced retirement benefits regardless of their
age at the date of termination.
In the June 2002 order, the judge further ruled that members of the
classes who elected to receive augmented separation pay in connection
with the closure of the Chicago catalog operations were not entitled to
also receive enhanced retirement benefits.
As to other claims of the plaintiffs in the cases, by order dated
January 4, 2002, the district court judge granted summary judgment on
the "Jefferson" claim relating to medical benefits, finding that
retirees from the Chicago catalog operations were not entitled to non-
contributory medical benefits for life.
Following a two week trial on the age discrimination claim raised in
"Gerlib," on August 2, 2002, a jury reached a verdict in the company's
favor, finding that the company did not discriminate against older
workers in the shutdown of the Chicago catalog operations. On August
12, 2002, plaintiffs filed a motion seeking a new trial on the age
discrimination claim, alleging that the jury verdict is contrary to the
weight of the evidence. That motion was denied on November 7, 2002.
The suits relate primarily to the circumstances surrounding the closure
of the Chicago catalog operations. The Company believes that it acted
properly and without discriminating in closing the operations, and that
the adverse rulings of the district court judge are based on language
contained in the Company's plan documents rather than on wrongdoing of
the Company. Further, the company does not believe that it
discriminated against any of the plaintiffs who have made allegations
surrounding other operations of the company.
However, rather than continue to litigate the issues in the suits
through the appellate process and begin the multiple trials required to
decide the claims, the parties reached agreement on the terms for
settlement. The settlements, which must be approved by the district
court following fairness hearings, resolve all of the issues in the
suits, without any admission of wrongdoing by the company. The total
amount to be paid in connection with the settlements is $21 million, of
which $9 million will be paid by the company's Retirement Benefit Plan.
SAWTEK INC.: Labels "Without Merit" Securities Fraud Lawsuit in M.D. FL
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Sawtek, Inc. faces several securities class actions filed in the United
States District Court for the Middle District of Florida, Tampa
Division on behalf of people who purchased securities of Sawtek between
Jan. 7, 2000, and May 24, 2001.
The suit charges that the Company and certain executives made
misleading statements about the company's business and conducted
"channel stuffing," inflating revenue by shipping more products than
distributors could sell. The Company, a unit of TriQuint
Semiconductor in Hillsboro, Oregon, supplies its SAW (surface acoustic
wave) filters to most major handset manufacturers.
The suit complains Sawtek's stock price plunged more than 17 percent in
one day after the company revealed its financial performance on May 23,
2001, when it projected results would fall below previously issued
guidance, the Wireless Week reports.
TriQuint's Chief Financial Officer Raymond Link, one of the executives
named in the suit, told the Wireless Week the allegations are without
merit and the company expects to win its case in court. Virtually
every high-tech company in America lost value during the 2000-2001
timeframe, he added.
SECURITIES LITIGATION: Document To Show Analyst Conflicts of Interest
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Final documents from the regulators' investigation into analyst
conflicts of interest will be publicly released in early March,
according to a recent report by Newsday. Securities lawyers are
awaiting this event in order to use the material to sue brokerage firms
for the losses their investor clients suffered when they relied on
analysts who allegedly provided biased research.
These documents were the basis for the $1.48 billion tentative
settlement regulators have reached with the 12 major Wall Street
brokerage houses. The regulators charge that the analysts at the major
firms produced exaggerated, glowing reports of dot-com and telecom
companies for investors' use, in order to win billions of dollars of
business from the very companies they were covering. Therefore, the
research product delivered to the investors, it is alleged, bore the
taint of the analysts' drive for financial rewards.
While, it is expected, that the final settlement will include some form
of restitution to help wronged investors, the regulators have said that
investors, mainly, should expect to recover their losses through
lawsuits.
New York Attorney General Eliot Spitzer, who played a dominant role,
along with other regulators, during the investigation of and
negotiations with the brokerage houses, has marshaled the plan to
publicly release e-mails and other documents from the investigations
into analyst conflicts of interest.
"We are putting this body of evidence in the public domain so those who
were wronged can have their day in court," said Mr. Spitzer's
spokesman, Darren Dopp.
Speaking of the ready-made body of evidence that will be available, Roy
Smith, professor of finance at New York University, said, "The whole
thing is utterly unprecedented." Because of this attractive windfall,
it is not just the securities lawyers who have the analysts and leading
brokerages in their sights. Even the so-called trial lawyers who
traditionally seek personal-injury suits, are considering the
opportunities offered by such a trio: lots of wronged investors,
reliable evidence and deep-pocketed brokerage firms.
Many brokerage firms are bracing for what has been called the
"onslaught." Citigroup, for instance, has announced that it is setting
aside $1.3 billion to cover the $325 million its Salomon Smith Barney
unit will have to use to satisfy public regulators and expected private
lawsuits. Other firms also likely to be sued by investors include
Merrill Lynch and Morgan Stanley. Class actions already have been
filed against Salomon Smith Barney and its one-time celebrity analyst
Jack Grubman. However, no one has a definite estimate of how many
lawsuits will be filed or how much it will cost Wall Street to fight or
settle the claims.
"The main thing for investors is going to be the release of the
'smoking gun' documents; that is an extraordinary weapon for us . and I
look forward to winning cases for clients with that," said Jacob
Zamansky, principal of Manhattan-based Zamansky & Associates. Mr.
Zamansky, who had a case settled against former Merrill Lynch analyst
Henry Blodget in 2001, said he is being selective about the cases he is
taking. Currently, he has 10 to 15 clients who he believes can show
"he or she relied on the integrity of a research report as to whether
to buy or sell his/her stock."
One of Mr. Zamansky's clients, George Zicarelli, said he lost more than
$455,000, after following the recommendations of former Salomon Smith
Barney analyst Jack Grubman.
Most observers expect a majority of the lawsuits will be filed through
an industry arbitration process. However, trial lawyers who have not
previously pursued securities litigation are now looking at how they
can use some of the conflict-of-interest evidence in jury litigation.
One group, based in Pensacola, Florida, called Mass Torts Made Perfect,
held a seminar on securities law in January, and is planning another in
June to train trial lawyers to pursue securities claims, largely in
state courts.
"I do not believe securities lawyers have the ability to solve the
problem," said Mike Papantonio, a Florida lawyer and co-founder of the
group. "When a jury sits and listens to the story that we have to tell
about these companies, someone is going to be severely punished."
Regardless of which legal remedy investors adopt, whether it is
arbitration, class action or a mass-torts case, investors will have to
prove they were directly harmed by their reliance on conflicted
research, say the lawyers. Ultimately, a jury or an arbitrator may not
necessarily side with an investor even with the evidence the regulators
will release. "Arbitration is really an incredible crapshoot," said
Saul Cohen, a partner in the corporate department of the Manhattan-
based law firm Proskauer Rose. "Even if someone hands you what you
think is the smoking gun evidence, it does not mean an arbitration
panel reads it that way."
SECURITIES LITIGATION: Wall Street Firms to Incur $1-3B in Damages
------------------------------------------------------------------
Wall street investment firms will pay between $1 billion and $3 billion
to settle allegations they rigged hundreds of initial public offerings,
a Prudential Securities analyst said on Tuesday, according to Reuters.
55 investment firms face a class action, alleging that there was
industry-wide misconduct to artificially boost demand and inflate the
price of more than three hundred initial public offerings. Included as
defendants were Credit Suisse First Boston and Citigroup Inc.'s Salomon
Smith Barney.
Prudential's David Trone told Reuters a likely settlement range would
be $1 billion to $3 billion, even as the "artificial inflation" amount
of the IPO price jumps is "impossible to even estimate. "We continue
to suspect that both sides of the talks will ultimately resort to
considerations that are more practical than scientific to arrive at an
agreed upon settlement amount," Mr. Trone said in a research note.
Mr. Trone said the $1 billion low end is in line with what a group of
securities firms paid in the mid-1990s to settle NASD price-fixing
charges, while the $3 billion high end implies $15 billion in
theoretical damages, based on a 20 cents on the dollar rate.
Last week, New York federal judge Shira Scheindlin refused to dismiss
the securities class action against the firms. Legal experts have also
said damages from a trial could run into the billions, which is the
hope of Melvyn Weiss, a partner in lead plaintiffs' firm Milberg Weiss
Bershad Hynes & Lerach. Mr. Weiss told Reuters last week there have
been no organized settlement talks with the banks, but that the judge's
decision opened the door to future talks as banks try to curb the costs
of litigation.
THIMEROSAL LITIGATION: BC Consumers Lodge Two Lawsuits V. Drug Firms
--------------------------------------------------------------------
Two class actions were filed yesterday in the Supreme Court of British
Columbia against on behalf of British Columbia residents who were
injured by the organic mercury compound Thimerosal.
The first class action was filed by Jaqueline Chamberlain of Sooke,
British Columbia, on behalf of her infant son, Aaron, who suffered
neurological damage after receiving two doses of the DPT vaccine,
containing Thimerosal, manufactured by Aventis Pasteur Limited/Aventis
Pasteur Limitee.
Aaron was born a perfectly normal, healthy boy. He demonstrated
social, language, cognitive, behavioral and physical skills appropriate
for his age. At about 1 1/2 years of age, after receiving the DPT
Vaccine, he became unresponsive, withdrawn, slow in speech development,
developed repetitive behaviors and an obsessive-compulsive disorder.
Aaron was diagnosed with autism at age 5 and now, at ten years, old
still has limited language and social skills.
The second class action was filed by Elias Soursos of Richmond, British
Columbia, on behalf of his infant son, Niko, who began to display
symptoms of neurological damage after receiving the hepatitis B
vaccine, containing Thimerosal, manufactured by Merck Frosst Canada &
Co. and Glaxosmithkline Inc.
Niko was also born a perfectly normal, healthy boy. Before the vaccine
injections Niko achieved every physical, neurological and social
developmental milestone expected of normally developing children. At
approximately 1 1/2 years of age after receiving 3 shots of hepatitis B
Vaccines, Niko began to display signs of neurological damage, became
more distant, lost all language skills he had acquired. He became non-
verbal and developed self-stimulating behaviors. Niko was diagnosed
with autism at the age of 2 1/2 years old.
According to the Statements of Claim, filed today in Vancouver, British
Columbia, Aventis Pasteur, Merck Frosst Canada and Glaxosmithkline knew
or reasonably should have known of the neurotoxic effects of the
mercury contained in Thimerosal in the vaccines. Mercury poisoning is
well documented in medical literature and the developing neurological
systems of infants are particularly vulnerable. The defendants
developed tested, manufactured, licensed, distributed, marketed,
supplied and/or sold the Vaccines with the knowledge that they would be
injected into infants.
The lawsuits were filed on behalf of Aaron and Niko by class action
lawyer David Klein of Klein Lyons of Vancouver. According to Mr. Klein
"the Defendants failed to communicate the dangerous nature of the
Vaccines to the public, and must be held accountable for their
negligence. It may be to late for Aaron and Niko but Thimerosal has
been taken out of all routine vaccines for infants in Canada".
For more information, contact David Klein by Mail: Suite 1100, 1333
West Broadway, Vancouver, B.C. or by Phone: (604) 874-7171
WALT DISNEY CO: Dealt Legal Setback In Winnie The Pooh Royalties Case
---------------------------------------------------------------------
The Walt Disney Company has been handed a significant legal reversal in
its battle to avoid paying more than $200 million in royalties from
sales of Winnie the Pooh videotapes and computer games, the Los Angeles
Times reports.
For the second time, the California Supreme Court successfully blocked
an appeal by Disney to prevent jurors from being told that the company
destroyed evidence in the case by shredding boxes of old documents,
including one labeled "Winnie the Pooh -- legal problems." Disney also
will not be allowed to dispute that a late Disney executive promised
plaintiffs they would be entitled to the royalties.
It is the state Supreme Court's refusal to hear an appeal by Disney on
these two issues, the shredding and the promise to the plaintiffs, that
results in the return of the defendant to Los Angeles County Superior
Court, where the company must now face jury trial without change in the
lower court's rulings on such critical evidentiary matters.
The imposition of these rulings and the shape they give the body of
evidence is the latest development in a 12-year-old lawsuit filed by
Shirley Slesinger Lasswell and her daughter Patricial Slesinger, who
inherited the Pooh merchandising rights in the 1950s.
A Disney spokesman said the company will continue to press its case.
*Lawyer Says Class Actions Protect Public V. "Bad Business Practices"
---------------------------------------------------------------------
Stephen Alexander, head of the British class action law firm, Class
Law, is a colorful, dramatic person, according to the report on him and
his law firm in recent issue of The Sunday Telegraph. Whichever way
one decides to answer the question, "Robin Hood or ambulance chaser?"
and, if indeed, an answer is required, the report gives an interesting
glimpse into the British class action world. The Sunday Telegraph
points out that Mr. Alexander claims to stand up for the little man,
but he has yet to win a single action.
Mr. Alexander admits that not one of the 20 class actions launched by
Class Law has yet come to trial, and that he has yet to win a penny in
court for any of the victims he represents. "Class actions take a
jolly long time," Mr. Alexander says.
He further states "When it comes to battling with huge great companies,
the little man has nowhere to turn. We represent middle law-abiding
England who are losing out because of bad business practice. Who else
is there to do it but us? Lawyers are the last protection the British
public has against elected dictators."
"They seem to be specialists in getting their name in the press, but
they haven't produced anything of substance so far," says Nigel Bence,
head of compliance at Hargreaves Lansdown.
However, Mr. Alexander is unfazed by such criticism. "Class actions
rely on letting people know what we are up to," he says. "But we can't
afford to advertise." He adds that in the United States, you can start
a class action with just one client, but in England you have to amass a
group of litigants. Mr. Alexander continues, in this country, losers
pay the winner's costs, in the United States, they do not.
Mr. Alexander's critics have become more vociferous. Two weeks ago,
says the Telegraph, the Financial Ombudsman Service (FOS) spoke out
against legal firms that take money from victims to pursue compensation
cases that could be dealt with free of charge by the FOS.
Mr. Alexander told The Sunday Telegraph in May last year that he would,
"within a matter of weeks," be sending a "claim" to the Financial
Services Authority for negligence over the collapse of Independent
Insurance. He never did, the Sunday Telegraph reports.
Class Law has been vocal on the split-cap trust debacle. Last April,
the law firm announced it was going to sue some 30 firms for the
alleged mis-selling of split caps. Ten months later, several of the
firms originally cited as potential targets, are understood to have
received nothing other than standard inquiry letters. None has
received a letter indicating that legal proceedings were imminent. The
firms include Aberdeen, BFS, Brewin, Exeter, Dolphin, Barclays Private
Clients and Hargreaves Lansdown. Mr. Alexander, when questioned about
this, said that he still is gathering information for a case.
"There are so many conflicts of interest with the split-cap investors,
I am puzzled as to how they are going to bring a group action," said
Robert Warwick, the head of compliance at BFS, one of the firms on the
receiving end of a standard inquiry letter. "I am not impressed with
what I have seen."
New Securities Fraud Cases
ARIBA INC.: Scott + Scott Commences Securities Fraud Lawsuit in N.D. CA
-----------------------------------------------------------------------
Scott + Scott, LLC initiated a securities class action in the United
States District Court for the Northern District of California on behalf
of purchasers of Ariba, Inc. (Nasdaq: ARBAE) stock during the period
between January 11, 2000 through January 15, 2003.
The complaint charges Ariba and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. Ariba is a
spend- management software solutions provider. Ariba provides
software, services and network access to enable corporations to
evaluate and manage the cash costs associated with running their
business.
On January 15, 2003, the Company issued a press release entitled,
"Ariba Provides Update on Accounting Review and Restatement of
Financial Statements." The press release stated in part: "Ariba, Inc.
announced today that it will restate its financial statements for the
fiscal years ended September 30, 2001 and 2000 and for the quarters
ended March 31, 2000 through June 30, 2002 as a result of an ongoing
review of accounting matters." While Ariba's financial statements were
admittedly false, the Company's top officers and directors took
advantage of this and sold nearly $692 million worth of their Ariba
shares to the unsuspecting public.
For more details, contact David R. Scott or Neil Rothstein by Mail: 108
Norwich Avenue, Colchester, Connecticut 06415 by Phone: 800/404-7770 by
Fax: 860/537-4432 by E-mail: drscott@scott-scott.com or
nrothstein@scott-scott.com or visit the firm's Website:
http://www.scott-scott.com/news/news.htm
CLEARONE COMMUNICATIONS: Scott + Scott Commences Securities Suit in UT
----------------------------------------------------------------------
Scott + Scott, LLC initiated a securities class action in the United
States District Court for the District of Utah on behalf of purchasers
of ClearOne Communications, Inc. (Nasdaq: CLRO) stock during the period
between April 17, 2001 through January 15, 2003.
The complaint charges ClearOne and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
complaint alleges that during the class period, defendants caused
ClearOne's shares to trade at artificially inflated levels through the
issuance of false and misleading financial statements.
As a result of this inflation, ClearOne was able to complete a private
offering of 1.2 million shares, raising proceeds of $25.5 million on
December 11, 2001. On January 15, 2003, the Securities and Exchange
Commission filed a complaint in the United States District Court for
the District of Utah seeking a temporary restraining order and
preliminary and permanent injunctions against ClearOne, Frances M.
Flood, the Company's Chairman, CEO and President, and Susie S. Strohm,
the Company's CFO and Vice President of Finance.
The stock dropped below $1.50 per share on this news, more than 90%
lower than its class period high.
For more details, contact David R. Scott or or Neil Rothstein by Mail:
108 Norwich Avenue, Colchester, Connecticut 06415 by Phone:
800/404-7770 by Fax: 860/537-4432 by E-mail: drscott@scott-scott.com or
nrothstein@scott-scott.com or visit the firm's Website:
http://www.scott-scott.com/news/news.htm
LEXENT INC.: William Rand Launches Securities Fraud Lawsuit in DE Court
-----------------------------------------------------------------------
The Law Office of William Coudert Rand commenced a class action in the
Delaware Chancery Court on behalf of shareholders of Lexent, Inc.
(Nasdaq:LXNT) challenging the proposed transaction by the Company's
management to take the Company private for $1.25 per share in cash.
The lawsuit names Hugh J. O'Kane, Jr., Kevin M. O'Kane, and the Company
as defendants and alleges breach of fiduciary duty by the O'Kanes in
connection with their recent proposal to take the Company private. The
lawsuit also alleges that the proposed offer of $1.25 per share for the
public's shares is inadequate and unfair from the perspective of the
Company's public shareholders.
For more details, contact William C. Rand by Mail: 19 West 44th Street,
Suite 1615, New York, New York 10036 by Phone: (212) 609-5058 by Fax:
(212) 944-1179 or by E-mail: wcrand@wcrand.com
ROYAL AHOLD: Wolf Popper Commences Securities Fraud Lawsuit in S.D. NY
----------------------------------------------------------------------
Wolf Popper LLP initiated a securities class action against Koninklijke
(Royal) Ahold NV (NYSE:AHO) (AMS:AHLN) (LSE:AHLNq) (Swiss:AHLN),
Cornelis H. van der Hoeven and Adriaan Michiel Meurs, on behalf of
persons who purchased Royal Ahold securities on the United States and
European stock exchanges from March 6, 2001 through February 21, 2003.
The action was filed in the United States District Court for the
Southern District of New York.
The complaint alleges that during the class period, defendants
materially misrepresented Ahold's financial results and performance for
each of the quarters of and full year of fiscal 2001, ended December
30, 2001, and each of the first three quarters of fiscal 2002, by
improperly recognizing income in Ahold's US Foodservice operations.
On February 24, 2003, prior to the opening of the financial markets,
Ahold announced that it would restate its results because "significant
accounting irregularities were discovered in the recognition of income
including prepayment amounts related to US Foodservice's promotional
allowance programs." The Company stated that the restatements may
exceed $500 million of previously recognized income.
On February 24, 2003, following the announcement of the restatement,
Ahold's American Depositary Shares fell 61% or $6.53 from their
February 21, 2003 closing price.
For more details, contact James A. Harrod by Mail: 845 Third Avenue,
New York, NY 10022 by Phone: 212-451-9642 or 877-370-7703 by Fax:
212-486-2093 or 877-370-7704 by E-mail: irrep@wolfpopper.com or visit
the firm's Website: http://www.wolfpopper.com
ROYAL AHOLD: Schiffrin & Barroway Lodges 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 Koninklijke (translated
as "Royal") Ahold, N.V. (NYSE:AHO), inclusive.
The complaint charges Koninklijke Ahold, N.V. and certain of its
officers and directors with issuing false and misleading statements
concerning its business and financial condition. Specifically, the
complaint alleges that defendants issued numerous statements and filed
annual reports with the SEC which described the Company's increasing
income 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 the Company had materially overstated its income by
improperly including far higher promotional allowances --
provided by suppliers to promote their products -- than the
company actually received in payment;
(2) that the Company's Disco unit had engaged in certain
transactions which were possibly illegal and were improperly
accounted for;
(3) that the Company was experiencing a slowdown in consumer
demand and that, contrary to defendants' representations, the
Company's financial performance was not "very solid" and its
fundamental business was not really "quite robust";
(4) that, contrary to defendants' representations, the Company was
having difficulty integrating its numerous acquisitions;
(5) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(6) as a result of the foregoing, the Company's financial
statements issued during the Class Period were materially
false and misleading.
The class period ends on Friday, February 21, 2003. On Monday morning,
February 24, 2003, before the opening of regular trading, Ahold shocked
the market by announcing that it:
(i) would be reducing its earnings expectations for 2002;
(ii) would be restating its financial results for 2000, 2001 and
its interim results for 2002, primarily due to overstatements
of income, which may exceed $500 million, related to
promotional allowance programs at U.S. Foodservice in the past
two years;
(iii) will deconsolidate its interests in three subsidiaries -- ICA
Ahold, Jeronimo Martins Retail and Disco Ahold International
Holdings; and
(iv) has been investigating the legality of certain transactions
and their accounting treatment at the Company's Argentine
subsidiary Disco; and
(v) as a result of all of this, the Company's CEO and CFO would be
resigning.
Later in the day, when the market opened for trading, shares of Ahold's
American Depositary Receipts fell $6.53 per share, or more than 61%, to
close at approximately $4.16 per share, a far cry below their class
period high of $32.65 per share, on extremely heavy trading volume of
more than 16.2 million shares traded.
For more details, contact Marc A. Topaz or Stuart L. Berman by Phone:
(888) 299-7706 toll free, (610) 667-7706 by E-mail: info@sbclasslaw.com
or visit the firm's Website: http://www.sbclasslaw.com
ROYAL AHOLD: Schoengold & Sporn Commences Securities Lawsuit in S.D. NY
-----------------------------------------------------------------------
Schoengold & Sporn, PC, filed on behalf of the New York Hotel Trades
Council and Hotel Association of New York City, Inc. Pension Fund, a
securities class action against Royal Ahold NV (NYSE: AHO) and certain
of its key officers and directors in the United States District Court
for the Southern District Court of New York.
The suit, filed on behalf of all purchasers of Ahold securities
including American Depositary Receipts (ADRs) of Ahold during the
period between May 15, 2001 and February 24, 2003, charges defendants
with violations of Sections 10(b) and 20(a) the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder.
The complaint alleges that during the class period, defendants issued
to the investing public false and misleading financial statements and
press releases concerning the Company's publicly reported earnings and
net income, and that the Company failed to disclose material
information necessary to make its prior statements not misleading.
On February 24, 2003, WMB shocked the market by announcing that its
"net earnings and earnings per share under Dutch GAAP and U.S. GAAP
will be significantly lower than previously indicated for the year
ended December 29, 2002," and that operating earnings for fiscal years
2001 and 2002 have been overstated by at least U.S. $500 million. The
Company also stated that there will be a restatement of Ahold's
financial statements for fiscal year 2001 and the first three quarters
of fiscal year 2002.
In addition, it was revealed that there is a pending investigation of
Ahold's Argentine subsidiary Disco concerning the "legality of certain
transactions and the accounting treatment." According to the press
release, the release of its fiscal year 2002 results scheduled for
March 5, 2002 will be delayed indefinitely. In response to this
shocking announcement, the price of Ahold ADRs declined sharply,
falling approximately 61% from $10.69 per share to close at $ 4.16 per
share on the 24th.
For more details, contact Jay P. Saltzman or Ashley Kim by Mail: 19
Fulton Street, Suite 406, New York, New York 10038 by Phone:
(212) 964-0046 by Fax: (212) 267-8137 or (866) 348-7700 or by E-Mail:
shareholderrelations@spornlaw.com
ROYAL AHOLD: Berger & Montague Commences Securities Lawsuit in E.D. VA
----------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against Royal
Ahold, NV (NYSE: AHO) and certain of its officers, in the United States
District Court for the Eastern District of Virginia on behalf of all
persons or entities who purchased Ahold American Depository Receipts
(ADRs) from January 8, 2002 through February 21, 2003. Also included
in the class are those US citizens who purchased Ahold common stock on
foreign exchanges during the class period.
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder by the Securities and Exchange Commission by materially
overstating Ahold's income in violation of Generally Accepted
Accounting Principles (GAAP).
On February 24, 2003, Ahold stunned the market when it disclosed that
operating earnings for fiscal year 2001 and expected operating earnings
for fiscal year 2002 were overstated by an amount that the company
believes may exceed $500 million. The overstatements of income
discovered to date will require the restatement of Ahold's financial
statements for fiscal year 2001 and the first three quarters of fiscal
year 2002.
As disclosed by the Company, and as alleged in the Complaint, during
the 2002 fiscal year-end audit for Ahold's U.S. Foodservice subsidiary,
significant accounting irregularities were discovered in the
recognition of income, including prepayment amounts related to U.S.
Foodservice's promotional allowance programs. In light of the
disclosure, Ahold President and Chief Executive Officer, Cees van der
Hoeven, and Chief Financial Officer, Michael Meurs, will resign.
In response to the disclosure of Ahold's true financial condition, its
ADRs plummeted from a close of $10.69 on February 21, 2003 to as low as
$3.60 per ADR when trading resumed Monday, February 24, 2003. The
decline represents a one day loss of over 65%.
For more details, contact Sherrie R. Savett, Todd S. Collins, Douglas
M. Risen or Kimberly A. Walker by Mail: 1622 Locust Street,
Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax:
215-875-5715 by E-mail: InvestorProtect@bm.net or visit the firm's
Website: http://www.bergermontague.com
ROYAL AHOLD: Cauley Geller Commences Securities Fraud Suit in S.D. NY
---------------------------------------------------------------------
Cauley Geller Bowman Coates & Rudman, LLP initiated a securities class
action in the United States District Court for the Southern District of
New York, on behalf of purchasers of Koninklijke Ahold, N.V. (NYSE:
AHO) publicly traded securities during the period between March 6, 2001
and February 21, 2003, inclusive.
Throughout the class period, as alleged in the complaint, defendants
issued numerous statements and filed annual reports with the SEC which
described the Company's increasing income 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 the Company had materially overstated its income by
improperly including far higher promotional allowances --
provided by suppliers to promote their products -- than the
company actually received in payment;
(2) that the Company's Disco unit had engaged in certain
transactions which were possibly illegal and were improperly
accounted for;
(3) that the Company was experiencing a slowdown in consumer
demand and that, contrary to defendants' representations, the
Company's financial performance was not "very solid" and its
fundamental business was not really "quite robust";
(4) that, contrary to defendants' representations, the Company was
having difficulty integrating its numerous acquisitions;
(5) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(6) as a result of the foregoing, the Company's financial
statements issued during the class period were materially
false and misleading.
The class period ends on Friday, February 21, 2003. On Monday morning,
February 24, 2003, before the opening of regular trading, Ahold shocked
the market by announcing that it:
(i) would be reducing its earnings expectations for 2002;
(ii) would be restating its financial results for 2000, 2001 and
its interim results for 2002, primarily due to overstatements
of income, which may exceed $500 million, related to
promotional allowance programs at U.S. Foodservice in the past
two years;
(iii) will deconsolidate its interests in three subsidiaries -- ICA
Ahold, Jeronimo Martins Retail and Disco Ahold International
Holdings; and
(iv) has been investigating the legality of certain transactions
and their accounting treatment at the Company's Argentine
subsidiary Disco; and
(v) as a result of all of this, the Company's CEO and CFO, would
be resigning.
Later in the day, when the market opened for trading, shares of Ahold's
American Depositary Receipts fell $6.53 per share, or more than 61%, to
close at approximately $4.16 per share, a far cry below their class
period high of $32.65 per share, on extremely heavy trading volume of
more than 16.2 million shares traded.
For more details, contact Samuel H. Rudman or David A. Rosenfeld by
Mail: 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
ROYAL AHOLD: Wolf Haldenstein Launches Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP filed a securities class
action in the United States District Court for the Southern District of
New York, on behalf of purchasers of the securities of KONINKLIJKE
AHOLD N.V. d/b/a ROYAL AHOLD, Inc. (NYSE: AHO) between May 15, 2001 and
February 21, 2003, inclusive, against the Company, certain of its
officers and directors, and its accountants.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities.
During the class period, defendants issued many statements and filed
quarterly and annual reports with the SEC which depicted the Company's
net income and financial performance. The complaint alleges that these
statements were materially false and misleading because they omitted
and/or misrepresented several undesirable facts, such as that, during
the class period, AHOLD had significantly overstated its operating
earnings for its US Foodservice division.
The complaint further alleges that the Company lacked sufficient
internal controls resulting in an inability to determine the true
financial condition of AHOLD, which lead to the value of the Company's
net income and financial results being materially overstated at all
pertinent times.
On February 24, 2003, before the market opened for trading, AHOLD
announced that it discovered over $500 million in "overstatements of
income related to promotional allowance programs", requiring the
Company to restate its previously-issued financial reports for fiscal
years 2001 and 2002. Following this report, shares of AHOLD declined
over 60%, to close at $4.16 per share, on volume of more than 16
million shares traded, or nearly thirty times the average daily volume.
For more details, contact Fred Taylor Isquith, Gustavo Bruckner,
Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison
Avenue, New York, New York 10016, by Phone: (800) 575-0735 by E-mail:
classmember@whafh.com or visit the firm's Website:
http://www.whafh.com. All e-mail correspondence should make reference
to AHOLD.
ROYAL AHOLD: Cohen Milstein To File Securities Fraud Lawsuit in E.D. VA
-----------------------------------------------------------------------
Cohen, Milstein, Hausfeld & Toll, PLLC intends to file an investor
lawsuit today against Royal Ahold Corporation (NYSE:AHO) in the United
States District Court for the Eastern District of Virginia, in
Alexandria, Virginia. Ahold's US headquarters are located in
Chantilly, Virginia.
The lawsuit will seek recovery for investors who have lost money in
Ahold securities as a result of the recent announcement of accounting
irregularities and the resignation of the Company's chief executive
officer and chief financial officer.
For more details, contact Steven J. Toll or Katrina Jurgill by Mail:
1100 New York Avenue, NW Suite 500 - West Tower, Washington, DC 20005
by Phone: 888-240-0775 or 202-408-4600 by E-mail: stoll@cmht.com or
kjurgill@cmht.com or visit the firm's Website: http://www.cmht.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
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