/raid1/www/Hosts/bankrupt/CAR_Public/030401.mbx
C L A S S A C T I O N R E P O R T E R
Tuesday, April 1, 2003, Vol. 5, No. 64
Headlines
ASIAINFO HOLDINGS: NY Court Dismisses in Part Securities Fraud Lawsuit
BAUSCH & LOMB: Asks NY Court to Dismiss Consolidated Securities Lawsuit
CHARLES SCHWAB: Settlement in USTC ERISA Lawsuit Presented to LA Court
COEUR D'ALENE: Asks ID Court to Dismiss Bunker Hill Superfund Site Suit
COMMONWEALTH EDISON: Agrees to Settle for $8M IL Consumer Fraud Lawsuit
EXELON CORPORATION: Plaintiffs File Consolidated Securities Suit in IL
FEDEX CORPORATION: Plaintiffs Appeal IL Court's Approval of Settlement
FLORIDA POWER: Reaches Settlement in Employee Age Discrimination Suits
FLORIDA POWER: Appeals Court Reverses Right-of-Way Lawsuit Settlement
GEORGIA: Rights Group Sues Over Failure to Provide Lawyers to Indigent
HUMANA INC.: Trial in Subscriber RICO Lawsuit Set for Sept. 2003 in FL
HUMANA INC.: Discovery to Proceed in Provider RICO Lawsuits in FL Court
IDAHO: Admin Effort Commenced to Find Mentally Ill Children in Schools
NETRO CORPORATION: Engages in Settlement Discussion for Securities Suit
NEW JERSEY: Appeals Panel Rules Doctors Can Be Sued for Consumer Fraud
OHIO: Predatory Lenders Possible Cause of High Akron Foreclosure Rates
PHOENIX HOME: Plaintiffs Appeal Dismissal of NY Policyholders' Lawsuit
PHYSICIAN CORPORATION: FL to Rule on Certification, Set Trial for Suit
TEXAS: Criminal Board to Set Limits on Correspondence Between Inmates
TEXAS: Lawsuit Limitation Bill HB4 Passes in House by Party-Line Votes
TOBACCO LITIGATION: Philip Morris Might Default on Settlement Payments
TOBACCO LITIGATION: Plaintiff Quit Smoking by Seeking Professional Help
UNITED STATES: Bush Admin Plans Overhaul of Overtime Wage Eligibility
WIRELESS FACILITIES: NY Court Dismisses in Part Consolidated Fraud Suit
WIT CAPITAL: IL Court to Hear Motions for Dismissal of Consumer Lawsuit
New Securities Fraud Cases
ACCLAIM ENTERTAINMENT: Marc Henzel Commences Securities Suit in E.D. NY
ADC TELECOMMUNICATIONS: Wolf Haldenstein Launches Securities Suit in MN
ADC TELECOMMUNICATIONS: Bernstein Liebhard Lodges Securities Suit in MN
AEGON NV: Marc Henzel Commences Securities Fraud Suit in S.D. New York
AFC ENTERPRISES: Abbey Gardy Commences Securities Fraud Suit in N.D. GA
AFC ENTERPRISES: Marc Henzel Commences Securities Fraud Suit in N.D. GA
BLACK BOX: Marc Henzel Commences Securities Fraud Lawsuit in W.D. PA
COLLINS & AIKMAN: Marc Henzel Launches Securities Fraud Suit in E.D. MI
COSI INC.: Bernstein Liebhard Launches Securities Fraud Suit in S.D. NY
ELECTRO SCIENTIFIC: Levy & Levy Commence Securities Fraud Lawsuit in OR
GEORGESON SHAREHOLDER: Stull Stull Commences Securities Suit in S.D. NY
KING PHARMACEUTICALS: Shapiro Haber Launches Securities Suit in E.D. TN
KING PHARMACEUTICALS: Berger & Montague Launches Securities Suit in TN
SKECHERS USA: Cauley Geller Commences Securities Fraud Suit in C.D. CA
SOLECTRON CORPORATION: Cohen Milstein Lodges Securities Suit in N.D. CA
*********
ASIAINFO HOLDINGS: NY Court Dismisses in Part Securities Fraud Lawsuit
----------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed in part the consolidated securities class action pending
against AsiaInfo Holdings, Inc., certain of its current officers and
directors and the underwriters of its initial public offering, or IPO.
The lawsuit alleged violations of the federal securities laws. The
suit alleged, among other things, that the underwriters of the
company's IPO improperly required their customers to pay the
underwriters excessive commissions and to agree to buy additional
shares of the company's common stock in the aftermarket as conditions
to their purchasing shares in the company's IPO. The lawsuit further
claimed that these supposed practices of the underwriters should have
been disclosed in the company's IPO prospectus and registration
statement.
In addition to the case against the Company, various other plaintiffs
have filed approximately 1,000 other, substantially similar class
action cases against approximately 300 other publicly traded companies
and their IPO underwriters in New York City, which along with the case
against the company have all been transferred to a single federal
district judge for purposes of case management.
On July 15, 2002, together with the other issuer defendants, the
company filed a collective motion to dismiss the consolidated, amended
complaints against the issuers on various legal grounds common to all
or most of the issuer defendants. The underwriters also filed separate
motions to dismiss the claims against them.
On October 9, 2002, the court dismissed without prejudice all claims
against the individual defendants in the litigation (Louis Lau, the
company's Chairman, James Ding, its President and Chief Executive
Officer and Ying Han, its Chief Financial Officer). The dismissals
were based on stipulations signed by those defendants and the
plaintiffs' representatives.
On February 19, 2003, the court issued its ruling on the motions to
dismiss filed by the underwriter and issuer defendants. In that ruling
the court granted in part and denied in part those motions. As to the
claims brought against the company under the anti-fraud provisions of
the securities laws, the court dismissed all such claims without
prejudice. As to the claims brought under the registration provisions
of the securities laws, which do not require that intent to defraud be
pleaded, the court denied the motion to dismiss such claims as to the
company and as to substantially all of the other issuer defendants.
The court also denied the underwriter defendants' motion to dismiss in
all respects.
While the company cannot guarantee the outcome of these proceedings, it
believes that the final result of these actions will have no material
effect on its consolidated financial condition, results of operations
or cash flows.
BAUSCH & LOMB: Asks NY Court to Dismiss Consolidated Securities Lawsuit
-----------------------------------------------------------------------
Bausch & Lomb, Inc. asked the United States District court for the
Western District of New York to dismiss a consolidated securities class
action filed against the company and:
(1) Stephen C. McCluski, Chief Financial Officer,
(2) William M. Carpenter, former Chairman and Chief Executive
Officer, and
(3) Carl E. Sassano, former President,
The suit alleges that the value of the company's stock was inflated
artificially by alleged false and misleading statements about expected
financial results. The plaintiffs seek to represent a class of
shareholders who purchased company common stock between January 27,
2000 and August 24, 2000.
The company labeled the suit without merit and intends to defend itself
vigorously against it.
CHARLES SCHWAB: Settlement in USTC ERISA Lawsuit Presented to LA Court
----------------------------------------------------------------------
The settlement proposed by Charles Schwab Corporation for the
consolidated class action filed against the US Trust Company, N.A.
(which it acquired) has been presented to the United States District
Court in Louisiana. The court, however, has yet to rule on the suit.
Three suits were initially commenced on behalf of participants in an
employee stock ownership plan (UC ESOP) sponsored by United Companies
Financial Corporation (United Companies), which is currently in
bankruptcy proceedings in Delaware. Plaintiffs allege that USTC, N.A.,
as directed trustee of UC ESOP, breached its fiduciary duties under the
Employee Retirement Income Security Act of 1974 (ERISA) by failing to
diversify the assets of UC ESOP. Damages were not specified.
In November 2000, the plaintiffs filed a consolidated complaint for all
three suits, which USTC, N.A. answered, denying all liability. In
December 2001, plaintiffs and USTC, N.A. reached a tentative
settlement. Under the terms of this settlement, plaintiffs would
release USTC, N.A. of all liability. Other than an insignificant
deductible, the settlement payment would be paid from insurance
coverage.
COEUR D'ALENE: Asks ID Court to Dismiss Bunker Hill Superfund Site Suit
-----------------------------------------------------------------------
Coeur d'Alene Mines Corporation and other defendants asked the Idaho
District Court for the First District in Kootenai County, Idaho to
dismiss the private class action filed against the companies that have
been defendants in the prior Bunker Hill and natural resources
litigation in the Coeur d'Alene Basin, including the Company, by eight
northern Idaho residents seeking medical benefits and real property
damages from the mining companies involved in the Bunker Hill Superfund
site.
In October 2002, the court conducted a hearing on motions resulting in
an order striking certain of the alleged causes of action from the
complaint, and dismissing the complaint with leave to amend it. In
January 2003, the plaintiffs filed an amended complaint.
Certain of the defendants, including the Company, filed motions to
dismiss the complaint, which will be heard by the court in May 2003.
While the company believes the suit is without merit, at this early
stage of the proceedings, the company cannot predict the outcome of
this suit.
COMMONWEALTH EDISON: Agrees to Settle for $8M IL Consumer Fraud Lawsuit
-----------------------------------------------------------------------
Commonwealth Edison Company agreed to settle the consolidated class
action pending against it in the Circuit Court of Cook County, Illinois
seeking damages for personal injuries, property damage and economic
losses related to a series of service interruptions that occurred in
the summer of 1999. The combined effect of these interruptions
resulted in over 168,000 customers losing service for more than four
hours.
The court later approved conditional class certification for the sole
purpose of exploring settlement. The company filed a motion to dismiss
the complaints. In April 2001, the court dismissed four of the five
counts of the consolidated complaint without prejudice and the sole
remaining count was dismissed in part. In June 2001, the plaintiffs
filed a second amended consolidated complaint and the company has filed
an answer.
On December 5, 2002, a settlement was reached, pending court approval,
whereby the company will pay up to $8 million, which includes $4
million paid to date. The settlement, when approved, will release the
company from all claims arising from the 1999 power outages. A portion
of any settlement or verdict may be covered by insurance.
EXELON CORPORATION: Plaintiffs File Consolidated Securities Suit in IL
----------------------------------------------------------------------
Plaintiffs in the securities class actions against Exelon Corporation
filed an amended consolidated suit in the United States District Court
in Chicago, Illinois, containing allegations of new facts and several
new theories of liability.
Between May 8 and June 14, 2002, several lawsuits were filed asserting
nearly identical securities law claims on behalf of purchasers of
Exelon securities between April 24, 2001 and September 27, 2001. The
complaints allege that the company violated federal securities laws by
issuing a series of materially false and misleading statements relating
to its 2001 earnings expectations during the class period. The court
consolidated the pending cases into one lawsuit and has appointed two
lead plaintiffs as well as lead counsel.
The company believes the lawsuit is without merit and is vigorously
contesting this matter.
FEDEX CORPORATION: Plaintiffs Appeal IL Court's Approval of Settlement
----------------------------------------------------------------------
Plaintiffs appealed the Illinois state court's preliminary approval of
the settlement of the class action filed against Fedex Corporation, in
relation to the fuel surcharge that the company imposed on customers.
The lawsuit alleges that the fuel surcharge is not consistent with the
terms and conditions of its contracts with customers.
Under the terms of the settlement, the company will issue coupons to
qualifying class members toward the purchase of future FedEx Express
shipping services. The coupons will be subject to certain terms and
conditions and will be redeemable for a period of one year from
issuance. No coupons will be issued, however, pending resolution of
the appeals.
The ultimate cost to the company under the settlement agreement will
not be material, the company revealed in a disclosure to the Securities
and Exchange Commission.
FLORIDA POWER: Reaches Settlement in Employee Age Discrimination Suits
----------------------------------------------------------------------
Florida Power Corporation and Florida Progress Corporation have
successfully resolved and settled the multi-party lawsuit served on the
companies in 1995. The suit charged the companies with age
discrimination. The number of plaintiffs was 116, but four of those
plaintiffs have had their federal claims dismissed and 74 others have
had their state age claims dismissed. While no dollar amount was
requested, each plaintiff sought back pay, reinstatement or front pay
through their projected dates of normal retirement, costs and
attorneys' fees.
In October 1996, the federal court approved an agreement between the
parties to provisionally certify this case as a class action under the
Age Discrimination in Employment Act (ADEA). Florida Power filed a
motion to decertify the class and in August 1999, the court granted the
motion. In October 1999, the judge certified the question of whether
the case should be tried as a class action to the Eleventh Circuit
Court of Appeals for immediate appellate review.
In December 1999, the appeals court agreed to review the judge's order
decertifying the class. In anticipation of a potential ruling
decertifying the case as a class action, plaintiffs filed a virtually
identical lawsuit, which identified all opt-in plaintiffs as named
plaintiffs.
On July 5, 2001, the Eleventh Circuit Court of Appeals ruled that as a
matter of law, disparate claims cannot be brought under the Age
Discrimination in Employment Act. This ruling has the effect of
decertifying the case as a class action.
In October 2001, the plaintiffs filed a petition in the United States
Supreme Court, requesting a hearing of the case, on the issue of
whether disparate claims can be brought under the ADEA. In December
2001, the United States Supreme Court agreed to hear the case.
Oral arguments on the issue were held on March 20, 2002. On April 1,
2002, the US Supreme Court issued a per curiam affirmed order in the
case stating they had improvidently granted the oral argument and they
would uphold the ruling of the Eleventh Circuit Court of Appeals.
Therefore, the case will remain decertified.
As a result of the decertification, the trial court has grouped the
plaintiffs cases to be tried. The trial for the first set of twelve
plaintiffs began on July 22, 2002. The jury entered a verdict in favor
of Florida Power in that trial on August 9, 2002. The next group of
plaintiffs' to be tried was named, but no trial date was set. The
parties attended a second mediation on October 31 and November 1, 2002.
The company was able to reach a settlement of this matter with all but
one plaintiff, the details of which are subject to a confidentiality
agreement. The amount of the settlements are not expected to have a
material adverse impact on the Company.
FLORIDA POWER: Appeals Court Reverses Right-of-Way Lawsuit Settlement
---------------------------------------------------------------------
The United States First District Court of Appeals reversed a lower
court's approval of a settlement proposed by Florida Power Corporation
for a class action filed in December 1998, seeking damages, declaratory
and injunctive relief for the alleged improper use of electric
transmission easements.
The plaintiffs contend that the licensing of fiber-optic
telecommunications lines to third parties or telecommunications
companies for other than Florida Power's internal use along the
electric transmission line right-of-way exceeds the authority granted
in the easements. In June 1999, plaintiffs amended their complaint to
add Progress Telecom as a defendant and adding counts for unjust
enrichment and constructive trust.
In January 2000, the trial court conditionally certified the class
statewide. In mediation held in March 2000, the parties reached a
tentative settlement of this claim. In January 2001, the trial court
preliminarily approved the amended settlement agreement, certified the
settlement class and approved the class notice. In November 2001, the
trial court issued a final order approving the settlement.
Several objectors to the settlement appealed the order to the 1st
District Court of Appeal. On February 12, 2003, the appellate court
issued an opinion upholding the trial court's subject matter
jurisdiction over the case, but reversing the trial court's order
approving the mandatory settlement class for purposes of declaratory
and injunctive relief. The appellate court remanded the case to the
trial court for further proceedings. The company filed a motion
requesting discretionary review before the Florida Supreme Court, which
is pending before the 1st District Court of Appeal. The objectors and
the class plaintiffs also have filed similar requests for discretionary
review as well as requests for rehearing before the 1st District Court
of Appeal, all of which are pending.
The company cannot predict the outcome of any future proceedings in
this case.
GEORGIA: Rights Group Sues Over Failure to Provide Lawyers to Indigent
----------------------------------------------------------------------
The Southern Center for Human Rights recently filed a lawsuit seeking
class action status against the four-county Cordele Judicial Circuit in
South Georgia, alleging that indigent criminal defendants there are
processed through the court system without proper legal representation,
even as the state's legislators battle over how to reform the state's
entire indigent criminal defense system, the Atlanta Journal-
Constitution reports.
Stephen Bright, the Southern Center's director and lead plaintiffs'
lawyer, said, " The Georgia Legislature must act to address this
enormous problem, or lawsuits will continue to be filed to bring each
county in this state into compliance with the Constitution."
Then referring to the Cordele circuit, Mr. Bright said, "This situation
is so urgent and such a clear violation of the law that it requires
action now . There is a total disregard for fairness by everyone
in the system."
Poor people accused of crimes in the Cordele circuit routinely sit in
jail for months without seeing a lawyer, according to the lawsuit,
filed in Crisp County Superior Court. The lawsuit also said almost
half of the circuit's criminal defendants enter into plea negotiations
with a prosecutor and then plead guilty without ever being represented
by a lawyer.
The local defenders, who are signed to contracts to represent poor
defendants in the circuit, carry twice as many felony cases as
recommended by the Georgia Supreme Court. These attorneys routinely
allow their clients to plead guilty after only a few minutes'
discussion, says the lawsuit, which seeks class action status on behalf
of all indigent defendants in the four counties comprising the Cordele
circuit. Four criminal defendants are plaintiffs, and the lead
plaintiff, Kelvin Hampton, was charged last September with burglary and
selling $20 worth of cocaine. He has not been paid a visit by his
court-appointed lawyer, the suit said.
The lawsuit names as defendants the two judges who preside over the
circuit, Chief Superior Court Judge Whitfield Forrester and Superior
Court Judge John Pridgen, members of the circuit's district attorney's
Office, the committees overseeing the indigent defense programs, all
four counties' commissioners and Governor Sonny Perdue.
The noted Atlanta lawyers Edward Garland, Donald Samuel and Al Pearson
have joined the Southern Center's legal team.
HUMANA INC.: Trial in Subscriber RICO Lawsuit Set for Sept. 2003 in FL
----------------------------------------------------------------------
Trial in the consolidated subscriber track class action against Humana,
Inc. is set to commence on September 22,2003 in the United States
District Court for the Southern District of Florida.
In the suit, the plaintiffs seek a recovery under the Racketeer
Influenced and Corrupt Organizations Act (RICO) for all persons who are
or were subscribers at any time during the four-year period prior to
the filing of the complaints. Plaintiffs also seek to represent a
subclass of policyholders who purchased insurance through their
employers' health benefit plans governed by ERISA, and who are or were
subscribers at any time during the six-year period prior to the filing
of the complaints.
The suit alleges, among other things, that the company intentionally
concealed from members certain information concerning the way in which
it conducts business, including the methods by which it pay providers.
The plaintiffs do not allege that any of the purported practices
resulted in denial of any claim for a particular benefit, but instead,
claim that the company provided the purported class with health
insurance benefits of lesser value than promised. The suit also
alleges an industry-wide conspiracy to engage in the various alleged
improper practices.
In February 2002, the court dismissed the RICO claims of ten of the
sixteen named plaintiffs, including three of the four involving the
Company, on the ground that the McCarran-Ferguson Act prohibited their
claims because they interfered with the state regulatory processes in
the states in which they resided (Florida, New Jersey, California and
Virginia). With respect to ERISA, the court dismissed the
misrepresentation claims of current members, finding that they have
adequate remedies under the law and failed to exhaust administrative
remedies. Claims for former members were not dismissed. The court
also refused to dismiss claims by all plaintiffs for breach of
fiduciary duty arising from alleged interference with the doctor-
patient relationship by the use of so-called "gag clauses" that
assertedly prohibited doctors from freely communicating with members.
The plaintiffs then sought certification of a class consisting of all
members of our medical plans, excluding Medicare and Medicaid plans,
for the period from 1990 to 1999. On September 26, 2002, the court
denied the plaintiffs' request for class certification. On October 9,
2002, the plaintiffs asked the court to reconsider its ruling on that
issue. The court denied the motion on November 25, 2002.
HUMANA INC.: Discovery to Proceed in Provider RICO Lawsuits in FL Court
-----------------------------------------------------------------------
The United States District Court in Florida allowed discovery to
proceed in the consolidated provider class action filed against Humana,
Inc. and other defendants, alleging they improperly paid providers'
claims and "downcoded" their claims by paying lesser amounts than they
submitted. The complaint alleges, among other things, multiple
violations under the Racketeer Influenced and Corrupt Organizations Act
(RICO) as well as various breaches of contract and violations of
regulations governing the timeliness of claim payments.
The company moved to dismiss the suit in September 2000, and the other
defendants filed similar motions thereafter. In March 2001, the court
dismissed certain of the plaintiffs' claims pursuant to the defendants'
several motions to dismiss. However, the court allowed the plaintiffs
to attempt to correct the deficiencies in their complaint with an
amended pleading with respect to all of the allegations except a claim
under the federal Medicare regulations, which was dismissed with
prejudice. The court also left undisturbed the plaintiffs' claims for
breach of contract.
In March 2001, the plaintiffs filed their amended complaint, which,
among other things, added four state or county medical associations as
additional plaintiffs. Two of those, the Denton County Medical Society
and the Texas Medical Association, purport to bring their actions
against us, as well as against several other defendant companies. The
Medical Association of Georgia and the California Medical Association
purport to bring their actions against various other defendant
companies. The associations seek injunctive relief only. The
defendants filed a motion to dismiss the amended complaint in April
2001.
In September 2002, the court granted the plaintiffs' request to file a
second amended complaint, adding additional plaintiffs, including the
Florida Medical Association, which purports to bring its action against
all defendants. In October 2002, the defendants moved to dismiss the
second amended complaint. The court has not yet ruled.
Also on September 26, 2002, the court certified a global class
consisting of all medical doctors who provided services to any person
insured by any defendant from August 4, 1990, to September 30, 2002.
The class includes two subclasses. A national subclass consists of
medical doctors who provided services to any person insured by a
defendant when the doctor has a claim against such defendant and is not
required to arbitrate that claim. A California subclass consists of
medical doctors who provided services to any person insured in
California by any defendant when the doctor was not bound to arbitrate
the claim.
On October 10, 2002, the defendants asked the court of Appeals for the
Eleventh Circuit to review the class certification decision. On
November 20, 2002, the Court of Appeals agreed to review the class
issue. The district court has ruled that discovery can proceed during
the pendency of the request to the Eleventh Circuit, and the Eleventh
Circuit rejected a request to halt discovery.
IDAHO: Admin Effort Commenced to Find Mentally Ill Children in Schools
----------------------------------------------------------------------
Mary Bostick, a coordinator with the Special Education Bureau in
Idaho's Department of Education, is engaged in an administrative effort
she launched, which aims to find, treat and teach mentally ill
children, the Associated Press Newswires reports.
The effort stems from a class action brought 20 years ago that
condemned the state for its failure to help mentally ill children. The
special education bureau's goals are part of a settlement requiring
Idaho to create an integrated system to care for those children.
The "Jeff D." lawsuit was filed against the state's leaders, the
Department of Health and Welfare and some other agencies by Howard
Belodoff, the attorney who represented the children and families
involved. The lawsuit sought to create services for the children in
their communiies so that they would not have to be institutionalized,
said Mr. Belodoff. However, such a program was never successfully
implemented.
Jana Jones, chief of the Bureau of Special Education, said that the
children with problems who get arrested have a chance for serious help
because the Department of Juvenile Corrections has a good program for
children with serious disorders.
"But that kind of success (having to get arrested first in order to get
into a good treatment program) is a failure in disguise," said Mr.
Belodoff. "These kids should not have to be arrested to get good
medical services."
However, Mary Bostick says, mentally ill children who function
moderately well, are hard to spot. The schools are doing a better job
at finding and channeling for help the ones with severe problems, she
said. The job of her new program is to set up a comprehensive system
that will begin with helping teachers recognize the disturbed children
who function moderately well and to immediately have available an
integrated comprehensive program which the child can enter and from
which all the different service providers can be reached according to
the needs of each child. Communication between the services is
important, said Ms. Bostick, so that they function together in working
out what each child needs as the treatment goes forward.
NETRO CORPORATION: Engages in Settlement Discussion for Securities Suit
-----------------------------------------------------------------------
Netro Corporation is engaged in mediation with plaintiffs in the
consolidated securities class action filed in the United States
District Court for the Southern District of New York against it and:
(1) Richard Moley,
(2) Gideon Ben-Efraim,
(3) Michael T. Everett,
(4) Dain Rauscher, Inc.,
(5) FleetBoston Robertson Stephens, Inc., and
(6) Merrill Lynch, Pierce, Fenner and Smith, Inc.
The complaint alleges claims against the company arising under Section
11 of the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and
against the Individual Defendants under Section 10(b), Rule 10b-5 and
Section 20(a) of the Exchange Act, and Section 15 of the 1993 Act. The
claims allege various misconduct arising from the company's August
1999 initial public offering and March 2000 follow-on offering
of its common stock, including, among other things, that the
disclosures made in connection with the offerings were incomplete or
misleading in various respects.
The allegations include, among other things, that the company and the
individual defendants failed to disclose that the underwriter
defendants:
(1) charged us excessive commissions and inflated transaction fees
in violation of the securities laws and regulations; and
(2) allowed certain investors to take part in the company's
initial public offering in exchange for promises that these
investors would purchase additional shares in the after-market
for the purpose of inflating and maintaining the market price
of the company's common stock.
The suit seeks to certify a class of shareholders who purchased the
company's common stock between August 18, 1999 and December 6, 2000,
and to recover monetary damages from defendants in an unspecified
amount, as well as plaintiff's attorneys' fees and expenses in
bringing the action.
The suit is similar to more than 1,000 lawsuits filed in the Southern
District of New York against more than 300 different issuers, certain
officers and directors of these issuers and more than 45 different
underwriters arising out of initial public offerings occurring
between December 1997 and December 2000. The suits have been
coordinated under the Honorable Shira A. Scheindlin for
all pre-trial purposes.
On September 7, 2001, Judge Scheindlin adjourned the time for all
defendants in the IPO Allocation Litigation, including the company and
the Individual Defendants, to answer, move or otherwise respond to
current and future complaints indefinitely pending further instruction
from the court.
On October 9, 2002, the claims against the Individual Defendants were
dismissed without prejudice on consent of the parties. In addition,
counsel for the plaintiffs, liaison counsel for the issuer defendants
and counsel for insurers of the issuer defendants have taken part in
continuing discussions mediated by a former federal district court
judge to explore a possible settlement of the claims against all of the
issuer defendants in the IPO Allocation Litigation, including the
Company.
The IPO Allocation Litigation in general, and the Netro Litigation in
particular, are in an early phase, and no date has yet been set by the
court for completion of pre-trial discovery or trial. The company
believes the claims asserted against it in the suit are without merit,
and intends to vigorously defend against those claims.
NEW JERSEY: Appeals Panel Rules Doctors Can Be Sued for Consumer Fraud
----------------------------------------------------------------------
A three-judge appellate panel unanimously overturned a trial judge's
decision that said the state's Consumer Fraud Act does not apply to
doctors, the Associated Press Newswires reports. The panel found that
the act does not exempt doctors or other professionals, even though
they work in highly regulated industries.
The class action focuses on claims by two patients who said that Dr.
Joseph Dello Russo, a noted Bergenfield eye surgeon, led them to
believe that he would perform their surgery and give them their follow-
up care. However, their aftercare was provided by Dr. William T.
Kellogg, a doctor whose license has been revoked by the New Jersey
State Board of Medical Examiners. Dr. Dello Russo denied the charges
and said Dr. Kellogg was working in his office as a technician not a
doctor. The patients accused Dr. Dello Russo of using misleading and
deceptive advertising under New Jersey's Consumer Fraud Act, which
allows successful plaintiffs to recover triple their actual damages and
legal fees.
The three-judge appellate panel, in an opinion written by Judge Howard
Kestin, ruled, "When professionals engage in common commercial activity
designed to attract the patronage of the public, they should be held to
the same standards of truth and completeness that govern the sales
activities of all other persons or entities."
OHIO: Predatory Lenders Possible Cause of High Akron Foreclosure Rates
----------------------------------------------------------------------
The high foreclosure rate is not amongst the mansions or the old
middle-income neighborhoods in Akron, Ohio but in the four
neighborhoods where many of the homes are valued between $30,000 and
$75,000. These are some of the findings of a local study of
foreclosures sponsored by the philanthropic Ford Foundation, which has
given out grants nationwide trying to find out whether neighborhoods
are endangered by predatory lending, the Akron Beacon Journal reports.
Although the local researchers in Akron have not have not reached
specific conclusions yet, they believe that 25 percent of the
foreclosed loans in Summit County could be traced to the four
neighborhoods of Akron noted above, and are the result of predatory
lending.
"We see foreclosures as the tip of the iceberg to predatory lending,"
said David H. Kaplan, a Kent State University professor, who along with
two other professors conducted the research in this area of the
country. Borrowers who get predatory loans "sometimes are being set up
to fail. "They are being set up for foreclosure," said Professor
Kaplan.
The research of Professor Kaplan and his two other team members
Professors Gail Sommers, also of Kent State, and Brian K. Sommers, of
Central Connecticut State University, will be presenting their
preliminary findings at a conference sponsored by mortgage giant
Fannie Mae and the Urban Affairs Association in Cleveland.
"Our charge is to try to see what predatory lending is taking place and
where it is concen-trated," Professor Kaplan said.
"Our hope obviously is that the study will lead to policy changes,"
said Professor Sommers. "This is sort of like the ammunition the
legislators can use" to regulate lending.
The top originator of foreclosed loans in Summit County was EquiCredit
Corp., a subprime subsidiary of Bank of America that has been sold off
and disbanded - 131 of its loans entred foreclosure. In April of last
year, EquiCredit agreed to pay $2.5 million to settle a class action
brought by Pennsylvania homeowners who got high-cost loans that
resulted in hundreds of foreclosures.
Usually, the class actions are brought by advocacy groups on behalf of
the homeowners. Material supplied by the research being done by the
Ford Foundation researchers can be useful to such groups after it
becomes public. One of the problems is to get the homeowner in trouble
to call an advocacy group.
PHOENIX HOME: Plaintiffs Appeal Dismissal of NY Policyholders' Lawsuit
----------------------------------------------------------------------
Plaintiffs appealed the Supreme Court for the State of New York's
dismissal of the suit filed against Phoenix Home Life Mutual Insurance
Company, seeking to its reorganization and the adequacy of the
information provided to policyholders regarding the plan of
reorganization.
The plaintiff seeks to maintain a class action on behalf of a putative
class consisting of the eligible policyholders of Phoenix Life
as of December 18, 2000, the date the plan of reorganization was
adopted. The plaintiff also seeks compensatory damages for losses
allegedly sustained by the class as a result of the demutualization,
punitive damages and other relief. The defendants named in the lawsuit
include Phoenix Life and PNX and their directors, as well as
Morgan Stanley & Co. Incorporated, financial advisor to Phoenix Life in
connection with the plan of reorganization.
The company believes the suit is without merit and will rigorously
defend this suit.
PHYSICIAN CORPORATION: FL to Rule on Certification, Set Trial for Suit
----------------------------------------------------------------------
The United States District Court for the Southern District of Florida
has yet to set a trial date for the consolidated securities class
action filed by former stockholders of Physician Corporation of America
(PCA) against the company and certain of its former directors and
officers.
The consolidated complaint alleges that the company and the individual
defendants knowingly or recklessly made false and misleading statements
in press releases and public filings with respect to the financial and
regulatory difficulties of PCA's workers' compensation business. In
May 1999, plaintiffs moved for certification of the purported class,
and in August 2000, the defendants moved for summary judgment. In
January 2001, defendants were granted leave to file a third-party
complaint for declaratory judgment on insurance coverage. The
defendants seek a determination that the defense costs and liability,
if any, resulting from the class action defense are covered by an
insurance policy issued by one insurer and, in the alternative,
declaring that there is coverage under policies issued by two other
insurers.
On April 25, 2002, the court dismissed the third-party complaint
without prejudice finding that it could be re-filed in the future if
the insurance claims are not otherwise resolved. On July 24, 2002, the
court denied the defendants' motion for summary judgment and set the
case on the court's trial calendar for December 2, 2002. The court
subsequently postponed the trial. The Court is expected to set a date
which is 90 days after it rules on the plaintiff's motion for class
certification.
TEXAS: Criminal Board to Set Limits on Correspondence Between Inmates
---------------------------------------------------------------------
Correspondence between inmates will be restricted under a rule change
approved recently by the Texas Board of Criminal Justice, the
Associated Press Newswires reports. Beginning May 1, says the rule
change, offenders will be permitted to write each other only if:
(1) they are immediate family members;
(2) have a child together;
(3) are co-parties in an active legal matter; or
(4) if one inmate is providing a witness affidavit in an active
case
The limits were instituted to cut down on the workload in prison mail
rooms, where employee spend significant amounts of time vetting letters
full of gang-related dialogue, said Carl Reynolds, general counsel for
the Texas Department of Criminal Justice.
The change is similar to that put in force in other states, cutting
back on liberal correspondence rule dating from class action litigation
in 1971, Mr. Reynolds said. However, he added that he expects that the
state will be sued over the new rules.
The Board also voted to have the staff throw out certain publications
sent to inmates, instead of spending time to clip forbidden material
from them. Publications that would be tossed in the trash, under the
new rules, include certain pornography, racist literature and materials
that advocate or explain how to commit violent acts, said Sharon Felfe,
the agency's director of preventive law.
TEXAS: Lawsuit Limitation Bill HB4 Passes in House by Party-Line Votes
----------------------------------------------------------------------
The debate was bitter in the Texas House as Democrats raised a rigorous
opposition every step of the way as the lawsuit limitation bill (HB4)
moved through the various stages of debate, concluding with a vote of
99 to 45, the Associated Press Newswires reports. Almost 200
amendments were proposed, and the Legislators' debate was marred by
charges of scandal and expressions of partisan politics. The bill's
provisions, among other things:
(1) establish new rules on class action filings;
(2) set limits on which parties must pay for damages;
(3) grant new protections for retailers and manufacturers; and
(4) would allow a judge to refer some cases to applicable state
agencies before going to trial.
The set piece of the bill relates to medical malpractice lawsuits. The
bill places a cap of $250,000 on non-economic damage awards such as
pain and suffering. Democrats sought exemptions in the cap, but
Republicans voted against the changes, almost without any deviation on
party lines. One amendment by Democrat Rep. Craig Eiland would have
exempted children, elderly and mentally handicapped citizens who either
cannot work or who earn very little.
"I am trying to make sure that our most vulnerable populations have a
chance to be adequately compensated." Joseph Nixon, author of the
bill, said, "We have got to hold fast on what we are trying to do on a
public policy decision." The amendment was tabled 88-55, largely along
party lines. Other amendments aimed at establishing guidelines that
would give relief to mothers staying at home with children and people
who do not work were similarly dismissed.
Democrats used several legislative maneuvers, but Republican House
Speaker, an unswerving supporter of the bill, was quick to overrule
their objections at every turn.
The bill still requires a proposed constitutional amendment, which
would require a two-thirds vote of the House. It takes 100 of 149
House votes to put such an issue on the election ballot. Although the
constitutional amendment was on the House calendar for last Thursday,
no action was taken.
TOBACCO LITIGATION: Philip Morris Might Default on Settlement Payments
----------------------------------------------------------------------
Philip Morris, the nation's largest tobacco company, may not be able to
meet the tobacco settlement payments to 46 state governments next month
if it is required to post a $12 billion appeal bond in the court case
it lost on March 21, in Illinois, when the judge rendered a
$10 billion award, according to a report by Associated Press Newswires.
The billion-dollar award was made in the class action on behalf of one
million Illinois smokers, who alleged that Philip Morris misled them
into believing its "light" cigarettes are less harmful than regular
cigarettes. The judge set the appeal bond at $12 billion. If the
company cannot post the bond by April 21, it would be prevented from
appealing, and the plaintiffs could thereupon collect on the judgment.
Philip Morris has said that if it makes payment of an appeal bond of
$12 billion, that might mean it will default on the Master Settlement
agreement with the 46 states.
Oklahoma's Attorney General Drew Edmonson said that Oklahoma is
supposed to get a $53.4 million payment in April, from the national
Tobacco Settlement Agreement. Philip Morris's share makes up 53
percent of the payment, or about $27 million.
"They cannot fail to make this payment without violating the Master
Settlement Agreement," Attorney General Edmonson said. "If that
payment is not made, . I am sure Oklahoma and 45 other states will file
a lawsuit."
The Attorney General said he hopes the Illinois appeal bond issue can
be resolved without a default in state tobacco payments.
TOBACCO LITIGATION: Plaintiff Quit Smoking by Seeking Professional Help
-----------------------------------------------------------------------
The lead plaintiff recently testified in a tobacco litigation in
Louisiana in which the plaintiffs are contending that the tobacco
companies conspired to manipulate nicotine levels in order to keep the
smokers hooked, Associated Press Newswires reports.
The plaintiffs' attorneys are therefore asking that the industry be
ordered to pay for quit-smoking programs and medical monitoring for the
smokers. To this end, the lead plaintiff testified that although she
had smoked for 48 years, she was able to quit with the help of medical
and mental health professionals.
Gloria Scott, 57, testified as a representative of about one million
current and former Louisiana smokers in the eighth week of trial
against the nation's biggest cigarette-makers. Defendants' attorneys
plan to ask Civil District Judge Richard Ganucheau to dismiss the case
after the plaintiffs rest, probably early next week. If he does not
dismiss the case, the companies likely will begin presenting their
evidence early next month.
Ms. Scott told the jury that she began smoking unfiltered cigarettes,
but moved later to filtered brands because she believed the tobacco
companies' claim on the cigarette packages that such products contained
less tar and nicotine than regular cigarettes.
She admitted that though she knew for more than 20 years that smoking
could cause health problems, including emphysema, she did not seek out
help in quitting before 2000. Before that year, said Ms. Scott, no
medical doctor had prescribed smoking cessation assistance.
"Every doctor just used to say 'quit smoking,' but no one said how.
The physicians I have now . can tell you what to do," she said.
UNITED STATES: Bush Admin Plans Overhaul of Overtime Wage Eligibility
---------------------------------------------------------------------
The Bush administration is proposing an overhaul of federal regulations
relating to overtime pay, the Austin American-Statesman reports. The
new regulations, amending the 1938 Fair Labor Standards Act, will
redefine which employees are exempt from mandatory time-and-a-half pay
after a 40 hour workweek.
The changes to the 1938 Act would add an estimated 1.3 million low-wage
workers to those automatically eligible for additional pay if they work
more than 40 hours a week, but also may remove hundreds of thousands of
higher-paid workers from eligibility. The changes do not require
congressional approval.
The revisions will receive a 90-day public review process. The new
regulations left intact existing overtime provisions for unionized
employees and blue-collar workers, such as laborers and truck drivers.
However, the regulations did raise the salary threshold for the first
time since 1975, ensuring automatic overtime pay for this category of
employees who earn less than $22,100 a year.
Some white-collar professionals will find that the redefined
regulations will affect their paychecks. Generally, workers will be
exempt from overtime in the new rules if they manage more than two
employees an have authority to hire and fire; or if they have an
advanced degree or similar training and work in a specialized field, or
work in the operations, finance and auditing areas of a company.
The Labor Department says those requirements would exempt about 644,000
professional employees earning between $22,100 and $65,000 who now get
overtime pay.
"It is an absolute disaster for white-collar workers who deserve
protection under these regulations," said Nick Clark, senior assistant
general counsel with the United Food and Commercial Workers Union. "It
is going to gut protections for many workers in the military, airlines,
energy, financial securities and health care industries."
To determine whether an administrative employee is exempt from
overtime, the Labor Department's proposal drops the longtime test of
whether the worker customarily and regularly exercises discretion and
independent judgment. Instead, the test becomes whether the worker
holds a "position of responsibility," defined as performing work of
substantial importance or performing work requiring a high level of
skill or training.
WIRELESS FACILITIES: NY Court Dismisses in Part Consolidated Fraud Suit
-----------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed in part the consolidated securities class action filed
against Wireless Facilities, Inc. and certain of its directors and
officers on behalf of persons and entities who acquired the company's
common stock at various times on or after November 4, 1999.
The respective complaints allege that the registration statement and
prospectus issued by the company in connection with the public offering
of its common stock contained untrue statements of material fact or
omissions of material fact in violation of the Securities Act of 1933
and the Securities Exchange Act of 1934. Specifically, these claims
allege that the company failed to disclose that the offering's
underwriters had:
(1) solicited and received additional and excessive compensation
and benefits from their customers beyond what was listed in
the registration statement and prospectus; and
(2) entered into tie-in or other arrangements with certain of
their customers which were allegedly designed to maintain,
distort and/or inflate the market price of the company's
common stock in the aftermarket.
The complaints seek unspecified monetary damages and other relief.
This case is among the over 300 class actions pending in the United
States District Court for the Southern District of New York that have
come to be known as the IPO laddering cases.
In October 2002, the court signed Stipulations and Orders of Dismissal,
which dismissed the company's named individual officers and directors
from the action, without prejudice, but the company remains a
defendant. On November 1, 2002, the court heard argument on motions to
dismiss all of the IPO laddering cases, and issued its decision on the
joint motion to dismiss on February 19, 2003.
The decision:
(i) allowed the plaintiffs to pursue their claim against the
company based on its alleged issuance of a registration
statement and prospectus that failed to disclose a fraudulent
scheme by the offering's underwriters; and
(ii) dismissed, with leave to amend, the plaintiffs' claim against
the company based on its alleged knowledge and intent to
defraud investors so as to benefit from an inflated price for
the company's common stock in the aftermarket.
The company believes this litigation is without merit and intends to
vigorously defend itself against it. It is impossible at this time to
assess whether or not the outcome of these proceedings will or will not
have a materially adverse effect on the Company. Further, any possible
range of loss cannot be estimated at this time.
WIT CAPITAL: IL Court to Hear Motions for Dismissal of Consumer Lawsuit
-----------------------------------------------------------------------
The Circuit Court of Cook County, Illinois is set to hear Wit Capital
Corporation's motion to dismiss the third amended class action filed by
two of the company's customers on behalf of investors who maintain
brokerage accounts with the company from January 1, 1999 to the
present, and asserted state statutory and common law causes of action.
In June 2000, the company filed a Notice of Removal in the United
Stares District Court, Northern District of Illinois, Eastern Division,
on the grounds that the Securities Litigation Uniform Standards Act of
1998 preempted the claims asserted. After significant motion practice
and two motions to remand, on September 20, 2001, the court granted
plaintiff's second motion to remand and denied the company's motion to
dismiss as moot. The case was transferred back to the Circuit Court of
Cook County in October 2001 and plaintiffs amended their complaint
twice. Plaintiffs' current complaint asserts state statutory and
common law causes of action.
In response to the company's motion to dismiss the Second Amended
Complaint for failure to state a claim, on August 5, 2002, the Court
entered an order striking certain allegations, dismissing plaintiffs'
cause of action for breach of fiduciary duty/unjust enrichment with
leave to seek amendment after discovery, and dismissing plaintiffs'
cause of action for negligence/intentional tort without prejudice with
leave to seek an amendment immediately. The company answered the
remaining counts of the second amended complaint on December 20, 2002.
On December 18, 2002, plaintiffs sought leave to file a third amended
complaint, repleading the cause of action for negligence/intentional
tort. The Court granted plaintiffs such leave, and on January 17,
2003, the company moved to dismiss the third amended complaint for
failure to state a claim.
The company's motion to dismiss the third amended complaint is
scheduled to be heard in March 2003. The company intends to continue
to defend the lawsuit vigorously and has filed a motion to dismiss the
complaint in state court. The company does not believe that this
lawsuit should have a material adverse effect on it.
New Securities Fraud Cases
ACCLAIM ENTERTAINMENT: Marc Henzel Commences Securities Suit in E.D. NY
-----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Eastern District of New
York, on behalf of purchasers of the securities of Acclaim
Entertainment, Inc. (Nasdaq: AKLM) between January 22, 2002 and
September 19, 2002 inclusive, and who suffered damages thereby.
The action, is pending against the Company, Rodney Cousens (Chief
Operating Officer) and Gerard Agoglia (Chief Financial Officer).
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between January 22, 2002 and September 19,
2002. The complaint alleges that during the class period, Acclaim
improperly capitalized software development costs and overstated
earnings by recording declining allowances for returns and price
concessions together with failing to write down receivables despite
deteriorating customer quality and increasingly delinquent accounts
receivable.
These materially false and misleading statements caused Acclaim's
shares to trade at artificially inflated levels and, as a result of
this inflation, Acclaim was able to complete a private placement
offering raising net proceeds of $21.5 million on April 11, 2002. On
September 19, 2002, just months after the offering was completed,
Acclaim revealed that its fiscal year 2002 first and second quarter
results and 2003 projections were false when issued. On this news, the
stock dropped below $1 per share, from a class period high of $5.85.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
ADC TELECOMMUNICATIONS: Wolf Haldenstein Launches Securities Suit in MN
-----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the District of
Minnesota, on behalf of all persons who purchased the common
stock of ADC Telecommunications, Inc. (Nasdaq: ADCT)
between November 28, 2000 and March 28, 2001, inclusive, against the
company and certain officers of the Company.
The suit alleges that ADC and certain of its officers violated federal
securities laws by making false and misleading statements and material
omissions regarding ADC's financial prospects. The suit further
alleges that during the class period, defendants represented numerous
times that ADC would maintain considerable growth and would be
unaffected by broadly known declines in capital spending from
communications service providers on the telecommunications
infrastructure.
On March 28, 2001, defendants disclosed that the company's fiscal 2001
earnings guidance, issued four weeks prior, would be reduced. ADC also
announced that approximately 4,000 jobs would be cut and facilities
closed as the company experienced canceled orders and decreasing
revenues resulting from the declines in equipment spending by
telecommunications service providers.
For more details, contact Fred Taylor Isquith, Gustavo Bruckner,
Michael Miske, George Peters and 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 ADC.
ADC TELECOMMUNICATIONS: Bernstein Liebhard Lodges Securities Suit in MN
-----------------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class action
on behalf of all persons who acquired securities of ADC
Telecommunications, Inc. (NASDAQ: ADCT) between November 2, 2000 to
March 28, 2001, inclusive. The case is pending in the United States
District Court for the District of Minnesota against the Company,
William Cabogan, and Robert W. Switz.
The complaint charges that Defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market during the class period, thereby artificially inflating the
price of AstroPower securities.
Specifically, the complaint alleges that throughout the class period,
ADC announced in a press release that the company would meet or exceed
published fiscal expectations, and that shifts in Internet carrier
spending would continue to benefit the Company, especially in broadband
access and optical components, despite the expected overall decrease in
telecom spending. These bullish predictions were reiterated throughout
the class period.
However, the false and misleading nature of the Defendants statements
was revealed at the end of the class period when the company abandoned
its financial outlook for fiscal 2001. On March 28, 2001, ADC
announced that the company would make extensive cutbacks in costs,
including layoffs and the closure of several facilities. The company
also lowered fiscal guidance for the remainder of fiscal 2001.
Investor reaction to this shocking news was swift. The value of the
company's common stock dropped by 22% from a close of $10.56 per share
on March 27, 2001, to a closing price of $8.22 per share on March 28,
2001, on unusually high trading volume of 24 million shares.
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 by E-mail: ADCT@bernlieb.com or
visit the firm's Website: http://www.bernlieb.com.
AEGON NV: Marc Henzel Commences Securities Fraud Suit in S.D. New York
----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated 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 Aegon N.V. (NYSE:
AEG) between August 9, 2001 to July 22, 2002, inclusive. The action is
pending against the company and:
(1) Don Shepard,
(2) Kees Storm and
(3) Jos B.M. Streppel
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between August 9, 2001 to July 22, 2002.
Aegon, through its member companies, is an international insurer.
During the years preceding the class period, and during the class
period, as stock markets suffered substantial declines, increasing
numbers of investors gravitated from variable products to fixed
products. Aegon distinguished itself from its competitors with the
claim that its purportedly broad product mix better enabled it to take
advantage of this market shift while it simultaneously assured
investors that it had sufficient reserves to fund the sharply
increasing guaranteed payout obligations required by its fixed
products.
The complaint further alleges that Aegon also assured investors that it
was less vulnerable to the vicissitudes of the equity and credit
markets than competitors because the company matched "high quality
investment assets . in an optimal way to the corresponding insurance
liability, taking into account currency, yield and maturity
characteristics." The company claimed that, for the foregoing reasons,
"(c)onsistency and reliability in earnings forecasting is a particular
source of pride" and that, while not immune to equity and real estate
market shifts, the company was not subject to sharp downward variations
in annual net income.
Accordingly, the company reduced its earnings guidance for 2002 but at
all relevant times maintained its forecast that 2002 net income would
at least equal 2001 net income.
The class period ends on July 22, 2002. The complaint alleges that, on
that date, the company shocked the market, announcing that 2002 net
income would not equal 2001 net income but, on the contrary, would be
30% to 35% lower than 2001 net income. On this news, Aegon shares
declined from a closing price of $16.99 on Friday, July 19, 2002 to a
closing price of $13.25 on Monday, July 22, 2002, when trading resumed.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
AFC ENTERPRISES: Abbey Gardy Commences Securities Fraud Suit in N.D. GA
-----------------------------------------------------------------------
Abbey Gardy, LLP initiated a securities class action in the United
States District Court for the Northern District of Georgia on behalf of
all persons or entities who purchased securities of AFC Enterprises,
Inc. (AFCE) between March 2, 2001 and March 24, 2003, inclusive.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market during the class period, thereby artificially inflating the
price of AFC securities. The suit names as the Company, Frank J.
Belati (CEO) and Gerald J. Wilkins (CFO).
Specifically, the complaint that defendants' statements were materially
false and misleading because the press releases and SEC filings issued
during the class period failed to reveal that AFC inflated its
operating results by:
(1) improperly accounting for the sale of corporate-owned stores
to franchisees;
(2) improperly accounting for the value of certain long-lived
assets;
(3) understating advertising costs; and
(4) improperly accounting for inventory at the company's Seattle
Coffee Company division.
As a result, AFC's financial statements published during the class
period were not prepared in accordance with Generally Accepted
Accounting Principles and, therefore, it was not true that the
company's financial statements were a "fair presentation" of the
company's financial position. Indeed, by announcing its intention to
restate its financial statements, AFC has admitted that its prior
financial statements were materially false and misleading when issued.
On March 24, 2003, after the market closed, AFC shocked the market by
announcing that it would be restating its financial statements for
fiscal year 2001 and the first three quarters of 2002. In response to
this negative announcement the price of AFC common stock dropped by
over 20% on extremely heavy trading volume.
For more details, contact Mark Gardy by Phone: (800) 889-3701 or (212)
889-3700 or by E-mail: MGardy@abbeygardy.com or visit the firm's
Website: http://www.abbeygardy.com
AFC ENTERPRISES: Marc Henzel Commences Securities Fraud Suit in N.D. GA
-----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Northern District of
Georgia on behalf of all purchasers of the common stock of AFC
Enterprises, Inc. (NasdaqNM: AFCE) from March 2, 2001 through March 24,
2003, inclusive.
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 issuing a series of material misrepresentations to the
market between March 2, 2001 and March 24, 2003, thereby artificially
inflating the price of AFC securities.
The complaint alleges that these statements were materially false and
misleading because they failed to disclose and misrepresented the
following adverse facts, among others:
(1) that the company was improperly accounting for the value of
certain long-lived assets, thereby artificially inflating its
operating results;
(2) that the company was improperly accounting for the sale of
corporate-owned stores to franchisees, thereby artificially
inflating its operating results;
(3) that the company was improperly accounting for cooperative
advertising costs, thereby understating its advertising
expenses and artificially inflating its operating results;
(4) that the company's Seattle Coffee Company was improperly
accounting for inventory, sales allowances and slotting fees;
and
(5) as a result of the foregoing, the company's financial
statements published during the class period were not prepared
in accordance with Generally Accepted Accounting Principles
and, therefore, it was not true that the company's financial
statements were a ``fair presentation'' of the company's
financial position.
Indeed, by announcing its intention to restate its financial
statements, AFC has admitted that its prior financial statements were
materially false and misleading when issued.
On March 24, 2003, after the market closed, AFC shocked the market by
announcing that it would be restating its financial statements for
fiscal year 2001 and the first three quarters of 2002. The company
also reported that it was examining whether or not its financial
statements for fiscal year 2000 should be restated. In response to
this negative announcement the price of AFC common stock dropped
precipitously, falling to as low as $12.30 per share, on extremely
heavy trading volume
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
BLACK BOX: Marc Henzel Commences Securities Fraud Lawsuit in W.D. PA
--------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Western District of
Pennsylvania, on behalf of purchasers of Black Box Corporation (Nasdaq:
BBOX) publicly traded securities during the period between October 15,
2002 and March 11, 2003, inclusive.
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 issuing a series of material misrepresentations to the
market between October 15, 2002 and March 11, 2003, thereby
artificially inflating the price of Black Box securities.
Throughout the class period, as alleged in the Complaint, defendants
failed to disclose and misrepresented the following material adverse
facts:
(1) that the company's European operations were not performing
well and would have to be scaled down significantly and
staffing levels reduced accordingly;
(2) that the company was improperly delaying the write down of a
material amount of uncollectible receivables, thereby
overstating its financial results; and
(3) that the company was experiencing declining demand for its
products and services and was not performing according to its
internal plans.
The class period ends on March 11, 2003. On that date, Black Box
shocked the market when it announced that it expects earnings for the
fourth quarter, the period ending March 31, 2003, to be between 53
cents and 54 cents, prior to one-time charges -- as compared to
analysts earnings estimates of 74 cents per share. The company further
reported that it would be recording a $9 to $10 million one-time pre-
tax charge, or 29 cents to 32 cents per share.
In response to this announcement, the price of Black Box common stock
dropped from $39.14 per share to $26.78 per share, a decline of 31%, on
extremely heavy volume. During the class period, Black Box insiders
sold their personally-held shares of Black Box common stock generating
proceeds of more than $5 million.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
COLLINS & AIKMAN: Marc Henzel Launches Securities Fraud Suit in E.D. MI
-----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Eastern District of
Michigan, on behalf of purchasers of the securities of Collins & Aikman
Corporation (NYSE: CKC) between August 7, 2001 and August 2, 2002,
inclusive, and who suffered damages thereby. The action, is pending
against the Company, Heartland Industrial Partners L.P. and ten senior
officers and/or directors of CKC.
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between August 7, 2001 and August 2, 2002.
The complaint alleges that Heartland was at all relevant times a
private equity firm that presented itself as being expert in leveraged
buyouts of industrial manufacturers and that, in February 2001,
Heartland acquired a controlling interest in CKC. CKC was at all
relevant times a manufacturer of automotive interior components.
The complaint further alleges that Heartland and CKC acquired Textron
Automotive Company's TAC-Trim division and that, throughout the class
period, Heartland and CKC repeatedly stated that the TAC-Trim
acquisition would be accretive to earnings and that, in addition to
doubling CKC's annual revenue, the TAC-Trim acquisition would increase
operating income by reducing costs through synergies and economies of
scale.
The truth was revealed on August 5, 2002, when the company reported a
net loss of $20.3 million, or $0.29 per diluted share, compared with
net income of $9.2 million, or $0.11 per diluted share a year earlier,
and announced that it expected 2002 earnings to be $0.20 to $0.26 per
share, well below the consensus estimate of $0.74 per share. On this
news, the investing public dumped its CKC stock, pushing the price down
49% to close at $2.81 on relatively high trading volume.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave.,
Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735
by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's
Website: http://members.aol.com/mhenzel182
COSI INC.: Bernstein Liebhard Launches Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class action
on behalf of all persons who acquired the common stock of Cosi, Inc.
(NASDAQ: COSI) traceable to the Initial Public Offering (IPO) of Cosi
common stock, which was completed by Cosi on or about November 22, 2002
through February 3, 2003. The case is pending in the United States
District Court for the Southern District of New York, against the
company and:
(1) Andrew M. Stenzler,
(2) Jonathan M. Wainwright, Jr.,
(3) Kenneth S. Betuker, and
(4) William Blair & Company, LLC
The complaint charges that Defendants violated Sections 11, 12, and 15
of the Securities Act of 1933 by issuing a series of material
misrepresentations in connection with the IPO Registration Statement
and Prospectus. Specifically the complaint alleges that the Offering
Materials were false and misleading and failed to disclose:
(i) that the funds raised by the IPO would be insufficient to
implement the company's expansion plan, contrary to the
representations repeatedly made in the company's Offering
Materials;
(ii) that at the time of the IPO, Defendants should have known that
the costs of expansion would be greater than the cash
available to the company (which included working capital and
proceeds from the IPO), making it highly improbable that the
company would be able to successfully continue to open
numerous new stores at such a rapid pace; and
(iii) that a reduction in the price of the IPO would result in the
company being forced to abandon its growth strategy.
As a result of the materially false and misleading Offering Materials,
the company sold 5.55 million shares at inflated prices, and netted
proceeds of $36.2 million.
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:
COSI@bernlieb.com.
ELECTRO SCIENTIFIC: Levy & Levy Commence Securities Fraud Lawsuit in OR
-----------------------------------------------------------------------
Levy & Levy PC initiated a securities class action in the United States
District Court for the District of Oregon on behalf of all purchasers
of the common stock of Electro Scientific Industries, Inc. (ESIO) from
September 17, 2002, through March 30, 2003, inclusive.
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 issuing a series of statements that were materially
false and misleading because they failed to disclose and misrepresented
the following adverse facts, among others:
(1) that the company had reported artificially inflated financial
results for the quarters ended August 31, 2002 and November
30, 2002;
(2) that the company was improperly accounting for sales, thereby
overstating its sales figures and, in addition thereto, was
understating the cost of sales, in violation of Generally
Accepted Accounting Principles (GAAP) and its own revenue
recognition policies;
(3) that the company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the company; and
(4) as a result of the foregoing, it was not true that the
company's financial statements published during the class
period contained "all adjustments . necessary for a fair
presentation" of the company's financial position.
On March 20, 2003, after the close of the market, Electro Scientific
issued a press release announcing that it would be restating its
financial statements for the first and second fiscal quarters. In
response to this announcement, the price of Electro Scientific common
stock dropped precipitously falling from $15.17 per share to $12.51 per
share.
For more details, contact Stephen G. Levy by Mail: One Stamford Plaza,
263 Tresser Blvd., 9th Floor, Stamford, CT 06901 by Phone: 203-564-1920
by E-mail: LLNYCT@aol.com or visit the firm's Website:
http://www.levylawfirm.com
GEORGESON SHAREHOLDER: Stull Stull Commences Securities Suit in S.D. NY
-----------------------------------------------------------------------
Stull Stull & Brody initiated a securities class action in the United
States District Court for the Southern District of New York, asserting
claims for violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b-5, against Georgeson Shareholders,
Inc., its wholly-owned subsidiaries, Georgeson Shareholder
Communications, Inc. and Georgeson Shareholder Securities Corporation,
and AT&T Corp. (AT&T) on behalf of all securityholders who, during the
period from December 2000 through the present, exchanged MediaOne Corp.
shares for shares of AT&T pursuant to the June 2000 merger between AT&T
and MediaOne, using Georgeson as the exchange agent.
The complaint alleges that defendant AT&T authorized defendant
Georgeson to engage in a "post-merger clean-up," pursuant to which
Georgeson disseminated notices urging shareholders who had not already
done so, to promptly exchange their MediaOne shares for AT&T shares.
Plaintiff further alleges that Georgeson's notices misled shareholders
into believing that they were required to exchange their shares through
Georgeson, or else to forfeit all value of the shares, and further
allege that Georgeson charged an exorbitant "processing fee" for this
service, amounting to twelve percent (12%) of the value of each
shareholder's stock. In fact, however, shareholders could have
exchanged their shares directly through the transfer agent or other
brokers at little or no cost.
For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New
York NY 10017 by Phone: 1-800-337-4983 by Fax: 212-490-2022 by E-mail:
SSBNY@aol.com or visit the firm's Website: http://www.ssbny.com.
KING PHARMACEUTICALS: Shapiro Haber Launches Securities Suit in E.D. TN
-----------------------------------------------------------------------
Shapiro Haber & Urmy LLP initiated a securities class action against
King Pharmaceuticals, Inc. (NYSE: KG) and certain of its officers and
directors on behalf of persons who purchased King common stock from
April 26, 1999 through March 10, 2003, inclusive. The action was filed
in the United States District Court for the Eastern District of
Tennessee, Northeastern Division.
The complaint alleges that throughout the class period, defendants made
materially false and misleading statements concerning King's revenues
and earnings in filings with the SEC and in related press releases and
conference calls with investors. Specifically, throughout the class
period, King billed Medicaid for prescription pharmaceuticals in
amounts in excess of the Medicaid reimbursement to which King was
entitled and reported those billings as revenues. In doing so, King
overstated its revenues and earnings.
In addition, King omitted to disclose in its SEC filings its accounting
policy for Medicaid transactions and the significance of such
transactions to its results of operations.
On March 11, 2003, King announced that it had learned that the SEC had
issued a formal order of investigation pursuant to which it had issued
a subpoena for documents from King and King's auditor
PricewaterhouseCoopers. The subpoenaed documents related to sales of
King's products to VitaRx and Prison Health Services.
Following the disclosure, the price per share of King common stock fell
$3.73 or approximately 23% to close on March 11, 2003 at $12.17 on
volume of 19.5 million shares.
For more details, contact Thomas G. Shapiro, Ted Hess-Mahan, or Liz
Hutton by Mail: 75 State Street, Boston, MA 02109 by Phone: (800) 287-
8119 by Fax: (617) 439-0134 by E-mail: cases@shulaw.com or visit the
firm's Website: http://www.shulaw.com.
KING PHARMACEUTICALS: Berger & Montague Launches Securities Suit in TN
----------------------------------------------------------------------
The law firm of Berger & Montague, PC initiated a securities class
action on behalf of purchasers of the securities of King
Pharmaceuticals, Inc. (KG) between April 26, 1999 through March 10,
2003, who have been damaged thereby. This action was filed in the
United States District Court for the Eastern District of Tennessee,
against the company and:
(1) John M. Gregory,
(2) Jefferson J. Gregory,
(3) Joseph R. Gregory,
(4) Kyle P. Macione and
(5) James P. Lattanzi
The complaint charges the company and certain of its current and former
officers and directors with violations of the Securities Exchange Act
of 1934. King Pharmaceuticals is a vertically integrated
pharmaceutical company that develops, manufacturers, markets and sells
primarily branded prescription pharmaceutical products.
The complaint alleges that during the class period, defendants caused
King Pharmaceuticals' shares to trade at artificially inflated levels
through the issuance of false and misleading financial statements which
enabled the company to complete two secondary stock offerings, raising
more than $900 million in proceeds. The Registration Statements and
Prospectuses issued pursuant to these offerings contained the company's
false financial statements.
Ultimately, on March 11, 2003, the company disclosed an SEC
investigation into the company's sales of products to VitaRx and Prison
Health Services and regarding its pricing and rebate practices. On
this news the company's stock price declined to as low as $11.60 before
closing at $12.17, on volume of $19.5 million shares, a decline of 73%
from the class period high of $46.05.
For more details, contact Todd S. Collins, Carole Broderick, Sandra G.
Smith 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
SKECHERS USA: Cauley Geller Commences Securities Fraud Suit in C.D. CA
----------------------------------------------------------------------
Cauley Geller Bowman Coates & Rudman, LLP initiated a securities class
action in the United States District Court for the Central District of
California, on behalf of purchasers of Skechers USA, Inc. (SKX) common
stock during the period between April 3, 2002 and December 9, 2002,
inclusive.
The complaint charges that beginning in 2002, Skechers began assuming
the role of distributor of its products in several international
markets such as Spain, Italy, Portugal, the Benelux region, and
Austria. Once unencumbered by a third party distributor, Skechers was
able to increase their profit margin on sales without moving any
additional inventory.
Yet, this benefit was short-lived. While temporarily enjoying
increased profits by reaping greater margins on sales, Skechers'
overall merchandise sales ultimately began to slow and Skechers was
forced to significantly reduce earnings accordingly. The market,
unprepared for the temporary effect this role of distributor would have
on earnings, was stunned once the Company, having recorded record
revenue in the first and second quarter of 2002, began revising
earnings and ultimately recorded a loss.
Even more alarming, while Skechers stock was soaring as a result of the
market's favorable reaction to its increased profits, the individual
defendants, knowing the truth about the company's long-term outlook,
sold off considerable personal holdings in the company and reaped more
than $42 million profit from stock sales during the class period.
For more details, contact Samuel H. Rudman, David A. Rosenfeld, Jackie
Addison, Heather Gann or Sue Null 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
SOLECTRON CORPORATION: Cohen Milstein Lodges Securities Suit in N.D. CA
-----------------------------------------------------------------------
Cohen, Milstein, Hausfeld & Toll, PLLC, initiated a securities class
action against Solectron Corporation and certain of its officers and
directors (NYSE:SLR) in the United States District Court for the
Northern District of California on behalf of all persons who purchased
or otherwise acquired the securities of Solectron between September 17,
2001, and September 26, 2002, inclusive.
The complaint alleges that defendants issued numerous statements
reporting artificially inflated financial results. The complaint
further alleges that these statements were materially false and
misleading because they failed to disclose and/or misrepresented
several adverse facts, such as that the company possessed tens of
millions of dollars of obsolete and unsaleable inventory in its
Technology Solutions division which would need to be written down.
Solectron's reported financial results were thereby artificially
inflated at all times during the class period. As a result of the
company's failure to writedown its inventory in a timely manner, the
financial statements published by Solectron during the class period
were not prepared in accordance with Generally Accepted Accounting
Principles and were materially false and misleading. If the company
had properly accounted for its inventory, it would have missed its
guidance severely.
On September 26, 2002, following the close of the market, Solectron
issued a press release announcing its financial results for the fourth
quarter of 2002 and fiscal year 2002. The company further reported a
booking of a pre-tax charge of $97 million to reserve for inventory
revaluation and write-off. Solectron ascribed most of the charge to
"inventory risk assumed by Solectron's product-oriented Technology
Solutions business unit." Shares of Solectron common stock dropped
from their previous close, following that announcement, as well as
other disclosures.
For more details, contact Steven J. Toll or Angela Wallis 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
awallis@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
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 * * *