/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/030506.mbx C L A S S A C T I O N R E P O R T E R Tuesday, May 6, 2003, Vol. 5, No. 88 Headlines ALLOY INC.: NY Court Dismisses Securities Fraud Lawsuit in Part ALLOY INC.: Investors Lodge Securities Fraud Lawsuits in S.D. NY BOUCHARD TRANSPORTATION: Fishermen May Avoid Oil Spill's Disaster CHEVRON TEXACO: Ecuadoreans Commence Lawsuit Over Toxic Dumping COREL CORPORATION: Faces Securities Fraud Suit in NY State Court CORNING INC.: Asks NY Court To Dismiss Securities Fraud Lawsuit CORNING INC.: NY Court Hears Motion To File Amended Stock Lawsuit CREDIT CARDS: Retail Association Hails Antitrust Suit Settlement INTRAWARE INC.: NY Court Dismisses Securities Fraud Suit in Part INTRAWARE INC.: Faces Suit for Securities Violations in FL Court KEYSPAN CORPORATION: To Ask NY Court To Dismiss Securities Suit MH MEYERSON: FL Appeals Court Upholds Class Certification Denial MH MEYERSON: Asks NJ Court To Dismiss Securities Fraud Lawsuit MH MEYERSON: Appeals Court Upholds Dismissal of Stock Fraud Suit OMEGA PROTEIN: Investors Sue For Breach of Fiduciary Duty in NV OPSWARE INC.: Enters Agreement To Settle Securities Fraud Suits OPTIO SOFTWARE: Enters Settlement Discussions in Stock Fraud Suit OPTOMEDIC MEDICAL: Asks NJ Court To Dismiss Securities Fraud Suit RAYTHEON CO.: Asks MA Court To Dismiss Amended Stock Fraud Suit SEACHANGE INTERNATIONAL: MA Court Consolidated Stock Fraud Suits TACO BELL: Second Damages Trial in Overtime Suit Set July 2, 2003 TANNING TECHNOLOGY: Investors Sue To Oppose Tiger Holding Merger TIVO INC.: NY Court Partially Dismisses Securities Fraud Lawsuit TUT SYSTEMS: Asks CA Court To Dismiss Securities Fraud Lawsuit New Securities Fraud Cases AFC ENTERPRISES: Wolf Haldenstein Launches Securities Suit in GA CORE LABORATORIES: Stull Stull Commences Securities Fraud Suit REGENERON PHARMACEUTICAL: Milberg Weiss Launches Securities Suit SKECHERS USA: Bernstein Liebhard Commences Securities Suit in CA ********* ALLOY INC.: NY Court Dismisses Securities Fraud Lawsuit in Part --------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed in part the consolidated securities class action filed against Alloy, Inc. and: (1) James K. Johnson, Jr., (2) Matthew C. Diamond, (3) BancBoston Robertson Stephens, (4) Volpe Brown Whelan and Company, (5) Dain Rauscher Wessel and (6) Ladenburg Thalmann & Co., Inc. The complaint purportedly was filed on behalf of persons purchasing the Company's common stock between May 14, 1999 and December 6, 2000 and alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The suit asserts violations of Section 10(b) of the `34 Act and mirrors allegations asserted against scores of other issuers sued by plaintiffs` counsel. Pursuant to an omnibus agreement negotiated with representatives of the plaintiffs` counsel, Mr. Diamond and Mr. Johnson have been dismissed from the litigation without prejudice. In accordance with the court`s case management instructions, the Company joined in a global motion to dismiss the amended complaint which was filed by the issuers` liaison counsel. By opinion and order dated February 19, 2003, the court denied in part and granted in part the global motion to dismiss. With respect to the Company, the court dismissed the Section 10(b) claim and allowed the plaintiffs to proceed on the Section 11 claim. Accordingly, the remaining claim against the Company will focus solely on whether the registration statement filed in connection with the Company's initial public offering contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Although the Company has not retained a damages expert at this time, the dismissal of the Section 10(b) claim likely will reduce the potential damages that the plaintiffs can claim. Management believes that the remaining allegations against the Company are without merit. In particular, the Company plans to challenge the adequacy of the sole representative class plaintiff. The Company is also participating in court-ordered mediation with the other issuer defendants, the issuers` insurers and plaintiffs to explore whether a global resolution of the claims against the issuers can be reached. Although the parties have discussed a settlement framework whereby the issuers` insurers would be responsible for any monetary portion of any resolution, no definitive agreement has been reached. Settlement discussions are ongoing. At this point, however, the Company cannot predict whether these discussions will ripen into a definitive settlement. ALLOY INC.: Investors Lodge Securities Fraud Lawsuits in S.D. NY ---------------------------------------------------------------- Alloy, Inc. faces several securities class actions filed in the United States District Court for the Southern District of New York on behalf of persons who purchased its common stock between August 1,2002 and January 3,2003. The suit also names as defendants: (1) James K. Johnson, Jr., (2) Matthew C. Diamond and (3) Samuel A. Gradess The suits allege violations of Section 10(b) and Section 20(a) of `34 Act and Rule10b-5 promulgated thereunder stemming from a series of allegedly false and misleading statements made by the Company to the market between August 1, 2002 and January 23, 2003. Management believes that the allegations against the Company and Mr. Diamond, Mr. Gradess and Mr. Johnson are without merit. The Company believes that there is no claim or litigation pending, the outcome of which, that could have a material adverse effect on its financial condition or operating results. BOUCHARD TRANSPORTATION: Fishermen May Avoid Oil Spill's Disaster ----------------------------------------------------------------- The chief shell biologist of Massachusetts said that the cold water in Buzzards Bay and other favorable seasonal conditions may help the shellfishermen and the shellfishing industry, generally, avoid catastrophe, after the recent oil spill in the Bay involving one of the barges owned by Bouchard Transportation Co., according to a report by Dow Jones International News. A class action was filed against Bouchard in federal court in Detroit, on behalf of one of the shellfishermen, claiming liability for lost profits. Michael Hickey of the state's Division of Marine Fisheries said individual shellfishermen will suffer short term during the closures, which could stretch weeks or months in severely polluted areas. "Over the long term, I do not believe this is any kind of huge disaster," Mr. Hickey added. Relatively speaking, Mr. Hickey said, the timing of the spill was fortunate because many shellfish are largely dormant in the cold spring water and less likely to draw in the oil. A summertime spill would have been far worse, Mr. Hickey added. He also said the thick No. 6 fuel spill is less volatile than others because its toxic properties evaporate more quickly. A final damage assessment cannot be done, however, said Mr. Hickey, until the shoreline is cleaned and floating oil removed, thereby assuring scientists that additional shellfish beds will not be contaminated. CHEVRON TEXACO: Ecuadoreans Commence Lawsuit Over Toxic Dumping --------------------------------------------------------------- In "a tiny courthouse in an isolated pocket of the Amazon," in the small town of Lago Agrio, lawyers representing more than 30,000 indigenous Ecuadoreans will file suit next Tuesday against oil company Chevron Texaco Corporation. They are accusing the California-based multinational of dumping large amounts of toxic wastewater and crude oil on the Ecuadoreans' lands over two decades, Dow Jones International News reports. This is the first time this lawsuit, which has been winding its way through the US court system, will get a hearing on Ecuadorean soil. The Second Circuit Court of Appeals ruled last August that Ecuador has primary jurisdiction in the "high-profile case," and that the ruling will be enforceable in the United States. Paintiffs allege that a unit of Texaco dumped around 18.5 billion gallons of wastewater into Ecuador's rainforest instead of disposing of it properly while drilling for oil between 1971 and 1992, leaving 350 open waste pits and sickness behind them. US-based attorneys who are heading up the legal strategy have placed $1 billion as a rough number of the amount of damage caused to water sources and local health by defendants' dumping activities. The same attorneys also estimate Texaco dumped at least 50 percent more oil into the rainforest than the tanker Exxon Valdez spilled off the Alaskan coast, which resulted in a $5 billion judgment after a US jury trial. "That was a contained spill that resulted from an accident. This is a deliberate dumping over a 20-year period to save money," said Steven Donziger, an attorney in New York City, who is helping to head the US attorneys legal strategy group. The lawsuit alleges that several indigenous tribes have been forced to abandon their ancestral lands because of the rivers allegedly polluted by Chevron Texaco. The lawsuit contends further that the Cofan tribe dwindled from a population of 15,000 people to less than 300 individuals as a result of environmental damage wreaked upon the land by the dumping of the toxic wastewater and crude oil. Additionally, claims the lawsuit, various strains of cancer have skyrocketed in communities where Chevron Texaco was active. The indigenous Indian groups are prepared to give the case much attention to ensure the case gets a fair hearing: "In Ecuador, we are prepare to be vigilant," said Miguel Lluco, national coordinator for the pro-Indian Pachakutik party that helped get President Lucio Gutierrez elected. In Ecuador, much has changed since 1964, when a military government asked Chevron Texaco to help it develop untapped oil reserves. Roughly, half of Ecuador's population of 12 million is indigenous; local tribes have gained political clout and managed, finally, in an uprising in 2000, to topple the president and place Mr. Gutierrez, the uprising's organizer, into the presidency, after elections. Several indigenous leaders now have Cabinet posts and access into Mr. Gutierrez's inner circle. Although the impact of Texaco's operations are visible in the highly evident environmental destruction on display in the communities, Yolanda Kakabdase, Ecuador's environment minister in the late 1990s, has said that a quick, final ruling on the competing claims of Chevron Texaco, and the local communities might prove elusive. It is still not clear whether the Ecuadorean court will agree to hear the case, after local authorities requested during the 1990s, that the claims be heard in a US court, the environmental minister said. Lawyers targeting Chevron Texaco in Ecuador think they have "a reasonable shot." Interestingly, the new government of indigenous Ecuadoreans is lobbying aggressively for new foreign investments to boost output in the oil sector. Therefore, an expensive ruling against a foreign multination probably would not help that effort. If the Ecuadorean justice system does find Chevron Texaco guilty of misconduct, however, the US company could very well dispute the ruling by throwing into question the local court's competence and impartiality, Ecuador being notorious for corruption. If Chevron Texaco disputes the ruling, the case might then shift back to a US court to review Ecuador's handling of the case before any enforcement would begin. Such a scene of allegations and counter-allegations could plunge the already long-standing case into "a new legal limbo." "We have a global economy, but we do not have a global justice system, and that is a problem," said Alejandro Garro, a professor of Latin American law at Columbia University in New York. Critobal Bonifaz, one of the lead attorneys, an Ecuadorean who has a practice in Massachusetts, said the local court in Lago Agrio, could request both parties to submit written evidence in as little as six days after the suit is filed. A final local ruling, once all appeals have been exhausted on both sides, could emerge within two years, said Mr. Bonifaz. Mr. Bonifaz and Mr. Donziger have marshaled the help of some "heavy- hitters," including Kohn, Swift & Graf, a prominent class action law firm based in Philadelphia and Alberto Wray, a former member of Ecuador's Supreme Court. Mr. Bonifaz said his team has had plenty of time to collect evidence. "We know every pit; we know the families who live next to every pit," he said. COREL CORPORATION: Faces Securities Fraud Suit in NY State Court ---------------------------------------------------------------- Corel Corporation (NASDAQ: CORL, TSX: COR) faces a class action complaint brought by a purported Corel shareholder. The suit arises from the non-disclosure and standstill agreement entered into by Corel and Vector Capital and claims unspecified compensatory damages and injunctive relief. The complaint also names Corel's directors and Vector Capital and alleges that the defendants breached their duties to take steps to ensure that the shareholders receive maximum value for their shares in a change of control transaction. Corel and its directors believe the case is without merit and will defend their position vigorously. The suit was filed with the Supreme Court of the State of New York, County of Nassau. CORNING INC.: Asks NY Court To Dismiss Securities Fraud Lawsuit --------------------------------------------------------------- Corning, Inc. asked the United States District Court for the Western District of New York to dismiss a consolidated securities suit filed against it and three of its officers and directors, alleging violations of the US securities laws in connection with the Company's November 2000 offering of 30 million shares of common stock and $2.7 billion zero coupon convertible debentures, due November 2015. The consolidated suit also alleges selective disclosures and non- disclosures that allegedly inflated the price of the Company's common stock in the period from September 2000 through July 9, 2001. The plaintiffs in these actions ask to represent classes of purchasers of the Company's stock in all or part of the period indicated. In February 2003, defendants filed a motion to dismiss the complaint for failure to allege the requisite elements of the claims with particularity. Plaintiffs responded with opposing papers on April 7, 2003. Defendants have until May 12, 2003, to serve reply papers, and argument is set for May 29, 2003. The court's scheduling order further provides that a motion to certify the action as a class action shall be filed after all motions to dismiss are resolved. CORNING INC.: NY Court Hears Motion To File Amended Stock Lawsuit ----------------------------------------------------------------- The United States District Court in the Western District of New York heard plaintiffs motion to file an amended complaint of a securities class action filed against Corning, Inc. on behalf of participants in the Company's Investment Plan for Salaried Employees, purportedly as a class action on behalf of participants in the Plan who purchased or held Corning stock in a Plan account. On December 12, 2002, the court entered judgment dismissing the claims as to each of the defendants. On December 19, 2002, plaintiffs filed a motion to open the judgment and for leave to file an amended complaint. This motion was argued on April 10, 2003. The court reserved decision on the motion for leave to amend. Management is prepared to defend these lawsuits vigorously and, recognizing that the outcome of litigation is uncertain, believes that these will be resolved, net of applicable insurance, without material impact on Corning's financial statements. CREDIT CARDS: Retail Association Hails Antitrust Suit Settlement ---------------------------------------------------------------- The National Retail Federation today welcomed the settlements reached with Visa and MasterCard in a federal antitrust lawsuit brought by US merchants against the two companies regarding their debit card practices. The settlements came in a lawsuit filed against Visa and MasterCard in 1996 by NRF and about 20 of the nation's largest retailers. The lawsuit alleged that the companies' "honor all cards" practice of requiring retailers who accept their credit cards to also accept their "Visa Check" and "Master Money" debit cards was a violation of federal anti-trust law. Merchants objected to the cards because they carry higher transaction fees than independent bank debit cards when a consumer signs for a transaction rather than using a PIN number. In addition to the named plaintiffs, the lawsuit was a class action representing anyone who had accepted Visa or MasterCard debit cards since October 1992, or approximately 5 million large and small retailers. "We have been through more than six years of long and arduous litigation with two companies that are among retailers' biggest business partners, companies with whom we want to be friends, not adversaries," NRF Senior Vice President and General Counsel Mallory Duncan said. "These settlements bring that lawsuit to a close and will allow retailers, Visa and MasterCard to return to working together in a truly competitive environment to serve the needs of the American consumer." "Consumers will still be able to use their debit cards and they will still be able to choose between punching in a PIN number or signing for their purchases," Mr. Duncan said. "The difference now is that retailers will pay much lower transaction fees. That's a victory for both retailers and consumers because high fees have driven up the price of every product sold. Visa and MasterCard have charged merchants more than $1 extra on every $100 spent whenever a debit card user signs for a purchase. This settlement will eliminate that extra charge and save American consumers billions of dollars." Under the current system, merchants pay a flat fee of between 10 and 15 cents when a customer uses a PIN on a debit card transaction, but are forced by Visa and MasterCard to pay a percentage of the sale -- usually between 1.5 and 2 percent -- when the customer signs a sales slip instead. Under settlements reached with Visa and MasterCard this week, the fees for signature transactions will be substantially reduced between now and January 1, 2004. In addition, merchants will no longer be required to accept Visa or MasterCard debit cards unless they choose to do so, although most are expected to continue to accept the cards at competitive prices negotiated between the two card companies and the retailers. The MasterCard settlement includes damages of approximately $1 billion while the Visa settlement includes damages of approximately $2 billion. The damages will be divided among the retailers represented in the suit, based on a percentage of the debit card transactions they have conducted. INTRAWARE INC.: NY Court Dismisses Securities Fraud Suit in Part ---------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed in part a consolidated securities class action filed against Intraware, Inc., three of its present and former officers and directors and several investment banking firms that served as its initial public offering underwriters. The amended suit was brought on behalf of all persons who purchased the Company's common stock from February 25, 1999 (the date of the Company's initial public offering) through December 6, 2000. The complaint alleges liability under Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, on the grounds that the registration statement for the offerings did not disclose that: (1) the underwriters had agreed to allow certain customers to purchase shares in the offerings in exchange for excess commissions paid to the underwriters; and (2) the underwriters had arranged for certain customers to purchase additional shares in the aftermarket at predetermined prices The amended complaint also alleges that the underwriters misused their securities analysts to manipulate the price of the Company's stock. No specific damages are claimed. Lawsuits containing similar allegations have been filed in the Southern District of New York challenging over 300 other initial public offerings and secondary offerings conducted in 1999 and 2000. All of these lawsuits have been consolidated for pretrial purposes before United States District Court Judge Shira Scheindlin of the Southern District of New York. On July 15, 2002, an omnibus motion to dismiss was filed in the coordinated litigation on behalf of the issuer defendants, of which the Company and its three named current and former officers and directors are a part, on common pleadings issues. In October 2002, the court entered and ordered a Stipulation of Dismissal, which dismissed the three named current and former officers and directors from the litigation without prejudice. On February 19, 2003, the court entered an order denying in part the issuer defendants' omnibus motion to dismiss, including those portions of the motion to dismiss relating to the Company. No discovery has been served on us to date. The Company believes it has meritorious defenses to these claims and intends to defend against them vigorously. The Company is not presently able to estimate losses, if any, related to this lawsuit. INTRAWARE INC.: Faces Suit for Securities Violations in FL Court ---------------------------------------------------------------- Intraware, Inc. faces a securities class action filed in the United States District Court, Southern District of Florida. The suit also names as defendants Credit Suisse Group, several of Credit Suisse Group's current and former directors and officers, and several public companies and certain of their current and former directors and officers, including the Company and its chief executive officer and former chief financial officer. The suit alleges that the defendants engaged in a scheme to under-price initial public offerings and then artificially inflate prices of those stocks in the aftermarket, in violation of Florida blue sky law, Sections 11, 12 and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and the common law of fraud and negligence. The suit seeks unspecified damages, restitution, and injunctive relief. The Company believes it has meritorious defenses to these claims. The Company is not presently able to estimate losses, if any, related to this lawsuit. KEYSPAN CORPORATION: To Ask NY Court To Dismiss Securities Suit --------------------------------------------------------------- Keyspan Corporation intends to ask the United States District Court for the Eastern District of New York to dismiss the amended securities class action filed against it and certain of its officers and directors. Several suits were filed after the Company announced on July 17,2001 that it was taking a special charge in its Energy Services business and otherwise reducing its 2001 earnings forecast. These lawsuits allege, among other things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, in connection with disclosures relating to or following the acquisition of the Roy Kay companies and the announcement of the agreement to acquire Eastern Enterprises and Energy North Inc. The suits were later consolidated. In October 2001, a shareholder's derivative action was commenced in the same court against certain officers and directors of the Company, alleging, among other things, breaches of fiduciary duty, violations of the New York Business Corporation Law and violations of Section 20(a) of the Exchange Act. In addition, a second derivative action has been commenced asserting similar allegations. Each of the proceedings seek monetary damages in an unspecified amount. On March 18, 2003 the court granted the Company's motion to dismiss the class action. The court's order dismissed certain class allegations with prejudice, but provided the plaintiffs a final opportunity to file an amended complaint concerning the remaining allegations. In April 2003, the plaintiff filed an amended complaint. The Company is unable to predict the outcome of these proceedings or effect, if any, such outcome will have on its financial condition, results of operations or cash flows. MH MEYERSON: FL Appeals Court Upholds Class Certification Denial ---------------------------------------------------------------- The Third District Court of Appeals in Florida upheld the Circuit Court of the Eleventh Judicial Circuit, Miami Dade, Florida's decision denying class certification to a lawsuit filed against MH Meyerson & Co., Inc., Rainbow Medical, Inc. and certain of Rainbow's officers: (1) Hugo D. Goldstraj, M.D., (2) Marcela C. Goldstraj, M.D., and (3) Roberto P. Novo, M.D. The suit alleges that the class, consisting of all investors who purchased investment units in Rainbow Medical, Inc. in a $2.5 million private placement offering in June 1997, purchased units which became worthless when, after the offering closed, certain officers and inside directors of Rainbow, specifically looted Rainbow and stole the proceeds of the offering. The Company was the placement and selling agent for the private placement. Martin Leventhal, C.P.A., a director of the Company became an outside director of Rainbow after the offering closed. Plaintiffs also filed claims against the Company and Mr. Leventhal for breach of fiduciary duty, negligent misrepresentation and negligence. Plaintiff alleged that the Company failed to make certain disclosures in the offering memorandum concerning legal proceedings involving Rainbow's officers, that the Company failed to ensure that Rainbow engaged in certain corporate actions and that Rainbow failed to use the offering proceeds in the manner stated in the offering memorandum. Plaintiff Harry Binder, as the putative class representative, later filed a motion to have the lawsuit certified as a class action, which the court denied. Plaintiff appealed the court's order. Accordingly, the only claims that now remain in the case are plaintiff's individual claims, which seek damages of $37,500, together with interest and attorney's fees. The Company intends to defend itself vigorously against any litigation by plaintiff of his individual claims. MH MEYERSON: Asks NJ Court To Dismiss Securities Fraud Lawsuit -------------------------------------------------------------- MH Meyerson & Co., Inc. asked the United States District Court in New Jersey to dismiss the consolidated securities class action filed against it and several of its directors. Plaintiffs allege fraud claims under the federal securities law relating to the Company's disclosures, and alleged failures to disclose certain information relating to prior litigations involving the Company, the efforts of the Company's subsidiary, eMeyerson.com, Inc., to develop an electronic trading program through a license agreement with TradinGear.com, Inc. and a litigation arising from eMeyerson's termination of that agreement, and other matters. Plaintiffs seek damages in excess of $15 million for the alleged class. The defendants believe that the allegations are meritless and fail to state legally valid claims. The Company has filed a motion to dismiss all claims in the amended complaint, and intends to contest the allegations of wrongdoing vigorously. MH MEYERSON: Appeals Court Upholds Dismissal of Stock Fraud Suit ---------------------------------------------------------------- The Third Circuit Court of Appeals affirmed the dismissal of the securities class action filed against MH Meyerson & Co., Inc. and certain affiliated or related parties, arising from plaintiff's private placement purchase of $300,000 in stock of eMeyerson.com Inc. that was then a subsidiary of the Company. The lawsuit was filed in the United States District Court, District of New Jersey. Plaintiffs alleged that defendants failed to disclose material facts concerning, inter alia, eMeyerson's ownership of stock in a vendor company that was under contract to develop for eMeyerson an electronic trading platform. Defendants moved to dismiss the complaint. The District Court granted defendants' motion and dismissed the complaint with prejudice and without leave to replead. The plaintiffs appealed the District Court's order to the United States Court of Appeals for the Third Circuit. The Court of Appeals has affirmed the District Court's order and has entered a Final Judgment dismissing the case. OMEGA PROTEIN: Investors Sue For Breach of Fiduciary Duty in NV --------------------------------------------------------------- Omega Protein Corporation, the Company's directors and the Company's majority stockholder, Zapata Corporation, were named as defendants in a lawsuit instituted on March 10, 2003 in the District Court of Clark County, Nevada. The plaintiff, Robert Strougo, alleges that he is a Company stockholder and brought the action individually and as a putative class action on behalf of all Company stockholders. No class period has been identified. Plaintiff alleged that the individual defendants and Zapata breached their fiduciary duties to the Company's stockholders by not properly considering an alleged offer sent via e-mail to Zapata by Hollingsworth, Rothwell & Roxford (HRR). The complaint asserts that the alleged offer was to acquire all of Zapata's shares and all of the Company's shares, in each case for $45.00 per share. However, the Company is not aware of any communications by HRR to the Company or any of its directors or any offer for the purchase of Company shares. Plaintiff claims that Zapata and the individual defendants breached their duties to the Company's stockholders by rejecting the purported offer and that the Company's stockholders have been damaged by being prevented from receiving a fair price for their stock. Plaintiff seeks an order directing the defendants to carry out their fiduciary duties to the Company's stockholders, to refrain from breaching their duties, and awarding plaintiff unspecified compensatory damages and costs and expenses incurred in the action. The Company is not aware of any basis on which it or its directors could be liable for not responding to an offer they never received, and which appears to be directed to Zapata. The Company believes that the claims are without merit and intends to vigorously oppose the lawsuit. OPSWARE INC.: Enters Agreement To Settle Securities Fraud Suits --------------------------------------------------------------- Opsware, Inc. agreed to settle the consolidated securities class action filed against it, certain of its officers, directors and the underwriters of its initial public offering pending in the United States District Court for the Northern District of California, on behalf of purchasers of the Company's common stock from March 8,2001 to May 1,2001. The suit alleges that the Company, certain of its officers, directors and the underwriters of its initial public offering violated federal securities laws by providing materially false and misleading information in the Company's prospectus, an earlier Class Action Reporter story states. The stipulation of settlement, which is subject to court approval, provides for the full and final settlement and dismissal and release of all litigation brought by the plaintiffs and an insignificant settlement payment. The settlement payment will be paid by the Company's director's and officer's insurance policy and, therefore, will not impact its financial position or results of operations, the Company stated in a disclosure to the Securities and Exchange Commission. OPTIO SOFTWARE: Enters Settlement Discussions in Stock Fraud Suit ----------------------------------------------------------------- Optio Software, Inc. has entered discussions to settle the consolidated securities class action filed against it, certain of its officers and directors and the underwriters of the Company's initial public offering. The suit was filed purportedly on behalf of persons purchasing Optio's common stock between December 14, 1999 and December 6, 2000 and seeks class action status. The complaint includes allegations of violations of: (1) Section 11 of the Securities Act of 1933 by all named defendants, (2) Section 12(a)(2) of the Securities Act of 1933 by the underwriter defendants, (3) Section 15 of the Securities Act of 1933 by the individual defendants, and (4) Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the underwriter defendants. The complaint alleges that the Optio's prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the underwriters had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriters allocated to those investors material portions of the restricted number of Optio shares issued in connection with the Optio initial public offering; and (ii) the underwriters had entered into agreements with customers whereby the underwriters agreed to allocate Optio shares to those customers in the Optio initial public offering in exchange for which the customers agreed to purchase additional Optio shares in the aftermarket at pre-determined prices. Optio believes the lawsuit is without merit. The complaint seeks unspecified amounts as compensatory damages as a result of Optio's alleged actions, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. The Company is currently engaged in settlement negotiations between its insurance carrier and the plaintiffs. OPTOMEDIC MEDICAL: Asks NJ Court To Dismiss Securities Fraud Suit ----------------------------------------------------------------- Optomedic Medical Technologies, Ltd. asked the New Jersey Court to dismiss an action styled as a class action against it and an executive officer of Optomedic in connection with the underwriting in June 1998 of Optomedic securities. The Company believes that plaintiffs have filed a deficient pleading, and has made a motion to dismiss the plaintiffs' complaint. The court has had the Company's motion since June 2000 but has not yet indicated its decision. The accountants for Optomedic have not been joined by counterclaim to the action but the Company has reserved its right to do so. Following the court's response to its motion, to the extent that the matter or any portion thereof remains pending, the Company intends to depose various parties to prove its defense and to defend itself vigorously against plaintiff's claims. RAYTHEON CO.: Asks MA Court To Dismiss Amended Stock Fraud Suit --------------------------------------------------------------- The Raytheon Company asked the United States District Court in Massachusetts to dismiss the amended consolidated securities class action filed against it and certain of its current and former officers The suit principally alleges that the defendants violated federal securities laws by making misleading statements and by failing to disclose material information concerning the Company's financial performance during the purported class period. The suit was filed on behalf of people who purchased the Company's stock between October 7, 1998 and October 12, 1999. In August 2001, the court issued an order dismissing most of the claims asserted against the Company and the individual defendants. In March 2003, the plaintiff filed an amendment to the consolidated complaint which seeks to add the Company's independent accountant as an additional defendant. Discovery is proceeding on the two circumstances that remain the subject of claims. SEACHANGE INTERNATIONAL: MA Court Consolidated Stock Fraud Suits ---------------------------------------------------------------- The United States District Court for the District of Massachusetts ordered the securities class actions filed against Seachange International, Inc. consolidated by May 17,2003. The suits also name as defendants: (1) Morgan Stanley & Co. Incorporated, (2) Thomas Weisel Partners LLC, (3) RBC Dain Rauscher, Inc., (4) William Styslinger III, (5) William Fiedler, (6) Martin R. Hoffmann, (7) Thomas F. Olson and (8) Carmine Vona These complaints allege that the registration statement and prospectus issued by the Company in connection with its stock offering completed on January 31, 2002 contained statements that were materially inaccurate. The plaintiffs are seeking damages in an unspecified amount, together with interest thereon, rescissory damages, reimbursement of costs and expenses, and further relief that the court may determine to be appropriate. On April 3, 2003, the court held a hearing during which it consolidated the complaints. The court ordered the plaintiffs to file a consolidated amended complaint by May 17, 2003, and directed the defendants to respond to that complaint on or before July 11, 2003. The Company believes the allegations in the complaints are without merit. The Company cannot be certain of the outcome of the foregoing current or potential litigation, but plans to oppose allegations that may be brought against it in the future. Accordingly, the Company is unable to determine the ultimate impact of this litigation on the Company's business, financial condition and results of operations or cash flows. TACO BELL: Second Damages Trial in Overtime Suit Set July 2, 2003 ----------------------------------------------------------------- The second damages trial for claimants in a class action filed against Taco Bell Corporation is set to begin July 2,2003 in the Circuit Court of the State of Oregon of the County of Multnomah. The lawsuit was filed by two former Taco Bell shift managers purporting to represent approximately 17,000 current and former hourly employees statewide. The lawsuit alleges violations of state wage and hour laws, principally involving unpaid wages including overtime and rest and meal period violations and seeks an unspecified amount in damages. Under Oregon class action procedures, the Company was allowed an opportunity to "cure" the unpaid wage and hour allegations by opening a claims process to all putative class members prior to certification of the class. In this cure process, the Company paid out less than $1 million. The court later certified a class of all current and former shift managers and crewmembers who claim one or more of the alleged violations. A court-approved notice and claim form was mailed to approximately 14,500 class members on January 31, 2000. Trial began on January 4, 2001. On March 9, 2001, the jury reached verdicts on the substantive issues in this matter. A number of these verdicts were in favor of the Taco Bell position; however, certain issues were decided in favor of the plaintiffs. In April 2002, a jury trial to determine the damages of 93 of those claimants found that Taco Bell failed to pay for certain meal breaks and/or off-the-clock work for 86 of the 93 claimants. However, the total amount of hours awarded by the jury was substantially less than that sought by the claimants. In July and September 2002, the court ruled on several post-trial motions, including fixing the total number of potential claimants at 1,031 (including the 93 claimants for which damages have already been determined) and holding that claimants who prevail are entitled to prejudgment interest and penalty wages. The Company intends to appeal the April 2002 damages verdict, as well as the March 2001 liability verdict. TANNING TECHNOLOGY: Investors Sue To Oppose Tiger Holding Merger ---------------------------------------------------------------- Tanning Technology Corporation faces a class action filed by one of the Company's stockholders in the Court of Chancery of the State of Delaware. The suit also names as defendants the Company's board of directors, and Platinum Equity alleging claims of breach of fiduciary duty. The complaint seeks an injunction preventing the Company's merger with Tiger Holding Corporation, rescission of the merger, in the event the merger is completed, compensatory damages, and an award of costs and attorneys' fees. The Company believes the claims are without merit, and intends to defend vigorously against these claims. TIVO INC.: NY Court Partially Dismisses Securities Fraud Lawsuit ---------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed in part the consolidated securities class action filed against TiVo, Inc., certain of its officers and directors and the underwriters involved in the Company's initial public offering. The suit, filed on behalf of purchasers of the Company's common stock from September 30, 1999, the time of its initial public offering, through December 6, 2000, alleges that the underwriters in the Company's initial public offering solicited and received undisclosed commissions from, and entered into undisclosed arrangements with, certain investors who purchased Company stock in the initial public offering and the after-market. The complaint also alleges that the TiVo defendants violated the federal securities laws by failing to disclose in the initial public offering prospectus that the underwriters had engaged in these allegedly undisclosed arrangements. More than 150 issuers have been named in similar lawsuits. In July 2002, an omnibus motion to dismiss all complaints against issuers and individual defendants affiliated with issuers (including the TiVo defendants) was filed by the entire group of issuer defendants in these similar actions. On October 8, 2002, the Company's executive officers were dismissed as defendants in the complaint. On February 19, 2003, the court in this action issued its decision on defendants' omnibus motion to dismiss. This decision dismissed the Section 10(b) claim as to TiVo but denied the motion to dismiss the Section 11 claim as to TiVo and virtually all of the other issuer- defendants. The Company believes it has meritorious defenses and intends to defend this action vigorously; however, the Company could be forced to incur material expenses in the litigation, and in the event there is an adverse outcome, its business could be harmed. TUT SYSTEMS: Asks CA Court To Dismiss Securities Fraud Lawsuit -------------------------------------------------------------- Tut Systems, Inc. asked the United States District Court for the Northern District of California to dismiss the consolidated securities class action filed against it and certain of its current and former officers and directors, on behalf of a purported class of people who purchased the Company's stock during the period between July 20, 2000 and January 31, 2001. The complaint alleges that the Company and certain of its current and former officers and directors made false and misleading statements about its business during the putative class period. Specifically, the complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. Defendants filed a motion to dismiss on March 29, 2002, which the court granted in part and denied in part. On September 23, 2002, the plaintiffs filed an amended complaint. The Company believes the allegations against it are without merit and intends to defend the action vigorously. An unfavorable resolution of this litigation could have a material adverse effect on the Company's business, results of operations, financial condition, or cash flows. New Securities Fraud Cases AFC ENTERPRISES: Wolf Haldenstein Launches Securities Suit in GA ---------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action the United States District Court for the Northern District of Georgia, on behalf of all persons who purchased the securities of AFC Enterprises, Inc. (Nasdaq: AFCEE) between March 2, 2001 and March 24, 2003, inclusive, against the Company and certain officers of the Company. According to the complaint, the Company's class period 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 of the Company's fraudulent accounting, 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. 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 by over 20% on extremely heavy trading volume. AFC insiders privy to the Company's fraudulent accounting practices did not share investors' losses. In a December 2001 public offering, AFC insiders unloaded 7,000,000 shares of their holdings at $23 per share. Indeed, during the class period, defendants and other Company insiders cashed out at prices as high as $34 per share, reaping profits of over $30 million. For more details, contact Fred Taylor Isquith, 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 AFC. CORE LABORATORIES: Stull Stull Commences Securities Fraud Suit -------------------------------------------------------------- Stull Stull & Brody initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of all persons who purchased common stock of Core Laboratories, N.V. (NYSE:CLB) between May 6, 2002 and March 31, 2003, inclusive against Core Laboratories, David M. Demshur and Richard L. Bergmark. 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 May 6, 2002 and March 31, 2003, thereby artificially inflating the price of Core Laboratories common stock. Throughout the class period, as alleged in the Complaint, defendants issued numerous statements and filed quarterly reports with the SEC which described the Company's increasing financial performance. The complaint alleges that 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 net income and earnings per share; (2) that the Company had overstated its ability to collect on certain accounts receivable; (3) that the Company had improperly delayed the booking of expenses and foreign exchange translation losses from certain field locations; (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results was materially overstated at all relevant time. On March 31, 2003, after the markets had closed trading for the day, the Company shocked the market by announcing that it would be restating its financial results for prior 2002 quarterly operating results because of: (i) the issuance of duplicate invoices in the Company's Mexico operations; (ii) the need for higher provisions for doubtful accounts receivables; (iii) the need for timely booking of expenses and foreign exchange translation losses from certain field locations; (iv) changes in the estimated life of certain assets; and (v) consolidation costs of two Nigerian offices Following this announcement, shares of Core common stock fell $1.31 per share, or more than 12.5%, to close at $9.09 per share, on volume of 515,300 shares traded, or almost four times the average daily volume. For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New York, NY 10017 by Phone: 800-337-4983 by Email: SSBNY@aol.com or visit the firm's Website: http://www.ssbny.com REGENERON PHARMACEUTICAL: Milberg Weiss Launches Securities Suit ---------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the securities of Regeneron Pharmaceuticals, Inc. (Nasdaq:REGN) between March 28, 2000 and March 30, 2003, inclusive, and who suffered damages thereby. The action, numbered 03-CV- 3111, is pending in the United States District Court for the Southern District of New York, 500 Pearl Street, New York, NY, before the Hon. Robert W. Sweet against the company, Leonard S. Schleifer (President and CEO), George D. Yancopoulos (Chief Scientific Officer), Hans-Peter Guler (VP of Clinical Studies), Neil Stahl (VP) and Murray A. Goldberg (CFO). 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 March 28, 2000 and March 30, 2003. Regeneron is a biopharmaceutical company that discovers, develops and intends to commercialize therapeutic drugs for the treatment of serious medical conditions. During the class period, Regeneron initiated Phase II clinical trials for its diet drug AXOKINE for use in obese patients. The complaint alleges that the Defendants claimed that AXOKINE would help patients lose weight better than a placebo over a year. However, more than two-thirds of the 1,467 patients on the medicine in the clinical trials developed antibodies to it after three months, which made the medicine less effective. Patients taking AXOKINE, including those who developed antibodies, lost an average 6.2 pounds, compared with 2.6 pounds for those on a placebo, which the Company admits is similar to results dieters get with already available pills. Before results were released, defendants had led the public to believe that AXOKINE would have more than $500 million in annual sales. On March 31, 2003, Regeneron admitted AXOKINE lost effectiveness in about 70% of patients in a study. On this news, the biotechnology company's shares plunged 57%, a market cap loss of more than $500 million. However, even defendants' admission was false, as, in fact, defendants manipulated the results of the study. In truth, 73.5% of the patients developed antibodies to the drug. As a result of the defendants' false statements, Regeneron's stock price traded at inflated levels during the class period, increasing to as high as $40 on December 18, 2000, whereby the Company and its top officers and directors sold more than $430 million worth of their own securities. For more details, visit the firm's Website: http://www.milberg.com SKECHERS USA: Bernstein Liebhard Commences Securities Suit in CA ---------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action in the United States District Court for the Central District of California, on behalf of all persons who purchased or acquired PEC Solutions, Inc. (NYSE: SKX) securities (the "Class") between April 3, 2002 and December 9, 2002, inclusive. Plaintiff alleges 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, Sketchers was able to increase their profit margin on sales without moving any additional inventory. However, this was a temporary benefit for Skechers. 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. Further, 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 Ms. Linda Flood, Director of Shareholder Relations, by Mail: Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 or by E-mail: SKX@bernlieb.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 2003. All rights reserved. ISSN 1525-2272. 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