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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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S U B S C R I P T I O N I N F O R M A T I O N
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Copyright 2003. All rights reserved. ISSN 1525-2272.
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