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C L A S S A C T I O N R E P O R T E R
Thursday, May 15, 2003, Vol. 5, No. 95
Headlines
ASHFORD.COM: NY Court Refuses To Dismiss Securities Fraud Suit
ATALANTA SOSNOFF: Investors File Suit Over Sosnoff Stock Offer
CITIZENS INC.: Firm Growth Targets Hindered By Possible Lawsuit
CONCORD EFS: Asks For Dismissal of Consumer Fraud Lawsuit in TN
CONCORD EFS: Officers, Directors Face Investors' Lawsuit in TN
CONCORD EFS: Faces TN Securities Fraud Suit V. First Data Merger
CONCORD EFS: Plaintiffs File Amended Derivative Suit in TN Court
DOMINION RESOURCES: Named As Defendant in D.C. Antitrust Lawsuit
ENTERASYS NETWORKS: Discovery Commences in NH Securities Lawsuit
ENTERASYS NETWORKS: Court To Hear Motion To Dismiss Stock Suit
FIRST DATA: Fairness Hearing Scheduled in August
FIRST DATA: Fairness Hearing For Settlement Set April 2004 in NY
GREAT ATLANTIC: Asks NY Court To Decertify Overtime Wage Lawsuit
GREAT ATLANTIC: NY Court Approves Settlement, Wage Suits Dropped
GREAT ATLANTIC: Asks NJ Court To Dismiss Securities Fraud Suit
GREAT ATLANTIC: To Appeal Certification of Franchisees' Suit
HECLA MINING: ID Court Dismisses Coeur d'Alene Residents' Suit
HONEYWELL INTERNATIONAL: Fails To Reach Settlement For NJ Suit
HONEYWELL INTERNATIONAL: Faces Suit for ERISA Violations in NJ
MATRIXONE INC.: NY Court Dismisses In Part Securities Fraud Suit
OKLAHOMA: Judge Okays Settlement Between Tulsa, Black Officers
SCIENTIFIC ATLANTA: Named As Defendant in MO Charter Fraud Suit
SCIENTIFIC ATLANTA: GA Court Allows Interlocutory Appeal in Suit
SELECT COMFORT: Court Grants Final Suit Settlement Approval
TOBACCO LITIGATION: Philip Morris Asks Court To Hear Lights Suit
UICI: Texas Court Grants Final Approval To Securities Settlement
UICI: Investors Commence Lawsuit Over Trade Practice in TX Court
WATTS INDUSTRIES: NCHG Lodges Suit Over Commercial Valve Models
WELLS REAL ESTATE: Court Refuses To Compel Arbitration in Suit
New Security Fraud Cases
ALLOU HEALTHCARE: Glancy & Binkow Launches Securities Suit in NY
AVERY DENNISON: Brian Felgoise Lodges Securities Suit in C.D. CA
*********
ASHFORD.COM: NY Court Refuses To Dismiss Securities Fraud Suit
--------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against Ashford.com, Inc., several of its officers
and directors, and various underwriters of the Company's initial
public offering.
The suit, filed on behalf of purchasers of the Company's common
stock during various periods beginning on September 22, 1999,
the date of the Company's initial public offering, allege that
the Company's prospectus, included in its Registration Statement
on Form S-1 filed with the Securities and Exchange Commission,
was materially false and misleading because it failed to
disclose, among other things, certain fees and commissions
collected by the underwriters or arrangements designed to
inflate the price of the common stock.
The plaintiffs further allege that because of these purchases,
the Company's post-initial public offering stock price was
artificially inflated. As a result of the alleged omissions in
the prospectus and the purported inflation of the stock price,
the plaintiffs claim violations of Sections 11 and 15 of the
Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934.
The suit has been consolidated with similarly consolidated cases
filed against 308 other issuer defendants for the purposes of
pretrial proceedings. The claims against the Company's officers
and directors were dismissed in exchange for tolling agreements
which permit the re-filing of claims against officers and
directors at a later date.
A motion to dismiss filed on behalf of all issuer defendants,
including the Company, was denied in all aspects relevant to
Ashford on February 19, 2003. The Company believes that it has
defenses against these actions, and that the ultimate
disposition of these matters will not have a material effect on
its business, financial condition or results of operations.
ATALANTA SOSNOFF: Investors File Suit Over Sosnoff Stock Offer
--------------------------------------------------------------
Atalanta Sosnoff Capital Corporation faces a consolidated
securities class action filed in the Court of Chancery in
Delaware after the Company's December 2002 announcement that it
had received a proposal from Martin Sosnoff to acquire the
approximately 17% of the Common Stock of the Company that he
does not own in a "going private" transaction at a price of
$12.50 per share, subject to adjustment to reflect changes in
the value of the Company's portfolio of marketable securities
from current levels from Martin Sosnoff, Chairman of the Board
and Chief Executive Officer.
The suit also names as defendants the Company's directors, and
Mr. Sosnoff. Each of the plaintiffs seeks to enjoin a
transaction arising out of Mr. Sosnoff's proposal and alleges in
generalized form breaches of fiduciary duty by him and the
directors. The Company believes these actions are without merit
and intends to vigorously defend them.
CITIZENS INC.: Firm Growth Targets Hindered By Possible Lawsuit
---------------------------------------------------------------
Citizens Inc., an Austin, Texas-based insurance holding company,
has told investors it has some ambitious growth targets, like
tripling its assets to $1 billion and tripling annual sales to
$250 million by 2010, the Austin American-Statesman reports. To
reach these goals, Citizen has been buying up smaller insurance
companies while trying to boost sales, but both strategies have
suffered a couple of recent setbacks.
The 3rd Court of Appeals in Austin on April 24, upheld the
certification of a potentially costly class action against the
Company for policies it sells in Latin America, one of the
company's biggest markets. The appeals court ruled only on
permitting a class of plaintiffs to sue Citizens, not on the
merits of the suit itself.
A group of Colombians sued Citizen in 2001, accusing the company
of selling unregulated life insurance, charging exorbitant
premiums for severely restricted coverage. The lawsuit also
claims that the policies are actually securities because they
are structured to pay dividends, which can be converted into
Citizens stock. The class could contain as many as 12,000
plaintiffs and damages could run into the hundreds of millions
of dollars, according to court records.
Citizens also is facing resistance from its most recent
acquisition target, First American Capital Corporation, a small,
privately held life insurance company based in Topeka, Kansas.
First American rejected Citizens' buyout offer last year,
prompting Citizens to nominate its own slate of candidates to
take control of First American's board of directors. First
American shareholders will elect board members June 2.
Acquiring First American "would be a nice complement to our
business, but it is not a make-or-break situation one-way or the
other," Citizens President Mark Oliver said. Mr. Oliver also
said Citizens expects the Texas Supreme Court to reject the
class-action status for the Latin-American insurance case. The
nine-member court, in recent years, has clamped down on the
certification of classes of plaintiffs.
Still, both developments threaten key strategies of Citizens,
and, consequently its stock price has "languished" for some two
years. When the company moved its listing from the American
Stock Exchange to the New York Stock Exchange on August 22, its
share price declined by 48 percent.
Citizens recently boosted sales through acquisitions. In 2002,
14 percent of Citizens' $83 million in sales were from companies
it acquired. The company has picked up pace this year, buying
two small insurance holding companies in the first quarter and
reaching a not-yet-finalized agreement to acquire a third.
Mr. Oliver has said that the First American board is running the
company "out of its own self-interest," not in the interests of
the shareholders. The two companies broke off talks early this
year after First American said it wanted to see whether any
other companies would make a bid. Mr. Oliver contends that the
current First American board has little insurance experience.
Citizens, by contrast, is led by executives with decades in the
industry.
Two former First American executives are helping Citizens. They
left the company last year and have put their shares in First
American under the control of Citizens officials, who used the
shares to put up its own slate of directors, as indicated above.
The June 2 date when the shareholders elect board members is
approaching.
Mr. Oliver said the board takeover is an anomaly. "Opposing a
board is not a typical approach for us. But we are not in this
to lose."
CONCORD EFS: Asks For Dismissal of Consumer Fraud Lawsuit in TN
---------------------------------------------------------------
Concord EFS, Inc., EFS National Bank, and John Doe Corporations
face a class action filed in the United States District Court
for the Western District of Tennessee, alleging that the Company
changed fees and charges without providing the requisite notice,
charged merchants for transactions that never occurred, and
failed to route payments in accordance with the plaintiffs'
instructions.
The plaintiffs allege:
(1) fraud,
(2) breach of contract,
(3) conversion,
(4) causes of action under the Tennessee Consumer
Protection Act and
(5) causes of action under the Racketeer Influenced and
Corrupt Organizations Act (RICO)
The class plaintiffs seek to certify consists of all merchant
customers of EFS National Bank, Concord, or John Doe
Corporations, who were subject to charges that were not fully
disclosed on their statements, charges for transactions which
the merchant never undertook, and/or charges in excess of the
amount agreed upon in their contracts.
The Company has moved to dismiss all claims, but the court has
not yet ruled on the motion. Although this matter is in the
preliminary stages, the Company believes that the claims against
it are without merit and intends to vigorously defend against
all claims.
CONCORD EFS: Officers, Directors Face Investors' Lawsuit in TN
--------------------------------------------------------------
Concord EFS, Inc.'s current and former officers and directors
face two class actions filed in the Circuit Court of Tennessee
for the Thirtieth Judicial District at Memphis.
The complaints generally allege breaches of the defendants' duty
of loyalty and due care in connection with the defendants'
alleged attempt to sell Concord without maximizing the value to
shareholders in order to advance the defendants' alleged
individual interests in obtaining indemnification agreements
related to the securities and other derivative litigation
discussed above. The complaints seek class certification,
injunctive relief directing the defendants' conduct in
connection with an alleged sale or auction of the Company,
reasonable attorneys' fees, experts' fees and other costs and
relief the court deems just and proper.
These complaints have recently been consolidated into one action
and transferred to the division of the Shelby County Circuit
Court in which the Tennessee consolidated state-court derivative
action is pending. Although these matters are in the very
preliminary stages, the Company believes that the claims against
its officers and directors are without merit and intends to
vigorously contest these claims.
CONCORD EFS: Faces TN Securities Fraud Suit V. First Data Merger
---------------------------------------------------------------
Concord EFS, Inc., certain of its current and former officers
and directors and First Data Corporation face a purported class
action filed in the Chancery Court for Shelby County, Tennessee.
The complaint contains allegations regarding the individual
defendants' alleged insider trading and alleged violations of
securities and other laws and alleges that this alleged
misconduct reduced the consideration offered to the Company's
shareholders in the proposed merger between Concord and First
Data. The complaint seeks class certification, attorneys' fees,
expert fees, costs and other relief the court deems just and
proper.
The complaint seeks an order enjoining consummation of the
merger, rescinding the merger if it is consummated and setting
it aside or awarding rescissory damages to members of the
putative class, and directing the defendants to account to the
putative class members for unspecified damages.
Although this matter is in the very preliminary stages, the
Company believes that the claims are without merit and intends
to vigorously contest these claims.
CONCORD EFS: Plaintiffs File Amended Derivative Suit in TN Court
----------------------------------------------------------------
Plaintiffs in the stockholder derivative suits filed against
Concord EFS, Inc. and certain of its current and former
directors and officers filed an amended consolidated suit in the
Circuit Court for the Thirtieth Judicial District at Memphis.
The Company also faces a securities class action in the United
States District Court for the Western District of Tennessee.
The lawsuits raise allegations relating to the Company's
financial performance between March 2001 and September 2002,
changes in the price of the Company's common stock during that
time, alleged failures to disclose material facts, and alleged
insider trading and breaches of fiduciary duties by certain
officers and certain directors.
On April 21, 2003 the plaintiffs in the Tennessee state court
derivative action filed a consolidated complaint which adds
allegations that the defendants arranged the proposed merger
with First Data at a below market price in return for
indemnification against alleged prior wrongdoing and for other
benefits to them personally. The lawsuits seek unspecified
compensatory and punitive damages, attorneys' fees, and other
relief. In addition, the Tennessee state court derivative
action seeks an injunction against the proposed merger.
Although these matters are in the preliminary stages, the
Company believes that the claims against it and its directors
and officers are without merit and intends to vigorously defend
against all claims. Any losses incurred by the Company in
connection with this litigation may be covered in part by the
Company's directors' and officers' liability insurance.
DOMINION RESOURCES: Named As Defendant in D.C. Antitrust Lawsuit
----------------------------------------------------------------
Dominion Resources, Inc. faces an antitrust class action filed
by Triad Energy Resources Corporation and other parties filed in
the United States District Court for the District of Columbia.
The suit names a number of defendants, including Virginia Power
and Cove Point LNG Limited Partnership, an affiliate of CNG.
The complaint seeks compensatory damages for alleged violations
of the Sherman Act and tortious interference with contractual
and business relationships as a result of activities involving
the storage and transportation of natural gas. No trial date
has been set. The outcome of the proceeding, including an
estimate as to any potential loss, cannot be predicted at this
time.
ENTERASYS NETWORKS: Discovery Commences in NH Securities Lawsuit
----------------------------------------------------------------
Parties in the consolidated securities class action filed
against Enterasys Networks, Inc. and certain of its officers and
directors in the United States District Court for the District
of New Hampshire are now engaged in discovery.
The complaint alleges that the Company and several of its
officers and directors disseminated materially false and
misleading information about the Company's operations and acted
in violation of Section10(b) and Rule10b-5 of the Exchange Act
during the period between March 3, 1997 and December 2, 1997.
The complaint further alleges that certain officers and
directors profited from the dissemination of such misleading
information by selling shares of the Company's common stock
during this period. The complaint does not specify the amount
of damages sought on behalf of the class.
In a ruling dated May 23, 2001, the court dismissed this
complaint with prejudice. The plaintiffs appealed that ruling
to the First Circuit Court of Appeals, and, in a ruling issued
on November 12, 2002, the Court of Appeals reversed and remanded
the case to the court for further proceedings.
On January 17, 2003, the defendants filed an answer denying all
material allegations of the complaint. By order of the court
dated March 18, 2003, the parties are now engaged in limited
discovery. If the plaintiffs prevail on the merits of this
case, the Company could be required to pay substantial damages.
ENTERASYS NETWORKS: Court To Hear Motion To Dismiss Stock Suit
--------------------------------------------------------------
The United States District Court for the District of New
Hampshire is set to hear the motion for the dismissal of the
securities class action filed against Enterasys Networks, Inc.
and:
(1) former chairman and chief executive officer Enrique
Fiallo,
(2) former chief financial officer Robert Gagalis,
(3) former Cabletron Systems, Inc. chief executive officer
and
(4) former Cabletron chief financial officer David
Kirkpatrick
The amended complaint alleges violations of Sections 10(b) and
20(a) of the Exchange Act and Rule 10b-5 thereunder.
Specifically, plaintiffs allege that during periods spanning
from June 28, 2000 and August 3, 2001 and in the period between
August 6, 2001 and February 1, 2002, defendants issued
materially false and misleading financial statements and press
releases that overstated the Company's revenues, income, and
cash, and understated the Company's net losses, because the
Company purportedly recognized revenue in violation of Generally
Accepted Accounting Principles (GAAP) and the Company's own
accounting policies in connection with various sales and/or
investment transactions.
On February 10, 2003, the Company filed a motion to dismiss the
amended complaint. A hearing on this motion has been scheduled
to convene during the second quarter of fiscal year 2003. If
plaintiffs prevail on the merits of the case, the Company could
be required to pay substantial damages.
FIRST DATA: Fairness Hearing Scheduled in August
------------------------------------------------
Fairness hearing for final approval of the settlement of a class
action filed against First Data Corporation, Western Union
Financial Services, Inc. and Orlandi Valuta has been set for
August 4, 2003 in California State Court.
The plaintiffs claimed that an undisclosed "commission" is
charged by the Company or its subsidiaries when consumers
transmit money to Mexico, in that the exchange rate used in
these transactions is less favorable than the exchange rate that
the Company or its subsidiaries receive when they trade dollars
in the international money market. The plaintiffs asserted that
the Company and its subsidiaries violated the law by failing to
disclose this "commission" in advertising and in the
transactions.
The putative class consists of those persons who have used
Western Union's or Orlandi Valuta's services after August 31,
1999 to transmit money from California to Mexico, or who have
used the Western Union or Orlandi Valuta money transfer services
to transmit money from California to Mexico and have opted out
of one of the nationwide settlements of similar actions
previously filed against the Company and its subsidiaries.
The plaintiffs seek injunctive relief, imposition of a
constructive trust, an accounting, restitution, compensatory and
statutory damages alleged to be in excess of $500,000,000,
statutory penalties in an amount of $1,000 for each offense,
punitive damages, attorneys' fees, prejudgment interest, and
costs of suit.
The parties to this action have reached a proposed settlement of
all claims that includes the following:
(1) Western Union and Orlandi Valuta will issue coupons for
discounts on future money transfer transactions from
California to Mexico to class members who transferred
money from California to Mexico between January 1, 1987
and March 31, 2000;
(2) the Company also will make a payment of $1.5 million to
be distributed to charitable organizations that assist
the Mexican and Mexican-American communities in the
State of California;
(3) injunctive relief requiring Western Union and Orlandi
Valuta to make additional disclosures regarding their
foreign exchange practices and to include a provision
in new and renewed contracts with agents in Mexico
prohibiting the imposition of an undisclosed charge on
recipients of money transfers; and
(4) reasonable attorneys' fees, expenses and costs as well
as the costs of settlement notice and administration
On October 7, 2002, the court issued an order preliminarily
approving the proposed settlement and enjoining the prosecution
of any action that asserts claims that would be resolved by the
settlement. If the settlement is not approved, the Company
intends to vigorously defend this action.
FIRST DATA: Fairness Hearing For Settlement Set April 2004 in NY
----------------------------------------------------------------
Fairness hearing for the settlement of a consolidated class
action filed against First Data Corporation and its subsidiary
Western Union Financial Services, Inc. has been set for April
9,2004 in the United States District Court for the Eastern
District of New York
The suit asserts claims on behalf of a putative worldwide class
(excluding members of the settlement class of similar actions
previously filed against the Company and its subsidiaries). The
plaintiffs claim that the Company, Western Union and Orlandi
Valuta impose an undisclosed "charge" when they transmit
consumers' money by wire either from the United States to
international locations or from international locations to the
United States, in that the exchange rate used in these
transactions is less favorable than the exchange rate that
Western Union and Orlandi Valuta receives when it trades
currency in the international money market.
Plaintiffs further assert that Western Union's failure to
disclose this "charge" in the transactions violates 18 U.S.C.
section 1961 et seq. and state deceptive trade practices
statutes, and also asserts claims for civil conspiracy. The
plaintiffs seek injunctive relief, compensatory damages in an
amount to be proven at trial, treble damages, punitive damages,
attorneys' fees, and costs of suit.
The parties to this action reached a proposed settlement of all
claims that includes the following:
(1) Western Union (and, with respect to money transfer
transactions from the U.S. other than California to
Mexico, Orlandi Valuta) will issue coupons for
discounts on future international money transfer
transactions to customers who transferred money from
the US to certain countries other than Mexico between
January 1, 1995 and approximately March 31, 2000 (for
certain services, Western Union will issue coupons for
transactions conducted as late as December 31, 2001),
from anywhere in the US other than California to Mexico
between September 1, 1999 and March 31, 2000 (again,
for certain services, Western Union will issue coupons
for transactions conducted as late as December 31,
2001), from countries other than Canada to the US
between January 1, 1995 and March 31, 2000, and from
Canada to the US between January 1, 1995 and
approximately July 31, 2002;
(2) injunctive relief requiring Western Union and Orlandi
Valuta to make additional disclosures regarding their
foreign exchange practices; and
(3) reasonable attorneys' fees, expenses and costs as well
as the costs of settlement notice and administration
The Court has granted conditional preliminary approval of the
proposed settlement, granted conditional approval of the
proposed form and manner of class notice. If the settlement is
not approved, the Company intends to vigorously defend this
action.
GREAT ATLANTIC: Asks NY Court To Decertify Overtime Wage Lawsuit
----------------------------------------------------------------
The Great Atlantic & Pacific Tea Co., Inc. asked the United
States District Court in New York to decertify the class action
filed against it by four present and former employees of The
Food Emporium for unpaid wages and overtime.
In April 2000, the judge granted class action status to the case
covering approximately 82 stores in 9 counties in the New York
metropolitan area. Approximately 840 current and former full
and part-time employees of The Food Emporium and A&P opted into
the class.
GREAT ATLANTIC: NY Court Approves Settlement, Wage Suits Dropped
----------------------------------------------------------------
The United States District Court for the Southern District of
New York approved the settlement proposed by Great Atlantic &
Pacific Tea Co., Inc. to settle two overtime wage lawsuits.
The Attorney General of the State of New York filed the first
suit in New York Supreme Court, County of New York, alleging
that the Company and its subsidiary Shopwell, Inc., together
with its outside delivery service Chelsea Trucking, Inc.,
violated New York law by failing to pay minimum and overtime
wages to individuals who deliver groceries at one of the Food
Emporium's stores in New York City. The complaint sought a
determination of violation of law, an unspecified amount of
restitution, an injunction and costs.
A purported class action was filed on January 13, 2000 in the
United States District Court for the Southern District of New
York against the Company, Shopwell, Inc. and others by Faty
Ansoumana and others. The federal suit made similar minimum
wage and overtime pay allegations under both federal and
state law and extends the allegations to various stores operated
by the Company.
In May 2001, the federal court granted plaintiffs' motion for
certification of a class action. On September 18, 2002, the
plaintiffs, the Attorney General and the Company entered into a
Stipulation and Agreement of Settlement pursuant to which the
Company would pay approximately $3.3 million in full settlement
of the actions and would receive releases from the class and the
Attorney General. The actions would be dismissed with
prejudice.
On January 23, 2003, the federal court entered an order and
final judgment approving the settlement and dismissing the
action against the Company. On March 17, 2003, the Attorney
General and the Company filed a Stipulation of Discontinuance in
New York Supreme Court, dismissing with prejudice the Attorney
General's action against it. The Company has made the full
payment required by the settlement agreement.
GREAT ATLANTIC: Asks NJ Court To Dismiss Securities Fraud Suit
--------------------------------------------------------------
Great Atlantic & Pacific Tea Co., Inc. asked the United States
District Court for the District of New Jersey to dismiss the
consolidated securities class action filed against it and
certain of its officers and directors.
The suit alleges claims under Sections 10(b) (and Rule 10b-5
promulgated thereunder) and 20(a) of the Securities Exchange Act
of 1934 arising out of the Company's July 5, 2002 filing of
restated financial statements for fiscal 1999, fiscal 2000 and
the first three quarters of fiscal 2001.
On January 17, 2003, defendants filed a motion seeking to
dismiss the suit. On February 28, 2003, plaintiffs filed their
brief in opposition to defendants' motion. Defendants' reply
brief in support of their dismissal motion was filed on March
28, 2003.
While the outcome of these claims cannot be predicted with
certainty, management does not believe that the outcome of any
of these legal matters will have a material adverse effect on
its consolidated results of operations, financial position or
cash flows.
GREAT ATLANTIC: To Appeal Certification of Franchisees' Suit
-------------------------------------------------------------
The Great Atlantic & Pacific Company of Canada, Limited will
proceed with the appeal of class certification for the lawsuit
filed by three Canadian Food Basics franchisees for breach of
contract.
The suit was filed in a Canadian court on behalf of a purported
class of approximately 70 current and former Canadian Food
Basics franchisees. The lawsuit seeks unspecified damages in
connection with the Company's alleged failure to distribute to
the franchisees the full amount of vendor allowances and/or
rebates to which the franchisees claim they are entitled under
the operative franchise agreements.
The Company disputes the plaintiff-franchisees' claim and has
filed a counterclaim seeking to recover subsidies made by it to
the plaintiffs. The lawsuit was certified as a class action in
December 2002. The majority of the potential class members have
opted out of this class proceeding. The Company later obtained
leave to appeal the class certification order.
HECLA MINING: ID Court Dismisses Coeur d'Alene Residents' Suit
--------------------------------------------------------------
The Idaho District Court, County of Kootenai dismissed a class
action filed against Hecla Mining Company and other corporate
defendants, seeking certification of three plaintiff classes of
Coeur d'Alene Basin residents and current and former property
owners to pursue three types of relief: various medical
monitoring programs, real property remediation and restoration
programs, and damages for diminution in property value, plus
other damages and costs.
On April 23, 2002, the Company filed a motion with the court to
dismiss the claims for relief relating to any medical monitoring
programs and the remediation and restoration programs. At a
hearing before the Idaho District Court on the Company's and
other defendants' motions held October 16, 2002, the Judge
struck the complaint filed by the plaintiffs in January 2002 and
instructed the plaintiffs to re-file the complaint limiting the
relief requested by the plaintiffs to wholly private damages.
The court also dismissed the medical monitoring claim as a
separate cause of action and stated that any requested remedy
that encroached upon the EPA's cleanup in the Silver Valley
would be precluded by the pending court case.
The plaintiffs re-filed their amended complaint on January 9,
2003. As ordered by the Court, the amended complaint omits any
cause of action for medical monitoring and no longer requests
relief in the form of real property remediation or restoration
programs.
At a hearing on May 7, 2003, the court vacated the entire
amended complaint and issued sanctions against plaintiffs'
counsel for noncompliance with Idaho law. The court gave
plaintiffs' counsel until June 30, 2003, to re-file an amended
complaint that complies with Idaho law.
The Company believes the claims alleged against it are subject
to challenge on a number of bases and intends to vigorously
defend this litigation.
HONEYWELL INTERNATIONAL: Fails To Reach Settlement For NJ Suit
--------------------------------------------------------------
Honeywell International, Inc. and plaintiffs in the consolidated
securities class action filed against the Company failed to
reach a settlement in the two-day mediation held in April 2003.
The suit is pending in the United States District Court for the
District of New Jersey, alleging that the defendants violated
federal securities laws by purportedly making false and
misleading statements and by failing to disclose material
information concerning the Company's financial performance,
thereby allegedly causing the value of the Company's stock to be
artificially inflated.
On January 15, 2002, the court dismissed the consolidated
complaint against four of Honeywell's current and former
officers. The court also granted plaintiffs' motion for class
certification defining the purported class as all purchasers of
Honeywell stock between December 20, 1999 and June 19, 2000.
The parties participated in mediation in an attempt to resolve
the cases without resort to a trial. The mediation proved
unsuccessful in resolving the cases. As all significant
discovery in the cases had been stayed pending completion of the
mediation, the Company expects discovery to resume immediately.
The Company continues to believe that the allegations in the
securities suits are without merit. Although it is not possible
at this time to predict the outcome of these cases, the Company
expects to prevail. However, an adverse outcome could be
material to the Company's consolidated financial position or
results of operations.
HONEYWELL INTERNATIONAL: Faces Suit for ERISA Violations in NJ
--------------------------------------------------------------
Honeywell International, Inc. and several of its current and
former officers face a class action filed in the United States
District Court for the District of New Jersey. The complaint
principally alleges that the defendants breached their fiduciary
duties to participants in the Honeywell Savings and Ownership
Plan by:
(1) purportedly making false and misleading statements;
(2) failing to disclose material information concerning
Honeywell's financial performance; and
(3) failing to diversify the Savings Plan's assets and
monitor the prudence of Honeywell stock as a Savings
Plan investment.
The Company has been advised that a second complaint making
similar allegations has been filed in the same district, which
complaint is likely to be consolidated with the original one.
No answers have been filed and discovery has not commenced.
Although it is not possible at this time to predict the outcome
of this litigation, the Company believes that the allegations in
these complaints are without merit and expects to prevail. An
adverse litigation outcome could, however, be material to the
Company's consolidated financial position or results of
operations. As a result of the uncertainty regarding the
outcome of this matter, no provision has been made in the
Company's financial statements with respect to this contingent
liability.
MATRIXONE INC.: NY Court Dismisses In Part Securities Fraud Suit
----------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed the consolidated securities class action
filed against MatrixOne, Inc., two of its officers, and certain
underwriters involved in its initial public offering (IPO) of
common stock.
The suit, filed on behalf of purchasers of the Company's common
stock during the period from February 29, 2000 to December 6,
2000, asserts, among other things, that the Company's IPO
prospectus and registration statement violated federal
securities laws because they contained material
misrepresentations and/or omissions regarding the conduct of the
Company's IPO underwriters in allocating shares in its IPO to
the underwriters' customers, and that the Company and the two
named officers engaged in fraudulent practices with respect to
this underwriters' conduct.
Pursuant to a stipulation between the parties, the Company's two
named officers were dismissed from the lawsuit, without
prejudice, on October 9, 2002. The court later ruled on a
motion to dismiss the complaint that had been filed by the
Company, along with the three hundred plus other publicly-traded
companies that have been named by various plaintiffs in
substantially similar lawsuits.
The court granted the Company's motion to dismiss the claim
filed against it under Section 10(b) of the Securities Exchange
Act of 1934, but denied the Company's motion to dismiss the
claim filed against it under Section 11 of the Securities Act of
1933, as it denied the motions under this statute for virtually
every other company sued in the substantially similar lawsuits.
The Company believes that the allegations in the complaint are
without merit and intends to contest them vigorously. The
litigation process is inherently uncertain and unpredictable,
however, and there can be no guarantee as to the ultimate
outcome of this pending lawsuit.
OKLAHOMA: Judge Okays Settlement Between Tulsa, Black Officers
--------------------------------------------------------------
US District Court Judge Sven Erik Holmes recently approved a
settlement decree between the city of Tulsa and black officers
who had filed a racial discrimination lawsuit some nine years
earlier, the Associated Press Newswire reports. The Fraternal
Order of Police (FOP) immediately said it would appeal.
The settlement, wrote Judge Holmes in a 122-page order, "offers
the parties and the community the opportunity to settle this
case and move forward."
The Black Officers Coalition's lawsuit, filed in January 1994,
alleged blacks faced a segregated work environment, were
discriminated against in hiring and promotions, received no help
when calling for backup and faced retaliation if they complained
of discrimination.
Judge Holmes wrote that police officers and city officials have
been subject to "destructive allegations and recriminations"
over nine "divisive" years of litigation. "Many honorable men
and women, the TPD (Tulsa Police Department) and the community
at large have suffered as a result," he wrote.
The FOP claimed the decree should be rejected on grounds that it
violated the union's contractual and legal rights under the
Oklahoma Fire and Police Arbitration Act as well as the union's
collective bargaining agreement with the city. However, Judge
Holmes found that the agreement did not "erode or infringe" upon
the union's contractual or legal rights underneath the
arbitration act or the collective bargaining agreement. Judge
Holmes ruled that the decree does not impose any legal duties or
obligations on the FOP and does not bind it to act.
"Let the appeals begin," said Bob Jackson, president of the
Fraternal Order of Police.
Scott Wood, an attorney for the police union, said he expected
to ask Judge Holmes to issue a stay, which would keep the
decree's terms from being put into effect while an appeal is
pending.
The FOP had encouraged the court to have a trial on the
plaintiffs' claims in the class action. However, Judge Holmes
wrote that such a proceeding would have been "lengthy and
complex" and "very expensive for all parties." Judge Holmes
wrote that because the FOP had an opportunity to present its
objections, and because the court had thoroughly considered
those objections, the union has been afforded all the process it
is due, according to US Supreme Court precedent.
"Thus, the court finds that it may approve the December 2002
decree over the FOP's objections," Judge Holmes wrote.
Joel Wohlgemuth, who represents the city, said the city would
"vigorously oppose" an attempt for a stay. Mr. Wohlgemuth said
it was time "to move forward as expeditiously as possible," and
that drawing out the nine-year-old case further with a stay
would be of no benefit to the community."
Plaintiffs' attorney Louis Bullock, said he would oppose any
request for a stay; any appeal, he said, would probably last
from nine months to a year or longer.
The agreement states that hiring and promotions at the
department are to be based on merit, and that the police force
must adhere to its policy against racial profiling.
Additionally, the city will collect data on officers and their
policing activities, including their race, training
level and any traffic or pedestrian stops, in order that an
independent auditor can monitor compliance.
In all, the agreement reached in December and recently approved
by Judge Holmes addresses about 30 policies, many of which
already are in place at the department, and will cost about
$6 million to implement. The city admits no wrongdoing.
SCIENTIFIC ATLANTA: Named As Defendant in MO Charter Fraud Suit
---------------------------------------------------------------
Scientific Atlanta Corporation was added as co-defendant in the
consolidated securities class action filed against Charter
Communications, Inc. in the United States District Court in St.
Louis, Missouri.
Securities investors brought the suit against Charter, a number
of its present and former officers and Arthur Andersen LLP. The
consolidated complaint, which alleges various purported
securities laws violations by Charter and its management, also
alleges that certain commercial transactions between Charter and
Scientific-Atlanta relating to Charter's purchase of digital
set-top boxes and a marketing support arrangement purportedly
resulted in violations of the anti-fraud provisions of the
federal securities laws with respect to investors in Charter
securities.
The consolidated complaint has not been filed with the court,
and Scientific-Atlanta has been advised that the Court has
stayed the filing pending transfer of all of the cases to the
Missouri Court and a Court conference. The suit does not allege
any impropriety by Scientific-Atlanta regarding its financial
statements or its investors. The Company intends to vigorously
defend the claim.
SCIENTIFIC ATLANTA: GA Court Allows Interlocutory Appeal in Suit
----------------------------------------------------------------
The United States District Court for the Northern District of
Georgia certified for appeal an issue raised by Scientific
Atlanta, Inc. in its motion for certification for interlocutory
appeal in the consolidated securities class action filed against
it and certain of its officers.
The suit alleges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5,
promulgated thereunder. The defendants allegedly issued
materially false and misleading statements that had the effect
of artificially inflating the market price of the Company's
securities, an earlier Class Action Reporter story states.
The court has stayed discovery in the securities class action
pending resolution of such appeal.
SELECT COMFORT: Court Grants Final Suit Settlement Approval
-----------------------------------------------------------
The United States District Court for the District of Minnesota
granted final approval to the settlement of a securities class
action filed against Select Comfort Corporation and certain of
its former officers and directors.
The suit, filed on behalf of purchasers of the Company's common
stock between December 4, 1998 and June 7, 1999, alleges that
the Company and the named former directors and officers failed
to disclose or misrepresented certain information concerning the
Company in violation of federal securities laws.
The Company believes that the suit is without merit and has
vigorously defended the matter. The Company consented to a
settlement of this litigation negotiated by the Company's
insurance carrier. The settlement did not have any impact on
the Company's results of operations or financial condition. On
February 28, 2003, the settlement agreement received final
approval from the court, resulting in the dismissal with
prejudice of the plaintiffs' complaint.
TOBACCO LITIGATION: Philip Morris Asks Court To Hear Lights Suit
----------------------------------------------------------------
Philip Morris USA has asked the Illinois Supreme Court to bypass
a lower court and hear its appeal of a $10.1 billion verdict in
the class action over 'light cigarettes,' the Associated Press
Newswires reports.
The company's lawyers recently filed a petition seeking the
dispensation, saying that the direct appeal would bring quicker
resolution and address questions running to an important
question about whether the case should have been certified as a
class action.
In March, Madison County Judge Nicholas Byron ordered Philip
Morris to pay 1.1 million 'light' cigarette' smokers $10.1
billion for deceiving Illinois smokers into believing that light
cigarettes are less harmful than are regular cigarettes.
If the state's Supreme Court approves the petition, Philip
Morris will be able to bypass the 5th District Appellate Court
in Mount Vernon, Illinois, and appeal Judge Brody's verdict
directly to the Supreme Court. The plaintiffs' lead attorney,
Stephen Tillery, said that he has not yet decided whether to
challenge the cigarette maker's petition.
Philip Morris also petitioned the Illinois Supreme Court to
limit appeal bonds at $100 million, or 10 percent of the
company's net worth, whichever is lower. Judge Brody already
has reduced the amount of the initial appeal bond from $12
billion, on grounds that failure to do so would cause Philip
Morris to seek the protection of a Chapter 11 bankruptcy.
Illinois law requires those who lose big lawsuits to post a bond
before appealing the judgment to ensure those who were awarded
the judgment ultimately receive it should the appellant lose his
appeal.
UICI: Texas Court Grants Final Approval To Securities Settlement
----------------------------------------------------------------
The United States District Court for the Northern District of
Texas granted final approval to the settlement of a consolidated
securities class action filed against UICI and certain of its
executive officers.
The suit alleges, among other things, that the Company's
periodic filings with the SEC contained untrue statements of
material facts and/or failed to disclose all material facts
relating to the condition of the Company's credit card business,
in violation of Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 thereunder. Plaintiffs purport to represent
a class of persons who purchased the Company's common stock from
February 10, 1999 through December 9, 1999.
Following a mediation held on May 23, 2002, the parties entered
into definitive settlement agreement on July 3, 2002 pursuant to
which the parties have agreed, without admitting or denying
liability and provided that certain conditions are satisfied, to
fully and finally resolve the litigation.
The Company believes that the terms of the settlement as
contemplated by the settlement agreement will not have a
material adverse effect upon the financial condition or results
of operations of the Company. Funding of the settlement amount
was completed on July 15, 2002.
On December 12, 2002, the court issued an order preliminarily
approving the settlement and providing for notice to prospective
class members. At fairness hearing, held on March 3, 2003, the
court confirmed the settlement and entered final judgment that,
pursuant to the terms of the settlement agreement, released
the Company and named individual defendants with respect to all
issues raised or which could have been raised in the litigation.
UICI: Investors Commence Lawsuit Over Trade Practice in TX Court
----------------------------------------------------------------
UICI and The MEGA Life and Health Insurance Company face a class
action filed in the District Court of Starr County, Texas for
the 381st Judicial District. The suit also names as defendants
NASE Group Insurance Trust and National Association for the Self
Employed.
Plaintiff on behalf of himself and a purported class of
similarly situated individuals has asserted, among other things,
that MEGA, NASE Group Trust and NASE are under common control
and ownership and operate as a "unified business arrangement"
which is used solely for the purpose of generating profits
through association dues and avoiding state insurance
regulations.
Plaintiffs have alleged that defendants have used false and
deceptive advertising and sales practices in connection with the
sale of insurance in Texas in violation of the Texas Insurance
Code. Plaintiffs further allege conversion and breach of
contract, for which they have asked for a return of all
association dues and administrative fees collected by the
defendants. Plaintiffs have served discovery requests on MEGA,
UICI and NASE, though neither UICI nor MEGA has answered or
otherwise pleaded in the case.
The Company believes that plaintiffs' claims in these cases are
wholly without merit, and intends to vigorously contest the
claims.
WATTS INDUSTRIES: NCHG Lodges Suit Over Commercial Valve Models
---------------------------------------------------------------
Watts Industries, Inc. and Watts Regulator Company faces a class
action filed by North Carolina Hospitality Group, Inc. (NCHG) in
the Circuit Court of Maryland, Prince George's County. The suit
alleges that certain Watts commercial valve models contain a
design defect that causes them to fail prematurely. The
complaint asserts claims for:
(1) breach of implied warranty of merchantability,
(2) strict liability for defective design,
(3) strict liability for failure to warn,
(4) negligence and
(5) unjust enrichment
The complaint seeks unspecified compensatory damages sufficient
to permit the members of the alleged class (national or Maryland
purchasers of the valves for self use) to inspect, repair and/or
replace the valves, and also seeks to recover costs, interest
and attorneys fees.
The Company believes that the allegations in the complaint are
without merit and intends to defend vigorously against those
claims. Based on the facts presently known to the Company, it
does not believe that the ultimate outcome of this litigation
will have a material adverse effect on its liquidity, financial
condition or results of operations.
WELLS REAL ESTATE: Court Refuses To Compel Arbitration in Suit
--------------------------------------------------------------
The Superior Court of Gwinnett County, Georgia refused to compel
arbitration of all claims in a class action filed against Wells
Real Estate Fund I by a limited partner holding Class B units,
on behalf of all limited partners holding Class B units as of
January 15, 2003.
The suit seeks equitable relief with regard to the rights and
obligations of all the Partnership's limited partners and
general partners under the Partnership Agreement. The plaintiff
generally alleges that the terms of the Partnership Agreement,
as it relates to the allocation and distribution of net sale
proceeds, are inconsistent with the original intent of the
parties. The plaintiff alleges that the original intent was
that limited partners holding Class B units would have a
priority in payment of cash distributions of net sale proceeds
to bring them even with the amount of cash distributions
previously made to limited partners holding Class A units.
The suit seeks, among other things, to have the Partnership's
Partnership Agreement equitably reformed consistent with the
alleged original intent or, in the alternative, to have the
investments made by limited partners holding Class B units
equitably rescinded, and requests an injunction prohibiting the
general partners of the Partnership from distributing net sales
proceeds until the resolution of the action.
On March 31, 2003, the Partnership's motion requesting the court
to compel arbitration of all claims alleged in the Johnston
Action was denied by the Court.
New Security Fraud Cases
ALLOU HEALTHCARE: Glancy & Binkow Launches Securities Suit in NY
----------------------------------------------------------------
Glancy & Binkow LLP initiated a securities class action in the
United States District Court for the Eastern District of New
York on behalf of all persons who purchased securities of Allou
Healthcare, Inc. (Amex: ALU) between June 22, 1998, and April 9,
2003, inclusive.
The complaint charges the auditors and certain executive
officers of the Company with violations of federal securities
laws. Among other things, plaintiff claims that defendants'
material omissions and the dissemination of materially false and
misleading statements concerning the Company's financial
performance caused the Company's stock price to become
artificially inflated, inflicting damages on investors.
The Company is a distributor of consumer personal care products
and prescription pharmaceuticals, and also manufactures upscale
hair- and skin-care products for sale under private labels. The
complaint alleges that, during the class period, Allou was
materially overstating its account receivables, thereby
overstating its revenue and earnings, and overstating its
inventory, thereby overstating its net worth.
As a result of the foregoing, Allou's financial statements
during the class period were not prepared in accordance with
Generally Accepted Accounting Principles (GAAP). Additionally,
plaintiff claims that the Company's auditors did not audit
Allou's financial statements in accordance with Generally
Accepted Auditing Standards (GAAS), as they either knew of the
accounting fraud at Allou or recklessly disregarded it.
On April 9, 2003, Allou announced that its lenders have filed an
involuntary petition for bankruptcy in the Eastern District of
New York under the provisions of Chapter 11 of the United States
Bankruptcy Code. Also on April 9, 2003, the American Stock
Exchange halted trading in Allou stock.
For more details, contact Lionel Z. Glancy by Mail: 1801 Avenue
of the Stars, Suite 311, Los Angeles, California 90067, by
Phone: (310) 201-9161 or (888) 773-9224 or by E-mail:
info@glancylaw.com.
AVERY DENNISON: Brian Felgoise Lodges Securities Suit in C.D. CA
----------------------------------------------------------------
The Law Offices of Brian M. Felgoise initiated a securities
class action on behalf of shareholders who acquired Avery
Dennison Corporation (NYSE:AVY) securities between July 24, 2001
and April 14, 2003, inclusive. The case is pending in the
United States District Court for the Central District of
California, against the company and certain key officers and
directors.
The action charges that defendants violated the federal
securities laws by issuing a series of materially false and
misleading statements to the market throughout the class period
which statements had the effect of artificially inflating the
market price of the Company's securities.
For more details, contact Brian M. Felgoise by Mail: 261 Old
York Road, Suite 423, Jenkintown, Pennsylvania, 19046 by Phone:
215-886-1900 or by E-mail: FelgoiseLaw@aol.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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