/raid1/www/Hosts/bankrupt/CAR_Public/030530.mbx
C L A S S A C T I O N R E P O R T E R
Friday, May 30, 2003, Vol. 5, No. 106
Headlines
AETHER SYSTEMS: NY Court Refuses Dismissal of Securities Lawsuit
AIRGATE PCS: Court Denies Lead Plaintiff Motions in Stock Suits
ALABAMA: Arbitration Spurs Consumers To Establish Right To Sue
ALAMOSA DELAWARE: NY Court Dismisses Fraud Suit in Part
ALLIANT ENERGY: Investors File Securities Fraud Suits in W.D. WI
ANTIGENICS INC.: NY Court Dismisses in Part Securities Lawsuit
BACKWEB TECHNOLOGIES: NY Court Refuses to Dismiss Investor Suit
CENTRAL SPRINKLERS: Modifies Earlier 35M Fire Sprinkler Recall
DIGIMARC CORPORATION: NY Court Dismisses in Part Securities Suit
DIGITAS INC.: NY Court Dismisses in Part Securities Fraud Suit
EDISON SCHOOLS: Plaintiffs Commence Consolidated Suit in S.D. NY
E-LOAN INC.: NY Court Refuses To Dismiss Securities Fraud Suit
EXPEDIA INC.: NY Court Refuses To Dismiss Securities Fraud Suit
FOUNDRY NETWORKS: Asks CA Court To Dismiss Securities Fraud Suit
FOUNDRY NETWORKS: NY Court Dismisses in Part Securities Lawsuit
HOTELS.COM: Shareholders Commence Suit Opposing USA Merger in DE
HOTELS.COM: Securities Fraud Lawsuits Consolidated in N.D. TX
INFORMATICA CORPORATION: NY Court Refuses To Dismiss Stock Suit
INTERWAVE COMMUNICATIONS: NY Court Refuses To Dismiss Stock Suit
LOOKSMART LTD.: CA Court Refuses to Dismiss Unfair Trade Lawsuit
MARTHA STEWART: Asks NY Court To Dismiss Securities Fraud Suit
NEW YORK: Suit Says New Rochelle's New Districts Gerrymandering
OPENTV CORPORATION: NY Court Dismisses in Part Securities Suit
OPENTV CORPORATION: Faces Lawsuit Over ACTV Merger in DE Court
OPUS360 CORPORATION: Agrees To Settle NY Securities Fraud Suit
REDBACK NETWORKS: NY Court Refuses To Dismiss Securities Lawsuit
SEQUENOM INC.: NY Court Dismisses in Part Securities Fraud Suit
SONICWALL INC.: NY Court Refuses To Dismiss Securities Lawsuit
STARBUCKS COFFEE: Recalls 38,000 Tumbler Cups For Choking Hazard
TELECOMUNICACIONES DE PUERTO RICO: Plaintiffs Withdraw From Suit
TELECOMUNICACIONES DE PUERTO RICO: Consumer Fraud Suit Dismissed
THESTREET.COM INC.: NY Court Dismisses in Part Securities Suit
VERITAS SOFTWARE: Securities Fraud Suits Consolidated in N.D. CA
WINK COMMUNICATIONS: NY Court Dismisses in Part Securities Suit
Asbestos Alert
ASBESTOS LITIGATION: ABB Not Fazed by Latest Bankruptcy Delay
ASBESTOS LITIGATION: Senator Foresees Passage of Asbestos Bill
ASBESTOS LITIGATION: CSR Posts Asbestos Provision
ASBESTOS ALERT: Company Fined For Asbestos Exposure
ASBESTOS ALERT: Coroner Says Asbestos Killed 56-Year-Old
ASBESTOS ALERT: Plastic Bag Found In Hawaii May Contain Asbestos
ASBESTOS ALERT: General Cable Units Faces Asbestos-Related Suits
New Securities Fraud Cases
DIVINE INC.: Cauley Geller Commences Securities Suit in N.D. IL
*********
AETHER SYSTEMS: NY Court Refuses Dismissal of Securities Lawsuit
----------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against Aether Systems, Inc. relating to allegedly
fraudulent initial public offering practices.
The suit, filed on behalf of persons and entities that acquired
the Company's common stock after the initial public offering on
October 20, 1999, claims that prospectuses, dated October 20,
1999, March 17, 2000, and September 27, 2000 and issued by the
Company in connection with the public offerings of common stock,
allegedly contained untrue statements of material fact or
omissions of material fact in violation of securities laws
because, inter alia the prospectuses allegedly failed to
disclose that the offerings' underwriters had solicited and
received additional and excessive fees, commissions and benefits
beyond those listed in the arrangements with certain of their
customers which were designed to maintain, distort and/or
inflate the market price of the Company's common stock in the
aftermarket. The actions seek unspecified monetary damages and
rescission.
The Company believes the claims are without merit and is
vigorously contesting the suit. The suit was coordinated before
Judge Shira A. Scheindlin under the caption In Re Initial Public
Offering Securities Litigation, 21 MC 92. The court has
consolidated the actions by issuer, and, accordingly, there are
approximately 310 consolidated actions before Judge Scheindlin,
including the consolidated action against the Company.
Initial motions to dismiss the case were filed and the court
held oral argument on the motions to dismiss on November 1,
2002. On February 19, 2003, the court issued an opinion and
order on defendants' motions to dismiss, which granted
the motions in part and denied the motions in part.
As to the Company, the motion to dismiss the claims against it
was denied in its entirety. Discovery is now commencing. The
plaintiffs voluntarily dismissed without prejudice the officer
and director defendants of the Company. Because the litigation
is at a very early stage, the Company is unable to assess the
likelihood of an unfavorable outcome and can make no
determination as to the amount or range of potential loss, if
any.
AIRGATE PCS: Court Denies Lead Plaintiff Motions in Stock Suits
---------------------------------------------------------------
The United States District Court for the Northern District of
Georgia denied motions seeking lead plaintiff positions in the
securities class actions filed againt AirGate PCS, Inc. and:
(1) Thomas M. Dougherty,
(2) Barbara L. Blackford,
(3) Alan B. Catherall,
(4) Credit Suisse First Boston,
(5) Lehman Brothers,
(6) UBS Warburg LLC,
(7) William Blair & Company,
(8) Thomas Wiesel Partners LLC and
(9) TD Securities
The complaints seek class certification and allege that the
prospectus used in connection with the secondary offering of
Company stock by certain former iPCS shareholders on December
18, 2001 contained materially false and misleading statements
and omitted material information necessary to make the
statements in the prospectus not false and misleading.
The alleged omissions include:
(i) failure to disclose that in order to complete an
effective integration of iPCS, drastic changes would
have to be made to the Company's distribution
channels;
(ii) failure to disclose that the sales force in the
acquired iPCS markets would require extensive
restructuring; and
(iii) failure to disclose that the "churn" or "turnover" rate
for subscribers would increase as a result of an
increase in the amount of sub-prime credit quality
subscribers the Company added from its merger with
iPCS.
On July 15, 2002, certain plaintiffs and their counsel filed a
motion seeking appointment as lead plaintiffs and lead counsel,
which the court denied without prejudice. Two of the plaintiffs
have filed a renewed motion. The defendants responded to the
renewed motion, but the court has not yet entered a ruling. The
Company believes the plaintiffs' claims are without merit and
intends to vigorously defend against these claims. However, no
assurance can be given as to the outcome of the litigation.
ALABAMA: Arbitration Spurs Consumers To Establish Right To Sue
--------------------------------------------------------------
In the 1990s, Alabama juries were awarding so many multi-
million-dollar verdicts against companies that critics
complained of a "jackpot justice" mentality in the state. Years
after changes in the tort law, many of those class actions that
resulted in the large awards have dried up, replaced by an issue
that is proving highly controversial: the use of arbitration
agreements as a pre-emptive measure against lawsuits, the
Financial Times reports.
The practice has become widespread in Alabama and one lawsuit is
winding its way up to the state's Supreme Court to challenge the
legality of the arbitration agreements, in effect, establishing
the right of an Alabama resident to sue, "to have his/her day in
court."
Lorie McGrue, resident of Birmingham, filed this type of suit.
She claims all Alabama car dealers are requiring customers to
agree to arbitration in a contract before cars can be purchased,
thereby forcing consumers to give up their rights to trial by
jury.
The Birmingham Automobile Dealers Association denies there is
any collusion among car dealers requiring customers to agree to
arbitration in a contract before cars can be purchased. Brett
McBrayer, president of the association, has commented that there
are, in fact, some car dealers who make it a selling point not
to have arbitration agreements. However, Mr. McBrayer also
said, "We know a lot of the dealers use arbitration; and the
legal situation here got so bad in the mid-1990s that it was the
obvious thing to consider."
If the McGrue lawsuit is granted class action status, a decision
that will be known in the next few weeks, and if ultimately
successful, the case may have wider implications on the national
debate surrounding consumer arbitration, an area that has yet to
be fully explored. Commercial and labor arbitration are common
in the United States, and used in the airline industry between
management and pilots or in baseball between players and owners.
Arbitration concerning consumers is relatively newer.
"In reality, the experience of the American Arbitration
Association is that we do not do a lot of consumer cases," said
Richard Naimark, the AAA's senior vice-president. "The real
issue on the consumer side is access to justice: Can you get
the same remedies in arbitration that you would get in court."
Some cases already have tested the boundaries of these
arbitration agreements. The Ninth US Circuit Court of Appeals
in California, ruled this year that AT&T had used illegal
tactics by burying its arbitration clause in notices that were
easily overlooked by long-distance customers. "But Alabama is
ahead of the rest of the country in adopting consumer
arbitration agreements and then arguing about them," said
Stephen Ware, professor at the Cumberland School of Law in
Birmingham, Alabama.
The state's arbitration laws contradict the Federal Arbitration
Act, which enforces pre-dispute agreements. That has left wide
open to interpretation the cases that can be enforced, prompting
Alabama's Supreme Court to hear more arbitration cases than do
most other states, according to Professor Ware.
Most of the United States has remained largely indifferent to
the issue of arbitration in consumer disputes; there are pre-
dispute arbitration clauses in everything from credit card to
brokerage contracts. Alabama residents have taken up the
subject with a certain fervor, regarding it as the same kind of
David and Goliath battle that gave rise to the class action
against companies during the 1990s.
The debate around arbitration taps into a largely populist
outlook arising out of the poorer, rural life with a deep,
lingering resentment toward federal laws and mandates. Yet,
quietly over the years, whole areas of American life have been
privatized, as consumers and employees are being forced more
frequently to submit disputes to arbitration, where a private
arbitrator decides matters formerly handled by public courts.
Banks, brokers, insurance firms, car dealers and e-commerce
companies now frequently include mandatory arbitration
provisions in consumer contracts, obliging consumers to give up
the right to sue, often without their even realizing that they
have done so. More and more, employers are refusing to hire
workers unless they agree to submit all disputes to arbitration.
Supporters of arbitration say it is quicker and less costly than
a lawsuit. Opponents say arbitration favors big companies.
There is no public deterrence, however, since most rulings are
private; and only a very limited right to appeal in court
against such rulings is provided.
The Supreme Court is being called in more often to rule on when
and how arbitration can provide a substitute for litigation.
The justices have heard more cases in the past four terms on
arbitration than on antitrust or securities litigation,
suggesting how pervasive a phenomenon arbitration has become in
the life of American citizens, almost without their looking, as
it were.
The Supreme Court justices will be deciding one of the most
important cases to date in this area of legal thought: one that
tests whether many small claims can be brought together in a
class-action arbitration (in cases where a contract does not
specifically rule out class actions). If small claims cannot be
brought as class actions together, many probably cannot be
brought at all, because plaintiffs will not find lawyers willing
to represent them under America's contingency fee system unless
many claims can be lumped together.
Opponents argue that allowing class-action arbitration would
defeat the purpose of arbitration itself, which is to provide
justice more swiftly and at a lower cost.
ALAMOSA DELAWARE: NY Court Dismisses Fraud Suit in Part
-------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against Alamosa Delaware, Inc. and the underwriters
of its initial public offering (IPO).
The action against the Company is one of more than 300 related
class actions which have been consolidated and are pending in
the same court. The complainants seek to recover damages and
allege, among other things, that the registration statement and
prospectus filed with the Securities and Exchange Commission for
purposes of the IPO were false and misleading because they
failed to disclose that the underwriters allegedly:
(1) solicited and received commissions from certain
investors in exchange for allocating to them shares of
common stock in connection with the IPO; and
(2) entered into agreements with their customers to
allocate such stock to those customers in exchange for
the customers agreeing to purchase additional Company
shares in the aftermarket at pre-determined prices.
On February 19, 2003, the court granted motions by the Company
and 115 other issuers to dismiss the claims under Rule 10b-5 of
the Exchange Act which had been asserted against them. The
court denied the motions by the Company and virtually all of the
other issuers to dismiss the claims asserted against them under
Section 11 of the Securities Act.
ALLIANT ENERGY: Investors File Securities Fraud Suits in W.D. WI
----------------------------------------------------------------
Alliant Energy Corporation faces several securities class
actions filed in the United States District Court for the
Western District of Wisconsin. The suit also names as
defendants:
(1) Erroll B. Davis, Jr.,
(2) Thomas M. Walker and
(3) John E. Kratchmer
The actions were allegedly brought on behalf of purchasers of
Company securities from Jan. 29, 2002 through July 18, 2002.
The complaints allege that the defendants made false and
misleading statements relating to the Company's expected
performance of its various non-regulated businesses.
The Company expects that these cases and any additional similar
cases will be consolidated into one action. The Company
believes these actions are without merit and intends to defend
them vigorously, but cannot predict the outcome at this time.
ANTIGENICS INC.: NY Court Dismisses in Part Securities Lawsuit
--------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against Antigenics, Inc., its Chairman and Chief
Executive Officer Garo Armen, and two investment banking firms
that served as underwriters in its initial public offering.
The suit, filed on behalf of a class of purchasers of Company
stock between February 3, 2000 and December 6, 2000, alleges
that the brokerage arms of the investment banking firms charged
secret excessive commissions to certain of their customers in
return for allocations of Company stock in the offering. The
suit also alleges that shares of Company stock were allocated to
certain of the investment banking firms' customers based upon an
agreement by such customers to purchase additional shares of our
stock in the secondary market.
The complaint alleges that Antigenics is liable under Section 11
of the Securities Act of 1933, as amended (the Securities Act),
and Dr. Armen is liable under Sections 11 and 15 of the
Securities Act because its registration statement did not
disclose these alleged practices.
On April 19, 2002, the plaintiffs in this action filed an
amended complaint, which contains new allegations. Again,
virtually identical amended complaints were filed in the other
300 initial public offering cases.
In addition to the claims in the earlier complaint, the amended
complaint alleges that Antigenics and Dr. Armen violated Section
10(b) and 20 of the Securities Exchange Act and SEC Rule 10(b)-5
by making false and misleading statements and/or omissions in
order to inflate the Company's stock price and conceal the
investment banking firms' alleged secret arrangements.
The claims against Dr. Armen, in his individual capacity have
been dismissed without prejudice. On July 15, 2002, the Company
and Dr. Armen joined the Issuer Defendants' Motion to Dismiss
the consolidated suit. By order of the Court, this motion set
forth all "common issues," i.e., all grounds for dismissal
common to all or a significant number of issuer defendants.
The hearing on the issuer defendant's motion to dismiss and the
other defendants' motions to dismiss was held on November 1,
2002. On February 19, 2003, the court issued its opinion and
order on the Issuer Defendants' Motion to Dismiss. The court
granted the Company's motion to dismiss the Rule 10(b)-5 and
Section 20 claims with leave to amend and denied its motion to
dismiss the Section 11 claim. The Company expects that the
plaintiffs will file an amended complaint.
BACKWEB TECHNOLOGIES: NY Court Refuses to Dismiss Investor Suit
---------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against BackWeb Technologies, Ltd., six of the
Company's officers and directors, and various underwriters for
the Company's initial public offering.
The suit asserts that the prospectus from the Company's June 8,
1999 initial public offering failed to disclose certain alleged
improper actions by the underwriters for the offering, including
the receipt of excessive brokerage commissions and agreements
with customers regarding aftermarket purchases of shares of
Company stock.
The complaint alleges violations of Sections 11 and 15 of the
Securities Act of 1933, Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated under
the Exchange Act. On July 15, 2002, an omnibus motion to
dismiss was filed in the coordinated litigation on behalf of
defendants, including the Company, on common pleadings issues.
In October 2002, the court dismissed all six individual
defendants from the litigation without prejudice, pursuant to a
stipulation. On February 19, 2003, the court denied the motion
to dismiss with respect to the claims against the Company. No
trial date has been set.
The Company believes it has meritorious defenses and intends to
defend this action vigorously; however, the results of any
litigation are inherently uncertain and can require significant
management attention, and the Company could be forced to incur
substantial expenditures, even if it ultimately prevails.
CENTRAL SPRINKLERS: Modifies Earlier 35M Fire Sprinkler Recall
--------------------------------------------------------------
The US Consumer Product Safety Commission (CPSC) and Central
Sprinkler Company, an affiliate of Tyco Fire Products LP are
announcing a modification to the voluntary replacement program
announced on July 19, 2001. The company is replacing 35 million
Central fire sprinklers that have O-ring seals. The program
also includes a limited number of O-ring models sold by Gem
Sprinkler Company and Star Sprinkler, Inc. totaling about
167,000 sprinkler heads.
Under the original recall program, consumers were required to
use Central contractors. Now, after notifying Central in
advance and completing certain forms, consumers also can hire
their own contractors and be reimbursed for all or some of the
labor charges.
Central initiated the voluntary replacement program in 2001
because it discovered the performance of these O-ring sprinklers
can degrade over time. These sprinkler heads can corrode or
minerals, salts and other contaminants in water can affect the
rubber O-ring seals. These factors could cause the sprinkler
heads not to activate in a fire. Central is providing newer
fire sprinklers that do not use O-ring seals.
Central is providing, free of charge, replacement sprinkler
heads and the labor needed to replace the sprinklers. As
before, Central will arrange for the installation by using
either its own Central Field Service crews or by contracting
with professional sprinkler contractors.
Now, consumers can arrange to have the free replacement
sprinklers installed themselves rather than waiting for Central
to arrange for installation. Subject to certain conditions,
including advance notice to Central, verification of the
replacements and return of the removed sprinklers, Central will
provide either full or partial reimbursement for labor charges.
For more information, call the Notice Packet Request Line by
Phone: 1-800-871-3492 24 hours a day, 7 days a week or visit the
program's Website: http://www.SprinklerReplacement.com.
DIGIMARC CORPORATION: NY Court Dismisses in Part Securities Suit
----------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against Digimarc Corporation, certain of its
officers and directors and certain underwriters of the Company's
initial public offering.
The suit alleges, among other things, that the underwriters of
the Company's initial public offering violated securities laws
by failing to disclose certain alleged compensation arrangements
(such as undisclosed commissions or stock stabilization
practices) in the Company's initial public offering registration
statement and by engaging in manipulative practices to
artificially inflate the price of the Company's stock in the
after-market subsequent to the Company's initial public
offering.
The Company and certain of its officers and directors are named
in the amended complaint pursuant to Section11 of the Securities
Act of 1933, and Section 10(b) and Rule10b-5 of the Securities
Exchange Act of 1934 on the basis of an alleged failure to
disclose the underwriters' alleged compensation arrangements and
manipulative practices. The complaint seeks unspecified
damages.
The individual officer and director defendants entered into
tolling agreements and, pursuant to a Court Order dated October
9, 2002, were dismissed from the litigation without prejudice.
Furthermore, in July 2002, the Company and the other issuers in
the consolidated cases filed motions to dismiss the amended
complaint for failure to state a claim. The motion to dismiss
claims under Section 11 was denied as to virtually all the
defendants in the consolidated actions, including the Company.
The claims against the Company under Section 10(b), however,
were dismissed.
The Company intends to defend these actions vigorously. Due to
the inherent uncertainties of litigation and because the
litigation is still at a preliminary stage, the ultimate outcome
of the matter cannot be predicted.
DIGITAS INC.: NY Court Dismisses in Part Securities Fraud Suit
--------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against Digitas, Inc., several of its officers and
directors, and five underwriters of its initial public offering
(IPO).
The suit was brought on behalf of purchasers of the Company's
common stock since March 13, 2000, the date of the offering.
The plaintiffs allege, among other things, that the Company's
prospectus, incorporated in the Registration Statement on Form
S-1 filed with the Securities and Exchange Commission, was
materially false and misleading because it failed to disclose
that the underwriters had engaged in conduct designed to result
in undisclosed and excessive underwriters' compensation in the
form of increased brokerage commissions and also that this
alleged conduct of the underwriters artificially inflated the
Company's stock price in the period after the IPO.
The plaintiffs claim violations of Sections 11, 12 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder by the Securities and Exchange Commission and seek,
among other things, damages, statutory compensation and costs of
litigation.
Effective October 9, 2002, the claims against the Company's
146;s officers and directors were dismissed without prejudice.
Effective February 19, 2003, the Section 10(b) claims against
the Company were dismissed.
The Company believes that the remaining claims against it are
without merit and intends to defend them vigorously. Management
currently believes that resolving these matters will not have a
material adverse impact on the Company's financial position or
its results of operations; however, litigation is inherently
uncertain and there can be no assurances as to the ultimate
outcome or effect of these actions.
EDISON SCHOOLS: Plaintiffs Commence Consolidated Suit in S.D. NY
----------------------------------------------------------------
Plaintiffs in the securities class actions filed against Edison
Schools, Inc. and certain of its officers and directors filed a
consolidated suit in the United States District Court for the
Southern District of New York. The court appointed Hawaii
Electricians Annuity Fund as lead plaintiff and Milberg Weiss
Bershad Hynes & Lerach LLP as lead counsel.
The lawsuit alleges that the Company and certain of its officers
and directors violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15
of the Securities Act of 1933. The lawsuit seeks an unspecified
amount of compensatory damages, rescission and/or rescissory
damages, costs and expenses related to bringing the action, and
injunctive relief.
Plaintiffs allege that the Company's public disclosures from
November 1999 to May 2002 regarding its financial condition were
materially false and misleading because the Company allegedly
improperly inflated its total revenues by including certain
payments, including payments for teacher salaries, that were
paid directly to third parties by local school districts and
charter school boards that contracted with the Company,
accelerated revenues on an unexecuted contract with one school
district, and failed to timely recognize losses related to
contracts with two school districts.
The lawsuit further alleges that the Company lacked adequate
internal accounting controls, manipulated the test scores of its
students in order to demonstrate improvement in the students'
academic performance, and failed to disclose that the Company
agreed to fulfill the final two years of its contract with the
Sherman, Texas school district without pay.
The lawsuit also mentions three restatements of the Company's
financial statements, one regarding a warrant purchased in 1998
by a philanthropic organization, one regarding a severance
agreement between the Company and one of its senior officers,
both of which were made by the Company as a result of the May
14, 2002 cease-and-desist order, and another regarding stock
based compensation the Company granted to one of its senior
officers.
The Company has negotiated a stipulation in this consolidated
action that allows defendants until August 1, 2003 to file a
responsive pleading. The Company believes that it has strong
defenses to the claims raised by these lawsuits, however the
outcome of this litigation cannot be determined at this time.
E-LOAN INC.: 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 E-loan, Inc. and:
(1) Christian Larsen,
(2) Janina Pawlowski,
(3) Frank Siskowski,
(4) The Goldman Sachs Group, Inc.,
(5) FleetBoston Robertson Stephens, Inc.,
(6) Merrill Lynch Pierce Fenner & Smith, Inc.,
(7) Credit Suisse First Boston Corporation and
(8) J. P. Morgan Chase & Co.
The suit alleges, among other things, that the underwriters of
the Company's initial public offering violated Section 12(a) of
the Securities Act of 1933 by receiving excessive and
undisclosed commissions and fees, and by entering into unlawful
private agreements with brokers' customers, and that all
defendants violated Section 11 of the Securities Act of 1933,
and Section 10(b) and Rule 10b-5 under the Securities Exchange
Act of 1934 by making material false and misleading statements
in the Company's initial public offering prospectus concerning
brokers' commissions and private agreements with brokers'
customers.
The Company has been served with two of the complaints and has
entered into a stipulation with plaintiffs' counsel for an
extension of time to respond to the complaint. Similar
complaints have been filed against over 300 other issuers that
have had initial public offerings since 1998 and all such
actions have been included in a single coordinated proceeding.
In July 2002, the Company and the other issuers in the
consolidated cases filed motions to dismiss the amended
complaint for failure to state a claim, which was denied as to
the Company on February 19, 2003. On October 9, 2002, the
Company's individual defendants were dismissed, without
prejudice, from the lawsuit, pursuant to a stipulated agreement
with the plaintiffs.
The Company intends to vigorously defend these lawsuits.
However, due to the inherent uncertainties of litigation, it
cannot accurately predict the ultimate outcome of the
litigation. Any unfavorable outcome of the litigation could
have an adverse impact on its business.
EXPEDIA INC.: 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 Expedia, Inc., alleging violations of
Sections 11 and 15 of the Securities Act of 1933 and Sections
10(b) and 20 of the Securities Exchange Act of 1934. The suit
also names as defendants certain of its officers and directors
and certain underwriters of the Company's initial public
offering (IPO).
Plaintiffs filed an amended complaint on April 20, 2002. The
amended complaint alleges that the Company's prospectus was
false or misleading in that it failed to disclose:
(1) that the underwriters allegedly were paid excessive
commissions by certain customers in return for
receiving shares in the IPO; and
(2) that certain of the underwriters' customers allegedly
agreed to purchase additional shares of the Company in
the aftermarket in return for an allocation of shares
in the IPO.
The complaint further alleges an agreement by the underwriters
with the Company to provide positive market analyst coverage for
the Company after the IPO that had the effect of manipulating
the market for Expedia's stock. Plaintiffs contend that, as a
result of the alleged omissions from the prospectus and alleged
market manipulation through the use of analysts, the price of
the Company's stock was artificially inflated between November
9, 1999 and December 6, 2000, and that the defendants are liable
for unspecified damages to those persons who purchased stock
during that period.
On August 9, 2001, these actions were consolidated before a
single judge along with cases brought against numerous other
issuers and their underwriters that make similar allegations
involving the IPOs of those issuers. The consolidation was for
purposes of pretrial motions and discovery only.
On July 15, 2002, the Company and the individual defendants,
along with the other issuers and their related officer and
director defendants, filed a joint motion to dismiss based on
common issues. Arguments for and against the motion to dismiss
were presented to the court on November 1, 2002. The court
denied the Company's motion on February 19, 2003.
Discovery is currently ongoing. The Company intends to
vigorously defend against this action.
FOUNDRY NETWORKS: Asks CA Court To Dismiss Securities Fraud Suit
----------------------------------------------------------------
Foundry Networks, Inc. asked the United States District Court
for the Northern District of California to dismiss the fourth
amended consolidated securities class action filed against it
and certain of its officers.
Several suits were filed following the Company's announcement in
December 2000 of its anticipated financial results for the
fourth quarter ended December 31, 2000. The lawsuits were
subsequently consolidated by the court, lead plaintiffs were
selected as required by law and such plaintiffs filed a
consolidated amended complaint which alleged violations of
federal securities laws and purported to seek damages on behalf
of shareholders who purchased the Company's common stock during
the period from September 7, 2000 to December 19, 2000.
On October 26, 2001, the court granted the Company's motion to
dismiss the consolidated amended complaint without prejudice and
with leave to amend. Attorneys for lead plaintiffs then filed a
second amended complaint.
On June 6, 2002, the court granted the Company's motion to
dismiss the second amended complaint, but without prejudice and
with leave to amend. Plaintiffs then filed a third amended
complaint. The Company again moved to dismiss the suit, which
the court again granted.
On March 17, 2003, attorneys for lead plaintiffs filed a fourth
amended complaint. On April 7, 2003, the Company filed a motion
to dismiss the suit. A hearing on the motion has been scheduled
for June 13, 2003. The Company believes the lawsuit is without
merit and intends to defend itself vigorously.
FOUNDRY NETWORKS: NY Court Dismisses in Part Securities Lawsuit
---------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against Foundry Networks, Inc. on behalf of all
persons who purchased the Company's common stock from September
27, 1999 through December 6, 2000.
The amended complaint names as defendants, the Company, three of
its officers, and investment banking firms that served as
underwriters for the Company's initial public offering in
September 1999. The amended complaint alleges violations of
Sections 11 and 15 of the Securities Act of 1933, and Section
10(b) of the Securities Exchange Act of 1934, on the grounds
that the prospectus incorporated in the registration statement
for the offering failed to disclose, among other things, that:
(1) 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 shares of the
Company's stock sold in the initial public offering;
and
(2) the underwriters had entered into agreements with
customers whereby the underwriters agreed to allocate
shares of the Company's stock sold in the initial
public offering to those customers in exchange for
which the customers agreed to purchase additional
shares of the Company's stock in the aftermarket at
pre-determined prices.
The amended complaint also alleges that false analyst reports
were issued following the IPO. No specific damages are claimed.
The Company is aware that similar allegations have been made in
lawsuits relating to more than 300 other initial public
offerings conducted in 1999 and 2000. Those cases have been
consolidated for pretrial purposes before the Honorable Judge
Shira A. Scheindlin. Motions to dismiss the case were filed on
behalf of all the defendants in all of the cases.
On February 19, 2003, Judge Scheindlin issued a ruling on the
motions. In ruling on motions to dismiss, the court must treat
the allegations in the complaint as if they were true solely for
purposes of deciding the motions. The court denied the motion
to dismiss the claims against the Company alleged under the
Securities Act of 1933. The same ruling was made in all but 10
of the other cases.
The court dismissed the claims alleged under the Securities
Exchange Act of 1934, Section 10(b), against the Company and one
of the individual defendants and dismissed all of the
"controlling person" claims alleged under that Act against all
of the Foundry Networks individual defendants. The court denied
the motion to dismiss the Section 10(b) claims against the
remaining Foundry Networks individual defendants on the basis
that those defendants sold the Company's stock during the class
period alleged in the complaint and that those allegations were
sufficient purely for pleading purposes to allow those claims to
move forward. A similar ruling was made with respect to 62 of
the individual defendants in the other cases.
Management believes that the remaining allegations in the class
action against the Company and its officers are without merit
and intends to contest them vigorously. The litigation process
is inherently uncertain. If the outcome of the litigation is
adverse to the Company and if, in addition, the Company is
required to pay significant monetary damages in excess of
available insurance, its business could be significantly harmed.
HOTELS.COM: Shareholders Commence Suit Opposing USA Merger in DE
----------------------------------------------------------------
Hotels.com, Inc. faces two class actions filed in the Delaware
Court of Chancery relating to its proposed merger with USA
Interactive. The suits also name as defendants the Company's
Board of Directors and USA. The suits allege that the
consideration to be received by our public shareholders in the
contemplated merger of Hotels.com with USA is inadequate.
The complaint seeks, among other things, injunctive relief
against consummation of the transaction and damages in an
unspecified amount. The Company believes that this lawsuit is
without merit, and intends to defend vigorously against it.
HOTELS.COM: Securities Fraud Lawsuits Consolidated in N.D. TX
-------------------------------------------------------------
The securities class actions filed against Hotels.com, Inc. and
three of its executives have been consolidated into one suit in
the United States District Court for the Northern District of
Texas.
These suits purport to be brought on behalf of purchasers of our
common stock during the period from October 23, 2002 to January
6, 2003 and make certain claims under the federal securities
laws. Specifically, the complaints allege that during the class
period, the defendants knowingly:
(1) made certain materially false and misleading public
statements, in a press release and two press
interviews, with respect to the anticipated performance
of the company during the fourth quarter of 2002; and
(2) concealed from the investing public certain material
events and developments that were likely to render that
anticipated performance unattainable.
The complaints assert that the individual defendants profited
from the rise in our share price caused by their public
statements through sales of Company stock during the class
period. The complaints further allege that as a result of the
Company's announcement on January 6, 2003 of a downward revision
of its guidance for the fourth quarter of 2002, its share price
declined precipitously.
The plaintiffs seek certification of a class of all non-
defendant purchasers of our stock during the class period and
seek damages in an unspecified amount suffered by the putative
class.
The Company believes that these lawsuits are without merit, and
the defendants intend to defend vigorously against them.
INFORMATICA CORPORATION: NY Court Refuses To Dismiss Stock Suit
---------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against Informatica Corporation, on behalf of all
persons who purchased the Company's common stock from April 29,
1999 through December 6, 2000.
It names as defendants the Company, one of the Company's current
officers, one of the Company's former officers, and several
investment banking firms that served as underwriters of the
Company's April 29, 1999 initial public offering and September
28, 2000 follow-on public offering.
The amended complaint alleges liability as to all defendants
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 false analyst reports
were issued. No specific damages are claimed.
The Company is aware that similar allegations have been made in
other lawsuits filed in the Southern District of New York
challenging over 300 other initial public offerings and follow-
on offerings conducted in 1999 and 2000. Those cases have been
consolidated for pretrial purposes before the Honorable Judge
Shira A. Scheindlin.
On July 15, 2002, the Company and its affiliated individual
defendants (as well as all other issuer defendants) filed a
motion to dismiss the complaint. On February 19, 2003, the
court ruled on the motions to dismiss. The Court denied the
motions to dismiss the claims under the Securities Act of 1933
against the Company, the motion to dismiss the claim under
Section 10(a) of the Securities Exchange Act of 1934 against the
Company and 184 other issuer defendants, and the motion to
dismiss the claims under Section 10(a) and 20(a) of the
Securities Exchange Act of 1934 against the individual
defendants and sixty-two other individual defendants.
The Company believes that it has meritorious defenses to the
claims against it, and intends to defend itself vigorously.
INTERWAVE COMMUNICATIONS: NY Court Refuses To Dismiss Stock Suit
----------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against interWAVE Communications International,
certain investment bank underwriters for the Company's initial
public offering (IPO), the Company, and various of the Company's
officers and directors.
The amended complaint alleges undisclosed and improper practices
by the underwriters concerning the allocation of the Company's
IPO shares, in violation of the federal securities laws, and
seeks unspecified damages on behalf of persons who purchased
Company stock during the period from January 28, 2000 through
December 6, 2000.
Similar complaints have been filed regarding more than 300 other
IPOs. These cases have been coordinated as In re Initial Public
Offering Securities Litigation, Civil Action No. 21-MC-92.
On October 8, 2002, the Court dismissed all of the individual
defendants in the Company's IPO litigation, without prejudice,
subject to a tolling agreement. Issuer and underwriter
defendants in the coordinated litigation filed omnibus motions
to dismiss on common pleading issues.
On February 19, 2003, the court denied the motion to dismiss the
Company's claims. The Company believes it has meritorious
defenses to the claims and will continue to defend the action
vigorously.
LOOKSMART LTD.: CA Court Refuses to Dismiss Unfair Trade Lawsuit
----------------------------------------------------------------
The Superior Court in San Francisco County, California refused
to dismiss the consolidated class action filed against Looksmart
Ltd., alleging breach of contract, unfair business practices and
false advertising in connection with the launch of the Company's
new Small Business Listings product announced in April 2002.
The complaint sought restitution, unspecified compensatory
damages, injunctive relief and attorneys' fees.
In November 2002, the Company filed a motion to dismiss the
claims in the amended complaint, which the court denied. The
Company has answered the suit. Plaintiffs have served document
and deposition requests, but no other discovery is being sought
at this time.
MARTHA STEWART: Asks NY Court To Dismiss Securities Fraud Suit
--------------------------------------------------------------
Martha Steward Living Omnimedia, Inc. asked the United States
District Court for the Southern District of New York to dismiss
the consolidated securities class action filed on behalf of
persons who purchased common stock in the Company between
January 8, 2002 and October 2, 2002. The suit also names as
defendans:
(1) Martha Stewart,
(2) Gregory R. Blatt,
(3) Dora Braschi Cardinale,
(4) Sharon L. Patrick,
(5) Margaret Roach,
(6) Suzanne Sobel,
(7) Lauren Podlach Stanich, and
(8) Gael Towey
The action consolidates seven class actions previously filed in
the Southern District of New York. The plaintiffs assert
violations of Sections 10(b) (and rules promulgated thereunder),
20(a) and 20A of the Securities Exchange Act of 1934. The
plaintiffs allege that the Company, Ms. Stewart and the
individual defendants made statements about Ms. Stewart's sale
that were materially false and misleading.
The plaintiffs allege that as a result of these false and
misleading statements, the market price of the Company's stock
was inflated during the putative class periods and dropped after
the alleged falsity of the statements became public. The
plaintiffs further allege that the Individual Defendants traded
Company stock while in possession of material non-public
information.
NEW YORK: Suit Says New Rochelle's New Districts Gerrymandering
---------------------------------------------------------------
Four black voters recently filed a class action alleging that
New Rochelle's newly drawn City Council districts amount to
"racial gerrymandering," Associated Press Newswires reports.
The lawsuit claims that the only district in the city of New
Rochelle that had a black majority, and elected a black council
member, was redrawn by the council last month in order to reduce
the black proportion from 53 percent to 45 percent, violating
the Constitution and the Voting Rights Act of 1965.
The plaintiffs' lawyer, Randolph McLaughlin, said blacks in New
Rochelle were disappointed that the black incumbent, Buenia
Brown, voted for the new district lines. Ms. Brown said she
voted for the new lines to help create a separate district that
could elect a Hispanic.
Mayor Tim Idoni, who has a seat on the Council, defended the
lines; he said, "We believe, based on the way we wrote them,
that they are legal and lawful and that they will be upheld."
The lines had to be redrawn to reflect population changes
recorded in the 2000 Census. The lawsuit seeks a preliminary
injunction to prevent this year's elections from going forward
under the new districts. Judge Charles Brieant scheduled a
hearing for June 3, the first day candidates are permitted to
collect signatures on their ballot petitions.
Randolph McLaughlin, the plaintiffs' lawyer, was asked whether
he knew the Council's motive for diluting the black percentage
in District 3. "We are calling it racial gerrymandering," Mr.
McLaughlin said.
The lawsuit alleges that 600 residents of the city have been put
into two districts. Mr. McLaughlin said that may have been
caused by "ineptness," but is reason enough to throw out the
lines.
OPENTV CORPORATION: NY Court Dismisses in Part Securities Suit
--------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against OpenTV Corporation, certain investment
banks which acted as underwriters for its initial public
offering, and various of its officers and directors
The suit alleges undisclosed and improper practices concerning
the allocation of the Company's initial public offering shares,
in violation of the federal securities laws, and seek
unspecified damages on behalf of persons who purchased OpenTV
Class A ordinary shares during the period from November 23, 1999
through December 6, 2000.
Other actions have been filed making similar allegations
regarding the initial public offerings of more than 300 other
companies. All of these lawsuits have been coordinated for
pretrial purposes as In re Initial Public Offering Securities
Litigation, Civil Action No. 21-MC-92.
Defendants in these cases have filed omnibus motions to dismiss
on common pleading issues. Oral arguments on these omnibus
motions to dismiss were held on November 1, 2002. All claims
against the Company's officers and directors have been dismissed
without prejudice in this litigation.
On February 19, 2003, the court denied in part and granted in
part the motion to dismiss filed on behalf of defendants,
including the Company. The court's order dismissed all claims
against us except for a claim brought under Section 11 of the
Securities Act of 1933. However, the court has given plaintiffs
an opportunity to amend their claims in order to state a claim.
The Company believes that it has meritorious defenses to the
claims asserted in this matter and will defend itself
vigorously. The Company is unable to predict the likelihood of
a favorable outcome or estimate our potential liability, if any.
OPENTV CORPORATION: Faces Lawsuit Over ACTV Merger in DE Court
--------------------------------------------------------------
OpenTV Corporation faces a class action filed in the Court of
Chancery of the State of Delaware in and for the County of New
Castle. The suit also names as defendants ACTV and its
directors.
The complaint generally alleges that the directors of ACTV
breached their fiduciary duties to the ACTV shareholders in
approving the merger agreement and that, in approving the merger
agreement, ACTV's directors failed to take steps to maximize the
value of ACTV to its shareholders. The complaint further
alleges that the Company aided and abetted the purported
breaches of fiduciary duties committed by ACTV's directors on
the theory that the potential merger could not occur without the
Company's participation. The complaint seeks certain forms of
equitable relief, including enjoining the consummation of the
merger.
The Company believes that the allegations are without merit and
intends to defend against the complaint vigorously.
OPUS360 CORPORATION: Agrees To Settle NY Securities Fraud Suit
--------------------------------------------------------------
Opus360 Corporation reached a settlement for the consolidated
securities class action filed against it in the United States
District Court for the Southern District of New York, on behalf
of all persons who acquired securities of the Company between
April 7, 2000 and March 20, 2001. Also named as defendants in
the complaint were the Company's current and former officers and
directors, the underwriters of the Company's initial public
offering (IPO) and two shareholders who sold stock in a
secondary offering concurrent with the IPO.
The suit alleged that, among other things, the plaintiff and
members of the proposed class were damaged when they acquired
securities of the Company because false and misleading
information and material omissions in the registration statement
relating to the IPO and the secondary offering caused the prices
of the Company's securities to be inflated artificially.
The suit asserted violations of Section 11, 12(a)(2), and 15 of
the Securities Act of 1933. Damages in unspecified amounts and
certain rescission rights were sought.
In October 2001, the Company and all other defendants filed
motions to dismiss the amended complaint. By opinion and order
dated October 2, 2002, the court granted all of the motions and
dismissed the amended complaint, but granted plaintiffs leave to
serve a second consolidated amended class action.
On October 30, 2002, plaintiffs served their second amended
complaint, which contains allegations similar to those in the
first suit. Briefing on defendants' motion to dismiss the
second amended complaint is scheduled to be completed by May 30,
2003.
In the interim, the parties have reached an agreement in
principle to settle all claims asserted and that could have been
asserted in this litigation. Under the terms of the proposed
settlement, which is still subject to further documentation and
court approval, most of the settlement proceeds would be paid by
the insurance carrier pursuant to the Company's D & O coverage,
and the Company would pay an immaterial amount.
REDBACK NETWORKS: NY Court Refuses To Dismiss Securities Lawsuit
----------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against Redback Networks, Inc. and its former
officers.
The lawsuit asserts, among other claims, violations of the
federal securities laws relating to how the Company's
underwriters of the initial public offering allegedly allocated
IPO shares to the underwriters' customers. In March 2002, the
United States District Court for the Southern District of New
York entered an order approving the joint request of the
plaintiffs and the Company to dismiss the claims without
prejudice.
On April 20, 2002, plaintiffs filed a consolidated amended class
action complaint against the Company and its current and former
officers and directors, as well as certain underwriters involved
in the Company's initial public offering. Similar complaints
have been filed concerning more than 300 other IPOs, all of
these cases have been coordinated as In re Initial Public
Offering Securities Litigation, 21 MC 92.
On July 15, 2002, the issuer defendants filed an omnibus motion
to dismiss for failure to comply with applicable pleading
standards. On October 8, 2002, the court entered an Order of
Dismissal as to the individual defendants in the Redback IPO
litigation, without prejudice, subject to a tolling agreement.
On February 19, 2003, the court denied the motion to dismiss the
Company's claims.
Although the outcome of this lawsuit cannot be predicted with
certainty, the Company believes it has meritorious defenses and
intends to defend the action vigorously. Were an unfavorable
ruling to occur, there exists the possibility of a material
impact on business, results of operations, financial condition
and cash flow.
SEQUENOM INC.: NY Court Dismisses in Part 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 Sequenom, Inc. and certain of its current
or former officers and directors.
In the complaint, the plaintiffs allege that the Company's
underwriters, certain of its officers and directors and the
Company violated the federal securities laws because our
registration statement and prospectus contained untrue
statements of material fact or omitted material facts regarding
the compensation to be received by and the stock allocation
practices of the underwriters. The plaintiffs seek unspecified
monetary damages and other relief.
In October 2002, the Company's officers and directors were
dismissed without prejudice pursuant to a stipulated dismissal
and tolling agreement with the plaintiffs. In February 2003,
the Court dismissed the claim against the Company brought under
Section 10(b) of the Securities Exchange Act of 1934, without
giving the plaintiffs leave to amend the complaint with respect
to that claim. The court, however, declined to dismiss the
claim brought under Section 11 of the Securities Act of 1933.
The Company denies all material allegations and intends to
defend against the remaining claim vigorously. Management does
not anticipate that the ultimate outcome of this event will have
a material adverse impact on the Company's financial position.
SONICWALL INC.: NY Court Refuses To Dismiss Securities Lawsuit
--------------------------------------------------------------
The United States District Court for the Southern District of
New York refused to dismiss the consolidated securities class
action filed against SonicWall, Inc., three of its officers and
directors, and certain of the underwriters in the Company's
initial public offering in November 1999 and its follow-on
offering in March 2000.
The amended complaint alleges claims under the Securities Act of
1933 and the Securities Exchange Act of 1934, and seeks damages
or rescission for misrepresentations or omissions in the
prospectuses relating to, among other things, the alleged
receipt of excessive and undisclosed commissions by the
underwriters in connection with the allocation of shares of
common stock in the Company's public offerings.
On July 15, 2002, the issuers filed an omnibus motion to dismiss
for failure to comply with applicable pleading standards. On
October 8, 2002, the court entered an order of dismissal as to
all of the individual defendants in the SonicWALL IPO
litigation, without prejudice. On February 19, 2003, the court
denied the motion to dismiss the Company's claims.
The Company intends to defend the action vigorously. No
estimate can be made of the possible loss or possible range of
loss, if any, associated with the resolution of this
contingency.
STARBUCKS COFFEE: Recalls 38,000 Tumbler Cups For Choking Hazard
----------------------------------------------------------------
Starbucks Coffee Co. is cooperating with the US Consumer Product
Safety Commission (CPSC) by voluntarily recalling approximately
38,000 plastic Bearista(tm) Bear tumbler cups. When the
flexible straw on the cups is chewed, small pieces of plastic
can detach, posing a choking hazard to young children.
Starbucks has received two reports of pieces of the straws
becoming detached in the children's mouths. No injuries have
been reported; however, in one instance, a child reportedly
began to choke on a detached piece of the straw and the parent
administered the Heimlich Maneuver to remove it.
The tumbler cup is constructed of translucent plastic in the
shape of a bear with the words "Bearista(tm) Bear" printed on
the front. The cup was sold in both blue and green. The cup
has a screw-on lid in the shape of a bear's head, from which a
soft, flexible straw protrudes. The product's lid can rotate in
a way that bends the straw attachment to prevent liquid from
leaking out.
Starbucks stores in the United States, Canada and Taiwan sold
the recalled cups from April 2003 through May 2003 for
approximately $7.
For more information, contact Starbucks Customer Relations by
Phone: (800) 235-2883 between 9 am and 6 pm ET any day, or visit
the company's Website: http://www.starbucks.comor
http://www.starbuckscollectibles.com.
TELECOMUNICACIONES DE PUERTO RICO: Plaintiffs Withdraw From Suit
----------------------------------------------------------------
The Superior Court of Puerto Rico dismissed some of the
plaintiffs in the class action filed against Telecomunicaciones
de Puerto Rico, Inc. by three residential telephone service
subscribers and one business service subscriber under the Puerto
Rico Telecommunications Act of 1996.
The plaintiffs claim that the Company's charges for touchtone
service are not based on cost, and are therefore in violation of
the Act. They have requested that the Court:
(1) issue an Order certifying the case as a class action,
(2) designate the plaintiffs as representatives of the
class,
(3) find that the charges are illegal,
(4) establish a maximum charge based on cost, and
(5) order the Company to reimburse every subscriber for
excess payments made since September 1996.
On October 25, 2002, plaintiffs filed a motion requesting class
certification. The plaintiffs filed on November 22, 2002, a
voluntary request for dismissal as to some plaintiffs. On
December 19, 2002, PRTC filed its answer to the amended
complaint. On February 18, 2003, PRTC filed its respective
opposition to plaintiff's motion for class certification.
On April 4, 2003, the court issued a partial order granting the
voluntary dismissals. On this same date, the court issued an
order scheduling a hearing for May 20, 2003 in order to discuss
the request and opposition for class certification. The court
ordered the stay of the discovery proceeding until the
certification of class issue is determined.
TELECOMUNICACIONES DE PUERTO RICO: Consumer Fraud Suit Dismissed
----------------------------------------------------------------
The Superior Court of Puerto Rico dismissed without prejudice
the class action filed against Telecomunicaciones de Puerto
Rico, Inc. by one residential telephone service subscriber and
three business service subscribers under the Puerto Rico
Telecommunications Act of 1996.
The plaintiffs claim that the Company's unit charges for local
measured service are not based on cost, and are therefore in
violation of the Act. They have requested that the Court:
(1) issue an Order certifying the case as a class action,
(2) designate the plaintiffs as representatives of the
class,
(3) find that the unit charges are illegal,
(4) establish a maximum unit charge based on cost, and
(5) order the Company to reimburse every subscriber for
excess payments made since September 1996.
On November 22, 2002 plaintiffs filed a request for voluntary
dismissal without prejudice. On February 26, 2003, the Court
issued an Order with respect to the motion requesting voluntary
dismissal. Specifically, the court ordered the plaintiffs to
present within a period of twenty (20) days, that is until
March 18, 2003, their position towards the class action if the
dismissal is granted.
THESTREET.COM INC.: NY Court Dismisses in Part Securities Suit
--------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against TheStreet.com, Inc., certain of its former
officers and directors and a current director, and certain
underwriters of the Company's initial public offering:
(1) The Goldman Sachs Group, Inc.,
(2) Chase H&Q,
(3) Thomas Weisel Partners LLC,
(4) FleetBoston Robertson Stephens, and
(5) Merrill Lynch Pierce Fenner & Smith, Inc.
The complaint alleges, among other things, that the underwriters
of TheStreet.com's initial public offering violated the
securities laws by failing to disclose certain alleged
compensation arrangements (such as undisclosed commissions or
stock stabilization practices) in the offering's registration
statement. TheStreet.com and certain of its former officers and
directors and a current director are named in the complaint
pursuant to Section 11 of the Securities Act of 1933, and
Section 10(b) of the Securities Exchange Act of 1934. The
plaintiffs seek damages and statutory compensation against each
defendant in an amount to be determined at trial, plus pre-
judgment interest thereon, together with costs and expenses,
including attorneys' fees.
Similar complaints have been filed against over 300 other
issuers that have had initial public offerings since 1998 and
all such actions have been included in a single coordinated
proceeding. Pursuant to a Court Order dated October 9, 2002,
each of the individual defendants to the action has been
dismissed without prejudice. Additionally, pursuant to a Court
Opinion and Order dated February 19, 2003, the claims against
TheStreet.com for violations of Section 10(b) of the Exchange
Act have been dismissed with prejudice.
The Company remains a party to the action and intends to defend
itself vigorously. However, due to the inherent uncertainties
of litigation, the Company cannot accurately predict the
ultimate outcome of the litigation. Any unfavorable outcome of
this litigation could have an adverse impact on the Company's
business, financial condition and results of operations.
VERITAS SOFTWARE: Securities Fraud Suits Consolidated in N.D. CA
----------------------------------------------------------------
The United States District Court for the Northern District of
California consolidated several securities class actions filed
against Veritas Software Corporation filed after the Company
announced in January 2003 that it would restate financial
results as a result of transactions entered into with America
Online (AOL) in September 2000 in the United States District
Court for the Northern District of California.
The suit alleges that the Company and some of its officers and
directors violated provisions of the Securities Exchange Act of
1934. The complaint contains allegations, including that the
Company made materially false and misleading statements with
respect to the Company's 2000, 2001 and 2002 financial results
included in the Company's filings with the SEC, press releases
and other public disclosures.
In addition, several complaints purporting to be derivative
actions have been filed in California state court against some
of the Company's directors and officers. These complaints are
based on the same facts and circumstances as the class actions
and generally allege that the named directors and officers
breached their fiduciary duties by failing to oversee adequately
the Company's financial reporting. All of the complaints
generally seek an unspecified amount of damages.
The cases are still in the preliminary stages, and it is not
possible for the Company to quantify the extent of its potential
liability, if any. An unfavorable outcome in any of these cases
could have a material adverse effect on the Company's business,
financial condition, results of operations and cash flow.
WINK COMMUNICATIONS: NY Court Dismisses in Part Securities Suit
---------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed in part the consolidated securities class
action filed against Wink Communications, Inc., certain
investment banks which acted as underwriters for the Company's
initial public offering, and two of its officers and directors.
The suit alleges undisclosed and improper practices concerning
the allocation of the Company's initial public offering shares,
in violation of the federal securities laws, and seeks
unspecified damages on behalf of persons who purchased the
Company's common stock during the period from August 19, 1999
through December 6, 2000.
This action is among the over 300 lawsuits that have been
consolidated for pretrial purposes as In re Initial Public
Offering Securities Litigation, Civil Action No. 21-MC-92.
Defendants in these cases have filed motions to dismiss on
common pleading issues.
Oral arguments on these omnibus motions to dismiss were held on
November 1, 2002. On February 19, 2003, the court ruled on the
motions to dismiss. The court denied the motions to dismiss
claims against the Company and the individual defendants under
Sections 11 and 15 of the Securities Act of 1933. The court
granted the motion to dismiss the claims under Section 10(b) of
the Securities Exchange Act of 1934 against the Company and one
individual defendant, and denied that motion against the other
individual defendant and 59 individual defendants in the related
cases, on the basis that the respective amended complaints
alleged that the individuals sold stock. The court granted the
motion to dismiss the claims under Section 20(a) of the
Securities Exchange Act of 1934.
The Company believes that it has meritorious defenses to the
claims brought against it and that it will defend itself
vigorously. No provision has been made in its condensed
consolidated financial statements for this matter.
Asbestos Alert
ASBESTOS LITIGATION: ABB Not Fazed by Latest Bankruptcy Delay
--------------------------------------------------------------
ABB gets another blow as US bankruptcy court Judge Judith
Fitzgerald told the group's lawyers, the insurers, and the
asbestos claimants that the paperwork presented to her was
voluminous thus no ruling was to be expected before late June at
the earliest.
The engineering giant was hoping the $1,300,000,000 asbestos
deal will be settled before the month ends as it tries to
restore profits and cut its debt mountain. The delay raised
fears among some investors that ABB will have to raise fresh
capital as it attempts to return to profit and cut its œ5bn dept
pile. ABB aims to raise GBP1,000,000,000 as it moves to sell
its oil, gas and petrochemicals arm, which employs the bulk of
its 800-strong Scottish workforce. The Swiss engineering group
remains unfazed however, saying that the delay should not be
seen negatively because the company was moving in the right
direction.
ABB chairman Juergen Dormann said the company was talking with
three potential buyers for OGP. ABB spokesman Thomas Schmidt
said, "Everything is on track with the sale of OGP. If there is
a delay of some weeks (on asbestos) it won't have an impact on
OGP."
ASBESTOS LITIGATION: Senator Foresees Passage of Asbestos Bill
--------------------------------------------------------------
Christopher Dodd of Connecticut, a Democratic US senator, taking
note of the surge of stock prices of the companies involved in
the asbestos litigation in the past days, is optimistic that all
the parties will find points to agree upon so that legislation
to curb asbestos litigation will be passed.
The measure offered by Orrin Hatch, a Utah Republican Senator,
that would set up a $108,000,000,000 fund to pay for asbestos
victims it still on shaky ground as enough support from
Democrats is still uncertain in a closely-divided Republic-led
Senate.
Sen. Dodd, whose state, Connecticut, is the haven to most of the
country's insurers, said, "We just want to say to those
wondering whether or not we're going to get a bill, we believe
we will."
"It's going to take a little time," he said. "It's very hard
work to pull this together properly because it's a lot of detail
work that needs to be done . But we thought it was important to
send a message to those who are interested in the subject matter
that we are confident that can be done."
Sen. Patrick Leahy of Vermont, ranking Democrat on Hatch's
Judiciary Committee, said "We're getting closer (but) we're
still not there."
Sen. Rick Santorum of Pennsylvania, a member of the Republican
leadership, said his party would back the Hatch measure but the
bill's fate would be up to Democrats.
Republicans control the 100-member Senate with 51 lawmakers.
However, 60 votes may be needed to clear a possible procedural
hurdle that Democrats could erect. Even before Judiciary
Committee Chairman Hatch announced his bill, it was criticized
as a "corporate bailout" by organized labor, whose backing is
key to getting Democratic votes. Sen. Hatch plans to hold a
hearing on his measure when Congress returns June 2 from its
Memorial Day recess.
Asbestos, a heat-resistant mineral, was used for fireproofing
and insulation until the 1970s when scientists concluded that
inhaled fibers could be linked to cancer and other diseases.
ASBESTOS LITIGATION: CSR Posts Asbestos Provision
-------------------------------------------------
In its latest filing with the Securities and Exchange
Commission, CSR Ltd reports that as of March 31, a provision of
AU$332,300,000 has been made for all known claims and probable
future claims but not for such claims as cannot presently be
reliably measured.
CSR cannot determine with certainty the amount of its ultimate
liability with respect to asbestos related claims or the future
impact on its financial condition. However, taking into account
the provision already included in CSR's financial statements,
the status of proceedings in CSR's insurance litigation and
current claims management experience, the directors are of the
opinion that asbestos litigation in the United States and
Australia will not have a material adverse impact on its
financial condition.
CSR Limited and/or certain subsidiaries (CSR) were involved in
mining asbestos and manufacturing and marketing products
containing asbestos in Australia, and exporting asbestos to the
United States. As a result of these activities, CSR has been
named as a defendant in litigation in Australia and the United
States.
ASBESTOS ALERT: Company Fined For Asbestos Exposure
---------------------------------------------------
A cafe was fined for allegedly exposing 17 workers to asbestos
fibers. Chicago Rock Cafe's parent company, Luminar Leisure, of
Luton, was fined GBP7,800 Luminar Leisure, of Luton, with costs
and also fined fitters GF Interiors, of West Yorkshire, œ17,965
with costs for other breaches of health and safety law.
The parent company of Chicago Rock Caf‚ on Unicorn Hill had been
charged with failing to ensure the refurbishment of the old ABC
Cinema did not start until a suitable health and safety plan had
been prepared. It was also charged with failing to ensure the
refurbishment planning supervisor was provided with information
relating to the presence of asbestos.
GF Interiors was charged with five breaches, including failing
to prepare an adequate safety plan, failing to provide
comprehensive information on health and safety risks to
contractors and failing to prevent or reduce the spread of
asbestos. Both companies pleaded guilty to the charges, which
were brought by the Health and Safety Executive.
Investigating officer Tom Cleary said both companies had co-
operated in the investigation.
Luminar representative Stuart Tyler told the court the company
had implemented a review of procedures to prevent a similar
occurrence in the future. Stuart Armstrong, for GF Interiors,
said asbestos had originally been identified and noted in
certain areas of the old cinema such as the projection room. He
said more asbestos had been found during refurbishment and those
areas sealed. However, he admitted the company had failed to
provide contractors with the original asbestos survey.
He said the company took the allegations very seriously and
spent more than œ50,000 in reviewing procedures to prevent a
repeat. Magistrates decided not to implement the full œ5,000
fine for each offence but the chairman of the bench said: "Both
companies can't hold their head very high in light of this . To
expose 17 employees to the risk of asbestosis is disgraceful."
ASBESTOS ALERT: Coroner Says Asbestos Killed 56-Year-Old
--------------------------------------------------------
Bill Taylor, 56, of Hill Lane, Blackrod, succumbed to a lung
tumor after years of working as a sheet metal fabricator.
Coroner Jennifer Leeming declared asbestos-related industrial
disease as the cause of Mr. Taylor's death.
Mr. Taylor who repaired boilers without protective clothing,
died last Christmas Eve after being diagnosed with the disease
in April 2001. The Company where Taylor worked was not
disclosed as of presstime.
ASBESTOS ALERT: Plastic Bag Found In Hawaii May Contain Asbestos
----------------------------------------------------------------
A plastic bag marked "Warning: Contains asbestos fibers" was
illegally dumped in Central O'ahu, Hawaii. Carroll Cox,
president of the environmental watchdog group EnviroWatch, said
he found the bag Sunday in Poamoho near Whitmore Village while
looking for illegal dump sites.
Two metal pipes were found in a bag typically used for disposal
of asbestos materials, said Liz Galvez of the state Office of
Hazard Evaluation. The contents of the bag will be analyzed to
determine whether they contain asbestos, she said.
Marilyn Carlsmith, who owns the property with her brother, said
the area had been used as a dump site without her permission.
She says a group that restores old military vehicles agreed to
clean up the property in exchange for use of the area.
Exposure to asbestos has been linked to lung cancer.
ASBESTOS ALERT: General Cable Units Faces Asbestos-Related Suits
----------------------------------------------------------------
Subsidiaries of General Cable Corporation have been named as
defendants in lawsuits alleging exposure to asbestos in products
manufactured by the Company. At December 31, 2002, there were
around 11,400 non-maritime claims and 33,000 maritime asbestos
claims outstanding. During 2002, some 300 new non-maritime
claims and 550 maritime claims were filed; 35 non-maritime
claims and no maritime claims were dismissed, settled or
otherwise disposed of in that period. At December 31, 2002 and
2001, General Cable had accrued around $1,300,000 and
$1,200,000, respectively, for these lawsuits.
There are around 11,400 pending non-maritime asbestos cases
involving subsidiaries of General Cable. The majority of these
cases involve plaintiffs alleging exposure to asbestos-
containing shipboard cable, manufactured by General Cable's
predecessors. In addition to the Company's subsidiaries,
numerous other wire and cable manufacturers have been named as
defendants in these cases. Most cases previously filed have
been dismissed with prejudice and without an imposition of
liability against General Cable.
In some instances, individual cases have settled on a relatively
nominal basis. In addition, subsidiaries of General Cable have
been named, along with numerous other product manufacturers as
defendants in approximately 33,000 suits in which plaintiffs'
alleged that they suffered an asbestos-related injury while
working in the maritime industry (MARDOC cases). These cases
are currently managed under the supervision of the US District
Court for the Eastern District of Pennsylvania.
On May 1, 1996, the District Court ordered that all pending
MARDOC cases be dismissed without prejudice for failure to plead
sufficient facts. Under that order of dismissal, all future
MARDOC cases filed by the plaintiff's attorney are required to
be accompanied by a filing fee for each new complaint. These
cases can only be removed from the inactive docket if the
plaintiff is able to prove an asbestos-related injury, and show
specific product identification as to each defendant against
whom the plaintiff chooses to proceed.
Based upon its experience to date, the Company does not believe
that the outcome of the pending non-maritime and/or MARDOC
asbestos cases will have a material adverse effect on its
results of operation, cash flows or financial position.
In January 1994, General Cable entered into a settlement
agreement with certain principal primary insurers concerning
liability for the costs of defense, judgments and settlements,
if any, in all of the asbestos litigation described above.
Subject to the terms and conditions of the settlement agreement,
the insurers are responsible for a substantial portion of the
costs and expenses incurred in the defense or resolution of such
litigation. Accordingly, based on the terms of the insurance
settlement agreement; the relative costs and expenses incurred
in the disposition of past asbestos cases; reserves established
on the books of the Company which are believed to be reasonable;
and defenses available to the Company in the litigation, the
Company believes that the resolution of the present asbestos
litigation will not have a material adverse effect on its
results of operations, cash flows or financial position.
Liabilities incurred in connection with asbestos litigation are
not covered by the American Premier indemnification.
COMPANY PROFILE
General Cable Corporation (NYSE: BGC)
4 Tesseneer Dr.
Highland Heights, KY 41076-9753
Phone: 859-572-8000
Fax: 859-572-8458
http://www.generalcable.com
Employees: 5,900
Description: General Cable makes aluminum, copper, and fiber-
optic wire and cable products. The Company has three operating
segments: communications (wire for low-voltage signals for
voice, data, video and control applications); industrial and
specialty (wire and cable products conduct electrical current
for industrial and commercial power and control applications);
and energy (cables used for low-, medium- and high-voltage power
distribution and power transmission products). Brand names
include Carol and Brand Rex. General Cable also produces power
cables, automotive wire, mining cables, and custom-designed
cables for use with products such as medical equipment.
New Securities Fraud Cases
DIVINE INC.: Cauley Geller Commences Securities Suit in N.D. IL
---------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a securities class
action in the United States District Court for the Northern
District of Illinois, Eastern Division on behalf of purchasers
of divine, inc. (OTC Pink Sheets: DVINQ) publicly traded
securities during the period between November 12, 2001 to
February 18, 2003, inclusive.
The complaint alleges that defendants Andrew J. Filipowski
(Chief Executive Officer and Chairman of the Board of Directors)
and Michael P. Cullinane (Chief Financial Officer and Executive
Vice President) 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 November 12, 2001, and February 18, 2003,
thereby artificially inflating the price of Divine securities.
Throughout the class period, as alleged in the complaint,
defendants failed to disclose and misrepresented the following
material adverse facts:
(1) Divine was engaged in a scheme of inflating its
revenues by approximately $65 million by instructing
employees of its wholly-owned subsidiary, RoweCom, to
offer discounts to library customers that paid cash in
advance -- months before payments were due to
publishers -- even though Divine had no plan to pay its
obligations to publishers,
(2) Divine was fraudulently diverting nearly $74 million
from RoweCom's operations,
(3) Divine lacked adequate financial and internal controls
with respect to its RoweCom operations, and
(4) as a result of the foregoing, Divine lacked a
reasonable basis to project profitability by year-end
or an ability to maintain its operations without
bankruptcy protections.
The class period ends on February 18, 2003. On that date,
Divine announced that "despite efforts over the past several
months to minimize operating expenses and various liabilities,
its board of directors has determined that it must seek
alternatives to protect the value and viability of its
operations.
As a result, Divine has engaged Broadview International LLC as
advisors to assist in exploring strategic options, which may
include asset divestitures, comparable transactions, and/or the
filing of a voluntary petition under Chapter 11 of the United
States Bankruptcy Code."
In response to this announcement, the price of Divine stock
declined precipitously. During the class period, Divine
completed two acquisitions, among numerous others -- acquiring
Viant Corporation and Delano Technology Corporation -- using its
common stock as currency.
For more details, contact Samuel H. Rudman, David A. Rosenfeld,
Jackie Addison, Heather Gann or Candace Randle by Mail: P.O. Box
25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 by
Fax: 1-501-312-8505 by E-mail: info@cauleygeller.com
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
*********
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.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
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are $25 each. For subscription information, contact Christopher
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* * * End of Transmission * * *