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/raid1/www/Hosts/bankrupt/CAR_Public/030619.mbx C L A S S A C T I O N R E P O R T E R Thursday, June 19, 2003, Vol. 5, No. 120 Headlines ABERCROMBIE & FITCH: Minorities File Racial Discrimination Suit CALIFORNIA: Court Dismisses Lawsuit V. Worker Compensation Fund COLE NATIONAL: Executes MOU To Settle Securities Suit in N.D. OH COLE NATIONAL: CA Sues Over Pearle Vision Center Operations INRANGE TECHNOLOGIES: NY Court Dismisses in Part Securities Suit KMART HOLDINGS: CA Overtime Lawsuits Stayed Due To Ch. 11 Filing KMART HOLDINGS: Employees File Suit For Overtime Wage Violations KMART HOLDINGS: Plaintiffs File Class Proof of Claim in MI Suit LEHMAN BROTHERS: Jury Awards $51M to First Alliance Customers MARVELL TECHNOLOGY: NY Dismisses in Part Securities Fraud Suit OXFORD HEALTH: NY Court Approves Securities Lawsuit Settlement PORTAL SOFTWARE: NY Court Refuses To Dismiss Securities Lawsuit RITE-AID CORPORATION: Ex-CEO Pleads Guilty To Conspiracy Charges SEACHANGE INTERNATIONAL: Plaintiffs Consolidate Lawsuits in MA SYMANTEC CORPORATION: CA Consumers File Lawsuit Over WinFax Pro SYMANTEC CORPORATION: Plaintiffs Lodge Amended Suit in CA Court SYMANTEC CORPORATION: Faces Consumer Lawsuit Over Rebates in NY SYMANTEC CORPORATION: Asks For Dismissal of Utah E-mail Lawsuit TCF FINANCIAL: Motion To Intervene in Credit Card Suit Refused UNITED STATES: Insurers Group Lauds Class Action Fairness Act UTi WORLDWIDE: Named As Defendant in Gulf War Veterans' Lawsuit New Securities Fraud Cases ALLOU HEALTHCARE: Wolf Haldenstein Lodges Securities Suit in NY BLUE RHINO: Kirby McInerney Launches Securities Suit in C.D. CA CREE INC.: Schiffrin & Barroway Lodges Securities Lawsuit in NC CREE INC.: Vianale & Vianale Lodges Securities Fraud Suit in NC FEDERAL HOME: Bernard Gross Commences Securities Suit in S.D. NY FEDERAL HOME: Shepherd Finkelman Lodges Securities Lawsuit in VA GUIDANT CORPORATION: Wolf Haldenstein Lodges IN Securities Suit J. JILL: Kirby McInerney Lodges Securities Fraud Lawsuit in MA REGENERON PHARMACEUTICALS: Weiss & Yourman Files NY Stock Suit TYCO INTERNATIONAL: Bernard Gross Lodges Securities Suit in FL UNUMPROVIDENT CORPORATION: Charles Piven Files Stock Suit in NY ********* ABERCROMBIE & FITCH: Minorities File Racial Discrimination Suit --------------------------------------------------------------- Clothing retailer Abercrombie & Fitch faces a class action filed in California federal court, alleging it hired a disproportionately white sales force, puts minorities in less- visible jobs and cultivates a virtually all-white image in its catalogues and elsewhere, the Associated Press reports. Nine Hispanic and Asian plaintiffs filed the suit, alleging that the Company enforced a nationwide corporate policy of preferring white employees for sales positions, desirable job assignments and work schedules. "If you look at the material they put out, they are cultivating an all-white look," Thomas Saenz, vice president of litigation at the Mexican American Legal Defense and Educational Fund, one of the attorneys for the plaintiffs, told AP. "It is difficult to understand why, given that their target age demographic is even more heavily minority than the rest of the population." One of the plaintiffs, Filipino-American Anthony Ocampo told AP he applied for a job at the Company's Glendale outlet, where he had previously worked. Mr. Ocampo, a Stanford University graduate, said he was turned down because there were already "too many Filipinos" working in the store. "I was pretty appalled and for a good amount of time I was just real angry," Mr. Ocampo said. The suit further alleges that the Company has a policy that requires all sales people to exhibit an all-white "A&F look." The Company's posters and a television program in stores display models who are mostly white, as does the company's catalogue. The Company also encourages recruitment from overwhelmingly white fraternities and sororities. Minorities are relegated to stock room and overnight shifts and their working hours are allegedly reduced. Last spring, the Company removed T-shirts from stores after Asian-American groups complained about depictions of two slant- eyed men in conical hats and the slogan "Wong Brothers Laundry Service - Two Wongs Can Make it White." The Company refused to comment on the suit, the Associated Press reports. CALIFORNIA: Court Dismisses Lawsuit V. Worker Compensation Fund --------------------------------------------------------------- San Francisco Superior Court in California dismissed a class action filed by five businesses against the State's worker compensation fund, the Associated Press reports. The suit was filed on behalf of all employers who paid into the fund from 1987 through 1994 and alleges that the fund artificially inflated reserves to retain payments that should have been returned to California businesses. The fund managers allegedly artificially inflated the fund's reserve and thus withheld dividend refunds to businesses to create a "war fund" it could then use to undercut private worker compensation providers, Greg Long, the fund's lead attorney told AP. Judge John Munter ruled against the suit last spring. An adverse decision could have cost the State Compensation Insurance Fund more than $2 billion and bankrupted the fund that provides more than half of California's worker compensation coverage, fund attorneys told AP. COLE NATIONAL: Executes MOU To Settle Securities Suit in N.D. OH ---------------------------------------------------------------- Cole National Corporation is in the process of settling a securities class action filed in the United States District Court for the Northern District of Ohio, alleging claims for various violations of federal securities laws related to the Company's publicly reported revenues and earnings. The action, which pleaded claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1993 named the Company and certain present and former officers and directors as defendants, sought unspecified compensatory damages, punitive damages "where appropriate," costs, expenses and attorneys' fees. On May 30, 2003, the Company and attorneys for the plaintiffs have executed a memorandum of understanding for a settlement to resolve the lawsuit. The settlement is subject to court approval. COLE NATIONAL: CA Sues Over Pearle Vision Center Operations ----------------------------------------------------------- The State of California sued Cole National Corporation and its optical subsidiaries alleging claims for various statutory violations related to the operation of 24 Pearle Vision Centers in California. The claims include: (1) untrue or misleading advertising, (2) illegal dilation fees, (3) unlawful advertising of eye exams, (4) maintaining an optometrist on or near the premises of a registered dispensing optician, (5) unlawful advertising of an optometrist, (6) unlicensed practice of optometry, and (7) illegal relationships between dispensing opticians, optical retailers and optometrists The action seeks unspecified damages, restitution and injunctive relief. Although the State of California obtained a preliminary injunction to enjoin certain advertising practices and from charging dilation fees in July 2002, the terms of the injunction have not had and are not expected to have any material effect on the Company's operations. In addition, both the State and the Company have appealed the preliminary injunction. Although the Company believes it is in compliance with California law, it may be required to further modify its activities or might be required to pay damages and or restitution in a currently undeterminable amount if it is not successful, the cost of which, as well as continuing defense costs, might have a material adverse effect on the Company's operating results and cash flow in one or more periods. INRANGE TECHNOLOGIES: 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 Inrange Technologies, Inc. and certain of its officers. The suit seeks recovery of damages caused by the Company's alleged violation of securities laws, including section 11 of the Securities Act of 1933 and section 10(b) of the Exchange Act of 1934. The complaint, which was also filed against the various underwriters that participated in the Company's initial public offering (IPO), is identical to hundreds of shareholder class actions pending in this court in connection with other recent IPOs and is generally referred to as In re Initial Public Offering Securities Litigation. The complaint alleges, in essence: (1) that the underwriters combined and conspired to increase their respective compensation in connection with the IPO by receiving excessive, undisclosed commissions in exchange for lucrative allocations of IPO shares, and trading in the Company's stock after creating artificially high prices for the stock post- IPO through "tie-in" or "laddering" arrangements (whereby recipients of allocations of IPO shares agreed to purchase shares in the aftermarket for more than the public offering price for Inrange shares) and dissemination of misleading market analysis on the Company's prospects; and (2) that Inrange violated federal securities laws by not disclosing these underwriting arrangements in its prospectus. The court has granted the Company's motion to dismiss claims under Section 10(b) of the Securities Exchange Act of 1934 because of the absence of a pleading of intent to defraud. The court granted plaintiffs leave to replead these claims, but no further amended complaint has been filed. The court also denied the Company's motion to dismiss claims under Section 11 of the Securities Act of 1933. The court has also dismissed the Company's individual officers without prejudice, after they entered into a tolling agreement with the plaintiffs. KMART HOLDINGS: CA Overtime Lawsuits Stayed Due To Ch. 11 Filing ---------------------------------------------------------------- The employee class actions filed against Kmart Holdings Corporation in California federal and state courts have been stayed as a result of the Company's Chapter 11 proceedings, and confirmation of its reorganization plan. The suits relate to the Company's classification of assistant managers and various other employees as "exempt" employees under the federal Fair Labor Standards Act (FLSA) and the California Labor Code, and the Company's alleged failure to pay overtime wages as required by these laws. Seven wage-and-hour cases were all filed during 2001 and are currently pending in the United States District Court for the Eastern District of California, the United States District Court for the Central District of California and the Superior Courts of the State of California for the Counties of Alameda, Los Angeles and Riverside. If all of these cases were determined adversely to the Company, the resulting damages could have a material adverse impact on its results of operations and financial condition. However, there have been no class certifications, and, based on the Company's initial investigations, it believes that it has meritorious defenses to each of these claims. The Company does not presently expect to have any material financial exposure as a result of these cases. KMART HOLDINGS: Employees File Suit For Overtime Wage Violations ---------------------------------------------------------------- Kmart Holdings Corporation faces a putative class action pending in the United States District Court for the Northern District of Oklahoma relating to the proper payment of overtime to hourly associates under the Fair Labor Standards Act (FLSA). The plaintiff claims he represents a class of all current and former Kmart employees who have been improperly denied overtime pay. At this time, the likelihood of a material unfavorable outcome is not considered probable. There is an increasing trend of high profile class action litigation, particularly in the retail industry, against employers of large numbers of people, which allege violations of the FLSA. Other companies against which these cases have been filed have paid significant settlements and/or had significant judgments entered against them. The Company has a large employee base; however no FLSA class actions against the Company have yet been certified. KMART HOLDINGS: Plaintiffs File Class Proof of Claim in MI Suit --------------------------------------------------------------- Attorneys for the plaintiffs of the consolidated securities class action filed against Kmart Holdings Corporation filed a class proof of claim in the United States District Court for the Eastern District of Michigan. Since February 21, 2002, five separate class actions have been filed on behalf of purchasers of the Company's common stock, between May 17, 2001 and January 22, 2002, inclusive. The suit names Charles C. Conaway, former CEO and Chairman of the Board of Kmart as the sole defendant. The complaints alleged among other things, that Mr. Conaway made material misstatements or omissions during the alleged class period that inflated the trading prices of the Kmart Corporation's (its Predecessor Company) common stock and seek, among other things, damages under Section 10b-5 of the Securities and Exchange Act of 1934. On October 15, 2002, an amended consolidated complaint was filed that enlarged the class of persons on whose behalf the action was brought to include purchasers of the Predecessor Company's securities between March 13, 2001 and May 15, 2002, and added former officers and PricewaterhouseCoopers LLP as defendants. Kmart is not a defendant in this litigation. The attorneys for plaintiffs in the then pending class actions filed a class proof of claim in the court on behalf of the plaintiffs and all purchasers of the Predecessor Company's common stock between May 17, 2001 and January 22, 2002, inclusive. The Class Proof of Claim, which is asserted against the Debtors, reserved the right to identify additional claimants or members of the class group in the future. In support of the Class Proof of Claim, the claimants rely on the class actions filed against the parties identified above. The claimants state that the grounds for liability are alleged damages for violations of federal securities laws, including the Securities Exchange Act of 1934, in connection with the purchase or acquisition of the Predecessor Company's common stock by the claimants during the class period. The Class Proof of Claim alleges that the Debtors are liable to the claimants for damages in a sum not presently determinable but believed to be not less than $700 in the aggregate, plus interest, costs and allowed attorneys' fees. LEHMAN BROTHERS: Jury Awards $51M to First Alliance Customers ------------------------------------------------------------- A federal jury ruled that investment bank Lehman Bros. Holdings, Inc. helped First Alliance Corporation carry out a fraud scheme, awarding 4,500 $51 million in damages, the Associated Press reports. First Alliance and its executives were assessed with 85% of the award, Lehman Bros. with ten%. MBIA Insurance, which insured First Alliance's mortgage securities will shoulder the remaining 5%. However, because MBIA was not a defendant, it will not pay. The plaintiffs have alleged that lending firm First Alliance would have been out of business if Lehman hadn't provided a $150-million credit line and bundled its mortgages into securities that were sold to investors. Lehman funded First Alliance in 1999 and through March 2000, when First Alliance filed for bankruptcy, AP states. Last year, First Alliance settled fraud charges filed by the Federal Trade Commission for about $75 million and won't have to pay the damages assessed Monday, leaving Lehman Bros. with a $5.1 million tab. Judge David O. Carter instructed the jury that to find liability, they must unanimously agree that Lehman knew of "systematic fraud," and had "substantially assisted" in it, AP reports. The judge noted that the case was the first time a claim involving such secondary liability had gone to trial. Plaintiffs' attorney Richard Scruggs, who had a hand in the strategy that led to billions of dollars in judgments against tobacco companies, said the precedent was important. "This is going to slow down somebody who's thinking about funding a predatory lending scheme," he told the Los Angeles Times for Tuesday editions. "There's now a jury verdict that Wall Street can be held liable for failing to supervise the use of their money." Lehman attorney Helen L. Duncan told AP Lehman would appeal. The firm said in a statement its employees were "never aware of any wrongdoing that may have been committed by individual loan officers at First Alliance." MARVELL TECHNOLOGY: NY 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 Marvell Technology Group, Inc. and two of its officers, one of whom is also a director. This complaint relating to the Company's IPO has been consolidated with hundreds of other lawsuits by plaintiffs against approximately 55 underwriters and approximately 300 issuers across the United States. Plaintiffs allege that defendants violated various provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In these actions, plaintiffs seek, among other items, unspecified damages, pre- judgment interest and reimbursement of attorneys' and experts' fees. The defendants in the consolidated proceedings moved to dismiss the action. In February 2003, the court issued its ruling on the motions, granting the motions in part, and denying them in part. Thus, the cases may proceed against the underwriters and the Company as to alleged violations of section 11 of the Securities Act of 1933 and section 10(b) of the Securities Exchange Act of 1934. Claims against the individual officers have been voluntarily dismissed with prejudice by agreement with plaintiffs. OXFORD HEALTH: NY Court Approves Securities Lawsuit Settlement -------------------------------------------------------------- US District Court Judge Charles L. Brieant of the Southern District Court of New York approved the settlement of a securities class action against Oxford Health Care Insurance Inc., certain of its officers and directors and its auditor KPMG L.L.P for a total of $300 Million in cash. The class consists of purchasers of common stock of Oxford, purchasers of call- options and sellers of Oxford put-options during the class period between November 6, 1996 through December 9, 1997. "This recovery was extraordinary because it dealt with attacking the Company's financial reports which were never restated and continued to be supported by KPMG, the firms outside auditor," said Patricia M. Hynes, Of Counsel to Milberg Weiss and lead trial attorney for the class. Melvyn I. Weiss, who negotiated the settlement, stated, "The settlement is in the top 10 of recoveries in securities class actions and took 6 years to achieve." PORTAL SOFTWARE: 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 Portal Software, Inc., certain of its officers and several underwriters of the Company's initial public offering (IPO). The lawsuit alleges violations of Section 11 of the Securities Act of 1933, as amended and Section 10(b) of the Securities Exchange Act of 1934, as amended, arising from alleged improprieties by the underwriters in connection with the Company's 1999 IPO and follow-on public offering, and claims to be on behalf of all persons who purchased Portal Software shares from May 5, 1999 through December 6, 2000. Specifically, the suit alleges the underwriters charged certain of their customers fees in excess of those disclosed in the prospectus and engaged in certain allegedly improper activities in connection with the distribution of the IPO shares. The complaint was subsequently amended to allege similar claims with respect to the Company's secondary public offering in September 1999. The suit is part of the IPO Securities Litigation against over 300 issuers and nearly 40 underwriters alleging claims virtually identical to those alleged against the Company. The action seeks damages in an unspecified amount. Discovery is expected to begin in the near future. In the opinion of management, resolution of this litigation is not expected to have a material adverse effect on the financial position of the Company. However, depending on the amount and timing, an unfavorable resolution of these matters could materially affect the Company's future results of operations or cash flows in a particular period. RITE-AID CORPORATION: Ex-CEO Pleads Guilty To Conspiracy Charges ---------------------------------------------------------------- Former Rite Aid Corporation chief executive Martin L. Grass agreed to plead guilty to two counts of conspiracy in a deal that calls for an eight-year prison sentence, the Associated Press reports. Mr. Grass plead guilty to one count of conspiracy to defraud the Company and its shareholders and one count of conspiracy to obstruct justice. Mr. Grass appeared before US District Judge Sylvia H. Rambo as prosecutors outlined the plea bargain. Remaining charges would be dismissed. Mr. Grass agreed to an eight-year prison sentence, a fine of $500,200, and forfeiture of $3 million in connection with a real estate deal. He also promised to cooperate with the government and potentially testify against remaining defendants. Judge Rambo said she would take the deal under advisement pending a pre-sentence investigation. If Judge Rambo accepts Mr. Grass' plea, only Rite Aid's former vice chairman and chief counsel, Franklin C. Brown will stand trial next week in federal court. Mr. Brown is similarly charged with: (1) conspiracy, (2) fraud in the purchase or sale of securities, (3) conspiracy to obstruct justice, (4) obstructing grand jury proceedings, (5) obstructing proceedings of a government agency, (6) witness tampering, (7) 13 counts of lying to the SEC, (8) 10 counts of mail fraud and (9) six counts of wire fraud Former company chief financial officer Franklyn M. Bergonzi plead guilty to one count of conspiracy in early June and agreed to cooperate with prosecutors. The fourth defendant, Eric S. Sorkin, Rite Aid's vice president for pharmacy purchasing, is expected be tried separately on charges of conspiracy to obstruct justice and lying to a grand jury, the Associated Press reports. Last year, a grand jury indicted Mr. Grass, the son of the drug store chain's founder, and two other former executives and one current employee. The indictments allege that the meteoric increase in Rite Aid's stock price under the Grass team's management in the late 1990s was accomplished by "massive accounting fraud, the deliberate falsification of financial statements, and intentionally false (Securities and Exchange Commission) filings," the Associated Press reports. The court action has had no effect on the nation's third-largest drugstore chain, Rite Aid spokeswoman Karen Rugen told AP. "We've been moving ahead now for the past four years," she said. "Martin Grass hasn't been here for four years." SEACHANGE INTERNATIONAL: Plaintiffs Consolidate Lawsuits in MA -------------------------------------------------------------- Plaintiffs filed a consolidated securities class action against Seachange International in the United States District Court for the District of Massachusetts. The suit also names as defendants: (1) Morgan Stanley & Co. Incorporated, (2) Thomas Weisel Partners LLC, (3) RBC Dain Rauscher, Inc., (4) William Styslinger, III, (5) William Fiedler, (6) Martin R. Hoffmann, (7) Thomas F. Olson and (8) Carmine Vona In the complaint, the plaintiffs allege that the defendants violated Sections 11 and/or 12(2) of the Securities Act of 1933 and in the case of the individual defendants Section 15 of the Securities Act, in connection with the stock offering that the Company completed on January 31, 2002. The Complaint seeks damages in an unspecified amount, together with interest thereon, recissory damages, reimbursement of costs and expenses, and further relief that the court may determine to be appropriate. SYMANTEC CORPORATION: CA Consumers File Lawsuit Over WinFax Pro --------------------------------------------------------------- Symantec Corporation faces a class action filed by Ronald Pearce on behalf of himself and purportedly on behalf of the general public of the United States and Canada in the California Superior Court, Santa Clara County. The suit alleges violations of California Business and Professions Code section 17200 and false advertising, in connection with the Company's WinFax Pro product. The complaint seeks damages and injunctive and other equitable relief, as well as costs and attorney fees. Although adverse decisions (or settlements) may occur in the suit, and it is not possible to estimate the possible loss or losses from the suit, the Company does not expect the final resolution of the suit, individually or in the aggregate, to have a material adverse affect on its financial condition. SYMANTEC CORPORATION: Plaintiffs Lodge Amended Suit in CA Court --------------------------------------------------------------- Plaintiffs in a class action filed against Symantec Corporation, Microsoft Corporation and two retailers in the California Superior Court, Marin County, filed an amended complaint, on behalf of the general public of California and of a class of certain purchasers of software products. The amended suit adds Greg Johnson as plaintiff and Adobe Systems and another retailer as defendants. The complaint alleges that Symantec's refund policies violate consumer warranty and unfair business practice laws. The lawsuit seeks damages, rescission and injunctive relief, as well as costs and attorney fees. Although adverse decisions (or settlements) may occur in the suit, and it is not possible to estimate the possible loss or losses from the suit, the Company does not expect the final resolution of the suit, individually or in the aggregate, to have a material adverse affect on its financial condition. SYMANTEC CORPORATION: Faces Consumer Lawsuit Over Rebates in NY --------------------------------------------------------------- Symantec Corporation and a New York retailer faces a class action filed by William Pereira in the Supreme Court of New York, New York County, alleging breach of contract and deceptive business practices in connection with rebates offered by the Company. The complaint seeks damages, costs and attorney fees. Although adverse decisions (or settlements) may occur in the suit, and it is not possible to estimate the possible loss or losses from the suit, the Company does not expect the final resolution of the suit, individually or in the aggregate, to have a material adverse affect on its financial condition. SYMANTEC CORPORATION: Asks For Dismissal of Utah E-mail Lawsuit --------------------------------------------------------------- Symantec Corporation asked Utah State Court to dismiss the class action filed by Craig Hughes, purportedly on behalf of persons located in Utah who he asserts received unsolicited commercial email from the Company. The complaint alleges violation of Utah's recently enacted Unsolicited Commercial Email Act. The lawsuit requests damages, costs and attorney fees. Although adverse decisions (or settlements) may occur in the suit, and it is not possible to estimate the possible loss or losses from the suit, the Company does not expect the final resolution of the suit, individually or in the aggregate, to have a material adverse affect on its financial condition. TCF FINANCIAL: Motion To Intervene in Credit Card Suit Refused -------------------------------------------------------------- The United States District Court for the Eastern District of New York refused to allow TCF Financial Corporation to intervene in the settlement forged by Visa and Mastercard in April that placed restrictions on debit fees, the Star Tribune reports. Judge John Gleeson granted preliminary approval to the combined $3 billion settlement that Visa USA and MasterCard International reached with Wal-Mart Stores Inc. and other retailers, but denied the Company's motion. The motion asserted that the pact would negatively affect banks, such as the Company, that issue debit cards. Visa and the retailers set a ceiling on the rates that merchants pay to Visa and banks to accept debit cards, but the Company, which issues debit cards but not credit cards, benefits from the fees Visa charges retailers. The judge's preliminary approval of the settlement sets the stage for plaintiffs' attorneys to begin notifying retailers that were part of the class action suit. Plaintiffs can raise objections over the next several months, the Star Tribune states. UNITED STATES: Insurers Group Lauds Class Action Fairness Act ------------------------------------------------------------- The Alliance of American Insurers commended the United States House of Representatives for approving the "Class Action Fairness Act" (HR 1115). The Senate Judiciary Committee approved a similar bill (S 274) April 11. It awaits action by the full Senate. "The Class Action Fairness Act attacks some of the worst problems in our current class-action system: forum shopping, nuisance suits, class certification and settlements not in the best interest of plaintiffs," Kenneth D. Schloman, Alliance Washington counsel said in a statement. "Consumers will benefit from the quicker hearings and more uniform approach in the federal court system . This bill provides needed reform without removing anyone's right to their day in court. It simply assures that cases are heard in the most appropriate forum." "Committee Chairman F. James Sensenbrenner (R-WI) and two key sponsors of the legislation - Reps. Bob Goodlatte (R-VA) and Rick Boucher (D-VA) - deserve a tremendous amount of credit for their steadfast leadership and support of this critically- important legislation," he continued. "We believe today's House action will encourage the Senate to pass its version of class action reform. The bipartisan support this measure received in the House further illustrates a growing recognition of the need for reform." The bill would ease the transfer of class-action suits that are national in nature from state courts to federal courts. The bill also would require that notices sent to class members be in plain English, coupon settlements be judicially scrutinized. It also would bar attorneys from entering into settlements that cause members to suffer a net loss. The Alliance of American Insurers, based in Downers Grove, Illinois, is a national trade association representing more than 340 property/casualty insurance companies. UTi WORLDWIDE: Named As Defendant in Gulf War Veterans' Lawsuit --------------------------------------------------------------- UTi Worldwide, Inc. was named as one of the approximately 83 defendants named in the consolidated class action filed in the District Court of Brazaria County, Texas (23rd Judicial District) where it is alleged that various defendants sold chemicals that were utilized in the Gulf War by the Iraqi army which caused personal injuries to US armed services personnel and their families, including birth defects. The lawsuits were brought on behalf of the military personnel who served in the Gulf War and their families and the plaintiffs are seeking in excess of $1 billion in damages. To date, the plaintiffs have not obtained class certification. The Company believes it is a defendant in the suit because an entity that sold the Company assets in 1993 is a defendant. The Company believes it will prevail in this matter because the alleged actions giving rise to the claims occurred prior to the Company's purchase of the assets and it never manufactured chemicals. The plaintiffs have been unable to produce evidence that the Company acted as a freight forwarder for cargo that included chemicals used by the Iraqi army. New Securities Fraud Cases ALLOU HEALTHCARE: Wolf Haldenstein Lodges Securities Suit in NY --------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz 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 the securities of Allou Healthcare, Inc. (Amex: ALU - News) between June 22, 1998 and April 9, 2003, inclusive, against certain officers and directors of the Company. The complaint alleges that although the Company had been reporting strong revenue and earnings growth over the years, its business had not generated positive cash flow and, as a result, the Company had relied on loans to operate its business. During the class period, Allou issued press releases and filed quarterly reports with the SEC, which purported to accurately report the Company's performance and financial condition. The complaint further alleges that unbeknownst to class members, the Company's class period reports contained material overstatements of inventory and accounts receivable. As such, defendants were motivated to inflate Allou's results and balance sheet in order to secure much-needed financing from creditors. The scheme began to unravel after accounting experts working for Allou's lenders discovered that the Company had been inflating its financial results. As a result of the investigation, creditors sought to force the Company and its operating subsidiaries into bankruptcy, filing an involuntary petition for bankruptcy with the Bankruptcy Court of this district on April 9, 2003. The petition was consented to by the Company following its filing. The American Stock Exchange halted trading in Allou stock on April 9, 2003; the last listed trading price was $1.07 per share, which is 91.92% below the Class period high of $13.25, reached on April 21, 1999. For more details, contact Fred Taylor Isquith, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016, by Phone: (800) 575-0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com. All e-mail correspondence should make reference to Allou. BLUE RHINO: Kirby McInerney Launches Securities Suit in C.D. CA --------------------------------------------------------------- Kirby McInerney & Squire, LLP initiated a securities class action in the United States District Court for the Central District of California on behalf of all purchasers of Blue Rhino Corporation (NasdaqNM:RINO - News) common stock during the period from August 15, 2002 through February 5, 2003, inclusive. The action charges Blue Rhino and certain of its senior officers with violations of Sections 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The alleged violations stem from the dissemination of false and misleading statements, which had the effect -- during the class period -- of artificially inflating the price of Blue Rhino's shares. The Complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's operations and financial results. Specifically, the Complaint alleges that defendants' statements were materially false and misleading because defendants failed to disclose and misrepresented: (1) that ten distributors acquired by the Company were not healthy, highly profitable, and independent of the Company as portrayed by Blue Rhino; (2) that the Company misrepresented the purchase price of the acquisition of the ten distributorships by more than $10,000,000.00; (3) that the Company was beginning to see a decline in earnings from certain Overfill Protection Device regulations; (4) that the Company's earnings projections were lacking in any reasonable basis when made; and (5) that the false and misleading information disseminated by the defendants caused Blue Rhino's securities to trade at artificially inflated prices. For more details, contact Ira M. Press, Elaine Mui by Mail: 830 Third Avenue, 10th Floor, New York, New York 10022 by Phone: (212) 317-2300 or (888) 529-4787 or by e-mail: emui@kmslaw.com CREE INC.: Schiffrin & Barroway Lodges Securities Lawsuit in NC --------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Middle District of North Carolina on behalf of all purchasers of the common stock of Cree, Inc. (NasdaqNM:CREE) from August 19, 1998 through June 13, 2003, inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 19, 1998 and June 13, 2003, thereby artificially inflating the price of Cree securities. During the class period, the Company issued statements that failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Company had materially overstated its net income and earnings per share; (2) that the defendants artificially boosted Cree's operating income through an undisclosed agreement with defendant Neal Hunter's brother, Jeff Hunter, the then chairman of C3, that required C3 to accept shipments of silicon carbide (SiC) crystals for the manufacture of moissanite gemstones far in excess of market demand; (3) that the defendants failed to properly disclose how officers and director's compensation was determined; (4) that the defendants failed to disclose in its registration statements and its prospectuses the proper use of the proceeds from those offerings. For example, in its January 14, 2000 prospectus, Cree failed to disclose that it would invest $5 million of the offering proceeds in World Theatre, Inc.; (5) that the defendants were actively concealing these facts in order to manipulate the Company's earnings outlooks in order to maintain its favorable stock prices; (6) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (7) that the Company's earnings projections were lacking in any reasonable basis when made. On June 13, 2003, Eric Hunter, the former chief executive of Cree filed a $3 billion lawsuit against Cree and defendant Neal Hunter, his brother. Among the allegations contained in the lawsuit, Eric Hunter alleged that since as early as August 1995 and continuing until at least May 2003, Cree and the Individual Defendants engaged in a series of undisclosed corporate activities, which included, among other things, the filing of false and misleading statements to the public and the SEC with respect to the Company's secondary stock offerings, anticipated earnings and revenue, reported income and operating income. Market reaction to the news was swift. Shares of Cree fell 18.5% or $4.11 per share to close at $18.10 per share on heavy trading volume on June 13, 2003. For more details, contact Marc A. Topaz or Stuart L. Berman by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 or by E- mail: info@sbclasslaw.com CREE INC.: Vianale & Vianale Lodges Securities Fraud Suit in NC --------------------------------------------------------------- Vianale & Vianale LLP initiated a securities class action on behalf of investors who purchased the securities of Cree, Inc. (NasdaqNM:CREE) during the class period January 14, 2000 to June 13, 2003. The lawsuit was filed in the United States District Court in Greensboro, North Carolina. The complaint charges that defendants artificially inflated Cree's stock price by making false statements to the marketplace during the class period. On January 14, 2000 Cree filed a prospectus and registration statement in connection with the offering of 2,860,000 shares of common stock. The "Use Of Proceeds" section of the prospectus failed to disclose that Cree would invest $5 million of the offering proceeds in World Theatre, Inc., a speculative start-up company in which C. Eric Hunter, a brother of the Company's Chairman and Chief Executive Officer, was a substantial shareholder. In addition, in December 2000, Cree bought the UltraRF division from Spectrian Corporation (Spectrian) for approximately 908,000 shares of Cree common stock and $30 million in cash. Cree falsely told the market UltraRF would be accretive to earnings and that, as part of the acquisition, Spectrian would enter into a 2-year supply agreement requiring it to buy semiconductor parts from Cree. Spectrian was required to purchase, however, only if Cree sold product to it at the lowest available commercial price, a fact which Cree did not disclose. Although the UltraRF division continued to lose money for Cree, a write down for the division's goodwill was delayed until March 2002, when Cree announced that it would take a $60-$77 million goodwill write down for the division. On June 13, 2003, Cree disclosed that it had been sued by Eric Hunter. The lawsuit revealed that Cree had falsified its books to allow certain executives to receive higher compensation and had intentionally oversold product to C3 Corporation to artificially inflate Cree's income and stock price. Cree's stock dropped nearly 19% on the news. For more details, contact Kenneth J. Vianale or Julie Prag Vianale by Mail: 5355 Town Center Road, Suite 801, Boca Raton, Florida 33486 by Phone: 561-391-4900 or by E-mail: info@vianalelaw.com FEDERAL HOME: Bernard Gross Commences Securities Suit in S.D. NY ---------------------------------------------------------------- Bernard M. Gross PC initiated a securities class action in the United States District Court for the Southern District of New York on behalf all persons who purchased and/or acquired Federal Home Loan Mortgage Corporation (NYSE:FRE) common stock between April 18, 2000 and June 6, 2003. The suit names as defendant the Company and: (1) David Glemm, (2) Vaughn Clarke and (3) Leland C. Brendsel The complaint charges defendants with violations of sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by issuing false and misleading statements of material fact, including, inter alia, false and misleading quarterly and annual income. The complaint alleges that during the class period, defendants continuously reported that Freddie Mac was experiencing growth in net income and was well-positioned to report increasing growth in quarterly earnings. The complaint also alleges that defendants also touted Freddie Mac's forthright financial disclosures, stating that they were in the vanguard of full and fair disclosure. In truth and in fact, defendants' alleged statements and reported income were false and misleading because defendants manipulated Freddie Mac's reported income in order to make it appear that the Company was experiencing continued explosive growth in profitability, Freddie Mac lacked adequate internal accounting controls and failed to follow Generally Accepted Accounting Principles in reporting Freddie Mac's quarterly and annual financial results. For more details, Bernard M. Gross or Deborah R. Gross by Mail: 1515 Locust Street, 2nd Floor, Philadelphia, PA 19102 by Phone: 800-849-3120 (toll-free), 866-561-3600 (toll-free) or 215-561-3600 by E-mail: susang@bernardmgross.com or debbie@bernardmgross.com or visit the firm's Website: http://www.bernardmgross.com FEDERAL HOME: Shepherd Finkelman Lodges Securities Lawsuit in VA ---------------------------------------------------------------- Shepherd, Finkelman, Miller & Shah, LLC initiated a securities class action on behalf of institutions, individuals and other investors who purchased the securities of the Federal Home Loan Mortgage Corporation (NYSE: FRE), between April 18, 2000 and June 6, 2003 inclusive, in the United States District Court for the Eastern District of Virginia. The complaint alleges violations of the Securities Exchange Act of 1934 and, specifically, pleads that, during the class period, the defendants made materially false and misleading representations regarding the Company's operating earnings. During the class period it has been reported that Freddie Mac may have earned more than it reported and had a higher capital surplus. This practice, which is referred to as "smoothing," allows companies to meet or exceed earnings estimates and report substantial growth in the future by deferring present gains to future periods. This practice, which also is often referred to as "cookie jar" accounting, violates Generally Accepted Accounting Principles, and is designed to create the impression that earnings growth is steady and meets or exceeds analyst's expectations. When these potential practices were revealed, the market reacted swiftly and shares of Freddie Mac closed down $9.61 on June 6, 2003 on extremely heavy trading volume. For more details, contact James E. Miller or James C. Shah by Phone: 866/540-5505 or 877-8891-9880 or by E-mail: jmiller@classactioncounsel.com or jshah@classactioncounsel.com GUIDANT CORPORATION: Wolf Haldenstein Lodges IN Securities Suit --------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Southern District of Indiana, on behalf of all persons who purchased or otherwise acquired the securities of Guidant Corporation (NYSE: GDT) between September 28, 1999 and June 12, 2003, inclusive, against Guidant and certain officers and directors of the Company. On June 12, 2003, Guidant announced that it and Endovascular Technologies (Endovascular), Guidant's wholly owned subsidiary, had settled with the Department of Justice in relation to an investigation of the regulatory misconduct involving the deployment of Guidant's Ancure Endograft System (Ancure). Under the terms of the plea agreement Guidant agreed to make a payment of $43.4 million and an additional $49 million civil settlement to the government. Endovascular also agreed to plead guilty to 10 felony counts, including nine for shipping misbranded products and one count of a former employee making false statements to the government. The plea agreement pertained only to the delivery system of Ancure prior to the company's voluntary recall. So gross was the misconduct that it is one of the first times there has been felony convictions for such conduct. The complaint alleges that Guidant Corporation misled the investing public as to the safety, reliability, marketability and financial impact of Ancure, a device Guidant's subsidiary, EndoVascular, developed and marketed for the treatment of abdominal aortic aneurysms. Defendants misled the investing public as to the present risks for its business and finances as a result of product liability lawsuits and government prosecution relating to Ancure's introduction and deployment into the marketplace. Defendants further misled the investing public and the FDA as to the safety of Ancure by under-reporting the number of patient injuries or complications that resulted from the use of Ancure. The purpose of the scheme was to avoid investor scrutiny of the improprieties of the Company's management, to allow the Company to continue to provide inflated expectations as to Ancure's marketability, and to maintain inflated share price multiples unobtainable had any "hazard discount" been introduced into the valuation of the Company's share price. For more details, contact Fred Taylor Isquith, Lawrence P. Kolker, Christopher S. Hinton, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016, by Phone: (800) 575-0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com. All e-mail correspondence should make reference to Guidant. J. JILL: Kirby McInerney Lodges Securities Fraud Lawsuit in MA -------------------------------------------------------------- Kirby McInerney & Squire, LLP initiated a securities class action in the United States District Court for the District of Massachusetts on behalf of all purchasers of The J. Jill Group, Inc. (NasdaqNM:JILL) common stock during the period from February 12, 2002 through December 4, 2002, inclusive. The action charges J. Jill and certain of its senior officers with violations of Sections 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The alleged violations stem from the dissemination of false and misleading statements, which had the effect -- during the class period -- of artificially inflating J. Jill's share price. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's operations and financial results. In particular, the complaint alleges that defendants' statements were materially false and misleading because defendants failed to disclose and misrepresented: (1) that the Company's same-store sales growth -- an operating metric that is important to investors in retailing stocks -- was declining during the class period as demand for the Company's products weakened; (2) that the Company was amassing a material amount of product that was of diminishing value and would have to be discounted in promotional campaigns, thereby causing the Company to experience declining financial results; (3) that the Company was not collecting taxes in certain States where it made Internet sales and also had a retail store. As a result, the Company was exposed to the heightened risk that it would be subject to regulatory scrutiny; and (4) as a result of the foregoing, defendants' earnings projections and positive statements about the Company were lacking in a reasonable basis and were therefore materially false and misleading. On December 5, 2002, prior to the open of the market, J. Jill Group shocked the market by announcing that it was revising its earnings for the fourth quarter of 2002. The Company reported that it expected fourth quarter diluted earnings per share to range between $0.25 and $0.30. In response to this announcement, the price of J. Jill common stock declined from $23.01 per share to $16.52 per share, a decline of 28%, on extremely heavy volume. Prior to the end of the Class Period, J. Jill insiders sold more than $17 million of their personally- held stock to the unsuspecting public. For more details, contact Ira M. Press or Elaine Mui by Mail: 830 Third Avenue, 10th Floor, New York, New York 10022 by Phone: (212) 317-2300 or (888) 529-4787 or by E-Mail: emui@kmslaw.com REGENERON PHARMACEUTICALS: Weiss & Yourman Files NY Stock Suit -------------------------------------------------------------- Weiss & Yourman initiated a securities class action against Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN - News) and certain of its officers in the United States District Court for the Southern District of New York on behalf of purchasers of Regeneron securities between March 28, 2000 and March 30, 2003. The complaint charges defendants with violations of the Securities Exchange Act of 1934. It alleges that defendants issued materially false and misleading statements, which resulted in plaintiffs purchasing Regeneron securities during the class period at artificially inflated prices. For more details, contact David C. Katz, James E. Tullman, and/or Mark D. Smilow by Mail: The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176 by Phone: 888/593-4771 or 212/682-3025 or by E-mail: info@wynyc.com TYCO INTERNATIONAL: Bernard Gross Lodges Securities Suit in FL -------------------------------------------------------------- The Law Offices of Bernard M. Gross, PC initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of purchasers of TYCO International Ltd (NYSE:TYC) securities during the period between December 30, 2002 through and including March 12, 2003. The suit charges the Company and Edward D. Breen -- Chairman and Chief Executive Officer with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the class period, thereby artificially inflating the price of TYCO securities. The complaint alleges, among other things, that at the start of the class period, December 30, 2002, defendants filed an 8-K reporting the conclusion of an investigation of Tyco's accounting and corporate governance. Defendants identified charges, reflecting accounting errors in fiscal year 2002, which totaled $382.2 million. When defendants issued their financial statements, they assured the marketplace that there was no systemic or significant fraud related to the financial statement or of any clear accounting errors affecting the year 2003. Additionally, defendants assured the market that this intensive review was to build Tyco's credibility, strengthen Tyco's accounting practices and fulfill its commitment to investors. Shortly thereafter, ADT raised billions of dollars in the marketplace through the issuance of new securities and were able to negotiate new lines of credit with its lenders. However, in fact, defendants embarked on a scheme and course of conduct to misrepresent the true current financial and operating condition of, and financial prospects for Tyco and its ADT business segment by failing to disclose that there were additional material accounting adjustments that would be required to be made to Tyco's financial statements in order to properly present its financial condition and that those adjustments would reduce Tyco's earnings materially below the levels defendants had conditioned the market to expect in fiscal year 2003. On March 12, 2003, after the close of trading on the NYSE, defendants stunned the market by announcing ``that in the quarter ending March 31, 2003, it expects to take non-cash, pre- tax charges that are estimated to be between $265 million and $325 million for issues identified primarily in its (ADT) business. These charges are expected to lower earnings by $0.09 to $0.11 per share.'' In response to this announcement, the price of Tyco common stock fell from a close of $14.03 per share on March 12, 2003 to close at $12.18 per share on March 13, 2003, on unusually large trading volume of 89,694,200 shares. For more details, contact Susan Gross or Deborah R. Gross by Mail: 1515 Locust Street, 2nd Floor, Philadelphia, PA 19102 by Phone: 866-561-3600 (toll-free) or 215-561-3600 by E-mail: susang@bernardmgross.com or debbie@bernardmgross.com or visit the firm's Website: http://www.bernardmgross.com UNUMPROVIDENT CORPORATION: Charles Piven Files Stock Suit in NY --------------------------------------------------------------- The Law Offices Of Charles J. Piven, PA initiated a securities class action in the United States District Court for the Southern District of New York on behalf of purchasers of CorTS Trust II for Provident Financial Trust I (NYSE:KCC) (NYSE:UNM) UnumProvident Corporate-Backed Trust Securities (CorTS) Certificates pursuant to an initial public offering on or about April 18, 2001 and/or in the aftermarket for CorTS through and including March 24, 2003. The complaint entitled, Azzolini vs. CorTS Trust II for Provident Financial Trust I, et al. 03 cv 3257, was filed in the United States District Court for the Southern District of New York. The complaint charges CorTS Trust II for Provident Financial Trust I, UnumProvident, Salomon Smith Barney and certain UnumProvident officers with violations of the Securities Exchange Act of 1934 and with violations of the Securities Act of 1933. UnumProvident Corporation is the parent holding company for a group of insurance and non-insurance companies that collectively operate throughout North America and in the United Kingdom, Japan and Argentina. UnumProvident's principal operating subsidiaries are Unum Life Insurance Company of America, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company (Paul Revere Life) and Colonial Life & Accident Insurance Company (Colonial). UnumProvident, through its subsidiaries, is a provider of group and individual disability insurance. It also provides a complementary portfolio of other insurance products, including long-term care insurance, life insurance, employer- and employee-paid group benefits and related services. According to the CorTS IPO prospectus, UnumProvident Corporation guaranteed the payment of distributions on the Underlying Capital Securities but only to the extent that the Underlying Issuer had funds legally and immediately available therefor. On April 18, 2001, the first day of the class period, the CorTS were issued pursuant to the Prospectus and Registration Statement and began to publicly trade. The trust consisted of a single class of certificates, which represented interests in the trust and the certificates would only be paid through the trust. Therefore, the CorTS would only be paid if UnumProvident paid the original trust. During the class period, UnumProvident falsely reported financial results because it did not properly account for the long-term impairment of its investments. Moreover, the financial information was inflated due to UnumProvident's overzealous denial of legitimate claims of its insureds through, what one federal judge deemed "a comprehensive system for targeting and terminating expensive claims." The financial statements and related press releases by UnumProvident identified above contained statements that were materially false and misleading when made. On March 24, 2003, UnumProvident issued a press release in which they stated their intentions to restate financial statements from previous years. This put the payments of the CorTS in jeopardy and caused the CorTS to lose almost 50% of their value. For more details, contact Charles J. Piven by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202, by Phone: 410-332-0030 by E-mail: piven@pivenlaw.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. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *