/raid1/www/Hosts/bankrupt/CAR_Public/030627.mbx
C L A S S A C T I O N R E P O R T E R
Friday, June 27, 2003, Vol. 5, No. 126
Headlines
ABERCROMBIE & FITCH: Agrees To Settle Wardrobing Suit For $2.2M
BOY SCOUTS: Report To Reveal Sexual Abuse in Explorers Program
COMPUWARE CORPORATION: Plaintiffs Consolidate Suits in E.D. MI
CYTODYNE TECHNOLOGIES: CA Judge Questions Dietary Supplements
DAIMLERCHRYSLER AG: DE Court Throws Out Part of Dismissal Motion
DOREL JUVENILE: Recalls Infant Seats/Carriers For Injury Risk
ILLINOIS: Sued For Skimming Children's Checks For Admin Funds
IOWA: ICLU Sues Over Law Obstructing Sex Offenders' Rights
JAPAN: Activist Readies Lawsuits Over Firms' Alleged Wrongdoings
KRAFT FOODS: Settles Suit For Harassment of Male Employees in AL
LEHMAN BROTHERS: Jury Rules Bank Supported Fraudulent Lender
MCDONALD'S CORPORATION: Seeks Dismissal of Amended Obesity Suit
MICHIGAN: State To Receive Additional $7M in Tobacco Settlement
OXFORD CAPITAL: SEC Imposes Sanctions For Securities Violations
SOUTH KOREA: New Class Action System To Take Effect by July 2004
SUPREMA SPECIALTIES: Plaintiffs, Trustee Agree on Sharing Funds
TOMMY HILFIGER: Factory Workers' Suit Dismissed After Settlement
Asbestos Alert
ASBESTOS ALERT: Landmark Asbestos Class Action Opens in Israel
ASBESTOS LITIGATION: Court Allows Suit Against Timber Giant
ASBESTOS LITIGATION: Court OKs Most of ABB's Asbestos Proposal
ASBESTOS LITIGATION: Eastman Posts Latest Asbestos Statistics
ASBESTOS LITIGATION: MeadWestVaco Reveals Asbestos Litigation
ASBESTOS LITIGATION: NSI Pegs Asbestos Liabilities at $138M
New Securities Fraud Cases
ADMINISTAFF INC.: Ademi & O'Reilly Lodges Securities Suit in TX
CENTRAL PARKING: Marc Henzel Launches Securities Suit in M.D. TN
CERNER CORPORATION: Marc Henzel Lodges Securities Suit in W.D MO
CREE INC.: Marc Henzel Commences Securities Fraud Lawsuit in NC
DIVINE INC.: Marc Henzel Commences Securities Fraud Suit in IL
DIVINE INC.: Kirby McInerney Lodges Securities Suit in N.D. IL
ELECTRO SCIENTIFIC: Marc Henzel Commences Securities Suit in OR
EUNIVERSE INC.: Marc Henzel Launches Securities Suit in C.D. CA
FEDERAL HOME: Marc Henzel Lodges Securities Fraud Lawsuit in NY
PRINTCAFE SOFTWARE: Cauley Geller Launches Securities Suit in PA
PRINTCAFE SOFTWARE: Schiffrin & Barroway Files Stock Suit in PA
SALOMON SMITH: Goodkind Labaton Files Securities Suit in S.D. NY
SEARS ROEBUCK: Charles Piven Launches Securities Suit in N.D. IL
*********
ABERCROMBIE & FITCH: Agrees To Settle Wardrobing Suit For $2.2M
---------------------------------------------------------------
Abercrombie & Fitch has agreed to pay $2.2 million in a first-
of-its-kind settlement over allegations that it forced its
employees to buy and wear the company's clothes on the job, The
San Francisco Chronicle reports. The settlement with state
regulators signals a potential shift in dress-code rules for
clothing salespeople at stores not only around California, but
also nationwide.
Abercrombie, a clothing chain based in Ohio, with $1.6 billion
in sales last year, also is facing a pending civil lawsuit and
other civil lawsuits on the way, separate from the state action,
over its dress-code policies. The terms of the deal apply to
nearly 11,000 people who worked at Abercrombie & Fitch,
Abercrombie & Hollister Co. stores in California, from January
1, 1999, through February 15, 2002.
The $2.2 million settlement, in which Abercrombie agrees not to
force workers to buy its clothes will reimburse former employees
for company-branded outfits purchased for working in the
company's California stores during that period. Former
Ambercrombie workers are eligible for sums ranging from about
$200 to $490, depending on job status and tenure.
The state's settlement with Abercrombie could set a precedent in
the growing debate over who must pay for the retail workers' on-
the-job clothes - the employer or employee - when the bosses
mandate specific styles, colors, even brands. Retailers usually
want workers to portray what they are selling.
In its findings, the California Division of Labor Standards
Enforcement accused Abercrombie of violating the state's worker-
uniform rules. The state also claimed that mandatory clothing
purchases pushed some workers' hourly wages below the legal
minimum.
"These are workers who may have been making more than minimum
wage, but not much more," said Miles Locker, a California Labor
Commission attorney. "Abercrombie required them to purchase
items of clothing from their employer to act as living models."
The state settlement is separate from Abercrombie's pending
civil dress-code lawsuit. The settlement also is unrelated to
the lawsuits against Gap Inc., Polo Ralph Lauren of New York and
Chico's FAS Inc. of Florida. These cases all seek class action
status on behalf of current and former California employees.
All the targeted retailers deny they require employees to buy
their clothing as a condition of employment. California carries
a great deal of weight in the industry because of its size and
spending power. When a retailer changes dress-code policies in
California, retailers in other states are likely to follow
course, a move likely to affect their bottom line, said Marshal
Cohen, a trends analyst with New York's NPD Group.
The state settlement does not prevent civil actions against the
retailer, Mr. Locker said. However, recipients of payments from
the settlement must waive further claims for damages for
purchases made during the period covered by the settlement.
BOY SCOUTS: Report To Reveal Sexual Abuse in Explorers Program
--------------------------------------------------------------
Criminologists' research reveals that at least a dozen teenagers
assigned to work with police departments under the Boy Scouts'
Law Enforcement Explorers program were sexually abused by
officers last year, the Associated Press reports. Molestations
have reportedly reached at least 25 in the past five years.
The co-ed program is affiliated with the Boy Scouts of America
and places 14 to 20 year olds with firefighters, medical
providers, lawyers and others to learn about those careers. In
2002, about 43,000 Explorers were assigned to police and
sheriff's departments around the United States.
A report by University of Nebraska criminal justice professor
Samuel Walker and his colleague Dawn Irlbeck, who study police
sexual abuse of women will be released this week. They
uncovered that almost half of the reported teenage victims of
police sexual abuse in the past decade were enrolled in police
Explorer programs, they found, with the rest abused during
arrests, traffic stops and in other situations.
"When you have repeated incidents across the country, a new one
every month, that's a real problem," Mr. Walker told the
Associated Press.
The program has been criticized, even when abuse is not alleged.
For example, Explorers were taken along on undercover
pornography stings, where they entered adult bookstores and
purchased materials not appropriate for their age group. Some
explorers were allowed to drive marked patrol cars, exposing
them to harm from gang members and drug dealers.
The Explorers guidelines discourage this practice, stating that
this will put inexperienced youth in harm's way. "Stings are
prohibited and always have been prohibited," Boy Scouts of
America spokesman Gregg Shields told AP. "These are juveniles
and it's just not proper."
However, most of the abuse happens during the one activity
allowed by the program - certified law enforcement ride-alongs,
according to the report. "I think it's a program that allows
inappropriate contact between the officers and the kids without
the proper supervision," attorney Todd Walburg, who represents a
former Explorer alleging in a lawsuit that David Kalish, a
candidate for Los Angeles police chief last year, sexually
abused him while in the program during the 1970s, told AP. Mr.
Kalish, 49, has been suspended as deputy chief, pending grand
jury action.
According to the Associated Press, some other cases are:
(1) The East Ridge, Tennessee, police department suspended
its Explorer program after Officer Keith Maynard, 31,
was charged with two counts of statutory rape and two
counts of aggravated child molestation, accused of
having sex with a 15-year-old girl in the program. He
is awaiting trial.
(2) In Haltom City, Texas, former police officer John Ross
Ewing, 28, was indicted by a grand jury in March on
charges that he sexually assaulted two male Explorer
scouts, ages 15 and 16, at his apartment.
(3) In San Bernardino, California, Freddie Lee Johnson, 34,
pleaded guilty in April to having sex with a 16-year-
old girl on a scout-related camping trip. According to
court records, the girl woke up in her tent and found
the officer on top of her. He was sentenced to 60
weekends in jail.
"I was scared that if I said anything, I would get into trouble
and I would have to leave the sheriff's department," the victim
said in a statement at the sentencing hearing, AP reports.
The program's sponsors have promised reforms to the program.
Boy Scouts of America officials said they were surprised and
concerned to learn of the incidents.
"I really don't understand why this is happening," John Anthony,
executive director of the Learning For Life program, which
oversees Explorers told AP.
COMPUWARE CORPORATION: Plaintiffs Consolidate Suits in E.D. MI
--------------------------------------------------------------
Compuware Corporation faces a consolidated securities class
action filed in the United States District Court for the Eastern
District of Michigan, on behalf of purchasers of the Company's
common stock from January 1, 1999 to April 3, 2002. Principal
defendants include the Company and:
(1) Peter Karmanos, Jr.,
(2) Joseph A. Nathan and
(3) Elizabeth Chappell
The plaintiffs allege that the Company failed to disclose
under the securities laws its problems with the misappropriation
of its software source code by IBM. The plaintiffs further
allege that the Company omitted and/or disseminated materially
false and misleading statements concerning its deteriorating
relationship with IBM. The plaintiffs request that the court
award them monetary damages and expenses of litigation,
including reasonable attorneys fees.
The Company strongly denies the allegations. At this time, the
Company's legal counsel is preparing a responsive pleading to
the lawsuit.
CYTODYNE TECHNOLOGIES: CA Judge Questions Dietary Supplements
-------------------------------------------------------------
When California Superior Court Judge Ronald Styn handed down a
$12.5 million false-advertising judgment in a class action
lawsuit against Cytodyne Technologies, maker of an ephedra-based
weight-loss pill, he also issued what amounted to a "bill of
reproach" against the science of dietary supplements, the
International Herald Tribune reports.
The company, maker of the supplement implicated in the death of
a professional baseball pitcher, was found in Judge Styn's
ruling to have exaggerated the findings of clinical trials it
had commissioned. The company, said Judge Styn in his ruling,
also cajoled some researchers into fudging results in published
scientific articles. The evidence, Judge Styn said, had left
him no alternative but to conclude that the researchers had set
out to create a study that justified the money being spent by
Cytodyne and would ensure that the researchers received further
work from the company.
There is a swelling tide of litigation raising serious questions
about how makers of ephedra and other dietary supplements use
and often misuse the promise of scientific proof to bolster the
marketing of products. In just the past eight months, three
leading manufacturers of weight-loss pills have received false
advertising verdicts in the millions of dollars. A fourth has
been rebuked by a federal judge for hiding evidence.
The regulators have gotten into the act: The Missouri attorney
general and a group of district attorneys in California also
have brought false-advertising lawsuits against the
manufacturers; Congress has demanded Cytodyne's research
records.
Last week, New York state became the second state, after
Illinois, to ban ephedra. The federal government is also
considering a ban. However, experts say a switch in ingredients
will not alter the industry's reliance on questionable science.
They say they are concerned because there is so little rigorous
research on the ephedra substitutes, primarily synephrine.
Supplement makers are not obliged to do research. A 1994 law
exempts them from having to prove that their products are
harmless and effective. Since the industry is not regulated,
its research is sometimes not strictly scientific, experts say.
Experts say the scientific research done for clinical trials of
nutraceuticals is not the most rigorous. An industry spokesman
Steven Dinali, vice president for science and technical affairs
at the American Herbal Products Association, said, for example,
that whenever there is a desired outcome, you have the potential
for bias. However, he said, supplement science is no worse than
that done for pharmaceuticals.
The Food and Drug Administration has collected reports linking
ephedra to more than 100 deaths, but most of the studies done
have been too small and too limited to assess the danger. A
Rand Corporation analysis combining the results of many small
studies found legitimate evidence that ephedra worked for weight
loss in the short term, but could produce many cardiac side
effects.
Documents from the lawsuits, including e-mail and experiment
records, provide an inside look at how the demands of marketing
have sometimes compromised those of science. They show how
companies and researchers suppressed negative data; removed
product names from abstracts when the conclusions showed no
positive effects; changed statistical methods to see whether
results could be improved; and left out subjects who complained
of troublesome side effects.
DAIMLERCHRYSLER AG: DE Court Throws Out Part of Dismissal Motion
----------------------------------------------------------------
The United States District Court in Delaware rejected part of
DaimlerChrysler's motion to dismiss the multi-billion-dollar
securities class actions filed against them, over its merger
with Chrysler Corporation in 1998, Reuters reports.
The suits were filed after DaimlerChrysler Chairman Juergen
Schrempp told the Financial Times that he had always meant to
relegate Chrysler to a division of Daimler. The plaintiffs,
including wealthy investor Kirk Kerkorian, allege that had the
deal been billed as a takeover of Chrysler by Daimler, they
would have demanded a higher price for their shares. The
Company allegedly planned and executed a takeover of Chrysler in
1998 but used the "merger of equals" language to get the deal
done at a cheaper price.
The Company asked the Court to dismiss the suit, saying that the
plaintiffs were aware of the details and the doubts surrounding
the merger since 1998 or 1999. It further argued that the
statute of limitations gave the plaintiffs only a one-year
window to file a lawsuit.
Judge Joseph Farnon rejected its argument that the investors
knew of the merger's details. He said investors could not
reasonably have suspected the so-called "merger of equals" was a
takeover.
"I find (DaimlerChrysler's) position untenable," Judge Farnan
said in his ruling, Reuters reports. "Defendants are basically
seeking to punish plaintiffs for trusting their word, a position
which I find to be at odds with their role as corporate
insiders."
Judge Farnan did not rule on the rest of DaimlerChrysler's
motion for summary judgment, saying he would do so at a later
date.
In a statement, DaimlerChrysler stressed that he had ruled on
only one issue raised by the company's motion for summary
judgment. "The company remains committed to a vigorous defense
of these cases, which it believes lack any valid basis," the
statement said, according to Reuters.
DOREL JUVENILE: Recalls Infant Seats/Carriers For Injury Risk
-------------------------------------------------------------
Dorel Juvenile Group, Inc. is cooperating with the United States
Consumer Product Safety Commission (CPSC) and the National
Highway Traffic Safety Administration (NHTSA) by voluntarily
recalling Cosco Arriva and Turnabout infant car seats/carriers
to address a problem with the carry handle.
On July 8, 1999, the two federal agencies and Cosco, now known
as the Dorel Juvenile Group, announced the recall of 670,000 of
these infant car seat/carriers made from March 1995 through
September 1997. This recall adds 1.2 million of the same model
infant car seats/carriers made through January 2000.
When the seat is used as a carrier, the plastic handle locks can
unexpectedly break or release from the carrying position,
causing the seat to unlatch or flip forward. When this happens,
an infant can fall to the ground and suffer injuries.
Dorel Juvenile Group has received 416 reports of the handle
locks on the additional recalled infant car seats/carriers
breaking or unlatching, resulting in nine injuries to children.
These reports include bruises and scratches to the head and
face. According to the reports, some injuries occurred to
children restrained in the seat.
The recalled car seats/carriers were sold under the Cosco Arriva
and Turnabout brand names and were manufactured by Dorel
Juvenile Group in the US. The car seat/carriers have the
following model numbers:
ARRIVA
02-665 02-727 02-728
02-729 02-731 02-732
02-733 02-750 02-751
02-755 02-757 02-774
TURNABOUT
02-753 02-756 02-758
02-759 02-760 02-761
02-762 02-763 02-764
02-765 02-770 02-771
02-772
The model number and manufacture date are located on the
instruction and warning label on the side of the car
seat/carrier. The recalled seats were manufactured on or before
January 31, 2000.
Juvenile product, mass merchandise, department stores and major
discount stores nationwide sold the Arriva and Turnabout infant
car seats/carriers from September 10, 1997 through December 2000
for between $30 and $60 when sold alone or $90 to $140 when sold
with strollers. The recalled seats are no longer available for
purchase.
For more details, contact the Company by Phone: (800) 880-9435
between 7 a.m. and 4:30 p.m. ET Monday through Friday, or visit
the firm's Website: http://www.djgusa.com.
ILLINOIS: Sued For Skimming Children's Checks For Admin Funds
-------------------------------------------------------------
A public interest lawyer representing several current and former
state wards has asked the Illinois Court of Claims to order the
state to pay potentially thousands of dollars each to up to
2,000 wards, whose federal benefits were trimmed by state
officials, the Chicago Tribune reports.
Bruce Boyer, head of the ChildLawClinic at Loyola University
Chicago, argued at a recent hearing that the state Department of
Children and Family Services had improperly siphoned money from
federal aid checks earmarked for the children, in order to pay
the administrative costs of several independent agencies it
hires to monitor the care and placement of its wards.
"You can't take money intended for the fundamental needs of food
and rent and use it to pay Catholic Charities' electric bill,
(for instance)," said Mr. Boyer. "It's just dead illegal."
Mr. Boyer is representing about 100 children and wants the court
to certify his petition seeking class-action status for the
lawsuit that could affect some 2,000 more children whose monies
were taken from them when state officials deducted a given
amount off each check each affected child was to receive under
the federal Supplemental Security Income (SSI) program, which
assists low-income disabled persons.
The state contended the children did benefit from the expenses
paid for by the funds skimmed off the state wards' SSI checks.
IOWA: ICLU Sues Over Law Obstructing Sex Offenders' Rights
----------------------------------------------------------
The Iowa Civil Liberties Union (ICLU) filed a class action over
a state law preventing convicted sex offenders from living
within 2,000 feet of a school or daycare center, the Times
Leader reports.
The suit was filed in Iowa federal court on behalf of three
unidentified sex offenders and names as defendants Iowa Attorney
General Tom Miller and officials in Johnson and Clinton counties
in eastern Iowa, where the plaintiffs either live or would like
to live.
The suit asserts that the law makes it virtually impossible for
an offender to find a place to live "because there is virtually
no place in towns or urban areas in Iowa that is not within
2,000 feet of a school or daycare center," the Times Leader
reports. The suit further asserts that the law violates
constitutional protections against cruel and unusual punishment
and the right to avoid self-incrimination.
"Herding former offenders into penal colonies may help get
politicians re-elected, but it is poor use of law enforcement
dollars," Ben Stone, executive director of the ICLU told the
Times-Leader. He said Iowa is the only state that prohibits
offenders from living near schools and childcare facilities.
"We expect to defend the constitutionality of the statute ... so
that prosecutors will have clear guidance from the courts on
enforcement of the statute," Bob Brammer, spokesman for the
attorney general's office told the Times-Leader.
A Washington County judge ruled in a separate case in April,
declaring the state law unconstitutional. The attorney
general's office has appealed the ruling.
JAPAN: Activist Readies Lawsuits Over Firms' Alleged Wrongdoings
----------------------------------------------------------------
M&A Consulting Inc., a company led by one of Japan's most
prominent shareholder activists, said recently it has as asked
Tokyo Style Co.'s auditors to file a damages suit against
company President Yoshio Takano over losses the company incurred
from securities investments, Jiji Press English News Service
reports.
The Japanese investment firm, led by former bureaucrat and high-
profile shareholder activist Yoshiaki Murakami, is effectively
the top shareholder in Tokyo Style, a maker of women's clothes.
In its request, M&A Consulting asked three of Tokyo Style's
auditors to file suit over 7.3 billion yen in losses that Tokyo
Style incurred from investing in securities such as bonds issued
by failed supermarket chain operator Mycal Corporation, shares
in Sumitomo Realty & Development Co. and a stock fund managed by
Nomura Securities Co.
M&A Consulting Co. said it will launch a class-action lawsuit if
the request is not met. Separately, M&A Consulting filed a suit
with Tokyo District Court Monday over the way Tokyo Style
conducted its general shareholders' meeting on May 22.
In the lawsuit, M&A called for cancellation of four proposals
made by Tokyo Style's board and approved at the shareholders'
meeting on the grounds that the company accepted few questions
before putting the proposals to the vote.
KRAFT FOODS: Settles Suit For Harassment of Male Employees in AL
----------------------------------------------------------------
Kraft Foods, Inc. settled a lawsuit filed by the Equal
Employment Opportunity Commission, alleging that a male
supervisor sexually harassed 17 male employees at work, the
Associated Press reports.
The suit alleges that a male supervisor propositioned them for
sex and sexually assaulted them at a Birmingham, Alabama
facility. The management allegedly ignored their complaints
because the employees were black and allegedly threatened
retaliation for reporting the incidents.
The employees initially filed lawsuits, but these were dismissed
on procedural grounds. The EEOC then filed lawsuits on behalf
of the employees. The Company later entered private settlements
with the employees, according to the EEOC.
Under the settlement, Kraft agreed to implement training
programs for managers and employees on harassment, the
Associated Press reports.
LEHMAN BROTHERS: Jury Rules Bank Supported Fraudulent Lender
------------------------------------------------------------
An Orange County jury in California found that Lehman Brothers,
a Wall Street investment bank, was liable in the case before it,
because the bank knowingly supported a lender that defrauded its
borrowers, The Orange County Register reports.
The jury decided that Lehman Brothers should pay $5.1 million in
damages in the class action brought on behalf of a class of
borrowers, for aiding and abetting financial fraud when it
served as banker for First Alliance, the Irvine mortgage lender
that went out of business three years ago amid allegations it
was cheating customers by charging excessive fees.
Today, because consumer advocates and others have been fighting
predatory lending both in and out of the courts, several states,
including California, have passed laws that are aimed at
protecting borrowers. Nonetheless, the problem of predatory
lending abides.
"I think very little has changed (since First Alliance)," said
Aashish Desai, an Irvine attorney who specializes in mortgage-
lending fraud. "There are a lot more laws on the books, but
enforcement is another matter. Until I see more class action
lawsuits like the Lehman Brothers case, I think lenders will
continue to do what they do."
California has tried to set up protections for borrowers through
a state law that took effect last summer. The law does not ban
excessive fees. Rather, it offers consumers some limited
protections. For example, for some high-cost loans, the law
curbs some balloon payments, prohibits the financing of credit
life insurance and bans the practice of putting consumers into
loans they can't repay. While the law may discourage abusive
lenders from excessively overcharging borrowers, it does not
prevent them from overcharging in general.
"They just not gouging as much per loan," said Kurt Eggert, a
professor at Chapman University School of Law and an expert on
banking and consumer law.
States are not the only ones looking to curb lending abuses.
Shortly after First Alliance filed for bankruptcy in 2000,
Fannie Mae, which buys mortgages from lenders and sells them to
Wall Street, issued rules that essentially said it would not buy
"predatory" loans. Among the mortgages it will not buy: those
where total points and fees charged to the borrower exceed five
percent of the mortgage amount.
Some laws end up punishing consumers; sometimes laws meant to
help borrowers can backfire. For example, a law Georgia passed
last fall gave borrowers the right to sue all parties involved
in predatory lending, including any lender or broker, and even
investors who may have bought securities backed by those loans.
It was a law meant to protect borrowers, but ended up penalizing
them.
Credit-rating agencies balked, saying they no longer would rate
securities containing Georgia home loans because the possibility
of lawsuits made those investments too risky. Without credit
ratings, major lenders who specialized in making loans to people
with poor credit now could not sell their loans on the secondary
market.
Georgia consumers with poor credit histories therefore had fewer
and fewer lenders to contact. This year, Georgia revised the
law, easing some of the restrictions that made investors
nervous, and the lenders who specialize in loan-making to people
with poor credit history, are back.
The experts say the best defense against predatory lending is
for consumers to be better educated about loans. However, the
lending process remains difficult to understand, which provides
continued opportunities for abuse.
"The California law operates under the fiction that people
understand everything they sign," said Mr. Desai, the Irvine
attorney specializing in mortgage-lending fraud. Unless more
class actions like the Lehman Brothers case are successful,
abusive leaders won't get the message, said Mr. Desai.
However, there are some experts, like Georgia's Commissioner of
Insurance John Oxendine, who believe legislation prohibiting
predatory lending in all its forms is the best, possibly the
only avenue that will ultimately be effective in the area of
predatory lending. Otherwise, the regulator is regularly in
court prosecuting the one aspect of predatory lending that has
been put into a lawsuit on behalf of a group of exploited
borrowers, and when the settlement has been approved and
the damages allocated, the lender sails forth to set up his
business in some other form that skirts the precedent just made.
MCDONALD'S CORPORATION: Seeks Dismissal of Amended Obesity Suit
---------------------------------------------------------------
Lawyers for McDonald's Corporation asked Federal Judge Robert
Sweet to dismiss the amended class action blaming the fast food
giant for causing obesity in children, Reuters reports.
Judge Sweet dismissed an earlier version of the suit, but
allowed plaintiffs to re-file. The plaintiffs later amended the
suit to focus on deceptive advertising claims.
The Company's lawyers said a key claim that customers were
unaware its food could pose a health threat was dropped. The
dropped claim states that Chicken McNuggets, Filet-O-Fish,
French fries and other menu items are so processed with
additives and other ingredients that they can pose a health
hazard of which consumers are not aware.
"I think that's the sensational part of the suit. We don't need
that," Samuel Hirsch, the plaintiffs' lawyer, told reporters
after the hearing, saying he would leave those allegations for
other lawyers to pursue.
Attorney for the Company Brad Lerman said the false advertising
claims were flawed. The plaintiffs, he stated, did not specify
what ads they had seen and could not link advertising to the
injuries. The two plaintiffs in the case were born in 1984 and
1988. Mr. Lerman pointed out that the plaintiffs were too young
to have seen or be affected by the 1987 print ads attached as
exhibits in the suit, Reuters reports.
"There are no allegations that the plaintiffs saw any of the
material that was referenced," Mr. Lerman said. He said the
plaintiffs cannot claim they were injured by advertising they
had not seen or heard, Reuters reports.
The suit, the first of its kind, caused restaurants and other
manufacturers to worry about a new wave of tobacco-like
litigation against them. Judge Sweet dismissed the earlier suit
but said plaintiffs could try backing up their claim that diners
have no idea what is really in their food or that the products
have allegedly become more harmful because of processing.
MICHIGAN: State To Receive Additional $7M in Tobacco Settlement
---------------------------------------------------------------
Michigan Attorney General Mike Cox announced today that a new
settlement with tobacco manufacturers will yield an additional
$7 million for the state. A total of $6,837,480.42 will be
wired into state coffers by the end of the month and has yet to
be appropriated by the legislature. The settlement resolves two
major issues involving the national tobacco settlement: contract
manufacturing of cigarettes and state enforcement of the Master
Settlement Agreement.
"Everyone in Lansing is doing their part to ease public impact
of a very tight budget," Mr. Cox said in a statement. "The
Attorney General's office remains vigilant in getting money back
for taxpayers from those who violate our laws. This multi-
million dollar settlement will go a long way to providing some
immediate relief."
The issue of contract manufacturing of cigarettes first arose
when Brown & Williamson Tobacco manufactured cigarettes for Star
Tobacco. B&W is a party to the national tobacco settlement, but
Star is not a party. B&W denied that it should pay revenues to
the states for the billions of cigarettes that it manufactured
for Star.
In the settlement, B&W agreed to make payments of more than $150
million to the States in exchange for dismissal of claims. In
addition, B&W and all other major tobacco companies agreed that
in the future they would take responsibility under the MSA for
cigarettes they manufacture for other companies.
The settlement also protects Michigan from protracted legal
challenges that could have cost the state future settlement
dollars. Under the Master Settlement Agreement the annual
payments can be reduced if a state fails to diligently enforce
tobacco escrow laws. Under the new agreement, potential
enforcement claims against states for the period of January 1,
1999 through December 31, 2002, totaling about $1.1 billion,
have been abandoned.
OXFORD CAPITAL: SEC Imposes Sanctions For Securities Violations
---------------------------------------------------------------
The United States Securities and Exchange Commission (SEC)
issued an order making findings, imposing remedial sanctions and
cease-and-desist order against Oxford Capital Management, Inc.
and John G. Danz, Jr.
The order finds that the Company, an investment adviser
registered with the Commission, and Mr. Danz, president and
majority shareholder of Oxford, engaged in a scheme to defraud
potential investment adviser clients by advertising inflated
performance results and assets under management in Oxford's
Enhanced Equity composite. In addition, the order finds that
the Company through Mr. Danz, willfully failed to maintain
required books and records.
In settling this matter, the Company and Mr. Danz neither admit
nor deny the order's findings. The order:
(1) suspends Mr. Danz from association with any investment
adviser for three months;
(2) limits Mr. Danz's participation in any activity related
to investment performance calculation or marketing of
Oxford's Enhanced Equity composite performance results
for twelve months (beginning after the three-month
association suspension is completed); and
(3) orders Mr. Danz to cease and desist from committing or
causing any violations or future violations of Sections
204, 206(1), 206(2), 206(4) of the Investment Adviser
Act and Rules 204-2(a)(7), (11) and (16) and 206(4)-
1(a)(5) promulgated thereunder.
In addition, the order requires Mr. Danz to be jointly and
severally liable with Oxford for payment of a civil penalty in
the amount of $35,000.
The order directs Oxford to complete three remedial
undertakings:
(i) retain an independent consultant to conduct a review
of Oxford's policies and procedures designed to prevent
and detect federal securities law violations;
(ii) retain an independent consultant for 5 years to conduct
an annual compliance examination of Oxford; and
(iii) retain a certified public accountant for 5 years to
perform an annual review of Oxford's Enhanced Equity
composite.
In addition, Oxford is ordered to cease and desist from
committing or causing any violations or future violations of
Sections 204, 206(1), 206(2), 206(4) of the Investment Adviser
Act and Rules 204-2(a)(7), (11) and (16) and 206(4)- 1(a)(5)
promulgated thereunder, and required to be jointly and severally
liable with Mr. Danz for payment of a civil penalty in the
amount of $35,000.
SOUTH KOREA: New Class Action System To Take Effect by July 2004
----------------------------------------------------------------
Class actions in South Korea are expected to go into effect in
July of 2004, after a one-year grace period, the Ministry of
Finance and Economy (MOFE) said recently, the Asia Pulse
reports. The Ministry said the timetable will be contingent
upon the National Assembly approving new legislation in the near
future.
Safeguard measures, such as making it mandatory for plaintiffs
to place a deposit with authorities, which will be forfeited if
they lose the case in court, probably will become part of the
system, said the Ministry spokesman. On the other hand, giving
financial regulators a say on whether or not a lawsuit can be
conducted, will be deleted.
"The bill is being deliberated at parliament's Legislation and
Judiciary Committee, and although there are some differences, a
compromise on the timing for the start of the lawsuit is likely
to be agreed upon," said a MOFE official.
The grace period of two years before class actions go into
effect is being asked for by the opposition party, Grand
National Party (GNP), in order to give companies a chance to
clean up their bookkeeping practices. The government said suits
against fraudulent bookkeeping and false disclosure probably
will be limited to listed and registered companies with assets
in excess of 2 trillion won (US$1.68 billion). Class actions
against illegal stock manipulation, on the other hand, will
likely be able to be brought against all listed and registered
companies.
Meanwhile, government insiders said more talks were needed on
when a class action can be filed. The GNP has been insisting
suits only can commence after criminal proceedings for
wrongdoings are started while the ruling Millennium Democratic
Party (MDP) said people should be allowed to carry out suits
once a misdeed has been found.
SUPREMA SPECIALTIES: Plaintiffs, Trustee Agree on Sharing Funds
----------------------------------------------------------------
Attorneys for plaintiffs in the securities class action against
now-bankrupt cheese maker Suprema Specialties have reached an
agreement with the bankruptcy trustee investigating fraud
charges at the Company on how to split the proceeds of certain
potential settlements, the Star-Ledger reports.
The Company filed for bankruptcy in February 2002, after two of
its financial officers suddenly resigned from the Company.
Securities investigations were launched and are still ongoing,
and it has been revealed that much of the Company's $420 million
in annual sales apparently never took place.
The bankruptcy trustee has also reviewed documents and conducted
interviews over the Company's collapse. He plans to file
negligence and breach of fiduciary duty claims against certain
officers and directors who already are defendants in the class
action case, according to a motion filed in the bankruptcy case.
For a while, the parties were locked in a battle over who gets
most of the potential settlement. Without the agreement, the
first party to win a judgment could essentially clean out the
limits of the insurance policies, leaving the other out of luck,
the Star-Ledger reports. Both sides have claims that if won
would draw down the entire $25 million.
Under the agreement, as much as $25 million in insurance
policies would be split evenly between the two groups. "There's
no question this is a hugely beneficial agreement for everyone,"
said Erik Sandstedt, one of the attorneys representing
shareholders in the class action case, told the Star-Ledger.
The agreement will save both sides time and money as it will
prevent them from fighting over insurance proceeds. However,
the stipulation only covers claims shareholders are pursuing in
the bankruptcy case. It does not include settlements that might
be reached against other defendants named in the civil lawsuit,
such as Suprema's outside auditor and the banks that underwrote
the company's public offerings.
Lawrence Rolnick, an attorney representing an institutional
investor pursuing claims against various Suprema executives and
directors, told the Star-Ledger the real benefit to the
agreement is that it gives shareholders access to company
documents held by the trustee. Those records can help
shareholders pursue their claims.
"It's better often than both sides trying to win the race,"
Trenton bankruptcy attorney Simon Kimmelman told the Star-
Ledger. "It can be real good."
TOMMY HILFIGER: Factory Workers' Suit Dismissed After Settlement
----------------------------------------------------------------
The class action filed against Tommy Hilfiger Corporation have
been dismissed after the United States District Court in Saipan
approved the settlement the Company proposed for the suits. The
suits also name as defendants other garment manufacturers and
retailers.
The suits assert claims that garment factories located on the
island of Saipan engaged in unlawful practices relating to the
recruitment and employment of foreign workers. The suit was
initially filed in the United States District Court for the
Central District of California on behalf of an alleged class
consisting of the Saipanese factory workers.
The Company entered into settlement agreement with the
plaintiffs in the suit. As part of this agreement, the Company
specifically denies any wrongdoing or liability with regard to
the claims made in the actions. The settlement provides for a
monetary payment, in an amount that is not material to the
Company's financial position, results of operations or cash
flows, to a class of plaintiffs in the federal action. On April
23, 2003, the Court issued an order and final judgment approving
the settlement and dismissing the action with prejudice.
Asbestos Alert
ASBESTOS ALERT: Landmark Asbestos Class Action Opens in Israel
-------------------------------------------------------------
A class action suit has been filed against a western Galilee
factory that the plaintiffs claim is responsible for the
presence of asbestos. Government ministries and local councils
in the factory's vicinity have also been named in the suit,
Ha'aretz reports.
Eitanit promoted the use asbestos in the 1960s "to prevent the
sinking of vehicles in the winter mud." Hundreds of area
residents, kibbutzim, moshavim and cities responded to the ads
and asbestos became widely-used throughout the region. The
Nahariya-based company provided all of Israel's needs for
asbestos, a mineral used for insulation, from 1952 to 1997.
"The asbestos hazard in the western Galilee is at its peak. It
is a threat to the public, especially to young children," Dr.
Elihu Richter, of the School of Occupational Medicine at
Hadassah University Hospital, Jerusalem, told Ha'aretz.
The lawsuit, filed by the Association for Quality of Life and
the Environment in Nahariya demands that Eitanit, together with
the municipality of Nahariya and the regional councils of
Ma'aleh Yosef and Asher, as well as the health and environment
ministries, clean up the hazard, and prevent the further
dispersal of asbestos fibers in the wind. The plaintiffs also
want a fund established to help the early diagnosis of asbestos-
related illnesses among western Galilee residents.
The suit is a first for Israeli courts. "The law preventing
environmental nuisances states that steps may be taken to
correct and reverse the situation, but does not state that such
steps must be taken," says Adam Fish of the Justice Chaim Cohen
Center for Human Rights, lawyer for the plaintiffs.
The plaintiffs allege that Eitanit knew about the dangers of
asbestos. The company ceased asbestos manufacture in 1997.
Tons of asbestos were buried over the years in the area around
the factory. The Nahariya municipality sought to build an
amusement park on the site, but the courts ordered it to first
clean up the area. Only a partial cleanup was carried out as
the project was shelved.
Dr. Richter asserts that the number of Nahariya residents with
mesothelioma, a lung disease associated with asbestos exposure,
is three times higher than elsewhere in the country. The
Environment Ministry declared it will conduct a thorough
investigation of the case.
ASBESTOS LITIGATION: Court Allows Suit Against Timber Giant
-----------------------------------------------------------
The state Supreme Court gives the green light to five women from
Martin County for their case against Weyerhaeuser Co.
The women, who were married to men who worked at the Plymouth
mill, claim that the company should have warned them that they
could get sick from the asbestos dust brought into their homes.
The timber giant had asked the Supreme Court in March dismiss
the case, saying that it might draw the state court into "the
black hole of asbestos litigation."
In a one-word ruling issued June 20, the court refused to hear
the case, so it now returns to Martin County, and the lawyers
will prepare for trial.
The mill's pipes, walls and machinery were covered with asbestos
that workers say flaked off daily and filled the air with tiny
particles. Workers went home with the dust clinging to their
clothes, which their wives shook out and cleaned.
The plaintiffs claim that they have asbestosis. Weyerhaeuser
defended itself by saying that they do not have a duty to warn
the wives, who were not employees, about the dangers of asbestos
exposure. It was found out that the company once prepared, but
never distributed, pamphlets to caution families.
ASBESTOS LITIGATION: Court OKs Most of ABB's Asbestos Proposal
--------------------------------------------------------------
ABB Ltd. shares soared on June 24 as a US court has
conditionally approved a key asbestos settlement. The court
approved the deal, which caps liability claims at 1,300,000,000.
The asbestos litigation stems from ABB's US unit, Combustion
Engineering, which has more than 100,000 lawsuits pending.
Judge Judith K. Fitzgerald ruled, however, that Combustion
Engineering failed to show that it had sought support of the
plan from asbestos claimants of two ABB subsidiaries, ABB Lummus
Global Inc. and Basic Inc. The federal bankruptcy judge gave CE
until July 3 to supply the necessary information. Lummus is
facing about 7,600 asbestos claims independent of ABB and
Combustion Engineering, while Basic is facing about 3,500, the
opinion says.
In the same ruling, Judge Fitzgerald dismissed all other
objections to the plan, which is backed by representatives for
the majority of Combustion Engineering's asbestos creditors.
Some were concerned about the judge's request for more
information, focusing on the Lummus Global and Basic units. ABB
said the request was related to procedural matters and
reiterated it was "very happy" with the deal. Approval of the
motion will definitely protect ABB from future asbestos-related
ordeals.
The ruling catapults ABB to the realization of its plans to sell
its oil, gas and petrochemicals business, worth around US$1.4
million. ABB wants to sell the unit to cut its near US$8M debt.
The Swiss Engineering group said that its own asbestos case was
so well advanced it was unlikely to benefit from a proposed US
national fund to pay injury claims now clogging up US courts.
ASBESTOS LITIGATION: Eastman Posts Latest Asbestos Statistics
-------------------------------------------------------------
Eastman reports that there are around 8,000 claims pending
against the company in less than 25 cases that also involve
hundreds of other defendants. According to its first quarter
report filed with the Securities and Exchange Commission, the
company has been involved in an asbestos-related lawsuit that
has numerous defendants in various state courts. Plaintiffs
alleged injury due to exposure to asbestos at Eastman's
manufacturing sites and sought unspecified monetary damages and
other relief. Historically, these cases were dismissed or
settled without a material effect on Eastman's financial
condition, results of operations, or cash flows.
As previously reported, Eastman, like many other companies, has
recently experienced an increase in the number of asbestos
claims against it. Based on its investigation to date, the
Company has information that it manufactured limited amounts of
an asbestos-containing plastic product between the mid-1960's
and the early 1970's.
The Company's investigation has found no evidence that any of
the Mississippi plaintiffs worked with or around any such
product alleged to have been manufactured by the Company. The
Company intends to defend vigorously all of these actions or to
settle them on acceptable terms.
The Company continues to evaluate the allegations and claims
made in recent asbestos-related lawsuits and its insurance
coverages. Based on such evaluation to date, the Company
continues to believe that the ultimate resolution of asbestos
cases will not have a material impact on the Company's financial
condition, results of operations, or cash flows, although these
matters could result in the Company being subject to monetary
damages, costs or expenses and charges against earnings in
particular periods. To date, costs incurred by the Company
related to the recent asbestos-related lawsuits have not been
material, and in the case of the Mississippi claims have been
limited to legal fees and expenses.
ASBESTOS LITIGATION: MeadWestVaco Reveals Asbestos Litigation
-------------------------------------------------------------
MeadWestVaco Corporation reports that as of April 30, 2003, it
was facing around 600 asbestos-related personal injury lawsuits.
As with numerous other large industrial companies, the Company
has been named a defendant in an asbestos-related litigation.
Typically, these suits also name many other corporate
defendants. All of the claims against the company resolved to
date have been concluded before trial, either through dismissal
or through settlement with payments to the plaintiff that are
not material to the company.
To date, the costs resulting from the litigation, including
settlement costs, have not been significant. Management
believes that the company has substantial indemnification
protection and insurance coverage, subject to applicable
deductibles and policy limits, with respect to asbestos claims.
The company has valid defenses to these claims and intends to
continue to defend them vigorously.
Additionally, based on its historical experience in asbestos
cases and an analysis of the current cases, the company believes
that it has adequate amounts accrued for potential settlements
and judgments in asbestos-related litigation.
The company has established litigation liabilities of around
$36,000,000, a significant portion of which relates to asbestos.
Should the volume of litigation grow substantially, it is
possible that the company could incur significant costs
resolving these cases. Although the outcome of this type of
litigation is subject to many uncertainties, after consulting
with legal counsel, the company does not believe that such
claims will have a material adverse effect on its consolidated
financial condition, liquidity or results of operations.
ASBESTOS LITIGATION: NSI Pegs Asbestos Liabilities at $138M
-----------------------------------------------------------
National Service Industries, Inc reports that during the quarter
ended February 28, 2003, the increase in the asbestos-related
liabilities resulting from this review process was a range of
$138,000,000 to $209,000,000.
NSI does not believe that any amount in the range is more
accurate than any other. Therefore, as of February 28, 2003, the
Company increased its liabilities for asbestos-related costs by
approximately $138,000,000, the low end of the range.
Additionally, the Company believes it has adequate insurance
coverage available to cover this increase in liabilities and
therefore recorded an additional insurance recovery amount of
$138,000,000.
The Company's estimates of indemnity payments and defense costs
associated with pending and future asbestos claims are based on
the Company's estimate of the number of future asbestos-related
claims and the type of disease, if any, alleged or expected to
be alleged in such claims, assumptions regarding the timing and
amounts of settlement payments, the status of ongoing litigation
and settlement initiatives, and the advice of outside counsel
with respect to the current state of the law related to asbestos
claims. The ultimate liability for all pending and future claims
cannot be determined with certainty due to the difficulty of
forecasting the numerous variables that can affect the amount of
liability. There are inherent uncertainties involved in
estimating these amounts, and the Company's actual costs in
future periods could differ materially from the Company's
estimates due to changes in facts and circumstances after the
date of each estimate.
New Securities Fraud Cases
ADMINISTAFF INC.: Ademi & O'Reilly Lodges Securities Suit in TX
---------------------------------------------------------------
Ademi & O'Reilly, LLP initiated a securities class action in the
United States District Court for the Southern District of Texas,
Houston Division, on behalf of purchasers of Administaff, Inc.
(NYSE:ASF) publicly traded securities during the period between
April 3, 2001 to July 31, 2002, 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 April 3, 2001 and July
31, 2002, thereby artificially inflating the price of
Administaff securities.
The complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that Administaff had inadequate and deficient pricing
and billing systems and was incorrectly calibrating
pricing for clients that experienced declines in
average payroll cost per worksite employee;
(2) that Administaff was incorrectly matching the price and
cost for health insurance on new and renewing client
contracts; and
(3) that, in violation of Generally Accepted Accounting
Practices and in order to retain its coveted place on
the Fortune 500 listing, Administaff was improperly
recognizing revenue by failing to net Administaff's
worksite employee payroll costs against revenues.
On August 1, 2002, before the open of trading, Administaff
shocked the investing public when it released its financial and
operational results for the second quarter ended June 30, 2002,
reporting ``a net loss and diluted net loss per share of $3.2
million and $0.11'' as compared to Thomson Financial/First Call
estimates of $0.04 earnings per share.
Market reaction was swift and negative, with Administaff stock
falling from a close of $7.50 on July 31, 2002 to a close of
$4.20 on August 1, 2002, or a single-day decline of 44% in heavy
trading.
For more details, contact Guri Ademi by Phone: (866) 264-3995 by
Fax: 1-414-482-8001 or visit the firm's Website:
http://www.gademi@ademilaw.com
CENTRAL PARKING: Marc Henzel Launches Securities Suit in M.D. TN
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Middle
District of Tennessee, Nashville Division, on behalf of all
purchasers of the common stock of Central Parking Corporation
(NYSE: CPC) from November 4, 2002 through February 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 November 4, 2002 and
February 13, 2003, thereby artificially inflating the price of
Central Parking common stock.
The complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that the Company's internal controls were inadequate to
record and document the Company's financial results;
(2) that the Company was materially understating its bad
debt reserve, thereby overstating its earnings;
(3) that the Company was materially understating its
accounts payable, thereby overstating its financial
condition; and
(4) as a result of the foregoing, the Company's financial
statements were not prepared in accordance with
Generally Accepted Accounting Principles and,
therefore, were materially false and misleading.
On February 14, 2003, Central Parking shocked the market when it
announced that it would be taking a charge to increase its bad
debt reserve and that it would be taking a charge to increase
its accounts payables. In response to this announcement, the
price of Central Parking common stock dropped from $15.82 on
February 13, 2003 to a close of $12.31 on February 14, 2003, or
a single-day decline of more than 22%, on more than seven times
normal trading volume.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
CERNER CORPORATION: Marc Henzel Lodges Securities Suit in W.D MO
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Western
District of Missouri, on behalf of purchasers of Cerner
Corporation (Nasdaq: CERN) publicly traded securities during the
period between January 23, 2003 and April 2, 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 January 23, 2003 and
April 2, 2003, thereby artificially inflating the price of
Cerner common stock.
The complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that the Company was experiencing an increased level of
competition as competitors slashed prices in order to
take business from the Company. As a result, the
Company was losing a material amount of sales to
competitors;
(2) that certain of the Company's clients were delaying or
deferring the purchase of products from the Company or
determining not to proceed with those purchases at all;
(3) that the Company had reorganized its sales force and
that the reorganization was negatively impacting the
ability of the Company to close certain sales; and
(4) as a result of the foregoing, defendants' earnings
projections were lacking in a reasonable basis at all
times and were materially false and misleading.
On April 3, 2003, Cerner shocked the market by announcing that
"it expects its first quarter 2003 revenue and earnings to be
below expectations because of a lower level of new business
bookings in the quarter." The press release further revealed
that the Company expected bookings for the first quarter of 2003
to be between $145 and $150 million and that earnings would be
between $0.13 to $0.15 per share as compared to analysts
earnings estimates of $0.38 per share.
In response to this announcement, the price of Cerner common
stock declined precipitously falling from $32.09 per share to as
low as $18.35 per share on extremely heavy trading volume.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
CREE INC.: Marc Henzel Commences Securities Fraud Lawsuit in NC
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the District of
North Carolina 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 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 Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
DIVINE INC.: Marc Henzel Commences Securities Fraud Suit in IL
--------------------------------------------------------------
The Law Offices of Marc S. Henzel 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) formerly publicly
traded securities during the period between November 12, 2001 to
February 18, 2003, inclusive.
The complaint alleges that 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 Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
DIVINE INC.: Kirby McInerney Lodges Securities Suit in N.D. IL
--------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a securities class
action in the United States District Court for the Northern
District of Illinois, Eastern Division on behalf of all
purchasers of Divine, Inc. (Other OTC:DVINQ.PK) common stock
during the period from November 12, 2001 through February 18,
2003, inclusive.
The action charges Divine 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 Divine's shares.
Throughout the class period, defendants issued a series of
material misrepresentations to the market, which served to
artificially inflate the price of Divine securities. 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.
Additionally, as alleged in the complaint, Divine filed a
Registration Statement on Form S-4 in connection with its
acquisition of Viant Corporation, on June 19, 2002. That
Registration Statement was false and misleading as it
incorporated by reference Divine's materially false and
misleading financial results, as previously reported on Forms
10-K and 10-Q with the SEC.
During the class period, Divine completed its acquisition of
Viant Corporation, among other acquisitions, using its
artificially inflated common stock as currency.
On February 18, 2003, the close of the Class Period, 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.
For more details, contact Ira M. Press or Elaine Mui by Phone:
(888) 529-4787 or by E-mail: emui@kmslaw.com.
ELECTRO SCIENTIFIC: Marc Henzel Commences Securities Suit in OR
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The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the District of
Oregon on behalf of all purchasers of the common stock of
Electro Scientific Industries, Inc. (NasdaqNM: ESIO) from
September 17, 2002 through March 30, 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 September 17, 2002 and
March 20, 2003, thereby artificially inflating the price of
Electro Scientific securities.
The complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that the Company had reported artificially inflated
financial results for the quarters ended August 31,
2002 and November 30, 2002;
(2) that the Company was improperly accounting for sales,
thereby overstating its sales figures and, in addition
thereto, was understating the cost of sales, in
violation of Generally Accepted Accounting Principles
(GAAP) and its own revenue recognition policies;
(3) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(4) as a result of the foregoing, it was not true that the
Company's financial statements published during the
class period contained ``all adjustments ... necessary
for a fair presentation'' of the Company's financial
position.
On March 20, 2003, after the close of the market, Electro
Scientific issued a press release announcing that it would be
restating its financial statements for the first and second
fiscal quarters. In response to this announcement, the price of
Electro Scientific common stock dropped precipitously falling
from $15.17 per share to $12.51 per share.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
EUNIVERSE INC.: Marc Henzel Launches Securities Suit in C.D. CA
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Central
District of California on behalf of purchasers of eUniverse Inc.
(Nasdaq: EUNI) common stock during the period between July 30,
2002 and May 5, 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 July 30, 2002 and May
5, 2003, thereby artificially inflating the price of eUniverse
common stock.
Throughout the class period, as alleged in the Complaint,
defendants issued numerous statements and filed quarterly
reports with the SEC which described the Company's increasing
financial performance. The complaint alleges that these
statements were materially false and misleading because they
failed to disclose and/or misrepresented the following adverse
facts, among others:
(1) that the Company had materially overstated its net
income and earnings per share;
(2) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(3) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On May 6, 2003, before the opening of trading, the Company
shocked the market by announcing that it "intends to restate its
financial statements for the second and third quarters of the
year ended March 31, 2003" and possibly also for the first
quarter of fiscal 2003. The Company also told investors not to
rely on its reported financial results for the first three
quarters of fiscal 2003.
The Company attributed the need for the restatement to the
"incorrect processing of certain transactions within the
Company's accounting system." The Company further said that the
restated financial results will differ materially from the
previously-reported results.
Following this announcement, the NASDAQ halted trading in
eUniverse shares and stated that the shares will remain halted
until the company has supplied additional information.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
FEDERAL HOME: Marc Henzel Lodges Securities Fraud Lawsuit in NY
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Southern
District of New York on behalf of purchasers of the securities
of Federal Home Loan Mortgage Corporation (NYSE: FRE) between
January 27, 2003 and June 9, 2003, inclusive against the Company
and:
(1) David Glenn (COO until June 9, 2003),
(2) Vaughn Clarke (CFO until June 9, 2003) and
(3) Leland C. Brendsel (CEO and Chairman until June 9,
2003)
The complaint charges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of materially false
and misleading statements to the market between January 27, 2003
and June 9, 2003.
According to the complaint, the Company's Class Period earnings
announcement was materially false and misleading because it
failed to disclose that the Company lacked adequate internal
accounting controls and personnel expertise, failed to follow
accounting rules that require derivative securities to be marked
to market, "smoothed out its earnings" using accounting
techniques to lower results in good times and lift results when
business conditions deteriorated and provided investigators with
doctored records to conceal their improper accounting
techniques.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
PRINTCAFE SOFTWARE: Cauley Geller Launches Securities Suit in PA
----------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a securities class
action in the United States District Court for the Western
District of Pennsylvania, on behalf of purchasers of Printcafe
Software, Inc. (Nasdaq: PCAF) common stock during the period
between June 18, 2002 and October 22, 2002, inclusive.
The complaint alleges that defendants violated Sections 11,
12(a)(2) and 15 of the Securities Act of 1933 by issuing a
materially false and misleading Registration Statement and
Prospectus in connection with Printcafe's initial public
offering (IPO).
The complaint alleges that the Registration Statement and
Prospectus were materially false and misleading because
statements made therein failed to disclose and misrepresented
the following adverse facts, among others:
(1) that demand for the Company's products and services was
declining to the extent that the Company was not
performing in line with its internal expectations;
(2) that the Company's product development efforts were
experiencing difficulties; and
(3) that the Company's declining financial performance
would require it to engage in a material restructuring
of its operations in order to generate cost savings and
reverse that negative trend.
At the time of the filing of the complaint, the price of
Printcafe common stock was $2.57 per share.
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 or by E-mail: info@cauleygeller.com
PRINTCAFE SOFTWARE: Schiffrin & Barroway Files Stock Suit in PA
---------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in
the United States District Court for the Western District of
Pennsylvania on behalf of all purchasers of the common stock of
Printcafe Software, Inc. (NasdaqNM:PCAF) from June 18, 2002
through October 22, 2002, inclusive.
The complaint alleges that defendants violated Sections 11,
12(a)(2) and 15 of the Securities Act of 1933 by issuing a
materially false and misleading Registration Statement and
Prospectus in connection with Printcafe's initial public
offering (IPO).
The complaint alleges that the Registration Statement and
Prospectus were materially false and misleading because
statements made therein failed to disclose and misrepresented
the following adverse facts, among others:
(1) that demand for the Company's products and services was
declining to the extent that the Company was not
performing in line with its internal expectations;
(2) that the Company's product development efforts were
experiencing difficulties; and
(3) that the Company's declining financial performance
would require it to engage in a material restructuring
of its operations in order to generate cost savings and
reverse that negative trend.
At the time of the filing of the complaint, the price of
Printcafe common stock was $2.57 per share.
For more details, contact Marc A. Topaz or Stuart L. Berman by
Phone: (888) 299-7706 (toll free) or (610) 667-7706 or by E-
mail: info@sbclasslaw.com
SALOMON SMITH: Goodkind Labaton Files Securities Suit in S.D. NY
----------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP initiated a securities
class action in the United States District Court for the
Southern District of New York, against Citigroup Inc. and
certain of its affiliates, including Salomon Smith Barney.
The suit was filed on behalf of persons who purchased, or
otherwise invested $100,000 or more in class B shares in one or
more Salomon Smith Barney mutual funds during the period June
12, 1998 through June 12, 2003, where such investment(s) could
have otherwise qualified for the $100,000 "breakpoint" load
reduction associated with investments in class A shares of the
same fund(s).
The complaint alleges that defendants violated the federal
securities laws and engaged in a course of business which
operated as a fraud and deceit on members of the class, as
defined above, in the following Salomon Smith Barney mutual
funds:
Adjustable Rate Income Fund (Smith Barney Shares)
Aggressive Growth Fund
Allocation Series Balanced Portfolio
Allocation Series Conservative Portfolio
Allocation Series Global Portfolio
Allocation Series Growth Portfolio
Allocation Series High Growth Portfolio
Allocation Series Income Portfolio
Appreciation Fund
Arizona Municipals Fund
Balanced Fund
California Municipals Fund
Capital and Income Fund (Smith Barney Shares)
Classic Values Fund Annual Semi-Annual
Convertible Fund (Smith Barney Shares)
Diversified Large Cap Growth Fund
Diversified Strategic Income Fund
Financial Services Fund
Florida Portfolio
Fundamental Value Fund
Georgia Portfolio
Global Government Bond Portfolio
Government Securities Fund
Group Spectrum Fund
Growth & Income Fund (Smith Barney Shares)
Hansberger Global Value Fund
Health Sciences Fund
High Income Fund
Intermediate Maturity California Municipals Fund
Intermediate Maturity New York Municipals Fund
International All Cap Growth Portfolio
International Large Cap Fund
Investment Grade Bond Fund
Large Cap Core Fund
Large Capitalization Growth Fund
Large Cap Value Fund Annual Semi-Annual
Limited Term Portfolio
Managed Governments Fund
Managed Municipals Fund
Massachusetts Municipals Fund
Mid Cap Core Fund
Municipal High Income Fund
National Portfolio
New Jersey Municipals Fund
New York Portfolio
Oregon Municipals Fund
Pennsylvania Portfolio
Premier Selections: All Cap Growth Fund
Premier Selections: Global Growth Fund
Premier Selections: Large Cap Fund
Short-Term Investment Grade Bond Fund
Small Cap Core Fund
Small Cap Growth Fund
Small Cap Growth Opportunities Fund
Small Cap Value Fund
Social Awareness Fund
S&P 500 Index Fund
Technology Fund
Total Return Bond Fund
US Government Securities Fund
As alleged in the Complaint, Smith Barney's class B shares are
an inferior investment choice because, for investors willing to
invest $100,000 or more in Smith Barney Funds, investments in
class B shares will yield a smaller return because class B
shareholders are charged higher sales charges and ongoing annual
fees than holders of class A and/or L shares in the same fund.
Investors with $100,000 or more to invest will always pay less
in sales charges and ongoing distribution fees by investing in
class A shares than they will investing in B shares because such
investors pay a reduced up front load due to the size of their
investment. Under these circumstances, A shares are always a
superior investment choice to class B, regardless of anticipated
holding period.
Despite the fact that class B shares are not a sound investment
choice for investors that could have qualified for the $100,000
breakpoint reduction had they invested in class A shares, the
majority of money invested in the Smith Barney Funds goes into
class B shares.
Smith Barney fails to disclose to Class members that investing
in class B shares never makes economic sense but instead results
in the payment of unnecessary and excessive fees to Defendants.
For more details, contact Chris Keller by Phone: 212/907-0700 or
by E-mail: ckeller@glrslaw.com
SEARS ROEBUCK: Charles Piven Launches Securities Suit in N.D. IL
----------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities
class action on behalf of shareholders who purchased, converted,
exchanged or otherwise acquired the 7% Subordinated Notes
(NYSE:SRF) issued by Sears Roebuck Acceptance Corporation
(NYSE:SRJ) between June 21, 2002 and October 17, 2002,
inclusive. The case is pending in the United States District
Court for the Northern District of Illinois against the Company
and certain of its officers and directors.
The action charges that defendants violated federal securities
laws by issuing a series of materially false and misleading
statements to the market throughout the class period which
statements had the effect of artificially inflating the market
price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World
Trade Center-Baltimore, 401 East Pratt Street, Suite 2525,
Baltimore, Maryland 21202, by Phone: 41-986-0036 or by E-mail:
hoffman@pivenlaw.com.
*********
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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
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Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora
Fatima Antonio and Lyndsey Resnick, Editors.
Copyright 2003. All rights reserved. ISSN 1525-2272.
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