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/raid1/www/Hosts/bankrupt/CAR_Public/030723.mbx C L A S S A C T I O N R E P O R T E R Wednesday, July 23, 2003, Vol. 5, No. 144 Headlines AMERICAN AIRLINES: Trial in NC Antitrust Suit Set February 2004 AMERICAN AIRLINES: Canada Court To Decide on Suit Certification AMERICAN AIRLINES: Agencies Sue Over 9/11 Ticket Refund Policy AMERICAN AIRLINES: Amended Breach of Contract Suit Filed in NY BLUE CROSS: PA Medical Society Urges Members To Opt Out of Pact CREED: Lead Singer Denies Charges in Suit over Chicago Concert DOUBLECLICK INC.: Computer Users Sue Over Misleading Banner Ads ESSO: 38 Bendigo Businesses Join Suit Over 1998 Gas Disruption GOING PLATINUM: SEC Files Suit over Fraudulent Investment Scheme GUN MANUFACTURERS: NY Court Dismisses NAACP Lawsuit V. Gun Firms INDIAN FUNDS: Court Dismisses Sec. Norton's Contempt Citation INTERNATIONAL BUSINESS: CO Judge Orders Payment of Penalties MICROSOFT CORPORATION: Court Approves Consumer Suit Settlement MONTANA: Parents Tour School To See How Athletes Were Videotaped OXBOW CAPITAL: SEC Launches Lawsuit Over Fraudulent Scheme in OR SPAM LITIGATION: First Wave of Consumer Lawsuits Hit Utah Court STEWART FINANCE: GA Court To Hear Arguments For Consumer Lawsuit TOBACCO LITIGATION: Arguments End In LA Medical Monitoring Suit UNITED PARCEL: To Settle Deaf Employees' Lawsuit For $10 Million UNITED STATES: Contempt Motion V. Agriculture Secretary Refused * D.C. Tobacco Litigation Expert Takes On Obesity Lawsuits Meetings, Conferences & Seminars * Scheduled Events for Class Action Professionals * Online Teleconferences New Securities Fraud Cases CENTRAL PARKING: Wechsler Harwood Lodges Securities Suit in TN DIVINE INC.: Marc Henzel Lodges Securities Fraud Suit in N.D. IL LEHMAN BROTHERS: Marc Henzel Lodges Securities Suit in S.D. NY MATRIA HEALTHCARE: Marc Henzel Lodges Securities Suit in N.D. GA MATRIA HEALTHCARE: Wolf Haldenstein Lodges Securities Suit in GA PEDIATRIX MEDICAL: Kirby McInerney Files Securities Suit in FL POLYMEDICA CORPORATION: Kirby McInerney Lodges Stock Suit in MA PROVIDENT FINANCIAL: Marc Henzel Lodges Stock Lawsuit in N.D. GA READ-RITE CORPORATION: Kirby McInerney Lodges Stock Suit in CA SINGING MACHINE: Kirby McInerney Launches Securities Suit in FL ********* AMERICAN AIRLINES: Trial in NC Antitrust Suit Set February 2004 --------------------------------------------------------------- Trial in the travel agents' class action filed against American Airlines and other domestic carriers is set for February 2,2004 in the United States District Court for the Eastern District of North Carolina. The suit alleges that that between 1995 and the present, American and over 15 other defendant airlines conspired to reduce commissions paid to U.S.-based travel agents in violation of Section 1 of the Sherman Act. The court granted class action certification to the plaintiff on September 17, 2002, defining the plaintiff class as all travel agents in the United States, Puerto Rico, and the United States Virgin Islands, who, at any time from October 1, 1997 to the present, issued tickets, miscellaneous change orders, or prepaid ticket advices for travel on any of the defendant airlines. The case is stayed as to US Airways and United Air Lines, since they filed for bankruptcy. Defendant carriers filed a motion for summary judgment on December 10, 2002. A final adverse court decision awarding substantial money damages or placing restrictions on the Company's commission policies or practices would have an adverse impact on the Company. AMERICAN AIRLINES: Canada Court To Decide on Suit Certification --------------------------------------------------------------- The Federal Court of Montreal, Canada, Trial Division is set to hear arguments for certification of a travel agents' suit against American Airlines, other defendant airlines and the International Air Travel Association (IATA) on September 2,2003. The statement of claim alleges that between 1995 and the present, the defendant airlines, and the IATA conspired to reduce commissions paid to Canada-based travel agents in violation of Section 45 of the Competition Act of Canada. The named plaintiffs seek to certify a nationwide class of travel agents. The Company vigorously denies the allegations. A final adverse court decision awarding substantial money damages or placing restrictions on the Company's commission policies would have an adverse impact on the Company. AMERICAN AIRLINES: Agencies Sue Over 9/11 Ticket Refund Policy -------------------------------------------------------------- American Airlines, Inc. faces a class action filed in the United States District Court for the Central District of California, Western Division, alleging that requiring travel agencies to pay debit memos for refunding tickets after September 11, 2001: (1) breaches the Agent Reporting Agreement between American and plaintiff; (2) constitutes unjust enrichment; and (3) violates the Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO) The as yet uncertified class includes all travel agencies who have or will be required to pay moneys to the Company for an "administrative service charge," "penalty fee," or other fee for processing refunds on behalf of passengers who were unable to use their tickets in the days immediately following the resumption of air carrier service after the tragedies on September 11, 2001. The plaintiff seeks to enjoin the Company from collecting the debit memos and to recover the amounts paid for the debit memos, plus treble damages, attorneys' fees, and costs. The Company intends to vigorously defend the lawsuit. Although the Company believes that the litigation is without merit, a final adverse court decision could impose restrictions on the Company's relationships with travel agencies which could have an adverse impact on the Company. AMERICAN AIRLINES: Amended Breach of Contract Suit Filed in NY -------------------------------------------------------------- Plaintiffs filed an amended class action against American Airlines and other airlines in the United States District Court for the Southern District of New York. The suit also names as defendants: (1) Continental Airlines, (2) Delta Air Lines, (3) United Airlines, and (4) Northwest Airlines The suit alleges that American and the other defendants breached their contracts with the agency and were unjustly enriched when these carriers at various times reduced their base commissions to zero. The as yet uncertified class includes all travel agencies accredited by the Airlines Reporting Corporation - whose base commissions on airline tickets were unilaterally reduced to zero by the defendants. The case is stayed as to United Air Lines, since it filed for bankruptcy. American is vigorously disputing the allegations. Although the Company believes that the litigation is without merit, a final adverse court decision awarding substantial money damages or forcing the Company to pay agency commissions would have an adverse impact on the Company. BLUE CROSS: PA Medical Society Urges Members To Opt Out of Pact --------------------------------------------------------------- The Pennsylvania Medical Society urged members to opt out of a proposed settlement announced last month by Independence Blue Cross (IBC) and the Pennsylvania Orthopedic Society, the American City Business Journal reports. The settlement was for a class action filed against IBC by the Pennsylvania Orthopedic Society and three Montgomery County doctors. The suit alleged IBC improperly bundled payments to physicians and failed to disclose fee schedules outlining how payment decisions were made. Under the settlement, IBC agreed to: (1) fully disclose actual fee schedule and methods used to determine payments for all doctors, (2) follow Medicare payment guidelines for procedures involving multiple surgeries and (3) establish a dispute resolution process Dr. Edward H. Dench Jr., president of the Pennsylvania Medical Society, told the Business Journal the organization has several concerns about the proposed settlement. Those concerns include a lack of details about IBC's new payment and dispute resolution programs and the absence of a guarantee that the $40 million estimate will be met. CREED: Lead Singer Denies Charges in Suit over Chicago Concert -------------------------------------------------------------- Scott Stapp, lead singer of popular rock band Creed, answered allegations in a class action filed against the band by four frustrated fans who went to watch a December 29 concert at the AllState Arena in Chicago, MTV.com reports. The four fans filed the suit in late April, alleging that Mr. Stapp failed to give a good perormance because he was too intoxicated to perform. The fans sought reimbursement for tickets and parking fees on behalf of 15,000 fans in attendance, which could possibly cost the group $2 million. In an interview with the Orlando Sentinel, Mr. Stapp said his performance was an "over-the-top, dramatic gesture meant to convey the difficulties he was facing in his personal life at the time." During a performance of the song "Who's Got My Back," Mr. Stapp was making a gesture in which he lay down to make a point, but fans mistook it for him passing out onstage. "It was a symbolic, personal gesture," Mr. Stapp told the Sentinel. "I had some things going on in my life. I kind of felt alone. And it was a symbol that I didn't think anybody had my back at the time. Some people get it. Some people don't." The suit alleges that Mr. Stapp was "so intoxicated and/or medicated" that he could not sing the lyrics to any of the band's songs, that he left the stage for long periods of time and rolled around on the floor as if in pain. They also claimed that he appeared to pass out at one point during the show, MTV.com reports. Mr. Stapp said he was fighting off an undisclosed illness at the time. "We didn't feel like it was an awful show," he told the Sentinel, following his reported review of a videotape of the Chicago concert. "That's why it kind of shocked us ... We appreciate the fans. We know that the fans are the reason we are here today. And that night, we gave it everything that we had -- like we do every night." In January, the band apologized to frustrated fans, saying on their official website that they "... apologize if you don't feel the show was up to the very high standards set by our previous shows in Chicago." It went on to console the fans by saying they "definitely experienced the most unique of all Creed shows and may have become part of the unusual world of rock and roll history!" The band's attorneys have asked the court to dismiss the suit. "The motion basically argues that you can't bring a lawsuit against a band for sucking," the attorney for the disgruntled fans, Daniel J. Voelker told MTV.com. "That this is a subjective issue." The Sentinel reported that Mr. Stapp said in the past Creed has performed makeup dates for shows they thought were substandard, but that the Chicago show did not qualify. "If these allegations were true, the band would, of course, feel that the fans deserved a free show," Mr. Stapp said. "These allegations are a lie. They're false." DOUBLECLICK INC.: Computer Users Sue Over Misleading Banner Ads --------------------------------------------------------------- DoubleClick, Inc. faces a consumer class action filed in the Court of Common Pleas of Allegheny County, Pennsylvania, charging it with fraudulent and misleading advertising, DMNews.com reports. The suit was filed over advertisements served using the Company's DART technology which masquerade as computer warnings to trick computer users to click on them. The suit says the ads are "a diabolical scheme to deceive computer users into misdirecting their computers to Internet sites of defendants' clients." The suit further says the ads are unfair and deceptive advertising and that they have unjustly enriched the Company. Pittsburgh resident Christopher Steelman is the lead plaintiff for the suit, which defines members of the class as "anyone in the United States who has encountered banners or pop-up ads disguised as computer warnings." The suit also names as defendants "100 John Does . including but not limited to directors, officers and employees of DoubleClick Inc., its affiliates, parent of subsidiary corporations or of other legal entities, and third-party agents of and/or principals of named defendants." The Company is believed to have served in excess of 500 million such banner ads," a statement by the plaintiffs' attorneys said July 18. "In a conspiratorial enterprise having no motive but to procure pecuniary gain for themselves, (DoubleClick) deceptively and fraudulently commandeered millions of unwitting Internet users to the commercial Web sites of defendants' customers through dissemination of tens of millions of deceptive Internet advertising banners that impersonated computer system warnings," the complaint alleges, DMNews states. "Through use of such Fake User Interface (`FUI') dialogs that fraudulently represented themselves as computer system error messages, defendants tricked millions of Internet users into interrupting work they were performing to respond to the fraudulent system message, only to unexpectedly find both computer and computer user thus hijacked to commercial Web sites of defendants' customers, where these customers attempted to hawk services and software," the complaint said. A DoubleClick spokeswoman said yesterday the company had not been served with the suit yet and so the company's lawyers were unable to comment, DMNews.com reports. ESSO: 38 Bendigo Businesses Join Suit Over 1998 Gas Disruption -------------------------------------------------------------- 38 Bendigo, Australia businesses joined the class action against Exxon Mobil subsidiary Esso, charging it with failing to provide continual gas supply in the wake of the 1998 crisis, the Bendigo Advertiser reports. Thousands of Victorian businesses, workers and consumers suffered losses amounting to almost $1.3 billion during gas disruption in September 1998. The disruption was due to a huge explosion at Esso's Longford plant, killing two and injuring eight men. The suit seeks compensation for property damage suffered and consequential economic loss. Melbourne law firm Slater & Gordon spearheads the suit together with several other law firms. The firms this week called for plaintiffs to come forward, citing a deadline of September 1, when the right to entitlement ceases. According to Slater & Gordon, Esso, a subsidiary of one of the largest companies in the world, Exxon Mobil Corporation, has poured massive resources into trying to stop the class action by Victorians and Victorian businesses, the Bendigo Advertiser reports. The company has unsuccessfully appealed against decisions by the Federal Court. The case is likely to proceed to trial within the next 12 months. GOING PLATINUM: SEC Files Suit over Fraudulent Investment Scheme ---------------------------------------------------------------- The United States Securities and Exchange Commission filed a civil action in the United States District Court for the Eastern District of Pennsylvania, against Alan H. Catalan and Going Platinum, Inc., a company owned and controlled by Mr. Catalan, alleging that Mr. Catalan and Going Platinum fraudulently solicited approximately $2.4 million from investors and misappropriated most of that money. The Commission's complaint alleges that between May of 2000 and August of 2001, Mr. Catalan and Going Platinum used the broad reach of the Internet to raise approximately $2.4 million from close to 100,000 investors in what ultimately became a Ponzi and pyramid scheme. The complaint alleges that approximately $1 million of new investor money was used to pay obligations to existing investors for their recruitment of new investors. The complaint also alleges that defendants solicited investors through a combination of false and misleading representations, including false promises of great riches (up to $160,000 per month return on a $25 investment), as well as false representations concerning the company, the participation of advertisers and other website vendors, and the sources and availability of financial backing. The complaint alleges that, contrary to defendants' representations, Going Platinum was little more than an empty shell, with no significant revenues other than investor funds. The complaint further alleges that the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement together with prejudgment interest, and civil penalties from both Going Platinum and Mr. Catalan. GUN MANUFACTURERS: NY Court Dismisses NAACP Lawsuit V. Gun Firms ---------------------------------------------------------------- The United States District Court in New York dismissed a lawsuit filed by the National Association for the Advancement of Colored People (NAACP) charging gun manufacturers with endangering minorities by irresponsibly marketing firearms, the New York Times reports. The suit said the major gun makers did not do anything prevent dealers from selling firearms to criminals in black and Hispanic neighborhoods. However, Judge Jack B. Weinstein ruled that while there is "clear and convincing evidence" that gun dealers are guilty of "careless practices," the members of the NAACPO were not "uniquely harmed" by illegal use of firearms. The judge further said that courts should create "new legal solutions . to overriding social problems even when other branches of the government are heavily involved in attempting to solve the problems." He further wrote that the NAACP proved its members suffered "relatively more harm from the nuisance created by the defendants through illegal availability of guns in New York," the New York Times states. However, the civil rights group did not "show that its harm was different in kind from that suffered by other persons in New York." Gun-control advocates told the Times that the ruling that the NAACP lacked legal standing was based on a "technicality," while gun owners' groups said the decision showed Congress must act to stop "frivolous" lawsuits against firearms makers. Supporters of a pending Senate bill that would protect gun manufacturers from class actions said Judge Weinstein's ruling demonstrates the need for congressional action. In March, the House overwhelmingly approved a bill to block lawsuits against gun makers. INDIAN FUNDS: Court Dismisses Sec. Norton's Contempt Citation ------------------------------------------------------------- A federal appeals court recently dismissed the contempt ruling against Gale Norton, Secretary of the Department of the Interior, saying she cannot be held accountable for her predecessors' mismanagement of a multibillion-dollar Indian trust fund, The Commercial Appeal reports. "She simply cannot be held criminally to account for any delay (in making an accounting of the monies taken in as royalties over the years and developing new accounting practices for the present handling of such funds) that occurred prior to her assuming office," Chief Judge Douglas Ginsburg wrote for the appeals court's three-judge panel. The panel also ruled unanimously that Secretary Norton's conduct did not constitute a fraud on the court of US District Judge Royce Lamberth. In issuing contempt citations last September against Secretary Norton and the assistant secretary for Indian affairs, Neal McCaleb, Judge Lamberth ruled that by their actions they had defrauded his court. The case grew out of a $137 billion class action filed in 1996 on behalf of more than 300,000 Indian plaintiffs. The lawsuit alleged the Interior Department failed to manage properly oil, gas, mining, grazing and timber royalties from land assigned to Indian ownership more than a century ago. The Indian landowners contend that large amounts of royalties to which they were entitled were lost, squandered, improperly recorded and possibly not even collected from users of the Indian lands. The Interior Department has spent more than $600 million to comply with instructions from Congress and Judge Lamberth, but still the accounting problems persist. Secretary Norton, appointed by President Bush, has blamed most of the problems on previous administrations. Judge Lamberth reprimanded both Secretary Norton and Mr. McCaleb harshly for what he said were attempts to hide their failures to comply with his 1999 order to account for royalties. The panel also dismissed Mr. McCaleb's contempt of court citation. Ms. Norton was the third Cabinet member that Judge Lamberth has held in contempt in the Indian trust case, after the Clinton administration's Interior Secretary Bruce Babbitt and Treasury Secretary Robert Rubin in 1999. Keith Harper, an attorney for the Indian plaintiffs, called the appeals court ruling disappointing, but he cautioned that the ruling should not be viewed either as an attempt to rein in Judge Lamberth or exonerate Secretary Norton and her agency. INTERNATIONAL BUSINESS: CO Judge Orders Payment of Penalties ------------------------------------------------------------ Judge Marcia S. Kreiger, United States District Judge for the District of Colorado, entered a final judgment against William L. Brotherton, an unlicensed chiropractor and the sole executive officer of International Business Consortium, Inc. The United States Securities and Exchange Commission's complaint, filed July 13, 2001, alleged that Mr. Brotherton and IBC raised over $300,000 by selling IBC stock without registration to over 180 investors between January and July of 2001. Holding IBC out as a promising start-up preparing to offer discount workers' compensation insurance, IBC and Mr. Brotherton deceived investors about, among other things, IBC's true state of development and operations, a future initial public offering for IBC securities, the use of investment proceeds and the risks and returns associated with the ownership of IBC stock. Mr. Brotherton misappropriated at least 25% of the offering proceeds for the personal benefit of himself and some of his relatives. The complaint charged Mr. Brotherton and IBC with violations of the registration provisions, Section 5(a), 5(c) of the Securities Act of 1933 and the antifraud provisions, Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Some of the proceeds of the defendants' illegal conduct are held in bank accounts that were frozen by the court's order of July 23, 2001, which was entered upon consent in response to the Commission's application for a preliminary injunction, asset freeze and other emergency relief intended to halt the fraud. The judge ordered them to pay disgorgement of $325,144, plus prejudgment interest of $36,602.03, and imposing civil money penalties of $50,000. The judgment provides that Mr. Brotherton and IBC are jointly and severally liable for the judgment debt totaling $411,746.03. The court also resolved other pending motions in favor of the Commission and vacated a trial date previously set by the court. In previous orders, the Court had granted the Commission's motions for a default judgment against IBC and for summary judgment against Mr. Brotherton, though the court denied the Commission's request for injunctive relief against him. MICROSOFT CORPORATION: Court Approves Consumer Suit Settlement -------------------------------------------------------------- San Francisco Superior Court Judge Paul Alvarado approved a settlement proposed by Microsoft Corporation to settle the class action filed against it by California consumers, CBS Marketwatch reports. The suit alleges the Company breached unfair competition laws, and overcharged as much as $40 for every copy of its desktop operating software. Under the settlement, about 13 million California consumers and business customers who purchased Microsoft desktop software between February 1995 and December 2001 will be qualified to get vouchers ranging from $5 to $29 to buy computer hardware or software from any manufacturer. If the vouchers are not claimed, the Company would pay $367 million to California schools. The Company did not admit wrongdoing while entering into the settlement. "Whatever Microsoft ends up paying, it's a small penalty compared with the fruits of its antitrust violations, said Glenn Manishin, antitrust attorney with the firm Kelley, Drye & Warren in New York. "The company has $49 billion of cash. Even if the maximum amount is paid out, it's small enough that it's lost in a rounding error. It's not enough to change Microsoft's behavior in any way." MONTANA: Parents Tour School To See How Athletes Were Videotaped ---------------------------------------------------------------- Parents and victims of a videotaping scheme in Powell County High School visited the school this week, to see how three high school boys used secret passageways to film as many as 600 female athletes as they undressed and showered after athletic competitions, the Montana Standard reports. Parents and victims of the scheme filed two class actions against the High School District, its superintendent Joe Brott, school administrators and certified and non-certified staff after three high school seniors - Eddy John Newman, Benjamin Frankforter and Matthew Thomas - were convicted on felony burglary charges in connection to two-and-a-half years of crime that school officials refer to as "the security breach." Parents, a videographer, a school facilities security specialist, and lawyers for both sides toured the school. The group saw several suspended ceiling panels that showed holes where circles and notches were cut or drilled. In the boys' locker room, the group saw a row of low-profile lockers where another locker with a two-way mirror concealing camera equipment was laid horizontally according to court records about 10 feet from an office occupied by athletic supervisors, the Montana Standard reports. Other spaces were less convenient: a cinder block wall where a two-way mirror concealed a video camera setup provided little elbow room. Parents Julie Meyer and Tami Steiger said they were shocked to learn the extent of the scheme. Their daughters were members of teams that visited the school between 2000 and 2002. "It gave me goosebumps," Ms. Meyer told the Standard. "They were everywhere. There's nooks and corners everywhere. I didn't realize they had so much access." "The places they'd gotten into--that's desperation," Ms. Steiger said. OXBOW CAPITAL: SEC Launches Lawsuit Over Fraudulent Scheme in OR ---------------------------------------------------------------- The United States Securities and Exchange Commission filed a complaint in the United States District Court in Portland, Oregon, against Daniel D. Dyer, 49, and a resident of University Place, Washington, and his wholly owned company, Oxbow Capital Partners, LLC, based in Tacoma, Washington. The complaint alleges that the defendants aided and abetted a massive Ponzi scheme perpetrated by Capital Consultants, LLC, formerly an investment adviser in Portland, Oregon. The Commission previously sued Capital Consultants and its principals for fraud in September 2000. The Commission's complaint alleges that Mr. Dyer and Oxbow Partners helped Capital Consultants conceal from its clients the failure of a loan made by the former investment adviser. In November 1998, the borrower of a $160 million loan from Capital Consultants announced that it was having financial problems and stopped making loan payments. In December 1998, Mr. Dyer and Oxbow Partners purchased from Capital Consultants the failed loan at its full $160 million principal balance but were unable to make scheduled monthly payments. From July 1999 to August 2000, Mr. Dyer and Oxbow Partners entered into a series of complex transactions involving Capital Consultants that resulted in new client funds being used to repay clients invested in the failed loan. During the scheme, the defendants knew that Capital Consultants made misrepresentations to its clients about Mr. Dyer and Oxbow Partners' role in purchasing the failed loan. The Commission also charges Mr. Dyer and Oxbow Partners with fraud in connection with two securities offerings, Oxbow Capital 1999 Fund I, LLC (Oxbow Fund I) and Washington Motorcycle Partners, LLC, conducted between April 1999 and November 2000. The Commission alleges that the defendants failed to disclose to Oxbow Fund I investors that the fund's first investment would be in the failed Capital Consultants loan. The defendants also defrauded Oxbow Fund I by purporting to replace the fund's investment in the failed Capital Consultants loan with securities that the defendants did not own. In the unregistered Washington Partners offering, the defendants used offering proceeds to enrich themselves and make payments on the failed Capital Consultants loan rather than to purchase stock in a motorcycle company as represented to investors. The Commission's complaint alleges that Mr. Dyer and Oxbow Partners violated the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and violated and aided and abetted violations of the investment advisory antifraud provisions of Sections 206(1) and (2) of the Investment Advisers Act. In its action, the Commission seeks a final judgment against Mr. Dyer and Oxbow Partners enjoining them from future violations of the provisions and ordering them to disgorge all ill-gotten gains and pay a civil penalty. In September 2000, the Commission charged Capital Consultants and its principals, Jeffrey L. Grayson and his son, Barclay L. Grayson, with fraud and obtained emergency relief against them, including the appointment of a receiver over Capital Consultants. On April 30, 2001, the United States District Court for the District of Oregon entered permanent injunctions against Capital Consultants and the Graysons. On February 26 and December 5, 2002, amended judgments of permanent injunction were entered against Barclay and Jeffrey Grayson, respectively, that did not assess a civil penalty against them based upon their demonstrated inability to pay. On November 20, 2001, Barclay Grayson was sentenced to two years in prison in a related criminal action. On April 23, 2002, Jeffrey Grayson pleaded guilty to charges in a related criminal action. SPAM LITIGATION: First Wave of Consumer Lawsuits Hit Utah Court --------------------------------------------------------------- The Third District Court in Utah faces a huge backlog of lawsuits filed by consumers against scores of alleged spammers, making claims under the state's 14-month-old unsolicited e-mail act, the Salt Lake Tribune reports. The act provides for fines of $10 per unwanted e-mail up to a maximum of $25,000 per day. Judge Denise Lindberg dismissed a proposed class action accusing Sprint Communications of spamming in March, ruling that lead plaintiff Terry Gillman had technically given his permission to receive third-party promotional messages when he signed on to the Audio Galaxy Web site, which sold e-mail addresses to other parties. The decision is now on appeal. Judge Lindberg now faces a backlog of about 1,200 new complaints against scores of alleged spammers. Defendants include InfoUSA, Anheuser-Busch and Omaha Steaks. Mr. Gilliam's suit targeted companies such as Verizon Communications Inc., Chase Manhattan, Pepsico, VideoProfessor, The Washington Post, Etraders, SecretShopper, University of Phoenix, Eddie Bauer, Cingular, Disney Online and others. The flood of suits, brought by Mr. Gilliam's attorney Denver Snuffer and Draper lawyer Jesse Riddle, is the first of many more expected suits. "We've had more than 30,000 e-mails from people wanting to sue (spammers) since we first filed [in July 2002]," Mr. Snuffer told the Tribune. "We've only been able to screen 8,000 of those so far, finding 944 of them suitable. We have 22,000 more to go. We intend to continue to file them until we have some effect on the practice of spammers in Utah." If the suits get certified as class actions, damages could reach millions of dollars. However, these suits must first get to trial. Judge Lindberg has asked attorneys to present arguments for all suits in a consolidated hearing on September 15, for which she will accept one brief representing each side. Randy Dryer of Parsons Behle & Latimer is heading a group of defense attorneys collaborating on their argument against declaring the suits a unified class action. "No one likes spam," Mr. Dryer, who represents 60 of those accused of sending unsolicited e-mails, told the Tribune. "But none of my clients are what you would consider traditional spammers. They are small businesses, not someone blasting out millions of e-mails every day from off-shore." He said that the suits are "1,200 individual $10 claims" that should be settled out of court. "What is solicited or not is dependent on the facts of each case," Mr. Dryer continued. STEWART FINANCE: GA Court To Hear Arguments For Consumer Lawsuit ---------------------------------------------------------------- The Georgia Court of Appeals will hear arguments in the Stewart Finance case on July 22, 2003, at 9:30 a.m. The case was filed last year by lawyers from the Atlanta Legal Aid Society, AARP and the firm Bondurant, Mixon & Elmore LLP on behalf of a collection of mostly elderly and disabled plaintiffs who received small, short-term, high-interest cash loans from Stewart Finance Company. The suit alleges that Stewart, after taking control of the borrowers' bank accounts, began debiting the accounts for miscellaneous surcharges and for worthless insurance and auto club memberships that the borrowers neither requested nor wanted. Former governor Roy Barnes is serving as co-counsel for the case; Jeffrey Bramlett of Bondurant, Mixon & Elmore LLP is arguing the appeal. Stewart's lawyers filed the appeal in December 2002 after the Superior Court rejected their motion to compel arbitration of the claims -- a motion that sought to uphold one of the many inequitable clauses in the contracts Stewart loan officers had borrowers sign. Stewart's original loan contracts contained one- sided mandatory binding arbitration clauses. Under the terms of the contracts, the consumers would have to pay exorbitant arbitration fees in order to proceed with any claims, and some of the arbitration proceedings would have to take place in Union Point, where Stewart is mayor. The original lawsuit charges that Stewart Finance embeds the secret arbitration provisions in its documents "(to) evade law enforcement and regulatory scrutiny of (its) overreaching, illegal and improper" business conduct in an attempt to prevent consumers from bringing any disputes to court. The decisions of the Superior Court, if upheld, will give the plaintiffs their day in court. If the plaintiffs win on appeal, the attorneys will begin to prepare for trial on the legality of Stewart's practices. Stewart Finance Company recently filed for Chapter 11 bankruptcy. TOBACCO LITIGATION: Arguments End In LA Medical Monitoring Suit --------------------------------------------------------------- Closing arguments in a medical monitoring class action filed against major tobacco companies R.J. Reynolds, Philip Morris and Brown & Williamson in Louisiana state court will be presented before a jury, the Associated Press reports. The suit, filed in Louisiana state court on behalf of 1.5 million Louisiana residents, seeks medical monitoring programs for healthy smokers. The suit alleges that Big Tobacco did not reveal the dangers of smoking to the public and targeted youth with advertising to cultivate a new market of smokers. The suit further alleges that the industry manipulated nicotine levels to keep smokers hooked. The suit does not seek individual payments for the smokers. A similar class action was filed in West Virginia, seeking medical monitoring for smokers in that state. The jury agreed that a person with a five-year, pack-a-day habit has higher risks of contracting disease, but ruled medical tests for lung cancer, emphysema and chronic obstructive lung diseases were unnecessary. The jury accepted the defense's assertion that smokers concerned about their health should just quit. Attorneys for the tobacco industry say there is no need for additional quit-smoking programs and routine medical monitoring is of questionable value - if not outright dangerous - to smokers and former smokers, AP reports. If the industry in the Louisiana case is found liable, a second phase of the trial will be held to determine how much the industry would have to pay to set up the programs. UNITED PARCEL: To Settle Deaf Employees' Lawsuit For $10 Million ---------------------------------------------------------------- The United Parcel Service agreed to settle for $10 million a class action alleging the Company discriminated against its deaf employees, the Associated Press reports. The suit was filed in the United States District Court for the Northern District of California and includes more than 900 current and former hearing-impaired employees. The suit alleges that the Company routinely precluded deaf employees from accessing workplace information, denied opportunities for promotion and exposed them to unsafe conditions Under the settlement, deaf employees will get full access to workplace safety materials and promotion opportunities. The Company would create a system to track promotions and provide text telephones and vibrating pagers to alert deaf employees to emergency evacuations. The Company also agreed to make sure that deaf employees and job applicants have access to certified interpreters. Plaintiffs' attorneys would get $4.1 million of the settlement and UPS would also set aside $100,000 for a monitoring program. "I'm hopeful that deaf employees will not be held back anymore," Babaranti Oloyede, one of the plaintiffs and employee for 12 years, told AP through an interpreter. "For all those years UPS didn't provide interpreters, a telephone for emergency use, closed captioning on training videotapes or emergency signals like flashing lights . We had many meetings, like a meeting about anthrax, and I didn't have an interpreter, so I didn't know what was going on." Company officials denied the charges in the suit, saying they have always tried to accommodate deaf and hard-of-hearing employees. "UPS has long been a positive work environment for those with disabilities and we're proud of our record thus far," Peggy Gardner, spokeswoman for the Atlanta-based company told AP. "We feel the measures called for in the settlement are only going to make a positive work environment even better." However, lawyers for the plaintiffs said that the Company's arrogant attitude forced the settlement. "Their defense was basically that deaf people should be happy to have a job," attorney Todd Schneider told AP. "I was shocked, the court was shocked, and that's why we settled." The settlement resolves all issues in the case, except for standards that UPS drivers must meet - the company adheres to a Department of Transportation test that requires a minimum level of hearing to pass. The settlement still requires court approval. Both sides said they hope that final approval will occur by year's end. UNITED STATES: Contempt Motion V. Agriculture Secretary Refused --------------------------------------------------------------- Federal Judge D. Lowell Jensen refused to hold Department of Agriculture secretary Ann Veneman in contempt, for the department's slow compliance with the settlement of the sexual harassment class action against the Forest Service, GovExec.com reports. Forest Service employees Ginelle O'Connor and Lesa Donnelly filed the class action in December 1995, charging the department with sexual discrimination, harassment and retaliation. The class began with 50 women and was later certified and expanded to include 5,800 women. The parties reached a settlement in 2001, under which the department agreed to create special civil rights enforcement programs and personnel training programs, and to set up an Equal Employment Opportunity processing unit to deal with sexual harassment and hostile workplace environment claims. The department was also required to create a monitoring council that included a class member, an agency employee and a neutral third party. In March 2003, the monitoring council reported that the department had not yet implemented the changes proposed in the settlement. In June, lawyers for the plaintiffs filed a contempt of court motion over the unimplemented changes. In his ruling, Judge Jensen asked lawyers for both sides to report to him by December 5 about efforts to eliminate reprisals against people who have lodged sexual harassment allegations at the department and to create a database tracking workplace complaints. He also extended the settlement agreement until January 8, 2006, a year beyond the original expiration date. "He did say we have shortcomings, but he said that our shortcomings are not substantial enough to warrant a contempt finding," Matt Mathes, spokesman for the Forest Service's Region 5 in California told GovExec.com. "He had some problems with our database and he was concerned about our progress against retaliation," Mr. Mathes continued. "We do need to a do a better job of reporting and tracking things, and we realize that, but everybody from the regional forester on down feels very strongly that our workforce has to operate in an atmosphere of mutual respect." Lead Plaintiff Donnelly said she was happy with the judge's ruling. "The judge realized that reprisal had to be dealt with, had to be corrected, because it's so severe in Region 5. And now we know that the court is watching and asking for a report," Ms. Donnelly said. "So we're happy about that." * D.C. Tobacco Litigation Expert Takes On Obesity Lawsuits ---------------------------------------------------------- The man who brought the threat of an anti-obesity lawsuit to the Seattle School Board works in a university office about 3,000 miles away, in Washington, D.C., with a sign hanging outside the door that reads "Torts R Us," the Seattle Post-Intelligencer reports. John Banzhaf III, a public-interest lawyer and law professor at George Washington University in Washington, D.C., has a sense of humor his targets may not find amusing. At the moment, the 63- year-old maverick, who successfully took on the tobacco industry has turned his attention to the nation's obesity epidemic, and the school districts that have exclusive contracts with soft- drink manufacturers are squarely within his purview. The School Board is scheduled to vote tonight on whether to extend the district's exclusive five-year contract with Coca- Cola. Professor Banzhaf recently sent a letter to the board members, warning that they could be sued for allowing schools to sell soda to students, citing studies that suggest a link between soda consumption and obesity. At a committee meeting yesterday, board members made no mention of Professor Banzhaf's legal threat as they discussed a proposal to extend the contract for another five years, with the option of canceling at any time. The Coke contract nets about $400,000 annually. The revised contract would require that middle schools turn off beverage vending machines before and during school hours; that machine in high school lunchrooms be shut off during lunch, and that three slots in each machine be reserved for water and non- carbonated drinks. As Professor Banzhaf sees it, schools and school boards could be subject to lawsuits for neglecting their legal duty to protect the students. He said he is looking at other school districts that have contracts with soft-drink companies, including Boston and several districts in Texas, as possible targets. Professor Banzhaf he would not argue a case against the Seattle School Board himself. His modus operandi is to plant the seed and provide the advice necessary for designing and pursuing the case when another lawyer takes up the issue. Seattle attorney Dwight Van Winkle has advised the board that he may take legal action. Although no plaintiffs have yet emerged, Mr. Van Winkle said, "the reality is that down the road the board could be facing legal action. I do not think the School Board has any authority to be offering children up for sale to Coca-Cola." Professor Banzhaf, a professor of law at George Washington University, teaches a course on legal activism, known on campus as "Sue the Bastards 101." The course requires that the students bring their own legal actions. He and his students have helped establish smoke-free airplanes; prevented dry-cleaners and hairdressers from charging women more than men; and brought about clearer warnings on birth control pills, among other initiatives. His students were involved in a class action lawsuit filed on behalf of vegetarians and Hindus against McDonald's that resulted in the restaurant chain agreeing to a $10 million settlement for failing to disclose that it served french fries flavored with beef extract. Professor Banzhaf rose to prominence in 1967, when he first took on the tobacco industry and started designing cases that would reach into the activities of the tobacco companies and find there the ingredients of a class action. Professor Banzhaf has since moved on to obesity, providing advice in a class action lawsuit filed last summer by Caesar Barber, a 270-pound Bronx man, who alleged that McDonald's, Burger King, Wendy's and KFC did id not properly disclose the risks of eating too much of their fatty, salty fare. Samuel Hirsch shelved the Barber case and lunched another in which Professor Banzhaf is involved: suing McDonald's on behalf of two New York families whose teenage daughters have eaten at McDonald's for years and suffer from obesity-related conditions such as diabetes and high blood pressure. The Center for Consumer Freedom, a Washington, D.C., coalition that promotes personal responsibility and is backed by the food industry, is highly critical of Professor Banzhaf. Mike Burita, the center's communications director, accuses the attorney of championing frivolous lawsuits and said he has "sunk to a new low" with his threat to the Seattle School Board. However, Northeastern University law professor Richard Daynard believes Professor Banzhaf is justified. "If a school board today votes to continue a contract like this, I think they should have serious legal concerns," said Professor Daynard. "They are doing something that to me sees quite reckless." Professor Banzhaf said about his activities, "I would rather spend my time suing people who deserve to be sued rather than suing somebody simply because the other side brought me a check and said, ' I don't like Mr. Smith because Mr. Smith did something to me.' " Professor Banzhaf added, "Often you can accomplish more by suing than by public education or organizing." Meetings, Conferences & Seminars * Scheduled Events for Class Action Professionals ------------------------------------------------- July 31-August 1, 2003 CLASS ACTION LITIGATION 2003: PROSECUTION AND DEFENSE STRATEGIES Practising Law Institute PLI New York Center Contact: 800-260-4PLI; info@pli.edu. August 1, 2003 CLASS ACTION LITIGATION 2003: PROSECUTION AND DEFENSE STRATEGIES Practising Law Institute PLI New York Center Contact: 800-260-4PLI; info@pli.edu. August 26-27, 2003 THE ANNUAL MANAGING MOLD LIABILITIES CONFERENCE FROM CONSTRUCTION THROUGH TRIAL Bridgeport Continuing Education Contact: http://www.reconferences.com;818-505-1490 September 8-9, 2003 CORPORATE GOVERNANCE: LIABILITY OF CORPORATE OFFICERS AND DIRECTORS Mealey Publications The Ritz-Carlton Hotel Amelia Island, FL Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com September 8-10, 2003 NATIONAL ASBESTOS LITIGATION CONFERENCE Mealey Publications The Ritz-Carlton Hotel Chicago Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com September 11-12, 2003 MASS TORT LITIGATION TOOLS FOR PARALEGALS Mealey Publications The Westin Hotel, Philadelphia Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com September 15-16, 2003 SECURITIES LITIGATION & ENFORCEMENT 2003 Practising Law Institute PLI New York Center Contact: 800-260-4PLI; info@pli.edu. September 18-19, 2003 REINSURANCE SUMMIT Mealey Publications The Westin Hotel, Chicago Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com September 19-21, 2003 THE 20TH TOBACCO PRODUCTS LIABILITY PROJECT CONFERENCE Northeastern University School of Law Contact: scuri@tplp.org September 22-23, 2003 BAD FAITH CONFERENCE Mealey Publications The Westin Hotel, Philadelphia Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com September 26, 2003 MANAGING ENVIRONMENTAL RISKS Bridgeport Continuing Education Los Angeles Contact: 818-505-1490 September 29-30, 2003 PRACTICAL SKILLS SERIES: MASS TORT LITIGATION Mealey Publications The Ritz-Carlton Hotel, Philadelphia Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com September 29-30, 2003 CONSUMER FINANCE CLASS ACTIONS American Conference Institute New York City Contact: 1-888-224-2480; http://www.americanconference.com October 2-3, 2003 SECURITIES LITIGATION & ENFORCEMENT 2003 Practising Law Institute PLI New York Center Contact: 800-260-4PLI; info@pli.edu. October 8-9, 2003 ASBESTOS LITIGATION American Conference Institute New York City Contact: 1-888-224-2480; http://www.americanconference.com October 13-14, 2003 SILICA LITIGATION CONFERENCE Mealey Publications The Ritz-Carlton Hotel, Atlanta Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com October 15, 2003 LEXISNEXIS PRESENTS WALL STREET FORUM: PHARMACEUTICAL & MEDICAL DEVICE INDUSTRY LITIGATION Mealey Publications The Ritz-Carlton New York, Battery Park Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com October 16-17, 2003 LEAD LITIGATION CONFERENCE Mealey Publications Westin Copley Plaza, Boston Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com October 24, 2003 7TH ANNUAL NATIONAL INSTITUTE ON CLASS ACTIONS American Bar Association San Francisco, CA Contact: 800-285-2221; abacle@abanet.org November 6-7, 2003 SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION MassTortsMadePerfect.Com Ritz Carlton, New Orleans, Louisiana Contact: 1-800-320-2227; register@masstortsmadeperfect.com November 7, 2003 7TH ANNUAL NATIONAL INSTITUTE ON CLASS ACTIONS American Bar Association Washington, DC Contact: 800-285-2221; abacle@abanet.org November 10-11, 2003 FEN-PHEN LITIGATION CONFERENCE Mealey Publications The Four Seasons Hotel, Houston Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com November 13-14, 2003 MASS TORT LITIGATION TOOLS FOR PARALEGALS Mealey Publications The Westin Bonaventure Hotel, Los Angeles Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com November 13-14, 2003 ASBESTOS LITIGATION IN THE 21ST CENTURY ALI-ABA New Orleans Contact: 215-243-1614; 800-CLE-NEWS x1614 November 17, 2003 WATER CONTAMINATION LITIGATION CONFERENCE Mealey Publications Pasadena Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com November 17-18, 2003 INSURANCE ALLOCATION CONFERENCE Mealey Publications The Ritz-Carlton Golf Resort, Naples, FL Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com November 18, 2003 MEDICAL MONITORING CONFERENCE Mealey Publications The Ritz-Carlton Huntington Hotel & Spa, Pasadena Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com December 8-9, 2003 ASBESTOS PREMISES LIABILITY CONFERENCE Mealey Publications The Fairmont Hotel, San Francisco Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com December 8-9, 2003 CALIFORNIA SECTION 17200 CONFERENCE Mealey Publications The Fairmont Hotel, San Francisco Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com December 11-12, 2003 CONSTRUCTION DEFECT AND MOLD LITIGATION CONFERENCE Mealey Publications The Ritz-Carlton, Lake Las Vegas, Las Vegas Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com December 12, 2003 MOLD LITIGATION 101 CONFERENCE Mealey Publications The Ritz-Carlton, Lake Las Vegas, Las Vegas Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com January 22-23, 2004 ENVIRONMENTAL AND TOXIC TORT MATTERS: ADVANCED CIVIL LITIGATION ALI-ABA Orlando (Walt Disney World) Contact: 215-243-1614; 800-CLE-NEWS x1614 March 18-19, 2004 SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION MassTortsMadePerfect.Com The Fairmont, San Francisco, California Contact: 1-800-320-2227; register@masstortsmadeperfect.com June 10 & 11, 2004 SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION MassTortsMadePerfect.Com Atlantis, Paradise Island, Bahamas Contact: 1-800-320-2227; register@masstortsmadeperfect.com TBA FAIR LABOR STANDARDS CONFERENCE Mealey Publications Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com TBA AIRLINE BANKRUPTCY LITIGATION CONFERENCE Mealey Publications Contact: 1-800-MEALEYS; 610-768-7800; mealeyseminars@lexisnexis.com * Online Teleconferences ------------------------ ADVERSARIAL PROCEEDINGS IN ASBESTOS BANKRUPTCIES LawCommerce.Com/Mealey's Online Streaming Video Contact: customerservice@lawcommerce.com ASBESTOS BANKRUPTCY - PANEL OF CREDITORS COMMITTEE MEMBERS LawCommerce.Com/Mealey's Online Streaming Video Contact: customerservice@lawcommerce.com EXPERT WITNESS ADMISSIBILITY IN MOLD CASES LawCommerce.Com/Mealey's Online Streaming Video Contact: customerservice@lawcommerce.com INTRODUCTION TO CLASS ACTIONS AND LARGE RECOVERIES Big Class Action Contact: seminars@bigclassaction.com NON-TRADITIONAL DEFENDANTS IN ASBESTOS LITIGATION Online Streaming Video LawCommerce.Com/Mealey's Contact: customerservice@lawcommerce.com PAXIL LITIGATION Online Streaming Video LawCommerce.Com/Mealey's Contact: customerservice@lawcommerce.com RECENT DEVELOPMENTS INVOLVING BAYCOL Online Streaming Video LawCommerce.Com/Mealey's Contact: customerservice@lawcommerce.com RECOVERIES Big Class Action Contact: seminars@bigclassaction.com SELECTION OF MOLD LITIGATION EXPERTS: WHO YOU NEED ON YOUR TEAM Online Streaming Video LawCommerce.Com/Mealey's Contact: customerservice@lawcommerce.com SHOULD I FILE A CLASS ACTION? LawCommerce.Com / Law Education Institute Contact: customerservice@lawcommerce.com THE EFFECTS OF ASBESTOS ON THE PULMONARY SYSTEM Online Streaming Video LawCommerce.Com/Mealey's Contact: customerservice@lawcommerce.com THE STATE OF ASBESTOS LITIGATION: JUDICIAL PANEL DISCUSSION Online Streaming Video LawCommerce.Com/Mealey's Contact: customerservice@lawcommerce.com TRYING AN ASBESTOS CASE LawCommerce.Com Contact: customerservice@lawcommerce.com THE IMPACT OF LORILLAR ON STATE AND LOCAL REGULATION OF TOBACCO SALES AND ADVERSTISING American Bar Association Contact: 800-285-2221; abacle@abanet.org ________________________________________________________________ The Meetings, Conferences and Seminars column appears in the Class Action Reporter each Wednesday. Submissions via e-mail to carconf@beard.com are encouraged. New Securities Fraud Lawsuits CENTRAL PARKING: Wechsler Harwood Lodges Securities Suit in TN -------------------------------------------------------------- Wechsler Harwood LLP initiated a securities class action in the United States District Court for the Middle District of Tennessee, on behalf of all persons who purchased the securities of Central Parking Corporation (NYSE:CPC) between November 4, 2002 and February 13, 2003, inclusive, against Central Parking and certain officers of the Company. The complaint alleges that throughout the class period, defendants issued a series of false and misleading statements to the investing public. The defendants failed to disclose several adverse facts, including that the Company was unable to sufficiently record and document its financial results due to its inadequate internal controls. The complaint further alleges that Central Parking was materially understating its bad debt reserve and its accounts payable. Consequently, the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles and were thereby materially false and misleading. On February 14, 2003, Central Parking 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. Following this announcement, the price of Central Parking common stock decreased from $15.82 on February 13, 2003 to a close of $12.31 on February 14, 2003, or a one-day decline of over 22%, on over seven times normal trading volume. For more details, contact Craig Lowther by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by Phone: (877) 935-7400 or by E-mail: clowther@whesq.com DIVINE INC.: Marc Henzel Lodges Securities Fraud Suit in N.D. 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 defendants Andrew J. Filipowski (Chief Executive Officer and Chairman of the Board of Directors) and Michael P. Cullinane (Chief Financial Officer and Executive Vice President) violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between November 12, 2001, and February 18, 2003, thereby artificially inflating the price of Divine securities. Throughout the class period, as alleged in the Complaint, defendants failed to disclose and misrepresented the following material adverse facts: (1) Divine was engaged in a scheme of inflating its revenues by approximately $65 million by instructing employees of its wholly-owned subsidiary, RoweCom, to offer discounts to library customers that paid cash in advance -- months before payments were due to publishers -- even though Divine had no plan to pay its obligations to publishers; (2) Divine was fraudulently diverting nearly $74 million from RoweCom's operations; (3) Divine lacked adequate financial and internal controls with respect to its RoweCom operations, and (4) as a result of the foregoing, Divine lacked a reasonable basis to project profitability by year-end or an ability to maintain its operations without bankruptcy protections. The Class Period ends on February 18, 2003. On that date, Divine announced that "despite efforts over the past several months to minimize operating expenses and various liabilities, its board of directors has determined that it must seek alternatives to protect the value and viability of its operations. As a result, Divine has engaged Broadview International LLC as advisors to assist in exploring strategic options, which may include asset divestitures, comparable transactions, and/or the filing of a voluntary petition under Chapter 11 of the United States Bankruptcy Code." In response to this announcement, the price of Divine stock declined precipitously. During the Class Period, Divine completed two acquisitions, among numerous others acquiring Viant Corporation and Delano Technology Corporation and 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 or by E-Mail: mhenzel182@aol.com LEHMAN BROTHERS: Marc Henzel Lodges Securities Suit in S.D. 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, against Lehman Brothers Inc. and its senior technology analyst, Michael E. Stanek on behalf of investors who purchased the common stock of RealNetworks, Inc. (NasdaqNM: RNWK) during the period from July 1, 1999 through June 30, 2001, inclusive. The lawsuit charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading analyst reports on RealNetworks, a global provider of software products and services for internet media delivery, in a bid to win or maintain lucrative banking and advisory work from the Company. As a result of defendants' false and misleading statements, the market price of RealNetworks common stock was artificially inflated, maintained or stabilized during the Class Period. On April 28, 2003, the United States Securities and Exchange Commission (SEC) issued a complaint charging Lehman with violating numerous rules of conduct of the National Association of Securities Dealers, Inc. (NASD) and the New York Stock Exchange, Inc. (NYSE), by issuing false and misleading analyst reports on numerous companies, including RealNetworks. The complaint describes the influence and control exerted by Lehman's investment bankers on its supposedly independent research analysts, and details how positive ratings and research reports on RealNetworks issued by defendants to the public were contrary to defendants' more negative assessments of the Company's true value and prospects. Lehman eventually settled these charges for the payment of $50 million. 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 or by E-Mail: mhenzel182@aol.com MATRIA HEALTHCARE: Marc Henzel Lodges Securities Suit in N.D. GA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in United States District Court for the Northern District of Georgia on behalf of all persons who purchased or otherwise acquired the securities of Matria Healthcare, Inc., (NASDAQ: MATR) between October 24, 2001 and June 25, 2002, inclusive. 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 October 24, 2001 and June 25, 2002. During the class period, the defendants touted the "strong performance" of all of its diabetes businesses and repeatedly bragged about the company's growth, noting the signing of new contracts and anticipated contracts. Defendants assured the market during this time that they were ramping up the company's infrastructure and implementing a major systems change that would help them fulfill their goal to be the most technologically advanced provider in their sector of the health industry and that would significantly increase their capabilities. Citing their growth, defendants explained that the reason expenses had exceeded anticipated revenues at certain times was that it was difficult to time the need for additional personnel and infrastructure with the receipt of large contracts because "contractual negotiations can delay the anticipated start dates for new disease management programs." Unbeknownst to the investors, however, the complaint alleges that the company was experiencing serious known problems that rendered defendants' Class Period statements false and misleading and that defendants had a duty to disclose under Item 303(a)(ii) to Regulation S-K. Specifically, the complaint alleges that the defendants failed to disclose until June 25, 2002, despite a duty to do so, the following adverse, known facts: (1) the company's Health Enhancement Segment was experiencing significant "information system constraints" which led to unfilled customer orders; (2) the company's Facet Technologies division was experiencing higher costs as a result of undisclosed inventory and supply chain management problems; (3) Facet's gross margins were materially and adversely affected by decreasing price concessions from its major suppliers; (4) Matria' s gross profit margins were being negatively impacted by an increase in the price of one of its key drugs; and (5) the company's Health Enhancement revenues would be negatively impacted by at least $800,000 due to the bankruptcy of a health plan whose deteriorating financial condition the defendants knew of or were severely reckless in disregarding. The complaint alleges that the defendants were motivated to conceal these problems in order to inflate the purchase price of Matria common stock because defendants negotiated two acquisitions during the Class Period, using Matria common stock as currency. On June 25, 2002, after the close of trading, defendants shocked the market by revising the company's financial outlook for fiscal 2002 and revealing the problems discussed above. In response to the Company's shocking news, the price of Matria's common stock plummeted on unusually heavy volume the next trading day, dropping from nearly $12 to $7 before closing at $8.95 per share. A chorus of Wall Street analysts also downgraded the stock as a result. 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 or by E-Mail: mhenzel182@aol.com MATRIA HEALTHCARE: Wolf Haldenstein Lodges Securities Suit in GA ---------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Northern District of Georgia, on behalf of all persons who purchased or otherwise acquired the securities of Matria Healthcare, Inc. (Nasdaq: MATR) between October 24, 2001 and June 25, 2002, inclusive, against the Company and: (1) Parker H. Petit, (2) Jeffrey D. Koepsell, and (3) George W. Dunaway 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 October 24, 2001 and June 25, 2002. During the class period, the defendants touted the "strong performance" of all of its diabetes businesses and repeatedly bragged about the company's growth, noting the signing of new contracts and anticipated contracts. Defendants assured the market during this time that they were ramping up the company's infrastructure and implementing a major systems change that would help them fulfill their goal to be the most technologically advanced provider in their sector of the health industry and that would significantly increase their capabilities. Citing their growth, defendants explained that the reason expenses had exceeded anticipated revenues at certain times was that it was difficult to time the need for additional personnel and infrastructure with the receipt of large contracts because "contractual negotiations can delay the anticipated start dates for new disease management programs." Unbeknownst to the investors, however, the complaint alleges that the company was experiencing serious known problems that rendered defendants' Class Period statements false and misleading and that defendants had a duty to disclose under Item 303(a)(ii) to Regulation S-K. Specifically, the complaint alleges that the defendants failed to disclose until June 25, 2002, despite a duty to do so, the following adverse, known facts: (1) the company's Health Enhancement Segment was experiencing significant "information system constraints" which led to unfilled customer orders; (2) the company's Facet Technologies division was experiencing higher costs as a result of undisclosed inventory and supply chain management problems; (3) Facet's gross margins were materially and adversely affected by decreasing price concessions from its major suppliers; (4) Matria's gross profit margins were being negatively impacted by an increase in the price of one of its key drugs; and (5) the company's Health Enhancement revenues would be negatively impacted by at least $800,000 due to the bankruptcy of a health plan whose deteriorating financial condition the defendants knew of or were severely reckless in disregarding. The complaint alleges that the defendants were motivated to conceal these problems in order to inflate the purchase price of Matria common stock because defendants negotiated two acquisitions during the Class Period, using Matria common stock as currency. On June 25, 2002, after the close of trading, defendants shocked the market by revising the company's financial outlook for fiscal 2002 and revealing the problems discussed above. In response to the Company's shocking news, the price of Matria's common stock plummeted on unusually heavy volume the next trading day, dropping from nearly $12 to $7 before closing at $8.95 per share. A chorus of Wall Street analysts also downgraded the stock as a result. For more details, contact Gregory Mark Nespole 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 Matria. PEDIATRIX MEDICAL: Kirby McInerney Files Securities Suit in FL -------------------------------------------------------------- Kirby McInerney & Squire, LLP initiated a securities class action in the United States District Court for the Southern District of Florida, Miami Division, on behalf of all purchasers of Pediatrix Medical Group, Inc. (NYSE:PDX) common stock during the period from February 7, 2002 through June 23, 2003, inclusive. The action charges Pediatrix 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 Pediatrix's shares. Pediatrix issued a series of material misrepresentations to the market concerning the Company's financial condition during the class period. Specifically, Pediatrix failed to disclose and misrepresented the following adverse facts, among others: (1) that the defendants engaged in fraudulent "upcoding" in its billing practices while telling the investing public that its billing practices were legitimate; (2) that by virtue of having improperly received and recorded as revenue payments to which Pediatrix was not entitled, Pediatrix materially inflated several key indicators, including operating income, net inpatient revenue per admission, EBITDA and EBITDA margins; (3) that these unsafe and unsound business practices materially misrepresented the Company's business operations and financial performance by enabling the defendants to post better financial results; and (4) that as a result, the Company's stock price was artificially inflated. On June 24, 2003, the Company issued a press release with the headline: ``Pediatrix Notified of Billing Inquiry.'' Therein, the Company announced that it had been advised by the U.S. Attorney's Office that it was conducting a civil investigation into Pediatrix's Medicaid billing practices nationwide. Additionally, the Company announced that the U.S. Attorney's Office intended to make a document and information request, informally or by subpoena, within the next few weeks. Market reaction to the news was swift. Pediatrix's shares fell 24% or $9.90 per share, on unusually high trading volume, to close at $32.20 per share. 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 POLYMEDICA CORPORATION: Kirby McInerney Lodges Stock Suit in MA --------------------------------------------------------------- Kirby McInerney & Squire, LLP launched a securities class action lawsuit in the United States District Court for the District of Massachusetts on behalf of all purchasers of PolyMedica Corporation (NasdaqNM:PLMD) common stock during the period from July 23, 2001 through June 30, 2003, inclusive. The action charges certain of PolyMedica's 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 PolyMedica's shares. PolyMedica issued a series of material misrepresentations to the market concerning the Company's financial condition during the class period. Specifically, during the relevant time period, it has been alleged that PolyMedica overstated earnings by capitalizing direct response advertising costs related to the acquisition of new customers rather than expensing them as incurred. Consequently, PolyMedica recorded such advertising costs as assets rather than as expenses. By accounting for these expenses as assets, PolyMedica could spread the cost over a two to four year period rather than accounting for the expense in the quarter in which they were incurred. This allowed PolyMedica to understate operating expenses, overstate assets, and create a false impression of operating efficiencies with the overall effect being that the Company misled investors concerning the Company's growth and earnings. This contrivance violates Generally Accepted Accounting Principles and the SEC has closely scrutinized this practice. On June 30, 2003, after the stock market closed, PolyMedica issued a press release announcing that as a result of discussions with the SEC regarding the expensing of the Company's direct response advertising costs, PolyMedica may be forced to restate results for the fiscal years 2002 and 2003. The Company said the restatement would reduce its fiscal 2002 earnings to $1.76 from $2.38 per share, a reduction of 26%, its fiscal 2003 to $2.61 from $3.21, a reduction of 19%, and fiscal 2004 first quarter earnings expectations to $.66-.72 from $.84- .90. On this news, shares of PolyMedica, which had closed at $45.86 on June 30, 2003, opened for trading on July 1, 2003, at $38.56, down $7.30, or 15.9%. PolyMedica shares closed later that day at $37.39 per share for a loss of $8.47 per share, or 18.5%. 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 PROVIDENT FINANCIAL: Marc Henzel Lodges Stock Lawsuit in N.D. GA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Northern District of Georgia, on behalf of all persons who purchased securities of Provident Financial Group (Nasdaq: PFGI) between January 17, 1997 and March 5, 2003, inclusive, and who were injured thereby. Provident Financial Group Inc.'s earnings restatement is one for the record books - its six years worth of revisions is the longest continuous string of amendments in memory for a US company. However, if history is any indication, Provident's problems are only just beginning. The company's stock lost 20% on Wednesday, the day of the announcement by the Cincinnati banking company, but a study from New York University's Stern School of Business finds that the stocks of companies that announce restatements drop for three straight sessions on average. "Earnings restatements rewrite a company's history," generally in an unflattering way, said Min Wu of NYU's Department of Accounting, Taxation and Business Law, who conducted the study in conjunction with Softrax, whose software helps companies tally revenue. When companies restate earnings, and particularly when that's accompanied by a warning about future earnings - as was the case with Provident - there are usually reverberations, Ms. Wu said. "Analysts' downgrades, class-action lawsuits and management shuffles are not uncommon and they cast a shadow over the firms, quite often for a long time." However, Provident launched a quick offensive in an effort to restore its credibility, said Christopher Carey, the company's executive vice president and chief financial officer. "We acted as soon as we found out and have been talking to people all day emphasizing this was totally inadvertent on our part and would never had been done if we had known differently," Mr. Carey told Dow Jones Newswires. "At some point we expect to go out and tell people face-to-face exactly why it happened and exactly why it won't happen again." However, he acknowledged Provident "has certainly experienced a big setback." Provident has plenty of company in revising its financial reports. Restatements appear as commonly today as increases in profit expectations did in the late 1990s. Restatements have spiked further since the Sarbanes-Oxley Act was passed in July. The law calls for stringent reporting by companies and requires executives to certify results. Consider how times have already changed. From 1994 through 1997, just 220 public companies restated earnings. Over the next four years - 1998 to 2001 - that number quadrupled to roughly 900, according to Ms. Wu's research. This year there have already been dozens of restatements, with one of the most high- profile being Royal Ahold NV (AHO), which said last month it would restate $500 million of earnings going back two years. But six years "is very, very unusual," said Joe Cooper of Thomson Financial/ First Call, who said he could not recall a longer string than the 24 quarters that Provident's move will encompass. Provident "voluntarily" made its disclosure like three-fourths of companies do, according to Ms. Wu's research, and that can be a plus for retaining investor credibility. The bank holding company has since notified the Federal Reserve and the Securities and Exchange Commission of the errors and said it expects to file its 10-K report, with the correct data, on time - another positive, Ms. Wu said. Provident is also in the majority of companies that give the amount of the restatement on the day they announce the development. The other one- third do not, with the data coming as soon as two days after and as late as one and a half years. The average is one to two months, she added. Provident's restatement totaled $70.3 million over the six years, and the company said it was able to pin down the numbers immediately after recognizing the deals involved nine leases that were posted as off-balance-sheet transactions and shouldn't have been. By keeping these transactions off the balance sheet, the company "gave the appearance it had more capital and higher income," said Wilson Smith, banking analyst at Cohen Brothers in Philadelphia. "That's something that could hang over their head for a while, but be mitigated by the proactive steps they're discussing." 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 or by E-Mail: mhenzel182@aol.com READ-RITE CORPORATION: Kirby McInerney Lodges Stock Suit in CA -------------------------------------------------------------- Kirby McInerney & Squire, LLP initiated a securities class action in the United States District Court for the Northern District of California on behalf of all purchasers of Read-Rite Pharmaceuticals, Inc. (Other OTC:RDRTQ.PK) common stock during the period from October 30, 2001 to June 6, 2003, inclusive. The action charges certain of Read-Rite's 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 Read-Rite's shares. The complaint alleges that during the class period defendants issued a series of false and misleading statements about the Company, and as a result Read-Rite's stock traded at inflated prices during the Class Period, increasing to as high as $39 on January 9, 2002, before the Company announced it would file for bankruptcy. The true facts which were known to each of the defendants, but concealed from the investing public during the Class Period, were as follows: (1) The Company's 40 GB/platter inventory was overstated by $16.7 million; (2) The Company's Philippine real estate holdings were overstated by approximately $6.8 million; (3) The Company needed to restructure its operations and the associated charges would cost the Company in excess of $20 million and would cause an earnings shortfall in coming quarters; (4) The Company's Q2 FY03 loss was grossly understated; (5) The Company was experiencing massive technical problems associated with its 40GB/per platter programs. Moreover, the Company was experiencing these problems well before January 2002 and beyond April 2002 when defendants claimed such problems were fixed; and (6) The Company was underfunded and could not complete the production of its 80GB programs. 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 by E-Mail: emui@kmslaw.com SINGING MACHINE: Kirby McInerney Launches Securities Suit in FL --------------------------------------------------------------- Kirby McInerney & Squire, LLP initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of all purchasers of Singing Machine Medical Group, Inc. (AMEX:SMD) common stock during the period from February 14, 2001 through July 14, 2003, inclusive. The action charges Singing Machine 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 Singing Machine's shares. 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 9, 2001 and June 27, 2003, thereby artificially inflating the price of The Singing Machine 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 had materially overstated its net income in violation of Generally Accepted Accounting Principles (GAAP); (2) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; (3) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times; (4) that the Company avoided taking sufficient changes to earnings in 2001 and 2002 to account for income tax liabilities; and (5) that as a result, the Company's financial results were materially overstated at all relevant times. On June 27, 2003, the Company announced that it would restate its fiscal 2002 financial statements and possibly fiscal 2001 financial statements to increase the accrual for income taxes. Moreover, the Company stated that the restatement will have the effect of reducing net income for fiscal 2002 and possibly fiscal 2001. News of The Singing Machine's restatement shocked the market. Shares of The Singing Machine fell 33%, or $1.80 per share, to close at $3.60 per share on June 27, 2003. On July 14, 2003, the Company announced further details about its restatement and also announced that ``its auditors have expressed substantial doubt about Singing Machine's ability to continue as a going concern.'' News of this again shocked the market, and shares of the Singing Machine fell 19% percent to close at $3.03 per share on July 15, 2003. 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 ********* 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. 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