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C L A S S A C T I O N R E P O R T E R
Friday, August 8, 2003, Vol. 5, No. 156
Headlines
AMERICAN FIDELITY: Gains Favorable Verdict in Policyholder Suit
ASK JEEVES: Reaches Settlement in Consolidated Securities Suit
ASK JEEVES: Plaintiffs Withdraw Derivative Suit Dismissal Appeal
BURGER KING: Subpoenaed in Investigation Over Frozen Coke Fraud
CHARTER COMMUNICATIONS: To Ask MO Court To Dismiss Stock Lawsuit
CHURCH & DWIGHT: Plaintiffs Dismiss Lawsuit Over Condoms in NJ
COPPER MOUNTAIN: To Ask CA Court To Dismiss Consolidated Lawsuit
COPPER MOUNTAIN: Reaches Agreement To Settle NY Securities Suit
CRYOLIFE INC.: Discovery Proceeds in GA Securities Fraud Lawsuit
CRYOLIFE INC.: Committee Recommends Dismissal of Derivative Suit
DPL INC.: OH Court Affirms Stay of Discovery in Derivative Suits
ENRON CORPORATION: Shareholders Closer To Getting Compensation
GOLDEN STAR: Named As Defendant in Omai Mine Lawsuit in Guyana
HALLWOOD REALTY: Trial in DE Unitholders Suit Set September 2003
HERTZ CORPORATION: Travel Agencies Launch Antitrust Suit in CA
HERTZ CORPORATION: Consumers Lodge IL Suit Over Service Charges
HSBC USA: PA Court Dismisses Suit For Securities Act Violations
LOOKSMART LTD.: Plaintiffs Serve Document Requests in CA Lawsuit
MEDCO HEALTH: Fairness Hearing For ERISA Suit Set December 2003
MICROSOFT CORPORATION: EU To Ask For Stricter Antitrust Measures
NEW JERSEY: Court Upholds Aid Cap For Children Born On Welfare
NICOR GAS: Settling Lawsuits Over Mercury-Containing Regulators
OXFORD HEALTH: NY Court Grants Approval to Securities Settlement
RENT-A-CENTER INC.: NY Court Hears Orders on Suit Certification
RENT-A-CENTER INC.: TX Court Mulls Dismissal of Securities Suit
RENT-A-CENTER INC.: Oral Arguments in Consumer Suit Held in PA
RENT-A-CENTER INC.: Summary Judgment Denied for OR Overtime Suit
RENT-A-CENTER INC.: Overtime Wage Suits Pending in WA, CA Courts
TEXTRON FINANCIAL: Court Refuses To Dismiss Credit Facility Suit
TEXTRON INC.: Plaintiffs Appeal Dismissal of ERISA Lawsuit in RI
TOM BROWN: Faces Lawsuit Over Gas Royalties in WY State Court
W.R. GRACE: Pretrial Hearing For ZAI Suits Set September 2003
WASTE MANAGEMENT: TX Court Grants Approval To Securities Pact
Asbestos Alert
ASBESTOS LITIGATION: Court Approves Asbestos Settlement Package
ASBESTOS LITIGATION: Asbestos Claims Continue to Haunt GP
ASBESTOS LITIGATION: Hartford Posts $888M Loss, Blames Asbestos
ASBESTOS LITIGATION: RHI Companies File Chapter 11 Plans in US
ASBESTOS LITIGATION: Travelers Pleased with Asbestos Ruling
ASBESTOS ALERT: Three Companies to Pay $25K for Asbestos Case
ASBESTOS ALERT: Ireland to Commence Suit V. Asbestos Claimants
ASBESTOS ALERT: Property Owner to Pay $25,000 Asbestos Penalty
New Securities Fraud Cases
BARRICK GOLD: Wolf Haldenstein Lodges Securities Suit in S.D. NY
CREE INC.: Kaplan Fox Lodges Securities Fraud Lawsuit in M.D. NC
CROMPTON CORPORATION: Ademi & O'Reilly Lodges CA Securities Suit
IMPATH INC.: Wolf Popper Commences Securities Lawsuit in S.D. NY
INTERMUNE INC.: Ademi & O'Reilly Lodges Securities Lawsuit in CA
STELLENT INC.: Milberg Weiss Lodges Securities Suit in MN Court
*********
AMERICAN FIDELITY: Gains Favorable Verdict in Policyholder Suit
---------------------------------------------------------------
Recent jury verdicts found that American Fidelity Insurance
Company did not defraud its policyholders in the highly
publicized California class action Heathcock v. Trans World
Assurance Company.
In rejecting the plaintiffs' claims, the Jury's Special Verdict
specifically found that no misrepresentations were made to the
plaintiffs and that there was no breach of the covenant of good
faith and fair dealing. In the decision, the court found that
American Fidelity did not act unlawfully, fraudulently or
unfairly in selling and servicing in Flexible Dollar Builder
(FDB) life insurance policies. The court also reversed earlier
rulings certifying the case as a class action.
The Special Verdicts and Court Decision are consistent with the
results of other cases that have gone to trial and prove once
and for all that AFLIC's agents fairly disclose the material
terms of the FDB. Unfortunately, while the Heathcock lawsuit
was pending, its unproved allegations received much notoriety
and often were cited as evidence of misconduct by AFLIC's
agents.
The jury verdicts and court decision confirm that American and
its agents involved with the plaintiffs are innocent of any
wrongdoing. "We are pleased that American Fidelity and its
agent sales force have been vindicated by the Jury Verdicts and
the Court Decision," as stated by American Fidelity Insurance
Company's management.
In summarizing the Jury's decision, the court stated, "On March
21, 2003, the jury returned its special verdicts in favor of
both TWA and AFLI. These special verdicts included the
following findings: (1) Neither TWA nor AFLI made any false
representation, whether intentionally or negligently, to
Heathcock, Cavanaugh or Bremer. (2) Neither TWA nor AFLI
concealed or suppressed any material fact to Heathcock,
Cavanaugh or Bremer. (3) Neither TWA nor AFLI breached the
implied covenant of good faith and fair dealing, which breach
caused damage to Heathcock, Cavanaugh or Bremer."
In its own opinion, the court stated, "The only inferences that
can reasonably be drawn from the jury's special verdicts are
that either (a) Heathcock, Cavanaugh and Bremer knew that the
FDB was life insurance, or (b) Defendants' agents fully
disclosed the true nature of the FDB to each of the three named
plaintiffs and ye, for some reason through no fault of
Defendants (e.g., the three named plaintiffs did not listen to
what they were being told by Defendants agents), Heathcock,
Bremmer and Cavanaugh still did not understand what they were
buying."
Still pending are proceedings in which the companies are asking
to recover in excess of $200,000 from the plaintiffs in court
costs.
For more details, contact American Fidelity Life Insurance
Company by Mail: P.O. Box 4847, Pensacola, FL 32507 or by Phone:
850-456-7401
ASK JEEVES: Reaches Settlement in Consolidated Securities Suit
--------------------------------------------------------------
Ask Jeeves, Inc. reached a settlement for the consolidated
securities class action filed in the United States District
Court for the Southern District of New York, against it, two of
its officers and directors and underwriters of it's initial
public offering, namely:
(1) Morgan Stanley & Co., Inc.,
(2) FleetBoston Robertson Stephens,
(3) Goldman Sachs & Co.,
(4) US Bancorp Piper Jaffray, and
(5) Dain Rauscher, Inc.
The complaint alleges violations of Section 11 of the Securities
Act of 1933 against all defendants, and violations of Section 15
of the Securities Act against the individual defendants in
connection with the Company's initial public offering (IPO). An
amended complaint was filed on December 6, 2001, which includes
the same allegations in connection with Ask Jeeves' secondary
offering in March 2000. The complaints seek unspecified damages
on behalf of a purported class of purchasers of common stock
between June 30, 1999 and December 6, 2000.
On June 24, 2003, a special committee of the Company's board of
directors approved the settlement of this action, subject to
certain conditions including that a sufficient number of the
defendants participate in the settlement, and on July 9, 2003,
the Individual Defendants approved the settlement of this
action. It is anticipated that the settlement will be submitted
to the court for approval before the end of the year.
ASK JEEVES: Plaintiffs Withdraw Derivative Suit Dismissal Appeal
----------------------------------------------------------------
Plaintiffs dismissed their appeal of the dismissal of a
consolidated stockholder derivative lawsuit filed against Ask
Jeeves, Inc. in the United States District Court for the
Northern District of California.
The lawsuit purported to be filed on behalf of the Company,
asserting claims against the officers and directors at the time
of the Company's IPO. Also named as defendants were Morgan
Stanley & Co., Inc., and FleetBoston Robertson Stephens, the
underwriters of the Company's IPO. The complaint alleged breach
of fiduciary duty, negligence, an unjust enrichment of the named
officers and directors, for acquiescing and/or conspiring with
the underwriter defendants in underpricing the IPO.
On October 31, 2002, the court dismissed the lawsuit, with
prejudice. The plaintiff appealed and the case was consolidated
with similar derivative actions.
BURGER KING: Subpoenaed in Investigation Over Frozen Coke Fraud
---------------------------------------------------------------
A federal grand jury has subpoenaed Burger King Corporation to
participate in an investigation of allegations of fraud at
softdrink giant Coca-Cola Co., the Associated Press reports.
The probe was triggered by a civil lawsuit filed in May by
former Coke manager Matthew Whitley which charged Coke with
manipulating the marketing test of the popularity of Frozen Coke
three years ago at Burger King restaurants in Virginia, and
artificially boosting equipment sales. In June, Coke
acknowledged that some of its employees rigged the test and said
the workers had been disciplined.
The suit, filed in Atlanta state and federal courts, added that
the promotion resulted in a $65 million investment by Burger
King in Frozen Coke. Last month, Burger King said it was
discontinuing the sale of Frozen Coke at its restaurants and
would stop using Coke's frozen carbonated-beverage machines
because the drink was no longer "strategically relevant" to the
fast-food chain's long-term plans.
Burger King spokesman Rob Doughty did not give out details on
the subpoena but confirmed it was related to an investigation by
the US Attorney into Frozen Coke, AP reports. Neither Coke nor
the U.S. Attorney's Office in Atlanta, where Coca-Cola is based,
would comment on the subpoena.
"We're not going to go beyond our statement of July 11, that
there is an investigation and that we are cooperating in it,"
Coke spokesman Dan Schafer told AP.
CHARTER COMMUNICATIONS: To Ask MO Court To Dismiss Stock Lawsuit
----------------------------------------------------------------
Charter Communications, Inc. intends to ask the United States
District Court for the Eastern District of Missouri to dismiss
the consolidated securities class action against it and certain
of its former and present officers and directors.
The suit, filed on behalf of all purchasers of the Company's
securities during the period from either November 8 or November
9, 1999 through July 17 or July 18, 2002, allege that the
Company utilized misleading accounting practices and failed to
disclose these accounting practices and/or issued false and
misleading financial statements and press releases concerning
the Company's operations and prospects.
By virtue of a prior court order, StoneRidge Investment Partners
LLC became lead plaintiff upon entry of the panel's transfer
order. On June 19, 2003, following a pretrial conference with
the parties, the court issued a Case Management Order setting
forth a schedule for the pretrial phase of the consolidated
class action.
CHURCH & DWIGHT: Plaintiffs Dismiss Lawsuit Over Condoms in NJ
--------------------------------------------------------------
Plaintiffs voluntarily dismissed a class action filed against
Church & Dwight Co., Inc., Armkel LLC and two other condom
manufacturers, in the Superior Court of New Jersey.
The suit alleges that condoms lubricated with the spermicide
nonoxynol-9 (N-9) are being marketed in a misleading manner
because the makers of such condoms claim they aid in the
prevention of sexually transmitted diseases whereas, according
to the plaintiffs, public health organizations have found that
N-9 usage can under some circumstances increase the risk of
transmission of disease, an earlier Class Action Reporter story
states.
The World Health Organization and other interested groups have
issued reports suggesting that N-9 should not be used rectally
or for multiple daily acts of vaginal intercourse, given the
ingredient's potential to cause irritation to human membranes.
In June 2003, the plaintiffs voluntarily dismissed the suit
after defendants filed a motion to dismiss on the ground that
their compliance with comprehensive federal medical device
regulations precluded recovery.
COPPER MOUNTAIN: To Ask CA Court To Dismiss Consolidated Lawsuit
----------------------------------------------------------------
Copper Mountain Networks, Inc. intends to ask the United States
District Court for the Northern District of California to
dismiss a consolidated securities class action filed against it
and two of its officers.
The suit, filed on behalf of a class of Company stockholders,
alleges violations of the federal securities laws arising out of
recent declines in the Company's stock price. In addition,
three related derivative actions against certain current and
former Copper Mountain officers and directors were filed in
state courts in Delaware and California.
Both the federal class action and state derivative lawsuits
allege claims in connection with various alleged statements and
omissions to the public and to the securities markets. The two
derivative lawsuits pending in California Superior Court have
been consolidated and all three derivative lawsuits have been
stayed, pending resolution of the Northern District Complaints.
All of the foregoing complaints have been tendered to the
Company's insurance carrier. No discovery has been conducted in
any of these lawsuits.
COPPER MOUNTAIN: Reaches Agreement To Settle NY Securities Suit
---------------------------------------------------------------
Copper Mountain Networks, Inc. has reached a settlement in the
consolidated securities class action filed against it and
certain of its officers and directors in the United States
District Court for the Southern District of New York.
The plaintiffs allege that the Company, certain of its officers
and directors and the underwriters of its initial public
offering (IPO) violated section 11 of the Securities Act of 1933
based on allegations that the Company's registration statement
and prospectus failed to disclose material facts regarding the
compensation to be received by, and the stock allocation
practices of, the IPO underwriters. The complaint also contains
a claim for violation of section 10(b) of the Securities
Exchange Act of 1934 based on allegations that this omission
constituted deceit on investors.
Similar complaints were filed in the same court against hundreds
of other public companies that conducted IPOs of their common
stock in the late 1990s. The IPO Lawsuits were consolidated for
pretrial purposes before United States Judge Shira Scheindlin of
the Southern District of New York.
On July 15, 2002, the Company joined in a global motion to
dismiss the IPO Cases filed by all of the Issuers (among
others). On October 9, 2002, the court entered an order
dismissing the Company's named officers and directors from the
IPO Lawsuits without prejudice, pursuant to an agreement tolling
the statute of limitations with respect to these officers and
directors until September 30, 2003.
On February 19, 2003, the court issued a decision denying the
motion to dismiss the claims against the Company. In June 2003,
Issuers and Plaintiffs reached a tentative settlement agreement
that would, among other things, result in the dismissal with
prejudice of all claims against the issuers and their officers
and directors in the IPO Lawsuits.
In addition, the tentative settlement guarantees that, in the
event that the Plaintiffs recover less than $1 billion in
settlement or judgment against the Underwriter defendants in the
IPO Lawsuits, the Plaintiffs will be entitled to recover the
difference between the actual recovery and $1 billion from the
insurers for the Issuers. Although the Company has approved
this settlement proposal in principle, it remains subject to a
number of procedural conditions, as well as formal approval by
the Court.
CRYOLIFE INC.: Discovery Proceeds in GA Securities Fraud Lawsuit
----------------------------------------------------------------
Discovery has commenced in the consolidated securities class
action filed against Cryolife, Inc. and certain officers of the
Company, alleging violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 based on a series of purportedly
materially false and misleading statements to the market.
The suit principally alleges that the Company failed to disclose
its alleged lack of compliance with certain FDA regulations
regarding the handling and processing of certain tissues and
other product safety matters. The consolidated complaint seeks
certification of a class of purchasers between April 2, 2001 and
August 14, 2002, compensatory damages, and other expenses of
litigation.
The Company and the other defendants filed a motion to dismiss
the consolidated complaint on February 28, 2003, which motion
the United States District Court for the Northern District of
Georgia denied in part and granted in part on May 27, 2003.
The Company carries directors' and officers' liability insurance
policies, which the Company presently believes to be adequate to
defend against this action. Nonetheless, an adverse judgment in
excess of the Company's insurance coverage could have a material
adverse effect on its financial position, results of operations,
and cash flows.
CRYOLIFE INC.: Committee Recommends Dismissal of Derivative Suit
----------------------------------------------------------------
An independent committee formed by Cryolife, Inc. to investigate
charges in purported shareholder derivative actions filed
against it (as a nominal defendant) in the Superior Court of
Gwinnett County, Georgia recommended the suits' dismissal. The
suit also names as defendants:
(1) Steven G. Anderson,
(2) Albert E. Heacox,
(3) John W. Cook,
(4) Ronald C. Elkins,
(5) Virginia C. Lacy,
(6) Ronald D. McCall,
(7) Alexander C. Schwartz, and
(8) Bruce J. Van Dyne
The suit alleges that the individual defendants breached their
fiduciary duties to the Company by causing or allowing the
Company to engage in certain inappropriate practices that caused
the Company to suffer damages. The complaint was preceded by
one day by a letter written on behalf of lead plaintiff Rosemary
Lichtenberger demanding that the Company's Board of Directors
take certain actions in response to her allegations.
On January 16, 2003 another purported derivative suit alleging
claims similar to those of the Lichtenberger suit was filed in
the Superior Court of Fulton County by complainant Robert F.
Frailey. As in the Lichtenberger suit, the filing of the
complaint in the Frailey action was preceded by a purported
demand letter sent on Mr. Frailey's behalf to the Company's
Board of Directors. Both complaints seek undisclosed damages,
costs and attorney's fees, punitive damages, and prejudgment
interest against the individual defendants derivatively on
behalf of the Company.
The Company's Board of Directors has established an independent
committee to investigate the allegations of Ms. Lichtenberger
and Mr. Frailey. The independent committee engaged independent
legal counsel to assist in the investigation and has concluded
its investigation. The committee's report concludes that no
officer or director breached any fiduciary duty and recommends
that the Board of Directors seek to have the lawsuits dismissed.
The Company anticipates responding to the complaint in August of
2003.
DPL INC.: OH Court Affirms Stay of Discovery in Derivative Suits
----------------------------------------------------------------
The United States District Court for the Southern District of
Ohio affirmed its stay of discovery in several class actions and
derivative cases filed against DPL, Inc., certain of its present
and former officers and directors, and PricewaterhouseCoopers
LLP, DPL's former independent auditor.
Six of those cases have been consolidated. The consolidated
action asserts class action claims under the federal securities
laws and seeks unspecified damages, interest, attorneys' fees,
and costs. Discovery is currently stayed in the consolidated
suit under the requirements of federal securities laws.
Three cases are pending in the Hamilton County Court of Common
Pleas, alleging class claims for breach of fiduciary duty,
violation of Ohio Rev. Code section 1701.93, and negligence, and
derivative claims on behalf of DPL for breach of fiduciary duty,
breach of the duty of loyalty, self-dealing, corporate waste,
abuse of control, gross mismanagement, unjust enrichment, and
negligence.
These actions seek unspecified compensatory damages on behalf of
a class of shareholders, compensatory damages of $200 million on
behalf of DPL, unspecified punitive damages, attorneys' fees,
and costs.
On July 25, 2003, the state trial judge affirmed his case
management order, which he set for trial on October 7, 2003.
Additionally, the court found that the stay of proceedings order
issued by the federal court had expired. Therefore, the state
court trial judge established an expedited discovery schedule.
Subsequently, the federal court affirmed its stay of discovery
until such time as the Plaintiffs filed responsive pleadings to
a motion to dismiss, which Defendants must file no later than
August 19, 2003.
ENRON CORPORATION: Shareholders Closer To Getting Compensation
--------------------------------------------------------------
Two years after Enron's share price began plummeting,
shareholders finally have a bit of good news. Last week, the
Securities and Exchange Commission announced a settlement with
the two banks most closely tied to Enron, Citigroup and J.P.
Morgan Chase, the Houston Chronicle reports.
The settlement calls for the two banks to pay $255 million into
a fund for Enron victims. The fund now totals $324 million,
including settlement payments from Merrill Lynch and former
Enron officer Michael Kopper for their part in fraudulent Enron-
related schemes. The SEC has filed similar complaints against
eight other Enron officer, meaning that the fund is likely to
grow.
Another development last week also could help the shareholders.
The court-appointed examiner in Enron's bankruptcy, Neal Batson,
filed a report suggesting there is sufficient evidence to
subordinate $5 billion in debt held by six banks below that of
other creditors. Such subordination is by no means a certainty,
but Batson's report gives other creditors considerable leverage
on the banks to negate at least a portion of their claims
against Enron.
Under terms of Enron's recently filed plan of reorganization,
which spells out how much cash Enron has to pay its monumental
debts, the banks' claims could be worth $770 million or more.
Chase, Citigroup and other banks are currently in talks with the
attorneys in two lawsuits filed by shareholders and former
employees. It is possible the banks will agree to subordinate
some of their claims in the bankruptcy and apply the rest toward
a settlement of the shareholders' and ex-employees' lawsuits.
"There is a feeling that one of the ways that the court could
ultimately find would be to take bank claims, whatever their
portion is, and make it available to investors," said Andrew
Entwistle, who represents institutions with large holdings in
Enron stock.
"We feel strongly that they (the banks) have unclean hands, and
that they ought not walk away from the bankruptcy with
anything," said Mr. Entwistle.
A new federal law has created an incentive to settle with the
SEC: The money Citigroup and J.P. Morgan paid into the victim
fund will count toward any settlement in a class action
litigation. The Sarbanes-Oxley Act, passed a year ago in the
wake of the Enron, WorldCom and other corporate scandals, also
made it legal for the SEC and other federal agencies to
establish funds for victims from the proceeds of any
settlements. Previously, the money had to go into the US
Treasury.
How the money collected by the SEC will be distributed is
unclear, but it is likely to follow the template established by
the shareholder and former employee lawsuits, an agency source
said. However, neither lawsuit has yet established a formula
for determining who should get what.
The shareholder lawsuit is likely to include those who purchased
Enron stock in the class period between September 9, 1997, and
November 27, 2001. It is not known whether recovery will be
greater for those who bought stock at its peak price of about
$90.
SEC said it would not make sense to distribute funds from the
victims' fund while the lawsuits are pending. Shareholders will
certainly share in the victims' fund, and former Enron employees
who owned Enron stock - also are likely to participate in some
way.
Some classes of stockholders, such as former officers and their
families, will be ineligible for reimbursement. With more than
700 million shares outstanding, simple math shows the payment to
be less than 50 cents per share. That is, by the way, better
than the present price of an Enron share, which is about six
cents.
For many shareholders and ex-employees, the amount of the check
is less important than the identity of the check writer. "Most
of the employees that want to 'get them guys' have it in more
for the officers of Enron than they do for the banks," said Rod
Jordan, chairman of the Severed Enron Employees Coalition.
GOLDEN STAR: Named As Defendant in Omai Mine Lawsuit in Guyana
--------------------------------------------------------------
Golden Star Resources Ltd. has been named as one of 14
defendants in a class action filed in the High Court of the
Supreme Court of Judicature of Guyana, related to the August
1995 accidental release of cyanide-bearing waste into a stream
near the Omai gold mine, in which the Company then owned a 30%
interest. Other defendants include Cambior Inc., who co-owned
and operated the mine in 1995 and to whom the Company
subsequently sold the mine in 2002.
The plaintiffs claim to represent residents near the stream and
its tributaries. The plaintiffs claim various environmental and
other damages and have asked for substantial damages, in excess
of $1 billion, from all defendants, jointly and severally, among
other remedies.
The Company has not been served with process in this litigation.
In connection with the sale of its interest in the Omai mine to
Cambior, Cambior indemnified the Company from any claims related
to the mine.
HALLWOOD REALTY: Trial in DE Unitholders Suit Set September 2003
----------------------------------------------------------------
Trial in the class action filed against Hallwood Realty LLC is
set for September 2, 2003 in the Court of Chancery of the State
of Delaware. The suit was filed against the Company, its
directors and Hallwood Realty Partners, LP (HRP) as nominal
defendant by three purported unitholders of the Company.
The action asserts that in allegedly refusing to consider the
High River tender offer, the defendants are not acting in good
faith and are deriving an improper personal benefit in impeding
a potential removal of the Company or a sale of control of HRP,
in breach of their fiduciary duties under the partnership
agreement. The action further asserts that HRP's Schedule 14D-9
issued in response to the High River tender offer fails to
disclose material information relating to the Company's
recommendation regarding the offer.
The complaint seeks as relief an order requiring the Company to
consider the High River tender offer, an order preventing the
General Partner or its affiliates from acquiring units or
otherwise improperly entrenching the General Partner or impeding
a transaction that would maximize value for the public
unitholders, an order directing the defendants to use the Rights
Plan fairly and disclose all material information in connection
with the tender offer and the General Partner's recommendations
and conclusions with respect thereto, and damages. This matter
has been coordinated with the High River case and is therefore
also scheduled for trial on September 2, 2003.
HERTZ CORPORATION: Travel Agencies Launch Antitrust Suit in CA
--------------------------------------------------------------
The Hertz Corporation faces a class action filed in the Superior
Court of California, for the County of San Diego. The suit also
names as defendants:
(1) Avis Rent A Car System, Inc.,
(2) Budget Rent A Car System, Inc.,
(3) Dollar Rent A Car, Inc.,
(4) Enterprise Rent-A-Car Company,
(5) The Hertz Corporation, and
(6) Thrifty Rent-A-Car System, Inc.
The suit purports to be a class action on behalf of certain
United States travel agents and agencies that regularly book
customers with the major rental car companies. The complaint
alleges that the defendant rental car companies breached their
unwritten contracts with the plaintiffs by knowingly and
deliberately under-reporting and underpaying the commissions due
to the plaintiffs, that in so doing the defendants engaged in
deceit and that the defendants engaged in unfair competition by
deducting processing fees or other administrative fees from
payments they make to travel agents.
HERTZ CORPORATION: Consumers Lodge IL Suit Over Service Charges
---------------------------------------------------------------
The Hertz Corporation faces a class action filed in the Circuit
Court, Twentieth Judicial Circuit, in St. Clair County, Illinois
on behalf of all persons in the United States who rented from
the Company (other than persons who rented in California) and
incurred the Company's fuel and service charge.
The complaint alleges that the fuel and service charges paid by
the members of the purported class are unlawful penalties. The
Company has not yet filed an answer to the complaint.
HSBC USA: PA Court Dismisses Suit For Securities Act Violations
---------------------------------------------------------------
The United States District Court for the Eastern District of
Pennsylvania dismissed a class action filed against HSBC USA,
Inc. on behalf of former shareholders of Republic New York
Corporation (Republic) who acquired common stock between May 10,
1999 (when the signing of the merger agreement between Republic
and the Company was announced) and September 15, 1999.
On January 16, 2003, the court denied plaintiff's motion for
class certification and also denied a motion by the plaintiff to
provide notice to the proposed class that the named plaintiff
wished to withdraw from the case. The court required
plaintiff's counsel to provide a substitute plaintiff by
February 15, 2003. When plaintiff's counsel failed to do so,
the Company moved to dismiss for this and other reasons.
Plaintiff's counsel then agreed to stipulate to dismiss the
action with prejudice; and the court entered an order to that
effect on April 7, 2003.
LOOKSMART LTD.: Plaintiffs Serve Document Requests in CA Lawsuit
----------------------------------------------------------------
Plaintiffs have served document and deposition requests in the
consolidated class action filed against Looksmart Ltd. in
Superior Court in San Francisco County, California.
The complaint alleged breach of contract, unfair business
practices and false advertising in connection with the launch of
the Company's new Small Business Listings product announced in
April 2002. The complaint sought restitution, unspecified
compensatory damages, injunctive relief and attorneys' fees.
In November 2002, the Company filed a motion to dismiss the
claims in the amended complaint. The court denied the motion in
January 2003. The Company filed an answer to the amended
complaint in January 2003. No other discovery is being sought at
this time.
MEDCO HEALTH: Fairness Hearing For ERISA Suit Set December 2003
---------------------------------------------------------------
Fairness hearing for the settlement of the class actions filed
against Medco Health Solutions, Inc. and Merck & Co., Inc. is
set for December 11,2003.
Plaintiffs from six pharmaceutical plans for which the
defendants are the pharmacy benefit managers (PBM) filed the
suit, alleging that the Company is a fiduciary under the
Employee Retirement Income Security Act (ERISA), and that the
defendants breached fiduciary obligations under ERISA in
connection with the Company's development and implementation of
formularies, preferred drug listings and intervention programs.
In particular, the plaintiffs contend that in accepting and
retaining various rebates the defendants failed to make adequate
disclosure and have acted in their own best interest and against
the interests of their clients.
The plaintiffs also allege that the Company was wrongly used to
increase Merck's market share, claiming that under ERISA the
Company's drug formulary choices and therapeutic interchange
programs were "prohibited transactions" that favor Merck's
products. The plaintiffs have demanded that the Company and
Merck turn over any unlawfully obtained profits to a trust to be
set up for the benefit plans.
Although none has done so to date, some of the plaintiffs have
indicated that they may amend their complaints against the
defendants and others to allege violations of the Sherman Act,
the Clayton Act and various states' antitrust laws due to
alleged conspiracies to suppress price competition and unlawful
combinations allegedly resulting in higher pharmaceutical
prices.
In December 2002, Merck and the Company agreed to settle this
series of lawsuits on a class action basis to avoid the
significant cost and distraction of protracted litigation. The
Company, Merck and the plaintiffs in five of these six cases
filed a proposed class action settlement with the court.
On June 12, 2003, the settling parties filed an amended
settlement agreement and supporting documents with the court and
requested that the court grant preliminary approval to the
settlement. Under the proposed settlement, as amended, Merck
and the Company have agreed to pay $42.5 million and have agreed
to change or to continue certain specified business practices
for a period of five years.
The proposed settlement would resolve litigation by plans
against Medco Health and Merck based on ERISA and similar
claims, except with respect to those plans that affirmatively
opt out of the settlement. It does not involve the release of
any potential antitrust claims.
The release of claims under the settlement would cover the
period from December 17, 1994 to the date the settlement
receives final approval. The financial compensation discussed
above is intended to benefit the ERISA plans for which the
Company administered a pharmacy benefit at any time during that
time period.
On July 31, 2003, the court granted preliminary approval to the
settlement. The class member plans will have the opportunity to
participate in or opt out of the settlement. The court has
scheduled a hearing to occur on December 11, 2003, for the
purpose of determining, among other things, whether the
settlement should be finally approved. The settlement becomes
final only if and when the court grants final approval and all
appeals have been exhausted. One of the initial plaintiffs in
these lawsuits is expected to oppose the settlement.
Similar complaints against the Company and Merck have been filed
in eight additional actions by ERISA plan participants,
purportedly on behalf of their plans and, in some of the
actions, similarly situated self-funded plans. The complaints
in these actions rely on many of the same theories as the
litigation discussed above. The plans themselves, which could
decide to opt out of or participate in the proposed settlement
discussed above, are not parties to these lawsuits.
In addition, a proposed class action complaint against Merck and
the Company has been filed by trustees of another benefit plan
in the US District Court for the Northern District of
California. The plaintiffs in these actions are expected to
oppose the proposed settlement discussed above.
MICROSOFT CORPORATION: EU To Ask For Stricter Antitrust Measures
----------------------------------------------------------------
The European Union is set to ask for concessions from Microsoft
Corporation, after it charged the software giant with trying to
monopolize new markets, even after settling its landmark
antitrust case in the United States, the Associated Press
reports.
The European Commission revealed that recent surveys of more
than 150 businesses that use Microsoft products showed that
"Microsoft's abuses are still ongoing." The Company allegedly
used the "overwhelmingly dominant position" Windows enjoys on
personal computers to help it gain a lot of share in the
expanding low-end server market. The Company allegedly designed
Windows to work better with its own server software than rivals,
giving it an unfair advantage.
The EU antitrust watchdog also asserted that by building Media
Player into Windows, the Company is outwitting rivals such as
Apple Computer and RealNetworks, who make Quicktime and Real
Player, respectively. These software play digital video, clips,
music and Internet radio. The survey further revealed that the
"ubiquity" of Microsoft's Media Player weakens competition and
"stifles product innovation and ultimately reduces consumer
choice."
One industry executive familiar with the EU investigation told
AP that the EU determined that online publishers are
increasingly embracing Microsoft's proprietary data formats
because Media Player is already built into most recent versions
of the Windows operating system.
The EU intends to ask the Company to offer a Windows version
without the Media Player or include rival players with Windows,
and to disclose more of its software code so its rivals in the
server market could design products that would work as
seamlessly with Windows as Media Player.
"We have reserved the possibility to levy fines," EU spokesman
Tilman Lueder told AP. The fine could go up to 10 percent of
violator's sales - a figure that could reach into the billions
for Microsoft.
"We have so much material now and we have such a strong case,
that from our perspective the legal and factual analysis is
complete and allows us to adopt a final decision," Mr. Lueder
said of the EU's nearly four-year investigation. The EU will
wait for Microsoft's response, which is due by the end of
September.
Microsoft spokeswoman Tiffany Steckler in Paris called the EU
action "unfortunate" and refused to comment on whether the
company would make concessions, the Associated Press reports.
"We will of course respond to the statement of objections . and
continue to focus our efforts on finding a positive resolution,"
Ms. Steckler said.
The Company asserted that the settlement it forged in the US
last year and the steps it has taken voluntarily already answer
the EU charges. Under the settlement, the Company agreed to
disclose part of its software code to rivals and to allow
computer makers to hide icons for some Windows applications, a
move that would boost exposure of competing software.
The Company's rivals have expressed dissatisfaction with the
moves and have asked the EU to demand more. "The people working
on this at the EC get it," Dave Stewart, deputy general counsel
for Seattle-based RealNetworks, who said Real provided
information for the EU probe told AP. "They understand the
importance of these markets and the importance of protecting
competition."
NEW JERSEY: Court Upholds Aid Cap For Children Born On Welfare
--------------------------------------------------------------
The New Jersey Supreme Court, in a five to zero decision, upheld
a 10-year-old law on Monday, that denies additional welfare
benefits to women who have more children while on welfare, The
Record (NJ) reports.
The High Court's decision terminated the six-year effort by an
unusual alliance of opponents to the family cap, who were trying
to get the provision struck down as unconstitutional. The so-
called family cap, which was widely copied by other states and
which was incorporated into the landmark federal welfare reform
of 1996, represented but a small piece of the state's own
welfare overhaul.
Under the welfare law, a family with one child receives $322 a
month and a family with two children receives $424 a month.
However, the grant stayed at $323 if a second child was born
while the family was on welfare. However, the newborn was still
eligible for Medicaid and food stamp benefits. Moreover the aid
cap did not apply to children born on welfare as a result of
rape or incest.
Controversy over the cap has overshadowed all other provisions
of Work First New Jersey, the state's welfare reform law, signed
by Governor James Florio in 1992. It sparked a national debate
over how aggressive government can be in reducing the size of
its welfare rolls.
Advocates for the poor argued that the law unconstitutionally
interfered with a woman's private decisions on childbearing, and
that it penalized families who already were struggling. In
1997, the American Civil Liberties Union filed a class action on
behalf of welfare recipients, claiming the law violated the
state constitution's privacy and equal protection provisions.
Pro-life groups, such as the New Jersey Catholic Conference,
opposed the law, fearing that it would encourage women to have
abortions once they realized they would not be given extra money
for the child. These groups, however, were not part of the
lawsuit.
The court said the law did little more than subject welfare
families to similar standards as working families, who do not
receive automatic salary increases after the birth of a new
child.
"Indeed, the family cap appears to do no more than place welfare
families on par with working families," Chief Justice Deborah T.
Poritz wrote in the unanimous decision, citing federal court
cases that have ruled similarly on the same issue. In upholding
a lower court decision, the justices also ruled that while women
do have the right to give birth, the government is not obligated
to subsidize those decisions to have children.
Also, they said the Work First law is designed to encourage
people to find long-term jobs and free themselves of the welfare
system entirely. It is not clear, however, exactly what effects
the law has had on the welfare population since it took effect
in August 1993.
Since that date, approximately 43,200 children have been born to
welfare recipients who did not receive an increase in benefits
after the new birth; over the years, that has amounted to an
estimated $47.1 million in savings to the state, which diverted
that money toward other Work First programs such as job training
and child care, said Edwar Rogan, a spokesman for the Department
of Human Services.
A study released by Rutgers University in 1998, ended up
generating more fuel for opponents of the law, because the study
showed that while birthrates bell among women on welfare, the
number of abortions among those women went up during the period
covered by the study, 1992 to 1996. The pro-life groups had
opposed the law for just this reason - they feared it would
encourage women to have abortions once they realized they would
not be given additional funds for the child.
New Jersey was the first state in the country to adopt the
family cap. Twenty-two other states have enacted similar
measures since then, and federal courts also have upheld such
laws as constitutional. With the ruling by New Jersey's highest
court, opponents of the law appear to have exhausted all efforts
to fight it in this state.
Associate Justices Peter Verniero and Jaynee LaVecchia did not
participate in the ruling.
NICOR GAS: Settling Lawsuits Over Mercury-Containing Regulators
----------------------------------------------------------------
Nicor Gas Company is in the process of settling several private
lawsuits, all in the Circuit Courts of Cook and DuPage Counties,
Illinois, claiming a variety of unquantified damages (including
bodily injury, property and punitive damages) allegedly caused
by mercury-containing regulators.
Under the terms of a class action settlement, the Company will
continue, until 2006, to provide medical screening to persons
exposed to mercury from its equipment, and will use its best
efforts to replace any remaining inside residential mercury
regulators by 2005.
The class action settlement permitted class members to "opt out"
of the settlement and pursue their claims individually.
Approximately 160 households have opted out of the class. Of
those, 45 households had traces of mercury, and Nicor Gas has
settled with seven households.
The Company had remaining an estimated liability of $22.6
million, representing management's best estimate of future
costs, including potential liabilities relating to remaining
lawsuits, based on an evaluation of currently available
information. Actual costs may vary from this estimate. The
company will continue to reassess its estimated obligation and
will record any necessary adjustment, which could be material to
operating results in the period recorded.
OXFORD HEALTH: NY Court Grants Approval to Securities Settlement
----------------------------------------------------------------
The United States District Court for the Southern District of
New York granted final approval to a settlement proposed by
Oxford Health Plans, Inc. to settle a consolidated class action
filed following the October 27, 1997 decline in the price per
share of the Company's common stock. The suit names as
defendants the Company, certain of its officers and directors,
and its former independent auditor, KPMG LLP.
On March 3, 2003, the Company agreed with the plaintiffs to
settle the suit for $225 million. In connection with the
settlement, the Company incurred an additional pretax charge of
$45 million, net of insurance recoverable, in the first quarter
of 2003, which charge, along with prior charges, fully covers
all of the Company's expenses relating to the settlement, and
related legal fees and expenses.
The excess insurance carriers responsible for the first $25
million under the Company's $200 million Excess Insurance
policies contributed $25 million to the Settlement, but the
other carriers under the policies refused to contribute to
the Settlement.
Accordingly, the Company paid $200 million of the Settlement
and paid the Excess Insurance carriers an additional premium of
$8 million. Also, in connection with the Settlement:
(1) plaintiffs settled the class' claims against KPMG LLP
for $75 million and
(2) a derivative shareholder action against KPMG LLP in the
name of the Company pending in state court was
dismissed with prejudice.
RENT-A-CENTER INC.: NY Court Hears Orders on Suit Certification
---------------------------------------------------------------
New York state court held a hearing over plaintiffs' orders in
the class action filed against Rent-A-Center, Inc. and Thorn
Americas, which it acquired.
The plaintiff acknowledges that rent-to-own transactions in New
York are subject to the provisions of New York's Rental Purchase
Statute but contends the Rental Purchase Statute does not
provide Thorn Americas immunity from suit for other statutory
violations. The plaintiff alleges Thorn Americas has a duty to
disclose effective interest under New York consumer protection
laws, and seek damages and injunctive relief for Thorn Americas'
failure to do so. This suit also alleges violations relating
to:
(1) excessive and unconscionable pricing,
(2) late fees,
(3) harassment,
(4) undisclosed charges, and
(5) the ease of use and accuracy of its payment records
In the prayer for relief, the plaintiff requested class
certification, injunctive relief requiring Thorn Americas to
cease certain marketing practices and price their rental
purchase contracts in certain ways, unspecified compensatory and
punitive damages, rescission of the class members contracts, an
order placing in trust all moneys received by Thorn Americas in
connection with the rental of merchandise during the class
period, treble damages, attorney's fees, filing fees and costs
of suit, pre- and post-judgment interest, and any further relief
granted by the court. The plaintiff has not alleged a specific
monetary amount with respect to the request for damages.
The proposed class includes all New York residents who were
party to the Company's rent-to-own contracts from November 26,
1994. In November 2000, following interlocutory appeal by both
parties from the denial of cross-motions for summary judgment,
the Company obtained a favorable ruling from the Appellate
Division of the State of New York, dismissing the plaintiff's
claims based on the alleged failure to disclose an effective
interest rate. The plaintiff's other claims were not dismissed.
The plaintiff moved to certify a state-wide class in December
2000. The plaintiff's class certification motion was heard by
the court on November 7, 2001 and, on September 12, 2002, the
court issued an opinion denying in part and granting in part the
plaintiff's requested certification. The opinion grants
certification as to all of the plaintiff's claims except the
plaintiff's pricing claims pursuant to the Rental Purchase
Statute, as to which certification was denied.
The parties have differing views as to the effect of the court's
opinion, and accordingly, the court granted the parties
permission to submit competing orders as to the effect of the
opinion on the plaintiff's specific claims. Both proposed
orders were submitted to the court on March 27, 2003.
No order has yet been entered by the court. Regardless of the
determination of the final certification order by the court, the
Company intends to pursue an interlocutory appeal of the court's
certification order.
The Company believes these claims are without merit.
RENT-A-CENTER INC.: TX Court Mulls Dismissal of Securities Suit
---------------------------------------------------------------
The United States District Court in Texarkana, Texas heard
motions for dismissal of a class action filed against Rent-A-
Center, Inc. and certain of its current and former officers and
directors by Terry Walker.
The complaint alleges that the defendants violated Sections
10(b) and/or Section 20(a) of the Securities Exchange Act and
Rule 10b-5 promulgated thereunder by issuing false and
misleading statements and omitting material facts regarding its
financial performance and prospects for the third and fourth
quarters of 2001. The complaint purports to be brought on
behalf of all purchasers of the Company's common stock from
April 25, 2001 through October 8, 2001 and seeks damages in
unspecified amounts.
On November 25, 2002, the lead plaintiffs in the Walker matter
filed an amended consolidated complaint which added certain of
the Company's outside directors as defendants to the Exchange
Act claims. The amended complaint also added claims that the
Company, and certain of its current and former officers and
directors, violated various provisions of the Securities Act as
a result of alleged misrepresentations and omissions in
connection with an offering in May 2001 and also added the
managing underwriters in that offering as defendants.
On February 7, 2003, the Company, along with certain officer and
director defendants, filed a motion to dismiss the matter as
well as a motion to transfer venue. In addition, the Company's
outside directors named in the matter separately filed a motion
to dismiss the Securities Act claims on statute of limitations
grounds. On February 19, 2003, the underwriter defendants also
filed a motion to dismiss the matter. A hearing was held by the
court on June 26, 2003 to hear each of these motions. No
decision has yet been entered by the court.
RENT-A-CENTER INC.: Oral Arguments in Consumer Suit Held in PA
--------------------------------------------------------------
Oral arguments in the appeal of the dismissal of a class action
filed against Rent-A-Center, Inc. were held in the Superior
Court of Pennsylvania. The suit seeks relief on behalf of a
class of customers in Pennsylvania, and charges that the Company
violated the Pennsylvania Goods and Services Installment Sales
Act and the Pennsylvania Unfair Trade Practices and Consumer
Protection Law.
The amended complaint asserts that the rental purchase
transactions are, in fact, retail installment sales
transactions, and as such, are not governed by the Pennsylvania
Rental-Purchase Agreement Act, which was enacted after the
adoption of the Pennsylvania Goods and Services Installment
Sales Act and the Pennsylvania Unfair Trade Practices Act. The
suit seeks class-wide remedies, including injunctive relief,
unspecified statutory, actual and treble damages, as well as
attorney's fees and costs.
In July 2002, the Company filed preliminary objections to the
complaint in Griffin. On December 13, 2002, the court granted
the preliminary objections and dismissed the plaintiffs' claims.
On January 6, 2003, the plaintiffs filed a notice of appeal.
The plaintiffs' appeal brief was filed on May 9, 2003 and the
Company subsequently filed its response brief. No decision has
yet been entered by the Court.
RENT-A-CENTER INC.: Summary Judgment Denied for OR Overtime Suit
----------------------------------------------------------------
The Multnomah County Court in Oregon denied plaintiffs' motion
for summary judgment in the class action filed against Rent-A-
Center, Inc. alleging violations of Oregon state law regarding
overtime, lunch and work breaks and failure to timely pay all
wages due the Company's Oregon employees, as well as contract
claims that the Company promised but failed to pay overtime.
The suit seeks to represent a class of all present and former
executive assistants, inside/outside managers and account
managers employed by the Company within the six year period
prior to the filing of the complaint as to the contract claims,
and three years as to the statutory claims, and seeks class
certification, payments for all unpaid wages under Oregon law,
statutory and civil penalties, costs and disbursements, pre- and
post-judgment interest in the amount of 9% per annum and
attorneys fees. As of June 30, 2003, the Company operated 20
stores in Oregon.
On July 25, 2002, the plaintiffs filed a motion for class
certification and on July 31, 2002, the Company filed its motion
for summary judgment. On January 15, 2003, the court orally
granted the Company's motion for summary judgment in part,
ruling that the plaintiffs were prevented from recovering
overtime payments at the rate of "time and a half," but stated
that the plaintiffs may recover "straight-time" to the extent
plaintiffs could prove purported class members worked in excess
of forty hours in a work week but were not paid for such time
worked.
The court denied the Company's motion for summary judgment on
the remaining claims and granted plaintiff's motion for class
certification with respect to the remaining claims. The Company
strongly disagrees with the court's rulings against its
positions and have requested that the court grant it
interlocutory appeal on those matters. The Company's request
for interlocutory appeal is currently pending before the court.
The plaintiffs filed a motion for summary judgment seeking to
resolve certain factual issues related to the purported class,
which was denied on July 1, 2003. Although the Company believes
the claims remaining in this case are without merit, it cannot
give any assurance that it will be found to have no liability in
this matter.
RENT-A-CENTER INC.: Overtime Wage Suits Pending in WA, CA Courts
----------------------------------------------------------------
Rent-A-Center, Inc. faces overtime wage suits filed in Clark
County, Washington (Kevin Rose, et al. v. Rent-A-Center, Inc.,
et al.) and in Los Angeles, California (Jeremy Burdusis, et al.
v. Rent-A-Center, Inc., et al. and Israel French, et al. v.
Rent-A-Center, Inc.).
The suits allege similar violations of the wage and hour laws of
those respective states. As of June 30, 2003, the Company
operated 41 stores in Washington and 151 stores in California.
On March 24, 2003, the Burdusis court denied the plaintiffs'
motion for class certification in that case, which the Company
views as a favorable development in that proceeding. On April
25, 2003, the plaintiffs in Burdusis filed a notice of appeal of
that ruling, and on May 8, 2003, the Burdusis court, at the
Company's request, stayed further proceedings in Burdusis and
French pending the resolution on appeal of the court's denial of
class certification in Burdusis. The Burdusis and French
proceedings are pending before the same judge in California.
On May 14, 2003, the Rose court denied the plaintiffs' motion
for class certification in that case, which the Company views as
a favorable development in that proceeding. On June 3, 2003,
the plaintiffs in Rose filed a notice of appeal.
Although the wage and hour laws and class certification
procedures of Oregon, Washington and California contain certain
differences that could cause differences in the outcome of the
pending litigation in these states, the Company believes the
claims of the purported classes involved in each are without
merit.
TEXTRON FINANCIAL: Court Refuses To Dismiss Credit Facility Suit
----------------------------------------------------------------
The class action filed against Textron Financial Corporation and
Litchfield Financial Corporation is proceeding after federal
court refused to dismiss it.
The suit was filed after the United States Department of Justice
(DOJ) authorized the filing of a civil action against the two
companies and other third parties in March 2003, arising from
the financing of certain land purchases by consumers through a
third-party land developer.
While the Company believes that it has good defenses to any
Government or potential consumer litigation, it entered into
settlement discussions with the DOJ during the second quarter of
2003 to resolve the entire matter. While the outcome of the
settlement discussions with the DOJ is uncertain at this time,
the Company believes that it is reasonably possible that this
matter will be resolved for less than $5 million.
The suit arises out of Litchfield's extension of credit
facilities to a third party. The plaintiffs in the class action
are seeking compensatory and punitive damages in excess of $20
million from all the defendants.
On July 16, 2003, the Company's motion to dismiss certain counts
within the class action was denied and the judge entered a
preliminary ruling against the Company. The Company is
aggressively defending this litigation and believes that a
substantial part of any settlement or judgment would be covered
by insurance. The Company is not able to predict the outcome of
this action at this time.
TEXTRON INC.: Plaintiffs Appeal Dismissal of ERISA Lawsuit in RI
----------------------------------------------------------------
Plaintiffs appealed the dismissal of the consolidated class
action filed against Textron, Inc. on behalf of the Company's
benefit plans and participants and beneficiaries of those plans
during 2000 and 2001, filed in 2002 in the United States
District Court in Rhode Island.
The suit names as defendants the Company, the Textron Savings
Plan and the Plan's trustee. The consolidated amended complaint
alleges breach of certain fiduciary duties under the Employee
Retirement Income Security Act (ERISA), based on the amount of
Plan assets invested in Textron stock during 2000 and 2001.
Textron's motion to dismiss the consolidated amended complaint
was granted on June 24, 2003. Plaintiffs filed a notice of
appeal of the dismissal with the US Court of Appeals for the
First Circuit.
TOM BROWN: Faces Lawsuit Over Gas Royalties in WY State Court
-------------------------------------------------------------
Tom Brown, Inc. faces a class action filed in Sweetwater County
Court in Wyoming by three overriding royalty interest owners on
behalf of all non-governmental entities that are paid royalties
or overriding royalties by the Company in Wyoming.
This action is one of more than a dozen virtually identical
class action lawsuits filed in various Wyoming courts against
producers and operators in Wyoming. The complaint alleges that
the Company violated the Wyoming Royalty Payment Act by
improperly deducting gas transportation costs in calculating
royalties and overriding royalties on Wyoming production and by
failing to properly itemize all deductions taken on its payee
reports. The complaint does not allege specific money damages.
The issue in the case is whether transportation of natural gas
off the lease to market is deductible transportation or
nondeductible gathering within the meaning of the Act.
In January 2003, the Wyoming Supreme Court agreed to answer two
certified questions in a separate lawsuit, which are:
(1) what is meant by the term "gathering" as that term is
employed in the Act in defining nondeductible "costs of
production," and
(2) when do the causes of action for recovery of the
reporting penalty and for improper deductions under the
Act accrue.
Because of the preliminary nature of these proceedings, it is
not possible to fully determine the ultimate loss exposure or
probable outcome of this litigation.
W.R. GRACE: Pretrial Hearing For ZAI Suits Set September 2003
-------------------------------------------------------------
Pretrial hearings for class actions against W.R. Grace & Co.
over homes containing Zonolite attic insulation (ZAI) is set for
September 2003 in US Bankruptcy Court.
The suits were filed in 2000 and 2001 on behalf of owners of
homes containing ZAI. These cases seek damages and equitable
relief, including the removal, replacement and/or disposal of
all such insulation.
The plaintiffs assert that this product is in millions of homes
throughout the US and that the cost of removal could be several
thousand dollars per home. As a result of the filing, these
cases have been transferred to the US Bankruptcy Court.
Based on the Company's investigation of the claims described in
these lawsuits, and testing and analysis of this product by the
Company and others, the Company believes that the product was
and continues to be safe for its intended purpose and poses
little or no threat to human health. At this time, Grace is not
able to assess the extent of any possible liability related to
this matter.
In July 2002, the Bankruptcy Court approved special counsel to
represent the ZAI claimants, at the Debtors' expense, in a
proceeding to determine certain threshold scientific issues
regarding ZAI.
WASTE MANAGEMENT: TX Court Grants Approval To Securities Pact
-------------------------------------------------------------
The United States District Court for the Eastern District of
Texas approved the settlement of a class action filed against
Waste Management, Inc. arising from events related to its
earnings announcements in July and August of 1999.
On November 7, 2001, the Company announced that it had reached a
settlement agreement with the plaintiff in this case, resolving
all claims against it as well as claims against its current and
former officers and directors.
The agreement provides for a payment of $457 million to members
of the class and for the Company to consent, for settlement
purposes, to the certification of a class of purchasers or
acquirers of its securities from June 11, 1998 through November
9, 1999. The payment provided for by the settlement agreement,
including interest accrued at the Federal Funds rate, is
included in the accompanying condensed consolidated balance
sheets as a component of accrued liabilities.
A hearing was held April 29, 2002 at which the settlement was
approved. A former participant in WM Holdings ERISA plans filed
an appeal of both the final ruling and related motions on March
27, 2003. That appeal has now been conditionally remanded back
to the trial court where a settlement among plaintiffs' counsel
and the appellant was approved by the court.
This settlement requires no additional commitment from the
Company. If no appeal is made after this most recent trial
court approval, the case will be final and payment will be due
in September.
This former participant and another individual also filed a
separate case in Washington, D.C. against the Company and
others, attempting to increase the recovery of a class of ERISA
plan participants based on allegations related to both the
events alleged in, and the settlements relating to, the class
action against WM Holdings that was settled in 1998 and the
complaint in this action. This D.C. case has been stayed
pending finalization of the class action settlement.
Asbestos Alert
ASBESTOS LITIGATION: Court Approves Asbestos Settlement Package
---------------------------------------------------------------
ABB Ltd. celebrates as the settlement package to resolve all
asbestos claims against Combustion Engineering worth
$1,300,000,000 gets an approval. US District Judge Alfred M.
Wolin, in Newark, N.J., said that he would ink the approval of
the company's recovery plan, which will settle 130,000 lawsuits
over asbestos exposure from boilers made by Combustion
Engineering from the 1930s to the 1960s.
"The plan is fair," Judge Wolin said. "It will treat present
and future claimants equally."
ABB Chief Executive Officer Juergen Dormann has said that
settling suits against the Zurich-based company will speed the
sale of its oil-equipment business. According to a report from
the Hartford Courant, ABB, which has had $1,500,000,000 in
annual losses since 2001, is seeking buyers for units to cut its
debt of $8,200,000,000 by a fifth this year.
An attorney for ABB, David Bernick, said 111,000 plaintiffs in
those suits have approved the pact. "Each and every
constituency has taken full advantage of the negotiation
process. Everybody had an opportunity," Mr. Bernick said.
"ABB is very delighted with the strong and positive ruling,"
company spokesman Thomas Schmidt said. "The judge has confirmed
the plan for Combustion Engineering and all related companies in
every aspect. It covers the ABB Group in every relevant
respect."
The Combustion Engineering settlement, approved earlier this
month by a bankruptcy judge in Delaware, was opposed by a group
of 280 individual plaintiffs, as well as insurers that are
expected to pay into a trust to cover asbestos claims. The
insurers contend that ABB's decision to cut them out of the
negotiation process might invalidate the company's policies.
"This plan leaves a mess," said Eric Brunstad, an attorney with
Travelers Life & Annuity, a unit of Citigroup Inc. "What it
does is basically just get ABB off the hook."
Opponents of the plan said the settlement does not provide
adequate protection from future suits against ABB's Lummus
refinery unit, which already faces 8,000 asbestos claims.
Critics also said current claimants were offered more money in
return for voting in favor of the recovery plan. Future
claimants will get less, opponents of the plan said.
Judge Wolin rejected the assertion that future claimants would
suffer, but he said he was concerned about the voting process.
"The public deserves better" than to have the process tainted by
accusations of bribes, he said. "It's not a perfect plan . The
court is not enamored with the process."
ASBESTOS LITIGATION: Asbestos Claims Continue to Haunt GP
---------------------------------------------------------
Georgia Pacific reports that as of the second quarter, 29,500
asbestos-related claims have been filed against the company.
The Atlanta-based pulp and paper products company reveals that
it has resolved 31,200 claims as of their latest filing with the
Securities and Exchange Commission. However, unresolved claims
stood at 67,100 at the midway point of 2003, compared with
64,400 unresolved halfway through 2002. The increase in the
number of claims filed against the company is blamed largely on
the higher rate of filings in Mississippi due to impending
changes to the state's tort law. The same is expected to happen
in Texas. Last year, there were 41,700 claims were filed
against the company, 35,100 were resolved and 68,800 were
unresolved.
The suits allege a variety of lung and other diseases based on
alleged exposure to Georgia-Pacific products. The company
claims in the filing that in many cases, the plaintiffs are
unable to demonstrate that they have suffered any compensable
loss as a result of their exposure, or that any injuries they
have incurred did in fact result from exposure to the company's
products, according to a report from the Atlanta Business
Chronicle.
Georgia-Pacific said it is unable to provide any meaningful
disclosure about the total amount of these damages because:
"First, we do not track this data in any form since we do not
consider the amount of damages, if any, alleged in the initial
complaint relevant in assessing our exposure to asbestos
liabilities.
"Second, we previously reviewed this issue and estimated that
only a small percentage of the claims then pending against us
contained any specific demand for damages, as opposed to a
general demand for damages as the plaintiff may prove at trial,
or a demand which was stated as being in excess of the minimum
jurisdictional limit of a particular court," the Company
asserted.
"Third, even those complaints which did contain a specific
damage demand nearly always involved multiple defendants
(anywhere from 30 to over 100), most of which never manufactured
joint systems products. As part of that prior review (which we
have not updated), we did not identify any complaint, which
stated a specific demand for money damages solely from us," it
continued. "Finally, even for claims which allege specific
damages, plaintiffs' lawyers often allege the same amount of
damages regardless of the specific disease a plaintiff may have.
In addition, in many cases no specific disease is alleged, and
thus the damages alleged are meaningless because the ultimate
settlement value of any claim is significantly influenced by the
actual disease the plaintiff is able to prove."
ASBESTOS LITIGATION: Hartford Posts $888M Loss, Blames Asbestos
---------------------------------------------------------------
Hartford Accident and Indemnity Company reports a net loss of
$888,000,000 as a result of the first quarter increase in
asbestos reserves as it continues to receive asbestos-related
claims.
In its latest filing with the Securities and Exchange
Commission, Hartford A and I reports that is has issued primary
general liability policies to MacArthur Company and its
subsidiary, Western MacArthur Company, during the period 1967 to
1976. MacArthur sought coverage for asbestos-related claims
from Hartford A and I under these policies beginning in 1978.
During the period between 1978 and 1987, Hartford A and I paid
its full aggregate limits under these policies plus defense
costs. In 1987, Hartford A and I notified MacArthur that its
available limits under these policies had been exhausted, and
MacArthur ceased submitting claims to Hartford A&I under these
policies.
On October 3, 2000, thirteen years after it had accepted
Hartford A and I's notice of exhaustion, MacArthur filed an
action against Hartford A&I and another insurer in the U.S.
District Court for the Eastern District of New York, seeking for
the first time additional coverage for asbestos bodily injury
claims under the Hartford A and I primary policies on the theory
that Hartford A and I had exhausted only its products aggregate
limit of liability, not separate limits MacArthur alleges to be
available for non-products liability.
The complaint sought a declaration of coverage and unquantified
damages. On March 28, 2003, the court dismissed this action
without prejudice on MacArthur's motion.
On June 3, 2002, The St. Paul Companies, Inc. announced a
settlement of a coverage action brought by MacArthur against
United States Fidelity and Guaranty Company, a subsidiary of St.
Paul. Under the settlement, St. Paul agreed to pay a total of
$975 to resolve its asbestos liability to MacArthur in
conjunction with a proposed bankruptcy petition and pre-packaged
plan of reorganization to be filed by MacArthur. USF&G provided
at least twelve years of primary general liability coverage to
MacArthur, but, unlike Hartford A&I, had denied coverage and had
refused to pay for defense or indemnity.
On October 7, 2002, MacArthur filed an action in the Superior
Court in Alameda County, California, against Hartford A&I and
two other insurers. As in the now-dismissed New York action,
MacArthur seeks a declaration of coverage and damages for
asbestos bodily injury claims. Four asbestos claimants who
allegedly have obtained default judgments against MacArthur also
are joined as plaintiffs; they seek to recover the amount of
their default judgments and additional damages directly from the
defendant insurers and assert a right to an accelerated trial.
On November 22, 2002, MacArthur filed a bankruptcy petition and
proposed plan of reorganization, which seeks to implement the
terms of its settlement with St. Paul. MacArthur's bankruptcy
filings indicate that in conjunction with plan confirmation it
will seek to have the full amount of its current and future
asbestos liability estimated in an amount substantially more
than the alleged liquidated but unpaid claims. If such an
estimation is made, MacArthur intends to ask the Alameda County
court to enter judgment against the insurers for the amount of
its total estimated liability, including unliquidated claims and
future demands, less the amount ultimately paid by St. Paul.
Hartford A&I has filed an adversary complaint in the MacArthur
bankruptcy seeking a declaratory judgment that any estimation
made in the bankruptcy proceedings is not an adjudication of
MacArthur's asbestos liability for purposes of insurance
coverage. A confirmation trial currently is scheduled to begin
November 10, 2003.
In a second amended complaint filed on July 21, 2003 in the
Alameda County action, following Hartford A and I's successful
demurrer to the first two complaints, MacArthur alleges that its
liability for liquidated but unpaid asbestos bodily injury
claims is $2.5 billion, of which more than $1.8 billion consists
of unpaid judgments. The ultimate amount of MacArthur's alleged
non-products asbestos liability, including any unresolved
present claims and future demands, is currently unknown.
Hartford A and I intends to defend the MacArthur action
vigorously. In the opinion of management, the ultimate outcome
is highly uncertain for many reasons. It is not yet known, for
example, whether Hartford A and I's defenses based on
MacArthur's long delay in asserting claims for further coverage
will be successful; how other significant coverage defenses will
be decided; or the extent to which the claims and default
judgments against MacArthur involve injury outside of the
products and completed operations hazard definitions of the
policies. In the opinion of management, an adverse outcome
could have a material adverse effect on the Company's results of
operations, financial condition and liquidity.
ASBESTOS LITIGATION: RHI Companies File Chapter 11 Plans in US
--------------------------------------------------------------
In early 2002, RHI initiated the split from all its refractory
companies in the USA due to asbestos-related problems. These
companies were deconsolidated at December 31, 2001, and RHI
successfully implemented the required capital restructuring.
As a result of the steps taken by the US management, North
American Refractories Co. and Global Industrial Technologies
Inc. with the core companies Harbison-Walker and A.P.Green have
been operating under Chapter 11 and reorganization proceedings
since 2002.
On Friday, the plans of reorganization for the North American
Refractories Co. and Global Industrial Technologies Inc. groups
were presented at the competent court in Pittsburgh. Thus
another important step has been taken towards completing the
Chapter 11 proceedings successfully.
The parties involved in the Chapter 11 proceedings, especially
the former owners of the refractories companies, the court in
Pittsburgh and RHI, are reviewing the legal and economic
implications of the plans. The scope and time at which RHI will
be able to realize contractual claims for payments against
parties involved will be determined in the course of this
review.
Objections against the presented plans of reorganization can be
lodged at court at any time until the confirmation hearing, the
final hearing to be set by the court. Due to the complexity of
the reorganization, the court review may take several months
before a date is set for the confirmation hearing. RHI
continues to be confident that the development and conclusion of
the Chapter 11 proceedings will not constitute a burden on the
company's financial performance and results.
ASBESTOS LITIGATION: Travelers Pleased with Asbestos Ruling
-----------------------------------------------------------
The panel in the confidential asbestos arbitration between
Travelers Property Casualty Corporation and ACandS, Inc. rules
that asbestos bodily injury claims paid by the latter on or
before July 31, are subject to Travelers' aggregate policy
limits.
The property and casualty insurer expects ACandS to demand
payment for 45 percent of its unpaid but purportedly settled
asbestos bodily injury claims that predate the arbitration
decision date. In its bankruptcy filings, ACandS has indicated
that the total value of these unpaid but supposedly settled
claims stands at around $2,800,000,000.
According to the Insurance Journal, Travelers claims to have
meritorious defenses to this potential ACandS claim, which could
eliminate or substantially reduce any obligation to ACandS for
the purported settlements. Travelers will continue to challenge
the amount and validity of these purported settlements in the
ACandS bankruptcy.
Among other defenses, Travelers believes the purported
settlements are not final and are unreasonable in amount. In
addition, in ACandS, Inc. v. Travelers Casualty and Surety Co.
(U.S. D. Ct., E.D. Pa), Travelers will continue to assert that
the occurrence limits in its policies eliminate or substantially
reduce any payment obligations it may have with respect to the
purportedly settled claims.
"We are pleased with the panel's decision on ACandS, which has
been our most significant potential non-products exposure," said
Robert I. Lipp, chairman and CEO.
Travelers is making no adjustment to its asbestos reserves as a
result of the ruling.
ASBESTOS ALERT: Three Companies to Pay $25K for Asbestos Case
-------------------------------------------------------------
The Environmental Protection Agency has settled an asbestos-
related case against Victoria Ward Ltd., Island Demo Inc., and
Coralco Corp. in Honolulu.
Victoria Ward, and the two other companies will pay $24,966 for
violations of the Clean Air Act regarding asbestos emissions,
disposal violations, and paperwork violations.
Victoria Ward hired Island Demo and its subcontractor Coralco to
remove ceiling materials from Club Laimu, in January of 2000.
The materials contained asbestos, and the next month a state
health inspector found asbestos-laden debris all over the club.
The inspector also found that the plan for removing the debris
had been worked out by an Island Demo employees with no asbestos
accreditation.
ASBESTOS ALERT: Ireland to Commence Suit V. Asbestos Claimants
--------------------------------------------------------------
The State of Ireland has taken steps to sue hundreds of workers
who filed claims for anxiety for asbestos exposure. According
to the Irish Times, the unprecedented move to recoup legal costs
from almost 500 workers is aimed at dispelling the perception
that the State is a "soft-touch" for compensation claims.
The decision follows a landmark Supreme Court judgment earlier
this year, which overturned a large compensation award given to
a worker who developed an "irrational fear" of contracting a
disease following exposure to asbestos in Leinster House. There
are hundreds of similar cases still outstanding against the
State from public sector workers who worked in buildings such as
Aras an Uachtarain, the National Gallery, the National Museum
and Hawkins House.
The State Claims Agency, which handles almost all personal
injury cases against the State, estimates that it has been
forced to spend an average of EUR 5,000, or EUR 2,300,000 in
total, on legal costs preparing for these cases. Government
sources say they hope the adversarial move will undo some of the
damage caused by what they describe as "copycat" cases, such as
the Army deafness claims, which have cost the State almost EUR
350,000,000.
Ciaran Breen, of the State Claims Agency, said the decision to
recover the costs would send out a strong signal. "The days
when claimants felt they could be speculative in relation to
suing the State are gone. Now, if you decide to sue the State
and lose, we will seek to recover those costs," Mr. Breen said.
The State will seek an order from the High Court in October
seeking permission to recoup legal costs from the asbestos
claimants. The Government had feared that it was facing another
major lawsuit following a series of successful legal cases over
exposure to asbestos.
However, the State successfully appealed a case in February this
year when a man was awarded more than GBP48,700 (EUR 61,800) for
exposure to asbestos dust while working in the basement of
Leinster House in the late 1980s.
In that decision, the Chief Justice, Justice Keane, said the law
should not be extended by the courts to allow plaintiffs to
recover damages for psychiatric injury "resulting from an
irrational fear of contracting a disease because of their
negligent exposure to health risks by their employers, where
their risk is characterized by their medical advisers as very
remote."
The vast majority of the asbestos cases against the State
involves alleged psychological damage and do not involve any
physical harm. The State Claims Agency has already written to
solicitors representing these clients. ESB workers, who say
they were exposed to asbestos, and some maintenance workers in
Iarnrod Eireann, whose train carriages were sprayed with
asbestos, have also lodged legal actions.
A total State liability of EUR 50 million had originally been
suggested, but this will be substantially reduced as a result of
the Supreme Court case. The Office of Public Works began an
asbestos removal program in all 6,000 State buildings five years
ago, but has yet to complete the task.
Asbestos was used widely as a lagging material and in cement
products because of its insulation and fire-protection
qualities. It becomes dangerous when its fibers are released
into the air and this can cause asbestosis and lung and chest
cancers. Some of these illnesses can take up to 30 years to
develop.
ASBESTOS ALERT: Property Owner to Pay $25,000 Asbestos Penalty
--------------------------------------------------------------
David L. Murphy has been ordered to pay a $25,000 penalty for
violating Massachusetts asbestos removal regulations. The
Massachusetts Department of Environmental Protection ordered
Murphy and the 49-51 Central Street Realty Trust to pay the
penalty.
The Leominster property owner allegedly violated numerous
regulations during the course of some asbestos removal work two
years ago, according to the DEP. A code enforcement inspector
for the Leominster Health Department reported the potential
asbestos removal problem to the DEP when during an inspection of
the property she discovered "unauthorized" individuals were
removing asbestos.
Ann Cramer, said, "You have to use a certified asbestos removal
company. That's very important."
Exposure to asbestos can result in a number of serious asbestos-
related diseases, the most serious of which is mesothelioma, a
particularly lethal form of lung cancer. "If you've ever seen
asbestos fibers, they look like quills," Ms. Cramer said. "Once
it's embedded inside your body, it can't expel it. Over time
you'll have any number of problems."
New Securities Fraud Cases
BARRICK GOLD: Wolf Haldenstein Lodges Securities Suit in S.D. NY
----------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP filed a class action
lawsuit in the United States District Court for the Southern
District of New York, on behalf of all persons who purchased or
otherwise acquired the securities of Barrick Gold Corporation
(NYSE: ABX) between February 14, 2002 and September 26, 2002,
inclusive, against the Company and certain officers of the
Company.
During the class period, Barrick sought to artificially inflate
its stock price by falsely and misleadingly assuring the markets
that its operations were improving considering that its
production costs were kept in check and that the Company had
expectations of earning between $0.42 and $0.47 per share in
2002, even allowing for the elimination of several mines and
declining ore quality (which increases costs) in several of its
mines.
Barrick falsely assured the market that its operations were
continuing as scheduled and the Company was well-positioned and
would profit from the steady increase in gold prices. The
complaint alleges that these representations were materially
false and misleading because they failed to disclose:
(1) that the Company's expected costs for the year would be
much greater than the figures displayed for the public;
(2) that Barrick's costs per ounce had increased
considerably in 2002 and would remain increasing during
the year;
(3) that these problems were not offset by the supposed
synergies from the Homestake acquisition sufficiently
to allow it to meet its earnings expectations; and
(4) that the Company's recurring assertions that production
and costs would remain improving in 2002 were lacking
in any realistic basis and were contradicted by facts
known to defendants, or, irresponsibly disregarded by
them.
On September 26, 2002, the Company announced that it anticipates
earnings materially less in 2002 than earlier announced,
stemming from increased costs due to production issues at
several mines (which, Barrick misleadingly represented
throughout the Class Period, would be resolved in the second
half of 2002).
Following the announcement, which came days after the Company
repeated its positive expectations, Barrick's stock decreased by
10.5% in one day, on extremely heavy trading volume.
For more details, contact Fred Taylor Isquith, Lawrence P.
Kolker, Michael J. Miske, George Peters, or Derek Behnke by
Mail: 270 Madison Avenue, New York, New York 10016, by Phone:
(800) 575-0735 by E-mail: classmember@whafh.com or visit the
firm's Website: http://www.whafh.com. All e-mail correspondence
should make reference to Barrick.
CREE INC.: Kaplan Fox Lodges Securities Fraud Lawsuit in M.D. NC
----------------------------------------------------------------
Kaplan Fox & Kilsheimer LLP initiated a securities class action
against Cree, Inc. (NASDAQ: CREE) and certain of its officers
and directors, in the United States District Court for the
Middle District of North Carolina. The suit is brought on
behalf of all persons or entities, other than defendants, who
purchased Cree common stock between August 19, 1998 and June 13,
2003, inclusive.
The complaint alleges that Cree and certain of its officers and
directors violated the federal securities laws. During the
class period, defendants issued statements that failed to
disclose and/or misrepresented the following adverse facts,
among others:
(1) that the Company had materially overstated its net
income and earnings per share;
(2) that the defendants artificially inflated Cree's
operating income by improperly recognizing revenue on
purported "sales" of Cree's silicon carbide crystals to
C3 Inc., an affiliated company of Cree that was run by
the brother of the company's former CEO;
(3) that the defendants failed to disclose, in Cree's
registration statements and its prospectuses, how
proceeds from its secondary offerings would be used;
(4) that the defendants artificially inflated Cree's
operating income so that they could participate in the
Company's "discretionary incentive program" and so that
the Company's outside directors would qualify for
additional Cree stock options;
(5) that the defendants were concealing these facts in
order to manipulate the Company's earnings so that
defendants could unload material amounts of their Cree
holdings for more than $68 million; and
(6) that the false and misleading information disseminated
by the defendants caused Cree's common stock to trade
at artificially inflated prices.
For more details, contact Robert N. Kaplan, Christine M. Fox by
Mail: 805 Third Avenue, 22nd Floor, New York, NY 10022 by Phone:
(800) 290-1952 or (212) 687-1980 by Fax: (212) 687-7714 or by E-
mail: mail@kaplanfox.com
CROMPTON CORPORATION: Ademi & O'Reilly Lodges CA Securities Suit
----------------------------------------------------------------
Ademi & O'Reilly, LLP initiated a securities class action in the
United States District Court for the Northern District of
California on behalf of purchasers of Crompton Corporation
(NYSE:CK) publicly traded securities, including former Crompton
& Knowles and Witco shareholders who exchanged their shares of
stock for CK Witco stock pursuant to the merger during the
period between October 26, 1998 and October 8, 2002.
The complaint charges Crompton and certain of its officers and
directors with violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934. Crompton manufactures and
markets a wide variety of polymer and specialty products. The
complaint alleges that during the Class Period, defendants
caused Crompton's shares to trade at artificially inflated
levels through the issuance of false and misleading financial
statements by:
(1) agreeing to charge prices at certain levels and
otherwise to fix, increase, maintain or stabilize
prices of rubber chemicals sold in the United States;
(2) selling rubber chemicals at the agreed upon prices; and
(3) inflating their profits via the above acts.
As a result, the Company's shares traded at inflated prices
enabling the Company to refinance its debt and consummate a
major acquisition using its inflated securities as currency.
For more details, contact Guri Ademi by Phone: 1-866-264-3995 or
1-414-482-8001 or by E-mail: gademi@ademilaw.com
IMPATH INC.: Wolf Popper Commences Securities Lawsuit in S.D. NY
----------------------------------------------------------------
Wolf Popper LLP initiated a securities class action against
Impath, Inc. (NasdaqNM:IMPH), and certain of its senior
officers, on behalf of purchasers of Impath common stock between
April 25, 2001 and July 30, 2003, inclusive, in the US District
Court for the Southern District of New York.
The complaint alleges, among other things, that during the Class
Period, defendants consistently made materially false and
misleading statements regarding the financial condition of
Impath. Specifically, Impath's accounts receivable were grossly
overstated as a result of defendants' improper recognition and
reporting of revenue, creating the illusion that Impath was
experiencing immense financial growth.
In reliance on defendants' misrepresentations, Impath shares
traded as high as $73.675 per share during the Class Period.
However, on July 30, 2003, Impath announced that it would be
forced to restate its financial results from prior periods and
prior years to correct its previous overstatements of revenue.
Trading in Impath's shares was halted at $18.09 per share and
will remain suspended until Impath has satisfied Nasdaq's
request for additional information.
For more details, contact Caroline S. Curtiss or Sheila Feerick,
Investor Relations by Mail: 845 Third Avenue, New York, NY
10022-6689 by Phone: 212-759-4600 or 877-370-7703 by Fax:
212-486-2093 or 877-370-7704 by E-mail: irrep@wolfpopper.com or
visit the firm's Website: http://www.wolfpopper.com
INTERMUNE INC.: Ademi & O'Reilly Lodges Securities Lawsuit in CA
----------------------------------------------------------------
Ademi & O'Reilly, LLP commenced a securities class action in the
United States District Court for the Northern District of
California on behalf of purchasers of InterMune Inc.
(NasdaqNM:ITMN) securities during the period between October 24,
2002 and June 11, 2003.
The complaint charges InterMune and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. The complaint alleges that defendants made false and
misleading statements about one of the Company's leading
products, Actimmune.
Specifically the complaint alleges that defendants were aware
that:
(1) InterMune's estimated number of patients on Actimmune,
disclosed throughout the Class Period as an accurate
and valid means by which to register the level of
strength of the demand for Actimmune, was
``inherently'' unreliable, inconsistent, and lacking in
any accountable basis for presentation;
(2) there had been disruptions and problems with
InterMune's sales and marketing efforts, including
extraordinary turnover and lack of proper training;
(3) since at least the fourth quarter of fiscal 2002,
InterMune was materially understating the level of
inventory being held by its distributors, of which
millions of dollars worth was being held in excess, and
materially overstating its revenues;
(4) InterMune lacked adequate and sufficient internal
controls and systems; and
(5) based on the foregoing, InterMune had no reasonable
basis to issue its financial and operational
projections.
On June 11, 2003, the Company announced that it was cutting its
2003 revenue guidance figures and slashing projected earnings
from Actimmune. The Company also announced it had overstated
the number of patients using Actimmune and that, contrary to its
earlier representations, demand for Actimmune from physicians
was flat. These disclosures sent the Company's stock price
plummeting to $16.74, a 33% one-day fall.
For more details, contact Guri Ademi by Phone: 1-866-264-3995 by
Fax: 1-414-482-8001 or by E-mail: gademi@ademilaw.com
STELLENT INC.: Milberg Weiss Lodges Securities Suit in MN Court
---------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP intiated a securities
class action in the United States District Court for the
District of Minnesota on behalf of purchasers of Stellent Inc.
(Nasdaq:STEL) publicly traded securities during the period
between Oct. 2, 2001 and April 1, 2002.
The complaint charges Stellent and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Stellent is a provider of business content management
solutions, providing browser-based Web and wireless access to
content-centric business Web sites and content-supported e-
business applications.
The complaint alleges that the true facts which were known by
each of the defendants, but concealed from the investing public
during the Class Period, were as follows:
(1) The Company's ability to achieve its Q3FY02 and beyond
projections was contingent upon the Company's Chairman
subsidizing one of the Company's customers;
(2) The transaction with ActiveIQ was actually a "sham
transaction" wherein the Company actually owned 8.5% of
ActiveIQ;
(3) The Company was experiencing severe weakness in its
wireless/file conversion division; and
(4) The Company's receivables, which were more than three
months old, were grossly over-valued.
As a result of the defendants' false statements, Stellent's
stock traded at inflated levels during the Class Period,
increasing to as high as $34.72 on Jan. 4, 2002 whereby
defendant Robert F. Olson sold more than $2.3 million worth of
his own shares.
For more details, contact William Lerach by Phone: 800-449-4900
by E-mail: wsl@milberg.com or visit the firm's Website:
http://www.milberg.com
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora
Fatima Antonio and Lyndsey Resnick, Editors.
Copyright 2003. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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