/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/030812.mbx C L A S S A C T I O N R E P O R T E R Tuesday, August 12, 2003, Vol. 5, No. 158 Headlines AIMCO: Nation's Largest Apartment Owner Faces Overtime Wage Suit ARKANSAS: Refund Of Rice Research Money In Dispute After Ruling BAUSCH & LOMB: NY Court Dismisses Some Claims in Securities Suit BLUE MARTINI: Inks Settlement of Securities Fraud Lawsuit in NY BLUE MARTINI: Plaintiffs Junk Derivative Suit Dismissal Appeal FIRST UNION: Investors Commence Suit Asserting Securities Fraud FLEET FINANCIAL: Judge Okays Credit Card Fee Lawsuit Settlement FREDDI MAC: Ohio, West Virginia Pension Funds Sue Over Losses GRAPHIC PACKAGING: CO Court Grants Certification To Stock Suit GRAPHIC PACKAGING: Faces 3 Suits Over Riverwood Holding Merger HALLIBURTON: Scott + Scott Accuses Firm Of Favoring Executive HALLIBURTON: Plaintiffs in Stock Suit Determined To Go To Trial HIGH SPEED: Agrees To Participate in Securities Suit Settlement IDAHO POWER: WA Court Dismisses Natural Gas Purchasers' Lawsuit IDAHO POWER: OR Court Grants Motion To Dismiss Consumer Lawsuit INFORMATICA CORPORATION: Agrees To Settle Securities Suit in NY INSURANCE MANAGEMENT: Court Grants Approval To Suit Settlement JUNIPER NETWORKS: Moving Towards Settlement of Securities Suit JUNIPER NETWORKS: Dismissal For Suit To Be Heard September 2003 JUNIPER NETWORKS: CA Court To Hear Derivative Lawsuit Demurrer MAXIM PHARMACEUTICALS: Asks CA Court To Dismiss Securities Suit MAXIM PHARMACEUTICALS: Enters Arbitration For CA Securities Suit MEDCO HEALTH: Investors Launch New Securities Suit in NJ Court MICHIGAN: Witnesses File Lawsuit V. Police Over Improper Arrests NEBRASKA: Court Orders Resumption of Medicaid To 10,000 Parents OVERTURE SERVICES: Engages in NY Lawsuit Settlement Discussions PENNSYLVANIA: Residents, Tenant Groups Sue Over Demolition Plan PHILADELPHIA: Settles Disabled Access Suit Over Polling Places REPUBLIC BANCSHARES: MO Borrowers File Suit Over High LTV Loans RIVIERA HOLDINGS: Plaintiffs File Amended Securities Suit in NV RIVIERA HOLDINGS: Stockholders Lodge Securities Suit in NV Court SHURGARD STORAGE: CA Court Limits Class in Consumer Fraud Suit TACO BELL: Reaches $1.5 Million Settlement With Former Employees VIRAGE INC.: Enters Settlement for Consolidated Securities Suit New Securities Fraud Cases MATRIA HEALTHCARE: Chitwood & Harley Lodges Stock Lawsuit in GA SINGING MACHINE: Schiffrin & Barroway Files Stock Lawsuit in FL ********* AIMCO: Nation's Largest Apartment Owner Faces Overtime Wage Suit ---------------------------------------------------------------- AIMCO, the largest owner of residential apartment building communities in the country, was sued in federal court in Washington, D.C. by seven current and former building maintenance staff workers who were the subject of a policy denying them and thousands of other maintenance workers around the country, overtime pay for work performed while on call during nights and weekends to respond to tenant service requests, the Associated Press Newswires reports. The lawsuit also challenges a policy of compensating some employees with a salary who should be paid on an hourly basis and entitled to overtime pay when they work more than 40 hours per week. "AIMCO serves its tenants' needs by exploiting its workers," said Joseph M. Sellers, who heads the civil rights and employment practice at Cohen, Milstein, Hausfeld & Toll P.L.L.C. in Washington, D.C. and represents the plaintiffs in this case. "Denying pay to workers who labor through the night is hardly conduct befitting this industry leader." Charles E. Tompkins, also of Cohen, Milstein, Hausfeld & Toll stated, "We know that AIMCO has engaged in a uniform and systematic scheme of wage abuse against its hourly paid employees. This lawsuit seeks to make them change that policy; and seeks, as well, to recover the compensation that AIMCO's employees are due." The class action seeks payment of the wages lost because of violation of the overtime laws and damages equal to the lost wages, because AIMCO's "on call" pay policy was not adopted in good faith. The plaintiffs also seek to end the policy that has systematically denied them overtime for years. The plaintiffs are also represented by Steven M. Pavsner and Jay P. Holland of Joseph, Greenwald & Laake, P.A., located in Greenbelt, Maryland. "At its Spring Hill Lake Apartment complex in Greenbelt, Maryland, as elsewhere, AIMCO profits by short- changing its employees," said Mr. Pavsner. The named plaintiffs have worked at AIMCO facilities located in Washington, D.C., Greenbelt, MD, Antioch, CA and Freehold, NJ, reflecting that the policy they challenge has operated nationwide. AIMCO owns or manages nearly 18,000 properties with more than 300,000 apartment units located in 47 states, the District of Columbia and Puerto Rico. ARKANSAS: Refund Of Rice Research Money In Dispute After Ruling --------------------------------------------------------------- An Arkansas Supreme Court ruling could force the state board that decides how rice research money is spent to refund up to half the funds collected in the late 1990s, money it now longer has, the Associated Press Newswires reports. The Arkansas rice industry has paid as much as $6 million a year since the 1980s into state coffers for the purpose of financing research into developing a better rice plant as well as marketing or promotion. The Supreme Court's decision overturned a lower court ruling that said a pair of rice buyers, Carwell Elevator Co. and Poinsett Rice & Grain, were not entitled to a refund of about $580,000 they had paid to the state's Rice Research and Promotion Board between August 1996 and July 1999. The high court then remanded the case to Pulaski County Circuit Court and granted the rice buyers' lawsuit class-action status. Plaintiffs' attorneys said the class could include up to 70 rice buyers. The size of the potential refund won't be known until the class is established, a process that is just beginning, attorneys in the case said. Riceland Foods and Producers Rice Mill, the state's two largest rice buyers and largest contributors to the Rice Research and Promotion Board funds, said they will not be part of that class. No matter how much the class seeks a refund, "the money is gone," said Keith Glover, a nonvoting member of the Board and president of Producers. "It was used for promotion. I put the odds of them collecting their money very low." Todd Williams, the Jonesboro attorney for the plaintiffs, said his clients sued after the Supreme Court ruled in another case that money collected from rice buyers was an illegal exaction, a tax that was not imposed by the Legislature. The Rice Research and Promotion Board's funds come from fees: 1.35 cents a bushel that farmers pay on what they grow; and another 1.35 cents a bushel paid by buyers purchasing from the growers. The farmers' money is spent on research; while the buyers' money is spent on marketing. It has been suggested that refunds might come out of future fees, but some farmers and buyers object to that idea. BAUSCH & LOMB: NY Court Dismisses Some Claims in Securities Suit ---------------------------------------------------------------- The United States District Court for the Western District of New York dismissed several claims in the consolidated securities class action filed against Bausch & Lomb, Inc. and: (1) the Company's Chief Financial Officer, Stephen C. McCluski, (2) former Chairman and Chief Executive Officer, William M. Carpenter, and (3) former President, Carl E. Sassano The complaints allege that the value of the company's stock was inflated artificially by alleged false and misleading statements about expected financial results. The plaintiffs seek to represent a class of shareholders who purchased company common stock between January 27, 2000 and August 24, 2000. On March 31, 2003, the court, on the company's motion, dismissed certain claims asserted against the company in the consolidated action. In addition to dismissing certain claims against the company, all direct claims against Mr. McCluski were dismissed and those direct claims paralleling the claims dismissed against the company were also dismissed as to Mr. Carpenter and Mr. Sassano. The company denies the allegations. BLUE MARTINI: Inks Settlement of Securities Fraud Lawsuit in NY --------------------------------------------------------------- Blue Martini Software, Inc. forged a settlement for the securities class action filed against it, certain of its current and former officers and directors and Goldman Sachs and the other underwriters in the United States District Court for the Southern District of New York. The suit alleges that the Company, certain of its officers and directors, and the underwriters of its initial public offering (IPO) violated the federal securities laws because the Company's IPO registration statement and prospectus allegedly contained untrue statements of material fact or omitted material facts regarding the underwriters' compensation and stock allocation practices. The plaintiffs seek unspecified monetary damages and other relief. Similar complaints were filed in the same Court against hundreds of other public companies that conducted IPOs of their common stock since the mid-1990s. The complaints were subsequently amended and consolidated into a single complaint, the Company's directors and officers were dismissed without prejudice, and defendants filed a global motion to dismiss the lawsuits, which the court granted in part and denied in part with respect to the Company. In June 2003, the Company joined in a tentative global settlement that would, among other things, result in the dismissal with prejudice of all claims against all issuers and their officers and directors in the IPO related lawsuits. 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-related lawsuits, the plaintiffs will be entitled to recover the difference between the actual recovery and $1 billion from the insurers for the issuers. The tentative settlement does not involve any payment or admission of wrongdoing by the Company. 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. BLUE MARTINI: Plaintiffs Junk Derivative Suit Dismissal Appeal -------------------------------------------------------------- Plaintiffs voluntarily dismissed its appeal of the dismissal of a shareholder derivative lawsuit filed against Blue Martini Software, Inc. alleging derivative claims against certain officers and directors of the Company and against the lead underwriter of the Company's IPO. The complaint alleged claims against the individual defendants relating to the Company's IPO for: (1) breach of fiduciary duty, (2) breach of agent's duty to principal, (3) negligence and (4) unjust enrichment The plaintiff sought unspecified monetary damages and other relief. The complaint was subsequently dismissed and the plaintiff appealed the dismissal. In June 2003, the plaintiff voluntarily dismissed the appeal. FIRST UNION: Investors Commence Suit Asserting Securities Fraud --------------------------------------------------------------- A bank that handled accounts for a company that was running a multimillion-dollar securities fraud was accused recently in federal court in Fort Lauderdale, of aiding and abetting the plan, the Orlando Sentinel reports. An attorney representing 531 investors, who lost about $34 million in the Cyprus Funds investment scheme, alleged at the trial in US District Court that First Union National Bank, its securities arm First Union Securities Inc. and bank employee Zoraida Diaz, allowed the fraud to occur and did nothing to stop it. "They did it step by step by step," said Miami attorney Harley Tropin. "They helped assist this fraud." First Union's attorney, Stephen Gillman of Miami, argued that his clients had done nothing wrong, had no knowledge of the fraud and followed all the proper procedures. Cyprus billed itself as an offshore mutual fund and was sued in a 1999 civil action by the Securities and Exchange Commission, along with its Miami-based investment adviser, Latin American Services Co. Ltd. and four Cyprus directors. The defendants were accused of defrauding investors, many of them Ohio retirees and wealthy Latin Americans. The SEC said Cyprus was an elaborate Ponzi scheme in which money was raised from new investors and used to pay old ones until the company collapsed. Regulators said most of money raised didn't go into a mutual fun, but instead was misappropriated and used to buy property, businesses and luxury items that included jewelry and cars. Three of the directors agreed to a permanent injunction barring them from committing fraud in the future, without admitting or denying the allegations. The fourth, Eric V. Bartoli, also was permanently enjoined from committing fraud in a default judgment against him. While a court-appointed receiver is attempting to recover any remaining assets, the class-action lawsuit was filed against First Union, which merged with Wachovia Corporation in 2001, in hopes of collecting additional money from the bank. The case against First Union is rare because it resulted in a jury trial, according to legal experts. While "third parties" such as banks or law firms sometimes are sued in connection with securities fraud cases, usually such matters are settled out of court or dropped. FLEET FINANCIAL: Judge Okays Credit Card Fee Lawsuit Settlement --------------------------------------------------------------- US District Judge Frank Polozola gave initial approval to a $3.5 million settlement between Fleet Financial Group and more than two million Fleet credit-card holders who alleged in their class-action lawsuit that Fleet improperly charged its late fees, the Associated Press Newswires reports. The settlement covers three lawsuits involving Fleet credit-card holders in Louisiana, California and Rhode Island. Fleet has been setting due dates for bills on Fridays, weekends and holidays, when the company did not pick up the mail and could not credit payment to the card-holder's account before the deadline. "You will now have a day's grace period when you get your statement to pay them," Scott Fruge said. Judge Polozola set a final hearing to approve the settlement for November. A group of six cardholders filed a class action against Fleet in January 2001, in Baton Rouge, alleging Fleet intentionally misled Visa cardholders about when late fees would be charged. The California and Rhode Island cases were filed later that year. The settlement also calls for Fleet to pay $500,000 in damages, $350,000 to reimburse customers who can prove they paid late charges before 1998, and $150,000 to reimburse customers who paid finance charges for being over their credit limit. Attorneys could receive up to 20 percent of the settlement. FREDDI MAC: Ohio, West Virginia Pension Funds Sue Over Losses ------------------------------------------------------------- State pension funds from Ohio and West Virginia, aided by well- known private trial lawyers, filed court actions recently against Freddie Mac, a mortgage lending company and three of their ousted executives, accusing them of securities fraud because of "deliberately misleading accounting practices" that the company recently admitted, The Washington Post reports. Ohio Attorney General James Petro, a former state auditor who plans to run for governor in 2006, said that Freddie Mac's "manipulation" cost the state employees' and teachers' pension funds more than $25 million in lost stock value. The Ohio lawsuit, which was signed by noted Cincinnati plaintiffs' lawyer Stanley Chesley, named as defendants, former Freddie chief executive Leland C. Brendsel, president David W. Glenn and chief financial officer Vaughan A. Clarke. All were forced out in the midst of a financial restatement in which the company understated its income over three years by as much as $4.5 billion. An internal investigative report last month said the company had manipulated its finances and used incorrect accounting in an attempt to create the smooth earnings growth favored by Wall Street. Ohio also filed a motion asking that it be named the lead plaintiff in the various shareholder class-action suits that have been brought against Freddie Mac. West Virginia officials filed a similar request, seeking the status of lead plaintiff. The state lost $1.8 million, said Steven G. Schulman, a partner at Milberg Weiss Bershad Hynes & Lerach LLP, the law firm representing the West Virginia Investment Management Board in its joining the suit against Freddie Mac and the three former executives, named above. Lynn A. Stout, law professor at the University of California in Los Angeles, said the state actions yesterday are part of a general trend in which state authorities are taking the lead in prosecuting fraud cases. This has occurred more frequently since passage of a 1995 federal law providing that institutional investors that lost the most, rather than individual shareholders, would get priority in being named lead plaintiffs in securities cases. Lawyers representing other shareholders in lawsuits against Freddie Mac said Ohio most likely would be chosen to take the lead in a federal class-action case. Having Ohio on board "gives more credibility to the claim," said Steven J. Toll, managing partner at Washington law firm Cohen, Milstein, Hausfeld & Toll, which is representing another pension fund in one of the class actions against the mortgage company. GRAPHIC PACKAGING: CO Court Grants Certification To Stock Suit -------------------------------------------------------------- The District Court in Jefferson County, Colorado certified as a class action the lawsuit filed against Graphic Packaging International, Inc. and certain of its shareholders and directors. The complaint alleges that the defendants breached their fiduciary duties in connection with the issuance on August 15, 2000, of the Company's Series B Preferred Stock to the Grover C. Coors Trust. Plaintiff is seeking damages in the amount of $43 million or, alternatively, to require transfer to the class of some or all of the Trust's GPIC common stock into which the convertible preferred stock will be converted. The court dismissed the plaintiff's claim against the Company for breach of fiduciary duty while allowing the plaintiff to proceed against the named directors and shareholders, including certain Coors family trusts. The Company is continuing to provide a defense to this action pursuant to its indemnification obligations. Currently, discovery is being conducted. By order dated June 12, 2003, the court certified a class comprised of all owners of GPIC common stock as of August 2, 2000, excluding the defendants and members of the Coors family and their affiliates and excluding any additional shares purchased by class members after August 2, 2000. The Company believes that the transaction was in the best interest of the Company and its shareholders. GRAPHIC PACKAGING: Faces 3 Suits Over Riverwood Holding Merger -------------------------------------------------------------- Graphic Packaging International, Inc. and its directors face three lawsuits relating to the merger between Graphic Packaging International Corporation and Riverwood Holding, Inc. Robert F. Smith and Harold Lightweis filed two suits on behalf of themselves and all others similarly situated. Each of the two complaints alleges breach of fiduciary duties by the Company's directors to the Company's public shareholders in connection with the merger and that Riverwood aided and abetted the alleged breach. The complaint alleges that the Coors family stockholders negotiated the merger consideration in their own interest and not in the interest of the public stockholders. The complaint seeks an injunction against consummation of the merger, rescission of the merger if it is consummated, unspecified damages, costs and other relief permitted by law and equity. On July 3, 2003, a third lawsuit was filed in District Court of Jefferson County in Colorado, on behalf of a purported class of the Company's stockholders against the Company, the Company's directors and Riverwood, alleging that the Company's directors breached their fiduciary duties to the stockholders of the Company in connection with the negotiation of the proposed merger and that the Company and Riverwood aided and abetted the alleged breach. The complaint alleges that the defendants negotiated the terms of the merger in their own interest and in the interest of certain other insiders (including the Coors family stockholders), to the detriment of the public stockholders. HALLIBURTON: Scott + Scott Accuses Firm Of Favoring Executive ------------------------------------------------------------- Neil Rothstein, attorney with Scott + Scott, said in documents obtained by the Financial Times that Richard Schiffrin of Schiffrin & Barroway, lead counsel in the lawsuit against Halliburton, "admitted that Cheney may have risk involved in this lawsuit, but he was not named as a defendant because it would be inappropriate to do so in a 'time of war.'" The charge is one of many Scott + Scott is leveling against Schiffrin & Barroway in an attempt to remove the firm as lead counsel in the accounting fraud lawsuit against Halliburton. Both law firms are well known as class action law firms. Meanwhile, Terence O'Donnell, private counsel to Richard Cheney, US vice president, said, "We have never requested anyone to forego litigation against the vice president because the country was at war." In court papers, Mr. Schiffrin admits meeting with Mr. Cheney's attorneys, but said, "Lead counsel acknowledges only that these discussions were conducted at a time when this country was focused on its war efforts against Iraq." In an interview, Mr. Schiffrin said he had sought the meeting to explain, as a courtesy, that the vice president would not be named in the lawsuit. "My point was that there was no basis to name him as a defendant," he said, "particularly, in a time of war." Because the case centers on an accounting issue, and Mr. Cheney was chief executive, there was nothing that tied him into the decision-making process on the alleged fraud, Mr. Schiffrin said. Nonetheless, Mr. Schiffrin's law firm did name David Lesar, who replaced Mr. Cheney as CEO, as defendant in the lawsuit. Mr. Schiffrin told the Financial Times that he "honestly cannot remember" why Mr. Lesar was named. The class action period covers May 1998 to May 2002, a period in which both men led the company. Mr. Schiffrin said Scott + Scott had not named Mr. Cheney as a defendant in its initial lawsuit. Mr. Rothstein said it could have added him as the investigation proceeded. "Numerous clients who are class members, including US military stationed in Kuwait, find it offensive and presumptuous that any law firm would unilaterally decide to make a political decision regarding a shareholder securities fraud action," Mr. Rothstein said in an interview. HALLIBURTON: Plaintiffs in Stock Suit Determined To Go To Trial --------------------------------------------------------------- Halliburton announced on May 30, that it had reached a $6 million agreement to settle 20 lawsuits arising from allegations that the US energy company, located in Houston, used deceptive accounting practices starting when Richard Cheney, now United States Vice President, ran the company as its CEO, the Financial Times reports. Connecticut law firm Scott + Scott, which represents one of four lead plaintiffs in the case, has not signed the settlement and is determined that the lawsuit against Halliburton will face trial. This time, if trial there is, Mr. Cheney would be named as a defendant. Court documents obtained by the Financial Times show that Scott + Scott is accusing Schiffrin & Barroway, a Pennsylvania law firm and lead counsel in the case, of violating court orders by agreeing to a settlement without the participation or consent of its lead partners. They allege that Schiffrin & Barroway never convened a single meeting of the lead plaintiffs; refused to give the other firms evidence it had investigated the charges; and then settled the case for $6 million, even though damages have been estimated as high as $6.8 billion, according to Scott + Scott documents. Neil Rothstein, an attorney with Scott + Scott, said Schiffrin & Barroway admitted it had reached a verbal agreement with Halliburton lawyers to stall the case until it could be settled. "Lead counsel's conduct has brought a cloud over this matter," Mr. Rothstein said. Judge David Godbey, US District Court Judge in Dallas, Texas has agreed to permit Scott + Scott to show cause at a hearing on August 25, why Schiffrin & Barroway should be removed as lead counsel and the class freed from its proposed settlement. Richard Schiffrin, of Schiffrin & Barroway, has said the damages incurred were minimal, that he consulted with the other firms as needed and he does not recall the details of exchanges over investigator reports. Besides, he said, Scott + Scott has never suggested why the settlement is flawed, except they were not consulted in its drafting. Scott + Scott insists it has a strong case. It centers on allegations that in May 1998, Halliburton secretly changed its accounting methods and began recognizing as revenue and income some claims that the company had against customers for project cost overruns and for change orders related to fixed-cost projects. Scott + Scott has hired investigators, forensic accountants and damage analysts. Mr. Rothstein maintains they determined that, by the end of the class period, Halliburton had recognized as revenue more than $450 million in unsettled claims. About $200 million remained uncollected but was on Halliburton's balance sheet as "fictitious receivables." Schiffrin & Barroway notes three of the four lead plaintiffs and their counsel already have approved the settlement, adding there is no evidence that the firm failed in its responsibilities to represent the class. Indeed, Schiffrin & Barroway accuses Scott + Scott of failing to offer to assist with the case, which it says it had the right to settle "subject to approval by the parties." Mr. Rothstein pointed out his firm is acting on behalf of its client and class members, "who have been excluded from the entire litigation, which occurred in secret." Scott + Scott said its client, the Wisconsin-based AMS Fund is a self-sustaining organization that supports charities, hospitals and schools; whereas Private Asset Management (PAM), which Schiffrin & Barroway represents, is an investment institution that does not accept members without net worth exceeding $750,000. PAM claims to have suffered damages exceeding $800,000 due to the securities fraud alleged in this case, according to Scott + Scott. "Lead counsel claims PAM has approved the purported $6 million settlement. If true, by our estimates, PAM agreed to accept at most, something shy of $40 per member," Mr. Rothstein said. "The people who (our client) AMS Fund supports use social services and will benefit by a rightful recovery by the AMS Fund." HIGH SPEED: Agrees To Participate in Securities Suit Settlement --------------------------------------------------------------- High Speed Access Corporation is participating in the settlement between issuer defendants and plaintiffs in the IPO Litigation in the United States District Court for the Southern District of New York. The suit was initially filed on November 5, 2001 against the Company and: (1) Mr. George Willett, President and Chief Financial Officer, (2) Mr. Ron Pitcock, one of the Company's former President, (3) Lehman Brothers, Inc., (4) J.P. Morgan Securities, Inc., (5) CIBC World Markets Corporation, and (6) Banc of America Securities, Inc., The suit alleges that the Company's Registration Statement, dated June 3, 1999, and Prospectus, dated June 4, 1999, for the issuance and initial public offering of 13,000,000 shares of the Company's common stock to investors contained material misrepresentations and/or omissions. The purported class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b- promulgated thereunder. The essence of the complaints is that defendants issued and sold the Company's common stock pursuant to the Registration Statement for the IPO without disclosing to investors that certain underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. The complaints also allege that the Company's registration statement for the IPO failed to disclose that the underwriters allocated Company shares in the IPO to customers in exchange for the customers' promises to purchase additional shares in the aftermarket at pre-determined prices above the IPO price, thereby maintaining, distorting and/or inflating the market price for the shares in the aftermarket. The plaintiff asks to represent the interest of all holders of the Company's common stock and seeks unspecified monetary damages. On July 15, 2002, the Company moved to dismiss all claims against it, Mr. Willett and Mr. Pitcock. The allegations against Mr. Willett and Mr. Pitcock were dismissed without prejudice on October 11, 2002 pursuant to a Reservation of Rights and Tolling Agreement dated as of July 20, 2002. On February 19, 2003, the court denied the Company's motion to dismiss the alleged violations of Section 11 and 15 of the 1933 Act. However, the court granted the Company's motion to dismiss the alleged violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b- promulgated thereunder. On February 28, 2003, Charter notified the Company of its assertion of a potential claim for indemnity in respect of Charter being named as a "successor in interest" to the Company in the IPO Litigation and deferred release of half of the $2.0 million indemnity holdback. Charter was dismissed as a defendant in the IPO Litigation on May 28, 2003 and paid the remaining $1.0 million indemnity holdback to the Company on June 5, 2003. On June 26, 2003, the Plaintiffs' Executive Committee announced that a proposed settlement between the approximately 300 issuer defendants and their directors and officers and the plaintiffs has been structured in the IPO Litigation which would guarantee at least $1.0 billion to investors who are class members from the insurers of the issuers. The cases will continue against the 55 investment bank underwriter defendants. The Company had assented to participate in the settlement, which is subject to final documentation and review and consent of the court. If final settlement occurs, the Company will be removed from the litigation without payment of any funds. IDAHO POWER: WA Court Dismisses Natural Gas Purchasers' Lawsuit --------------------------------------------------------------- The United States District Court for the Western District of Washington at Seattle granted plaintiffs' motion to voluntarily dismiss the class action filed against Idaho Power Corporation and other entities. The class action was filed on behalf of all persons and businesses residing in Washington who were purchasers of electrical and/or natural gas energy from any period beginning in January 2000 to the present. The complaint alleges claims under the Washington Consumer Protection Act, RCW 19.86, as well as common law claims of fraud by concealment, negligence and requests an accounting. The complaint asserts that the defendants, including the Company, engaged in, among other things, unfair and deceptive acts, in violation of the FPA, by: (1) withholding the supply of energy; (2) misrepresenting the amount of its energy supplies; (3) exercising improper control over the energy markets; and (4) manipulating the price of energy markets resulting in energy rates being unjust, unreasonable and unlawful. The plaintiff seeks certification of a class action, equitable and injunctive relief, an accounting, treble damages, attorneys' fees and costs. On February 3, 2003, another defendant, Reliant Energy, moved to transfer the case to the Judge who is presiding over Multiple District Litigation (MDL) No. 1405. The MDL rejected this request because that Judge, as a Washington resident, is a member of the class. On March 11, 2003, the Company, along with other defendants, filed a motion with the MDL seeking to transfer the case to be consolidated with similar actions before the Judge who is presiding over the California Attorney General Action, and other similar cases. On March 21, 2003, the court granted the Company's motion for an extension of time to respond to the complaint until 30 days after the MDL panel rules. Subsequently, plaintiffs sought permission from the court to voluntarily dismiss their claims without prejudice, which the court granted. IDAHO POWER: OR Court Grants Motion To Dismiss Consumer Lawsuit --------------------------------------------------------------- The United States District Court for the District of Oregon granted plaintiffs' motion to voluntarily dismiss the class action filed against Idaho Power Corporation and various entities. The suit, originally filed on behalf of all persons and businesses residing in Oregon who were purchasers of electrical and/or natural gas energy from any period beginning in January 2000 to the present, alleges claims under the Oregon Unfair Trade Practices Act, ORS 646.605 et seq. in addition to claims of fraud by concealment, negligence and requests an accounting. The complaint asserts that the defendants, including IPC, engaged in, among other things, unfair and deceptive acts, in violation of the FPA, by: (1) withholding the supply of energy; (2) misrepresenting the amount of its energy supplies; (3) exercising improper control over the energy markets; and (4) manipulating the price of energy markets resulting in energy rates being charged to Oregon energy consumers that were unjust, unreasonable and unlawful. The plaintiff seeks certification of a class action, equitable and injunctive relief, an accounting, attorneys' fees and costs. The action was removed to federal court, and on March 11, 2003, the Company, along with other defendants, filed a motion with the MDL seeking to transfer the case to be consolidated with similar actions before the Judge who is presiding over the California Attorney General Actions, and other similar cases. A stipulation has been submitted to the Court for an extension of time to respond to the complaint, until 30 days after the MDL panel rules. Subsequently, plaintiffs sought permission from the court to voluntarily dismiss their claims without prejudice, which the court granted. INFORMATICA CORPORATION: Agrees To Settle Securities Suit in NY --------------------------------------------------------------- Informatica Corporation agreed to settle the consolidated securities class action filed in the United States District Court for the Southern District of New York, on behalf of all persons who purchased the Company's common stock from April 29, 1999 through December 6, 2000. It names as defendants the Company, one of its current officers, and one of its former officers and several investment banking firms that served as underwriters of the Company's April 29, 1999 initial public offering and September 28, 2000 follow-on public offering. The complaint alleges liability as to all defendants under Sections 11 and/or 15 of the Securities Act of 1933 and Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934, on the grounds that the registration statements for the offerings did not disclose that: (1) the underwriters had agreed to allow certain customers to purchase shares in the offerings in exchange for excess commissions paid to the underwriters; and (2) the underwriters had arranged for certain customers to purchase additional shares in the aftermarket at predetermined prices. The complaint also alleges that false analyst reports were issued. No specific damages are claimed. Similar allegations were made in other lawsuits challenging over 300 other initial public offerings and follow-on offerings conducted in 1999 and 2000. The cases were consolidated for pretrial purposes. On February 19, 2003, the court ruled on all defendants' motions to dismiss. The court denied the motions to dismiss the claims under the Securities Act of 1933. The court denied the motion to dismiss the Section 10(a) claim against Informatica and 184 other issuer defendants. The court denied the motion to dismiss the Section 10(a) and 20(a) claims against the Company defendants and 62 other individual defendants. The Company has decided to accept a settlement proposal presented to all issuer defendants. In this settlement, plaintiffs will dismiss and release all claims against the Informatica defendants, in exchange for a contingent payment by the insurance companies collectively responsible for insuring the issuers in all of the IPO cases, and for the assignment or surrender of control of certain claims the Company may have against the underwriters. The Informatica defendants will not be required to make any cash payments in the settlement, unless the pro rata amount paid by the insurers in the settlement exceeds the amount of the insurance coverage, a circumstance which the Company does not believe will occur. The settlement will require approval of the Court, which cannot be assured, after class members are given the opportunity to object to the settlement or opt out of the settlement. INSURANCE MANAGEMENT: Court Grants Approval To Suit Settlement -------------------------------------------------------------- The United States District Court for the Middle District of Florida granted final approval to the settlement proposed by Insurance Management Solutions Group, Inc. for a consolidated securities class action filed against it. The suit was filed on behalf of all persons who purchased shares of the Company's Common Stock pursuant and/or traceable to the registration statement for the Company's February 1999 initial public offering and names as defendants the Company and: (1) BIG Venture Capital Corporation, a selling shareholder in the IPO, (2) the five inside directors of the Company at the time of the IPO, (3) Raymond James & Associates, Inc., and (4) Keefe, Bruyette & Woods, Inc., the underwriters for the IPO The complaint alleges, among other things, that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, by making certain false and misleading statements in the roadshow presentations, registration statement and prospectus relating to the IPO, an earlier Class Action Reporter story states. More specifically, the complaint alleges that, in connection with the IPO, the defendants made various material misrepresentations and/or omissions relating to: (i) the Company's ability to integrate Geotrac's flood zone determination business with the Company's own flood zone determination business and with its insurance outsourcing services business; (ii) actual and anticipated synergies between the Company's flood zone determination and outsourcing services business lines; and (iii) the Company's use of the IPO proceeds In March 2001, the Company, BIG and the five inside director defendants filed a motion to dismiss the plaintiff's complaint for, among other things, failure to allege material misstatements and/or omissions in the roadshow presentations, registration statement and/or prospectus relating to the IPO. In July 2001, US District Judge Richard A. Lazzara denied all of the defendants' motions to dismiss the complaint. On August 6, 2002, the plaintiff offered to accept, in full settlement of the IPO Litigation as to all defendants, payment of $2.1 million to the putative plaintiff class. On August 14, 2002, the Company's Board of Directors voted to accept this offer, and the issuer of the Company's applicable Directors and Officers and Company Reimbursement insurance policy has agreed to pay $2.1 million to the plaintiff class. The settlement was also approved by BIG and by the other defendants represented by Company counsel. The parties to the IPO Litigation have negotiated and signed a Memorandum of Understanding (MOU) of the principal material settlement terms, and the parties presently are preparing a Stipulation and Agreement of Settlement, and related documents, for submission to Judge Lazzara. JUNIPER NETWORKS: Moving Towards Settlement of Securities Suit -------------------------------------------------------------- Juniper Networks, Inc. is working to settle the consolidated securities class action filed in the United States District Court for the Southern District of New York against it, certain of its officers and directors and: (1) the Goldman Sachs Group, Inc., (2) Credit Suisse First Boston Corporation, (3) FleetBoston Robertson Stephens, Inc., (4) Royal Bank of Canada (Dain Rauscher Wessels), (5) SG Cowen Securities Corporation, (6) UBS Warburg LLC (Warburg Dillon Read LLC), (7) Chase (Hambrecht & Quist LLC), (8) J.P. Morgan Chase & Co., (9) Lehman Brothers, Inc., (10) Salomon Smith Barney, Inc., and (11) Merrill Lynch, Pierce, Fenner Smith, Incorporated This action was brought on behalf of purchasers of the Company's common stock in the Company's initial public offering in June 1999 and its secondary offering in September 1999. Specifically, among other things, this complaint alleged that the prospectus pursuant to which shares of common stock were sold in the Company's initial public offering and its subsequent secondary offering contained certain false and misleading statements or omissions regarding the practices of the underwriters with respect to their allocation of shares of common stock in these offerings and their receipt of commissions from customers related to such allocations. Various plaintiffs have filed actions asserting similar allegations concerning the initial public offerings of approximately 300 other issuers. These various cases pending in the Southern District of New York have been coordinated for pretrial proceedings. In April 2002, plaintiffs filed a consolidated amended complaint in the action against the Company, alleging violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Defendants in the coordinated proceeding filed motions to dismiss. In October 2002, the Company's officers were dismissed from the case without prejudice pursuant to a stipulation. On February 19, 2003, the court granted in part and denied in part the motion to dismiss, but declined to dismiss the claims against the Company. A proposal has been made for the settlement and release of claims against the issuer defendants, including the Company. The settlement is subject to a number of conditions, including approval of the proposed settling parties and the court. If the settlement does not occur, and litigation against the Company continues, the Company believes it has meritorious defenses and intends to defend the case vigorously. JUNIPER NETWORKS: Dismissal For Suit To Be Heard September 2003 --------------------------------------------------------------- The United States District Court for the Northern District of California will hear the motion to dismiss the securities class action filed against Juniper Networks, Inc. in September 2003. During the quarter ended March 31, 2002, a number of essentially identical shareholder class actions were filed against the Company and certain of its officers and former officers purportedly on behalf of those stockholders who purchased the Company's publicly traded securities between April 12, 2001 and June 7, 2001. In April 2002, the judge granted the defendants' motion to consolidate all of these actions into one; in May 2002, the court appointed the lead plaintiffs and approved their selection of lead counsel and an amended complaint was filed in July 2002. The plaintiffs allege that the defendants made false and misleading statements, assert claims for violations of the federal securities laws and seek unspecified compensatory damages and other relief. In September 2002, the defendants moved to dismiss the amended complaint. In March 2003, the judge granted defendants motion to dismiss with leave to amend. The plaintiffs filed their amended complaint in April 2003 and the defendants moved to dismiss the amended complaint in May 2003. JUNIPER NETWORKS: CA Court To Hear Derivative Lawsuit Demurrer -------------------------------------------------------------- The Superior Court of the State of California, County of Santa Clara will hear in August 2003 Juniper Networks, Inc.'s demurrer to the consolidated amended shareholder derivative complaint filed against it and certain of its officers and directors. The complaint alleges that certain of the Company's officers and directors breached their fiduciary duties to the Company by engaging in alleged wrongful conduct. The complaint also asserts claims against a Juniper Networks investor. The Company is named solely as a nominal defendant against whom the plaintiff seeks no recovery. In October 2002, the Company as a nominal defendant and the individual defendants filed demurrers to the consolidated amended shareholder derivative complaint. In March 2003, the judge sustained defendants' demurrers with leave to amend. The plaintiffs lodged their amended complaint in May 2003 and the defendants demurred to the amended complaint. MAXIM PHARMACEUTICALS: Asks CA Court To Dismiss Securities Suit --------------------------------------------------------------- Maxim Pharmaceuticals, Inc. asked the United States District Court for the Southern District of California to dismiss the securities class action filed against it and two officers of the Company, alleging violations of federal securities laws related to declines in the Company's stock price in connection with various statements and alleged omissions to the public and to the securities markets, and seeking damages therefore. No discovery has been conducted. The Company successfully brought motions to dismiss the consolidated complaint and a second amended complaint. The plaintiff then filed a third amended complaint, and the Company's motion to dismiss the third amended complaint is currently under consideration by the court. The complaint has been tendered to the Company's insurance carrier. MAXIM PHARMACEUTICALS: Enters Arbitration For CA Securities Suit ---------------------------------------------------------------- Arbitration has almost finished for the class action filed against Maxim Pharmaceuticals, Inc. and two of its officers by certain former shareholders of Cytovia, Inc. filed complaints in California Superior Court in San Diego, alleging fraud and negligent misrepresentation in connection with the Company's acquisition of Cytovia. The court subsequently issued an order compelling the first lawsuit to a binding arbitration forum, and the second lawsuit has been stayed pending the resolution of the arbitration proceeding. A binding arbitration proceeding with the American Arbitration Association was held in May 2003. The three-member arbitration panel rejected all of the claims asserted by certain former shareholders of Cytovia, Inc. and determined that the Company has no liability for such claims. In its interim decision the panel also determined that Maxim should be awarded reasonable attorney fees, costs and expenses in an amount yet to be determined. The arbitration panel has not yet issued its final award. MEDCO HEALTH: Investors Launch New Securities Suit in NJ Court -------------------------------------------------------------- Merck & Co. and its Medco Health Solutions unit, a prescription- benefits firm set to be spun off by its parent company, have been named as defendants in a shareholder lawsuit, the Associated Press Newswires reports. The lawsuit filed in federal court in New Jersey, is based on allegations regarding the way Medco recognizes revenue for retail co-payments. The lawsuit seeks unspecified damages from Merck and Medco. Other defendants include Medco officers and directors and Arthur Andersen LLP, Medco's independent auditor for 1999 and 2000. Medco said the claims for breach of fiduciary duty stem from pending whistleblower lawsuits, pending antitrust claims in the Northern District of Illinois, and alleged failure to prevent conduct that led to a series of lawsuits related to the Employment Retirement Income Security Act (ERISA). Drugmaker Merck & Co., located in Whitehouse Station, New Jersey, said a federal court judge has granted preliminary approval to an agreement to pay $42.5 million to settle five of the six ERISA-related class actions. Medco, based in Franklin Lakes, New Jersey, did not admit wrongdoing, but the firm did agree to change some of its business practices. Medco is one of the nation's largest pharmacy-benefits managers. Part of the company's purpose is to negotiate discounts from drug makers for the client companies and HMOs it serves. Merck said it will spin off all of Medco's outstanding common shares to shareholders as a special dividend. Merck shareholders are to receive about 0.12 of one Medco share for every Merck share held. MICHIGAN: Witnesses File Lawsuit V. Police Over Improper Arrests ---------------------------------------------------------------- Lawyers for dozens of witnesses who claim Detroit police improperly arrested them, have asked a federal judge to grant class action status to plaintiff witnesses' lawsuit, the Associated Press Newswires reports. If such status is approved, the lawyers would be able to collect money for hundreds of people who have not filed a lawsuit but had similar experiences as the plaintiff witnesses now suing the city. US District Judge Patrick Duggan did not immediately rule on the recently made request, but said he would issue a written opinion. John Quinn, a lawyer for the city, said the class- action designation was unnecessary and improper due to the wide variety of circumstances surrounding the detention of witnesses. He said the class-action decision would serve only to "drum up more clients" for the lawyers suing Detroit. N.C. Deday LaRene, a lawyer for the detained witnesses, said the Class action status is needed to guarantee all people who were harmed are compensated. "One man's liberty is worth the same as the next," the lawyer told The Detroit News. Last month, the city paid $3.4 million to settle lawsuits by more then 30 people detained under a police practice of jailing uncooperative homicide witnesses. That policy has since been abandoned under an agreement with the federal government. Dozens of cases are still pending. NEBRASKA: Court Orders Resumption of Medicaid To 10,000 Parents --------------------------------------------------------------- The Eighth US Circuit Court of Appeals has ordered Nebraska to begin making Medicaid payments to an estimated 10,000 single working parents who were cut from the program last year. The court rejected a state request to review its earlier decision, made by a three-judge panel, that the parents were entitled to the payments, which total $18 million a year, Associated Press Newswires reports. The court ordered the matter to proceed to trial, with the state making the payments until the case is decided. The Medicaid program cuts were made during a special budget-cutting legislative session last year. The class action was filed by two low-income mothers who lost Medicaid coverage as a result. The two mothers' lawsuit contended that federal law entitled them to continuing coverage through the Transitional Medical Assistance Program whose program provides up to a year of additional health-care coverage for those terminated from Medicaid. The appeals court did not rule on the merits of the lawsuit, but simply upheld an earlier ruling by one of its three-judge panels that the parents must continue getting benefits while the case works its way through the courts. That panel also said the women were likely to succeed on their claims. Mike Rumbaugh, the lawyer who handles appeals for the state, said he was unsure whether the state would proceed to trial or just accept the Eighth Circuit's ruling. OVERTURE SERVICES: Engages in NY Lawsuit Settlement Discussions --------------------------------------------------------------- Overture Services, Inc. is working to settle the consolidated securities class action filed in the United States District Court, Southern District of New York against it, certain underwriters involved in its initial public offering, and certain of its current and former officers and directors. Plaintiffs allege, among other things, violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 involving undisclosed compensation to the underwriters, and improper practices by the underwriters, and seek unspecified damages. Similar complaints were filed in the same court against numerous public companies that conducted initial public offerings of their common stock since the mid-1990s. All of these lawsuits were consolidated for pretrial purposes before Judge Shira Scheindlin. On July 15, 2002, the issuers filed an omnibus motion to dismiss for failure to comply with applicable pleading standards. On October 8, 2002, the court entered an order of dismissal as to all of the individual defendants in the Overture IPO litigation, without prejudice. On February 19, 2003, the court largely denied the motion to dismiss, including the Rule 10b-5 claims against the Company, and the Company remains a defendant in the case. The Company continues to deny the allegations against it, believes that it has meritorious defenses to the amended complaint, and intends to contest the allegations vigorously. The parties have continued to engage in settlement discussions, and the plaintiffs, insurers, and defendant issuers (including individual officers and directors) are considering a final draft of a settlement memo of understanding. PENNSYLVANIA: Residents, Tenant Groups Sue Over Demolition Plan --------------------------------------------------------------- Residents, as well as tenant groups, at three federally subsidized high-rises in Pittsburgh, Pennsylvania filed a federal civil rights lawsuit seeking to prevent housing agencies from moving ahead with a plan to demolish and replace the aging structures, the Associated Press Newswires reports. The lawsuit, which is seeking class action status, contends about 300 families - most of them black and many with disabled family members - are facing unfair hardship due to involuntary displacement unless the court intervenes. The lawsuit alleges the city's Urban Redevelopment Authority and the Housing Authority of Pittsburgh failed to minimize the impact of their development plans by putting together a fair relocation program as required by federal law. It claims the agencies failed to provide residents with adequate relocation assistance. These are but a couple examples of the kinds of hardships faced: A disabled mother of two will lose convenient access to medical centers. A disabled man won't have easy access to public transportation from his apartment. Generally, the sense of community will be lost for many of the residents. "They did not want to help us find new housing," said Marvin Harpool of the Coalition of Organized Residents of East Liberty. "They really didn't do anything but rush people out." According to the lawsuit, relocating the families from the East Liberty neighborhood would force residents to move to areas with inadequate medical services, public transportation and other needs. The city's plans would cause residents "unnecessary hardship and effectively segregates them into racially concentrated, high-poverty and marginalized areas in order to redevelop the East Liberty neighborhood of Pittsburgh." Since the mid-1990s, the city has been planning to demolish the three aging high-rises in the East Liberty neighborhood and replace them with a mix of subsidized housing and market price rental housing as part of a redevelopment plan. The shift is part of a national movement to repair and replace unsafe and aging public housing, and provide important features in subsidized housing for the aging and the disabled, such as wider doorways and larger bathrooms. The three buildings slated for demolition were built around 1969. The lawsuit was filed by Donald Driscoll and Kevin Quisenberry of the Community Justice Project, in the US District Court in Pittsburgh. PHILADELPHIA: Settles Disabled Access Suit Over Polling Places -------------------------------------------------------------- Officials of Philadelphia and a national disabilities group have agreed to settle a civil-rights lawsuit with a three-year plan to make the city's voting machines and polling places more accessible to voters who are blind or use wheelchairs, The Philadelphia Inquirer reports. The proposed settlement of the two-year-old lawsuit by the National Organization on Disability and nine local disabled citizens was filed in federal court in Philadelphia. The agreement was preliminarily approved by US District Judge John R. Padova, who ordered the proposal published in three newspapers this month and set a hearing for November 19. Under the proposed settlement, by January 1, 2006, each of the city's 1,682 polling places will have at least one electronic voting machine equipped with earphones and audio instructions for use by voters who are blind or visually impaired. The city also will create a Polling Place Access Committee to evaluate approximately 800 of the 1,682 polling places in 66 wards that are not accessible to people who use wheelchairs. The committee's recommendations and their implementation must be completed by May 1, 2006. Stephen F. Gold, a veteran Center City disabilities lawyer involved in the lawsuit, called the agreement the best possible in an old city such as Philadelphia. Jeffrey M. Scott, a divisional deputy city solicitor in the Civil Right unit, referred to the "Help America Vote Act of 2002," which overhauls the nation's voting system and was signed into law last October. Under the $3.9 billion measure, the federal government for the first time will give states money to create computerized voter- registration lists, replace antiquated machines, educate poll workers and ensure access for the disabled. REPUBLIC BANCSHARES: MO Borrowers File Suit Over High LTV Loans --------------------------------------------------------------- Discovery is commencing in a class action filed against Republic Bancshares, Inc. and 34 other investor defendants on behalf of several Missouri residential real estate owners or borrowers. The plaintiffs obtained second mortgage High LTV Loans from Century Financial, Inc. during the 1997-1998 timeframe. During this period, the Company purchased from Century and, of those purchases, has identified 12 loans secured by properties in Missouri totaling approximately $690,000. The plaintiffs allege that Century charged illegal loan origination fees and closing costs in violation of the Missouri Second Mortgage Loans Act. Under the purchase agreement with Century, it retained all fees and costs it collected. The plaintiffs are seeking both actual and punitive damages. The Company has not at this point reached any conclusion regarding the merits of the lawsuit. RIVIERA HOLDINGS: Plaintiffs File Amended Securities Suit in NV --------------------------------------------------------------- Plaintiffs filed an amended class action in the Clark County, Nevada District Court against Riviera Holdings Corporation and Company directors: (1) William L. Westerman, (2) Robert R. Barengo, (3) Jeffrey A. Silver and (4) Paul A. Harvey The plaintiffs in the suit assert, among other things, that the defendants violated their fiduciary duties because they did not take affirmative steps in furtherance of an offer by a third party to purchase all of the outstanding Common Stock at a premium price. That offer was contingent upon, among other things, a waiver by the holders of the 11% Notes of the right to an accelerated repayment of the 11% Notes at a premium, which would be triggered by that third party's purchase of the Common Stock. In the complaint, the plaintiff seeks an order which would require the individual defendants to take the following actions, among others: (i) cooperate with any individual who makes a bona fide offer to acquire the Company; (ii) take steps that are calculated to result in a buy-out or takeover of the Company at the highest price; (iii) comply with their fiduciary duties, and reimburse the plaintiff's class for damages, costs and disbursements related to the lawsuit The complaint states that the named plaintiff also seeks to have all of the Company's public shareholders, excluding the defendants, certified as a class for purposes of the class action suit and seeks to be the representative of the class. On July 10, 2003, the defendants filed a motion to dismiss the suit against all defendants on the grounds that the suit was filed without the authorization of the plaintiff. This motion to dismiss has not yet been heard or ruled upon. An amended complaint was filed on July 11, 2003, alleging, among other things, that the Director defendants are attempting to entrench themselves in their position of control. RIVIERA HOLDINGS: Stockholders Lodge Securities Suit in NV Court ---------------------------------------------------------------- Riviera Holdings Corporation faces a class action filed in the Clark County, Nevada District Court. The suit also names as defendants: (1) William L. Westerman, (2) Robert R. Barengo, (3) Jeffrey A. Silver, (4) Paul A. Harvey and (5) Vincent L. DiVito The named plaintiff in this action is a shareholder of the Company and also seeks to have all of the Company's public shareholders, excluding defendants and related shareholders, certified as a class for purposes of the class action. On July 21, 2003, the defendants filed a motion to dismiss the action on the grounds that the complaint fails to state a claim upon which relief may be granted. This motion to dismiss has not yet been heard or ruled upon. The suit asserts, among other things, that the defendants violated their fiduciary duties because they did not take affirmative steps in furtherance of an offer by a third party to purchase all of the outstanding Common Stock at a premium price. That offer was contingent upon, among other things, a waiver by the holders of the 11% Notes of the right to an accelerated repayment of the 11% Notes at a premium, which would be triggered by that third party's purchase of the Common Stock. SHURGARD STORAGE: CA Court Limits Class in Consumer Fraud Suit -------------------------------------------------------------- The Superior Court of California for Orange County limited the class in the lawsuit filed against Shurgard Storage Centers, Inc. to California customers only. The complaint alleges that the Company misrepresents the size of its storage units, seeks class action status and seeks damages, injunctive relief and declaratory relief against the Company under California statutory and common law relating to consumer protection, unfair competition, fraud and deceit and negligent misrepresentation. No class has yet been certified. The Company vigorously denies the allegations. TACO BELL: Reaches $1.5 Million Settlement With Former Employees ---------------------------------------------------------------- Taco Bell reached a $1.5 million settlement with about 1,000 former employees who had sued the company claiming overtime and meal break violations at restaurants in Oregon, Associated Press Newswires reports. The employees will be paid an amount of the settlement based on their length of employment at the fast-food chain, said India Simmons, a spokeswoman for PR Ink, a public relations firm representing the plaintiffs. The lawsuit, filed in 1997, was certified as a class action in 1999, with 13,000 former employees from about 45 Oregon Taco Bell stores participating, Ms. Simmons said. Just under 1,000 employees submitted a claim in Multnomah County Circuit Court, making them eligible for the settlement, said Paul Breed, the plaintiffs' attorney. Taco Bell is a division of Yum! Brands Inc., which also owns KFC and Pizza Hut. VIRAGE INC.: Enters Settlement for Consolidated Securities Suit --------------------------------------------------------------- Virage, Inc. has entered a settlement for the consolidated securities class action filed in the United States District Court for the Southern District of New York, on behalf of all persons who purchased the common stock of the Company from June 28, 2000 through December 6, 2000. The defendants are the Company, one of its current officers and one of its former officers, and investment banking firms that served as underwriters for the Company's initial public offering. The operative amended complaint alleges liability under Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, on the grounds that the registration statement for the IPO did not disclose that: (1) the underwriters agreed to allow certain customers to purchase shares in the IPO in exchange for excess commissions paid to the underwriters; and (2) the underwriters arranged for certain customers to purchase additional shares in the aftermarket at predetermined prices. The complaint also appears to allege that false or misleading analyst reports were issued. The complaint does not claim any specific amount of damages. Similar allegations were made in other lawsuits challenging over 300 other initial public offerings and follow-on offerings conducted in 1999 and 2000. The cases were consolidated for pretrial purposes. On February 19, 2003, the court ruled on all defendants' motions to dismiss. The court denied the motions to dismiss the claims under the Securities Act of 1933. The court granted the motions to dismiss the claims under the Securities Exchange Act of 1934. The Company has decided to accept a settlement proposal presented to all issuer defendants. In this settlement, plaintiffs will dismiss and release all claims against the defendants, in exchange for a contingent payment by the insurance companies collectively responsible for insuring the issuers in all of the IPO cases, and for the assignment or surrender of control over certain claims the Company may have against the underwriters. The defendants will not be required to make any cash payments in the settlement, unless the pro rata amount paid by the insurers in the settlement exceeds the amount of the insurance coverage, a circumstance which the Company does not believe will occur. The settlement will require approval of the court, which cannot be assured, after class members are given the opportunity to object to the settlement or opt out of the settlement. New Securities Fraud Cases MATRIA HEALTHCARE: Chitwood & Harley Lodges Stock Lawsuit in GA --------------------------------------------------------------- Chitwood & Harley, LLP initiated a securities class action against Matria Healthcare, Inc., Parker H. Petit, Jeffrey D. Koepsell, and George W. Dunaway, in the United States District Court for the Northern District of Georgia. The lawsuit was filed on behalf of all persons who purchased or otherwise acquired the securities of Matria Healthcare, Inc. (NASDAQ: MATR), between October 24, 2001 and June 25, 2002, inclusive. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between October 24, 2001 and June 25, 2002. During the class period, the defendants touted the "strong performance" of all of its diabetes businesses and repeatedly bragged about the company's growth, noting the signing of new contracts and anticipated contracts. Defendants assured the market during this time that they were ramping up the company's infrastructure and implementing a major systems change that would help them fulfill their goal to be the most technologically advanced provider in their sector of the health industry and that would significantly increase their capabilities. Citing their growth, defendants explained that the reason expenses had exceeded anticipated revenues at certain times was that it was difficult to time the need for additional personnel and infrastructure with the receipt of large contracts because "contractual negotiations can delay the anticipated start dates for new disease management programs." Unbeknownst to the investors, however, the complaint alleges that the company was experiencing serious known problems that rendered defendants' Class Period statements false and misleading and that defendants had a duty to disclose under Item 303(a)(ii) to Regulation S-K. Specifically, the complaint alleges that the defendants failed to disclose until June 25, 2002, despite a duty to do so, the following adverse, known facts: (1) the company's Health Enhancement Segment was experiencing significant "information system constraints" which led to unfilled customer orders; (2) the company's Facet Technologies division was experiencing higher costs as a result of undisclosed inventory and supply chain management problems; (3) Facet's gross margins were materially and adversely affected by decreasing price concessions from its major suppliers; (4) Matria' s gross profit margins were being negatively impacted by an increase in the price of one of its key drugs; and (5) the company's Health Enhancement revenues would be negatively impacted by at least $800,000 due to the bankruptcy of a health plan whose deteriorating financial condition the defendants knew of or were severely reckless in disregarding. The complaint alleges that the defendants were motivated to conceal these problems in order to inflate the purchase price of Matria common stock because defendants negotiated two acquisitions during the Class Period, using Matria common stock as currency. On June 25, 2002, after the close of trading, defendants shocked the market by revising the company's financial outlook for fiscal 2002 and revealing the problems discussed above. In response to the Company's shocking news, the price of Matria's common stock plummeted on unusually heavy volume the next trading day, dropping from nearly $12 to $7 before closing at $8.95 per share. A chorus of Wall Street analysts also downgraded the stock as a result. For more details, contact Lauren S. Antonino by Phone: 888-873-3999/404-873-3900 ext. 6888 or contact Jennifer L. Morris by Phone: 888-873-3999/404-873-3900 ext.6883 by E-mail: jlm@classlaw.com SINGING MACHINE: Schiffrin & Barroway Files Stock Lawsuit in FL --------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of all purchasers of the common stock of The Singing Machine, Inc. (AMEX:SMD) from February 14, 2001 through July 14, 2003, inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between February 14, 2001 and July 14, 2003, thereby artificially inflating the price of Singing Machine common stock. The complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (1) that the Company had materially overstated its net income in violation of generally accepted accounting principles (GAAP); (2) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; (3) that the Company avoided taking sufficient changes to earnings in 2001 and 2002 to account for income tax liabilities; and (4) that as a result, the Company's financial results were materially overstated at all relevant times. On June 27, 2003, the Singing Machine announced that it would restate its fiscal 2002 financial statements and possibly fiscal 2001 financial statements to increase the accrual for income taxes. Moreover, the Company stated that the restatement will have the effect of reducing net income for fiscal 2002 and possibly fiscal 2001. Market reaction to the news was swift. The Singing Machine's shares fell 33%, or $1.80 per share, to close at $3.60 per share on June 27, 2003. On July 14, 2003, the Company announced further details about its restatement and also announced that ``its auditors have expressed 'substantial doubt' about Singing Machine's ability to continue as a going concern.'' News of this again shocked the market. Shares of the Singing Machine fell 19% percent to close at $3.03 per share on July 15, 2003. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: (888) 299-7706 (toll free) or (610) 667-7706 or by E- mail: info@sbclasslaw.com ********* A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to carconf@beard.com are encouraged. Each Friday's edition of the CAR includes a section featuring news on asbestos-related litigation and profiles of target asbestos defendants that, according to independent researches, collectively face billions of dollars in asbestos-related liabilities. The Asbestos Defendant Profiles is backed by an online database created to respond to custom searches. Go to http://litigationdatasource.com/asbestos_defendant_profiles.html ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2003. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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