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C L A S S A C T I O N R E P O R T E R
Monday, August 18, 2003, Vol. 5, No. 162
Headlines
ALLIANCE SEMICONDUCTOR: Named As Defendant in Tower Stock Suit
ALLSTATE CORPORATION: Review of Nationwide Certification Granted
ALLSTATE CORPORATION: Faces Suits For Fair Credit Act Violations
ANADARKO PETROLEUM: Royalty Owners To File New Suit in TX Court
AUTOBYTEL INC.: Agrees To Settle Securities Fraud Lawsuit in NY
AUTOWEB.COM: Agrees to Settle NY Consolidated Securities Lawsuit
AUTOWEB.COM: Dropped as Defendant in Florida CSFB Stock Lawsuit
AVATAR HOLDINGS: Investors Commence Securities Fraud Suits in DE
CAPITAL ONE: Plaintiffs Appeal VA Securities Lawsuit Dismissal
CHICAGO CUBS: Sued For Violations of State Ticket Scalping Act
CONCORD EFS: Asks For Dismissal of Securities, Derivative Suits
CONCORD EFS: Faces Consolidated Securities Lawsuit in TN Court
CONCORD EFS: Shareholders Launch Suit V. First Data Merger in TN
ELECTRO SCIENTIFIC: Plaintiffs To File Consolidated Suit in OR
FIRST UNION: Reaches $5M Settlement to Investment Scheme Lawsuit
FLEXTRONICS INTERNATIONAL: Asks CA Court To Dismiss Stock Suit
HARMONIC INC.: Plaintiffs Appealed CA Ruling on Securities Suit
HEALTH NET: Fairness Hearing For Suit Settlement Set Oct. 2003
HEALTH NET: JPMDL Transfers Managed Care Litigation To S.D. FL
HOMESTORE INC.: Agrees To Settle CALSTeRS' Securities Fraud Suit
INDIANA: Brown County Officials Approve Contractor For New Jail
INVESTORS FINANCIAL: Reaches Agreement To Settle Overtime Suit
IRVINE SENSORS: Asks CA Court To Dismiss Securities Fraud Suit
KOS PHARMACEUTICALS: To Oppose Writ of Certiorari For Stock Suit
LOUISIANA: Court Remands Race Bias Suit For Certification Review
MITSUBISHI: Minority Workers Allege Discrimination, Retaliation
MURPHY OIL: LA Residents Launch Lawsuit Over June Refinery Fires
NATIONWIDE FINANCIAL: Summary Judgment Arguments Held in Ohio
NATIONWIDE FINANCIAL: CT Court Allows Filing of Amended Lawsuit
NATIONWIDE LIFE: Asks LA Court To Dismiss Securities Fraud Suit
NOVELL: Three-Judge Panel Limits Scope Of Securities Fraud Suit
PERINI CORPORATION: San Francisco, CA Launches Civil Fraud Suit
PERINI CORPORATION: To Ask MA Court To Dismiss Securities Suit
POLO: Asks For Partial Summary Judgment in Wardrobing Suit
PROGRESS ENERGY: Inks Agreement To Settle Right-of-Way Suit
STERICYCLE INC.: AZ, CO, UT Consumers Launch Antitrust Lawsuits
New Securities Fraud Cases
FIRSTENERGY CORPORATION: Milberg Weiss Lodges Stock Suit in Ohio
IMPATH INC.: Kirby McInerney Lodges Securities Suit in S.D. NY
LABORATORY CORPORATION: Emerson Poynter Files Stock Suit in NC
LABORATORY CORPORATION: Kirby McInerney Lodges Stock Suit in NC
*********
ALLIANCE SEMICONDUCTOR: Named As Defendant in Tower Stock Suit
--------------------------------------------------------------
Alliance Semiconductor Corporation was named as a defendant in a
class action filed in the United States District Court for the
Southern District of New York against Tower Semiconductor Ltd.,
certain of Tower's directors, including N. Damodar Reddy, and
certain of Tower's shareholders (including the Company).
The lawsuit alleges violations of Section 14(a) of the
Securities Exchange Act of 1934 and Rule 14a-9 promulgated
thereunder, and also alleges that certain defendants (including
N. Damodar Reddy and the Company) have liability under Section
20(a) of the Exchange Act.
The lawsuit was brought by plaintiffs on behalf of a putative
class of persons who were ordinary shareholders of Tower at the
close of business on April 1, 2002, the record date for voting
on certain matters proposed in a proxy statement issued by
Tower.
The Company has reviewed a copy of the complaint, and believes
it has meritorious defenses to the allegations.
ALLSTATE CORPORATION: Review of Nationwide Certification Granted
----------------------------------------------------------------
The Eleventh Circuit Court of Appeals granted a review of the
certification of one of the nationwide class actions filed
against Allstate Corporation regarding its specification of
after-market (non-original equipment manufacturer) replacement
parts in the repair of insured vehicles.
The Company faces two similar suits. One of these suits alleges
that the specification of such parts constitutes breach of
contract and fraud, and this suit mirrors to a large degree
lawsuits filed against other carriers in the industry. The
plaintiffs allege that after-market parts are not "of like kind
and quality" as required by the insurance policy, and they are
seeking actual and punitive damages.
In the second lawsuit, plaintiffs allege that the Company and
three co-defendants have violated federal antitrust laws by
conspiring to manipulate the price of auto physical damage
coverages in such a way that not all savings realized by the use
of aftermarket parts are passed on to the policyholders. The
plaintiffs seek actual and treble damages. In November 2002, a
nationwide class was certified in this case. The defendants
filed a petition to appeal the certification, and the Eleventh
Circuit Court of Appeals granted review of the certification.
ALLSTATE CORPORATION: Faces Suits For Fair Credit Act Violations
----------------------------------------------------------------
Allstate Corporation faces one putative statewide and a number
of putative nationwide class actions in various courts seeking
actual and punitive damages from the Company and alleging that
The Company violated the Fair Credit Reporting Act or state law
by failing to provide appropriate notices to applicants and/or
policyholders when adverse action was taken as a result of
information in a consumer report or by ordering consumer reports
without a permissible purpose.
These cases are all pending in federal courts, and all but one,
filed in federal court in Louisiana, have been centralized in
the federal court in Nashville, Tennessee.
The Company is also defending a putative nationwide class action
that alleges that the Company discriminates against non-
Caucasian policyholders, through underwriting and rate-making
practices including the use of credit by charging them higher
premiums. The Company is also defending two putative statewide
class actions challenging its use of credit under certain state
insurance statutes.
The Company denies all allegations.
ANADARKO PETROLEUM: Royalty Owners To File New Suit in TX Court
---------------------------------------------------------------
A group of royalty owners is filing a new class action against
Anadarko Petroleum Corporation, after the Houston Court of
Appeals decertified the original suit.
The group filed a suit on behalf of the Company's gas royalty
owners in Texas. The 21st Judicial District Court of Washington
County, Texas certified the class in December 1999, in
connection with a gas royalty underpayment case against the
Company. The certification did not constitute a review by the
court of the merits of the claims being asserted. The royalty
owners' pleadings did not specify the damages being claimed,
although a demand for damages in the amount of $100 million was
asserted.
The Company appealed the class certification order. A favorable
decision from the Houston Court of Appeals decertified the
class. The royalty owners did not appeal this matter to the
Texas Supreme Court and the decision from the Houston Court of
Appeals became final in the second quarter of 2002.
The royalty owners filed a new petition alleging that the class
may properly be brought so long as "sub-class" groups are broken
out. The Company is contesting this new petition.
AUTOBYTEL INC.: Agrees To Settle Securities Fraud Lawsuit in NY
---------------------------------------------------------------
Autobytel, Inc. agreed to settle the consolidated securities
class action filed in the United States District Court for the
Southern District of New York against it and certain of its
current and former directors and officers and underwriters
involved in the Company's initial public offering.
This action purports to allege violations of the Securities Act
of 1933 and the Securities Exchange Act of 1934. Plaintiffs
allege that the underwriter defendants agreed to allocate stock
in the Company's initial public offering to certain investors in
exchange for excessive and undisclosed commissions and
agreements by those investors to make additional purchases of
stock in the aftermarket at pre-determined prices.
Plaintiffs allege that the prospectus for the Company's initial
public offering was false and misleading in violation of the
securities laws because it did not disclose these arrangements.
The action seeks damages in an unspecified amount. The action
is being coordinated with approximately 300 other nearly
identical actions filed against other companies.
A motion to dismiss addressing issues common to the companies
and individuals who have been sued in these actions was filed on
July 15, 2002. On October 9, 2002, the court dismissed the
Autobytel Individual Defendants from the case without prejudice
based upon Stipulations of Dismissal filed by the plaintiffs and
the Autobytel Individual Defendants. On February 19, 2003, the
Court denied the motion to dismiss the complaint against the
Company.
The Company has approved a Memorandum of Understanding (MOU) and
related agreements, which set forth the terms of a settlement
between it and the plaintiff class. It is anticipated that any
of the Company's potential financial obligation to plaintiffs
due pursuant to the terms of the MOU and related agreements will
be covered by existing insurance.
The MOU and related agreements are subject to a number of
contingencies, including the approval of the MOU by a sufficient
number of the other approximately 300 companies who are part of
the consolidated case, the negotiation of a settlement
agreement, and approval by the court. The Company cannot
determine whether or when a settlement will occur or be
finalized and whether the outcome of the litigation will have a
material impact on its results of operations or financial
condition in any future period.
AUTOWEB.COM: Agrees to Settle NY Consolidated Securities Lawsuit
----------------------------------------------------------------
Autoweb.com, Inc. agreed 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 Autoweb's
current and former directors and officers and underwriters
involved in the Company's initial public offering.
The suit alleges violations of the Securities Act of 1933 and
the Securities Exchange Act of 1934. Plaintiffs allege that the
underwriter defendants agreed to allocate stock in the Company's
initial public offering to certain investors in exchange for
excessive and undisclosed commissions and agreements by those
investors to make additional purchases of stock in the
aftermarket at pre-determined prices.
Plaintiffs allege that the prospectus for the Company's initial
public offering was false and misleading in violation of the
securities laws because it did not disclose these arrangements.
The action seeks damages in an unspecified amount. The action
is being coordinated with approximately 300 other nearly
identical actions filed against other companies.
A motion to dismiss addressing issues common to the companies
and individuals who have been sued in these actions was filed on
July 15, 2002. On October 9, 2002, the court dismissed the
individual defendants from the case without prejudice based upon
Stipulations of Dismissal filed by the plaintiffs and the
individual defendants.
On February 19, 2003, the Court dismissed the Section 10(b)
claim without prejudice and with leave to replead but denied the
motion to dismiss the claim under Section 11 of the Securities
Act of 1933 against the Company.
The Company has approved the MOU and related agreements, which
set forth the terms of a settlement between the Company and the
plaintiff class. It is anticipated that any of Autoweb's
potential financial obligation to plaintiffs due pursuant to the
terms of the MOU and related agreements will be covered by
existing insurance.
The MOU and related agreements are subject to a number of
contingencies, including the approval of the MOU by a sufficient
number of the other approximately 300 companies who are part of
the consolidated case, the negotiation of a settlement
agreement, and approval by the court.
AUTOWEB.COM: Dropped as Defendant in Florida CSFB Stock Lawsuit
---------------------------------------------------------------
Plaintiffs voluntarily dismissed Autoweb.com, Inc. as a
defendant in the securities class action filed in the
United States District Court for the Southern District of
Florida against Credit Suisse First Boston (CSFB), the co-lead
underwriter of the Company's initial public offering.
The complaint named the Company, the former Chief Executive
Officer and the former Chief Financial Officer, as defendants.
The complaint alleged claims against Autoweb and such former
officers for violations of the Securities Act of 1933,
Securities Exchange Act of 1934, and Florida's Blue Sky laws and
also alleged claims based on common law theories of fraud,
negligent misrepresentation and respondeat superior.
The complaint made similar allegations against approximately 50
other companies for which CSFB was the lead or a co-lead
underwriter. The complaint alleged that the defendants
disseminated false and misleading information to the public,
which misrepresented the accuracy of Autoweb's initial public
offering price, its financial condition and future revenue
prospects.
The complaint further alleged that the effect of the purported
fraud was to manipulate Autoweb's stock price so that the
defendants could profit from the manipulation. The action
sought damages in an unspecified amount.
On June 19, 2003, an amended complaint was filed in this action.
The amended complaint states that plaintiffs have voluntarily
dismissed the Company as a defendant without prejudice.
AVATAR HOLDINGS: Investors Commence Securities Fraud Suits in DE
----------------------------------------------------------------
Avatar Holdings, Inc. faces several securities class actions in
the United States District Court for the District of Delaware on
behalf of a class of all persons or entities who hold 7%
convertible subordinated notes due April 1, 2005 sold by Avatar
Holdings Inc. (NasdaqNM:AVTR).
The complaint alleges that defendants violated Sections 12(a)(2)
and 15 of the Securities Act of 1933. The complaint names as
defendants the Company, Gerald D. Kelfer, Avatar's Chief
Financial Officer, President and Vice Chairman, and Juanita I.
Kerrigan, Avatar's Vice President and Secretary.
The Company believes the allegations contained in the suits are
without merit, it stated in a disclosure to the Securities and
Exchange Commission.
CAPITAL ONE: Plaintiffs Appeal VA Securities Lawsuit Dismissal
--------------------------------------------------------------
Plaintiffs appeal the dismissal of the consolidated securities
class action filed against Capital One Financial Corporation
and several of the Company's executive officers in the United
States District Court for the Eastern District of Virginia.
The suit alleged that the Company and the Individual Defendants
violated Section 10(b) of the Exchange Act, Rule 10b-5
promulgated thereunder, and Section 20(a) of the Exchange Act.
The amended complaint asserted a class period of January 16,
2001, through July 16, 2002, inclusive.
The amended complaint alleged generally that, during the
asserted class period, the Company misrepresented the adequacy
of its capital levels and loan loss allowance relating to higher
risk assets. In addition, the amended complaint alleged
generally that the Company failed to disclose that it was
experiencing serious infrastructure deficiencies and systemic
computer problems as a result of its growth.
On December 4, 2002, the Court granted defendants' motion to
dismiss plaintiffs' amended complaint with leave to amend.
Pursuant to that order, plaintiffs filed a second amended
complaint on December 23, 2002, which asserted the same class
period and alleged violations of the same statutes and rule.
The second amended complaint also added a new Individual
Defendant and asserted violations of GAAP.
Defendants moved to dismiss the second amended complaint on
January 8, 2003, and plaintiffs filed a motion on March 6, 2003,
asking to amend their complaint. On April 10, 2003, the court
granted defendants' motion to dismiss plaintiffs' second amended
complaint, denied plaintiffs' motion for permission to amend,
and dismissed the consolidated action with prejudice. Plaintiffs
appealed the court's order, opinion, and judgment to the United
States Court of Appeals for the Fourth Circuit.
CHICAGO CUBS: Sued For Violations of State Ticket Scalping Act
--------------------------------------------------------------
The Chicago Cubs is violating Illinois scalping laws and
defrauding consumers by illegally transferring baseball tickets
to a brokerage service that the team created - an 'alter ego'
for the team, which then sells the tickets at inflated prices.
This was the opening argument made by Paul M. Bauch, lawyer for
the plaintiffs, during the trial stemming from the class action,
the Chicago Tribune reports.
Mr. Bauch said such an arrangement with the brokerage service,
Wrigley Field Premium Ticket Services, places the Cubs in
violation of the Illinois Ticket Scalping Act. Mr. Bauch is
seeking to have the operation halted and to have fans who bought
tickets through the brokerage reimbursed at $100 per ticket.
"It is what we believe to be a very thinly disguised artifice to
evade the statute," he said.
James Klenk, the lawyer representing the Cubs and the ticket
service, insisted, during his opening arguments, that the firm
is a licensed broker, operating separately from the Cubs, that
purchases its tickets from the ballclub. Mr. Klenk said the
brokerage was set up as a way to better serve fans who buy
tickets through brokers, by offering lower prices and tickets
that are guaranteed to be legitimate.
The first witness to testify was Mark McGuire, the Cubs'
executive vice president for business operations, who said he
started investigating the idea of a separate brokerage in 2001.
Mr. McGuire said the tickets come from a pool reserved for sale
to VIPs, such as league officials and sponsors, among some
others. Mr. McGuire said he instructed Frank Maloney, the Cubs'
director of ticket operations to reduce the size of the pool and
sell the difference to Wrigley Field Premium.
This season, according to the Cubs, the brokerage has sold an
average of fewer than 150 tickets per game. The Cubs are owned
by Tribune Co., which also owns the Chicago Tribune.
CONCORD EFS: Asks For Dismissal of Securities, Derivative Suits
---------------------------------------------------------------
Concord EFS, Inc. filed motions to dismiss a purported
securities class action and a consolidate stockholder derivative
suit filed in the United States District Court for the Western
District of Tennessee and in the Circuit Court for the Thirtieth
Judicial District at Memphis, respectively.
The suits also name as defendants certain of the Company's
officers and directors. The lawsuits raise allegations relating
to:
(1) the Company's financial performance between March 2001
and September 2002,
(2) changes in the price of its common stock during that
time,
(3) alleged failures to disclose material facts, and
(4) alleged insider trading and breaches of fiduciary
duties by certain officers and certain directors
On April 21, 2003 the plaintiffs in the Tennessee state court
derivative action filed a consolidated complaint which adds
allegations that the defendants arranged the proposed merger
with First Data Corporation at a below market price in return
for indemnification against alleged prior wrong doing and for
other benefits to them personally. The lawsuits seek
unspecified compensatory and punitive damages, attorneys' fees,
and other relief. In addition, the Tennessee state court
derivative action seeks an injunction against the proposed
merger.
Although these matters are in the preliminary stages, the
Company believes that the claims against it and its directors
and officers are without merit.
On April 1, 2003, the Company filed a motion to dismiss the
consolidated amended complaint filed in the shareholder
derivative litigation pending in the United States District
Court for the Western District of Tennessee. This motion was
fully briefed as of May 30, 2003, but has yet to be ruled
on by the court.
On May 2, 2003 Concord filed a motion to dismiss the
consolidated amended complaint filed by the lead plaintiffs in
the purported securities class action pending in the United
States District Court for the Western District of Tennessee.
This motion was fully briefed as of June 25, 2003, but has yet
to be ruled on by the court.
On June 20, 2003 Concord filed a motion to dismiss the
consolidated complaint filed in the shareholder derivative
litigation pending in Tennessee state court. This motion has
yet to be ruled on by the court.
CONCORD EFS: Faces Consolidated Securities Lawsuit in TN Court
--------------------------------------------------------------
Concord EFS, Inc. faces a consolidated class actions filed in
the Shelby County Circuit Court of Tennessee for the Thirtieth
Judicial District at Memphis. The defendants in these suits are
certain of the Company's current and former officers and
directors.
The suit generally alleges breaches of the defendants' duty of
loyalty and due care in connection with the defendants' alleged
attempt to sell Concord without maximizing the value to
shareholders in order to advance the defendants' alleged
individual interests in obtaining indemnification agreements
related to the securities and other derivative litigation
discussed above. The complaint seeks class certification,
injunctive relief directing the defendants' conduct in
connection with an alleged sale or auction of Concord,
reasonable attorneys' fees, experts' fees and other costs and
relief the court deems just and proper.
Although these matters are in the preliminary stages, Concord
believes that the claims against its officers and directors are
without merit.
CONCORD EFS: Shareholders Launch Suit V. First Data Merger in TN
----------------------------------------------------------------
Concord EFS, Inc. faces a class action filed in the Shelby
County Circuit Court in Tennessee. The suit also names as
defendants certain of the Company's current and former officers
and directors, and First Data Corporation.
The complaint contains allegations regarding the individual
defendants' alleged insider trading and alleged violations of
securities and other laws and asserts that this alleged
misconduct reduced the consideration offered to the Company's
shareholders in the proposed merger between the Company and
First Data. The complaint seeks class certification, attorneys'
fees, expert fees, costs and other relief the court deems just
and proper.
The complaint seeks an order enjoining consummation of the
merger, rescinding the merger if it is consummated and setting
it aside or awarding rescissory damages to members of the
putative class, and directing the defendants to account to the
putative class members for unspecified damages.
ELECTRO SCIENTIFIC: Plaintiffs To File Consolidated Suit in OR
--------------------------------------------------------------
Plaintiffs to file consolidated securities class action against
Electro Scientific Industries, Inc. in the United States
District Court for the District of Oregon. The suit also names
as defendants:
(1) David F. Bolender,
(2) James T. Dooley, and
(3) Joseph L. Reinhart
The individual defendants are current and/or former officers and
directors of the Company. Lead plaintiffs and lead counsel for
plaintiffs have been appointed. Plaintiffs' consolidated class
action is due to be filed 45 days following the filing of the
Company's restated financial statements.
In March 2003, the Company's Audit Committee commenced an
investigation into certain accounting matters. As a result of
the investigation, which was completed on July 11, 2003, the
Company restated its financial statements for the fiscal year
ended June 1, 2002 and for the quarters ended August 31, 2002
and November 30, 2002.
The complaints were filed on behalf of a purported class of
persons who purchased the Company's common stock between
September 17, 2002 and at the latest April 15, 2003. The
complaints assert causes of action (and seek unspecified
damages) for alleged violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, as well as Section 20(a) of the Act.
In particular, the complaints allege that the defendants were
involved in making false and misleading statements during the
putative class period about the Company's business, prospects,
and operations, all of which resulted in artificially inflating
the Company's stock price
Discovery had not yet commenced when this report was filed, and
the Company was in the early stages of its assessment of the
possible outcomes of this litigation. The Company expects,
however, that the litigation will be costly and will to some
degree divert management's attention from daily operations.
FIRST UNION: Reaches $5M Settlement to Investment Scheme Lawsuit
----------------------------------------------------------------
First Union National Bank agreed recently to settle a securities
fraud class action for $5 million after only two days of
testimony during a federal jury trial in Fort Lauderdale, the
South Florida Sun-Sentinel reports.
The bank, which had handled accounts for Cyprus Funds, a company
that ran a multimillion-dollar securities investment scheme, had
been accused in the civil lawsuit of aiding and abetting the
fraud. The 531 investors, many of whom were Ohio retirees and
wealthy Latin Americans, lost about $34 million.
The trial, which was expected to last between two and three
weeks, ended after two days of testimony. The settlement came
before any defense witnesses were called and on the same day
that bank employee Zoraida Diaz was to be called to testify by
the plaintiffs' attorney.
Miami attorney Harley Tropin, who represented the investors,
argued that First Union, through Ms. Diaz, was actively involved
in the investment scheme run by Cyprus Funds, and should have
put a stop to the fraud and reported it. However, First Union
attorneys argued that the bank and its employee had no knowledge
of the fraud and had done nothing wrong.
Legal experts have said the case against First Union was unusual
because it resulted in a jury trial. 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.
Tracy Nichols, a Miami attorney who defends companies in
securities class actions, said that in general, big cases
involving complex securities issues difficult for the average
juror to understand have "inherent risk" for the defendants.
Mr. Tracy said that is why the defendant companies settle;
because of the risk that the jury might take an adverse view.
Cyprus, which called itself an offshore mutual fund, was sued in
a 1999 civil action by the Securities and Exchange Commission,
along with its Miami-based investment advisor, Latin American
Services Co. Ltd., and four Cyprus directors for defrauding
investors. The SEC said Cyprus actually was an elaborate Ponzi
scheme, in which money was raised from new investors and then
used to pay old ones until the company collapsed.
Regulators said most of the money raised was misappropriated and
used to buy property, other businesses such as a sheep farm and
luxury items that included jewelry and cars.
Three of the Cyprus directors agreed to a permanent injunction
barring them from committing fraud in the future, without
admitting or denying the allegations. The fourth director, Eric
Bartoli, also was permanently enjoined from committing fraud in
a default judgment against him. It is believed that Mr. Bartoli
fled the country and may be living in Peru, according to Michael
Goldberg, the court-appointed receiver from Miami who is
responsible for gathering and selling the company's remaining
assets and returning the money to investors.
Mr. Goldberg has been able to recover about $7 million for the
investors, which will be added to the $5 million settlement,
which was preliminarily approved by US District Judge Kenneth
Marra. Judge Marra will hold a hearing October 24 to make a
final ruling.
FLEXTRONICS INTERNATIONAL: Asks CA Court To Dismiss Stock Suit
--------------------------------------------------------------
Flextronics International Ltd. asked the United States District
Court for the Northern District of California to dismiss the
consolidated securities class action filed against it and
certain of its officers and directors.
The suit was filed on behalf of those who purchased, or
otherwise acquired, the Company's ordinary shares between
October 2, 2001 and June 4, 2002. The suit generally alleges
that, during this period, the defendants made misstatements to
the investing public about the financial condition and prospects
of the Company.
Plaintiffs later amended their allegations to change the class
period to January 18, 2001 to June 4, 2002. They also added
claims on behalf of plaintiffs who purchased shares pursuant to,
or traceable to, the secondary offerings of the Company on
February 1, 2001 and January 7, 2002. In addition, plaintiffs
added claims against the underwriters involved in those
offerings. On July 16, 2003, the Company filed a motion to
dismiss on behalf of itself and its officers and directors named
as defendants. A hearing on the motion to dismiss is scheduled
for September 24, 2003.
These actions seek unspecified damages. The Company believes
that the plaintiffs' claims lack merit but is unable to predict
the ultimate outcome of these lawsuits. There can be
no assurance the Company will be successful in defending the
lawsuits, and, if the Company is unsuccessful, the Company may
be subject to significant damages.
HARMONIC INC.: Plaintiffs Appealed CA Ruling on Securities Suit
---------------------------------------------------------------
Plaintiffs filed an appeal of the United States District Court
for the Northern District of California's refusal of its motion
to amend the judgment for a consolidated securities class action
against Harmonic, Inc. and certain of its officers and directors
(some of whom are no longer with Harmonic).
The suit was filed on behalf of persons who purchased the
Company's publicly traded securities between January 19 and June
26, 2000 and on behalf of a purported subclass of persons who
purchased C-Cube Microsystems, Inc. securities between January
19 and May 3, 2000. In addition to the Company and certain of
its officers and directors, the complaint also named C-Cube and
several of its officers and directors as defendants.
The complaint alleged that, by making false or misleading
statements regarding the Company's prospects and customers and
its acquisition of C-Cube, certain defendants violated sections
10(b) and 20(a) of the Securities Exchange Act of 1934. The
complaint also alleged that certain defendants violated section
14(a) of the Exchange Act and sections 11, 12(a)(2), and 15 of
the Securities Act of 1933 by filing a false or misleading
registration statement, prospectus, and joint proxy in
connection with the C-Cube acquisition.
On July 3, 2001, the court dismissed the consolidated complaint
with leave to amend. An amended complaint alleging the same
claims against the same defendants was filed on August 13, 2001.
Defendants moved to dismiss the amended complaint on September
24, 2001. On November 13, 2002, the court issued an opinion
granting the motions to dismiss the amended complaint without
leave to amend. Judgment for defendants was entered on December
2, 2002.
On December 12, 2002, plaintiffs filed a motion to amend the
judgment and for leave to file an amended complaint pursuant to
Rules 59(e) and 15(a) of the Federal Rules of Civil Procedure.
On June 6, 2003, the court denied plaintiffs' motion to amend
the judgment and for leave to file an amended complaint.
Plaintiffs filed a notice of appeal on July 1, 2003. According
to the scheduling order issued by the Court on July 3, 2003,
plaintiffs' opening brief is due on October 17, 2003. No
hearing date has been scheduled.
HEALTH NET: Fairness Hearing For Suit Settlement Set Oct. 2003
--------------------------------------------------------------
Fairness hearing for the settlement proposed by Health Net, Inc.
for the class action filed against it is set for October 2003 in
the United States District Court for the Southern District of
California.
Since May 1998, several complaints have been filed in federal
and state courts seeking an unspecified amount of damages on
behalf of an alleged class of persons who purchased shares of
common stock, convertible subordinated debentures and options to
purchase common stock of FPA Medical Management, Inc. (FPA) at
various times between February 3, 1997 and May 15, 1998.
The complaints name as defendants FPA, certain of FPA's
auditors, the Company and certain of its former officers, and
were filed in the:
(1) United States District Court for the Southern District
of California;
(2) United States Bankruptcy Court for the District of
Delaware; and
(3) California Superior Court in the County of Sacramento
The complaints allege that the Company and such former officers
violated federal and state securities laws by misrepresenting
and failing to disclose certain information about a 1996
transaction between the Company and FPA, about FPA's business
and about the Company's 1997 sale of FPA common stock held by
us. The suits were later consolidated in the Southern District
of California.
All claims against the Company's former officers were
voluntarily dismissed from the consolidated class action. In
early 2000, the Company filed a motion to dismiss all claims
asserted against it in the consolidated federal class action but
have not formally responded to the other complaints. That
motion has been withdrawn without prejudice and the cases have
been provisionally settled without calling for any payment from
the Company or its insurer.
The United States District Court for the Southern District of
California has granted preliminary approval to the settlement
and has scheduled a hearing for final review of the proposed
settlement for October 2003.
HEALTH NET: JPMDL Transfers Managed Care Litigation To S.D. FL
--------------------------------------------------------------
The Judicial Panel on Multidistrict Litigation (JPMDL)
transferred various class actions against managed care
companies, including the Company, to the United States District
Court for the Southern District of Florida for coordinated or
consolidated pretrial proceedings in "In re Managed Care
Litigation, MDL 1334." This proceeding is divided into two
tracks, the subscriber track, which includes actions brought on
behalf of health plan members, and the provider track, which
includes suits brought on behalf of physicians.
The subscriber track included four actions involving the
Company, three of which sought certification of nationwide class
actions for unspecified damages and injunctive relief. On
September 26, 2002, the court denied the motion for class
certification in the lead action against the Company in the
subscriber track.
In the interest of avoiding the further expense and burden of
continued litigation, the Company resolved all three actions,
which had sought nationwide class certification for immaterial
amounts ($5,000 in the aggregate), and the actions have been
dismissed with prejudice, with no admission of liability.
One action remains pending against the Company in the subscriber
track, State of Connecticut v. Physicians Health Services of
Connecticut, Inc. (filed in the United States District of
Connecticut on September 7, 2000). The suit asserts claims
against the Company subsidiary, Physicians Health Services of
Connecticut, Inc., and the Company that are similar, if not
identical, to those asserted in the previous lawsuit which the
United States Court of Appeals for the Second Circuit affirmed
dismissal of on March 27, 2002.
The provider track includes the following actions involving the
Company:
(1) Shane v. Humana, Inc., et al. (including Foundation
Health Systems, Inc.) (filed in the United States
District Court for the Southern District of Florida on
August 17, 2000 as an amendment to a suit filed in the
Southern District of Mississippi),
(2) California Medical Association v. Blue Cross of
California, Inc., PacifiCare Health Systems, Inc.,
PacifiCare Operations, Inc. and Foundation Health
Systems, Inc. (filed in the United States District
Court for the Northern District of California in May
2000),
(3) Klay v. Prudential Ins. Co. of America, et al.
(including Foundation Health Systems, Inc.) (filed in
the United States District Court for the Southern
District of Florida on February 22, 2001 as an
amendment to a case filed in the Northern District of
California),
(4) Connecticut State Medical Society v. Physicians Health
Services of Connecticut, Inc. (filed in Connecticut
state court on February 14, 2001),
(5) Lynch v. Physicians Health Services of Connecticut,
Inc. (filed in Connecticut state court on February 14,
2001),
(6) Sutter v. Health Net of the Northeast, Inc. (filed in
New Jersey state court on April 26, 2002) and
(7) Medical Society of New Jersey v. Health Net, Inc., et
al., (filed in New Jersey state court on May 8, 2002).
On March 2, 2001, the District Court for the Southern District
of Florida issued an order in the lead provider action (Shane)
granting the dismissal of certain claims with prejudice and the
dismissal of certain other claims without prejudice, and denying
the dismissal of certain claims.
On March 26, 2001, a consolidated amended complaint was filed in
the lead provider action, which adds new plaintiffs, including
Leonard Klay and the California Medical Association (who, as set
forth below, had previously filed claims against the Company),
and has, in addition to revising the pleadings of the original
claims under the federal Racketeer Influenced and Corrupt
Organizations Act (RICO), the Employee Retirement Income
Security Act (ERISA) and various state laws, added a claim under
the California Business and Professions Code.
On May 1, 2001, the Company filed a motion to compel arbitration
in Shane of the claims of all individual plaintiffs that allege
to have treated persons insured by the Company. On that same
date, the Company filed a motion to dismiss this action.
On September 26, 2002, the Court granted plaintiffs' motion for
class certification and granted plaintiffs' request for leave to
amend their complaint. The new complaint adds another managed
care company as a defendant, adds the Florida Medical Society
and the Louisiana Medical Society as plaintiffs, withdraws
Dennis Breen as a named plaintiff, and adds claims under the
New Jersey Consumer Fraud Act and the Connecticut Unfair Trade
Practices Act against defendants other than Health Net.
The Court has set a date of August 14, 2003 for oral argument on
pending motions to compel arbitration and August 19, 2003 for
oral argument on motions to dismiss this amended complaint. The
court has also entered a scheduling order with a trial date set
for June 2004. The action has also been referred for mediation.
Discovery is ongoing in the case.
On November 20, 2002, the Eleventh Circuit granted the
defendants' petition for review of the district court's
certification decision. Oral argument on defendants' appeal of
the class certification decision is scheduled to take place
before the Eleventh Circuit on September 11, 2003.
The CMA action alleges violations of RICO, certain federal
regulations and the California Business and Professions Code and
seeks declaratory and injunctive relief, as well as costs and
attorneys' fees. On March 26, 2001, the California Medical
Association was named as an additional plaintiff in the
consolidated amended complaint filed in the Shane action.
The Klay suit is a purported class action allegedly brought on
behalf of individual physicians in California who provided
health care services to members of the defendants' health plans.
The complaint alleges violations of RICO, ERISA, certain federal
regulations, the California Business and Professions Code and
certain state common law doctrines, and seeks declaratory and
injunctive relief and damages. On March 26, 2001, Leonard Klay
was named as an additional plaintiff in the consolidated amended
complaint filed in the Shane action.
The CSMS case was originally brought in Connecticut state court
against Physicians Health Services of Connecticut, Inc. (PHS-CT)
alleging violations of the Connecticut Unfair Trade Practices
Act. The complaint alleges that PHS-CT engaged in conduct that
was designed to delay, deny, impede and reduce lawful
reimbursement to physicians who rendered medically necessary
health care services to PHS-CT health plan members. The
complaint, which is similar to others filed against the Company
and other managed care companies, seeks declaratory and
injunctive relief. On March 13, 2001, the Company removed this
action to federal court. Before this case was transferred to
MDL 1334, the plaintiffs moved to remand the action to state
court and the federal District Court of Connecticut consolidated
this action and Lynch v. Physicians Health Services of
Connecticut, Inc., along with similar actions against Aetna,
CIGNA and Anthem, into one case entitled CSMS v. Aetna Health
Plans of Southern New England, et al. PHS-CT has not yet
responded to the complaint.
The Lynch case was also originally filed in Connecticut state
court. This case was brought by J. Kevin Lynch, M.D. and Karen
Laugel, M.D. purportedly on behalf of physician members of
the Connecticut State Medical Society who provide health care
services to PHS-CT health plan members pursuant to provider
service contracts. The complaint alleges that PHS-CT engaged in
improper, unfair and deceptive practices by denying, impeding
and/or delaying lawful reimbursement to physicians. The
complaint seeks declaratory and injunctive relief and damages.
On March 13, 2001, the Company removed this action to federal
court. Before this case was transferred to MDL 1334, the
plaintiffs moved to remand the action to state court and the
case was consolidated. PHS-CT has not yet responded to the
complaint. On July24, 2003, PHS-CT moved to compel to
arbitration the claims of plaintiffs Lynch and Laugel.
On April 26, 2002, plaintiff John Ivan Sutter, M.D., P.A. filed
an amended complaint in New Jersey state court joining Health
Net of the Northeast, Inc. (Health Net of the Northeast), a
Company subsidiary , in an action originally brought against
Horizon Blue Cross Blue Shield of New Jersey, Inc., CIGNA
Healthcare of New Jersey, Inc. and CIGNA Corporation
(collectively known as CIGNA), United Healthcare of New Jersey,
Inc. and United Healthcare Insurance Company and Oxford Health
Plans, Inc.
The complaint seeks certification of a statewide class of health
care providers who render or have rendered services to patients
who are members of health care plans sponsored by the
defendants. Plaintiff alleges that the defendants engage in
unfair and deceptive acts and practices designed to delay, deny,
impede and reduce compensation to physicians. The complaint
seeks unspecified damages and sets forth various causes of
action under New Jersey law.
On May 22, 2002, the New Jersey state court severed the action
into five separate cases. On May 24, 2002, Health Net of the
Northeast removed the case against it to federal court.
Plaintiff moved to remand, which motion was denied without
prejudice. On July 18, 2002, the JPML transferred this action
to MDL 1334 for coordinated or consolidated pretrial
proceedings.
On September 23, 2002, plaintiff filed in the MDL proceeding a
motion to remand to state court. Remand briefing was completed
on December 30, 2002. On July 24, 2003, the Health Net
defendants moved to compel to arbitration the claims of
plaintiff Sutter.
On May 8, 2002, the Medical Society of New Jersey filed a
complaint in New Jersey state court against the Company and its
subsidiaries, Health Net of the Northeast, Inc., First Option
Health Plan of New Jersey, Inc., and Health Net of New Jersey,
Inc. (the Health Net defendants).
Plaintiff brought this action on its own behalf and purportedly
on behalf of its physician members and alleges that the Health
Net defendants engage in practices which are designed to delay,
deny, impede and reduce compensation to physicians. Plaintiff
has requested declaratory and injunctive relief and has set
forth causes of action for violation of public policy,
violations of the New Jersey Consumer Fraud Act, violations of
the Healthcare Information Networks and Technologies Act (the
HINT Act) and tortious interference with prospective economic
relations.
On June 14, 2002, the Health Net defendants removed this case to
federal court. On July 3, 2002, the Health Net defendants filed
a motion to stay this action pending ruling by the JPMDL on
whether to transfer this case to MDL 1334. On July 15, 2002,
plaintiff filed a motion to remand this case to state court. On
August 2, 2002, the JPMDL transferred this case to MDL 1334 for
coordinated or consolidated pretrial proceedings.
HOMESTORE INC.: Agrees To Settle CALSTeRS' Securities Fraud Suit
----------------------------------------------------------------
Homestore Inc. agreed to settle a federal class action, filed by
the California State Teachers' Retirement System (Calstrs), for
$63.6 million in stock and cash, The Wall Street Journal
reports. The Company said it would put $10 million in cash into
escrow upon preliminary approval of the settlement agreement by
the US District Court, with an additional $3 million in cash due
after final approval.
Last year, the US District Court for the Central District of
California in Los Angeles named Calstrs the lead plaintiff in a
consolidation of lawsuits filed against Homestore and several
former executives. The lawsuits alleged Homestore falsified
financial statements and engaged in accounting irregularities in
order to artificially inflate revenues.
Under the terms of the settlement agreement, Homestore will pay
$13 million in cash and issue 20 million new common shares
valued at $50.6 million to members of the class. As indicated
above, the cash payments will be made in two separate payments,
linked to approval of the agreement by the court.
Homestore, an operator of home and real-estate Web sites, based
in Westlake Village, California, also, as part of the
settlement, will adopt corporate-governance provisions designed
to improve shareholder value, including two-year board terms,
the appointment of a new shareholder-appointed director and
minimum stock ownership requirements for directors. The company
also agreed not to use future stock options for director
compensation.
"Homestore has agreed to institute meaningful corporate-
governance protections, setting an example for all of Wall
Street," Jack Ehnes, chief executive officer of Calstrs, said of
the settlement. Homestore called it "an important step
forward."
Associated Press Newswires also contributed to this story.
INDIANA: Brown County Officials Approve Contractor For New Jail
---------------------------------------------------------------
Officials in Brown County, Indiana, gave tentative approval to
hire a Columbus contractor to construct a new jail, which a
class action settlement requires the county to start building
next month, the Associated Press Newswires reports.
The settlement with the Indiana Civil Liberties Union, which
represented inmates in the class action, requires bonds for
funding the jail to be sold this month. Commissioners in Brown
County said they likely will accept the $7 million bid by Dunlap
and Co. to build the 117-bed lockup and sheriff's department on
Indiana 46 on Nashville's east side. Nashville is about 60
miles south of Indianapolis.
The deal will be contingent on funding. Previous plans for a
new jail collapsed in 2001, because of bids that were higher
than officials anticipated, which, in turn, led officials to
back down because of threat of taxpayer disapproval.
INVESTORS FINANCIAL: Reaches Agreement To Settle Overtime Suit
--------------------------------------------------------------
Investors Financial Services Corporation reached an agreement to
settle the class action filed in the Superior Court of
California, County of Sacramento, alleging violations of
California wage and hour laws at the Company's Sacramento and
Walnut Creek facilities.
On July 23, 2003, the Company reached an agreement in principle
with representatives of the plaintiffs to settle the case. The
settlement will not have a material impact on the Company's
business, financial condition or results of operations. In
anticipation of this settlement and related costs, the Company
accrued a liability of approximately $1.0 million in the second
quarter of 2003.
IRVINE SENSORS: Asks CA Court To Dismiss Securities Fraud Suit
--------------------------------------------------------------
Irvine Sensors Corporation asked the United States District
Court for the Central District of California to dismiss the
consolidated securities class action filed against it, certain
of its current and former officers and directors, and an officer
and director of its former subsidiary Silicon Film Technologies,
Inc.
The suit alleged that the defendants made false and misleading
statements about the prospects of Silicon Film during the period
January 6, 2000 to September 15, 2001, inclusive. The amended
complaint asserted claims for violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, as amended, and
SEC Rule 10b-5, and sought damages of an unspecified amount.
Defendants' time to answer or otherwise respond to the amended
complaint was September 2002, at which time the Company filed a
motion to dismiss the amended complaint. This motion was heard
on May 5, 2003, at which time the Court dismissed the amended
complaint, but granted the plaintiffs leave to further amend
their complaint within 20 days.
The plaintiffs filed a second amended complaint on May 27, 2003,
reasserting the claims made previously, primarily on the basis
of purported greater particularity. The Company filed a motion
to dismiss the second amended complaint on June 24, 2003. The
Company's motion to dismiss is scheduled before the court on
September 22, 2003.
There has been no discovery to date and no trial has yet been
scheduled in this matter. The Company believes that it has
meritorious defenses to the plaintiffs' allegations, recently
filing a motion to dismiss. Failure by the Company to obtain a
favorable resolution of claims set forth in the second amended
complaint could have a material adverse effect on the Company's
business, results of operations and financial condition.
KOS PHARMACEUTICALS: To Oppose Writ of Certiorari For Stock Suit
----------------------------------------------------------------
One of the plaintiffs in the consolidated securities class
action filed against Kos Pharmaceuticals, Inc. filed a petition
for writ of certiorari to the United States Supreme Court on the
dismissal of the suit.
The suit was initially filed in the United States District Court
for the Northern District of Illinois, Eastern Division, against
the Company, the members of the Company's Board of Directors,
certain of its officers, and the underwriters of the Company's
October 1997 offering of shares of Common Stock.
The plaintiff asserts, on behalf of itself and a putative class
of purchasers of the Company's Common Stock during the period
from July 29, 1997, through November 13, 1997, claims under:
(1) Sections 11, 12(a)(2) and 15 of the Securities Act of
1933;
(2) sections 10(b) and 20(a) of the Securities Exchange Act
of 1934, and Rule 10b-5 promulgated thereunder; and
(3) common law fraud,
(4) negligent misrepresentation and
(5) breach of fiduciary duty
The claims in the lawsuit relate principally to certain
statements made by the Company, or certain of its
representatives, concerning the efficacy, safety, sales volume
and commercial viability of the Niaspan product. The complaint
sought unspecified damages and costs, including attorneys' fees
and costs and expenses.
Upon the Company's motion, the case was transferred to the
United States District Court for the Southern District of
Florida. The Company filed a motion to dismiss the complaint
against it and the individual defendants on January 7, 1999.
The court dismissed the lawsuit with prejudice.
The plaintiffs filed an appeal on June 7, 1999, with the United
States Circuit Court of Appeals for the 11th Circuit. On July
16, 2002, the 11th Circuit Court of Appeals affirmed the
District Court's dismissal of the plaintiff's claims with
prejudice. The plaintiffs petitioned the Court of Appeals for a
rehearing of the appeal, which was denied by the Court of
Appeals.
Recently, one of the plaintiffs filed a Petition for Writ of
Certiorari to the United States Supreme Court from the 11th
Circuit decision. The Company intends to file a brief in
opposition to that petition.
LOUISIANA: Court Remands Race Bias Suit For Certification Review
----------------------------------------------------------------
Judge Martin Feldman must reconsider allowing class action
status for a lawsuit alleging several insurance companies
deliberately sold substandard and more expensive life insurance
policies to blacks than they sold to whites, a federal appeals
court recently ruled, according to a report by Associated Press
Newswires.
A panel of the Fifth US Circuit Court of Appeals ruled 2 to 1
that Judge Feldman erred when he denied the plaintiffs' lawsuit
class action status because it sought both injunctive and
monetary relief. The panel did not rule on whether the lawsuit
should be a class action, only disagreeing with Judge Martin's
rationale for denial and ordering him to reconsider his previous
decision.
Andrew S. Friedman, a lawyer for the plaintiffs, called the
appeals court's recent ruling important because it clearly
stated that a lawsuit should not be denied class-action status
simply because it seeks both injunctive and monetary relief.
In their lawsuit, plaintiffs asked for two forms of relief:
reimbursement for current and former policyholders and those
receiving death payments from the policies; and an injunction
ordering the companies to stop charging blacks more than whites
and to stop selling them substandard policies, though the
companies have said they have remedied most of the imbalanced
rates.
More than 10 plaintiffs, mostly from Louisiana and Florida,
bought cheap life insurance policies that required small weekly
or monthly premiums beginning as early as the 1940s. The
lawsuit accuses the companies of placing blacks in substandard
policies that provided fewer or lower benefits than comparable
plans sold to whites. The lawsuit also says the companies
deliberately charged blacks more than whites. A 1962 American
National Insurance Company Rate Book shows the company charged
a 20-year-old black 41 cents weekly for a $500 policy; while
charging a 20-year-old white 32 cents, according to the court's
ruling.
The companies have not denied charging blacks more than whites,
and they have defended the race-based rates, saying regulators
approved of the practice at the time. The defendants include
Monumental Life Insurance and Western, and the Southern Life
Insurance Company.
The case has gotten attention from many civil rights groups, and
a number have joined the lawsuit as 'friends of the court,'
including the Rev. Jesse Jackson's Rainbow Coalition, the
Southern Poverty Law Center and the National Legal Defense Fund.
MITSUBISHI: Minority Workers Allege Discrimination, Retaliation
---------------------------------------------------------------
Seven minority workers filed a federal lawsuit in the US
District Court in Peoria, alleging racial discrimination and
harassment at Mitsubishi's auto plant in Normal, Illinois, the
Associated Press Newswires reports.
The lawsuit also contends Mitsubishi has retaliated against
minority workers ever since it settled an earlier racial
discrimination lawsuit involving 250 black and Hispanic workers
at the Normal plant for $3.2 million in 2001.
According to the lawsuit, minority workers have been the target
of derogatory remarks, forced to do work for which they were not
trained, denied requests for time off and subjected to
unwarranted disciplinary action. The new lawsuit asks the court
to end racial discrimination and retaliation at the decade-old
plant, which employs about 3,400 workers. It also seek
discipline or dismissal of any employee who violates harassment
policies. Punitive and compensatory damages also are sought,
but no amount is specified in the lawsuit.
Mitsubishi said a zero-tolerance policy for harassment was
implemented after a $34 million settlement in a landmark sexual
discrimination case in 1998, involving the Normal plant. Court-
appointed monitors have endorsed the policy, which has become a
benchmark for other businesses, the Company said.
MURPHY OIL: LA Residents Launch Lawsuit Over June Refinery Fires
----------------------------------------------------------------
Murphy Oil Corporation faces fifteen class actions filed after a
fire severely damaged the Residual Oil Supercritical Extraction
(ROSE) unit at the Company's Meraux, Louisiana refinery in June
2003. The ROSE unit recovers feedstock from the heavy fuel oil
stream for conversion into gasoline and diesel.
The suits seek damages for area residents. The Company does not
believe that the ultimate resolution of the class action will
have a material adverse effect on its financial condition.
NATIONWIDE FINANCIAL: Summary Judgment Arguments Held in Ohio
-------------------------------------------------------------
Arguments for the appeal of the Ohio State court's granting of
summary judgment in favor Nationwide Financial Services, Inc. in
the class action filed against it were held on July 1, 2003.
The suit is related to the sale of deferred annuity products for
use as investments in tax-deferred contributory retirement
plans, and also names as defendants Nationwide Life Insurance
Company and Nationwide Life and Annuity Insurance Company. The
complaint was later amended to, among other things, add Marcus
Shore as a second plaintiff.
The amended complaint was brought as a class action on behalf of
all persons who purchased individual deferred annuity contracts
or participated in group annuity contracts sold by the Company
and the other named Company affiliates, which were allegedly
used to fund certain tax-deferred retirement plans. The amended
complaint seeks unspecified compensatory and punitive damages.
On June 11, 1999, the Company and the other named defendants
filed a motion to dismiss the amended complaint. On March 8,
2000, the court denied the motion to dismiss the amended
complaint filed by the Company and the other named defendants.
On January 25, 2002, the plaintiffs filed a motion for
permission to amend their complaint to add three new named
plaintiffs. On February 9, 2002, the plaintiffs filed a motion
for class certification. On April 16, 2002, the Company filed a
motion for summary judgment on the individual claims of
plaintiff Mercedes Castillo. On May 28, 2002, the court granted
the motion of Marcus Shore to withdraw as a named plaintiff and
denied plaintiffs' motion to add new persons as named
plaintiffs, so the action is now proceeding with Mercedes
Castillo as the only named plaintiff.
On November 4, 2002, the court issued a decision granting the
Company's motion for summary judgment on all of plaintiff
Mercedes Castillo's individual claims, and ruling that
plaintiff's motion for class certification is moot. Judgment
for the Company was entered on November 15, 2002.
On December 16, 2002, plaintiff Mercedes Castillo filed a notice
of appeal from the Court's orders granting the Company's motion
for summary judgment and denying Ms. Castillo's motion for leave
to amend the complaint to add three new named plaintiffs.
NATIONWIDE FINANCIAL: CT Court Allows Filing of Amended Lawsuit
---------------------------------------------------------------
The Connecticut federal court allowed plaintiffs to file a third
amended class action against Nationwide Financial Services, Inc.
and Nationwide Life Insurance Company (NLIC).
The plaintiffs ask to represent a class of retirement plans that
purchased variable annuities from NLIC to fund qualified
Employee Retirement Income Security Act (ERISA) retirement
plans. The amended complaint alleges that:
(1) the retirement plans purchased variable annuity
contracts from the Company that allowed plan
participants to invest in funds that were offered by
separate mutual fund companies;
(2) the Company was a fiduciary under ERISA and
(3) the Company breached its fiduciary duty when it
accepted certain fees from the mutual fund companies
that purportedly were never disclosed by the Company;
and
(4) the Company violated ERISA by replacing many of the
funds originally included in the plaintiff's annuities
with "inferior" funds because the new funds
purportedly paid higher fees to the Company.
The amended complaint seeks disgorgement of the fees allegedly
received by the Company and other unspecified compensatory
damages, declaratory and injunctive relief and attorney's fees.
On December 3, 2001, the plaintiffs filed a motion for class
certification. The Company is opposing that motion. The
Company's motion to dismiss was denied on September 11, 2002.
On January 14, 2003, plaintiffs filed a motion to file a second
amended complaint and the motion was granted on February 21,
2003. The second amended complaint removed the claims against
the Company concerning a violation of ERISA through the
replacement of many of the funds originally included in the
plaintiffs' annuities with "inferior" funds that purportedly
paid higher fees to the Company.
On April 14, 2003, plaintiffs filed a motion for leave to file a
third amended complaint, which has been granted by the court.
The third amended complaint does not include claims against the
Company explicitly alleging a violation of ERISA through
misrepresentation, breach of contract, or the replacement of
funds originally included in the plaintiffs' annuities with
"inferior" funds that purportedly paid higher fees to the
Company. The Company denies the allegations.
NATIONWIDE LIFE: Asks LA Court To Dismiss Securities Fraud Suit
---------------------------------------------------------------
Nationwide Life Insurance Company (NLIC) asked the United States
District Court for the Eastern District of Louisiana to dismiss
the class action, entitled Edward Miller, Individually, and on
behalf of all others similarly situated, v. Nationwide Life
Insurance Company.
The complaint alleges that in November 2001, plaintiff Edward
Miller purchased a group modified single premium variable
annuity issued by NLIC. Plaintiff alleges that NLIC represented
in its prospectus and promised in its annuity contract that
contract holders could transfer assets without charge among the
various funds offered in the contracts, that the transfer rights
of contract holders could not be modified and that NLIC's
expense charges under the contracts were fixed.
Plaintiff claims that NLIC has breached the contracts and
violated federal securities laws by imposing trading fees on
transfers that were supposed to have been without charge.
Plaintiff seeks compensatory damages and rescission on behalf of
himself and a class of persons who purchased this type of
annuity or similar products issued by NLIC between May 1, 2001
and April 30, 2002 inclusive and were allegedly damaged by
paying transfer fees.
This case is in a very preliminary stage, and NLIC denies all
allegations.
NOVELL: Three-Judge Panel Limits Scope Of Securities Fraud Suit
---------------------------------------------------------------
A three-judge federal appellate panel ordered a drastically
trimmed version of a long-running shareholders' securities fraud
lawsuit against Novell, a computer networking software company,
back to a Salt Lake City, Utah, courtroom, The Salt Lake Tribune
reports.
In their unanimous decision, Judges Carlos F. Lucero, Robert R.
Baldock and Terrence L. O'Brien of the Denver-based Tenth
Circuit Court of Appeals, upheld the bulk of US District Judge
Tena Campbell's dismissal of the class action.
The appellate court agreed that most of the lawsuit's
allegations of false financial statements and projections
between the Class Period of November 1, 1996, and late April
1997, were, as Judge Tena Campbell wrote in her lower court
decision, "vague, unspecific and unsupported."
However, the panel reversed Judge Campbell on two counts,
finding the shareholders had sufficient support to charge
specific violations related to Novell's commission of "various
accounting shenanigans" in order to purportedly boost Novell's
financial reports and subsequently cause investors to lose big
when Novell stock slipped from about $13 to $7 a share.
Richard Burbidge, one of the lawyers representing the investors,
called the ruling "a significant victory. " Mr. Burbidge said
the appellate court had decided to "allow the plaintiffs to go
forward with what we considered the most serious of the
charges."
Specifically, the appellate judges found the plaintiff investors
deserved possible trial on claims that former Novell President
Joseph Marengi; then-board chairman Robert Frankenberg; and ex-
Chief Financial Officer James Tolonen, among others, created a
fictional "in transit" category and improperly recorded
shipments to OEMs (or original equipment manufacturers) as sales
revenue.
The appellate judges looked especially askance at Novell's
alleged creation of the "in transit" category, to include among
its reported revenue, products whose sales were anticipated but
not completed. That charge, Judge Lucero wrote for the court,
was potentially "quite damning."
"If we accept them (the claims about creation of the "in
transit" category) as true, as we must at this stage, they
establish that defendant former Novell President Joseph Marengi
intentionally deceived investors by fraudulently inflating
company revenue estimates through creation of a fictitious
category of revenue," Judge Lucero wrote for the court.
PERINI CORPORATION: San Francisco, CA Launches Civil Fraud Suit
---------------------------------------------------------------
Perini Corporation faces a civil action filed by the San
Francisco City Attorney, on behalf of the City and County of San
Francisco and the citizens of California, demanding a jury trial
against the Company and:
(1) Tutor-Saliba Corporation (TSC),
(2) the Tutor-Saliba, Perini & Buckley, Joint Venture (JV),
(3) Buckley & Company, Inc. (Buckley) and
(4) their bonding companies
The suit was filed in the United States District Court in San
Francisco relating to seven projects for work on the expansion
of the San Francisco International Airport. The JV was
established by TSC, Perini and Buckley through two Joint Venture
Agreements dated October 28, 1996 and February 11, 1997.
The JV had agreements with the Owner to perform work on two of
the above projects and, as part of those Contracts, the JV
provided performance and payment bonds to the Owner. The
plaintiffs allege various overcharges, bidding violations,
violations of minority contracting regulations, civil fraud, and
violation of the California and San Francisco False Claims and
California Unfair Competition Acts.
In addition, the plaintiffs allege that TSC has violated the
United States Racketeer Influenced Corrupt Organizations Act.
The plaintiffs have asserted $30 million in damages and are
seeking treble damages, various civil penalties and debarment of
the JV and TSC from doing business with the City of San
Francisco. The Plaintiffs have not allocated their claims for
damages and penalties amongst the defendants or the seven
projects at issue.
TSC is the managing partner of the JV and, in December 1997,
Perini sold its entire 20% interest in the JV to TSC. As part
of that sale agreement, TSC agreed to indemnify Perini from any
liability that Perini is required to pay by reason of or arising
out of any event or occurrence subsequent to the date of the
sale of Perini's interest in the JV in any way connected with
the Joint Venture Agreements, the Contracts, the Projects, and
the Bonds. The ultimate financial impact of this action is not
yet determinable.
PERINI CORPORATION: To Ask MA Court To Dismiss Securities Suit
--------------------------------------------------------------
Perini Corporation intends to ask the United States District
Court for the District of Massachusetts to dismiss the class
action filed on behalf of holders of the Company's $2.125
Depositary Convertible Exchangeable Preferred Shares, each of
which represents 1/10th of a share of the Company's $21.25
Convertible Exchangeable Preferred Stock. The suit names as
defendants certain of the Company's current and former directors
of Perini.
Specifically, the complaint alleges that the defendants breached
their fiduciary duties owed to the holders of the Depositary
Shares and to the Company. The plaintiffs principally allege
that the defendants improperly authorized the exchange of Series
B Preferred Stock for common stock while simultaneously refusing
to pay accrued dividends due on the Depositary Shares.
On January 6, 2003, the defendants moved to dismiss the lawsuit.
Among other things, the defendants argued that they did not owe
fiduciary duties to the holders of the Depositary Shares and the
claims of breach of fiduciary duty owed to the Company must be
dismissed because the claim could only be brought as a
derivative action.
On March 21, 2003, the plaintiffs filed an opposition to the
motion to dismiss and in May 2003, the plaintiffs asked the
court for leave to file an amended complaint. In June 2003, the
plaintiffs were given leave to file an amended complaint.
The amended complaint adds an allegation that the defendants
have further breached their fiduciary duties by authorizing a
tender offer for the purchase of up to 90% of the Depositary
Shares and an allegation that the collective actions of the
Defendants constitute unfair and deceptive business practices
under the provisions of the Massachusetts Consumer Protection
Act. The Plaintiffs seek damages in an amount not less than
$15,937,500, trebled, plus interest, costs, fees, and other
unspecified punitive and exemplary damages.
POLO: Asks For Partial Summary Judgment in Wardrobing Suit
----------------------------------------------------------
Polo Ralph Lauren Corporation asked for partial summary judgment
in the class action filed in the United States District Court
for the Northern District of California by Toni Young, one of
its store employee, alleging violations of California antitrust
and labor laws.
The plaintiff purports to represent a class of retail employees
who were allegedly injured by being required to purchase and
wear Polo Ralph Lauren merchandise as a condition of their
employment. The complaint, as amended, seeks an unspecified
amount of actual and punitive damages, disgorgement of profits
and injunctive and declaratory relief.
A second class action, was filed in the San Francisco
County Superior Court on April 14, 2003. This state court
action alleges virtually identical claims, to those in the
Federal action, and Ms. Young is one of the purported class
representatives. The state action has been stayed pending
resolution of the federal action.
The Company has moved for partial summary judgement on the issue
of whether the Company's policies violated California law, and a
hearing on the Company's motion has been scheduled for August
14, 2003.
PROGRESS ENERGY: Inks Agreement To Settle Right-of-Way Suit
-----------------------------------------------------------
Progress Energy Florida, Inc. reached a settlement for the class
action filed against it seeking damages, declaratory and
injunctive relief for the alleged improper use of electric
transmission easements.
The plaintiffs contend that the licensing of fiber-optic
telecommunications lines to third parties or telecommunications
companies for other than the Company's internal use along the
electric transmission line right-of-way exceeds the authority
granted in the easements. In June 1999, plaintiffs amended
their complaint to add Progress Telecommunications Corporation
as a defendant and adding counts for unjust enrichment and
constructive trust.
In January 2000, the trial court conditionally certified the
class statewide. In mediation held in March 2000, the parties
reached a tentative settlement of this claim. In January 2001,
the trial court preliminarily approved the amended settlement
agreement, certified the settlement class and approved the class
notice.
On November 16, 2001, the trial court issued a final order
approving the settlement. Several objectors to the settlement
appealed the order to the First District Court of Appeal. On
February 12, 2003, the appellate court issued an opinion
upholding the trial court's subject matter jurisdiction over the
case, but reversing the trial court's order approving the
mandatory settlement class for purposes of declaratory and
injunctive relief.
The appellate court remanded the case to the trial court for
further proceedings. The Company filed a motion to seek
discretionary review before the Florida Supreme Court. Other
parties filed similar motions as well as motions for rehearing
before the First District Court of Appeal. Subsequent to filing
these motions, the Company and the appellants reached a
settlement resolving the appellants' dispute.
The settlement was contingent upon the trial court approving a
mandatory class settlement consistent with the First District
Court of Appeal's February 12, 2003 opinion. On May 29, 2003
the trial court entered an Amended Final Judgment again
approving the mandatory class settlement, consistent with the
First District Court of Appeals' February 12, 2003 opinion. No
appeals have been taken from that judgment, and the time to
appeal has expired.
On July 1, 2003, the Company, the class representatives and the
appellants filed a joint withdrawal of all pending motions with
the First District Court of Appeal. The First District Court of
Appeal acknowledged the withdrawal of all pending motions and
issued a mandate on July 14, 2003. Under the terms of the
mandatory class settlement, PEF will make settlement payments to
class members in August 2003. The settlement payments will not
have a material adverse effect upon PEF's financial condition or
results of operations.
STERICYCLE INC.: AZ, CO, UT Consumers Launch Antitrust Lawsuits
---------------------------------------------------------------
Stericycle, Inc. faces several suits alleging anticompetitive
conduct in Arizona, Colorado and Utah on behalf of all customers
of the Company and Browning-Ferris Industries, Inc. (BFI) in the
three states. The suits allege anticompetitive conduct.
A private plaintiff filed a suit in the United States District
Court in Arizona. In February and March 2003, three similar
suits were filed in federal court in Arizona, Colorado and Utah,
and in April 2003, a fifth similar suit was filed in federal
court in New Mexico. In addition, in February 2003, a sixth
suit, alleging substantially the same anticompetitive conduct
but not seeking class action, was filed in federal court in
Utah. The Company has moved to transfer and consolidate all six
lawsuits in federal court in Utah.
New Securities Fraud Cases
FIRSTENERGY CORPORATION: Milberg Weiss Lodges Stock Suit in Ohio
----------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities
class action on behalf of purchasers of the securities of
FirstEnergy Corporation (NYSE:FE) between April 24, 2002 and
August 5, 2003, inclusive, seeking to pursue remedies under the
Securities Exchange Act of 1934. The action is pending in the
United States District Court for the Northern District of Ohio,
against the Company and:
(1) H. Peter Burg,
(2) Anthony J. Alexander,
(3) Richard H. Marsh and
(4) Harvey L. Wagner
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between April 24, 2002 and
August 5, 2003.
The complaint alleges that during the Class Period, First Energy
issued quarterly press releases and filed financial reports with
the SEC which purported to accurately reflect the Company's
operating results and financial condition. Unbeknownst to class
members, according to the complaint, the financial information
contained in the Company's quarterly news releases and reports
was artificially inflated through accounting improprieties.
Specifically, the complaint alleges that the Company had been
improperly accounting for certain of its leased generation
plants by assigning such assets inflated values and had
improperly accounted for costs incurred in connection with the
deregulation of certain of its businesses by employing an
inappropriately long amortization schedule, thereby artificially
inflating its reported earnings by material amounts.
The complaint alleges that these accounting irregularities had
the effect of materially inflating the Company's reported assets
and income, thereby deceiving investors as to the Company's true
results and financial condition.
On August 5, 2003, the Company issued a press release and posted
a letter on its website announcing that it would be restating
its previously reported financial results for all of 2002 and
the first quarter of 2003 materially downward, reportedly "to
reflect implementation of changed accounting treatments
regarding the recovery of transition assets in Ohio and
recognition of above-market values of certain leased generation
facilities."
In reaction to this announcement, the price of FirstEnergy
common stock dropped materially, falling from $34.24 per share
on August 4, 2003, to close at $31.33 per share on August 5, a
one-day loss of 8.5% on unusually high trading volume of 5.4
million shares, which is more than four times the stock's
average daily trading volume of 1.2 million shares.
For more details, contact Steven G. Schulman by Mail: One
Pennsylvania Plaza, 49th fl, New York, NY, 10119-0165 by Phone:
(800) 320-5081 by E-mail: impath@milbergNY.com or visit the
firm's Website: http://www.milberg.com
IMPATH INC.: Kirby McInerney Lodges Securities Suit in S.D. NY
--------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a securities class
action in the United States District Court for the Southern
District of New York on behalf of all purchasers of IMPATH Inc.
(Nasdaq:IMPH) securities during the period from February 21,
2001 through July 29, 2003, inclusive.
The action charges IMPATH and certain of its senior officers
with violations of Sections 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934. The alleged violations stem
from the dissemination of false and misleading statements, which
had the effect - during the class period - of artificially
inflating the price of IMPATH's shares.
On July 30, 2003, IMPATH shocked the market when it issued a
press release announcing that it had initiated an investigation
into possible accounting irregularities involving accounts
receivable which the Company believes have been materially
overstated and will likely require restatement. Following this
announcement, shares of IMPATH common stock were halted from
trading.
For more details, contact Pamela Kulsrud or Elaine Mui by Mail:
830 Third Avenue, 10th Floor, New York, New York 10022 by Phone:
(212) 317-2300 or (888) 529-4787 or by E-Mail: emui@kmslaw.com
LABORATORY CORPORATION: Emerson Poynter Files Stock Suit in NC
--------------------------------------------------------------
Emerson Poynter LLP initiated a securities class action in the
United States District Court for the Middle District of North
Carolina, on behalf of purchasers of the securities of
Laboratory Corporation of America Holdings (NYSE:LH) between
February 13, 2002 and October 3, 2002, inclusive.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of materially false
and misleading statements to the market between February 13,
2002 and October 3, 2002. During the class period, the Company
issued statements that failed to disclose and/or misrepresented
the following adverse facts, among others:
(1) LabCorp was experiencing increased competition in its
traditionally strongest and core markets, such as the
Carolinas;
(2) the Company had understaffed certain of its core
markets, leading to a lack of key employees, such as
phlebotomists and account representatives, causing a
material deterioration of service levels and a loss of
business to increased competition;
(3) the decreased sale volume was caused by material
operational deficiencies, rather than by a couple of
pending deals that closed late, as the Company had
represented;
(4) defendants knew that the Company's sales problems would
continue in the foreseeable future, contrary to the
statements that volume growth would increase; and
(5) as a result of the foregoing, the Company's assurance
that its historical strong growth would continue lacked
any reasonable basis.
Throughout the class period, LabCorp insiders, including the
individual defendants, sold a total of 316,112 shares of LabCorp
stock at artificially inflated prices, collecting proceeds of
over $26 million.
On October 3, 2002, after the close of regular trading, LabCorp
shocked the market by announcing that it expected disappointing
3Q:2002 results due to "continued slowdown in volume growth in
the routine, or core, testing business in certain key regions of
the country," which it expected would continue at least until
the end of 2002.
Investors, primed by defendants' Class Period statements to
believe that the Company's business was growing faster than ever
and had already overcome the brief slowdown in growth during the
second quarter, were shocked to learn that the slowdown had
continued and was not expected to abate until after the end of
the year and that the slowdown had been in the Company's core
business.
In reaction to the Company's belated disclosure, the price of
LabCorp common stock plummeted, falling 34.6% in one day, from a
close of $33.18 per share on October 3 to $21.68 per share on
October 4, on trading volume of over 21.2 million shares, which
is many times the Company's average daily trading volume.
For more details, contact John G. Emerson or Tanya Autry by
Mail: 830 Apollo Lane, Houston, TX 77058 by Phone:
(281) 488-8854 or (800) 663-9817 or by E-mail:
shareholder@emersonfirm.com
LABORATORY CORPORATION: Kirby McInerney Lodges Stock Suit in NC
---------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a securities class
action in the United States District Court for the Middle
District of North Carolina on behalf of all purchasers of
Laboratory Corporation of America Holdings (NYSE:LH) securities
during the period from February 13, 2002 through October 3,
2002, inclusive.
The action charges LabCorp and certain of its senior officers
with violations of Sections 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934. The alleged violations stem
from the dissemination of false and misleading statements, which
had the effect -- during the class period -- of artificially
inflating the price of LabCorp's shares.
The truth about LabCorp was partially revealed when on October
3, 2002, defendants announced that LabCorp failed to meet
revenue and earnings guidance for the third quarter ended
September 30, 2002, as well as the remainder of 2002, due to a
revenue shortfall, primarily, in the South and Southeast regions
of the US stemming from a material loss of routine/core testing
volumes among independent physicians.
Subsequently, on October 4, 2002, Thomas MacMahon, LabCorp's
Chairman and Chief Executive Officer, admitted that defendants
were aware that the Company was losing sales to local and
regional labs and had attempted, unsuccessfully, to "remedy the
problem" as early as May 2002.
Following these announcements, the price of LabCorp common stock
collapsed, losing over 34% of their value in one day of trading
to close at $21.68 per share on October 4, 2002, and falling
over 58% from the Class Period high of $51.98 per share reached
on or about May 10, 2002.
For more details, contact Pamela Kulsrud or Elaine Mui by Mail:
830 Third Avenue, 10th Floor, New York, New York 10022 by Phone:
(212) 317-2300 or (888) 529-4787 or by E-Mail: emui@kmslaw.com
*********
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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
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Fatima Antonio and Lyndsey Resnick, Editors.
Copyright 2003. All rights reserved. ISSN 1525-2272.
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