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C L A S S A C T I O N R E P O R T E R
Friday, August 29, 2003, Vol. 5, No. 171
Headlines
ALLIANT ENERGY: WI Court Dismisses Consolidated Securities Suit
ASCENDANT SOLUTIONS: Discovery Commences in TX Securities Suit
AUDIBLE INC.: Agrees To Settle Securities Fraud Suit in S.D. NY
AUSTRALIA: Court Approves $112M Payout To Former GIO Investors
BACKWEB TECHNOLOGIES: Agrees To Settle NY Securities Fraud Suit
BLOCKBUSTER INC.: Negotiating To Settle Suits Over Rental Fees
BLOCKBUSTER INC.: Plaintiffs File Consolidated Securities Suit
BROOKSTONE INC.: Settles CA Overtime Wage Lawsuit For $1.5M
CALIFORNIA: Anti-War Protestors Question Panel's Dissolution
CENTRA SOFTWARE: Agrees To Settle Securities Lawsuit in S.D. NY
CONCUR TECHNOLOGIES: Agrees To Settle Securities Suit in S.D. NY
CYPRUS FUNDS: Bogus Securities Investors Recover From FL Bank
FATBRAIN.COM: Reaches Settlement For NY Securities Fraud Lawsuit
GOLD FIELDS: Faces Suit For Property Damages in Picher, Oklahoma
HMO LITIGATION: Doctors Opt Out Of Blue Cross Settlement
HOMESTORE INC.: CA Court To Hear Final Approval for Settlement
HOMESTORE INC.: CA Court Dismisses Without Prejudice Stock Suit
KPMG LLP: Former Polaroid Shareholders Allege Accounting Fraud
LOOKSMART LTD: Agrees To Settle Consumer Fraud Suit in CA Court
MARKETWATCH.COM: Pinnacor Investors File Suit Over Acquisition
MIDAMERICAN ENERGY: Tentative $7.5M Pact Reached In Stock Suit
MIIX GROUP: Plaintiffs To Launch Securities Fraud Lawsuit in NJ
NET PERCEPTIONS: Seeks Settlement of Securities Suit in S.D. NY
NEOFORMA INC.: Inks Settlement For Securities Lawsuit in S.D. NY
NETRATINGS INC.: Working For Settlement of NY Securities Lawsuit
NETRO CORPORATION: Agrees To Settle Securities Fraud Suit in NY
NEW VALLEY: DE Court Dismisses in Part Securities Fraud Lawsuit
OHIO: Clinton County Deputy Sheriffs File Unpaid Overtime Suit
REDBACK NETWORKS: Agrees To Settle Securities Lawsuit in S.D. NY
SAUDI ARABIA: US Workers Sue Over Savings and Property Rights
SKECHERS USA: Store Managers Commence CA Overtime Wage Lawsuits
SKECHERS USA: Plaintiffs to File Consolidated CA Securities Suit
STORAGENETWORKS INC.: Reaches Settlement For NY Securities Suit
VERITAS SOFTWARE: Plaintiffs Consolidate Securities Suits in CA
Z-TEL TECHNOLOGIES: Reaches Settlement For Securities Suit in NY
Asbestos Alert
ASBESTOS LITIGATION: Ampco-Pittsburgh Faces 25,600 Claimants
ASBESTOS LITIGATION: Collins & Aikman Posts Asbestos Statistics
ASBESTOS LITIGATION: Lincoln Faces 34,830 Asbestos Claimants
ASBESTOS LITIGATION: OI Group Faces 30T Asbestos Related Claims
ASBESTOS LITIGATION: Standard Motor Reveals Asbestos Liabilities
ASBESTOS LITIGATION: TriMas Corporation Reveals Asbestos Data
ASBESTOS LITIGATION: Viacom Continues to Face Asbestos Lawsuits
ASBESTOS LITIGATION: Grace to Pay for Montana Asbestos Cleanup
ASBESTOS ALERT: No More Asbestos Liabilities Filed Since 2001
New Securities Fraud Cases
FIRSTENERGY CORPORATION: Seeger Weiss Lodges OH Securities Suit
*********
ALLIANT ENERGY: WI Court Dismisses Consolidated Securities Suit
---------------------------------------------------------------
The United States District Court for the Western District of
Wisconsin dismissed without prejudice the consolidated
securities class action filed against Alliant Energy Corporation
and:
(1) Erroll B. Davis, Jr.,
(2) Thomas M. Walker and
(3) John E. Kratchmer
The actions were allegedly brought on behalf of purchasers of
Company securities from January 29, 2002 through July 18, 2002.
The amended consolidated complaint alleged that the defendants
made false and misleading statements in relation to the
Company's expected performance of its various non-regulated
businesses.
ASCENDANT SOLUTIONS: Discovery Commences in TX Securities Suit
--------------------------------------------------------------
Discovery has begun in a consolidated securities class action
filed in the United States District Court for the Northern
District of Texas against Ascendant Solutions, Inc., certain of
its directors, and a limited partnership of which a director is
a partner.
The suit asserts assert causes of action under Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, as amended,
for an unspecified amount of damages on behalf of a putative
class of individuals who purchased the Company's common stock
between various periods ranging from November 11, 1999 to
January 24, 2000.
The lawsuits claim that the Company and the individual
defendants made misstatements and omissions concerning the
Company's products and customers. The Company denies the
plaintiffs' allegations and intends to vigorously defend against
the lawsuits.
The Company filed a motion to dismiss the suit on September 9,
2002. On July 22, 2003, the court granted in part and denied in
part the motion to dismiss. Defendant's answer is due September
2, 2003. The Court has not yet entered a scheduling order.
AUDIBLE INC.: Agrees To Settle Securities Fraud Suit in S.D. NY
---------------------------------------------------------------
Audible, Inc. agreed to settle the consolidated securities class
action filed in the United States District Court for the
Southern District of New York related to its initial public
offering (IPO) in July 1999. The suit names as defendants the
Company, certain of its officers and directors and former
directors and certain of the underwriters of the IPO, including:
(1) Credit Suisse First Boston Corporation,
(2) J.P. Morgan Chase & Co.,
(3) Volpe Brown Whelan & Co., LLC, and
(4) Wit Capital Corporation
The suit alleges that the prospectus and the registration
statement for the IPO failed to disclose that the underwriters
allegedly solicited and received "excessive" commissions from
investors and that some investors in the IPO allegedly agreed
with the underwriters to buy additional shares in the
aftermarket in order to inflate the price of the Company's
stock.
The Company and certain officers, directors and former directors
are named in the suit pursuant to Section 11 of the Securities
Act of 1933. The complaint requests unspecified damages,
attorney and expert fees, and other unspecified litigation
costs.
On July 1, 2002, the underwriter defendants in the consolidated
actions moved to dismiss all of the IPO Litigations, including
the action involving the Company. On July 15, 2002 the Company,
along with other non-underwriter defendants in the coordinated
cases, also moved to dismiss the litigation.
On February 19, 2003, the court ruled on the motions. The court
granted the Company's motion to dismiss the claims against it
under Rule 10b-5, due to the insufficiency of the allegations
against the Company. The motions to dismiss the claims under
Section 11 of the Securities Act were denied as to virtually all
of the defendants in the consolidated cases, including the
Company. In addition, the individual defendants in the IPO
Litigation, signed a tolling agreement and were dismissed from
the action without prejudice on October 9, 2002.
On June 26, 2003, a committee of the Company's Board of
Directors conditionally approved a proposed partial settlement
with the plaintiffs in this matter. The settlement would
provide, among other things, a release of the Company and of the
individual defendants for the conduct alleged in the action to
be wrongful in the amended complaint. The Company would agree
to undertake other responsibilities under the partial
settlement, including agreeing to assign away, not assert, or
release certain potential claims the Company may have against
its underwriters. The Company's insurance carriers are expected
to cover any direct financial impact of the proposed settlement.
The committee agreed to approve the settlement subject to a
number of conditions, including the participation of a
substantial number of other Issuer Defendants in the proposed
settlement, the consent of the Company's insurers to the
settlement, and the completion of acceptable final settlement
documentation. Furthermore, the settlement is subject to a
hearing on fairness and approval by the court.
AUSTRALIA: Court Approves $112M Payout To Former GIO Investors
--------------------------------------------------------------
The Federal Court in Sydney, recently approved a $112 million
payout to former GIO shareholders for losses and costs incurred
as a result of the disastrous 1998-99 attempted hostile takeover
of GIO by AMP, according to a report by The Age.
More than 23,000 shareholders, including almost 5,000
Victorians, will share in the largest agreed settlement made in
an Australian shareholder class action. The shareholders
claimed they incurred huge losses after being wrongly advised
that GIO was forecasting a large profit and that they should not
sell their stock to AMP because its offer was too low. The
directors of the New South Wales insurance company predicted
that it would make a $250 million profit in December 1998, but
six months later it posted a $750 million loss.
"They were wrong by $1 billion in six months," said the
shareholders' lawyer Bernard Murphy of the lawfirm Maurice
Blackburn Cashman. The decision not to sell ended up costing
shareholders about $600 million.
Mr. Murphy said the shareholders stood to recover between 55 and
63 percent of their losses as a result of the four-year, $15
million fight waged on their behalf by his firm on a no-win, no-
fee basis.
The settlement of $97 million plus costs should serve as a
warning to Australian public companies that they must be open
with their shareholders. "The case goes to the heart of
corporate governance in Australia and is a graphic illustration
of what can happen if shareholders are misled," Mr. Murphy said.
"Corporate governance must be a daily responsibility for our
biggest and most successful companies."
BACKWEB TECHNOLOGIES: Agrees To Settle NY Securities Fraud Suit
---------------------------------------------------------------
BackWeb Technologies, Inc. agreed to settle the consolidated
securities class action filed against it, six of the Company's
officers and directors, and various underwriters for the
Company's initial public offering in the United States District
Court, Southern District of New York.
The suit asserts that the prospectus from the Company's June 8,
1999 initial public offering failed to disclose certain alleged
improper actions by the underwriters for the offering, including
the receipt of excessive brokerage commissions and agreements
with customers regarding aftermarket purchases of shares of
Company stock.
The complaint alleges violations of Sections 11 and 15 of the
Securities Act of 1933, Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated under
the Exchange Act.
On July 15, 2002, an omnibus motion to dismiss was filed in the
coordinated litigation on behalf of defendants, including the
Company, on common pleadings issues. In October 2002, the
court dismissed all six individual defendants from the
litigation without prejudice, pursuant to a stipulation.
On February 19, 2003, the court denied the motion to dismiss
with respect to the claims against the Company. No trial date
has been set. 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 the litigation against the
Company continues, the Company believes it has meritorious
defenses.
BLOCKBUSTER INC.: Negotiating To Settle Suits Over Rental Fees
--------------------------------------------------------------
Blockbuster, Inc. is working to settle several class actions
filed by customers in state court in 12 states, alleging common
law and statutory claims for fraud, deceptive practices, and
unlawful business practices regarding the Company's extended
viewing fee policies for customers who choose to keep rental
product beyond the initial rental term. Some of the cases also
allege that these policies impose unlawful penalties and result
in unjust enrichment. The Company is also a defendant in four
similar lawsuits filed by customers in Canada.
In January 2002, a Texas court entered a final judgment
approving a national class settlement, which included
settlements in 12 of the 17 pending putative class action
lawsuits. Under the approved settlement, the Company would make
certificates available to class members for rentals and
discounts and would pay up to $9.25 million in plaintiffs'
attorneys' fees in connection with the settlement.
An Illinois state court has entered a provisional order
certifying plaintiff and defendant classes, subject to further
review and final determination. The Texas court has entered
orders barring the settlement class members from challenging the
Company's extended viewing fee policies in any other litigation
and enjoining the settlement class members and anyone acting on
their behalf, including their lawyers, from prosecuting claims
on their behalf in the Illinois litigation.
Two parties have appealed the Texas settlement and on July 31,
2003 the Beaumont Court of Appeals approved the settlement and
remanded one issue back to the trial court to address the
language in the settlement agreement as to a segment of the
class and to determine if the appealing attorneys are entitled
to any attorneys fees with respect to that one issue.
One objecting party has appealed the Texas court orders barring
further litigation. In another Illinois case, a federal judge
has dismissed litigation because of the Texas settlement.
California state court class claim allegations in one lawsuit
have also been dismissed because of the Texas settlement and
summary judgment has been granted on all claims in the one case
pending in California that is not a putative class action. An
appeal has been filed by plaintiffs. In Canada, plaintiff's
request for class certification has been denied in Ontario and
granted in Quebec.
The Company believes the plaintiffs' positions in these cases
are without merit. The Company is waiting to see if the
settlement reached in Texas receives final approval.
BLOCKBUSTER INC.: Plaintiffs File Consolidated Securities Suit
--------------------------------------------------------------
Plaintiffs filed a consolidated securities class action against
Blockbuster, Inc. in the United States District Court for the
Northern District of Texas, Dallas Division. Lead plaintiffs
are City of Westland Police and Fire Retirement System and the
Dearborn Heights General Government Employees Retirement System.
The consolidated amended complaint, filed July 21, 2003, claims
violations of Section 10(b), Section 20(a) and Rule 10b-5 of the
Securities Exchange Act of 1934 for the time period between
February 12, 2002 to December 17, 2002. The consolidated
amended complaint generally alleges that the defendants made
untrue statements of material fact and/or omitted to disclose
material facts about the business and operations of the Company.
The consolidated amended complaint also alleges that the value
of the Company's common stock was therefore artificially
inflated and that certain of the individual defendants sold
shares of the Company's common stock at inflated prices. The
plaintiffs seek unspecified compensatory damages.
The Company believes the plaintiffs' positions in these actions
are without merit.
BROOKSTONE INC.: Settles CA Overtime Wage Lawsuit For $1.5M
-----------------------------------------------------------
Brookstone, Inc., which sells quirky gifts and gadgets through
its stores and catalogues, revealed recently that the company
has agreed to a $1.5 million settlement in a California class
action over overtime pay, according to a regulatory filing with
the Securities and Exchange Commission, the Associated Press
Newswires reports. Current and former managers and assistant
managers at Brookstone stores in California had filed the
lawsuit, the filing said.
In January 2000, California returned to a system of daily
overtime, where workers must be paid time and a half for work
done after working eight hours in a day. Double time must be
paid after the 12th hour. The previous system called for
overtime pay when more than 40 hours were worked in a week.
Last week, the Nashua, N.H.-based company reported a quarterly
loss, which included $1.1 million, or eight cents a share, for
the settlement of certain outstanding legal matters, including
this overtime class action.
According to Retail Merchandise, last year, companies paid out
$143 million in back wages, up 29 percent from the previous
year, for violations of the Fair Labor Standards Act, which
requires employees to be paid overtime. The Gale Group Inc.
publication noted that most of the problem appears to be due to
confusing job classification rules, particularly for low-level
managers.
CALIFORNIA: Anti-War Protestors Question Panel's Dissolution
------------------------------------------------------------
Attorneys representing anti-war protesters injured by the police
at Oakland, California's port on April 7, have criticized the
reasons given for the recent breakup of the independent panel
appointed by the city to investigate why the police fired at the
protesters with "less lethal" munitions, such as wooden dowels,
the Contra Costa Times (Walnut Creek, CA) reports.
Attorneys have filed a class action against the city over the
alleged misconduct of the police against the protesters and
bystanders during the anti-war demonstration. Two class
actions, seeking unspecified monetary damages and changes in
police tactics, have been filed against the city in federal
court. The dates for the trial have not yet been set.
Plaintiffs' attorney James Chanin, lead counsel in the class
action against Oakland, said "I don't think (the panelists) knew
what they wanted (what they were looking for)." Mr. Chanin
added, "I don't think the city had a real commitment to it (the
investigation)."
Mr. Chanin also took issue with one of the reasons panel members
gave for disbanding August 15; namely, the high number of people
suing the city over the clash between the police and anti-war
protesters.
The five-member independent panel resigned earlier this month
because its members felt there was not enough time to complete a
thorough investigation. Panel chairperson LaDoris Cordell also
attributed the breakup to "the highly charged atmosphere of
mounting litigation against the city" that would hinder their
work.
"To blame the demise of the independent panel on us (the class-
action lawsuit) is ridiculous," said Mr. Chanin.
Karen Boyd, spokeswoman for the city attorney's office, refuted
Mr. Chanin's claims that the city did not support the
investigation. "That is not true; it was our idea to do the
panel. The council supported the panel; the city manager and
the city attorney were very committed . If the city had not
supported it, it (the investigative panel) would not have
occurred."
The panelists were set to hear from both police and protesters
in an attempt to understand why police fire their "less lethal"
munitions, such as wooden dowels, at the anti-war protesters and
bystanders. Protesters were targeting two shipping companies
with business ties to the war in Iraq, which were anchored at
Oakland's port." Police have said they fired at the protesters
because they disobeyed dispersal orders and that rocks and other
objects were thrown at them. Protesters deny throwing anything
at the police. Protesters sustained dozens of injuries. Police
made 31 arrests.
Rachel Lederman, who also is representing protesters, said the
reasons panelists gave for disbanding did not make sense. "The
panel disbanded because there's litigation? . People were shot
in the head and face, so of course there is litigation."
Ms. Lederman said one reason the panel broke up could have been
the city's concern that testimony from police and protesters
would not be confidential.
"The city never told me one way or another whether they wanted
confidentiality or non-confidentiality," said Kimon Manolius, a
lawyer representing the five panel members. "The city really
did not get involved with that."
Mr. Manolius said, additionally, that city officials never said
they did not want transcripts or tapes made. "If that's what
the city wanted, they would not have set up the panel; because
it (the panel) was set to release a public report," he said.
Mr. Manolius said it was his belief that the panelists quit
because they did not have enough time to do a thorough job. The
City Council, he added, had requested a report on the
investigation of police action at the port protest by September.
"As time went on, it became clear that there were a lot of folks
who wanted to be heard from; too many to accommodate in five
weeks," he said.
CENTRA SOFTWARE: Agrees To Settle Securities Lawsuit in S.D. NY
---------------------------------------------------------------
Centra Software, 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 its officers and directors and the managing underwriters
of its initial public offering.
The suit, filed on behalf of the class of persons who purchased
the Company's common stock between February 3, 2000 and December
6, 2000, asserts claims 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.
The complaint alleges that, in connection with the Company's
initial public offering in February 2000, the underwriters
received undisclosed commissions from certain investors in
exchange for allocating shares to them and also agreed to
allocate shares to certain customers in exchange for the
agreement of those customers to purchase additional shares in
the after-market at pre-determined prices.
The complaint asserts that the Company's registration statement
and prospectus for the offering were materially false and
misleading due to their failure to disclose these alleged
arrangements. The complaint seeks damages in an unspecified
amount against the Company and the named individuals.
The underwriter defendants and the Company defendants joined in
motions to dismiss the above-reference action on July 3 and July
15, 2002, respectively. On October 9, 2002, the plaintiffs
dismissed, without prejudice, the claims against the named
Company officers and directors in the suit. On February 19,
2003, the court issued an order denying the motion to dismiss as
to Centra and other defendants.
On June 7, 2003, the plaintiffs announced a proposed settlement
with all issuers, including Centra. The Company presently plans
to participate in this settlement, which is expected to be
funded by its insurers. The settlement is subject to
finalization and court approval. No amount has been accrued
related to this matter and legal costs incurred in the defense
of the matter are being expensed as incurred.
CONCUR TECHNOLOGIES: Agrees To Settle Securities Suit in S.D. NY
----------------------------------------------------------------
Concur Technologies, 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, several
of its current and former officers and the underwriters of its
initial public offering in December 1998.
The suit alleges errors and omissions concerning underwriting
terms in the prospectus for the Company's initial public
offering. The plaintiffs in these lawsuits seek damages in
unspecified amounts, which could be substantial.
In April 2002, these lawsuits were consolidated. In October
2002, the court dismissed the individual defendants from the
consolidated lawsuit, without prejudice, pursuant to a
stipulated agreement between the parties.
In February 2003, the presiding judge denied a motion to dismiss
all claims. In July 2003, the Company decided to participate in
a proposed settlement being negotiated by representatives of a
coalition of issuers named as defendants in similar actions and
their insurers.
Although the Company believes that the plaintiffs' claims have
no merit, it has decided to participate in the proposed
settlement to avoid the cost and distraction of continued
litigation. The Company does not believe that the proposed
settlement will have any material adverse effect on its
business, financial condition, or results of operations.
The proposed settlement agreement would dispose of all remaining
claims against Concur and the individual defendants without any
admission of wrongdoing. The proposed settlement is subject to
final approval by the parties and the court. There is no
guarantee that the parties or the court will approve the
proposed settlement. Should the parties and the court fail to
approve the proposed settlement, Concur will continue to dispute
the allegations.
CYPRUS FUNDS: Bogus Securities Investors Recover From FL Bank
-------------------------------------------------------------
Investors who bought bogus Cyprus Funds securities from vanished
businessman Eric Bartoli have recovered an extra $5 million by
suing a Florida bank, First Union National Bank. First Union
has agreed to settle a class action alleging securities fraud,
after two days of testimony during a federal jury trial in Fort
Lauderdale, the Akron Beacon Journal (OH) reports.
A hearing to certify the agreement is scheduled for October 22
in Fort Lauderdale. After the hearing, the settlement will be
divided among the 531 plaintiffs represented by the lawsuit.
The lawsuit was filed on behalf of two Ohio investors and the
Miami-based court-appointed receiver Michael Goldberg. The suit
alleged that bank personnel knew that Mr. Bartoli, a former
Doylestown financial planner, had moved Cyprus Funds money out
of a First Union account in Florida into other corporate
accounts held there to pay for lavishly remodeled homes and
farms in Ohio, while the fund was bouncing checks to its
investors.
Many of the Cyprus investors were Ohio retirees, who lost an
estimated $34 million when the US Securities and Exchange
Commission (SEC) closed the fund in 1999. Investigators believe
Cyprus Funds raised about $80 million, but evidence the SEC has
gathered indicates no more than $4 million actually was
invested.
FATBRAIN.COM: Reaches Settlement For NY Securities Fraud Lawsuit
----------------------------------------------------------------
Fatbrain.com LLC 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 its former
officers and directors.
The complaint alleges that the initial public offering
registration statements filed by the Company with the Securities
and Exchange Commission were false and misleading because they
failed to disclose that the underwriters were receiving excess
compensation in the form of profit sharing with certain of its
customers and that some of those customers agreed to buy
additional shares of the Company's common stock in the after
market at increasing prices.
The complaint also alleges that the foregoing constitute
violations of:
(1) Section 11 of the Securities Act of 1933, the Company,
its directors and officers signing the related
registration statements, and the related underwriters;
(2) Rule 10b-5 promulgated under the Securities Exchange
Act of 1934 against the same parties; and
(3) the control person provisions of the 1933 Act and 1934
Act by certain directors and officers of the defendant
issuers.
A motion to dismiss by the defendant issuers, including the
Company, was denied. After extensive negotiations among
representatives of plaintiffs and defendants, a memorandum of
understanding (MOU), outlining a proposed settlement resolving
the claims in the Action between plaintiffs and the defendant
issuers, has been entered into.
It is contemplated that a settlement agreement among the
defendants and plaintiffs in the Action will be prepared, the
terms of which will be consistent with the MOU and which, after
execution, will be submitted to the court for approval. The
proposed settlement is not expected to have any material adverse
impact on the Company.
GOLD FIELDS: Faces Suit For Property Damages in Picher, Oklahoma
----------------------------------------------------------------
Gold Fields Mining Corporation and five other mining companies
face a class action filed in the United States District Court
for the Northern District of Oklahoma, asserting nuisance and
trespass claims predicated on allegations of intentional lead
exposure by the defendants, including the Company. The suit
seeks compensatory damages for diminution of property value,
punitive damages and the implementation of medical monitoring
and relocation programs for the affected individuals.
A predecessor of the Company formerly operated two lead mills
near Picher, Oklahoma prior to the 1950's. The plaintiff
classes include all persons who have lived in the vicinity of
Picher within a specified time period.
The Company has agreed to indemnify one of the other defendants,
which is a former subsidiary. The Company is also a defendant,
along with other companies, in 17 individual lawsuits arising
out of the same lead mill operations involved in the class
action. Plaintiffs in these actions are seeking compensatory
and punitive damages for alleged personal injuries from lead
exposure. Two of those lawsuits have been consolidated for a
trial set for November 17, 2003 in the US District Court for the
Northern District of Oklahoma.
While the outcome of litigation is subject to uncertainties,
based on the Company's preliminary evaluation of the issues and
their potential impact on the Company, the Company believes this
matter will be resolved without a material adverse effect on the
Company's financial condition, results of operations or cash
flows.
HMO LITIGATION: Doctors Opt Out Of Blue Cross Settlement
--------------------------------------------------------
Close to one-third of the 34,000 doctors and other providers
eligible to benefit from a major class action settlement with
Independence Blue Cross, have opted out of the agreement before
a judge has even ratified it, according to court records
recently filed in Philadelphia, The Philadelphia Inquirer
reports.
Lawyers for the two groups advocating the agreement -
Independence and the Pennsylvania Orthopedic Society - are
asking the judge to invalidate the opt-outs, maintaining that
many providers were misled by lawyers eager to wreck the
settlement. The pact's defenders want the judge to repeat the
polling process and give doctors another chance to consider the
agreement.
Philadelphia Common Pleas Court Judge Albert W. Sheppard Jr.,
will be sorting through these competing interests, and recently
has heard two days of often-heated testimony. Judge Sheppard is
not expected to finish the proceedings and come to a final
decision for a month or more. An appeal could further delay the
agreement for a year.
Independence, the region's largest health insurer, agreed in
June to settle a suit brought by the Pennsylvania Orthopedic
Society and disclose its pay policies for the first time. The
insurer also offered to stop "downcoding" and "bundling,"
practices that often pay doctors little or nothing for multiple
procedures. Orthopedic Society attorney Jerome Marcus last week
called the agreement "a sea change in the way the company will
treat its providers."
The agreement would improve patient care by helping to end
situations where a provider's economic self-interest collides
with clinical care, said Linda Peeno, a physician and former
managed-care executive from Louisville, Kentucky. Sometimes, if
insurers will not pay for multiple procedures, a provider will
bring patients back on different days, thereby subjecting them
to greater risk and discomfort. The agreement should help stop
that.
While advocates of the pact, including Independence, have said
it would raise payments to physicians by $40 million over the
next two years, and some experts have placed the increase as
high as $63.8 million, critics of the pact have replied that it
failed to help many doctors. Cardiologists and
gastroenterologists - those who perform a lot of procedures -
would do better under the proposed agreement, but it would do
little to raise the billings of internists, pediatricians,
obstetricians and family-practice doctors, according to research
from the Pennsylvania Medical Society, one of the critics.
Many medical groups have urged providers to oppose the
settlement, arguing that it was vague and let Independence off
the hook for alleged past transgressions. The groups opposed
include the Pennsylvania Chiropractic Association, Medical
Society of New Jersey and the Pennsylvania Medical Society, as
well as physician groups from the Jefferson Health System and
the University of Pennsylvania Health System.
HOMESTORE INC.: CA Court To Hear Final Approval for Settlement
--------------------------------------------------------------
Homestore, Inc. awaits final approval for the settlement of the
consolidated securities class actions charging it and certain of
its current and former officers and directors with violating
certain provisions of the Securities Exchange Act of 1934.
The suit alleges the Company made materially false and
misleading statements with respect to its 2000 and 2001
financial results included in its filings with the SEC, analysts
reports, press releases and media reports, and seeks an
unspecified amount of damages.
In March 2002, the California State Teachers Retirement
System was named lead plaintiff and the complaints have been
consolidated in the United States District Court, Central
District of California. The suit also names as defendants
MaxWorldwide, Inc. (formerly L90, Inc.) and
PricewaterhouseCoopers LLP.
On March 7, 2003, the court dismissed, with prejudice, the
plaintiffs' claims against a number of corporate and individual
defendants whom the plaintiff alleged either assisted in the
planning and execution of the purportedly fraudulent
transactions at issue, or who were parties to those
transactions. The court also dismissed, without prejudice, the
plaintiff's claims against a number of the Company's current and
former officers and employees.
With regard to those claims dismissed without prejudice, the
plaintiff has advised that it does not intend to amend the
complaint. At the same time, the court denied the motions to
dismiss of PricewaterhouseCoopers LLP and the Company's former
chief executive officer. The Company did not file a motion to
dismiss the plaintiff's claims against it, but answered the
complaint. Accordingly, the March 7, 2003 decision did not make
any ruling with respect to the claims asserted against the
Company.
On August 12, 2003, the Company entered into a settlement
agreement with the plaintiff to resolve all outstanding claims
related to the suit. The settlement, which is subject to court
approval, will be filed with the court and a hearing on final
approval is not expected before December 2003.
HOMESTORE INC.: CA Court Dismisses Without Prejudice Stock Suit
---------------------------------------------------------------
The United States District Court for the Central District of
California dismissed without prejudice the class action filed
against Homestore, Inc., certain of its former officers and
directors, and certain underwriters, purporting to state claims
under Sections 11, 12(a)(2) and 15 of the Exchange Act.
The suit alleges that the Company's January 26, 2000,
registration statement contained materially false and misleading
statements.
The suit was originally filed in California state court and
moved to federal court. Plaintiffs asked the court to remand
the suit to state court, which the district court denied. In
June 2003, plaintiff filed with the United States Court of
Appeals for the Ninth Circuit, a Petition for Writ of Mandamus,
asking the Ninth Circuit to direct the court to vacate the
federal court's order.
On August 11, 2003, the court issued an order dismissing without
prejudice plaintiff's claims against the defendants, and
striking his class action allegations. The court found that the
plaintiff had failed to meet the requirements of the Private
Securities Litigation Reform Act to maintain the action as a
class action; as well as other deficiencies in his complaint.
Plaintiff has been given until September 8, 2003, to amend the
complaint.
KPMG LLP: Former Polaroid Shareholders Allege Accounting Fraud
--------------------------------------------------------------
Shareholders of the former Polaroid Corporation recently sued
KPMG LLP, the company's former accountants, alleging the firm
violated accounting guidelines when it audited the company
before it had filed for bankruptcy, the Associated Press
Newswires reports. The lawsuit also names as defendants former
Polaroid CEO Gary DiCamillo and several other former executives
of Polaroid.
The lawsuit, filed in US District Court in New York, comes four
days after the release of a report by an independent examiner,
who cleared the former Polaroid Corporation of allegations that
it tried to make its finances look worse than they were in order
to justify a bankruptcy filing. The report raised questions
about the company's accounting and then concluded that
Polaroid's finances actually were worse than it disclosed.
The shareholders' lawsuit, which requests class action status
and is based on material in the above-described report, claims
that a 2000 audit and subsequent annual filings approved by
KPMG, gave an improper rosy picture of Polaroid's finances.
Among other things, the lawsuit claims that KPMG included
provisions for tax-deferred assets that did not meet the
standards of general accounting principles.
KPMG spokesman George Ledwith said he had not seen the
complaint, but he criticized the independent examiner's report.
"It is clear to us that a great deal of the material in that
report has been taken out of context or is simply wrong," said
Mr. Ledwith.
A spokesman for the reconstituted Polaroid, now a separate
entity owned by One Equity Partners, a division of Chicago-based
BankOne,did not immediately return a phone message, AP reports.
LOOKSMART LTD: Agrees To Settle Consumer Fraud Suit in CA Court
---------------------------------------------------------------
Looksmart Ltd. reached an agreement to settle a class action
filed in the Superior Court in San Francisco County, California
in connection with the launch of the Company's new Small
Business Listings product announced in April 2002.
Several express listing customers filed the suit, alleging
breach of contract, unfair business practices and false
advertising. The complaint sought restitution, unspecified
compensatory damages, injunctive relief and attorneys' fees.
In November 2002, the Company filed a motion to dismiss the
claims in the amended complaint. The court denied the motion in
January 2003. Plaintiffs have served document and deposition
requests, but no other discovery is being sought at this time.
In June 2003, the Company reached a tentative agreement to
settle the matter that is subject to the execution of a
definitive agreement and approval of the court.
MARKETWATCH.COM: Pinnacor Investors File Suit Over Acquisition
--------------------------------------------------------------
Marketwatch.com, Inc. faces a securities class action filed in
Delaware Chancery Court relating to its proposed acquisition of
Pinnacor, Inc. The suit names as defendants the Company,
Pinnacor, Inc., and certain of Pinnacor's current officers and
Directors.
The suit was filed on behalf of holders of the Company's common
stock as of the date of the announcement of the proposed
acquisition. The lawsuit alleges that the Pinnacor's directors
breached their fiduciary duties in proceeding with the sale of
Pinnacor to the Company by agreeing to an inadequate proposed
purchase price which fails adequately to compensate Pinnacor
shareholders for the loss of control of the company.
The lawsuit alleges that the Company aided and abetted these
breaches of fiduciary duty in some unspecified way. The lawsuit
seeks an unspecified amount of damages and also prays for an
injunction against consummation of the proposed transaction.
MIDAMERICAN ENERGY: Tentative $7.5M Pact Reached In Stock Suit
--------------------------------------------------------------
A tentative $7.5 million settlement has been reached in a class
action filed by the shareholders of MidAmerican Energy Holdings
Co., the Associated Press Newswires reports.
The shareholders sued, claiming they were shortchanged by the
October 1999 sale of the company to Berkshire Hathaway Inc. The
shareholders sued MidAmerican chief executive David Sokol, the
board of directors and the company's largest shareholder, Walter
Scott Jr., alleging that they breached their fiduciary
responsibility when they sold the company at what the lawsuit
contended was a below-market price.
The MidAmerican board of directors approved the sale to
Berkshire Hathaway at a price of $35.05 per share. Some
analysts later said the sale price could have gone as high as
$42 to $48 a share. Berkshire Hathaway was not a party to the
lawsuit; although the company originally was sued, the
plaintiffs later removed it from the complaint.
A judge still has to sign off on the agreement, but, according
to court documents filed last Friday, the settlement calls for
the money to be placed in escrow and then invested on behalf of
the MidAmerican shareholders.
According to court papers, Mr. Scott and Mr. Sokol devised the
MidAmerican merger with Teton Acquisition Corporation, whose
shares are owned by Omaha, Nebraska-based Berkshire Hathaway as
well as by Mr. Scott and Mr. Sokol. Mr. Scott also was a good
friend of Warren Buffett, Berkshire Hathaway's chief executive.
"I felt Sokol was an insider and all through it I felt there
were many problems," said Martin J. Cohen, of Cuddebackville,
New York, who owned 500 shares of stock, and was lead plaintiff
in the class action. Mr. Cohen believed the friendship between
Mr. Scott and Warren Buffet also created "insider" circumstances
that required further action by the shareholders.
According to the lawsuit, Mr. Sokol and the board delayed the
release of the financial report until after announcement of the
merger. If the report had been released earlier, its favorable
information could have boosted the company's sale price. By not
seeking that better price, the suit claimed, Mr. Sokol and the
board breached their fiduciary responsibility to the
shareholders.
MIIX GROUP: Plaintiffs To Launch Securities Fraud Lawsuit in NJ
---------------------------------------------------------------
Plaintiffs intend to file a consolidated amended class action
against The MIIX Group, Inc. in the United States District Court
for the District of New Jersey. The suit will also name as
defendants the Company's directors and officers, Medical Society
of New Jersey and Fox-Pitt Kelton, Inc., which acted as
financial advisor to the Company.
The complaint alleges that the Company and its directors and
officers engaged in securities fraud, breaches of fiduciary duty
and violations of New Jersey antitrust laws in connection with
the MIIX Advantage contracts and alleged misrepresentations and
omissions of material fact in various SEC filings by the
Company. The complaint demands unspecified compensatory
damages, treble damages, rescission of the sale of shares in the
Company's initial public offering, attorney fees and other
relief.
The plaintiffs' counsel entered into a Stipulation and Order
providing that a consolidated amended complaint would be filed
after entry of the Stipulation and Order by the court. The
Company denies the consolidated action's allegations.
NET PERCEPTIONS: Seeks Settlement of Securities Suit in S.D. NY
---------------------------------------------------------------
Net Perceptions, Inc. is working towards settling the
consolidated securities class action filed in the United States
District Court for the Southern District of New York against it
and:
(1) FleetBoston Robertson Stephens, Inc., the lead
underwriter of the Company's initial public offering,
(2) several other underwriters who participated in the
Company's initial public offering,
(3) Steven J. Snyder, the Company's then president and
chief executive officer, and
(4) Thomas M. Donnelly, the Company's current president and
chief financial officer
The amended complaint generally alleges that the defendants
violated federal securities laws by not disclosing certain
actions taken by the underwriter defendants in connection with
the initial public offering and the follow-on public offering.
The amended complaint alleges specifically that the underwriter
defendants, with the Company's direct participation and
agreement and without disclosure thereof, conspired to and did
raise and increase their underwriters' compensation and the
market prices of the Company's common stock following the
Company's initial public offering and in the Company's follow-on
public offering by requiring their customers, in exchange for
receiving allocations of shares of common stock sold in the
Company's initial public offering, to pay excessive commissions
on transactions in other securities and to purchase additional
shares of the Company's common stock in the initial public
offering aftermarket at pre-determined prices above the initial
public offering price, and to purchase shares of the Company's
common stock in the follow-on public offering.
The amended complaint seeks unspecified monetary damages and
certification of a plaintiff class consisting of all persons who
acquired the Company's common stock between April 22, 1999
through December 6, 2000.
The plaintiffs have since agreed to dismiss the claims against
Mr. Snyder and Mr. Donnelly without prejudice, in return for
their agreement to toll any statute of limitations applicable to
those claims; and those claims have been dismissed without
prejudice. On July 15, 2002, all of the issuer defendants filed
a joint motion to dismiss the plaintiffs' claims in all of the
related cases. On February 19, 2003, the court ruled against
the Company on this motion.
A special committee of the Company's Board of Directors has
authorized the Company to negotiate a settlement of the pending
claims substantially consistent with a memorandum of
understanding negotiated among class plaintiffs, all issuer
defendants and their insurers. Any such settlement would be
subject to approval by the Court.
NEOFORMA INC.: Inks Settlement For Securities Lawsuit in S.D. NY
----------------------------------------------------------------
Neoforma, 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:
(1) Merrill Lynch, Pierce, Fenner & Smith,
(2) Bear Stearns,
(3) FleetBoston Robertson Stephens,
(4) Robert Zollars, Chairman and Chief Executive Officer,
and
(5) Frederick Ruegsegger, former Chief Financial Officer
The suit, filed on behalf of those who purchased stock from
January 24, 2000 to December 6, 2000, alleges that the
underwriters solicited and received "undisclosed compensation"
from investors in exchange for allocations of stock in the
Company's IPO, and that some investors in the IPO allegedly
agreed with the underwriters to buy additional shares in the
aftermarket in order to artificially inflate the price of the
Company's stock.
The Company and its officers are named in the suits pursuant to
Section 11 of the Securities Act of 1933 and Section 10(b) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, for allegedly failing to disclose in its IPO
registration statement and prospectus that the underwriters had
entered into the arrangements described above. The complaints
seek unspecified damages.
Approximately 300 other issuers and their underwriters have had
similar suits filed against them, all of which are included in a
single coordinated proceeding in the Southern District of New
York. On July 1, 2002, the underwriter defendants moved to
dismiss all of the IPO allocation litigation complaints against
them, including the action involving the Company. On July 15,
2002, the Company, along with the other non-underwriter
defendants in the coordinated cases, also moved to dismiss the
litigation. Those motions were fully briefed on September 13
and September 27, 2002, respectively, and have not yet been
decided. On October 9, 2002, all of the individual defendants,
including Mr. Zollars and Mr. Ruegsegger, were dismissed from
the action without prejudice.
On June 30, 2003, the Company's board of directors approved a
proposed settlement for this matter, which is part of a larger
global settlement between issuers and plaintiffs. The
acceptance of the settlement by the plaintiff is contingent on a
number of factors, including the percentage of issuers who
approve the proposed settlement. The Company has agreed to
undertake other responsibilities under the proposed settlement,
including agreeing to assign away, not assert, or release
certain potential claims the Company may have against
its underwriters. It is expected that any direct financial
impact of the proposed settlement will be covered by the
Company's insurers.
NETRATINGS INC.: Working For Settlement of NY Securities Lawsuit
----------------------------------------------------------------
Netratings, Inc. is working to settle the consolidated
securities class action filed in the United States District
Court for the Southern District of New York on behalf of
purchasers of its common stock from December 8, 1999 through
December 6, 2000. The complaint names as defendants the
Company, two of its former officers or directors and investment
banking firms that served as underwriters for the Company's
initial public offering in December 1999.
The amended complaint alleges violations of Section 11 and 15 of
the Securities Act of 1933, and Section 10(b) of the Securities
Exchange Act of 1934, on the grounds that the prospectus
incorporated in the registration statement for the offering
failed to disclose, among other things, that:
(1) the underwriters had solicited and received excessive
and undisclosed commissions from certain investors in
exchange for which the underwriters allocated to those
investors material portions of the shares of the
Company's stock sold in the initial public offering;
and
(2) the underwriters had entered into agreements with
customers whereby the underwriters agreed to allocate
shares of the Company's stock sold in the initial
public offering to those customers in exchange for
which the customers agreed to purchase additional
shares of the Company's stock in the aftermarket at
pre-determined prices.
The amended complaint also alleges that false analyst reports
were issued following the IPO. No specific damages are claimed.
The Company is aware that similar allegations have been made in
lawsuits relating to more than 300 other initial public
offerings conducted in 1999 and 2000. Those cases, including
the Company's case, have been consolidated for pretrial purposes
before the Honorable Judge Shira A. Scheindlin.
On July 15, 2002, the Company (as well as the other issuer
defendants) filed a motion to dismiss the complaint. The
motions were heard on November 1, 2002. In February 2003, the
judge granted the motion to dismiss certain of the claims
against the Company and the two individual defendants and denied
the motion to dismiss certain other claims against the Company
and the two individual defendants.
The Company believes that the remaining claims against it and
the officers and directors are without merit. The issuer
defendants and the plaintiffs have been engaged in settlement
negotiations and it is possible that the issuer defendants and
the plaintiffs will reach a settlement.
NETRO CORPORATION: Agrees To Settle Securities Fraud Suit in NY
---------------------------------------------------------------
Netro Corporation 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:
(1) Richard Moley,
(2) Gideon Ben-Efraim,
(3) Michael T. Everett,
(4) Dain Rauscher, Inc.,
(5) FleetBoston Robertson Stephens, Inc., and
(6) Merrill Lynch, Pierce, Fenner and Smith, Inc.
The suit is one of more than 1,000 lawsuits filed in the same
court against more than 300 different issuers, certain officers
and directors of these issuers and more than 45 different
underwriters arising out of initial public offerings occurring
between December 1997 and December 2000. By Order dated
August9, 2001, Chief Judge Michael B. Mukasey assigned the IPO
Allocation Litigation, including the suit against the Company,
to the Honorable Shira A. Scheindlin for all pre-trial purposes.
On September 7, 2001, Judge Scheindlin adjourned the time for
all defendants in the IPO Allocation Litigation, including Netro
and the Individual Defendants, to answer, move or otherwise
respond to current and future complaints indefinitely pending
further instruction from the court.
The complaint alleges claims against the Company arising under
Section 11 of the Securities Act and Section 10(b) of the
Exchange Act, and Rule l0b-5 promulgated thereunder, and against
the Individual Defendants under Section 10(b), Rule l0b-5 and
Section20(a) of the Exchange Act, and Section15 of the
Securities Act.
The claims allege various misconduct arising from the Company's
August 1999 initial public offering and March 2000 follow-on
offering of its common stock, including, among other things,
that the disclosures made in connection with the offerings were
incomplete or misleading in various respects.
The allegations include, among other things, that Netro and the
Individual Defendants failed to disclose that the Underwriter
Defendants charged Netro excessive commissions and inflated
transaction fees in violation of the securities laws and
regulations; and allowed certain investors to take part in
Netro's initial public offering in exchange for promises that
these investors would purchase additional shares in the after-
market for the purpose of inflating and maintaining the market
price of Netro common stock.
The complaint seeks to certify a class of stockholders who
purchased the Company's common stock between August 18, 1999 and
December 6, 2000, and to recover monetary damages from
defendants in an unspecified amount, as well as plaintiff's
attorneys' fees and expenses in bringing the action.
On October 9, 2002, the claims against the Individual Defendants
were dismissed without prejudice on consent of the parties. In
addition, counsel for the plaintiffs, liaison counsel for the
issuer defendants and counsel for insurers of the issuer
defendants have taken part in discussions mediated by a former
federal district court judge to explore a possible settlement of
the claims against all of the issuer defendants in the IPO
Allocation Litigation, including the Company.
In June 2003, a memorandum of understanding was entered into
by and among the plaintiffs, liaison counsel for the issuer
defendants and counsel for the insurers which would result in
dismissal of the action against the issuers, including Netro, on
terms that would not require any current payment by Netro and
would carry only a remote risk that any future payment by
Netro would be required.
On July 14, 2003, Netro's Audit Committee approved the
memorandum of understanding and authorized Netro to enter into
the proposed settlement. The memorandum of understanding and
proposed settlement are expected to be submitted to the Court
for its required approval shortly.
NEW VALLEY: DE Court Dismisses in Part Securities Fraud Lawsuit
---------------------------------------------------------------
The Delaware Chancery Court dismissed six of the plaintiffs'
claims in the class action filed against New Valley Corporation,
Brooke Group Holding and certain directors and officers on
behalf of its former Class B preferred shareholders.
The complaint alleges that the re-capitalization, approved by a
majority of each class of the Company's stockholders in May
1999, was fundamentally unfair to the Class B preferred
shareholders, the proxy statement relating to the re-
capitalization was materially deficient and the defendants
breached their fiduciary duties to the Class B preferred
shareholders in approving the transaction. The plaintiffs seek
class certification of the action and an award of compensatory
damages as well as all costs and fees.
The court dismissed six of plaintiff's nine claims alleging
inadequate disclosure in the proxy statement. Brooke Group
Holding and the Company believe that the remaining allegations
are without merit and recently filed a motion for summary
judgment on the remaining three claims.
OHIO: Clinton County Deputy Sheriffs File Unpaid Overtime Suit
--------------------------------------------------------------
Three Clinton County, Ohio deputy sheriffs are suing Sheriff
Ralph D. Fizer Sr., claiming he forced employees to work unpaid
overtime and retaliated against officers who tried to form a
union, Associated Press Newswires reports. The deputies allege
that Sheriff Fizer began harassing them after they started
trying to unionize employees last November and complained, as
well, to the US Department of Labor that they were not paid for
overtime hours worked.
The lawsuit also names as defendants the Clinton County
commissioners, two of Sheriff Fizer's sons, who are supervisory
officers in his department and Ida Fizer, the sheriff's wife,
who supervises the department's record keeping.
Plaintiffs' lawyers Addison Stonewall, Stephanie Bivens and
Thomas Little recently filed the lawsuit in Clinton County
Common Pleas Court. They are asking the court to certify the
lawsuit as a class action representing current and former
sheriff's department employees who were not paid for their
overtime work.
Sheriff Fizer said labor investigators have visited his office
several times and are scheduled to return soon. The sheriff
said he is awaiting their final report and will comply with
their recommendations.
Labor Department spokesman Edward Frank declined to say when the
department's investigation began, how many people had been
interviewed or when the investigation will be completed. Mr.
Frank said only the department is continuing to investigate.
REDBACK NETWORKS: Agrees To Settle Securities Lawsuit in S.D. NY
----------------------------------------------------------------
Redback Networks, Inc. agreed to settle a securities class
action filed in the United States District Court for the
Southern District of New York against it and its former
officers.
The lawsuit asserts, among other claims, violations of the
federal securities laws relating to how the Company's
underwriters of the initial public offering allegedly allocated
IPO shares to the underwriters' customers.
In March 2002, the court for the Southern District of New York
entered an order approving the joint request of the plaintiffs
and the Company to dismiss the claims without prejudice. On
April 20, 2002, plaintiffs filed a consolidated amended class
action complaint against the Company and its current and former
officers and directors, as well as certain underwriters involved
in its initial public offering.
Similar complaints have been filed concerning more than 300
other IPOs; all of these cases have been coordinated as In
re Initial Public Offering Securities Litigation, 21 MC 92. On
July 15, 2002, the issuer defendants 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 the individual defendants in the Redback IPO
litigation, without prejudice, subject to a tolling agreement.
On February 19, 2003, the Court denied the motion to dismiss the
Company's claims.
Settlement discussions on behalf of the named defendants have
occurred over the last several months, resulting in a final
settlement memorandum of understanding with the plaintiffs in
the case and the Company's insurance carriers. The underwriters
are not parties to the proposed settlement.
The Company has tentatively agreed to this settlement as of June
30, 2003, provided substantially all of the other defendants
also agree to the memorandum of understanding. As of July 31,
2003, over 250 issuers, constituting a majority of the issuer
defendants, had tentatively approved the settlement. It is
currently anticipated that the settlement will be finalized by
late 2004. The Company will continue diligently to pursue its
interests in this case.
SAUDI ARABIA: US Workers Sue Over Savings and Property Rights
-------------------------------------------------------------
The law firm of Henrichsen Siegel filed a class action in the
United States District Court for the District of Columbia on
behalf of John W. Peterson, and all American workers similarly
situated, against the Kingdom of Saudi Arabia and the General
Organization of Social Insurance (GOSI), an agency of that
government.
"This case involves the savings and property rights of thousands
of American citizens and permanent residents who played a key
role in the construction and development of the modern day Saudi
Arabia," said attorney Eric L. Siegel. "Many workers, including
Mr. Peterson, were enticed to Saudi Arabia by favorable
employment packages, which included GOSI benefits and an annuity
system based on an employee-employer contribution. And
thousands of those workers have been denied the money that is
rightfully theirs."
Mr. Peterson, and class members, seeks class relief, injunctive
relief and refunds from pensions from the Saudi Government and
GOSI. Legal theories of recovery include unlawful expropriation
of property rights; arbitrary and discriminatory treatment of
foreign workers with regard to their property in Saudi Arabia;
breach of contract and unjust enrichment. Mr. Peterson, who now
lives in Virginia, lived and worked in Saudi Arabia for 11
years, employed by a number of engineering and construction
companies.
Like thousands of other highly skilled workers from the US and
other Western nations, Mr. Peterson and his employers made
mandatory contributions to the GOSI system, with the
anticipation of a payment of the annuity when their work in
Saudi Arabia was complete.
"Employers used GOSI benefits to attract foreign workers," Mr.
Peterson said in a statement. "For nearly 20 years (1969-1987)
contributions were mandatory for private employees and their
employers, regardless of nationality."
GOSI was established by the Saudis in 1969. Contributions,
which were mandatory for private employers and their employees,
were calculated as thirteen percent (13%) of the total value of
an employee's wages and benefits.
The employee contribution was five percent; the employer
contribution, made in the employee's name, was eight percent.
From the program's inception, Mr. Peterson and other US citizens
and permanent residents involved in the pension program
understood the Saudi Government intended to distribute GOSI
benefits to non-Saudi workers in their home country, upon the
completion of their contracts and return to their country of
origin.
GOSI invests and reinvests employer and employee contributions
to its fund in various domestic corporations, organizations and
international banks. In March 1987, the Saudi government issued
a decree excluding non-Saudi workers from GOSI.
"The impact of the 1987 decree was devastating for foreign
workers," said co-counsel Stephen A. Saltzburg of the George
Washington University Law School. "Mr. Peterson and many others
assumed the GOSI contributions deposited in their names would be
promptly refunded when they returned home . We are calling on
the Saudi Government to fulfill its obligation to these American
workers and return to them that to which they are entitled."
Mr. Peterson worked in Saudi Arabia until 1990. Upon his return
to the United States, he sought to recover the money that had
been placed in his name. In 1990, he received a check for five
percent - his own contribution to the GOSI plan. The remaining
eight percent, based on the employer contribution, has been
withheld, despite his frequent attempts to glean information
about its disposition.
"Mr. Peterson and thousands of others have waited long enough
for simple justice," said attorney Siegel.
SKECHERS USA: Store Managers Commence CA Overtime Wage Lawsuits
---------------------------------------------------------------
Skechers USA, Inc. faces two class actions alleging overtime and
related violations of the California Labor Code on behalf of
managers of Skechers retail stores. The suits seek damages and
restitution as well as injunctive and declaratory relief.
One suit is pending in the Superior Court for the State of
California for the County of Orange, while another is pending in
the Superior Court for the State of California for the County of
Los Angeles.
While it is too early in the litigation to predict the outcome
of the claims against the Company, the Company believes that it
has meritorious defenses to the claims asserted in both class
actions and intends to defend against those claims vigorously.
Further, the Company is unable to determine the extent, if any,
of any liability however, and does not believe that an adverse
result would have a material effect on the Company's financial
position or results of operations.
SKECHERS USA: Plaintiffs to File Consolidated CA Securities Suit
----------------------------------------------------------------
Plaintiffs intend to file a consolidated securities class action
against Skechers USA, Inc. in the United States District Court
for the Central District of California by September 2003. Five
suits were initially filed on behalf of persons who purchased
publicly traded securities of the Company between April 3, 2002
and December 9, 2002:
(1) HARVEY SOLOMON v. SKECHERS USA, INC. alleges violations
of federal securities laws and breach of fiduciary duty
against the Company and certain of its officers and
directors, and seeks compensatory damages, interest,
attorneys' fees, and injunctive and equitable relief;
(2) CHARLES ZIMMER v. SKECHERS USA, INC. et al. alleges
violations of federal securities laws against the
Company and certain of its officers and directors, and
seeks compensatory damages, interest, costs, and
injunctive and equitable relief;
(3) MARTIN H. SIEGEL v. SKECHERS USA, INC. et al. alleges
violations of the federal securities laws and breach of
fiduciary duty and seeks compensatory damages,
interest, attorneys' fees, and injunctive and equitable
relief;
(4) ADAM D. SAPHIER v. SKECHERS USA, INC. et al. alleges
violations of the federal securities laws and seeks
compensatory damages, interest, attorneys' fees and
injunctive and equitable relief; and
(5) LARRY L. ERICKSON v. SKECHERS USA, INC. alleges
violations of the federal securities laws and breach of
fiduciary duty and seeks compensatory damages,
interest, attorneys' fees and injunctive and equitable
relief
In July 2003, the court in the five suits has ordered the case
consolidated and a consolidated complaint to be filed and served
within sixty days, by September 16, 2003.
STORAGENETWORKS INC.: Reaches Settlement For NY Securities Suit
---------------------------------------------------------------
StorageNetworks, Inc. agreed to settle a securities class action
filed in the United States District Court for the Southern
District of New York against it and several of its officers as
well as against the underwriters of the Company's initial public
offering of common stock in June, 2000.
The complaint, which seeks unspecified damages, was filed
allegedly on behalf of persons who purchased the Company's
common stock between June 30, 2000 and December 6, 2000. The
complaint alleges violations of the Securities Act of 1933 and
the Securities Exchange Act of 1934, each as amended, primarily
based on allegations that the Company, the underwriters and the
other named defendants made material false and misleading
statements concerning fees paid by purchasers of the Company's
common stock to the underwriters in the prospectus that was part
of the registration statement on Form S-1 that was filed in
connection with the Company's initial public offering.
The allegations in the complaint are generally related to the
alleged receipt of excessive and undisclosed commissions by the
underwriters and alleged prohibited after-market transactions by
the underwriters. The complaint alleges that the underwriters
obtained excessive commissions and inflated transactions fees
from their customers, and allegedly entered into agreements with
their customers pursuant to which the customers, in return for
being allocated shares in the initial public offering, agreed to
purchase additional shares on the open market at specified
increased prices.
In April 2002, the complaint was amended to add allegations,
substantially similar to those described above, concerning the
Company's secondary public offering of stock. In October 2002,
the individual defendants were dismissed without prejudice from
this lawsuit pursuant to tolling agreements entered into with
the plaintiffs.
The Company believes that these claims are without merit. The
Company has agreed to join a proposed settlement regarding this
claim, which settlement is subject to final negotiation and
court approval.
VERITAS SOFTWARE: Plaintiffs Consolidate Securities Suits in CA
---------------------------------------------------------------
Plaintiffs consolidated the securities class actions filed
against Veritas Software, Inc. after it announced in January
2003 that it would restate financial results as a result of
transactions entered into with AOL Time Warner in September
2000.
The suits, filed in the United States District Court for the
Northern District of California, allege that the Company and
some of its officers and directors violated provisions of the
Securities Exchange Act of 1934. The complaints contain varying
allegations, including that the Company made materially false
and misleading statements with respect to its 2000, 2001 and
2002 financial results included in its filings with the SEC,
press releases and other public disclosures.
In addition, several complaints purporting to be derivative
actions have been filed in California state court against some
of the Company's directors and officers. These complaints are
based on the same facts and circumstances as the class actions
and generally allege that the named directors and officers
breached their fiduciary duties by failing to oversee adequately
the Company's financial reporting. The state court complaints
have also been consolidated.
All of the complaints generally seek an unspecified amount of
damages. The cases are still in the preliminary stages, and it
is not possible for the Company to quantify the extent of its
potential liability, if any.
Z-TEL TECHNOLOGIES: Reaches Settlement For Securities Suit in NY
----------------------------------------------------------------
Z-Tel Technologies, Inc. forged a memorandum of understanding to
settle the consolidated securities class action filed against
it, certain of its current and former directors and officers and
firms engaged in the underwriting of the Company's initial
public offering of stock.
The complaint is based on the allegations that the Company's
registration statement on Form S-1, filed with the Securities
and Exchange Commission (SEC) in connection with the IPO,
contained untrue statements of material fact and omitted to
state facts necessary to make the statements made not misleading
by failing to disclose that the underwriters allegedly had
received additional, excessive and undisclosed commissions from,
and allegedly had entered into unlawful tie-in and other
arrangements with, certain customers to whom they allocated
shares in the IPO.
The plaintiffs in the suit assert claims against the Company and
its directors and officers pursuant to Section 11 of the
Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC
thereunder. The plaintiffs assert claims against the Company's
directors and officers pursuant to 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-5 promulgated by
the SEC thereunder.
The plaintiffs seek an undisclosed amount of damages, as well as
pre-judgment and post-judgment interest, costs and expenses,
including attorneys' fees, experts' fees and other costs and
disbursements. Initial discovery has begun.
A memorandum of understanding has been reached by lawyers for
the plaintiffs, the issuers and insurers of the issuers. The
memorandum sets forth the terms of a proposed settlement, the
principal components of which are:
(1) a release of all claims against the issuers and their
officers and directors,
(2) the assignment by the issuers to the plaintiffs of
certain claims the issuers may have against the
Underwriters and
(3) an undertaking by the insurers to ensure the plaintiffs
receive not less than $1 billion in connection with
claims against the underwriters
The Company's board of directors has approved the memorandum of
understanding. To be binding, the settlement must be approved
by substantially all the issuers and thereafter submitted to and
approved by the court. The settlement will not be binding upon
any plaintiffs electing to opt-out of the settlement.
Asbestos Alert
ASBESTOS LITIGATION: Ampco-Pittsburgh Faces 25,600 Claimants
------------------------------------------------------------
Ampco-Pittsburgh Corp reports that as of June 30, 2003, the
company and its subsidiaries are involved in asbestos-related
cases, along with many other defendants, filed in various state
and federal courts involving around 25,600 claimants.
The agreed gross settlement costs, including defense costs, in
the second quarter of 2003 were about $553,000 and for the year
to date of $903,000, substantially all of which was paid by
insurance. There were 55 cases, involving 105 claimants, have
been settled in the second quarter of 2003 without any payment
bringing the total for the year to date to 69 cases, involving
119 claimants, being settled without any payment.
On February 7, 2003, Utica Mutual Insurance Company filed a
lawsuit in the Supreme Court of the State of New York, County of
Oneida against the Corporation and certain of the subsidiaries.
Utica disputes certain coverage obligations to the Corporation
and asserts that Utica also has defense and indemnity
obligations to the Corporation. The lawsuit seeks a declaratory
judgment and reimbursement of amounts already paid. Ampco-
Pittsburgh answered Utica's complaint, denying that Utica was
entitled to the relief it requested against them, and asserting
counterclaims against Utica.
According to the filing, June 27, 2003, Ampco-Pittsburgh and
Utica entered a Defense and Indemnity Agreement with Respect to
Asbestos-Related Bodily Injury Claims settling most of the
issues raised in the Oneida County Litigation. Under the
Coverage Agreement, Utica has accepted financial responsibility,
subject to the limits of its policies and based on fixed defense
percentages and specified indemnity allocation formulas, for a
substantial majority of the asbestos personal injury claims
arising out of exposure to alleged asbestos-containing
components in products distributed by Ampco-Pittsburgh.
Utica's agreed share of such defense and indemnification costs
varies depending upon the alleged asbestos-containing product at
issue and whether Utica primary or umbrella policies are
responsible for the claims and, for indemnification costs only,
the years of the claimant's exposure to asbestos.
Under the Agreement, Utica and Ampco-Pittsburgh will continue to
litigate the effect, if any, of an exclusion addressing products
liability with respect to sales to the United States government
contained in certain primary Utica policies. Utica has agreed,
however, that any claims precluded from coverage under the
primary policies containing the exclusion will be covered under
the umbrella policies issued by Utica. Under certain of the
umbrella policies, defense costs expended on covered claims will
erode the policy limits, in contrast to the primary policies
where only indemnity costs erode the policy limits.
Based on the Corporation's claims experience to date, insurance
coverage and the identity of the subsidiaries that are named in
the cases, the Corporation believes that the pending legal
proceedings will not have a material adverse effect on its
consolidated financial condition or liquidity. The outcome of
any of the particular lawsuits, however, could be material to
the consolidated results of operations of the period in which
the costs, if any, are recognized.
There can be no assurance that the Corporation or certain of its
subsidiaries will not be subjected to significant additional
claims in the future or that the Corporation's or its
subsidiaries' ultimate liability with respect to these
claims will not present significantly greater and longer lasting
financial exposure than presently contemplated.
Although it is probable that future costs will be incurred, the
amounts cannot reasonably be estimated. Accordingly, the
Corporation has not made an accrual for such costs in its
financial statements and has retained a law firm to advise it on
all matters pertaining to these asbestos cases including
insurance issues.
Ampco-Pittsburgh incurred uninsured legal costs approximating
$670,000 in the second quarter and $1,270,000 year to date. The
Corporation expects the level of these expenses to reduce
towards year end but are likely to aggregate in excess of
$1,800,000 for 2003.
ASBESTOS LITIGATION: Collins & Aikman Posts Asbestos Statistics
---------------------------------------------------------------
Collins & Aikman Corporation reveals that as of June 30, 2003,
it is party to around 815 pending cases alleging personal injury
from exposure to asbestos.
The plaintiffs allege that they were exposed to asbestos-
containing materials used in boilers manufactured before 1966 by
former operations of the Company, which were sold in 1966.
Asbestos-containing refractory bricks lined the boilers and, in
some instances, Collins' former operations installed asbestos-
containing insulation around the boilers.
According to its latest Securities and Exchange Commission
filing, these pending cases do not include cases that have been
dismissed or are subject to agreements to dismiss due to the
inability of the plaintiffs to establish exposure to
a relevant product and cases that have been settled or are
subject to settlement agreements.
Total settlement costs for these cases have been less than
$800,000 or an average of less than $8,000 per settled case.
The defense and settlement costs have been substantially covered
by our primary insurance carriers under a claims handling
agreement that expires in August 2006.
Collins & Aikman has primary, excess and umbrella insurance
coverage for various periods available for asbestos-related
boiler and other claims. The Company's primary carriers have
agreed to cover about 80% of certain defense and settlement
costs up to a limit of approximately $70,500,000 for all claims
made, subject to reservations of rights. The excess insurance
coverage, which varies in availability from year to year, is
roughly $620,000,000 in aggregate for all claims made.
Based on the age of the boilers, the nature of the claims and
settlements made to date and the insurance coverage, management
does not believe that these cases will have a material impact on
the Company's financial condition, results of operations or cash
flows. However, it cannot assure that the Company will not be
subjected to significant additional claims in the future, that
insurance will be available as expected or that unanticipated
damages or settlements in the future would not exceed insurance
coverage.
Legal expenses associated with asbestos-related matters are
expensed as incurred and recorded as a loss from discontinued
operations in the statement of operations.
ASBESTOS LITIGATION: Lincoln Faces 34,830 Asbestos Claimants
------------------------------------------------------------
Lincoln Electric Holdings Inc. reports that at June 30, the
Company was a co-defendant in cases alleging asbestos
induced illness involving claims by around 34,830 plaintiffs,
which is a net increase of 5255 claims from those previously
reported.
In its latest filing with the Securities and Exchange
Commission, Lincoln admits that it is one of the many defendants
in these asbestos-related cases. The asbestos claimants seek
compensatory and punitive damages, in most cases for unspecified
sums.
Since January 1, 1995, Lincoln has been a co-defendant in other
asbestos-related cases that have been resolved as follows:
11,714 of those claims were dismissed, 9 were tried to defense
verdicts, 2 were tried to plaintiff verdicts (which will be
appealed as noted below) and 180 were decided in favor of the
Company following summary judgment motions.
On July 16, a New York state court jury in an asbestos trial
involving two claimants returned verdicts against the Company.
The verdict amounts for each claimant were $1,840,000 and
$1,750,000, respectively, a substantial portion of which would
be covered by insurance and, in the second instance, reduced by
payments by an unaffiliated co-defendant.
The Company will appeal any judgments based on such verdicts and
believes it will prevail on the merits.
ASBESTOS LITIGATION: OI Group Faces 30T Asbestos Related Claims
---------------------------------------------------------------
Owens Illinois Group, Inc reports that as of June 30, it has
determined that it is a named defendant in asbestos lawsuits and
claims involving around 30,000 plaintiffs and claimants.
Based upon an analysis of the claims and lawsuits pending as of
December 31, 2002, around 55% of the claims and lawsuits pending
as of that date involved multiple claimants, and virtually all
such pending claims and lawsuits named a number of additional
defendants (typically from 20 to 100 or more). Around 40% of
the claimants and plaintiffs do not specify the monetary damages
sought.
Another 39% of the plaintiffs merely recite that the amount of
damages sought exceeds the required jurisdictional minimum
damages in the court of jurisdiction in which the suit is filed.
Around 14% of the plaintiffs specify the maximum damages sought
in amounts from $10,000,000 to $40,000,000. Lastly, fewer than
7% of the plaintiffs are involved in lawsuits which specify
precise damage amounts, with approximately 5.8% specifying
amounts up to $20,000,000; around 0.2% specifying amounts from
$20,000,000 to $75,000,000; and, about 0.5% specifying amounts
from $75,000,000 to $125,000,000.
In addition, one lawsuit, pending since 1991 and involving fewer
than 0.2% of the plaintiffs and around 60 defendants, specifies
damages of $11,000,000,000.
ASBESTOS LITIGATION: Standard Motor Reveals Asbestos Liabilities
----------------------------------------------------------------
Standard Motor Products Inc reports that it is responsible for
certain future liabilities relating to alleged exposure to
asbestos-containing products.
A September 2002 actuarial study estimated a liability for
settlement payments ranging from $27,300,000 to $58,000,000.
The Company concluded that no amount within the range of
settlement payments was more likely than any other and,
therefore, recorded the low end of the range as the liability
associated with future settlement payments through 2052 in its
consolidated financial statements, in accordance with generally
accepted accounting principles. Standard Motor plans on
performing a similar annual actuarial analysis during the third
quarter of each year for the foreseeable future.
Based on this analysis and all other available information,
Standard Motor will reassess the recorded liability, and if
deemed necessary, record an adjustment to the reserve, which
will be reflected as a loss or gain from discontinued
operations.
ASBESTOS LITIGATION: TriMas Corporation Reveals Asbestos Data
-------------------------------------------------------------
TriMas Corporation reports that as of August 8, 2003, it faces
around 612 pending cases involving about 30,427 claimants
alleging personal injury from exposure to asbestos containing
materials formerly used in gaskets manufactured or distributed
by certain of its subsidiaries for use in the petrochemical
refining and exploration industries.
TriMas manufactured three types of gaskets and has stopped using
asbestos in its products. The Company believes that many of the
pending cases relate to locations at which none of its gaskets
were distributed or used. In addition, TriMas acquired various
companies to distribute the Company's products and also had
distributed gaskets of other manufacturers prior to acquisition.
Total settlement costs, excluding the defense costs, for all
such cases, some of which were filed over 12 years ago, have
been about $2,300,000. The Company does not have significant
primary insurance to cover its settlement and defense costs.
The Company believes that there may be excess insurance policies
of former owners available to it that the Company is in the
process of reconstructing, but such insurance may not be
available.
Based upon the Company's experience to date and other available
information, TriMas does not believe that these cases will have
a material adverse effect on its financial condition or future
results of operations. However, the Company may be subjected to
significant additional claims in the future, the cost of
settling cases in which product identification can be made may
increase, and the Company may be subjected to further claims in
respect of the former activities of its acquired gasket
distributors.
ASBESTOS LITIGATION: Viacom Continues to Face Asbestos Lawsuits
---------------------------------------------------------------
Viacom Inc. reports that as of June 30, 2003, the Company had
pending around 116,200 asbestos claims, as compared to about
103,800 as of December 31, 2002 and around 118,000 as of June
30, 2002.
The Company is a defendant in lawsuits claiming various personal
injuries related to asbestos and other materials, which
allegedly occurred as a result of exposure caused by various
products manufactured by Westinghouse, a predecessor, generally
prior to the early 1970s.
Westinghouse was neither a producer nor a manufacturer of
asbestos. The Company is typically named as one of a large
number of defendants in both state and federal cases. In the
majority of asbestos lawsuits, the plaintiffs have not
identified which of the Company's products is the basis of a
claim.
The June 2002 number of claims included around 7,600 claims on
an inactive docket which would not be counted as pending under
the Company's current methodology. In addition, the December
31, 2002 pending claim number reflects the transfer of around
24,000 claims to a deferred docket of claimants alleging minimal
or no impairment established by order of the Supreme Court of
New York in December2002. Of the claims pending as of June 30,
2003, about 86,600 were pending in state courts, 27,100 in
federal court and around 2,500 were third party claims.
During the second quarter of 2003, the Company received around
18,900 new claims and closed around 11,900 claims. Viacom
reports claims as closed when it becomes aware that a dismissal
order has been entered by a court or when the Company
has reached agreement with the claimants on the material terms
of a settlement.
Viacom mentions that it has not yet been involved in third party
claims. The Company's total costs in 2002 for settlement and
defense of asbestos claims after insurance recoveries and net of
tax benefits were around $28,000,000. A portion of such costs
relates to claims settled in prior years.
ASBESTOS LITIGATION: Grace to Pay for Montana Asbestos Cleanup
--------------------------------------------------------------
A blow came hard for W.R. Grace & Co. (GRA) as a federal court
ruled that Grace pay for the cleanup costs of an asbestos site
near Libby, Montana. The ruling states that the company has to
pay $54,500,000, the largest fine ever in a lawsuit brought
under the federal Superfund law, according to a report from
Reuters. The money will help cover the cleanup costs at Grace's
former vermiculite mining and processing activities that were
incurred by the Environmental Protection Agency through December
31, 2001.
Donald Molloy, chief judge for the U.S. District Court, District
of Montana, made public on Wednesday his ruling in favor of the
federal government. In addition, the court order said Grace
would be responsible for paying EPA's future costs to clean up
hundreds residential and commercial facilities contaminated by
the company's operations. Eventually Grace may have to pay EPA
$110 million, an agency official told Reuters.
Based on Grace's latest quarterly report filed with the
Securities and Exchange Commission, the company said it had set
aside $61,000,000 by June 30 of this year to handle the EPA
lawsuit and future cost recovery claims expected to be made by
the agency.
ASBESTOS ALERT: No More Asbestos Liabilities Filed Since 2001
-------------------------------------------------------------
Exide Technologies reports that it has no longer received any
asbestos-related claims since August 2001. From 1957 to 1982,
the Company's French subsidiary, CEAC, operated a plant using
crocidolite asbestos fibers in the formation of battery cases,
which, once formed, encapsulated the fibers.
There were around 1,500 employees worked in the plant over the
period. Since 1982, the French governmental agency responsible
for worker illness claims has received 34 employee claims
alleging asbestos-related illnesses, and no such claims have
been filed since August 2001. For some of those claims, CEAC is
obligated to and has indemnified the agency in accordance with
French law for around $132, $169 and $260 in calendar years
2001, 2002 and 2003, respectively.
In addition, CEAC has been adjudged liable to indemnify the
agency for approximately $45, $78, and $200, during the same
periods to date for the dependents of four such claimants.
Although the Company cannot predict the number or size of any
future claims, after consultation with legal counsel the Company
does not believe resolution of the current or any future claims,
individually or in the aggregate, will have a material adverse
effect on the Company's financial condition, cash flows or
results of operations.
New Securities Fraud Cases
FIRSTENERGY CORPORATION: Seeger Weiss Lodges OH Securities Suit
---------------------------------------------------------------
Seeger Weiss LLP initiated a securities class action in the
United States District Court for the Northern District of Ohio
on behalf of all persons who purchased the publicly traded
securities of FirstEnergy Corporation (NYSE:FE) between April
24, 2002 and August 5, 2003, inclusive. The suit names as
defendants the Company and:
(1) H. Peter Burg,
(2) Anthony J. Alexander,
(3) Richard H. Marsh and
(4) Harvey L. Wagner
The defendants allegedly 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, FirstEnergy
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 during the Class Period the Company improperly accounted
for certain of its leased generation plants by assigning such
assets inflated values and 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 Stephen A. Weiss, David R. Buchanan or
Eric T. Chaffin by Mail: One William Street, New York, New York
10004 by Phone: 212-584-0700 or by E-Mail:
sweiss@seegerweiss.com, dbuchanan@seegerweiss.com,
echaffin@seegerweiss.com
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora
Fatima Antonio and Lyndsey Resnick, Editors.
Copyright 2003. All rights reserved. ISSN 1525-2272.
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