/raid1/www/Hosts/bankrupt/CAR_Public/030903.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, September 3, 2003, Vol. 5, No. 174
Headlines
ACTERNA CORPORATION: Investors File Securities Fraud Suit in MD
AMERADA HESS: Pension Plan Participants File ERISA Lawsuit in NJ
AMERICAN EXPRESS: Plaintiffs Appeal Settlement Objections Ruling
AMERICAN EXPRESS: Asks NY Court To Dismiss Securities Fraud Suit
AMERICAN EXPRESS: Faces IL Suit Over Collected Conversion Fees
AMERICAN EXPRESS: TX Consumers Commence Deceptive Practices Suit
AMERICAN EXPRESS: NY Consumers File Business Law Violations Suit
AMERICAN EXPRESS: Faces Suits Over Tying Arrangements in LA, CA
AMERICAN EXPRESS: Moved To Compel Arbitration, Dismiss TN Suit
AMERICAN SEAFOODS: Court Repeals Attorney's Fee Award in WA Suit
AMEX BANK: Quebecers Launch Lawsuit Over Consumer Act Violations
CALIFORNIA: FERC Recommends Dismissal of Energy Crisis Charges
CINCINNATI BELL: Faces Several Securities, ERISA Lawsuits in OH
CINCINNATI INSURANCE: IN Court Decertifies Part of Class in Suit
CMS ENERGY: Plaintiffs File Consolidated Securities Suit in MI
CONSECO INC.: Asks For Extension of Automatic Stay of Stock Suit
CONSECO INC.: CO Court Hears Certification For Policyholder Suit
CONSECO INC.: Asks For Extension of Automatic Stay on Stock Suit
EXXON-MOBIL CORPORATION: Avoids Huge Damages In Valdez Oil Spill
FEDERATED NATIONAL: DC Court Dismisses in Part Consumer Lawsuit
FIRST UNION: Plaintiffs Ask NY Court To Issue Contempt Ruling
FIRST UNION: Plaintiffs Lodge Amended Shareholder Lawsuit in NY
FIRST UNION: Appeals Unfavorable Ruling in Peach Tree Mall Suit
FLOWSERVE CORPORATION: Faces Securities Fraud Suit in N.D. Texas
HALLWOOD REALTY: Trial in Unitholder Suit Set For September 2003
INTERNATIONAL PAPER: Facts Discovery in Antitrust Suit Finished
INTERNATIONAL PAPER: Discovery Proceeds in Antitrust Suit in NY
INTERPUBLIC GROUP: Officers, Directors Dismissed From NY Lawsuit
INTERPUBLIC GROUP: Asks IL Court To Dismiss Securities Lawsuits
MORGAN GROUP: Filed Securities Suit V. Officers, Directors in NY
MQ ASSOCIATES: Faces GA Lawsuit Over Purchase Service Agreements
PFGI CAPITAL CORPORATION: Faces Securities Fraud Suit in S.D. OH
PHILADELPHIA LIFE: Court Reverses Suit Summary Judgment Ruling
PNC FINANCIAL: Pension Plan Members Launch ERISA Violations Suit
PUBLIC STORAGE: Customers Launch Business Fraud Suit in CA Court
PUBLIC STORAGE: Plaintiffs Appeal Denial of Class Certification
QUALITY SYSTEMS: CA Court Grants Final Approval To Settlement
RFS PARTNERSHIP: TN Court Refuses To Grant TRO For CNL Merger
TELAXIS COMMUNICATIONS: Reaches Settlement in NY Securities Suit
TRIPLE-S INC.: Named As Defendant in Blue Cross Physician's Suit
VISA USA: NC Consumers Lodge Suit Over Internet Transaction Fees
WESTMINSTER CAPITAL: Reaches Settlement For Investor Suit in DE
* Maine Cases Join Debate Over First Amendment Rights Limits
Meetings, Conferences & Seminars
* Scheduled Events for Class Action Professionals
* Online Teleconferences
New Securities Fraud Cases
FLOWSERVE CORPORATION: Bernstein Liebhard Files Stock Suit in TX
FLOWSERVE CORPORATION: Shepherd Finkelman Files TX Stock Lawsuit
IMPATH INC.: Cauley Geller Commences Securities Suit in S.D. NY
IMPATH INC.: Goodkind Labaton Lodges Securities Suit in S.D. NY
LABORATORY CORPORATION: Bernstein Liebhard Files NC Stock Suit
PEDIATRIX MEDICAL: Bernstein Liebhard Lodges FL Securities Suit
QUEST SOFTWARE: Weiss & Yourman Files Securities Suit in C.D. CA
READ-RITE CORPORATION: Bernstein Liebhard Launches CA Stock Suit
SUREBEAM CORPORATION: Glancy & Binkow Lodges CA Securities Suit
SUREBEAM CORPORATION: Wolf Popper Commences CA Securities Suit
*********
ACTERNA CORPORATION: Investors File Securities Fraud Suit in MD
---------------------------------------------------------------
Acterna Corporation faces a securities class action filed in the
United States District Court for the District of Maryland,
charging it and certain of its officers and directors with
certain securities law violations. The plaintiff seeks
compensatory damages and payment of legal and expert fees
incurred.
The Company is a party to several pending legal proceedings and
claims. The Company believes that any final outcome should not
have a material adverse effect on the Company's operations or
financial position.
AMERADA HESS: Pension Plan Participants File ERISA Lawsuit in NJ
----------------------------------------------------------------
Amerada Hess Corporation faces a class action filed in the
United States District Court for the District of New Jersey by
Martin Falk, an employee of the Company, on behalf of himself
and other class members. The suit also names as defendants:
(1) John B. Hess,
(2) John Y. Schreyer,
(3) members of the Company's Employee Benefit Plans
Committee and
(4) other unnamed fiduciaries
The members of the purported class are participants in the
Company's Savings and Stock Bonus Plan who maintained
investments through the Plan in the Company's common stock
between February 9, 2001 and the present.
The complaint alleges that the defendants breached their
fiduciary duties under the Employment Retirement Income Security
Act (ERISA) resulting in losses to plaintiff in the Company's
common stock during the class period.
AMERICAN EXPRESS: Plaintiffs Appeal Settlement Objections Ruling
----------------------------------------------------------------
Plaintiffs appealed a lower court decision overruling their
objections to a settlement of a class action filed against
American Express Company, American Express Travel Related
Services Company, Inc. (TRS) and American Express Centurion Bank
(AECB) in the United States District Court for the Central
District of California.
The complaint principally alleges that class members improperly
were charged daily compounded interest on revolving credit cards
and that AECB and TRS improperly applied credits for returned
merchandise against balance transfer balances. The suit
asserted various claims including:
(1) violation of the federal Truth in Lending Act,
(2) breach of contract,
(3) fraud and unfair and deceptive practices and
(4) violations of the California Consumer Legal Remedies
Act
Although the Company believed it had meritorious defenses to
this action, in light of the inherent uncertainties and the
burden and expense of lengthy litigation, the Company reached an
agreement to settle the lawsuit. On April 23, 2003 the court
approved the proposed settlement filed by the parties.
The settlement provides for certification of two classes. The
first class, defined as the "finance charge" class, includes all
customers who incurred finance charges between August 1994 and
September 2002. The proposed settlement of the first class
consists of a settlement fund in the amount of $15,950,000 that
will be distributed on a pro rata basis to those class members
who are entitled to a refund.
The second class, defined as the "delayed notice" class,
includes all customers who did not receive change in terms
notices and who, as a result, incurred increased charges between
September 2001 and September 2002. In April 2003, these class
members received a refund of charges affected by the terms
changes that were incurred during the class period.
In May 2003, a group of class members whose objections to the
settlement were overruled by the Court filed a notice of appeal
of the final approval order and judgment to the United States
Court of Appeals for the Ninth Circuit. The objectors' opening
brief is to be filed in early September 2003.
AMERICAN EXPRESS: Asks NY Court To Dismiss Securities Fraud Suit
----------------------------------------------------------------
American Express Company asked the United States District Court
for the Southern District of New York to dismiss the
consolidated securities class action, alleging violations of the
federal securities laws and the common law in connection with
alleged misstatements regarding certain investments in high-
yield bonds and write downs in the 2000-2001 time frame.
The purported class covers the period from July 18, 1999 to July
17, 2001. The actions seek unspecified compensatory damages as
well as disgorgement, punitive damages, attorneys fees and
costs, and interest.
AMERICAN EXPRESS: Faces IL Suit Over Collected Conversion Fees
--------------------------------------------------------------
American Express Company and American Express Travel Related
Services Co., Inc. faces a class action filed in the Circuit
Court, Third Judicial Circuit, Madison County, Illinois,
alleging that the Company wrongfully collected conversion fees
assessed on transactions made in a foreign currency.
The complaint alleges causes of actions for:
(1) unjust enrichment,
(2) breach of contract and
(3) statutory fraud under the Illinois Consumer Fraud Act
The plaintiff is seeking an unspecified amount of damages. The
defendants were served with the complaint in June 2003.
AMERICAN EXPRESS: TX Consumers Commence Deceptive Practices Suit
----------------------------------------------------------------
American Express Company faces a purported class action, filed
in the Cameron County District Court for the State of Texas,
103rd Judicial District. In the complaint, plaintiffs Angie
Arambula and Wayne Dodd assert causes of action for violation of
the Texas Deceptive Trade Practices Act, unjust enrichment and
breach of contract.
The plaintiffs allege that the defendants failed properly to
disclose a purported transaction fee that is assessed on
purchases of goods and/or services in a foreign currency and
further allege that the defendants include in their cardmember
agreements unconscionable and unlawful arbitration provisions.
Based on these allegations, the plaintiffs seek injunctive
relief, unspecified damages and treble damages, restitution and
attorneys' fees and costs.
AMERICAN EXPRESS: NY Consumers File Business Law Violations Suit
----------------------------------------------------------------
American Express Company faces a class action filed in the
Queens County Supreme Court for the State of New York. In the
complaint, plaintiff asserts a cause of action for violation of
New York General Business Law Section 349.
Plaintiff alleges that the defendants failed properly to
disclose a purported transaction fee that is assessed on
purchases of goods and/or services in a foreign currency. Based
on these allegations, plaintiff seeks unspecified damages and
attorneys' fees.
AMERICAN EXPRESS: Faces Suits Over Tying Arrangements in LA, CA
---------------------------------------------------------------
American Express faces several class actions alleging an
unlawful antitrust tying arrangement exists between the
Company's charge cards, credit cards and "debit cards."
In early May 2003, the first suit was filed in the United States
District Court for the Eastern District of New York against the
Company and one of its subsidiaries. The plaintiffs seek
injunctive relief and an unspecified amount of damages. Upon
being advised that the Company intended to seek to compel
arbitration of these claims pursuant to the plaintiffs' card
acceptance agreements with the Company, the plaintiffs
voluntarily dismissed their action without prejudice.
The Company has been advised that it and one of its subsidiaries
have recently been named in two purported class actions
captioned Aydin Inc. v. American Express Company et al. and Il
Forno, Inc., et al. v. American Express Company et al., filed in
the United States District Courts for the Eastern District of
Louisiana and the Central District of California, respectively.
These complaints include allegations similar to those in the
first action and seek similar relief. The Company also
understands that the California complaint also alleges that the
Company maintains a monopoly through the inclusion of an
arbitration provision in its merchant agreements.
AMERICAN EXPRESS: Moved To Compel Arbitration, Dismiss TN Suit
--------------------------------------------------------------
American Express Company moved to compel arbitration or
alternately, moved to dismiss the class action filed in the
United States District Court for the Middle District of
Tennessee against it and one of its subsidiaries on behalf of a
class of Tennessee merchants.
The suit alleges that an unlawful antitrust tying arrangement
exists between the Company's charge cards, credit cards and
"debit cards." The purported tying arrangements violated the
Tennessee Trade Practices Act and the Tennessee Consumer
Protection Act of 1977.
AMERICAN SEAFOODS: Court Repeals Attorney's Fee Award in WA Suit
----------------------------------------------------------------
The United States Ninth Circuit Court of Appeals reversed the
award of attorney's fees and costs in the class action filed
against American Seafoods Group, LLC in the United States
District Court for the Western District of Washington.
Two former vessel crew members filed the suit, alleging that the
Company breached the terms of their crew member agreements,
resulting in the underpayment of the individuals' crew shares
for the 2000 "A" season. The plaintiffs also claimed that the
Company had violated certain federal requirements that entitle
them to be paid the highest rate of wages paid to similarly
rated crew members aboard other vessels.
On October 11, 2000, the action was certified as a class action,
with the plaintiff class consisting of all of the crewmembers on
all of the Company's vessels during the 2000 "A" season. On
January 8, 2002, the court ruled in favor of the plaintiffs on
one of their four specific claims after finding they had proved
that the Company diluted each individual's crew share by
dividing each individual share by a number that was larger than
the number of shares assigned to the whole crew, thereby
depriving the crew members of their full wages.
The court awarded damages in the aggregate amount of $1,607,254
and attorneys' fees and expenses in an aggregate amount to be
determined. The plaintiffs requested attorneys' fees of
approximately $600,000. On April 29, 2002, the court awarded
$383,234 in attorneys' fees and expenses, and an additional
$103,588 to be paid out of the plaintiffs' award at no
additional cost to the Company. The court further found that
the Company's underpayment of crew shares was not willful.
The plaintiffs filed a Notice of Appeal to the Ninth Circuit
Court in connection with one of the three claims that the court
rejected. The appealed claim alleges that the crew contracts
did not comply with the provisions of the applicable statutes,
which govern the form, and content of crewmember contracts. The
Company filed a separate Notice of Appeal with respect both to
the grant of attorneys' fees and the award of damages against
it. On July 9, 2003, the appeals court reversed the award of
attorneys' fees and costs and affirmed the lower court's
decision in all other respects.
AMEX BANK: Quebecers Launch Lawsuit Over Consumer Act Violations
----------------------------------------------------------------
Amex Bank of Canada faces a class action captioned "Option
Consommateurs and Normand Painchaud v. Amex Bank of Canada et
al." filed in the Superior Court of Quebec, District of
Montreal. The motion also names as defendants:
(1) Citibank Canada,
(2) MBNA Canada,
(3) Capital One and
(4) Royal Bank of Canada
The suit alleges that the defendants have violated the Quebec
Consumer Protection Act by imposing finance charges on credit
card transactions prior to 21 days following the receipt of the
statement containing the charge. It is alleged that the Quebec
Consumer Protection Act provisions which require a 21-day grace
period prior to imposing finance charges applies to credit cards
issued by Amex Bank of Canada in Quebec and that finance charges
imposed prior to this grace period violate the Act.
The proposed class claims seek reimbursement of all finance
charges imposed in violation of the Act, $200 in punitive
damages per class member, interest and fees and costs.
CALIFORNIA: FERC Recommends Dismissal of Energy Crisis Charges
----------------------------------------------------------------
The staff of the Federal Energy Regulatory Commission (FERC) has
recommended dismissing charges that the Los Angeles Department
of Water and Power, and several other public and private
utilities, manipulated prices during California's energy crisis,
The San Francisco Chronicle reports. They were among the more
than 40 utilities and energy companies ordered by FERC in June
to explain trading activity that might have helped raise state
electricity prices to record levels.
Some companies have agreed to settlements without admitting
wrongdoing. One of the largest, Reliant Resources, filed a
settlement last week under which it would pay $836,000, the
amount the company said it potentially earned by double-selling
power-related services that it held in reserve for emergencies.
FERC staff attorneys moved to dismiss allegations against more
than a dozen utilities, including city-owned power agencies in
Los Angeles, Anaheim, Pasadena and Burbank. If the
recommendations are approved by an administrative law judge,
they will then go to the five-member commission.
Thomas Dressler, spokesman for the state's Attorney General
William Lockyer, said that "this so-called exoneration" should
be viewed skeptically. "FERC's history throughout this debacle
has been to be aggressive only when it comes to absolving energy
companies of any wrongdoing, to let them off the hook, or off
easy," Mr. Dressler said.
Attorney General Lockyer is investigating manipulation of state
energy markets and has submitted thousands of pages of evidence
to FERC in support of California's claim for $9 billion in
refunds. The state also has asked a federal appeals court to
overrule two unfavorable FERC decisions.
During the 18-month FERC investigation, now-bankrupt Enron has
admitted using misleading trading strategies, with nicknames
like Fat Boy and Death Star, to milk the state's energy grid for
financial gain. Two former Enron executives have pleaded guilty
to criminal charges.
"There is no doubt that private power companies did by far the
most damage," said Douglas Heller, of the advocacy group
Foundation for Taxpayer and Consumer Rights. "But we still have
some concern that public entities (like Los Angeles Department
of Water and Power) made off with ill-gotten gains."
In another development, US District Judge Robert Whaley, in San
Diego, recently dismissed class actions by small businesses
accusing Duke Power Co. of artificially restricting the supply
of electric power in order to boost prices in 2002.
Judge Whaley ruled that FERC has exclusive authority over the
issues raised in the lawsuits, and that federal law bars any
challenges to utility rates that a federal agency has reviewed
and approved.
CINCINNATI BELL: Faces Several Securities, ERISA Lawsuits in OH
---------------------------------------------------------------
Cincinnati Bell, Inc. faces several putative class actions and
derivative lawsuits filed in the United States District Court
for the Southern District of Ohio and the Ohio Court of Common
Pleas, Hamilton County Division, respectively, on behalf of
purchasers of the securities of the Company between January 17,
2001 and May 20, 2002, inclusive.
The complaints alleged that the Company, and two of its former
Chief Executive Officers (CEOs) violated federal securities laws
arising out of allegedly issuing material misrepresentations to
the market during the class period which resulted in
artificially inflating the market price of the Company's
securities.
In a separate action, a number of complaints have been filed in
the United States District Court for the Southern District of
Ohio on behalf of the Company's retirement savings plan and
its beneficiaries alleging that the Company and several of its
directors violated the Employee Retirement Income Security Act
by allegedly exposing the beneficiaries' retirement savings to
unreasonable risk of loss and injury.
CINCINNATI INSURANCE: IN Court Decertifies Part of Class in Suit
----------------------------------------------------------------
The United States District Court for Southern Indiana
decertified the Title VII class in the class action filed
against The Cincinnati Insurance Company on behalf of certain
female employees in three departments of the company alleging
employment-related gender discrimination in promotions and pay.
The complaint seeks unspecified monetary damages and injunctive
relief.
In July 2003 the court decertified the Title VII class, but left
in place conditional certification of the collective action
filed under the Equal Pay Act. The company denies the
allegations of the suit and is vigorously defending this action.
CMS ENERGY: Plaintiffs File Consolidated Securities Suit in MI
--------------------------------------------------------------
Plaintiffs filed a consolidated amended securities class action
against CMS Energy Corporation, Consumers Energy, Inc. and
certain officers and directors of CMS Energy and its affiliates,
in the United States District Court for the Eastern District of
Michigan.
The consolidated complaint contains a purported class period
beginning on May 1, 2000 and running through March 31, 2003. It
generally seeks unspecified damages based on allegations that
the defendants violated United States securities laws and
regulations by making allegedly false and misleading statements
about CMS Energy's business and financial condition,
particularly with respect to revenues and expenses recorded in
connection with round-trip trading by CMS MST.
CONSECO INC.: Asks For Extension of Automatic Stay of Stock Suit
----------------------------------------------------------------
Conseco, Inc. filed an adversary proceeding to extend the
automatic stay provided for by the Bankruptcy Code to the
consolidated securities class action filed in the United States
District Court for the Southern District of Indiana, against it,
and certain of its current and former officers.
The suit was filed on behalf of persons or entities who
purchased the Company's common stock on various dates between
October 24, 2001 and August 9, 2002. The suit alleges claims
under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and alleges material omissions and dissemination of
materially misleading statements regarding, among other things,
the Company's liquidity. The suit also alleged problems in
CFC's manufactured housing division, allegedly resulting in the
artificial inflation of the Company's stock price.
The Company believes these lawsuits are without merit.
CONSECO INC.: CO Court Hears Certification For Policyholder Suit
----------------------------------------------------------------
The District Court of Adams County, Colorado heard the motions
for class certification of a nationwide class action filed
against four of Conseco, Inc.'s subsidiaries:
(1) Conseco Annuity Assurance Company,
(2) Conseco Life Insurance Company,
(3) Bankers National Life Insurance Company and
(4) Bankers Life and Casualty Company
The suit alleges, among other things, breach of contract
regarding alleged non-disclosure of additional charges for those
policyholders wishing to pay premium modes other than annual.
The court has taken the matter under advisement. The defendants
believe this lawsuit is without merit and intends to defend it
vigorously. The ultimate outcome of the lawsuit cannot be
predicted with certainty.
CONSECO INC.: Asks For Extension of Automatic Stay on Stock Suit
----------------------------------------------------------------
Conseco, Inc. filed an adversary proceeding to extend the
automatic stay provided for by the Bankruptcy Code to the
consolidated securities class action filed on behalf of the
ConsecoSave Plan in the United States District Court for the
Southern District of Indiana. The suit names as defendants the
Company, Conseco Services, LLC and certain of the Company's
current and former officers.
The class consists of all individuals whose 401(k) accounts held
common stock of the Company at any time from April 28, 1999
through the present. The complaint alleges, among other things,
breaches of fiduciary duties under the Employee Retirement
Income Security Act (ERISA) by continuing to permit employees to
invest in the Company's common stock without full disclosure of
the Company's true financial condition.
The Company denies the allegations.
EXXON-MOBIL CORPORATION: Avoids Huge Damages In Valdez Oil Spill
----------------------------------------------------------------
The 1989 Exxon Valdex oil spill was one of the biggest
environmental and public relations disasters ever. Yet Exxon
Mobil Corporation, with its enormous wealth and "relentless"
legal defense, so far has avoided big financial damages,
according to several oil analysts, Reuters News reports.
"Relative to Exxon's size, this is not a black hole," said
Howard Weil oil analyst Gene Gillespie. "It's expensive, it's
unfortunate, but they can financially deal with it."
For 14 years, the world's largest public oil company has battled
in a class action with more than 34,000 fishermen and other
Alaskans who claimed harm after an Exxon tanker ran aground and
spilled 11 million gallons of crude into unspoiled Prince
William Sound.
However, Exxon has, by its views, battled successfully. Last
week, an appellate court rejected a $4 billion punitive damages
award against the company. It was the second time in a year
that the appellate court asked the Anchorage District Court to
reconsider what Exxon should pay beyond $287 million in actual
damages.
"They will litigate this until the end of time," John S. Herold
analyst Lysle Brinker said.
Exxon Mobil is not completely unscathed. The company said it
paid $287 million in compensation, actual damages, to fishermen
and other Alaskans, as well as $1 billion in state and federal
settlements, and $2.2 billion for the cleanup of Prince William
Sound.
"The company took immediate responsibility for the spill,
cleaned it up and voluntarily compensated those who claimed
direct damages," Exxon Mobil said in a statement last week.
At the same time, Exxon has done a good job of insulating its
stock price and market reputation from the fallout surrounding
the spill. Investors remain confident Exxon will do everything
in its considerable power to reduce or avoid major damages. In
the past few years Exxon successfully has appealed the Anchorage
District Court's original $5 billion punitive damages award, and
then last December's $4 billion award.
Even if the company were to face a $5 billion punitive damages
award, the world's largest public oil company can easily afford
to pay. All of which helps explain why last week's remand by
the appellate court to Anchorage District Court of the $4
billion punitive damages award caused barely a ripple in Exxon's
shares.
Lysle Brinker, analyst with John S. Herold, observed that Exxon
generates about $3 million of cash flow per hour, which means it
can amass a $4 billion punitive damages award in less than two
months. The actual charge, moreover, would be far less after
taxes and insurance payments.
However one public relations expert warns that while Exxon so
far has "weathered the storm," it risks alienating consumers
with its hard-ball approach. "From a public relations
standpoint, Exxon remains today the textbook example on how not
to handle a crisis," said Ronald Smith, a public communications
professor at Buffalo State College and author of "Strategic
Planning for Public Relations," published last year.
The plaintiffs in the class action meanwhile complain that Exxon
is using its size and wealth to avoid punishment, nine years
after a jury concluded the company had been reckless. "They
have been able to get away with acting in an imperial fashion,
in never even coming to the table in a meaningful way to
negotiate a settlement," said Melvyn Weiss, a co-founder of
class action powerhouse Milberg Weiss Bershad Hynes & Lerach.
"You don't just tie your hands and say 'I am bigger than you and
I am going to fight you until Doomsday,' " said Mr. Weiss, whose
firm is one of several representing Valdez plaintiffs against
Exxon. "It is an affront to the entire judicial system."
Mr. Weiss said he expects Federal Judge Russel Holland will
resubmit his $4 billion award, after concluding that the Supreme
Court's recent State Farm ruling on punitive damages was not
relevant in the Valdez case. Exxon argues the company should
pay no more than $287 million, and as little as $25 million.
If Exxon does not like the new damages figure, analysts have
said, it will simply appeal.
FEDERATED NATIONAL: DC Court Dismisses in Part Consumer Lawsuit
---------------------------------------------------------------
The United States District Court for the District of Columbia
dismissed in part the class action filed against Federated
National Mortgage Corporation (Fannie Mae), seeking declaratory
and injunctive relief, as well as statutory and punitive
damages, on behalf of all minority borrowers who have been
denied loans as a result of the Company's automated underwriting
systems (AUS).
The lawsuit alleges that Fannie Mae's AUS unlawfully fails to
give adverse action notices to borrowers who are not approved
for the loans for which they apply, and unlawfully discriminates
against minorities.
The Company moved to dismiss the complaint in its entirety and
the court granted that motion in part and denied it in part.
The court held that the Company did not have a legal obligation
to provide adverse action notices and the court declined
plaintiff's motion to reconsider that decision or certify it for
appeal. The court held that the plaintiff had met the minimal
requirements for pleading the discrimination claim, but that
plaintiff must demonstrate that she was qualified to obtain a
loan.
The Company anticipates that it will file dispositive motions on
a variety of factual and legal grounds, as well as file briefs
to defeat class certification. Management believes that their
outcome will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.
FIRST UNION: Plaintiffs Ask NY Court To Issue Contempt Ruling
-------------------------------------------------------------
The Supreme Court of New York in New York County heard oral
arguments on the motion seeking to declare First Union Real
Estate Investment Equity and Mortgage Investments (the Trust) in
contempt of court over its termination of its merger with Gotham
Golf Corporation (Gotham).
On April 15, 2002, the Trust was served with a complaint filed
in the Supreme Court of New York in New York County on behalf of
a purported holder of the Trust's convertible preferred shares.
Among the allegations made by the plaintiff is that the proposed
transaction with Gotham was approved by the Trust's Board of
Trustees in violation of fiduciary duties owed to the holders of
the Trust's convertible preferred shares. The suit seeks, among
other things, unspecified damages, an injunction of the proposed
transaction and the court's certification of the lawsuit as a
class action. Named as defendants in the lawsuit were the
Trust, its then five trustees and Gotham.
On February 13, 2002, the Trust entered into a definitive
agreement of merger and contribution with, among others, Gotham,
a shareholder of the Trust that is controlled by affiliates of
William A. Ackman, who was at the time Chairman of the Board of
Trustees of the Trust, and Gotham Golf, a Delaware corporation
controlled by Gotham, pursuant to which the Trust agreed to
merge with and into Gotham Golf. The proposed transaction was
approved by the Trust's common shareholders at a special meeting
held on November 27, 2002.
In November 2002, the plaintiff in the suit filed with the New
York Supreme Court for New York County an Order to Show Cause
why the transaction should not be enjoined. The court held a
hearing on that issue on November 20. On November 21, 2002, the
court issued an order denying the defendants' motion to dismiss
the complaint and granting plaintiff's motions for preliminary
injunction and expedited discovery in connection with the
proposed merger.
Following a hearing to determine whether to grant further relief
to the plaintiff with respect to the proposed transaction, the
court issued an order dated December 6, 2002, reaffirming its
preliminary injunction barring the proposed merger of the Trust
with and into Gotham Golf. The court's order extended
indefinitely the preliminary injunction previously granted with
respect to the proposed merger transaction.
The Trust appealed the court's order barring the transaction in
the Appellate Division of the New York Supreme Court. Oral
argument on the appeal was heard by the Appellate Division on
March 11, 2003. As of August 8, 2003, the Appellate Division
had not issued a decision with respect to the appeal. There
is no specific timetable for the Appellate Division to render
its decision.
In November 2002, First Carolina Investors, Inc., a holder of
preferred shares, filed a separate lawsuit in New York Supreme
Court for New York County, naming the same defendants as in the
first case.
In December 2002, the plaintiffs in both suits filed a
consolidated amended complaint, styled Kimeldorf et al. v. First
Union, et al, alleging, among others:
(1) breach of contract;
(2) aiding and abetting breach of contract;
(3) tortious interference with the contract;
(4) breach of fiduciary duties;
(5) aiding and abetting of breach of fiduciary duties; and
(6) unconscionability against the defendants
On April 30, 2003, the trial court granted the plaintiff's
motion to certify the litigation as a class action. In July
2003, the plaintiffs in the two suits each filed separate
motions with the trial court seeking to hold the defendants in
contempt as a result of the execution and performance of the
Termination Agreement. The plaintiffs contend that these
actions violated the trial court's injunction against the
consummation of the merger between the Trust and Gotham Golf.
Defendants filed a brief in opposition to the motions. The
trial court heard oral argument on July 29, 2003 and has taken
the motions under advisement.
FIRST UNION: Plaintiffs Lodge Amended Shareholder Lawsuit in NY
---------------------------------------------------------------
Plaintiffs filed an amended class action against First Union
Real Estate Equity and Mortgage Investments (the Trust) in the
Supreme Court of New York, New York County on behalf of the
Company's common shareholders.
The lawsuit seeks a declaration that the lawsuit is maintainable
as a class action and a certification that the plaintiff, Robert
Fink, is the representative of the class. Also named as
defendants in the lawsuit are:
(1) Gotham Golf Corporation (Gotham Partners),
(2) the companies affiliated with Gotham Partners and the
Trust that are parties to the Merger Agreement,
(3) William Ackman and
(4) the four current Trustees of the Trust
Among the allegations asserted are breach of fiduciary duty and
aiding and abetting thereof in connection with the transactions
contemplated by the Merger Agreement. The relief requested by
the plaintiff includes an injunction preventing the defendants
from proceeding with consummation of the merger, rescission of
the merger if it occurs, an accounting for any profits realized
by the defendants as a result of the actions complained of, an
order permitting the creation of a shareholders' committee
composed of the Trust common shareholders and their
representatives to manage the affairs of the Trust, compensatory
damages and the costs and disbursements of plaintiff's counsel.
On February 14, 2003, the parties to this lawsuit stipulated
that the defendants need not answer or otherwise respond to the
complaint for an indefinite period of time. The stipulation is
revocable by the plaintiff at any time. The Trust believes that
the purpose of the stipulation was to delay court proceedings in
this lawsuit until the outcome of the appeal of the injunction
entered in the prior case is decided by the Appellate Division.
On July 3, 2003, the Plaintiff filed an amended complaint which
seeks additional relief based upon the termination agreement,
including a request that the defendants be required to return to
the Trust the termination fee paid to Gotham as well as the
consideration paid for Gotham's shares in the Trust.
As with the original complaint, the parties have stipulated that
the defendants need not answer or otherwise respond to the
amended complaint for an indefinite period of time. The
stipulation is revocable by the plaintiff at any time.
FIRST UNION: Appeals Unfavorable Ruling in Peach Tree Mall Suit
---------------------------------------------------------------
The California Court of Appeals finished briefing First Union
Real Estate Equity and Mortgage Investments' (the Trust) and
other plaintiffs' appeal of a lower court's decision in favor of
the State of California, in a class action associated with the
1986 flood of Sutter Buttes Center, formerly Peach Tree Mall.
In September 1991, the court ruled in favor of the plaintiffs on
the liability portion of the inverse condemnation suit, which
the State of California appealed. In the third quarter of 1999,
the 1991 ruling in favor of the Trust and the other plaintiffs
was reversed by the State of California Appeals Court, which
remanded the case to the trial court for further proceedings.
After the remand to the trial court, the Trust and the other
plaintiffs determined to pursue a retrial before the court.
The retrial of the litigation commenced February 2001 and was
completed July 2001. In November 2001, the trial court issued a
decision that generally held in favor of the State of
California. In February 2002, the Plaintiffs in the case filed
a notice of appeal of the ruling of the trial court in the
California Court of Appeals. The appellate briefing was
completed in May 2003.
FLOWSERVE CORPORATION: Faces Securities Fraud Suit in N.D. Texas
----------------------------------------------------------------
Flowserve Corporation faces several securities class actions
filed in the United States District Court in the Northern
District of Texas, alleging that the Company violated federal
securities law during a period beginning on October 23, 2001 and
ending September 27, 2002.
The complaint seeks unspecified compensatory damages and
recovery of costs. The complaint also names as defendants Mr.
C. Scott Greer, Chairman, President and Chief Executive Officer
and Ms. Renee J. Hornbaker, Vice President and Chief Financial
Officer.
The Company strongly believes that the lawsuit is without any
merit. The Company has also reported the lawsuit to its
applicable insurers.
HALLWOOD REALTY: Trial in Unitholder Suit Set For September 2003
----------------------------------------------------------------
Trial in the class action filed against Hallwood Realty LLC, its
directors and Hallwood Realty Partners LP (HRP) is set for
September 2, 2003 in the Court of Chancery of the State of
Delaware.
The action asserts that in allegedly refusing to consider the
High River tender offer, the defendants are not acting in good
faith and are deriving an improper personal benefit in impeding
a potential removal of the Company or a sale of control of HRP,
in breach of their fiduciary duties under the partnership
agreement. The action further asserts that HRP's Schedule 14D-9
issued in response to the High River tender offer fails to
disclose material information relating to the Company's
recommendation regarding the offer.
The complaint seeks as relief an order requiring the Company to
consider the High River tender offer, an order preventing it or
its affiliates from acquiring units or otherwise improperly
entrenching the Company or impeding a transaction that would
maximize value for the public unitholders, an order directing
the defendants to use the Rights Plan fairly and disclose all
material information in connection with the tender offer and the
Company's recommendations and conclusions with respect thereto,
and damages.
INTERNATIONAL PAPER: Facts Discovery in Antitrust Suit Finished
---------------------------------------------------------------
Facts discovery has concluded in the consolidated class action
filed in the United States District Court in the Eastern
District of Pennsylvania against International Paper Co., the
former Union Camp Corporation (acquired by International Paper
in 1999), and other manufacturers of linerboard.
The suit alleges that the defendants conspired to fix prices for
linerboard and corrugated sheets during the period October 1,
1993, through November 30, 1995. The suit seeks injunctive
relief as well as treble damages and other costs associated with
the litigation. The plaintiffs in these consolidated cases
sought certification on behalf of both corrugated sheet
purchasers and corrugated container purchasers.
On September 4, 2001, the district court certified both classes.
Defendants filed a petition appealing the certification order.
On September 5, 2002, the Court of Appeals for the Third Circuit
affirmed the district court's certification decision.
On January 14, 2003, the defendants filed a petition for
certiorari with the US Supreme Court seeking a review of the
Court of Appeals decision; the Supreme Court denied the petition
on April 21, 2003. The deadline by which members of the class
had to elect to opt out of the class action litigation expired
on June 9, 2003.
Ten opt-out complaints, most with multiple plaintiffs, have been
filed in various federal district courts around the country. It
is expected that they will be consolidated for pre-trial
purposes, where the class action litigation is also pending.
Discovery in the opt-out cases is expected to proceed on a
separate schedule from discovery in the class action litigation.
INTERNATIONAL PAPER: Discovery Proceeds in Antitrust Suit in NY
---------------------------------------------------------------
Discovery in the consolidated class action filed against
International Paper Co. has commenced in the United States
District Court in New York.
In 2000, purchasers of high-pressure laminates filed a number of
purported class actions under the federal antitrust laws
alleging that International Paper's Nevamar division (which was
part of the Decorative Products division) participated in a
price-fixing conspiracy with competitors between January 1, 1994
and June 30, 2000. These lawsuits sought injunctive relief as
well as treble damages and other costs associated with the
litigation. These cases were later consolidated.
In 2000 and 2001, indirect purchasers of high-pressure laminates
also filed similar purported class actions under various state
antitrust and consumer protection statutes in Arizona,
California, Florida, Maine, Michigan, Minnesota, New Mexico, New
York, North Carolina, North Dakota, South Dakota, Tennessee,
West Virginia, Wisconsin and the District of Columbia. The case
in New York state court and one of the two Michigan cases have
been dismissed, while all of the other state cases have been
stayed.
On June 17, 2003, the federal district court certified the
consolidated federal case as a class action. The deadline by
which members of the class must decide whether to opt out of the
class action litigation is forty-five days following issuance of
the class action notice. This notice must be issued by
August 1, 2003.
INTERPUBLIC GROUP: Officers, Directors Dismissed From NY Lawsuit
----------------------------------------------------------------
The United States District Court for the Southern District of
New York dismissed The Interpublic Group of Companies, Inc.'s
former and present officers and directors as defendants in the
consolidated securities class action filed against them and the
Company.
The suit, filed on behalf of purchasers of the Company's stock
shortly after the Company's August 13, 2002 announcement
regarding the restatement of its previously reported earnings
for the periods January 1, 1997 through March 31, 2002, from
October 1997 to October 2002, alleges that the Company and
certain of its present and former directors and officers made
misleading statements to its shareholders between October 1997
and October 2002. The defendants allegedly failed to disclose
the existence of additional charges that would need to be
expensed and the lack of adequate internal financial controls,
which allegedly resulted in an overstatement of Interpublic's
financial results during those periods.
The consolidated amended complaint alleges that such false and
misleading statements constitute violations of Sections 10(b)
and 20(a) of the Exchange Act and Rule 10b-5 promulgated
thereunder. The consolidated amended complaint also alleges
violations of Sections 11 and 15 of the Securities Act of 1933
in connection with the Company's acquisition of True North
Communications, Inc. (True North) on behalf of a purported class
of True North shareholders who acquired Company stock. No
amount of damages is specified in the consolidated amended
complaint.
On February 6, 2003, defendants filed a motion to dismiss the
consolidated suit in its entirety. On May 29, 2003, the court
denied the motion to dismiss as to the Company and granted the
motion as to the present and former directors and officers named
in the consolidated amended complaint.
INTERPUBLIC GROUP: Asks IL Court To Dismiss Securities Lawsuits
---------------------------------------------------------------
The Interpublic Group of Companies, Inc. asked the Circuit Court
of Cook County, Illinois to dismiss two securities class actions
filed against it and certain of its present and former directors
and officers by a purported class of purchasers of Company stock
shortly after the Company's November 13, 2002 announcement
regarding the restatement of its previously reported earnings
for the periods January 1, 1997 through March 31, 2002.
The purported classes consist of Interpublic shareholders who
acquired Interpublic stock on or about June 25, 2001 in
connection with Interpublic's acquisition of True North. These
lawsuits allege that the Company and certain of its present and
former directors and officers allegedly made misleading
statements in connection with the filing of a registration
statement on May 9, 2001 in which the Company issued 67,644,272
shares of its common stock for the purpose of acquiring True
North, including the alleged failure to disclose the existence
of additional charges that would need to be expensed and the
lack of adequate internal financial controls, which allegedly
resulted in an overstatement of Interpublic's financial results
at that time.
The suits allege that such misleading statements constitute
violations of Sections 11 and 15 of the Securities Act of 1933.
No amount of damages is specified in the complaints.
On December 18, 2002, defendants removed these actions from
Illinois state court to the United States District Court for the
Northern District of Illinois. Thereafter, on January 10, 2003,
defendants moved to transfer these two actions to the Southern
District of New York. Plaintiffs moved to remand these actions.
On April 15, 2003, the United States District Court for the
Northern District of Illinois granted plaintiffs' motions to
remand these actions to Illinois state court and denied
defendants' motion to transfer.
MORGAN GROUP: Filed Securities Suit V. Officers, Directors in NY
----------------------------------------------------------------
Morgan Group Holdings, Inc., on behalf of itself and all other
persons who purchased or acquired its securities during the
period of November 13, 2001 through August 19, 2002 commenced a
class action against:
(1) Anthony T. Castor III, its Chief Executive Officer
during the class period,
(2) Gary J. Klusman, Chief Financial Officer during the
class period,
(3) Michael Archual, the President of Drive Away, Inc., a
subsidiary of the Company, during the class period and
(4) Ernst & Young LLP, the Company's independent auditor
during the class period
The suit was filed in the United States District Court, Southern
District of New York. The lawsuit seeks recovery of monetary
damages as a result of the Company's failure to truthfully
disclose the status of its compliance with loan covenants and
other provisions contained within a financing agreement between
the Company and GMAC Commercial Credit LLC (GMAC), and to
properly report receivables due to GMAC pursuant to the
Revolving Credit and Security Agreement governing the Credit
Facility.
The lawsuit alleges that as a result of the failure to comply
with the loan covenants contained in the Credit Agreement during
the relevant period and the subsequent discovery of such
violations, the Company was effectively deprived of credit
sources.
The lawsuit further alleges that this loss of financing
ultimately forced the Company and its subsidiaries to file for
bankruptcy protection, thereby causing damages to the Company
and all other investors in Company securities during the class
period.
The Company exercised Class A Warrants to purchase 5,000 Class A
Shares of Morgan at $2.25 per share on April 30, 2002.
MQ ASSOCIATES: Faces GA Lawsuit Over Purchase Service Agreements
----------------------------------------------------------------
MQ Associates, Inc. faces a class action filed in the State
Court of Fulton County in the State of Georgia, raising
questions concerning the legality of the purchase service
agreements, which were otherwise the subject of the request for
a declaratory statement from the Georgia Composite State Board
of Medical Examiners (CME). The suit also names as defendants
its subsidiaries, officers and directors, as well as various
physician groups that conduct business with the Company.
Due to the preliminary state of the suit and the fact that the
complaint does not allege damages with any specificity,
management is unable at this time to assess the probable outcome
or the materiality of the risk of loss. However, management
believes that these agreements neither violate the Georgia Act
nor are improper under Georgia law and will vigorously defend
the suit.
PFGI CAPITAL CORPORATION: Faces Securities Fraud Suit in S.D. OH
----------------------------------------------------------------
PFGI Capital Corporation faces a class action filed in the
United States District Court for the Southern District of Ohio
on behalf of all purchasers of PRIDES (issued by the Company and
Provident Financial Corporation in or traceable to a June 6,
2002 offering of those securities registered with the Securities
and Exchange Commission and extending to March 5, 2003.
The suit, filed by shareholder Silverback Master Ltd., also
names as defendants:
(1) Provident Financial Corporation,
(2) Provident's President, Robert L. Hoverson,
(3) Provident's Chief Financial Officer, Christopher J.
Carey,
(4) Former Provident officer Allen L. Davis and
(5) Former Provident officer John R. Farrenkopf
This action is based upon circumstances involved in a
restatement of earnings announced by Provident on March 5, 2003.
It alleges violations of securities laws by the defendants in
Provident's financial disclosures during the period from March
30, 1998 through March 5, 2003 and in the June 2002 offering.
The suit seeks an unspecified amount of compensatory damages
and/or rescission of purchases of those securities.
PHILADELPHIA LIFE: Court Reverses Suit Summary Judgment Ruling
--------------------------------------------------------------
The United States 11th Circuit Court of Appeals affirmed in part
and reversed in part a lower court's ruling granting summary
judgment in favor of Philadelphia Life Insurance Company in the
consolidated nationwide class action filed against it, alleging
among other things, fraudulent sales and a "vanishing premium"
scheme.
The Company filed a motion for summary judgment against both
named plaintiffs, which motion was granted in June 2002.
Plaintiffs appealed to the 11th Circuit. The 11th Circuit, in
July 2003, affirmed in part and reversed in part, allowing two
fraud counts with respect to one plaintiff to survive. The
plaintiffs have asked for a rehearing with respect to this
decision.
PNC FINANCIAL: Pension Plan Members Launch ERISA Violations Suit
----------------------------------------------------------------
PNC Financial Services Group, Inc. faces a class action filed by
a former employee in the United States District Court for the
Western District of Pennsylvania relating to the Company's
Defined Benefit Pension Plan. The suit also names as defendants
its Chairman and Chief Executive Officer, its former Chief
Financial Officer, the Plan administrator and certain past and
present members of the Administrative Committee of the Plan.
The complaint, brought on behalf of the Plan and all Plan
participants for whose individual accounts the Plan purchased
and/or held shares of the Company during the class period,
alleges that the defendants breached their fiduciary duties
related to disclosures regarding several transactions in 2001
and related matters. The defendants also allegedly breached
their fiduciary duties by permitting the Plan to purchase and
hold Company stock. The complaint seeks, among other things,
unquantified damages, declaratory and injunctive relief, and
attorneys' fees and costs.
PUBLIC STORAGE: Customers Launch Business Fraud Suit in CA Court
----------------------------------------------------------------
Public Storage, Inc. faces a class action filed in the Superior
Court for Orange County, California, on behalf of renters who
rented self-storage units from the Company.
Plaintiff alleges that the Company misrepresented the size of
its storage units, has brought claims under California statutory
and common law relating to:
(1) consumer protection,
(2) fraud,
(3) unfair competition, and
(4) negligent misrepresentation
The suit is seeking monetary damages, restitution, and
declaratory and injunctive relief. Based upon the uncertainty
inherent in any putative class action, the Company cannot
presently determine the potential damages, if any, or the
ultimate outcome of this litigation.
PUBLIC STORAGE: Plaintiffs Appeal Denial of Class Certification
---------------------------------------------------------------
Plaintiffs appealed the Superior Court for Los Angeles County,
California's denial of class certification for the lawsuit filed
against Public Storage, Inc. on behalf of California resident
property managers who claim that they were not compensated for
all the hours they worked. The suit asserts claims under the
California Unfair Business Practices Act.
The plaintiffs' motion for class certification was denied in
August 2002; the plaintiffs have appealed this denial. This
denial does not deal with the claim under the California Unfair
Business Practices Act.
The Company is continuing to vigorously contest the claims in
this case and intends to resist any expansion beyond the named
plaintiffs on the grounds of lack of commonality of claims. The
Company's resistance will include opposing the plaintiffs'
appeal of the court's denial of class certification and opposing
the claim on behalf of others under the California Unfair
Business Practices Act.
QUALITY SYSTEMS: CA Court Grants Final Approval To Settlement
-------------------------------------------------------------
The Superior Court of California for the County of Orange
granted final approval to the settlement of consolidated
securities class action filed against Quality Systems, Inc. on
behalf of persons others who purchased the Company's Common
Stock between June 26, 1995 and July 3, 1996. The suit also
names as defendants:
(1) Sheldon Razin,
(2) Robert J. Beck,
(3) Gregory S. Flynn,
(4) Abe C. LaLande,
(5) Donn Neufeld,
(6) Irma G. Carmona,
(7) John A. Bowers,
(8) Graeme H. Frehner, and
(9) Gordon L. Setran
The suit alleges the defendants violated California Corporations
Code Sections 25400 and 25500, California Civil Code Sections
1709 and 1710, and California Business and Professions Code
Sections 17200 et. seq., by issuing positive statements about
the Company that allegedly were knowingly false, in part, in
order to assist the Company and the individual defendants in
selling common stock at an inflated price in the Company's March
5, 1996 public offering and at other points during the class
period. The complaint seeks compensatory and punitive damages
in unspecified amounts, disgorgement, declaratory and injunctive
relief, and attorneys' fees.
On March 27, 2001, the court approved a notice of class
certification to be mailed to shareholders who are potential
class members. Between April 9, 2001 and May 9, 2001, class
notice was mailed to potential class members. Six class members
opted out of the class, and their requests were filed with the
court.
On November 18, 2002, the parties reached an agreement to settle
the consolidated action. On January 6, 2003, the parties
entered into a Stipulation of Settlement whereby in
consideration of a cash payment to the class fully funded by the
Company's directors and officers liability insurance, all
members of the class released all defendants from any and all
claims that the class members had or may have had relating to
the purchase of the Company's securities during the class period
or based on any facts or events that were or could have been
asserted against the defendants in this action. The settlement
agreement expressly provides that the Company and the named
defendants do not admit, and continue to deny, any and all
allegations of wrongdoing.
On January 14, 2003, the court granted preliminary approval of
the settlement, and approved a notice of the settlement that was
mailed to shareholders who were potential class members. Two
additional class members opted out of the settlement, and their
requests were filed with the court.
The court later granted final approval to the settlement and
entered an Order and Final Judgment dismissing the entire action
with prejudice. The ruling expressly released all defendants
from any and all claims that were or could have been alleged in
the action.
RFS PARTNERSHIP: TN Court Refuses To Grant TRO For CNL Merger
-------------------------------------------------------------
The Circuit Court of Shelby County, Tennessee, 30th Judicial
District refused to grant a temporary restraining merger to
enjoin the merger between RFS Partnership LP and CNL Hospitality
Properties, Inc.
On May 13, 2003, A. Bruce Chasen, as class representative, filed
a class action against the Partnership, its directors and CNL.
The suit was later amended. The amended complaint alleges,
among other things, that:
(1) the merger consideration to be received by RFS's
shareholders is significantly less than the intrinsic
value of RFS;
(2) the RFS directors breached their fiduciary duties due
to shareholders on a variety of grounds including
failing to ascertain the true value of RFS, failing to
determine whether there were any other bidders for RFS,
and failing to avoid certain alleged conflicts of
interest shared by members of the RFS board of
directors and its financial advisor;
(3) CNL aided and abetted the RFS board of directors in
connection with their breach of fiduciary duties;
(4) the RFS board of directors violated portions of the
Tennessee Investor Protection Act; and
(5) the RFS proxy statement is false and misleading.
Among other relief, the amended complaint seeks certification of
the class action, an injunction enjoining RFS and CNL from
completing the merger, monetary damages in an unspecified
amount, the payment of attorney's fees, and rescissory damages.
On June 23 and on July 1, 2003, respectively, RFS and CNL filed
an answer to the amended complaint setting forth an affirmative
defense and its general denials of the allegations set forth
therein. The plaintiff's motion for a temporary restraining
order for purposes of enjoining the transaction, which was
argued by the plaintiff on July 8, 2003, was denied by the
court.
Based upon the information currently available to the Operating
Partnership and CNL, the Operating Partnership and CNL believe
the allegations contained in the amended complaint are without
merit and they intend to vigorously defend the suit.
TELAXIS COMMUNICATIONS: Reaches Settlement in NY Securities Suit
----------------------------------------------------------------
Telaxis Communications Corporation reached an agreement to
settle the consolidated securities class action filed in the
United States District Court against it, one or more of the
underwriters in the Company's initial public offering and
certain of the Company's officers and directors.
The amended complaint alleges, among other things, violations of
the registration and antifraud provisions of the federal
securities laws due to alleged statements in and omissions from
the Telaxis initial public offering registration statement
concerning the underwriters' alleged activities in connection
with the underwriting of Telaxis' shares to the public. The
amended complaint seeks, among other things, unspecified damages
and costs associated with the litigation.
The suit has been assigned along with approximately 1,000 other
lawsuits making substantially similar allegations against
approximately 300 other publicly-traded companies and their
public offering underwriters to a single federal judge in the
Southern District of New York for consolidated pre-trial
purposes.
On July 15, 2002, together with the other issuer defendants, the
Company filed a collective motion to dismiss the consolidated,
amended complaints against the issuers on various legal grounds
common to all or most of the issuer defendants. The
underwriters also filed separate motions to dismiss the claims
against them. In October 2002, the court approved a stipulation
dismissing without prejudice all claims against the Company
directors and officers who had been defendants in the
litigation.
On February 19, 2003, the court issued its ruling on the
separate motions to dismiss filed by the issuer defendants and
the underwriter defendants. The court granted in part and
denied in part the issuer defendants' motions. The court
dismissed, with prejudice, all claims brought against the
Company under the anti-fraud provisions of the securities laws.
The court denied the motion to dismiss the claims brought under
the registration provisions of the securities laws (which do not
require that intent to defraud be pleaded) as to the Company and
as to substantially all of the other issuer defendants. The
court denied the underwriter defendants' motion to dismiss in
all respects.
In June 2003, the Company elected to participate in a proposed
settlement agreement with the plaintiffs in this litigation.
This decision was made by a special independent committee of its
board of directors. The Company understands that a large
majority of the other issuer defendants have also elected to
participate in this settlement.
If ultimately approved by the court, this proposed settlement
would result in a dismissal, with prejudice, of all claims in
the litigation against the Company and against the other issuer
defendants who elect to participate in the proposed settlement,
together with the current or former officers and directors of
participating issuers who were named as individual defendants.
The proposed settlement does not provide for the resolution of
any claims against the underwriter defendants.
The proposed settlement provides that the insurers of the
participating issuer defendants will guarantee that the
plaintiffs in the cases brought against the participating issuer
defendants will recover at least $1 billion. This means there
will be no monetary obligation to the plaintiffs if they recover
$1 billion or more from the underwriter defendants. In
addition, the Company and the other participating issuer
defendants will be required to assign to the plaintiffs certain
claims that the participating issuer defendants may have against
the underwriters of their IPOs.
Consummation of the proposed settlement is conditioned upon,
among other things, negotiating, executing, and filing with the
court final settlement documents and final approval by the
court. If the proposed settlement is not consummated, the
Company intends to continue to fight the allegations.
TRIPLE-S INC.: Named As Defendant in Blue Cross Physician's Suit
----------------------------------------------------------------
Triple-S, Inc. was named as one of the defendants in the class
action filed by Kenneth A. Thomas, M.D. and Michael Kutell,
M.D., on behalf of themselves and all other similarly situated
and the Connecticut State Medical Society against the Blue Cross
and Blue Shield Association and multiple other insurance
companies.
The individual plaintiffs bring this action on behalf of
themselves and a class of similarly situated physicians seeking
redress for alleged illegal acts of the defendants which they
allege have resulted in a loss of their property and a detriment
to their business, and for declaratory and injunctive relief to
end those practices and prevent further losses.
Plaintiffs alleged that the defendants, on their own and as part
of a common scheme, systematically deny, delay and diminish the
payments due to doctors so that they are not paid in a timely
manner for the covered, medically necessary services they
render.
The complaint alleges that the Company's health care plans are
the agents of Blue Cross and Blue Shield licensed entities, and
as such has committed the acts alleged above and acted within
the scope of their agency, with the consent, permission,
authorization and knowledge of the others, and in furtherance of
both their interest and the interests of other defendants.
Management believes that the Company was brought to this
litigation for the sole reason of its association with the Blue
Cross and Blue Shield Association and that none of the
allegations made by the Plaintiffs are applicable to the
Company. Therefore, the Company pursuant to the advice of legal
counsel will move for the dismissal of the complaint against it.
VISA USA: NC Consumers Lodge Suit Over Internet Transaction Fees
----------------------------------------------------------------
Visa U.S.A., Inc. faces a class action filed in the Eastern
District of North Carolina alleging that the fees charged to
Internet merchants when funds have been advanced by American
Express and are later charged back to those merchants because a
consumer transaction has been determined to be the result of
fraud, or when a transaction has been disputed by the consumer
and the dispute is resolved in the consumer's favor are
excessive. The Plaintiffs seek treble damages in an unspecified
amount "but which is, at a minimum, hundreds of millions of
dollars," disgorgement of fees earned, injunctive and other
relief.
WESTMINSTER CAPITAL: Reaches Settlement For Investor Suit in DE
---------------------------------------------------------------
The settlement proposed by Westminster Capital, Inc. for the
class action filed against it and each member of the
Corporation's board of directors in the Delaware Court of
Chancery for New Castle County is deemed final after no appeals
were filed.
The lawsuit was filed in response to the Company's tender offer
to purchase any and all outstanding shares of its common stock
at a price of $2.80 per share. The plaintiff brought this
action individually and as a purported class action on behalf of
all Company shareholders.
The complaint, as subsequently amended, alleged that the Company
and the members of its board of directors breached their
fiduciary duties to the Company shareholders. Specifically the
complaint alleged:
(1) Westminster's shareholders were denied the opportunity
to make a fully informed judgment on a major corporate
transaction in which they had to select among their
options to hold or tender their stock;
(2) the offer was structured in such a way that it was
coercive; and
(3) the Offer benefited the fiduciaries at the expense of
Westminster's public shareholders.
The complaint sought, among other things, preliminary and
permanent injunctive relief prohibiting the Company from
proceeding and implementing the offer and, if the offer was
completed, an order rescinding the offer and awarding damages to
the purported class.
On May 8, 2002, the court denied the motion for expedited
proceedings filed by the plaintiff and refused to schedule a
hearing on the plaintiff's motion for a preliminary injunction,
which sought to enjoin the Company's offer. The offer was
closed without resolving the lawsuit.
Although the Company and its directors denied and continue to
deny any allegations of wrongdoing, the Company engaged in
settlement discussions with the plaintiff following completion
of the offer. On January 7, 2003, a Stipulation of Settlement
was filed with the court. On March 7, 2003, the court held a
hearing to consider the settlement. On June 25, 2003, the court
entered an order and final judgment approving the settlement,
which provides that:
(1) Westminster will pay each shareholder that tendered
common stock in the Offer an additional $0.20 per share
(less a pro rata share of attorneys' fees);
(2) Westminster will purchase the common stock owned by
Barry Blank, which is represented to be approximately
349,300 shares, for $3.00 per share (less a pro rata
share of attorneys' fees); and
(3) William Belzberg, Hyman Belzberg, Greggory Belzberg and
Keenan Behrle will contribute their shares of common
stock to a newly formed company which will then own in
excess of 90% of Westminster's outstanding common stock
and the new company will then merge with and into
Westminster, and each of the shareholders of
Westminster (other than the new company) will be
entitled to receive $3.00 per share for their shares of
common stock (less a pro rata share of attorneys' fees)
and the shareholders of the new company (i.e. the
Continuing Shareholders) will receive shares of stock
of Westminster.
Upon completion of the merger, Westminster will be privately
held by the Continuing Shareholders. If any of Westminster's
shareholders entitled to receive cash for their shares in the
merger object to the price, they may exercise appraisal rights
as provided under the Delaware General Corporation Law. The
court did not approve the amount of attorneys' fees provided for
in the Settlement, reducing the award of fees from $125,000 to
$100,000.
On July 2, 2003, Mr. Fred Lowenschuss, a Westminster
shareholder, filed a Request for Reconsideration of the Order
and Final Judgment with the court. On July 24, 2003, the court
denied Mr. Lowenschuss's Request for Reconsideration. The
deadline to timely appeal the Order and Final Judgment expired
on July 25, 2003, and no appeals were filed by that date.
* Maine Cases Join Debate Over First Amendment Rights Limits
------------------------------------------------------------
Even after being sued by Monsanto over content on the labels on
his dairy's milk, Oakhurst Dairy President Stanley Bennett
resists the urge to run every marketing and advertising matter
past his lawyers. Mr. Bennett said he consulted with lawyers,
but "not very closely before or after (the suit); as little as I
can, because they cost too much."
However, Mr. Bennett and other business soon may have to budget
more for legal advice, the Portland Press Herald stated in a
report on the increasing difficulties before commercial
enterprises as they try to navigate the complex issues of free
speech. Vivid, indeed, is the recent illustration that comes to
mind of the current problems of Philip Morris USA as it
struggles with the possibility of having to pay $12 billion for
an appeal bond, the obtainment of which is necessary to stay the
$10.1 judgment rendered against it in Illinois, as the company
endeavors to exercise its right to appeal.
This problem of Philip Morris's arises out of a verdict holding,
in a class action, that the company had deceived 1.1 million
Illinois light cigarette smokers by advertising those cigarettes
as safer than the regular brands, thereby violating Illinois'
consumer protection statutes - a clear example of the balancing
of commercial speech against the usual conceptions of free
speech under the First Amendment.
The First Amendment protects individuals from most restrictions
on speech; but businesses are governed by a "web of laws" on
advertising and marketing, designed mostly to protect consumers
from misleading, unsubstantiated or outright false claims.
Bruce E.H. Johnson, a Seattle lawyer, who is a nationally
recognized expert on commercial free speech, said the US Supreme
Court started the trend toward greater regulation of commercial
speech more than 60 years ago, when it ruled that an
advertisement is not constitutionally protected speech.
In recent years, federal regulators have become more involved in
this issue, setting limits on the claims that companies, such as
makers of herbal remedies or diet products, can make for their
products. The instances have become rife, as in the instance
above, in which consumers do bring class actions and in which
they potentially could.
A handful of cases that could have further impact on the
definition of commercial free speech involve Maine companies or
laws. Monsanto, for instance is suing the Oakhurst dairy for
promoting its products as containing milk from cows who are not
treated with artificial growth hormones. Monsanto, which makes
the leading artificial hormone for cows, claims the marketing
implies that there is something wrong with milk from treated
cows, even though studies have shown the milk is no different
than milk from untreated cows.
Further, a class action was filed in June against Nestle and
Poland Spring, contending that the bottled water is not really
spring water because it comes from a well in a parking lot.
Poland Spring said its water meets federal requirements for
being called spring water because it comes from the same source
that feeds the spring.
Earlier this month, a manufacturers' group filed to stop
operation of a Maine law that requires the labels on bottled
water to identify the specific source of the water. The bottled
water producers say federal law protects them from having to
disclose the water's source.
Mr. Johnson said the lawsuits and arguments over what a company
can or cannot say, or over what it must say, show how the law is
evolving, and how likely it is that it will continue to be
tested for years to come.
One case currently being watched closely is a lawsuit against
Nike, the shoe manufacturer, by a California activist, Marc
Kasky. Mr. Kasky contends that Nike misled consumers when it
launched a public relations counteroffensive on charges that it
was exploiting overseas labor. Mr. Kasky's argument is that the
company does not enjoy free speech protections, even in the
forum of public relations, and that its statements are governed
by California laws on misleading advertising.
Nike sought to stop the lawsuit in an appeal directly to the US
Supreme Court this year. The court sidestepped the issue, in
June, but signaled that it will likely take up the matter after
it has worked its way through the California courts.
Mr. Johnson filed briefs in the case on behalf of news
organizations that sided with Nike. He argued that Mr. Kasky's
suit could limit debate on public issues that involve companies.
The organizations Mr. Johnson represented include The Seattle
Times, which owns Blethen Maine Newspapers, including The
Portland Press Herald/Maine Sunday Telegram.
Mr. Johnson said the Monsanto suit against Oakland is full of
ramifications and will play a role in further defining what
commercial speech is protected and what is not. Mr. Johnson
noted that previous rulings suggest companies can use accurate
statements in marketing, and that Monsanto will have a tough
time proving the Oakhurst labels are misleading.
"The plain fact is that if something (the statement) is
accurate, it is valid and protected," Mr. Johnson said.
However, companies are still going to have to tread carefully,
said Jack Trifts, dean of the School of Business at the
University of Southern Maine. He noted, as an example of how
urgently business is perceiving the issue of free speech has
become, that lawyers are sitting in on marketing meetings
already.
"It has become a regular course of action, that advertising
passes through the in-house legal departments for virtually all
companies," said Dean Trifts.
Dean Trifts said a suit like Monsanto's can be a double-edged
sword. Monsanto may have entered the suit on behalf of dairy
farmers who use the company's hormones on their cows. If milk
from treated cows is rejected by consumers, those farmers lose
business and so does Monsanto, which sells them the hormones.
However, Monsanto risks a "public black eye" as a big company
taking on a small family-owned dairy.
"This is big business at its worst," said Mr. Trifts.
"Companies always have to be concerned with not only what can
you do legally, but how is your audience going to perceive it."
Meetings, Conferences & Seminars
* Scheduled Events for Class Action Professionals
-------------------------------------------------
September 8-9, 2003
CORPORATE GOVERNANCE: LIABILITY OF CORPORATE
OFFICERS AND DIRECTORS
Mealey Publications
The Ritz-Carlton Hotel Amelia Island, FL
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 8-10, 2003
NATIONAL AND INTERNATIONAL ASBESTOS LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel Chicago
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 11-12, 2003
MASS TORT LITIGATION TOOLS FOR PARALEGALS
Mealey Publications
The Westin Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 15-16, 2003
SECURITIES LITIGATION & ENFORCEMENT 2003
Practising Law Institute
PLI New York Center
Contact: 800-260-4PLI; info@pli.edu.
September 18-19, 2003
REINSURANCE SUMMIT
Mealey Publications
The Westin Hotel, Chicago
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 19-21, 2003
THE 20TH TOBACCO PRODUCTS LIABILITY PROJECT CONFERENCE
Northeastern University School of Law
Contact: scuri@tplp.org
September 22-23, 2003
BAD FAITH CONFERENCE
Mealey Publications
The Westin Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 26, 2003
MANAGING ENVIRONMENTAL RISKS
Bridgeport Continuing Education
Los Angeles
Contact: 818-505-1490
September 29-30, 2003
PRACTICAL SKILLS SERIES: TOXIC TORT LITIGATION
Mealey Publications
The Ritz-Carlton Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 29-30, 2003
CONSUMER FINANCE CLASS ACTIONS
American Conference Institute
New York City
Contact: 1-888-224-2480; http://www.americanconference.com
October 2-3, 2003
SECURITIES LITIGATION & ENFORCEMENT 2003
Practising Law Institute
PLI New York Center
Contact: 800-260-4PLI; info@pli.edu.
October 8-9, 2003
ASBESTOS LITIGATION
American Conference Institute
New York City
Contact: 1-888-224-2480; http://www.americanconference.com
October 13, 2003
MASS TORT LITIGATION TOOLS FOR PARALEGALS
Mealey Publications
The Ritz-Carlton Hotel, Atlanta
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 13-14, 2003
SILICA LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel, Atlanta
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 15, 2003
LEXISNEXIS PRESENTS WALL STREET FORUM:
PHARMACEUTICAL & MEDICAL DEVICE INDUSTRY LITIGATION
Mealey Publications
The Ritz-Carlton New York, Battery Park
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 16-17, 2003
LEAD LITIGATION CONFERENCE
Mealey Publications
Westin Copley Plaza, Boston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 20, 2003
FUNDAMENTALS OF INSURANCE COVERAGE LAW
Mealey Publications
The Westin Chicago River North
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 21, 2003
FUNDAMENTALS OF REINSURANCE AND INSOLVENCY
Mealey Publications
The Westin Chicago River North
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 23 - 24, 2003
THE SECOND INTERNATIONAL ADVANCED FORUM ON RUN-OFF AND
COMMUTATIONS
American Conference Institute
New York Marriott East Side
Contact: 1-888-224-2480; http://www.americanconference.com
October 24, 2003
7TH ANNUAL NATIONAL INSTITUTE ON CLASS ACTIONS
American Bar Association
San Francisco, CA
Contact: 800-285-2221; abacle@abanet.org
October 27-28, 2003
INSURANCE COVERAGE DISPUTES CONCERNING CONSTRUCTION DEFECTS
Mealey Publications
The Westin Chicago River North
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 6-7, 2003
SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION
MassTortsMadePerfect.Com
Ritz Carlton, New Orleans, Louisiana
Contact: 1-800-320-2227; register@masstortsmadeperfect.com
November 7, 2003
7TH ANNUAL NATIONAL INSTITUTE ON CLASS ACTIONS
American Bar Association
Washington, DC
Contact: 800-285-2221; abacle@abanet.org
November 10-11, 2003
FEN-PHEN LITIGATION CONFERENCE
Mealey Publications
The Four Seasons Hotel, Houston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 13-14, 2003
MASS TORT LITIGATION TOOLS FOR PARALEGALS
Mealey Publications
The Westin Bonaventure Hotel, Los Angeles
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 13-14, 2003
ASBESTOS LITIGATION IN THE 21ST CENTURY
ALI-ABA
New Orleans
Contact: 215-243-1614; 800-CLE-NEWS x1614
November 17, 2003
WATER CONTAMINATION LITIGATION CONFERENCE
Mealey Publications
Pasadena
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 17-18, 2003
INSURANCE ALLOCATION CONFERENCE
Mealey Publications
The Ritz-Carlton Golf Resort, Naples, FL
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 18, 2003
MEDICAL MONITORING CONFERENCE
Mealey Publications
The Ritz-Carlton Huntington Hotel & Spa, Pasadena
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 18, 2003
DAUBERT CONFERENCE
Mealey Publications
The Ritz-Carlton Huntington Hotel & Spa, Pasadena
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 8-9, 2003
ASBESTOS PREMISES LIABILITY CONFERENCE
Mealey Publications
The Fairmont Hotel, San Francisco
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 8-9, 2003
CALIFORNIA SECTION 17200 CONFERENCE
Mealey Publications
The Fairmont Hotel, San Francisco
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 11-13, 2003
CONSTRUCTION DEFECT AND MOLD LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton, Lake Las Vegas, Las Vegas
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 11-13, 2003
EMERGING SECURITIES LITIGATION CONFERENCE
Emerging Securities Litigation Conference
Mealey Publications
The Westin Kierland Resort & Spa, Scottsdale
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 12, 2003
MOLD LITIGATION 101 CONFERENCE
Mealey Publications
The Ritz-Carlton, Lake Las Vegas, Las Vegas
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
January 22-23, 2004
ENVIRONMENTAL AND TOXIC TORT MATTERS: ADVANCED CIVIL LITIGATION
ALI-ABA
Orlando (Walt Disney World)
Contact: 215-243-1614; 800-CLE-NEWS x1614
March 18-19, 2004
SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION
MassTortsMadePerfect.Com
The Fairmont, San Francisco, California
Contact: 1-800-320-2227; register@masstortsmadeperfect.com
April 14-17, 2004
INSURANCE INSOLVENCY AND REINSURANCE ROUNDTABLE
Mealey Publications
The Scottsdale Princess, Scottsdale, AZ
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
June 10 & 11, 2004
SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION
MassTortsMadePerfect.Com
Atlantis, Paradise Island, Bahamas
Contact: 1-800-320-2227; register@masstortsmadeperfect.com
TBA
FAIR LABOR STANDARDS CONFERENCE
Mealey Publications
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
TBA
AIRLINE BANKRUPTCY LITIGATION CONFERENCE
Mealey Publications
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
* Online Teleconferences
------------------------
September 05-30, 2003
DAMAGES IN TEXAS INSURANCE LITIGATION:
EVALUATING, PLEADING, AND PROVING
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
September 05-30, 2003
NBI PRESENTS "EMERGING ISSUES IN CALIFORNIA
INDOOR AIR QUALITY AND TOXIC MOLD LITIGATION
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
September 05-30, 2003
NBI PRESENTS "LITIGATING THE CLASS ACTION LAWSUIT IN FLORIDA
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
September 16, 2003
AORTIC ANEURYSM DEVICE LITIGATION
Mealey Publications
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
ADVERSARIAL PROCEEDINGS IN ASBESTOS BANKRUPTCIES
LawCommerce.Com/Mealey's
Online Streaming Video
Contact: customerservice@lawcommerce.com
ASBESTOS BANKRUPTCY - PANEL OF CREDITORS COMMITTEE MEMBERS
LawCommerce.Com/Mealey's
Online Streaming Video
Contact: customerservice@lawcommerce.com
EXPERT WITNESS ADMISSIBILITY IN MOLD CASES
LawCommerce.Com/Mealey's
Online Streaming Video
Contact: customerservice@lawcommerce.com
INTRODUCTION TO CLASS ACTIONS AND LARGE RECOVERIES
Big Class Action
Contact: seminars@bigclassaction.com
NON-TRADITIONAL DEFENDANTS IN ASBESTOS LITIGATION
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
PAXIL LITIGATION
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
RECENT DEVELOPMENTS INVOLVING BAYCOL
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
RECOVERIES
Big Class Action
Contact: seminars@bigclassaction.com
SELECTION OF MOLD LITIGATION EXPERTS: WHO YOU NEED ON YOUR TEAM
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
SHOULD I FILE A CLASS ACTION?
LawCommerce.Com / Law Education Institute
Contact: customerservice@lawcommerce.com
THE EFFECTS OF ASBESTOS ON THE PULMONARY SYSTEM
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
THE STATE OF ASBESTOS LITIGATION: JUDICIAL PANEL DISCUSSION
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
TRYING AN ASBESTOS CASE
LawCommerce.Com
Contact: customerservice@lawcommerce.com
THE IMPACT OF LORILLAR ON STATE AND LOCAL REGULATION OF TOBACCO
SALES
AND ADVERSTISING
American Bar Association
Contact: 800-285-2221; abacle@abanet.org
________________________________________________________________
The Meetings, Conferences and Seminars column appears in the
Class Action Reporter each Wednesday. Submissions via e-mail to
carconf@beard.com are encouraged.
New Securities Fraud Cases
FLOWSERVE CORPORATION: Bernstein Liebhard Files Stock Suit in TX
----------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class
action in the United States District Court for the Northern
District of Texas, on behalf of all persons who purchased or
acquired Flowserve Corporation (NYSE: FLS) securities between
October 23, 2001 and September 27, 2002, inclusive.
By the beginning of the class period, Flowserve was experiencing
double-digit declines in its "aftermarket" sales of pumps and
valves, primarily to the chemical and general industrial
segments of its markets. In preparation for continued declines
in its aftermarket sales and services, the Company idled several
of its manufacturing plants.
Flowserve withheld these adverse facts from the public while it
continued to issue highly positive earnings statements and
forecasts. In light of its declining revenues and earnings, the
Company determined that in order to maintain its debt covenants,
avoid default, and obtain favorable debt re-financing and re-
pricing terms, among other things, it would need to obtain
additional capital from the equity markets.
Consequently, Flowserve completed two public offerings during
the class period, issuing over 16 million shares of its common
stock to the unsuspecting investing public at artificially
inflated prices. The $433.9 million in proceeds realized from
the offerings was used to retire debt incurred in connection
with Flowserve's prior acquisitions and to finance an additional
acquisition.
During this time, certain Flowserve executives, including
Defendant Renee J. Hornbaker, engaged in a substantial insider
selling campaign, disposing of over 98,000 shares of Flowserve
common stock, at or near market highs, and realizing over $3.2
million in illicit proceeds.
The truth was revealed on September 27, 2002, when the Company
warned of a 21% earnings shortfall for the quarter ending
September 30, 2002, and cut its full year 2002 earnings guidance
by over 60%, to $1.45 per share, from the $2.30 per share
earnings guidance shared with investors during roadshow
presentations promoting Flowserve's public offerings less than
six months prior.
Market reaction to the Company's announcement was swift and
severe. Flowserve shares fell over 38% to close at $8.70 per
share on September 27, 2002, a decline of more than 75% from the
Class Period high of $34.90 per share reached on May 2, 2002.
For more details, contact Ms. Linda Flood, Director of
Shareholder Relations, by Mail: 10 East 40th Street, New York,
New York 10016 by Phone: (800) 217-1522 or (212) 779-1414 by E-
mail: FLS@bernlieb.com or visit the firm's Website:
http://www.bernlieb.com.
FLOWSERVE CORPORATION: Shepherd Finkelman Files TX Stock Lawsuit
----------------------------------------------------------------
Shepherd, Finkelman, Miller & Shah, LLC initiated a securities
class action on behalf of all purchasers of securities of
Flowserve Corporation (NYSE: FLS), between and including October
23, 2001 and September 27, 2002. The suit is filed in the
United States District Court for the Northern District of Texas
against the Company, C. Scott Greer, and Renee J. Hornbaker.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between October 23, 2001 and
September 27, 2002, thereby artificially inflating the price of
Flowserve securities.
During the class period, the Complaint alleges that Defendants,
among other things:
(1) misrepresented that the Company's aftermarket sales
(the Company's "quick turnaround" business) were
steady, stable and consistent streams of revenue;
(2) misrepresented that the Company's growth made it less
dependent upon the chemical and industrial segments,
which had historically been very sensitive to economic
downturn;
(3) failed to disclose that the Company had instructed one
or more of its plants to stop building inventory as a
result of the projected (albeit undisclosed) continuing
decline in sales; and
(4) without any reasonable basis, projected full year 2002
earnings at ranges that were unattainable due to the
declines the Company was experiencing in critical
business segments.
On September 27, 2002, the Company warned of a 21% earnings
shortfall for the quarter ending September 30, 2002, and cut its
full year 2002 earnings guidance by over 60%, to $1.45 per
share, from the $2.30 per share earnings guidance shared with
investors during road show presentations promoting Flowserve's
public offerings less than six months earlier.
Market reaction to the Company's announcement was swift and
severe. Flowserve shares fell over 38% to close at $8.70 on
September 27, 2002, a decline of more than 75% from the Class
Period high of $34.90 reached on May 2, 2002.
During the Class Period, Flowserve completed two public
offerings of its common stock, raising more than $430 million,
and Flowserve insiders sold their Flowserve common stock for
substantial profit.
For more details, contact James E. Miller by Phone: 866/540-5505
or by E-mail: jmiller@classactioncounsel.com or James C. Shah by
Phone: 877/891-9880 or by E-mail: jshah@classactioncounsel.com
IMPATH INC.: Cauley Geller Commences Securities Suit in S.D. NY
---------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a securities class
action in the United States District Court for the Southern
District of New York, on behalf of purchasers of Impath, Inc.
(Other OTC:IMPH) (Nasdaq:IMPHE) publicly traded securities
during the period between February 21, 2001 and July 29, 2003,
inclusive.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing numerous positive statements
throughout the Class Period regarding the Company's financial
performance.
As alleged in the complaint, these statements were each
materially false and misleading when made as they failed to
disclose and misrepresented the following material adverse facts
which were then known to defendants or recklessly disregarded by
them:
(1) that the Company was failing to timely record an
impairment in the value of its accounts receivables.
As a result, the Company's reported financial results
were artificially inflated throughout the Class Period;
(2) that the Company was failing to properly account for
its GeneBank (TM) asset, thereby overstating its
reported financial results; and
(3) as a result of the foregoing, the Company's financial
statements published during the Class Period were not
prepared in accordance with Generally Accepted
Accounting Principles and were therefore materially
false and misleading.
On July 30, 2003, Impath shocked the market when it issued a
press release announcing that it had initiated an investigation
into possible accounting irregularities involving accounts
receivables which the Company believes have been materially
overstated and will likely require restatement. Following this
announcement, shares of Impath common stock were halted from
trading.
For more details, contact Samuel H. Rudman, David A. Rosenfeld,
Jackie Addison or Heather Gann by Phone: 1-888-551-9944 by Fax:
1-501-312-8505 by E-mail: info@cauleygeller.com or visit the
firm's Website: http://www.cauleygeller.com
IMPATH INC.: Goodkind Labaton Lodges Securities Suit in S.D. NY
---------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP initiated a securities
class action in the United States District Court for the
Southern District of New York, on behalf of persons who
purchased or otherwise acquired publicly traded securities of
IMPATH Inc. (OTC Bulletin Board: IMPH) between February 21, 2001
and July 29, 2003, inclusive. The lawsuit was filed against the
Company and certain of its officers.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, throughout the Class Period by issuing
false and misleading statements concerning the Company's
earnings, income and Company assets.
Specifically, the complaint alleges that the Company overstated
the value of certain assets during the Class Period while at the
same time the Company failed to properly record its account
receivables. As a result the Company's reported financial
results were artificially inflated throughout the Class Period.
On July 30, 2003 IMPATH shocked investors when it announced it
had initiated an internal investigation of company accounting
practices following the discovery of possible accounting
irregularities relating to the Company's accounts receivables
and certain banking assets. The Company further announced it
may restate its financial results for fiscal 2002 and prior
periods and that several Company officials had resigned.
Trading of IMPATH shares was halted. When trading resumed, the
share price fell approximately 85%.
For more details, contact Henry Young by Phone: 800-321-0476 or
by E-mail: nching@glrslaw.com
LABORATORY CORPORATION: Bernstein Liebhard Files NC Stock Suit
--------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class
action on behalf of all persons who acquired securities of
Laboratory Corporation of America Holdings (NYSE: LH) between
February 13, 2002 to October 3, 2002, inclusive. The case is
pending in the United States District Court for the Middle
District of North Carolina against the Company and:
(1) Thomas MacMahon,
(2) Richard L. Novak, and
(3) Wesley Elingburg
The complaint charges that LabCorp and certain of its officers
and directors 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 during the Class Period, thereby artificially
inflating the price of LabCorp securities.
Specifically, the complaint alleges that throughout the Class
Period, the Company issued quarterly press releases and filed
reports with the SEC which represented that the Company's
business was strong and growing. Defendants also allayed
investor concerns of weakened sales-volume growth by
representing that issues that previously slowed sales had been
resolved.
However, these statements were materially false and misleading
when made because Defendants failed to disclose that the Company
was experiencing increased competition in its traditionally
strongest markets and was suffering from material, company-
specific sales-force problems, such as a decline in service
levels, leading to lost sales.
The truth was revealed when on October 3, 2002, after the close
of regular trading, LabCorp shocked the market by stating that
due to the negative impact from a "continued slowdown in volume
growth in the routine, or core, testing business in certain key
regions of the country," the Company's results in the third
quarter would be less than the Company had previously led the
market to believe. The Company further stated that the negative
impact is expected to last through the remainder of 2002.
Investors were shocked to learn of the "continued slowdown" in
the Company's core business. As a result of this news, the
price of LabCorp common stock fell 34.6% in one day, to $21.68
per share on October 4, 2002 from a close of $33.18 per share on
October 3, 2002.
For more details, contact Ms. Linda Flood, Director of
Shareholder Relations by Mail: 10 East 40th Street, New York,
New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 by E-
mail: LH@bernlieb.com or visit the firm's Website:
http://www.bernlieb.com.
PEDIATRIX MEDICAL: Bernstein Liebhard Lodges FL Securities Suit
---------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class
action filed in the United States District Court for the
Southern District of Florida, Miami Division, on behalf of all
persons who purchased or acquired Pediatrix Medical Group, Inc.
(NYSE: PDX) securities between April 17, 2002 and June 23, 2003,
inclusive.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between April 17, 2002 and June
23, 2003, thereby artificially inflating the price of Pediatrix
common stock.
The Complaint alleges that these statements were materially
false and misleading because they failed to disclose, among
other things:
(1) that the defendants engaged in fraudulent "upcoding" in
its billing practices while telling the investing
public that its billing practices were legitimate and
(2) Pediatrix materially inflated its Class Period
financial results through inclusion of these fraudulent
revenues.
On June 24, 2003, the Company issued a press release with the
headline: "Pediatrix Notified of Billing Inquiry." Contrary to
defendants' public representations that its fraudulent billing
practices were in the past, the Company announced that it had
been advised by the U.S. Attorney's Office that it was
conducting a civil investigation into Pediatrix's Medicaid
billing practices nationwide. Additionally, the Company
announced that the U.S. Attorney's Office intended to make a
document and information request, within the next few weeks.
Market reaction to the news was swift. Pediatrix's shares fell
24% or $9.90 per share, on unusually high trading volume, to
close at $32.20 per share.
For more details, contact Ms. Linda Flood, Director of
Shareholder Relations by Mail: 10 East 40th Street, New York,
New York 10016 by Phone: (800) 217-1522 or (212) 779-1414 by E-
mail: PDX@bernlieb.com or visit the firm's Website:
http://www.bernlieb.com.
QUEST SOFTWARE: Weiss & Yourman Files Securities Suit in C.D. CA
----------------------------------------------------------------
Weiss & Yourman initiated a securities class action against
Quest Software, Inc. (NASDAQ:QSFT) and its officers in the
United States District Court for the Central District of
California on behalf of purchasers of Quest securities between
April 30, 2002 and July 23, 2003.
The complaint charges defendants with violations of the
Securities Exchange Act of 1934. It alleges that defendants
issued materially false and misleading statements which resulted
in plaintiff purchasing Quest securities during the Class Period
at artificially inflated and/or maintained prices.
For more details, contact Weiss & Yourman by Mail: 10940
Wilshire Blvd., 24th Floor, Los Angeles CA 90024 by Phone:
(800) 437-7918 or (310) 208-2800 or by E-mail: info@wyca.com
READ-RITE CORPORATION: Bernstein Liebhard Launches CA Stock Suit
----------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class
action in the United States District Court for the Northern
District of California on behalf of all persons who purchased or
acquired Read-Rite Corporation (OTC: RDRTQ) (Formerly NASDAQ:
RDRT) securities between October 30, 2001 and June 6, 2003,
inclusive.
The complaint charges certain of Read-Rite's officers and
directors with violations of the Securities Exchange Act of
1934. Read-Rite is an independent supplier of magnetic
recording heads for the hard disk drive (HDD) and tape drive
markets. The Company designs, manufactures and markets magnetic
recording heads as head gimbal assemblies (HGAs) and
incorporates multiple HGAs into head stack assemblies.
Read-Rite's products are sold primarily for use in 3.5-inch HDDs
for desktop computer devices, for high-performance enterprise
HDDs used in network and mainframe applications, as well as for
consumer electronic devices such as game stations or personal
video recorders.
The complaint alleges that during the Class Period defendants
issued a series of false and misleading statements about the
Company, and as a result Read-Rite's stock traded at inflated
prices during the Class Period, increasing to as high as $39 on
January 9, 2002, before the Company announced it would file for
bankruptcy.
The facts which were known to each of the defendants, but
concealed from the investing public during the Class Period,
were as follows:
(1) the Company's 40 GB/platter inventory was overstated by
$16.7 million;
(2) the Company's Philippine real estate holdings were
overstated by approximately $6.8 million;
(3) the Company needed to restructure its operations and
the associated charges would cost the Company in excess
of $20 million and would cause an earnings shortfall in
coming quarters;
(4) the Company's Q2 FY03 loss was grossly understated;
(5) the Company was experiencing massive technical problems
associated with its 40GB/per platter programs.
Moreover, the Company was experiencing these problems
well before January 2002 and beyond April 2002 when
defendants claimed such problems were fixed; and
(6) the Company was underfunded and could not complete the
production of its 80GB programs.
For more details, contact Ms. Linda Flood, Director of
Shareholder Relations by Mail: 10 East 40th Street, New York,
New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 or by
E-mail: RDRT@bernlieb.com.
SUREBEAM CORPORATION: Glancy & Binkow Lodges CA Securities Suit
---------------------------------------------------------------
Glancy & Binkow LLP initiated a securities class action in the
United States District Court for the Southern District of
California on behalf of all persons who purchased securities of
SureBeam Corporation (Nasdaq:SUREE) between March 16, 2001 and
August 20, 2003, inclusive.
The complaint charges the Company and certain of the Company's
executive officers with violations of federal securities laws.
Among other things, plaintiff claims that defendants'
dissemination of materially false and misleading statements
concerning SureBeam's financial performance caused the Company's
stock price to become artificially inflated, inflicting damages
on investors.
SureBeam provides electronic irradiation systems and services
for the food industry. The complaint alleges that during the
Class Period defendants caused SureBeam to report in its public
filings, press releases and other public statements favorable
financial results by, among other things, artificially inflating
the Company's revenue and earnings by improper revenue
recognition practices.
On July 30 and August 12, 2003, Surebeam issued press releases
stating that the Company was delaying the release of its second
quarter earnings. On August 21, 2003, Surebeam issued a press
release stating that Deloitte & Touche, LLP, SureBeam's
independent auditor for 2003, had raised issues involving
"certain aspects of SureBeam's revenue recognition policies and
certain contracts entered into in 2000 and affecting subsequent
periods."
SureBeam's stock dropped to $1.55 per share as a result of this
news.
For more details, contact Lionel Z. Glancy by Mail: 1801 Avenue
of the Stars, Suite 311, Los Angeles, California 90067, by
Phone: (310) 201-9161 or (888) 773-9224 or by E-mail:
info@glancylaw.com.
SUREBEAM CORPORATION: Wolf Popper Commences CA Securities Suit
--------------------------------------------------------------
Wolf Popper LLP initiated a securities class action against
SureBeam Corporation (Nasdaq:SUREE), in the United States
District Court for the Southern District of California, on
behalf of persons who purchased shares of SureBeam's common
stock pursuant to SureBeam's March 16, 2001 initial public
offering or on the open market during the period from March 16,
2001, through August 27, 2003.
The complaint alleges that during the class period, defendants
improperly utilized the percentage-of-completion method for
accounting for its revenue and improperly accounted for millions
of dollars of revenue derived from sales of equipment to a
Brazilian company and to Texas A&M University causing the
Company's Class Period revenues to be misrepresented.
The facts began to be revealed when, on June 3, 2003, SureBeam
announced that it had terminated KPMG LLP as its auditor. A
little more than two months later, on August 21, 2003, SureBeam
announced that it was firing Deloitte & Touche, which had been
hired to replace KPMG, because Deloitte & Touche allegedly had
refused to sign off on the Company's improper accounting. Prior
to the termination of KPMG, SureBeam's stock was selling for
$3.10 per share. After the substantial issues that Deloitte had
contested became public, SureBeam's stock had dropped almost in
half, to $1.62 per share.
During the period SureBeam was issuing its favorable false
statements about the Company's financial results, defendant
Lawrence A. Oberkfell, the former President and Chief Executive
Officer of the Company, sold over 1.5 million SureBeam shares
for proceeds of more than $5.5 million. Similarly, defendant
Kevin K. Claudio, formerly the Chief Financial Officer of the
Company and currently its Senior Vice President, sold over
522,000 SureBeam shares for proceeds of more than $2.3 million.
For more details, contact Carl L. Stine by Mail: 845 Third
Avenue, New York, NY 10022 by Phone: 212-451-9631 or
877-370-7703 (toll free) by Fax: 212-486-2093 or 877-370-7704 by
E-mail: irrep@wolfpopper.com or visit the firm's Website:
http://www.wolfpopper.com
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora
Fatima Antonio and Lyndsey Resnick, Editors.
Copyright 2003. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
The CAR subscription rate is $575 for six months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
* * * End of Transmission * * *