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C L A S S A C T I O N R E P O R T E R
Monday, November 1, 2004, Vol. 6, No. 216
Headlines
AGL RESOURCES: Agrees To Settle Shareholder Fraud Lawsuit in NJ
ANTHEM INC.: Appeals Court Affirms Dismissal of CT AG ERISA Suit
ANTHEM INC.: Subsidiary Appeals CT Consumer Suit Certification
ANTHEM INC.: Files Petition For Certiorari in FL HMO Litigation
ANTHEM INC.: OH, KY Units Seek Dismissal of Antitrust Lawsuits
ANTHEM INSURANCE: Continues To Face Consumer Lawsuit in IN Court
BEACON HILL: Settles SEC Hedge Fund Fraud Suit For $4.4 Million
BOEING CO.: Working To Resolve 8 Employment Discrimination Suits
CALIFORNIA: ACLU Files Privacy Suit V. Ontario Police Department
CATHOLIC CHURCH: Iowa Diocese To Settle Sex Abuse Claims For $9M
CINERGY CORPORATION: Settles Breach-Of-Contract Lawsuit in Ohio
DELL COMPUTERS: CA Suit Alleges Fraud in Sale Of Plasma Monitors
EL PASO: Continues To Face Derivative, Securities Fraud Lawsuits
FABI CONSTRUCTION: Depositions Begin in Lawsuit Over Accident
GALEZ TOWING: MO A.G. Nixon Launches Consumer Fraud Lawsuit
GERMANY: DSW Urges Investors To Join U.S. Securities Fraud Suits
MAYTAG CORPORATION: Settles Consumer Suit Over Defective Washers
MARSH & MCLENNAN: To Adopt Reforms, Works To Settle NY AG Suit
MARSH & MCLENNAN: AG Denies $500M Settlement Figure For Lawsuit
MAYTAG CORPORATION: Settles Consumer Suit Over Defective Washers
NEW YORK: Dealers File Antitrust Suit V. 17 Auto Parts Makers
PACER INTERNATIONAL: New Trial Set in CA Truck Drivers Lawsuit
PAYPAL INC.: CA Court Approves Consumer Fraud Lawsuit Settlement
POZEN INC.: Shareholders Launch Stock Fraud Lawsuits in NC Court
PRE-PAID LEGAL: Continues To Face Fraud Suits Over Memberships
PRE-PAID LEGAL: OK Court Refuses Certification For Stock Lawsuit
PRE-PAID LEGAL: OK Court Hears Summary Judgment Motion in Suit
RAZMATAZ LLC: MI Court Approves Consumer Fraud Suit Settlement
UNITED STATES: Anti-Spam Alliance Lodges More Suits V. Spammers
UNITED TECHNOLOGIES: Faces Elevator, Escalator Antitrust Suits
VIRGINIA ELECTRIC: Residents To Get Payout From $20M Settlement
WELLCHOICE INC.: Asks FL Court To Dismiss RICO, Fraud Lawsuit
WELLCHOICE INC.: Asks FL Court To Dismiss RICO, Fraud Lawsuit
New Securities Fraud Cases
AON CORPORATION: Milberg Weiss Files Securities Fraud Suit in IL
APOLLO GROUP: Milberg Weiss Lodges Securities Fraud Suit in AZ
AXIS GLOBAL: Lerach Coughlin Lodges Securities Fraud Suit in NY
BIOLASE TECHNOLOGY: Abraham Fructer Lodges Securities Suit in CA
LEHMAN BROTHERS: Herman & Mermelstein Lodges FL Securities Suit
STAR GAS: Schiffrin & Barroway Files Securities Fraud Suit in CT
*********
AGL RESOURCES: Agrees To Settle Shareholder Fraud Lawsuit in NJ
---------------------------------------------------------------
AGL Resources, Inc. reached an agreement to settle the
securities class action filed against it in the Superior Court
of the State of New Jersey, County of Somerset, Law Division,
styled "Green Meadows Partners, LLP on behalf of itself and all
others similarly situated v. Robert P. Kenney, Bernard S. Lee,
Craig G. Mathews, Dr. Vera King Farris, James J. Forese, J.
Russell Hawkins, R. Van Whisnand, John Kean, NUI and the
Company."
The Complaint, brought on behalf of a potential class of the
stockholders of NUI Corporation (NUI), names as defendants all
of the directors of NUI (Individual Defendants), NUI and the
Company. The Company first became aware of the Complaint when
NUI notified the Company that it had been formally served on
September 9, 2004 and forwarded to the Company a copy of the
Complaint for review. The Company was formally served with the
Complaint on September 14, 2004.
The Complaint alleges that purported financial incentives in the
form of change of control payments and indemnification rights
created a conflict of interest on the part of certain of the
Individual Defendants in evaluating a possible sale of NUI. NUI
has communicated that it believes the change in control payments
include a retirement plan for directors, last amended as of
January 24, 1995, that provides for a lump sum payment of the
retirement benefits that would be paid to such directors on
retirement, discounted for present value, in the event of a
change of control.
The Complaint further alleges that the Individual Defendants,
aided and abetted by the Company, breached fiduciary duties owed
to the plaintiff and the potential class by:
(1) deciding to sell NUI to the Company without making the
requisite effort to obtain the best share price,
(2) agreeing to an unfair and inadequate cash sale price of
$13.70 per share,
(3) entering into a merger agreement with the Company that
provided for a $7.5 million break-up fee, and
(4) failing to disclose material information in NUI's
preliminary proxy statement filed on August 13, 2004,
including, among other things, the precise amount of
consideration received by each director in connection
with the sale of NUI, strategic alternatives considered
by NUI and its financial advisors, additional details
of the sale process, and prior relationships, if any,
between NUI, the Company and/or NUI's financial
advisors
The Complaint demands judgment:
(i) determining that the action is properly maintainable as
a class action,
(ii) declaring that the Individual Defendants breached
fiduciary duties owed to the plaintiff and the
potential class, aided and abetted by the Company,
(iii) enjoining the sale of NUI, or if consummated,
rescinding the sale,
(iv) eliminating the $7.5 million break-up fee with the
Company,
(v) awarding the plaintiff and the potential class
compensatory and/or rescissory damages,
(vi) awarding interest, attorney's fees, expert fees and
other costs, and
(vii) granting such other relief as the Court may find just
and proper
On October 12, 2004, the Company reached an agreement in
principle with Green Meadows Partners, LLP to settle this
litigation. Although the Company believes that the Complaint is
without merit, it also believes that litigation could delay and
create uncertainty as to the Company's ability to consummate the
acquisition of NUI and that such delay and uncertainty are not
in the Company's or its shareholders' best interests.
The settlement calls for NUI to provide certain additional
information and disclosures to its shareholders, as reflected in
the "Additional Disclosure" section of NUI's proxy statement
supplement, filed on October 12, 2004 with the SEC. In
addition, as part of the settlement, NUI and the Company will
consent to a settlement class that consists of persons holding
shares of NUI common stock at any time from July 15, 2004 until
the date on which the acquisition is consummated, and we will
pay plaintiff's attorney's fees and costs in the amount of
$285,000. No part of these attorney's fees or costs will be
paid out of funds that would otherwise have been paid to NUI's
shareholders.
ANTHEM INC.: Appeals Court Affirms Dismissal of CT AG ERISA Suit
----------------------------------------------------------------
The United States Eleventh Circuit Court of Appeals affirmed the
dismissal of a class action filed against Anthem, Inc. by the
Connecticut Attorney General on behalf of a purported class of
HMO and Point of Service members in Connecticut.
No monetary damages are sought, although the suit does seek
injunctive relief from the Court to preclude the Company from
allegedly utilizing arbitrary coverage guidelines, making late
payments to providers or members, denying coverage for medically
necessary prescription drugs and misrepresenting or failing to
disclose essential information to enrollees.
The complaint contends that these alleged policies and practices
are a violation of Employee Retirement Income Security Act
(ERISA). This case was dismissed by the trial Court on
September 19, 2003; the Connecticut Attorney General filed a
motion for reconsideration by the trial Court, which was denied
on October 1, 2003. The Attorney General filed an appeal to the
Eleventh Circuit on December 1, 2003. The Eleventh Circuit
heard oral argument on August 11, 2004.
ANTHEM INC.: Subsidiary Appeals CT Consumer Suit Certification
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Anthem, Inc.'s Connecticut subsidiary appealed the Connecticut
state Court's decision granting class certification for the
lawsuits filed against it on behalf of professional providers in
Connecticut.
The suits allege that the Connecticut subsidiary has breached
its contracts by, among other things, failing to pay for
services in accordance with the terms of the contracts. The
suits also allege violations of the Connecticut Unfair Trade
Practices Act, breach of the implied duty of good faith and fair
dealing, negligent misrepresentation and unjust enrichment.
Two of the suits seek injunctive relief and monetary damages
(both compensatory and punitive). The third suit, brought by
the Connecticut State Medical Society, seeks injunctive relief
only. Two of the suits were transferred to the Multi District
Litigation (MDL) docket in Miami, Florida, as tag-along cases.
All of the tag-along cases in the MDL are being stayed, until
all motions in the main provider track cases have been ruled on.
On July 19, 2001, the Connecticut state Court suit was certified
as a class action as to three of the plaintiff's fifteen
allegations. The class is defined as those physicians who
practice in Connecticut or group practices which are located in
Connecticut that were parties to either a Participating
Physician Agreement or a Participating Physicians Group
Agreement with the Company and/or its Connecticut subsidiary
during the period from 1993 to the present, excluding risk-
sharing arrangements and certain other contracts.
The claims certified as class claims are:
(1) the Company's alleged failure to provide plaintiffs and
other similarly situated physicians with consistent
medical utilization/quality management and
administration of covered services by paying financial
incentive and performance bonuses to providers and the
Company's staff members involved in making utilization
management decisions;
(2) an alleged failure to maintain accurate books and
records whereby improper payments to the plaintiffs
were made based on claim codes submitted; and
(3) an alleged failure to provide senior personnel to work
with plaintiffs and other similarly situated
physicians.
The Company appealed the class certification decision, and on
September 22, 2003, the Connecticut Supreme Court reversed the
class certification decision, and remanded the matter back to
the trial Court for further proceedings. On June 16, 2004, the
trial Court certified a class as to four claims.
The class claims certified are:
(i) the Company's alleged failure to provide plaintiffs and
other similarly situated physicians with consistent
medical utilization/quality management and
administration of covered services by paying financial
incentive and performance bonuses to providers and the
Company's staff members involved in making utilization
management decisions;
(ii) an alleged failure to maintain accurate books and
records whereby improper payments to the plaintiffs
were made based on claim codes submitted;
(iii) an alleged failure to provide senior personnel to work
with plaintiffs and other similarly situated
physicians; and
(iv) alleged provider profiling by the Company
An appeal of the class certification decision was filed on July
6, 2004 with the Connecticut Supreme Court. Briefing is
proceeding in the Connecticut Supreme Court and the Court has
not set a date for oral argument. The trial Court proceedings
are currently stayed.
ANTHEM INC.: Files Petition For Certiorari in FL HMO Litigation
---------------------------------------------------------------
Anthem, Inc. and other managed care organizations filed a
petition for certiorari with the United States Supreme Court
over a lower Court ruling granting class certification to all
the Racketeer Influenced and Corrupt Organization Act (RICO)
claims in the multidistrict litigation pending against them in
the United States District Court in Miami Florida. The ruling
also denied certification to state law claims.
Several class actions were initially filed against the Company
and other managed care organizations asserting various causes of
action under federal and state law, along with other managed
care organizations. These lawsuits typically allege that the
defendant managed care organizations employ policies and
procedures for providing health care benefits that are
inconsistent with the terms of the coverage documents and other
information provided to their members, and because of these
misrepresentations and practices, a class of members has been
injured in that they received benefits of lesser value than the
benefits represented to and paid for by such members.
On September 26, 2002, Anthem was added as a defendant to a MDL
class action lawsuit pending in Miami, Florida brought on behalf
of individual doctors and several medical societies. Defendants
include a number of other managed health care organizations.
The managed care litigation around the country has been
consolidated to the U.S. District Court in Miami, Florida, under
MDL rules.
The Court has split the case into two groups, a "provider track"
involving claims by doctors, osteopaths, and other professional
providers, and a "subscriber track" involving claims by
subscribers or members of the various health plan defendants.
The complaint against Anthem and the other defendants alleges
that the defendants do not properly pay claims, but instead
"down-code" claims, improperly "bundle" claims, use erroneous or
improper cost criteria to evaluate claims and delay paying
proper claims. The suit also alleges that the defendants
operate a common scheme and conspiracy in violation of the
Racketeer Influenced Corrupt Organizations Act (RICO). The suit
seeks declaratory and injunctive relief, unspecified monetary
damages, treble damages under RICO and punitive damages.
The Court certified a class in the provider track cases on
September 26, 2002, but denied class certification in the
subscriber track cases. Defendants in the provider track cases
sought, and on November 20, 2002 were granted, an interlocutory
appeal of the class certification in the Eleventh Circuit. Due
to the Company's late addition to the case, it was not included
in the September 26, 2002 class certification order, and is
therefore not part of the appeal; however, the Company may be
affected by the outcome of the appeal.
The appeal was argued to the Eleventh Circuit panel on September
11, 2003. On September 1, 2004, the Eleventh Circuit issued an
opinion affirming the trial Court's class certification of all
RICO claims, and reversing the trial Court's class certification
on all state law claims. Defendants filed a petition for
certiorari with the U.S. Supreme Court on October 15, 2004.
Separately, defendants appealed to the Eleventh Circuit an
earlier trial Court ruling denying in part motions to enforce
the arbitration clauses in the contracts between the physicians
and the managed care organizations. The trial Court proceedings
were stayed by the Eleventh Circuit, pending a ruling on such
appeal.
The Company and other managed care companies continue to face
several suits which have been stayed, as tag-along suits in the
MDL.
On October 10, 2001, the Connecticut State Dental Association
and five dental providers filed suit against the Company's
Connecticut subsidiary. The suit alleged breach of contract and
violation of the Connecticut Unfair Trade Practices Act. The
suit was voluntarily withdrawn on November 9, 2001. The claims
were re-filed on April 15, 2002, as two separate suits; one by
the Connecticut State Dental Association and the second by two
dental providers, purportedly on behalf of a class of dental
providers.
Both suits seek injunctive relief, and unspecified monetary
damages (both compensatory and punitive). Both cases were
transferred to the Multi-District Litigation (MDL) docket as
tag-along cases, and have been consolidated with the MDL suits
pending before Judge Federico Moreno in the United States
District Court in Miami, Florida. Both cases are being stayed,
as are all of the tag-along suits in the MDL.
On May 22, 2003, in a case titled "Kenneth Thomas, M.D., et al.,
v. Blue Cross Blue Shield Association, et al.," several medical
providers filed suit in federal Court in Miami, Florida against
the Blue Cross Blue Shield Association and Blue Cross and Blue
Shield plans across the country, including the Company. The
suit alleges that the BCBS Association and the BCBS Plans
violated RICO and challenges many of the same practices as other
suits in the MDL. This case has been assigned to Judge Moreno
in Miami, and is in the early stages of pleading.
On May 8, 2003, in a case titled "Dr. Allen Knecht, et al., v.
Cigna, et al.," several chiropractors filed a purported class
action in federal Court in Portland, Oregon, naming several Blue
Cross Blue Shield Plans, including the Company, as well as
several commercial insurers. This case also alleges that the
defendants violated RICO and challenges many of the same
practices in regards to chiropractors. This case has been
transferred to the MDL docket and is now assigned to Judge
Moreno in Miami. This case has been stayed as a tag-along case
to the MDL proceedings.
On October 17, 2003, in a case titled "Jeffrey Solomon, D.C., et
al., v. Cigna, et al.," several chiropractors and a podiatrist,
along with chiropractic and podiatric associations, filed suit
in federal Court in Miami, Florida, against ten managed care
corporations, including the Company. The suit alleges that the
companies violated RICO and challenges many of the same
practices as other suits in the MDL. This case has been
transferred to the MDL docket and is now assigned to Judge
Moreno in Miami. This case has been stayed as a tag-along case
to the MDL proceedings.
On November 4, 2003, in a case titled "Jeffrey Solomon, D.C., et
al., v. Blue Cross Blue Shield Association, et al.," several
chiropractors, podiatrists, a psychologist and a physical
therapist, along with their professional corporations and trade
associations, filed suit in federal Court in Miami, Florida
against the Blue Cross Blue Shield Association and Blue Cross
and Blue Shield plans across the country, including the Company.
The suit alleges that the BCBS Association and the BCBS Plans
violated RICO and challenges many of the same practices as other
suits in the MDL. This case has been transferred to the MDL
docket and is now assigned to Judge Moreno. This case is in the
early stages of the pleadings.
On February 23, 2004, in a case titled "Richard Freiberg, et
al., v. United Healthcare, Inc., et al.," an acupuncturist and
an association promoting acupuncture, filed suit in federal
Court in Miami, Florida against ten managed care corporations,
including the Company. The complaint purports to be a class
action filed on behalf of all non-doctor health care providers,
and alleges that the companies involved violated RICO, and
challenges many of the same practices as other suits in the MDL
proceedings. This case has been stayed as a tag-along case in
the MDL proceedings.
ANTHEM INC.: OH, KY Units Seek Dismissal of Antitrust Lawsuits
--------------------------------------------------------------
Anthem, Inc.'s primary Ohio subsidiary and primary Kentucky
subsidiary were sued on June 27, 2002, in their respective state
Courts, by the Academy of Medicine of Cincinnati, as well as
individual physicians, and purport to be class action suits
brought on behalf of all physicians practicing in the greater
Cincinnati area and in the Northern Kentucky area, respectively.
In addition to the Anthem subsidiaries, both suits name Aetna,
United Healthcare and Humana as defendants.
The first suit, captioned "Academy of Medicine of Cincinnati and
Luis Pagani, M.D. v. Aetna Health, Inc., Humana Health Plan of
Ohio, Inc., Anthem Blue Cross and Blue Shield, and United Health
Care of Ohio, Inc., No. A02004947," was filed on June 27, 2002
in the Court of Common Pleas, Hamilton County, Ohio.
The second suit, captioned "Academy of Medicine of Cincinnati
and A. Lee Greiner, M.D., Victor Schmelzer, M.D., and Karl S.
Ulicny, Jr., M.D. v. Aetna Health, Inc., Humana, Inc., Anthem
Blue Cross and Blue Shield, and United Health Care, Inc., No.
02-CI-903" was filed on June 27, 2002 in the Boone County,
Kentucky Circuit Court.
Both suits allege the four companies acted in combination and
collusion with one another to reduce the reimbursement rates
paid to physicians in the area. The suits allege that as a
direct result of the defendants' alleged anti-competitive
actions, health care in the area has suffered, namely that:
(1) there are fewer hospitals;
(2) physicians are rapidly leaving the area;
(3) medical practices are unable to hire new physicians;
and,
(4) from the perspective of the public, the availability of
health care has been significantly reduced.
Each suit alleges that these actions violate the respective
state's antitrust and unfair competition laws, and each suit
seeks class certification, compensatory damages, attorneys'
fees, and injunctive relief to prevent the alleged anti-
competitive behavior against the class in the future.
Motions to dismiss or to send the cases to binding arbitration,
per the provider contracts, were filed in both Courts. The Ohio
Court overruled the motions on January 21, 2003 and the Kentucky
Court overruled the motions on February 19, 2003. Defendants
have appealed both rulings. The Ohio appeal was heard on
September 23, 2003. The Ohio appellate Court affirmed the trial
Court's ruling on November 21, 2003.
On January 2, 2004, Anthem filed a motion seeking a
discretionary appeal to the Ohio Supreme Court. The Court
accepted the case for review on April 13, 2004. Briefing is
complete in the Ohio Supreme Court and the Court has not set a
date for oral argument.
In the Kentucky case, oral argument was heard on August 11,
2004, before the Kentucky Court of Appeals. Plaintiffs filed a
motion for class certification, which was heard and rejected by
the trial Court on July 24, 2003. Plaintiffs filed a renewed
motion for class certification, which was heard and rejected on
October 24, 2003.
ANTHEM INSURANCE: Continues To Face Consumer Lawsuit in IN Court
----------------------------------------------------------------
Anthem Insurance and two of its Indiana affiliates continue to
face a lawsuit currently pending in Indiana state Court, styled
"Dr. William Lewis, et al. v. Associated Medical Networks, Ltd.,
et al."
The suit was initially filed in the Superior Court of Lake
County, Indiana. The plaintiffs are three related health care
providers. The health care providers assert that the Company
failed to honor contractual assignments of health insurance
benefits and violated equitable liens held by the health care
providers by not paying directly to them the health insurance
benefits for medical treatment rendered to patients who had
insurance with the Company.
The Company paid its customers' claims for the health care
providers' services by sending payments to its customers as
called for by their insurance policies, and the health care
providers assert that the patients failed to use the insurance
benefits to pay for the health care providers' services. The
plaintiffs filed the case as a class action on behalf of
similarly situated health care providers and seek compensatory
damages in unspecified amounts for the insurance benefits not
paid to the class members, plus prejudgment interest.
The case was transferred to the Superior Court of Marion County,
Indiana, where it is pending. On December 3, 2001, the Court
entered summary judgment for the Company on the health care
providers' equitable lien claims. The Court also entered
summary judgment for the Company on the health care providers'
contractual assignments claims to the extent that the health
care providers do not hold effective assignments of insurance
benefits from patients. On the same date, the Court certified
the case as a class action.
As limited by the summary judgment order, the class consists of
health care providers in Indiana who:
(1) were not in one of the Company's networks,
(2) did not receive direct payment from the Company for
services rendered to a patient covered by one of the
Company's insurance policies that is not subject to
ERISA,
(3) were not paid by the patient (or were otherwise damaged
by the Company's payment to its customer instead of to
the health care provider), and
(4) had an effective assignment of insurance benefits from
the patient.
The Company filed a motion seeking an interlocutory appeal of
the class certification order in the Indiana Court of Appeals.
On May 20, 2002 the Indiana Court of Appeals granted the
Company's motion seeking an interlocutory appeal of the class
certification order. In February 2003, the Indiana Court of
Appeals affirmed the trial Court's class certification. The
Company filed a petition for the transfer to the Indiana Supreme
Court in March 2003. The petition for transfer was argued on
October 2, 2003, and the Indiana Supreme Court accepted transfer
in an order dated October 2, 2003.
BEACON HILL: Settles SEC Hedge Fund Fraud Suit For $4.4 Million
---------------------------------------------------------------
Hedge fund Beacon Hill Asset Management and its four principals
have agreed to settle the Securities and Exchange Commissions
investor fraud charges for $4.4 million, the Associated Press
reports.
The SEC alleged in its complaint that four of the Company's
principals, namely John Barry, Thomas Daniels, John Irwin and
Mark Miszkiewicz, carried out a fraudulent scheme that involved
misrepresenting and manipulating the procedures for valuing the
hedge fund in 2002.
Under the settlement, the $4.4 million - $2 million in fines and
$2.4 million in restitution and interest - will go to the
defrauded investors. The four principals were barred from for
any hedge fund or mutual fund management Company, but Mr.
Miszkiewicz was given the right to reapply after four years.
The defendants neither admitted to nor denied wrongdoing in the
settlement, but did agree to not violate securities laws in the
future.
Hedge funds use leveraging and complex trading methods -
including short selling and investing in commodities, foreign
currencies or troubled companies' debt - to make profits without
regard to the stock market's performance. The SEC says it has
seen an increase in fraud among the 5,700 or so hedge funds in
the United States, and has brought 40 enforcement cases in the
last five years, able to act only after investors have lost
money, AP reports.
BOEING CO.: Working To Resolve 8 Employment Discrimination Suits
----------------------------------------------------------------
Boeing Co. faces eight employment discrimination matters filed
during the period of June 1998 through June 2004, in which class
certification is sought or has been granted.
Three matters are pending in the federal Court for the Western
District of Washington in Seattle; one case is pending in the
federal Court for the Central District of California in Los
Angeles; one case is pending in state Court in California; one
case is pending in the federal Court in St. Louis, Missouri; one
case is pending in the federal Court in Tulsa, Oklahoma; and the
final case is pending in the federal Court in Wichita, Kansas.
The lawsuits seek various forms of relief including front and
back pay, overtime, injunctive relief and punitive damages. The
lawsuits are in varying stages of litigation.
One case in Seattle alleging discrimination based on national
origin (Asian) resulted in a verdict for us following trial.
One case in Seattle alleging discrimination based on gender has
been settled. Three cases - one in Los Angeles, one in
Missouri, and one in Kansas, all alleging gender discrimination
- have resulted in denials of class certification. The case
in Oklahoma, also alleging gender discrimination, resulted in
the granting of class action status, but the Company will seek
to overturn that decision. The other two cases - a second case
alleging discrimination based on gender in California, this one
in state Court, and a case alleging discrimination based on race
(African-American) in federal Court in Seattle - are in earlier
stages of litigation. Class certification in the Seattle case
will be decided in the fourth quarter of 2004.
CALIFORNIA: ACLU Files Privacy Suit V. Ontario Police Department
----------------------------------------------------------------
The American Civil Liberties Union (ACLU) is filing a class
action lawsuit against the Ontario Police Department for
allegedly videotaping police officers in various states of
undress, the KABC reports.
According to a group of Ontario police officers in July 1996
they were being videotaped while undressing in a locker room.
They further stated that a police sergeant had installed the
video surveillance camera in the police building and was only
discovered when they were moving into a new headquarters. The
officers contend that its installation and operation without
their knowledge is not only a violation of their rights, but
also against the law. When the officers found out about the
videotape they had asked for an investigation by the city
manager, which would later reveal that the camera was installed
to see who had stolen a flashlight. About 125 officers can be
clearly identified on the videotape.
The officers decided to file the lawsuit after arriving to the
conclusion that the investigation was basically a cover up and
nobody will be disciplined and the city did not feel anyone's
rights were violated and that the matter was closed.
ACLU Attorney Peter Eliasberg, who filed the suit on behalf of
the officers stated, "Every American has a basic right to
privacy. Not to be not photographed, peeped at, looked at
through a hidden mirror while they are doing something basic and
private as changing in a locker room. This is a grievous
violation of the law by those that should be held to the highest
standards."
The angered officers stated that they basically want
accountability and feel that it had happened at the direction of
the former Chief of Police.
CATHOLIC CHURCH: Iowa Diocese To Settle Sex Abuse Claims For $9M
----------------------------------------------------------------
The Roman Catholic Diocese of Davenport, Iowa will pay $9
million to settle 37 clergy sexual abuse claims, the Associated
Press reports. The settlement was reached after weeks of
negotiations.
The settlement would allow the diocese to avoid bankruptcy, and
averts a potentially embarrassing series of trials over the
church's handling of abuse claims dating back 50 years or so.
The diocese had earlier warned that it might file for
bankruptcy, following the steps taken by dioceses in Tucson,
Arizona, and Portland, Oregon.
"This has been a tragic time for our church," Bishop William
Franklin said, according to AP. "It is my prayer that true
healing may now begin in the Diocese of Davenport."
CINERGY CORPORATION: Settles Breach-Of-Contract Lawsuit in Ohio
---------------------------------------------------------------
Residential natural gas customers in Southwest Ohio will
entitled to payments of at least $100 under settlement of a
protracted class action lawsuit against Cinergy Corp. and a
Newark, Ohio-based energy cooperative, the Cincinnati Enquirer
reports.
About 13,000 residential customers of the former Cinergy
Resources, a non-regulated unit of Cinergy, will share in a $2.5
million settlement of a breach-of-contract suit brought in
February 2001.
The suit was filed against Cinergy and The Energy Cooperative
(TEC), a unit of Licking Rural Electrification Inc., which
acquired Cinergy Resources in January 2000. The suit had stated
that all the customers in the class had one- or two-year
agreements with Cinergy Resources to provide natural gas to
their homes at a fixed price of 32 cents per hundred cubic feet
plus sales tax. But in the wake of extremely cold weather in
late 2000, natural gas prices tripled, and TEC began terminating
customers it acquired from Cinergy.
According to Gregory Berberich, lawyer for Brad Vigran, a
customer in Symmes Township who filed the initial lawsuit, both
Cinergy and TEC were liable since customers relied on
representations that Cinergy, as their home utility, would stand
behind the supply agreements.
Mr. Vigran's initial suit was combined with several others filed
by other consumers into a single-class action in Hamilton County
Common Pleas Court.
Under the settlement members of the class can either opt for the
lump-sum settlement of about $104 or collect the full amount
they paid over their contract price if they can provide
documentation. The settlement funds though wouldn't come out of
Cinergy's rate base but fromb the settlement of a separate
lawsuit between Cinergy and TEC. In addition to the settlement,
TEC agreed to pay for the claims administrator.
The settlement though is still subject to a fairness hearing in
Hamilton County Common Pleas Court slated for either late
December or early January.
DELL COMPUTERS: CA Suit Alleges Fraud in Sale Of Plasma Monitors
----------------------------------------------------------------
On the eve of a November roll out of its new line of Dell 42"
Plasma TVs, attorneys for Dell Computers are quietly dealing
with a class action lawsuit, entitled Crispino v. Dell, Inc.,
(Superior Court of California, County of Riverside - Indio
Branch Case No. INC 043 487), alleging Dell duped consumers
across the nation into believing they were purchasing a "Plasma
TV" when they made purchases from their mail order catalog.
Unlike the new line of Plasma TVs being offered by Dell, these
products did not have the required television tuners or speakers
to function as "televisions" and were described as "monitors" or
"displays" by their manufacturers while Dell advertised them as
"TVs".
"It is outrageous that Dell can enter this market in good faith
having left untold numbers of consumers holding the bag with
deceptively sold products. What Dell has done is the rough
equivalent of advertising the sale of a car and then shipping it
without an engine," said lead attorney Ricardo A. Torres II.
"Dell needs to account for its past behavior before it enters
the homes of U.S. consumers with any more plasma television
products," added co-counsel Nick Pacheco.
Dell's deceptive sales of the following Plasma Displays/Monitors
are the focus of the Class Action lawsuit: 37" Panasonic TH-
37PWD-5UZ/UY; 42" Planar PDP-42BK; and 42" NEC PlasmaSync 42VP4.
The lawsuit seeks damages, restitution and injunctive relief
against future deceptive practices by Dell. The next Court date
in the case is set for November 9, 2004.
EL PASO: Continues To Face Derivative, Securities Fraud Lawsuits
----------------------------------------------------------------
El Paso Corporation continues to face several securities class
action and shareholder derivative lawsuits in New York and Texas
federal Courts, alleging violations of securities laws.
Beginning in July 2002, twelve purported shareholder class
action lawsuits alleging violations of federal securities laws
have been filed against the Company and several of its former
officers. Eleven of these lawsuits are now consolidated in
federal Court in Houston before a single judge. The twelfth
lawsuit, filed in the Southern District of New York, was
dismissed in light of similar claims being asserted in the
consolidated suits in Houston. The lawsuits generally challenge
the accuracy or completeness of press releases and other public
statements made during 2001 and 2002.
Two shareholder derivative actions have also been filed which
generally allege the same claims as those made in the
consolidated shareholder class action lawsuits. One, which
was filed in federal Court in Houston in August 2002, has been
consolidated with the shareholder class actions pending in
Houston, and has been stayed. The second shareholder derivative
lawsuit, filed in Delaware State Court in October 2002,
generally alleges the same claims as those made in the
consolidated shareholder class action lawsuit and also has been
stayed.
Two other shareholder derivative lawsuits are now consolidated
in state Court in Houston. Both generally allege that
manipulation of California gas supply and gas prices exposed the
Company to claims of antitrust conspiracy, FERC penalties and
erosion of share value.
Beginning in February 2004, seventeen purported shareholder
class action lawsuits alleging violations of federal securities
laws were filed against the Company and several individuals in
federal Court in Houston. The lawsuits generally allege that
the Company's reporting of natural gas and oil reserves was
materially false and misleading. Each of these lawsuits
recently has been consolidated into the shareholder lawsuits
pending in Texas. An amended complaint in this consolidated
securities lawsuit was filed on July 2, 2004.
In September 2004, a new derivative lawsuit was filed in federal
Court in Houston against certain of El Paso's current and former
directors and officers. The claims in this new derivative
lawsuit are for the most part the same claims made in the July
2004 consolidated amended complaint in the securities lawsuit.
The one distinction is that the new derivative lawsuit includes
a claim for compensation disgorgement under Sarbanes-Oxley Act
of 2002 against certain of the individually named defendants.
FABI CONSTRUCTION: Depositions Begin in Lawsuit Over Accident
-------------------------------------------------------------
Depositions that will determine who's hurt, how badly are they
hurt, and the future medical needs for pain and suffering have
begun in the class-action lawsuit filed by survivors and
families of workers killed and injured in the October 30, 2003
collapse of the Tropicana parking garage, which killed four and
injured 20, according to Robert Mongeluzzi, a lead attorney for
the plaintiffs, the Cherry Hill Courier Post reports.
Paul D'Amato, another lead attorney for the plaintiffs also
stated that Superior Court Judge William Todd III has begun
directing the victims' attorneys to supply all medical and
hospital records to the defense with the goal of reaching an
early resolution on some of the claims.
Though not mentioning any monetary figure, the suit claims that
the casino hotel, its parent, the general contractor and other
companies failed to adequately reinforce floors to walls with
steel, failed to maintain enough shoring or bracing until the
concrete hardened, and relied on inadequate inspections.
The lawsuit, which mentions 38 plaintiffs, named as defendants
the following: Fabi Construction Inc. of Egg Harbor Township;
Site-Blauvelt Engineers of Mount Laurel; Keating Building Corp.
of Philadelphia; Mitchell Rebar Placement Inc. of Sewell; Aztar
Corp, Phoenix, Arizona; Tropicana Casino and Resort; Liberty
Mutual Insurance Co., Boston; DeSimone Consulting Engineers, New
York City; Wimberly Allison Ton and Goo, architects from Newport
Beach, Calif.; Sykes O'Connor, Salerno and Hazaveh, Atlantic
City architects; the City of Atlantic City and the State of New
Jersey.
GALEZ TOWING: MO A.G. Nixon Launches Consumer Fraud Lawsuit
-----------------------------------------------------------
Missouri Attorney General Jay Nixon filed a lawsuit against a
Wellston towing and storage business, that allegedly charged
outrageous amounts from consumers whose vehicles were towed.
AG Nixon obtained a temporary restraining in St. Louis County
Circuit Court in Missouri against Galez Towing and Recovery, of
Wellston, and owner Bruce Gales to freeze their assets and stop
further violations of Missouri consumer protection laws while
the Attorney General's lawsuit is pending.
Eighty-eight consumers complained to AG Nixon about problems
with Galez Towing; some were hit with bills for towing or
storage of more than $600. In addition, AG Nixon's suit states
Galez Towing sold vehicles it towed without having a valid title
to the vehicles - an illegal practice in Missouri. "This tow
operator has caused unbelievable headaches and hassles for too
many people. He needs to be out of the towing business for
good," AG Nixon said in a press release.
In the lawsuit filed in St. Louis County Circuit Court, AG Nixon
asks the Court to permanently bar Bruce Gales from operating a
towing and storage business; pay restitution to consumers; and
pay a civil penalty of $1,000 per violation of the Missouri
Merchandising Practices Act.
Galez Towing provides towing services to cities in St. Louis
County including Wellston, Moline Acres, Pagedale and Pine Lawn.
Vehicles are towed to the Galez Towing lot in Wellston. While
Galez publishes rates for various services, several consumers
were surprised to discover there is a charge of $100 to simply
retrieve personal items from their towed vehicle.
The suit also says Galez Towing charges far more than other tow
operators in the area and customers do not receive an itemized
or detailed receipt of the towing and storage charges.
In addition to barring Gales from disposing of any property
without prior authorization from the Court, the temporary
restraining order issued by Judge Bernhardt Drumm Jr. also
prohibits the defendants from:
(1) Perpetrating unlawful and unfair acts and practices;
(2) Charging towing and storage fees in excess of those
charged by other tow companies in the St. Louis area or
charging consumers for storage exceeding the actual
numbers of hours the vehicle is stored;
(3) Selling vehicles to Missouri consumers without a valid
title to the sale vehicle
A hearing on Nixon's request for preliminary and permanent
injunctions is scheduled for November 9, 2004 at 1:30 p.m.
GERMANY: DSW Urges Investors To Join U.S. Securities Fraud Suits
----------------------------------------------------------------
German investors should join U.S. class action suits related to
accounting scandals such as WorldCom Inc. and Enron Corp.,
according to DSW, Germany's largest shareholder group, Bloomberg
reports.
At a press conference in Dusseldorf, Germany, DSW head Ulrich
Hocker stated that investors have until March 4 to join
Citigroup Inc.'s $2.65 billion settlement of the bank's WorldCom
claims, since according to him, the number of German investors
eligible to join could be more than 250,000. He also reiterates,
"Everyone who doesn't join gives away money. The only financial
risks involved are the stamps for a letter to the U.S."
Mr. Hocker also pointed out that though Germany lacks the
legislation to enforce comparable damages awards in financial
fiascos at companies such as EM.TV & Merchandising AG, Courts in
the U.S. in some cases allow international investors to join the
suits.
DSW points out that it would be very beneficial for German
investors to join, since Citigroup's settlement will be
distributed to shareholders who bought the shares between April
1999 and June 2002 and may compensate the damage by as much as
50 percent. They also pointed out that in the U.S., there are
currently about 8,000 class-action lawsuits pending, including
2,800 shareholder lawsuits involving German companies such as
DaimlerChrysler AG and Infineon Technologies AG.
MAYTAG CORPORATION: Settles Consumer Suit Over Defective Washers
----------------------------------------------------------------
As part of a class action settlement, Maytag Corporation agreed
to reimburse owners of Neptune front-loading washer for out-of-
pocket repair costs, compensate people who replaced their
Neptune with another washer with up to $500, or issue a voucher
for $200 to $1,000 toward the purchase of a new Neptune Top
Loader, the consumerreports.org reports.
On September 10, 2004, Maytag announced that it had agreed to
settle the suit. A Nov. 22, 2004 Court date has been set for
approval of the settlement by the Circuit Court for the 20th
Judicial Circuit in St. Clair County, Illinois.
Those machines typically sell for $900 to $1,300, according to
Maytag. The voucher would be issued only if Maytag could not fix
an existing problem, and the actual dollar value of the voucher
would be prorated according to the age of the machine. The
agreement covers any Neptune front-loaders bought from April 1,
1997, to Aug. 9, 2004.
Aside from obvious trouble signs--mold, mildew, or odor--the
settlement covers machines that experience "motor control and
circuit board related failure," a condition that prevents the
washer from tumbling or causing it to stop in the middle of the
spin cycle. It also covers problems related to the door latch or
wax motor, a component that determines when the latch locks and
unlocks during a cycle and that stops the door from locking and
the washer from advancing to the spin cycle.
Lynne Dragomier, Maytag's senior director of corporate
communications, said that most of the problematic washers were
manufactured before March 2000. She said that the Company agreed
to compensate owners of machines made through August 2004 "to
put the risk totally behind us as well as not confuse the
consumer." However, she would not provide figures on the number
of Neptune front-loaders sold to date or estimate how many units
might be affected.
For more details, contact Maytag Neptune Claims Administrator by
Mail: P.O. Box 6198, Novato, CA 94948-6198 by Phone:
866-288-0515 or visit their Web site:
http://www.maytagfrontloadsettlement.com
MARSH & MCLENNAN: To Adopt Reforms, Works To Settle NY AG Suit
--------------------------------------------------------------
Beleaguered insurance brokerage Marsh & McLennan Companies, Inc.
is adopting "significant reforms" to its business operations,
after facing a probe by New York Attorney General Eliot Spitzer
on its incentive fees, the Associated Press reports.
On Monday, the brokerage firm announced that it had accepted the
resignation of its chairman and chief executive Jeffrey W.
Greenberg. The step is possibly aimed to facilitate a
settlement of the charges filed by Atty. Gen. Spitzer against
the Company on October 14. AG Spitzer alleged that that the
incentive fees were "kickbacks" and said they were a factor in
businesses being forced to pay more than necessary for property
and casualty insurance. He also accused Marsh & McLennan of
bid-rigging and price fixing and said he wouldn't deal with the
current management, which precipitated Greenberg's ouster.
Mr. Greenberg will be replaced by Michael Cherkasky, 54, who was
recently named head of Marsh Inc., the Company's risk and
insurance services unit. He was formerly chief executive of
Marsh Kroll, the Marsh & McLennan risk consulting subsidiary.
The insurance brokerage seeks to initiate the reforms by January
1. Among the significant measures is the elimination of its
controversial incentive fees. Contingent commissions - also
known as marketing service agreements or placement service
agreements - are fees paid to brokers by insurance companies in
exchange for getting more business.
In its announcement, the firm said the changes in its Marsh Inc.
unit "will ensure that the best interests of its clients are
served and that every transaction is executed in accordance with
the highest professional and ethical standards," according to
AP. "Marsh has permanently eliminated the practice of receiving
any form of contingent compensation from insurers," the
announcement said.
The Company also said it was delaying the announcement of its
third-quarter earnings to November 9. They had been scheduled
for release on Wednesday. No reason was given for the change,
AP reports.
In a conference call with reporters, Mr. Cherkasky said that
Marsh & McLennan also was centralizing its insurance placement
process to give the Company "the ability to get the best deal
for our clients" and to create a system that can be easily
audited. He said he believed that moving quickly to adopt
reforms will "give us competitive advantage" in the marketplace.
He also revealed that the Company has taken action against
several Marsh & McLennan employees linked to the Spitzer probe.
Marsh & McLennan said in its announcement that "all revenue
streams will be 100 percent transparent to clients." It said it
would outline for the clients all fees, retail commissions,
wholesale commissions and premium finance compensation. It
added that the Company "will insist that insurance companies
show commission rates on all policies," AP reports.
After the announcement of Mr. Greenberg's ouster, AG Spitzer
said the board's action "permits Marsh and this office to move
forward toward a civil resolution of our lawsuit." He added
that any criminal action would not be against the Company but
against individuals.
Despite the promised reforms, Moody's Investors Service on
Tuesday downgraded Marsh & McLennan's debt by two notches, to
Baa2 from A3. It said the downgrade reflected concern about
future earnings, the cost of re-engineering its business model
and uncertainty over the pending litigation. Both Standard &
Poor's and Fitch Ratings repeated that they have the Company's
debt on "negative watch" for possible further downgrades, AP
reports.
MARSH & MCLENNAN: AG Denies $500M Settlement Figure For Lawsuit
---------------------------------------------------------------
New York Attorney General Eliot Spitzer the $500 million figure
touted by The Wall Street Journal for the settlement of the
attorney general's charges against Marsh & McLennan Companies,
Inc., the nation's largest insurance broker, the Associated
Press reports.
On October 14, AG Spitzer filed a civil suit against the firm,
alleging it engaged in price fixing and bid rigging, over its
so-called contingent commissions. Insurance companies paid
Marsh & McLennan these commissions in exchange for steering more
business their way. AG Spitzer called the fees "kickbacks." He
asserted that the illegal processes forced businesses to pay
more than necessary for property and casualty insurance.
The Company has shown an eagerness to settle the case, as it
stock price plummeted after the announcement. Earlier this
week, the Company announced that it had accepted the resignation
of chairman and chief executive, Jeffrey W. Greenberg. The
Company on Monday named Michael G. Cherkasky, the former head of
Kroll risk consultancy, to lead the Company. The move has been
seen as a bid to reach settlement of the charges.
Citing unnamed sources, the Wall Street Journal reported
Thursday that $500 million was the minimum for any settlement of
the suit, and that the settlement was about two weeks away. The
total cost of the case including class action suits and other
private litigation recently filed could top well over $1
billion, some of which could be covered by insurance, the
newspaper reported. At least seven federal lawsuits have been
filed as of Wednesday, and a California attorney has filed a
lawsuit in state Court.
However, Atty. General Spitzer denied that a figure had been
set. The price for settling state charges of collusion and bid
rigging by the nation's largest insurance broker could be "far
higher" than $500 million, AG Eliot Spitzer said, according to
AP.
"The number I saw in the paper is not one that I have heard," AG
Spitzer told The Associated Press after speaking to the Federal
Law Enforcement Foundation in Manhattan. "There has been no
discussion about a number. It is very premature."
"We will do the calculation and it could be far higher than the
$500 million," AG Spitzer said. "Anybody who says $500 million
as some kind of cap is going to be miscalculating."
A Marsh spokesman didn't respond to a request for comment
Thursday, AP reports.
MAYTAG CORPORATION: Settles Consumer Suit Over Defective Washers
----------------------------------------------------------------
As part of a class action settlement, Maytag Corporation agreed
to reimburse owners of Neptune front-loading washer for out-of-
pocket repair costs, compensate people who replaced their
Neptune with another washer with up to $500, or issue a voucher
for $200 to $1,000 toward the purchase of a new Neptune Top
Loader, the consumerreports.org reports.
On September 10, 2004, Maytag announced that it had agreed to
settle the suit. A Nov. 22, 2004 Court date has been set for
approval of the settlement by the Circuit Court for the 20th
Judicial Circuit in St. Clair County, Illinois.
Those machines typically sell for $900 to $1,300, according to
Maytag. The voucher would be issued only if Maytag could not fix
an existing problem, and the actual dollar value of the voucher
would be prorated according to the age of the machine. The
agreement covers any Neptune front-loaders bought from April 1,
1997, to Aug. 9, 2004.
Aside from obvious trouble signs--mold, mildew, or odor--the
settlement covers machines that experience "motor control and
circuit board related failure," a condition that prevents the
washer from tumbling or causing it to stop in the middle of the
spin cycle. It also covers problems related to the door latch or
wax motor, a component that determines when the latch locks and
unlocks during a cycle and that stops the door from locking and
the washer from advancing to the spin cycle.
Lynne Dragomier, Maytag's senior director of corporate
communications, said that most of the problematic washers were
manufactured before March 2000. She said that the Company agreed
to compensate owners of machines made through August 2004 "to
put the risk totally behind us as well as not confuse the
consumer." However, she would not provide figures on the number
of Neptune front-loaders sold to date or estimate how many units
might be affected.
For more details, contact Maytag Neptune Claims Administrator by
Mail: P.O. Box 6198, Novato, CA 94948-6198 by Phone:
866-288-0515 or visit their Web site:
http://www.maytagfrontloadsettlement.com
NEW YORK: Dealers File Antitrust Suit V. 17 Auto Parts Makers
-------------------------------------------------------------
A coalition of 160 auto parts retailers and warehouse
distributors have filed an antitrust suit in federal Court in
New York against AutoZone, Advance Auto, Wal-Mart, Sam's Club
and 13 auto parts manufacturers, including Dana, Ford Motor Co,
Standard Motor Products and Cardone.
The coalition (represented by lead plaintiff The Coalition for a
Level Playing Field, L.L.C.) claims that the manufacturers are
selling auto parts (including accessories such as plugs,
filters, motor oils) to AutoZone, Advance Auto, Wal-Mart and
Sam's Club at substantially lower per-unit prices than charged
to the plaintiff warehouse distributors, and that the prices to
the favored purchasers are lower than the manufacturers' direct
costs, in violation of the Robinson-Patman Act as well as the
Sherman Antitrust Act.
Plaintiffs claim that they are unable to compete because of the
price discrimination, and will be driven out of business as ten
thousand others have already by driven out, unless the
discriminatory practices are stopped.
In what may be a first, the plaintiffs claim that the defendant
auto parts manufacturers have failed to comply with the
requirements of the Sarbanes-Oxley corporate governance statute,
which became effective in September, 2003, by failing to report
in their SEC filings that they are selling below cost to their
largest customers, and by not having in place any system to
disclose the existence of such below-cost sales practices.
The retailer plaintiffs are suing the manufacturers for failing
to provide advertising and promotional programs comparable to
the programs they provide to the retailer defendants, as well as
for injunctive relief requiring the manufacturers to create and
use a price list instead of negotiating different terms with the
major-retailer defendants.
The warehouse distributors are suing the competing retailer
defendants for price discrimination, and for similar injunctive
relief.
Also, the plaintiffs are suing AutoZone and various
manufacturers to enjoin sales being made to AutoZone on a "pay
on scan" or "POS" basis, under which AutoZone received a refund
from the participating manufacturer for inventory previously
bought by AutoZone (and not resold), and only pays the
manufacturer for inventory as it is sold to AutoZone's
customers, within 90 days after the AutoZone sale is made (and
"scanned").
The plaintiffs allege POS enables AutoZone to stock slow-moving
parts without any investment, whereas plaintiffs are required by
the same manufacturers to pay for such parts within 30 days, or
be cut off from further purchases. POS will force the plaintiffs
out of business, according to allegations in the complaint.
Also, the plaintiffs are suing Wal-Mart and Sam's Club for
imposing costs of development of Radio Frequency Identification
(RFID) technology and chips upon the defendant auto-parts
manufacturers without the manufacturers offering any programs to
plaintiffs for development of RFID capabilities.
The plaintiffs allege that Wal-Mart has imposed a costs of an
estimated $50 billion on the 21,000 suppliers to Wal-Mart (an
average cost of $2,380,952 per supplier), which amounts to an
unlawful rebate or reduction of the price at which Wal-Mart is
purchasing its goods from such suppliers.
The plaintiffs allege that Wal-Mart, Sam's Club, AutoZone and
Advance Auto are purchasing monopolists (actually,
"monopsonists") with the power to dictate the price at which
they buy auto parts, and that they are exercising such monopsony
power to coerce lower prices when purchasing their inventory
requirements, in violation of Section 2 of the Sherman Antitrust
Act.
Federal Mogul, the leading auto-parts manufacturer for the
aftermarket, was not sued because it is under the protection of
the Bankruptcy Court, but the plaintiffs note in their complaint
that they plan to sue Federal Mogul when it emerges from
bankruptcy in January 2005, if its discriminatory pricing
practices have not changed.
For more details, contact Attorney Carl E. Person by Phone:
212-307-4444 by E-mail: carlpers@ix.netcom.com
PACER INTERNATIONAL: New Trial Set in CA Truck Drivers Lawsuit
--------------------------------------------------------------
A new trial has been set for the remaining issue in the class
action filed against two of Pacer International, Inc.'s
subsidiaries engaged in the local cartage and harbor drayage
operations, namely Interstate Consolidation, Inc., which was
subsequently merged into Pacer Cartage, Inc., and Intermodal
Container Service, Inc.
The suit, filed in July 1997 in the State of California, Los
Angeles Superior Court, Central District, (the Albillo case),
alleging, among other things, breach of fiduciary duty, unfair
business practices, conversion and money had and received in
connection with monies (including insurance premium costs)
allegedly wrongfully deducted from truck drivers' earnings.
The plaintiffs and defendants entered into a Judge Pro Tempore
Submission Agreement in October 1998, pursuant to which they
waived their rights to a jury trial, stipulated to a certified
class, and agreed to a minimum judgment of $250,000 and a
maximum judgment of $1.75 million. In August 2000, the trial
Court ruled in the Company's favor on all issues except one,
namely that in 1998 the Company's subsidiaries failed to issue
to the owner-operators new certificates of insurance disclosing
a change in the Company's subsidiaries' liability insurance
retention amount, and ordered that restitution of $488,978 be
paid for this omission.
Plaintiffs' counsel then appealed all issues except one (the
independent contractor status of the drivers), and the Company's
subsidiaries appealed the insurance retention disclosure issue.
In December 2003, the appellate Court affirmed the trial Court's
decision as to all but one issue, reversed the trial Court's
decision that the owner-operators could be charged for the
workers compensation insurance coverage that they elected to
obtain through the Company's subsidiaries, and remanded back to
the trial Court the question of whether the collection of
workers compensation insurance charges from the owner-operators
violated California's Business and Professions Code and, if so,
to determine an appropriate remedy.
The Company sought review at the California Supreme Court of
this workers compensation issue, and the plaintiffs sought
review only of whether the Company's subsidiaries' providing
insurance for the owner-operators constituted engaging in the
insurance business without a license under California law. In
March 2004, the Supreme Court of California denied both parties'
petitions for appeal, thus ending all further appellate review.
As a result, the only remaining issue is whether the Company's
subsidiaries' collection of workers compensation insurance
charges from the owner-operators violated California's Business
and Professions Code and, if so, what restitution, if any,
should be paid to the owner-operator class. The schedule for
this new trial, which will be litigated in the same trial Court
that heard the original case, has recently been set, and the
Court has asked the parties to submit their evidence in the form
of briefs, affidavits and other documents as opposed to
convening a full evidentiary trial. The Company currently
expects that this briefing will be completed and that the Court
will issue its holding sometime in the first half of 2005, it
stated in a regulatory filing.
The same law firm prosecuting the Albillo case has filed a
separate class action lawsuit in the same jurisdiction on behalf
of a putative class of owner-operators (the "Renteria" class
action) who are purportedly not included in the Albillo class.
The claims in the Renteria case, which is being stayed pending
full and final disposition of the remaining issue in Albillo>,
mirror those in Albillo>, specifically, that the Company's
subsidiaries' providing insurance for their owner-operators
constitutes engaging in the insurance business without a license
in violation of California law and that charging the putative
class of owner-operators in Renteria for workers compensation
insurance that they elected to obtain through the Company's
subsidiaries violated California's Business and Professions
Code.
The Company believes that the final disposition of the insurance
issue in Albillo in the Company's favor precludes the plaintiffs
from re-litigating this issue in Renteria, the Company said in a
disclosure to the Securities and Exchange Commission. Based on
the final ruling in Albillo on the insurance issue and other
information presently available, and in light of the Company's
legal and other defenses on the insurance issue and the workers
compensation related claim, management does not expect these
legal proceedings to have a material adverse impact on the
Company's consolidated financial position, results of operations
or liquidity.
PAYPAL INC.: CA Court Approves Consumer Fraud Lawsuit Settlement
----------------------------------------------------------------
The United States District Court for the Northern District of
California granted conditional final approval to the settlement
of the consolidated class action filed against PayPal, Inc.,
alleging violations of California consumer laws.
In February 2002, PayPal was sued in California state Court (No.
CV-805433) in a purported class action alleging that its
restriction of customer accounts and failure to promptly
unrestrict legitimate accounts violates California state
consumer protection laws and is an unfair business practice and
a breach of PayPal's User Agreement. This action was re-filed
with a different named plaintiff in June 2002 (No. CV-808441),
and a related action was also filed in the U.S. District
Court for the Northern District of California in June 2002 (No.
C-02-2777).
In March 2002, PayPal was sued in the U.S. District Court for
the Northern District of California (No. C-02-1227) in a
purported class action alleging that its restrictions of
customer accounts and failure to promptly unrestrict legitimate
accounts violates federal and state consumer protection and
unfair business practice laws.
The two federal Court actions were consolidated into a single
case, and the state Court action was stayed pending developments
in the federal case. On June 14, 2004, the parties announced
that they had reached a proposed settlement.
Under the terms of the proposed settlement, certain PayPal
account holders will be eligible to receive payment from a
settlement fund in accordance with the settlement's plan of
allocation. The settlement fund, which will be funded by
PayPal, will total $9.25 million, less administrative costs
and any amount awarded to plaintiffs' counsel by the Court. In
the proposed settlement, PayPal does not acknowledge that any of
the allegations in the case are true. The proposed settlement
has been preliminarily approved by the federal Court but remains
subject to final Court approval.
On October 13, 2004, the federal Court gave conditional final
approval to the settlement, subject to modification of the
wording of the release of claims by the class members. PayPal
expects this modification to be completed without any material
impact. If the modification is completed and the proposed
settlement is approved by the federal Court, all claims of the
class in both the federal and state actions will be dismissed.
Any person that timely filed an objection to the settlement
would have the right to appeal the Court's order granting final
approval.
POZEN INC.: Shareholders Launch Stock Fraud Lawsuits in NC Court
----------------------------------------------------------------
Pozen, Inc. and certain of its current and former directors and
officers face five purported securities class action lawsuits
filed in the United States District Court for the Middle
District of North Carolina. The lawsuits are brought on behalf
of a purported class of purchasers of the Company's securities,
and seek unspecified damages.
As is typical in this type of litigation, these securities class
action lawsuits contain substantially similar allegations, and
additional lawsuits containing substantially similar allegations
may be filed in the future, the Company said in a regulatory
filing. These actions have been consolidated for pre-trial
purposes and any other similar federal actions that may be filed
will also be consolidated with these actions for pre-trial
purposes. The lawsuits allege claims based on purportedly
misleading statements concerning the Company's product
candidates MT 100 and MT 300.
Two derivative actions have also been filed against certain of
the Company's current and former directors and officers in the
Superior Court for the County of Orange in the State of North
Carolina. These actions allege violations of state law,
including breaches of fiduciary duties and insider sales,
relating to the same allegedly misleading statements concerning
our product candidates MT 100 and MT 300 that are referenced in
the various purported class action lawsuits.
PRE-PAID LEGAL: Continues To Face Fraud Suits Over Memberships
--------------------------------------------------------------
Pre-paid Legal Services, Inc., certain of its officers,
employees, sales associates and other defendants continue to
face several lawsuits filed in various Alabama and Mississippi
state Courts by current or former members seeking actual and
punitive damages for alleged breach of contract, fraud and
various other claims in connection with the sale of Memberships.
During 2003, there were at one time as many as 30 separate
lawsuits involving approximately 285 plaintiffs in Alabama. As
of October 26, 2004, as a result of dismissals, summary
judgments, or settlements for nominal amounts, the Company was
aware of approximately 17 separate lawsuits involving
approximately 64 plaintiffs that have been filed in multiple
counties in Alabama.
As of October 26, 2004, the Company was aware of 17 separate
lawsuits involving approximately 430 plaintiffs in multiple
counties in Mississippi. Certain of the Mississippi lawsuits
also name the Company's former provider attorney in Mississippi
as a defendant. Proceedings in several of the eleven cases
which name the Company's provider attorney as a defendant had
been stayed pending the Mississippi Supreme Court's ruling on
the Pre-Paid defendants' appeal of a trial Court's granting of a
partial summary judgment that the action is not required to be
submitted to arbitration.
On April 1, 2004, the Mississippi Supreme Court affirmed the
trial Court's partial summary judgment that arbitration should
not be had in one of the cases on appeal. The Company asked the
Mississippi Supreme Court to rehear that issue but that motion
was denied on June 3, 2004 and Pre-Paid sought certiorari on
that issue with the United States Supreme Court on September 1
and 8, 2004. At this time, Pre-Paid is unable to predict
whether or not the Court will grant certiorari review of the
issue.
At least three complaints have been filed by the law firm
representing plaintiffs in eleven of the cases on behalf of
certain of the Mississippi plaintiffs and others with the
Attorney General of Mississippi in March 2002, December 2002 and
August 2003. The Company has responded to the Attorney
General's requests for information with respect to these
complaints, and as of October 26, 2004, the Company was not
aware of any further actions being taken by the Attorney
General.
In Mississippi, the Company has filed lawsuits in the United
States District Court for the Southern and Northern Districts of
Mississippi in which the Company seeks to compel arbitration of
the various Mississippi claims under the Federal Arbitration Act
and the terms of the Company's Membership agreements. One of
the federal Courts has ordered arbitration of a case involving 8
plaintiffs. These cases are all in various stages of
litigation, including trial settings in Alabama in November
2004, and in Mississippi in February 2005, and seek varying
amounts of actual and punitive damages. The first trial in
Mississippi on these cases resulted in a unanimous jury verdict
in the Company's favor, including other named defendants, on all
claims on October 19, 2004. While the amount of Membership fees
paid by the plaintiffs in the Mississippi cases is $500,000 or
less, certain of the cases seek damages of $90 million.
Additional suits of a similar nature have been threatened. The
ultimate outcome of any particular case is not determinable.
On April 19, 2002, counsel in certain of the above-referenced
Alabama suits also filed a similar suit against the Company and
certain of its officers in the District Court of Creek County,
Oklahoma on behalf of Jeff and Jana Weller individually and
doing business as Hi-Tech Auto, making similar allegations
relating to the Company's Memberships and seeking unspecified
damages on behalf of a "nationwide" class. The Pre-Paid
defendants' preliminary motions in this case were denied, and on
June 17, 2003, the Oklahoma Court of Civil Appeals reversed the
trial Court's denial of the Pre-Paid defendants' motion to
compel arbitration, finding that the trial Court erred when it
denied Pre-Paid's motion to compel arbitration pursuant to the
terms of the valid Membership contracts, and remanded the case
to the trial Court for further proceedings consistent with that
opinion.
PRE-PAID LEGAL: OK Court Refuses Certification For Stock Lawsuit
----------------------------------------------------------------
The United States District Court for the Western District of
Oklahoma refused to grant class certification to the lawsuit
filed against Pre-Paid Legal Services, Inc. by by Caroline
Sandler, Robert Schweikert, Sal Corrente, Richard Jarvis and
Vincent Jefferson. The suit also names certain of the Company's
executive officers as defendants.
This action is a putative class action seeking unspecified
damages filed on behalf of all sales associates of the Company
and alleges that the marketing plan offered by the Company
constitutes a security under the Securities Act of 1933 and
seeks remedies for failure to register the marketing plan as a
security and for violations of the anti-fraud provisions of the
Securities Act of 1933 and the Securities Exchange Act of 1934
in connection with representations alleged to have been made in
connection with the marketing plan.
The complaint also alleges violations of the Oklahoma Securities
Act, the Oklahoma Business Opportunities Sales Act, breach of
contract, breach of duty of good faith and fair dealing and
unjust enrichment and violation of the Oklahoma Consumer
Protection Act and negligent supervision. This case is subject
to the Private Litigation Securities Reform Act.
Pursuant to the Act, the Court has approved the named plaintiffs
and counsel and an amended complaint was filed in August 2002.
The Pre-Paid defendants filed motions to dismiss the complaint
and to strike the class action allegations on September 19,
2002, and discovery in the action was stayed pending a ruling on
the motion to dismiss.
On July 24, 2003, the Court granted in part and denied in part
the Pre-Paid defendants' motion to dismiss. The claims asserted
under the Securities Exchange Act of 1934 and the Oklahoma
Securities Act were dismissed without prejudice. The motion was
denied as to the remaining claims. On September 8, 2004, the
Court denied plaintiffs motion for class certification.
Plaintiffs have petitioned the Tenth Circuit Court of Appeals
for permission to appeal the class certification ruling, and
that matter has been fully briefed.
PRE-PAID LEGAL: OK Court Hears Summary Judgment Motion in Suit
--------------------------------------------------------------
The District Court of Canadian County, Oklahoma has taken Pre-
Paid Legal Services, Inc.'s motion for summary judgment in the
lawsuit filed against it, by Gina Kotwitz, later adding, George
Kotwitz, Rick Coker, Richard Starke, Jeff Turnipseed and Aaron
Bouren, on behalf of all sales associates of the Company.
The amended petition seeks injunctive and declaratory relief,
with such other damages as the Court deems appropriate, for
alleged violations of the Oklahoma Uniform Consumer Credit Code
in connection with the Company's commission advances, and seeks
injunctive and declaratory relief regarding the enforcement of
certain contract provisions with sales associates, including a
request stated in June 2003 for the imposition of a constructive
trust as to earned commissions applied to the reduction of debit
balances and disgorgement of all earned renewal commissions
applied to the reduction of debit balances.
On September 23, 2003 the Court entered an order dismissing the
class action allegations upon the motion of the plaintiffs. The
order provides that the action will proceed only on an
individual basis, and that the hearing on plaintiffs' motion for
class certification previously set for February 2004 was
cancelled. Oral argument on the Company's motion for summary
judgment was held on July 2, 2004 and the Court has taken the
motion under advisement.
RAZMATAZ LLC: MI Court Approves Consumer Fraud Suit Settlement
--------------------------------------------------------------
The Macomb Circuit Court in Michigan has approved a settlement
against Razmataz, LLC, of Sterling Heights, Attorney General
Mike Cox announced in a statement. Last year, AG Cox brought
legal action under the Michigan Consumer Protection Act alleging
that Razmataz's email ads for colorized "Operation Freedom"
coins were deceptive.
The consent judgment provides for restitution to aggrieved
consumers, a payment to the United Services Organization (USO)
for the benefit of troops who have seen active duty in Iraq, and
a penalty of $50,000 if the Company does not comply with the
terms of the agreement.
"As Attorney General, I take seriously my obligation to protect
consumers," AG Cox said. "I am glad we were able to reach a
settlement that will avoid further litigation and provide
complete restitution to consumers. But if Razmataz doesn't live
up to its word, we will be back in Court to demand compliance
and stiff penalties."
AG Cox argued that the coins, Kennedy half dollars decorated
with patriotic images to commemorate the military operation in
Iraq, were misrepresented as an official product of the U.S.
Mint. AG Cox also asserted that the Company had misled
consumers regarding charitable benefits that U.S. soldiers would
receive as a result of coin purchases.
Razmataz's websites claimed the Company would match consumers'
purchases 100% by donating coins to members of the U.S. military
in Iraq. However, neither consumers nor any soldier received a
genuine U.S. Mint coin commemorating the war effort, as the U.S.
Mint did not produce any such coin and no relationship existed
between Razmataz and the Department of Defense.
The Company agreed to refund money to consumers and to
contribute $1,000 and 180 "Operation Freedom Coins" to the USO
for the benefit of armed forces personnel who have been on
active duty in Iraq. The Company also agreed to refrain from
false advertising, charging for coins not delivered, and
withholding money from consumers who cancel orders that are not
expeditiously fulfilled. Razmataz will also comply with a recent
federal law regulating unsolicited commercial email, or "spam."
AG Cox, a former Marine, warned consumers not to let their guard
down when confronted with patriotic appeals. "Consumers should
carefully examine all offers appealing to their patriotism,
especially in these times of national concern," AG Cox said.
"We want to do all we can to support our troops, but we must be
careful not to fall for con-artists trying to make a quick buck
by preying on consumers' public-spirited emotions and
sympathies."
Consumers who were unsatisfied with purchases from Razmataz must
file complaints with the Attorney General's office on or before
January 5, 2005, in order to qualify for restitution under the
terms of the settlement. For more details, contact Attorney
General Mike Cox, Consumer Protection Division, by Mail: P.O.
Box 30213, Lansing, MI. 48909 or visit the Attorney General's
Website: http://www.michigan.gov/ag.
UNITED STATES: Anti-Spam Alliance Lodges More Suits V. Spammers
---------------------------------------------------------------
The Anti-Spam Alliance, which is composed of America Online,
Microsoft, EarthLink and Yahoo have each filed new lawsuits in
U.S. Federal Court against senders of unwanted computer messages
otherwise known as spammers, the CNET News.com reports.
The companies filed suits in the states of Washington, Georgia
and California accusing defendants of violating the federal Can-
Spam Act, along with other state and federal laws. The legal
action is the second time the companies have banded together to
take on spammers. In March, they collaborated to file the
industry's first major round of lawsuits accusing spammers of
violating the Can-Spam Law, which went into effect Jan. 1.
According to Randall Boe, executive vice president and general
counsel of AOL, one of their new lawsuits should be taken note
of, since it's the first to target "spim," unwanted messages
that are sent through instant messaging programs or chat rooms.
So far spim has only affected a small number of users, but
experts believe the problem is growing even though it can be
minimized by new enterprise-class IM applications and
enhancements in consumer IM software. Mr. Boe also stated that
the suit is a show of force targeting spimmers and telling them
that the Company is dead serious about shutting down the threat
through legal avenues as well.
AOL and EarthLink also took aim at spammers peddling controlled
substances, including Vicodin and other drugs, which are legally
sold only by prescription. EarthLink's suit also accused several
"John Doe" defendants of sending deceptive e-mails to advertise
low mortgage or loan rates. The Company accused the defendants
of attempting to collect and resell consumers' names and contact
information, which is illegal.
Meanwhile, Microsoft filed three lawsuits alleging that
defendants "spoofed" addresses from all four Internet service
providers and sent millions of e-mails to users of its Hotmail
e-mail service, soliciting herbal growth supplements, mortgage
services and get-rich-quick schemes, all in violation of the
Can-Spam law. "Spoofing" is a method of altering a domain name
or e-mail address so that it appears to have come from a
legitimate source.
Finally, Yahoo filed a lawsuit against East Coast Exotics
Entertainment Group and Epoth, two adult entertainment
companies, for disguising their identities, designing messages
to circumvent spam filters and using sexually explicit subject
lines to send unsolicited, sexually oriented e-mail messages.
UNITED TECHNOLOGIES: Faces Elevator, Escalator Antitrust Suits
--------------------------------------------------------------
United Technologies Corporation faces several class actiosn
filed in various federal district Courts in the United States,
alleging a worldwide agreement among elevator and escalator
manufacturers to fix prices in violation of the Sherman Act.
The suit also names Otis Corporation and other elevator and
escalator manufacturers.
The plaintiffs purport to represent injured parties worldwide
that have allegedly purchased elevators, escalators, or elevator
and escalator repair services from the Company, Otis, and other
defendants. These lawsuits will likely be consolidated through
the Multi-District Litigation procedures available in the United
States. The lawsuits do not specify the amount of damages
claimed, the Company stated in a regulatory filing.
VIRGINIA ELECTRIC: Residents To Get Payout From $20M Settlement
---------------------------------------------------------------
Due to a $20 million settlement of a class-action suit, Virginia
Electric and Power Co. (VEPCO) and Dominion Telecom Inc. are
obligated to pay local residents, who own or owned property
through, which Virginia Power had electric transmission lines in
March 1998 or thereafter - when those lines were used for
commercial telecommunications purposes, the Fairfax Station
Connection reports.
The power lines run through Clifton, Centreville and many other
parts of Fairfax County. A federal Court ruled that VEPCO and
Dominion Telecom used electric-transmission line easements
unlawfully for commercial telecommunications purposes.
"They strung fiber optic cable on the towers for the power
lines," said Clifton's Don Ballard. "This violated the easement
because they made a profit off of it."
The $20 million settlement was reached on July 1 in U.S.
District Court in Virginia, but many residents are only now
receiving notices that money is due them.
Mr. Ballard, however is concerned in the way the settlement had
been implemented, due to the fact that others, who are also due
money from the settlement don't know about it. He further
states, "I got a letter from the Virginia Power Settlement
Center, but some of my neighbors, who also own property under
the power lines haven't been notified."
For more details, contact the Virginia Power Settlement Center
in Dallas, Texas by Phone: 214-753-5044 or 1-877-450-9844 or
visit their Web site: http://www.vepcoclassaction.com
WELLCHOICE INC.: Asks FL Court To Dismiss RICO, Fraud Lawsuit
-------------------------------------------------------------
WellChoice, Inc. asked the United States District Court for the
Southern District of Florida, Miami Division to dismiss the
class action filed against it and other managed care
organizations, styled "Thomas, et al. v. Empire, et al."
The suit was initially filed in the United States District Court
for the Southern District of Florida, Miami Division against the
Blue Cross Blue Shield Association, Empire and substantially all
of the other Blue plans in the country. The named plaintiffs
have brought this case on their own behalf and also purport to
bring it on behalf of similarly situated physicians and seek
damages and injunctive relief to redress their claim of economic
losses which they allege is the result of defendants, on their
own and as part of a common scheme, systemically denying,
delaying and diminishing claim payments.
More specifically, plaintiffs allege that the defendants deny
payment based upon cost or actuarial criteria rather than
medical necessity or coverage, improperly downcode and bundle
claims, refuse to recognize modifiers, intentionally delay
payment by pending otherwise payable claims and through
calculated understaffing, use explanation of benefits, or EOBs,
that fraudulently conceal the true nature of what was processed
and paid and, finally, by use of capitation agreements which
they allege are structured to frustrate a provider's ability to
maximize reimbursement under the capitated agreement.
The plaintiffs allege that the co-conspirators include not only
the named defendants but also other insurance companies, trade
associations and related entities such as Milliman and Robertson
(actuarial firm), McKesson (claims processing software Company),
National Committee for Quality Assurance, Health Insurance
Association of America, the American Association of Health Plans
and the Coalition for Quality Healthcare. In addition to
asserting a claim for declaratory and injunctive relief to
prevent future damages, plaintiffs assert several causes of
action based upon civil Racketeer Influenced and Corrupt
Organizations (RICO) and mail fraud.
The plaintiffs have subsequently amended their complaint, adding
several medical societies as additional plaintiffs a cause of
action based upon an assignment of benefits, adding several
additional defendants including the Company and two of its other
subsidiaries, WellChoice Insurance of New Jersey, Inc. and
Empire HealthChoice HMO, Inc. and dropping their direct RICO
claim, but instead base their RICO claim solely on a conspiracy
theory.
In October 2003, the action was transferred to District Court
Judge Federico Moreno, who also presides over "Shane v. Humana,
et al.," a class-action lawsuit brought against other insurers
and HMOs on behalf of health care providers nationwide. The
Thomas case involves allegations similar to those made in the
Shane action.
In the Shane case, the 11th Circuit Court of Appeals, on
September 1, 2004, upheld class certification as to RICO related
claims but decertified a class as to state law claims. On
October 15, 2004, the Shane defendants filed a petition for a
writ of certiorari, seeking U.S. Supreme Court review of the
11th Circuit decision.
On June 14, 2004, the Court ordered the commencement of
discovery. The defendants filed motions to dismiss on October
4, 2004, which are pending before the Court. Meanwhile, class
certification discovery is to be concluded by December 31, 2004,
by which date plaintiffs are to file their motion for class
certification.
WELLCHOICE INC.: Asks FL Court To Dismiss RICO, Fraud Lawsuit
-------------------------------------------------------------
WellChoice, Inc. asked the United States District Court for the
Southern District of Florida, Miami Division to dismiss the
class action filed against them and other managed care
organizations, styled "Solomon, et al. v. Empire, et al."
In November 2003, this putative class action was commenced
against the Blue Cross Blue Shield Association, Empire and
substantially all other Blue plans in the country. This case is
similar to "Thomas, et al. v. Empire, et al," except that this
case is brought on behalf of certain ancillary providers, such
as podiatrists, psychologists, chiropractors and physical
therapists.
Like the Thomas plaintiffs, the Solomon plaintiffs allege that
the defendants, on their own and as part of a common scheme,
systematically deny, delay and diminish payments to these
providers. The plaintiffs' allegations are similar to those set
forth in Thomas but also include an allegation that defendants
have subjected plaintiffs claims for reimbursement to stricter
scrutiny than claims submitted by medical doctors and doctors of
osteopathy. Plaintiffs are seeking compensatory and monetary
damages and injunctive relief.
The complaint was subsequently amended to add several new
parties, including the Company and two of its other
subsidiaries, WellChoice Insurance of New Jersey, Inc. and
Empire HealthChoice HMO, Inc. By an Order dated January 7,
2004, the case was transferred to Judge Moreno, but not
consolidated with the other pending actions. The Court, on its
own initiative, deemed this action a "tag along" action to the
Shane litigation, and ordered the case closed for statistical
purposes and placed the matter in a civil suspense file.
On June 14, 2004, the Court ordered the commencement of
discovery. The defendants filed motions to dismiss on August
27, 2004, which are pending before the Court. Meanwhile, class
certification discovery is to be concluded by December 31, 2004,
by which date plaintiffs are to file their motion for class
certification.
New Securities Fraud Cases
AON CORPORATION: Milberg Weiss Files Securities Fraud Suit in IL
----------------------------------------------------------------
The law firm of Milberg Weiss Bershad & Schulman LLP initiated a
class action lawsuit on behalf of purchasers of the securities
of Aon Corporation ("Aon" or the "Company") (NYSE: AOC) between
October 31, 2002, and October 22, 2004, inclusive, (the "Class
Period"), seeking to pursue remedies under the Securities
Exchange Act of 1934 (the "Exchange Act").
The action, numbered 2004 C 6962, is pending in the United
States District Court for the Northern District of Illinois,
Eastern Division, against defendants Aon, Patrick G. Ryan (CEO),
Harvey N. Medvin (CFO until April 2003), and David P. Bolger
(CFO since April 2003).
The complaint alleges that defendants' publicly disseminated
Class Period statements were materially false and misleading
because, unbeknownst to investors, Aon engaged in an illegal
scheme engineered by defendants to steer business to favored
insurance companies in exchange for lucrative contingent
commissions. In collusion with preferred insurance carriers, Aon
routinely orchestrated illusory bidding competitions in which it
would designate a winner first and then urge other favored
insurance companies to submit inflated bids with the
understanding that Aon would make similar favorable arrangements
for the "losing" bidders in subsequent competitions. Aon
presented clients with the fictitious high quotes from the
insurance companies to create the appearance of a fair bidding
competition. Thus, the complaint alleges, Aon's Class Period
representations regarding its performance were materially false
and misleading because, among other reasons, they failed to
disclose that a material portion of defendants' revenues were
derived from illegal bid rigging and kickback schemes that was
inherently unsustainable and which subjected the Company to a
serious risk of regulatory penalties, potential criminal and
civil liability, and the loss of goodwill among its clients,
thereby compromising the Company's overall financial condition
and prospects for future business.
On October 14, 2004, New York Attorney General Eliot Spitzer
issued a press release, headlined "Investigation Reveals
Widespread Corruption in Insurance Industry," announcing his
filing of an action, in New York state Court, against insurance
broker Marsh & McLennan Cos. and two executives for rigging bids
and collecting fees from insurers for steering business their
way, pursuant to "contingent commission" agreements. The civil
complaint accuses the defendants of engaging in fraudulent
business practices, antitrust violations, securities fraud,
unjust enrichment and common law fraud. The press release
described wide-ranging fraud and improper conduct within the
insurance industry. In response to this announcement, and
widespread media coverage of the action, which sent shockwaves
throughout the insurance industry, the price of Aon common stock
dropped dramatically, falling 16% in one day, from a closing
price of $27.66 per share on October 13, 2004 to a closing price
of $23.18 per share on October 14. On October 15, 2004, The Wall
Street Journal reported that Aon was a target of Mr. Spitzer's
probe, having been served with a subpoena for documents related
to its contingent commission agreements. Numerous similar
articles, highlighting the corruption alleged in Mr. Spitzer's
complaint, and the fruits of their own investigations, were
published since then, causing Aon's stock price to decline
further. On October 22, 2004, SmartMoney reported that Mr.
Spitzer's office criticized Aon for "dragging its feet" in
complying with the investigation. Also that day, Aon issued a
press release announcing that "it is eliminating its practice of
accepting contingent commissions from underwriters." Aon's stock
closed at $19.35 on October 22, 2004, 30% below its closing
price prior to the breaking of the scandal.
For more details, contact Steven G. Schulman, Peter E. Seidman
or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl.,
New York, NY 10119-0165 by Phone: (800) 320-5081 by E-mail:
sfeerick@milbergweiss.com or visit their Web site:
http://www.milbergweiss.com
APOLLO GROUP: Milberg Weiss Lodges Securities Fraud Suit in AZ
--------------------------------------------------------------
The law firm of Milberg Weiss Bershad & Schulman LLP initiated a
class action lawsuit on behalf of all persons who purchased or
otherwise acquired the securities of Apollo Group, Inc.
("Apollo") (Nasdaq: APOL) between February 27, 2004 and
September 14, 2004, inclusive (the "Class Period"), seeking to
pursue remedies under the Securities Exchange Act of 1934 (the
"Exchange Act"). A copy of the complaint filed in this action is
available from the Court, or can be viewed on Milberg Weiss'
website at: http://www.milbergweiss.com
The action, Case No. CV 04-2334 PHX LOA, is pending in the
United States District Court for the District of Arizona,
against defendants Apollo, Todd S. Nelson (CEO, President, and
Chairman), Kenda B. Gonzales (CFO), and Daniel E. Bachus (Chief
Accounting Officer and Controller). According to the complaint,
defendants violated sections 10(b) and 20(a) of the Exchange
Act, and Rule 10b-5, by issuing a series of material
misrepresentations to the market during the Class Period.
The complaint alleges that Apollo, a provider of adult higher
education through its subsidiaries, The University of Phoenix,
Inc., Institute for Professional Development ("IPD"), The
College for Financial Planning Institutes Corporation, and
Western International University, Inc., reported positive
financial results in publicly disseminated press releases and
filings with the SEC throughout the Class Period. Apollo
attributed these results to strong growth in tuition and other
net revenues primarily from an increase in average full-time
equivalent degree student enrollments. According to the
complaint, a material portion of Apollo's revenues was derived
from federal financial aid programs in which Apollo's students
participated to receive tuition assistance. In connection with
its students' receipt of federal financial aid, the Company was
subject to extensive regulation by governmental agencies and
licensing and accrediting bodies. Most importantly, Title IV of
the Higher Education Act of 1965 (the "HEA"), and certain of the
regulations issued thereunder by the Department of Education
("DOE"), prohibits institutions which participate in the federal
financial aid programs from paying commissions, bonuses, or
other incentives on the basis of the success of student
recruitment, admission, or financial aid awards. The Company
acknowledged in its second-quarter 2004 report that its success
depended upon its compliance with Title IV. On February 27,
2004, the first day of the Class Period, the Company announced
the dismissal of a whistleblower lawsuit that alleged that the
Company improperly compensated its student recruiters, and
suggested that there was no merit to the allegations. In the
Company's second- and third-quarter 2004 reports, Apollo
revealed that the DOE's Office of the Inspector General ("OIG"),
in its audit of IPD and certain client institutions for which
IPD provides management, program development, and student
recruitment services, found evidence of incentive-based
compensation of student recruiters by IPD and the client
institutions. Defendants assured investors that the audit "will
be resolved without any material effect on its financial
position, results of operations, or cash flows, and without any
material change in IPD's business strategy."
On September 7, 2004, the truth began to emerge when the Company
issued a press release stating, without disclosing further
details, that it had resolved the DOE's audit of IPD and The
University of Phoenix. On the same day, after the market closed,
Bloomberg published an article entitled "Apollo Group Settles
Department of Education Audit," which revealed that the Company
had reached a settlement with the DOE for $4.4 million in
connection with allegations that IPD had tied the compensation
of its student recruiters to enrollment figures. Moreover, the
article stated that the Company had agreed to pay $9.8 million
in connection with a regulatory investigation into the same
issues at The University of Phoenix. In reaction to this news,
the price of Apollo common stock dropped $0.65 per share from
its previous day's closing price of $82.72 to close at $82.07 on
September 8, 2004. On September 15, 2004, The Wall Street
Journal published an article reporting the findings of the DOE's
probe into The University of Phoenix, stating that its
supervisors "improperly lavished money on employees for signing
up scores of new students, including those unable to cut it."
Moreover, the Journal reported that the Company promised its
student recruiters who started at salaries of $26,000 an
increase "to as much as $120,000 if they logged enough
enrollments," and rewarded top performers with all-expense paid
trips, gift certificates, and spa packages. According to the
Journal, the DOE investigators also found "'a culture of
duplicity,' with some counselors even forging student signatures
on loan documents." In reaction to this news, the price of
Apollo common stock declined, falling $1.41, or 1.7%, from its
previous trading day's closing price to close at $78.68 on
September 15, 2004.
For more details, contact Steven G. Schulman, Peter E. Seidman
or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl.,
New York, NY 10119-0165 by Phone: (800) 320-5081 by E-mail:
sfeerick@milbergweiss.com or visit their Web site:
http://www.milbergweiss.com
AXIS GLOBAL: Lerach Coughlin Lodges Securities Fraud Suit in NY
---------------------------------------------------------------
The law firm of Lerach Coughlin Stoia Geller Rudman & Robbins
LLP ("Lerach Coughlin") initiated a class action in the United
States District Court for the Southern District of New York on
behalf of purchasers of AXIS Capital Holdings Ltd. ("AXIS")
(NYSE:AXIS) publicly traded securities during the period between
August 6, 2003 and October 14, 2004 (the "Class Period").
The complaint charges AXIS and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. AXIS is a holding Company that through its subsidiaries
provides a range of insurance and reinsurance products on a
world-wide basis.
The complaint alleges that during the Class Period, defendants
disseminated materially false and misleading statements
concerning the Company's results and operations. The true facts,
which were known by each of the defendants but concealed from
the investing public during the Class Period, were as follows:
(1) that the Company was paying illegal and concealed
"contingent commissions" pursuant to illegal
"contingent commission agreements;"
(2) that by concealing these "contingent commissions" and
such "contingent commission agreements," the defendants
violated applicable principles of fiduciary law,
subjecting the Company to enormous fines and penalties
totaling potentially tens, if not hundreds, of millions
of dollars; and
(3) that as a result, the Company's prior reported revenue
and income was grossly overstated.
On October 14, 2004, New York Attorney General Elliot Spitzer
announced that he had charged several of the nation's largest
insurance companies and the largest broker with bid rigging and
pay-offs that he claimed violated fraud and competition laws. On
these revelations, the Company's shares fell to $23.36 from
$25.89 per share, a drop of 10%.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin by Phone: 800-449-4900 or by E-mail:
wsl@lerachlaw.com or visit their Web site:
http://www.lerachlaw.com/cases/axiscapital/
BIOLASE TECHNOLOGY: Abraham Fructer Lodges Securities Suit in CA
----------------------------------------------------------------
The law firm of Abraham, Fruchter & Twersky, LLP initiated a
class action lawsuit on behalf of all persons who purchased the
publicly traded securities of Biolase Technology, Inc.
("Biolase" or the "Company") (NASDAQ: BLTI) during the period
between October 29, 2003 and July 16, 2004 (the "Class Period").
The complaint was filed in the United States District Court for
the Central District of California, Southern Division, and
alleges that Biolase and certain of its officers and directors
violated the Securities Exchange Act of 1934 and the Securities
Act of 1933 by issuing materially false and misleading financial
statements, which caused Biolase's shares to trade at
artificially inflated prices during the Class Period.
Biolase is a medical technology Company that designs,
manufactures and markets proprietary dental laser systems that
allow dentists, oral surgeons and other specialists to perform a
broad range of common dental procedures, including cosmetic
applications. The complaint alleges that the Company recognized
revenue in advance of earning it and failed to record adequate
reserves for returns, causing Biolase's financial results to be
inflated. The complaint further alleges that because of this
inflation, the Company was able to complete a secondary stock
offering of 2.8 million shares in February 2004 at $18.80 per
share.
On July 16, 2004, after the markets closed, Biolase reported
preliminary results for the second quarter of 2004. After
release of this news, the Company's stock price declined to
$8.78 per share on volume of 4.8 million shares. The Company's
Chief Financial Officer resigned within two weeks of this
announcement. As alleged in the complaint, defendants knew that
Biolase was not performing as well as had been represented. The
truth, which was allegedly known to defendants, but concealed
from the investing public during the Class Period, was that:
(1) Waterlase was not gaining market share and demand for
the product was not increasing at the rates represented
by defendants;
(2) Biolase had introduced a lower priced entry level laser
which was cannibalizing sales such that Biolase's
reported earnings were false and misleading;
(3) defendants were concealing this decreasing demand by
granting extended payment terms and price breaks; and
(4) the Company would not achieve the earnings growth
forecasted.
Plaintiff seeks to recover damages on behalf of all purchasers
of Biolase publicly traded securities during the Class Period
(the "Class").
For more details, contact Jack G. Fruchter, Esq. or Lawrence D.
Levit, Esq. of Abraham, Fruchter & Twersky, LLP by Phone:
212-279-5050 or 212-714-2444 or 800-440-8986 by Fax: 212-279-
3655 by E-mail: Jfruchter@FruchterTwersky.com or
Larryl@abrahamlaw.com
LEHMAN BROTHERS: Herman & Mermelstein Lodges FL Securities Suit
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The law firm of Herman & Mermelstein, P.A. initiated a class
action complaint in the United States District Court for the
Southern District of Florida charging Lehman Brothers, Inc.,
Lehman ABS Corp., Bank of America Securities LLC and J.J.B.
Hilliard, W.L. Lyons, Inc., with violations of the Federal
Securities Laws (Securities Act of 1933). The complaint was
filed on behalf of all purchasers (other than Defendants) who
acquired "Corporate Backed Trust Certificates of GE Global
Insurance, Series 2003-19, Class A-1" (the "Certificates"),
between December 11, 2003 and May 17, 2004.
Plaintiffs' claims arise from Defendants' "repackaging" of debt
securities issued by GE Global Insurance Holding Corp. ("GE
Global") for sale to investors. In December, 2003, a trust was
created (the "Trust") to hold $38 million aggregate principal
amount of 7% Notes issued by GE Global (the "GE Global Notes" or
the "Underlying Securities"). The Trust was formed pursuant to
Trust Agreement between Lehman ABS, as Depositor, and U.S. Bank
Trust National Association, as Trustee.
The Underlying Securities were originally issued by GE Global in
February, 1996, and are to mature in February, 2026. The
aggregate principal amount of $38 million of the Underlying
Securities was purchased by Lehman ABS in the secondary market,
and delivered to the Trustee pursuant to the Trust Agreement.
By means of the Trust, the GE Global Notes were repackaged as
new securities, denominated Class A-1 Certificates. The Trust
offered 1,520,000 A-1 Certificates to the public at an interest
rate of 6% and a price of $25 per Certificate. Each Certificate
represented an undivided beneficial interest in the assets of
the Trust.
The Trust also issued in a private offering Class A-2
Certificates, which were interest-only Certificates that did not
entitle holders to distributions of principal from the Trust.
The Trust required that its assets be liquidated in the event
that GE Global were to state in writing that it intends
permanently to cease filing periodic reports required under the
Securities Exchange Act of 1934 (referred to in the Prospectus
as an "SEC Reporting Failure").
Although the Prospectus discloses the contingency of an SEC
Reporting Failure, nowhere does the Prospectus discuss or
mention the nature and extent of the risk of an SEC Reporting
Failure. Other potential adverse events and contingencies, and
the risks associated therewith, are discussed in some detail in
the Prospectus, including those which may from GE Global's
financial difficulties or its failure to make payments on the
Notes.
Shortly after the initial sale of the Certificates to the
public, GE reorganized its businesses, as of January 1, 2004,
around its "markets and customers," reducing the number of its
reporting segments from 5 to 4.
On March 16, 2004, GE Global issued a press release announcing
that it would cease SEC reporting as a separate entity and de-
list the GE Global Notes from the New York Stock Exchange. GE
Global stated the following reasons for this action:
GE Global is taking the action to simplify and streamline its
reporting. The current number of GE Global's debt holders of
record falls below the minimum SEC thresholds required for
ongoing reporting.
Shortly after GE Global's announcement the Trust was liquidated
resulting in a substantial and immediate loss to the investors.
The Complaint alleges that the Prospectus for the Certificates
failed to accurately disclose the risks associated with the
investment.
For more details, contact Herman & Mermelstein, P.A. by Phone:
1-800-686-9921 or by E-mail: herman@hermanlaw.com
STAR GAS: Schiffrin & Barroway Files Securities Fraud Suit in CT
----------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
District of Connecticut on behalf of all securities purchasers
of Star Gas Partners, L.P. (NYSE: SGU) (NYSE: SGH) ("Star" and
the "Partnership") from April 30, 2003 through October 15, 2004
inclusive (the "Class Period").
The complaint charges Star, Irik P. Sevin, and Ami Trauber with
violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More
specifically, the complaint alleges that the Partnership failed
to disclose and misrepresented the following material adverse
facts which were known to defendants or recklessly disregarded
by them:
(1) that the Partnership was unable to pass costs of rising
heating oil prices on to its customers because the
Partnership had earlier acquired heating oil at a much
lower cost;
(2) that as a result of this, defendants were unable to
increase or maintain profit margins in its heating oil
segment;
(3) that the Partnership was experiencing massive customer
attrition; and
(4) that the Partnership's Petro heating oil division's
operational restructuring, undertaken at the beginning
of the Class Period, was a complete and utter failure
because of delays in the centralization of Star's
dispatch system.
On October 18, 2004, Star issued a press release with the
headline: "STAR GAS PARTNERS, L.P. ANNOUNCES SUSPENSION OF
COMMON UNIT DISTRIBUTION." Therein, the Partnership stated that
it had recently advised its Petro heating oil division bank
lenders of a substantial expected decline in earnings for this
division for the fiscal year that ended on September 30, 2004,
and a further projected decline in earnings for the fiscal year
ending September 30, 2005, which would not permit Petro to meet
the borrowing conditions under its working capital line.
According to Star, the source of the problem was a combination
of the inability to pass on the full impact of record heating
oil prices to customers, and the effects of unusually high
customer attrition principally related to its operational
restructuring undertaken in the past 18 months. Petro was
continuing to submit borrowing requests under its working
capital line. Star was in discussions with the lenders to modify
conditions and other terms necessary to assure that Petro would
have sufficient liquidity to operate through the winter. Star
anticipated that because of the requirements of Star's current
and potential lenders, it would not be permitted to make any
distributions on its Common Units. Star believed that with the
support of its existing lenders, which cannot yet be assured, it
could manage the extraordinary challenges arising from current
energy prices and other factors. However, without that support,
Star may be forced to seek interim financing on extremely
disadvantageous terms or even to seek to restructure its debts
under the protection of the bankruptcy Courts.
News of this shocked the market. Shares of Star fell $17.28 per
share, or 80 percent, to close at $4.32 per share on unusually
high trading volume on October 18, 2004.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Phone:
1-888-299-7706 or 1-610-667-7706 or by E-mail:
info@sbclasslaw.com
*********
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*********
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Copyright 2004. All rights reserved. ISSN 1525-2272.
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