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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 8, 2004, Vol. 6, No. 221
Headlines
ASSOCIATED ESTATES: Seeks Summary Judgment For OH Consumer Suit
AZTAR CORPORATION: Faces Suits Over October 2003 Garage Collapse
BELLSOUTH CORPORATION: Racial Discrimination Suit Pending in GA
BELLSOUTH CORPORATION: Securities Fraud Lawsuits Pending in GA
BELLSOUTH CORPORATION: Faces Consolidated ERISA Suit in N.D. GA
BELLSOUTH CORPORATION: NY Antitrust Lawsuit Dismissal Appealed
CAESARS ENTERTAINMENT: NV Visitors Sue Over Norovirus Outbreak
CLECO CORPORATION: LA Court To Approve Antitrust Suit Dismissal
CORDELIA LIGHTING: Recalls 1.4T Light Fixtures Due To Burn Risk
DIET SUPPLEMENTS: FDA Issues Warning V. Actra-Rx, Yilishen Drugs
DOWNEY SAVINGS: Parties in CA Wage Lawsuit Agree To Mediation
FEDERATED INVESTORS: Shareholders Launch Mutual Fund Fraud Suits
FINOVA CAPITAL: Shareholders File Suits Over Thaxton Loans in SC
FREMONT INVESTMENT: SEC Brings Settled Action V. Firm, Officers
GEORGIA: King & Spalding Lodges Federal Suit V. Forced Jail Fees
HOUSEHOLD INTERNATIONAL: Settlement Hearing Set November 22,2004
INFORMATION HOLDINGS: Settles DE Thomson Corporation Merger Suit
INTERNATIONAL TRADING: Recalls Luncheon Meat For Underprocessing
KINDER MORGAN: Seeks Arbitration For NM Oil and Gas Leases Suit
KINDER MORGAN: Preliminary Discovery Proceeds in TX Fraud Suit
KINDER MORGAN: Faces Gas Pricing Antitrust Lawsuit in AR Court
KINDER MORGAN: Working To Resolve City of Fallon Injury Lawsuits
KINDER MORGAN: Trial in TX Gas Royalties Suits Set January 2005
LEARN WATERHOUSE: SEC Obtains Injunction in $24.5M Ponzi Scheme
MORGAN STANLEY: Agrees To SEC Issuance Of Cease-And-Desist Order
NEW YORK: Gas Station Owners File Price-Fixing Suit V. Oil Firms
NORTEL NETWORKS: Plaintiffs Lodge Statement Of Claim in NY Court
NORVERGENCE INC.: NC A.G. Cooper Lodges Consumer Fraud Lawsuit
PEMBRIDGE GROUP: SEC Lodges Fraud Charges V. Firm, Founder in MA
PEROT SYSTEMS: Plaintiffs Appeal Energy Antitrust Lawsuit in CA
PEROT SYSTEMS: TX Court Dismisses Consolidated Securities Suit
PETIT BATEAU: Recalls 2.7T Children's Bathrobe Due To Burn Risk
PRESSTEK INC.: Plaintiffs Appeal NH Ruling For Securities Suit
SONIC AUTOMOTIVE: Subsidiaries Oppose Certification For TX Suits
SPECTRASITE BUILDING: Asks NY Court To Dismiss Winstar Lawsuit
ST. PAUL TRAVELERS: Wolf Haldenstein Lodges Suit Over Payments
STILLWATER MINING: MT Court Mulls Dismissal of Securities Suit
TALX CORPORATION: MO Court Approves Securities Suit Settlement
TRIBUNE COMPANY: Circulation Fiasco Triggers IL Shareholder Suit
UNITED STATES: ACLU Presents Arguments For Suit V. No-Fly Lists
VALVOLINE COMPANY: Recalls 2.8M Brake Cleaners Due To Defects
WACHOVIA CORPORATION: Agrees To SEC Injunction, $37Mil Penalty
WHOLE FOODS: Recalls Chicken Products For Listeria Contamination
W.R. GRACE: Employees Lodge Suit To Recover $40M in Lost Profits
New Securities Fraud Cases
AUTOBYTEL INC.: Lasky & Rifkind Lodges Securities Suit in CA
AUTOBYTEL INC.: Schatz & Nobel Files Securities Fraud Suit in CA
AXT INC.: Miller Shea Lodges Securities Fraud Lawsuit in N.D. CA
CONVERIUM HOLDING: Zwerling Schachter Lodges NY Securities Suit
DOBSON COMMUNICATIONS: Lasky & Rifkind Lodges OK Securities Suit
INTELLIGROUP INC.: Goodkind Labaton Lodges Securities Suit in NJ
SOURCECORP INC.: Brian M. Felgoise Lodges Securities Suit in TX
SOURCECORP INC.: Lasky & Rifkind Lodges Securities Suit in TX
*********
ASSOCIATED ESTATES: Seeks Summary Judgment For OH Consumer Suit
---------------------------------------------------------------
Associated Estates Realty Corporation asked the Franklin County,
Ohio Court of Common Pleas to grant summary judgment in its
favor in the class action filed against it, seeking undetermined
damages and injunctive relief, relating to the Company's
Suredeposit program.
This program allows cash short prospective residents to purchase
a bond in lieu of paying a security deposit. The bond serves as
a fund to pay those resident obligations that would otherwise
have been funded by the security deposit.
Plaintiffs allege that the non-refundable premium paid for the
bond is a disguised form of security deposit, which is otherwise
required to be refundable in accordance with Ohio's Landlord-
Tenant Act. Plaintiffs further allege that certain
nonrefundable pet deposits and other nonrefundable charges
required by the Company are similarly security deposits that
must be refundable in accordance with Ohio's Landlord-Tenant
Act.
On January 15, 2004, the Plaintiffs filed a motion for class
certification. The Company subsequently filed a motion for
summary judgment. Both motions are pending before the Court.
AZTAR CORPORATION: Faces Suits Over October 2003 Garage Collapse
----------------------------------------------------------------
Aztar Corporation and its affiliates Adamar of New Jersey, Inc.
and the Tropicana Casino and Resort face several lawsuits over
the accident that occurred on the site of the construction of
the parking-garage component of the expansion of the Atlantic
City Tropicana on October 30, 2003. The accident resulted in a
loss of life and serious injuries, as well as extensive damage
to the facilities under construction.
One suit is pending in the Court of Common Pleas in Philadelphia
County, Pennsylvania. The Plaintiff, Scannicchio's Restaurant,
is located in the vicinity of the garage collapse. The lawsuit
purports to be a class action on behalf of Scannicchio's
Restaurant and all neighboring businesses for damages to
buildings and loss of business. The action seeks compensatory
and punitive damages in unspecified amounts for negligence and
for private and public nuisance. This action was dismissed
without prejudice to the Plaintiff filing in New Jersey.
The Company and the Tropicana Casino and Resort in Atlantic City
were named as Defendants to an action brought by Govathlay
Givens in the Superior Court of New Jersey in Atlantic County.
The action also arises out of the garage collapse.
Between June 15, 2004 and October 11, 2004, thirty-six
additional complaints were filed by other Plaintiffs for
wrongful death for individuals who were killed in the collapse
and for compensatory and punitive damages of unspecified amounts
in connection with personal injuries suffered in the collapse.
Also named as Defendants in one or more of these complaints are
various companies involved with the project, including:
(1) the Company's affiliate Adamar of New Jersey, Inc.;
(2) Keating Building Corporation;
(3) Wimberly, Allison, Tong & Goo;
(4) SOSH Architects;
(5) DeSimone Consulting Engineers;
(6) Mid-State Filigree Systems;
(7) Site-Blauvelt Engineers;
(8) Fabi Construction, Inc.;
(9) Pro Management Group, Inc.;
(10) Liberty Mutual Insurance Co.; and
(11) Mitchell Bar Placement, Inc.
The Court is handling these cases in a coordinated fashion as
the Tropicana Parking Garage Collapse Litigation and has issued
a Case Management Order governing various matters concerning
complaints, answers and cross-claims, as well as discovery and
mediation. Mediation is anticipated to begin in early 2005.
BELLSOUTH CORPORATION: Racial Discrimination Suit Pending in GA
---------------------------------------------------------------
BellSouth Corporation continues to face a racial discrimination
class action filed in the United States District Court for the
Northern District of Alabama, styled "Gladys Jenkins et al. v.
BellSouth Corporation."
Five of the Company's African-American employees filed the suit,
alleging that the Company discriminated against current and
former African-American employees with respect to compensation
and promotions in violation of Title VII of the Civil Rights Act
of 1964 and 42 USC Section 1981.
Plaintiffs purport to bring the claims on behalf of two classes:
a class of all African-American hourly workers employed by
BellSouth at any time since April 29, 1998, and a class of all
African-American salaried workers employed by BellSouth at any
time since April 29, 1998 in management positions at or below
Job Grade 59/Level C. The Plaintiffs are seeking unspecified
amounts of back pay, benefits, punitive damages and attorneys'
fees and costs, as well as injunctive relief.
BELLSOUTH CORPORATION: Securities Fraud Lawsuits Pending in GA
--------------------------------------------------------------
BellSouth Corporation continues to face the consolidated
securities class action filed in the United States District
Court for the Northern District of Georgia, captioned "In re
BellSouth Securities Litigation."
Pursuant to the provisions of the Private Securities Litigation
Reform Act of 1995, the Court has appointed a Lead Plaintiff.
The consolidated suit also names three of the Company's officers
and four outside directors as additional Defendants. The
complaint alleges that during the period November 7, 2000
through February 19, 2003, the Company:
(1) overstated the unbilled receivables balance of its
advertising and publishing subsidiary;
(2) failed to properly implement SAB 101 with regard to its
recognition of advertising and publishing revenues;
(3) improperly billed CLECs to inflate revenues,
(4) failed to take a reserve for refunds that ultimately
came due following litigation over late payment charges
and
(5) failed to properly write down goodwill of its Latin
American operations.
The Plaintiffs are seeking an unspecified amount of damages, as
well as attorneys' fees and costs. At this time, the likely
outcome of the case cannot be predicted, nor can a reasonable
estimate of loss, if any, be made.
In February 2003, a similar complaint was filed in the Superior
Court of Fulton County, Georgia on behalf of participants in
BellSouth's Direct Investment Plan alleging violations of
Section 11 of the Securities Act. Defendants removed this
action to Federal Court pursuant to the provisions of the
Securities Litigation Uniform Standards Act of 1998. On July 3,
2003, the Federal Court issued a ruling that the case should be
remanded to Fulton County Superior Court. The Plaintiffs are
seeking an unspecified amount of damages, as well as attorneys'
fees and costs.
BELLSOUTH CORPORATION: Faces Consolidated ERISA Suit in N.D. GA
---------------------------------------------------------------
Plaintiffs filed a consolidated class action against BellSouth
Corporation, its directors, three of its senior officers and
other individuals in the United States District Court for the
Northern District of Georgia, alleging violations of the
Employee Retirement Income Security Act (ERISA).
The Plaintiffs, who seek to represent a putative class of
participants and beneficiaries of BellSouth's 401(k) plans (the
"Plans"), allege in the Consolidated Complaint that the Company
and the individual Defendants breached their fiduciary duties in
violation of ERISA, by among other things:
(1) failing to provide accurate information to the Plans'
participants and beneficiaries;
(2) failing to ensure that the Plans' assets were invested
properly;
(3) failing to monitor the Plans' fiduciaries;
(4) failing to disregard Plan directives that the Defendants
knew or should have known were imprudent and
(5) failing to avoid conflicts of interest by hiring
independent fiduciaries to make investment decisions.
The Plaintiffs are seeking an unspecified amount of damages,
injunctive relief, attorneys' fees and costs. Certain
underlying factual allegations regarding BellSouth's advertising
and publishing subsidiary and its Latin American operation are
substantially similar to the allegations in the putative
securities class action captioned In re BellSouth Securities
Litigation described above.
BELLSOUTH CORPORATION: NY Antitrust Lawsuit Dismissal Appealed
--------------------------------------------------------------
Plaintiffs appealed the dismissal of a consumer class action
filed against BellSouth Corporation and other telecommunications
firms, alleging antitrust violations of Section 1 of the Sherman
Antitrust Act. The suit, captioned "William Twombley, et al v.
Bell Atlantic Corp., et al," is pending in the United States
District Court for the Southern District of New York. The suit
also names as Defendants Verizon, SBC and Qwest.
The complaint alleged that Defendants conspired to restrain
competition by "agreeing not to compete with one another and
otherwise allocating customers and markets to one another." The
Plaintiffs are seeking an unspecified amount of treble damages
and injunctive relief, as well as attorneys' fees and expenses.
In October 2003, the District Court dismissed the complaint for
failure to state a claim and the case is now on appeal.
CAESARS ENTERTAINMENT: NV Visitors Sue Over Norovirus Outbreak
--------------------------------------------------------------
More than two-dozen Las Vegas visitors are suing Caesars
Entertainment because they claim that no one warned them in
October about the hotel's norovirus outbreak, the KVBC, NV
reports.
Norovirus causes gastroenteritis and other flu-like symptoms and
usually lasts about 36 hours. Hotel officials say there's more
than two dozen signs hanging up to warn guests about the
outbreak, but one man who checked into the Flamingo just
recently claims that in a big, busy casino, the signs are easy
to miss. Officials further point out that in addition to the
signs informing guests about the norovirus, there are notes in
each of the 3500 rooms.
A Seattle-based law firm is now representing Martin McCurdy and
two dozen others in a class action lawsuit against Caesers
Entertainment. "We had no idea. There was nothing posted in the
lobby that we could see. The hotel really needs to inform their
guests so the guests have an opportunity to leave the hotel,"
according to the Plaintiffs. Hotel officials responded to these
comments by saying that they did inform them and that they
continue to do so. Those suing say they wanted a verbal warning.
If they were told when they first walked in, they would have
immediately walked out.
"It was pretty awful. It was pretty much two to two and a half
days of being really sick," added Mr. McCurdey.
To date, 1,252 employees and guests of the Flamingo reported
having norovirus symptoms, the majority of them sick during the
third week of October.
CLECO CORPORATION: LA Court To Approve Antitrust Suit Dismissal
---------------------------------------------------------------
The 27th Judicial District Court, Parish of St. Landry, State of
Louisiana will hear the motion to approve the dismissal of a
petition filed by several Cleco Power customers against Cleco
Corporation and:
(1) Cleco Power,
(2) Midstream,
(3) Marketing & Trading,
(4) Evangeline,
(5) Acadia, and
(6) Westar
The Plaintiffs seek class action status on behalf of all Cleco
Power's retail customers, and their petition centers around
Cleco's trading activities first disclosed by Cleco in November
2002. The Plaintiffs allege, among other things, that the
Defendants' conduct was in violation of Louisiana antitrust law.
On July 6, 2004, Cleco Corporation announced that it had reached
a preliminary settlement regarding these issues, as well as the
issues raised in the pending fuel audit by the Louisiana Public
Service Commission (LPSC). On July 14, 2004, Cleco, the LPSC
Staff and these Plaintiffs entered into a settlement in
connection with the LPSC settlement of the fuel audit and
related trading issues. On July 21, 2004, the LPSC issued an
order approving the settlement.
To become effective, the settlement and dismissal still need
approval by the Court. A hearing to have the Court approve the
dismissal has been set for November 15, 2004.
CORDELIA LIGHTING: Recalls 1.4T Light Fixtures Due To Burn Risk
---------------------------------------------------------------
Cordelia Lighting, of Rancho Dominguez, California and the Expo
Design Center, a division of The Home Depot, of Atlanta, Georgia
is cooperating with the United States Consumer Product Safety
Commission by voluntarily recalling about 1,400 Hampton Bayr
halogen light fixtures.
The decorative metal rings on the ends of the lamp fixtures can
detach. Consumers could suffer minor burns if they touch the hot
rings. Five reports of incidents involving in-store displays
have been reported by store associates. No injuries have been
reported.
The recall involves the Hampton Bayr three-head, flush-mount,
halogen light fixture with silver metal rings on the lamp
fixtures. It is 15.75-inches wide by 6 inches high. The lights
have frosted glass shades. The position of the three lamps on
the fixture can be adjusted by turning and bending the lamp
heads. A clear label on the fixture reads "MADE IN CHINA," and
"E91785."
Manufactured in China, the light fixtures were sold at all Expo
Design Center stores from February 2004 to August 2004 for about
$40.
Customers should stop using the light fixtures and return them
to the nearest Expo Design Center store for a refund. For more
details, contact Home Depot toll-free at (800) 553-3199 between
9 a.m. and 5 p.m. ET Monday through Friday or contact: Jean
Osta, Public Relations, The Home Depot, at (770) 384-3407.
DIET SUPPLEMENTS: FDA Issues Warning V. Actra-Rx, Yilishen Drugs
----------------------------------------------------------------
The Food and Drug Administration warns consumers not to purchase
or to consume Actra-Rx or Yilishen, two products promoted and
offered for sale on Web sites as "dietary supplements" for
treating erectile dysfunction and enhancing sexual performance
for men. These products in fact contain an active prescription
drug ingredient. FDA has also issued an Import Alert instructing
FDA field personnel to stop the importation of "Actra-Rx" and
"Yilishen."
A research letter published in the Journal of the American
Medical Association described the results of a chemical analysis
of Actra-Rx, finding that each capsule analyzed contained
prescription-strength quantities of sildenafil. Sildenafil is
the active drug ingredient in Viagra, a Pfizer prescription drug
product approved in the United States for the treatment of
erectile dysfunction. FDA conducted its own tests of Actra-Rx
and found that the product contained prescription-strength
sildenafil.
An interaction between sildenafil and certain prescription drugs
containing nitrates (such as nitroglycerin) or nitrates found in
illicit substances (such as amyl nitrate) may cause a
significant lowering of blood pressure to an unsafe level.
Consumers with diabetes, high blood pressure, high cholesterol,
or heart disease often take nitrates.
Because erectile dysfunction can be a common problem in
individuals with these conditions, these consumers may take
Actra-Rx or Yilishen and risk experiencing serious adverse
effects. Anyone experiencing erectile dysfunction should seek
guidance from their health care provider before purchasing a
product to treat that condition.
Consumers who have taken Actra-Rx or Yilishen should stop taking
it and consult with their health care providers regarding
erectile dysfunction treatment. Consumers who are seeking
treatment for erectile dysfunction should not take Actra-Rx or
Yilishen as either can be dangerous to their health and even
life-threatening.
For more details contact the Food and Drug Administration -
Media Inquiries: 301-827-6242 or Consumer Inquiries:
888-INFO-FDA
DOWNEY SAVINGS: Parties in CA Wage Lawsuit Agree To Mediation
-------------------------------------------------------------
Parties in the class action filed against Downey Savings and
Loan Association in the Los Angeles Superior Court in California
agreed to participate in mediation in early 2005.
On July 23, 2004, two former in-store banking employees brought
an action against the Bank, styled "Michelle Cox and Mary Ann
Tierra et al. v. Downey Savings and Loan Association, Case No.
BC318964." The complaint seeks unspecified damages for alleged
unpaid overtime wages, inadequate meal and rest breaks, and
other unlawful business practices and related claims.
The Plaintiffs also seek class action status to represent all
other current and former California employees who held the
position of branch manager or assistant manager at the in-store
branches who were treated as exempt and not paid overtime
between July 23, 2000 and November 2002 and allegedly received
inadequate meal/rest periods since October 1, 2000.
With the Court's approval, the parties have reached an informal
agreement to participate in mediation in early 2005 and to stay
the lawsuit, including discovery, until the completion of the
mediation.
FEDERATED INVESTORS: Shareholders Launch Mutual Fund Fraud Suits
----------------------------------------------------------------
Federated Investors, Inc. faces several class action and
shareholder derivative lawsuits filed on behalf of certain
alleged shareholders in various Federated-sponsored mutual
funds.
During the period October 2003 through September 2004, the
Company was named as a Defendant in 21 class action or
derivative lawsuits. Fourteen of these actions have been
transferred to a multi-district litigation (MDL) panel of judges
sitting in the U.S. District Court for the District of Maryland
for consolidated pre-trial proceedings.
On September 29, 2004, two amended consolidated complaints were
filed in these proceedings. The first asserts claims on behalf
of the shareholders of certain Federated mutual funds; the
second asserts derivative claims on behalf of the Federated
mutual funds. Both complaints premise their claims primarily on
allegations that Federated permitted improper trading practices,
including market timing and late trading in concert with certain
institutional traders.
Four additional cases, alleging excessive advisory, Rule 12b-1
and other fees on behalf of certain Federated mutual funds, have
been filed in or transferred to the U.S. District Court for the
District of Western Pennsylvania. One additional case alleging
improper and excessive fees has been filed in the Western
District of Tennessee. Two cases have been dismissed
voluntarily.
All of these lawsuits seek unquantified damages, attorneys
fees and expenses. Federated intends to defend this litigation.
The potential impact of these recent
lawsuits and future potential similar suits is uncertain. It is
possible that an unfavorable determination will cause a material
adverse impact on Federateds financial position, results
of operations or liquidity in the period in which the
effect becomes reasonably estimable.
FINOVA CAPITAL: Shareholders File Suits Over Thaxton Loans in SC
----------------------------------------------------------------
FINOVA Capital Corporation faces five lawsuits that relate to
its loan to The Thaxton Group Inc. and several related entities
(collectively the "Thaxton Entities").
Under its loan agreement, FINOVA has a senior secured loan to
the Thaxton Entities of approximately $108 million at December
31, 2003. The Thaxton Entities were declared in default under
their loan agreement with FINOVA after they advised FINOVA that
they would have to restate earnings for the first two fiscal
quarters of 2003, and had suspended payments on their
subordinated notes. As a result of the default, FINOVA
exercised its rights under the loan agreement, and accelerated
the indebtedness. The Thaxton Entities then filed a petition
for bankruptcy protection under chapter 11 of the federal
bankruptcy code in the United States Bankruptcy Court for the
District of Delaware on October 17, 2003, listing assets of
approximately $206 million and debts of $242 million.
The first lawsuit, a complaint captioned "Earle B. Gregory, et
al, v. FINOVA Capital Corporation, James T. Garrett, et al.,"
was filed in the Court of Common Pleas of Lancaster County,
South Carolina, case no. 2003-CP-29-967, and was served on
FINOVA on October 17, 2003. An amended complaint was served on
November 5, 2003, prior to the deadline for FINOVA to answer,
plead, or otherwise respond to the original complaint.
The Gregory action was properly removed to the United States
District Court for the District of South Carolina on November
17, 2003, pursuant to 28 U.S.C. 1334 and 1452. The Plaintiffs
filed a motion to remand the case to state Court, but the U.S.
District Court denied this motion in an order dated December 18,
2003.
The second Thaxton-related complaint, captioned "Tom Moore, Anna
Nunnery, et al., v. FINOVA Capital Corporation, Moore & Van
Allen PLLC, and Cherry, Bekaert & Holland LLP, case No. 8:03-
372413," was filed in the United States District Court for the
District of South Carolina on November 25, and was served on
FINOVA on December 2, 2003.
The third complaint, captioned "Sam Jones Wood and Kathy Annette
Wood, et al., v. FINOVA Capital Corporation, Moore & Van Allen
PLLC, and Cherry, Bekaert & Holland LLP," was filed in the
Superior Court for Gwinnett County, Georgia, case no. 03-A13343-
B, and was served on FINOVA on December 9, 2003.
The fourth complaint, captioned "Grant Hall and Ruth Ann Hall,
et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC,
and Cherry, Bekaert & Holland LLP, case no. 03CVS20572," was
filed in the Mecklenberg County, North Carolina, Superior Court,
and was also served on FINOVA on December 9, 2003.
The fifth complaint, captioned "Charles Shope, et al., v. FINOVA
Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert
& Holland LLP, case No. C 204022," was filed in the United
States District Court for the Southern District of Ohio, Eastern
Division, and was served on FINOVA on January 13, 2004.
Each of the five Thaxton-related lawsuits are styled as class
actions, purportedly brought on behalf of certain defined
classes of people who had purchased subordinated notes from the
Thaxton Entities. The complaints by the subordinated
noteholders allege claims of fraud, securities fraud, and
various other civil conspiracy and business torts in the sale of
the subordinated notes. Each of the complaints seeks an
unspecified amount of damages, among other remedies. In
addition to FINOVA, the complaints each name as co-Defendants
Thaxton's accountants and attorneys, and in the Gregory case,
several officers of the Thaxton Entities.
FREMONT INVESTMENT: SEC Brings Settled Action V. Firm, Officers
---------------------------------------------------------------
The Securities and Exchange Commission filed settled
administrative proceedings against San Francisco-based mutual
fund adviser Fremont Investment Advisors, Inc. (Fremont) and
former President and CEO Nancy Tengler. The Commission also
brought litigated administrative and cease-and-desist
proceedings against former Vice President of Institutional Sales
Larry Adams.
The Commission found Fremont entered into improper and
undisclosed agreements allowing favored large investors to
engage in rapid in-and-out securities trading known as market
timing and charged Tengler and Adams for their role in Fremont's
misconduct. In addition to the market timing charges, the
Commission charged Fremont for allowing mutual fund trades to be
placed after the 4:00 p.m. market close.
Without admitting or denying the Commission's findings, Fremont
has agreed to pay $4.146 million, including disgorgement of
$2.146 million and a civil penalty of $2 million, to settle the
Commission's charges. The Commission anticipates distributing
the recovered money to investors of the mutual funds affected by
the market timing.
According to the Commission's order, Fremont's mutual fund
prospectus prohibited market timing, and the firm enforced this
policy by employing a "timing cop" to monitor and block
excessive trading. Notwithstanding this policy, Fremont entered
into undisclosed agreements in 2001 and 2002 allowing certain
large investors to engage in market timing in Fremont's Global
and U.S. Micro-Cap Funds. The Commission's order found that one
of these agreements included a requirement that the investor
place a multimillion-dollar long-term investment (or "sticky
asset") in another Fremont fund, one recently established and
co-managed by then-CEO Nancy Tengler. The Commission alleges
that Sales VP Adams crafted the agreement, and finds that
Tengler allowed the arrangement to go forward. The improper
market timing arrangements generated additional fees of at least
$170,000 for Fremont between 2001 and 2002, while allowing
significant growth in the size of the fund founded by Tengler.
The Commission also found that a Fremont employee improperly
authorized a brokerage firm to place mutual fund orders after
the 4:00 p.m. Eastern Time market close, while still receiving
the current day's price. This arrangement conferred an unfair
advantage upon the broker's customers, allowing them the
opportunity to profit from post-market close information and
stale prices at the expense of other Fremont shareholders.
The Order against Fremont finds that Fremont willfully violated
Sections 206(1) and 206(2) of the Investment Advisers Act and
Sections 17(d) and 34(b) of the Investment Company Act and Rules
17d-1 and 22c-1 thereunder. Fremont has agreed to undertake
certain remedial actions and to cease and desist from similar
violations in the future.
The Order against Tengler finds that Tengler willfully violated
Section 206(2) of the Investment Advisers Act and Section 34(b)
of the Investment Company Act and caused Fremont's violation of
Section 17(d) of the Investment Company Act and Rule 17d-1
thereunder. Nancy Tengler has agreed, without admitting or
denying the Commission's findings, to cease and desist from
committing or causing violations of those provisions in the
future. Tengler also has agreed to pay disgorgement of $27,000
and a civil penalty of $100,000, and has consented to an order
suspending her from associating with an investment adviser or
investment Company for 6 months.
Finally, the Commission instituted litigated administrative and
cease-and-desist proceedings against former Vice President of
Institutional Sales Larry Adams, alleging that he negotiated an
improper market timing agreement on behalf of Fremont and
charging him with willfully aiding and abetting and causing
Fremont's violations of the Investment Advisers Act.
GEORGIA: King & Spalding Lodges Federal Suit V. Forced Jail Fees
----------------------------------------------------------------
Attorneys from King & Spalding LLP, a leading international law
firm, and the Southern Center for Human Rights filed a federal
class action lawsuit on behalf of individuals who are being
forced to pay for their "room and board" at the Clinch County
Jail in Homerville, Georgia.
King & Spalding is representing the Plaintiffs pro bono. The
action was filed on November 2, 2004, and the federal Judge
hearing the case has scheduled a preliminary injunction hearing
on last Friday, November 5 at 9:30am.
The Defendants named in the suit are Clinch County, Georgia;
Winston Peterson, Sheriff of Clinch County; and Sissy Suggs,
Deputy Sheriff of Clinch County. Without any legal authority,
Defendants force inmates at the Clinch County Jail to pay $18
per day, resulting in fees of more than $4,000 in some cases.
Prior to being released, inmates are required to sign a contract
agreeing to pay this fee regardless of whether they have been
convicted of a crime or whether they have the ability to pay. If
they do not pay, they may be picked up and incarcerated again.
"It's like a debtors prison. They charge people who have not
been convicted of any crime and are presumed innocent -- and
throw them back in jail if they don't pay. This is simply an
abuse of authority and something that needs to be stopped," said
Courtland Reichman, the King & Spalding partner leading the
firm's representation of the Plaintiffs. "By bringing this
lawsuit, we hope to help the victims of this unlawful practice -
- many of whom cannot afford the fees -- recoup the money they
were wrongly forced to pay."
One of the Plaintiffs, Willie Williams, was in the Clinch County
Jail for nine months. Despite having posted bond and being free
to leave under the law, Mr. Williams was not allowed to leave
until he signed a promissory note agreeing to pay the jail
$4,608 and had his mother show up with an initial payment of
$100 in cash. Mr. Williams, who has held a job as a forklift
operator for the past 10 years, currently brings home $75 per
week after paying his child support obligations. Yet he is
expected to pay $20 per week towards his jail bill. To date, Mr.
Williams has not been convicted of any crime.
The other Plaintiff, Mickle Jackson, spent three months in the
jail. He was charged $1,415 for his stay there. Mr. Jackson
lives on a fixed income of $562 per month in Supplemental
Security Income. His mother, also on SSI, has paid hundreds of
dollars towards her son's jail bill. Mr. Jackson, like Mr.
Williams, has not been convicted of any crime.
The experiences of Mr. Williams and Mr. Jackson are not isolated
instances. It is the jail's policy and practice to charge
inmates -- including pre-trial detainees -- for the cost of room
and board.
"Many of the people affected by this practice have not been
convicted of any crime; most are living well below the poverty
level," states Sarah Geraghty, attorney at the Southern Center
for Human Rights who is representing the Plaintiffs. "What the
Sheriff is doing is illegal. He has no authority to charge this
fee, and he certainly cannot throw people in jail for failing to
pay it."
For more details, contact the Southern Center for Human Rights
by Phone: 404/688-1202 or visit their Web site:
http://www.schr.org
HOUSEHOLD INTERNATIONAL: Settlement Hearing Set November 22,2004
----------------------------------------------------------------
The United States District Court for the Northern District of
Illinois - Eastern Division will hold a fairness hearing for the
proposed $46.5 million settlement of the class action, In re:
Household International ERISA Litigation (No. 02C7921, U.S.
District Court, N.D. Illinois). The suit was originally filed on
behalf of participants in the Company's Tax Reduction Investment
Plan and whose individual accounts the Plan purchased and/or
held interests in the Company's Common Stock Fund at any time
during the period July 23, 2001 through and including March 28,
2003, or the beneficiary of such a participant or former
participant.
The Court will hold a fairness hearing on November 22, 2004 in
the United States District Court for the Northern District of
Illinois - Eastern Division Courthouse.
For more details, visit http://www.kellersettlements.comor
http://www.ssbny.com
INFORMATION HOLDINGS: Settles DE Thomson Corporation Merger Suit
----------------------------------------------------------------
Information Holdings, Inc. reached a settlement for the
purported class action filed against it, its directors and The
Thomson Corporation in the Court of Chancery of the State of
Delaware in and for New Castle County, styled "Myszkowski v.
Information Holdings Inc. et al., C.A. No. 537-N."
The complaint alleges, among other things, that:
(1) approval of the merger with Thomson by the Company's
directors amounted to a breach of fiduciary duty,
(2) the $28.00 cash consideration per share to be received
by the Company's stockholders in the merger does not
represent the true value of IHI and
(3) there were relationships among Thomson, Warburg Pincus
LLC, a New York limited liability Company that manages
Warburg, Pincus Ventures L.P., and some of the
Company's directors that created conflicts of interest
preventing these directors from acting in the best
interest of the Company's stockholders.
The complaint asks for an injunction against the merger and
damages as well as awarding the Plaintiffs the costs and
disbursements of this Class Action, including attorneys' and
Experts' fees.
The Plaintiff and the Defendants have negotiated a settlement to
dismiss the action with prejudice, subject to:
(i) the drafting and execution of the settlement documents
and the other agreements necessary to effectuate the
terms of the proposed settlement;
(ii) the completion by the Plaintiff and his counsel of
appropriate confirmatory discovery in the action
sufficient to satisfy the Plaintiff's counsel that the
proposed settlement is fair and reasonable;
(iii) final Court approval of the settlement and dismissal of
the action with prejudice and without awarding costs to
any party, except as agreed by the parties; and
(iv) consummation of the merger, provided, that this
condition shall be deemed to have been satisfied if the
merger is not consummated due to the merger not
receiving the requisite vote of holders of outstanding
shares of IHI common stock or circumstances that give
rise to the right of Thomson to receive from IHI a
termination fee pursuant to the terms of the Merger
Agreement.
As part of the memorandum of understanding, which is subject to
certain conditions, setting forth the terms of a negotiated
settlement, the Company agreed to provide the additional
disclosure set forth in the proxy statement supplement filed
with the SEC on August 6, 2004, and to pay fees and expenses of
the Plaintiff's counsel in the amount of $280,000.
Additionally, Thomson agreed to reduce from $20 million to $18.5
million the termination fee to which it is entitled if the
Merger Agreement is terminated under certain circumstances as
described in the Merger Agreement and the Proxy Statement.
INTERNATIONAL TRADING: Recalls Luncheon Meat For Underprocessing
----------------------------------------------------------------
International Trading Co., a Houston, Texas, firm, is
voluntarily recalling approximately 10,910 pounds of turkey
luncheon meat due to possible underprocessing, the U.S.
Department of Agriculture's Food Safety and Inspection Service
(FSIS) announced.
The product being recalled is 12 oz. cans of "PICNIC Turkey
Luncheon Meat." Each can bears the message "Best if Used by Date
062407" on the top, and the codes "40434 03 EST P7220A" and
"1764 PTW" on the bottom. The meat was produced on June 24,
2004, and distributed to wholesale and retail establishments in
Puerto Rico.
The problem was discovered by a wholesale customer who notified
the Company. FSIS has received no reports of illnesses from
consumption of the product.
Media with questions about the recall may contact Director of
Media Relations Gary Mickelson at 479-290-6111. Consumers with
questions can call Consumer Representative Maricela De La Torre
at 1-866-658-0019.
Consumers with food safety questions can phone the toll-free
USDA Meat and Poultry Hotline at 1-800-535-4555. The hotline is
available in English and Spanish and can be reached from l0 a.m.
to 4 p.m. (Eastern Time) Monday through Friday. Recorded food
safety messages are available 24 hours a day.
KINDER MORGAN: Seeks Arbitration For NM Oil and Gas Leases Suit
---------------------------------------------------------------
Kinder Morgan CO2 Company, L.P. moved to compel arbitration in
the class action filed against it in the 8th Judicial District
Court, Union County, New Mexico, styled "J. Casper Heimann,
Pecos Slope Royalty Trust and Rio Petro LTD, individually and on
behalf of all other private royalty and overriding royalty
owners in the Bravo Dome Carbon Dioxide Unit, New Mexico
similarly situated v. Kinder Morgan CO2 Company, L.P., No. 04-
26-CL."
The suit alleges the Company has failed to pay the full royalty
and overriding royalty on the true and proper settlement value
of compressed carbon dioxide produced from the Bravo Dome Unit.
The complaint purports to assert claims for violation of the
Unfair Practices Act, Constructive Fraud, Breach of Contract
and of the Covenant of Good Faith and Fair Dealing, Breach of
the Implied Covenant to Market, and claims for an Accounting,
Unjust Enrichment and Injunctive Relief.
The purported class is alleged to be comprised of current and
former owners, during the period January 2000 to the present,
who have private property Royalty Interests burdening the oil
and gas leases held by the Defendant, excluding the Commissioner
of Public Lands, the United States of America, and those private
Royalty Interests that are not unitized as part of the Bravo
Dome Unit.
The Plaintiffs allege that they were members of a class
previously certified as a class action by the United States
District Court for the District of New Mexico in the matter
Doris Feerer, et al. v. Amoco Production Company, et al., USDC
N.M. Civ. No. 95-0012 (the "Feerer Class Action"). Plaintiffs
allege that Defendant's method of paying Royalty Interests
is contrary to the methodology established in the previous
settlement of the Feerer Class Action. The Company moved to
compe arbitration of this matter pursuant to the arbitration
provisions contained in the Feerer Class Action Settlement
Agreement, which motion is currently pending.
KINDER MORGAN: Preliminary Discovery Proceeds in TX Fraud Suit
--------------------------------------------------------------
Preliminary discovery is proceeding in the class action filed
against Kinder Morgan Texas Pipeline, L.P. and Kinder Morgan
Energy Partners, L.P. in the District Court for Wharton County,
Texas, styled "Maher et ux. v. Centerpoint Energy, Inc. d/b/a
Reliant Energy, Incorporated, Reliant Energy Resources Corp.,
Entex Gas Marketing Company, Kinder Morgan Texas Pipeline, L.P.,
Kinder Morgan Energy Partners, L.P., Houston Pipeline Company,
L.P. and AEP Gas Marketing, L.L.C., No. 30875."
The suit was later amended to add as Defendants Kinder Morgan
G.P., Inc., Kinder Morgan Tejas Pipeline GP, Inc., Kinder Morgan
Texas Pipeline GP, Inc., Tejas Gas, LLC and HPL GP, LLC. The
amended complaint purports to bring a class action on behalf of
those Texas residents who purchased natural gas for residential
purposes from the so-called "Reliant Defendants" in Texas at any
time during the period encompassing "at least the last ten
years."
The Complaint alleges that Reliant Energy Resources Corporation,
by and through its affiliates, has artificially inflated the
price charged to residential consumers for natural gas that it
allegedly purchased from the non-Reliant Defendants, including
the above-listed Kinder Morgan entities. The complaint further
alleges that in exchange for Reliant Energy Resources Corp.'s
purchase of natural gas at above market prices, the non-Reliant
Defendants, including the above-listed Kinder Morgan entities,
sell natural gas to Entex Gas Marketing Company at prices
substantially below market, which in turn sells such natural gas
to commercial and industrial consumers and gas marketers at
market price.
The Complaint purports to assert claims for fraud, violations of
the Texas Deceptive Trade Practices Act, and violations of the
Texas Utility Code against some or all of the Defendants, and
civil conspiracy against all of the Defendants, and seeks relief
in the form of, among other things, actual, exemplary and
statutory damages, civil penalties, interest, attorneys' fees
and a constructive trust ab initio on any and all sums which
allegedly represent overcharges by Reliant and Reliant Energy
Resources Corp.
On November 18, 2002, the Kinder Morgan Defendants filed a
Motion to Transfer Venue and, Subject Thereto, Original Answer
to the First Amended Complaint.
KINDER MORGAN: Faces Gas Pricing Antitrust Lawsuit in AR Court
--------------------------------------------------------------
Several Kinder Morgan entities were named as Defendants in a
class action filed in the Circuit Court of Miller County,
Arkansas, styled "Weldon Johnson and Guy Sparks, individually
and as Representative of Others Similarly Situated v.
Centerpoint Energy, Inc. et. al., No. 04-327-2."
The suit includes as Defendants:
(1) Kinder Morgan Texas Pipeline L.P.;
(2) Kinder Morgan Energy Partners, L.P.;
(3) Kinder Morgan G.P., Inc.;
(4) KM Texas Pipeline, L.P.;
(5) Kinder Morgan Texas Pipeline G.P., Inc.;
(6) Kinder Morgan Tejas Pipeline G.P., Inc.;
(7) Kinder Morgan Tejas Pipeline, L.P.;
(8) Gulf Energy Marketing, LLC;
(9) Tejas Gas, LLC; and
(10) Midcon Corporation
The Complaint was filed on behalf of those who purchased natural
gas from the Centerpoint Defendants from October 1, 1994 to the
date of class certification. The Complaint alleges that the
Centerpoint Energy, Inc., by and through its affiliates, has
artificially inflated the price charged to residential consumers
for natural gas that it allegedly purchased from the non-
Centerpoint Defendants, including the above-listed Kinder Morgan
entities.
The Complaint further alleges that in exchange for Centerpoint's
purchase of such natural gas at above market prices, the non-
Centerpoint Defendants, including the above-listed Kinder Morgan
entities, sell natural gas to Centerpoint's non-regulated
affiliates at prices substantially below market, which in turn
sells such natural gas to commercial and industrial consumers
and gas marketers at market price. The Complaint purports to
assert claims for fraud, unlawful enrichment and civil
conspiracy against all of the Defendants, and seeks relief in
the form of actual, exemplary and punitive damages, interest,
and attorneys' fees.
KINDER MORGAN: Working To Resolve City of Fallon Injury Lawsuits
----------------------------------------------------------------
Kinder Morgan Energy Partners L.P. is working for the resolution
or dismissal of several class actions filed against it, over an
alleged leukemia cluster that developed in the City of Fallon,
Nevada.
The suits are:
(1) Marie Snyder, et al v. City of Fallon, United States
Department of the Navy, Exxon Mobil Corporation, Kinder
Morgan Energy Partners, L.P., Speedway Gas Station and
John Does I-X, No. cv-N-02-0251-ECR-RAM, filed in the
United States District Court, District of Nevada
("Snyder");
(2) Frankie Sue Galaz, et al v. United States of America,
City of Fallon, Exxon Mobil Corporation, Kinder Morgan
Energy Partners, L.P., Berry Hinckley, Inc., and John
Does I-X, No. cv-N-02-0630-DWH-RAM, filed in the
United States District Court, District of Nevada
("Galaz I");
(3) Frankie Sue Galaz, et al v. City of Fallon, Exxon Mobil
Corporation, Kinder Morgan Energy Partners, L.P.,
Kinder Morgan G.P., Inc., Kinder Morgan Las Vegas, LLC,
Kinder Morgan Operating Limited Partnership "D", Kinder
Morgan Services LLC, Berry Hinkley and Does I-X, No.
CV03-03613, filed in the Second Judicial District
Court, State of Nevada, County of Washoe ("Galaz II);
(4) Frankie Sue Galaz, et al v. The United States of
America, the City of Fallon, Exxon Mobil Corporation,
Kinder Morgan Energy Partners, L.P., Kinder Morgan
G.P., Inc., Kinder Morgan Las Vegas, LLC, Kinder Morgan
Operating Limited Partnership "D", Kinder Morgan
Services LLC, Berry Hinkley and Does I-X, No.CVN03-
0298-DWH-VPC, filed in the United States District
Court, District of Nevada ("Galaz III)
On July 9, 2002, the Company was served with a purported
Complaint for Class Action in the Snyder case, in which the
Plaintiffs, on behalf of themselves and others similarly
situated, assert that a leukemia cluster has developed in the
City of Fallon, Nevada. The Complaint alleges that the
Plaintiffs have been exposed to unspecified "environmental
carcinogens" at unspecified times in an unspecified manner and
are therefore "suffering a significantly increased fear of
serious disease."
The Plaintiffs seek a certification of a class of all persons in
Nevada who have lived for at least three months of their first
ten years of life in the City of Fallon between the years 1992
and the present who have not been diagnosed with leukemia. The
Complaint asserts causes of action for nuisance and "knowing
concealment, suppression, or omission of material facts" against
all Defendants, and seeks relief in the form of "a Court-
supervised trust fund, paid for by Defendants, jointly and
severally, to finance a medical monitoring program to deliver
services to members of the purported class that include, but are
not limited to, testing, preventative screening and surveillance
for conditions resulting from, or which can potentially result
from exposure to environmental carcinogens," incidental damages,
and attorneys' fees and costs.
The Defendants responded to the Complaint by filing Motions to
Dismiss on the grounds that it fails to state a claim upon which
relief can be granted. On November 7, 2002, the United States
District Court granted the Motion to Dismiss filed by the United
States, and further dismissed all claims against the remaining
Defendants for lack of Federal subject matter jurisdiction.
Plaintiffs filed a Motion for Reconsideration and Leave to
Amend, which was denied by the Court on December 30, 2002.
Plaintiffs filed a Notice of Appeal to the United States Court
of Appeals for the 9th Circuit. On March 15, 2004, the 9th
Circuit affirmed the dismissal of this case.
On December 3, 2002, Plaintiffs filed an additional Complaint
for Class Action in the Galaz I matter asserting the same claims
in the same Court on behalf of the same purported class against
virtually the same Defendants, including the Kinder Morgan
Defendants. On February 10, 2003, the Defendants filed Motions
to Dismiss the Galaz I Complaint on the grounds that it also
fails to state a claim upon which relief can be granted. This
motion to dismiss was granted as to all Defendants on April 3,
2003. Plaintiffs have filed a Notice of Appeal to the United
States Court of Appeals for the 9th Circuit. On November 17,
2003, the 9th Circuit dismissed the appeal, upholding the
District Court's dismissal of the case.
On June 20, 2003, Plaintiffs filed an additional Complaint for
Class Action (the "Galaz II" matter) asserting the same claims
in Nevada State trial Court on behalf of the same purported
class against virtually the same Defendants, including the
Kinder Morgan Defendants (and excluding the United States
Department of the Navy). On September 30, 2003, the Kinder
Morgan Defendants filed a Motion to Dismiss the Galaz II
Complaint along with a Motion for Sanctions.
On April 13, 2004, Plaintiffs' counsel voluntarily stipulated to
a dismissal with prejudice of the entire case in State Court.
The Court has accepted the stipulation and the parties are
awaiting a final order from the Court dismissing the case with
prejudice.
Also on June 20, 2003, the Plaintiffs in the Galaz matters filed
yet another Complaint for Class Action in the United States
District Court for the District of Nevada (the "Galaz III"
matter) asserting the same claims in United States District
Court for the District of Nevada on behalf of the same purported
class against virtually the same Defendants, including the
Kinder Morgan Defendants. The Kinder Morgan Defendants filed a
Motion to Dismiss the Galaz III matter on August 15, 2003. On
October 3, 2003, the Plaintiffs filed a Motion for Withdrawal of
Class Action, which voluntarily drops the class action
allegations from the matter and seeks to have the case proceed
on behalf of the Galaz family only.
On December 5, 2003, the District Court granted the Kinder
Morgan Defendants' Motion to Dismiss, but granted Plaintiffs
leave to file a second Amended Complaint. Plaintiff filed a
Second Amended Complaint on December 13, 2003, and a Third
Amended Complaint on January 5, 2004. The Kinder Morgan
Defendants filed a Motion to Dismiss the Third Amended Complaint
on January 13, 2004. The Motion to Dismiss was granted with
prejudice on April 30, 2004. On May 7, 2004, Plaintiffs filed a
Notice of Appeal in the United States Court of Appeals for the
9th Circuit, which appeal is currently pending.
KINDER MORGAN: Trial in TX Gas Royalties Suits Set January 2005
---------------------------------------------------------------
Trial in the remaining lawsuits filed against Kinder Morgan CO2
Company L.P., Kinder Morgan G.P., Inc., and Cortez
Pipeline Company in the Statutory Probate Court, Denton County,
Texas is set for January 2005. The suits are styled:
(1) Shores, et al. v. Mobil Oil Corp., et al., No. GC-99-
01184 and
(2) First State Bank of Denton, et al. v. Mobil Oil Corp.,
et al., No. 8552-01
These cases involve claims brought on behalf of classes of
overriding royalty interest owners (Shores) and royalty interest
owners (Bank of Denton) for underpayment of royalties on carbon
dioxide produced from the McElmo Dome Unit. The Plaintiffs'
claims include claims for breach of contractual duties and
covenants, breach of agency duties, civil conspiracy, and
declaratory relief. In addition to their claims for actual
damages, Plaintiffs seek an equitable accounting, imposition of
a constructive trust over the Defendants' interests, and
punitive damages.
After the trial Court certified classes in both cases, the Fort
Worth Court of Appeals reversed and vacated the trial Court's
class certification order in Shores because the trial Court
lacked jurisdiction to certify a class. The Court of appeals
also ruled that most of the named Plaintiffs in Shores could not
establish proper venue in Denton County and dismissed those
parties' claims.
The trial Court's class certification order in Bank of Denton is
currently on appeal to the Fort Worth Court of Appeals, but the
Plaintiffs have filed a motion with the trial Court to vacate
its class certification order, which was unopposed by the
Defendants. This motion was granted in May 2004. The remaining
claims in the Shores and Bank of Denton cases are currently
scheduled to go to trial in January 2005.
On May 13, 2004, William Armor, one of the former Plaintiffs in
the Shores matter whose claims were dismissed for improper venue
by the Court of Appeals, filed a new case alleging the same
claims against the same Defendants as he had previously asserted
in the Shores case, styled "Armor v. Shell Oil Company, et al,
No. 04-03559 (14th Judicial District, Dallas County Court)."
Defendants filed their answers and special exceptions on June 4,
2004. Trial, if necessary, has been scheduled for July 25,
2005.
LEARN WATERHOUSE: SEC Obtains Injunction in $24.5M Ponzi Scheme
---------------------------------------------------------------
The Securities and Exchange Commission obtained a preliminary
injunction in a multi-million dollar securities fraud scheme
perpetrated by five Defendants: Learn Waterhouse, Inc. (LWI), a
Texas corporation based in Jacksonville, Florida and Tyler,
Texas; Randall T. Treadwell, 46, of Savannah, Georgia; Rick D.
Sluder, 47, of Tyler, Texas; Larry C. Saturday, 57, of Savannah,
Georgia; and Arnulfo M. Acosta, 41, of Edinburg, Texas. The
Defendants have raised at least $24.5 million from the offer and
sale of fictitious "prime bank" instruments. The Honorable
Thomas J. Whelan, United States District Judge for the Southern
District of California, also granted additional relief that the
Commission sought, including orders freezing assets, appointing
a permanent receiver over LWI, and requiring the Defendants to
repatriate assets from abroad.
The Commission's complaint, filed on October 12 in Federal Court
in San Diego, alleges that the Defendants raised at least $24.5
million from 1700 investors nationwide by conducting a
fraudulent prime bank scheme. According to the complaint, LWI
pooled investor funds to engage in "buy/sell" transactions in a
"secret," "invitation only" bank trading program that generated
investor returns ranging from 5% to 50% per month. The
Defendants represented that one such trading program purportedly
earned investors 500% in just 60 days. The Defendants also
represented that an investor's principal was secured by a "pre-
funded, cash-back instrument" issued by a top U.S. bank, which
purportedly restricted LWI's bank trading program to completely
risk-free transactions.
According to the complaint, these representations were false.
The Defendants instead were promoting a fictitious prime bank
trading program and operating a Ponzi scheme. At least $8.2
million, or 46.9%, of the returns paid to investors came from
investor funds. The Defendants also misappropriated at least
$2.5 million in investor funds to support themselves and finance
other businesses. The complaint also alleges that there was no
bank trading program, nor were investor funds secured by a "pre-
funded, cash-back instrument"; rather, the bank trading program
and the extraordinary returns promised by the Defendants were
part of a prime bank investment fraud.
In its lawsuit, the Commission obtained an order freezing each
of the Defendants' assets, an order appointing Thomas Lennon as
a permanent receiver over LWI, an order requiring the Defendants
to repatriate assets from abroad, and a preliminary injunction
prohibiting all the Defendants from future violations of the
securities registration and antifraud provisions - Sections
5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections
10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. In addition to the relief already granted by
the Court, the Commission will seek permanent injunctions,
disgorgement and civil penalties against all Defendants. The
action is titled, SEC v. Learn Waterhouse, Inc.; Randall T.
Treadwell; Rick D. Sluder; Larry C. Saturday; and Arnulfo M.
Acosta, Civil Action No. 04-CV-2037 W (LSP) SDCA (LR-18959)
MORGAN STANLEY: Agrees To SEC Issuance Of Cease-And-Desist Order
----------------------------------------------------------------
The Securities and Exchange Commission issued an Order
Instituting Cease-and-Desist Proceedings, Making Findings, and
Imposing a Cease-and-Desist Order Pursuant to Section 21C of the
Securities Exchange Act of 1934 (the "Order") against Morgan
Stanley. In its Order, the Commission found that Morgan Stanley
violated financial reporting, record-keeping, and internal
controls provisions of the federal securities laws as a result
of its conduct related to its valuation of certain aircraft in
its aircraft leasing business in late 2001, late 2002, and early
2003, as well as certain bonds in its high-yield bond portfolio
in late 2000.
Specifically, regarding its aircraft valuations, Morgan Stanley
undervalued impairments taken on certain of its aircraft in late
2001, late 2002 and early 2003, which resulted in Morgan Stanley
filing financial reports with the Commission that overstated
earnings for certain reporting periods in a manner not in
conformity with Generally Accepted Accounting Principals
("GAAP"). Regarding its high-yield bond portfolio, Morgan
Stanley overvalued certain bonds in the portfolio in
2000, which resulted in the Company filing a financial report
with the Commission that understated losses it had incurred on
these bonds in a manner not in conformity with GAAP. Morgan
Stanley also failed to maintain sufficient underlying
documentation supporting its valuations and the Company's
internal controls failed to ensure that it valued both its
aircraft and bond positions in accordance with GAAP. Without
admitting or denying the Commission's findings, Morgan Stanley
consented to the issuance of the Order, which orders Morgan
Stanley to cease and desist from committing or causing
violations of, and committing or causing any future violations
of, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the
Securities Exchange Act of 1934 (Exchange Act) and Exchange Act
Rules 12b-20, 13a-1, 13a-11, and 13a-13. (Rel. 34-50632; AAE
Rel. 2132; File No. 3-11725)
NEW YORK: Gas Station Owners File Price-Fixing Suit V. Oil Firms
----------------------------------------------------------------
Four New York gas station owners have initiated a lawsuit
seeking class-action status against Shell, ChevronTexaco and
Saudi Refining, part of Aramco, three of the world's largest
suppliers, claiming that they fixed prices for fuel sold at
20,000 service stations, according to Court sources, Agence
France Presse reports.
Seeking to allow tens of thousands of other retailers to join
in, the suit claims that Shell and Texaco met and entered into
an agreement to raise, fix, peg and stabilize the price of motor
fuel sold to Shell and Texaco dealers. It also charges that
Shell and Texaco created two joint ventures, Equilon Enterprises
and Motiva Enterprises, as a guise to overcharge the stations
for gasoline.
The four gas station owners, which include the Bedford Village
Service Station in Westchester County outside New York City, T
and C Service Station on Long Island, the Fort Schuyler Quick
Stop and Ralph's Food Mart, both in New York City, said they
brought the case on behalf of US dealers of the Shell and Texaco
brand franchises who purchased fuel from Equilon and Motiva
between July 1, 1998 and February 28, 2002.
On June 1, a Federal Court in California allowed a similar case
against the companies. That ruling came the same day as the US
Government Accountability Office reported a study indicating the
two joint ventures may have led to higher gas prices in some US
cities.
NORTEL NETWORKS: Plaintiffs Lodge Statement Of Claim in NY Court
----------------------------------------------------------------
In a new statement of claim filed as part of a class action
lawsuit against Nortel Networks, Plaintiffs alleged that former
executives of the Company have routinely engaged in questionable
financial practices to get millions of dollars in bonuses, the
CBC News Online reports.
The expanded class action suit, which has been filed with the
U.S. District Court for the Southern District of New York, is
being led by two pension funds - the Ontario Teachers' Pension
Fund and the New Jersey Division of Investment. The suit, whose
allegation have not yet been proven in Court, now names members
of the audit committee of Nortel's Board of Directors as
Defendants, including John Cleghorn, former CEO of the Royal
Bank.
The suit's allegations include testimony from nine former Nortel
finance executives in Canada, the U.S., Europe and Asia who are
now co-operating with the lawsuit. The executive's testimonies
claim that during the Company's huge restructuring in 2002,
Nortel senior executives held back hundreds of millions of
dollars in reserve, money they then reported as income in 2003
to make the Company appear more profitable, which according to
the lawsuit was done in a way that amounted to a violation of
good corporate governance rules.
According to a claim in the lawsuit, "The improper inflation of
reserves for later use was such an accepted practice at Nortel
that executives gave the existence of cookie jar reserves its
own name: hardness."
However, Ross Healy, an analyst with the Strategic Analysis
Corp. told CBC Business News that the practice of setting up
rainy day "cookie jar" reserves is commonly done to smooth out
the ups and downs of the business cycle. He further stated that
it is perfectly legitimate and that he doesn't necessarily see
anything sinister about what Nortel did this time or what
[former Nortel CEO] Frank Dunn did this time around."
The lawsuit claims the motive for the alleged financial
mismanagement was money, specifically a bonus plan set up by
former CEO Frank Dunn in mid-2002 and approved by the board. The
incentive was millions of dollars in management bonuses if the
Company returned to profitability in 2003.
NORVERGENCE INC.: NC A.G. Cooper Lodges Consumer Fraud Lawsuit
--------------------------------------------------------------
North Carolina Attorney General Roy Cooper launched a complaint
against NorVergence, Inc., a Company that allegedly deceived
small businesses and other consumers into purchasing
telecommunications contracts and then failed to deliver
services.
"NorVergence convinced small businesses, churches and non-
profits across our state that it could give them a good deal on
phone service," said AG Cooper. "But the deal quickly turned
sour as NorVergence left consumers without service and locked
into paying on long-term contracts."
In a complaint filed in Wake County Superior Court, AG Cooper
accused the Company of Newark, New Jersey of making unfair and
deceptive representations to consumers in order to get them to
sign agreements and make payments for telecommunications
services. AG Cooper has asked the Court to bar NorVergence from
collecting money from past North Carolina customers and to
permanently block the Company and its employees from doing
business in North Carolina. In addition, the suit seeks
cancellation of all contracts, refunds for consumers, and civil
penalties. The Federal Trade Commission also filed suit against
NorVergence.
According to AG Cooper's complaint, NorVergence marketed
telecommunications services to small businesses, non-profit
organizations and churches. The Company offered local, long
distance, wireless, and high-speed Internet services and falsely
claimed that it was affiliated with recognized
telecommunications companies.
As alleged in the complaint, NorVergence told small businesses
that it could provide them dramatic savings and free minutes by
installing its revolutionary "black box" at the business to
route telecommunications. Businesses had to sign a rental
agreement for the black box, obligating them to make monthly
payments of $200 to $2,300 for five years for a total of $12,000
to more than $138,000 per business. NorVergence then sold these
rental agreements to various finance companies.
In reality, the "black box" is a standard router used to connect
telephone equipment to a long distance provider's lines. It is
widely available, retails for $500 to $1,500 and is not related
to wireless services or to lower long distance rates.
According to the 34 small businesses and other customers who
filed complaints with Cooper about NorVergence, the Company told
them that they would continue to get free unlimited calls for
five years as long as they paid the monthly rental fee and their
local telephone bill, even if anything happened to NorVergence.
However, NorVergence did not have a commitment from any
telecommunications carrier to provide services to these
customers if NorVergence folded. Once the Company had sold a
number of rental agreements, it ceased operations. Customers no
longer got the telecommunications services they had paid for,
but certain finance companies that had purchased the agreements
have continued to try to collect monthly payments. Cooper is
investigating the role of these finance companies in the scam.
Other North Carolina businesses and consumers that may have done
business with NorVergence are encouraged to file a complaint
with the Attorney General's Office by Phone: 1-877-5-NO-SCAM, or
contact Noelle Talley, Public Information Officer, N.C.
Department of Justice by Phone: (919) 716-6484 or (919) 716-6413
by Fax: (919) 716-0803 or by E-mail: ntalley@ncdoj.com.
PEMBRIDGE GROUP: SEC Lodges Fraud Charges V. Firm, Founder in MA
----------------------------------------------------------------
The Securities and Exchange Commission filed civil fraud charges
against Treyton L. Thomas, a resident of Boston, Massachusetts,
and a Company he founded, Pembridge Group, Ltd., for engaging in
a scheme to manipulate the securities of Imagis Technologies,
Inc., a Canadian software Company quoted on the OTC-Bulletin
Board.
In a complaint filed in U.S. District Court in Boston the SEC
alleges that from at least 1999 through 2002, Thomas generated
several false press releases in which he claimed to be the
chairman of Pembridge, a purported multi-faceted investment firm
that managed several hundred million dollars and provided growth
capital to formative companies. In fact, it is alleged,
Pembridge had no such assets under management and instead was
simply a front that Thomas used to gain credibility and further
his fraudulent scheme. The Commission charges that, after
several of the false press releases were disseminated, Thomas
manipulated the stock of Imagis by causing Pembridge to propose
a fraudulent cash tender offer for all of Imagis' outstanding
stock. On March 6, 2002, Pembridge publicly announced the
proposed tender offer with a potential offer price of over $4.00
per share (almost double the price at which Imagis' stock was
trading in previous months). Pembridge's March 6 announcement
sent the price of Imagis' stock up to a 52-week high of $3.40.
As alleged, neither Thomas nor Pembridge controlled or had
access to hundreds of millions of dollars let alone the
resources necessary to buy out Imagis' shareholders.
The SEC further alleges in the complaint that prior to
announcing the false tender proposal, Thomas had arranged for an
offshore entity - known as Indo Sakura Trust - to acquire over
100,000 warrants of Imagis stock. Shortly before the fraudulent
March 6 tender offer announcement, Indo Sakura converted 70,000
warrants to shares and, a few days after the bogus release, Indo
Sakura exercised its remaining 35,000 warrants. Pembridge also
acquired warrants to purchase 50,000 shares of Imagis stock at
$2.20 (CDN) a share. In addition, Thomas advised purported
clients to purchase Imagis stock. The Defendants' illicit scheme
artificially inflated the value of Indo Sakura's Imagis stock,
as well as the securities held directly by Pembridge and its
purported clients.
The SEC alleges Thomas and Pembridge violated Section 10(b) of
the Exchange Act, and Rule 10b-5 thereunder, by their fraudulent
scheme to manipulate the market in Imagis stock. The Commission
further alleges that the Defendants violated Section 14(e) of
the Exchange Act, and Rule 14e-8 thereunder by their false and
fraudulent communication of the tender offer. The relief sought
in the complaint as to each of the Defendants includes permanent
injunctions from further violations of the general and tender
offer antifraud provisions of the federal securities laws,
disgorgement of ill-gotten gains with prejudgement interest,
civil monetary penalties, penny stock bars, and a permanent bar
prohibiting Thomas from serving as an officer or director of a
public Company. The action is titled, SEC v. Treyton L. Thomas,
et al., Civil Action No. 04-12315 (PBS) D.MA] (LR-18957).
PEROT SYSTEMS: Plaintiffs Appeal Energy Antitrust Lawsuit in CA
---------------------------------------------------------------
Plaintiffs appealed the Superior Court for the County of
Sacramento, California's dismissal with prejudice of the class
action filed against Perot Systems Corporation, styled "Art
Madrid v. Perot Systems Corporation, et al."
The suit alleges the Company conspired with energy traders to
manipulate the California energy market. The Plaintiffs are
seeking unspecified damages, treble damages, restitution,
punitive damages, interest, costs, attorneys' fees and
declaratory relief.
In September 2003, the Company filed a demurrer to the complaint
and an alternative motion to strike all claims for monetary
relief. In January 2004, the Court granted the Company's
demurrer and did not grant the Plaintiffs leave to amend their
complaint.
PEROT SYSTEMS: TX Court Dismisses Consolidated Securities Suit
--------------------------------------------------------------
The United States District Court for the Northern District of
Texas, Dallas Division dismissed without prejudice the
consolidated class action filed against Perot Systems
Corporation, Ross Perot and Ross Perot, Jr., styled "Vincent
Milano v. Perot Systems Corporation."
The suit alleges violations of Rule 10b-5, and, in some of the
cases, common law fraud. It also alleges the Company's filings
with the Securities and Exchange Commission contained material
misstatements or omissions of material facts with respect to its
activities related to the California energy market. The
Plaintiffs are seeking unspecified monetary damages, interest,
attorneys' fees and costs.
PETIT BATEAU: Recalls 2.7T Children's Bathrobe Due To Burn Risk
---------------------------------------------------------------
Petit Bateau, of Millburn, New Jersey is cooperating with the
United States Consumer Product Safety Commission by voluntarily
recalling about 2,700 Children's bathrobes.
These robes fail to meet the children's sleepwear flammability
standards, posing a risk of burn injury to children due to the
possible ignition of the garment.
The bathrobes are made of terrycloth, 90 percent cotton and 10
percent polyester, with a hood, long sleeves and two front patch
pockets. They were sold in sizes 12M, 18M, 2YR, 3YR, 4YR, 6YR,
8YR and 10YR. Colors of the bathrobes include white with pink
trimming, white with blue trimming, white with beige trimming,
cream with pink trimming, cream with blue trimming, and blue
with white trimming. The bathrobes are labeled, "Petit Bateau"
on the center-back neck edge.
Manufacture in either Tunisia or France, the bathrobes were sold
at all Petit Bateau retail stores and other outlets nationwide
from February 2002 through June 2004 for about $65.
Return the recalled bathrobes to Petit Bateau USA Inc., 45 Essex
Street, Suite 200, Millburn, N.J. 07041 to receive a full refund
including postage and a special gift.
Consumer Contact: Contact Petit Bateau at (888) 897-2872 between
8:30 a.m. and 5:30 p.m. ET Monday through Friday or log onto the
Company's Web site at http://www.petit-bateau.comfor
instructions on returning the bathrobes OR FDA Media Contact:
Martin Brown at (973) 379-5703
PRESSTEK INC.: Plaintiffs Appeal NH Ruling For Securities Suit
--------------------------------------------------------------
Plaintiffs in the purported securities class action lawsuit
brought against Presstek, Inc., its former Chief Executive
Officer Robert W. Hallman, and its former Chief Financial
Officer Neil Rossen, have filed an appeal of the U.S. District
Court's recent dismissal of the suit.
The lawsuit was allegedly brought on behalf of purchasers of
Presstek's common stock during the period from December 10, 1999
through July 16, 2001, and was filed in June 2003 in the United
States District Court for the District of New Hampshire. In
October 2004, in a 47-page decision granting Presstek's motion
to dismiss, Judge Steven McAuliffe of the U.S. District Court,
found that each of the claims brought by the Plaintiffs failed
to allege a claim on which the Court could grant relief and the
case was dismissed.
SONIC AUTOMOTIVE: Subsidiaries Oppose Certification For TX Suits
----------------------------------------------------------------
Sonic Automotive Inc. is opposing class certification for three
lawsuits filed against some of its Texas dealership
subsidiaries, the Texas Automobile Dealers Association (TADA)
and other new vehicle dealerships in Texas that are members of
the TADA.
Approximately 630 Texas dealerships are named as Defendants in
two of the actions, and approximately 700 Texas dealerships are
named as Defendants in the other action. The three actions
allege that since January 1994, Texas automobile dealerships
have deceived customers with respect to a vehicle inventory tax
and violated federal antitrust and other laws.
In two of the actions, the Texas State Court certified two
classes of consumers on whose behalf the actions would proceed.
The Texas Court of Appeals has affirmed the trial Court's order
of class certification in the state actions, and the Texas
Supreme Court issued an order for the second time in September
2004 stating that it would not hear the merits of the Defendant'
appeal on class certification.
The Federal Trial Court conditionally certified a class of
consumers in the federal antitrust case, but on appeal by the
Defendant dealerships, the U.S. Court of Appeals for the Fifth
Circuit reversed the certification of the Plaintiff class in
October 2004 and remanded the case back to the federal trial
Court for further proceedings not inconsistent with the Fifth
Circuit's ruling. The Plaintiffs may appeal this ruling by the
Fifth Circuit.
SPECTRASITE BUILDING: Asks NY Court To Dismiss Winstar Lawsuit
--------------------------------------------------------------
SpectraSite Building Group, Inc. and other Defendants asked the
United States District Court for the Southern District of New
York to dismiss the class action filed against them by Winstar
Communications, LLC and Winstar of New York, LLC.
The suit names as Defendants more than 800 owners and managers
of commercial real estate properties that have entered into
leases or other arrangements with Winstar. The Defendants
include real estate investment trusts, privately held commercial
real estate companies, the Building Owners and Managers
Association of New York (BOMA) and the Company.
The suit asserts claims for violations of federal and state
antitrust law, and federal communications law, and seeks an
unspecified amount of monetary damages and specific performance.
The claims are premised upon the allegations, among others, that
the Defendants, through BOMA and other rooftop managers
including SpectraSite Building Group, Inc., conspired to fix
rental prices of building access for telecommunications services
by disseminating non-public pricing information among the
Defendants that stabilized building access rates for competitive
telecommunications providers such as Winstar.
The motion to dismiss the suit, filed on August 13, 2004,
remains pending.
ST. PAUL TRAVELERS: Wolf Haldenstein Lodges Suit Over Payments
--------------------------------------------------------------
The New York law firm of Wolf Haldenstein Adler Freeman & Herz
initiated a class action lawsuit in U.S. District Court in
Minneapolis against St. Paul Travelers Cos., accusing it of
making false and misleading statements regarding commission
payments, the Associated Press reports.
The suit alleges that St. Paul Travelers, which is the nation's
second-largest insurer of businesses paid hundreds of millions
of dollars in "bribes or kick-backs, known as 'contingent
commissions,' in return for insurance brokers steering them
business and shielding them from competition" from 2000 to 2004.
Furthermore, the suit also alleges that the Company's actions
artificially inflated the price of the Company's common stock
and that the Company's "revenues and earnings would have been
significantly less had the Company not engaged in such unlawful
practices."
In the wake of insurance industry investigations led by New
York's attorney general, lawyers have filed similar lawsuits
against several insurance companies and brokers across the
country, including American Insurance Group and Ace Ltd. The New
York and Connecticut attorneys general have subpoenaed St. Paul
Travelers and many other insurance companies, seeking
information regarding their compensation to brokers and bids
made through brokers, legal experts though point out that the
subpoenas do not necessarily mean a Company is suspected of
wrongdoing.
According to Joan Palm, a spokeswoman for St. Paul Travelers,
"We believe this suit is totally without merit and we intend to
defend against it vigorously."
STILLWATER MINING: MT Court Mulls Dismissal of Securities Suit
--------------------------------------------------------------
The United States District Court for the District of Montana is
still hearing the motion to dismiss the consolidated securities
class action filed against Stillwater Mining Company and certain
of its senior officers.
The consolidated suit was filed on behalf of a class of all
persons who purchased or otherwise acquired common stock of the
Company from April 20, 2001 through and including April 1, 2002.
The suit asserts claims against the Company and certain of its
officers under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934. Plaintiffs challenge the accuracy of
certain public disclosures made by the Company regarding its
financial performance and, in particular, its accounting for
probable ore reserves.
Plaintiffs filed an amended consolidated complaint in September
2002. In October2002, Defendants moved to dismiss the complaint
and to transfer the case to Federal District Court in New York
to the federal district Court in Montana. The motion to
transfer the case was granted on May 9, 2003, and the case is
now pending in the federal district Court in Montana.
On January 30, 2004, the Court held a status conference at which
time the Plaintiffs were given until March 30, 2004 to file a
second amended complaint, which the Plaintiffs subsequently
filed. Pursuant to a briefing schedule set by the Court,
Defendants filed a motion to dismiss Plaintiffs' second amended
complaint on May 14, 2004, and Plaintiffs filed their opposition
on June 14, 2004. Defendants filed their reply on June 28,
2004. The hearing on the motion to dismiss has been continued
from July 22, 2004 to February 3, 2005.
TALX CORPORATION: MO Court Approves Securities Suit Settlement
--------------------------------------------------------------
The United States District Court for the Eastern District of
Missouri granted final approval of the settlement of the
consolidated securities class action against TALX Corporation,
certain of its officers and directors and its underwriters.
On December 26, 2001, a purported class action lawsuit was filed
in the United States District Court for the Eastern District of
Missouri (Civil Action No. 4:01CV02014DJS) by Matt L. Brody, an
alleged shareholder of the Company, against the Company, certain
of our executive officers and directors (William W. Canfield,
Craig N. Cohen and Richard F. Ford) and two underwriters
(Stifel, Nicolaus & Company, Incorporated and A.G. Edwards &
Sons, Inc.) in the Company's August 2001 secondary common stock
offering.
The case purportedly is brought on behalf of all persons who
purchased or otherwise acquired shares of Company common stock
between July 18, 2001 and October 1, 2001, including as part of
the Secondary Offering. The complaint alleges, among other
things, that certain statements in the registration statement
and prospectus for the Secondary Offering, as well as other
statements made by us and/or the Individual Defendants during
the Putative Class Period, were materially false and misleading
because they allegedly did not properly account for certain
software and inventory, did not reflect certain write-offs, and
did not accurately disclose certain business prospects.
The complaint alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder against TALX and the Individual Defendants,
violations of Section 11 of the Securities Act of 1933 against
TALX, the Individual Defendants and the underwriters, and
violation of Section 15 of the Securities Act of 1933 against
Mr. Canfield.
Three additional purported class action lawsuits were filed in
the same Court, against the same Defendants and making
substantially the same allegations: on January 8, 2002 by Donald
Metzger (Civil Action No. 4:02CV00031DJS); on January 9, 2002 by
Anna Goodman (Civil Action No. 4:02CV00033DJS); and on January
30, 2002 by Al Hinton (Civil Action No. 4:02CV00168DJS) each of
whom allegedly were shareholders of TALX during the Putative
Class Period. On February 15, 2002, these three lawsuits were
consolidated with and into the Brody lawsuit (Civil Action No.
4:01CV02014DJS) for all purposes.
The Consolidated Complaint seeks, among other things, an award
of unspecified money damages, including interest, for all losses
and injuries allegedly suffered by the putative class members as
a result of the Defendants' alleged conduct and unspecified
equitable/injunctive relief as the Court deems proper.
On May 5, 2004, the Company reached an agreement with the
Plaintiffs to settle all pending class action lawsuits. The
settlement called for payment of $5.75 million, which was made
by the Company's insurance carriers. On October 6, 2004, the
Court entered a Final Judgment and Order of Dismissal with
Prejudice, approving the proposed settlement in all respects.
The Court simultaneously issued an Order Approving Allocation of
Settlement Proceeds. The Court's Final Judgment provides that
the claims of the named Plaintiffs and all members of the class
are dismissed with prejudice; that any claims that were or could
have been alleged by the named Plaintiffs or members of the
class are released and forever discharged; and that the action
is dismissed subject to the Court's continuing jurisdiction with
regard to implementation of the settlement and distribution of
the settlement fund to the class.
TRIBUNE COMPANY: Circulation Fiasco Triggers IL Shareholder Suit
----------------------------------------------------------------
The Tribune Company recently learned that a shareholder lawsuit
has been filed against it and the Board of Directors in relation
to the circulation scandals at Newsday and Hoy in New York, New
York Newsday reports.
Responding to questions from a Newsday reporter, Company
spokeswoman Christine Hennessey described the case as a
"shareholder derivative lawsuit" filed against Tribune and its
board of directors. According to her, "The lawsuit alleges that
the directors violated fiduciary duties owed to Tribune's
shareholders in connection with the circulation irregularities
at Newsday and Hoy, New York. Tribune will seek to dismiss the
lawsuit."
It was unclear whether the suit, filed Oct. 14 in Cook County
Superior Court in Illinois, involved a single shareholder or a
group. The only named Plaintiff is David Jaroslawicz, a
Manhattan lawyer involved in several class action suits,
including ones against Northrop Grumman, Livent and the City of
New York.
The scandal, which stems from revelations by Newsday that its
circulation had been overstated by up to 100,000 copies daily,
has resulted in multiple suits by advertisers against it.
Newsday's actual sales from September 2002 through March 2004
were 480,000 to 490,000 copies daily, which were clearly far
below the 580,000, Newsday admits. Tribune also admitted to
circulation overstatements at Hoy, its Spanish language daily
now published in Chicago and Los Angeles, as well as New York
City. The Hoy sales inflation happened only in New York City.
UNITED STATES: ACLU Presents Arguments For Suit V. No-Fly Lists
---------------------------------------------------------------
Lawyers for the American Civil Liberties Union recently
presented arguments in a motion involving the first nationwide
class action lawsuit challenging the government's controversial
No-Fly lists, which is a part of the Secure Flight plan, FCW.com
reports.
Reginald T. Shuford, an ACLU senior staff attorney and lead
counsel in the case argued during the hearing that "as a result
of flawed and ineffective No-Fly lists, innocent passengers are
being singled out virtually every time they fly and subjected to
delays, interrogations and even detentions."
The hearing came in response to a request for dismissal by
attorneys for the Transportation Security Administration and the
Homeland Security Department, who don't want the case being
heard in the U.S. District Court for Western Washington,
claiming that the district Court lacks jurisdiction to review
the case.
ACLU officials argued that the motion is actually an attempt by
federal officials to prevent the case from going forward. Aaron
Caplan, a staff attorney with the ACLU of Washington even
states, "The government is saying that American trial Courts
have no power to review TSA policies. The is an attempt to avoid
any meaningful judicial review of government practices."
Originally filed by ACLU officials in April, the class action
lawsuit was initially against the Transportation Security
Administration over its use of the former Computer Assisted
Passenger Prescreening System (CAPPS) II, which has since been
revamped and renamed Secure Flight.
The lawsuit charges that a substantial percentage of employees
for the 15 domestic airlines have access to a list of people
deemed terrorist threats to air travel. Airport officials,
border and immigration agents, law enforcement officials and
those with access to other security databases may view the so-
called No-Fly list. Critics have said that the list ranks civil
liberties groups because scrutinized individuals cannot confirm
if they are on the list, making it difficult to correct errors.
According to the ACLU, individuals named as representative
Plaintiffs in the class-action lawsuit include:
(1) John Shaw, 75, a retired Presbyterian minister, from
Sammamish, Washington;
(2) Michelle D. Green, 36, a Master Sgt. in the U.S. Air
Force;
(3) David Nelson, 35, an attorney from Belleville, Ill.;
(4) David C. Fathi, 41, a senior staff attorney with the
ACLU National Prison Project in Washington, D.C.;
(5) Mohamed Ibrahim, 51, a coordinator for an immigrants'
rights project with the American Friends Service
Committee in Philadelphia;
(6) Alexandra Hay, 22, a student at Middlebury College in
Vt.; and
(7) Sarosh Syed, 27, a graduate student at Georgetown
University in Washington, D.C.;
VALVOLINE COMPANY: Recalls 2.8M Brake Cleaners Due To Defects
-------------------------------------------------------------
The Valvoline Company, a Division of Ashland Inc., of Lexington,
Kentucky is cooperating with the United States Consumer Product
Safety Commission by voluntarily recalling about 2.8 million
cans of Pyroilr Brake Parts Cleaner and NAPAr Brake Cleaners.
The affected aerosol cans contain a defective spray valve that
might stick when depressed, possibly emptying the can's
flammable contents. Valvoline has received nine complaints about
sticking spray valves. One consumer was injured when the product
sprayed into his eye.
The recall involves 13-ounce cans of Pyroilr Non-Chlorinated
Brake Parts Cleaner and NAPAr Non-Chlorinated Brake Cleaner.
This product is used by professional mechanics as well as "do-
it-yourself" consumers who perform brake repairs on their own
vehicles. The recalled cans contain one of the following four
digits in their date codes, which are found on the bottom of the
cans:
Pyroil (Part No. 4003)
C014, C024, C184, C194, C304, D024, D034, D214, D224, D264,
E104, F074, F084, F094, F104, F234, F244, F284, G134, G144,
G194, G294, H034, H194
NAPA (Part No. 4800)
C024, C094, C184, C194, C224, C234, C304, C314, D014, D034,
D054, E054, E064, E144, E244, E254, F174, F184, G284, H124,
H304, H314, I074, I084
Manufactured in the United States, the brake cleaners were sold
at all auto parts retail stores nationwide from March 2004
through September 2004 for about $2.
Consumers should stop using the recalled aerosol cans
immediately and contact Valvoline for a free replacement.
Consumer Contact: For more information, consumers should call
Valvoline at (800) 255-3533 between 8:30 a.m. and 5:30 p.m. ET
Monday through Friday.
WACHOVIA CORPORATION: Agrees To SEC Injunction, $37Mil Penalty
--------------------------------------------------------------
The Securities and Exchange Commission initiated a settled civil
action in the U.S. District Court for the District of Columbia
against Wachovia Corporation (Wachovia) for violations of proxy
disclosure laws and other reporting rules involving the 2001
merger between First Union Corporation (First Union) and Old
Wachovia Corporation (Old Wachovia).
The complaint alleges that Old Wachovia and First Union failed
to disclose in quarterly reports and in a joint proxy statement-
prospectus filed in connection with the merger the total number
of shares of First Union common stock (FTU) that Old Wachovia
intended to and did purchase during the period when First Union
and SunTrust Corporation (SunTrust) were engaged in a hostile
takeover battle for Old Wachovia. Without admitting or denying
the allegations in the complaint, Wachovia consented to entry of
a judgment enjoining it from violating the Sections 13(a) and
14(a) of the Securities Exchange Act of 1934 and Rules 12b-20,
13a-13 and 14a-9 thereunder and to pay a civil penalty of $37
million. The action is titled, SEC v. Wachovia Corporation,
Civil Action No. 041910 (D.D.C.).
WHOLE FOODS: Recalls Chicken Products For Listeria Contamination
----------------------------------------------------------------
Whole Foods Mid-Atlantic Kitchen, a Landover, Maryland firm, is
voluntarily recalling approximately 1,275 pounds of chicken
products that may be contaminated with Listeria monocytogenes,
the U.S. Department of Agriculture's Food Safety and Inspection
Service announced.
The products subject to recall are:
(1) 12 oz."WHOLE FOODS CHICKEN POT PIE." Each package
contains a best if used by date of "11/02/04."
(2) 10 lb. bags of "WHOLE FOODS Classic Chicken Salad."
Each bag has a use by date of "11/01/04."
(3) 15 oz. containers of "WHOLE FOODS CHICKEN NOODLE SOUP,
SMALL." Each container has a sell by date of
"11/04/04."
(4) 30 oz. containers of "WHOLE FOODS CHICKEN NOODLE SOUP,
LARGE." Each container has a sell by date of
"11/04/04."
All products bear the establishment number "P-18768" inside the
USDA seal of inspection. The chicken pot pie and chicken noodle
soup were produced on October 28, 2004. The chicken salad was
produced on October 27, 2004. All products were distributed to
retail stores in the District of Columbia, Kentucky, Maryland,
New Jersey, Pennsylvania and Virginia.
The problem was discovered through routine FSIS sampling. FSIS
has received no reports of illnesses associated with consumption
of these products.
Consumption of food contaminated with Listeria monocytogenes can
cause listeriosis, an uncommon but potentially fatal disease.
Healthy people rarely contract listeriosis. Listeriosis can
cause high fever, severe headache, neck stiffness, and nausea.
Listeriosis can also cause miscarriages and stillbirths, as well
as serious and sometimes fatal infections in those with weak
immune systems - infants, the frail or elderly, and persons with
chronic disease, with HIV infection, or taking chemotherapy.
Media and consumers with questions about the recall may contact
Company Director of Marketing Sarah Kenney by Phone: (301) 984-
3737, ext. 2020. Consumers with food safety questions can phone
the toll-free USDA Meat and Poultry Hotline at 1-800-535-4555.
The hotline is available in English and Spanish and can be
reached from 10 a.m. to 4 p.m. (Eastern Time) Monday through
Friday. Recorded food safety messages are available 24 hours a
day.
W.R. GRACE: Employees Lodge Suit To Recover $40M in Lost Profits
----------------------------------------------------------------
Employees of W. R. Grace & Co. (NYSE: GRA) initiated a class
action against the firm to recover $40 million in profits lost
by the class in their personal retirement accounts. The
employees claim that Grace and its investment advisors forced
the employees to sell their Grace stock at a distressed price of
$3.50 per share. Soon after the sale, the stock value tripled
but the employees got nothing. The 300% profit -- nearly $40
million -- was taken from the Grace employees and pocketed or
diverted to others by State Street Bank & Trust of Boston, the
Plan's investment advisor, according to the federal Court
complaint filed by the employees.
The employees and the class members are represented by Waite,
Schneider, Bayless & Chesley of Cincinnati, Ohio, a nationally
known business litigation law firm. "This case is corporate
arrogance at its worst -- Grace just walked all over its
employees and destroyed their life savings," said Stan Chesley,
one of the employees' trial attorneys.
According to the lawsuit, Grace purposely set up the retirement
plan so the personal savings of the employees could be used to
buy the Company's stock. In early 2004, Grace hired State Street
Bank & Trust of Boston to rapidly liquidate all of the
employees' Grace stock investment at an artificially low sales
price. Grace ignored the protests and objections of the
employees, the lawsuit says. The employees were even instructed
by Grace to have no communication with State Street, their
retirement plan's advisor.
The case will be heard by Judge David Bunning of the U.S.
District Court in Covington, Kentucky. As part of the early
stages of the case, the employees' attorneys are investigating
the unusual relationship among Grace, State Street and others
involved in the transactions, according to Jim Cummins, the
employees' other principal trial attorney.
For more details, contact Stanley M. Chesley, Esq. by Phone:
513-621-0267 OR James R. Cummins, Esq. by Phone: 513-621-0267
New Securities Fraud Cases
AUTOBYTEL INC.: Lasky & Rifkind Lodges Securities Suit in CA
------------------------------------------------------------
The law firm of Lasky & Rifkind, Ltd. initiated a lawsuit in the
United States District Court for the Central District of
California, on behalf of persons who purchased or otherwise
acquired publicly traded securities of Autobytel Inc.
("Autobytel" or the "Company") (NASDAQ:ABTL) between July 24,
2003 and October 20, 2004, inclusive, (the "Class Period"). The
lawsuit was filed against Autobytel, Michael Fuchs, Jeffrey
Schwartz and Hoshi Printer ("Defendants").
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically the complaint alleges that
the Company failed to disclose or misrepresented that Autobytel
inappropriately recognized some unapplied credits, that as a
result, the Company's financial results were inflated by
approximately $900,000, and that the Company's financial results
were not presented in accordance with Generally Accepted
Accounting Principles ("GAAP").
On October 21, 2004, Autobytel announced partial third quarter
2004 financial results, and that it would postpone its earnings
webcast. Moreover, the Company announced that the Audit
Committee of the Board of Directors of the Company was
conducting an internal review of the accounting treatment of
certain unapplied credits that were recognized as revenue during
the four quarters ended March 31, 2004. Shares of Autobytel
reacted negatively to the news, falling $1.93 per share, or
approximately 21.9%, to close at $6.80 per share.
For more details, contact Lasky & Rifkind, Ltd. by Phone:
800-495-1868 or visit their Web site:
investorrelations@laskyrifkind.com
AUTOBYTEL INC.: Schatz & Nobel Files Securities Fraud Suit in CA
----------------------------------------------------------------
The law firm of Schatz & Nobel, PC initiated a lawsuit seeking
class action status in the United States District Court for the
Central District of California on behalf of all persons who
purchased the securities of Autobytel Inc. (Nasdaq: ABTL)
("Autobytel") from July 24, 2003 to October 20, 2004 (the "Class
Period").
The Complaint alleges that during the Class Period, Autobytel
violated federal securities laws by making materially false or
misleading public statements. On October 21, 2004, Autobytel
announced partial third quarter 2004 financial results and
stated that it would reschedule its earnings conference call
which had been scheduled for that afternoon. Autobytel further
announced that its Audit Committee was directing an internal
review of the accounting treatment of certain unapplied credits
that were recognized as revenue during the four quarters ended
March 31, 2004. On this news, Autobytel stock fell $1.93 per
share, or 22%, on October 21, 2004, to close at $6.80 per share.
For more details, contact Wayne T. Boulton or Nancy Kulesa by
Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their
Web site: http://www.snlaw.net
AXT INC.: Miller Shea Lodges Securities Fraud Lawsuit in N.D. CA
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The law firm of Miller Shea, PC initiated a securities class
action lawsuit in the United States District Court for the
Northern District of California on behalf of shareholders who
purchased the common stock of AXT, Inc. ("AXT" or the "Company")
(Nasdaq:AXTI), between February 6, 2001 and April 27, 2004,
inclusive (the "Class Period").
AXT manufactures semiconductor parts for a variety of electronic
products, including telecommunications and consumer electronics.
The Complaint alleges that Defendants violated federal
securities laws by issuing a series of material
misrepresentations to the market during the Class Period,
thereby artificially inflating the price of AXT securities.
On May 24, 2004, AXT disclosed to the SEC that an investigation
by AXT's Audit Committee confirmed that the Company had "not
followed requirements for testing of products and provision of
testing data and information relating to customer requirements
for certain shipments made over the past several years." The
Company further disclosed that during the first quarter of 2004,
AXT increased its reserve for sales returns "related to our
failure to follow certain testing requirements and provision of
testing data and information to certain customers." No class has
yet been certified in the above action.
For more details, contact Jayson E. Blake, Esq. or Marc L.
Newman of Miller Shea, P.C. by Mail: 950 West University Drive,
Suite 300, Rochester, MI 48307 by Phone: (248) 841-2200 or visit
their Web site: http://www.millershea.com
CONVERIUM HOLDING: Zwerling Schachter Lodges NY Securities Suit
---------------------------------------------------------------
The law firm of Zwerling, Schachter & Zwerling, LLP ("Zwerling
Schachter") initiated a class action lawsuit in the United
States District Court for the Southern District of New York on
behalf of all persons and entities who purchased securities
(ADSs) of Converium Holding AG ("Converium" or the "Company")
(NYSE: CHR) between December 11, 2001 and July 20, 2004,
inclusive (the "Class Period"). The deadline to file a motion
seeking to be appointed lead Plaintiff is December 3, 2004.
The complaint charges that Converium and two of its officers,
Dirk Lohmann, and Martin Kauer, violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically, it alleges that the
Defendants failed to disclose and misrepresented the following
material adverse facts which were known to Defendants or
recklessly disregarded by them:
(1) that Converium maintained inadequate loss reserves in
its Converium North America subsidiary;
(2) that the Company did not, as it had announced,
establish adequate loss reserves to cover claims by
Converium North America policy holders;
(3) that reserve increases announced by the Company during
the Class Period were materially insufficient; and
(4) as a consequence of the understatement of loss
reserves, Converium's earnings and assets were
materially overstated during the Class Period.
On July 20, 2004, the Company announced that its second quarter
results would be impacted by a reserve strengthening for US
casualty business and subsequent asset impairments on the
balance sheet of Converium North America. On this disclosure,
shares of Converium collapsed $11.12 per share, or approximately
44 percent, on July 20, 2004, to close at $13.90 per share.
For more details, contact Shaye J. Fuchs, Esq. or Jayne Nykolyn
of Zwerling Schachter by Phone: 1-800-721-3900 by E-mail:
sfuchs@zsz.com or jnykolyn@zsz.com or visit their Web site:
http://www.zsz.com
DOBSON COMMUNICATIONS: Lasky & Rifkind Lodges OK Securities Suit
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The law firm of Lasky & Rifkind, Ltd., initiated a lawsuit in
the United States District Court for the Western District of
Oklahoma, on behalf of persons who purchased or otherwise
acquired publicly traded securities of Dobson Communications
Corporation ("Dobson" or the "Company") (NASDAQ:DCEL) between
May 19, 2003 and August 9, 2004, inclusive, (the "Class
Period"). The lawsuit was filed against Dobson and Everett R.
Dobson, Russell L. Dobson, Stephen T. Dobson, Douglas B.
Stephens, Bruce R. Knooihuizen and Richard D. Sewell
Jr.("Defendants").
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically, the complaint alleges that
the Company failed to disclose or misrepresented that Defendants
knew or disregarded the fact that the Company's growth in
roaming minutes was slowing, that it was missing sales quotas,
as upgrade costs were rapidly increasing, and that large equity
holders in the Company wanted to dispose of their interests.
On February 17, 2004 Dobson reported results for the fourth
quarter ended December 31, 2003, which disappointed investors.
The weak results were attributed by the Company due to anemic
growth in roaming minutes and a substantial reduction in
guidance. Shares of Dobson reacted negatively to the news,
shedding $2.65 per share, representing a price decline of 36.6%.
On August 9, 2004, the Company reported a net loss to
shareholders of $0.12 per share., for the second quarter ended
June 30, 2004. Dobson continued to fall, dropping an additional
$1.30 per share, representing a decline of approximately 54%.
For more details, contact Lasky & Rifkind, Ltd. by Phone: 800-
495-1868 or visit their Web site:
investorrelations@laskyrifkind.com
INTELLIGROUP INC.: Goodkind Labaton Lodges Securities Suit in NJ
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The law firm of Goodkind Labaton Rudoff & Sucharow LLP initiated
a class action lawsuit in the United States District Court for
the District of New Jersey, on behalf of persons who purchased
or otherwise acquired publicly traded securities of Intelligroup
Inc. ("Intelligroup" or the "Company") (Nasdaq:ITIG) between May
1, 2001 and September 24, 2004, inclusive, (the "Class Period").
The lawsuit was filed against Intelligroup, Arjun Valluripalli,
Nicholas Visco and David J. Distel ("Defendants.")
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically, the complaint alleges that
throughout the Class Period, Intelligroup publicly touted its
strong financial performance. In reality however, the complaint
alleges, that the Company's revenues, net income and earnings
were materially misstated as a direct result of Intelligroup's
improper accounting practices and inadequate internal controls.
On August 11, 2004, Intelligroup announced that its independent
auditors, Deloitte & Touche LLP had resigned from serving as the
Company's independent auditor. Then on September 24, 2004,
Intelligroup announced that it intended to restate its financial
results for the years ended December 31, 2003, 2002 and 2001.
Intelligroup shares reacted negatively to the news, falling 32%
to close at $1.13 per share.
For more details, contact Christopher Keller, Esq. by Phone:
800-321-0476 or visit their Web site:
http://www.glrslaw.com/get/?case=intelligroup
SOURCECORP INC.: Brian M. Felgoise Lodges Securities Suit in TX
---------------------------------------------------------------
The law offices of Brian M. Felgoise, PC initiated a securities
class action on behalf of shareholders who acquired SOURCECORP
Incorporated (NASDAQ: SRCP) securities between May 7, 2003 and
October 26, 2004, inclusive (the Class Period).
The case is pending in the United States District Court for the
Northern District of Texas, against the Company and certain key
officers and directors.
The action charges that Defendants violated the federal
securities laws by issuing a series of materially false and
misleading statements to the market throughout the Class Period
which statements had the effect of artificially inflating the
market price of the Company's securities. No class has yet been
certified in the above action.
For more details, contact Brian M. Felgoise, Esq. by Mail: 261
Old York Road, Suite 423, Jenkintown, PA 19046 by Phone:
(215) 886-1900 or by E-mail: FelgoiseLaw@aol.com
SOURCECORP INC.: Lasky & Rifkind Lodges Securities Suit in TX
-------------------------------------------------------------
The law firm of Lasky & Rifkind, Ltd., initiated a lawsuit in
the United States District Court for the Northern District of
Texas, on behalf of persons who purchased or otherwise acquired
publicly traded securities of SOURCECORP Inc. ("SOURCECORP" or
the "Company") (NASDAQ:SRCP) between May 7, 2003 and October 27,
2004, inclusive, (the "Class Period"). The lawsuit was filed
against SOURCECORP and certain officers and directors
("Defendants").
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically, the complaint alleges
that, during the Class Period, Defendants issued numerous false
and misleading statements with respect to the Company's
financial results. More specifically, these statements were
false and misleading because they failed to disclose and
misrepresented that the Company had improperly and prematurely
recognized revenue before delivering contractually required
output to a certain customer, that it also improperly recognized
revenues for services that were delivered to customers that were
in excess of contractual volume limits and that the Company
lacked adequate internal controls.
On October 27, 2004, SOURCECORP announced that the Audit
Committee of its board of directors had concluded that the
Company's previously issued financial statements for the year
ended December 31, 2003 and its quarterly reports for March 31,
and June 30, 2004 should no longer be relied upon. Specifically,
the Company indicated that one of its divisions had improperly
and prematurely recognized revenues. Due to this improper
revenue recognition, the Company will adjust its revenues and
earnings per share by at least $5.4 million and $0.19
respectively. In reaction to this news, shares of SOURCECORP
fell $5.96 per share, or approximately 30% to close at $16.25
per share on very heavy trading volume.
For more details, contact Lasky & Rifkind, Ltd. by Phone:
800-495-1868 or visit their Web site:
investorrelations@laskyrifkind.com
*********
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news on asbestos-related litigation and profiles of target
asbestos Defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
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Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Glenn Ruel Seorin, Aurora Fatima Antonio and Lyndsey
Resnick, Editors.
Copyright 2004. All rights reserved. ISSN 1525-2272.
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