/raid1/www/Hosts/bankrupt/CAR_Public/041118.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, November 18, 2004, Vol. 6, No. 229
Headlines
ABERCROMBIE & FITCH: Reaches $40 Mil Race-Bias Settlement in CA
ACTIVISION INC.: Shareholders Launch Securities Suits in C.D. CA
AT&T CORPORATION: Reaches Settlement For NJ Securities Lawsuit
AUSTRALIA: Victorian Farmers Start Action Over 2003 Brushfires
AVS MARKETING: FTC Files Complaint Over Bogus Weight Loss Claims
BETTER BUDGET: FTC Commences Complaint Due To Consumer Fraud
BIG LOTS: Texas Employees Lodge Federal Overtime Wage Lawsuit
BRYAN FOODS: Recalls 81,500 lbs Corn Dogs Due To Undeclared Egg
CHK INC.: FTC Launches Complaint Over Bogus Weight Loss Claims
DESERT COMMUNITY: Homeowners Lodge Suit Over Construction Delays
ELI LILLY: Zyprexa Product Liability Lawsuits Consolidated in NY
ENRON NORTH: SEC Files Proceedings Against CAO Wesley H. Colwell
FEMINA INC.: FTC Lodges Consumer Suit Over Weight Loss Products
FISCHER IMAGING: SEC Institutes Cease-And-Desist Proceedings
FLORIDA: Lee County Teachers Seek Certification For 2002 Lawsuit
GENERAL MOTORS: Quebecer Seeks To File Suit Over Premature Rust
GUIDANT CORPORATION: IN Judge Dismisses Securities Fraud Suit
HALLIBURTON CO.: Parties in Securities Suit Ordered To Mediation
HUMANA INC.: Trial in FL Managed Care Suit Moved To March 2005
INTELLIGROUP INC.: Stock Delisted, Shareholders Lodge Suit in NJ
KNIGHT CREDIT: NC Attorney General Orders Halt To Consumer Fraud
LUFKIN INDUSTRIES: Trial in TX Race Discrimination Lawsuit Ends
MERCURY INSURANCE: Consumers Commence Fraud Lawsuit in CA Court
NASHUA CORPORATION: IL Court Yet To Rule on Suit Certification
NATIONAL MACHINERY: OH Judge Reluctantly OKs $375/Worker Deal
NATURAL FOODS: FTC Files Complaint Over Bogus Weight Loss Claims
NAUTILUS GROUP: Recalls 782T Fitness Machines Due To Injury Risk
NEVADA: Judge Enters Final Judgment in Online Casino Stock Fraud
NEW ENGLAND: FTC Lodges Complaint Over Bogus Weight Loss Claims
NICOR ENERGY: Consumers Launch Amended Fraud Lawsuit in IL Court
NICOR INC.: IL Shareholder Fraud Lawsuit Settlement Deemed Final
OWENS CORNING: MA Court Certifies in Part Stock Suit V. Officers
OWENS CORNING: Asks OH Court To Dismiss Fraud Suit v. Officers
PHILIP MORRIS: Korein-Tillery Lodges New IL Consumer Fraud Suit
PHOENIX TELECOM: SEC Obtains Final Judgment, Other Relief
SOUTH DAKOTA: Abuse Case To Continue Despite Dismissal Of Suit
TENNESSEE VALLEY: NC Attorney General Warns Over Air Pollution
TYSON FOODS: Recalls Frozen Chicken Due To Undeclared Allergen
UNUMPROVIDENT CORPORATION: Working To Resolve MA Agent Lawsuits
UNUMPROVIDENT CORPORATION: Limited Discovery Begins in TN Suit
UNUMPROVIDENT CORPORATION: Limited Discovery Starts in TN Suit
New Securities Fraud Cases
AON CORPORATION: Murray Frank Lodges Securities Fraud Suit in IL
H&R BLOCK: Cotchett Pitre Lodges Securities Fraud Suit in CA
JAKKS PACIFIC: Milberg Weiss Lodges Securities Fraud Suit in NY
JAKKS PACIFIC: Schiffrin & Barroway Lodges Securities Suit in NY
REMEC INC.: Bernstein Liebhard Files Securities Fraud Suit in CA
*********
ABERCROMBIE & FITCH: Reaches $40 Mil Race-Bias Settlement in CA
---------------------------------------------------------------
Civil rights attorneys recently revealed the settlement of a
class action lawsuit, Gonzalez v. Abercrombie & Fitch, which
requires the retail clothing giant to pay $40 million dollars to
Latino, African American, Asian American and women applicants
and employees who charged the Company with discrimination. The
settlement, approved this morning by U.S. District Court Judge
Susan Illston, also requires the Company to institute a range of
policies and programs to promote diversity among its workforce
and to prevent discrimination based on race or gender.
The lawsuit was originally filed in U.S. District Court in San
Francisco in June 2003 by the Mexican American Legal Defense and
Educational Fund (MALDEF), the NAACP Legal Defense and
Educational Fund (LDF), the Asian Pacific American Legal Center
(APALC) and the law firm of Lieff, Cabraser, Heimann, &
Bernstein, LLP, on behalf of nine young adults of color,
including students and graduates of the University of California
and Stanford, who were refused sales jobs or terminated based on
their race or ethnicity.
"This agreement promises to transform this Company, whose
distinctiveness will no longer stem from an all-white image and
workforce," stated Thomas A. Saenz, Vice President of Litigation
at MALDEF. "This welcome change results from the courageous
actions of the plaintiffs who, beginning five years ago, stepped
forward to challenge prevalent discrimination at Abercrombie &
Fitch." Saenz explained that the case began with the 1999 filing
of a charge of discrimination by Juancarlos Gomez-Montejano.
The original plaintiffs were later joined by others across the
country. During the course of the negotiations, the plaintiffs
were also represented by the federal Equal Employment
Opportunity Commission (EEOC), who validated their claims, as
well as Minami, Lew & Tamaki LLP, and a team of eastern law
firms led by Kohn, Swift & Graf, P.C. in Philadelphia.
Attorney Bill Lann Lee of Lieff, Cabraser, Heimann & Bernstein
explained the breadth of the Consent Decree, which covers
recruitment, hiring, job assignment, promotion and training of
employees: "This comprehensive package of reforms will ensure
that minority and women employees feel welcome. The Company
should get credit for agreeing to changes that will transform
how Abercrombie does business," said Lee, who is the former
Assistant Attorney General for Civil Rights at the U.S.
Department of Justice.
The settlement requires the store to pursue "benchmarks" for the
hiring and promotion of Latinos, African Americans, Asian
Americans and women; the Company must report on its progress
toward these goals at regular intervals to the plaintiffs'
attorneys and to a Special Master named by the Court.
In addition, the Company must hire 25 recruiters who will seek
out minority employees. The Company is barred from targeting
particular fraternities or sororities for recruitment purposes,
a practice that previously helped to ensure a predominantly
white sales staff.
To ensure compliance with the provisions of the Consent Decree,
the Company will name a Vice President for Diversity, and
provide diversity training for all employees with hiring
authority. A new internal complaint procedure will provide
employees with a mechanism to report any problems they face.
Abercrombie has more than 700 stores and a workforce of 22,000.
The retail chain uses visual media to promote the "A&F Look" and
image to employees, customers, and potential applicants. The
settlement requires that marketing materials - including the
posters, shopping bags and catalogue - include members of
minority racial and ethnic groups.
"Abercrombie now realizes diversity makes good business sense,"
said Kimberly West-Faulcon, Director and Western Regional
Counsel for the NAACP Legal Defense and Educational Fund. "We
hope the rest of corporate America gets the message."
The settlement provides very detailed guidance and mechanisms
for compliance. In addition, an appointed monitor will regularly
evaluate and report on Abercrombie's compliance with the Decree.
The Consent Decree will be in effect a minimum of four-and-a-
half years; its duration will depend on the progress of the
Company.
If the settlement is properly implemented, the stories of the
named plaintiffs will be a thing of the past, according to the
attorneys.
Eduardo Gonzalez, a Stanford student from Hayward, California,
was pleased with the settlement. "I remember how discouraged I
felt when I applied for a job at the Santa Clara store and the
manager suggested that I work in the stock room or on the late
night crew in a non-sales position. I felt it was because I was
a Latino - but there was no one I could report this to at the
time."
Plaintiff Anthony Ocampo, a recent Stanford graduate, who was
told he couldn't be hired because "there's already too many
Filipinos," agreed with Gonzalez. "It is important that
Abercrombie seek out employees of color and provide them
training and opportunities for promotion."
Jennifer Lu worked at the Crystal Court Mall store in Costa
Mesa, California for three years while she was a student at U.C.
Irvine. She and five other Asian American employees were
terminated after a visit from senior management and replaced
with white sales staff. "I was very distressed after I was
terminated for being an Asian American woman. I am now very
excited about the policies and programs Abercrombie must
implement that came about as a result of this lawsuit. I am
looking forward to seeing a more diverse Abercrombie; one that
actually reflects the look of America," said Lu.
Carla Grubb, an African American student at California State
Bakersfield, was constructively discharged from the Abercrombie
store in the Bakersfield Valley Plaza Mall after being assigned
cleaning and other menial jobs. "I felt demoralized being the
only African American employee and being specifically assigned
to dust the store, wash the windows and clean the floors. With
this settlement, I now know that Abercrombie cannot treat other
employees of color in such a manner."
Minah Park, staff attorney with the Asian Pacific American Legal
Center applauded the courage of the plaintiffs. "This case is an
example of a handful of individuals making an impact in the
struggle to end racial discrimination. Thanks to these
plaintiffs who stepped forward to take action, we are going to
see real change in Abercrombie stores nationwide," Park said.
Attorney Martin J. D'Urso of Kohn, Swift & Graf, P.C. explained
that the monetary awards to the class members will be based on
the number of claimants who come forward and the kind of
discrimination they faced: "The true value of this settlement
goes far beyond the money being paid to class members. The
changes that are being made, pursuant to the consent decree,
will help to transform Abercrombie into the type of Company
that, I believe, its customers want and the law demands."
In addition, Abercrombie & Fitch will pay all the costs to
monitor the compliance as well as attorneys' fees. Attorneys
estimated that would be approximately an additional $10 million.
For more details, contact the settlement administrator by Phone:
1-866-854-4175 or visit the following Web sites:
http://www.Abercrombieclaims.comor
http://AFjustice.com/media.htm.
ACTIVISION INC.: Shareholders Launch Securities Suits in C.D. CA
----------------------------------------------------------------
Activision, Inc. and certain of its current and former officers
and directors continue to face several class actions filed in
the United States District Court for the Central District of
California.
On March 5, 2004, a class action lawsuit was filed, asserting
claims under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 based on allegations that the Company's revenues and
assets were overstated during the period between February 1,
2001 and December 17, 2002. The suit was filed by the
Construction Industry and Carpenters Joint Pension Trust for
Southern Nevada purporting to represent a class of purchasers of
Activision stock.
Five additional purported class actions have subsequently been
filed by Gianni Angeloni, Christopher Hinton, Stephen Anish, the
Alaska Electrical Pension Fund, and Joseph A. Romans asserting
similar claims. Five of the six actions have been transferred
to the same Court where the first-filed complaint was pending.
In addition, on March 12, 2004, a shareholder derivative lawsuit
was filed which asserts the same claims set forth in the federal
class action lawsuit. That complaint was filed in Superior
Court for the County of Los Angeles.
The suits are being coordinated in the "In Re Activision, Inc
Securities Litigation, lead docket 2:04-cv-01501-PA-E," filed in
the United States District Court for the Central District of
California, Western Division, under Judge Percy Anderson,
referred to Magistrate Judge Charles F. Eick. Plaintiffs are
Construction Industry and Carpenters Joint Pension Trust for
Southern Nevada, on Behalf of Itself and All Others Similarly
Situated, Plumbers and Pipefitters National Pension Fund,
Logan Capital Management, Inc. and Trust Mark Group.
Law firms for the plaintiffs are:
(1) Darren J. Robbins of Lerach Coughlin Stein and Robbins,
Mail: 401 B Street, Suite 1700 San Diego, CA 92101-4297
Phone: 619-231-1058 E-mail: Denisey@lcsr.com
(2) Jason Robert Llorens, Jonathan Behar and William S.
Lerach of Lerach Coughlin Stoia and Robbins, Mail: 355
South Grand Avenue, Suite 4170 Los Angeles, CA 90071
Phone: 213-617-9007
(3) Daniel E. Bacine, David E. Robinson, Leonard Barrack of
Barrack Rodos and Bacine, Mail: 3300 Two Commerce
Square, 2001 Market Street, Philadelphia, PA 19103
Phone: 215-963-0600
(3) John L. Haeussler, Marisa Livesay, Samuel L. Ward,
Stephen R. Basser of Barrack Rodos and Racine, Mail:
402 West Broadway, Suite 850 San Diego, CA 92101,
Phone: 619-230-0800
(4) Christopher Kim and Lisa Yang of Lim Ruger & Kim, Mail:
1055 W 7TH St, Ste 2800, Los Angeles, CA 90017, Phone:
213-955-9500, Email: Ckim@lrklawyers.com
(5) Marc A. Topaz and Richard A. Maniskas of Schiffrin and
Barroway, Mail: Three Bala Plaza East, Suite 400 Bala
Cynwyd, PA 19004, Phone: 610-667-7706, Fax: 610-667-
7056
(6) Aaron L Brody and Jules Brody of Stull Stull and Brody
Mail: 6 East 45TH Street New York, NY 10017, Phone:
212-687-7230
(7) Joseph H Weiss of Weiss and Yourman, Mail: 551 Fifth
Avenue, New York, NY 10176, Phone: 212-682-3025, Fax:
212-682-3010
(8) Michael D Braun of Stull Stull and Brody, Mail: 10940
Wilshire Blvd, Suite 2300, Los Angeles, CA 90024,
Phone: 310-209-2468 Email: Service@secfraud.com
Lawyers for the defendants are:
(i) Harriet S Posner and Robert F. Lemoine, Mail: Skadden
Arps Slate Meagher and Flom, 300 South Grand Avenue Los Angeles,
CA 90071-3144, Phone: 213-687-5000 Fax: 213-687-5600 E-mail:
lacefax@skadden.com
(ii) James E Lyons of Skadden Arps Slate Meagher and Flom
4 Embarcadero Center, Suite 3800 San Francisco, CA
94111, Phone: 415-984-6400 Fax: 415-984-2698
AT&T CORPORATION: Reaches Settlement For NJ Securities Lawsuit
--------------------------------------------------------------
AT&T Corporation reached a settlement for the consolidated
securities class action filed against it in the United States
District Courts for the District of New Jersey on behalf of
persons who purchased shares of its common stock from October
25, 1999 through May 1, 2000.
The suit alleges, among other things, that during the period
referenced above, the Company made materially false and
misleading statements and omitted to state material facts
concerning its future business prospects.
On January 30, 2002, the Court granted in part and denied in
part defendants' motion to dismiss. Thereafter, defendants
filed an answer denying all material allegations of plaintiffs'
Consolidated Amended Complaint and have asserted defenses
thereto. On September 17, 2002, the Court entered an order
certifying the Class defined as: all purchasers of AT&T
Corporation common stock between October 25, 1999 and May 1,
2000, inclusive of those dates. On June 4, 2004, the Court
granted in part and denied in part defendants' motion for
summary judgment. On July 2, 2004, the Court amended the
previously-certified Class to remove purchasers of AT&T common
stock between October 25, 1999 and December 5, 1999.
Accordingly, the certified Class is now defined as " all persons
or entities who purchased the Company's common stock between
December 6,1999 and May 1,2000, inclusive of those dates.
Excluded from the class are all persons named as defendants in
the consolidated amended complaint for violations of the
securities exchange act of 1934, members of the immediate family
of each of the individual defendants, any entity in which any
defendant has a controlling interest and the legal
representatives, officers and directors, heirs, successors or
assigns of any such excluded party.
The trial commenced in October 2004 and as a result of recent
negotiations, the Company settled the claim for $100 million,
subject to final Court approval. Under terms of a separation
agreement between AT&T and its former broadband subsidiary,
which was spun off to Comcast in 2002, the settlement will be
shared equally between the two parties.
The consolidated suit is pending before the Honorable Garrett E.
Brown, Jr., in the United States District Court, District of New
Jersey, and styled "In re AT&T Corporation Securities
Litigation, MDL Docket No. 1399m Master File No. 3:00cv05364.
Counsel for the plaintiffs is Lerach Coughlin Stoia Geller
Rudman & Robbins LLP of 401 B Street, Suite 1700, San Diego,
California 92101.
AUSTRALIA: Victorian Farmers Start Action Over 2003 Brushfires
--------------------------------------------------------------
The Victorian Farmers Federation (VFF) mailed letters to more
than 1,000 farmers in northern and eastern Victoria inviting
them to join a $500 million class-action lawsuit against several
government agencies, including the Department of Sustainability
and Environment (DSE), Parks Victoria and the Country Fire
Authority (CFA) for losses from last year's devastating
bushfires, the Brisbane Courier Mail reports.
The mail-out, which asks for information about the nature,
extent and causes of losses from the fires is the first step
towards a statement of claim to be lodged in the Supreme Court
or Federal Court by the end of the year.
The class action, which will seek compensation for VFF members
who suffered significant damage and loss from the 2002-03
bushfires, follows a long campaign by the VFF and a think-tank,
the Stretton Group, for an "effective, independent"
investigation into the contributing factors behind the January
2003 bushfires, which burnt out more than 1.3 million hectares
and destroyed 41 houses plus caused the deaths of about 11,000
head of livestock and one person.
The Stretton Group made up of landowners, community groups and
fire experts believes that years of negligence by state
government departments, rather than an act of nature, caused the
fire's magnitude.
According to VFF President Paul Weller, the legal action is also
aimed to change the management of Crown land so there would be
no repeat of last year's fires. He further adds, farmers were
not satisfied with the Esplin inquiry into the bushfires which
earlier this year made 148 recommendations, including the
spending of an extra $168 million on measures to reduce fire
risk and fight fires.
In the letter to the farmers Mr. Weller further states, "public
land management and actions undertaken by the government during
and following the bushfires has been a slap in the face for
those who have lost property, livestock, and income."
Meanwhile, in a written briefing for the Stretton Group,
solicitor John McMullan of McMullan Solicitors in Melbourne,
which has agreed to provide pro bono legal advice for the
action, said it could take two to three years between commencing
the action and it coming to trial.
AVS MARKETING: FTC Files Complaint Over Bogus Weight Loss Claims
----------------------------------------------------------------
On October 27, 2004, the Federal Trade Commission (FTC) filed a
complaint in U.S. District Court for the Northern District of
Illinois, Eastern Division, against AVS Marketing, Inc., and
William R. Heid. The defendants, based in Thomson, Illinois,
sell "Himalayan Diet Breakthrough," a dietary supplement
containing Nepalese Mineral Pitch - "a paste-like material" that
"oozes out of the cliff face cracks in the summer season" in the
Himalayas. Users are directed to take one tablet with water
before lunch, dinner and bedtime.
The complaint alleges that the defendants make false and
unsubstantiated claims that Himalayan Diet Breakthrough:
(1) causes rapid and substantial weight loss, including as
much as 37 pounds in 8 weeks, without the need to
reduce caloric intake or increase exercise;
(2) causes users to lose substantial weight, including as
much as 37 pounds in 8 weeks, while still consuming
unlimited amounts of food;
(3) causes substantial weight loss, including as much as 37
pounds in 8 weeks, by preventing the formation of body
fat;
(4) causes substantial weight loss for all users; and
(5) enables users to lose safely as much as 37 pounds in 8
weeks
On October 28, 2004, the Court entered a temporary restraining
order that prohibits the defendants from making the above claims
or any other false or unsubstantiated product claims, and
prohibits further sales of Himalayan Diet Breakthrough pending
determination of the FTC's motion for a preliminary injunction.
The TRO also includes provisions freezing the defendants'
assets, requiring the defendants to maintain records and other
evidence, and requiring the defendants to provide an accounting
of their sales and other financial information.
BETTER BUDGET: FTC Commences Complaint Due To Consumer Fraud
------------------------------------------------------------
An operation billing itself as a debt negotiation Company that
promised to reduce consumers' debt, negotiate with creditors,
and stop harassment from debt collectors in exchange for various
fees instead pocketed the fees and plunged consumers deeper into
debt, according to the Federal Trade Commission.
The FTC charges that Better Budget Financial Services (BBFS) and
its principals, John Colon, Jr. and Julie Fabrizio-Colon, have
defrauded consumers out of hundreds or thousands of dollars
each, causing many to be sued by their creditors and forcing
others into bankruptcy. The FTC has asked the Court to award
consumer redress to the victims of this scam. On November 3,
2004, the Court entered a temporary restraining order halting
the defendants' illegal business practices, freezing their
assets, and appointing a temporary receiver pending a
preliminary injunction hearing. The FTC received substantial
assistance in bringing this case from Massachusetts Attorney
General Tom Reilly's Consumer Protection and Antitrust Division.
"This scam has had devastating consequences for consumers who
thought they were taking the right steps to get out of debt,"
said Lydia Parnes, Acting Director of the FTC's Bureau of
Consumer Protection. "They signed up for the defendants'
services in good faith and expected the Company to act
accordingly. Now the defendants have learned that reneging on a
promise to help people settle their debt has serious
consequences, too."
According to the FTC, Massachusetts-based BBFS has advertised
its services through Internet advertising and on its Web sites
since at least August 2000. The defendants' Web sites,
www.betterbudget.net and www.termidebt.net, claim that BBFS can
negotiate with consumers' creditors to reduce their debt by 50
percent. Consumers who contact the defendants are promised that
the defendants will negotiate with consumers' creditors for a
non-refundable retainer fee, monthly administrative fees of
$29.95 to $39.95, and 25 percent of any savings realized by a
debt settlement. According to the FTC, consumers typically paid
the defendants hundreds or even thousands of dollars in fees.
The FTC's complaint states that consumers who sign up with BBFS
provide the defendants with a list of all their creditors and
the total amount of their debt. The defendants then tell
consumers to set up a special bank account and deposit a
calculated sum into the account, which will be used to pay
creditors and pay BBFS its monthly fee. The defendants
allegedly tell consumers to stop paying their creditors
directly, claiming that consumers' failure to pay their
creditors will demonstrate a "hardship" condition that will
enable BBFS to negotiate on their behalf. The defendants claim
they will settle each creditor's account once the consumer saves
half the amount they owe on each debt.
According to the FTC, BBFS also tells consumers to sign power of
attorney forms, claiming that the forms will enable BBFS to
contact creditors on the consumers' behalf and instruct debt
collectors to stop calling consumers directly. The consumers are
instructed not to talk to any creditors who contact them
directly. Further, the defendants allegedly tell consumers that
negative information may appear on their credit reports while
they are working with BBFS, but that the information is
temporary and that BBFS will direct consumers to a Company to
get assistance repairing their credit.
The FTC charges that, rather than negotiating with consumers'
creditors as promised, the defendants in numerous instances fail
to contact creditors and debt collectors. Instead, consumers
continue to be contacted by their creditors, receive repeated
phone calls from debt collection agencies, and incur late fees
and penalties on their credit accounts, increasing their debt
and worsening their financial situation. The FTC's complaint
states that the defendants in numerous instances fail to
negotiate with creditors even after consumers call to let them
know they have sufficient funds set aside to pay a settlement.
In many cases, consumers have been sued by their creditors,
resulting in them paying substantial legal fees. According to
the FTC, as a result of the defendants' scam, many consumers
have been forced to file for bankruptcy.
The FTC's complaint charges that the defendants have violated
the FTC Act by falsely claiming that:
(1) they will enable consumers to pay off their debts for a
reduced amount;
(2) they will settle each creditor's account once the
consumer accumulates half the amount owed to the
creditor; and
(3) they will contact creditors on consumers' behalf to
ensure that consumers stop receiving phone calls from
debt collectors.
The FTC thanks its partners: the Beverly, Massachusetts Police
Department; and the Better Business Bureau Serving Eastern
Massachusetts, Maine & Vermont, for their invaluable assistance
in bringing this case.
The FTC's complaint names Better Budget Financial Services,
Inc.; John Colon, Jr., president of BBFS; and Julie Fabrizio-
Colon, treasurer, clerk, and director of BBFS, as defendants.
The Commission vote authorizing staff to file the complaint was
5-0. The complaint was filed under seal in the U.S. District
Court for the District of Massachusetts on November 2, 2004. The
temporary restraining order was entered by the Court on November
3, 2004.
For more details, contact Jen Schwartzman, Office of Public
Affairs by Phone: 202-326-2674 or contact Barbara Anthony or
Carole A. Paynter, FTC Northeast Region by Phone: 212-607-2829
BIG LOTS: Texas Employees Lodge Federal Overtime Wage Lawsuit
---------------------------------------------------------------
Current and former employees of the Texas branch of Big Lots,
Inc. (NYSE: BLI) initiated a lawsuit in U.S. district Court over
the denial of overtime payments by being falsely classified as
managers, just months after the retailer settled a similar suit
in California, the Columbus Dispatch reports.
Filed by attorney Michael A. Josephson of the Houston law firm
Fibich, Hampton & Leebron on behalf of Deborah Hanks and Shirley
Trahan of Orange, Texas, and Brian Narens of Texarkana, Texas,
the lawsuit according to Mr. Josephson has added seven other
Texans in what could become a class-action lawsuit with
thousands of plaintiffs.
According to the suit, furniture-department managers, furniture-
sales managers and assistant-store managers, were denied
overtime pay even though they worked more than 40 hours a week
and spent more than 90 percent of their time performing sales,
stocking, janitorial and other non-management work. Furthermore,
Mr. Josephson states that the Columbus-based closeout retailer
"created and implemented an unlawful payment scheme" to deny
many of its 45,000 workers in 46 states overtime.
However, Big Lots general counsel Charles Haubiel denied the
allegations and instead stated, "we are not operating a scheme
to in any way harm our associates." Mr. Haubiel also stated that
neither the Company nor their law firm was contacted by the
employees to discuss their concerns before the lawsuit was
filed.
As previously reported in the February 9, 2004 edition of the
CAR Newsletter, Big Lots had agreed to pay $10 million in a
settlement of a class-action lawsuit that was approved by San
Bernardino Superior Court Judge Walter Blackwell to resolve
claims for unpaid overtime by the managers who had been
classified as exempt from overtime by the Company.
Experts say that because the Texas lawsuit was filed in federal
Court, U.S. labor standards will apply, which gives more
discretion to employers.
BRYAN FOODS: Recalls 81,500 lbs Corn Dogs Due To Undeclared Egg
---------------------------------------------------------------
Bryan Foods, a Haltom City, Texas, firm, is voluntarily
recalling approximately 81,500 pounds of corn dogs due to an
undeclared allergen (dried egg yolk), the U.S. Department of
Agriculture's Food Safety and Inspection Service announced.
Being recalled are 40 oz. packages of "Bryan CORN DOGS, BATTER
WRAPPED FRANKS ON A STICK, MADE WITH BEEF AND PORK, TURKEY
FRANKS." Each carton contains 15 individually wrapped corn dogs
with one of the following label codes: "04110," "04138,"
"04160," "04243," "04257," "04281" and "04285." The
establishment number "582" appears inside the USDA seal of
inspection.
The corn dogs were produced on April 19, 2004; May 17, 2004;
June 8, 2004; August 30, 2004; September 13, 2004; October 7,
2004; and October 11, 2004. The corn dogs were distributed to
retail stores in Alabama, Florida, Louisiana and Mississippi.
The problem was discovered by the Company. FSIS has received no
reports of allergic reactions associated with consumption of
this product. Anyone concerned about an allergic reaction should
contact a physician.
Media with questions may contact Company Director of
Communications and Public Affairs Goldie Taylor at
1-513-936-2001. Consumers with questions about the recall may
contact the Company call center at 1-800-544-3870.
Consumers with other food safety questions can phone the toll-
free USDA Meat and Poultry Hotline at 1-888-MPHotline
(1-888-674-6854). 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.
CHK INC.: FTC Launches Complaint Over Bogus Weight Loss Claims
--------------------------------------------------------------
On November 4, 2004, the Federal Trade Commission (FTC) filed a
complaint in the U.S. District Court, Southern District of New
York, against two companies - CHK Trading Co., Inc., based in
New Jersey, and CHK Trading Corp., based in New York City.
The Commission alleged that the corporate defendants and their
principal, Chong Kim, market and sell "Hanmeilin Cellulite
Cream," a topical cream which contains Chinese herbs and other
all-natural ingredients. Users are told to apply the cream on
the buttocks, stomach, and thighs and massage until the cream is
completely absorbed. The defendants advertise their product to
Spanish-speaking consumers via national advertisements in
TeleRevista magazine, as well as to English-speaking and Korean-
speaking consumers via their Web sites.
The complaint alleges that the defendants make false and
unsubstantiated claims that rubbing Hanmeilin Cellulite Cream
into the body:
(1) causes permanent weight loss;
(2) causes substantial weight loss, including as much as 10
to 95 pounds; and
(3) eliminates fat and cellulite.
DESERT COMMUNITY: Homeowners Lodge Suit Over Construction Delays
----------------------------------------------------------------
Carlos and Alma Rodriguez, who have reserved a house in future
phases of a Rancho Las Flores development initiated a lawsuit in
the Superior Court in Indio against the builder of the homes,
Desert Community Developers for delays in construction of the
houses, the Desert Sun reports.
According to the couple's attorney Tony Shafton, who is working
with attorneys from the Dale S. Gribow law firm, plans to amend
the lawsuit and add about 60 other couples, which could make it
eligible to be deemed a class action suit.
The lawsuit states that Desert Community Developers accepted in
writing the March offer of $214,490 for a home, which is
supposed to be ready for the Rodriguezes in March 2005. The
lawsuit also states that there are about 100 other families in
the same situation as the Rodriguezes: "The homes that they
purchased were to be completed within 12 months of the date. the
offer was accepted. The construction of the homes has not
started at all or, if construction was started, construction has
come to a complete halt with no likelihood that the defendants
will be able to complete construction within the time provided
for in their individual purchase and sales agreement."
Mr. Shafton points out that the goal of the lawsuit is to
protect the plaintiffs' rights in regards to the purchase of the
home. "This is a group of people who were seeking a dream and. a
house they could live in for a decent price," he adds.
Mark Ladeda, the Rancho Las Flores builder, could not be reached
for comment either by phone of at his Palm Desert office, the
Desert Sun states.
ELI LILLY: Zyprexa Product Liability Lawsuits Consolidated in NY
----------------------------------------------------------------
The federal product liability cases filed against Eli Lilly &
Co. over its product Zyprexa involving 235 claimants have been
or will be transferred to the United States District Court for
the Eastern District of New York, under Judge Jack Weinstein,
for consolidated and coordinated pretrial proceedings.
Zyprexa (Olanzapine), which is prescribed for the treatment of
schizophrenia and bipolar mania, has been linked to diabetes
mellitus, hyperglycemia, pancreatitis and blood sugar disorders.
There have been 288 reported diabetes cases in Zyprexa patients,
with 23 of them being fatal. Zyprexa side effects are
considered such a risk that in 2002, both the Japanese Health
and Welfare Ministry and the Great Britain Medicines Control
Agency issued emergency warnings concerning Zyprexa and
diabetes-related complications.
Eli Lilly & Co. is accused of heavily promoting Zyprexa as a
safe and effective drug for psychotic disorders, while virtually
concealing the risks of side effects from doctors and from the
patients themselves.
The Company faces approximately 125 product liability cases in
the United States involving approximately 340 claimants alleging
a variety of injuries from the administration of Zyprexa. Most
of the cases allege that the product caused or contributed to
diabetes or high blood-glucose levels. The suits seek
substantial compensatory and punitive damages and typically
accuse the Company of inadequately testing for and warning about
side effects of Zyprexa, and many of the suits also allege that
the Company improperly promoted the drug.
Two cases requesting certification of nationwide class actions
on behalf of those who allegedly suffered injuries from the
administration of Zyprexa were filed in the United States
District Court for the Eastern District of New York on April 16,
2004, and May 19, 2004, respectively. The cases seek damages
for alleged personal injuries and also seek compensation for
medical monitoring of individuals who have taken Zyprexa. A
class action was also filed on behalf of Iowa residents who took
Zyprexa, and that case is being transferred to the United States
District Court in New York.
In addition, the Company has entered into agreements with
various plaintiffs' counsel halting the running of the statutes
of limitation (tolling agreements) with respect to over 1,800
individuals who do not have lawsuits on file and may or may not
eventually file suits. This provides counsel additional time to
evaluate the potential claims. In exchange, the individuals
have agreed not to file suits in state Courts and the Plaintiffs
Steering Committee agreed to dismiss the personal injury claims
in the two pending nationwide class actions. The class action
claims seeking medical monitoring for Zyprexa patients are not
affected by this agreement.
The injury multidistrict litigation (MDL) is assigned to Senior
U.S. Judge Jack B. Weinstein of the Eastern District of New York
and styled "In Re Zyprexa Products Liability Litigation, MDL
Docket No. 1596, JPMDL; No. 04-md-1596, E.D. N.Y."
ENRON NORTH: SEC Files Proceedings Against CAO Wesley H. Colwell
----------------------------------------------------------------
The Securities and Exchange Commission issued an Order
Instituting Administrative Proceedings pursuant to Rule 102(e)
of the Commission's Rules of Practice, Making Findings, and
Imposing Remedial Sanction (Order) against Wesley H. Colwell
(Colwell). The Order finds that:
(1) Colwell, age 44, was the Chief Accounting Officer of
Enron North America (ENA). At all relevant times, he
was a certified public accountant licensed to practice
in the States of Texas and Oklahoma.
(2) On Oct. 9, 2003, the Commission filed a complaint
against Colwell in the U.S. District Court for the
Southern District of Texas, entitled SEC v. Wesley H.
Colwell (Civil Action No. H-03-4308). On Oct. 20, 2003,
the Court entered its Final Judgment against Colwell,
which, among other things, permanently enjoined
Colwell, by consent, from future violations of Sections
10(b), 13(a), 13b(2) and 13(b)(5) of the Securities
Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1,
13a-13 and 13b2-1 thereunder. The Court also ordered
Colwell to pay $275,000 in disgorgement, prejudgment
interest of $25,000 and a civil money penalty of
$200,000, for a total of $500,000.
(3) The Commission's complaint alleged, among other things,
that Colwell, in coordination with other Enron
employees, manipulated Enron's publicly reported
earnings through a variety of devices designed to
produce material false and misleading financial
results, including misuse of reserve accounts,
concealment of losses, inflation of asset values and
deliberate use of improper accounting treatment for
transactions.
Based on the above, the Order suspended Mr. Colwell from
appearing or practicing before the Commission as an accountant,
with the right to apply for reinstatement after four years from
the date of the entry of the Order.
Mr. Colwell consented to the entry of the Order without
admitting or denying any of the findings therein, except as
otherwise noted in the order.
FEMINA INC.: FTC Lodges Consumer Suit Over Weight Loss Products
---------------------------------------------------------------
On November 8, 2004, the Federal Trade Commission (FTC) filed a
complaint in the U.S. District Court, Southern District of
Florida, against Femina, Inc., based in Pembroke Pines, Florida,
and its owner, Husnain Mirza, challenging ads for three products
- "1-2-3 Reduce Fat" (a three-part kit), "Siluette Patch" (a
transdermal patch made from pure seaweed), and "Fat Seltzer
Reduce" (a dietary supplement). The 1-2-3 Reduce Fat kit
includes Xena RX, a diet pill; Reduce Gel Magic, a gel to put on
the body; and a plaster corset to wrap around the body. The Xena
RX pill purportedly contains green tea extract, and the Magic
gel purportedly contains aloe vera and sea algae. The defendants
primarily use Spanish-language ads.
The complaint alleges that the defendants make false and
unsubstantiated claims:
(1) that 1-2-3 Reduce Fat causes weight loss by blocking
and eliminating fat;
(2) that the green tea extract blocks up to 40 percent of
the absorption of fat; and
(3) that the aloe vera and seaweed gel eliminates inches of
fat.
The complaint also alleges that the defendants make false and
unsubstantiated claims that the Siluette Patch:
(i) causes substantial weight loss when worn on the body;
(ii) causes rapid weight loss with no dietary changes;
(iii) eliminates cellulite and controls metabolism; and
(iv) eliminates accumulated fat
The complaint also alleges that the defendants make false and
unsubstantiated claims that Fat Seltzer Reduce:
(a) causes rapid and permanent weight loss;
(b) causes fat to be absorbed and eliminated fast and
easily through the urine; and
(c) causes weight loss without the need to diet or
exercise.
On November 8, 2004, the Court entered a temporary restraining
order that prohibits the defendants from making false or
misleading claims for any weight loss product. The TRO also
includes provisions requiring the defendants to maintain records
and other evidence, and requiring them to provide an accounting
of their sales and other financial information.
FISCHER IMAGING: SEC Institutes Cease-And-Desist Proceedings
------------------------------------------------------------
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 8A of the
Securities Act of 1933 (Securities Act) and Section 21C of the
Securities Exchange Act of 1934 (Exchange Act) against Fischer
Imaging Corporation, a Company based in Denver. The Order finds
that Fischer materially misstated its reported revenue,
inventory, net income, and gross profit in its Commission
filings and press releases from the beginning of 2000 through
the third quarter of 2002. With respect to revenue, the Order
finds that Fischer improperly recognized revenue when it shipped
equipment to third party warehouses where the equipment remained
insured and controlled by Fischer, and in some cases, remained
subject to outstanding contingencies such as cancellation
rights. With respect to inventory, the Order finds that Fischer
materially overstated its inventory account by improperly
valuing excess and obsolete inventory, overvaluing returned
malfunctioning parts, and double-counting certain of its raw
materials.
As a result of Fischer's improper revenue recognition and
overstatement of inventory, the Order finds that Fischer
materially misstated its net income. Additionally, the Order
finds that Fischer materially overstated its gross profit
because it improperly classified certain expenses associated
with its service business as other operating expenses rather
than costs of sales. The Order finds that Fischer knew
or acted recklessly with respect to all of these misstatements.
Simultaneously with the institution of these proceedings,
without admitting or denying the allegations set forth therein,
Fischer consented to an administrative order to cease and desist
from committing or causing any violation and any future
violation of Section 17(a) of the Securities Act and Sections
10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the
Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1
thereunder.
FLORIDA: Lee County Teachers Seek Certification For 2002 Lawsuit
----------------------------------------------------------------
In a bid to have their 2002 civil suit turned into a class
action case, some of the nine Lee County School District
teachers or staff, who say they were exposed to so much toxic
mold and other harmful substances in the county's schools,
testified before Lee County Circuit Judge William C. McIver, the
Naples Daily News reports.
In their suit, the teachers and other staff contends that while
working in at least five specific schools, they all suffered
health problems some requiring surgeries, because of hazardous
exposure to toxic mold, asbestos, mildew, carbon dioxide and
lead-based paint.
During the hearing, teachers' attorney Marcus Viles told Judge
McIver, "There are over 8,000 employees of the (district). Their
claims are, in fact, typical of people who have suffered similar
harm. The claims all stem from indoor air quality problems."
Of the staff suing, two worked at San Carlos Park Elementary
School, two at Spring Creek Elementary in Bonita Springs, two at
Estero High School, and one who worked at both Mirror Lakes
Elementary in Lehigh Acres and Pinewood Elementary in Estero.
Former district safety director Ernie Scott, who won $400,000 in
a federal civil suit Nov. 8 against the district for eliminating
his job because he reported school safety hazards, also is suing
in this case claiming that he was exposed to hazardous asbestos
while performing safety checks at the buildings.
In reaction to the testimonies of the plaintiffs, school
district attorney John Lewis argued that the case shouldn't be
opened to more plaintiffs, since staffs throughout the district
weren't exposed to the same problems. He further argued that the
staffs have the right to file workers' compensation claims and
their own lawsuits. But by using a workers' compensation system,
the district shouldn't be held liable again in Court, since
according to Mr. Lewis, "the statute says if you have a workers'
compensation system you have exclusive liability."
GENERAL MOTORS: Quebecer Seeks To File Suit Over Premature Rust
---------------------------------------------------------------
Stephane Vermette, of Blainville, Quebec, who drives a General
Motors vehicle, is seeking authorization to file a multimillion-
dollar class action lawsuit against the automaker for the
premature rusting of his van, the CBC News, Canada reports.
In a filing before the Quebec Superior Court, Mr. Vermette
states that Chevrolet Ventures and Pontiac Trans Sports and
Montanas built between 1998 and 2004 have a manufacturing flaw
that makes them rust prematurely. Mr. Vermette is seeking about
$3,600 in compensation for replacing the rusted parts,
inconvenience and punitive damages.
According to Sam Malek, Mr. Vermette's attorney, if the Court
authorizes the lawsuit, it could attract an estimated 20,000 to
30,000 other GM owners in Quebec, said his lawyer. He further
states, "we believe that corrosion of this nature is premature
and abnormal and a consumer should not have to change his entire
roof after six or seven years." A judge is expected to hear the
request for a class action on February 15, 2005, Mr. Malek said.
GUIDANT CORPORATION: IN Judge Dismisses Securities Fraud Suit
-------------------------------------------------------------
Indiana Federal Judge Sarah Evans Barker recently dismissed a
securities fraud lawsuit against Guidant Corporation, an
Indianapolis medical device firm, originally arising from its
cover-up of problems with an abdominal aortic graft procedure,
the Indianapolis Star reports.
Coming just seventeen months after the original complaint was
filed against Guidant that led to the proposed class action
lawsuit by Guidant shareholders, Judge Barker's ruling in U.S.
District Court for Southern Indiana states that the complaint
"fails to state an actionable claim" and that the lead plaintiff
may lack legal standing to file the lawsuit.
In her ruling, the federal judge enumerated three reasons why
the lawsuit is inadequate, as it:
(1) Fails to state sufficient facts indicating Guidant's
public statements about the graft product were
misleading.
(2) Fails to state sufficient facts to show Guidant acted
with intent to deceive shareholders.
(3) Contains largely "statements of puffery" that can't
legally be acted on.
Guidant pled guilty in June 2003 to 10 felonies and agreed to
pay a $92 million federal fine to settle criminal and civil
charges over its cover-up of problems related to a fabric graft
used to treat weak spots in the lower aorta. The Company also
stopped selling the Ancure brand graft soon after.
Though the suit was dismissed, plaintiffs' attorney Jules Brody,
of the New York law firm Stull Stull & Brody, told Indianapolis
Star that he and other plaintiffs' attorneys are still
considering whether to amend their complaint, appeal the judge's
decision, or drop the case.
HALLIBURTON CO.: Parties in Securities Suit Ordered To Mediation
----------------------------------------------------------------
The United States District Court for the Northern District of
Texas ordered parties in the consolidated securities class
action filed against Halliburton Co., to go into mediation after
it denied final approval for the proposed settlement of the
suit.
On June 3, 2002, a class action lawsuit was filed against the
Company on behalf of purchasers of its common stock during the
period of approximately May 1998 until approximately May 2002
alleging violations of the federal securities laws in connection
with the accounting change and disclosures involved in the SEC
investigation. In addition, the plaintiffs allege that the
Company overstated its revenue from unapproved claims by
recognizing amounts not reasonably estimable or probable of
collection.
After that date, approximately twenty similar class actions were
filed against the Company. Several of those lawsuits also named
as defendants Arthur Andersen, LLP, its independent accountants
for the period covered by the lawsuits, and several of its
present or former officers and directors. The class action
cases were later consolidated and the amended consolidated class
action complaint, styled "Richard Moore, et al. v. Halliburton
Company, et al.," was filed and served upon the Company on or
about April 11, 2003.
Subsequently, in October 2002 and March 2003, two derivative
actions arising out of essentially the same facts and
circumstances were filed, one of which was subsequently
dismissed, while the other was transferred to the same judge
before whom the Moore class action was pending.
In early May 2003, the Company announced that it had entered
into a written memorandum of understanding setting forth the
terms upon which both the class action and the remaining
derivative action would be settled. In June 2003, the lead
plaintiffs in the class action filed a motion for leave to file
a second amended consolidated complaint, which was granted by
the Court. In addition to restating the original accounting and
disclosure claims, the second amended consolidated complaint
includes claims arising out of the 1998 acquisition of Dresser
Industries, Inc. by Halliburton, including that the Company
failed to timely disclose the resulting asbestos liability
exposure (the "Dresser claims").
The Dresser claims were included in the settlement discussions
leading up to the signing of the memorandum of understanding and
are among the claims the parties intended to be resolved by the
terms of the proposed settlement of the consolidated class
action and the derivative action.
The memorandum of understanding called for Halliburton to pay $6
million, which would be funded by insurance proceeds. After the
May 2003 announcement regarding the memorandum of understanding,
one of the lead plaintiffs in the consolidated class action
announced that it was dissatisfied with the lead plaintiffs'
counsel's handling of settlement negotiations and what the
dissident plaintiff regarded as inadequate communications by the
lead plaintiffs' counsel. The dissident lead plaintiff further
asserted that it believes that, for various reasons, the $6
million settlement amount is inadequate.
The attorneys representing the dissident plaintiff filed another
class action complaint in August 2003, raising allegations
similar to those raised in the second amended consolidated
complaint regarding the accounting/disclosure claims and the
Dresser claims. In addition, the complaint enhances the Dresser
claims to include allegations related to our accounting with
respect to the acquisition, integration and reserves of Dresser.
The Company moved to dismiss that complaint, styled "Kimble v.
Halliburton Company, et al.," however, the Court never ruled on
the Company's motion and ordered the case consolidated with the
class action.
On August 3, 2004 the attorneys representing the dissident
plaintiff filed a motion for leave to file yet another class
action complaint styled "Murphey v. Halliburton Company, et al."
The Court has not ruled on that motion. The proposed complaint
raises and augments allegations similar to those in the action,
including additional allegations regarding disclosure of
asbestos liability exposure.
On June 7, 2004, the Court entered an order preliminarily
approving the settlement. Following the transfer of the case(s)
to another district judge and a final hearing on the fairness of
the settlement, on September 9, 2004, the Court entered an order
denying the motion for final approval of the settlement in the
class action and ordering the parties, among other things, to
mediate.
In the Halliburton case, the Court concluded that it had not
been presented with sufficient evidence to reach an intelligent
and informed opinion on the merits of the case and the wisdom of
the proposed settlement. In its opinion, the Court ruled that
since the Court is not satisfied that the settlement proposed is
fair, reasonable and adequate, and since the Court has concerns
both about the manner in which the settlement was reached, and
the terms of the proposed settlement, the Court will not approve
it at this time.
The Court stated that it was "dismayed" that lead counsel
negotiated the settlement without the knowledge of all of the
lead plaintiffs, which "deprived the class of the benefits of
multiple Lead Plaintiffs." This appeared to be the Court's most
significant concern.
The Court also determined that the lead plaintiffs in favor of
the settlement presented "virtually no evidence" other than
conclusory declarations regarding the lawsuit's likelihood of
success on the merits. In such situations, of course,
plaintiffs are in the somewhat awkward position of arguing the
weaknesses of their own case to support the amount offered in
settlement.
None of the pro-settlement plaintiffs appeared at the hearing to
articulate their views on why the proposed settlement was
advisable for the class, the Court ruled. The Court found that
their absence ran counter to their fiduciary duty to the class
either to appear or submit affidavits stating their position.
Lead counsel offered no analysis of the likely recovery to class
members under the settlement, the Court further stated. The
Court's own efforts to determine the approximate recovery
indicated a range between a low of $0.006 per share and a high
of $0.12 per share. Additionally, the record did not provide a
damages estimate sufficient to permit the Court to assess
whether the proposed settlement was within an acceptable range.
The mediation is expected to take place in the first quarter of
2005. After the Court's denial of the motion to approve the
settlement, the Company withdrew from the settlement as it
believes it is entitled to do by its terms (although the
settling plaintiffs assert otherwise).
On September 9, 2004, the Court ordered that if no objections to
the settlement of the derivative action described above were
made by October 20, 2004, the Court would finally approve the
derivative action settlement. No timely objections were made to
the settlement of the derivative action.
The suit is styled "Richard Moore, et al. v. Halliburton Company
et al. 3:02-CV-1152-M," pending in the United States District
Court for the Northern District of Texas, Dallas Division under
Judge Barbara M.G. Lynn. The lead plaintiffs are Archdiocese of
Milwaukee Supporting Fund (AMSF), Private Asset Management Group
(PAM), Gabriel T. Forest and Paul J. Beneck. Lead counsel and
liaison counsel for the Lead Plaintiff is Schiffrin & Barroway
LLP. Federman & Sherwood and Emerson & Poynter have been
appointed as Co-Liaison Counsel, while Stull, Stull & Brody,
Scott + Scott and Wolf Haldenstein Adler Freeman & Herz are
members of executive committee.
HUMANA INC.: Trial in FL Managed Care Suit Moved To March 2005
--------------------------------------------------------------
Trial in the managed care class action filed against Humana,
Inc., styled "In RE Managed Care Litigation," has been reset to
March 21,2005 in the United States District Court for the
Southern District of Florida.
Several purported class action lawsuits that are part of a wave
of generally similar actions that target the health care payer
industry and particularly target managed care companies were
initially filed against the Company and several of its
competitors that purports to be brought on behalf of physicians
who have treated the defendant's members. As a result of action
by the Judicial Panel on Multidistrict Litigation (JPDML), the
case was consolidated.
The plaintiffs assert that the Company and other defendants
improperly paid providers' claims and "downcoded" their claims
by paying lesser amounts than they submitted. The complaint
alleges, among other things, multiple violations under the
Racketeer Influenced and Corrupt Organizations Act, or RICO, as
well as various breaches of contract and violations of
regulations governing the timeliness of claim payments.
The complaint was subsequently amended to add as plaintiffs
several medical societies, including the Texas Medical
Association, the Medical Association of Georgia, the California
Medical Association, the Florida Medical Association, and the
Louisiana State Medical Society, each of which purports to bring
its action against specified defendants.
On September 26, 2002, the Court certified a global class
consisting of all medical doctors who provided services to any
person insured by any defendant from August 4, 1990, to
September 26, 2002. The class included two subclasses. A
national subclass consisted of medical doctors who provided
services to any person insured by a defendant when the doctor
had a claim against such defendant and was not required to
arbitrate that claim. A California subclass consisted of
medical doctors who provided services to any person insured in
California by any defendant when the doctor was not bound to
arbitrate the claim.
On September 1, 2004, the Court of Appeals for the Eleventh
Circuit agreed with the District Court's ruling as to the class
for the RICO claims, although it suggested that the class should
be split so that claims involving capitation and fee-for-service
payments would be handled separately. However, it reversed the
lower Court as to state law claims, including breach of
contract, unjust enrichment and violations of prompt pay laws.
It found that the state claims were too individualized to be
dealt with in a class action. The California subclass was not
specifically challenged and therefore was permitted to remain.
On October 15, 2004, the defendants filed a Petition for a Writ
of Certiorari to the United States Supreme Court, asking for
review of the Eleventh Circuit's decision.
Meanwhile, on September 17, 2004, the plaintiffs filed an
amended motion for class certification, seeking a global fee-
for-service class and five subclasses for the time period from
January 1, 1996, to the date of certification. The global class
would consist of any medical doctor who provided service on a
fee-for-service basis to any person insured by Cigna Corporation
or any other defendant for claims of RICO conspiracy and aiding
and abetting.
The motion seeks subclasses for the conspiracy counts for
capitation damages and capitation injunctive relief consisting
of all medical doctors who provided services on a capitated
basis. The motion also requests a subclass for a direct RICO
claim consisting of medical doctors who provided services on a
fee-for-service basis to any person insured by Humana pursuant
to a contract without an arbitration clause or without a
contract. The motion also seeks two California subclasses, one
involving physicians who provided services on a fee-for-service
basis and the other for capitated physicians.
On September 20, 2004, all proceedings were halted. T he
defendants had earlier filed a request with the Eleventh Circuit
for the stay of proceedings pending an appeal to that Court from
an order denying enforcement of certain arbitration agreements.
On September 20, 2004, the Eleventh Circuit issued the stay. On
November 5, 2004, the Eleventh Circuit rejected the defendants'
appeal on the arbitration issues.
At the defendants' request, the Court had previously filed a
motion with the JPMDL, asking the JPMDL to determine whether the
suits that were consolidated in Miami should be returned for
trial to the Courts in which they were initially filed. The
JPMDL initially refused to consider the request because of the
pendency of the Eleventh Circuit decision on class
certification. After the Eleventh Circuit ruled, the defendants
again asked the JPMDL for a ruling. On October 27, 2004, the
JPML refused to rule again, citing the status of the case.
Two of the defendants, Aetna Inc. and Cigna Corporation, have
entered into settlement agreements which have been approved by
the Court.
The suit is styled "In re Managed Care Litigation, MDL 1334,"
filed in the United States District Court for the Southern
District of Florida, Miami Division, under Judge Federico A.
Moreno. The suit initially named as defendants Aetna, Inc.,
Cigna, Humana, Inc., Coventry Health Care, Inc., Health Net,
Inc., Foundation Health Systems, Inc., PacifiCare Health
Systems, Inc., Prudential Insurance of America, UnitedHealth
Group Incorporated, F/k/a United HealthCare Corporation and
WellPoint Health Networks Inc.
INTELLIGROUP INC.: Stock Delisted, Shareholders Lodge Suit in NJ
----------------------------------------------------------------
Intelligroup Inc. (NASD: ITIGE), a provider of IT outsourcing
services has been recently delisted from the Nasdaq Stock Market
for failing to file a quarterly financial report and is now
facing a class-action lawsuit that was filed on behalf of the
Company's shareholders who bought Intelligroup shares between
May 1, 2001 and Sept. 24, 2004, the IndUS Business Journal
reports.
In a released statement, Arjun Valluri, chief executive officer
of Intelligroup said, "while we are disappointed with the
Nasdaq's decision, we will continue our efforts to complete the
previous restatements and become current with our periodic
filings as soon as possible."
Meanwhile, the class action lawsuit, which the Company did not
comment on alleges that Intelligroup and certain key officers,
including Mr. Valluri, violated the Securities Exchange Act of
1934 and produced false and misled financial statements. It was
filed in the United States District Court for the District of
New Jersey.
The complaint specifically alleges that, throughout the Class
Period, defendants issued numerous statements and filed
quarterly and annual reports with the United States Securities
and Exchange Commission regarding the Company's current
financial performance and future earnings. As alleged in the
complaint, these statements were materially false and misleading
because defendants knew, but failed to disclose:
(1) that Intelligroup was materially overstating its
financial results by engaging in improper accounting
practices. As detailed herein, Intelligroup has
admitted that its prior financial reports are
materially false and misleading as it announced that it
is going to restate its previously issued financial
statements filed on Form 10-K for the years ended
December 31, 2003, 2002 and 2001 and filed on Form 10-Q
for the quarterly periods beginning January 1, 2001 to
date;
(2) that the Company lacked adequate internal controls and
was therefore unable to ascertain its true financial
condition; and
(3) that as a result of the foregoing, the values of the
Company's revenues, net income and earnings before
interest, taxes, depreciation, and amortization
("EBITDA") were materially overstated at all relevant
times.
On September 24, 2004, slightly over a month after its auditors
resigned, the Company shocked the market when it issued a press
release announcing its intention to restate its previously
issued financial statements filed on Form 10-K for the years
ended December 31, 2003, 2002 and 2001 and filed on Form 10-Q
for the quarterly periods beginning January 1, 2001 to date.
Upon this shocking news, shares of the Company's stock fell an
additional $0.52 per share or almost 32% to close at $1.13 per
share, on unusually heavy trading volume. Prior to the
disclosure of these adverse facts, defendants Valluripalli and
Visco sold their personally-held Intelligroup stock to the
unsuspecting public thereby reaping almost $3 million in illicit
proceeds.
KNIGHT CREDIT: NC Attorney General Orders Halt To Consumer Fraud
----------------------------------------------------------------
A Fayetteville Company that misrepresented its services and
charged illegal fees to consumers who wanted to get out of debt
has been ordered to stop, Attorney General Roy Cooper announced
in a statement.
"People turned to this Company because they needed help paying
bills and making ends meet," said AG Cooper. "But they wound up
deeper in debt because this so-called credit counselor charged
hefty fees."
Cumberland County Superior Court Judge Joseph R. John, Sr.
approved Cooper's request to stop Knight Credit Services, Inc.
and Knight Credit Counseling Services of Fayetteville and
Lumberton from deceiving its customers and engaging in illegal
debt adjusting, credit repair services and loan brokering.
Jaime Martin Acosta, the Company's president and C.E.O, who was
also named as a defendant, agreed to the terms of the Court
order.
Knight is also prohibited from collecting any money from North
Carolina consumers for these services and is required to turn
over business records to the Attorney General's Office within 3
days. In addition to this preliminary injunction, Cooper is
seeking a permanent ban on Knight's services as well as
cancellation of all contracts with North Carolina consumers,
refunds and civil penalties.
A total of 41 consumers complained to AG Cooper's office about
Knight. Knight's clients include soldiers stationed at Fort
Bragg and Pope Air Force Base and their families.
As alleged in the complaint, Knight offered to help financially
strapped consumers pay off their debts and improve their credit.
Knight told its customers that the Company would negotiate with
their creditors to reduce monthly payments, interest rates and
fees. Consumers were instructed to stop paying their creditors
and to instead make monthly payments to Knight, which the
Company promised to use to pay consumers' bills. People paid
hundreds and even thousands of dollars to Knight to settle
debts.
However, Cooper contends that Knight kept some of its customers'
money as profit despite claims that it provides a non-profit
service. It is against the law in North Carolina to charge
consumers money for debt adjusting, the practice of negotiating
with creditors to pay off consumers' debts. For example, Knight
kept consumers' first monthly payment as a "security deposit."
Some consumers were led to believe this payment would go to pay
their creditors, while others were told they would later get the
deposit back. Instead, Knight kept the funds and consumers did
not receive the deposit back as promised. Knight also charged
consumers additional fees.
Many consumers complained that Knight failed to pay their
creditors on time, adding late fees to consumers' debts and
worsening their credit. According to affidavits filed with the
lawsuit, some consumers discovered that money they paid to
Knight wasn't being used to pay bills when creditors began
calling, complaining that they were being paid late or hadn't
been paid at all. One couple paid more than $1,500 to Knight
but learned later that only $350 had ever been used to pay their
bills with Knight keeping the rest. Another client paid
approximately $1,700 to Knight, none of which apparently went to
her creditors.
Cooper also alleges that Knight violated state law by promising
to restore consumers' credit rating in exchange for up-front
payments of as much as $1,500. Consumers who paid steep fees
never saw their credit improve. In addition, Knight charged
advance fees for loans in violation of loan brokering laws.
According to consumers who paid the fees, Knight failed to
arrange any loans.
Consumers should be skeptical of anyone who promises to clean up
their credit, Cooper warned. No one can get credit bureaus to
delete accurate information from credit reports. People can
dispute mistakes on their credit report directly with the credit
bureaus for free. Consumers who need help managing debts should
check with with a national accrediting organization such as the
National Foundation for Credit Counseling at 1-800-388-2227 or
www.nfcc.org to find a reputable local counselor.
For more details, contact Noelle Talley, Public Information
Officer, N.C. Department of Justice, Phone: (919) 716-6484 or
(919) 716-6413 or by Fax: (919) 716-0803
LUFKIN INDUSTRIES: Trial in TX Race Discrimination Lawsuit Ends
---------------------------------------------------------------
Trial in the class action filed against Lufkin Industries, Inc.
in the United States District Court for the Eastern District of
Texas has been concluded. The Court has asked both parties to
submit briefs before the judge issues his decision.
The suit was a race discrimination class action brought by
African American employees of Lufkin Industries, Inc., an
approximately 1800-employee Company with four manufacturing
divisions and corporate headquarters in Lufkin, Texas.
Plaintiffs allege that Lufkin's subjective employment practices
have a disparate impact on African American employees in initial
assignments, promotions and compensation.
Certification hearings were conducted in Beaumont, Texas in
February of 1998 and in Lufkin, Texas in August of 1998. In
April 1999, the Court issued a decision that certified a class
for this case, which includes all persons of a certain minority
employed by the Company from March 6, 1994, to the present.
The Company appealed this class certification decision by the
District Court to the 5th Circuit United States Court of Appeals
in New Orleans, Louisiana. This appeal was denied on June 23,
1999. Trial for this case began in December 2003 but was
postponed by the Court. The trial resumed on October 12, 2004,
and was concluded on October 14, 2004.
The suit is styled "McClain v. Lufkin Industries, Inc., 1999 WL
285566," filed in the United States District Court for the
Eastern District of Texas, under Judge Howell Cobb. Lead
plaintiffs for the counsels are Timothy B. Garrigan of Stuckey,
Garrigan & Cassetter of Nacogdoches, Texas, and Goldstein
Demchack Baller Borgen & Dardarian Mail: 300 Lakeside Drive
Suite 1000 Oakland California 94612, Phone: 510-763-9800 E-mail:
info@gbdlegal.com.
MERCURY INSURANCE: Consumers Commence Fraud Lawsuit in CA Court
----------------------------------------------------------------
Mercury Insurance Company faces a class action filed in Orange
County Superior Court in California, styled "Kate Steinbeck vs.
Mercury Insurance Company, Mercury Casualty Company, and
California Automobile Insurance Company."
The suit alleges that billing service fees charged in connection
with installment payments made by insureds constitute premium
and that Insurance Code, Section 381 bars the charging of
premium not specified in the policy. The complaint states
claims for breach of contract, violations of the Unfair
Competition Law, violation of the Consumer Legal Remedies Act,
and common law claims for unjust enrichment and money had and
received under this theory. The complaint also seeks class
action status, damages and restitution, injunctive relief, and
attorneys' fees.
NASHUA CORPORATION: IL Court Yet To Rule on Suit Certification
--------------------------------------------------------------
The Circuit Court of Cook County, Illinois has yet to rule on
motions for summary judgment and class certification of a
consolidated amended lawsuit against Nashua Corporation, Cerion
Technologies, Inc., certain directors and officers of Cerion,
and the Company's underwriter, on behalf of all persons who
purchased the common stock of Cerion between May 24, 1996 and
July 9, 1996.
The amended consolidated complaint alleged that, in connection
with Cerion's initial public offering, the defendants issued
materially false and misleading statements and omitted the
disclosure of material facts regarding, in particular, certain
significant customer relationships.
In October 1997, the Court on motion by the defendants dismissed
the consolidated complaint. The plaintiffs filed a second
amended consolidated complaint alleging similar claims as the
first consolidated complaint seeking damages and injunctive
relief. On May 6, 1998, the Circuit Court, on motion by the
defendants, dismissed with prejudice the second amended
consolidated complaint. The plaintiffs filed with the Appellate
Court an appeal of the Circuit Court's ruling.
On November 19, 1999, the Appellate Court reversed the Circuit
Court's ruling that dismissed the second amended consolidated
complaint. The Appellate Court ruled that the second amended
consolidated complaint represented a valid claim and sent the
case back to the Circuit Court for further proceedings.
On December 27, 1999, the Company filed a petition with the
Supreme Court of Illinois. In that petition, the Company asked
the Supreme Court of Illinois to determine whether the Circuit
Court or the Appellate Court is correct. The Company's petition
was denied and the case was sent to the Circuit Court for trial.
Discovery has been completed, but no date has been set for trial
and pre-trial motions.
On October 8, 2003, the Circuit Court heard motions on a Summary
Judgment motion and a class action certification motion. The
Company is awaiting a decision by the Circuit Court, which is
expected to rule on these motions.
The suit is styled "PHILIPPE OLCZYK, ROBERT K. PICKUP, JOSHUA
TEITELBAUM, on their behalf and on behalf of all others
similarly situated v. CERION TECHNOLOGIES, INC., NASHUA
CORPORATION, WILLIAM BLAIR & CO., DAVID A. PETERSON, PAUL A.
HARTER, RICHARD A. CLARK, GERALD G. GARBACZ and DANIEL M.
JUNIUS, case no. 1996-CH-094061996-CH-09406." The suit is
pending in the Circuit Court of Cook County, Illinois, Chancery
Division under Judge Thomas P. Durkin.
Lawyer for the plaintiffs is Robert D. Allison Mail: 122 S.
Michigan 1850, Chicago IL 60603 Phone: (312) 427-4500. Law
firms for the defendants are Jenner & Block, Mail: One IBM
Plaza, Chicago IL 60611, Phone: (312) 222-9350 and Sidley &
Austin Mail: 1 First National PL Chicago, IL 60603 Phone:
(312) 853-7000
NATIONAL MACHINERY: OH Judge Reluctantly OKs $375/Worker Deal
-------------------------------------------------------------
Almost three years after National Machinery Co. abruptly shut
down and laid off more than 500 workers, U.S. District Judge
James Carr of Ohio reluctantly approved a legal settlement that
will pay each of the displaced workers $375, the Toledo Blade
reports.
Though calling the payments "a pittance," Judge Carr stated that
they were likely the best the former employees could get from
the Company's previous owners under the federal Worker
Adjustment and Retraining Notification Act. The law, which was
passed in the late 1980s, essentially requires companies with at
least 100 employees to give 60 days' notice if more than a third
of the work force is being idled.
"It's a very small amount of money," the judge recently said
during a hearing attended by seven former National Machinery
employees who spoke against the deal. "I'm going to approve the
settlement, but I do so without any great enthusiasm."
Filed in 2002, the class action lawsuit by the laid-off National
employees had sought the 60 days' pay called for by law, which
was an amount some former workers said would amount to more than
$5,000 apiece. The ex-employees were also seeking compensation
for unused vacation time.
John Lankenau, a New York City attorney representing the former
workers, told the workers and Judge Carr that they stood little
chance of obtaining the full amount or anything close to it from
the former National Machinery Co., which was forced to close
when its creditors cut off financing in December, 2001. The
Company had no financial assets, and Mr. Lankenau said the
former employees would face an uphill battle to win a judgment
against Citicorp Venture Capital, which owned 49 percent of
National's voting stock and controlled three of the five seats
on the Company's board at the time of the shutdown.
At the same time, he and attorneys for the defendants, including
Citicorp, agreed that National Machinery LLC, which bought the
Company's assets and restarted production in 2002 - had no legal
obligation to the former employees. The reconstituted Company,
led by Chief Executive Officer Andrew Kalnow - a member of the
old National Machinery board of directors - now has nearly 300
full-time permanent employees.
"The new Company ... is a wholly separate entity which was
created following the sale of the assets of the old entity,"
said Terri Ross, a New York City attorney for the defendants,
including National Machinery Co. and Citicorp.
NATURAL FOODS: FTC Files Complaint Over Bogus Weight Loss Claims
----------------------------------------------------------------
On November 3, 2004, the Federal Trade Commission (FTC) filed a
complaint in the U.S. District Court, Central District of
California, against Natural Products, LLC; All Natural 4 U, LLC;
and Ana M. Solkamans.
The Tustin, California-based defendants sell a dietary
supplement called "Bio Trim," "Body-Trim/Bio-Trim" or "Body-
Trim" in capsule and powder form. Users are told to take two
capsules with eight ounces of water one half-hour before their
two biggest meals, or, if using the powder, users are told to
take one half-teaspoon of the powder mix in eight ounces of cold
juice 15 minutes before two meals.
The complaint alleges that the defendants make false and
unsubstantiated claims that Bio Trim:
(1) causes users to lose substantial weight, while eating
unlimited amounts of food;
(2) causes substantial weight loss by blocking the
absorption of fat or calories;
(3) works for all overweight users; and
(4) is clinically proven to cause rapid and substantial
weight loss without reducing calories.
NAUTILUS GROUP: Recalls 782T Fitness Machines Due To Injury Risk
----------------------------------------------------------------
The Nautilus Group, of Vancouver, Washington is cooperating with
the United States Consumer Product Safety Commission by
voluntarily recalling about 680,000 Bowflex Power Pro and
102,000 Bowflex Ultimate Fitness Machines.
The seat pin on the Power Pro with "Lat Tower" and Ultimate
models can break or become disengaged, allowing the seat to move
suddenly. Also, the incline support bracket on the Power Pro
without a "Lat Tower" can break, allowing the incline bench to
move suddenly. Both hazards pose a fall risk to the user.
Nautilus has received 46 reports of the seat pin failure,
including two serious injuries requiring stitches to the head.
Additionally, Nautilus received 42 reports of the incline
support bracket failure including injuries to the back, neck and
head.
The recalled fitness machines are the Bowflex Power Pro with and
without a "Lat Tower" and Ultimate models built before September
1, 2002. The "Lat Tower" attaches to the back of the bench, and
has pull-down pulleys attached. The name "Bowflex" and the model
name are printed on the front of the machines.
Manufactured in China and Taiwan, the machines were sold at all
specialty fitness stores, infomercials and direct sales
nationwide from January 1995 through April 2004 for between
$1,200 and $1,600.
Consumers should stop using the incline support mechanism and
contact Bowflex to receive a free repair kit. Consumers who
participated in the Bowflex safety recall earlier in 2004, and
owners of Ultimate units do not need to call Bowflex for a
repair kit, as they will receive one automatically. Nautilus is
contacting owners of affected machines by direct mail where the
name is known to the firm.
Consumer Contact: Contact Bowflex at 800-820-8604 between 5 a.m.
and 8 p.m. PT Monday through Saturday, or visit the firm's Web
site: http://www.bowflex.comor the Firm's Media Contact: Ron
Arp, Senior Vice-President, Corporate Communications by Phone:
360-418-6169.
NEVADA: Judge Enters Final Judgment in Online Casino Stock Fraud
----------------------------------------------------------------
The Honorable Kent J. Dawson, U.S. District Judge, District of
Nevada entered a final judgment against Investment Technology,
Inc., Thomas Vidmar, Ulysses "Thomas" Ware, Rosenfeld, Goldman &
Ware, Small Cap Research Group, Inc., and Centennial Advisors,
LLC. in a civil injunction action alleging that the Defendants
manipulated the stock of Investment Technology by disseminating
false and misleading information about the Company and its
purported on-line casino.
The Court entered the default judgment as a sanction for
repeated misconduct during the litigation by Ware, an attorney,
who represented himself and each of the other Defendants in the
civil action. The final judgment permanently enjoins the
Defendants from committing further violations of the federal
securities laws, imposes a penny stock bar against Vidmar and
Ware, imposed an officer and director bar against Vidmar, orders
Vidmar to pay disgorgement of $31,000 plus prejudgment interest
of $3,811 and Ware to pay disgorgement of $171,000 plus
prejudgment interest of $21,025, and orders Vidmar and Ware to
pay civil penalties of $120,000 each and the remaining
Defendants to pay civil penalties of $600,000 each. The action
is titled, SEC v. Investment Technology, Inc., et al., Case No.
CV-S-03-0831-KJD-RJJ (D. Nev.)(LR-18970).
NEW ENGLAND: FTC Lodges Complaint Over Bogus Weight Loss Claims
---------------------------------------------------------------
On November 4, 2004, the Federal Trade Commission (FTC) filed a
complaint in the U.S. District Court, District of Connecticut,
against Bronson Partners, LLC, (doing business as New England
Diet Center and Bronson Day Spa), and Martin Howard. The
defendants, based in Westport, Connecticut, sold Chinese Diet
Tea and the Bio-Slim Patch - purported weight loss products.
Users of the Chinese Diet Tea are told to drink one cup of tea
after each meal to neutralize the absorption of fattening foods.
The complaint alleges that the defendants make false and
unsubstantiated claims that Chinese Diet Tea:
(1) causes rapid and substantial weight loss without the
need to diet or exercise;
(2) enables users to lose as much as six pounds per week
over multiple weeks and months without the need to diet
or exercise;
(3) enables users to lose substantial weight while enjoying
their favorite foods;
(4) blocks the absorption of fat and calories; and
(5) causes substantial weight loss for all users.
The complaint further alleges that defendants falsely claim that
Chinese Diet Tea is clinically proven to cause rapid and
substantial weight loss without exercising or dieting.
The complaint further alleges that the defendants make false and
unsubstantiated claims that the Bio-Slim Patch:
(i) causes rapid and substantial weight loss without the
need to exercise or diet; and
(ii) causes substantial weight loss when worn on the body.
NICOR ENERGY: Consumers Launch Amended Fraud Lawsuit in IL Court
----------------------------------------------------------------
Nicor Energy Services Company faces a second amended purported
class action filed in the Circuit Court of Cook County, Illinois
alleging violation of the Illinois Consumer Fraud and Deceptive
Practices Act (ICFA) relating to the fixed bill service offered
by the Company.
The Company offered a fixed bill product under which it paid the
annual gas service portion of a customer's Nicor Gas utility
bill in exchange for twelve equal monthly payments by the
customer to the Company, regardless of changes in the price of
natural gas or weather. The plaintiff is seeking compensatory
damages, prejudgment and postjudgment interest, punitive
damages, attorneys' fees and injunctive relief.
NICOR INC.: IL Shareholder Fraud Lawsuit Settlement Deemed Final
----------------------------------------------------------------
The settlement of the consolidated securities class action filed
against Nicor, Inc. is deemed final, as plaintiffs did not file
an appeal against it.
Following a July 18, 2002 Nicor press release concerning Nicor
Energy and its performance based rate (PBR) plan, several
purported class actions were brought against the Company, Thomas
Fisher (Chairman and CEO) and Kathleen Halloran (former
Executive Vice President Finance and Administration and former
Executive Vice President and Chief Risk Officer).
The actions were brought in the United States District Court for
the Northern District of Illinois, Eastern Division, and have
been consolidated. On February 14, 2003, plaintiffs filed an
amended complaint adding as defendants George Behrens (Vice
President and Treasurer), Philip Cali (former Executive Vice
President of Operations) and Arthur Andersen LLP, the Company's
former independent auditor. The plaintiffs sought to represent
a class consisting of all persons or entities who purchased
Nicor common stock on the open market during the period from
November 24, 1999 through and including July 19, 2002.
They alleged that the defendants violated Section 10(b) and
Section 20(a) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. Plaintiffs alleged that during the class
period defendants misrepresented the PBR plan, Nicor's
historical financial condition and results of operations, and
its future prospects. The class sought compensatory damages,
prejudgment interest, and attorneys' fees and costs.
On April 16, 2004, Nicor announced that its board of directors
had approved an agreement to settle the above referenced action.
Under the terms of the settlement, all claims against Nicor and
Nicor-related defendants have been dismissed without any finding
or admission of wrongdoing or liability, for a payment of $38.5
million. On July 13, 2004 the Court granted final approval
of the settlement. All appeal rights expired on August 12,
2004.
OWENS CORNING: MA Court Certifies in Part Stock Suit V. Officers
----------------------------------------------------------------
The United States District Court for the District of
Massachusetts granted class certification as to those claims
relating to written representations in the class action filed
against certain of Owens Corning's officers and directors as
well as certain underwriters, styled "John Hancock Life
Insurance Company, et al. v. Goldman, Sachs & Co., et al." The
Company is not named in the lawsuit.
The suit purports to be a securities class action on behalf of
purchasers of certain unsecured debt securities of Owens Corning
in offerings occurring on or about April 30, 1998 and July 23,
1998. The complaint alleges that the registration statements
pursuant to which the offerings were made contained untrue and
misleading statements of material fact and omitted to state
material facts which were required to be stated therein and
which were necessary to make the statements therein not
misleading, in violation of sections 11, 12(a)(2) and 15 of the
Securities Act of 1933. The amended complaint seeks an
unspecified amount of damages or, where appropriate, rescission
of the plaintiffs' purchases.
The defendants filed a motion to dismiss the action on November
20, 2001. A hearing was held on this motion on April 11, 2002,
and the Court issued a decision denying the motion on August 26,
2002. The Court granted class certification as to those claims
relating to written representations but denied certification as
to claims relating to alleged oral representations.
OWENS CORNING: Asks OH Court To Dismiss Fraud Suit v. Officers
--------------------------------------------------------------
Owens Corning asked the United States District Court for the
Northern District of Ohio, Western Division to dismiss the
consolidated securities class action filed against certain of
its current and former directors and officers.
On January 27, 2003, certain of the Company's current and former
directors and officers were named as defendants in a lawsuit
captioned Robert Greenburg, et al. v. Glen Hiner, et al.
Subsequent to January 27, 2003, three substantially similar
actions, with named plaintiffs Nicholas Radosevich, Howard E.
Leppla, and William Benanchietti, respectively, were filed
against the same defendants in the same Court.
On July 30, 2003, the Court consolidated the four cases under
the caption Robert Greenburg, et al. v. Glen Hiner, et al., and
appointed lead plaintiffs JKF Investment Co., Icarus Trading,
Inc. and HGK Asset Management. An amended complaint was filed
by the plaintiffs on or about September 8, 2003. The Company is
not named in this suit.
The suit purports to be a class action for securities fraud
under sections 10(b) and 20(a) of the Securities Exchange Act of
1934, on behalf of a class comprised of persons who purchased
stock of Owens Corning during the period from September 20,
1999, through October 4, 2000. The complaint seeks an
unspecified amount of damages and/or, where appropriate,
rescission. The defendants have filed a motion to dismiss the
action, and the matter is fully briefed.
PHILIP MORRIS: Korein-Tillery Lodges New IL Consumer Fraud Suit
---------------------------------------------------------------
Korein-Tillery, the law firm that initiated a class action
lawsuit against Altria Group Inc.'s Philip Morris USA is again
taking the corporate giant to Court, this time claiming an
individual client suffered lung cancer, the Alton Telegraph
reports.
Filed in Madison County Circuit Court late last week, the suit
is claiming that the Company violated the state's consumer fraud
act, which lead to the lung cancer, suffered by its client,
Barbara Sandrowski of Collinsville. Many of the claims made in
the new lawsuit are the same as those in the class action suit
in that they claim the Company sold "light" cigarettes, claiming
they would be lower in tar and nicotine, while knowing they
would actually be higher.
The suit also claims that Ms. Sandrowski began smoking as a
teen-ager and was diagnosed with lung cancer in July 28, 2000.
She had bought and smoked, on average, 40 Marlboro Lights per
day for 17 years and did not know of the Company's deceptive
acts until 2003, the suit claims. Furthermore, the suit is
claiming that Philip Morris represented Lights as low tar and
nicotine and concealed the fact that Lights "actually increases
the mutagenicity of the tar delivered to the consumer and
increases the levels of most of the harmful toxins delivered to
the consumer."
The aforementioned claims were similar to the famous class
action suit filed against Philip Morris that was previously
reported in the November 12, 2004 edition of the CAR Newsletter,
which resulted in a ruling by Madison County Circuit Judge
Nicholas G. Byron to award all Illinois smokers of light
cigarettes more than $10 billion in damages after a bench trial
in 2003. The Illinois Supreme Court last week heard arguments on
the Company's appeal. The Company is claiming there are too many
differences among the members of the class for the case to have
been certified as a class action.
According to Korein-Tillery, the suit is seeking an unspecified
amount of damages for the plaintiff's injuries, past and future
medical expenses, past and future loss of wages, past and future
pain and suffering, disability and lost of life expectancy.
PHOENIX TELECOM: SEC Obtains Final Judgment, Other Relief
---------------------------------------------------------
The Securities and Exchange Commission obtained through the
Honorable Jack T. Camp of the U.S. District Court for the
Northern District of Georgia, a final judgment of permanent
injunction and other relief against Phoenix Telecom, L.L.C.
(Phoenix). The order enjoins Phoenix from future violations of
Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and
Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder.
Phoenix, which has been under the control of a Court appointed
receiver since shortly after the Commission filed this case,
consented to the entry of the final judgment without admitting
or denying the allegations of the Commission's complaint. The
Commission withdrew its claims against Phoenix for disgorgement
and civil penalties.
Phoenix, through the efforts of its codefendants, engaged in
fraud in the offer and sale of unregistered investment contracts
in a scheme involving pay telephone lease-backs. The Commission
alleged that the defendants promoted a massive fraudulent scheme
through the use of insurance agents and over the Internet, in
which Phoenix raised more than $74 million from more than 2,000
mostly elderly investors. All of the individual defendants in
this action have been permanently enjoined in earlier orders,
and have been ordered to pay disgorgement and other relief.
In earlier orders, the Court concluded that the scheme was based
upon purported investments in customer owned, coin-operated
telephones offered and sold in units, involving a telephone,
site lease, lease-back agreement and buy-back agreement, that
constituted securities, and further concluded that no
registration statement was filed with the Commission in
connection with those securities. Phoenix was the source of
lease payments on the telephones and was the insurer of the
investment. Investors were not told that Phoenix was losing
money, had a negative net worth, and was dependent on revenue
from new investors to sustain its operations. The action is
titled, SEC v. Phoenix Telecom, L.L.C., Jerold Benjamin Clawson,
Jerry Deland Beacham and H. Ellis Ragland, Jr., Civil Action
File No. 1:00-CV-1970-JTC, N.D. Ga. (LR-18971).
SOUTH DAKOTA: Abuse Case To Continue Despite Dismissal Of Suit
--------------------------------------------------------------
Despite the dismissal by Judge Diane Gilbert Sypolt of the U.S.
Court of Federal Claims of a federal lawsuit that accused the
government of failing in its treaty duties to protect Indian
students who allege that they were abused at Indian boarding
schools, attorneys for the former students stated that they will
continue to pursue their legal claims against the federal
government by filing an administrative claim with the Bureau of
Indian Affairs, the Associated Press reports.
In her ruling, Judge Sypolt said that before the issue can be
considered in Court, the former students first have to seek an
administrative remedy by filing a claim directly with U.S.
Interior Department agencies, since such an administrative claim
allows the responsible agency to establish facts, apply its
expertise to the issue and correct any of its own errors. She
further stated that the administrative process could help avoid
the necessity of a Court fight.
Jeffrey M. Herman of Miami, the lawyer who filed the dismissed
lawsuit arguing that federal officials failed to live up to the
terms of the 1868 Fort Laramie Treaty, which required federal
agencies to protect the Sioux from "bad men among the whites,"
said he would now file a claim directly with the Bureau of
Indian Affairs.
Mr. Herman also said that federal officials in their response to
the lawsuit agreed that American Indians could enforce claims
against the government under the "bad men" treaty provisions.
Furthermore, the Miami-based attorney said in a written
statement, "we continue to believe that the United States is
responsible for the tremendous suffering caused at the Indian
boarding schools and that the United States will eventually
compensate the victims and that the cases will move forward."
The federal class action lawsuit, filed in April 2003 by six
Sioux tribe members, sought $25 billion in damages from the
federal government for the alleged mental, physical and sexual
boarding school students' abuse. The schools were run by
religious organizations from the late 1800s or early 1900s until
the 1970s, when most were closed or transferred to tribal
control. The suit sought damages for all students allegedly
abused at three schools that educated Sioux students in South
Dakota: St. Paul's at Marty, St. Francis on the Rosebud
Reservation and Holy Rosary on the Pine Ridge Indian
Reservation. Lawyers also plan to seek damages for students who
attended Indian boarding schools in other states.
Even though it was dismissed, according to Gary Frischer, a Los
Angeles-based legal consultant for the boarding school students,
the dismissal wound up being good news since the judge and
federal officials recognized that Indians could seek
compensation under treaty language requiring their protection
from harm by white people.
Furthermore, Mr Herman states, that related lawsuits have also
been filed in state Court against the Catholic Diocese of Sioux
Falls, the Catholic Diocese of Rapid City and the organizations
that provided the priests and nuns who worked in the schools.
TENNESSEE VALLEY: NC Attorney General Warns Over Air Pollution
--------------------------------------------------------------
North Carolina Attorney General Roy Cooper informed the
Tennessee Valley Authority that North Carolina intends to take
legal action to force coal-fired power plants operated by TVA to
comply with federal law and reduce pollutants that dirty the
state's air.
In a letter written last week to TVA, the Environmental
Protection Agency, and environmental administrators in
Tennessee, Kentucky and Alabama, AG Cooper notified them that he
plans to file suit in Federal District Court, if the TVA will
not agree to significantly reduce pollution that is harmful to
North Carolinians.
"Pollution ignores state boundaries, so we all have to do our
part to make sure the air is clean," said AG Cooper.
He points out that several TVA plants have been shown by the EPA
"to contribute significantly to air quality problems in North
Carolina, resulting in adverse consequences to the health and
welfare of the citizens of this State. For this reason, North
Carolina has a compelling interest in ensuring that these plants
have complied, and continue to comply, with the Clean Air Act."
He alleges that TVA violated New Source Review provisions of the
federal Clean Air Act by modifying several of its coal-fired
power plants without determining whether additional emission
controls are necessary or installing the best available
technology to control dirty air created by the plants. The
letter cites nine TVA plants located in Tennessee, Alabama, and
Kentucky.
In the letter, AG Cooper cited North Carolina's Clean
Smokestacks Act, which he has long encouraged other states to
use as a model. "By its enactment in 2002 of the Clean
Smokestacks Act, North Carolina publicly committed to dramatic
reductions in emissions from coal-fired power plants. The State
also was directed to aggressively pursue emissions reductions
from out-of-state plants that are adversely affecting our air
quality."
In March of this year, AG Cooper filed a petition under Section
126 of the Clean Air Act, asking the federal government to force
coal-fired power plants in thirteen other states, including
Tennessee, Kentucky and Alabama, to cut down on pollution they
are contributing to North Carolina.
Approved by the General Assembly and Governor Easley in June
2002, Clean Smokestacks is expected to lead to fewer cases of
lung disease and asthma, less smog and acid rain, and lower
mercury levels in the states waterways. The law requires the
state's 14 largest coal-fired power plants to reduce harmful
emissions of nitrogen oxide, sulfur dioxide and mercury. These
pollutants in the air degrade our water and soil, damage
farmers' crops, and hurt the state's forests, rivers and lakes.
In addition, they cause haze and reduce visibility, especially
in the North Carolina mountains where vistas are an important
draw for the state's $12 billion-a-year tourism industry. Dirty
air also costs people and businesses in increased doctor and
hospital visits, higher health insurance costs and lost
productivity due to illness.
North Carolina's law is stricter than federal restrictions on
power plant emissions. The federal approach relies on a cap and
trade system that allows utilities to buy and sell pollution
credits and requires power plants to cut back emissions only
during the peak of the ozone season, April through October.
For more details, 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.
TYSON FOODS: Recalls Frozen Chicken Due To Undeclared Allergen
--------------------------------------------------------------
Tyson Foods, Inc., a Rogers, Ark., firm, is voluntarily
recalling approximately 420 pounds of frozen chicken products
due to an undeclared allergen, (whey), the U.S. Department of
Agriculture's Food Safety and Inspection Service announced in a
statement. The product could cause an allergic reaction for
people who are milk-sensitive.
Subject to recall are 28 oz. packages of "Tyson FULLY COOKED
CRISPY CHICKEN STRIPS, CHICKEN BREAST STRIP FRITTERS WITH RIB
MEAT." Each package bears one of the following production
codes: "3024CNQ0216," "3024CNQ0217," "3024CNQ0218,"
"3024CNQ0219," "3024CNQ0220" or "3024CNQ0221." Each package
also bears the establishment number "P-7221" printed adjacent to
the code on the back of the package.
The chicken strips were produced on October 28, 2004 and were
distributed to retail stores in Ohio, Michigan, and West
Virginia. The problem was discovered by the Company. FSIS has
received no reports of allergic reactions associated with
consumption of this product. Anyone concerned about an allergic
reaction should contact a physician.
Media with questions may contact Company representative Gary
Mickelson 1-479-290-6111. Consumers with questions about the
recall should contact Tyson's Consumer Information Hotline at
1-866-328-3156.
Consumers with other food safety questions can phone the toll-
free USDA Meat and Poultry Hotline at 1-888-MPHotline
(1-888-674-6854). 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.
UNUMPROVIDENT CORPORATION: Working To Resolve MA Agent Lawsuits
---------------------------------------------------------------
UnumProvident Corporation is working to resolve two alleged
class actions filed in the Superior Court in Worcester,
Massachusetts against it and several of its subsidiaries:
(1) The Paul Revere Corporation (Paul Revere),
(2) The Paul Revere Life Insurance Company,
(3) The Paul Revere Variable Annuity Insurance Company, and
(4) Provident Life and Accident Insurance Company
One purported to represent independent brokers who sold certain
individual disability income policies with benefit riders that
were issued by subsidiaries of Paul Revere and who claimed that
their compensation had been reduced in breach of their broker
contract and in violation of the Massachusetts Consumer
Protection Act (the Massachusetts Act).
A class was certified in February 2000. In April 2001, the jury
returned a complete defense verdict on the breach of contract
claim. Notwithstanding the jury verdict, the judge was
obligated to rule separately on the claim that the Company and
its affiliates violated the Massachusetts Act. In September
2002, the judge ruled that Paul Revere violated the
Massachusetts Act and awarded double damages plus attorneys'
fees. Complicating the matter was the unexpected death of the
trial judge. In March 2003, a new judge was assigned to the
case so the parties can proceed to conclude matters before the
trial Court.
As to calculating damages, interest, and attorneys' fees, as of
July of 2004 almost all of these issues have been resolved, and
the case could have been perfected for appeal by the end of the
third quarter. However, the parties have executed a Memorandum
of Understanding agreeing in principle to settle all issues in
the case. Pursuant to the Memorandum, the Company believes the
loss resulting from damages, interest, and attorneys' fees will
approximate $5.0 million, which amount has been accrued.
The career agent class action purports to represent all career
agents of subsidiaries of Paul Revere whose employment
relationships ended on June 30, 1997 and who were offered
contracts to sell insurance policies as independent producers.
The career agents claimed that the termination of their
employment relationship was contrary, inter alia, to promises of
lifetime employment. Class certification was denied for the
career agents. The career agent plaintiffs had re-filed their
complaint seeking class action status by limiting the issues to
compensation matters similar to those in the certified broker
class action, but now have filed a motion to dismiss the entire
action.
In addition, the same plaintiffs' attorney who had initially
filed the class action lawsuits filed approximately 50,
including the two individual career agents who brought the class
action referenced above, individual lawsuits on behalf of
current and former Paul Revere sales managers alleging various
breach of contract claims. Of the 48 general manager cases, one
was arbitrated and all the others have been settled. If the
filing of the dismissal is accepted, the two career agent cases
will be dismissed as well.
The suit is styled "STEPHEN F. ELDRIDGE and others vs. PROVIDENT
COMPANIES, Inc. and others, Case No. 97-1294C," and is pending
under Judge Daniel F. Toomey of the Superior Court of Worcester,
Massachusetts.
UNUMPROVIDENT CORPORATION: Limited Discovery Begins in TN Suit
--------------------------------------------------------------
Parties in the consolidated class action against UnumProvident
Corporation, styled "In re UnumProvident Corp. ERISA Benefit
Denial Actions," engaged in limited discovery for the suit filed
in the United States District Court for the Eastern District of
Tennessee.
On May 22, 2003, UnumProvident, several of its subsidiaries, and
some of their officers and directors filed a motion with the
Judicial Panel on Multidistrict Litigation (JPMDL) seeking to
transfer more than twenty class actions and derivative suits now
pending against them in various federal district Courts to a
single district for coordinated or consolidated pre-trial
proceedings.
Each of these actions, discussed below, contends, among other
things, that the defendants engaged in improper claims handling
practices in violation of the Employee Retirement Income
Security Act (ERISA) or various state laws or failed to disclose
the effects of those practices in violation of the federal
securities laws. On September 2, 2003, the JPMDL entered an
order transferring these cases, described below, to the U.S.
District Court for the Eastern District of Tennessee for
coordinated or consolidated pretrial proceedings.
On February 12, 2003, the first of five virtually identical
alleged securities class action suits styled "Knisley v.
UnumProvident Corporation, et al.," was filed in the United
States District Court for the Eastern District of Tennessee. On
February 27, 2003, a sixth complaint entitled "Martin v.
UnumProvident Corporation, et al.," was filed in the United
States District Court for the Southern District of New York, and
later was transferred to the Eastern District of Tennessee by
agreement of the parties.
In two orders dated May 21, 2003 and January 22, 2004, the
district Court consolidated these actions under the caption "In
re UnumProvident Corp. Securities Litigation." On November 6,
2003, the district Court entered an order appointing a Lead
Plaintiff in the consolidated action.
On January 9, 2004, the Lead Plaintiff filed its consolidated
amended complaint. The Lead Plaintiff seeks to represent a
putative class of purchasers of UnumProvident Corporation
publicly traded securities between March 30, 2000 and April
24, 2003. The plaintiffs allege, among other things, that the
Company issued misleading financial statements, improperly
accounted for certain impaired investments, failed to properly
estimate its disability claim reserves, and pursued certain
improper claims handling practices. The complaint asserts
claims under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder. On March 19, 2004, the
defendants filed a motion to dismiss the consolidated amended
complaint, which has not as of yet been ruled upon by the Court.
On May 7, 2003, "Azzolini v. CorTs Trust II for Provident
Financial Trust, et al.," was filed in the Southern District of
New York. This is a federal securities law class action brought
by the plaintiff on behalf of himself and a purported Class
consisting of all persons who purchased UnumProvident Corporate-
Backed Trust Securities (CorTs) certificates pursuant to an
initial public offering by an entity unaffiliated with the
Company on or about April 18, 2001 through March 24, 2003.
Plaintiff seeks to recover damages caused by UnumProvident's and
certain underwriter defendants' alleged violations of the
Securities Act of 1933 and the Securities Exchange Act of 1934.
Plaintiff asserts that UnumProvident issued and/or failed to
correct false and misleading financial statements and press
releases concerning the Company's publicly reported revenues and
earnings directed to the investing public.
Three additional actions alleging similar claims and purporting
to be class actions were filed, two in the Southern District of
New York, "Strahle v. CorTs Trust II for Provident Financing
Trust I, et al.," and "Finke v. CorTs Trust II for Provident
Financing Trust I, et al.," filed on March 23, 2003 and May 15,
2003, respectively, and the third in the Eastern District of New
York, "Bernstein v. CorTs for Provident Financing Trust I, et
al.," filed on July 7, 2003.
These actions all have been transferred to the Eastern District
of Tennessee for coordinated pre-trial proceedings. On February
18, 2004, the Court consolidated each of these actions other
than the Bernstein action under the Azzolini caption. The
Bernstein action makes identical allegations as the other
actions, but with respect to a different series of CorTs
securities.
On March 19, 2004, amended complaints were filed in both the
Azzolini and Bernstein actions. The amended complaints assert
claims under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder against UnumProvident and
one of its officers. The Azzolini plaintiff seeks to represent
a putative class of purchasers of certain CorTs certificates
between March 21, 2001 and March 24, 2003. The Bernstein
plaintiff seeks to represent a putative class of purchasers of a
different series of CorTs certificates between February 8, 2001
and March 10, 2003.
On April 19, 2004, the defendants moved to dismiss the
complaints in each of these actions. The Court has not as of
yet ruled on those motions. Discovery is stayed in each of these
actions pursuant to the Private Securities Litigation Reform Act
of 1995.
On July 15, 2002, the case of Rombeiro v. Unum Life Insurance
Company of America, et al., was filed in the Superior Court of
Sonoma County, California. It was subsequently removed to the
United States District Court for the Northern District of
California.
On January 21, 2003, a First Amended Complaint was filed,
purporting to be a class action. This complaint alleges that
plaintiff individually was wrongfully denied disability benefits
under a group long-term disability plan and alleges breach of
state law fiduciary duties on behalf of himself and others
covered by similar plans whose disability benefits have been
denied or terminated after a claim was made. The complaint
seeks, among other things, injunctive and declaratory relief and
payment of benefits.
On April 30, 2003, the Court granted in part and denied in part
the defendants' motion to dismiss the complaint. On May 14,
2003, the plaintiff filed a Second Amended Complaint seeking
injunctive relief on behalf of a putative nationwide class of
long-term disability insurance policyholders. This action was
transferred to the Eastern District of Tennessee as part of the
multidistrict litigation transfer order.
On November 4, 2002, the case of "Keir, et al. v. UnumProvident
Corporation, et al.," was filed in the United States District
Court for the Southern District of New York. This case purports
to be a class action on behalf of a putative class of group
long-term disability participants insured under ERISA plans
whose claims were denied or terminated on or after June 30,
1999.
The amended complaint alleges that these claimants had their
claims improperly challenged and allege that the Company and its
insurance subsidiaries breached certain fiduciary duties owed to
these participants in ERISA plans in which the Company is the
claims adjudicator. The Company maintains that the allegations
are false and that the claims, as framed, are not permissible
under ERISA's carefully structured avenues of relief.
On April 29, 2003, the Court denied the defendants' motion to
dismiss the complaint. The Company denies the allegations in
the complaint and will vigorously defend the litigation and any
attempt to certify the putative class. This action was
transferred to the Eastern District of Tennessee as part of the
multidistrict litigation transfer order.
Another suit was filed in the Circuit Court of St. Clair County,
Illinois. This case purports to be a class action. The
complaint alleges that individuals were wrongfully denied
benefits and alleges causes of action under breach of contract,
breach of the covenant of good faith and fair dealing, violation
of the Illinois Consumer Fraud Act, common law fraud,
intentional misrepresentation, and breach of fiduciary duty on
behalf of a putative class of policyholders. Alternatively, the
complaint alleges violations of ERISA. The complaint seeks
injunctive and declaratory relief as well as restitution and
punitive damages. On April 4, 2003, the case was removed to the
United States District Court for the Southern District of
Illinois. This action was transferred to the Eastern District of
Tennessee as part of the multidistrict litigation transfer
order.
On February 25, 2003, the case of "Davis, et al. v.
UnumProvident Corporation, et al.," was filed in the United
States District Court for the Eastern District of Pennsylvania.
The plaintiffs are seeking representative status as a class of
disability participants insured under ERISA plans. The
complaint alleges that these claimants had their claims
improperly denied or terminated and that the Company breached
certain fiduciary duties owed to these participants in ERISA
plans. The complaint also alleges violations under the federal
Racketeer Influenced and Corrupt Organizations Act (RICO). The
complaint seeks reversal of claim denials or contract
rescissions and re-determination by an independent person of
claims of the named plaintiffs and others similarly situated,
appointment of a master to oversee certain claim handling
matters, and treble damages under RICO. This action was
transferred to the Eastern District of Tennessee as part of the
multidistrict litigation transfer order.
On April 30, 2003, the case of "Taylor v. UnumProvident
Corporation, et al.," was filed in the Circuit Court for Shelby
County, Tennessee in the Thirteenth Judicial District at
Memphis. The plaintiff seeks to represent all individuals who
were insured by long-term disability policies issued by
subsidiaries of UnumProvident and who did not obtain their
coverage through employer sponsored plans and who had a claim
denied, terminated, or suspended by a UnumProvident subsidiary
after January 1, 1995.
Plaintiff alleges that UnumProvident Corporation and its
subsidiaries employed various unfair claim practices in
assessing entitlement to benefits by class members during this
period and, as a result, wrongfully denied legitimate claims.
The plaintiff and the class seek contractual, equitable, and
injunctive relief. On June 9, 2003, the defendants removed this
action to the United States District Court for the Western
District of Tennessee. This action was transferred to the
Eastern District of Tennessee as part of the multidistrict
litigation transfer order.
On July 18, 2003, "Contreras v. UnumProvident Corporation, et
al.," was filed in the Southern District of New York.
Plaintiffs allege claims on behalf of a putative class of ERISA
plan participants, beneficiaries, third-party beneficiaries, or
assignees of group long-term disability insurance issued by the
insuring subsidiaries of UnumProvident, who have had a
disability claim denied, terminated, or suspended by
UnumProvident on or after June 30, 1999. Plaintiffs assert bad
faith claims practices by UnumProvident in violation of ERISA.
Plaintiffs seek equitable and injunctive relief to require,
among other things, that UnumProvident re-evaluate all
previously denied, terminated, or suspended claims. This action
was transferred to the Eastern District of Tennessee as part of
the multidistrict litigation transfer order.
On September 17, 2003, the case of "Rudrud, et al. v.
UnumProvident Corporation, et al.," was filed in the United
States District Court for the District of Massachusetts. The
plaintiffs assert claims on behalf of a putative class of
disability participants insured under ERISA plans. The
complaint alleges that these claimants had their claims
improperly denied or terminated and that the Company breached
certain fiduciary duties owed to these participants in ERISA
plans. The complaint also alleges violations under RICO and
Massachusetts state law. The complaint seeks payment of
benefits, reversal of claim denials or contract rescissions and
re-determination by an independent person of claims of the named
plaintiffs and others similarly situated, appointment of a
master to oversee certain claim handling matters, restitution
and damages, and treble damages under RICO. This action was
transferred to the Eastern District of Tennessee as part of the
multidistrict litigation order.
On November 13, 2003, the case of "Dauphinee, et al. v.
UnumProvident, et al.," was filed in the United States District
Court for the Eastern District of Tennessee. This action is
brought as a putative class action lawsuit on behalf of
representative plaintiffs and all disabled individuals insured
under a UnumProvident long-term disability plan. The complaint
alleges that UnumProvident and its subsidiaries fraudulently and
otherwise unlawfully denied and terminated long-term disability
insurance benefits. Additionally, the complaint alleges misuse
of authority as an ERISA claims fiduciary. The complaint seeks
injunctive and declaratory relief to require, among other
things, that UnumProvident re-evaluate all previously denied,
terminated, or suspended claims.
On December 22, 2003, the Tennessee Federal District Court
entered an order consolidating all of the above actions other
than the Taylor action for all pretrial purposes under the
caption "In re UnumProvident Corp. ERISA Benefit Denial
Actions." Among other things, the Court in that order appointed
a lead counsel in the actions and directed lead counsel to file
a consolidated amended complaint in the "ERISA Benefit Denial
Actions," which was filed on February 20, 2004.
On March 26, 2004, the defendants answered the complaints in
these actions, and simultaneously filed a motion for judgment on
the pleadings in the ERISA Benefit Denial Actions. The Court
has not yet ruled upon that motion.
The parties have engaged in certain limited discovery in
connection with a Court-ordered mediation to take place later
this year, as well as certain discovery on the merits of the
claims asserted in the actions.
On April 9, 2004, the plaintiffs in Taylor and in the ERISA
Benefit Denial Actions separately filed motions seeking
certification of a plaintiff class. The defendants opposed each
of those motions. The Court has not yet ruled upon the motions.
The Court entered a schedule providing for the completion of all
pretrial proceedings in these actions by December 2005.
UNUMPROVIDENT CORPORATION: Limited Discovery Starts in TN Suit
--------------------------------------------------------------
Limited discovery is proceeding in the consolidated class action
filed against UnumProvident Corporation on behalf of a putative
class of participants and beneficiaries of the Company's 401(k)
Retirement Plan, in the United States District Court for the
Eastern District of Tennessee.
On April 29, 2003, the case of "Gee v. UnumProvident
Corporation, et al.," was filed. Similar allegations were
raised in "Scanlon v. UnumProvident Corp., et al.," filed May
16, 2003, in the Eastern District of Tennessee.
On October 2, 2003, the Court issued an order consolidating
these cases for all purposes. On January 9, 2004, plaintiffs
filed their consolidated amended complaint against
UnumProvident, several of its Officers and Directors, and
several Plan fiduciaries, purportedly on behalf of a putative
class of Plan participants and beneficiaries during the period
since November 17, 1999.
Plaintiffs allege that the named defendants violated the
fiduciary provisions of Employee Retirement Income Security Act
(ERISA) by making direct and indirect communications to Plan
participants that included material misrepresentations and
omissions regarding investment in UnumProvident stock. Further,
the plaintiffs allege the defendants failed to take action to
protect participants from losses sustained from investment in
the Plan's UnumProvident Stock Fund.
On February 26, 2004, the defendants filed a motion to dismiss
contending that the complaint failed to state a valid claim
under ERISA. That motion has not as of yet been ruled upon by
the Court. The parties have engaged in certain limited document
discovery in this action on issues unique to this action that
are not raised in the other action. The Court entered a
schedule providing for the completion of all pretrial
proceedings in these actions by December 2005.
New Securities Fraud Cases
AON CORPORATION: Murray Frank Lodges Securities Fraud Suit in IL
----------------------------------------------------------------
The law firm of Murray, Frank & Sailer LLP initiated a class
action lawsuit the United States District Court for the Northern
District of Illinois on behalf of purchasers of the securities
of Aon Corporation ("Aon" or the "Company") (NYSE:AOC) between
October 31, 2002, and October 18, 2004, inclusive (the "Class
Period").
The complaint alleges that defendants' publicly disseminated
Class Period statements were materially false and misleading
because, unbeknownst to investors, Aon engaged in an illegal
scheme engineered by defendants to steer business to favored
insurance companies in exchange for lucrative contingent
commissions. In collusion with preferred insurance carriers, Aon
routinely orchestrated illusory bidding competitions in which it
would designate a winner first and then urge other favored
insurance companies to submit inflated bids with the
understanding that Aon would make similar favorable arrangements
for the "losing" bidders in subsequent competitions. Aon
presented clients with the fictitious high quotes from the
insurance companies to create the appearance of a fair bidding
competition. Thus, the complaint alleges, Aon's Class Period
representations regarding its performance were materially false
and misleading because, among other reasons, they failed to
disclose that a material portion of defendants' revenues were
derived from illegal bid rigging and kickback schemes that was
inherently unsustainable and which subjected the Company to a
serious risk of regulatory penalties, potential criminal and
civil liability, and the loss of goodwill among its clients,
thereby compromising the Company's overall financial condition
and prospects for future business.
On October 14, 2004, New York Attorney General Eliot Spitzer
issued a press release, headlined "Investigation Reveals
Widespread Corruption in Insurance Industry," announcing his
filing of an action, in New York state Court, against insurance
broker Marsh & McLennan Cos. and two executives for rigging bids
and collecting fees from insurers for steering business their
way, pursuant to "contingent commission" agreements. The civil
complaint accuses the defendants of engaging in fraudulent
business practices, antitrust violations, securities fraud,
unjust enrichment and common law fraud. The press release
described wide-ranging fraud and improper conduct within the
insurance industry. In response to this announcement, and
widespread media coverage of the action, which sent shockwaves
throughout the insurance industry, the price of Aon common stock
dropped dramatically, falling 16% in one day, from a closing
price of $27.66 per share on October 13, 2004 to a closing price
of $23.18 per share on October 14. On October 15, 2004, The Wall
Street Journal reported that Aon was a target of Mr. Spitzer's
probe, having been served with a subpoena for documents related
to its contingent commission agreements. Numerous similar
articles, highlighting the corruption alleged in Mr. Spitzer's
complaint, and the fruits of their own investigations, were
published since then, causing Aon's stock price to decline
further. On October 22, 2004, SmartMoney reported that Mr.
Spitzer's office criticized Aon for "dragging its feet" in
complying with the investigation. Also that day, Aon issued a
press release announcing that "it is eliminating its practice of
accepting contingent commissions from underwriters." Aon's stock
closed at $19.35 on October 22, 2004, 30% below its closing
price prior to the breaking of the scandal.
For more details, contact Eric J. Belfi or Aaron Patton of
Murray, Frank & Sailer LLP by Phone: 800-497-8076 or
212-682-1818 by Fax: 212-682-1892 or by E-mail:
info@murrayfrank.com.
H&R BLOCK: Cotchett Pitre Lodges Securities Fraud Suit in CA
------------------------------------------------------------
The law firm of Cotchett, Pitre, Simon & McCarthy initiated a
class action lawsuit in the United States District Court for the
Northern District of California, on behalf of all persons and
entities who purchased Enron corporate bonds from defendant H&R
Block Financial Advisors, Inc. from October 29, 2001 through
November 27, 2001 (the "Class Period").
Plaintiffs' Complaint alleges causes of action under:
(1) section 10(b) of the Securities Exchange Act of 1934,
(2) fraud and concealment, and
(3) breach of fiduciary duty.
Plaintiffs allege that H&R Block Financial Advisors made false
statements and concealed material information in its sale of
Enron bonds to Class members. Specifically, plaintiffs allege
that during an approximate one-month period immediately
preceding Enron's bankruptcy on December 2, 2001, H&R Block
Financial Advisors, through its registered representatives,
solicited and sold Enron bonds without disclosing material facts
including known risks associated with the bonds due to Enron's
accounting and credit problems, H&R Block Financial Advisors'
internal decision to downgrade another Enron security due to
credit risks, and H&R Block Financial Advisors' internal
decision to pay increased incentives to brokers to sell the
bonds.
For more details, contact Cotchett, Pitre, Simon & McCarthy by
Mail: 840 Malcolm Road, Suite 200, Burlingame, CA 94010 or visit
their Web site: http://www.cpsmlaw.com.
JAKKS PACIFIC: Milberg Weiss Lodges Securities Fraud Suit in NY
---------------------------------------------------------------
The law firm of Milberg Weiss Bershad & Schulman LLP initiated a
class action lawsuit on behalf of all persons who purchased or
otherwise acquired the securities of JAKKS Pacific, Inc.
("JAKKS") (Nasdaq: JAKK) between December 3, 1999 and October
19, 2004, inclusive (the "Class Period"), seeking to pursue
remedies under the Securities Exchange Act of 1934 (the
"Exchange Act").
The action, Case No. 04-CV-9021, is pending before the Honorable
Kenneth M. Karas in the United States District Court for the
Southern District of New York, against defendants JAKKS, Jack
Friedman (Chairman and CEO), Stephen Berman (President and COO),
and Joel Bennett (CFO and Executive VP). According to the
complaint, defendants violated sections 10(b) and 20(a) of the
Exchange Act, and Rule 10b-5, by issuing a series of material
misrepresentations to the market during the Class Period.
The complaint alleges that JAKKS designs, develops, produces and
markets toys and related products using well-recognized
trademarks and brand names it licenses. Prior to the Class
Period, JAKKS licensed the rights from World Wrestling
Entertainment ("WWE"), an integrated media and entertainment
Company, to manufacture toys bearing the WWE brand name in the
United States. According to the Complaint, in pursuit of more
lucrative agreements with WWE, JAKKS bribed a senior WWE
executive, James Bell ("Bell"), who was responsible for
negotiating and managing license agreements, and WWE's licensing
agent, Stanley Shenker & Associates, Inc. ("SSAI"), among
others. In exchange for the bribes from JAKKS, laundered through
foreign corporations, Bell and SSAI agreed to assist JAKKS in
securing a WWE videogame license and favorable amendments to the
toy license. The complaint alleges that JAKKS's bribery scheme
was successful, and on or about February 10, 1997, WWE, at the
recommendation of SSAI and Bell, entered into an international
toy license agreement with JAKKS. In June 1998, SSAI and Bell
convinced WWE management to enter into a videogame license
agreement with THQ & Jakks Pacific LLC, a joint venture formed
by JAKKS and video game maker THQ Inc. The videogame license was
set to expire on December 31, 2009, subject to the right to
renew for an additional five years. At the recommendation of
SSAI and Bell, WWE extended the term of the domestic and
international toy license agreements with JAKKS to make them
conterminous with the videogame license. The WWE videogame
license and toy licenses were extremely lucrative for JAKKS.
Throughout the Class Period, JAKKS publicly reported quarter
after quarter of positive results which it attributed, in
material part, to its WWE product line. At all relevant times,
however, defendants failed to disclose that in order to get the
licenses, they had bribed SSAI and Bell, among others.
The truth began to emerge on October 19, 2004. On that day,
before the market opened, JAKKS issued a press release
announcing its third-quarter 2004 results and that the Company
was "engaged in discussions with WWE" over the validity of its
toy and video games license, stating that the discussions are an
outgrowth of certain litigation that has been pending between
WWE and WWE's former licensing consultant and a former WWE
employee. In the press release, JAKKS stated that if the
discussions with WWE are not satisfactorily concluded, the
litigation is likely to be commenced by WWE. In reaction to this
news, the price of JAKKS common stock declined precipitously,
falling $5.34 per share, or 22%, from its previous day's closing
price of $24.15, to close at $18.81. On the same day, October
19, 2004, after the market closed, Reuters published an article
reporting that WWE filed a complaint against JAKKS and the
Individual Defendants, among others, alleging that they had
perpetrated a massive bribery scheme involving lucrative
licensing deals, in violation of the Racketeer Influenced and
Corrupt Organization Act and anti-bribery laws. On the following
trading day, October 20, 2004, the price of JAKKS stock
plummeted again in reaction to this news, falling $5.85 per
share, or 31% from its closing price on October 19, 2004, to
close at $12.96. Defendants were motivated to engage in this
illegal and fraudulent bribery scheme in order for Company
insiders, including defendants, to sell hundreds of thousands of
shares of their personally-held JAKKS securities at artificially
inflated prices and to reap over $37.6 million in proceeds.
During the Class Period, defendant Jack Friedman himself sold
960,635 shares of JAKKS stock for proceeds of over $19.3
million.
For more details, contact Steven G. Schulman, Peter E. Seidman
or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New
York, NY 10119-0165 by Phone: (800) 320-5081 by E-mail:
sfeerick@milbergweiss.com or visit their Web site:
http://www.milbergweiss.com.
JAKKS PACIFIC: Schiffrin & Barroway Lodges Securities Suit in NY
----------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
Southern District of New York on behalf of all purchasers of the
common stock of the JAKKS Pacific, Inc. (Nasdaq: JAKK) ("JAKKS"
or the "Company") from February 16, 2000 through October 19,
2004, inclusive (the "Class Period").
The complaint charges JAKKS and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. More specifically, the Complaint alleges that the Company
failed to disclose and misrepresented the following material
adverse facts which were known to defendants or recklessly
disregarded by them:
(1) that JAKKS had obtained its lucrative WWE licenses
through an illegal bribery scheme;
(2) that JAKKS' success was predicated upon unsustainable
business tactics;
(3) that discovery of these unsustainable business tactics
would have material impact on the Company's business
model; especially, the revenue that JAKKS received from
the WWE licenses;
(4) that the Company's revenues and earnings would have
been significantly less had the Company not engaged in
the bribery scheme; and
(5) that as a result of JAKKS' unsustainable business
tactics and bribery scheme, the terms of the WWE
licenses could be materially modified, or revoked in
its entirety, and the Company would be exposed to
significant liability in the form of damages sought by
WWE.
On October 19, 2004, JAKKS issued a press release announcing
that it was "engaged in discussions with WWE concerning the
restructuring of its toy license and with WWE and THQ with
respect to the restructuring of the JAKKS THQ Joint Venture
video games license agreement with WWE." On news of this, shares
of JAKKS fell from $24.15 per share to $18.81 per share despite
the fact that JAKKS reported "record" results for the third
quarter and increased its earnings guidance for the fiscal year.
Then, later that day, the WWE Action was filed. The filing of
the WWE Action was made public after the market closed on
October 19, 2004. The next trading day, October 20, 2004, in
response to the news that the problems with the WWE were much
more pronounced and serious than the impression conveyed by
JAKKS' third quarter financial release, the price of JAKKS
common stock declined precipitously, falling from $18.81 per
share to $12.96 per share on extremely heavy trading volume.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Phone:
1-888-299-7706 or 1-610-667-7706 or by E-mail:
info@sbclasslaw.com.
REMEC INC.: Bernstein Liebhard Files Securities Fraud Suit in CA
----------------------------------------------------------------
The law firm of Bernstein Liebhard & Lifshitz, LLP initiated a
securities class action lawsuit in the United States District
Court for the Southern District of California, on behalf of all
persons who purchased or acquired Remec, Inc. (NASDAQ: REMC)
("Remec" or the "Company") securities (the "Class") between
September 8, 2003 and September 8, 2004, inclusive (the "Class
Period").
Plaintiff alleges that Remec, Ronald E. Ragland, and Winston E.
Hickman violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More
specifically, the complaint alleges that the Company failed to
disclose and misrepresented the following material, adverse
facts which were known to defendants or recklessly disregarded
by them:
(1) defendants used faulty assumptions with respect to
revenue growth and gross margins in the Wireless
Systems subsidiary, in determining if its goodwill was
impaired;
(2) due to the faulty assumptions, the defendants failed to
take timely goodwill impairments;
(3) as a consequence of the foregoing, the Company's
announced financial results were in violation of
generally accepted accounting principles ("GAAP");
(4) the Company lacked adequate internal controls; and
(5) the Company's financial results were materially
inflated at all relevant times.
On September 9, 2004, Remec filed a Form 10-Q with the SEC for
the Company's second quarter of fiscal year 2005, which ended
July 30, 2004. The filing occurred a few hours after the filing
deadline. The reason for the delay was to allow management
additional time to finalize the required accounting disclosures
associated with the goodwill impairment charge. The Company also
stated that it had begun a detailed assessment of its internal
controls. Shares of Remec fell $1.00 per share or 18.87%, on
September 9, 2004, to close at $4.30 per share.
For more details, contact the Shareholder Relations Department
of Bernstein Liebhard & Lifshitz, LLP by Mail: 10 East 40th
Street, New York, NY 10016 by Phone: 800-217-1522 or
212-779-1414 or by E-mail: REMC@bernlieb.com.
*********
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*********
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Copyright 2004. All rights reserved. ISSN 1525-2272.
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