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C L A S S A C T I O N R E P O R T E R
Monday, March 28, 2005, Vol. 7, No. 60
Headlines
ARKANSAS: AG Mike Beebe Bares Share in $36M Remeron Settlement
AVICI SYSTEMS: NY Court Preliminarily Approves Suit Settlement
BAXTER INTERNATIONAL: Supreme Court Allows Discovery To Proceed
BEMIS CO.: Briefing on Antitrust Suit Certification To End Nov.
BLUE COAT: NY Court Preliminarily Approves Stock Suit Settlement
BODYSCAN CORPORATION: SEC Launches Federal Securities Complaint
CALIFORNIA: AFL-CIO Lauds Apprentices' Fiduciary Lawsuit V. ABC
CALIFORNIA: AG Bares Results of Campaign V. Work-At-Home Scams
COMMUNITY HEALTH: Uninsured Patients Launch Lawsuit in AL Court
COMMUNITY HEALTH: Faces Uninsured Patients' Lawsuit in PA Court
COMMUNITY HEALTH: Uninsured Patients Launch Fraud Lawsuit in IL
CREATIVE LABS: Settles Lawsuits Over Cards' Deceptive Marketing
FINISAR CORPORATION: NY Court Approves Stock Lawsuit Settlement
FIRST HORIZON: Plaintiffs Seek Review of Stock Lawsuit Dismissal
GATEWAY INTERNATIONAL: SEC Lodges Suit V. UT, FL Stock Promoters
GLOBUS MEDIA: Attorney General Warns V. Using Home-Use Test Kits
GRACO CHILDREN'S: Recalls 1.2M Toddler Beds Due To Injury Hazard
J.P. MORGAN: Agrees To Pay $120M To Settle Bank One Suit in IL
KATZMAN & KORR: Settles Homeowners' Complaint Over Liens Filings
MEDICAL STAFFING: Asks FL Court To Dismiss Securities Fraud Suit
MICHIGAN: ACLU Mulls Joining Lawsuit Over Jail Stripping Policy
MICROTUNE INC.: NY Court Preliminarily Approves Suit Settlement
MICROTUNE INC.: Reaches Settlement For TX Securities Fraud Suit
NEW YORK: Federal Judge Finds Families Eligible For Food Stamps
QWEST COMMUNICATIONS: U.S. West Retirees File Death Benefit Suit
SALTON INC.: AG King Presents George Foreman Grill Settlement
USIS COMMERCIAL: Judge OKs Suit Over Driver's Work Histories
SEASPECIALTIES: Recalls Salmon, Snacks Due To Listeria Content
TIME WARNER: Pays $300M, Restates Results To Settle SEC Charges
UNITED STATES: CTIA Asks FCC For Protection From ETF Complaints
UTA-BVI LTD.: SEC Lodges Suit Over Misappropriation Of Funds
WASHINGTON: Lawsuit Launched To Fight Amended Assistance Program
New Securities Fraud Cases
AUDIBLE INC.: Spector Roseman Lodges Securities Fraud Suit in NJ
CELL THERAPEUTICS: Milberg Weiss Lodges Securities Lawsuit in WA
DELPHI CORPORATION: Finkelstein Lodges Securities Lawsuit in OH
MAMMA.COM INC.: Stull Stull Lodges Securities Fraud Suit in NY
TEXTAINER EQUIPMENT: Abraham Fruchter Files CA Securities Suit
*********
ARKANSAS: AG Mike Beebe Bares Share in $36M Remeron Settlement
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Arkansans will be among the thousands of consumers eligible to
recover money from a $36-million settlement reached between all
50 states and the maker of the antidepressant drug Remeron,
state Attorney General Mike Beebe announced in a statement.
Consumers who purchased Remeron or its generic equivalent,
mirtazapine, between June 15, 2001 and January 25, 2005, can
file a claim to recover some of their out-of-pocket expenses for
purchasing the drug. Such claims must be filed by June 13, 2005.
The settlement arose after the states sued the drug's
manufacturer, Organon USA Inc., and its parent Company, Akzo
Nobel N.V., for antitrust violations. In the suit, the states
alleged that Organon obtained an improper patent to delay the
release of less expensive generic versions of the drug. The
states never questioned the safety or effectiveness of Remeron,
only alleging that Organon tried to manipulate the market for
the drug. Organon admits no wrongdoing in the settlement.
"This is another noteworthy example of states working together
as consumer advocates to prevent drug companies from illegally
maintaining high costs for prescription drugs," Mr. Beebe said.
"It can be difficult enough for consumers to afford their
medications without compounding the problem with illegal pricing
practices. It's gratifying to know that those Arkansans who
qualify will be able to recover some of their out-of-pocket
payments for this drug."
The amount of individual consumer refunds is not yet known, but
once the settlement is court-approved approximately one-third of
the final amount will be available for consumer claims
nationwide. Some state programs that purchase the drug will also
see refunds under the settlement. The effort to inform
consumers of their potential eligibility will include
advertisements in nationwide publications, and coordinated
efforts with pharmacists and psychiatrists to notify individual
consumers.
Consumers wishing to file a claim in the Remeron settlement may
call toll-free at 1-866-401-6807 or visit the settlement's Web
site at http://www.remeronsettlement.com.Again, claims must be
filed by June 13, 2005. Anyone wishing to opt-out of the class-
action settlement must do so by April 27, 2005.
AVICI SYSTEMS: NY Court Preliminarily Approves Suit Settlement
--------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
securities class action filed against the Company, one or more
of its underwriters of its initial public offering (IPO) and
certain of its officers and directors.
Twelve purported securities class action lawsuits were initially
filed, alleging violations of the federal securities laws,
namely:
(1) Felzen, et al. v. Avici Systems Inc., et al., C.A. No.
01-CV-3363;
(2) Lefkowitz, et al. v. Avici Systems Inc., et al., C.A.
No. 01-CV-3541;
(3) Lewis, et al. v. Avici Systems Inc., et al., C.A. No.
01-CV-3698;
(4) Mandel, et. al v. Avici Systems Inc., et al., C.A. No.
01-CV-3713;
(5) Minai, et al. v. Avici Systems Inc., et al., C.A. No.
01-CV-3870;
(6) Steinberg, et al. v. Avici Systems Inc., et al., C.A.
No. 01-CV-3983;
(7) Pelissier, et al. v. Avici Systems Inc., et al., C.A.
No. 01-CV-4204;
(8) Esther, et al. v. Avici Systems Inc., et al., C.A. No.
01-CV-4352;
(9) Zhous, et al. v. Avici Systems Inc. et al., C.A. No.
01-CV-4494;
(10) Mammen, et al. v. Avici Systems Inc., et. al., C.A. No.
01-CV-5722;
(11) Lin, et al. v. Avici Systems Inc., et al., C.A. No. 01-
CV-5674; and
(12) Shives, et al. v. Banc of America Securities, et al.,
C.A. No. 01-CV-4956.
On April 19, 2002, a consolidated amended class action
complaint, which superseded these twelve purported securities
class action lawsuits, was filed in the Court. The Complaint is
captioned "In re Avici Systems, Inc. Initial Public Offering
Securities Litigation (21 MC 92, 01 Civ. 3363 (SAS)" and names
as defendants the Company, certain of the underwriters of its
initial public offering, and certain of its officers and
directors.
The Complaint, which seeks unspecified damages, alleges
violations of the federal securities laws, including among other
things, that the underwriters of the Company's initial public
offering improperly required their customers to pay the
underwriters excessive commissions and to agree to buy
additional shares of Company stock in the aftermarket as
conditions of receiving shares in the Company's IPO. The
Complaint further claims that these supposed practices of the
underwriters should have been disclosed in the IPO prospectus
and registration statement.
In addition to the Complaint against the Company, various other
plaintiffs have filed other substantially similar class action
cases against approximately 300 other publicly traded companies
and their IPO underwriters in New York City, which along with
the case against the Company have all been transferred to a
single federal district judge for purposes of case management.
On July 15, 2002, the Company, together with the other issuers
named as defendants in these coordinated proceedings, filed a
collective motion to dismiss the consolidated amended complaints
against them on various legal grounds common to all or most of
the issuer defendants. On October 9, 2002, the Court dismissed
without prejudice all claims against the individual current and
former officers and directors who were named as defendants in
the Company litigation, and they are no longer parties to the
lawsuit. On February 19, 2003, the Court issued its ruling on
the motions to dismiss filed by the issuer defendants and
separate motions to dismiss filed by the underwriter defendants.
In that ruling, the Court granted in part and denied in part
those motions.
As to the claims brought against Avici under the antifraud
provisions of the securities laws, the Court dismissed all of
these claims with prejudice, and refused to allow the plaintiffs
an opportunity to re-plead these claims against the Company. As
to the claims brought under the registration provisions of the
securities laws, which do not require that intent to defraud be
pleaded, the Court denied the motion to dismiss these claims as
to the Company and as to substantially all of the other issuer
defendants as well. The Court also denied the underwriter
defendants' motion to dismiss in all respects.
In June 2003, the Company elected to participate in a proposed
settlement agreement with the plaintiffs in this litigation. If
ultimately approved by the Court, this proposed settlement would
result in the dismissal, with prejudice, of all claims in the
litigation against the Company and against any of the other
issuer defendants who elect to participate in the proposed
settlement, together with the current or former officers and
directors of participating issuers who were named as individual
defendants. The proposed settlement does not provide for the
resolution of any claims against the underwriter defendants, and
the litigation as against those defendants is continuing. The
proposed settlement provides that the class members in the class
action cases brought against the participating issuer defendants
will be guaranteed a recovery of $1 billion by insurers of the
participating issuer defendants. If recoveries totaling $1
billion or more are obtained by the class members from the
underwriter defendants, however, the monetary obligations to the
class members under the proposed settlement will be satisfied.
In addition, the Company and any other participating issuer
defendants will be required to assign to the class members
certain claims that they may have against the underwriters of
their IPOs.
The proposed settlement contemplates that any amounts necessary
to fund the settlement or settlement-related expenses would come
from participating issuers' directors and officers liability
insurance policy proceeds as opposed to funds of the
participating issuer defendants themselves. A participating
issuer defendant could be required to contribute to the costs of
the settlement if that issuer's insurance coverage were
insufficient to pay that issuer's allocable share of the
settlement costs.
Consummation of the proposed settlement is conditioned upon
obtaining both preliminary and final approval by the Court.
Formal settlement documents were submitted to the Court in June
2004, together with a motion asking the Court to preliminarily
approve the form of settlement. Certain underwriters who were
named as defendants in the settling cases, and who are not
parties to the proposed settlement, opposed preliminary approval
of the proposed settlement of those cases. On February 15,
2005, the Court issued an order preliminarily approving the
proposed settlement in all respects but one. The plaintiffs and
the issuer defendants are in the process of assessing whether to
proceed with the proposed settlement, as modified by the Court.
If the plaintiffs and the issuer defendants elect to proceed
with the proposed settlement, as modified by the Court, they
will submit revised settlement documents to the Court. The
underwriter defendants may then have an opportunity to object to
the revised settlement documents. If the Court approves the
revised settlement documents, it will direct that notice of the
terms of the proposed settlement be published in a newspaper and
mailed to all proposed class members and schedule a fairness
hearing, at which objections to the proposed settlement will be
heard. Thereafter, the Court will determine whether to grant
final approval to the proposed settlement.
BAXTER INTERNATIONAL: Supreme Court Allows Discovery To Proceed
---------------------------------------------------------------
The U.S. Supreme Court has allowed discovery to proceed in a
class-action securities lawsuit that accuses Baxter
International Inc. of issuing misleading financial forecasts,
the Chicago Tribune reports.
The Deerfield-based medical products giant had filed an appeal
with the high court, but justices decided, without comment, not
to review the matter.
Baxter investors had first sued the Company in 2002 after the
Company disclosed that sales and profits would not meet
previously stated forecasts. That lawsuit alleges that the
Company knowingly released materially false statements that were
not protected by the warnings.
A U.S. District Court judge in Chicago initially threw out the
lawsuit however, the 7th U.S. Circuit Court of Appeals in
Chicago later reinstated the class-action proceeding, allowing
discovery in the case.
According to a 7th Circuit three-judge panel, facts surrounding
the corporate disclosures "raises the possibility" that the
Company's public disclosures were stronger than its internal
projections. Furthermore, the 7th Circuit said discovery was
necessary, but adds "the safe harbor may yet carry the day,"
referring to SEC rules that absolve firms of liability if they
made a good-faith effort to comply with the law.
At the announcement of the ruling, Baxter expressed
disappointment in the Supreme Court's decision and vowed to
forge ahead with its fight against the shareholders' suit.
According to Deborah Spak, Baxter spokeswoman, "We sought the
Supreme Court's review of this earlier decision because of the
split among the federal circuit courts and the uncertainty that
they created with regard to safe harbor for forward looking
statements. We are disappointed that the Supreme Court declined
to hear our appeal. But we will nevertheless continue to
vigorously defend this groundless lawsuit."
Additional suits, some of which were consolidated into this
case, were filed in 2003 and 2004 after the Company made
additional changes to its forecasts.
Numerous business groups had filed legal briefs in support of
Baxter with the Supreme Court urging review of the case. The
Business Roundtable, in its brief, even argued that the 7th
Circuit decision could affect how public companies across the
country handle disclosures. "The ramifications of the decision
below could be enormous," it wrote, adding that companies "may
choose to avoid making forward-looking disclosures rather than
risk lawsuits like this one."
Attorneys for the investors though have rejected such claims.
BEMIS CO.: Briefing on Antitrust Suit Certification To End Nov.
---------------------------------------------------------------
Briefing on the motion for class certification for the antitrust
suit filed against Bemis Co., Inc. and its wholly-owned
subsidiary, Morgan Adhesives Company, in the United States
District Court for the Middle District of Pennsylvania is
expected to end in November 2005.
Twelve civil lawsuits were initially filed against the Company,
five of which purport to represent a nationwide class of
labelstock purchasers, and each alleges a conspiracy to fix
prices within the self-adhesive labelstock industry.
On November 5, 2003, the Judicial Panel on Multi-District
Litigation (JPMDL) issued a decision consolidating all of the
federal class actions for pretrial purposes in the United States
District Court for the Middle District of Pennsylvania, before
the Honorable Chief Judge Vanaskie. Judge Vanaskie entered an
order calling for discovery to be taken on the issues relating
to class certification and briefing on plaintiffs' motion for
class certification to be completed in November 2005. At this
time, a discovery cut-off and a trial date have not been set.
The Company is also named in four lawsuits filed in the
California Superior Court in San Francisco. Three of these
lawsuits ask to represent a class of all California indirect
purchasers of labelstock and each alleged a conspiracy to fix
prices within the self-adhesive labelstock industry. These
three lawsuits have been consolidated. The fourth lawsuit seeks
to represent a class of California direct purchasers of
labelstock and alleges a conspiracy to fix prices within the
self-adhesive labelstock industry. Finally, the Company has been
named in one lawsuit in Vermont, seeking to represent a class of
all Vermont indirect purchasers of labelstock, one lawsuit in
Ohio, seeking to represent a class of all Ohio indirect
purchasers of labelstock, and one lawsuit in Tennessee, seeking
to represent a class of purchasers of labelstock in various
jurisdictions, all alleging a conspiracy to fix prices within
the self-adhesive labelstock industry.
BLUE COAT: NY Court Preliminarily Approves Stock Suit Settlement
----------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
consolidated securities class action filed against Blue Coat
Systems, Inc., the firms that underwrote the Company's initial
public offering, and some of its officers and directors, styled
"In re CacheFlow, Inc. Initial Public Offering Securities
Litigation, Civil Action No. 1-01-CV-5143."
An additional putative securities class action has been filed in
the United States District Court for the Southern District of
Florida. The Court in the Florida case dismissed the Company and
individual officers and directors from the action without
prejudice.
The complaints in the New York and Florida cases generally
allege that the underwriters obtained excessive and undisclosed
commissions in connection with the allocation of shares of
common stock in the Company's initial public offering, and
maintained artificially high market prices through tie-in
arrangements which required customers to buy shares in the
after-market at pre-determined prices. The complaints allege
that the Company and its current and former officers and
directors violated Sections 11 and 15 of the Securities Act of
1933, and Sections 10(b) (and Rule 10b-5 promulgated thereunder)
and 20(a) of the Securities Exchange Act of 1934, by making
material false and misleading statements in the prospectus
incorporated in the Company's Form S-1 Registration Statement
filed with the Securities and Exchange Commission in November
1999. Plaintiffs seek an unspecified amount of damages on
behalf of persons who purchased the Company's stock between
November 19, 1999 and December 6, 2000. A lead plaintiff has
been appointed for the consolidated cases pending in New York.
On April 19, 2002 plaintiffs filed an amended complaint.
Various plaintiffs have filed similar actions asserting
virtually identical allegations against over 300 other public
companies, their underwriters, and their officers and directors
arising out of each Company's public offering. The lawsuits
against the Company, along with these other related securities
class actions currently pending in the Southern District of New
York, have been assigned to Judge Shira A. Scheindlin for
coordinated pretrial proceedings and are collectively captioned
"In re Initial Public Offering Securities Litigation Civil
Action No. 21-MC-92."
Defendants in these cases have filed omnibus motions to dismiss.
On February 19, 2003, the Court denied in part and granted in
part the motion to dismiss filed on behalf of defendants,
including the Company. The Court's order did not dismiss any
claims against the Company. As a result, discovery may now
proceed. The Company's officers and directors have been
dismissed without prejudice in this litigation.
In June 2004, a stipulation of settlement and release of claims
against the issuer defendants, including the Company, was
submitted to the Court for approval. Under the settlement, the
plaintiffs would dismiss and release all claims against
participating defendants, including the Company, in exchange for
a contingent payment undertaking by the insurance companies
collectively responsible for insuring the issuer defendants in
the coordinated action, and assignment or surrender to the
plaintiffs of certain claims the issuer defendants may have
against the underwriters. Pursuant to the undertaking, the
insurers would be required to pay the amount, if any, by
which $1 billion exceeds the total amount ultimately collected
by the plaintiffs from the underwriter defendants in the
coordinated action. The settlement is subject to a number of
conditions, including Court approval. If the settlement does not
occur, litigation against the Company would continue.
BODYSCAN CORPORATION: SEC Launches Federal Securities Complaint
---------------------------------------------------------------
The Securities and Exchange Commission initiated a complaint
against BodyScan Corporation, a Company whose shares are quoted
on the Pink Sheets under the symbol "BDYS", and Anthony Sciuto,
age 59, of San Clemente, Calif., BodyScan's president and CEO,
charging them with making a series of materially false and
misleading statements about their operation of "imaging centers"
in violation of the antifraud provisions of the federal
securities laws.
BodyScan, a Nevada corporation located in Irvine, Calif.,
purports to operate diagnostic or "imaging" centers that utilize
electron-beam scanners to detect disease or other abnormalities
of the internal organs at an early stage. The Commission's
complaint alleges that, from November 2003 to the present, the
defendants made and disseminated false statements concerning the
number of imaging centers operated by BodyScan, the Company's
prospects for growth, and its anticipated earnings. According
to the complaint, BodyScan issued a series of press releases
between November 2003 and February 2004 wherein it stated that
it operated up to eight imaging centers throughout the United
States. BodyScan reinforced and expanded upon that
representation by providing contact information for 11 imaging
centers on its website until August 2004. Sciuto made
additional misrepresentations in a May 2004 interview with an
online investor newsletter, in which he stated that BodyScan was
"negotiating" to acquire 12 additional imaging centers, was "on
track" to have 20 imaging centers operating within one year, and
that Company sales would be "around the $20 million mark" for
year-end 2004.
The statements concerning the number of imaging centers operated
by BodyScan were false and Sciuto's projections concerning the
growth of the number of imaging centers and year-end Company
sales were made without a good faith basis. In reality, the
number of BodyScan imaging centers had been dwindling since
early 2003, due to the Company's failure to remain current on
its premises and equipment-leasing obligations. As of January
2004, BodyScan operated only three imaging centers, only two of
which had functioning machinery. By March 2004, BodyScan was
unable to service patients at any of its imaging centers.
The Commission has charged BodyScan and Sciuto with violating
Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. The Commission seeks a final judgment
permanently enjoining the defendants from future violations of
the antifraud provisions, civil penalties, and an order that
bars Sciuto from serving as an officer or director of any
Company.
The Commission acknowledges the cooperation and assistance of
the Australian Securities & Investments Commission in this
matter. The action is entitled, SEC v. Bodyscan Corporation and
Anthony Sciuto, Civil Action No. SACV 05-256 DOC, RNBx, C.D.
Cal.] (LR-19141).
CALIFORNIA: AFL-CIO Lauds Apprentices' Fiduciary Lawsuit V. ABC
---------------------------------------------------------------
President Edward C. Sullivan, Building and Construction Trades
Department, AFL-CIO, lauded Southern California apprentices for
their effort to stop alleged unethical and unlawful practices of
the Associated Builders and Contractors (ABC) of Southern
California. "Unfortunately, what the ABC in California is trying
to get away with is not an isolated case. Recent research
uncovered no less that 18 other ABC chapters around the country
that appear to be involved in the breaches of fiduciary
responsibility."
On March 15, California apprentices filed a class action lawsuit
for breach of fiduciary duty against the Associated Builders and
Contractors of Southern California, a non-union construction
contractors' association, and the trustees of a trust fund set
up by the contractors' association to receive contributions for
apprenticeship training.
The lawsuit, filed in federal court in Los Angeles, alleges that
the defendants used apprenticeship trust fund money to support
the contractors' association rather than to pay for
apprenticeship programs.
The plaintiffs are asking the Court to appoint new trustees and
to order the return of any trust funds that were misused. The
suit is based on the federal Employee Retirement Income Security
Act (ERISA), which regulates apprenticeship trust funds.
The class action lawsuit follows an extensive report by the
Building Trades Department that found flawed and incomplete
financial reporting by the chapters and apprenticeship programs
of the Associated Builders and Contractors throughout the United
States. The State Building and Construction Trades Council of
California has already called on Attorney General Bill Lockyer
to conduct an investigation into whether training funds are
being misused in California.
"The vast majority of apprenticeship programs in California are
jointly run by labor and management to ensure that the interests
of both apprentices and employers are protected," said Robert L.
Balgenorth, President of the State Building and Construction
Trades Council of California. "The ABC programs are run solely
by employers so there is a risk that apprentices will be
exploited and training funds will be misused by employers. These
allegations of breach of fiduciary duty should receive very
serious consideration from the courts," Mr. Balgenorth said.
CALIFORNIA: AG Bares Results of Campaign V. Work-At-Home Scams
--------------------------------------------------------------
California Attorney General Bill Lockyer announced that a major
state-federal crackdown on unscrupulous marketers of work-at-
home scams and "business opportunity" plans has produced
criminal and civil enforcement actions against more than 200
operations that have victimized tens of thousands of consumers
in California and across the country.
"Consumers should be wary of television, radio or newspaper
advertisements that promote can't-miss `business opportunities'
that will bring them lots of money if they buy a product and
resell it to the public," said Attorney General Lockyer. "The
products often are very difficult to resell and have hidden
costs. What's worse, the victims of these scams can lose their
life savings."
The enforcement sweep, known as Project Biz Opp Flop, is a
coordinated effort launched by the Attorney General's office,
law enforcement agencies in 13 other states, the Federal Trade
Commission (FTC), the U.S. Department of Justice (DOJ) and the
U.S. Postal Inspection Service (USPIS). To date, more than 200
operations have been charged with criminal or civil violations
of fraud and consumer protection laws.
Business opportunity and work-at-home fraud can cause
substantial consumer injury. In the FTC actions alone, consumers
lost more than $100 million. In the California cases, the
defendants defrauded victims out of more than $250,000.
Project Biz Opp Flop contains four key components: civil actions
filed by state enforcement agencies; civil enforcement actions
filed by the FTC; civil penalty actions filed by the DOJ on
behalf of the FTC; and criminal prosecutions. The civil actions
filed by law enforcement agencies in 14 states, including
Attorney General Lockyer's office, have produced fines against
fraudulent work-at-home promoters and orders requiring the
defendants to provide restitution to victims. Additionally,
these actions have resulted in cease and desist orders, consent
agreements or judgments to end the unlawful practices. The
defendants in these actions are located in 24 states and Canada,
with the greatest number in California (11), Florida (26) and
Arizona (7).
The Attorney General has brought enforcement actions against a
number of companies which marketed business opportunity plans to
sell vending machines that dispense pre-paid telephone cards and
pre-paid debit cards. Those lawsuits yielded court orders
prohibiting the unlawful practices, requiring victim restitution
and awarding civil penalties.
Project Biz Opp Flop includes 16 FTC actions against 31
corporate defendants and 33 individual defendants. The
defendants marketed work-at-home opportunities involving
refrigerator magnets, medical billing, Web design and envelope-
stuffing, as well as snack and soda vending machine and surplus
goods brokerage businesses. In some cases, the promoters
overstated the demand for the products, according to the FTC. In
others, such as vending machine businesses, the operators
allegedly misrepresented the amount of assistance they would
provide the franchisee. All but one of the operations targeted
by the FTC allegedly shared one common element: unsubstantiated
or deceptive earnings claims. The FTC also announced the
referral of four new civil penalty cases to DOJ based on alleged
violations of the Franchise Rule.
On the criminal side, the U.S. Attorney's Office for the
Southern District of Florida - working with the FTC's Criminal
Liaison Unit, USPIS and the DOJ's Office of Consumer Litigation
- recently filed charges against 14 individuals operating
business opportunity scams.
Attorney General Lockyer reminded California consumers that if
they are considering investing in a business opportunity plan
they should make sure they obtain all necessary information
about the program before they sign a contract. California law,
he added, requires franchise sellers to register with the state
Department of Corporations, and requires sellers of other
business opportunities to file with the Attorney General's
Office.
"Before investing, consumers should talk with a friend or
financial advisor, and ensure the Company is properly registered
with the state and provides the disclosures required by
California law," he said.
To help spot and avoid business opportunity scams, consumers
should visit the FTC's web site at http://www.ftc.gov/bizoppsor
http://www.ftc.gov/workathomefor information in both English
and Spanish. Consumers who believe they have been victimized by
such scams can contact the Public Inquiry Unit of the Attorney
General's Office by writing to P.O. Box 944255, Sacramento, CA
94244-2550, or by visiting the Attorney General's web site at
http://www.ag.ca.gov/consumers/mailform.htm.
COMMUNITY HEALTH: Uninsured Patients Launch Lawsuit in AL Court
---------------------------------------------------------------
Community Health Systems, Inc. faces a class action filed in the
Circuit Court of Barbour County, Alabama (Eufaula Division)
styled "Arleana Lawrence and Robert Hollins v Lakeview Community
Hospital and Community Health Systems, Inc."
This alleged class action was initiated by the plaintiffs on
behalf of themselves and as the representatives of similarly
situated uninsured individuals who were treated at the Company's
Lakeview Hospital or any of its other Alabama hospitals. The
plaintiffs allege that uninsured patients who do not qualify for
Medicaid, Medicare or charity care are charged unreasonably high
rates for services and materials and that the Company uses
unconscionable methods to collect bills. The plaintiffs seek
restitution of overpayment, compensatory and other allowable
damages and injunctive relief.
COMMUNITY HEALTH: Faces Uninsured Patients' Lawsuit in PA Court
---------------------------------------------------------------
Community Health Systems, Inc. faces a class action filed in the
Court of Common Pleas, Montgomery County, Pennsylvania, styled
"James Monroe v Pottstown Memorial Hospital and Community Health
Systems, Inc."
This alleged class action was brought by the plaintiff on behalf
of himself, and as the representative of similarly situated
uninsured individuals who were treated at the Company's
Pottstown Memorial Hospital or any of its other Pennsylvania
hospitals. The plaintiff alleges that uninsured patients who do
not qualify for Medicaid, Medicare or charity care are charged
unreasonably high rates for services and materials and that we
use unconscionable methods to collect bills. The plaintiff
seeks recovery under the Pennsylvania Unfair Trade Practices and
Consumer Protection Law, restitution of overpayment,
compensatory and other allowable damages and injunctive relief.
COMMUNITY HEALTH: Uninsured Patients Launch Fraud Lawsuit in IL
---------------------------------------------------------------
Community Health Systems, Inc. faces a class action filed in the
Circuit Court of Williamson County, Illinois, styled "Sheri Rix
v. Heartland Regional Medical Center and Health Care Systems,
Inc."
This alleged class action was brought by the plaintiff on behalf
of herself and as the representative of similarly situated
uninsured individuals who were treated at our Heartland Regional
Medical Center. The plaintiff alleges that uninsured patients
who do not qualify for Medicaid, Medicare or charity care are
charged unreasonably high rates for services and materials and
that the Company uses unconscionable methods to collect bills.
The plaintiff seeks recovery for breach of contract and the
covenant of good faith and fair dealing, violation of the
Illinois Consumer Fraud and Deceptive Practices Act, restitution
of overpayment, and for unjust enrichment. The plaintiff class
seeks compensatory and other damages and equitable relief.
CREATIVE LABS: Settles Lawsuits Over Cards' Deceptive Marketing
---------------------------------------------------------------
Singaporean soundcard maker, Creative Labs, has agreed to settle
a class action lawsuit related to misleading marketing of its
Audigy and Extigy range, The Inquirer.net reports.
According to court documents, the settlement was apparently
agreed in principle at the end of last year, but few potential
claimants yet know about it.
Creative claimed that the products in question could handle 24-
bit audio at 96Khz - indeed this was stated on the product boxes
in bold letters, and in all advertising. However, complaints
filed in 2003 pointed out that this was only true in a very
limited set of circumstances, and pretty much all of the audio
passing through the cards would actually be processed at lower
quality.
The difference probably wouldn't concern the average gamer or
casual MP3 enthusiast, but the labeling outraged many of those
planning to use the Creative cards for professional-quality
audio.
Owners of all of the original Audigy series are included in the
proposed settlement. This includes the Audigy ES, Audigy
Platinum, Audigy Platinum eX, Audigy Gamer, Audigy MP3+ and also
the original Extigy external USB sound module.
Creative did not admit liability, but graciously agreed to
settle the embarrassing case. Anyone, anywhere, who purchased
one of these products before the end of 2004, and is unhappy
with the audio processing, will be able to get 25% off the cost
of their next purchase from Creative's website, up to a limit of
$62.50. Potential claimants have until September 25, 2005 to
avail of the money.
Meanwhile, the lawyers who helped inflict this savage punishment
on Creative will get up to $470,000 for their work on the case.
Court documents also revealed that the three individuals who
originally filed the complaint receive a mere $1000 to $3000 for
all their trouble.
The case is entitled, Holt v. Creative Labs, Inc., San Francisco
Superior Court (Case No.CGC-03-418809).
FINISAR CORPORATION: NY Court Approves Stock Lawsuit Settlement
---------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the securities class
action filed against Finisar Corporation and:
(1) Jerry S. Rawls, President and Chief Executive Officer,
(2) Frank H. Levinson, Chairman of the Board and Chief
Technical Officer,
(3) Stephen K. Workman, Senior Vice President and Chief
Financial Officer, and
(4) an investment banking firm that served as an
underwriter for the Company's initial public offering
in November 1999 and a secondary offering in April
2000.
The suit was filed on behalf of all persons who purchased the
Company's common stock from November 17, 1999 through December
6, 2000. The complaint, as subsequently amended, alleges
violations of Sections 11 and 15 of the Securities Act of 1933
and Sections 10(b) and 20(b) of the Securities Exchange Act of
1934, on the grounds that the prospectuses incorporated in the
registration statements for the offerings failed to disclose,
among other things, that the underwriter had solicited and
received excessive and undisclosed commissions from certain
investors in exchange for which the underwriter allocated to
those investors material portions of the shares of the Company's
stock sold in the offerings and the underwriter had entered into
agreements with customers whereby the underwriter agreed to
allocate shares of the Company's stock sold in the offerings to
those customers in exchange for which the customers agreed to
purchase additional shares of the Company's stock in the
aftermarket at pre-determined prices. No specific damages are
claimed.
Similar allegations have been made in lawsuits relating to more
than 300 other initial public offerings conducted in 1999 and
2000, which were consolidated for pretrial purposes. In October
2002, all claims against the individual defendants were
dismissed without prejudice. On February 19, 2003, the Court
denied the Company's motion to dismiss the complaint.
In July 2004, the Company and the individual defendants accepted
a settlement proposal made to all of the issuer defendants.
Under the terms of the settlement, the plaintiffs will dismiss
and release all claims against participating defendants in
exchange for a contingent payment guaranty by the insurance
companies collectively responsible for insuring the issuers in
all the related cases, and the assignment or surrender to the
plaintiffs of certain claims the issuer defendants may have
against the underwriters. Under the guaranty, the insurers will
be required to pay the amount, if any, by which $1 billion
exceeds the aggregate amount ultimately collected by the
plaintiffs from the underwriter defendants in all the cases. If
the plaintiffs fail to recover $1 billion and payment is
required under the guaranty, the Company would be responsible to
pay its pro rata portion of the shortfall, up to the amount of
the self-insured retention under its insurance policy, which may
be up to $2 million. The timing and amount of payments that the
Company could be required to make under the proposed settlement
will depend on several factors, principally the timing and
amount of any payment by the insurers pursuant to the $1 billion
guaranty. The settlement is subject to final approval of the
Court, which cannot be assured.
FIRST HORIZON: Plaintiffs Seek Review of Stock Lawsuit Dismissal
----------------------------------------------------------------
Plaintiffs asked the United States District Court for the
Northern District of Georgia to reconsider its dismissal of the
consolidated securities class action filed against First Horizon
Pharmaceuticals, Inc. and certain of its former and current
officers and directors.
Plaintiffs in the class action litigation alleged in general
terms that the Company violated Sections 11 and 12(a)(2) of the
Securities Act of 1933 and that the Company violated Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. In an amended complaint,
Plaintiffs claimed that the Company issued a series of
materially false and misleading statements to the market in
connection with its public offering on April 24, 2002 and
thereafter relating to alleged "channel stuffing" activities.
The amended complaint also alleged controlling person liability
on behalf of certain of the Company's officers under Section 15
of the Securities Act of 1933 and Section 20 of the Securities
Exchange Act of 1934. Plaintiffs sought an unspecified amount
of compensatory damages in an amount to be proven at trial.
On September 29, 2004, the court dismissed, without prejudice,
the class action lawsuit. Although the class action lawsuit was
dismissed, the court granted the plaintiffs the right to refile
their class action lawsuit provided that the plaintiffs pay all
of the defendants' fees and costs associated with filing the
motions to dismiss the class action lawsuit. Plaintiffs failed
to refile by the deadline, but have asked the Court to
reconsider its dismissal.
GATEWAY INTERNATIONAL: SEC Lodges Suit V. UT, FL Stock Promoters
----------------------------------------------------------------
The Securities and Exchange Commission launched an injunctive
action on March 13 against Utah resident Harvey L. Carmichael
(Carmichael) and Florida resident Irving Freiberg (Freiberg).
The complaint alleges that between late 2001 and early 2002, Mr.
Carmichael secretly acquired as much as 27% of the stock of
Gateway International Holdings, Inc. (Gateway), which was then a
publicly traded shell, without filing mandatory forms with the
Commission disclosing his beneficial ownership.
Further, the complaint alleges that in November-December 2001,
Mr. Carmichael manipulated Gateway stock by inducing a trader
associated with a registered broker-dealer to repeatedly raise
the inside bid price of the stock. Moreover, the complaint
alleges that in February 2002, Carmichael hired Mr. Freiberg to
send false and misleading "spam" e-mail messages to a large
number of prospective investors. According to the complaint, Mr.
Carmichael and Mr. Freiberg, who has since pleaded guilty to
federal securities fraud charges relating to his touting of
Gateway and other microcap stocks, sold restricted Gateway stock
that they held into the resulting inflated market for profits of
approximately $150,740 and $127,195, respectively, in violation
of the securities registration provisions.
The Commission's complaint alleges that Carmichael thereby
violated Sections 5(a) and 5(c) of the Securities Act of 1933
(Securities Act) and Sections 10(b), 13(d) and 16(a) of the
Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5,
13d-1, 13d-2, 16a-2 and 16a-3 thereunder, and that Mr. Freiberg
thereby violated Sections 5(a) and 5(c) of the Securities Act
and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The complaint seeks permanent injunctions, disgorgement and
prejudgment interest, penny stock bars, and third-tier civil
penalties against both defendants, and an officer and director
bar against Carmichael.
Without admitting or denying the Commission's allegations, Mr.
Freiberg has consented to the entry of an order that would
enjoin him from future violations of the foregoing provisions;
imposing a penny stock bar and ordering that he pay $145,098 in
disgorgement and prejudgment interest, but deeming payment
satisfied by his forfeiture of $145,098 or more in settlement of
the related criminal case and not imposing a civil penalty based
on his anticipated incarceration. The action is entitled, SEC v.
Harvey L. Carmichael and Irving Freiberg, Case No. 2:05CV00233
PGC (USDC D. Utah)] (LR-19148).
GLOBUS MEDIA: Attorney General Warns V. Using Home-Use Test Kits
----------------------------------------------------------------
Arizona Attorney General Terry Goddard warned consumers not to
use unapproved home-use diagnostic test kits that have been made
available over the Internet by Canadian firm Globus Media. The
manufacturer claims these kits will detect everything from
pregnancy to Dengue Fever.
The Attorney General cautioned consumers that the Federal Drug
Administration (FDA) has not approved these home-use kits and
are not approved for sale in the United States. "Consumers
using these home-use kits might get false results that could
lead unfavorable health consequences," he said. "If someone has
recently ordered one of these kits and used it, he or she should
visit their primary care doctor and get retested."
The Globus Media home-use kits are labeled as:
(1) Rapid HIV Test Kit
(2) Rapid Syphilis Test Kit
(3) One Step Cassette Style Cocaine Test
(4) One Step Cassette Style Marijuana (THC) Test
(5) One Step Cassette Style Amphetamine Test
(6) Rapid Dengue Fever Test
(7) One Step Midstream Style HCG Urine (Home) Pregnancy
Test
The home-use kits are sent in a paper envelope with instructions
inside the packaging, and the type of kit appears on the
instructions. The FDA also stated that no home-use test kits
intended for diagnosing HIV, syphilis, and dengue fever are
approved for sale in the U.S. For more information about these
home-use kits, please visit the FDA Web site at www.fda.gov, or
visit the Arizona Attorney General's website:
http://www.azag.gov.
GRACO CHILDREN'S: Recalls 1.2M Toddler Beds Due To Injury Hazard
----------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission
(CPSC), Graco Children's Products Inc. of Exton, Pa., is
voluntarily recalling about 1.2 million Graco Toddler Beds.
A child's arm, leg or foot can become entrapped between the
slats in the guardrails or footboard. This can result in broken
bones, sprains and other injuries to young children.
Graco has received reports of 77 entrapments. This resulted in
13 broken arms and legs, 1 broken foot, a sprained ankle, and 54
other injuries including bruised, scratched, and swollen limbs.
The recalled Graco toddler beds are white plastic and steel with
openings between the slats in the guardrails and footboard. The
beds were sold under the names "Cozy Toddler Bed," "Glow-in-the-
Dark Toddler Bed," and "Classic Toddler Bed." There is a label
on the guardrail or leg containing one of the following model
numbers: "8801, 8801WR, 8821, 8824, 8828, 8833, 30066, 34434 and
11030," a serial number, and the manufacturer's address. Model
8828's headboard has a blue sky with a yellow moon and stars.
Model 8801WR has red legs. "Graco" is printed on all of the
beds' footboards.
Manufactured in the United States, the beds were sold at all
discount, department and juvenile product stores nationwide from
February 1994 through March 2001 for between $50 and $70.
Consumers should remove the guardrails from the recalled Graco
toddler beds immediately and call the firm to receive a free
retrofit kit. The kit includes custom designed mesh coverings
that must be attached to the guardrails and footboard to prevent
entrapment. The mesh coverings will be available in 6 to 8
weeks.
Consumer Contact: Graco at (800) 837-4404 between 8 a.m. and 5
p.m. ET Monday through Friday or log on to the firm's Web site:
http://www.gracobaby.com.
J.P. MORGAN: Agrees To Pay $120M To Settle Bank One Suit in IL
--------------------------------------------------------------
Nine months after buying Bank One Corp., J.P. Morgan Chase & Co.
has agreed to pay $120 million to settle a class-action lawsuit
brought by former First Chicago shareholders, according to
Company officials, the Crain's Chicago Business reports.
The suit, filed in early 2000, accused Bank One of making
misleading statements about its credit-card unit, First USA
Bank. Following Bank One's purchase of First Chicago NBD Corp.
seven years ago, a customer exodus from First USA stemming from
a series of customer-service problems led to big losses at Bank
One and cut its stock price in half.
Under the terms of the settlement, J.P. Morgan isn't admitting
or denying responsibility for the problems.
News of this settlement closely follows J.P. Morgan's $2 billion
recent settlement with bondholders of WorldCom Inc., who'd
accused J.P. Morgan of aiding and abetting WorldCom's massive
accounting fraud.
KATZMAN & KORR: Settles Homeowners' Complaint Over Liens Filings
----------------------------------------------------------------
The law firm of Katzman & Korr has agreed to settle a federal
class-action lawsuit over its filing of liens and foreclosures
against homeowners for debts that may not even exist, the Sun-
Sentinel.com reports.
The suit, which represents 400 condo and homeowner associations
in South Florida, accused the firm of violating state and
federal debt collection and deceptive trade practice laws.
The number of unit owners who could benefit by the settlement is
estimated at more than 1,100, but whether they collect damages
will be determined later. Details of the settlement were not
released since it won't be presented to U.S. District Judge
William P. Dimitrouleas in Fort Lauderdale for preliminary
approval until late April.
The suit began in 2002, when the board of the Plaza East condo
in Fort Lauderdale accused unit owners Ramsey and Grace Agan of
not paying $356.43, part of a special assessment for replacing
concrete balconies. The Agans has contended that they owed
nothing and refused to pay. Katzman & Korr promptly filed a lien
on their unit for $1,001.01, which included the initial debt
plus attorneys' fees and costs. The apartment would be
foreclosed, the law firm warned, if the lien weren't paid.
Angered by the firms tactics, the Agans filed the federal
lawsuit on behalf of themselves and other owners in the condo
and homeowner associations represented by Katzman & Korr whose
homes had liens placed on them. Three years later, according to
the couple's attorney, F. Blane Carneal, as part of the
negotiations for the settlement, it was proven that the Agans
never owed anything.
Commenting on the settlement, James M. Kaplan of Miami, attorney
for Katzman & Korr, "If the settlement process is completed, our
litigation objectives will be met and we'll have the opportunity
to move on with our lives and conduct our business."
At public hearings during the past two years, an often-heard
complaint by owners was that lawyers representing their
associations would demand payment for amounts as low as $25 in
late fees. The lawyers would add their fees, and when owners
objected more fees were added, the lawyers, according to the
owners, would then file liens.
The Agans and the association last month settled the foreclosure
suit at a cost to Plaza East unit owners of more than $100,000,
said Ramsey Agan, a retired mortgage banker.
"I never owed these people anything, and suddenly I found my
house being foreclosed. Katzman & Korr ended up paying my
attorneys' fees, my expenses, and they said they would change
their way of doing business," he said.
MEDICAL STAFFING: Asks FL Court To Dismiss Securities Fraud Suit
----------------------------------------------------------------
Medical Staffing Network Holdings, Inc. asked the United States
District Court for the Southern District of Florida to dismiss
the consolidated securities class action filed against it and
certain of its officers and directors.
On February 20, 2004, Joseph and Patricia Marrari, and on April
16, 2004, Tommie Williams, filed class action lawsuits against
Medical Staffing Network in the United States District Court for
the Southern District of Florida, on behalf of themselves and
purchasers of the Company's common stock pursuant to or
traceable to the Company's initial public offering in April
2002. The complaints allege that certain disclosures in the
Registration Statement/Prospectus filed in connection with the
Company's initial public offering on April 17, 2002 were
materially false and misleading in violation of the Securities
Act of 1933. The complaints seek compensatory damages as well
as costs and attorney fees.
On March 29, 2004, a third class action lawsuit brought on
behalf of the same class of Company stockholders, making claims
under the Securities Act similar to those in the lawsuits filed
by Plaintiffs Joseph and Patricia Marrari and Tommie Williams,
was commenced by Plaintiff Haddon Zia in the Florida Circuit
Court of the Fifteenth Judicial Circuit in and for Palm Beach
County, Florida. Defendants removed this case to the United
States District Court for the Southern District of Florida and
Plaintiff moved to remand the case back to the Florida Circuit
Court of the Fifteenth Judicial Circuit, which motion Defendants
opposed. On September 16, 2004 the federal district court
entered an order granting Plaintiff's motion to remand. On
January 6, 2005, the state court stayed the state court
proceedings until further order of the court. The Zia complaint
seeks rescission or damages as well as certain equitable relief
and costs and attorney fees.
On March 2, 2004, another class action complaint was filed
against the Company and certain of its directors and executive
officers in the United States District Court for the Southern
District of Florida by Jerome Gould, individually and on behalf
of a class of Company stockholders who purchased stock during
the period from April 18, 2002 through June 16, 2003. The
complaint alleges that certain of the Company's public
disclosures during the class period were materially false and
misleading in violation of Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The
complaint seeks compensatory damages, costs and attorney fees.
On July 2, 2004, the Marrari, Gould, Williams and Zia actions
were consolidated, although, as noted above, the Zia action was
subsequently remanded to state court. Plaintiff Thomas Greene
was appointed Lead Plaintiff of the consolidated action and the
law firm of Cauley Geller Bowman & Rudman LLP was appointed
Lead Counsel for Plaintiffs. On September 1, 2004, Lead
Plaintiff filed his consolidated amended class action complaint.
The Complaint makes allegations on behalf of a class consisting
of purchasers of the Company's common stock pursuant to or
traceable to its initial public offering in April 2002, for
purposes of the Securities Act claims, and on behalf of Medical
Staffing Network's s stockholders who purchased stock during the
period from April 18, 2002 through June 16, 2003, for purposes
of the Exchange Act claims.
The Complaint alleges that certain of the Company's public
disclosures during the class period were materially false and
misleading in violation of Section 11 of the Securities Act and
Section 10(b) of the Exchange Act. The Complaint seeks
compensatory damages as well as costs and attorney fees.
MICHIGAN: ACLU Mulls Joining Lawsuit Over Jail Stripping Policy
---------------------------------------------------------------
The Michigan branch of the American Civil Liberties Union is
considering whether to join a lawsuit against a Saginaw County
Jail policy under which officers forcibly stripped unruly
detainees, sometimes with guards of the opposite sex
participating, the Saginaw News reports.
According to Kary Moss, executive director of the ACLU, "We're
investigating it." She also adds that a decision could come by
week's end. U.S. District Judge David M. Lawson has ruled that
the practice is illegal and demeaning.
Court documents reveal that about 130 former inmates are
considering whether to join a class action suit against the
jail. The suit claims that 27 inmates suffered mistreatment at
the hands of jail workers who forced uncooperative pre-
arraignment detainees to remove their clothes and submit to
solitary confinement. If the inmates refused, deputies took
their clothing off for them, according to court documents.
A Sheriff's Department official defended the detention practice
in court papers.
MICROTUNE INC.: NY Court Preliminarily Approves Suit Settlement
---------------------------------------------------------------
The United States District Court for the Southern District of
New York granted preliminary approval to the settlement of the
consolidated securities class action filed against Microtune,
Inc. and certain of its officers and directors.
Starting on July 11, 2001, multiple purported securities fraud
class action complaints were filed. The Company is aware of at
least three such complaints: "Berger v. Goldman, Sachs & Co.,
Inc. et al.;" "Atlas v. Microtune et al.;" and "Ellis
Investments Ltd. v. Goldman, Sachs & Co., Inc. et al." The
complaints are brought purportedly on behalf of all persons who
purchased our common stock from August 4, 2000 through December
6, 2000 and are related to "In re Initial Public Offering
Securities Litigation" (IPO cases).
The Atlas complaint names as defendants the Company and:
(1) Douglas J. Bartek, former Chairman and Chief Executive
Officer;
(2) Everett Rogers, former Chief Financial Officer and Vice
President of Finance and Administration; and
(3) several investment banking firms that served as
underwriters of the Company's initial public offering
The Company, Mr. Bartek and Mr. Rogers were served with notice
of the Atlas complaint on August 22, 2001, however, they have
not been served regarding the other referenced complaints. The
Berger and Ellis Investment Ltd. complaints assert claims
against the underwriters only. The complaints were consolidated
and amended on May 29, 2002.
The amended complaint alleges liability under Sections 11 and 15
of the Securities Act of 1933 (1933 Act Claims) and Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 (1934 Act
Claims), on the grounds that the registration statement for the
Company's initial public offering did not disclose that the
underwriters had agreed to allow certain of their customers to
purchase shares in the offering in exchange for excess
commissions paid to the underwriters, and the underwriters had
arranged for certain of their customers to purchase additional
shares in the aftermarket at pre-determined prices. The amended
complaint also alleges that false analyst reports were issued.
No specific amount of damages is claimed.
The Company is aware that similar allegations have been made in
other lawsuits filed in the Southern District of New York
challenging over 300 other initial public offerings and
secondary offerings conducted in 1998, 1999 and 2000. Those
cases have been consolidated for pretrial purposes before the
Honorable Shira A. Scheindlin. On February 19, 2003, the Court
ruled on all defendants' motions to dismiss. The Court denied
the motions to dismiss the 1933 Act Claims. The Court did not
dismiss the 1934 Act Claims against the Company and other
issuers and underwriters.
The Company accepted a settlement proposal presented to all
issuer defendants. Under the settlement, plaintiffs will dismiss
and release all claims against the Microtune defendants. The
insurance companies collectively responsible for insuring the
issuer defendants in all of the IPO cases will guarantee
plaintiffs a recovery of $1 billion, an amount that covers all
of the IPO cases. Under this guarantee, the insurers will pay
the difference, if any, between $1 billion and the amount
collected by the plaintiffs from the underwriter defendants in
all of the IPO cases. The Microtune defendants will not be
required to pay any money in the settlement. However, any
payment made by the insurers will be charged to the respective
insurance policies covering each issuer's case on a pro rata
basis (that is, the total insurance Company payments will be
divided by the number of cases that settle). If the pro rata
charge exceeds the amount of insurance coverage for an issuer,
that issuer would be responsible for additional payments. The
proposal also provides that the insurers will pay for the
Company's legal fees going forward. The settlement will require
approval of the Court, which cannot be assured.
MICROTUNE INC.: Reaches Settlement For TX Securities Fraud Suit
---------------------------------------------------------------
Microtune, Inc. reached a settlement for the consolidated
securities class action filed in the United States District
Court for the Eastern District of Texas against it and:
(1) Douglas J. Bartek, former Chairman of the Board and
Chief Executive Officer,
(2) Everett Rogers, former Chief Financial Officer and
Vice-President of Finance and Administration,
(3) William L. Housley former President and Chief Operating
Officer,
(4) Nancy A. Richardson, former Chief Financial Officer and
former General Counsel
Several suits were filed initially, alleging violations of
federal securities laws and regulations. The claims of the
plaintiffs in the various lawsuits include that the defendants
violated Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934, as well as SEC Rule 10b-5, resulting in damages to
persons who purchased, converted, exchanged, or otherwise
acquired the Company's common stock between July 23, 2001 and
February 20, 2003, inclusive.
The plaintiffs' specific allegations include that the defendants
engaged in fraudulent accounting and financial practices and
misrepresented material facts and omitted to state material
facts necessary to make other statements made not misleading,
and that these misrepresentations or omissions had the effect of
artificially inflating the Company's stock price. At this time,
the alleged misrepresentations and omissions include, among
others, allegations that:
(i) Microtune materially overstated revenue by recognizing
certain sales immediately as revenue when deferred
revenue recognition would have been more appropriate;
(ii) Microtune failed to establish reserves when
appropriate;
(iii) Microtune lacked adequate internal controls to assure
its financial statements were fairly presented in
conformity with generally accepted accounting
principles;
(iv) Microtune lacked sufficient controls and procedures for
the timely and accurate issuance of periodic press
releases;
(v) Microtune lacked sufficient means to monitor prior
public statements to detect whether an update was
required; and
(vi) Microtune failed to record impairment charges relating
to the assets acquired with the Transilica acquisition
at the appropriate time (Transilica-related claims).
The relief sought by the plaintiffs in the various lawsuits,
both individually and on behalf of stockholders, includes
damages, interest, costs, fees, and expenses. The actions have
all been consolidated into one case, lead plaintiffs have been
appointed, and a consolidated amended complaint has been filed.
The defendants filed motions to dismiss Plaintiffs' claims.
On April 12, 2004, the Court entered an order dismissing all
claims against Mr. Rogers and Mr. Housley with prejudice and
dismissing all claims against the remaining Defendants with
prejudice except the Transilica-related claims. On November 23,
2004, the Company and the other defendants entered into a
settlement agreement with the plaintiffs under which the
defendants agreed to settle the consolidated lawsuit for
$5,625,000, inclusive of attorneys'; fees and costs, in return
for a full release of all claims and dismissal of the
consolidated lawsuit. The district court has preliminarily
approved the settlement and notice of the settlement has been
sent to the Settlement Class, as defined in the settlement
agreement. The settlement is subject to certain conditions,
including final court approval, and the hearing on final
approval was held on March 14, 2005. Under a separate agreement
with the Company's director and officer insurance carriers, the
insurance carriers have agreed to reimburse the settlement
amount, subject to the Company's 15% co-pay obligation.
NEW YORK: Federal Judge Finds Families Eligible For Food Stamps
---------------------------------------------------------------
Judge William H. Pauley of the U.S. District Court for the
Southern District of New York issued a ruling that finds
thousands of poor New York families eligible for transitional
food stamp benefits known as "Transitional Benefits Alternative"
(TBA). The ruling will ensure that impoverished New Yorkers will
be able to feed their families while making the difficult
transition from welfare to work.
The New York Legal Assistance Group (NYLAG) brought this case,
Walker v. Eggleston, in 2004 as a class action against the City
of New York's Human Resources Administration (HRA) and the New
York State Office of Temporary and Disability Assistance (OTDA).
The case challenges the failure to provide TBA to families who
leave cash assistance when HRA places the parents in jobs
through the New York City Parks Opportunity Program (POP) at the
Parks and Recreation Department. Since 2001, HRA has placed
several thousand families into the six-month POP program, where
participants earn $7.50 an hour.
TBA is a federal program that allows states to provide a higher,
stable amount of food stamps to families who are transitioning
from welfare to work. HRA and OTDA claimed that, for technical
reasons, families whom HRA placed into the POP program were
ineligible for TBA. At the same time, HRA has been providing TBA
to other families who leave cash assistance because of
employment earnings.
The City's restrictions caused plaintiffs severe hardship. For
example, when the City placed lead plaintiff Tanya Walker in a
Parks Department position, HRA reduced her food stamps from $256
to $94 a month - a $162 per month reduction. Due to the
reduction in her benefits and her increased expenses related to
her work activity, Ms. Walker struggled to support herself and
her daughter while participating in POP. She did not have money
to buy enough food and frequently had to ask her friends to
borrow food. Having diverted her limited income towards food,
Ms. Walker did not have money left over to purchase other basic
items, such as warm clothing for her daughter.
In the ruling, Judge Pauley denied the defendants' motions to
dismiss, holding that the plaintiffs are in fact eligible for
TBA.
"This is a great victory for thousands of impoverished families
who are trying to make the transition from welfare to work,"
said NYLAG attorney Jennifer Werdell. "The additional food stamp
benefits provided by TBA will help ensure that families working
for the Parks Department have access to adequate food while
trying to make ends meet in a low-wage job."
QWEST COMMUNICATIONS: U.S. West Retirees File Death Benefit Suit
----------------------------------------------------------------
U.S. West retirees initiated a lawsuit in Denver Federal Court
against Qwest Communications in a bid to preserve a benefit they
fear they will lose if the Company succeeds in its bid to buy
MCI Inc., the Rocky Mountain News reports.
The proposed class-action complaint, which was filed by Colorado
retirees Edward Kerber and Nelson Phelps, asks to preserve a
"death benefit" payable to the surviving spouse when a retiree
dies.
According to court documents, the benefit is equal to a
retiree's 1993 salary or, if the person retired before then, the
annual salary at the time of leaving the Company. Qwest moved to
eliminate the benefit in fall 2003 but delayed the decision when
the Association of U.S. West retirees opposed it, the documents
reveal.
In their suit, the retirees argue that Qwest's predecessor,
telephone companies have a history dating from shortly after
World War II of promoting the death benefit, which is paid from
pension trust fund assets. Qwest had acquired U.S. West in 2000.
The retirees explained that the suit is being filed now because
of concerns about what will happen, if Qwest prevails in its
effort to buy MCI. The retirees' attorney Curtis Kennedy
recently wrote in a letter to members, "Many are very concerned
that, should there be a Qwest-MCI merger, there is the strong
possibility that the combined Company leadership will look to
ways to cut retiree benefits."
In another letter, this time to a Qwest attorney, Mr. Kennedy
said that the concern has only heightened after Qwest increased
its offer for MCI to nearly $8.5 billion recently. He also
stated in the letter that he hopes the two sides can reach an
agreement outside court proceedings that can be incorporated
into a possible Qwest-MCI merger arrangement.
The retirees said they resorted to filing the lawsuit after
exhausting the administrative procedures to address the issue.
SALTON INC.: AG King Presents George Foreman Grill Settlement
-------------------------------------------------------------
Alabama Attorney General Troy King presented to the Alabama
Department of Senior Services a check for $125,008, which his
office received from the settlement of a lawsuit regarding
alleged price-fixing of George Foreman grills. The money is
designated to assist the agency with its nutrition program that
provides meals for senior citizens.
"I am delighted to present this money for the Department of
Senior Services to help take care of our older citizens who
built this great state and who are the foundation of our
families," said Attorney General King. "We owe a tremendous
debt to the senior citizens of Alabama, and I commend Executive
Director Irene Collins and the Department of Senior Services for
their commitment to protect our older citizens. "
The Attorney General recovered the money from the settlement of
a lawsuit, filed by 44 states, the District of Columbia and
Puerto Rico, against houseware manufacturer Salton, Inc.,
distributor of George Foreman grills. The attorneys general
alleged that Salton coerced retailers into fixing the price for
the George Foreman grills and pressured retailers to exclude
other grills distributed by Salton's competitors. Under the
policies challenged by the attorneys general, when retailers
sold at a discount or stocked a competitor's product, Salton
suspended the retailer from receiving its own product until the
retailer fell into line with Salton's policies.
The settlement provided an estimated total of $8 million
nationwide to compensate for damages from the inappropriate
practices that were alleged by the attorneys general. Salton
also was required to agree to a court order prohibiting similar
anti-competitive activities in the future. Because it was not
feasible to identify and locate the individual consumers who may
have purchased grills that were priced inappropriately, the
settlement provided that restitution be distributed to charities
or governmental agencies for programs that improve health care
and nutrition in ways that would be to the overall benefit of
consumers as a group.
Attorney General King designated Alabama's share of the
settlement to assist the Department of Senior Services with its
nutrition program that provides meals for senior citizens. "We
are truly thankful for the Attorney General's continued support
and care for the needs of Alabama's senior citizens," said Irene
Collins, executive director of the Alabama Department of Senior
Services.
For more details, contact the Attorney General by Mail: Alabama
State House, 11 South Union Street Montgomery, AL 36130, Phone:
334.242.7300 or visit the Website: http://www.ago.alabama.gov.
USIS COMMERCIAL: Judge OKs Suit Over Driver's Work Histories
---------------------------------------------------------------
U.S. District Judge Robert Blackburn will allow the Owner-
Operator Independent Drivers Association (OOIDA) to move forward
in its class-action suit against USIS Commercial Services,
formerly known as DAC Services, the eTrucker reports.
OOIDA charges that the Oklahoma-based Company, which collects
the employment histories of millions of truck drivers,
distributes inaccurate information drivers have no opportunity
to correct.
In his ruling the Denver-based federal judge allowed OOIDA to
seek damages, costs and if willful violations are proven
punitive damages for alleged violations of the Fair Credit
Reporting Act.
However, he also ruled that OOIDA might not seek "equitable
relief," such as a share of any profits judged to be ill gotten,
or an injunction to prevent the Company from distributing the
employment histories. That part of the decision though,
according to OOIDA'S general counsel Paul D. Cullen, will not
significantly affect its case.
In addition, Judge Blackburn, who has set a May 2006 trial date
for the case, also ruled that fleets, which submit termination
records to the Company count as "consumer reporting agencies"
and therefore are potentially accountable under the Fair Credit
Reporting Act.
According to the USIS website, the Company's clients include 95
of the top 100 U.S. carriers, and its proprietary files contain
the work histories of more than 4 million drivers.
SEASPECIALTIES: Recalls Salmon, Snacks Due To Listeria Content
--------------------------------------------------------------
SeaSpecialties of Miami, FL, is voluntarily recalling "Mama's
Sliced Smoked Nova Salmon" packed in 4-oz. package and "Mama's
Smoked Salmon Nova Snacks" packed in a 8-oz. package due to
Listeria monocytogenes contamination. Listeria is an organism
that can be serious and sometimes cause fatal infections in
young children, frail or elderly people, and others with
weakened immune systems. Although healthy individuals may suffer
only short-term symptoms such a high fever, severe headache,
stiffness, nausea, abdominal pain and diarrhea, Listeria
infection can cause miscarriages and stillbirths among pregnant
women.
The recalled "Mama's Sliced Smoked Nova Salmon" 4-oz. package
and the "Mama's Smoked Salmon Nova Snacks" 8-oz. package were
distributed on the east coast of the U.S. Both products have a
Sell By date of August 10, 2005 printed on the front of the
packages. No illnesses have been reported as a result of this
problem.
The contamination was noted after routine testing by the Florida
Department of Agriculture and Consumer Services revealed the
presence of Listeria monocytogenes in 4oz. packages of Mama's
Sliced Smoked Nova Salmon with a sell by date of August 10,
2005.
Consumers who have purchased the recalled 4oz. package of Mama's
Sliced Smoked Nova Salmon and 8oz. package of Mama's Smoked
Salmon Nova Snacks are urged to return to the place of purchase
for a full refund. Consumers with questions may contact the
Recall Coordinator at (305) 621-7600 ext. 211.
TIME WARNER: Pays $300M, Restates Results To Settle SEC Charges
---------------------------------------------------------------
Time Warner Inc., the world's largest media Company has agreed
to pay $300 million and restate three years of financial results
to settle civil fraud charges stemming from its accounting of
online advertising revenue and subscriber counts at its AOL
unit, the Associated Press reports.
The settlement with the Securities and Exchange Commission,
which was filed in the U.S. District Court for the District of
Columbia, also calls for the media giant to open its books to an
independent examiner, which could result in additional
restatements.
The details of the deal, which include no admission or denial of
wrongdoing, are in line with a proposal the Company made and
disclosed last December. At that time, Time Warner also said it
agreed to pay $210 million to resolve charges of criminal
securities fraud in a separate investigation by the Department
of Justice.
Time Warner Chief Executive Officer Dick Parsons said the
Company was "pleased" to have resolved the investigation, and
was committed to cooperating with the independent examiner and
fulfilling its other obligations under the settlement with the
SEC. The examiner's report, according to Mr. Parsons, is
expected in about six months.
The D.C. Court has been assigned to manage the distribution of
the $300 million penalty to affected investors. Those payouts,
which are akin to class-action distributions, will be made under
the "fair fund" provision of the Sarbanes-Oxley Act.
The SEC had accused Time Warner of several fraudulent acts,
including inflating its own online advertising revenue with a
number of "round-trip" transactions in which it essentially
provided other companies with the means to buy online
advertising.
Furthermore, the SEC also accused Time Warner of overstating the
number of AOL subscribers by counting members from bulk
subscription sales to companies even though the Company knew
they had not been activated.
In addition, the SEC contends that because Time Warner failed to
treat AOL Europe as a consolidated business from March 2000 to
January 2002, as it should have been, the Company overstated its
financial results for those time periods. Time Warner though has
since revised its results to reflect that change.
UNITED STATES: CTIA Asks FCC For Protection From ETF Complaints
---------------------------------------------------------------
CTIA, the national cell-phone trade group, has asked the Federal
Communications Commission for a ruling that would shield mobile-
phone carriers in the future from class-action lawsuits
challenging early termination fees (ETF) assessed against
subscribers who break their contracts with service providers,
the RCR Wireless News reports.
According to the group, the FCC must act quickly to declare that
ETF suits in state courts are pre-empted by federal law.
The group further states, "Discovery is now going forward in
some of these cases, and wireless carriers are being forced to
produce cost data, expert evaluations of their rates and rate
structures, and economic justifications for the existence and
size of the ETF. The fact that discovery in these cases closely
resembles a traditional 'cost of service' rate case under state
regulation of intrastate wireline services powerfully
illustrates why these lawsuits are nothing more than a form of
state regulation expressly pre-empted by Section 332."
Section 332, experts explain, bans states from regulating rates
and market entry of commercial wireless carriers, but leaves to
states jurisdiction of other terms and conditions of wireless
service. Plaintiffs' lawyers have argued that ETFs violate
various state laws.
CTIA, noting that SunCom Operating Co L.L.C. filed a similar
petition in connection with an ETF class-action suit in South
Carolina, asked the FCC to consolidate both petitions. Other ETF
lawsuits are pending against mobile-phone carriers in
California, Florida and Illinois, according to CTIA.
UTA-BVI LTD.: SEC Lodges Suit Over Misappropriation Of Funds
------------------------------------------------------------
The Securities and Exchange Commission filed a complaint in the
U.S. District Court for the Northern District of Georgia against
Defendants Violet Gail Eldridge and UTA-BVI, Ltd. and Relief
Defendants, The United Tribes of the Americas, Inc. and
Executive Bureau of Research and Recovery, Inc.
The complaint alleges that Ms. Eldridge and UTA-BVI, which she
controlled, misappropriated at least $2 million from two
investment advisory clients. Specifically, the complaint alleges
that in 1999 UTA-BVI, acting through Ms. Eldridge, entered into
written trust management agreements with two entities named
First National Equity, LLC (First National Equity) and P.K.
Trust & Holding, Inc. (P.K. Trust). Under the terms of the trust
agreements UTA-BVI, through Ms. Eldridge, agreed to invest the
money received from First National Equity and P.K. Trust in the
best interest of those clients. After signing the trust
agreements, First National Equity and P.K. Trust transferred $24
million into securities brokerage accounts Eldridge controlled
in the name of UTA-BVI.
According to the Commission's complaint, rather than investing
funds for the benefit of First National Equity and P.K. Trust,
Ms. Eldridge and UTA-BVI misappropriated at least $2 million of
the funds by paying personal expenses for Ms. Eldridge and by
transferring funds to several bank accounts, including accounts
Ms. Eldridge controlled in the names of the Relief Defendants.
The Commission's complaint alleges that UTA-BVI violated Section
206(1) and 206(2) of the Investment Advisers Act of
1940 and that Ms. Eldridge aided and abetted those violations.
The complaint also alleges that Relief Defendants The United
Tribes of the Americas Inc. and Executive Bureau of Research and
Recovery received ill-gotten gains to which they have no
legitimate claim. First National Equity and P.K. Trust, along
with others, are defendants in an action the Commission
previously filed in the United States District Court for the
Southern District of Indiana. In that case, the Commission
alleges that First National Equity, P.K. Trust and others
fraudulently raised the $24 million in funds deposited with UTA-
BVI and Eldridge. Eldridge and UTA-BVI were initially defendants
in that action but were dismissed, without prejudice, on venue
grounds. The Commission's complaint requests that the Court
permanently enjoin UTA-BVI and Eldridge from the securities law
violations alleged, order both UTA-BVI and Ms. Eldridge to pay a
civil penalty, and order UTA-BVI and Eldridge, along with the
Relief Defendants, to disgorge, with pre-judgment interest, all
ill-gotten gains. The action is titled, SEC v. Violet Gail
Eldridge, et al., No. 05-0735 (N.D. Ga.)] (LR-19146).
WASHINGTON: Lawsuit Launched To Fight Amended Assistance Program
----------------------------------------------------------------
An estimated 39,000 people are being represented in a class-
action lawsuit that was filed against the state's Department of
Social and Health Services over changes made to the Washington
State Combined Application Program, The Olympian reports.
A pilot program created in 2001, WASHCAP was meant to make it
more convenient for elderly or disabled people living on federal
income assistance to apply for food stamps.
Filed recently in Thurston County Superior Court, the lawsuit
contends that DSHS instead has made people worse off financially
than if they had stayed in the state's Basic Food Program, and
it challenges the benefit reductions that were made across the
board.
The change in benefit calculations had to do with how costs for
clients' utilities are determined. Under the old rule, clients
in both received a 'standard utility allowance' if they paid for
heat and electricity and a 'limited utility allowance' if they
only paid for services such as water and garbage.
Under the changes, all WASHCAP recipients receive only a
"limited utility allowance," even if they pay higher costs for
heat or electricity.
Rebecca Henri, a WASHCAP program manager said, some were not
affected by the changes, in fact, according to her, on average
the changes reduced benefits by $17 per month.
However, in comparison with the Basic Food Program, some people
now get $50 less per month than others in similar circumstances,
which the lawsuit argues is unconstitutional because it grants
benefits to one group of people and not the other.
In the past, people could switch if it meant they could fare
better on one program over the other. But DSHS recently
implemented two emergency rules changes in December, including
one that also prevented people from opting out of WASHCAP, which
the state switched them to a few years ago.
WASHCAP was designed to help more disadvantaged, single, elderly
and disabled households, which were lagging behind statistically
on food stamp participation, Ms. Henri said. "When we started,
we had 16,000 within WASHCAP. We're now at nearly 40,000, and
many of those people have never been on food stamps before," she
adds.
The program, according to observers, actually streamlined the
application process, allowing people who apply for federal
Supplemental Security Income to simultaneously get foods stamps.
It also made staying in the program easier. Under the Basic Food
Program, recipients have to be re-screened every six months to a
year for changes in income or living costs, but under WASHCAP,
recipients only re-certify every two years or sometimes never
again, because their income levels don't change on federal
assistance.
DSHS explains that the recent changes in benefits were forced
due to a dispute over funding with the federal government, which
administers food stamps. WASHCAP was established as a five-year
pilot project under an agreement that it would be "cost neutral"
to the federal government, Ms. Henri said.
According to court documents, DSHS officials contend that they
were forced to implement the changes as emergency rules to
prevent the federal government from cutting funding. The
emergency rules provision under state law allows the agency to
temporarily bypass holding a public hearing.
Because of the difference in the way benefits were calculated,
WASHCAP was costing the federal government about $1 million more
every month, Ms. Henri said.
But Amy Crewdson, one of two attorneys from Columbia Legal
Services representing the plaintiffs, said that while it was
clear DSHS tried to negotiate with the federal government, it
misused the emergency rules provision in the state's
Administrative Procedures Act.
The lawsuit also argues that WASHCAP clients were not properly
notified in time to give them a chance to switch programs before
the changes went into effect in January. While DSHS sent out
letters, they were not clear to many clients about what was
happening, Ms. Crewdson said. The lawsuit requests back pay for
benefits not doled out since the rule changes.
New Securities Fraud Cases
AUDIBLE INC.: Spector Roseman Lodges Securities Fraud Suit in NJ
----------------------------------------------------------------
The law firm of Spector, Roseman & Kodroff, P.C. initiated a
securities class action lawsuit in the United States District
Court for the District of New Jersey, on behalf of purchasers of
the common stock of Audible, Inc. ("Audible" or the "Company")
(Nasdaq: ADBL) between November 2, 2004 through February 15,
2005, inclusive (the "Class Period").
The Complaint alleges that defendants Audible, Donald R. Katz
(Chairman and CEO), and Andrew P. Kaplan (CFO) violated the
federal securities laws by issuing materially false and
misleading statements contained in press releases and filings
with the Securities and Exchange Commission during the Class
Period. Specifically, the Complaint alleges that the Company
failed to disclose and misrepresented the following material
adverse facts known to defendants or recklessly disregarded by
them:
(1) that the Company intended to pursue new business
initiatives;
(2) that the Company's growth, through these expensive
initiatives, would severely undermine Audible's margins
and earnings; and
(3) that as a consequence of the foregoing the Company's
ambitious growth plan posed a substantial risk to the
future stability of the Company and its stock price.
On February 15, 2005, Audible announced that in 2005 it would be
undertaking several initiatives requiring substantial
investments in infrastructure, new business units and marketing,
among other areas, and that these initiatives would depress
earnings and cash flow at least until 2006. On this disclosure,
shares of Audible fell $9.38 per share or more than 35%, on
February 16, 2005, to close at $17.32 per share, on unusually
heavy volume.
For more details, contact Robert M. Roseman by Phone:
888-844-5862 or by E-mail: classaction@srk-law.com or visit
their Web site: http://www.srk-law.com.
CELL THERAPEUTICS: Milberg Weiss Lodges Securities Lawsuit in WA
----------------------------------------------------------------
The law firm of Milberg Weiss Bershad & Schulman LLP initiated a
class action lawsuit on behalf of purchasers of the securities
of Cell Therapeutics Inc. ("CTI" or the "Company") (NASDAQ:
CTIC) between June 7, 2004 and March 4, 2005, inclusive, (the
"Class Period"), seeking to pursue remedies under the Securities
Exchange Act of 1934 (the "Exchange Act").
The action, numbered CV05-0452, is pending in the United States
District Court for the Western District of Washington against
defendants CTI, Max Link (Chairman) and James Bianco (CEO,
President).
The complaint alleges that defendants' class period statements
regarding XYOTAX, one of the Company's lung cancer drugs
undergoing efficacy testing, were materially false and
misleading for the following reasons:
(1) contrary to the defendant's repeated representations
that observed results of the study were positive and
encouraging, the results in fact showed that XYOTAX
would not meet its primary endpoint;
(2) XYOTAX did not boost survival for non-small cell lung
cancer any better than Taxol, a chemotherapeutic agent
that had been on the market for years;
(3) based on the results of the trial the Company would not
be able to begin pre launch activities and to position
itself to submit a new drug application for XYOTAX in
the foreseeable future.
The complaint further alleges that defendants were motivated to
commit the fraud alleged herein so that CTI's private offering
would yield more money for the Company, than if the truth was
known. On December 20, 2004, CTI launched an $18.4 "Million
Direct Equity Placement," selling approximately 2,586,000 shares
of its common stock to institutional investors at a negotiated
price per share of $7.10. In addition, during the Class Period,
defendant Bianco sold 39,625 shares at artificially inflated
prices for proceeds of $300,877.
On March 7, 2005, prior to the opening of the market, CTI issued
a press release announcing that XYOTAX failed to meet the
endpoint of the STELLAR 3 Pivotal Trial, which had been touted
throughout the Class Period. The study showed that XYOTAX was no
better at boosting cancer survival than existing chemotherapy
agents. In reaction to this announcement, CTI shares fell $4.75
per share or 47.5%, on March 7, 2005, to close at $5.25 per
share, on unusually high volume.
For more details, contact Steven G. Schulman, Peter E. Seidman
or Andrei V. Rado by E-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.
DELPHI CORPORATION: Finkelstein Lodges Securities Lawsuit in OH
---------------------------------------------------------------
The law firm of Finkelstein & Krinsk, LLP initiated a class
action lawsuit on behalf of participants (current and former
employees) and beneficiaries of Delphi Corporation (NYSE: DPH -
News) pension plans for the extreme loss of value resulting from
the decline of Delphi stock. The lawsuit, filed in the United
States District Court for the Southern District of Ohio,
represents participants who since May 28, 1999 to the present
(the "Class Period") were in the Delphi Savings - Stock Purchase
Program for Salaried Employees in the U.S., Delphi Personal
Savings Plan for Hourly-Rate Employees in the U.S., ASEC
Manufacturing Savings Plan or the Delphi Mechatronic Systems
Savings-Stock Purchase Program (the "Plans").
The complaint charges plan fiduciaries with violations of the
Employee Retirement Income Security Act of 1974. The lawsuit
alleges that Plan fiduciaries breached their duties and
responsibilities by, among other things, failing to investigate
the prudence of investing in Delphi stock and abetting
misrepresentations about the Company's accounting practices
dating back to 1999. The complaint alleges that the defendants
made various material negligent misrepresentations and
manipulated disclosure of certain facts. Upon these disclosures,
Delphi's stock dropped to $5.41 per share before closing at
$5.46 per share on March 4, 2005, 68 percent below the Class
Period high of $17.40 per share and a one-day drop of 14
percent. The stock is currently trading at about $5.12 per
share. Many current and former Delphi employees have decided to
participate in the lawsuit; employees are organizing a
management structure to direct its conduct. Employees who choose
to participate in the lawsuit can do so confidentially; it is
unlawful for any fiduciary or defendant to take any retaliatory
action against any employee who chooses to participate.
Delphi is a global supplier of vehicle electronics,
transportation components, integrated systems and modules, and
other electronic technology to vehicle manufacturers. Delphi has
approximately 185,000 employees and operates 171 wholly owned
manufacturing sites, 42 joint ventures, 53 customer centers and
sales offices and 33 technical centers in 40 countries.
Fro more details, contact Finkelstein & Krinsk by Phone:
877/493-5366 or by E-mail: jrk@classactionlaw.com.
MAMMA.COM INC.: Stull Stull Lodges Securities Fraud Suit in NY
--------------------------------------------------------------
The law firm of Stull, Stull & Brody initiated a class action
lawsuit in the United States District Court for the Southern
District of New York, on behalf of all persons who purchased the
common stock of Mamma.com, Inc. ("Mamma.com") (NASDAQ:MAMA)
between March 2, 2004 and February 16, 2005, inclusive (the
"Class Period"). Also included are all those who acquired shares
of Mamma.com through its acquisition of Digital Arrow LLC.
The Complaint alleges that Mamma.com violated federal securities
laws by issuing false or misleading public statements.
Specifically, defendants failed to disclose the following
material adverse facts:
(1) that Irving Kott ("Kott"), a Canadian stock promoter
with a long history of stock manipulation, had a
significant undisclosed interest in Mamma.com;
(2) that Kott and his associates were manipulating the
Company's stock price by engaging in a classic "pump
and dump" scheme; and
(3) that Mamma.com was manipulating its financial results
so that the scheme would endure. Additionally, as a
result of its stock trading at artificially inflated
levels, Mamma.com was able to acquire Digital Arrow LLC
and entered into a letter of intent ("LOI") whereby
Mamma.com would acquire all of the shares of Copernic
Technologies for a combination of cash and shares of
Mamma.com. Finally, Mamma.com raised $16.6 million
through a private placement.
On February 16, 2005, midday, trading of Mamma.com was halted.
Shortly thereafter, Mamma.com announced that it had been unable
to reach an agreement on the terms of its audit with
PricewaterhouseCoopers LLP ("PWC") for the year ended December
31, 2004. Accordingly, PWC would not act as the Company's
independent auditor. On this news, Mamma.com fell $2.02 per
share to close at $4.25 per share.
For more details, contact Tzivia Brody, Esq. of Stull, Stull &
Brody by Phone: 1-800-337-4983 by Fax: 212/490-2022 or by E-
mail: ssbny@aol.com.
TEXTAINER EQUIPMENT: Abraham Fruchter Files CA Securities Suit
--------------------------------------------------------------
The law firm of Abraham Fruchter & Twersky LLP initiated an
action in the United States District Court for the Northern
District of California titled Robert Lewis v. Textainer
Equipment Income Fund II, L.P., C 05 0969.
The complaint asserts claims arising under Section 14(a) of the
Securities Exchange Act of 1934, and state law principles for
breach of fiduciary duties against all defendants on behalf of a
class (the "Class") consisting of the limited partners (the
"Limited Partners") of Textainer Equipment Income Fund II, L.P.,
Textainer Equipment Income Fund III, L.P., Textainer Equipment
Income Fund IV, L.P., Textainer Equipment Income Fund V, L.P.
and Textainer Equipment Income Fund VI, L.P. (collectively the
"Textainer Partnerships") against the Textainer Partnerships,
Textainer Financial Services Corporation, Textainer Capital
Corporation, Textainer Equipment Management Limited, John A.
Maccarone and RFH, Ltd.
The cases arises out of the proposed acquisition of the assets
of the Textainer Partnership by a newly formed entity known as
RFH, Ltd. ("RFH") in which the general partner of the Textainer
Partnerships (the "General Partner") will continue to maintain a
significant financial interest and the principals of which have
a series of pre-existing business relationships with the general
partner. The General Partner has disseminated proxy statements
(the "Proxy Statements") soliciting the approval of the
transaction by plaintiffs and the other Limited Partners. The
Complaint alleges that the Proxy Statements are deficient
because they fail to disclose information concerning the value
of the Partnerships assets which are required to be disclosed by
law and which are material to the deliberations of the limited
partners in deciding whether or not to vote in favor of the
proposed transaction. Plaintiffs moved for a Temporary
Restraining Order to enjoin the transaction denied by the Court.
Plaintiffs are, therefore, proceeding with litigating this
action in order to obtain monetary damages on behalf of the
Limited Partners.
For more details, contact Jeffrey S. Abraham or David Weinberger
of Abraham Fruchter & Twersky LLP by Mail: One Penn Plaza, Suite
2805, New York, New York 10119 by Phone: 212-279-5050 or
800-440-8986 or by E-mail: Jabraham@aftlaw.com or
dweinberger@aftlaw.com.
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
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Class Action Reporter is a daily newsletter, co-published by
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Resnick, Editors.
Copyright 2005. All rights reserved. ISSN 1525-2272.
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