/raid1/www/Hosts/bankrupt/CAR_Public/051017.mbx
C L A S S A C T I O N R E P O R T E R
Monday, October 17, 2005, Vol. 7, No. 205
Headlines
ALBERS MEDICAL: Indicted For Importing, Selling Fake Lipitor
ANZA CAPITAL: Faces CA Consumer Lawsuit For Violations of TCPA
ANZA CAPITAL: Former Employees Launch Labor Law Violations Suit
CARRIER ACCESS: CO Court Consolidates Securities Fraud Lawsuits
CISCO SYSTEMS: Shareholders Launch Securities Fraud Suit in CA
CONNECTICUT: Student to be Plaintiff in Suit Over School Funding
CREDIT CARDS: Deadline Extended in VISA/MasterCard Settlement
CROSSROADS SYSTEMS: TX Court Grants Final Approval To Settlement
CRITICAL INFRASTRUCTURE: SEC Files Fraud Suit in NY V. Manager
DURUS CAPITAL: SEC Files Civil Suit in CT V. Hedge Fund Manager
FOUR WINDS: Recalls 221 2006 Motor Homes Due to Crash Hazard
FUNERAL HOMES: FTC Sweep Uncovers Violations of Funeral Rule
HEART DEVICES: FDA Releases Study on Implantable Cardiac Devices
HIENERGY TECHNOLOGIES: Plaintiffs File Second Amended Stock Suit
ISUZU MANUFACTURING: Recalls Various SUVs Due to Fire Hazard
LAFAYETTE UTILITIES: Overcharging Suit Moved Back To State Court
MAJESCO ENTERTAINMENT: Shareholders Launch Fraud Lawsuits in NJ
METROMEDIA FIBER: Suit Settlement Hearing Set December 22, 2005
NORTH AMERICA BUS: Recalls 222 2002-04 Buses Due to Fire Hazard
NBTY INC.: To Pay $2M Civil Penalty For False Supplement Claims
NEIMAN MARCUS: To Ask TX Court To Dismiss Securities Fraud Suit
OKLAHOMA: GRDA Settles Property Owners' Suit Over 1990s Floods
OPTIO SOFTWARE: NY Court Preliminarily Approves Suit Settlement
PACIFIC CAPITAL: Plaintiffs Appeal Dismissal of CA RAL Lawsuit
PACIFIC CAPITAL: Asks NY Court To Dismiss RAL Agreement Lawsuit
SPARKS NETWORK: Faces Dating Consumer Fraud Suits in NY, CA, IL
SPX FILTRAN: Recalls 42,962 Various Fuel Filters For Fire Hazard
SUNNY VALLEY: Recalls Ham Products Due To Undeclared Allergens
SYCAMORE NETWORKS: NY Court Grants Tentative Approval to Pact
TENNESSEE: Expelled Students' Suit V. Knox County to be Appealed
TRANSNET WIRELESS: FL Court Halts Fraudulent Business Operation
UAL CORPORATION: Judge Rules Trustee Not Liable for Bankruptcy
UNITED KINGDOM: Court Set to Rule on Railtrack Compensation Case
VIXEL CORPORATION: NY Court Preliminarily OKs Lawsuit Settlement
YAKIMA PRODUCTS: Recalls 16,671 Bicycle Carriers For Crash Risk
New Securities Fraud Cases
BARRIER THERAPEUTICS: Dyer & Shuman Sets Lead Plaintiff Deadline
DANA CORPORATION: Lockridge Grindal Lodges Securities Suit in OH
DANA CORPORATION: Marc Henzel Lodges Securities Fraud Suit in GA
HUTCHINSON TECHNOLOGY: Dyer & Shuman Sets Lead Plaintiff Cutoff
REFCO INC.: Dyer & Shuman Schedules Lead Plaintiff Deadline
REFCO INC.: Goldman Scarlato Lodges Securities Suit in S.D. NY
REFCO INC.: Lockridge Grindal Lodges Securities Fraud Suit in NY
REFCO INC.: Marc S. Henzel Lodges Securities Fraud Suit in NY
REFCO INC.: Shalov Stone Lodges Securities Fraud Suit in S.D. NY
REFCO INC.: Wolf Haldenstein Lodges Securities Suit in S.D. NY
TEMPUR-PEDIC INTERNATIONAL: Federman & Sherwood Files Suit in NY
TEMPUR-PEDIC INTERNATIONAL: Marc Henzel Files GA Securities Suit
*********
ALBERS MEDICAL: Indicted For Importing, Selling Fake Lipitor
------------------------------------------------------------
The U.S. Food and Drug Administration (FDA) and the United
States Attorney for the Western District of Missouri, Kansas
City, Missouri, announced the indictments of 11 individuals, a
drug repacker, and two wholesale distributors in cases related
to the sale of Lipitor, a popular cholesterol reducing drug.
The indictment alleges numerous charges including conspiracy to
sell counterfeit, illegally imported and misbranded drugs as
well as conspiracy to sell stolen drugs. The conspiracy involved
the manufacture of counterfeit Lipitor at a clandestine facility
in Central America, the purchase of genuine Lipitor intended for
distribution in South America, and the illegal importation into
the United States of both products.
"This case demonstrates that the FDA will take the necessary
steps to protect the drug supply in America," said FDA
Commissioner Dr. Lester Crawford. "I am pleased that the U.S.
Attorney's Office and FDA have been able to put together this
case and stop these fraudulent schemes to sell pharmaceuticals
of unknown safety and efficacy to the public."
In 2003, Albers Medical Distributors, Kansas City, MO, (a drug
wholesaler) distributed over $20 million in illegally imported
and counterfeit Lipitor that was sold to H.D. Smith Wholesale
Drug Company (Wood Dale, IL). H.D. Smith distributed these
Lipitor tablets throughout the U.S. The counterfeit Lipitor was
repackaged by Med-Pro, Lexington, NE., a drug repacker. All
three participants in this scheme were named in the indictment
today. It is believed that these counterfeit Lipitor products
are out of circulation.
In addition, it is alleged in the indictment that members of the
conspiracy distributed pharmaceuticals stolen from
GlaxoSmithKline and Roche Pharmaceuticals and counterfeited
drugs The FDA's Office of Criminal Investigation (OCI) was able
to put together the case by tracing back the various steps in
this scheme. OCI was able to document where the chemicals and
products came from, where the counterfeit was being
manufactured, and how it was distributed.
Working together with the U.S. Attorney's Office in the Western
District of Missouri, these findings led to today's indictment
of all parties involved.
ANZA CAPITAL: Faces CA Consumer Lawsuit For Violations of TCPA
--------------------------------------------------------------
Anza Capital Inc. faces a class action filed in California
Superior Court, alleging the Company sent unsolicited
advertisements to fax machines in violation of Telephone
Consumer Protection Act (TCPA) 47USC section 227.
The tendered the matter to People's Home Loans (a company owned
by a former branch manager of the Company) for indemnification,
as they were responsible for the actions that are subject to the
Complaint. The Company recently received an indication that this
matter will be resolved with nominal financial impact to the
Company, the Company said in a disclosure to the Securities and
Exchange Commission.
ANZA CAPITAL: Former Employees Launch Labor Law Violations Suit
---------------------------------------------------------------
Anza Capital Inc., one of its former Branch Managers, and a
third party entity, Spectrum Funding Group, Inc., which is
operated by said former Branch Manager, faces a class action
filed in California Superior Court.
The Complaint alleges damages & equitable relief for violations
of the California Labor Codes; and California Unfair Business
Practices Act. The matter was tendered to the former Branch
Manager for indemnification based on his contract with the
Company.
CARRIER ACCESS: CO Court Consolidates Securities Fraud Lawsuits
---------------------------------------------------------------
The United States District Court for the District of Colorado
consolidated three securities class actions filed against
Carrier Access Corporation and certain of its officers and
directors, alleging violations of federal securities laws. The
cases are captioned:
(1) Croker v. Carrier Access Corporation, et al., Case No.
05-cv-1011-LTB;
(2) Chisman v. Carrier Access Corporation, et al., Case No.
05-cv-1078-REB, and
(3) Sved v. Carrier Access Corporation, et al, Case No. 05-
cv-1280-EWN,
The suits were purportedly brought on the behalf of those who
purchased the Company's publicly traded securities between
October 21, 2003 and May 20, 2005. Plaintiffs allege that
defendants made false and misleading statements, purport to
assert claims for violations of the federal securities laws, and
seek unspecified compensatory damages and other relief. The
complaints are based upon allegations of wrongdoing in
connection with the Company's announcement of its intention to
restate previously issued financial statements for the year
ended December 31, 2004 and certain interim periods in each of
the years ended December 31, 2004 and 2003.
The suit is styled "Croker v. Carrier Access Corporation et al.,
case no. 1:05-cv-01011-LTB," filed in the United States District
Court for the District of Colorado, under Judge Lewis T.
Babcock. Representing the Company is Karen Thomas Stefano,
Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, CA 94304-1050, U.S.A., Phone: 650-493-9300, Fax: 650-493-
6811, E-mail: kstefano@wsgr.com. Representing the plaintiffs
are:
(1) Kip Brian Shuman, Dyer & Shuman, LLP, 801 East 17th
Avenue, Denver, CO 80218-1417, U.S.A., Phone: 303-861-
3003, Fax: 303-830-6920, E-mail:
KShuman@DyerShuman.com;
(2) Matthew M. Wolf, Allen & Vellone, P.C., 1600 Stout
Street, #1100 Denver, CO 80202, U.S.A., Phone: 303-534-
4499, E-mail: mwolf@allen-vellone.com
(3) Karen Jean Cody-Hopkins and Charles Walter Lilley,
Lilley & Garcia, LLP, 1600 Stout Street #1100, Denver,
CO 80202, U.S.A., Phone: 303-293-9800, Fax: 303-298-
8975, E-mail: kcody-hopkins@lilleygarcia.com or
clilley@lilleygarcia.com
CISCO SYSTEMS: Shareholders Launch Securities Fraud Suit in CA
--------------------------------------------------------------
Cisco Systems, Inc. and certain of its officers and directors
continue to face a consolidated shareholder class action filed
in the United States District Court for the Northern District of
California.
The consolidated action is purportedly brought on behalf of
those who purchased the Company's publicly traded securities
between August 10, 1999 and February 6, 2001. Plaintiffs allege
that defendants have made false and misleading statements,
purport to assert claims for violations of the federal
securities laws, and seek unspecified compensatory damages and
other relief.
The suit is filed in the United States District Court for the
Northern District of California, under Magistrate Judge Bernard
Zimmerman. The plaintiff firms in this litigation are:
(1) Charles J. Piven, World Trade Center-Baltimore,401 East
Pratt Suite 2525, Baltimore, MD, 21202, Phone:
410.332.0030, E-mail: pivenlaw@erols.com
(2) Milberg, Weiss, Bershad, Hynes & Lerach LLP (San Diego,
CA), 600 West Broadway, 1800 One America Plaza, San
Diego, CA, 92101, Phone: 800.449.4900, E-mail:
support@milberg.com
(3) Rabin & Peckel LLP, 275 Madison Avenue, 34th Floor, New
York, NY, 10016, Phone: 212.682.1818, Fax:
212.682.1892, E-mail: email@rabinlaw.com
(4) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
CONNECTICUT: Student to be Plaintiff in Suit Over School Funding
----------------------------------------------------------------
A local student could become a plaintiff in a class action suit
that will claim the state of Connecticut failed to fund
education in its cities and towns adequately or equitably, which
a statewide group plans to file, The Norwich Bulletin reports.
Superintendent of Schools Mary Conway told The Norwich Bulletin
that representatives of Connecticut Coalition for Justice in
Education have targeted Plainfield as the source of one of the
16 students the group wants to build its case around. Ms.
Conway specifically told The Norwich Bulletin, "They have talked
to two families in town so far, but both have declined to allow
their child to be used as a plaintiff." She added, "But we have
a list of several other potential students whose parents the
group plans to interview."
According to Ms. Conway, the students range from some in lower
grades to some in their freshman year of high school. She also
told The Norwich Bulletin that the group is looking for students
who may have fallen behind other students in their grade level
because they lacked adequate educational opportunities. She
added that the coalition conducted an adequacy survey,
attempting to determine if towns throughout Connecticut received
sufficient funding to provide adequate educational opportunities
for all its students. Among the programs it considered were
universal pre-school programs, all-day kindergarten, after-
school and summer school opportunities that would help students
get a good head start on learning or help them to keep pace with
their classmates.
"These are all programs that we have had to eliminate or cut
back in past years because of budget limitations," according to
Ms. Conway said. "The suit is one way to force the state to look
more closely at how it funds the Education Cost Sharing
formula." She added that the survey indicated Plainfield was one
of 145 school districts in the state that spent less money on
education than was deemed adequate by the coalition.
The most recent study of funding, based on figures from the
2003-04 fiscal year, show Plainfield was $8,736,805, or 37.5
percent, below the targeted adequacy level. The town spent
$23,298,994 to educate 2,533 public school students, while the
coalition's study shows the town needed to spend $32,035,799 to
meet its targeted adequacy requirements.
The class action suit will be brought by the Yale Law School's
Education Adequacy Clinic, whose free legal services will be
aided by lawyers from private firms in the state.
Manchester Mayor Stephen T. Cassano, executive director of the
coalition, told The Norwich Bulletin that the action is intended
to help devise remedies that are adequate and equitable, to
inform the public and impress upon legislators the need for
reform and to share the fiscal burden of bringing about major
changes in how the state's public schools are funded.
CREDIT CARDS: Deadline Extended in VISA/MasterCard Settlement
-------------------------------------------------------------
Merchants have additional time to file claims in the $3 billion
VISA/MasterCard class action settlement as a result of court
documents filed by Spectrum Settlement Recovery, LLC, a San
Francisco-based firm that helps eligible businesses recover
their share of class action settlements.
On October 11, the Judge overseeing the case ordered an
extension of time to 90 days for class members to challenge or
accept claim estimates received from the Claims Administrator.
Previously, the deadlines were 30 and 60 days, respectively.
Spectrum wrote the Court on October 4 calling attention to
numerous difficulties that were apparent with the claims process
and sought a broad extension of the filing deadlines for the
entire class.
Lead counsel in the case immediately opposed the broad extension
sought by Spectrum and recommended that it be denied. This was
surprising since lead counsel had conceded that collecting
relevant data was sufficiently burdensome to warrant a limited
extension of the time to challenge an estimate.
Not satisfied with lead counsel's initial reaction, the Court
ordered it to respond to the issues raised by Spectrum,
whereupon lead counsel stated it had "no objection" to
Spectrum's request to extend the deadline.
"Spectrum is seeking to address issues that are complicating the
ability of class members to evaluate the claim estimates they
receive," says Howard Yellen, CEO of Spectrum. "We would like to
engage constructively with the lead counsel and the Claims
Administrator in this process."
Spectrum is working on a variety of issues important to
merchants in the class. For example, many merchants do business
at more than one location and therefore have more than one
Merchant ID. Spectrum has asked the Claims Administrator to
provide a list of a class member's Merchant IDs to enable the
merchant to confirm all its locations are accounted for in the
claims process.
"The process of allocating and distributing payments to
potentially millions of merchants is extremely complicated. As
the recovery process moves ahead, we will continue working to
ensure that all class members are treated fairly," says Spectrum
CEO Yellen.
The VISA/MasterCard settlement is the nation's largest
commercial class action settlement to date. Over 5 million
businesses are eligible for a refund. The entire $3 billion fund
will be distributed among only those who file a claim.
Businesses that accepted VISA or MasterCard credit and debit
cards between October 1992 and June 2003 are eligible to receive
a share of the settlement money. The settlement stems from a
class action suit that alleged the charge card companies
violated anti-trust laws and overcharged on transaction
processing fees.
For more details, contact Craig Wolfson of Spectrum Settlement
Recovery, LLC, Phone: 415-392-5900, ext. 245, Web site:
http://www.spectrumsettlement.com.
CROSSROADS SYSTEMS: TX Court Grants Final Approval To Settlement
----------------------------------------------------------------
The United States District Court for the Western District of
Texas granted final approval to the settlement of the
consolidated securities class action filed against Crossroads
Systems, Inc. and several of its officers and directors, styled
"In re Crossroads Systems, Inc. Securities Litigation, Master
File No. A-00-CA-457-JN."
The Company and several of its officers and directors were named
as defendants in several class action lawsuits, filed on behalf
purchasers of the Company's common stock during various periods
ranging from January 25, 2000 through August 24, 2000. These
suits were later consolidated.
On February 24, 2003, the Court entered a final judgment in the
defendants' favor. Plaintiffs appealed to the United States
Court of Appeals for the Fifth Circuit. On April 14, 2004, the
Fifth Circuit issued an opinion, which affirmed in part and
vacated in part the district court's ruling. The remaining
claims were remanded to the district court. On May 12, 2004,
the Fifth Circuit denied plaintiff's request for panel
rehearing.
In December 2004, the Company reached an agreement in principle
to settle this litigation. The shareholder class will receive a
total payment of $4.35 million. Of that amount, the Company's
directors-and-officers insurance carriers agreed to pay $3.35
million and the Company agreed to pay $1.0 million. On February
14, 2005, the Court entered into an order preliminarily
approving the settlement, certifying the class for settlement
purposes and providing for notice. The Court held a hearing on
the settlement on July 11, 2005, and at the hearing, it approved
the settlement and entered a final judgment dismissing the case
with prejudice.
The suit is styled "In re Crossroads Systems, Inc. Securities
Litigation, Master File No. A-00-CA-457-JN," filed in the United
States District Court, Western District of Texas (Austin) under
Judge James R. Nowlin. Representing the plaintiffs are:
(1) Roger F. Claxton and Robert J. Hill, Claxton & Hill,
P.L.L.C., 3131 McKinney Ave. Suite 700 Dallas, TX
75204-2471 Phone: (214) 969-9099;
(2) John K. Grant, Shirley H. Huang, Dennis J. Herman,
Lerach Coughlin Stoia Geller, 100 Pine Street Suite
2600 San Francisco, CA 94111
(3) James R. Hail, Milberg Weis Bershad Hynes & Lerach LLP,
401 B Street Suite 1700 San Diego, CA 92101 Phone:
(619) 231-1058
Representing the Company are Michael J. Biles and Paul R.
Besette, Akin, Gump, Strauss, Hauer & Feld, LLP, 300 W. 6th
Street Suite 2100 Austin, TX 78701 Phone: (512)499-6200; and
Howard M. Privette, II, 550 South Hope Street Los Angeles, CA
90071 Phone: (213)489-4060.
CRITICAL INFRASTRUCTURE: SEC Files Fraud Suit in NY V. Manager
--------------------------------------------------------------
The Securities and Commission filed securities fraud charges in
the United States District Court for the Southern District of
New York against Joseph W. Daniel, former managing partner of
the Critical Infrastructure Fund (the Fund), a hedge fund based
in New York that invested primarily in telecommunications and
internet companies. The Fund had 50 investors who invested a
total of approximately $7 million.
The Commission's complaint alleges that Mr. Daniel was managing
partner for the Fund from March 1999 to February 2002, and
during that time was responsible for valuing private placement
investments held in the Fund's portfolio. The complaint further
alleges that Mr. Daniel wrote up the value of the Fund's private
placement investments by over 20%. Starting in at least
December 2000, however, Mr. Daniel improperly failed to write
down the value of the private placement investments when those
companies encountered financial difficulties, even when some
declared bankruptcy. As a result, Mr. Daniel made
misrepresentations to investors about the value of their
investments in the Fund and the Fund's performance, allowed
certain investors to redeem their shares at inflated values to
the detriment of the remaining investors, and inflated the
management fees paid by investors. These events caused
significant losses for investors.
In addition, the complaint alleges that when new investors
invested in the Fund in December 2001 and January 2002, Mr.
Daniel made misrepresentations about the Fund's assets,
performance, and the percentage of assets the Fund invested in
private placements.
Mr. Daniel consented, without admitting or denying the
allegations in the complaint, to the entry of a Final Judgment
which enjoins him from future violations of Sections 17(a)(1),
(2) and (3) of the Securities Act of 1933, Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and
Sections 206(1) and (2) of the Investment Advisers Act of 1940.
The Judgment was entered on October 7, 2005, and also orders Mr.
Daniel to disgorge $97,152.60, but waives payment of
disgorgement and seeks no penalty based on the sworn
representations in his Statement of Financial Condition and
other documents and information submitted to the Commission.
The suit is styled, SEC V. Joseph W. Daniel, Civil Action No. 05
cv 8338, USDC, SDNY, September 28, 2005 (LR-19427).
DURUS CAPITAL: SEC Files Civil Suit in CT V. Hedge Fund Manager
---------------------------------------------------------------
The Securities and Exchange Commission filed civil fraud charges
in the United States District Court for the District of
Connecticut against Durus Capital Management, LLC (Durus), and
Durus Capital Management (N.A.), LLC (Durus N.A.); Scott R.
Sacane, the founder and managing member or director of Durus and
Durus N.A.; and J. Douglas Schmidt, the chief operating officer
and chief compliance officer of Durus.
The Commission's complaint charges the defendants for their
involvement during 2002 and 2003 in fraudulent schemes
concerning the purchase and sale of the common stock of two
biotechnology companies: Esperion Therapeutics, Inc. and Aksys
Ltd. Once the defendants' schemes were exposed in July 2003,
the complaint alleges that: Aksys' closing stock price fell 43%,
from $15.01 to $8.49, which resulted in lost market
capitalization value of approximately $193,753,595; and,
Esperion's closing stock price fell 23.5%, from $19.88 to
$15.20, which resulted in lost market capitalization value of
approximately $137,601,201. The Commission is seeking
injunctive relief, disgorgement of ill-gotten gains plus
prejudgment interest, and civil penalties. The United States
Attorney's Office for the District of Connecticut also brought
related criminal charges in connection with the scheme.
Among other things, the Commission's complaint alleges that the
defendants manipulated the price of both Esperion and Aksys
stock by making regular and substantial purchases of both stocks
through the hedge funds that they managed and concealing these
purchases by failing to file various forms and schedules with
the Commission as required by the federal securities laws and
making false filings with the Commission. The complaint further
alleges that Mr. Sacane and Durus later sold stock of both
companies without disclosing their ownership position as
required by the federal securities laws, and that Mr. Sacane
made misrepresentations to officers of Aksys, Esperion, and his
former employer about his stock purchases.
The Commission alleges in its complaint that: Mr. Sacane and
Durus violated Section 17(a) of the Securities Act of 1933; Mr.
Sacane, Durus, and Durus N.A. violated Sections 10(b), 13(d),
13(f), 13(g), 16(a), and 16(c) of the Securities Exchange Act of
1934 and Rules 10b-5, 13d-1, 13d-2, 13f-1, and 16a-3 thereunder,
and Sections 206(1) and 206(2) of the Investment Advisers Act.
The complaint further alleges that Mr. Schmidt violated Sections
13(d) and 13(f) of the Exchange Act and Rules 13d-1, 13d-2, and
13f-1 thereunder, and that he aided and abetted Durus', Durus
N.A.'s and Mr. Sacane's violations of Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and
206(2) of the Advisers Act. The suit is styled, SEC v. Scott R.
Sacane, et al., Civil Action No. 3:05cv1575-SRU, USDC, D. Conn.
(LR-19424).
FOUR WINDS: Recalls 221 2006 Motor Homes Due to Crash Hazard
------------------------------------------------------------
Four Winds International in cooperation with the National
Highway Traffic Safety Administration's Office of Defects
Investigation (ODI) is voluntarily recalling about 221 units of
2006 FOUR WINDS / CHATEAU CITATION, 2006 FOUR WINDS / DUTCHMEN
DORADO, 2006 FOUR WINDS / HURRICANE, 2006 FOUR WINDS / MAGELLAN,
2006 FOUR WINDS / SIESTA and 2006 FOUR WINDS / WINDSPORT motor
homes due to crash hazard. NHTSA CAMPAIGN ID Number: 05V465000.
According to certain class A and class B motor homes, the hitch
may have been manufactured with a spacer plate that does not fit
flush to the rear extension. This causes the fasteners to be
corner loaded when tightened, which could cause the hitch to
fail during usage causing a crash, which could result in death
and injury.
As remedy, dealers will install a new spacer plate and add six
new bolts, washers and nuts to secure the spacer plate in place.
The recall is expected to begin on November 7, 2005.
For more details, contact Four Winds, Phone: 574-266-1111 OR the
NHTSA Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153, Web
site: http://www.safecar.gov.
FUNERAL HOMES: FTC Sweep Uncovers Violations of Funeral Rule
------------------------------------------------------------
Staff of the Federal Trade Commission (FTC) announced the
results of a sweep of 20 funeral homes in Nassau County, New
York, to test compliance with the FTC's Funeral Rule. Seven of
those homes appeared to be in violation of the Rule, the agency
found.
The FTC's Northeast Region Office coordinated the sweep as part
of an ongoing nationwide law enforcement program. FTC "test
shoppers" visited the 20 funeral homes to determine whether they
were complying with key provisions of the FTC's Funeral Rule -
requirements that consumers be given a copy of an itemized
general price list, and that they be shown itemized price lists
for caskets and outer burial containers in a timely manner. The
Funeral Rule is designed to ensure that consumers making funeral
arrangements receive price lists and are informed that they can
buy only the goods and services they want or need.
According to the FTC, six of the funeral homes considered to be
in violation of the Rule will be allowed to resolve the possible
law violations by participating in the Funeral Rule Offenders
Program (FROP), in lieu of possible formal legal action, which
could result in an injunction and civil penalties.
The FROP program, announced in January 1996, was developed as a
joint effort between the National Funeral Directors Association
(NFDA) and the FTC to boost funeral industry compliance with the
Funeral Rule. Under the program, funeral homes that fail to give
test shoppers the itemized price lists in the time and manner
required by the Rule are given the option of entering the FROP
program rather than face possible formal legal action. If they
choose FROP, they make a voluntary payment to the U.S. Treasury
in lieu of civil penalties, and enroll in a program,
administered by the NFDA, that includes a review of price lists,
compliance training and follow-up testing and certification.
Depending on the severity of the violation, funeral homes
considered to be in violation of the Rule may be allowed to
resolve law violations through means other than the FROP program
or formal law enforcement action that could result in an
injunction and civil penalties. Among those alternative means of
resolving possible violations, a funeral home may receive a
letter notifying it that it is not in compliance with the Rule
and warning that future noncompliance could result in a monetary
penalty. In this instance, the seventh funeral home that
appeared to be in violation received such a warning letter.
The Funeral Rule, developed by the Commission in 1984, was
revised in 1994. One of its key requirements is that funeral
homes must give consumers a copy of an itemized general price
list, which they can use for comparison shopping at the
beginning of any discussion regarding funeral arrangements,
goods, services, or prices. The general price list must contain
a number of disclosures and other information including, for
example, that embalming is not necessarily required by law. The
Rule also makes clear that consumers do not have to buy a
package funeral, but instead, may pick and choose the goods and
services they want.
A free FTC brochure for consumers titled, "Funerals: A Consumer
Guide," provides additional information about consumers' rights
and legal requirements when planning funerals. A free FTC
handbook titled, "Complying with the Funeral Rule," provides
information to funeral providers on complying with the Rule.
Copies of the FTC brochure and other documents pertaining to the
FROP program are available from the FTC's Web site at
http://www.ftc.govand also from the FTC's Consumer Response
Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington,
D.C. 20580 or call toll-free: 1-877-FTC-HELP (1-877-382-4357).
For more details, contact Mitchell J. Katz, Office of Public
Affairs by Phone: 202-326-2161 or contact Barbara Anthony or
Robert Cancellaro, FTC Northeast Region, New York by Phone:
212-607-2829, E-mail:
http://www.ftc.gov/opa/2005/10/funeralsweep.htm.
HEART DEVICES: FDA Releases Study on Implantable Cardiac Devices
----------------------------------------------------------------
In its ongoing commitment to improve the safety monitoring of
implantable cardiac devices and provide earlier notice to
doctors and patients of potential problems, the U.S. Food and
Drug Administration (FDA) released its retrospective review of
malfunctions of implantable cardioverter defibrillators (ICD)
and pacemakers occurring from 1990-2002. The findings were
presented today at the Heart Rhythm Society "Policy Conference
on Pacemaker and ICD Performance," in Washington, DC.
The meeting is a gathering of clinicians, FDA medical and
scientific staff, and other stakeholders, to discuss ways in
which the agency can increase its collaborations with the
clinical community to improve the quality of information that is
made available to doctors and patients for making individual
medical decisions about the safe and effective use of
implantable defibrillators. This is part of a broader effort
inside FDA to increase its collaboration with medical
professional societies.
The study is part of the FDA device center's continuing efforts
to improve the medical information it makes available from
routine surveillance reports that the agency receives as part of
its post market safety monitoring. Overall, the study found that
the number of malfunctioning pacemakers removed and replaced in
patients has decreased, while the numbers for ICDs have
increased. The reasons for the increase in ICD malfunction rates
have not been established, but potentially could relate to the
increased complexity of these devices, manufacturing challenges
posed by device complexity, or increased reporting by
physicians.
The study also concluded that careful monitoring of device
performance is needed, along with better ways for doctors to
return explanted devices to companies for analysis and to report
adverse events.
"The FDA is committed to continuing to improve the quality of
information that patients and doctors have to make decisions
about the safe and effective use of these critical, life-saving
technologies," said Scott Gottlieb, MD, FDA Deputy Commissioner
for Scientific and Medical Affairs. "Pacemakers and ICDs have
saved many lives and the benefits of the devices clearly
outweigh the risks. All sophisticated medical devices like these
have certain risks. Our challenge remains to uncover these
risks, measure them, and make information available to patients
and doctors to help guide their personalized decisions about
where the benefits of technologies like these outweigh known or
potential risks from their use."
From 1990 to 2002, there were approximately 2.25 million
pacemakers (PMs) and 416,000 ICDs implanted in the United
States. During the same time period, 17,323 devices (8834 PMs
and 8489 ICDs) were removed from patients due to confirmed
device malfunction. The annual ICD malfunction replacement rate
of 20.7 per 1,000 implants was significantly higher than the PM
malfunction replacement rate of 4.6 replacements per 1000
implants. The PM malfunction replacement rate decreased
significantly during the study. In contrast, the ICD malfunction
replacement rate trended down during the first half of the
1990's but increased during the latter half of the study. In
addition, more than 50% of the ICD malfunctions occurred during
the last three years of the study. PM or ICD malfunctions were
directly responsible for 61 confirmed deaths out of the nearly
three million devices implanted during this time period.
However, the vast majority of reported malfunctions did not lead
to death or serious injury, and were detected in time to ensure
that patients would continue to receive therapy when it was
needed.
"It is important for patients to understand that there is no
action that they need to take as a result of this report. It
does alert FDA that there is a trend that needs to be addressed
and points out the need for our agency to improve the way it
regulates these products, and we are doing just that," said
Daniel Schultz, MD, Director of FDA's Center for Devices and
Radiological Health (CDRH). "We have already begun to better
coordinate our pre and post-market regulation of these devices,
to strengthen the link between how these products are approved
and how they are monitored after clinical use. We are also
considering whether we need additional data from manufacturers
in their annual reports, and how we can communicate more
effectively with physicians and patients when these devices
malfunction."
As part of FDA's goal to improve device safety monitoring and
issue earlier communications, the top priorities underway are:
(1) Increasing CDRH's ability to obtain critical
information about medical device failures and to
communicate this information clearly and rapidly to
physicians and the public so they can use it to make
sound, informed medical decisions.
(2) Better coordination of company annual report
information within CDRH to allow for an integrated
approach, leading to more efficient and timely review.
(3) For ICDs in particular, formation of a working group
tasked with improving communication within CDRH so
information about problems with ICDs and pacemakers can
be quickly reviewed and evaluated by staff, and shared
more rapidly with the public.
Operational changes made as the result of an ongoing internal
review of CDRH's post-market program, which tracks the
performance of medical devices once they reach the market and
are in general use. The changes being considered are Design of
an electronic system for adverse event reporting to make the
information available to CDRH analysts more quickly; Targeting
resources to inspections of firms that manufacture potentially
higher risk devices; Developing guidance for companies that
submit annual reports to make sure they provide information
about failures and problems in a way that assures prompt,
efficient review by FDA; Developing guidance that more clearly
defines when changes to devices need prior review and approval
by FDA before being implemented.
The study abstract and FDA's presentations from the Heart Rhythm
Society meeting are available on FDA's web site at
http://www.fda.gov/cdrh/ocd/icd/. The complete study will be
submitted to a medical journal for publication.
HIENERGY TECHNOLOGIES: Plaintiffs File Second Amended Stock Suit
----------------------------------------------------------------
Plaintiffs filed a second amended securities class action
against Hienergy Technologies, Inc. and certain of its officers
in the United States District Court for the Southern District of
California.
In January 2005, the Company was served with a Summons and Class
Action Complaint For Violations of Federal Securities Laws. The
Complaint named the Company, its Chairman, among other named
defendants on behalf of a class of persons who acquired the
stock of the Company during the period from February 22, 2002
through July 8, 2004. In February 2005, plaintiff's counsel
filed a First Amended Complaint entitled and styled, "In re:
HiEnergy Technologies, Inc. Securities Litigation," Master File
No. 8:04-CV-01226-DOC (JTLx), alleging various violations of the
federal securities laws, generally asserting the same claims
involving Philip Gurian, Barry Alter, and the Company's failure
to disclose their various securities violations including,
without limitation, allegations of fraud. The First Amended
Complaint seeks, among other things, monetary damages,
attorney's fees, costs, and declaratory relief.
On Friday, March 25, 2005, the Company timely filed responsive
pleadings as well as Motions to Dismiss the Plaintiffs' First
Amended Complaint arguing that the Complaint failed to state a
claim upon which relief can be granted. On June 17, 2005, the
Court issued an Order Granting the Motions to Dismiss (the
"Order"), finding that the First Amended Complaint failed to
allege causation of loss resulting from any alleged omissions
and/or misrepresentations of the Company or Dr. Maglich, to
sustain a cause of action for securities fraud under ss.10(b) of
the Exchange Act and Rule 10b-5 of the Securities and Exchange
Commission (SEC), that the Plaintiffs had failed to plead actual
reliance on any allegedly false or misleading filings of the
Company to sustain a claim under ss.18 of the Exchange Act, and
that the Plaintiffs had failed to allege a primary violation of
any securities laws to sustain a claim for a violation of
ss.20(a) of the Exchange Act.
On July 5, 2005, the Plaintiffs filed a Second Amended Complaint
in compliance with the Court's Order, as anticipated. Company
counsel will respond to the allegations in any further pleading
with appropriate challenges to its legal sufficiency to state a
claim upon which relief may be granted.
The suit is styled "In re: HiEnergy Technologies, Inc.
Securities Litigation," Master File No. 8:04-CV-01226-DOC
(JTLx)," filed in the United States District Court for the
Central District of California, under Judge David O. Carter.
The plaintiffs are represented by Kenneth J Catanzarite and Jim
T. Tice, Catanzarite Law Offices 2331 W Lincoln Ave Anaheim, CA
92801 Phone: 714-520-5544 E-mail: kcatanzarite@catanzarite.com,
jtice@catanzarite.com; and Laurence M. Rosen, Rosen Law Firm 350
Fifth Avenue, Suite 5508 New York, NY 10118 Phone: 212-686-1060
E-mail: lrosen@rosenlegal.com. The Company is represented by
Jason D. Annigian, Robert J. Feldhake, Daniel M. Hawkins, and
Lisa A. Roquemore, Feldhake and Roquemore, 19900 MacArthur
Boulevard, Suite 850 Irvine, CA 92612 Phone: 949-553-5000 E-
mail: jannigian@far-law.com, rfeldhake@far-law.com; and C.
William Kircher, Jr., C William Kircher Jr Law Offices 2 Park
Plaza, Ste 300 Irvine, CA 92614-8513 Phone: 949-474-2310 Fax:
949-261-1085.
ISUZU MANUFACTURING: Recalls Various SUVs Due to Fire Hazard
------------------------------------------------------------
Isuzu Manufacturing Services of America in cooperation with the
National Highway Traffic Safety Administration's Office of
Defects Investigation (ODI) is voluntarily recalling 2002 HONDA
/ PASSPORT, 2002-04 ISUZU / AXIOM, 2002-04 ISUZU / RODEO and
ISUZU / REDEO SPORT sports utility vehicles due to fire hazard.
NHTSA CAMPAIGN ID Number: 05V466000.
According to the ODI, certain SUVs that have been exposed to
fuel contaminated with silicon may develop small pinholes in the
pump feed port. In such a state, a fuel leak could lead to a
vehicle fire.
Silicon has been identified in the fuel systems affected
vehicles and in certain fuel available in the region Tyler,
Texas. This recall will be launched for vehicles registered in
Texas and the four surrounding states: Oklahoma, Arkansas, New
Mexico and Louisiana.
As a remedy, for vehicles registered in the states identified
above, dealers will provide a new cover over the existing feed
port on the fuel pump or, if the existing feed port has already
been damaged, dealers will install a new fuel pump that is
equipped with the new cover. The new cover will be made of a
different material. The recall is expected to begin in late
October 2005.
For more details, contact Isuzu, Phone: 1-800-255-6727 OR the
NHTSA Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153, Web
site: http://www.safecar.gov.
LAFAYETTE UTILITIES: Overcharging Suit Moved Back To State Court
----------------------------------------------------------------
The class action against Lafayette Utilities System, accusing it
of overcharging its electricity customers, was moved back to
state court, 2theadvocate.com reports.
The suit, filed by Elizabeth Naquin and Matthew Eastin, is
seeking for the return of millions to LUS customers. It alleges
that LUS overcharged customers $1.6 million over the last 10
years, an average of $160,000 a year -- or roughly $3 per
customer each year. The allegation is that LUS has overcharged
customers on the fuel cost portion of bills.
Court records revealed that LUS electricity bills come in two
sections: the base rate, which is set each year by the City-
Parish Council, and fuel cost adjustments, which LUS is
empowered to adjust in anticipation of fuel costs. LUS
officials argued that the plaintiff's numbers are incorrect --
that LUS has actually guessed too low more often than it has
guessed too high in adjusting fuel costs.
LUS asked U.S. District Court Judge Richard Haik to dismiss the
case, arguing that complaints about rates have to be handled by
the body that regulates LUS, the Lafayette Public Utility
Authority, which is made up of the five councilmen who represent
mostly city residents.
The suit was originally filed in state district court, but then
moved to federal court because the plaintiffs' complaint also
delved into issues that are handled by the Federal Energy
Regulatory Commission, a federal body. The plaintiffs later
amended their complaint to remove allegations related to the
Federal Energy Regulatory Commission. That amendment alone
prompted Judge Haik to move the case back to state court, since
it no longer contained issues he thought were properly handled
in federal court. In moving the case back to state court, Judge
Haik ruled, "This is not a federal issue. I don't wish to be
saying to the city-parish government what to do or what not to
do pertaining to LUS."
Glenn Farnet, who represented Lafayette at the hearing, said
that the plaintiffs filed their suit to try to get around the
only body authorized by the city-parish charter to oversee LUS -
- the LPUA. "If they don't like that, the remedy here is to
amend the home rule charter," Mr. Farnet said.
However, plaintiff attorney Stan Baudin countered that having
the elected officials that oversee LUS also in charge of
regulating the utility is like "the fox guarding the hen house."
He told 2theadvocate.com that it's not clear exactly how a
resident would go about complaining to the LPUA about rates.
MAJESCO ENTERTAINMENT: Shareholders Launch Fraud Lawsuits in NJ
---------------------------------------------------------------
Majesco Entertainment Co. and certain of its officers, and
former officers face four securities class action lawsuits filed
in July and August 2005 in the United States District Court for
the District of New Jersey.
The complaints assert claims under Section 10(b) and 20(a) of
the Securities Exchange Act of 1934 based on allegations that
the Company made false and misleading statements regarding the
Company's financial condition and future prospects. The lawsuits
purport to be class actions filed on behalf of purchasers of the
Company's common stock during the period from December 8, 2004
through July 12, 2005. The actions seek damages in an
unspecified amount.
As each of these lawsuits are in their initial stages, the
Company has been advised by its legal counsel that there is
insufficient information available to determine the outcome of
these matters and a loss, if any, cannot be reasonably
estimated, the Company stated in a disclosure to the Securities
and Exchange Commission.
METROMEDIA FIBER: Suit Settlement Hearing Set December 22, 2005
---------------------------------------------------------------
The United States District Court for the Southern District of
New York will hold a fairness hearing for the proposed $8.75
million settlement in the matter: In re Metromedia Fiber
Network, Inc. Securities Litigation, No. 01 Civ. 7353 (CLB),
which was filed on behalf of a class consisting of all persons
or entities who purchased or otherwise acquired the common stock
of Metromedia Fiber Network, Inc. (NASDAQ ticker: originally
"MFNX," then "MFNXE" as of 4/19/02, then "MFNXA" as of 5/21/02,
and finally "MFNXQ" since 5/31/02; CUSIP Number 591689104)
between January 8, 2001 and July 2, 2001, inclusive, and were
damaged thereby (the "Class").
The hearing will be held before the Hon. Charles L. Brieant,
United States District Judge, on December 22, 2005 at 10:00 a.m.
at the United States Courthouse, 300 Quarropas Street, Courtroom
218, White Plains, New York 10601.
For more details, contact In re Metromedia Fiber Network, Inc.
Securities Litigation Class Notices, c/o Gilardi & Co. LLC, P.O.
Box 990, Corte Madera, CA 94976-0990, Phone: 800-447-7657, E-
mail: MFNSettlement@gilardi.com; Deborah Clark-Weintraub, Esq.
of Milberg Weiss Bershad & Schulman LLP, One Pennsylvania Plaza,
New York, NY 10119-0165, Phone: 800-320-5081; and Louis
Gottlieb, Esq. of Goodkind Labaton Rudoff & Sucharow LLP, 100
Park Avenue, New York, NY 10017-5563, Phone: 800-321-0476.
NORTH AMERICA BUS: Recalls 222 2002-04 Buses Due to Fire Hazard
---------------------------------------------------------------
North America Bus Industries, Inc. in cooperation with the
National Highway Traffic Safety Administration's Office of
Defects Investigation (ODI) is voluntarily recalling about 222
units of 2002-04 NABI / 40LFW buses due to fire hazard. NHTSA
CAMPAIGN ID Number: 05V464000.
According to the ODI, on certain buses manufactured with Detroit
Diesel Series 50 Engines, the electronic control module (ECM)
will need to be reprogrammed to activate the exhaust temperature
sensor. Engine malfunction could lead to possible engine and
vehicle damage and potential for a vehicle fire.
As remedy, NABI is working with Detroit Diesel to reprogram the
engines. The recall is expected to begin on October 15, 2005.
For more details, contact NABI, Phone: 256-831-4296 OR the NHTSA
Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153, Web site:
http://www.safecar.gov.
NBTY INC.: To Pay $2M Civil Penalty For False Supplement Claims
---------------------------------------------------------------
Under the terms of a consent decree approved by the Federal
Trade Commission for submission by the U.S. Department of
Justice (DOJ) to the federal court for approval, NBTY, Inc.
(NBTY, formerly Nature's Bounty, Inc.), a leading manufacturer
and distributor of dietary supplements in the United States and
abroad, will pay a $2 million civil penalty to settle charges
that it violated the terms of a 1995 Commission order by making
false and misleading health claims about two of its products.
The FTC charged that the defendant made unsubstantiated promises
that its products would cause consumers to lose weight or cure a
variety of health problems.
"Misleading health claims prevent consumers from getting useful
information and can delay treatment for serious medical
conditions," said Lydia B. Parnes, Director of the FTC's Bureau
of Consumer Protection. "Companies already under order for
making deceptive health claims should know better than to try it
again."
In 1995, NBTY and its two wholly owned subsidiaries, Puritan's
Pride, Inc., and Vitamin World, Inc., settled FTC charges that
they made deceptive claims for 26 products. The FTC alleged
that, among other things, the company claimed falsely or without
substantiation that its products promoted weight loss, increased
muscle mass, decreased body fat, promoted hair growth, prevented
premature hair loss, lowered cholesterol, and prevented
arthritis. Under the terms of the order settling the matter,
NBTY agreed not to make unsubstantiated claims about any dietary
supplement and not to misrepresent the results or conclusions of
any test, study, research article, or any other scientific
opinion or data. NBTY further agreed to pay $250,000 in consumer
redress.
If approved by the court, the consent decree will resolve
allegations that NBTY violated the 1995 order through its
subsidiaries. The FTC charges that from 2001 through 2003,
Dynamic Essentials, Inc., an NBTY subsidiary, marketed a Tongan
seaweed extract, "Royal Tongan Limu," advertising in English and
Spanish that it was clinically proven to cure, prevent, or treat
a range of diseases and disorders such as allergies, diabetes,
cancer, and Alzheimer's disease.
The FTC alleges that during this same period, NBTY, through its
subsidiaries, also claimed that "Body Success PM Diet Program"
reduces body fat, increases metabolism, and causes weight loss,
even during sleep. According to the FTC, the company lacked
reliable scientific evidence to prove that its claims for either
product were true, and misrepresented that tests, studies,
research, articles, scientific opinion, and data supported its
claims for Royal Tongan Limu.
Under the terms of the consent decree, NBTY and its subsidiaries
are barred from violating the 1995 order, and NBTY must pay $2
million in civil penalties. The consent order also contains
terms requiring NBTY to distribute the order to certain company
personnel, as well as to keep relevant records and provide them
to the Commission to ensure compliance with the order's terms.
The Commission vote approving the consent decree and authorizing
transmission to DOJ for filing was 4-0. DOJ submitted the
proposed consent decree to the U.S. District Court for the
Eastern District of New York on October 12, 2005.
Copies of the consent decree and complaint are available from
the FTC's Web site at http://www.ftc.govand also from the FTC's
Consumer Response Center, Room 130, 600 Pennsylvania Avenue,
N.W., Washington, D.C. 20580. The FTC works for the consumer to
prevent fraudulent, deceptive, and unfair business practices in
the marketplace and to provide information to help consumers
spot, stop, and avoid them. To file a complaint in English or
Spanish (bilingual counselors are available to take complaints),
or to get free information on any of 150 consumer topics, call
toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint
form at http://www.ftc.gov.The FTC enters Internet,
telemarketing, identity theft, and other fraud-related
complaints into Consumer Sentinel, a secure, online database
available to hundreds of civil and criminal law enforcement
agencies in the U.S. and abroad. For more details, contact
Mitchell J. Katz, Office of Public Affairs by Phone:
202-326-2161 or contact Jock Chung or Pat Bak, Bureau of
Consumer Protection by Phone: 202-326-2984 or 202-326-2842 or
visit the Website: http://www.ftc.gov/opa/2005/10/nbty.htm.
NEIMAN MARCUS: To Ask TX Court To Dismiss Securities Fraud Suit
---------------------------------------------------------------
The Neiman Marcus Group, Inc. intends to ask the United States
District Court for the Northern District of Texas to dismiss the
class action filed against it and its directors, styled "NECA-
IBEW Pension Fund (The Decatur Plan) v. The Neiman Marcus Group,
Inc. et al. (CA No. 3-05 CV-0898B)."
On May 1, 2005, the Company's Board of Directors approved a
definitive agreement to sell the Company to an investment group
consisting of Texas Pacific Group and Warburg Pincus, LLC
(collectively, the Sponsors), through a merger of the Company
with an entity owned by the Sponsors. The amended complaint
alleges a cause of action for breach of fiduciary duty against
the Company and its directors, claiming, among other things,
that the defendants are endeavoring to complete the sale of the
Company and its assets at a grossly inadequate and unfair price
and pursuant to an unfair process that fails to maximize
shareholder value. In addition, the amended complaint alleges
that the directors are not independent and breached their
fiduciary duties in connection with the approval of the merger
by, among other things, tailoring the transaction to serve the
interests of the defendants and the family of Richard A. Smith,
chairman of the Company's board of directors and its largest
stockholder, rather than structuring the merger to obtain the
highest price for stockholders, depriving public stockholders of
the value of certain assets (including the credit card business
and its third quarter 2005 profits), failing to realize the
financial benefits from the sale of the credit card business,
not engaging in a fair process of negotiating at arm' s length,
including provisions precluding superior competing bids
(including a termination fee and no solicitation provision) and
structuring a preferential deal for insiders.
The amended complaint further claims that the Company's
financial advisor had a conflict of interest by also acting as a
financing source for the merger, and that its proxy statement in
respect of the merger allegedly omitted material information
purportedly necessary to ensure a fully informed shareholder
vote. The amended complaint currently seeks, among other
things, injunctive relief to enjoin the consummation of the
merger, to rescind any actions taken to effect the merger, to
direct the defendants to sell or auction the Company for the
highest possible price, and to impose a constructive trust in
favor of plaintiffs upon any benefits improperly received by
defendants. The lawsuit is in its preliminary stage and we
expect to file a motion to dismiss the lawsuit in October 2005.
The suit is styled "NECA-IBEW Pension Fund v. The Neiman Marcus
Group Inc et al., case no. 3:05-cv-00898," filed in the United
States District Court for the Northern District of Texas, under
Judge Sam A. Lindsay. Representing the defendants is William
Mayer Katz, Jr of Thompson & Knight LLP, 1700 Pacific Avenue,
Suite 3300, Dallas, TX 75201-4693, Phone: 214/969-1330, Fax;
214/880-3279, E-mail: william.katz@tklaw.com. Representing the
plaintiffs is Willie Briscoe of Provost Umphrey Law Firm -
Dallas, 3232 McKinney Ave, Suite 700, Dallas, TX 75204, Phone:
214/744-3000, E-mail: Provost_Dallas@yahoo.com.
OKLAHOMA: GRDA Settles Property Owners' Suit Over 1990s Floods
--------------------------------------------------------------
After ten years of legal wrangling, the Grand River Dam
Authority agreed to settle a class action lawsuit filed by about
80 property owners in Miami, Oklahoma, who sued the GRDA in the
1990s over flood damages, The KSN16 reports.
Court records show that in 1999 the GRDA was found liable for
the flooding because of its operation of the Pensacola dam,
which impounds water from the Grand River to form Grand Lake. In
that same year, the GRDA appealed the ruling but the state
Supreme Court declined to hear the appeal.
Though the terms of the proposed settlement are not being
disclosed, earlier estimates revealed that the authority could
owe between $10 and $20 million.
OPTIO SOFTWARE: 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 Optio
Software, Inc., certain of its officers and directors and the
underwriters in its initial public offering (IPO).
On November 13, 2001, a lawsuit styled "Kevin Dewey vs. Optio
Software, Inc., et. al." was filed in the United States District
Court for the Southern District of New York. The complaint was
filed on behalf of persons purchasing the Company's common stock
between December 14, 1999 and December 6, 2000 and seeks class
action status. The Company is a co-defendant with approximately
300 other issuers in this suit. The complaint includes
allegations of violations of:
(1) Section 11 of the Securities Act of 1933 by all named
defendants,
(2) Section 12(a)(2) of the Securities Act of 1933 by the
underwriter defendants,
(3) Section 15 of the Securities Act of 1933 by the
individual defendants, and
(4) Section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder by the
underwriter defendants.
The complaint alleges that the Company's prospectus was
materially false and misleading because it failed to disclose,
among other things, that:
(i) the underwriters had solicited and received excessive
and undisclosed commissions from certain investors in
exchange for which the underwriters allocated to those
investors material portions of a limited number of
Optio shares issued in connection with the Optio
initial public offering; and
(ii) the underwriters had entered into agreements with
customers whereby the underwriters agreed to allocate
Optio shares to those customers in the Optio initial
public offering in exchange for which the customers
agreed to purchase additional Optio shares in the
aftermarket at pre-determined prices.
The complaint seeks unspecified amounts as compensatory damages
as a result of the Company's alleged actions, as well as
punitive damages and reimbursement for the plaintiff's
attorney's fees and associated costs and expenses of the
lawsuit. A proposal to settle the claims against the Company and
other companies and individual defendants in the litigation was
conditionally accepted by the Company. The completion of the
settlement is subject to a number of conditions, including Court
approval. The Court preliminarily approved the settlement on
February 15, 2005, subject to certain modifications currently
pending approval by the defendants.
Under 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 the action.
The Company may still have yet undetermined exposure to the
underwriters pursuant to indemnification provisions in the
underwriting agreement entered into at the time of the initial
public offering. Under the guaranty, all the insurers for all
the issuers will be required to pay an amount equal to $1.0
billion less any amounts ultimately collected by the plaintiffs
from the underwriter defendants in all the cases.
The suit is styled "In re Optio Software, Inc. Initial Public
Offering Securities Litigation, (SAS)," filed in relation to "IN
re IPO Securities Litigation, 21-MC-92 (Sas)," in the United
States District Court for the Southern District of New York,
under Judge Shira A. Scheindlin. The plaintiff firms in this
litigation are:
(a) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(b) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300,
(c) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd,
PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E-
mail: info@sbclasslaw.com
(d) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(e) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(f) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
PACIFIC CAPITAL: Plaintiffs Appeal Dismissal of CA RAL Lawsuit
--------------------------------------------------------------
The Superior Court in Santa Barbara, California has yet to rule
on plaintiffs' appeal of the dismissal of the class action
against Pacific Capital Bancorp on behalf of persons who entered
into a refund anticipation loan application and agreement (the
"RAL Agreement") with the Company from whose tax refund the
Company deducted a debt owed by the applicant to another RAL
lender.
The lawsuit was filed on March 18, 2003 in the Superior Court in
San Francisco, California as "Canieva Hood and Congress of
California Seniors v. Santa Barbara Bank & Trust, Pacific
Capital Bank, N.A., and Jackson-Hewitt, Inc." The Company is a
party to a separate cross-collection agreement with each of the
other RAL lenders by which it agrees to collect sums due to
those other lenders on delinquent RALs by deducting those sums
from tax refunds due to its RAL customers and remitting those
funds to the RAL lender to whom the debt is owed. This cross-
collection procedure is disclosed in the RAL Agreement with the
RAL customer and is specifically authorized and agreed to by the
customer. The suit was later moved to the Santa Barbara Superior
Court.
The plaintiff does not contest the validity of the debt, but
contends that the cross-collection is illegal and requests
damages on behalf of the class, injunctive relief against the
Company, restitution of sums collected, punitive damages and
attorneys' fees. The Company has filed an answer to the
complaint and has also filed a cross-complaint seeking indemnity
from the other RAL lenders for which the funds were cross-
collected.
The Company filed an answer to the complaint and a cross
complaint for indemnification against the other RAL lenders. On
May 4, 2005, a superior court judge in Santa Barbara granted a
motion filed by the Company and the other RAL lenders, which
resulted in the entry of a judgment in favor of the Company
dismissing the suit. The plaintiffs have filed an appeal.
The Court has stayed all other proceedings, pending appeal. Ms.
Hood has also filed a separate suit against the Company and
Cendant Corporation on December 18, 2003 in the Ohio Court of
Common Pleas (Montgomery County) and is seeking to certify a
class in the action. The allegations relate to the same set of
facts as the California action. The Company filed a motion to
stay or dismiss, which was denied, and subsequently answered the
Complaint, denying any liability. The case is in its discovery
and pretrial stage. The Company has filed a motion to stay the
action, or in the alternative to add Santa Barbara Bank & Trust
as a third-party defendant, pending a decision in the California
appeal. The Company believes it has meritorious defenses to the
claims.
PACIFIC CAPITAL: Asks NY Court To Dismiss RAL Agreement Lawsuit
---------------------------------------------------------------
The Supreme Court of the State of New York, County of New York
has yet to rule on Pacific Capital Bancorp's motion to dismiss
the amended class action filed against it on behalf of residents
of the State of New York who engaged Jackson Hewitt, Inc (JHI)
to provide tax preparation services and who through JHI entered
into an agreement with the Company to receive a refund
anticipation loan (RAL). JHI is also a defendant.
The lawsuit was filed on June 18, 2004, as "Myron Benton v.
Jackson Hewitt, Inc. and Santa Barbara Bank & Trust Co." As
part of the RAL documentation, the customer receives and signs a
disclosure form which discloses that the Company may share a
portion of the federal refund processing fee and finance charge
with JHI. The plaintiffs allege that the failure of JHI and the
Company to disclose the specific amount of the fee which JHI
receives is unlawful and request damages on behalf of the class,
injunctive relief, punitive damages and attorneys' fees.
Following the filing of a motion to dismiss the complaint by the
Company, the plaintiff has filed an amended complaint. The
amended complaint has added three new causes of action:
(1) a cause of action for an alleged violation of
California Business and Professions Code Sections
17200, and 17500, et seq, as a result of alleged
deceptive business practices and false advertising;
(2) a cause of action for an alleged violation of the
California Legal Remedies Act, California Civil Code
Section 1750, et seq;
(3) a cause of action for an alleged negligent
misrepresentation.
SPARKS NETWORK: Faces Dating Consumer Fraud Suits in NY, CA, IL
---------------------------------------------------------------
Sparks Network PLC is working to resolve three consumer fraud
lawsuits filed in New York, California and Illinois state
courts, related to its dating service.
On June 21, 2002, Tatyana Fertelmeyster filed an Illinois class
action complaint in the Circuit Court of Cook County, Illinois,
based on an alleged violation of the Illinois Dating Referral
Services Act. On September 12, 2002, Lili Grossman filed a New
York class action complaint in the Supreme Court in the State of
New York based on alleged violations of the New York Dating
Services Act and the Consumer Fraud Act. On November 14, 2003,
Jason Adelman filed a nationwide class action complaint in the
Los Angeles County Superior Court based on an alleged violation
of California Civil Code section 1694 et seq., which regulates
businesses that provide dating services.
In each of these cases, the complaint included allegations that
The Company is a dating service as defined by the applicable
statutes and, as an alleged dating service, it is required to
provide language in its contracts that allows:
(1) members to rescind their contracts within three days,
(2) reimbursement of a portion of the contract price if the
member dies during the term of the contract and/or
(3) members to cancel their contracts in the event of
disability or relocation
Causes of action include breach of applicable state and/or
federal laws, fraudulent and deceptive business practices,
breach of contract and unjust enrichment. The plaintiffs are
seeking remedies including declaratory relief, restitution,
actual damages although not quantified, treble damages and/or
punitive damages, and attorney's fees and costs.
Another suit, styled "Huebner v. InterActiveCorp., Superior
Court of the State of California, County of Los Angeles, Case
No. BC 305875" involves a similar action, involving the same
Plaintiff's counsel as "Adelman," brought against
InterActiveCorp's Match.com that has been ruled related to
"Adelman," but the two cases have not been consolidated.
"Adelman" and "Huebner" each seek to certify a nationwide class
action based on their complaints. Because the cases are class
actions, they have been assigned to the Los Angeles Superior
Court Complex Litigation Program. The court has ordered a
bifurcation of the liability issue. At an August 15, 2005 Status
Conference, the court set the bifurcated trial on the issue of
liability for March 27, 2006. If the court determines that the
California Dating Services Act is inapplicable, all further
expenses associated with discovery and class certification can
be avoided.
On March 25, 2005, the court in "Fertelmeyster" entered its
Memorandum Opinion and Order granting summary judgment in the
Company's favor on the grounds that Fertelmeyster lacks standing
to seek injunctive relief or restitutionary relief under the
Illinois Dating Services Act, Fertelmeyster did not suffer any
actual damages, and the Company was not unjustly enriched as a
result of its contract with Fertelmeyster. The Memorandum
Opinion "disposes of all matters in controversy" in the
litigation and also provides that the Company is subject to the
Illinois Dating Services Act and, as such, its subscription
agreements violate the act and are void and unenforceable.
Fertelmeyster filed a Motion for Reconsideration of the
Memorandum Opinion and, on August 26, 2005, the court issued its
opinion denying Fertelmeyster's Motion for Reconsideration. In
the opinion, the court, among other things:
(1) decertified the class, eliminating the last remnant of
the litigation;
(2) rejected each of the plaintiff' arguments based on the
arguments and law that the Company provided in its
opposition;
(3) stated that the court would not judicially amend the
Illinois statute to provide for restitution when the
legislature selected damages as the sole remedy;
(4) noted that the cases cited by plaintiff in connection
with plaintiff's Motion for Reconsideration actually
support the court's prior order granting summary
judgment in its favor; and
(5) denied plaintiff's Motion for Reconsideration in
its entirety.
In December 2002, the Supreme Court of New York dismissed the
case brought by Ms. Grossman. Although the plaintiff appealed
the decision, in October 2004, the New York Supreme Court,
Appellate Division upheld the lower court's dismissal. In
addition, two Justices wrote concurring opinions stating their
opinion that the Company's services were not covered under the
New York Dating Services Act.
SPX FILTRAN: Recalls 42,962 Various Fuel Filters For Fire Hazard
----------------------------------------------------------------
SPX Filtran in cooperation with the National Highway Traffic
Safety Administration's Office of Defects Investigation (ODI) is
voluntarily recalling about 42,962 units of CARQUEST / 86099,
CARQUEST / 86471, NAPA / 3099, NAPA / 3471, SPX FILTRAN /
800F300-S2, SPX FILTRAN / 800F350-S1, WIX / 33099 and WIX /
33471 fuel filters due to fire hazard. NHTSA CAMPAIGN ID Number:
05E065000.
The recall affects certain SPX Filtran fuel filters with a 45-
degree angle inlet tube, Model 800F350-S1, sold as replacement
filers for 1993-1997 Ford probe and 1993-2001 Mazda passenger
vehicles. These filters are packaged as WIX, NAPA and CARQUEST
brand fuel filters. In addition, the recall also affects certain
SPX fuel filters with a 90-degree angle inlet tube, Model
800F300-S2, sold as replacement filters for 1993-1994 Subaru
vehicles with EFI or Turbo Engines. These filters are also
packaged as WIX, NAPA and CARQUEST brand fuel filters.
According to the ODI, fuel may leak from the filter due to non-
conforming brazing welds where the inlet tube is connected to
the filter can. In the presence of an ignition source, a vehicle
fire can occur.
As a remedy, SPX will notify its customers and replace the
filters free of charge. The recall began last September 16,
2005.
For more details, contact SPX Filtran, Phone: 847-635-6670 OR
the NHTSA Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153,
Web site: http://www.safecar.gov.
SUNNY VALLEY: Recalls Ham Products Due To Undeclared Allergens
--------------------------------------------------------------
Sunny Valley Smoked Meats, Inc., a Manteca, Calif., firm, is
voluntarily recalling approximately 37,000 pounds of ham
products due to undeclared allergens (soy and wheat proteins),
the U.S. Department of Agriculture's Food Safety and Inspection
Service announced today. The package labels do not specifically
state that wheat starch and soy flour, potential known
allergens, are ingredients.
The following products are subject to recall:
(1) One to two-pound vacuum packed packages of "SUNNYVALLEY
BRAND HICKORY SMOKED, HONEY CURED HAM WITH NATURAL
JUICES." Each package includes the establishment
number, "EST. 17823" inside the USDA seal of inspection
and a use by/freeze by date between "11/16/05" and
"12/26/05." Each case bears the code "31010."
(2) Eight to 10-pound packages of "SUNNYVALLEY BRAND
HICKORY SMOKED, HONEY CURED HAM WITH NATURAL JUICES."
Each package includes the establishment number, "EST.
17823" inside the USDA seal of inspection and a use
by/freeze by date between "9/30/05" and "12/26/05."
Each case bears the code "33000."
(3) Two to five-pound packages of "RALEY'S BEL AIR FINE
MEATS BONELESS HONEY HAM, HICKORY SMOKED, FULLY COOKED
WITH NATURAL JUICES." Each package includes the
establishment number, "EST. 17823" inside the USDA seal
of inspection and a use by/freeze by date between
"10/7/05" and "12/22/05." Each case bears the code
"33001" or "33002."
(4) Nine to 11-pound Cryovac wrapped packages of "HOBBS
APPLEWOOD SMOKED MEATS HONEY CURED HAM WITH NATURAL
JUICES." Each package includes the establishment
number, "EST. 17823" inside the USDA seal of inspection
and a use by/freeze by date between "12/15/05" and
"12/22/05." Each case bears the code "33003."
(5) Seven to eight-pound vacuum packed packages of "RALEY'S
BEL AIR FINE MEATS SPIRAL SLICED HAM, HICKORY SMOKED,
HONEY CURED, FULLY COOKED WITH NATURAL JUICES." Each
package includes the establishment number, "EST. 17823"
inside the USDA seal of inspection and a use by/freeze
by date between "11/4/05" and "12/29/05." Each case
bears the code "37003."
(6) 17 to 19-pound vacuum packed packages of "SUNNYVALLEY
BRAND HONEY CURED, SPIRAL CUT HAM WITH NATURAL JUICES,
FULLY COOKED READY TO EAT." Each package includes the
establishment number, "EST. 17823" inside the USDA seal
of inspection and a use by/freeze by date between
"10/13/05" and "12/13/05." Each case bears the code
"37004."
(7) Seven to eight-pound vacuum packed packaged of
"SUNNYVALLEY BRAND HONEY CURED, SPIRAL CUT HAM WITH
NATURAL JUICES, FULLY COOKED READY TO EAT." Each
package includes the establishment number, "EST. 17823"
inside the USDA seal of inspection and a use by/freeze
by date between "10/13/05" and "12/13/05." Each case
bears the code "37005."
(8) 18 to 20-pound vacuum packed packages of "SUNNYVALLEY
BRAND HONEY CURED SPIRAL CUT HAM WITH NATURAL JUICES,
FULLY COOKED READY TO EAT." Each package includes the
establishment number, "EST. 17823" inside the USDA seal
of inspection and a use by/freeze by date between
11/4/05 and 12/29/05. Each case bears the code "37006."
The products were sold to retail stores and restaurant suppliers
in California, Nevada and Oregon.
FSIS has had no reports of illness due to consumption of these
products. Anyone concerned about an allergic reaction should
contact a physician.
Consumers with questions about the recall should call company
Chief Financial Officer, Sandy Jones at (209) 825-0288, ext. 26.
Media with questions about the recall should contact company
President, Bill Andreetta at (209) 825-0288, ext. 22.
Consumers with food safety questions can call the toll-free USDA
Meat and Poultry Hotline at (888) 674-6854. The hotline is
available in English and Spanish and can presently be reached 24
hours a day. "Ask Karen" is the FSIS virtual representative
available 24 hours a day to answer your questions at
http://www.fsis.usda.gov/Food_Safety_Education/Ask_Karen/index.a
sp.
SYCAMORE NETWORKS: NY Court Grants Tentative Approval to Pact
-------------------------------------------------------------
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 Sycamore
Networks, Inc., certain of its officers and directors and the
underwriters of its October 21,1999 initial public offering and
its March 14,2000 secondary offering.
Beginning on July 2, 2001, several purported class action
complaints were filed. The complaints were consolidated into a
single action and an amended complaint was filed on April 19,
2002. The amended complaint, which is the operative complaint,
was filed on behalf of persons who purchased the Company's
common stock between October 21, 1999 and December 6, 2000. The
amended complaint alleges claims against the Company, several of
the Individual Defendants and the underwriters for violations
under Sections 11 and 15 of the Securities Act of 1933, as
amended (the "Securities Act"), primarily based on the assertion
that the Company's lead underwriters, the Company and several of
the Individual Defendants made material false and misleading
statements in the Company's Registration Statements and
Prospectuses filed with the Securities and Exchange Commission,
or the SEC, in October 1999 and March 2000 because of the
failure to disclose:
(1) the alleged solicitation and receipt of excessive and
undisclosed commissions by the underwriters in
connection with the allocation of shares of common
stock to certain investors in the Company's public
offerings and
(2) that certain of the underwriters allegedly had entered
into agreements with investors whereby underwriters
agreed to allocate the public offering shares in
exchange for which the investors agreed to make
additional purchases of stock in the aftermarket at
pre-determined prices.
The suit also alleges claims against the Company, the Individual
Defendants and the underwriters under Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), primarily based on the assertion that the
Company's lead underwriters, the Company and the Individual
Defendants defrauded investors by participating in a fraudulent
scheme and by making materially false and misleading statements
and omissions of material fact during the period in question.
The amended complaint seeks damages in an unspecified amount.
The action against the Company is being coordinated with
approximately three hundred other nearly identical actions filed
against other companies. Due to the large number of nearly
identical actions, the Court has ordered the parties to select
up to twenty "test" cases. To date, along with sixteen other
cases, the Company's case has been selected as one such test
case. As a result, among other things, the Company will be
subject to broader discovery obligations and expenses in the
litigation than non-test case issuer defendants.
On October 9, 2002, the court dismissed the Individual
Defendants from the case without prejudice based upon
Stipulations of Dismissal filed by the plaintiffs and the
Individual Defendants. This dismissal disposed of the Section
15 and Section 20(a) claims without prejudice, because these
claims were asserted only against the Individual Defendants. On
October 13, 2004, the court denied the certification of a class
in the action against the Company with respect to the Section 11
claims alleging that the defendants made material false and
misleading statements in the Company's Registration Statement
and Prospectuses. The certification was denied because no class
representative purchased shares between the date of the IPO and
January 19, 2000 (the date unregistered shares entered the
market), and thereafter suffered a loss on the sale of those
shares.
The court certified a class in the action against the Company
with respect to the Section 10(b) claims alleging that the
Company and the Individual Defendants defrauded investors by
participating in a fraudulent scheme and by making materially
false and misleading statements and omissions of material fact
during the period in question. The Company, the Individual
Defendants, the plaintiff class and the vast majority of the
other approximately three hundred issuer defendants and the
individual defendants currently or formerly associated with
those companies have approved, and submitted to the Court for
its approval, settlement and related agreements (the "Settlement
Agreement") which set forth the terms of a settlement between
these parties.
Among other provisions, the Settlement Agreement provides for a
release of the Company and the Individual Defendants for the
conduct alleged in the action to be wrongful and for the Company
to undertake certain responsibilities, including agreeing to
assign away, not assert, or release, certain potential claims
the Company may have against its underwriters. In addition, no
payments will be required by the issuer defendants under the
Settlement Agreement to the extent plaintiffs recover at least
$1 billion from the underwriter defendants, who are not parties
to the Settlement Agreement and have filed a memorandum of law
in opposition to the approval of the Settlement Agreement. To
the extent that plaintiffs recover less than $1 billion from the
underwriter defendants, the approximately three-hundred issuer
defendants are required to make up the difference.
On February 15, 2005, the court granted preliminary approval of
the Settlement Agreement, subject to certain modifications
consistent with its opinion. The issuer defendants and the
plaintiffs have until February 28, 2005 to submit a revised
Settlement Agreement which provides for a mutual bar of all
contribution claims by the settling and non-settling parties and
does not bar the parties from pursuing other claims. The
underwriter defendants will have until March 10, 2005 to object
to a revised Settlement Agreement.
The suit is styled "In Re Sycamore Networks, Inc. Initial Public
Offering Securities Litigation, 01 Civ. 6001 (Sas) (Dc),"
related to "In re Initial Public Offering Securities Litigation,
Master File No. 21 MC 92 (SAS)," filed in the United States
District Court for the Southern District of New York under Judge
Shira A. Scheindlin. The plaintiff firms in this litigation
are:
(1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300,
(3) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd,
PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E-
mail: info@sbclasslaw.com
(4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(5) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
TENNESSEE: Expelled Students' Suit V. Knox County to be Appealed
----------------------------------------------------------------
The Tennessee Court of Appeals will be most likely the next
arena for the dispute between the Knox County public school
system and the high school students expelled from it last year,
according to one of the attorneys representing the 400-plus
students in the class action lawsuit, Knoxville News Sentinel
reports.
At a recent hearing, Dean Rivkin told Knox County Chancellor
Daryl R. Fansler on that he planned to appeal Chancellor
Fansler's decision to a higher court. His decision, which he
wrote in a memorandum opinion, filed in September, stated that
it was not his business to decide whether the district's night
alternative school program was inadequate last year. He pointed
out that complaints might be better lodged with the state Board
of Education.
The class action lawsuit, which was filed in Knox County
Chancery Court on behalf of suspended students, specifically
challenges the quality of Knox County's night alternative
program in place this school year, an earlier Class Action
Reporter story (April 11, 2005) reports.
Even though Mr. Rivkin plans to file his complaints with a
higher court, Chancellor Fansler responded that's fine with him.
He also told Mr. Rivkin and Marty McCampbell, the school
system's attorney, during the hearing, "I'll just be frank with
you. These cases have been delving into new territory in
Tennessee law."
Part of that new territory involves whether education is a
"fundamental right" under state law. The courts here haven't
definitively decided that issue, according to Chancellor
Fansler, who added, "Appeals, certainly in a case like this,
don't insult me at all, Mr. Rivkin."
While Chancellor Fansler declined to rule on some parts of the
lawsuit in his written opinion, he did make some decisions, one
of them in favor of the district, which stated that the district
did not violate the expelled students' due-process rights.
Mr. Rivkin and attorney Brenda McGee previously argued that the
students were randomly assigned to the three-hour night program,
rather than to the daylong program at Richard Yoakley.
However, on the flip side, Chancellor Fansler ruled that the
district should provide some "remedies" to the students who
attended the night program in 2004-05 if they wanted them.
At Mr. Rivkin's request, Chancellor Fansler clarified the
remedies: The district must allow students to take classes via
computer for free if they need them to graduate on time. It also
must allow students to request a waiver to pursue a GED at age
17. Mr. McCampbell pointed out though that the district already
offers those options to all students.
In addition, Chancellor Fansler also said he would allow
families to seek reimbursement if they had to pay for
educational services because the district took too long to
enroll their child in the night alternative program.
The remedies were some of the same ones previously offered to
students who were expelled in 2003-04. The school board settled
that part of the lawsuit earlier this year.
The recent hearing nearly brought to a close Chancellor
Fansler's role in this complex case, which began 2 1/2 years
ago. The complaints have changed, as the district has gone from
offering limited alternative education to offering a night
program. In concluding, Chancellor Fansler said, "I think we're
ready to close this up. Let's see what the Court of Appeals and
the Supreme Court have to say."
TRANSNET WIRELESS: FL Court Halts Fraudulent Business Operation
---------------------------------------------------------------
A U.S. district court judge has stopped the allegedly illegal
practices of an "Internet kiosk" business opportunity and frozen
the assets of the companies and their principals following
Federal Trade Commission charges that their income claims were
deceptive and their location- assistance offers were false. The
FTC will seek an order permanently banning the defendants from
selling business opportunities, barring them from violating the
FTC Act and the Commission's Franchise Rule, and providing
consumer redress.
The defendants told consumers they could use the kiosks to start
their own business, promising them a substantial income and help
finding high-traffic, high-volume profitable locations for the
machines. According to the FTC, consumers typically lost the
money they invested, and the defendants rarely, if ever,
delivered the terminals to profitable locations.
The machines sold were public-access Internet terminals, mounted
computers that accepted payment in exchange for access to the
Internet that could be placed in public areas. The defendants
ran television and radio ads selling the terminals, making
claims like, "You simply receive a monthly check for all the
wireless revenue generated at your location . There is unlimited
income potential . Prime locations are available now." The ads
then provided a toll-free number to call for more information.
Over the phone, salespeople made additional false claims,
according to the FTC. Salespeople made claims such as, "a 142%
return on investment in the first year," "locations include
convention centers, military bases, hotels, malls, hospitals -
high-traffic, high-volume locations," and that $1,000 to $2,000
per month per kiosk could be expected in revenue. In many cases,
buyers were told the machines would be delivered to the location
within two weeks to 45 days after purchase.
Customers paid from $10,000 to $15,000 for one kiosk, up to
$100,000 for multiple kiosks. Their terminals, however, were
rarely, if ever, delivered and installed in profitable areas. In
many cases, the terminals consumers bought were never delivered
at all. And, when terminals were delivered, it was hardly ever
within the promised time period. Although the defendants did
supply the required disclosure document for franchises, it was
missing crucial information, including information on all of the
corporate officers (specifically, information on criminal
charges against one officer's), the names and addresses of
consumers who had bought into the business venture, and any
information about how long it would take to place a terminal.
Finally, the FTC claimed that the defendants had no support for
the earnings claims they made. Typically, buyers lost their
entire investment.
The FTC's complaint names as defendants Transnet Wireless
Corporation and its president Bradley Cartwright; Nationwide
Cyber Systems, Inc. and its president Farris Pemberton; and Paul
Pemberton, who directed day-to-day operations at the companies,
which are based in Florida. The complaint also names Margaret
Pemberton as a relief defendant - someone who is not accused of
wrongdoing, but has allegedly received ill-gotten gains and does
not have a legitimate claim to them.
The Commission vote to authorize staff to file the complaint was
4-0. The complaint was filed in the U.S. District Court for the
Southern District of Florida on September 26, 2005 under seal,
with the seal lifted on October 11, 2005. The judge granted a
temporary restraining order, an asset freeze, and the
appointment of a receiver.
Copies of the complaint are available from the FTC's Web site at
http://www.ftc.govand also from the FTC's Consumer Response
Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington,
D.C. 20580. The FTC works for the consumer to prevent
fraudulent, deceptive, and unfair business practices in the
marketplace and to provide information to help consumers spot,
stop, and avoid them. To file a complaint in English or Spanish
(bilingual counselors are available to take complaints), or to
get free information on any of 150 consumer topics, call toll-
free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form
at http://www.ftc.gov.The FTC enters Internet, telemarketing,
identity theft, and other fraud-related complaints into Consumer
Sentinel, a secure, online database available to hundreds of
civil and criminal law enforcement agencies in the U.S. and
abroad. For more details, contact Claudia Bourne Farrell or
Jackie Dizdul, Office of Public Affairs by Phone: 202-326-2181
or 202-326-2472 or contact Harold Kirtz, FTC's Southeast Region
by Phone: 404-656-1357 or visit the Website:
http://www.ftc.gov/opa/2005/10/transnet.htm.
UAL CORPORATION: Judge Rules Trustee Not Liable for Bankruptcy
--------------------------------------------------------------
U.S. District Judge Samuel Der-Yeghiayan ruled that the trustee
for a UAL Corporation employee stock ownership plan could not
have predicted the company's bankruptcy in time to sell the
stock and save the workers millions of dollars, Reuters reports.
The federal judge specifically ruled that State Street Bank was
not responsible for the loss because there was no clear
indication that United Airlines, the No. 2 U.S. carrier and a
unit of UAL, would file for Chapter 11 protection from
creditors.
Approximately 70,000 airline workers alleged in a class action
suit that the employee stock ownership plan committee for UAL
and the plan trustee, State Street Bank, were aware that UAL's
stock was unstable. Lawyers for the workers argued that State
Street could have known that United, which filed for bankruptcy
in December 2002, was in jeopardy as early as October 2001.
Judge Der-Yeghiayan wrote in his opinion, "There were sufficient
indications that UAL could recover from its setbacks, and
plaintiffs now in hindsight unfairly seek to hold State Street
accountable for not foreseeing the future and for failing to
foresee UAL's ultimate filing of bankruptcy."
Filed in 2003, the workers' complaint claims that State Street
even placed the stock on a watch list due to its volatility. It
goes on to claims that despite this knowledge, State Street held
the stock as its value fell even before the September 11, 2001,
attacks, which further weakened the stock and eventually cost
the employee-owners billions of dollars.
Attorneys for the employees said that by September 27, 2002, the
decline in UAL's stock had cost the plan about $2 billion.
However, Judge Der-Yeghiayan pointed out, "The fact that UAL was
on the watch list merely indicated that State Street was closely
monitoring UAL and did not mean that UAL was facing imminent
bankruptcy."
United is still in bankruptcy but has filed a plan of
reorganization with the court, a move that could see the carrier
exit Chapter 11 early by next year.
UNITED KINGDOM: Court Set to Rule on Railtrack Compensation Case
----------------------------------------------------------------
Though shareholders in collapsed rail operator Railtrack played
down their chances of winning a $275.71 million (157 million
pound) legal claim against the government, attorneys say that
the verdict, due this week, could still go either way, Reuters
reports.
The High Court is scheduled to rule on the claim for
compensation by 49,000 shareholders, Britain's biggest-ever
class action claim.
Emma Kent, a spokeswoman for the Railtrack Private Shareholders
Action Group told Reuters, "It is going to be pretty tough. I
would not want to bet on the outcome ... one has to be realistic
about the outcome."
The group represents Railtrack investors, many of them
pensioners with small shareholdings, who are seeking
compensation for Railtrack's slide into administration in 2001,
accusing the government of "misfeasance of justice", or acting
in bad faith.
Attorneys explained that the case would set a precedent for
group litigation in Britain, which has far fewer class action
lawsuits than the United States.
Graham Simkin, litigation partner at international law firm
Fulbright & Jaworski told Reuters, "I think they have a good
chance. We are watching it with great interest and it will
certainly go to appeal." Pointing out that there have only been
49 group litigation orders in Britain since November 2000, Mr
Simkin added, "It is a very important case and if they are
successful this will give a further seal of approval to group
litigation orders."
Other attorneys also agreed that a victory in the case, which
has lead strong criticism of the government, would set an
historic precedent.
Matthew Newick, a partner at London-based law firm Clifford
Chance, although he added it would be a tough case for the
shareholders to win told Reuters, "It might be a bit of a beacon
for other aggrieved investors and consumers."
Stephen Byers, a former cabinet minister and close ally of Prime
Minister Tony Blair, denied allegations during the trial that he
abused his powers as Transport Secretary in the run up to
Railtrack's collapse.
Even if they lost the case, the shareholders group said that the
trial had raised questions about whether the public could trust
government departments. "The moral high ground has already been
achieved," Ms. Kent pointed out.
But, if they win, attorneys for the shareholders, who are
seeking around 157 million pounds in compensation, said that a
second trial to determine damages could take up to a year.
Railtrack was created in Britain's rush to privatize state
industries in the 1980s and 1990s and many small investors
snapped up its shares, which debuted on the London Stock
Exchange in 1996.
The government forced Railtrack out of business in October 2001
by withdrawing funding after a fatal crash in 2000 at Hatfield,
north of London. That accident rocked public confidence and
exposed the poor state of the railways, sending costs soaring.
State-backed Network Rail has since replaced Railtrack.
The shareholders are suing the government for the difference
between the average price of Railtrack shares and the money they
were offered when the government bought the business to pass on
to Network Rail.
VIXEL CORPORATION: NY Court Preliminarily OKs Lawsuit 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 Vixel
Corporation, two of its officers and directors and certain
underwriters who participated in the Company's initial public
offering in late 1999. The suit is styled "In re Vixel
Corporation Securities Litigation, case no. 01 CIV. 10053(SAS)."
The amended complaint alleges violations under Section 10(b) of
the Exchange Act and Section 11 of the Securities Act and seeks
unspecified damages on behalf of persons who purchased the
Company's stock during the period October 1, 1999 through
December 6, 2000.
In October 2002, the parties agreed to toll the statute of
limitations with respect to the Company's officers and directors
until September 30, 2003, and on the basis of this agreement,
the Company's officers and directors were dismissed from the
lawsuit without prejudice.
During June 2003, the Company and the other issuer defendants in
the action reached a tentative settlement with the plaintiffs
that would, among other things, result in the dismissal with
prejudice of all claims against the defendants and their
officers and directors. In connection with the possible
settlement, those officers and directors who had entered tolling
agreements with the plaintiffs agreed to extend those agreements
so that they would not expire prior to any settlement being
finalized. Although Vixel approved this settlement proposal in
principle, it remains subject to a number of procedural
conditions, as well as formal approval by the court. On August
31, 2005, a Preliminary Order In Connection With Settlement
Proceedings was issued which among other items, sets a date for
a Settlement Fairness Hearing, and the form of notice to the
Settlement Classes of the Issuers' Settlement Stipulation.
The suit is styled "In re Vixel Corporation Securities
Litigation, case no. 01 CIV. 10053(SAS)," related to "In re
Initial Public Offering Securities Litigation, Master File No.
21 MC 92 (SAS)," filed in the United States District Court for
the Southern District of New York under Judge Shira A.
Scheindlin. The plaintiff firms in this litigation are:
(1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E.
40th Street, 22nd Floor, New York, NY, 10016, Phone:
800.217.1522, E-mail: info@bernlieb.com
(2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York,
NY), One Pennsylvania Plaza, New York, NY, 10119-1065,
Phone: 212.594.5300,
(3) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd,
PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E-
mail: info@sbclasslaw.com
(4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New
York, NY, 10005, Phone: 888.759.2990, Fax:
212.425.9093, E-mail: Info@SirotaLaw.com
(5) Stull, Stull & Brody (New York), 6 East 45th Street,
New York, NY, 10017, Phone: 310.209.2468, Fax:
310.209.2087, E-mail: SSBNY@aol.com
(6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270
Madison Avenue, New York, NY, 10016, Phone:
212.545.4600, Fax: 212.686.0114, E-mail:
newyork@whafh.com
YAKIMA PRODUCTS: Recalls 16,671 Bicycle Carriers For Crash Risk
---------------------------------------------------------------
Yakima Products, Inc. cooperation with the National Highway
Traffic Safety Administration's Office of Defects Investigation
(ODI) is voluntarily recalling about 16,671 units of MIGHTYJOE 2
and MIGHTYJOE 3 bicycle carriers due to crash hazard. NHTSA
CAMPAIGN ID Number: 05E064000.
According to the ODI, certain of the truck-mounted bicycle
carriers, P/NOS. 8002609 and 8002608 have a latch that may give
false feedback due to the usage of materials of inadequate
strength in conjunction with the location of the tightening
straps. In such a state, the bicycle load arms may unexpectedly
collapse, which possibly results in injury or a vehicle crash
should it collapse while the vehicle is in use.
As a remedy, Yakima will notify its customers and replace the
carriers free of charge. The recall is expected to begin on
October 6, 2005.
For more details, contact Yakima, Phone: 971-249-7500 OR the
NHTSA Auto Safety Hotline: 1-888-327-4236 or 1-800-424-9153, Web
site: http://www.safecar.gov.
New Securities Fraud Cases
BARRIER THERAPEUTICS: Dyer & Shuman Sets Lead Plaintiff Deadline
----------------------------------------------------------------
The law firm of Dyer & Shuman, LLP, is encouraging all persons
who purchased the common stock of Barrier Therapeutics, Inc.
(NASDAQ: BTRX) pursuant to the April 29, 2004 Initial Public
Offering or the February 9, 2005 Secondary Offering ("Class
Members") to contact Kip B. Shuman of Dyer & Shuman, LLP at 1-
800-711-6483 or via email at KShuman@DyerShuman.com, or their
counsel of choice, concerning their rights and interests as
potential class members in the shareholder class action lawsuit
recently filed in the United States District Court for the
District of New Jersey against Barrier Therapeutics, Inc. The
lawsuit alleges that Barrier Therapeutics violated federal
securities laws.
The firm reminds investors that they have until December 12,
2005 to file for lead plaintiff in the case.
For more details, contact Kip B. Shuman of Dyer & Shuman, LLP,
Phone: 1-800-711-6483, E-mail: KShuman@DyerShuman.com, Web site:
http://www.dyershuman.com.
DANA CORPORATION: Lockridge Grindal Lodges Securities Suit in OH
----------------------------------------------------------------
The law firm of Lockridge Grindal Nauen P.L.L.P. initiated a
class action lawsuit in the United States District Court for the
Northern District of Ohio on behalf of purchasers of the
securities of Dana Corporation ("Dana" or the "Company")
(NYSE:DCN) between March 23, 2005 and September 14, 2005,
inclusive (the "Class Period") seeking to pursue remedies under
the Securities Exchange Act of 1934 (the "Exchange Act").
The Complaint alleges that Dana made false or misleading public
statements regarding the Company's historical financial
performance and conditions. On September 15, 2005, Dana issued a
press release announcing that it would likely restate second
quarter 2005 financial results and that it had lowered its 2005
earnings guidance, to $0.60 to $0.70 per share from $1.30 to
$1.45. In reaction to this announcement, the price of Dana stock
fell from $12.78 per share on September 14, 2005 to $9.86 per
share on September 15, 2005, a one-day drop of 22.8% on heavy
trading volume.
For more details, contact Gregg M. Fishbein, Esq. of Lockridge
Grindal Nauen, P.L.L.P., 100 Washington Avenue South, Suite
2200, Minneapolis, MN 55401, Phone: (612) 339-6900, E-mail:
gmfishbein@locklaw.com, Web site: http://www.locklaw.com.
DANA CORPORATION: Marc Henzel Lodges Securities Fraud Suit in GA
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit in the United States District Court for the Northern
District of Ohio on behalf of purchasers of the securities of
Dana Corporation (NYSE: DCN) between March 23, 2005 to September
14, 2005, inclusive (the "Class Period"), seeking to pursue
remedies under the Securities Exchange Act of 1934 (the
"Exchange Act").
The Complaint alleges that by the beginning of the Class Period,
Dana's profits were being negatively impacted by an increase in
the price of raw materials - steel, in particular - which was
disconcerting to investors. In order to assure the market that
the Company's business was performing according to plan, and
would continue to perform well even if steel prices did not
decline materially, defendants artificially inflated Dana's net
income through improper accounting and, in addition, issued
earnings guidance that lacked any reasonable basis given the
Company's true performance and prospects, which were known to
defendants but not the investing public. In particular,
defendants' Class Period representations regarding Dana's
historical financial performance and condition and its expected
2005 earnings were materially false and misleading because:
(1) the Company had improperly accounted for price
increases, which materially artificially inflated its
second quarter of 2005 income;
(2) the Individual Defendants' assurances, made in written
certifications filed with the SEC, that the second
quarter Form 10-Q was free from misstatements and
fairly presented the Company's financial condition and
results of operations was patently false;
(3) the Company's apparent success was the result of
improper accounting, did not reflect the reality of its
business and deceived investors; and
(4) in light of these facts, which were known to
defendants, defendants' guidance lacked any rational
basis and could not be met without a material drop in
raw material prices, contrary to defendants' repeated
assurances to the contrary.
On September 15, 2005, before the open of ordinary trading, Dana
issued a press release announcing that it would likely restate
second quarter 2005 financial results and that it had
dramatically lowered its 2005 earnings guidance, to $0.60 to
$0.70 per share from $1.30 to $1.45, a more than 100% reduction.
Because of the expected earnings shortfall, the Company may have
to write down its U.S. deferred tax assets and may be in
violation of covenants contained in a loan agreement, according
to the press release. A main reason given for the halving of the
2005 guidance was high steel costs, a factor that defendants
repeatedly assured the market was already considered, and
accounted for, in the guidance.
In reaction to this announcement, the price of Dana stock fell
dramatically, from $12.78 per share on September 14, 2005 to
$9.86 per share on September 15, 2005, a one-day drop of 22.8%
on unusually heavy trading volume.
For more details, contact Marc S. Henzel, Esq. of The Law
Offices of Marc S. Henzel, 273 Montgomery Ave, Suite 202 Bala
Cynwyd, PA 19004-2808, Phone (888) 643-6735 or (610) 660-8000,
Fax: (610) 660-8080, E-mail: Mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
HUTCHINSON TECHNOLOGY: Dyer & Shuman Sets Lead Plaintiff Cutoff
---------------------------------------------------------------
The law firm of Dyer & Shuman, LLP, is encouraging all persons
who purchased the common stock of Hutchinson Technology, Inc.
(NASDAQ: HTCH) between October 4, 2004 and August 29, 2005
("Class Members") to contact Kip B. Shuman of Dyer & Shuman, LLP
at 1-800-711-6483 or via email at KShuman@DyerShuman.com, or
their counsel of choice, concerning their rights and interests
as potential class members in the shareholder class action
lawsuit recently filed in the United States District Court for
the District of Minnesota against Hutchinson Technology. The
lawsuit alleges that Hutchinson Technology violated federal
securities laws.
The firm reminds investors that they have until November 8, 2005
to file for lead plaintiff in the case.
For more details, contact Kip B. Shuman of Dyer & Shuman, LLP,
Phone: 1-800-711-6483, E-mail: KShuman@DyerShuman.com, Web site:
http://www.dyershuman.com.
REFCO INC.: Dyer & Shuman Schedules Lead Plaintiff Deadline
-----------------------------------------------------------
The law firm of Dyer & Shuman, LLP, is encouraging all persons
who purchased the common stock of Refco, Inc. (NYSE: RFX)
pursuant to the August 11, 2005 Initial Public Offering ("Class
Members") to contact Kip B. Shuman of Dyer & Shuman, LLP at 1-
800-711-6483 or via email at KShuman@DyerShuman.com, or their
counsel of choice, concerning their rights and interests as
potential class members in the shareholder class action lawsuit
recently filed in the United States District Court for the
Southern District of New York against Refco, Inc. The lawsuit
alleges that Refco, Inc. violated federal securities laws.
The firm reminds investors that they have until December 12,
2005 to file for lead plaintiff in the case.
For more details, contact Kip B. Shuman of Dyer & Shuman, LLP,
Phone: 1-800-711-6483, E-mail: KShuman@DyerShuman.com, Web site:
http://www.dyershuman.com.
REFCO INC.: Goldman Scarlato Lodges Securities Suit in S.D. NY
--------------------------------------------------------------
The law firm of Goldman Scarlato & Karon, P.C., initiated a
lawsuit in the United States District Court for the Southern
District of New York, on behalf of persons who purchased the
common stock of Refco, Inc. (NYSE:RFX) between August 11, 2005
and October 7, 2005, inclusive, (the "Class Period"). The
lawsuit was filed against, among others, Refco and certain of
its officers, including Phillip Bennett, Refco's CEO
("Defendants").
The lawsuit alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of Refco's common stock.
The lawsuit further alleges that throughout the Class Period,
Defendants represented to the investment community that Refco
was a highly-successful financial services company, while
concealing:
(1) that Refco's CEO owed the company over $430 million
allegedly as part of a scheme to hide bad debt from
Refco investors;
(2) the Company lacked adequate internal controls; and
(3) the Company's financial statements from fiscal 2002 to
the present were unreliable.
On October 10, 2005, before trading opened, defendants revealed
that the Company had been carrying an undisclosed receivable
from Mr. Bennett, in the amount of $430 million, that Bennett
was taking a leave of absence, and that Company financial
statements issued since 2002 could no longer be relied upon. On
October 12, 2005, federal prosecutors indicted Mr. Bennett on
fraud charges, and on October 13, 2005, Refco froze certain
customer accounts in one of its subsidiaries for 15 days because
it may not have enough cash on hand to operate normally. On the
same day, S&P lowered Refco's credit rating and issued a
statement that there is "substantial doubt" about Refco's
liquidity.
For more details, contact Brian Penny, Esq. of The Law Firm of
Goldman Scarlato & Karon, P.C., Phone: 888-753-2796, E-mail:
penny@gsk-law.com.
REFCO INC.: Lockridge Grindal Lodges Securities Fraud Suit in NY
----------------------------------------------------------------
The law firm of Lockridge Grindal Nauen P.L.L.P. initiated a
class action lawsuit in the United States District Court for the
Southern District of New York on behalf of all those who
purchased the common stock of Refco Inc. ("Refco" or the
"Company") (NYSE:RFX) between August 11, 2005 and October 7,
2005, inclusive (the "Class Period") seeking to pursue remedies
under the Securities Act of 1933 (the "Securities Act") and the
Securities Exchange Act of 1934 (the "Exchange Act").
The complaints allege that Refco went public through an initial
public offering in August 2005. Three months later, on October
10, 2005, before trading opened, defendants revealed that the
Company had been carrying an undisclosed receivable from its
Chief Executive Officer, Phillip R. Bennett, in the amount of
$430 million, that Bennett was taking a leave of absence, and
that Company financial statements issued since 2002 could no
longer be relied upon. The announcement stunned the market,
driving down the price of Refco shares by 44.4%, from a closing
price of $28.56 on October 7, 2005 (Friday) to a low of $15.60
on October 10, 2005 (Monday). Trading in Refco shares was halted
on the morning of October 11, 2005 pending additional news, and,
after resumption of trading, closed at $13.06, down 11.2% for
the day.
For more details, contact Gregg M. Fishbein, Esq. of Lockridge
Grindal Nauen, P.L.L.P., 100 Washington Avenue South, Suite
2200, Minneapolis, MN 55401, Phone: (612) 339-6900, E-mail:
gmfishbein@locklaw.com, Web site: http://www.locklaw.com.
REFCO INC.: Marc S. Henzel Lodges Securities Fraud Suit in NY
-------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit in the United States District Court for the Southern
District of New York on behalf of all those who purchased the
common stock of Refco, Inc. (NYSE: RFX) from August 11, 2005 to
October 7, 2005, including those who purchased the common stock
of Refco pursuant and/or traceable to the Company's initial
public offering ("IPO") on or about August 11, 2005, seeking to
pursue remedies under the Securities Act of 1933 (the
"Securities Act") and the Securities Exchange Act of 1934 (the
"Exchange Act").
The complaint charges Refco and certain of its officers and
directors with violations of the Securities Act and the Exchange
Act. Refco provides execution and clearing services for exchange
traded derivatives; and brokerage services in the fixed income
and foreign exchange markets in the United States, Bermuda, and
the United Kingdom.
Refco went public via an initial public offering in August 2005.
A mere three months later, on October 10, 2005, Refco announced
that Phillip R. Bennett, its Chief Executive Officer ("CEO") and
Chairman and controlling shareholder, was being placed on a
leave of absence and that the Company had discovered,
purportedly through an internal review, a receivable of $430
million owed by Bennett to the Company. The Company also
announced that based on the undisclosed related party
transaction, its prior financial statements should not be relied
upon.
According to the complaint, on or about August 10, 2005, Refco
filed with the SEC a Form S-1/A Registration Statement (the
"Registration Statement"), for the IPO. On or about August 11,
2005, the Prospectus (the "Prospectus") with respect to the IPO,
which forms part of the Registration Statement, became effective
and 26.5 million of Refco's common stock were sold to the
public, thereby raising approximately $583 million. According to
the complaint, the Prospectus issued in connection with the IPO
was materially false and misleading for several reasons. As
detailed in the complaint, Refco has now admitted that those
financial statements should no longer be relied upon and will
likely be restated. This amounts to an admission that those
financial statements were materially false and misleading when
issued. In a section entitled "Certain Relationships And Related
Transactions", the Prospectus purported to detail all of the
related party transactions concerning its business. The
Prospectus, however, failed to disclose the related-party loan
of $430 million to an entity controlled by Bennett.
In response to these announcements, the price of Refco common
stock declined precipitously falling from $28.56 per share to
$15.60 per share on extremely heavy trading volume.
For more details, contact Marc S. Henzel, Esq. of The Law
Offices of Marc S. Henzel, 273 Montgomery Ave, Suite 202 Bala
Cynwyd, PA 19004-2808, Phone (888) 643-6735 or (610) 660-8000,
Fax: (610) 660-8080, E-mail: Mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
REFCO INC.: Shalov Stone Lodges Securities Fraud Suit in S.D. NY
----------------------------------------------------------------
The law firm of Shalov Stone & Bonner, LLP, filed a class action
lawsuit on behalf of purchasers of the securities of Refco, Inc.
(NYSE:RFX), in the period between August 10, 2005, and October
7, 2005. The lawsuit was filed in the United States District
Court for the Southern District of New York and names as
defendants Refco, its Chief Executive Officer and other of its
key executive officers, the company's principal outside auditor,
and the lead underwriters for the company's recent initial
public offering.
The complaint alleges that the defendants made material
misrepresentations and omissions of material facts concerning
the company's financial condition and business performance
during the relevant time period. Among other things, the
complaint alleges that, just two months after its initial public
offering, Refco announced that Phillip R. Bennett, its Chief
Executive Officer and Chairman and controlling shareholder, was
being placed on a leave of absence and that the company had
discovered--ostensibly through an internal review--a receivable
of $430 million owed by Bennett to the company. The company also
announced that, based on the undisclosed related party
transaction, its prior financial statements should not be relied
upon.
For more details, contact Thomas G. Ciarlone, Jr. of Shalov
Stone & Bonner LLP, 485 Seventh Ave., Suite 1000, New York, NY,
10018, Phone: (212) 239-4340, E-mail: tciarlone@lawssb.com, Web
site: http://www.lawssb.com.
REFCO INC.: Wolf Haldenstein Lodges Securities Suit in S.D. NY
--------------------------------------------------------------
The law firm of Wolf Haldenstein Adler Freeman & Herz, LLP,
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 Refco, Inc. ("Refco"
or the "Company") (NYSE: RFX) between August 11, 2005 and
October 7, 2005, inclusive, (the "Class Period") against
defendants Refco and certain officers of the Company.
The case name is Weiss v. Refco, Inc., et al. The complaint
alleges that defendants violated the federal securities laws by
issuing materially false and misleading statements throughout
the Class Period that had the effect of artificially inflating
the market price of the Company's securities.
The complaint further alleges that throughout the Class Period,
Refco represented to the investment community that it was a
highly-successful financial services company, while concealing:
(1) that it lacked adequate internal controls;
(2) the Company's rosy financial statements from fiscal
2002 to the first quarter of 2006 were unreliable; and
(3) that the Company's financial projections were
irresponsible considering the knowledge defendants
possessed of the Company's actual financial situation.
For more details, contact Fred Taylor Isquith, Esq., Gustavo
Bruckner, Esq., George T. Peters, Esq., or Derek Behnke of Wolf
Haldenstein Adler Freeman & Herz, LLP, 270 Madison Ave., New
York, NY 10016, Phone: (800) 575-0735, E-mail:
classmember@whafh.com, Web site: http://www.whafh.com.
TEMPUR-PEDIC INTERNATIONAL: Federman & Sherwood Files Suit in NY
----------------------------------------------------------------
The law firm of Federman & Sherwood initiated a class action
lawsuit in the United States District Court for the Eastern
District of Kentucky against Tempur-Pedic International, Inc.
(NYSE: TPX).
The complaint alleges violations of federal securities laws,
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5, including allegations of issuing a series of
material misrepresentations to the market which had the effect
of artificially inflating the market price. The class period is
from April 22, 2005 through September 19, 2005.
For more details, contact William B. Federman of FEDERMAN &
SHERWOOD, 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102,
Phone: (405) 235-1560, Fax: (405) 239-2112, E-mail:
wfederman@aol.com, Web site: http://www.federmanlaw.com.
TEMPUR-PEDIC INTERNATIONAL: Marc Henzel Files GA Securities Suit
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action
lawsuit in the United States District Court for the Eastern
District of Kentucky on behalf of purchasers of the securities
of Tempur-Pedic International, Inc. (NYSE: TPX) between April
22, 2005 and September 19, 2005, inclusive (the "Class Period"),
seeking to pursue remedies under the Securities Exchange Act of
1934 (the "Exchange Act").
The Complaint alleges that by the beginning of the Class Period
investors became concerned that well-heeled competitors, such as
Sealy, Serta and Simmons, were making significant inroads into
the visco-elastic market that could challenge Tempur-Pedic's
dominance or, at the very least, erode its profits if it was
forced to slash prices in order to compete. Defendants allayed
these concerns by misrepresenting that its business was not
suffering from the effects of competition and would continue to
grow strongly. Well into the Class Period, defendants reiterated
aggressive sales and earnings guidance for 2005, even after the
Company had begun to experience a slowdown. Defendants' Class
Period representations were materially false and misleading when
made because they failed to disclose that:
(1) demand for Tempur-Pedic's products was slowing as
competitors were gaining a foothold in the visco-
elastic market;
(2) defendants' repeated express assurances that the
competition was not having a materially negative, or
any, impact on the Company, even in response to express
concerns raised by analysts, were untrue and provided
false comfort to investors while inflating the price of
Tempur-Pedic stock so insiders could sell their shares;
and
(3) in light of increasing competition that was already
having a noticeable effect on the Company's business,
defendants' guidance, reiterated on July 21, 2005,
lacked any reasonable basis.
Defendants were motivated to commit the wrongdoing alleged
herein in order to sell their personally held Tempur-Pedic stock
at artificially inflated prices. During the Class Period,
insiders and entities associated with insiders, sold a total of
5,620,591 shares of Tempur-Pedic common stock at artificially
inflated prices, for proceeds of $131,910,207. Of that amount,
$124,550,000 was sold by TA Associates, a controlling
shareholder that has two nominee directors on Tempur-Pedic's
board of directors - Jeffrey S. Barber and Chairman P. Andrews
McLane, who is also a managing director of TA Associates.
On September 19, 2005, Tempur-Pedic issued lower guidance for
2005, which it attributed to a number of factors, including
competition that it had said was not and would not have a
negative impact, at least not one large enough to cause it to
lower its 2005 guidance, which was reiterated less than a month
before this announcement.
In response to this announcement, the price of Tempur-Pedic
common stock plummeted, falling 28.5% in one day, to $11.70 per
share on July 20, 2005 from $16.38 per share on July 19, 2005,
on unusually heavy trading volume.
For more details, contact Marc S. Henzel, Esq. of The Law
Offices of Marc S. Henzel, 273 Montgomery Ave, Suite 202 Bala
Cynwyd, PA 19004-2808, Phone (888) 643-6735 or (610) 660-8000,
Fax: (610) 660-8080, E-mail: Mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
*********
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.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
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Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Glenn Ruel Senorin, Aurora Fatima Antonio and Lyndsey
Resnick, Editors.
Copyright 2005. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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