/raid1/www/Hosts/bankrupt/CAR_Public/060809.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, August 9, 2006, Vol. 8, No. 157
Headlines
A.G. EDWARDS: Calif. Brokers' Overtime Case Allowed to Proceed
ALLIED WASTE: Ariz. Court's Dismissal of Stock Lawsuit Appealed
AMERICAN EXPRESS: Faces Fraud Suit Over Blue Cash Card Rebates
AMERICAN EXPRESS: Appeals Court Vacates Dismissal of Stock Suit
ARKANSAS: Ex-Teachers' Motion Alleges Van Buren Officials Lied
AZTAR CORP: Continues to Face Lawsuits Over Pinnacle Merger
CENTRAL LIVESTOCK: Settles Cattlemen's Lawsuit in Kan. for $250T
CNL HOTELS: Fla. Court Grants Approval to Stock Suit Settlement
COLUMBIA GAS: High Court Bars Lawsuit by Energy Max Customers
CONTINENTAL CASUALTY: Faces La. Suit Over Unpaid Katrina Losses
CREDIT ACCEPTANCE: Appeals Mo. Court's Order to Expand Class
CROWN COLLEGE: Settles Lawsuit Over Credit Transfer for $87T
CUSHENBURY MINE: Retirees Sue Trustees for Alleged Mismanagement
EVCI CAREER: Complaint Outlines "Deeper" Problems at Interboro
FELT BICYCLES: Recalls Mountain Bikes with Defective Brake Boss
FINOVA CAPITAL: Thaxton Loan Suit Class Certification Overturned
GREAT EXPECTATIONS: N.Y. Customer Sues Over "Exorbitant" Fees
HUTCHINSON TECHNOLOGY: Seeks Dismissal of Minn. Securities Suit
INDINA TRUST: Bill on Settling "Cobell" Put on Hold Until Fall
INTEL CORP: Ill. Court Vacates Class Certification of P4 Suit
INTEL CORP: Still Faces Trade Practices Suits in Del., Calif.
INTERNATIONAL PAPER: Settles Price-Fixing Lawsuit for $12.4M
IRWIN UNION: "White" Plaintiffs Enter Arbitration for Md. Case
LANDAMERICA FINANCIAL: Units Settle Homeowners' Suit for $10.3M
LEVEL 3: K&T Reminds Investors of Aug. 31 Opt-Out Deadline
MTD SOUTHWEST: Recalls Weed Trimmers to Correct Blade Attachment
NICOR ENERGY: Ill. Court Denies Class Motion for Consumer Suit
NICOR GAS: Settles Property Owners Suit Over Ill. Plant Cleanup
PHILIP MORRIS: "Light" Cigarettes Suit Rehearing Set Sept. 13
RAY'S WHOLESALE: Recalls Ground Beef for E. Coli Contamination
RENAISSANCERE HOLDINGS: Seeks Dismissal of N.Y. Securities Suit
UNITED STATES: Milberg Weiss Files Fewer Cases After Indictment
WYOMING: Lawsuit Filed Over 1993 Law on Injured Workers Benefits
Meetings, Conferences & Seminars
* Scheduled Events for Class Action Professionals
* Online Teleconferences
New Securities Fraud Cases
CENTENE CORP: Federman & Sherwood Announces Stock Suit Filing
JOS A BANK: Schiffrin & Barroway Files Securities Suit in Md.
PAR PHARMACEUTICALS: Pomerantz Haudek Files N.J. Securities Suit
SCOTTISH RE: Abbey Spanier Files Securities Fraud Suit in N.Y.
SCOTTISH RE: Schiffrin & Barroway Files Securities Suit in N.Y.
*********
A.G. EDWARDS: Calif. Brokers' Overtime Case Allowed to Proceed
--------------------------------------------------------------
The U.S. District Court for the Southern District of California
"denied in its entirety" a motion for summary judgment filed by
A.G. Edwards, Inc. that seeks to dismiss claims by two former
brokers in a purported overtime pay class action against the
company, according to MarketWatch.
Former financial advisors Drew Takacs and Ryan Flynn filed the
case on Sept. 15, 2004. It is expected to cover about 9,000 to
10,000 brokers and broker-trainees. A September hearing was
slated to determine whether the case gets class-action status or
not.
In a decision dated July 31, Judge John A. Houston ruled that
the company must defend itself, since there were enough genuine
issues of fact for the case to proceed.
Ruling in favor of plaintiffs' claims, the judge pointed out
that the draws that financial advisors receive monthly could not
qualify as a guaranteed salary and that brokers, as salespeople,
are not covered by the federal law's administrative exemption
for overtime wages.
Brokers are generally paid based on commissions and fees that
they've brought to the company over the course of the year. To
accommodate their day-to-day expenses, they are given a monthly
advance or a draw.
However, plaintiffs are arguing that the draw acts as a loan,
not as a salary, because if brokers failed to earn sufficient
commissions in a particular month to cover the draw, the deficit
is carried forward and deducted from commissions in subsequent
months.
With regards to this issue, Judge Houston's ruling construes
'draw' deduction as an impermissible offset that is taken from
plaintiffs' guaranteed salary.
The judge's ruling stated that in order to be exempted from
overtime pay, the company must show that its business is a
"retail or service establishment."
Pointing to the labor department's definition, Judge Houston
noted in his ruling that the stockbrokers and investment-
counseling industries could not be classified as retail or
service establishment.
The suit is "Takacs, et al. v. AG Edwards and Sons, et al., Case
No. 3:04-cv-01852-JAH-NLS," filed on behalf of the U.S. District
Court for the Southern District of California under Judge John
A. Houston with referral to Judge Nita L. Stormes.
Representing the plaintiffs is James F. Clapp of Dostart Clapp
and Coveney, 4370 La Jolla Village Drive, Suite 970, San Diego,
CA 92122-1253, Phone: (858) 623-4200, Fax: (858) 623-4299.
Representing the defendants are Barbara I. Antonucci and
Christopher A. Parlo of Morgan Lewis and Bockius, Phone: (415)
442-1000 and (212) 309-6084 Fax: (415) 442-1001 and (212) 309-
6273.
ALLIED WASTE: Ariz. Court's Dismissal of Stock Lawsuit Appealed
---------------------------------------------------------------
The U.S. Court of Appeals for the Ninth Circuit has yet to rule
on plaintiffs appeal regarding the dismissal of the consolidated
securities fraud class action against Allied Waste Industries,
Inc. by the U.S. District Court for the District of Arizona.
A consolidated amended class action complaint was filed against
the company and five of its current and former officers on March
31, 2005 in the U.S. District Court for the District of Arizona,
consolidating three lawsuits previously filed on August 9, 2004,
Aug. 27, 2004 and Sept. 30, 2004.
The amended complaint asserted claims against all defendants
under Section 10(b) of the U.S. Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder and claims against the
officers under Section 20(a) of the U.S. Securities Exchange
Act.
The complaint alleged that from Feb. 10, 2004 to Sept. 13, 2004,
the defendants caused false and misleading statements to be
issued in the company's public filings and public statements
regarding the company's anticipated results for fiscal year
2004. The lawsuit sought an unspecified amount of damages.
The company filed a motion to dismiss the complaint on May 2,
2005. On Dec. 15, 2005, the U.S. District Court for the
District of Arizona granted the company's motion and dismissed
the lawsuit with prejudice. Plaintiffs appealed the dismissal
to the 9th Circuit Court of Appeals.
The suit is "Steven Zack, et al. v. Allied Waste Industries,
Inc., et al., Case No. 2:04-cv-01640-MHM," filed in the U.S.
District Court for the District of Arizona under Judge Mary H.
Murguia.
Representing the plaintiffs are:
(1) Stuart L. Berman of Schiffrin & Barroway, LLP, 280 King
of Prussia Rd., Radnor, PA 19087, Phone: 610-667-7706,
Fax: 610-667-7056, E-mail: ecf_filings@sbclasslaw.com;
and
(2) Richard Glenn Himelrick of Tiffany & Bosco, PA,
Camelback Esplanade II, 2525 E. Camelback Rd., 3rd
Floor, Phoenix, AZ 85016, Phone: 602-255-6021, Fax:
602-255-0103, E-mail: rgh@tblaw.com.
Representing the defendants are:
(i) David Hennes and Shahzeb Lari of Fried Frank Harris
Shriver & Jacobson, 1 New York Plaza, New York, NY
10004, Phone: (212) 859-8000; and
(ii) Doug C. Northup of Fennemore Craig, P.C., 3003 N.
Central Ave., Ste. 2600, Phoenix, AZ 85012-2913, Phone:
602-916-5000, Fax: 602-916-5562, E-mail:
dnorthup@fclaw.com.
AMERICAN EXPRESS: Faces Fraud Suit Over Blue Cash Card Rebates
--------------------------------------------------------------
American Express Co. is facing a putative class suit in the U.S.
District Court in New Jersey over alleged misleading and
fraudulent advertising related to cash rebates for its Blue Cash
card, MarketWatch reports.
The suit is seeking nationwide class certification of anyone who
applied for and received the card from Sept. 30, 2003, to the
present and didn't get the rebates provided in the offer.
Plaintiff is seeking unspecified damages and unspecified relief.
The suit is "Homa v. American Express Co. et al., Case No. 2:06-
cv-02985-JAP-MCA," filed in the U.S. District Court for the
District of New Jersey under Judge Joel A. Pisano, with referral
to Judge Madeline C. Arleo.
Representing the plaintiffs is Gary S. Graifman of Kantrowitz,
Goldhamer & Graifman, Esqs., 210 Summit Ave., Montvale, NJ
07645, Phone: (201) 391-7000, E-mail: ggraifman@kgglaw.com.
Representing the defendants is Louis Smith of Greenberg Traurig
LLP, 200 Park Avenue, Florham Park, NJ 07932, Phone: (973) 360-
7900, E-mail: smithlo@gtlaw.com.
AMERICAN EXPRESS: Appeals Court Vacates Dismissal of Stock Suit
---------------------------------------------------------------
The Second Circuit Court of Appeals issued a decision vacating
an earlier judgment by the U.S. District Court for the Southern
District of New York that dismissed an amended class action
complaint against American Express Co. and Amex officials.
The decision by the Court of Appeals will allow the lead
plaintiffs to amend their claims in this important case.
"We are gratified that the Court of Appeals ruling will allow us
to seek recovery for our clients on the basis of the merits of
this case," stated Sanford Dumain. "By agreeing with plaintiffs
that the amended complaint against Amex and Amex officials is
not barred by the statute of limitations, the Court of Appeals
has facilitated a new and full hearing on allegations brought
against the company and company leadership.
These allegations include that Amex failed to disclose its true
operating results, its lack of management controls, and its huge
losses suffered in risky junk bonds during the time period
concerned," added Mr. Dumain.
In 2005, American Express asked the U.S. District Court for the
Southern District of New York to dismiss the consolidated
securities class action filed against it, styled "In re American
Express Financial Advisors Securities Litigation" (Class Action
Report, June 16, 2005).
The action also named as defendants:
(1) American Express Company,
(2) American Express Financial Advisors, Inc., and
(3) James M. Cracchiolo in his capacity as president and
chief executive officer of American Express Financial
and chairman and CEO of American Express Advisors
Certain of the company's mutual funds are also named as nominal
defendants. The action is a consolidation of these actions:
(i) Naresh Chand v. American Express Company, American
Express Financial Corporation and American Express
Financial Advisors, Inc. (filed March 2004);
(ii) Elizabeth Flenner v. American Express Company et al.
(filed March 2004);
(iii) John B. Perkins v. American Express Company et al.
(filed March 2004);
(iv) Kathie Kerr v. American Express Company et al. (filed
April 2004); and
(v) Leonard D. Caldwell, Gale D. Caldwell and Richard T.
Allen v. American Express Company et al. (filed April
2004)
The plaintiffs allege violations of certain federal securities
laws and/or state statutory and common law. The plaintiffs,
among other things, allege that the company's financial plans
are used as a means to recommend mutual funds that pay
"undisclosed kickbacks." The class period at issue is March 10,
1999 through Feb. 9, 2004.
Plaintiffs seek to represent one class consisting of all of the
company's clients who purchased the preferred mutual funds
during the relevant period and another class comprised of those
of our clients who also purchased financial plans during the
relevant period.
For their damages, plaintiffs seek restitution of the
"undisclosed kickbacks" and the fees paid for the financial
plans.
For more information, contact Sanford P. Dumain of Milberg Weiss
Bershad & Schulman LLP, One Pennsylvania Plaza, 49th Floor, New
York, NY 10119, Phone: (212) 594-5300, Fax: (212) 868-1229.
The suit is "In Re American Express Financial Advisors
Securities Litigation, case no. 1:04-cv-01773-DAB," filed in the
United States District Court for the Southern District of New
York, under Judge Deborah A. Batts. Representing the Company is
Peter Kristian Vigeland of Wilmer, Cutler & Pickering (NYC), 399
Park Avenue, 30th Floor, New York, NY 10022, Phone: 212-230-
8800, Fax: 212-230-8888, E-mail: Peter.Vigeland@wilmer.com.
Representing the plaintiffs are:
(1) Jules Brody, Aaron Lee Brody, Stull, Stull & Brody, 6
East 45th Street, 5th Floor, New York, NY 10017, Phone:
(212) 687-7230, Fax: (212) 490-2022, E-mail:
ssbny@aol.com;
(2) Sharon M. Lee, Andrei V. Rado, Michael Robert Reese,
Steven G. Schulman and Peter Edward Seidman, Milberg,
Weiss, Bershad, Hynes & Lerach, L.L.P., One
Pennsylvania Plaza, New York, NY 10119, Phone: (212)
594-5300, E-mail: mreese@milberg.com,
sschulman@milbergweiss.com, pseidman@milberg.com; and
(3) Jonathan K. Levine, Girard, Gibbs & De Bartolomeo,
L.L.P., 601 California Street Suite 1400, San
Francisco, CA 94108, Phone: (415) 981-4800, Fax: (415)
981-4846, E-mail: jkl@girardgibbs.com.
ARKANSAS: Ex-Teachers' Motion Alleges Van Buren Officials Lied
--------------------------------------------------------------
In a request for admissions motion that was filed in the
Crawford County Circuit Clerk's office, attorney Brian Meadors
alleges that the Van Buren school district superintendent and a
former junior high principal made false statements while
testifying at the termination hearing of a junior high teacher,
according to The Times Record.
Mr. Meadors's motion was filed on behalf of former Coleman
Junior High civics teacher Steve Jones in a 2003 class action
against the school district.
Superintendent Merle Dickerson notified Mr. Jones on Jan. 6 that
he was recommending his termination, because he missed a faculty
meeting on Jan. 4, 2005, and left a faculty meeting without
permission on Jan. 2. Mr. Dickerson said the actions were a
failure to perform his duties and "insubordination." The school
board upheld the recommendation in a Feb. 13 hearing.
The admissions motion seeks a response from the school district
and individual defendants in the case regarding several
allegations of perjury and inaccurate testimony at the
termination hearing.
It asks for an admittance or denial to 38 separate claims. A
response is required within 30 days of the receipt of the motion
by the defendants or the allegations are deemed admitted.
Case Background
Mr. Jones originally filed his lawsuit along with another
teacher, Allen Wolfe, on Aug. 22, 2003, asking for payment to
teachers who had worked uncompensated duty time. Mr. Wolfe
recently settled his claim and was dismissed from the lawsuit.
Mr. Meadors of Fort Smith and Mark Burnette of Little Rock, both
representing Mr. Jones, claims that Mr. Jones was unfairly
dismissed from his position for making critical statements about
the school district in violation of his civil rights.
In April the two claims were added to the lawsuit:
-- an appeal of Mr. Jones' termination under the Teacher
Fair Dismissal Act; and
-- an allegation of a violation of the Arkansas Civil
Rights Act.
Crawford County Circuit Judge Mike Medlock granted class-action
status to that case back in 2005, allowing about 500 Van Buren
teachers to join the lawsuit.
The lawsuit covers any certified teacher working for the school
district between August 1998 and present who has performed
"uncompensated non-instructional duties."
Mr. Jones is asking for compensation for the duty time, pre- and
post-judgment interest and reasonable attorney's fees, costs and
other relief to which he and the class are entitled. He is also
asking for compensatory and punitive damages (Class Action
Reporter, April 27, 2006).
For more details, contact:
(1) C. Brian Meadors of Pryor, Robertson & Barry, PLLC, 315
North 7th Street, P.O. Drawer 848, Fort Smith, Arkansas
72902-0848, Phone: 479-782-8813 and 479-782-7911, Fax:
479-785-0254, Web Site: http://www.prblaw.com;and
(2) Mark T. Burnette of Mitchell, Blackstock, Barnes,
Wagoner, Ivers & Sneddon, PLLC, 1010 West Third Street,
Little Rock, Arkansas 72203-1510, (Pulaski Co.), Phone:
501-378-7870, Fax: 501-375-1940, Web site:
http://www.mbbwi.com.
AZTAR CORP: Continues to Face Lawsuits Over Pinnacle Merger
-----------------------------------------------------------
Aztar Corp. remains a defendant in several purported class
actions pending in various state courts throughout the U.S. over
certain provision in its merger agreement with Pinnacle
Entertainment, Inc.
Between approximately March 17, 2006 and April 24 2006, five
substantially identical putative class actions were filed
against the company and the members of its board of directors.
Two of the lawsuits were filed in the Superior Court of the
State of Arizona in and for the County of Maricopa, one was
filed in the Nevada District Court in and for Clark County, and
two were filed in the Court of Chancery of the State of Delaware
in and for New Castle County.
The complaints are:
-- "Plumbers Local Union No. 519 Pension Trust Fund v.
Aztar Corp. et al., Case No. CV2006-004622 (Arizona);"
-- "Robert Glasmann, v. Aztar Corp. et al., Case No.
CV2006-004087 (Arizona);"
-- "John Drauch v. Aztar Corp. et al., Case No. A519833
(Nevada)."
-- "Esther Lowinger v. Aztar Corp. et al., Civil Action
No. 2045-N (Delaware);" and
-- "Yolanda Heady v. Robert M. Haddock, et al., Civil
Action No. 2090-N (Delaware).
The complaints allege, among other things, that the defendants
breached their fiduciary duties by failing to conduct an auction
or active market check prior to entering into the merger
agreement with Pinnacle and by causing company to agree to the
termination fee provisions in the Pinnacle merger agreement,
which allegedly will deter other bidders for the company.
The complaints seek, among other things, an injunction against
the Pinnacle merger, rescission of the Pinnacle merger if it is
consummated and fees and costs.
Plaintiffs in the "Glasmann" and "Plumbers Local Union No. 519"
actions moved on April 11, 2006 for a temporary restraining
order and preliminary injunction barring the company from paying
to Pinnacle the termination fee and expenses provided for in the
Pinnacle merger agreement. On April 27, 2006, the Arizona court
denied the "Glasmann" and "Plumbers Local Union No. 519" motions
in all respects.
On May 15, 2006, the defendants and "Drauch" entered a
stipulation to stay the "Drauch" proceedings pending disposition
of the "Glasmann" and "Plumbers Local Union No. 519" litigation.
On April 20 and May 3, 2006, respectively, the defendants moved
to dismiss the "Lowinger" and "Heady" for failure to state a
claim upon which relief may be granted and to dismiss or stay
the actions in light of the prior filed Arizona cases.
In addition, the defendants moved for an order-staying discovery
in the "Lowinger" action pending the resolution of their motion
to dismiss or stay this action.
On May 3, 2006, the defendants and "Lowinger" entered a joint
stipulation to stay the proceedings pending disposition of the
"Glasmann" and "Plumbers Local Union No. 519" litigation.
On May 4, 2006, the defendants moved to consolidate the two
Delaware actions, and the Delaware Court of Chancery granted the
motion on May 15, 2006.
On May 25, 2006, the defendants, "Lowinger" and "Heady" entered
a revised joint stipulation to stay the two Delaware actions
pending disposition of the "Glasmann" and "Plumbers Local Union
No. 519" litigation.
No dates for the completion of discovery or trial have been set
for any of these actions, according to the company's Aug. 1,
2006 Form 10-Q filing with the U.S. Securities and Exchange
Commission for the period June 30, 2006.
Based in Phoenix, Arizona, Aztar Corp. (NYSE: AZR) --
http://www.aztar.com/-- develops and operates casinos in major
domestic gaming markets in the U.S. The company has casino
hotel facilities in Atlantic City, New Jersey, and Las Vegas and
Laughlin, Nevada. It also operates riverboat casinos in
Caruthersville, Missouri, and Evansville, Indiana.
CENTRAL LIVESTOCK: Settles Cattlemen's Lawsuit in Kan. for $250T
----------------------------------------------------------------
Reno County District Judge Richard Rome in Kansas approved an
approximately $250,000 settlement of a suit over bouncing checks
filed by a Hutchinson, Kansas attorney against defunct Central
Livestock Corp, the Associated Press reports.
The judge had also approved about $12,000 in bad check fees and
$350 in expenses, bringing the total judgment to more than
$260,000.
The proposal, which was also approved by Central Livestock's
attorney, Terry Bruce, will reimburse about 117 people who
received bad checks from former Central Livestock owner Mac
Frederick for about 85 percent of the total owed by the sale
barn.
Mr. Bruce said there's still about $10,000 that's not covered by
the money held by the court, but Mr. Frederick is liquidating
more assets to raise money.
According to plaintiffs' attorney Stan Juhnke, the settlement
when combined with the previous payments from a federally
required bond, will return 98 percent of the money owed to
claimants.
Mr. Juhnke told the court that 91 people had taken part in his
class action, 18 had not responded to his mailings, and eight
chose not to participate. He had asked the judge to approve his
fee of 12 1/2 percent, which he lowered from an original 25
percent request. The fee had been approved by Central
Livestock.
The lawsuit stemmed from a February investigation by the U.S.
Department of Agriculture on Central Livestock's finances after
cattlemen complained about checks from the business bouncing
(Class Action Reporter, June 13, 2006). It received class
certification from Senior Judge William Lyle in June (Class
Action Reporter, June 23, 2006).
The barn reopened under new ownership in early June.
Central Livestock is represented by Terry Bruce of Forker, Suter
& Rose, LLC, Suite 200, 129 West 2nd Avenue, P.O. Box 1868,
Hutchinson, Kansas 67504-1868, Phone: 620-663-7131, Fax: 620-
669-0714.
Plaintiffs are represented by Stanley Juhnke of Bretz Law
Offices, 400 W. 1st Ave., P.O. Box 567, Hutchinson, KS 67501-
5206, Phone: (316) 669-1022, Fax: (316) 669-1025.
CNL HOTELS: Fla. Court Grants Approval to Stock Suit Settlement
---------------------------------------------------------------
The U.S. District Court for the Middle District of Florida
granted final approval to the settlement of a securities fraud
class action against:
-- CNL Hotels & Resorts, Inc.,
-- CNL Hospitality Corp. (CHC),
-- certain affiliates of the company and of CHC, and
-- certain directors and officers, including
* James M. Seneff, Jr.,
* Robert A. Bourne,
* Thomas J. Hutchison III,
* John A. Griswold,
* Craig M. McAllaster, and
* Robert E. Parsons, Jr.
Following a final approval hearing held on July 26, 2006, the
court approved the settlement as fair, reasonable, and adequate,
and in rendering its approval of an award of attorneys' fees and
costs to plaintiffs' counsel, the court noted that "plaintiffs'
counsel pursued this complex case diligently, competently and
professionally" and "achieved a successful result." More than
100,000 class members received notice of the proposed settlement
and no substantive objection to the settlement, plan of
allocation or fee petition was voiced by any class member.
On Aug. 16, 2004, a shareholder filed a complaint on behalf of
two separate classes, those persons who purchased company shares
during the class period pursuant to certain registration
statements and those persons who received and were entitled to
vote on the Proxy Statement dated May 7, 2004, as amended (Class
Action Reporter, June 23, 2006).
The complaint alleges violations of Sections 11, 12(a)(2) and 15
of the U.S. Securities Act and Section 14(a), including Rule
14a-9 hereunder, and Section 20(a) of the Exchange Act, based
upon, among other things, allegations that:
(1) the defendants used improper accounting practices to
materially inflate company earnings to support the
payment of distributions and bolster its share price;
(2) conflicts of interest and self-dealing by the
defendants resulted in excessive fees being paid to the
advisor, overpayment for certain properties which the
company acquired and the proposed merger between the
company and its advisor;
(3) the proxy statement and certain registration statements
and prospectuses contained materially false and
misleading statements; and
(4) the individual defendants and the company's Advisor
breached their fiduciary duties to the members of the
class.
Settlement Demands
The complaint seeks, among other things, certification of the
class action, unspecified monetary damages, rescissory damages,
to nullify the various shareholder approvals obtained at the
2004 annual meeting, payment of reasonable attorneys' fees and
experts' fees.
It also seeks an injunction enjoining the postponed underwritten
offering and listing until the court approves certain actions,
including the nomination and election of new independent
Directors and retention of a new financial advisor.
Second Complaint
On Sept. 8, 2004, a second putative class action complaint was
filed in the U.S. District Court for the Middle District of
Florida containing allegations that are substantially similar to
those contained in the class action filed on Aug. 16, 2004.
On Nov. 10, 2004, the two complaints were consolidated and lead
plaintiffs were assigned for each of the two purported classes.
On Dec. 23, 2004, the plaintiffs served a corrected,
consolidated and amended complaint asserting substantially the
same claims and allegations.
On Feb. 11, 2005, the company and the other defendants filed
separate motions to dismiss the consolidated amended complaint.
On May 9, 2005, the court dismissed all causes of action against
the company's operating partnerships, CNL Hospitality Partners,
L.P., and RFS Partnership, L.P., and against the Advisor, CNL
Financial Group, Inc., and other advisor related entities.
The court sustained the sufficiency of the pleading relating to
the Sections 11, 12(a)(2), and 15 claims against the company and
the individual defendants, but instructed plaintiffs to re-plead
to specifically identify in the particular registration
statements the alleged misstatements or omissions attributable
to each defendant.
The court deferred consideration of the Section 14 (a) and 20(a)
claims in light of the company's April 8, 2005 disclosure
relating to the possible amendment of the existing merger
agreement.
Finally, the court dismissed completely the breach of fiduciary
duty claims finding they were derivative and belonged to the
company.
First Amended Complaint
On May 31, 2005, plaintiffs filed a consolidated first amended
class action complaint, which eliminated one of the named co-
plaintiffs and certain previously named defendants, including
CNL Hospitality Partners, L.P., RFS Partnership, L.P., CNL
Financial Group, Inc., CNL Real Estate Group, Inc. and Five
Arrows Realty Securities II, LLC, and adds CNL Securities
Corporation as a defendant for alleged violations of Sections
12(a)(2) and 15 of the Securities Act and Section 14(a) of the
Exchange Act.
The consolidated first amended class action complaint continues
to assert claims pursuant to Sections 11, 12(a)(2) and 15 of the
Securities Act and Section 14(a), including Rule 14a-9
hereunder, and Section 20(a) of the Exchange Act. Further, the
breach of fiduciary duty claim is expressly asserted as
derivative.
On July 22, 2005, the company and the other defendants filed
separate motions to dismiss the consolidated first amended class
action complaint. The court heard oral arguments on Sept. 9,
2005.
On the same day, the court dismissed without prejudice the
Section 14(a) and 20(a) claims as moot, and granted plaintiff
leave to amend its complaint, within thirty days, to add
additional plaintiffs that had standing to assert certain
Sections 11, 12(a)(2), and 15 claims, and instructed defendants
to advise the court, within thirty days thereafter, whether they
have any additional defenses to raise in support of their
motions to dismiss in light of any new plaintiffs.
On Sept. 13, 2005, the court dismissed the derivative claims
with prejudice finding that plaintiffs had failed to make a pre-
suit demand or establish that such demand would have been
futile.
On Sept. 20, 2005, the court dismissed the claims asserted
against CNL Securities Corp. On Sept. 21, 2005, the court
denied the motion to dismiss CHC as a defendant in the
complaint.
Second Amended Complaint
On Oct. 10, 2005, plaintiffs filed a Consolidated Second Amended
Shareholder Complaint, which added three additional named
plaintiffs to assert Sections 11, 12(a)(2), and 15 claims
against the company and the individual defendants.
On Nov. 9, 2005, the company moved to dismiss and strike the
second amended complaint. On Dec. 16, 2005, the court entered
an order postponing resolution of the motion to dismiss and
strike, pending settlement discussions among the parties.
Memorandum of Understanding
On Feb. 6, 2006, the company and the other defendants executed a
non-binding Memorandum of Understanding, which sets forth the
general terms of an agreement in principle for the settlement of
the class action.
The MOU assumed that a merger agreement would be executed in
accordance with a term sheet, dated Dec. 5, 2005.
On March 13, 2006, plaintiffs' counsel confirmed that they had
completed the discovery that was conducted to verify the
settlement was reasonable, and the parties informed the court of
the terms of the MOU and the parties' intention for the
settlement to be documented by a stipulation of settlement.
On March 16, 2006, the terms of the MOU and the settlement were
approved by the Special Litigation Committee of the Board, which
is comprised of the three non-defendant members of the Board.
Plan of Merger
On April 3, 2006, the company entered into an amended and
restated agreement and plan of merger with CHC, CNL Real Estate
Group, Inc., Five Arrows Realty Securities II L.L.C., the other
stockholders of CHC identified therein, CNL Hotels & Resorts
Acquisition, LLC (Acquisition Sub), CNL Hospitality Properties
Acquisition Corp., and CNL Financial Group, Inc. (CFG).
The company's board of directors approved the amended merger
agreement after receiving the recommendation of a special
committee comprised of three of its independent directors.
Pursuant to the amended merger agreement, CHC will merge with
and into Acquisition Sub, all of the membership interests of
which are owned by the company, and the separate corporate
existence of CHC will cease.
After execution of the amended merger agreement, counsel for the
company, CHC, CNL Securities Corp., and certain of the company's
current and former directors and officers, including Messrs.
Seneff, Bourne, Hutchison, Griswold, McAllaster, Parsons, Adams,
and Dustin, executed a stipulation of settlement, consistent
with the terms of the MOU, which sets forth the terms of an
agreement for the settlement of the class action.
Settlement Classes
Under the terms of the Stipulation, subject to court approval,
two settlement classes will be certified:
-- a class of all persons who purchased or otherwise
acquired the company's securities issued or offered
pursuant to or by means of the company's registration
statements and/or prospectuses between Aug. 16, 2001
and Aug. 16, 2004, inclusive (Purchaser Class), and
-- a class of all persons who were entitled to vote on the
proposals presented in the proxy statement filed by the
company, dated June 21, 2004, as amended or
supplemented by the additional proxy solicitation
materials filed on July 7, July 8 and July 20, 2004
(Proxy Class).
The company and the other defendants have denied and continue to
deny liability or any act of negligence or misconduct, but in
exchange for a release and resolution of the class action, the
company and the other defendants have agreed to settle the class
action.
Under the terms of the Stipulation, in connection with the
Purchaser Class claims, the company will pay a total of $35
million, consisting of $3.7 million to be paid by Jan.15, 2007,
$15.65 million to be paid by Jan.15, 2008, and $15.65 million to
be paid by Jan. 15, 2009, which payments will be deposited into
a settlement fund account to be administered by plaintiffs'
counsel.
Plaintiffs' counsel will seek a fee with respect to the
Purchaser Class equal to 25 percent of all amounts paid by the
company into the settlement fund account, totaling approximately
$8.75 million, plus expenses.
The proceeds in the settlement fund, plus any applicable
interest, less approved fees and expenses will be distributed to
stockholders who are members of the Purchaser Class.
In connection with the Proxy Class and derivative claims, the
company and the other defendants who were its directors during
the negotiation and execution of the amended merger agreement,
the amended and restated renewal agreement, and the payment
agreement (new agreements) have acknowledged that the class
action was among the material factors taken into account in
connection with the terms of the new agreements.
As required by the terms of the Stipulation, the company also
provided plaintiffs' counsel with an opportunity to review and
comment on its proxy statement relating to a special meeting of
the company's stockholders and all related materials for the
purposes of compliance with all applicable securities and
corporate fiduciary laws, rules, and regulations.
Additional Settlement Conditions
In addition, as a part of the settlement of the class action,
the company will adopt or maintain certain corporate governance
measures, including:
-- a mechanism for a committee of the board comprised
solely of three independent directors to review and
approve any proposal by the company to its stockholders
to approve an amendment to the charter to extend the
date specified in the charter by which the company must
commence an orderly liquidation (and that any final
evaluation by the advisor to such directors be provided
to plaintiffs' counsel for review); and
-- the maintenance of a committee of the board, consisting
solely of directors who do not have a financial
interest in the transaction being considered, to review
and approve all related-party transactions.
Plaintiffs' counsel will seek a fee and a portion of
reimbursable expenses with respect to the Proxy Class and
derivative claims in the amount of $5.5 million, which the
company has agreed to pay as part of the settlement.
The Special Litigation Committee of the Board has determined
that:
-- the settlement is advisable and in the company's best
interest and approved the settlement and the
implementation of its terms; and
-- under the indemnification agreements with the defendant
directors and under the Advisory Agreement, the
defendant directors and CHC would be entitled to
indemnification in connection with the class action and
that the company should not seek contribution or
reimbursement of advanced expenses from these parties
in connection with the class action.
Under the terms of the Stipulation, the named plaintiffs in the
class action and their legal counsel have agreed to fully
support stockholder approval of the amended merger and
associated charter amendments as being fair and reasonable, and
in the best interests of the company and its stockholders.
July 26 Hearing
By order dated April 21, 2006, the court preliminarily approved
the fairness of the settlement of the class action for the
limited purpose of permitting notice to be mailed to the class
of the proposed settlement and the fact that the court will hold
a hearing on July 26, 2006 to determine whether the proposed
settlement should be considered by the Court as fair, reasonable
and adequate, and to consider the fee and expense application of
the Plaintiffs' attorneys.
The company accrued $34.2 million as of Dec. 31, 2005,
representing the present value of the total settlement estimate
of $40.5 million, and recognized the related charge as an
expense for litigation settlement in its statement of operations
for the year ended Dec. 31, 2005. During the quarter ended
March 31, 2006, the company recognized approximately $0.7
million in interest expense pertaining to the accrued liability.
A copy of the final judgment is available free of charge at:
http://ResearchArchives.com/t/s?f12
The suit is "Campbell v. CNL Hotels & Resorts Inc. et al., Case
No. 6:04-cv-01231-GAP-KRS," filed in the U.S. District Court for
the Middle District of Florida under Judge Gregory A. Presnell.
Representing the plaintiffs are:
(1) Nicholas E. Chimicles, Kimberly Marie Donaldson,
Chimicles & Tikellis LLP, One Haverford Centre, 361
West Lancaster Ave., Haverford, PA 19041, Phone:
215/642-8500, E-mail: nick@chimicles.com or
kimdonaldson@chimicles.com;
(2) Beth Hoffman, Lawrence A. Sucharow, Goodkind Labaton
Rudoff & Sucharow LLP, 100 Park Ave., New York, NY
10017, E-mail: bhoffman@glrslaw.com or
lsucharow@glrslaw.com;
(3) Lawrence P. Kolker, Wolf, Haldenstein, Adler, Freeman &
Herz, 270 Madison Ave., New York, NY 10016, Phone:
212/545-4600, E-mail: kolker@whafh.com; and
(4) George E. Ridge, Cooper, Ridge & Lantinberg, P.A., 200
W. Forsyth St., Suite 1200, Jacksonville, FL 32202-
1069, Phone: 904/353-6555, Fax: 904-353-7550, E-mail:
gridge@attorneyjax.com.
Representing the defendants are:
(i) Mark Herman Budoff, Kenneth A. Lapatine, Toby S. Soli,
Greenberg Traurig LLP, MetLife Building, 200 Park Ave.,
15th Floor, New York, NY 10166, Phone: 212/801-9200,
Fax: 212/801-6400, E-mail: budoffm@gtlaw.com,
lapatinek@gtlaw.com, solit@gtlaw.com; and
(ii) David B. King and Thomas A. Zehnder, King, Blackwell,
Downs & Zehnder, P.A., 25 E. Pine St., P.O. Box 1631,
Orlando, FL 32801-1631, Phone: 407/422-2472, Fax: 407-
648-0161, E-mail: dking@kbdlaw.com or
tzehnder@kbdlaw.com.
COLUMBIA GAS: High Court Bars Lawsuit by Energy Max Customers
-------------------------------------------------------------
Justice Maureen O'Connor of the Ohio Supreme Court has ruled
that former customers of independent gas supplier Energy Max of
Northeast Ohio Inc. can't sue direct supplier Columbia Gas over
their terminated contracts, The Blade reports.
The high court ruled that such complaints amount to rate
disputes, which should be brought up with the province's Public
Utilities Commission of Ohio (PUCO.
According to Justice O'Connor, although Energy Max defaulted on
its gas supply contract, Columbia Gas did nothing wrong.
Columbia may be a public utility, but Energy Max was not. As
such, Columbia was and is subject to the regulatory jurisdiction
of the PUCO.
The ruling stems from a class action over breach of contract
filed by Charles Hull and other Toledo-area customers of
Columbia Gas of Ohio. It seeks to compel Columbia to make good
on contracts that Mr. Hull and the other plaintiffs signed with
Energy Max, one of the independent suppliers approved by
Columbia to participate in its "customer choice" program.
The program allows residents of the utility's service area the
opportunity to enter into fixed-term contracts with one of
several independent suppliers to purchase their natural gas,
which is still delivered to the customer through the utility
company's transmission lines, at prices that are often lower
than gas bought directly from the utility company.
Mr. Hull signed a "Columbia Gas of Ohio Customer Choice
Enrollment Card and Gas Purchase Agreement" in March 2000 with
Energy Max for a 12-month gas supply at a fixed rate of 36 cents
per hundred cubic feet.
In August 2000, Columbia notified its customers that it had
terminated its relationship with Energy Max because Energy Max
had failed to deliver the gas it was contractually committed to
furnish to Columbia for transmission to its customers who had
chosen Energy Max as their supplier.
Columbia advised Mr. Hull and others who had signed Energy Max
contracts that they were free to enter into a new contract with
any of the other independent suppliers on the company's customer
choice list at whatever current rate those providers were
asking. The notice specified that customers who did not sign up
with another independent supplier within a specified number of
days would automatically be reinstated as customers of
Columbia's own gas supply company, at a current rate of 63 cents
per ccf.
Mr. Hull did not select another independent supplier. He filed
suit against both Energy Max and Columbia in Lucas County Common
Pleas Court.
In his complaint, which was later expanded to a class action,
Mr. Hull claimed breach of contract and sought to recover the
difference between what his gas bills would have been under the
rate he had contracted for with Energy Max and the much higher
rate Columbia charged him for gas for the remainder of the 12-
month contract period.
The trial court granted default judgment against Energy Max, but
dismissed Mr. Hull's claim against Columbia Gas on the basis
that his complaint involved a disputed utility rate, and Ohio's
public utility statutes require that all rate-related disputes
between a regulated utility and its customers must be resolved
through administrative proceedings of the PUCO, not through
lawsuits filed in state courts.
On review, however, the 6th District Court of Appeals reversed
the trial court decision and remanded the case for further
proceedings. The appellate panel held 2-1 that Mr. Hull's
complaint was not a dispute over a utility rate, but was rather
a contract law dispute that was properly before the common pleas
court. Columbia Gas appealed the 6th District's ruling, and the
Supreme Court agreed to hear arguments in the case.
"We certainly feel that Columbia was not a party to that
contract," Columbia's attorney, Rod Cooper, said. "The reality
is that Columbia Gas is providing customers via its choice
program to select someone other than itself to provide their
gas. It would be counterintuitive to suggest Columbia should
guarantee the rates of competitors whom Columbia is allowing its
customers to contract with."
The suit succeeded in winning a monetary judgment against Energy
Max, but it did little good, according to the customers'
attorney, John A. Coble of the Law Firm Albrechta and Coble,
Toledo, Ohio.
Representing Columbia Gas is D. Rodman Cooper of Cooper &
Walinski, LPA, 900 Adams Street, Toledo, OH 43604, Phone: (419)
241-1200, Fax: (419) 242-5675, E-mail:
cooperr@cooperwalinski.com.
CONTINENTAL CASUALTY: Faces La. Suit Over Unpaid Katrina Losses
---------------------------------------------------------------
Loyola University filed a lawsuit in the U.S. District Court for
the Eastern District of Louisiana against Continental Casualty
Co. over alleged unpaid Hurricane Katrina-related losses, the
Associated Press reports.
The suit charges the insurer with "arbitrary and capricious"
failure to make payments due under the policy, and seeks payment
and unspecified punitive damages.
It claims Continental Casualty has paid less than one-seventh to
the university of the $6 million in property damage and $22.5
million in business-interruption losses, totaling $28.5 million.
According to Loyola attorney, Michael St. Martin, despite paying
$200,000 so Ernst and Young LLP could document claims it filed
in May, the university has only received $4 million.
The suit seeks class-action status so that plaintiffs could
represent businesses and others who bought Continental Casualty
policies and "whose documented claim was denied in whole or in
part," according to a ChicagoBusiness report. It did not
specify a time period during which Continental policies should
have been in force or limit class members' coverage disputes
specifically to Hurricane Katrina claims.
The suit is "Loyola University New Orleans v. Continental
Casualty Co., Case No. 2:06-cv-04079-KDE-DEK," filed in the U.S.
District Court for the Eastern District of Louisiana under Judge
Kurt D. Engelhardt, with referral to Judge Daniel E. Knowles,
III.
Representing the plaintiffs are Michael X. St. Martin, Charles
Clarence Bourque, Jr., Joseph G. Jevic, III, Melanie G. Lagarde,
Christopher John St. Martin and Conrad S. P. Williams, III all
of St. Martin & Williams, 4084 Highway 311, P. O. Box 2017
Houma, LA 70361-2017, Phone: 985-876-3891, Fax: 985-851-2219, E-
mail: cbourque@crescent-farm.com or jjevic@crescent-farm.com or
mlagarde@crescent-farm.com or cstmartin@crescent-farm.com or
duke525@msn.com.
CREDIT ACCEPTANCE: Appeals Mo. Court's Order to Expand Class
------------------------------------------------------------
Credit Acceptance Corp. is appealing the decision by the Circuit
Court of Jackson County, Missouri to allow an expanded
repossession class in a lawsuit filed against it alleging
violations of federal and state consumer protection laws.
The company is a defendant in a class action proceeding
commenced on Oct. 15, 1996 in the Circuit Court of Jackson
County, Missouri and removed to the U.S. District Court for the
Western District of Missouri.
The suit was initially filed in Oct. 15, 1996. On Oct. 9, 1997,
the District Court certified two classes on the claims brought
against the company, one relating to alleged overcharges of
official fees, the other relating to alleged overcharges of
post-maturity interest.
In August 1998, the court granted partial summary judgment on
liability in favor of the plaintiffs on the interest overcharge
claims based upon its finding of certain violations but denied
summary judgment on certain other claims.
The court also entered a number of permanent injunctions, which,
among other things, restrained the company from collecting on
certain class accounts.
The District Court also ruled in favor of the company on certain
claims raised by class plaintiffs. Because the entry of an
injunction is immediately appealable, the company appealed the
summary judgment order to the U.S. Court of Appeals for the
Eighth Circuit.
Oral argument on the appeals was heard on April 19, 1999. In
September 1999, the appeals court overturned the August 1998
partial summary judgment order and injunctions against the
company.
The appeals court held that the federal court lacked
jurisdiction over the interest overcharge claims and directed
the federal court to sever those claims and remand them to state
court.
On Feb. 18, 2000, the District Court entered an order remanding
the post-maturity interest class to the Circuit Court of Jackson
County, Missouri while retaining jurisdiction on the official
fee class.
The company then filed a motion requesting that the District
Court reconsider that portion of its order of Aug. 4, 1998, in
which the District Court had denied the company's motion for
summary judgment on the federal Truth-In-Lending Act claim.
On May 26, 2000, the District Court entered summary judgment in
favor of the company on the TILA claim and directed the Clerk of
the Court to remand the remaining state law official fee claims
to the appropriate state court.
On July 18, 2002, the Circuit Court of Jackson County, Missouri
granted plaintiffs leave to file a fourth amended petition,
which was filed on Oct. 28, 2002. Instead of a subclass of
Class 2, that petition alleges a new, expanded Class 3 relating
to allegedly inadequate repossession notices.
The company filed a motion to dismiss the plaintiff's fourth
amended complaint on November 4, 2002. On Nov. 18, 2002, the
company filed a memorandum urging the decertification of the
classes.
On Feb. 21, 2003, the plaintiffs filed a brief opposing the
company's Nov. 4, 2002 motion to dismiss the case. On May
19, 2004, the Circuit Court released an order, dated Jan. 9,
2004, that denied the company's motion to dismiss.
On Nov. 16, 2005 the Circuit Court issued an order that, among
other things, adopted the District Court's order certifying
classes. By adopting the District Court's order, the Circuit
Court's order certified only the two original classes and did
not certify the new, expanded Class 3.
On Jan. 13, 2006, plaintiffs filed a motion entitled Plaintiffs'
Motion To Adjust Class 2 Definition To Correspond With
Allegations Of Their Fourth Amended Complaint, which requested
that the "repossession subclass" be deleted from Class 2 and a
new Class 3 be adopted.
The company filed a response arguing that the new, expanded
Class 3 is inappropriate for a number of reasons including the
expiration of the statute of limitations.
On May 23, 2006, the Circuit Court issued several orders,
including an order granting plaintiffs' motion and adding the
new Class 3.
On June 2, 2006 the company filed for leave to appeal the
Circuit Court's decision to allow the expanded repossession
class as well as its Nov. 16, 2005 certification order,
according to the company's Aug. 2, 2006 Form 10-Q filing with
the U.S. Securities and Exchange Commission for the period ended
June 30, 2006.
CROWN COLLEGE: Settles Lawsuit Over Credit Transfer for $87T
------------------------------------------------------------
Crown College in Tacoma, Washington agreed to pay more than
$87,000 to settle claims by students that the school misled them
in guaranteeing that their school credits could be transferred
to other colleges.
Some students initiated a class action against Crown College in
Tacoma in March, accusing school officials falsely promised them
on the credit transfer (Class Action Reporter, March 23, 2005).
Though Crown is nationally accredited by an agency that oversees
career schools, traditional colleges, such as the University of
Washington or the University of Puget Sound, are regionally
accredited and most do not accept transfer credits from
nationally accredited schools.
In the recent settlement, Crown College did not admit any
wrongdoing.
In January Crown was also ordered by a Pierce County Superior
Court jury to pay nearly $77,000 in damages and attorney's fees
in a suit that claims the college violated the state Consumer
Protection Act in a lawsuit filed by a student wanting to
transfer her credits to Gonzaga University in Spokane.
In 2004, Crown settled a similar lawsuit brought by four
students.
Students have also filed a class action against the Gig Harbor-
based Business Career Training Institute, claiming the career
school targeted welfare recipients, the unemployed and other
vulnerable students and offered high-priced programs that
provided little useful training, but left students in debt.
CUSHENBURY MINE: Retirees Sue Trustees for Alleged Mismanagement
----------------------------------------------------------------
Trustees of Cushenbury Mine Trust, which provides benefits to
retired Kaiser Steel workers, are facing a class action for
alleged mismanagement, the San Bernardino County Sun reports.
Trustees Virginia Mulloy, Thomas Rabone and Michael Urbanek, and
the trusts' attorney, Alfred B. Fowler are facing a lawsuit
filed on July 28 in U.S. District Court in Los Angeles.
The trust has been providing benefits to the Kaiser worker since
the company closed its Fontana plant in 1984 and went bankrupt
in 1988. The Cushenbury Mine in Lucerne Valley was valued at
$15 million in the mid-1990s according to the suit.
The trustees are accused of failing to sell the mine and
distribute the proceeds to living retired Kaiser workers as
planned.
To support its claim of mismanagement, the suit cited
allegations by a former trustee regarding the acceptance by
former trustees of some $65,000 unreported payments from the
trust fund in 2003. Those trustees have since been replaced.
The current trustees are also accused of failing to take
reasonable steps to protect the trust assets by removing Frank
Bitonti, one of the three former trustees accused of
mismanagement, from the current record title holder of the
Cushenbury Mine property.
The suit is asking the court to appoint a neutral trustee.
Plaintiffs in the suit are Jeanette Barton, Fred Delgado, Jimmy
Elliott and William Walborn. They are proposing to represent at
least 1,500 Kaiser Steel retirees and their spouses.
A town-hall meeting to discuss the suit is scheduled for 10 a.m.
Aug. 29, 2006 in the Renaissance Room of the National Orange
Show Events Center, 689 Arrowhead Ave., San Bernardino.
The suit is "Elliott et al. v. Board of Trustees and Trust
Attorney for the Kaiser Steel Corp. Retirees Benefit Trust and
the Cushenbury Mine Trust et al., Case No. 2:06-cv-04716-JSL-
CT," filed in the U.S. District Court for the Central District
of California under Judge J. Spencer Letts with referral to
Judge Carolyn Turchin.
Representing the plaintiffs are Jae Kook Kim and Richard D
McCune, Jr. at Welebir and McCune, 2068 Orange Tree Lane, Suite
215, Redlands, CA 92374 U.S., 909-335-0444, E-mail: JKK@wmtrial-
law.com, ece@wmtrial-law.com.
EVCI CAREER: Complaint Outlines "Deeper" Problems at Interboro
--------------------------------------------------------------
New allegations were leveled against EVCI Career Colleges
Holding Corp. in a consolidated securities fraud class action
pending in the U.S. District Court for the Southern District of
New York against the company, according to the New York Times.
In a complaint filed on July 21, 2006, it was alleged that the
company's Interboro Institute subsidiary had problems that were
much deeper than those outlined by the State Education
Department in 2005.
The complaint alleged that cheating in determining whether
students were eligible for federal and state financial aid was
routine. It also alleged that the company dismissed employees
who failed to meet quotas in enrolling students.
Darnley D. Stewart and Alyson C. Bruns of Bernstein Litowitz
Berger & Grossmann filed the complaint on behalf of the Arkansas
Teacher Retirement System.
ATRS, which invested more than $2 million in EVCI stock and
claimed a loss of more than $1.7 million, was designated as lead
plaintiff in the case, which was consolidated by Judge Colleen
McMahon back in May along with several others similar
complaints.
Interboro, which seeks to enroll low-income students who have
not graduated from high school, grew in five years from about
1,000 students to more than 4,000, in part through subway ads
offering the opportunity to earn a high school equivalency
degree and a two-year college degree in 16 months. It has four
sites, three in New York City and one in Yonkers.
In 2005, the Education Department found several instances of
cheating on financial aid eligibility tests and other problems
at Interboro.
Thus, it ordered the EVCI subsidiary to improve its academics,
raise its graduation rates and hire an outside company to do
admissions testing. The department also ordered Interboro to
reduce enrollments while it corrected the other problems.
On numerous occasions, EVCI execs have maintained that their
problems were less pervasive than the state has said. It also
pointed out that those problems were the fault of a few "rogue
employees" that have been dismissed.
A law firm hired by EVCI's outside directors that reviewed
Interboro and interviewed employees even concluded that the
company's top executives did not encourage cheating and were
unaware that there was any.
However, the complaint, which also named EVCI's chairman, Arol
A. Buntzman; its chief executive officer, John J. McGrath; and
its former chief financial officer, Richard Goldenberg, as
defendants, contends that they exploited economically
disadvantaged students for personal gain.
It cited interviews with several former Interboro employees, who
said that after Dr. John J. McGrath became EVCI's chief
executive in 2003, he directed admissions officials to increase
enrollment by 20 percent each semester.
In order to meet the requirements for federal financial aid,
students without high school diplomas must pass a test approved
by the federal Department of Education. That test would show a
whether a student would benefit from post-secondary education or
not.
According to the complaint, one confidential informant who had
worked in testing at Interboro, said that graders were paid $50
or given other gifts to pass students who would otherwise have
failed.
The complaint claims that shareholders were misled by EVCI's
reports that its soaring enrollments resulted from the company's
improved efforts to help students stay in school. It pointed
out that the enrollments were generated through fraud and not
through the company's " retention strategies."
The suit is "Geoffrey Glauser, et al. v. EVCI Career Colleges
Holding Corporation, et al., Case No. 05-CV-10240," filed in the
U.S. District Court for the Southern District of New York under
Judge Colleen McMahon.
Representing the plaintiffs are:
(1) Bernstein Litowitz Berger & Grossmann, LLP, 1285 Avenue
of the Americas, New York, NY 10019, Phone: 212-554-
1282, Fax: 212-554-1444, Web site: www.blbglaw.com; and
(2) Samuel Howard Rudman of Lerach, Coughlin, Stoia,
Geller, Rudman & Robbins, LLP, 58 South Service Road,
Suite 200, Melville, NY 11747, Phone: 631-367-7100,
Fax: 631-367-1173, E-mail: srudman@lerachlaw.com.
Representing the defendants are Glenn Charles Colton and Gideon
Alexander Schor of Wilson Sonsini Goodrich & Rosati, 12 East
49th Street, 30th Flr., New York, NY 10017, Phone: 212-999-5804,
Fax: 212-999-5899, E-mail: gcolton@wsgr.com and gschor@wsgr.com.
FELT BICYCLES: Recalls Mountain Bikes with Defective Brake Boss
---------------------------------------------------------------
Felt Bicycles, of Lake Forest, California, in cooperation with
the U.S. Consumer Product Safety Commission, is recalling about
700 units of Felt mountain bicycles.
The company said the steel brake boss can detach from the frame,
causing the rider to lose control and fall.
Felt Bicycles has received three reports of the brake boss
coming loose. No injuries were reported.
This recall involves all model year 2005 and 2006 Kinesis made
RXC bicycles. The frames on these bicycles are made with carbon
fiber rear seat stays and are equipped with V-style brakes, and
not equipped with disk brakes from the factory. Frames affected
by this recall were shipped to dealers between October 2004 and
April 2006.
The Felt mountain bikes were manufactured in Taiwan and are
being sold at bicycle specialty stores nationwide from October
2004 through April 2006 for between $1,050 and $5,000.
Consumers are advised to stop using the bicycles immediately and
contact local Felt bicycle dealers to receive a free inspection
and repair.
For more information, contact Felt Bicycles at (866) 433-5887
between 8 a.m. and 5 p.m. PT Monday through Friday, or visit
http://www.feltracing.com.
FINOVA CAPITAL: Thaxton Loan Suit Class Certification Overturned
----------------------------------------------------------------
The U.S. Court of Appeals for the Fifth Circuit reversed the
class certification order granted by the U.S. District Court for
the District of South Carolina in the consolidated lawsuit filed
against FINOVA Capital Corp. over its loan to The Thaxton Group,
Inc. and several related entities.
Between Oct. 17, 2003 and Jan. 13, 2004, the company was served
with and named as a defendant with other parties in five
lawsuits that relate to its loan to The Thaxton Group Inc. and
several related entities. Under its loan agreement, the company
has a senior secured loan to the Thaxton Entities of
approximately $108 million at Dec. 31, 2005.
The Thaxton Entities were declared in default under their loan
agreement with the company after they advised it that they would
have to restate earnings for the first two fiscal quarters of
2003, and had suspended payments on their subordinated notes.
As a result of the default, the company exercised its rights
under the loan agreement, and accelerated the indebtedness. The
Thaxton Entities then filed a petition for bankruptcy protection
under chapter 11 of the federal bankruptcy code in the U.S.
Bankruptcy Court for the District of Delaware on Oct. 17, 2003,
listing assets of approximately $206 million and debts of $242
million. The Thaxton Group had approximately 6,800 holders of
its subordinated notes that were issued in several states, with
a total subordinated indebtedness of approximately $122 million.
The first lawsuit, "Earle B. Gregory, et al., v. FINOVA Capital
Corp., James T. Garrett, et al., (the Gregory action)," was
filed in the Court of Common Pleas of Lancaster County, South
Carolina, Case No. 2003-CP-29-967, and was served on the company
on Oct. 17, 2003. An amended complaint was served on Nov. 5,
2003, prior to the deadline for FINOVA to answer, plead, or
otherwise respond to the original complaint. The Gregory action
was properly removed to the U.S. District Court for the District
of South Carolina on Nov. 17, 2003, pursuant to Judiciary Code
section 1334 and 1452. The plaintiffs filed a motion to remand
the case to state court, but the U.S. District Court denied this
motion in an order dated Dec. 18, 2003.
The second Thaxton-related complaint, "Tom Moore, Anna Nunnery,
et al., v. FINOVA Capital Corp., Moore & Van Allen PLLC, and
Cherry, Bekaert & Holland LLP, Case No. 8:03-372413 (Moore),"
was filed in the U.S. District Court for the District of South
Carolina on Nov. 25, 2003, and was served on the company on Dec.
2, 2003.
The third complaint, "Sam Jones Wood and Kathy Annette Wood, et
al., v. FINOVA Capital Corp., Moore & Van Allen PLLC, and
Cherry, Bekaert & Holland LLP, (Wood)," was filed in the
Superior Court for Gwinnett County, Georgia, Case No. 03-A13343-
B, and was served on the company on Dec. 9, 2003. The company
properly removed the Wood action to the U.S. District Court for
the Northern District of Georgia on Jan. 5, 2004.
The fourth complaint, "Grant Hall and Ruth Ann Hall, et al., v.
FINOVA Capital Corp., Moore & Van Allen PLLC, and Cherry,
Bekaert & Holland LLP, Case No. 03CVS20572, (Hall)," was filed
in the Mecklenberg County, North Carolina, Superior Court, and
was also served on the company on Dec. 9, 2003. The company
properly removed the Hall action to the U.S. District Court for
the Western District of North Carolina on Jan. 5, 2004.
The fifth complaint, "Charles Shope, et al., v. FINOVA Capital
Corp., Moore & Van Allen PLLC, and Cherry, Bekaert & Holland
LLP, Case No. C204022 (Shope)," was filed in the U.S. District
Court for the Southern District of Ohio and was served on the
company on Jan. 13, 2004.
Each of the five Thaxton-related lawsuits are styled as class
actions, purportedly brought on behalf of certain defined
classes of people who had purchased subordinated notes from the
Thaxton Entities. The complaints by the subordinated note
holders allege claims of fraud, securities fraud, and various
other civil conspiracy and business torts in the sale of the
subordinated notes. Each of the complaints seeks an unspecified
amount of damages, among other remedies.
Upon motion by the company to the U.S. Judicial Panel for
MultiDistrict Litigation, MDL-1612, all five Thaxton-related
actions were transferred on June 18, 2004 to the U.S. District
Court for the District of South Carolina for coordinated pre-
trial proceedings. In June 2005, the South Carolina District
Court certified the MDL Litigation as a class action.
On Oct. 6, 2005, the U.S. Court of Appeals for the Fourth
Circuit issued an order granting the company's petition for
permission to appeal the order of the South Carolina District
Court certifying the class action cases and staying further
proceedings in the South Carolina District Court during the
pendency of the appeal or until the further order of the Court
of Appeals.
The Fourth Circuit heard oral arguments on the petition on Feb.
2, 2006. On March 14, 2006, the Fourth Circuit issued its
ruling, reversing the South Carolina District Court's class
certification, stating, that in light of the Adversary
Proceeding, class certification is not the superior method for
the fair and efficient adjudication of the controversy.
The suit is "In re The Thaxton Group Inc. Securities Litigation,
Case No. 8:04-cv-02612-GRA, MDL-1612," filed in the U.S.
District Court for the District of South Carolina under Judge G.
Ross Anderson, Jr.
Representing the plaintiffs are:
(1) Gilbert Scott Bagnell of Bagnell and Eason, P.O. Box
11852, Columbia, SC 29211-1852, Phone: 803-748-1333,
Fax: 803-748-1300, E-mail:
gilbagnell@bagnellandeason.com;
(2) Erica Busch and Declan Maher Butvick of Moses & Singer,
LLP, 1301 Avenue of the Americas, New York, NY 10019,
Phone: (212) 554-7879, Fax: (212) 554-7700, E-mail:
ebusch@mosessinger.com and dbutvick@mosessinger.com;
(3) Thomas E. Lydon of McAngus Goudelock and Courie, P.O.
Box 12519, Columbia, SC 29211, Phone: 803-779-2300,
Fax: 803-748-0526, E-mail: tlydon@mgclaw.com; and
(4) David Mark Rabinowitz of Buist Moore Smythe McGee, 1301
Avenue of the Americas, New York, NY 10019, Phone: 212-
554-7898, E-mail: drabinowitz@mosessinger.com.
Representing the defendants are:
(i) Allen Jackson Barnes and Elizabeth Van Doren Gray of
Sowell Gray Stepp and Laffitte, P.O. Box 11449,
Columbia, SC 29211, Phone: 803-929-1400 and 803-231-
7827, Fax: 803-929-0336 and 803-231-7877, E-mail:
jbarnes@sowell.com and egray@sowell.com; and
(ii) Daniel P. Shapiro of Goldberg Kohn Bell Black
Rosenbloom and Moritz, 55 E. Monroe Street, Suite 3700,
Chicago, IL 60603, Phone: 312-201-3963, Fax: 312-332-
2196, E-mail: daniel.shapiro@goldbergkohn.com.
GREAT EXPECTATIONS: N.Y. Customer Sues Over "Exorbitant" Fees
-------------------------------------------------------------
Mountain View, California-based Great Expectations is facing a
lawsuit in Manhattan Supreme Court over alleged exorbitant and
illegal high rates it charges customers for dating services, the
UPI Business News reports.
Lawyer Richard Altman, filed the suit on behalf of 55-year-old
Brooklyn resident, Sara Valentine, who said Great Expectations
billed her $3,990 for its services, even though state law
prevents dating services from charging individuals more than
$1,000.
The New York state "Dating Service Consumer Bill of Rights"
prevents dating services from charging individuals more than
$1,000 for their services. Further, if the service charges more
than $25 they must provide a minimum number of referrals per
month.
Ms. Valentine claimed Great Expectations ripped her off by
overcharging her by nearly $2,000, and never finding her a
boyfriend.
She seeks unspecified damages from Great Expectations and class-
action status so others who claim the company defrauded them can
get redress.
Great Expectations calls itself "the nation's premiere
destination for meeting and dating quality singles," according
to a New York Daily News report. It takes credit for getting
20,000 couples hitched in nearly 30 years.
Representing Ms. Valentine is Richard M. Altman of Pellettieri,
Rabstein & Altman, 100 Nassau Park Boulevard, Suite 111,
Princeton, NJ 08540, Phone: (609) 520-0900, Fax: (609) 452-8796.
HUTCHINSON TECHNOLOGY: Seeks Dismissal of Minn. Securities Suit
---------------------------------------------------------------
A December 2006 hearing was slated for Hutchinson Technology,
Inc.'s motion to dismiss the consolidated securities fraud class
action filed against it in the U.S. District Court for the
District of Minnesota.
The company and six of its present executive officers, two of
which are directors, were named as defendants in a Consolidated
Complaint filed by several investors on May 1, 2006.
The Consolidated Complaint purports to be brought on behalf of a
class of all persons, except the defendants, who purchased
company stock in the open market between Oct. 4, 2004 and Aug.
29, 2005.
The complaint alleges that the defendants made false and
misleading public statements about the company, and the business
and prospects, in press releases and the U.S. Securities and
Exchange Commission filings during the class period, and that
the market price of the company's stock was artificially
inflated as a result.
Additionally, the consolidated complaint also alleges claims
under Sections 10(b) and 20(a) of the U.S. Securities Exchange
Act of 1934, as amended.
It seeks compensatory damages on behalf of the alleged class in
an unspecified amount, interest, an award of attorneys' fees and
costs of litigation, and unspecified equitable/injunctive
relief.
On June 30, 2006, defendants filed a motion to dismiss the
Consolidated Complaint. Briefing on the motion is underway.
The motion is scheduled for hearing on Dec. 4, 2006.
The suit is "In re Hutchinson Technologies Securities
Litigation, Case No. 0:05-cv-02095-PJS-JJG," filed in the U.S.
District Court for the District of Minnesota under Judge Patrick
J. Schiltz with referral to Judge Jeanne J. Graham.
Representing the plaintiffs are:
(1) Mario Alba, Jr. of Lerach Coughlin Stoia Geller Rudman
& Robbins, LLP, 58 S. Service Rd., Ste. 200, Melville,
NY 11747, Phone: 631-454-7722, E-mail:
malba@lerachlaw.com;
(2) Gregg M. Fishbein of Lockridge Grindal Nauen, PLLP, 100
Washington Ave., S. Ste. 2200, Minneapolis, MN 55401-
2179, Phone: (612) 339-6900, Fax: (612) 339-0981, E-
mail: gmfishbein@locklaw.com; and
(3) Sharon M. Lee of Milberg Weiss Bershad & Schulman, LLP,
1 Pennsylvania Plaza, 48th Floor, New York, NY 10019,
US, Phone: 212-631-8605, E-mail:
smlee@milbergweiss.com.
Representing the defendants is Ahna M. Thoresen of Faegre &
Benson, LLP, 90 S. 7th St., Ste. 2200, Minneapolis, MN 55402-
3901, Phone: 612-766-7000, Fax: 612-766-1600, E-mail:
athoresen@faegre.com.
INDINA TRUST: Bill on Settling "Cobell" Put on Hold Until Fall
--------------------------------------------------------------
The U.S. Senate Indian Affairs Committee postponed consideration
of the Indian Trust Reform Act or HR 4322, a legislation that
would settle the decade-old class action, "Cobell v. Norton"
(now Cobell v. Kempthorne) that was brought by Native Americans
alleging mismanagement of American Indian money by the U.S.
Department of the Interior, according to The Jurist.
Previously, Committee chairman Sen. John McCain (R-Arizona) and
vice chairman Sen. Byron Dorgan (D-North Dakota) proposed the
legislation in 2005. The committee was supposed to complete
markup of the bill on an Aug. 2, 2006 hearing.
According to the committee officials, the hearing is postponed
for at least a month to allow more time to fine tune a
settlement. Sen. McCain specifically postponed markup until
after the summer recess.
The postponement comes as both Sen. Dorgan and Sen. McCain met
with Interior Secretary Dirk Kempthorne and Attorney General
Alberto Gonzales and obtained promises from both secretaries to
work with the committee through the recess "to produce
legislation that all parties to the Cobell litigation can live
with."
Sen. McCain pointed out that before the postponement, the very
first hearing that occurred last March regarding this issue
specifically clarified that all parties had to be committed to
reaching a settlement. Sen. Dorgan adds that it is imperative
that all sides agree to the settlement, or the case could go on
for another decade.
A summary of HR 4322 is available free of charge at:
http://researcharchives.com/t/s?f14
Case Background
Elouise Pepion Cobell, a member of the Blackfeet tribe in
Montana, filed the class action on June 10, 1996 in the U.S.
District Court for the District of Columbia. It seeks to force
the federal government to account for billions of dollars
belonging to approximately 500,000 American Indians and their
heirs, and held in trust since 1887.
Specifically, the case involves royalties for farming, grazing,
mining, logging and other economic activities on tribal lands.
It dates back to the 1880s, when the government, trying to break
up reservations, "allotted" some Indian lands, giving 40 to 160
acres to some individual Native Americans.
Back then, the government leased the lands for oil, gas, timber,
grazing and coal, and collected the fees to put into trust funds
for Indians and their survivors.
Through document discovery and courtroom testimony, the case has
revealed mismanagement, ineptness, dishonesty and delay by
federal officials, which lead a federal judge to declare their
conduct "fiscal and governmental irresponsibility in its purest
form."
As the case moved on, new revelations of false testimony,
financial misconduct and bureaucratic retaliation continued to
surface.
The purpose of the litigation is two-fold:
-- to force the government to account for the money, and
-- to bring about permanent reform of the system.
The suit is "Elouise Pepion Cobell, et al., v. Gale Norton,
Secretary of the Interior, et al., Case No. 96-1285 (RCL),"
filed in the U.S. District Court for the District of Columbia,
under Judge Royce C. Lamberth.
Representing the plaintiffs are:
(1) Mark Kester Brown, 607 14th Street, NW Washington, DC
20005-2000, Phone: (775) 542-4938, Fax: 202-318-2372,
E-mail: mkesterbrown@attglobal.net;
(2) Dennis M. Gingold, 607 14th Street, NW 9th Floor,
Washington, DC 20005, Phone: (202) 824-1448, Fax: 202-
318-2372, E-mail: dennismgingold@aol.com;
(3) Richard A. Guest and Keith M. Harper, Native American
Rights Fund, 1712 N Street, NW Washington, DC 20036-
2976, Phone: (202) 785-4166, Fax: 202-822-0068, E-mail:
richardg@narf.org or harper@narf.org; and
(4) Elliott H. Levitas, Kilpatrick Stockton, LLP, 607 14th
Street, NW Suite 900, Washington, DC 20005 Phone: (202)
508-5800, Fax: 202-508-5858, E-mail:
elevitas@kilpatrickstockton.com.
Representing the defendants are Robert E. Kirschman, Jr. and
Sandra Peavler Spooner of the U.S. Department of Justice, 1100 L
Street, NW Suite 10008, Washington, DC 20005, Phone: (202) 616-
0328, E-mail: robert.kirschman@usdoj.gov or
sandra.spooner@usdoj.gov.
For more details, contact
(1) Elouise Cobell, Blackfeet Reservation Development Fund,
Inc., PO Box 3029, 101 Pata Street, Browning, MT 59417,
E-mail: info@indiantrust.com, Web site:
http://www.indiantrust.com.
(2) The Committee on Indian Affairs, Phone: 202-224-2251,
Web site: http://indian.senate.gov;and
(3) House Resources Committee, Phone: 202-225-2761, Web
site: http://resourcescommittee.house.gov.
INTEL CORP: Ill. Court Vacates Class Certification of P4 Suit
-------------------------------------------------------------
The Illinois Appellate Court, Fifth District, vacated the Third
Judicial Circuit Court's class certification order in a consumer
fraud class action over Intel Corp.'s Pentium 4 microprocessor.
In June 2002, various plaintiffs filed a lawsuit in the Third
Judicial Circuit Court, Madison County, Illinois, against:
-- Intel Corp.,
-- Gateway Inc.,
-- Hewlett-Packard Co., and
-- HPDirect, Inc.
Plaintiffs in the suit include:
-- Barbara's Sales, Inc.,
-- Donald Braddy,
-- Michael Bundy,
-- Bundy & Associates, Inc.,
-- Rhonda Byington,
-- Rebecca S. Chandler,
-- Vernon Anthony Duenas,
-- Christopher R. Grout,
-- Deanna L. Neubauer,
-- Sandra Pyle, and
-- Richard Rodriguez.
The suit alleges that the defendants' advertisements and
statements misled the public by suppressing and concealing the
alleged material fact that systems containing Intel Pentium 4
processors are less powerful and slower than systems containing
Intel Pentium III processors and a competitor's microprocessors.
In July 2004, the court certified against Intel an Illinois-only
class of certain end-use purchasers of certain Pentium 4
processors or computers containing such microprocessors. The
court denied plaintiffs' motion for reconsideration of this
ruling.
In January 2005, the court granted a motion filed jointly by the
plaintiffs and the company that stayed the proceedings in the
trial court pending appellate review of the court's class
certification order.
On July 25, 2006, the Illinois Appellate Court, Fifth District,
vacated the Circuit Court's class certification order, and
remanded the case to the Circuit Court with instructions to
reconsider its class certification ruling applying California
law.
The plaintiffs seek unspecified damages and attorneys' fees and
costs. The company disputes the plaintiffs' claims and intends
to defend the lawsuit vigorously.
The Illinois Appellate Court's opinion is available free of
charge at:
http://researcharchives.com/t/s?f1c
The suit is "Barbara's Sales, et al. v. Intel Corp., Gateway
Inc., Hewlett-Packard Co. and HPDirect, Inc., (formerly Deanna
Neubauer, et al. v. Intel Corporation, Gateway Inc., Hewlett-
Packard Co. and HPDirect, Inc.), Docket No. No. 02-L-788," filed
in the Third Judicial Circuit Court, Madison County, Illinois.
Representing the plaintiffs are:
(1) Aaron M. Zigler and Stephen M. Tillery of Korein
Tillery, LLC, Gateway One on the Mall, 701 Market
Street, Suite 300, St. Louis, Missouri 63101-1820,
(Independent City), Phone: 314-241-4844, Fax: 314-588-
7036, Web Site: http://www.koreintillery.com;and
(2) Stephen A. Swedlow and Robert L. King of Swedlow &
King, LLC, Three First National Plaza, 70 W. Madison
Street, Suite 660, Chicago, Illinois 60603, Phone:
(312) 641-3750, Fax: (312) 641-9751.
Representing the company is Skadden, Arps, Slate, Meagher &
Flom, LLP, 333 West Wacker Drive, Chicago, Illinois 60606, (Cook
Co.), Phone: 312-407-0700, Fax: 312-407-0411, Web Site:
http://www.skadden.com.
INTEL CORP: Still Faces Trade Practices Suits in Del., Calif.
-------------------------------------------------------------
Intel Corp. remains a defendant in state and federal lawsuits in
either Delaware or California over allegations of unfair trade
practices, according to the company's Aug. 2, 2006 Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
period ended July 1, 2006.
The suits allege various consumer damages, including that
arising from paying higher prices for the company's
microprocessors.
In June 2005, Advanced Micro Devices, Inc. filed a complaint in
the U.S. District Court for the District of Delaware, alleging
that the company and its Japanese subsidiary engaged in various
actions in violation of the Sherman Act and the California
Business and Professions Code.
The complaint's allegations include providing secret and
discriminatory discounts and rebates and intentionally
interfering with prospective business advantages of AMD. It
seeks unspecified treble damages, punitive damages, an
injunction, and attorneys' fees and costs.
Subsequently, AMD's Japanese subsidiary also filed suits in the
Tokyo High Court and the Tokyo District Court against the
company's Japanese subsidiary, asserting violations of Japan's
Antimonopoly Law and alleging damages of approximately $55
million, plus various other costs and fees.
At least 78 separate class actions, generally repeating AMD's
allegations and asserting various consumer injuries, including
that consumers in various states have been injured by paying
higher prices for Intel microprocessors, have been filed in the
U.S. District Courts for the Northern District of California,
Southern District of California and the District of Delaware, as
well as in various California, Kansas and Tennessee state
courts.
The Multidistrict Litigation Panel has consolidated all the
federal class actions into District of Delaware. On the other
hand all California class actions were consolidated to the
Superior Court of California in Santa Clara County.
The company disputes AMD's claims and the class-action claims.
Based in Santa Clara, California, Intel Corp. (NASDAQ: INTC) --
http://www.intel.com/-- is a semiconductor chipmaker,
developing advanced integrated digital technology platforms for
the computing and communications industries. Its products
include chips, boards and other semiconductor components that
are the building blocks integral to computers, servers, and
networking and communications products. The company's other
products include microprocessors; chipsets; motherboards; flash
memory; wired and wireless connectivity products; communications
infrastructure components, including network processors;
application and cellular base band processors, and products for
networked storage.
INTERNATIONAL PAPER: Settles Price-Fixing Lawsuit for $12.4M
------------------------------------------------------------
International Paper Co. agreed to pay $ 12.4 million to settle a
price-fixing class suit filed against the company in 2002,
MarketWatch reports.
In 2002, a group of private landowners filed a lawsuit in the
U.S. District Court for the District of South Carolina against
International Paper alleging that the company and certain of its
fiber suppliers, known as "Quality Suppliers," engaged in an
unlawful conspiracy to artificially depress the prices at which
International Paper procures fibers for its mills. On March 31,
2004, the case was certified as a class action.
The suit seeks injunctive relief as well as treble damages and
other costs associated with the litigation.
The company denies all claims asserted in the lawsuit and
maintains its supplier program didn't violate any antitrust
laws. It agreed to the settlement to avoid further expense,
inconvenience and burden of litigation.
The settlement is subject to approval by the court in which the
action is pending. Upon approval of the proposed settlement by
the court, plaintiffs' attorneys are expected to apply for an
award of attorneys' fees and expenses.
A final hearing for court approval is set for Sept. 25.
A copy of the settlement agreement is available for free at:
http://ResearchArchives.com/t/s?f25
The suit is "Crane, et al. v. Intl Paper Co, et al., Case No.
3:02-cv-03352-CMC," filed in the U.S. District Court for the
District of South Carolina under Judge Cameron M. Currie.
Representing the plaintiffs are:
(1) Jacquelyn Lee Bartley of Jacquelyn L Bartley Law
Office, PO Box 11896, Columbia, SC 29211, Phone: 803-
376-1260, Fax: 803-376-1557, E-mail:
jlbartley@bellsouth.net; and
(2) Russell Thomas Burke and John F Emerson both of Nexsen
Pruet Jacobs and Pollard, PO Drawer 2426, Columbia, SC
29202, Phone: 803-771-8900, Fax: 803-253-8277, E-mail:
rburke@nexsenpruet.com or jemerson@nexsenpruet.com.
Representing the defendants are:
(1) Kevin Kendrick Bell of Robinson McFadden and Moore, PO
Box 944, Columbia, SC 29202, Phone: 803-779-8900, Fax:
803-252-0724, E-mail: kbell@robinsonlaw.com;
(2) Craig Thomas Cronheim of Hogan and Hartson, Columbia
Square, 555 13th Street NW, Suite 12W-303, Washington,
DC 20004-1109, Phone: 202-637-6853;
(3) Paul Madison Eckles of Skadden Arps Slate Meagher and
Flom, Four Times Square, New York, NY 10036, Phone:
212-735-3000, E-mail: pmeckles@skadden.com; and
(4) Andrew Kenneth Epting, Jr. of Pratt-Thomas Pearce
Epting and Walker, PO Box 22247, Charleston, SC 29413-
2247, Phone: 843-727-2207, Fax: 843-727-2236, E-mail:
ake@wiselaw.com.
IRWIN UNION: "White" Plaintiffs Enter Arbitration for Md. Case
--------------------------------------------------------------
Plaintiffs in the purported class action, "White et al. v. Irwin
Union Bank and Trust Co., et al.," initiated class arbitration
with the American Arbitration Association with regards to their
case.
On Jan. 5, 2006, the two subsidiaries of Irwin Financial Corp. -
- Irwin Union Bank and Trust Co. and Irwin Home Equity Corp. --
were named as defendants in a suit filed in the Circuit Court
for Baltimore City, Maryland.
Plaintiffs allege that the defendants charged or caused
plaintiffs to pay certain fees, costs and other charges that
were excessive or illegal under Maryland law in connection with
loans made to plaintiffs by the defendants.
They seek certification of a class consisting of Maryland
residents who received mortgage loans from Irwin secured by real
property in the State of Maryland and who claim injury due to
Irwin's lending practices.
In addition, plaintiffs are seeking damages under the Maryland
Mortgage Lending Laws and the Maryland Consumer Protection Act
for, among others:
-- relief from further interest payments on their loans;
-- reimbursement of interest, charges, fees and costs
already paid, including prepayment penalties paid by
the class;
-- and damages of three times the amount of all allegedly
excessive or illegal charges paid; and
-- plus attorneys' fees, expenses and costs.
In the alternative, the plaintiffs seek arbitration as provided
for in their mortgage notes.
On Feb. 17, 2006, defendants filed a notice of removal and
removed the case from state to the U.S. District Court for the
District of Maryland.
On March 17, 2006 the plaintiffs filed a motion to remand the
action back to state court and also filed an amended complaint
emphasizing the alleged state law basis for their claims.
The company believes, however, that the plaintiffs' state law
claims are completely preempted by Section 27 of the Federal
Deposit Insurance Corp. Act.
On April 24, 2006, the plaintiffs initiated class arbitration
with the American Arbitration Association, according to the
company's Aug. 1, 2006 Form 10-Q filing with the U.S. Securities
and Exchange Commission for the period ended June 30, 2006.
The suit is "White et al v. Irwin Union Bank and Trust Co., et
al., Case No. 1:06-cv-00429-JFM," filed in the U.S. District
Court for the District of Maryland under Judge J. Frederick
Motz.
Representing the plaintiffs is John A. Pica, Jr. of Law Offices
of Peter G. Angelos, PC, 100 N. Charles St., 20th Fl.,
Baltimore, MD 21201, Phone: 14106492000, Fax: 14106492150, E-
mail: johnpica28@hotmail.com.
Representing the defendants is John Preston Turner of Pope and
Hughes, PA, 29 W. Susquehanna Ave., Ste. 110, Towson, MD 21204,
Phone: 14104947777, Fax: 14104941658, E-mail:
jpturner@popehughes.com.
LANDAMERICA FINANCIAL: Units Settle Homeowners' Suit for $10.3M
---------------------------------------------------------------
Certain subsidiaries of LandAmerica Financial Group, Inc.
settled a consolidated class action filed by homeowners in the
U.S. District Court for the Eastern District of Michigan.
On May 9, 2000, Romeo Jergess filed a putative class action,
Case No. 00-72124, against Transnation Title Insurance Co., a
subsidiary of LandAmerica Financial Group, Inc.
The suit alleged that Transnation's rate for an owner's title
insurance policy, charged in accordance with rates for new
construction filed with the Insurance Bureau of the State of
Michigan, were less than the rate paid by the lender for a
simultaneously issued lender's title insurance policy, and that
the lower rate paid by the builder/developer for the owner's
policy involved an illegal kickback for a referral and an
illegal splitting of fees in violation of the Real Estate
Settlement Procedures Act.
On April 27, 2001, a similar suit was filed by Elaine Miller in
the same court, Case No. 01-71647, against Lawyers Title
Insurance Corp., a subsidiary of LandAmerica.
Plaintiffs in both suits sought an unspecified amount of damages
equal to three times the amount of the charge for each
simultaneously issued lender's title insurance policy in
connection with a new home purchase commencing with the period
one year before the filing of each complaint, plus costs,
interest and attorneys' fees.
Transnation and Lawyers Title engaged a forensic accountant to
review plaintiffs' estimate that the charges collected for such
policies by Transnation and Lawyers Title from the class as
originally defined was approximately $15.0 million.
The Jergess suit and the Miller suit were consolidated on July
18, 2002 with cases pending against First American Title
Insurance Co. and Chicago Title Insurance Co.
On Dec. 5, 2002, the court certified a class defined as all
individuals who, during the period commencing prior to one year
of the filing of the applicable suit and ending on Oct. 30,
2002, purchased a newly constructed one to four family dwelling
or condominium and were charged for a lender's title insurance
policy allegedly in violation of RESPA.
On Feb. 12, 2003, the U.S. Court of Appeals for the Sixth
Circuit denied Transnation's and Lawyers Title's petitions for
an interlocutory appeal of the class certification order.
On Oct. 30, 2003, the judge ordered that individuals otherwise
meeting the class definition, but who closed transactions
involving relevant policies between Oct. 31, 2002 through Oct.
30, 2003, would not be subject to a statute of limitations
defense raised by Transnation Title or Lawyers Title between
Oct. 30, 2003 and Oct. 31, 2004.
On Oct. 28, 2004, Transnation and Lawyers Title stipulated to an
order that individuals otherwise meeting the class definition,
but who closed transactions involving relevant policies between
Oct. 31, 2002 through Oct. 30, 2004, would not be subject to a
statute of limitations defense raised by Transnation or Lawyers
Title between Oct. 30, 2004 and Oct. 31, 2005.
The court reserved a decision on a motion to proceed to trial
with the certified class as originally defined. On Jan. 13,
2005, the court denied Transnation's and Lawyers Title's motion
to dismiss the case for lack of standing.
On Feb. 7, 2005, the court dismissed without prejudice
Transnation's and Lawyers Title's Motion for Partial Summary
Judgment with respect to those members of the class covered by
the affiliated business exception under RESPA with the court
indicating that the parties could resubmit the motion with
additional information.
On April 21, 2005, Transnation and Lawyers Title filed various
Motions for Summary Judgment and Limine with respect to multiple
issues. The parties participated in non-binding mediation
beginning May 3, 2005.
On May 19, 2005, Transnation and Lawyers Title entered into a
binding term sheet to settle the consolidated suits. The
parties entered into a final settlement agreement incorporating
the provisions of the term sheet on Feb. 8, 2006.
The settlement agreement provides for the dismissal with
prejudice of all claims by plaintiffs against Transnation and
Lawyers Title and a release of all claims by plaintiffs except
claims under their title policies.
The court granted Motions for Preliminary Approval on Feb. 10,
2006. A final fairness hearing was held on May 16, 2006.
The settlement was approved and no appeal was filed. Pursuant
to the Settlement Agreement, Transnation and Lawyers Title, who
did not admit any liability in the settlement, made a single
aggregate payment of $10.3 million out of an established reserve
into a settlement fund established for the benefit of eligible
class members.
The suit is "Jergess v. Transnation Title, et al., Case No.
2:00-cv-72124-AC," filed in the U.S. District Court for the
Eastern District of Michigan under Judge Avern Cohn.
Representing the plaintiffs are:
(1) Jeffrey A. Yellen, 37000 Grand River Avenue, Suite 300,
Farmington Hills, MI 48335, Phone: 248-473-0001, E-
mail: jeffyellen@ntlmj.com;
(2) Patrick J. Bruetsch, Bruetsch Assoc., 401 S. Old
Woodward Avenue, Suite 400, Birmingham, MI 48009,
Phone: 248-646-1114, E-mail: pbruetsch@aol.com; and
(3) Timothy K. McConaghy, Hardy, Lewis, 401 S. Old Woodward
Avenue, Suite 400, Birmingham, MI 48009-6629, Phone:
248-645-0800, E-mail: tkm@hardylewis.com.
Representing the company is Francis R. Ortiz of Dickinson
Wright, 500 Woodward Avenue, Suite 4000, Detroit, MI 48226-3425,
Phone: 313-223-3500, E-mail: fortiz@dickinson-wright.com.
LEVEL 3: K&T Reminds Investors of Aug. 31 Opt-Out Deadline
----------------------------------------------------------
The securities arbitration law firm of Klayman & Toskes, P.A.
reminds all customers who acquired stocks of Level 3
Communications, Inc. and are eligible to participate in the
settlement of the Salomon Analyst Level 3 Litigation, Case No.
02-6919 that they have until Aug. 31, 2006 to opt-out of the
class.
The case was brought on behalf of all persons, entities,
beneficiaries or participants in any entities who, from Jan. 4,
1999 through June 18, 2001, purchased or otherwise acquired
shares of Level 3 Communications, Inc. common stock by any
method, including but not limited to in the second market, in
exchange for shares of acquired companies pursuant to a
registration statement or through the exercise of options
including options acquired pursuant to employee stock plans
(Class Action Reporter, July 17, 2006).
The proposed settlement concerns claims asserted by lead
plaintiffs in this consolidated class action against defendants:
-- Citigroup Inc.,
-- Citigroup Global Markets Inc., formerly Salomon Smith
Barney Inc., and
-- Jack Benjamin Grubman
As part of the settlement of the class action, Smith Barney has
agreed to pay the class $10.25 million. However, Klayman &
Toskes said this amount represents only a fraction of Level 3's
market capital losses, which were in excess of $30 billion
during the class period of Jan. 4, 1999 through June 18, 2001.
Empirical evidence shows that investors may achieve an overall
higher rate of recovery by filing an individual securities
arbitration claim, it said.
According to the allegations in the class action, Smith Barney
issued material misstatements and omissions regarding Level 3
research reports, and failed to disclose conflicts of interest
which artificially inflated the price of Level 3.
Case Background
Beginning August 2002, at least seven putative class actions
were filed in the U.S. District Court for the Southern District
of New York against the defendants, alleging violations of
Section 10(b) of the U.S. Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder and Section 20(a) of the
Exchange Act on behalf of purchasers of shares of Level 3 common
stock between Jan. 4, 1999 through June 18, 2001.
By Order dated Jan. 24, 2003, the court consolidated these
actions as "In re Salomon Analyst Level 3 Litigation, Case No.
02 Civ. 6919 (GEL)."
On March 20, 2003, the court appointed lead plaintiffs pursuant
to the Private Securities Litigation Reform Act of 1995, 15
U.S.C. Section 78u-4(a)(3)(B), and approved lead plaintiffs'
selection of Weiss & Lurie and Beatie and Osborn LLP as lead
counsel.
On Oct. 15, 2003, lead plaintiffs filed a consolidated amended
class action complaint alleging that defendants violated
Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of
1934, and Rule 10b-5 promulgated thereunder, by publishing false
and misleading analyst reports concerning Level 3.
Following arms-length negotiations between the parties, the
parties entered into a Stipulation of Settlement dated May 5,
2006.
The hearing will be held before the Honorable Gerard E. Lynch,
on Sept. 29, 2006 at 10:30 a.m., at the U.S. Courthouse, 500
Pearl St., Room 2103, New York, NY 10007.
For more information on class members' legal options, contact
Lawrence L. Klayman, Esquire, or Jahan K. Manasseh, Esquire,
both of Klayman & Toskes, Phone: 888-997-9956, Web site:
http://www.nasd-law.com.
MTD SOUTHWEST: Recalls Weed Trimmers to Correct Blade Attachment
----------------------------------------------------------------
MTD Southwest Inc., of Tempe, Arizona, in cooperation with the
U.S. Consumer Product Safety Commission, is recalling about
20,000 units of Troy-Bilt 4-Cycle gasoline string trimmers.
The company said the blade that trims the excess string of these
weed trimmers can detach from the plastic shield covering the
trimmer head. The blade can be thrown outward, hitting the user
or bystander, resulting in a laceration. No injuries were
reported.
A 4-cycle gasoline engine powers the recalled handheld string
trimmer. The trimmer functions to cut grass or weeds through
the use of a spinning yellow trimmer head containing a spool of
orange filament line. Model numbers TB425CS and TB525CS and
"Troy-Bilt" are printed on the body of the muffler housing.
These string trimmers were manufactured in Mexico and are being
sold at Lowe's stores nationwide from January 2006 through March
2006 for about $170.
Picture of the recalled string trimmer:
http://www.cpsc.gov/cpscpub/prerel/prhtml06/06570.jpg
Consumers are advised to stop using the trimmers immediately and
contact Troy-Bilt for a free repair. Lowe's will mail free
repair kits with instruction to owners of registered equipment
directly.
For additional information, contact Troy-Bilt toll-free at (888)
848-6038 between 8 a.m. and 4:30 p.m. CT Monday through Friday
or visit http://www.troybilt.com.
NICOR ENERGY: Ill. Court Denies Class Motion for Consumer Suit
--------------------------------------------------------------
The Circuit Court of Cook County, Illinois denied plaintiffs
motion for class certification in a lawsuit against Nicor Energy
Services Co. over its fixed bill service.
On April 29, 2003, a second amended purported class action
complaint was filed in the Circuit Court of Cook County,
Illinois against Nicor Energy, alleging violation of the
Illinois Consumer Fraud Act by the company relating to the fixed
bill service offered by Nicor Services.
Nicor Services offered a fixed bill product under which it paid
the annual gas service portion of a customer's Nicor Gas Co.
utility bill in exchange for twelve equal monthly payments by
the customer to Nicor Services, regardless of changes in the
price of natural gas or weather.
The plaintiff sought compensatory damages, prejudgment and
postjudgment interest, punitive damages, attorneys' fees and
injunctive relief on behalf of a proposed class consisting of
all purchasers of the fixed bill service from Feb. 1, 2002
through Dec. 31, 2002.
On Oct. 7, 2005, the Circuit Court denied plaintiffs' motion to
certify the proposed class. As a result, if the case proceeds
in the Circuit Court, it will be as an individual action on
behalf of the named plaintiff alone. The class certification
decision remains subject to appeal.
Nicor on the Net: http://www.nicor.com/.
NICOR GAS: Settles Property Owners Suit Over Ill. Plant Cleanup
---------------------------------------------------------------
A settlement was reached in class actions filed in the Circuit
Court of Cook County, Illinois against Nicor Gas Co. and others
that claims ongoing cleanup of a former manufactured gas plant
site in Oak Park, Illinois is inadequate.
In December 2001, a purported class action was filed against
Exelon Corp., Commonwealth Edison Co. and the company. Since
then, additional lawsuits have been filed related to this same
former manufactured gas plant site.
These lawsuits seek, in part, unspecified damages for property
damage, nuisance, and various personal injuries that allegedly
resulted from exposure to contaminants allegedly emanating from
the site, and punitive damages.
An agreement in principle to settle the purported class action
has been reached and, as of June 30, 2006, the company has
recorded a $2.25 million liability in connection with this
matter.
For more details, visit http://www.nicor.com/.
PHILIP MORRIS: "Light" Cigarettes Suit Rehearing Set Sept. 13
-------------------------------------------------------------
The U.S. District Court for the Eastern District of New York has
postponed a hearing in the class action, "McLaughlin v. Philip
Morris USA, Inc. et al." until Sept. 13, the AFX News reports.
The hearing was originally set Aug. 14.
Lead plaintiff Barbara Schwab alleged in the suit that cigarette
manufacturers violated the Racketeer Influenced & Corrupt
Organizations Act by conspiring to mislead smokers into thinking
light cigarettes were safer than regular smokes when the
companies knew otherwise.
Named defendants in the suit are:
-- Altria Group Inc.,
-- Philip Morris USA, Inc.,
-- Brown & Williamson Tobacco Corp, and
-- R.J. Reynolds Tobacco Co.
If Judge Weinstein certifies the case, the cigarette companies
will be able to appeal his decision to the Second Circuit Court
of Appeals in New York, according to the report.
The suit is "McLaughlin v. Philip Morris USA, Inc. et al., Case
No. 1:04-cv-01945-JBW-SMG," filed in the U.S. District Court for
the Eastern District of New York under Judge Jack B. Weinstein,
with referral to Judge Steven M. Gold.
Representing the defendants are:
(1) Mark A. Belasic of Jones, Day, 901 Lakeside Avenue,
North Point, Cleveland, OH 44114, Phone: (216) 586-
3939, Fax: 216-579-0212, E-mail:
mabelasic@jonesday.com;
(2) Peter A. Bellacosa of Kirkland & Ellis, Citigroup
Center, 153 East 53rd Street, New York, NY 10022-4675,
Phone: (212) 446-4800, Fax: (212) 446-4900, E-mail:
peter_bellacosa@ny.kirkland.com; or David M. Bernick of
Kirkland & Ellis, 200 East Randolph Drive, Chicago, Il
60601, Phone: (312) 861-2148;
(3) Judith Bernstein-Gaeta of Arnold & Porter, 555 Twelfth
Street, N.W., Washington, D.C. 20004, Phone: (202) 942-
5000, E-mail: judith_bernstein-gaeta@aporter.com; or
Anthony D. Boccanfuso of Arnold & Porter, 399 Park
Avenue, New York, NY 10022, Phone: (212) 715-1000, Fax:
212-715-1399, E-mail: anthony_boccanfuso@aporter.com;
and
(4) Frances Bivens of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, NY 10017, Phone: 212-450-4000.
Representing the plaintiffs are Benjamin D. Brown of Cohen,
Milstein, Hausfeld & Toll, P.L.L.C, 1100 New York Avenue N.W.
West Tower, Suite 500, Washington, DC 20005; and William P.
Butterfield of Finkelstein Thompson & Loughran, 1050 30th
Street, NW, Washington, DC 20007, Phone: 202-337-8000, Fax: 202-
337-8090, E-mail: wpb@ftllaw.com.
RAY'S WHOLESALE: Recalls Ground Beef for E. Coli Contamination
--------------------------------------------------------------
Ray's Wholesale Meats of White, Georgia, in cooperation with the
U.S. Department of Agriculture's Food Safety and Inspection
Service, is voluntarily recalling approximately 120 pounds of
ground beef that may be contaminated with E. coli O157:H7.
The ground beef are in 10-pound packages of "Ray's Wholesale
Meats, Ground Beef, Net Wt. 10 lbs." Each package bears the
establishment number "Est. 27504" inside the USDA mark of
inspection and the production date, "July 25, 2006."
The problem was discovered through routine FSIS microbiological
testing. FSIS has received no reports of illnesses associated
with consumption of this product.
The ground beef was produced on July 25 and was distributed to
retail establishments in Georgia.
E. coli O157:H7 is a potentially deadly bacterium that can cause
bloody diarrhea and dehydration. The very young, seniors and
persons with compromised immune systems are the most susceptible
to foodborne illness.
Consumers and media with questions about the recall should
contact company Warehouse Manager Bo Mulkey at (770) 382-1604.
RENAISSANCERE HOLDINGS: Seeks Dismissal of N.Y. Securities Suit
---------------------------------------------------------------
RenaissanceRe Holdings Ltd. filed a motion to dismiss the
consolidated securities class action filed with in the U.S.
District Court for the Southern District of New York against the
company and certain of its present and former executive officers
and directors.
Beginning in July 2005, seven putative class actions were filed
against the defendants. In December 2005, these actions were
consolidated and in February 2006, the plaintiffs filed a
Consolidated Amended Complaint, purportedly on behalf of all
persons who purchased and/or acquired the publicly traded
securities of the company between Apr. 22, 2003 and Jul. 25,
2005.
The Consolidated Amended Complaint names as defendants in
addition to the company, current and former officers of the
company as defendants. It alleges that the company and the
other named defendants violated the U.S. federal securities laws
by making material misstatements and failing to state material
facts about the company's business and financial condition in,
among other things, U.S. Securities and Exchange filings and
public statements.
In March 2006, the defendants notified the court of their
intention to move to dismiss the Consolidated Amended Complaint.
In June 2006, the defendants filed motions to dismiss the
Consolidated Amended Complaint.
The suit, which is at an early stage, seeks unspecified
compensatory damages.
The suit is "In re RenaissanceRe Holdings Ltd. Securities
Litigation, No. 05-Civ.-6764 (WHP)," filed in the U.S. District
Court for the Southern District of New York under Judge William
H. Pauley, III.
Representing the plaintiffs are:
(1) Samuel Howard Rudman of Lerach, Coughlin, Stoia,
Geller, Rudman & Robbins, LLP, 58 South Service Road,
Suite 200, Melville, NY 11747, Phone: 631-367-7100,
Fax: 631-367-1173, E-mail: srudman@lerachlaw.com; and
(2) Christopher J. Keller of Labaton Rudoff & Sucharow,
LLP, 100 Park Avenue, 12th Floor, New York, NY 10017,
Phone: (212) 907-0853, Fax: (212) 883-7053, E-mail:
ckeller@labaton.com.
Representing the defendants is Steven Robert Paradise of Vinson
& Elkins, L.L.P., 666 Fifth Avenue, 26th Floor, New York 10103,
Phone: (917) 206-8000, Fax: (917) 849-5338, E-mail:
sparadise@velaw.com.
UNITED STATES: Milberg Weiss Files Fewer Cases After Indictment
---------------------------------------------------------------
Milberg Weiss Bershad & Schulman, LLP's recent federal
indictment is affecting its ability to bring fraud cases
especially on class action in general, according to Reuters.
Since the May 18 indictment of the firm and partners David J.
Bershad and Steven G. Schulman by a federal grand jury for
allegedly paying kickbacks to plaintiffs in more than 150 class
actions and shareholder derivative lawsuits, Milberg Weiss has
lost many attorneys and even some clients.
Though the indictment does not stop Milberg Weiss from
practicing law, a tally of its press releases on Business Wire
and PRNewswire indicated that in 2006, the firm only filed 17
class actions.
The numbers are in contrast to the 36 cases Milberg Weiss filed
in the second half of 2005 and 55 in the first half. The firm
has also announced no new lawsuits since the indictment.
The decline mirrors a drop in federal class actions. A study by
Cornerstone Research revealed that law firms filed 61 such cases
from January to June, the slowest pace in a decade. That is
down from 68 in last year's second half and 111 in the first
half.
Despite the decline, Cheryl Evans, special counsel to the U.S.
Chamber Institute for Legal Reform, told Reuters that the drop
in Cornerstone's data seems to be attributed to the decline in
Milberg cases, but they presume that the number of cases will go
back up.
In an e-mail to Reuters, Marina Ein, a Milberg Weiss
spokeswoman, acknowledged that the firm is cutting back. But,
she pointed out that the decline in securities class action
filings is being felt throughout the plaintiffs' bar.
Ms. Ein also pointed that the law firm is aggressively
prosecuting a number of large and important cases, thus it is
being more selective in its selection of new cases. She adds
that the pending indictment has also had an impact on this
decision-making process.
According to its Web site, Milberg Weiss has 75 lawyers, down
from the 125 it said it had when it was indicted. The firm
closed its Wilmington, Delaware, office and plans next month to
shut its Boca Raton, Florida, office. Ms. Ein though declined
to specify how many lawyers have departed.
Aside from losing some of its attorneys, Milberg Weiss is also
reportedly losing choice assignments:
-- A federal judge in Manhattan last month replaced it as
lead counsel in a case against Bayer A.G. over the
cholesterol drug Baycol after the named plaintiff, the
New York State Common Retirement Fund, said it would
not employ the firm;
-- In June, a federal judge in Minnesota cited the
indictment in removing Milberg Weiss as lead counsel in
a case against Medtronic Inc., which makes heart
defibrillators.
In spite of those setbacks, Milberg Weiss still manage to have
some assignments. One of them was a New York state judge
decision in July that allowed the firm to serve as co-lead
counsel in a case against software company Comverse Technology
Inc. over the alleged backdating of stock options.
In that case, Manhattan Supreme Court Justice Richard Lowe ruled
that the credentials of all proposed counsel, including Milberg
Weiss, are outstanding. He added in a footnote that the court
stresses that unless and until Milberg Weiss is found guilty for
the actions upon which it has been indicted, the presumption of
innocence is binding here.
The first superseding indictments against company and its
executives were for alleged conspiracy, racketeering conspiracy,
mail fraud, money laundering conspiracy, money laundering,
subscribing to false tax return, obstruction of justice, aiding
and abetting and causing an act to be done, and criminal
forfeiture. A copy of the indictment is at:
http://researcharchives.com/t/s?dfc.
Also charged in the indictment are Seymour M. Lazar, who is
alleged to have served as a paid plaintiff and attorney Paul T.
Selzer, who is alleged to have been one of the intermediary
lawyers who laundered illegal kickback payments for the benefit
of Mr. Lazar. The indictment also names as co-conspirators,
paid plaintiff Steven G. Cooperman of Connecticut, and Howard J.
Vogel of Aventura, Florida.
In July, Milberg Weiss, Mr. Schulman and Mr. Bershad pleaded not
guilty to the charges filed against them. Mr. Lazar and Paul T.
Selzer also pleaded not guilty.
In May, Los Angeles, California attorney Richard R. Purtich pled
guilty to a felony tax offense in connection with his
participation in an alleged kickback scheme.
For more details, visit http://www.milbergweiss.com.
WYOMING: Lawsuit Filed Over 1993 Law on Injured Workers Benefits
----------------------------------------------------------------
The Worker's Safety and Compensation Division faces a purported
class action in the U.S. District Court for the District of
Wyoming that challenges a state law on injured workers benefits,
according to The Star Tribune.
Filed by Richard and Ida Johnson on Aug. 1, 2006, the suit
claims that the denial of extended benefits to the plaintiffs
because his/her household income exceeds expenses, violates
their constitutional rights and those of other injured workers
in the same situation.
Essentially, the lawsuit seeking to declare unconstitutional a
1993 law that allows the state to consider all household income
in determining eligibility for extended workers compensation
benefits.
In addition to declaring the 1993 law unconstitutional the
lawsuit asks the federal court for damages and to allow the
Johnsons and others in their class to receive retroactive
benefits.
Named as defendants in the suit are:
-- Wyoming Department of Employment Director;
-- Wyoming Workers Safety and Compensation Division
Administrator;
-- Wyoming Workers Safety and Compensation Division
Assistant Administrator;
-- Wyoming Workers Safety and Compensation Division Claims
Manager; and
-- Wyoming Workers Safety and Compensation Division Claims
Analyst.
According to the lawsuit, in 1989, the Social Security
Administration found Mr. Johnson to be permanently and totally
disabled from a 1984 workplace accident. In 1993, the state's
worker's compensation division awarded him permanent total
disability benefits.
Mr. Johnson continued to receive the benefits up until 1997,
which was when the state agency denied his claim for extended
benefits. In denying Mr. Johnson's benefits, the agency cited
his wife's income, coupled with his Social Security income had
exceeded the allowed amount.
In 1997, the suit stated that the agency developed a rule to
allow consideration of a spouse's income in determining an
injured worker's entitlement to extended disability benefits.
But, after a contested hearing on Oct. 9, 1997, where injured
workers, including Mr. Johnson, protested, the division backed
off and pulled the rule.
Then in the 1998 budget session, the Legislature passed a law
clarifying its intent that spousal or other household income is
not be considered in determining an injured worker's entitled to
extended permanent total disability benefits.
Mr. Johnson, according to the lawsuit, continued to receive
extended benefits until Sept. 27, 2005, when a claims analyst
with the Wyoming Workers' Safety and Compensation Division
denied his claims on grounds that the 1993 law applied to his
case.
Basically, the division found his household income exceeded his
combined household expenses making him ineligible for the
benefits.
On July 6, 2006, a hearing examiner pointed out that Mr.
Johnson's combined income in 2005 was $4,863 per month -- $1,076
for Mr. Johnson and $3,787 income for his wife. The examiner
reportedly found nothing in the 1998 state law that requires the
change excluding spousal income to be applied retroactively.
The suit is "Johnson, et al. v. Wyoming Department of Employment
Director, et al., Case No. 2:06-cv-00194-ABJ," filed in the U.S.
District Court for the District of Wyoming under Judge Alan B.
Johnson with referral to Judge William C. Beaman.
Representing the plaintiffs is George Santini of Ross Ross &
Santini, 307 East 18th Street, Cheyenne, WY 82001, Phone: 307-
632-8957, Fax: 307-632-8960, E-mail: george@ross-santini.com.
Meetings, Conferences & Seminars
* Scheduled Events for Class Action Professionals
-------------------------------------------------
September 18-19, 2006
NATIONAL ASBESTOS LITIGATION CONFERENCE
Mealeys Seminars
The Ritz-Carlton Hotel (Arlington St.), Boston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 20, 2006
ASBESTOS INSURANCE CONFERENCE
Mealeys Seminars
The Ritz-Carlton Hotel (Arlington St.), Boston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 20, 2006
INSURANCE CONTRACT WORDING CONFERENCE
Mealeys Seminars
The Rittenhouse Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 21-22, 2006
BAD FAITH LITIGATION CONFERENCE
Mealeys Seminars
The Rittenhouse Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 21-22, 2006
EMINENT DOMAIN CONFERENCE
Mealeys Seminars
The Ritz-Carlton, Marina del Rey, CA
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 26-27, 2006
REINSURANCE ARBITRATION
American Conference Institute
New York
Contact: https://www.americanconference.com; 1-888-224-2480
September 27-28, 2006
CONSUMER FINANCE CLASS ACTIONS & LITIGATION
American Conference Institute
New York
Contact: https://www.americanconference.com; 1-888-224-2480
September 27-28, 2006
CLINICAL TRIALS
American Conference Institute
Boston
Contact: https://www.americanconference.com; 1-888-224-2480
September 28-30, 2006
LITIGATING MEDICAL MALPRACTICE CLAIMS
ALI-ABA
Boston
Contact: 215-243-1614; 800-CLE-NEWS x1614
September 28-29, 2006
INSURANCE & REINSURANCE CORPORATE COUNSEL CONFERENCE
Mealeys Seminars
The Rittenhouse Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 12-13, 2006
MASS TORTS MADE PERFECT SEMINAR
Mass Torts Made Perfect
Wynn, Las Vegas, Nevada
Contact: 1-800-320-2227; 850-916-1678
October 4-5, 2006
CHEMICAL PRODUCTS LIABILITY LITIGATION
American Conference Institute
Chicago
Contact: https://www.americanconference.com; 1-888-224-2480
October 5-7, 2006
LEXISNEXIS PRACTICE MANAGEMENT CIC CONFERENCE
Mealeys Seminars
Ballantyne Resort, Charlotte, NC
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 11, 2006
CORPORATE E-DISCOVERY CONFERENCE
Mealeys Seminars
The Ritz-Carlton, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 16-17, 2006
WATER CONTAMINATION CONFERENCE
Mealeys Seminars
The Fairmont Miramar Hotel, Santa Monica, CA
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 19-20, 2006
INSURANCE COVERAGE DISPUTES CONCERNING CONSTRUCTION DEFECTS
Mealeys Seminars
Caesar's Palace, Las Vegas
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 25-26, 2006
WAGE & HOUR CLAIMS & CLASS ACTIONS
American Conference Institute
San Francisco
Contact: https://www.americanconference.com; 1-888-224-2480
October 25-26, 2006
DERIVATIVES BOOT CAMP
American Conference Institute
New York
Contact: https://www.americanconference.com; 1-888-224-2480
October 26-27, 2006
EMERGING DRUGS & PREEMPTION CONFERENCE
Mealeys Seminars
Hyatt Regency, Chicago
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 31-November 1, 2006
EXIT STRATEGIES FOR THE INSURANCE MARKETPLACE CONFERENCE
Mealeys Seminars
The Jurys Great Russell Street Hotel, London, UK
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 1-2, 2006
INTERNATIONAL ASBESTOS CONFERENCE
Mealeys Seminars
The Jurys Great Russell Street Hotel, London, UK
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 2-3, 2006
LONG TERM CARE LITIGATION
American Conference Institute
Miami
Contact: https://www.americanconference.com; 1-888-224-2480
November 9-10, 2006
BAD FAITH AND PUNITIVE DAMAGES
American Conference Institute
Miami
Contact: https://www.americanconference.com; 1-888-224-2480
November 16-17, 2006
CONFERENCE ON LIFE INSURANCE COMPANY PRODUCTS: CURRENT
SECURITIES, TAX, ERISA, AND STATE REGULATORY AND COMPLIANCE
ISSUES
ALI-ABA
Washington, D.C.
Contact: 215-243-1614; 800-CLE-NEWS x1614
November 30-December 1, 2006
ASBESTOS LITIGATION IN THE 21ST CENTURY
ALI-ABA
New Orleans
Contact: 215-243-1614; 800-CLE-NEWS x1614
December 4-5, 2006
BENZENE LITIGATION CONFERENCE
Mealeys Seminars
The Ritz-Carlton Battery Park, New York
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 13-15, 2006
DRUG AND MEDICAL DEVICE LITIGATION
American Conference Institute
New York
Contact: https://www.americanconference.com; 1-888-224-2480
March 2007
MASS TORTS MADE PERFECT SEMINAR
Mass Torts Made Perfect
Loews Hotel, Miami, Florida
Contact: 1-800-320-2227; 850-916-1678
May 3-4, 2007
Accountants' Liability CM076
ALI-ABA
Boston
Contact: 215-243-1614; 800-CLE-NEWS x1614
* Online Teleconferences
------------------------
August 1-30, 2006
HBA PRESENTS: AUTOMOBILE LITIGATION: DISPUTES AMONG
CONSUMERS, DEALERS, FINANCE COMPANIES AND FLOORPLANNERS
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
August 1-30, 2006
CONSTRUCTION DISPUTES: TEXAS RESIDENTIAL CONSTRUCTION DEFECT
LIABILITY
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
August 1-30, 2006
HBA PRESENTS: ETHICS IN PERSONAL INJURY
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
August 1-30, 2006
IN-HOUSE COUNSEL AND WRONGFUL DISCHARGE CLAIMS:
CONFLICT WITH CONFIDENTIALITY?
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
August 1-30, 2006
BAYLOR LAW SCHOOL PRESENTS: 2004 GENERAL PRACTICE INSTITUTE --
FAMILY LAW, DISCIPLINARY SYSTEM, CIVIL LITIGATION, INSURANCE
& CONSUMER LAW UPDATES
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
August 1-30, 2006
HBA PRESENTS: "HOW TO CONSTRUE A CONTRACT IN BOTH CONTRACT AND
TORT CASES IN TEXAS"
CLEOnline.Com
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August 1-30, 2006
CONSTRUCTION DISPUTES: TEXAS RESIDENTIAL CONSTRUCTION DEFECT
LIABILITY
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August 9, 2006
ATTORNEY ADVERTISING
Mealeys Seminars
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
August 9, 2006
HEARING LOSS CLAIMS
Mealeys Seminars
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mealeyseminars@lexisnexis.com
August 10, 2006
CONCRETE LITIGATION
Mealeys Seminars
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mealeyseminars@lexisnexis.com
August 10, 2006
SULFATES LITIGATION
Mealeys Seminars
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August 10, 2006
INTERNATIONAL TRADE & ARBITRATION
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August 15, 2006
VAPOR INTRUSION - ADDRESSING CONTAMINATION THAT WON'T GO AWAY
Mealeys Seminars
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August 16, 2006
INVESTIGATIONS INTO FRAUDULENT ASBESTOS & SILICA CLAIMS
Mealeys Seminars
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mealeyseminars@lexisnexis.com
August 17, 2006
EMERGING DRUGS AND DEVICES
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September 13, 2006
PROPOSITION 64/17200
Mealeys Seminars
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September 15, 2006
HOW TO GET ON AN MDL COMMITTEE
Mealeys Seminars
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October 17, 2006
PROFESSIONAL DEVELOPMENT TELECONFERENCE SERIES: WOMEN IN THE LAW
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October 24, 2006
NANOTECHNOLOGY
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October 26, 2006
CURRENT CLAIMS ISSUES FOR UNDERWRITERS AND SENIOR CLAIMS PEOPLE
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CACI: CALIFORNIA'S NEW CIVIL JURY INSTRUCTIONS
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CIVIL LITIGATION PRACTICE: 22ND ANNUAL RECENT DEVELOPMENTS
(2004)
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CIVIL LITIGATION PRACTICE: 23RD ANNUAL RECENT DEVELOPMENTS
(2005)
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EFFECTIVE DIRECT AND CROSS EXAMINATION
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PUNITIVE DAMAGES: MAXIMIZING YOUR CLIENT'S SUCCESS OR MINIMIZING
YOUR CLIENT'S EXPOSURE
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STRATEGIC TIPS FOR SUCCESSFULLY PROPOUNDING & OPPOSING WRITTEN
DISCOVERY
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SUMMARY JUDGMENT AND OTHER DISPOSITIVE MOTIONS
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TORTS PRACTICE: 19TH ANNUAL RECENT DEVELOPMENTS (2004)
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TORTS PRACTICE: 20TH ANNUAL RECENT DEVELOPMENTS (2005)
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ADVERSARIAL PROCEEDINGS IN ASBESTOS BANKRUPTCIES
LawCommerce.Com/Mealey's
Online Streaming Video
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ASBESTOS BANKRUPTCY - PANEL OF CREDITORS COMMITTEE MEMBERS
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Online Streaming Video
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EXPERT WITNESS ADMISSIBILITY IN MOLD CASES
LawCommerce.Com/Mealey's
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INTRODUCTION TO CLASS ACTIONS AND LARGE RECOVERIES
Big Class Action
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NON-TRADITIONAL DEFENDANTS IN ASBESTOS LITIGATION
Online Streaming Video
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PAXIL LITIGATION
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RECENT DEVELOPMENTS INVOLVING BAYCOL
Online Streaming Video
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RECOVERIES
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SELECTION OF MOLD LITIGATION EXPERTS: WHO YOU NEED ON YOUR TEAM
Online Streaming Video
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SHOULD I FILE A CLASS ACTION?
LawCommerce.Com / Law Education Institute
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THE EFFECTS OF ASBESTOS ON THE PULMONARY SYSTEM
Online Streaming Video
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THE STATE OF ASBESTOS LITIGATION: JUDICIAL PANEL DISCUSSION
Online Streaming Video
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TRYING AN ASBESTOS CASE
LawCommerce.Com
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THE IMPACT OF LORILLAR ON STATE AND LOCAL REGULATION OF TOBACCO
SALES AND ADVERSTISING
American Bar Association
Contact: 800-285-2221; abacle@abanet.org
________________________________________________________________
The Meetings, Conferences and Seminars column appears in the
Class Action Reporter each Wednesday. Submissions via
e-mail to carconf@beard.com are encouraged.
New Securities Fraud Cases
CENTENE CORP: Federman & Sherwood Announces Stock Suit Filing
-------------------------------------------------------------
Federman & Sherwood announces that on July 28, 2006, a class
action was filed in the U.S. District Court for the Eastern
District of Missouri against Centene Corp.
The complaint alleges violations of federal securities laws,
Sections 10(b) and 20(a) of the U.S. 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 June 21, 2006 through July 17, 2006.
Interested parties may move the Court no later than September
26, 2006, to serve as a lead plaintiff for the Class.
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 to:
wfederman@aol.com, Web site: http://www.federmanlaw.com.
JOS A BANK: Schiffrin & Barroway Files Securities Suit in Md.
-------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP, filed a class action
in the U.S. District Court for the District of Maryland on
behalf of all securities purchasers of Jos. A. Bank Clothiers,
Inc. from Jan. 5, 2006 to June 7, 2006.
The complaint charges Jos. A. Bank and certain of its officers
and directors with violations of the U.S. Securities Exchange
Act of 1934.
More specifically, the complaint alleges that the company failed
to disclose and misrepresented the following material adverse
facts, which were known to defendants or recklessly disregarded
by them:
-- that the company knew that demand for its merchandise
was weak;
-- that, despite knowing this fact, the company
overinvested in fall clothing inventory, which
defendants knew would result in a carry-over of high
inventory into the first quarter of 2006;
-- that, due to the excessive inventory, the company
adopted extremely aggressive promotional pricing in
February and March 2006, a significant departure from
the company's prior after-season practices;
-- that, as a result of the aggressive promotional
pricing, the company's gross profit margins and profits
were considerably reduced in February and March 2006;
and
-- that, as a result of the foregoing, the company's
statements regarding the company's financial results
were lacking in any reasonable basis when made.
On June 8, 2006, Jos. A. Bank shocked investors when the company
announced that net income had fallen 13 percent in the first
quarter of 2006, ended April 29, 2006.
During the company's earnings conference call, defendants
announced that, in contrast to the company's prior announcements
regarding strong gains in sales and inventory controls, the
company's net income had fallen as a result of the company's
aggressive mark-downs of fall clothing inventory.
On this news, shares of the company's stock dropped $10.70, or
28.9 percent, to close, on June 8, 2006, at $26.40 per share.
Interested parties may, no later than Sept. 25, 2006 to move the
Court for appointment as lead plaintiff of the class.
For more details, contact Darren J. Check, Esq. and Richard A.
Maniskas, Esq. of Schiffrin & Barroway, LLP, 280 King of Prussia
Road, Radnor, PA 19087, Phone: 1-888-299-7706 or 1-610-667-7706,
E-mail: info@sbclasslaw.com, Web site:
http://www.sbclasslaw.com.
PAR PHARMACEUTICALS: Pomerantz Haudek Files N.J. Securities Suit
----------------------------------------------------------------
Pomerantz Haudek Block Grossman & Gross, LLP, filed a class
action against Par Pharmaceutical Companies, Inc. and certain of
its officers.
The class action was filed in U.S. District Court District of
New Jersey, on behalf of purchasers of the common stock of the
company during the period from April 29, 2004 to July 5, 2006.
The complaint alleges violations of Sections 10(b) and 20(a) the
U.S. Securities Exchange Act of 1934 and Rule10b-5 promulgated
thereunder.
Par, headquartered in New Jersey, develops, manufactures and
markets more than 110 generic drugs and innovative branded
pharmaceuticals for specialty markets.
The complaint alleges that throughout the class period,
defendants reported earnings that were materially inflated as a
result of accounting errors including an understatement of
accounts receivable reserves.
The company has now admitted that the overstatement of its
revenues has resulted in Par overpaying its business partners in
various profit sharing arrangements.
As a result of the company's internal review of its trade
accounts receivable balances, the company has decided to restate
its previously reported financial statements for fiscal year
2004 and 2005 and the first quarter of 2006.
In addition, Par announced it will write-off inventory in an
amount up to $15 million due to flawed physical inventory
procedures.
In response to these revelations, on July 6, 2006, Par stock
fell $4.78 per share, losing nearly 26% of its value in one day
on extremely high volume of over 9 million shares traded, to
close at $13.47 per share.
Additionally, the company has been informed by a letter from the
staff of the Securities and Exchange Commission, dated July 7,
2007, that the SEC is conducting an informal investigation of
the company related to the Restatement.
Interested parties have until Sept. 15, 2006, to move the Court
for appointment as lead plaintiff for the Class.
For more details, contact Teresa L. Webb or Carolyn S.
Moskowitz, Phone: 888.476.6529, E-mail: tlwebb@pomlaw.com or
csmoskowitz@pomlaw.com, Web site: http://www.pomlaw.com.
SCOTTISH RE: Abbey Spanier Files Securities Fraud Suit in N.Y.
--------------------------------------------------------------
Abbey Spanier Rodd Abrams & Paradis, LLP, filed a class action
in the U.S. District Court for the Southern District of New York
on behalf of purchasers of the common stock and other securities
of Scottish Re Group, Ltd. from Dec. 16, 2005 to July 28, 2006.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the U.S. Securities Exchange Act of 1934, and Rule
10b-5 promulgated thereunder, by issuing a series of material
misrepresentations to the market during the class period thereby
artificially inflating the price of Scottish Re securities.
The complaint alleges that Scottish Re and of its certain
officers and directors violated the federal securities laws by
making false and misleading statements and omissions concerning
Scottish Re's financial health and business prospects, and
covered up serious operational and financial problems.
In February 2006, the company reported robust earnings for the
4th quarter of 2005, announcing that this positive momentum
would continue going forward.
In early May 2006 the company announced that it had refinanced,
at favorable rates, all of its regulatory reserves for the
business acquired in its acquisition of ING Re's reinsurance
business.
While the company also reported reduced earnings for the first
quarter of 2006, this was dismissed as temporary, and not a
cause for concern.
Then on July 28, 2006, the defendants shocked the market by
announcing that CEO Scott Willkomm had resigned, and that for
the second quarter, the company would report a huge loss of $
130 million, and that results for the remainder of the year
would be negatively affected.
On this news the company's share prices declined an astounding
75%, from $16.00 to $3.99, wiping out millions in shareholder
value.
Interested parties may, no later than Oct. 2, 2006 request the
court for appointment as lead plaintiff.
For more details, contact Nancy Kaboolian, Esq. of Abbey Spanier
Rodd Abrams & Paradis, LLP, 212 East 39th Street, New York, New
York 10016, Phone: (212) 889-3700 and (800) 889-3701, E-mail:
nkaboolian@abbeyspanier.com.
SCOTTISH RE: Schiffrin & Barroway Files Securities Suit in N.Y.
---------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP, filed a class action
in the U.S. District Court for the Southern District of New
York, on behalf of all purchasers of the common stock of
Scottish Re Group Limited from Feb. 17, 2005 to July 28, 2006.
The complaint charges Scottish Re and certain of its officers
and directors with violations of the U.S. Securities Exchange
Act of 1934.
Scottish Re is a global life reinsurance specialist and issuer
of customized life insurance based wealth management products
for high net worth individuals and families.
The complaint alleges that the company failed to disclose and
misrepresented the following material adverse facts:
-- that defendants improperly valued allowances on
deferred tax assets by at least $112 million;
-- that the company improperly estimated retrocession
costs, premium accrual, and lapse rates on certain
fixed annuity treaties;
-- that the company sought to manipulate its financial
results because it was not able to effectively
implement new initiatives in its key markets;
-- that the company's financial statements were materially
inflated;
-- that the company's financial statements were presented
in violation of Generally Accepted Accounting
Principles;
-- that the company lacked adequate internal controls; and
-- that as a result of the above, the defendants' positive
statements about the company and its financial strength
were lacking in any reasonable basis when made.
On July 31, 2006, before the market opened, Scottish Re shocked
investors when the company announced that, contrary to the
company's earlier positive guidance, the company expected to
report a net operating loss of approximately $130 million for
the second quarter ended June 30, 2006, of which $112 million
was due to the valuation of allowances on deferred tax assets.
Additionally, the company stated that it would suspend its
ordinary share dividend and that it had engaged Goldman Sachs
and Bear Stearns to assist the company with evaluating strategic
alternatives and potential sources of capital.
Also on July 31, 2006, before the market opened, Scottish Re
announced that the company's President and Chief Executive
Officer, defendant Scott E. Willkomm had resigned his position.
On this news, shares of Scottish Re plummeted $12.01, or 75.06
percent, to close, on July 31, 2006, at $3.99 per share, on
unusually heavy trading volume.
Interested parties may no later than Oct. 2, 2006, move the
Court for appointment as lead plaintiff.
For more details, contact Darren J. Check, Esq. and Richard A.
Maniskas, Esq. of Schiffrin & Barroway, LLP, 280 King of Prussia
Road, Radnor, PA 19087, Phone: 1-888-299-7706 or 1-610-667-7706,
E-mail: info@sbclasslaw.com, Web site:
http://www.sbclasslaw.com.
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
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, Maria Cristina Canson, and Janice
Mendoza, Editors.
Copyright 2006. All rights reserved. ISSN 1525-2272.
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