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/raid1/www/Hosts/bankrupt/CAR_Public/990506.MBX C L A S S A C T I O N R E P O R T E R Thursday, May 6, 1999, Vol. 1, No. 65 Headlines * S. 353 Introduced to Limit Attorneys' Fees in Class Actions ADVANCED TISSUE: Announces Voluntary Dismissal of Securities Suit BLUE CROSS: Georgia High Court Limits Policyholder Count COMPAQ COMPUTER: Abraham Firm Files Suit on Behalf of Employees COMPAQ COMPUTER: Lowey Dannenberg Files Complaint in Texas CURATIVE HEALTH: Denies Allegations Charged by Shareholders CHARTER MUNICIPAL: Class Counsel Receives $6 Million in Fees CORT BUSINESS: Deposits Key Pleadings with the SEC CUSTOMS SERVICE: Black Women Allege Improper Profiling FORD MOTOR: Stakes are High in Stalling Vehicle Litigation IBP: Alabama Court Certifies Class Against Meatpacker MCKESSON HBOC: HBO & Company Investors Included in Class Action MCKESSON HBOC: Bernstein Liebhard Intends to Expand Class MCKESSON HBOC: Schubert & Reed Files Complaint in California MCKESSON HBOC: Milberg Weiss Files New Complaint in California MONY GROUP: Reminds Investors Insurance Case is Dismissed NETWORKS ASSOCIATES: Keller Rohrback Files Suit in California NETWORK ASSOCIATES: Shepherd & Geller Files Suit in California OSICAM TECHNOLOGIES: Bashian Firm Files Complaint in California PALM BEACH: Florida Suit Seeks to Change School Board Voting PHILIP SERVICES: Preparing June 1999 Chapter 11 & CCAA Filings PSS WORLD: Shepherd & Geller Files Complaint in Florida RAINFOREST CAFE: Wolf Haldenstein Files Revised Complaint RITE AID: Shepherd & Geller Files Complaint in Pennsylvania SGL CARBON: Settles Antitrust Case with Justice Department SUN HEALTHCARE: Klayman Firm Files Complaint in New Mexico TRAK AUTO: Settles Employee Claims for $4.5 Mil Before Insurance VIVUS, INC.: Settles Shareholder Lawsuits for $6 Million ********* * S. 353 Introduced to Limit Attorneys' Fees in Class Actions ------------------------------------------------------------- Legislation to curb abuses of class action lawsuits would prevent attorneys from extracting exorbitant fees from their clients, its Senate sponsors said Tuesday. Unethical attorneys representing large groups of plaintiffs sometimes arrange their cases so that they receive fees so large clients are left with little or nothing, Sens. Chuck Grassley, R-Iowa, and Herb Kohl, D-Wis., told a Senate subcommittee. "More and more people recognize that the class action system is being abused, and that the people who are supposed to be helped by this process are instead getting used," Grassley said at a hearing of the Senate Judiciary Committee's panel on administrative oversight and the courts. "Ultimately, the current system is benefiting lawyers, not your average class member," Grassley said. The bill introduced by Grassley and Kohl would set new rules for class-action suits and give federal courts a bigger say in how they are conducted. The Justice Department objected to the bill, saying pushing a lot of cases from state courts to federal courts would not necessarily solve any problems. "There's nothing magical about federal courts," said Assistant Attorney General Eleanor Acheson. "We do not believe that federal policy on class actions is sacrosanct." Also opposing the bill is Public Citizen Litigation Group, the legal advocacy arm of Public Citizen, a consumer advocacy organization. The bill is "an unwise and ill-considered incursion by the federal government on the jurisdiction of the state courts," Brian Wolfman, a group attorney, said in a written statement. Grassley and Kohl said they were taking aim against attorneys who mislead their clients into taking settlements that offer them little of value or even cost them money, while their lawyers pocket fees. "We heard about settlements where plaintiffs receive coupons of little value or redemption restrictions making them practically useless, yet their attorneys receive millions of dollars in attorneys' fees," Grassley said. "We heard about lawyers using the state court system to get the lowest settlement amount possible for defendants and the highest amount in attorneys' fees for plaintiff class lawyers." Kohl said one of his constituents won a little over $4 as her share in a class-action lawsuit against her mortgage company. A few months later, her lawyers charged her $ 80 for their work. "In total, her lawyers managed to pocket over $ 8 million in fees, but never explained to the court or to their own clients that the class - not the defendant - would pay the attorneys' fees." The bill would: * Require that state attorneys general be notified of any proposed class settlement that affects their residents so they can object if the settlement terms are unfair. * Penalize frivolous class action filings by requiring courts to impose sanctions. * Require that attorneys' fees be based on a reasonable percentage of damages paid to class members. * Allow more class-action lawsuits to be moved from state court, either by a defendant or unnamed class member, to federal court, where class-action rules are stricter. * Require that settlement notices be written in "plain English" and include the amount of attorneys' fees. ADVANCED TISSUE: Announces Voluntary Dismissal of Securities Suit ---------------------------------------------------------------- Advanced Tissue Sciences, Inc. (Nasdaq: ATIS) announced Tuesday that the federal securities class action filed against the Company and two of its officers last year has been voluntarily dismissed by lead plaintiffs' counsel. No payment was made by Advanced Tissue Sciences. Voluntary dismissal terminates the action. The Company was represented in the case by the law firm of Brobeck, Phleger & Harrison LLP. Commenting on the dismissal, Arthur J. Benvenuto, Chairman of the Board and Chief Executive Officer, stated, "We are pleased that the action has been voluntarily dismissed after plaintiffs' counsel completed a conscientious and thorough review of the facts. We look forward to concentrating exclusively on our core business objectives." Advanced Tissue Sciences, Inc. is a tissue engineering company utilizing its proprietary core technology to develop and manufacture human-based tissue products for tissue repair and transplantation. The Company, through its Dermagraft Joint Venture with Smith & Nephew plc, currently has two products on the market: TransCyte(TM), a temporary covering for second-degree (partial-thickness) and third-degree (severe, full-thickness) burns, and Dermagraft(R), a living dermal replacement for the treatment of diabetic foot ulcers (currently available in Canada and the United Kingdom). The Company is conducting a multi- center trial for Dermagraft for diabetic foot ulcers in the United States, and is pursuing additional indications for Dermagraft, including venous and pressure ulcers, through the Dermagraft Joint Venture. The Company is also developing products for cartilage and cardiovascular applications. BLUE CROSS: Georgia High Court Limits Policyholder Count -------------------------------------------------------- Andy Miller, a Staff Reporter for the Associated Press, relates that the Georgia Supreme Court, reversing a lower court decision, said Monday that only 70,000 policyholders would benefit from Blue Cross and Blue Shield of Georgia's acquisition by California-based WellPoint Health Networks. The ruling removes a major legal obstacle to the $ 500 million acquisition of Georgia's largest health insurer, originally expected to close at the end of last year. The 70,000 policyholders at the time of Blue Cross' 1996 conversion to a for-profit company will get about $ 4,000 or the equivalent of WellPoint stock if the acquisition is approved, as expected. The transaction had been delayed by a December decision by a Superior Court judge in Richmond County to double - -- to 144,000 --- the number of policyholders entitled to five shares of stock in Cerulean, the parent company of Blue Cross. The Superior Court judge ruled in favor of a class of 74,000 plaintiffs in a class-action lawsuit, who argued they should receive shares, too --- although they failed to sign up for the stock offer. If that ruling had been upheld, the value of the benefit to shareholders would have slipped to about $ 1,850. About 144,000 policyholders originally received notice that they were entitled to receive the shares because they had individual policies or were members of employer plans that weren't self- insured. But only 70,000 of them signed up. Blue Cross said it filed an appeal to the Superior Court ruling to protect the interests of those 70,000 policyholders. Blue Cross said it was pleased by the Supreme Court's decision. "The court said these people had several opportunities to challenge the offering of shares in the conversion,'' said Charlie Harman, a Blue Cross vice president. Monday's ruling affirmed the conversion and Insurance Commissioner John Oxendine's handling of it, Blue Cross added. Blue Cross is expected to file a motion in Richmond County to dismiss plaintiffs' charges of misrepresentation on the original proxy notice. Oxendine must still approve the acquisition. No hearing date has been set, an Oxendine spokesman said. Blue Cross shareholders must approve the deal as well. A shareholder meeting is now expected within six weeks, Harman said. Blue Cross and WellPoint, based in Thousand Oaks, Calif., expect the deal to close this summer, he added. The acquisition would have a big payoff to several groups. First, the deal would provide a windfall to private investors who sank almost $ 50 million into Cerulean during the conversion. They would earn a net profit of about $ 60 million on the investment when the acquisition closes. The deal would also allow about 280 Blue Cross employees to share in a $ 28 million incentive bonus. And the acquisition would lead to a payment of about $ 80 million in WellPoint stock to a new Georgia health care foundation. That endowment stemmed from a settlement between Blue Cross and several consumer groups that challenged the insurer's conversion to a for-profit company. The groups filed suit in 1997, claiming that Blue Cross, with years of tax breaks as a non-profit, should donate its assets to charity upon conversion. "Everything has been on hold, pending this court decision," Lynn Thogersen of Let's Get Together, a disabilities advocacy group that joined conversion lawsuit, told the AP. "We're happy because this will allow Healthcare Georgia to go forward on its mission --- to advance health care for all Georgians." COMPAQ COMPUTER: Abraham Firm Files Suit on Behalf of Employees --------------------------------------------------------------- Law Offices of Jeffrey S. Abraham, representing a proposed class consisting of former and current employees of Compaq Computer Corporation (NYSE: CPQ) who purchased Compaq securities including, without limitation, the Compaq Stock Fund, which were issued pursuant to registration statements and prospectuses during the period of January 27, 1999 through April 9, 1999, inclusive, has filed a class action suit against Compaq. The suit was filed in the United States District Court for the Southern District of Texas where Compaq maintains its, names Compaq, Eckhard Pfeiffer and Earl Mason as defendants and alleges that they violated Section 11 of the Securities Act of 1933 by making materially misleading statements or omitting to state facts necessary to make other statements made in the relevant registration statements and prospectuses not materially misleading. OPEN MARKET PURCHASERS OF COMPAQ SECURITIES ARE NOT REPRESENTED IN THIS LAWSUIT and are instead part of the class defined in previously filed actions seeking a recovery on behalf of such open market purchasers. ONLY PERSONS WHO PURCHASED COMPAQ SECURITIES PURSUANT TO A REGISTRATION STATEMENT AND/OR PROSPECTUS DURING THE CLASS PERIOD ARE INCLUDED WITHIN THE CLASS WHICH IS THE SUBJECT OF THIS NOTICE. For details, contact Jeffrey S. Abraham of the Law Offices of Jeffrey S. Abraham, toll-free at 800-938-0015 or at Jsalaw@aol.com via Internet e-mail or Gary S. Graifman at Kantrowitz, Goldhamer & Graifman, P.C. toll-free at 800-660-7843 or at KGLAW1@aol.com via Internet e-mail. COMPAQ COMPUTER: Lowey Dannenberg Files Complaint in Texas ---------------------------------------------------------- Lowey Dannenberg Bemporad & Selinger, P.C., has filed a class action lawsuit in the United States District Court for the Southern District of Texas on behalf of purchasers of Compaq Computer Corporation (NYSE:CPQ) common stock from January 27, 1999 through April 9, 1999, inclusive. The complaint charges Compaq and certain of its officers with violations of the federal securities laws which artificially inflated the market price of Compaq stock during the Class Period. The complaint alleges that during the Class Period, defendants issued a series of false and misleading statements regarding the Company's operating results, future prospects, and demand for its products. In advance of the revelation of the truth regarding the reduced demand for Compaq's products, Company insiders sold in excess of $ 48 million in Compaq common stock to the unsuspecting investing public at artificially inflated prices. Following these disclosures, the market price of Compaq common stock, which traded at over $ 51 per share during the Class Period, closed at about $ 24 per share. Contact Vincent Briganti, Esq. Lowey Dannenberg Bemporad & Selinger, P.C. The Gateway, 11th Floor One North Lexington Avenue White Plains, NY 10601-1714 TOLL FREE TELEPHONE: 877-777-3581 FAX: 914-997-0035 EMAIL: ldbs@westnet.com CURATIVE HEALTH: Denies Allegations Charged by Shareholders ----------------------------------------------------------- CURATIVE HEALTH SERVICES, INC., and its officers and directors acknowledge in a regulatory filing with the SEC that they have been named as defendants in three class actions pending in the U.S. District Court for the Eastern District of New York alleging securities fraud claims under the Securities Exchange Act of 1934. The three securities class action cases follow the disclosure on April 9, 1999 that the U.S. Department of Justice had joined in a "whistleblower" lawsuit charging the Company with Medicare fraud. The Plaintiffs essentially are asserting that the Company materially overstated its earnings by knowingly failing to disclose its purportedly improper contractual charges to hospitals. The Company, itself, is neither a provider nor a supplier participating in the Medicare program. The Company has entered into contracts with more than 170 hospitals for its services in managing Wound Care Centers. The Company believes its charges, to the hospitals, are fair market value for the services that it furnishes. The Company says it will defend itself vigorously in the securities class actions. The Company believes that it has made appropriate and timely disclosure concerning the facts, which are the subject of the "whistleblower" lawsuit. CHARTER MUNICIPAL: Class Counsel Receives $6 Million in Fees ------------------------------------------------------------ As part of the settlement of class action litigation known as Prudential Securities Inc. Limited Partnership Litigation, MDL No. 1005 relating to CHARTER MUNICIPAL MORTGAGE ACCEPTANCE CO.'s predecessor partnerships, counsel for the partners of the Partnerships had the right to petition the United States District Court for the Southern District of New York for additional attorney's fees in the form of CharterMac's shares of beneficial interest in an amount to be determined in the Court's sole discretion and based upon a percentage of the increase in value of CharterMac, one year after CharterMac's formation. On February 18, 1999, the Court issued an Order and Stipulation of Settlement which stated that Class Counsel is entitled to receive 608,955 Counsel Fee Shares, representing Added Value of $7,788,536. In lieu of the issuance of shares, on April 15, 1999, Related Charter, LP, on behalf of CharterMac, reached an agreement with Class Counsel for a cash settlement of $6,089,955, to be paid on or before April 30, 1999. Pursuant to the Agreement, the cash settlement will be in full satisfaction of Class Counsel's entitlement under the Order, and Class Counsel will have no right now or in the future to receive any shares of CharterMac, or any other consideration of any kind, from Charter. CORT BUSINESS: Deposits Key Pleadings with the SEC -------------------------------------------------- Under cover of Form 8-K, CORT BUSINESS SERVICES CORP. provides the Securities and Exchange Commission -- and the public -- with copies of three Delaware shareholder suits filed against it. Specifically, the Company deposited copies of: Exhibit 99.4 -- Complaint in the Court of Chancery of the State of Delaware, naming Michael Sternberg, as Plaintiff, and the Company, each of the directors of the Company, and Citicorp Venture Capital Ltd., as Defendants. Exhibit 99.5 -- Complaint in the Court of Chancery of the State of Delaware, naming Harbor Finance Partners, as Plaintiff, and the Company, each of the directors of the Company, and Citicorp Venture Capital Ltd., as Defendants. Exhibit 99.6 -- Complaint in the Court of Chancery of the State of Delaware, naming Harold Shapiro, as Plaintiff, and the Company, each of the directors of the Company, Bruckmann, Rosser, Sherrill & Co. and Citicorp Venture Capital Ltd., as Defendants. Full-text copies of these pleadings are available for free at http://www.sec.gov/cgi-bin/srch-edgar?0000893220-99-000511via the Internet. CUSTOMS SERVICE: Black Women Allege Improper Profiling ------------------------------------------------------ A black Tampa, Florida, woman has joined scores of others nationwide who are suing the federal government over claims that the U.S. Customs Service subjected them to unnecessary and humiliating drug searches, reports the St. Petersburg Times. Attorneys for Rhonda Larry, a 32-year-old mother of two, filed suit Monday in U.S. District Court, seeking unspecified damages for financial, mental and physical harm she said she suffered when she returned from a weeklong vacation to Jamaica last spring. Larry, who could not be reached for comment Monday, becomes the latest black woman to detail a harrowing experience other women have compared to rape. Some women have said they have even been forced to remove sanitary napkins during airport searches. In a class-action suit involving nearly 100 women in Chicago, black women or their attorneys said in the suit and in a Dateline NBC program aired last week that the Customs Service is targeting black women as suspected drug couriers. The Customs Service has responded to the criticism by appointing an independent panel to find out if black women are being wrongly selected for searches. Reached at his office Monday in Washington, D.C., Dennis Murphy, director of public affairs for the Customs Service, said he does not believe his agency targets black women. "We don't profile by race," Murphy said. "That's clear. The overall statistics do not imply that there's a problem. But there are those suits out there, and there is perception." Larry's suit claims customs agents at Tampa International Airport went way beyond their jobs on April 16, 1998. According to the suit, Larry arrived wearing a professional pant suit and was questioned about her ticket by customs agents, who then searched her luggage before ordering her into a small room for a "pat down" search by a female agent. Larry was in the room for more than an hour, the suit states, before she was taken to Tampa General Hospital "for a non-routine border search." There, the suit states, Larry was forced to consent to a blood and urine test as well as an abdominal X-ray and an ECG and EKG. Timothy Prugh, Larry's attorney, said he is not sure why Larry was taken to Tampa General and given the tests. "I guess she was a suspect," Prugh said. According to the suit, Larry was led through the hospital handcuffed, then was handcuffed to a bed and was not allowed to call her family during the approximately three hours she was detained at Tampa General. The suit, which includes claims of false imprisonment and negligent training, supervision, retention and assignment of inspection agents, states agents never found drugs on Larry or in her luggage Months later, after the agency rejected an administrative claim she filed, Larry's attorney said his client still has not received an apology. "They put her through the drill," Prugh said. "There was not so much as a "Hi, bye, thank you, ma'am.' " Customs officials at TIA referred questions to an agency spokesman in Miami. The spokesman was out of town, but Jim Moster, associate chief counsel for the agency's southeastern region, said apologies in cases like Larry's might not always be appropriate. "I think certainly the agency can apologize for inconveniencing people," Moster said. "I don't know that the agency can apologize for doing something wrong because we may have done everything right. They just might not have had drugs on them." Instead of an apology, Dateline NBC's segment showed the agency issued a form letter to people who were involved in searches where no drugs were found. "To be frank," Dateline NBC quotes from the letter, "we are not at all sorry. As a matter of fact, we are pleased you have complied with our laws." Murphy said the agency is considering issuing apologies in cases where people have been unnecessarily searched. FORD MOTOR: Stakes are High in Stalling Vehicle Litigation ---------------------------------------------------------- In the largest class-action lawsuit ever to go to trial against a U.S. automaker, the Ford Motor Co. is accused of fraudulently covering up a potentially dangerous stalling problem in 22 million cars and trucks. The trial, set for May 11 in California's Alameda County Superior Court, contends that Ford withheld information about a defective ignition module from federal regulators and the public. The lawsuit seeks $3-4 billion in damages. Ford could face damages in five companion lawsuits filed on behalf of another 27 million past or present Ford owners. Spokesman Jim Cain said the $4 billion figure represented the estimated damages that Ford could face if it lost on all counts. About three million plaintiffs in California accuse the No 2 car- maker of putting faulty ignition modules in 1.7 million 1983-95 cars and trucks that could cause the vehicles to stall. The thick film ignition modules, which pass sparks to the distributor which in turn sends them to the spark plugs, were intended to improve engines. IBP: Alabama Court Certifies Class Against Meatpacker ----------------------------------------------------- Joe Whatley, Esq., of Whatley Drake, LLC, advises that, on April 29, 1999, the Court certified the class in Pickett v. IBP, CV 96- A-1103-N (M.D.Ala.). The case involves claims under the Packers & Stockyards Act against IBP, the largest beef packer. The class includes all persons and entities who sold finished beef cattle to IBP on the cash market at any time since February 1, 1994. Contact Mr. Whatley at JWHATLEY@whatleydrake.com via e-mail. MCKESSON HBOC: HBO & Company Investors Included in Class Action ---------------------------------------------------------------- Kaplan, Kilsheimer & Fox LLP intends to file an additional Class Action suit against McKesson HBOC, Inc. (NYSE: MCK) and certain of its officers and directors on behalf of all purchasers of HBO & Company securities between April 14, 1998 and January 12, 1999. Kaplan, Kilsheimer & Fox LLP previously filed on behalf of all shareholders who purchased or otherwise acquired common stock of McKesson Corp. between October 18, 1998 and April 27, 1999, including all holders of HBO & Company stock on January 12, 1999 (without regard to the date of acquisition). Contact: Frederic S. Fox, Esq. Janine Azriliant, Esq. Donald R. Hall, Esq. Kaplan, Kilsheimer & Fox LLP (800) 290-1952 e-mail address: lawkkf@aol.com MCKESSON HBOC: Bernstein Liebhard Intends to Expand Class --------------------------------------------------------- Bernstein Liebhard & Lifshitz, LLP commenced a securities class action lawsuit on behalf of securities holders of McKesson HBOC, Inc. (NYSE: MCK), intends to expand the class period in an amended complaint. The expanded class period will include all persons who held McKesson securities as of April 27, 1999. Contact Mel E. Lifshitz Esq., or Michael S. Egan, Esq., at Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, 800-217-1522 or 212-779-1414 or at mckesson@bernlieb.com by e-mail. MCKESSON HBOC: Schubert & Reed Files Complaint in California ------------------------------------------------------------ A class action securities complaint, Case No. C-99-2063-MMC, was filed on April 29, 1999, in the United States District Court for the Northern District of California on behalf of public investors who purchased common shares of McKesson HBOC, Inc. (NYSE: MCK) predecessor HBO & Company, Inc. between April 14, 1998 and January 12, 1999, inclusive. The Complaint is filed against McKesson HBOC, Inc., the company's Chairman Charles McCall and the former HBOC's CFO Jay Gilbertson. The claims arise under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The Complaint alleges that defendants misrepresented and omitted material facts in the public statements and financial reports issued during the period, including the fact that McKesson HBOC, Inc.'s reported financial results for the fourth quarter ended March 31, 1999, were overstated by $26.2 million due to improper revenue recognition practices violative of Generally Accepted Accounting Principles, and that revenues from earlier periods were similarly overstated by $16.0 million. When the market learned the truth on April 28, 1999, McKesson HBOC, Inc. shares lost nearly 50% of their value in a single day's trading, closing at $34-1/2, down from the prior day's close of $65-3/4. The plaintiff is represented by the San Francisco law firm of Schubert & Reed LLP. Contact Robert C. Schubert or Juden Justice Reed of Schubert & Reed LLP, Two Embarcadero Center, Suite 1050, San Francisco, CA 94111, by telephone at 415-788-4220, by fax at 415-788-0161 or at mail@schubert-reed.com by e-mail. MCKESSON HBOC: Milberg Weiss Files New Complaint in California -------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP yesterday announced that a new class action entitled Berman v. McKesson HBOC, Inc., et al., Case No. C-99-2044-JL, has been commenced in the United States District Court for the Northern District of California on behalf of: -- purchasers of the common stock of McKesson between October 19, 1998 and January 12, 1999, inclusive; -- purchasers of the common stock of McKesson HBOC, Inc. (NYSE:MCK) between January 12, 1999 and April 27, 1999, inclusive; -- purchasers of the common stock of HBOC, Inc. (HBOC) between October 19, 1998 and January 12, 1999, inclusive; -- the former stockholders of US Servis ("Servis") who exchanged their Servis shares for the common stock of HBOC; -- the former stockholders of IMNET Systems, Inc. ("IMNET") who exchanged their IMNET shares for the common stock of HBOC; and -- the former stockholders of Access Health, Inc. ("Access") who exchanged their Access shares for the common stock of HBOC. The complaint charges McKesson and certain of its officers and directors with violations of the federal securities laws by making misrepre-senta-tions about McKesson's business, earnings growth and financial statements and its ability to continue to achieve profitable growth. By issuing these allegedly false and misleading statements, defendants artificially inflated McKesson's stock price to a Class Period high of $ 89-3/4 in January 1999, before the true facts about McKesson's troubled opera-tions, diminished profitability and false financial statements were revealed and McKesson's stock collapsed to as low as $32 per share. Contact William Lerach at Milberg Weiss Bershad Hynes & Lerach LLP, 800/449-4900 by phone or wsl@mwbhl.com via e-mail. MONY GROUP: Reminds Investors Insurance Case is Dismissed --------------------------------------------------------- On March 18, 1999, the Appellate Division of the Supreme Court of the State of New York unanimously affirmed the 1997 Supreme Court dismissal of a national class action lawsuit involving sales practices against MONY Life Insurance Company (the principal subsidiary of The MONY Group Inc.). The case involved the "vanishing premium" concept in the sale of life insurance policies in the 1980s and early 1990s. Any further appeal requires permission from the New York Court of Appeals. MONY reminded investors of this in connection with its earnings announcement yesterday, reporting $46 million in net income during the first quarter. NETWORKS ASSOCIATES: Keller Rohrback Files Suit in California ------------------------------------------------------------- Keller Rohrback L.L.P. has filed a new class action lawsuit in the U.S. District Court for the Northern District of California against Networks Associates, Inc. and certain of its officers and directors by IRA and Trust plaintiffs, which seek to recover damages on behalf of a Class of all persons who purchased or otherwise acquired common stock of Networks Associates (Nasdaq:NETA) between January 20, 1998 and April 19, 1999, inclusive. Excluded from the Class are NETA and its affiliates, NETA's managers, officers, and directors, and immediate family members of the individual defendants, and of NETA's managers, officers, and directors. The complaint charges that during the Class Period the defendants, including NETA, violated the federal securities laws by misrepresenting and/or failing to disclose material information regarding Networks Associates' financial results and business prospects, giving the false impression that the Company's finances were accurately reported, that its business was healthy, its prospects good, and that it would earn in the range of $ 2.12 per share in 1999. These alleged false statements caused the price of the Company's stock to be artificially inflated during the entire Class Period to levels as high as $ 67-11/16 per share. The Individual Defendants, all of them senior executive officers of the Company, are also alleged to have taken advantage of such inflated stock prices and their insider knowledge of undisclosed adverse information, by selling almost $ 33 million of their Networks Associates stock during the Class Period. When Networks Associates belatedly revealed, among other things, that an SEC investigation had uncovered improper accounting practices and that its first quarter 1999 earnings would be substantially less than previously indicated by the defendants and the First Call analyst consensus, the price of Networks Associates shares plummeted, and investors who purchased NETA were damaged thereby. Subsequently, the stock fell precipitously again when full year estimates were sharply reduced by NETA. Contact Lynn L. Sarko, Juli Farris, or Alex Perkins, of Keller Rohrback L.L.P, toll-free at 800/776-6044, or at aperkins@kellerrohrback.com via e-mail. NETWORK ASSOCIATES: Shepherd & Geller Files Suit in California -------------------------------------------------------------- The Law Firm of Shepherd & Geller, LLC announced today that it has filed, along with the law firm of Scott & Scott, LLC, a class action in the United States District Court, Northern District of California, on behalf of all individuals and entities that purchased NETWORK ASSOCIATES, INC. common stock (Nasdaq:NETA) between January 20, 1998 and April 19, 1999. The complaint charges that Network Associates, Inc. and certain of its officers and directors violated the federal securities laws by making numerous false and misleading statements about the Company's financial results and business prospects during the class period, causing the stock to trade at artificially inflated prices as high as $ 67 per share. The lawsuit further alleges that, during that time, certain company insiders sold off shares, reaping millions of dollars in insider profits. On April 6, 1999, the Company announced that it had overstated certain expenditures and understated certain expenses, causing the stock price to fall. On April 19, Defendants admitted that dealer inventory was so enormous that sales would drop significantly. Contact Paul J. Geller SHEPHERD & GELLER, LLC 7200 West Camino Real, Suite 203 Boca Raton, FL 33433 561/750-3000 Toll Free: 1- 888-262-3131 E-mail: pgeller@classactioncounsel.com or Scott R. Shepherd SHEPHERD & GELLER, LLC 117 Gayley St., Suite 200 Media, PA 19063 610/891-9880 Toll Free: 1-877-891-9880 E-mail: sshepherd@classactioncounsel.com OSICAM TECHNOLOGIES: Bashian Firm Files Complaint in California --------------------------------------------------------------- A class action lawsuit was filed in U.S. District Court in Los Angeles against Osicom Technologies, Inc. (Nasdaq: FIBR) and certain of its officers and directors by Law Offices of James V. Bashian, P.C., on behalf of purchasers of Osicom Technologies, Inc. securities between July 2, 1998 and April 21, 1999. Contact James V. Bashian, Esq., or Oren Giskan, Esq. at 800-556-8856 or osgiskan@aol.com PALM BEACH: Florida Suit Seeks to Change School Board Voting ------------------------------------------------------------ Democratic Representative Alcee Hastings filed a class-action suit against Palm Beach County officials because they "haven't endorsed" single-member school board districts. Hastings' attorneys said the suit was filed "on behalf of more than" 1K black Palm Beach County residents "because all black community members have the same problem in getting their feelings across at election time." The suit "asks a circuit judge to order a referendum this fall so that voters can decide if they'd rather be represented by school board members elected by voters only in each member's district." Currently the seven board members, "who are all white," are elected by voters county-wide. Hastings: "I'm tired of the fight to get white people to accept that black people have rights" (Flannery, Palm Beach Post 03-May-1999) PHILIP SERVICES: Preparing June 1999 Chapter 11 & CCAA Filings -------------------------------------------------------------- In 1997, Philip Services Corp. implemented an acquisition program designed to establish Philip as one of North America's leading metals processing and industrial services providers. During 1997, the Company acquired over 30 businesses at a cost of approximately $1.3 billion. The Company commenced 1998 with the objective of integrating the businesses it had acquired in 1997. The integration was interrupted by a series of events which occurred in 1998 that had a devastating impact on the Company and resulted in it recording a fiscal 1998 loss of $1.6 billion including special charges of $1.2 billion. The first event was the discovery and announcement in January 1998 of a discrepancy between the book and physical inventory values in the Company's yard copper business. The announcement of the discrepancy raised serious questions about the integrity of the Company's accounting and the effectiveness of its control systems and had a significant negative impact on the Company's business. After the announcement, numerous class action lawsuits and related claims were commenced against the Company in the United States and Canada. An exhaustive examination of the discrepancy was conducted by the Company, its auditors and special counsel to a committee of independent directors of the Company's Board of Directors. As a result of these examinations, it was determined that, amongst other things, unrecorded losses totalling $92 million arising from unauthorized trading of copper outside the Company's normal business practices had been incurred. The Company commenced a civil action against the former president of its metals division and others engaged in the trading in an effort to recover its losses and reported the activities to criminal and other appropriate authorities. As a result of the Company's findings, Philip restated its previously reported financial results for 1997, 1996 and 1995. In addition, the staff of the Securities and Exchange Commission is conducting a formal investigation of the circumstances surrounding the 1997, 1996 and 1995 restatements of the Company's financial statements. To compound matters, starting in late 1997 and continuing throughout 1998, there was a significant deterioration in the Company's copper and ferrous processing businesses due to the most significant decline in metals prices in over 20 years. The Company's Industrial Services Group failed to achieve its cost reduction objectives and its by-products business performed weakly, reflecting industry wide competitive conditions. In addition, declining crude oil prices, which resulted in deferred maintenance spending by customers with petrochemical refinery operations, negatively impacted the revenue and profitability of the Industrial Services Group's operations. The Company reported a first quarter 1998 loss of $565,000 and a second quarter 1998 loss of $73 million. Various initiatives were implemented throughout the year in an effort to improve the Company's operating and financial performance. Management changes were made, including the appointment of a new Chairman, President and Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer and Presidents of the Company's Metals Services and Industrial Services Groups. The deterioration in its principal business segments impaired Philip's ability to comply with the terms of its then $1.5 billion syndicated credit agreement. In June of 1998, the Company announced its intention to sell its ferrous and non- ferrous operations and various non-core assets in order to reduce and restructure its debt. The Company sold its steel distribution business in July 1998 for $95 million. However, weak ferrous market conditions lowered the value of the remaining assets and the Company subsequently determined that it would not proceed with the sale of its ferrous businesses. By July of 1998, the Company was not in compliance with the terms of its Credit Agreement and sought certain amendments from its lending syndicate. Philip did not reach an agreement with its lenders and accordingly, as at June 30, 1998, $1.04 billion of debt outstanding under the Credit Agreement was classified as a current liability on the Company's consolidated balance sheet. As the Company's operating results deteriorated, questions arose as to its ability to meet its obligations under the Credit Agreement and whether the Company had sufficient available cash to satisfy its working capital and capital expenditure needs. In the third quarter of 1998, a number of factors, including a continuing downturn in metal markets, a permanent decline in the value of investments held by the Company, and the decision to exit certain activities or locations and to divest of the Company's aluminum and US ferrous operations caused the Company to take special charges of $357 million and report a net loss of $645 million. The Company again made management changes including the appointment in October 1998 of a new Interim Chief Executive Officer and Chief Restructuring Officer. In November 1998, the Company ceased making payments on various debt obligations including the $1.02 billion outstanding under the Credit Agreement. Thereafter, Carl Icahn, the Company's largest shareholder and debt holder, together with another lender, announced that they were considering utilizing involuntary insolvency proceedings to protect their interests unless the Company met with them to formulate a pre-packaged plan to transfer the ownership and control of the business to the Company's lending syndicate. The Company commenced negotiations with Mr. Icahn and entered into a standstill agreement with him and the other lender on November 20, 1998. The agreement contemplated a restructuring plan whereby the debt outstanding under the Credit Agreement would be converted into $200 million of new secured debt and the distribution of 90% of the equity of the restructured entity to the syndicated debt holders. In accordance with the terms of the standstill agreement, the Company appointed two new directors nominated by Mr. Icahn to the Company's Board of Directors. Also, in November 1998, the Company replaced its then acting Interim Chief Executive Officer and appointed its Executive Vice Chairman, Allen Fracassi, as Interim Chief Executive Officer. After discussions with its lending syndicate, the Company determined that the restructuring plan contemplated by the November 20, 1998 standstill agreement would not be approved by the required number of lenders. The Company presented an alternative debt restructuring plan to its lending syndicate on December 15, 1998 which provided for the conversion of a smaller portion of the debt outstanding under the Credit Agreement into equity in an amount to be negotiated with its lending syndicate. RECENT DEVELOPMENTS On January 11, 1999, the Company announced that it had negotiated a term sheet with a sub-committee of the steering committee of its syndicated lenders. The term sheet set forth the principal terms of restructuring the Company under a pre-packaged plan of reorganization. Under the January 11, 1999 term sheet, $550 million of debt outstanding under the Credit Agreement would be restructured into $350 million of senior secured term debt and $200 million of secured payment in-kind notes. The balance of the debt outstanding under the Credit Agreement of approximately $550 million would be exchanged for 90% of the common shares of the restructured Company. Throughout January and February and into early March 1999, the Company continued negotiations with its lending syndicate in an effort to obtain an agreement on a plan to restructure the Company. On January 12, 1999, the Company announced that it had closed the sale of certain of its aluminum operations for $69.5 million. On March 8, 1999, the Company announced that it had concluded negotiations with the steering committee of its syndicated lenders on the terms of a lock-up agreement. Members of the steering committee, who held in excess of 50% of the outstanding syndicated debt, agreed to the form of Lock-Up Agreement. The agreement provided for the conversion of approximately $1.02 billion of secured debt outstanding under the Credit Agreement into $300 million of senior secured debt, $100 million in convertible secured payment in-kind notes and 90% of the common shares of the restructured Company. On March 26, 1999, the Company announced that it had entered into a definitive agreement to sell its 68% interest in Philip Utilities Management Corporation for net proceeds of approximately $67 million in cash. The proceeds of the disposition will be used to pay down the Company's outstanding debt under the Credit Agreement. Under the terms of the Lock-Up Agreement, if the Company completes the sale of Philip Utilities Management Corporation, the senior secured debt of the restructured Company will be reduced from $300 million to $250 million. On April 26, 1999, the Company announced that the terms of the Lock-Up Agreement had been approved by its lending syndicate. The Company will now prepare, in conjunction with its lending syndicate, a pre-packaged plan of reorganization. The Company expects to file the Plan in June 1999 under Chapter 11 of the United States Bankruptcy Code and in Canada under the Companies Creditors Arrangement Act, and to emerge from the restructuring process within 60 to 90 days thereafter. Key to the Plan is the preservation of the value of the Company's business through the protection of its employees, customers and ongoing trade suppliers. There can be no assurance that the Plan will be filed and if filed, that it will be approved by the required stakeholders and the courts having jurisdiction over such matters. If the Plan is not approved, there can be no assurance that the Company will continue as a going concern. PSS WORLD: Shepherd & Geller Files Complaint in Florida ------------------------------------------------------- The law firm of Shepherd & Geller, LLC announced yesterday that it has filed a class action lawsuit in the United States District Court, Middle District of Florida, on behalf of all individuals and entities that purchased the common stock of PSS World Medical, Inc. (NYSE:PSSI) between June 16, 1998 and March 10, 1999, inclusive. The complaint charges that PSS World Medical, Inc. and certain of its officers and directors violated the federal securities laws by improperly accounting for certain merger acquisitions. The Complaint alleges that Defendants' improper accounting methodologies caused the price of the Company stock to be artificially inflated during the Class Period. Then, when the Company revealed that it was the target of an SEC investigation over its accounting practices, the stock price plunged. Contact Paul J. Geller SHEPHERD & GELLER, LLC 7200 West Camino Real, Suite 203 Boca Raton, FL 33433 (561) 750-3000 Toll Free: 1- 888-262-3131 E-mail: pgeller@classactioncounsel.com or Scott R. Shepherd SHEPHERD & GELLER, LLC 117 Gayley St., Suite 200 Media, PA 19063 (610) 891-9880 Toll Free: 1-877-891-9880 E-mail: sshepherd@classactioncounsel.com RAINFOREST CAFE: Wolf Haldenstein Files Revised Complaint --------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP, as previously court appointed lead counsel, announces that it filed a subsequent and revised complaint in the United States District Court for the District of Minnesota on behalf of investors who purchased the common stock of Rainforest Cafe, Inc. (NASDAQ:RAIN) between October 20, 1997, and January 6, 1998. The revised complaint charges that Rainforest and certain officers and directors of the Company violated the federal securities laws and regulations of the United States. Specifically, the complaint alleges that during the Class Period, defendants failed to disclose material facts concerning declining sales in the Company's restaurants and issued a series of misstatements concerning the Company's future earnings prospects. Contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575-0735 (Gregory Mark Nespole, Esq. or legal assistant Michael Miske), classmember@whafh.com or whafh@aol.com via e-mail. RITE AID: Shepherd & Geller Files Complaint in Pennsylvania ----------------------------------------------------------- Shepherd & Geller, LLC, announced that a class action has been filed in United States District Court, Eastern District of Pennsylvania, on behalf of all purchasers of Rite Aid Corporation common stock (NYSE:RAD) during the period December 14, 1998 through March 11, 1999. The complaint charges that Rite Aid Corporation and certain of its officers and directors violated the federal securities laws by issuing false and misleading statements to the investing public regarding the Company's financial results. When the truth about the Company's financials was revealed, the price of the stock collapsed. Contact Scott R. Shepherd SHEPHERD & GELLER, LLC 117 Gayley St., Suite 200 Media, PA 19063 (610) 891-9880 Toll Free: 1-877-891- 9880 E-mail: sshepherd@classactioncounsel.com or Paul J. Geller SHEPHERD & GELLER, LLC 7200 West Camino Real, Suite 203 Boca Raton, FL 33433 (561) 750-3000 Toll Free: 1-888-262-3131 E-mail: pgeller@classactioncounsel.com SGL CARBON: Settles Antitrust Case with Justice Department ---------------------------------------------------------- SGL CARBON AG (NYSE: SGG) announced today that it has entered into plea agreements, settling the antitrust investigation by the United States Department of Justice (DoJ) regarding graphite electrodes. As a result, the Company will pay a total fine of US-$ 145 million, made up by US-$ 135 million for the Company and US-$ 10 million, respectively, for the Chairman of the Board of Management, Robert J. Koehler. As a consequence, the DoJ has agreed not to take any action against any of the Company's other employees in connection with any related charges. With these agreements, the DoJ has concluded its investigation into the business activities of SGL CARBON AG and its subsidiaries. The amount of US$145 million will be payable in six annual installments interest-free. As a result, the net present value of the agreements is significantly below the nominal value and improves the cash flow position considerably. The Company stated that it has agreed to this settlement with the U.S. authorities in order to resolve nearly two years of antitrust investigations and to avoid potentially lengthy litigation with further burdens on its employees and business. Also, the Supervisory Board who has been closely monitoring these developments, fully supports this decision on the grounds that it is in the best interest of the entire company, its shareholders and all its employees and it allows to refocus full attention and resources on its businesses. With regard to the civil proceedings in North America, further progress has been made. The Company confirmed today that settlements have been reached with all plaintiffs in Canada over the past two weeks. After reaching additional agreements in the past weeks, SGL CARBON has now also settled a significant number of outstanding claims in the USA. With regard to the remaining open cases in the USA with the class action and a group of plaintiffs, the U.S. subsidiary SGL CARBON Corporation filed a voluntary petition under Chapter 11 on December 16, 1998, in order to protect itself against unreasonable demands. On April 23, 1999, the judge responsible for the Chapter 11 proceedings denied a motion to dismiss the case. Following this development SGL CARBON is still committed to pursuing an expeditious and amicable resolution to these pending cases. With all these developments and since net present value calculations cannot be considered in the formation of reserves according to German accounting principles, SGL CARBON decided to review the existing reserve of DM 410 million taken approximately a year ago. This became necessary mainly due to the insufficient reserve for the DoJ fine, but also because of the recent agreement with the Canadian plaintiffs and an updated assessment of all remaining risks including those outside the USA. As a result, the overall reserve will be increased by DM 125 million and booked in the second quarter of 1999. With these agreements SGL CARBON has put behind it major parts of the antitrust case and is committed to conclude the remaining parts as soon as possible. SUN HEALTHCARE: Klayman Firm Files Complaint in New Mexico ---------------------------------------------------------- The law firms of Lawrence L. Klayman, P.A. and Shepherd & Geller, LLC today announced that a class action has been filed in Federal Court in New Mexico on behalf of all purchasers of Sun Healthcare Group common stock (NYSE:SHG) during the period June 2, 1998 through February 1, 1999, inclusive. The complaint charges that Sun Healthcare Group and certain of its officers and directors violated the federal securities laws by issuing false and misleading statements to the investing public regarding the impact that changes in the Medicare reimbursement system would have on the Company. When the truth finally was revealed, the price of the stock collapsed. Contacts: Scott R. Shepherd SHEPHERD & GELLER, LLC Toll Free: 1-877-891-9880 E-mail: sshepherd@classactioncounsel.com Paul J. Geller SHEPHERD & GELLER, LLC Toll Free: 1-888-262-3131 E-mail: pgeller@classactioncounsel.com Lawrence L. Klayman LAWRENCE L. KLAYMAN, P.A. Toll Free: 1-888-997-9956 E-mail: LLKSEC@aol.com TRAK AUTO: Settles Employee Claims for $4.5 Mil Before Insurance ---------------------------------------------------------------- In January 1998, TRAK AUTO CORP. was named as a defendant in two class action lawsuits (Amezcua v. Trak Auto Corporation, Superior Court of the State of California, Action No. BC183900 and Tett, v. Trak Auto Corporation, Superior Court of the State of California, Action No. BC186931) involving former California employees of the Company who alleged that the Company engaged in improper wage-and-hour practices. The suits claimed that former salaried employees should have been paid overtime. The Company has entered into a settlement agreement pursuant to which the Company's maximum exposure to members of the classes in both class action lawsuits was $4.5 million, and that money has been paid into an escrow account for payments to class members of these lawsuits. Trak anticipates recovering approximately $3.8 million of these amounts from its insurance carriers, VIVUS, INC.: Settles Shareholder Lawsuits for $6 Million -------------------------------------------------------- VIVUS, Inc. (Nasdaq:VVUS) announced yesterday that it has reached a settlement of the shareholder class action lawsuits pending in the United States District Court for Northern District of California and the Superior Court of the State of California for San Mateo County. The aggregate settlement amount is $6 million. The settlement will be funded by insurance proceeds of $5.4 million and by the Company contributing 120,000 shares of VIVUS Common Stock to the settlement fund. The settlement is subject to approval by the Court. ********* 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 Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Peter A. Chapman, Editor. Copyright 1999. All rights reserved. ISSN XXXX-XXXX. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *