/raid1/www/Hosts/bankrupt/CAR_Public/990511.MBX
C L A S S A C T I O N R E P O R T E R
Tuesday, May 11, 1999, Vol. 1, No. 68
Headlines
CHECKERS DRIVE-IN: Continues Defense of Rally's Merger Suit
CHEMINOVA, INC.: Malathion Pesticide Exposure Suit Filed in N.J.
CONNECTICUT POLICE: State Settles Wiretap Case for $17 Million
DUPONT: Continues to Fight & Settle Benlate Crop Damage Claims
EASTMAN CHEMICAL: Antitrust Plea Leads to Sorbate Purchaser Suit
EEX CORPORATION: Discovery Stayed Pending Motion to Dismiss
FVC.COM: Rabin & Peckel Files Complaint in California
IPO FEES: Consistent 7% Fee Could Haunt Underwriters
IRIDIUM WORLD: Olsen Firm Files Complaint in D.C.
IRIDIUM WORLD: Finkelstein Thompson Files 2nd Complaint in D.C.
IRIDIUM WORLD: Bernstein Litowitz Files Complaint in D.C.
IVF AMERICA: NY High Court Increases Medical Advertising Risks
HOST MARRIOTT: Limited Partners Petition for Class Action Status
MCKESSON HBOC: Weiss & Yourman Points-Out Business Week Coverage
MCKESSON HBOC: UF&CW Pension Fund Joins Long List of Plaintiffs
MCKESSON HBOC: Rabin & Peckel Amend California Complaint
MCKESSON HBOC: Caluey Firm Files Complaint in California
MEDIAONE GROUP: Abbey Gardy Files Complaint in New York
PHYSICIAN COMPUTER: Agrees to $25 Mil Settlement; Payment Suspect
PLM INTERNATIONAL: Monetary & Equitable Settlements Proposed
RALLYS HAMBURGERS: Settlement Talks Failed; Litigation Continues
ROYAL CARIBBEAN: Overcharged Passengers Receive $20-$45 Coupons
QUALCOMM, INC.: Employees Sue Over Unvested Stock Options
RITE AID: Finkelstein & Krinsk File Complaint in [Pennsylvania]
SS&C TECHNOLOGIES: Settles "Distracting" Shareholder Litigation
TAX-DEFERRED ANNUITIES: Deceptive Sales Practices Alleged
USDA: Employees' Attorneys Hopeful for Out-of-Court Settlement
*********
CHECKERS DRIVE-IN: Continues Defense of Rally's Merger Suit
-----------------------------------------------------------
DAVID J. STEINBERG AND CHAILE B. STEINBERG, INDIVIDUALLY AND ON
BEHALF OF THOSE SIMILARLY SITUATED V. CHECKERS DRIVE-IN
RESTAURANTS, INC., ET AL., Case No. 16680, is a putative class
action filed on October 2, 1998, in the Delaware Chancery Court
in and for New Castle County, Delaware by David J. Steinberg and
Chaile B. Steinberg, alleged stockholders of an unspecified
number of shares of the Company's common stock. The complaint
names the Company and certain of its current and former officers
and directors as defendants including William P. Foley, II, James
J. Gillespie, Harvey Fattig, Joseph N. Stein, Richard A. Peabody,
James T. Holder, Terry N. Christensen, Frederick E. Fisher,
Clarence V. McKee Burt Sugarman, C. Thomas Thompson and Peter C.
O'Hara. The Complaint also names Rally's and GIANT as
defendants. As with the FIRST ALBANY complaint described above,
this complaint arises out of the proposed merger announced on
September 28, 1998 between the Company, Rally's and GIANT and
alleges generally, that certain of the defendants engaged
in an unlawful scheme and plan to permit Rally's to acquire the
public shares of the Company's common stock in a "going-private"
transaction for grossly inadequate consideration and in breach of
the defendant's fiduciary duties.
The plaintiffs allegedly initiated the Complaint on behalf of all
stockholders of the Company as of September 28, 1998, and seeks
INTER ALIA, certain declaratory and injunctive relief against the
consummation of the Proposed merger, or in the event the Proposed
Merger is consummated, recision of the Proposed Merger and costs
and disbursements incurred in connection with bringing the
action, including attorneys' fees, and such other relief as the
Court may deem just and proper. For the reasons stated above in
the description of the FIRST ALBANY action, plaintiffs have
agreed to provide the Company and all other defendants with an
open extension of time to respond to the complaint. Plaintiffs
have indicated that they will likely file an amended complaint in
the event of the consummation of a merger between the Company and
Rally's. The Company believes the lawsuit is without merit and
intends to defend it vigorously.
CHEMINOVA, INC.: Malathion Pesticide Exposure Suit Filed in N.J.
----------------------------------------------------------------
At least 100,000 people who claim they suffered health problems
because of exposure to the pesticide malathion are part of a
lawsuit against the substance's manufacturer.
The class-action suit was filed against Cheminova Inc., of Wayne,
N.J., on Friday in U.S. district court. The lawsuit claims the
company improperly handled and stored the chemical, which was
spayed in 1997 and 1998 in several Florida counties, including
Hillsborough, Polk, Manatee and Sarasota.
Malathion is used to eradicate the fruit-eating Medfly. An
estimated 1 million people lived and worked in the spray zone,
and some complained of sinus congestion, headaches and
respiratory problems. Those suing the company say they were
exposed to contaminated batches of malathion. They are seeking
unspecified damages to pay for past and future medical bills,
property damages and other expenses.
"I hope this ends the use of malathion," said Kathy Rink of
Sarasota, one of the plaintiffs named in the class action suit.
"I hope this sends the message that they can't come and poison
us."
Cheminova officials had no immediate comment.
The suit asserts that malathion was stored above recommended
temperatures, causing the pesticide to break down into its highly
toxic components, malaoxon and isomalathion. It accused the
company of knowing about the danger, and also entrusting handling
and storage of the chemical to unqualified people. (Associated
Press 08-May-1999)
CONNECTICUT POLICE: State Settles Wiretap Case for $17 Million
--------------------------------------------------------------
The state of Connecticut Friday agreed to spend $17 million to
settle a decade-old class-action lawsuit brought by hundreds of
people who claim the state police systematically violated their
rights by secretly recording their telephone conversations.
The lawsuit, which has been bitterly contested since 1989,
complained that, from 1978 to 1989, the state police had an
official policy requiring the secret recording of virtually
every telephone call to and from all state police barracks
around the state. By settling the lawsuit, the state does not
dispute that some of the recorded calls -- although the number
will almost certainly never be known -- involved conversations
between arrested suspects and their attorneys. Such calls, by
law, are supposed to be protected.
The lawsuit was filed by the Connecticut Criminal Defense Lawyers
Association, a group that argued that the recording policy was
just one symptom of a state police department that had become
inordinately powerful and independent. Disclosure of the abuses
detailed in the lawsuit, in fact, marked the end of an era in
the history of the state police, according to Michael Koskoff,
attorney for the lead plaintiff in the case. After the recording
policy was disclosed, Lester Forst, the state police commander at
the time, was fired, and some of his closest subordinates were
forced to resign. There is no one in authority in the state
administration today who was in office while the taping policy
was in force.
"This was a very, very sad chapter in Connecticut history,"
Koskoff said Friday. "It was the state police run amok. They
were unsupervised. They invaded the privacy of private
citizens. They violated, in a terribly outright way, the laws of
both the state and the federal government," he said. "So this
was not an inadvertent oversight, but rather gross violation of
the rights of its citizens." Koskoff said that evidence
unearthed during the litigation showed that the state police
recording program was "the most pervasive illegal wiretap program
in any state or municipal government in the history of the United
States. There is nothing that anyone has been able to find that
compares."
State Attorney General Richard Blumenthal, whose office settled
the lawsuit, said Friday, "We're paying the bill for regrettable
practices that were stopped more than a decade ago and were not
permitted by anyone in authority now."
Public Safety Commissioner Henry Lee, who now supervises the
state police, issued a statement saying his department now has
policies to prevent abuses. But he also said the tape-recording
"is not something state police intended to do. It was an
oversight."
The plaintiffs in the lawsuit have argued consistently that the
tape-recording policy was intentional, and they have uncovered
evidence over 10 years of litigation to support that position.
For example, state police memorandums were located that order the
purchase and installation of sophisticated recording equipment.
When the equipment arrived and it was determined that it issued
beep tones to alert telephone callers that they were being
recorded, additional memorandums were issued ordering the
removal of the tones.
"There were calls that were listened to," Koskoff said. "The
problem here is the very nature of the beast. It is something
that is done in secret. The people who do it are breaking the
law and they're not going to come forward and tell you. The
lawyers whose calls were overheard do not know to what extent
the calls were used against their clients.
"But we do know the calls were listened to," he said. "We do know
there was ongoing monitoring of the tapes and we do know the
barracks where they were recorded and we know when."
State Rep. Richard D. Tulisano, D-Rocky Hill, perhaps the
legislature's best known civil libertarian, supported the
settlement and said state exposure could have been "much
greater" than $17 million. He said the cavalier attitude toward
civil rights was once part of state police culture.
"They think that the ends justify the means," said Tulisano.
"That's a continuing problem with government. I don't think
people have a commitment to civil rights and individual rights,
which we supposedly fight wars over."
He predicted such problems will be repeated. "I suspect we will
see this in the future," he said. "I don't think they ever learn
lessons. . . . I'm sure they taped me over the years."
Deputy Attorney General Aaron Bayer, who negotiated the
settlement for the state, called the taping scandal a well-
intentioned effort that spun out of control. It was originally
intended to monitor critical emergency calls, he said.
"There are a number of legitimate, legal law enforcement purposes
for having a recording system," he said. "But unfortunately,
during this time the uses of the system were not properly
limited."
The lawsuit was drafted on the basis that the recording policy
violated both state and federal wiretapping laws. Although the
parties have agreed on a settlement, it will not take force until
it is approved by U.S. District Judge Alan Nevas, who is trying
the case.
There are now about 1,600 people who have indicated they may file
claims against the state. No one knows how many more may
surface. Under the proposed settlement, people who prove they
were illegally recorded can collect between $350 and $1,950,
depending on how many calls were recorded, the nature of the
recorded conversations and when they were recorded. The $17
million fund agreed to by the state will cover payments to those
who were recorded, costs of administering the payments and fees
to lawyers. Total value of fees and costs has yet to be
determined. If total claims exceed the $17 million pool, the
payments to individuals will be decreased. If total claims are
less than $17 million, the surplus will return to the state,
according to the proposed settlement.
"This was something that was never about money, but the right to
privacy," Koskoff said. "An important part of the settlement is
that an [order] is going to issue against the state police to
prevent them from ever engaging in this behavior again." (The
Hartford Courant 08-May-1999)
DUPONT: Continues to Fight & Settle Benlate Crop Damage Claims
--------------------------------------------------------------
In 1991, E. I. du Pont de Nemours and Company began receiving
claims by growers that use of "Benlate" 50 DF fungicide had
caused crop damage. Based on the belief that "Benlate" 50 DF
would be found to be a contributor to the claimed damage, DuPont
began paying crop damage claims. In 1992, however, after 18
months of extensive research, DuPont scientists concluded that
"Benlate" 50 DF was not responsible for plant damage reports
received since March 1991, and concurrent with these research
findings, DuPont stopped paying claims. To date, DuPont has been
served with more than 750 lawsuits, most by growers who allege
plant damage from using "Benlate" 50 DF fungicide. Approximately
65 crop lawsuits are still pending against the company, as are
approximately 75 additional "Benlate" 50 DF cases based on
alleged personal injury, alleged securities violations, alleged
discovery abuse and fraud, and alleged damage to shrimp farming
operations. On February 17, 1999, the Florida Third Circuit
Court of Appeals reversed a June 1996 personal injury verdict of
$3,980,000 against DuPont. Other personal injury cases are
pending. In 1997, three putative "Benlate" 50 DF class actions
alleging crop damage and asserting fraud claims were filed: one
in Florida state court on behalf of growers of ornamental plants
in Florida; another in Hawaii state court on behalf of Hawaii
growers; and a third in Alabama state court seeking a nationwide
class. The class allegations in Florida have been dropped. The
Alabama case received conditional class certification by
the state court, but that certification has since been vacated.
A consent order and settlement recently ended a long running
Georgia case wherein plaintiffs had accused the Company of
discovery abuse during a 1993 "Benlate" 50 DF crop case. Under
the consent order, DuPont will supply $11 million to fund
academic chairs at four Georgia law schools and an annual
symposium on professionalism in the practice of law in Georgia.
The settlement also provides for the payment of plaintiffs'
attorneys fees.
A securities fraud class action filed in September 1995 by a
shareholder in federal district court in Florida against the
company and the then-Chairman is also still pending. The
plaintiff in this case alleges that DuPont made false and
misleading statements and omissions about "Benlate" 50 DF, with
the alleged effect of inflating the price of DuPont's stock
between June 19, 1993, and January 27, 1995. The district court
has certified the case as a class action. Discovery is
proceeding. A shareholder derivative action filed in Georgia
federal district court, alleging that DuPont's Board of
Directors breached various duties in connection with the
"Benlate" 50 DF litigation, remains pending. Certain plaintiffs
who have previously settled with the company have filed cases
alleging fraud and other misconduct relating to the litigation
and settlement of "Benlate" 50 DF claims. A number of these
cases, filed in Florida, Georgia and Hawaii, have been
dismissed by trial courts. The Eleventh Circuit Court of Appeals
has affirmed the dismissal of a number of such cases and has
referred others to the Florida Supreme Court for resolution of
questions of Florida law. In February 1999 the Ninth Circuit
Court of Appeals overturned the dismissal of one of the Hawaii
cases, remanding the case to federal district court. Another of
the Hawaii cases is on appeal. DuPont continues to believe that
"Benlate" 50 DF fungicide did not cause the damages alleged in
these cases and intends to defend against such allegations in
ongoing matters.
EASTMAN CHEMICAL: Antitrust Plea Leads to Sorbate Purchaser Suit
----------------------------------------------------------------
On September 30, 1998, EASTMAN CHEMICAL CO. entered into a
voluntary plea agreement with the Department of Justice and
agreed to pay an $11 million fine to resolve a charge brought
against the Company for violation of Section One of the Sherman
Act. Under the agreement, Eastman entered a plea of guilty to one
count of price-fixing for sorbates, a class of food
preservatives, from January 1995 through June 1997. The plea
agreement was approved by the United States District Court for
the Northern District of California on October 21, 1998. The
Company recognized the entire fine in third quarter 1998 and is
paying the fine in installments over a period of five years.
In addition, EASTMAN CHEMICAL CO., along with other companies,
has been named as a defendant in ten antitrust lawsuits brought
subsequent to the Company's plea agreement as putative class
actions on behalf of certain purchasers of sorbates. In each
case, the plaintiffs allege that the defendants engaged in a
conspiracy to fix the price of sorbates and that the class
members paid more for sorbates than they would have paid absent
the defendants' conspiracy. Four of the suits were filed in
Superior Courts for the State of California under various state
antitrust and consumer protection laws on behalf of classes of
indirect purchasers of sorbates; four of the proceedings are
pending in United States District Court for the Northern District
of California, three under federal antitrust laws on behalf of
classes of direct purchasers of sorbates and one under
California's antitrust and consumer protection laws on behalf of
a class of all indirect purchasers of sorbates; and two cases
were filed in Circuit Courts for the State of Tennessee under the
antitrust and consumer protection laws of various states,
including Tennessee, on behalf of classes of indirect purchasers
of sorbates in those states. The plaintiffs in each case seek
treble damages of unspecified amounts, attorneys' fees and costs,
and other unspecified relief; in addition, certain of the actions
claim restitution, injunction against alleged illegal conduct,
and other equitable relief. Each proceeding is in preliminary
pretrial motion and discovery stage, and none of the proposed
classes has been certified.
Eastman intends vigorously to defend these actions unless they
can be settled on terms acceptable to the parties. These matters
could result in the Company being subject to monetary damages and
expenses. The Company recognized a charge to earnings in the
fourth quarter of 1998 of $8 million for the estimated costs,
including legal fees, related to the pending sorbates litigation
described above. Because of the early stage of these putative
class action lawsuits, however, the ultimate outcome of these
matters cannot presently be determined, and they may result in
greater or lesser liability than that currently provided for in
the Company's financial statements.
EEX CORPORATION: Discovery Stayed Pending Motion to Dismiss
-----------------------------------------------------------
On August 3, 1998, EEX Corporation, several current and/or former
officers and directors, Texas Utilities Company ("TUC") and TUC's
Chief Executive Officer were named in a class action lawsuit
filed in the Northern District of Texas that was designated as
Gracy Fund L.P. v. EEX Corporation, et al. The Gracy Fund
complaint alleged violations of the Securities Act of 1933 ("33
Act") and the Securities Exchange Act of 1934 ("34 Act") against
various defendants.
Additionally, on August 3, 1998, EEX, several of its current
and/or former officers and directors, and two additional
companies (ENSERCH Corporation and DeGolyer & MacNaughton) were
named in a class action lawsuit filed in the Southern District of
Texas that was designated as Stan C. Thorne v. EEX Corp., et al.
The Thorne complaint alleged violations of the 34 Act and common
law-based negligent misrepresentations and fraud claims.
On October 5, 1998, the Thorne defendants filed a motion to
transfer the Thorne action to the Northern District of Texas. On
November 20, 1998, the Thorne action was transferred to the
Northern District of Texas and consolidated with the Gracy Fund
action.
On January 22, 1999, plaintiffs filed an amended class action
complaint in the consolidated Gracy Fund action against EEX,
several of its current and/or former officers and directors and
another company, ENSERCH Corporation. The Consolidated Complaint
alleges violations of Sections 11, 12(a)(2) and 15 of the 33 Act
and violations of Sections 10(b), 14(a) and 20(a) of the 34 Act
against various defendants. The Consolidated Complaint alleges
the Sections 10(b), 15 and 20(a) claims on behalf of a class of
plaintiffs who acquired EEX's stock pursuant to an October 1996
Registration Statement and Proxy/Prospectus.
Plaintiffs allege that during the class period, defendants made
materially false and misleading statements, and failed to
disclose material facts, regarding the value and volume of EEX's
proved reserves from its East Texas operations. According to
plaintiffs, these purported misrepresentations artificially
inflated the price of EEX's common stock throughout the class
period, induced the EEX Subclass to approve the merger that spun
EEX off from ENSERCH and induced the EEX Subclass to acquire
stock pursuant to the Registration Statement and Proxy/Prospectus
issued regarding this merger.
EEX intends to contest this action vigorously and has filed a
motion to dismiss the Consolidated Complaint. All discovery is
stayed pending the determination of the motion to dismiss.
FVC.COM: Rabin & Peckel Files Complaint in California
-----------------------------------------------------
Rabin & Peckel LLP announced the filing of a putative class
action in the United States District Court for the Northern
District of California on behalf of all purchasers of securities
of FVC.com, Inc. (Nasdaq: FVCX), from January 21, 1999 through
April 6, 1999, inclusive.
The Complaint alleges that, during the Class Period, FVC and
certain of its top officers and directors knowingly or
recklessly overstated FVC's financial condition and results of
operations for the Company's fourth quarter for fiscal 1998,
among other things, triggering liability under the Securities
Exchange Act of 1934 (Sections 10(b) and 20(a)). Specifically,
the defendants knowing or recklessly overstated sales from its
software unit, in violation of generally accepted accounting
principles ("GAAP"). The Complaint further alleges that certain
defendants availed themselves of their insider knowledge to take
advantage of the Company's inflated share price and sell their
own shares of FVC common stock for proceeds of more than $3
million.
Contact Joseph V. McBride of Rabin & Peckel LLP at (212) 682-1818
by telephone or email@rabinlaw.com by e-mail, or contact Leo W.
Desmond at The Law Office of Leo W. Desmond in West Palm Beach at
(561) 712-8000 by phone or info@securitiesattorney.com by e-mail.
IPO FEES: Consistent 7% Fee Could Haunt Underwriters
----------------------------------------------------
Wall Street could have a tough time debunking charges that it
stifled competition in initial public offerings, as an analysis
of the business shows that while underwriting fees have eroded
across the broad equity market, the 7% standard for small IPOs
never budged.
Of the more than 2,100 IPOs of less than $100 million priced in
the last four years, only 177 were priced below 7%, according to
Thomson Financial Securities Data. That consistency is at the
heart of a Department of Justice investigation into anti-
competitive practices in the IPO market and a class- action
lawsuit based on similar claims that was filed in November
against two dozen underwriters.
"The 7% standard is not something which has been significantly
eroded for the great bulk of the underwritings in that size
range {of $100 million and below}," said Samuel Hayes, an
economics professor at Harvard Business School. Certainly, IPO
spreads are not as static as they first appear-fees can average
anywhere from just over 4% to over 7%, depending upon the size of
the offering. However, the smaller the deal, the bigger the fee.
And for deals under $100 million, spreads have been decidedly
weighted at 7% and above.
Last year's blockbuster run for IPOs bears this out. The average
fee on deals between $50 and $100 million was 6.8% in 1998 with
average proceeds of $71 million-a four-year high. Meanwhile, in
IPOs below $50 million the spread was 7.20% with an average
proceed of $23.3 million. Both numbers are up slightly from a
year ago. Deals between $50 and $100 million averaged 6.68% in
1997, while those below $50 million carried an average fee of
7.17%.
The close examination of IPO underwriting fees was initiated by a
recent study by a University of Florida economics professor,
which revealed that more than 90% of deals with proceeds between
$20 million and $80 million had spreads of exactly 7%. The
study's author, Jay Ritter, said that the 7% standard is
significantly more prevalent today than a decade ago, while most
other banking fees including secondary equity offerings are
competitively priced. "For deals between $20 million and $80
million there is no trend {in fee movement}," Ritter said.
Although Ritter's work has been central in the legal action and
Justice investigation so far, equity pros point out that price
is often one of the last factors considered by potential IPO
candidates when choosing an underwriter, ranking a distant third
behind research and coverage.
"Fees are pretty standard, but I don't see the point of this as a
consumer protection issue or an antitrust issue," said Joe
Bartlett, an attorney with Morrison & Forrester. "You don't pick
an underwriter on the basis of price." In addition, underwriters
are quick to point out that smaller IPOs will always generate
higher fees due to the increased risks for underwriters, as
evidenced in recent months by several tiny tech IPOs that blew up
and were cancelled after pricing. In fact, while the major
securities firms-Goldman, Sachs & Co., Morgan Stanley Dean
Witter, Merrill Lynch & Co., Donaldson Lufkin & Jenrette,
Salomon Smith Barney, Lehman Brothers, et al-are the focus of the
complaints, business can get even more expensive for the smallest
issuers who turn to small-cap and boutique securities firms.
Indeed, the cost of business has increased throughout the small-
to micro- cap sector, where underwriters of deals $50 million and
under are fetching top dollar for their services, raking in fees
as high as 10% all-in in some cases. "The smaller in size you
get the more the alternatives {for other financing sources} are
diminished," said John Starr, head of capital markets at Gruntal
& Co. "That means bigger fees."
However, arguments about risks and alternatives could be lost
amid charges that the actual market value of a mandate is never
determined on most deals due to the lack of true competitive
bidding. Also, the fact that there has been movement in fees in
other areas of the market could provide ammunition for both
Justice and the class-action lawyers. But the impact that either
case ultimately will have on the underwriting business--or the
7% fee standard--remains to be seen.
"If this current inquiry gets enough publicity and arm twisting
we may see an acceleration in fee deterioration," added Hayes.
"But generally speaking, vendors only make concessions when all
else fails." (IPO Aftermarket & Investment Dealers Digest 10-
May-1999)
IRIDIUM WORLD: Olsen Firm Files Complaint in D.C.
-------------------------------------------------
The Olsen Law Firm, on May 6, 1999, filed a class action lawsuit
in the United States District Court for the District of Columbia
on behalf of all persons who between November 1, 1998 through
March 29, 1999, inclusive, purchased common stock of Iridium
World Communications (NASDAQ: IRID).
The complaint charges Iridium, certain of its officers and
directors, and its controlling shareholder Motorola, Inc. with
violations of the federal securities laws and regulations.
Specifically, the complaint alleges that, during the Class
Period, defendants issued materially false and misleading
statements concerning the Company's ability to launch the Iridium
system and subscriber demand for Iridium services. Ultimately,
on March 29, 1999, the Company disclosed that it would not be
able to satisfy its secured credit covenants due to its failure
to meet minimum subscription targets. Following this disclosure,
Iridium's stock price fell 73% from its 52 week high in May
1998.
Contact Kurt Olsen, Esq. of THE OLSEN LAW FIRM at 202-261-3553 by
phone or kurtolsen@sprintmail.com by e-mail.
IRIDIUM WORLD: Finkelstein Thompson Files 2nd Complaint in D.C.
---------------------------------------------------------------
On April 22, 1999, Finkelstein, Thompson & Loughran filed the
first securities fraud class action lawsuit against Iridium
World Communications, Ltd. (Nasdaq: IRID) in the United States
District Court for the District of Columbia, on behalf of
shareholders who purchased Iridium stock between September 9,
1998 and March 29, 1999.
On April 27, 1999, Finkelstein, Thompson & Loughran filed a
second class action Complaint against Iridium, on behalf of
purchasers of any Iridium securities (including bonds, notes and
warrants issued by Iridium or Iridium's subsidiaries, Iridium
LLC and Iridium Operating LLC) during the Class Period.
Both Complaints charge Iridium, Motorola, Inc. and certain
officers and directors of Iridium with violations of the federal
securities laws and regulations of the United States. Each
alleges that, during the Class Period, defendants issued false
and misleading statements and failed to disclose material facts
concerning the Iridium System, including misrepresentations and
omissions concerning the capabilities of the System, the timing
of "commercial availability", certain revenue targets, and the
Company's ability to meet certain covenants with its lenders.
The suits further charge that Iridium insiders sold over $1.5
million in stock during February 1999, and that certain
defendants sold over $250 million of Iridium stock during a
January 1999 public offering. The Company's fraudulent practices
were disclosed on March 29, 1999 when, for the first time, the
Company disclosed that it would not meet its necessary
subscriber numbers and that, as a direct consequence, the Company
would not be able to satisfy its Secured Credit Facility
covenants. More recently, further news developments have
underscored the problems Iridium faced throughout the Class
Period, but failed to disclose accurately. These developments
include the resignation of Edward Staiano as the Company's CEO,
and the publication of news articles in The Wall Street Journal
and TheStreet.com which provide strong anecdotal evidence that
the Iridium System fails to perform in a commercially acceptable
manner.
Contact (i) Donald J. Enright with Finkelstein, Thompson &
Loughran, toll-free at 888-333- 4409, or at DJE@FTLLAW.com by e-
mail; (ii) Fred Isquith with Wolf Haldenstein, at 800-575-0735
or at classmember@whafh.com by e-mail; or (iii) or Tzivia Brody
with Stull, Stull & Brody at 800-337-4983 or at SSBNY@aol.com by
e-mail.
IRIDIUM WORLD: Bernstein Litowitz Files Complaint in D.C.
---------------------------------------------------------
Bernstein Litowitz Berger & Grossmann LLP announces that on May
6, 1999, a class action lawsuit was filed in the United States
District Court for the District of Columbia on behalf of all
persons who between November 1, 1998 through March 29, 1999,
inclusive, purchased common stock of Iridium World Communications
(NASDAQ: IRID).
The complaint charges Iridium, certain of its officers and
directors, and its controlling shareholder Motorola, Inc. with
violations of the federal securities laws and regulations.
Specifically, the complaint alleges that, during the Class
Period, defendants issued materially false and misleading
statements concerning the Company's ability to launch the Iridium
system and subscriber demand for Iridium services. Ultimately,
on March 29, 1999, the Company disclosed that it would not be
able to satisfy its secured credit covenants due to its failure
to meet minimum subscription targets. Following this disclosure,
Iridium's stock price fell 73% from its 52 week high in May
1998.
Contact Robert S. Gans or Gerald H. Silk of Bernstein Litowitz
Berger & Grossmann LLP at (800) 380-8496 or at robert@blbglaw.com
by e-mail.
IVF AMERICA: NY High Court Increases Medical Advertising Risks
--------------------------------------------------------------
Physicians who market their services like "automobile dealers and
wedding singers" can be sued under New York's strict consumer
protection laws, New York's highest court ruled Tuesday.
The ground-breaking decision authored by Chief Judge Judith S.
Kaye establishes for the first time that medical consumers in
New York state can sue doctors for deceptive advertising.
Previously, doctors were shielded by the more physician-friendly
public health laws.
Kaye said in a 7-0 decision that doctors -- and, by implication,
other professionals such as lawyers -- are "subject to the
standards of an honest marketplace," as outlined in consumer
protection law, "when they choose to reach out to the consuming
public at large in order to promote business."
Last week's ruling exposes doctors and health care companies to
class-action lawsuits for up to six years -- generally double
the statute of limitations on a medical malpractice action.
"The court of appeals . . . has indicated that it will construe
the deceptive practice statutes in a very broad manner to
protect consumers," said Sheldon V. Burman, attorney for the
plaintiffs. The decision also extends the power of the attorney
general to act against unscrupulous medical providers, according
to Attorney General Eliot Spitzer.
"We want to ensure the consumers are protected, that the
consumers are not misled by promises of treatment that prove to
be illusory," Spitzer said. "It increases our capacity to act
against companies that would otherwise be tempted to make false
statements about the likelihood of success of their treatments. .
. . It is essential that we have this arrow in our quiver."
The decision stemmed from a consumer fraud case involving a
Westchester County couple who claim they were deceived by a
company, IVF America Inc., which ran a fertility clinic at
United Hospital in Port Chester. The company, which is no longer
associated with United Hospital, is now known as Integramed
America and is based in Purchase.
Jayne and Kenneth Karlin, who endured seven unsuccessful in vitro
fertilization treatments between 1987 and 1990, sued, alleging
IVF America misled them about the success rate in its program
and concealed the risks.
However, the suit was thrown out. An appellate court held that
state's General Business Law, which prohibits deceptive trade
practices and false advertising, does not apply to "the
providers of medical services."
On Tuesday, the Court of Appeals unanimously reversed it.
Nancy Ledy-Gurren, a New York City attorney who represents the
firm, said the decision, however, could have a "rebound affect"
in terms of chilling the free-flow of information from medical
professionals to medical consumers.
However, Kaye said the ruling should have little, if any, impact
on the traditional doctor-patient relationship. She noted that
consumer protection laws can succeed only if the plaintiffs can
demonstrate an impact on consumers at large, "something that a
physician's treatment of an individual patient typically does
not have." (Times Union 05-May-1999)
HOST MARRIOTT: Limited Partners Petition for Class Action Status
----------------------------------------------------------------
On March 16, 1998, limited partners in several partnerships
sponsored by Host Marriott, filed a lawsuit, styled Robert M.
Haas, Sr. and Irwin Randolph Joint Tenants, et al. v. Marriott
International, Inc., et al., Case No. 98-CI-04092, in the 57th
Judicial District Court of Bexar County, Texas against
Marriott International, Inc., Host Marriott, various of
their subsidiaries, J.W. Marriott, Jr., Stephen Rushmore,
and Hospitality Valuation Services, Inc.
The lawsuit relates to seven limited partnerships: Courtyard by
Marriott Limited Partnership, Courtyard by Marriott II Limited
Partnership, Marriott Residence Inn Limited Partnership,
Marriott Residence Inn II Limited Partnership, Fairfield
Inn by Marriott Limited Partnership, Desert Springs Marriott
Limited Partnership and Atlanta Marriott Marquis Limited
Partnership. The plaintiffs allege that the Defendants
conspired to sell hotels to the Seven Partnerships for inflated
prices and that they charged the Seven Partnerships excessive
management fees to operate the Seven Partnerships' hotels.
The plaintiffs further allege, among other things, that the
Defendants committed fraud, breached fiduciary duties and
violated the provisions of various contracts. The plaintiffs
are seeking unspecified damages.
The Defendants, which do not include the Seven Partnerships,
believe that there is no truth to the plaintiffs' allegations
and that the lawsuit is totally devoid of merit. The Defendants
intend to vigorously defend against the claims asserted in
the lawsuit. They have filed an answer to the plaintiffs'
petition and asserted a number of defenses.
A related case concerning Courtyard by Marriott II Limited
Partnership filed by the plaintiff's lawyers in the same court
involves similar allegations against the defendants, and has been
certified as a class action. On March 18, 1999, two of the
Partnership's limited partners filed a class action petition in
intervention seeking to convert that portion of the lawsuit
relating to the Partnership into a class action. The court
has not yet ruled on this petition.
Although the Seven Partnerships have not been named as
defendants in the lawsuit, the partnership agreements
relating to the Seven Partnerships include an indemnity
provision which requires the Seven Partnerships, under
certain circumstances, to indemnify the general partners
against losses, expenses and fees.
MCKESSON HBOC: Weiss & Yourman Points-Out Business Week Coverage
----------------------------------------------------------------
The following was released last week by the law firm of Weiss &
Yourman:
A news analysis and commentary entitled "Anatomy of A
Shareholder Slaughter" in this week's edition of Business Week
concludes that both McKesson HBOC Inc. (NYSE:MCK) and securities
analysts "were lax in reviewing HBOC's numbers".
Weiss & Yourman, a law firm which is representing McKesson
shareholders in securities class action litigation, reported that
Business Week noted: "There had been warning signs for two years
that something was amiss at HBOC. Using the company's public
filings with the Securities and Exchange Commission, forensic
accountant Howard Schilit's company, Center for Financial
Research & Analysis Inc., ran up the first red flag on HBOC in
1997 and waived another last August. The analyst who followed
the software company and recommended its shares can't say they
didn't know about Schilit's concerns; half a dozen lambasted his
first report, and three of them actually wrote rebuttals."
MCKESSON HBOC: UF&CW Pension Fund Joins Long List of Plaintiffs
---------------------------------------------------------------
A class action lawsuit has been commenced by the United Food &
Commercial Workers Local 342 Pension Fund, a labor union pension
fund with more than $100 million in assets, in the United States
District Court for the Northern District of California on behalf
of purchasers of the common stock of McKesson HBOC, Inc. (NYSE:
MCK) and its predecessors between July 28, 1998 and April 28,
1999.
The complaint charges McKesson and certain key officers and
directors with violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, by, among other things,
misrepresenting and omitting material information concerning the
Company's improper recording of revenue from its software sales.
This is the second major institutional investor to file a
securities fraud case against McKesson in the last two weeks.
Both of these investors are represented by Schoengold & Sporn,
P.C.
Schoengold & Sporn can be reached at 800-232-8092 by telephone or
Schoengold@aol.com by e-mail.
MCKESSON HBOC: Rabin & Peckel Amend California Complaint
--------------------------------------------------------
Rabin & Peckel LLP announce that an amended class action
complaint has been filed in the United States District Court for
the Northern District of California on behalf of all persons or
entities who purchased or otherwise acquired the securities of
HBO & Company between April 14, 1998 and January 12, 1999, and/or
the securities of McKesson HBOC, Inc. or its predecessor
McKesson Corp. (NYSE: MCK) between October 19, 1998, and April
27, 1999, all dates inclusive. Included in the putative Class
are all shareholders of US Servis, IMNET Systems, Inc., and
Access Health, Inc. who acquired HBOC common stock as a result
HBOC's acquisitions of those companies.
The Complaint alleges that McKesson and certain of its officers
violated the Securities Exchange Act of 1934 by making a series
of materially false and misleading statements concerning HBOC
and McKesson's reported financial results during the Class
Period. In particular, it is alleged that these reported
financial results are not presented in conformity with generally
accepted accounting principles and require restatement as a
result of the improper recording $42.2 million in software
transactions that were subject to contingencies as sales. The
Complaint alleges that as a result of these false and misleading
statements the price of HBOC and McKesson securities were
artificially inflated throughout the Class Period causing
plaintiff and the other members of the Class to suffer damages.
Contact Joseph V. McBride or Donald J. Wallace of Rabin & Peckel
LLP at (800) 497-8076 by telephone or email@rabinlaw.com by e-
mail.
MCKESSON HBOC: Caluey Firm Files Complaint in California
--------------------------------------------------------
The Law Offices of Steven E. Cauley, P.A. announced that a class
action complaint has been filed in United States District Court,
Northern District of California, on behalf of all purchasers of
stock of McKesson HBOC, Inc. (NYSE: MCK) and its predecessors
McKesson Corp. and HBO & Company during the period October 19,
1998 and April 27, 1999.
The complaint charges McKesson and certain of its officers and
directors with violations of federal securities laws by making
misrepresentations about McKesson's business, earnings growth
and financial statements and its ability to continue to achieve
profitable growth. By issuing these 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 operations, diminished
profitability and false financial statements were revealed and
McKesson's stock collapsed to as low as $32 per share.
Contact Steven E. Cauley, or Scott E. Poynter, or Gina M.
Cothern, all of Law Offices of Steven E. Cauley, P.A., at 888-
551-9944 by phone or cauleypa@aol.com by e-mail.
MEDIAONE GROUP: Abbey Gardy Files Complaint in New York
-------------------------------------------------------
Abbey, Gardy & Squitieri, LLP, filed a class action securities
complaint in the United States District Court for the Southern
District of New York against defendants Frank M. Eichler, Robert
L. Crandall, Charles P. Russ, III, Pierson M. Grieve, Louis A.
Simpson, Allan D. Gilmour, Charles M. Lillis, Grant A. Dove,
John Slevin, Kathleen A. Cote, Daniel W. Yohannes and MediaOne
Group, Inc. (NYSE: UMG).
On May 6, 1999, plaintiff Richard L. Kalnit, through his
attorneys, filed a class action complaint against the
Defendants, on behalf of all sellers of MediaOne Group, Inc.
common stock between March 31, 1999 through and April 22, 1999,
inclusive. In his class action complaint, plaintiff alleges
that the Defendants issued misleading statements and omitted to
state material facts about defendants' efforts to sell MediaOne
which damaged sellers of the stock during the Class Period.
Plaintiff asserts claims under 15 U.S.C. Sections 78j(b) and
78t(a), and 17 C.F.R. Section 240.10b-5.
Contact Stephen J. Fearon, Jr. of Abbey, Gardy & Squitieri, LLP,
at 800-889-3701 by telephone or sfearon@a-g-s.com by e-mail.
PHYSICIAN COMPUTER: Agrees to $25 Mil Settlement; Payment Suspect
-----------------------------------------------------------------
Physician Computer Network, Inc., entered into a Memorandum of
Understanding to settle the claims asserted in the class
action shareholder lawsuits filed against it and certain of its
current and former officers and directors in March 1998 in the
U.S. District Court for the District of New Jersey,
consolidated under the caption In re Physician Computer
Network, Inc. Securities Litigation, Civil Action No. 98-981
(MTB).
The terms of the MOU do not settle claims asserted against
certain non-settling defendants and certain potential
defendants. The settlement will provide for the payment of a
minimum of $25.25 million in cash to members of the proposed
settlement class and the dismissal and release of all claims
relating to the subject matter of the lawsuits that were or
could have been asserted against the Registrant, certain
of its former officers and current directors, and others. The
settlement is subject to certain conditions, including, but
not limited to: the Registrant either paying the Settlement
Amount to the plaintiffs by August 10, 1999 or under certain
other circumstances upon the sale of the Company if one occurs;
the execution of a stipulation of settlement; notice to the
class; and approval by the court. In settling the case, the
Registrant and the other settling defendants continued to deny
all of the allegations contained in the lawsuit.
The Company said it entered into the settlement because it would
eliminate the burden and expense of further litigation, which
the Company and the other settling defendants believe is in the
best interests of the Company and all of its shareholders.
The Company has defaulted on its working capital financing
facility, although Fleet Bank has consented to three forbearance
agreements. For further details concerning the Company's
financial condition, refer to the Company's filings posted at
http://www.sec.gov/cgi-bin/srch-edgar?0000861438on the SEC's Web
site.
PLM INTERNATIONAL: Monetary & Equitable Settlements Proposed
------------------------------------------------------------
PLM International, Inc., and various of its affiliates are named
as defendants in a lawsuit filed as a purported class action on
January 22, 1997 in the Circuit Court of Mobile County, Mobile,
Alabama, Case No. CV-97-251 (the Koch action). Plaintiffs, who
filed the complaint on their own and on behalf of all class
members similarly situated, are six individuals who invested in
certain California limited partnerships (the Funds) for which
the Company's wholly-owned subsidiary, FSI, acts as the
general partner, including the Partnership, PLM Equipment
Growth Funds IV and V, and PLM Equipment Growth & Income Fund
VII. The state court ex parte certified the action as a class
action (i.e., solely upon plaintiffs' request and without the
Company being given the opportunity to file an opposition). The
complaint asserts eight causes of action against all defendants,
as follows: fraud and deceit, suppression, negligent
misrepresentation and suppression, intentional breach of
fiduciary duty, negligent breach of fiduciary duty, unjust
enrichment, conversion, and conspiracy. Additionally,
plaintiffs allege a cause of action against PLM Securities
Corp. for breach of third party beneficiary contracts in
violation of the National Association of Securities Dealers
rules of fair practice. Plaintiffs allege that each defendant
owed plaintiffs and the class certain duties due to their
status as fiduciaries, financial advisors, agents, and
control persons. Based on these duties, plaintiffs assert
liability against defendants for improper sales and marketing
practices, mismanagement of the Funds, and concealing such
mismanagement from investors in the Funds. Plaintiffs seek
unspecified compensatory and recissory damages, as well as
punitive damages, and have offered to tender their limited
partnership units back to the defendants.
In March 1997, the defendants removed the Koch action from the
state court to the United States District Court for the Southern
District of Alabama, Southern Division (Civil Action No. 97-
0177-BH-C) based on the district court's diversity jurisdiction,
following which plaintiffs filed a motion to remand the action to
the state court. Removal of the action to federal court
automatically nullified the state court's ex parte certification
of the class. In September 1997, the district court denied
plaintiffs' motion to remand the action to state court and
dismissed without prejudice the individual claims of the
California plaintiff, reasoning that he had been fraudulently
joined as a plaintiff. In October 1997, defendants filed a
motion to compel arbitration of plaintiffs' claims, based on
an agreement to arbitrate contained in the limited partnership
agreement of each partnership, and to stay further
proceedings pending the outcome of such arbitration.
Notwithstanding plaintiffs' opposition, the district court
granted defendants' motion in December 1997.
Following various unsuccessful requests that the district
court reverse, or otherwise certify for appeal, its order
denying plaintiffs' motion to remand the case to state court and
dismissing the California plaintiff's claims, plaintiffs
filed with the U.S. Court of Appeals for the Eleventh Circuit a
petition for a writ of mandamus seeking to reverse the district
court's order. The Eleventh Circuit denied plaintiffs'
petition in November 1997, and further denied plaintiffs
subsequent motion in the Eleventh Circuit for a rehearing on
this issue. Plaintiffs also appealed the district court's order
granting defendants' motion to compel arbitration, but in June
1998 voluntarily dismissed their appeal pending settlement of
the Koch action, as discussed below.
On June 5, 1997, the Company and the affiliates who are also
defendants in the Koch action were named as defendants in another
purported class action filed in the San Francisco Superior
Court, San Francisco, California, Case No. 987062 (the Romei
action). The plaintiff is an investor in PLM Equipment Growth
Fund V, and filed the complaint on her own behalf and on
behalf of all class members similarly situated who invested in
certain California limited partnerships for which FSI acts as
the general partner, including the Funds. The complaint
alleges the same facts and the same nine causes of action as in
the Koch action, plus five additional causes of action against
all of the defendants, as follows: violations of California
Business and Professions Code Sections 17200, et seq. for
alleged unfair and deceptive practices, constructive
fraud, unjust enrichment, violations of California Corporations
Code Section 1507, and a claim for treble damages under
California Civil Code Section 3345.
On July 31, 1997, defendants filed with the district court
for the Northern District of California (Case No. C-97-2847 WHO)
a petition (the petition) under the Federal Arbitration Act
seeking to compel arbitration of plaintiff's claims and for an
order staying the state court proceedings pending the outcome of
the arbitration. In connection with this motion, plaintiff
agreed to a stay of the state court action pending the
district court's decision on the petition to compel
arbitration. In October 1997, the district court denied the
Company's petition to compel arbitration, but in November
1997, agreed to hear the Company's motion for reconsideration
of this order. The hearing on this motion has been taken off
calendar and the district court has dismissed the petition
pending settlement of the Romei action, as discussed below.
The state court action continues to be stayed pending such
resolution. In connection with her opposition to the petition
to compel arbitration, plaintiff filed an amended complaint
with the state court in August 1997, alleging two new causes of
action for violations of the California Securities Law of 1968
(California Corporations Code Sections 25400 and 25500) and
for violation of California Civil Code Sections 1709 and
1710. Plaintiff also served certain discovery requests on
defendants. Because of the stay, no response to the amended
complaint or to the discovery is currently required.
In May 1998, all parties to the Koch and Romei actions entered
into a memorandum of understanding (MOU) related to the
settlement of those actions (the monetary settlement). The
monetary settlement contemplated by the MOU provides for
stipulating to a class for settlement purposes, and a settlement
and release of all claims against defendants and third party
brokers in exchange for payment for the benefit of the class of
up to $6.0 million. The final settlement amount will depend on
the number of claims filed by authorized claimants who are
members of the class, the amount of the administrative
costs incurred in connection with the settlement, and the
amount of attorneys' fees awarded by the Alabama district court.
The Company will pay up to $0.3 million of the monetary
settlement, with the remainder being funded by an insurance
policy.
The parties to the monetary settlement have also agreed
to an equitable settlement (the equitable settlement) which
provides, among other things: (a) for the extension of the
operating lives of the Partnership and Funds V and VII
by judicial amendment to each of their partnership agreements,
such that FSI, the general partner of each such partnership, will
be permitted to reinvest cash flow, surplus partnership funds
or retained proceeds in additional equipment into the year
2004, and will liquidate the partnerships' equipment in 2006;
(b) that FSI is entitled to earn front-end fees (including
acquisition and lease negotiation fees) in excess of the
compensatory limitations set forth in the North American
Securities Administrators Association, Inc. Statement of Policy
by judicial amendment to the partnership agreements for the
Partnership and Funds V and VII; (c) for a one-time redemption
of up to 10% of the outstanding units of the Partnership and
Funds V and VII at 80% of such partnership's net asset value;
and (d) for the deferral of a portion of FSI's management fees.
The equitable settlement also provides for payment of the
equitable class attorneys' fees from partnership funds in the
event that distributions paid to investors in the Partnership and
Funds V and VII during the extension period reach a certain
internal rate of return.
Defendants will continue to deny each of the claims and
contentions and admit no liability in connection with the
proposed settlements. The parties completed the documentation of
the monetary and equitable settlements in April 1999. The
monetary settlement remains subject to numerous conditions,
including but not limited to, notice to and certification of
the monetary class for purposes of the monetary settlement,
and preliminary and final approval of the monetary settlement
by the Alabama district court. The equitable settlement
remains subject to numerous conditions, including but not
limited to: (a) notice to the current unitholders in the
Partnership and Funds V and VII (the equitable class)
and certification of the equitable class for purposes of
the equitable settlement, (b) preparation, review by the
Securities and Exchange Commission (SEC), and dissemination to
the members of the equitable class of solicitation statements
regarding the proposed extensions, (c) disapproval by less than
50% of the limited partners in the Partnership and Funds V and
VII of the proposed amendments to the limited partnership
agreements, (d) judicial approval of the proposed amendments to
the limited partnership agreements, and (e) preliminary
and final approval of the equitable settlement by the Alabama
district court. If the district court grants preliminary
approval, notices to the monetary class and equitable class will
be sent following review by the SEC of the solicitation
statements to be prepared in connection with the equitable
settlement. The monetary settlement, if approved, will go
forward regardless of whether the equitable settlement is
approved or not. The Company continues to believe that the
allegations of the Koch and Romei actions are completely
without merit and intends to continue to defend this matter
vigorously if the monetary settlement is not consummated.
RALLYS HAMBURGERS: Settlement Talks Failed; Litigation Continues
----------------------------------------------------------------
In its latest quarterly report filed with the Securities and
Exchange Commission, RALLYS HAMBURGERS, INC., provides investors
with a report concerning the status of on-going class action
suits against it:
A. JONATHAN MITTMAN ET AL. V. RALLY'S HAMBURGERS, INC.,
ET AL. (Case NO. C-94-0039-L-CS).
In January and February 1994, two putative class
action lawsuits were filed, purportedly on behalf of the
stockholders of Rally's, in the United States District Court for
the Western District of Kentucky, Louisville division, against
Rally's, Burt Sugarman and GIANT and certain of Rally's present
and former officers and directors and its auditors. The cases
were subsequently consolidated under the case name Jonathan
Mittman et al vs. Rally's Hamburgers, Inc., et al, case number C-
94-0039-L (CS). The complaints allege defendants violated the
Securities Exchange Act of 1934, among other claims, by issuing
inaccurate public statements about the Company in order to
arbitrarily inflate the price of its common stock. The plaintiffs
seek unspecified damages. On April 15, 1994, Rally's filed a
motion to dismiss and a motion to strike. On April 5, 1995, the
Court struck certain provisions of the complaint but otherwise
denied Rally's motion to dismiss. In addition, the Court denied
plaintiffs' motion for class certification; the plaintiffs
renewed this motion, and despite opposition by the defendants,
the Court granted such motion for class certification on April
16, 1996, certifying a class from July 20, 1992 to September 29,
1993. In October 1995, the plaintiffs filed a motion to
disqualify Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP as counsel for defendants based on a purported
conflict of interest allegedly arising from the representation of
multiple defendants as well as Ms. Glaser's position as both a
former director of Rally's and a partner in Christensen, Miller.
Defendants filed an opposition to the motion, and the motion to
disqualify Christensen, Miller was denied. A settlement
conference occurred on December 7, 1998, but was unsuccessful.
Fact discovery is not yet complete, but it is anticipated that a
deadline for completion of fact discovery will be set during
1999. No trial date has been set. Management is unable to
predict the outcome of this matter at the present time or whether
or not certain available insurance coverages will apply. The
defendants deny all wrongdoing and intend to defend themselves
vigorously in this matter. Because these matters are in a
preliminary stage, the Company is unable to determine whether a
resolution adverse to the Company will have a material effect on
its results of operations or financial condition. Accordingly, no
provisions for any liabilities that may result upon adjudication
have been made in the accompanying financial statements. An
estimate of defense costs reimbursable under the Company's
directors' and officers' insurance is included in "Other Assets"
in the accompanying consolidated financial statements.
B. HARBOR FINANCE PARTNERS V. GIANT GROUP, LTD. ET AL.
(Civ. Act. No. 4834).
In February 1996, Harbor Finance Partners ("Harbor")
commenced a derivative action, purportedly on behalf of Rally's
against GIANT and certain of Rally's officers and directors
before the Delaware Chancery Court. Harbor named Rally's as a
nominal defendant. Harbor claims that the directors and officers
of both Rally's and GIANT, along with GIANT, breached their
fiduciary duties to the public shareholders of Rally's by causing
Rally's to repurchase from GIANT certain Rally's Senior Notes at
an inflated price. Harbor seeks "millions of dollars in damages",
along with rescission of the repurchase transaction. In the
fall of 1996, all defendants moved to dismiss the action. The
Chancery Court conducted a hearing on November 26, 1996 and
denied the motions to dismiss on April 3, 1997. Discovery is
underway. No trial date has been set. The Company denies all
wrongdoing and intends to vigorously defend the action. It is not
possible to predict the outcome of this action at this time.
C. FIRST ALBANY CORP., AS CUSTODIAN FOR THE BENEFIT OF
NATHAN SUCKMAN V. CHECKERS DRIVE-IN RESTAURANTS, INC.
ET AL. Case No. 16667.
This putative class action was filed on September 29,
1998, in the Delaware Chancery Court in and for New Castle
County, Delaware by an alleged stockholder of 500 shares of the
common stock of Checkers. The complaint names the Company and
certain of its current and former officers and directors as
defendants including William P. Foley, II, James J. Gillespie,
Harvey Fattig, Joseph N. Stein, James T. Holder, Terry N.
Christensen, Burt Sugarman and C. Thomas Thompson. The Complaint
also names Checkers and GIANT as defendants. The complaint arises
out of the proposed merger announced on September 28, 1998
between Rally's, Checkers and GIANT and alleges generally, that
certain of the defendants engaged in an unlawful scheme and plan
to permit Rally's to acquire the public shares of the common
stock of Checkers in a "going-private" transaction for grossly
inadequate consideration and in breach of the defendants'
fiduciary duties. The plaintiff allegedly initiated the Complaint
on behalf of all stockholders of Checkers as of September 28,
1998, and seeks INTER ALIA, certain declaratory and injunctive
relief against the consummation of the Proposed Merger, or in the
event the Proposed Merger is consummated, recision of the
Proposed Merger and costs and disbursements incurred in
connection with bringing the action, including attorney's fees,
and such other relief as the Court may deem just and proper. In
view of a decision by Rally's, GIANT and Checkers not to
implement the transaction that had been announced on September
28, 1998, plaintiffs have agreed to provide the Company and all
other defendants with an open extension of time to respond to the
complaint. Plaintiffs have indicated that they will likely file
an amended complaint in the event of the consummation of a merger
between Rally's and Checkers. The Company believes the lawsuit
is without merit and intends to defend it vigorously. No estimate
of possible loss or range of loss resulting from the lawsuit can
be made at this time.
D. DAVID J. STEINBERG AND CHAILE B. STEINBERG, INDIVIDUALLY
AND ON BEHALF OF THOSE SIMILARLY SITUATED V. CHECKERS
DRIVE-IN RESTAURANTS, INC., ET AL. Case No. 16680.
This putative class action was filed on October 2,
1998, in the Delaware Chancery Court in and for New Castle
County, Delaware by David J. Steinberg and Chaile B. Steinberg,
alleged stockholders of an unspecified number of shares of the
common stock of Checkers. The complaint names the Company and
certain of its current and former officers and directors as
defendants including William P. Foley, II, James J. Gillespie,
Harvey Fattig, Joseph N. Stein, James T. Holder, Terry N.
Christensen, Burt Sugarman and C. Thomas Thompson. The Complaint
also names Checkers and GIANT as defendants. As with the FIRST
ALBANY complaint described above, this complaint arises out of
the proposed merger announced on September 28, 1998 between the
Rally's, Checkers and GIANT and alleges generally, that certain
of the defendants engaged in an unlawful scheme and plan to
permit Rally's to acquire the public shares of the Checkers'
common stock in a "going-private" transaction for grossly
inadequate consideration and in breach of the defendant's
fiduciary duties. The plaintiffs allegedly initiated the
Complaint on behalf of all stockholders of Checkers as of
September 28, 1998, and seeks INTER ALIA, certain declaratory and
injunctive relief against the consummation of the Proposed
Merger, or in the event the Proposed Merger is consummated,
recision of the Proposed Merger and costs and disbursements
incurred in connection with bringing the action, including
attorneys' fees, and such other relief as the Court may deem just
and proper. For the reasons stated above in the description of
the FIRST ALBANY action, plaintiffs have agreed to provide the
Company and all other defendants with an open extension of time
to respond to the complaint. Plaintiffs have indicated that they
will likely file an amended complaint in the event of the
consummation of a merger between Rally's and Checkers. The
Company believes the lawsuit is without merit and intends to
defend it vigorously. No estimate of possible loss or range of
loss resulting from the lawsuit can be made at this time.
ROYAL CARIBBEAN: Overcharged Passengers Receive $20-$45 Coupons
---------------------------------------------------------------
Royal Caribbean Cruises Ltd., the world's No.2 cruise line,
agreed to settle two class-action lawsuits alleging it misled
passengers into paying improper port charges on tickets on its
RCI and Celebrity Cruises lines. The Miami-based company will
give vouchers worth $20 to $45 for discounts on future trips to
passengers who traveled on either line from April 19, 1992 to
April 1, 1997.
QUALCOMM, INC.: Employees Sue Over Unvested Stock Options
---------------------------------------------------------
Disgruntled employees potentially numbering in the hundreds filed
a class- action lawsuit against Qualcomm yesterday, in a fight to
keep millions of dollars in unvested stock options.
The employees, including a vice president, are the intellectual
backbone of Qualcomm's wireless infrastructure equipment
business, which Swedish archrival Ericsson bought as part of a
sweeping patent settlement the two companies reached in March.
The lawsuit demands "immediate vesting" of unvested stock options
and "full, fair and just compensation" in monetary damages that
all told could top $50 million, said Richard Williams, an
attorney with one of three local law firms that filed the
lawsuit on behalf of the employees.
The action threatens the smooth transfer of more than 1,200
employees and underscores the overarching role stock options
play in hiring and retaining high-tech talent.
After Qualcomm and Ericsson forged their landmark truce in March,
affected workers wanted to know what would happen to their
unvested stock options. Both companies said workers would have
to surrender the unvested portion of those options, fanning
employee anger as the value of Qualcomm's stock soared to record
levels recently.
Attorney David Perkins said Qualcomm lured many recent
infrastructure recruits with the promise of lucrative stock
options to be paid out over a five- year period, but never
revealed that the company was negotiating to sell the division
as far back as mid-1998.
"We're alleging fraud," Perkins said. Perkins and fellow
attorneys said they will not know exactly how many will join the
lawsuit until after today, when a deadline to sign a Qualcomm
severance package expires.
Thomas M. Sprague, a Qualcomm vice president at the jettisoned
infrastructure division and the lead plaintiff in the lawsuit,
said he personally stands to lose more than $1 million in
unrealized unvested options. Flanked by attorneys at the
downtown law offices of Perkins & Miltner, Sprague, a former
Motorola executive who came to Qualcomm about two years ago,
yesterday called Qualcomm's denial of unvested options "unfair"
and a "sad situation." Sprague, 50, is among those who will be
working for Ericsson. He said he planned to retire within 10
years, buoyed into his golden years on vested Qualcomm options.
"I felt somebody had to step forward," he said.
Ericsson wants to use the infrastructure division as the research
and development epicenter of its new venture into making mobile
phone technology based on code division multiple access, or
CDMA, technology which Qualcomm pioneered and commercialized and
which has since become the hottest-selling wireless technology
on the planet. The infrastructure division makes closet-sized
base stations that keep mobile phones connected to standard
phone networks. Ericsson officials downplayed the obviously
uncomfortable prospect of acquiring an unhappy work force.
"We feel we have a good place for them," said spokeswoman Kathy
Egan. "We hope there's a peaceful transition." However, alarmed
by mounting discord, Qualcomm and Ericsson recently tried to
quiet rebellion by funding a retention bonus plan, which will
dispense four payments over two years based on the number of
unvested options each employee possesses. Many entry-level
workers would receive about $20,000, while senior executives
could see about $1 million or more, Qualcomm officials said.
Several hundred employees have signed the plan, officials added.
The value of the offer generally is about 20 percent to 50
percent of what the unvested options are worth at today's stock
price, Qualcomm said.
Qualcomm chief executive Irwin Jacobs said yesterday the company
has no plans to amend the plan, which he said represented
"substantial compensation."
Dan Sullivan, Qualcomm's senior vice president of human
resources, accused aggrieved employees of trying to profit off
the run-up in Qualcomm stock while simultaneously enjoying the
fruits of the bonus plan. Moreover, he noted the company is
keeping transferred employees on its payroll through June so
they can take advantage of Qualcomm's employee stock- purchasing
program. Employees can buy Qualcomm stock at about $43 a share,
five times under yesterday's market price, Sullivan said.
"Some of these employees, through their attorneys, are asking to
double dip," Sullivan said.
"It seems very wasteful to spend this kind of money on
attorneys.
"We are all working very, very hard to provide packages to
employees that are really industry-standard setting."
Not all agreed.
"Financially, (the package) is not any better than if we were to
keep our options," said one infrastructure worker moving to
Ericsson. He requested his name not be used. San Diego
employment attorney David Strauss said the employees have an
uphill battle. The offer of stock options does not guarantee
employment.
"They're tough cases," said Strauss, who is not affiliated with
the suit. "I'm not saying they're not winnable."
Tony Chartrand, Ericsson's vice president of human resources,
said yesterday the company will roll out a stock-option plan for
former Qualcomm employees effective Jan. 1. Details are still
being hammered out, he added. Qualcomm has a reputation of
seducing potential employees with stock options. Many in the
company's ranks have turned down or left jobs at Motorola,
Nortel and other larger telecom corporations because of
Qualcomm's generous stock-option incentive.
Options typically are awarded to employees as bonuses or hiring
inducements and allow workers to buy stock at a current market
price. Options can be exercised or sold at certain preset
vesting dates, usually at a price higher than for what they were
purchased. Many Qualcomm infrastructure workers are fuming that
they are losing options just months, in some cases weeks, shy of
their vesting dates. Sometimes, companies allow employees to
exercise unvested options when a company is acquired. Qualcomm
argues that this so-called change-of-control provision does not
apply because only one of its business units, not the entire
company, is being sold. Meanwhile, Ericsson confirmed yesterday
it is assimilating 1,280 infrastructure workers in a deal
expected to close by May 24. There are about 1,600 workers at
the division, meaning Qualcomm will have to absorb or lay off at
least 320 employees in the coming weeks. Qualcomm's Sullivan
confirmed yesterday that the company is in the process of trying
to absorb the infrastructure employees not on Ericsson's list,
which could take a couple of months. Qualcomm has room for 600.
"Theoretically, we could easily absorb all of them," Sullivan
said. "But we must see if their skills match requirements."
(San Diego Union And Tribune 07-May-1999)
RITE AID: Finkelstein & Krinsk File Complaint in [Pennsylvania]
---------------------------------------------------------------
Rite Aid Corporation (NYSE:RAD) is accused in a class action
lawsuit of violating the federal securities laws by
misrepresenting the Company's cost of store operations to
inflate the price of its' stock. When Rite Aid revealed its true
finances in March of 1999 the share price plummeted more than 39
percent ($14 7/16) to $22 9/16 per share.
According to the complaint, filed by Finkelstein & Krinsk,
executives of Rite Aid painted an excessively positive picture
of the Company to investors by deliberately withholding facts
demonstrating that the costs of opening, relocating, and
closings more than 500 stores were sharply accelerating. This
was done at the time to disguise that Rite Aid's new distribution
center and its acquisition of PCS Health Systems would adversely
impact fourth quarter earnings.
Finkelstein & Krinsk, the prominent San Diego, California law
firm specializing in class action recoveries for institutional
investors, was been retained by Rite Aid shareholders to recover
losses suffered by investors from December 14, 1998 thru March
11, 1999.
The complaint particularizes how Rite Aid and its management
violated the Securities Exchange Act of 1934 and specifies the
company's false statements and omitted material facts. It was
filed in the United States District Court for the Eastern
District of Pennsylvania, and is directed to large individual
and institutional shareholders who often avoid active
participation in class action lawsuits.
"Rite Aid executives knew their costs and expenses associated
with the expansion program and deliberately concealed the facts
from investors," stated Jeffrey Krinsk of Finkelstein and
Krinsk. "A number of institutional investors have now contacted
us with justifiable outrage at this misconduct of Rite Aid
executives." "It remains a continuing priority and we are
particularly pleased that
Contact: Jeffrey R. Krinsk, at Finkelstein & Krinsk, the Koll
Center 501 West Broadway Suite 1250 San Diego Ca 92101 by calling
toll free 1-877-493-5366 or at fk.@class-action-Law.com by e-
mail.
SS&C TECHNOLOGIES: Settles "Distracting" Shareholder Litigation
---------------------------------------------------------------
SS&C Technologies, Inc. (Nasdaq:SSNC) entered into an agreement
that provides for the settlement of the consolidated securities
class action lawsuit currently pending against the Company. The
settlement provides that all claims against the Company, certain
of its officers and directors and underwriters will be
dismissed. Under the terms of the settlement, in exchange for the
dismissal and release of all claims, the Company will pay to the
class $7.5 million in cash, together with shares of SS&C common
stock valued at $1.3 million. The Company will record a charge
of approximately $9.2 million, including legal fees, in the
quarter ending June 30, 1999. The settlement is subject to
certain customary conditions, including notice to the class and
approval by the Court.
In agreeing to the proposed settlement, the Company and other
defendants specifically denied any wrongdoing.
"Today's announcement reflects our commitment to serving our
customers and shareholders," said William C. Stone, President
and CEO of SS&C. "The cost, while substantial, will not impact
our ongoing operations. The company, our employees, and
shareholders are continuing to move forward and address
opportunities we enjoy in the marketplace without the further
costs and distractions caused by this litigation."
TAX-DEFERRED ANNUITIES: Deceptive Sales Practices Alleged
---------------------------------------------------------
Might something actually stop the deceptive sales of tax-deferred
annuities? I'm speaking of selling them as investments for IRAs
and other tax- deferred accounts. Nearly 55 percent of the
sales of variable annuities were to retirement plans in 1997
(the latest data available), according to the Life Insurance
Marketing Research Association in Windsor, Conn.
But that's not where annuities belong. When you buy an annuity
for a retirement plan, you're paying for tax deferral that you
don't need.
Mis-sold annuities are now the focus of class-action lawsuits
against four insurance companies. The plaintiffs charge
deception and fraud. They say they would not have put annuities
into their retirement accounts if they'd known the truth. The
lawsuits are targeting both annuities found in many employer
retirement plans and annuities you might buy for your IRA, from
a stockbroker, financial planner or insurance salesperson.
Some annuities don't share the sins that are under attack. The
teachers' CREF retirement account for example, provides annuities
at minimal cost (around 0.34 percent annually). But those are
exceptions to the way most annuities are sold. IRAs, Keoghs,
401(k)s and other retirement accounts are tax deferred. Your
money accumulates tax-free. A variable annuity also is tax
deferred. It contains several "subaccounts" which are similar to
mutual funds. You can choose which fund you want to invest your
money in.
But why would you put an investment that's already tax deferred
(the annuity) into a tax-deferred retirement account? The double
deferral gives you no extra benefit. If you want to invest
your retirement account in mutual funds, it's cheaper to buy
them directly rather than through an annuity. You'll pay less in
sales commissions and fees.
Now we're down to the nub of why salespeople urge you to buy an
annuity for your IRA, and why they peddle annuities to small
companies needing retirement plans. These sales earn them more
money than if they suggested straight mutual funds. Sales
commissions on variable annuities average about 6 percent,
according to Cerulli Associates in Boston. Some pay as high as
13.5 percent. By contrast, you might pay in the 4 percent range
for mutual funds bought from a stockbroker or planner, and zero
for no-load mutual funds you choose yourself.
You don't see the commission. It's buried in the so-called
"mortality and expense" (M&E) fee that annuities charge to cover
their overhead and profit, plus a tiny life-insurance cost. In
short, most variable annuities are an expensive way of buying
mutual funds. The expense might be worth it, if you're investing
money outside a retirement account and want the tax deferral.
But it's a waste when you're investing retirement money that's
already tax deferred.
Which brings me to the lawsuits, filed by class-action
specialists Milberg Weiss Bershad Hynes & Lerach against:
* Nationwide Financial Services,
* American United Life Insurance,
* American Express Financial Corp. and
* SunAmerica Inc.
along with several of its affiliates. The plaintiffs bought
annuities for their retirement accounts. The salespeople, they
allege, said that annuities were the right kind of investment. So
they're charging deception, under the consumer anti-fraud laws.
The insurers had no comment or said that the case was without
merit. (Northern New Jersey Record 02-May-1999)
USDA: Employees' Attorneys Hopeful for Out-of-Court Settlement
--------------------------------------------------------------
Press reports say that top officials at the U.S. Agriculture
Department have called a meeting for today with lawyers
representing 12,000 black employees, a move attorneys hope is a
sign the USDA wants to settle a discrimination case. The
employees allege they have faced constant discrimination in
hiring, promotions and in day-to-day life at the department and
have threatened to file a formal class-action lawsuit.
*********
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Copyright 1999. All rights reserved. ISSN XXXX-XXXX.
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