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/raid1/www/Hosts/bankrupt/CAR_Public/000308.MBX C L A S S A C T I O N R E P O R T E R Wednesday, March 8, 2000, Vol. 2, No. 47 Headlines AK STEEL: USWA Updates NLRB Charges Including Bill Johnson's ANALYTICAL SURVEYS: Donovan Miller Files Securities Suit in Indiana CA TEACHER: Teachers Sue Association over Payment Of Union Dues CARSON, INC : James, Hoyer Files Suit over Defective Hair Relaxer CHESAPEAKE ENERGY: Obtains Dismissal of 1997 Securities Litigation CINAR CORPORATION: Founders Resign; More Irregularities Found COCA COLA: Asks Judge to Reprimand Attorneys in Racial Bias Case CYBERSHOP.COM, INC: Bernstein Liebhard Files Securities Suit in NJ CYBERSHOP.COM: Weiss & Yourman Files Securities Suit in New Jersey CYPRESS SEMICONDUCTOR: Securities Suit Recoils; WLF Files Amicus Brief D.C. MENTAL: Agreement Ends '97 Court Receivership of Health System DUPONT: Suit over Procurement of Settlement Can Proceed Despite Waiver DYNAMEX INC: Auditors Resign; Stock Exchange to Strike Co. from List FOCUS ENHANCEMENTS: Faruqi & Faruqi Files Securities Lawsuit in MA FOCUS ENHANCEMENTS: Schiffrin & Barroway Files Securities Suit in MA HMOs: CA Suit Names 5 Medicare Providers for Failure to Cover Expenses JDN REALTY: Pomerantz Haudek Files Securities Lawsuit in Georgia JONES APPAREL: Resolves Allegations Concerning Nine West Shoes Pricing RAVISENT TECHNOLOGIES: Cohen, Milstein Files Securities Suit in PA RAVISENT TECHNOLOGIES: Schiffrin & Barroway Files Securities Suit in PA TOBACCO LITIGATION: BAT's Broughton Presents Robust Set of Figures VISX INC: Shepherd & Geller Files Securities Suit in California ********* AK STEEL: USWA Updates NLRB Charges Including Bill Johnson's ------------------------------------------------------------ An announcement by The United Steelworkers of America (USWA), March 6, says that the union has updated the four National Labor Relations Board (NLRB) charges it has filed against Middletown, Ohio-based AK Steel. Allegations against the embattled steelmaker include bad faith bargaining, unlawful surveillance and two Bill Johnson's charges. A Bill Johnson's charge is often filed in response to what the charging party believes is a bogus lawsuit intended to harass and punish employees engaged in lawful activity, and if upheld, would hold the company accountable for all the attorney's fees accrued in defending its baseless and retaliatory suits against the union and its members. The first charge, filed in July of 1999, alleges that the company repudiated the existing collective bargaining agreement and brought in unnecessary security to harass and intimidate workers during contract negotiations. It contains a Bill Johnson's charge in response to the company's allegedly baseless and retaliatory lawsuit that claims members of USWA Local 169 conspired with the Local Union and its International in a concerted effort to refuse to work overtime. In reality, the USWA feels that employees were exercising their contractual right not to be compelled or coerced into working overtime. All evidence on the charge has been submitted, and both sides are waiting the NLRB's decision on issuing a complaint. The second charge, filed on October 18, 1999, and amended on February 23, 2000, alleges that the company unlawfully enforced the current lockout of Local 169 and has intentionally prolonged the dispute by bad faith bargaining. A victory for the union in this suit could carry with it a substantial back pay liability. The NLRB has yet to rule on this charge, however. The third charge, filed on January 24, 2000, asserts that AK Steel security personnel have engaged in illegal surveillance of union members' homes, the Local 169 Union Hall and other instances of union members allegedly engaged in obviously lawful activities -- designed to intimidate, harass and prevent members from participating in legal union-oriented functions. USWA attorneys are still in the process of gathering information and affidavits to submit as evidence to the NLRB in this case. The fourth and final charge, filed on January 28, 2000, contains another Bill Johnson's charge in response to AK Steel's allegedly baseless and retaliatory claims in federal court that the Local Union conspired with the International Union and several individuals employed by the City of Mansfield to prevent the company from hiring replacement workers. However, the USWA asserts that filing a motion to keep replacement workers out of the plant is a protected activity under the National Labor Relations Act and any claims of a conspiracy are without merit and aimed at intimidation of union and city officials from carrying out their obligations to the community. According to the USWA, AK Steel (then Armco) locked out 620 workers on September 1, 1999, and currently faces a class-action lawsuit in Richland County Common Pleas Court filed on March 3, 2000, that alleges a breach of contract with its locked out employees and may result in substantial back pay liabilities estimated at nearly a million dollars if a jury finds in the union's favor. ANALYTICAL SURVEYS: Donovan Miller Files Securities Suit in Indiana ------------------------------------------------------------------- The law firm of Donovan Miller, LLC, announced on March 2 that a class action lawsuit was filed in the United States District Court for the Southern District of Indiana, Indianapolis Division against Analytical Surveys, Inc. (Nasdaq: - ANLT - news), and certain of its Officers and Directors, on behalf of all persons who purchased ASI securities between January 25, 1999 and January 27, 2000, inclusive. The plaintiffs in the case are stock purchasers who are alleged to have sustained losses as a result of defendants' alleged violations. The Complaint alleges that, during the Class Period, defendants issued false and misleading financial statements and press releases concerning ASI's revenues, income and earnings per share and thereby violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Complaint further alleges that the price of ASI's shares was artificially inflated as a result of Defendants' omissions of material fact. Contact: Donovan Miller, LLC Ann Miller, 215/732-6020 Fax: 215/732-8060 http://www.dmlaw.commdonovan@dmlaw.com CA TEACHER: Teachers Sue Association over Payment Of Union Dues --------------------------------------------------------------- A group of eight teachers, including one from San Jose, filed suit in federal court on March 6 against the California Teachers Association and more than 400 local school districts over collection of compulsory union dues from their paychecks, The San Francisco Chronicle, March 7, 2000, reports. The teachers are challenging a practice by which union locals, in conjunction with school districts, deduct "agency fees" for collective bargaining without first performing a legally mandated audit of how the funds are used. They want their suit to receive class-action status so that it applies to the nearly 15,000 nonunion teachers in the state who may also object to the use of such fees for political activities. If a teacher objects to how such funds are used, he or she is entitled to a refund of politics-related dues -- usually about $200, or a third of the total amount collected by the union each year, according to The San Francisco Chronicle. The audit determines the percentage that can be returned, the report says. "The union is not entitled to the fees unless they do the audit," said Stefan Gleason, vice president of the National Right to Work Foundation, which is providing legal aid to the plaintiffs. "They've come up with a dodge to avoid the audit," quotes The San Francisco Chronicle. Teachers' associations in many school districts statewide rely on a so-called local union presumption -- a presumption that an audit of how they use funds would be the same as that of a sampling of districts conducted by the statewide union, The San Francisco Chronicle reveals. In this way, the local associations say they can save time and money by claiming the union's audit as their own and thus meet legal requirements for collection of fees. "There's nothing in the law that allows a local union presumption," insisted Milton Chappell, staff attorney for the National Right to Work Foundation. "Every court that has looked at it has struck it down." Last April, a federal judge ruled that the union could not force eight public-school teachers in Livermore, Fremont, Orinda, Pleasant Hill, San Jose and Ukiah to pay dues without first disclosing audited financial statements. U.S. District Judge Charles Legge said all union locals are obliged to hire an auditor so that nonunion teachers can see exactly how their money is spent. However, Beverly Tucker, chief counsel for the California Teachers Association, said Legge's ruling applied only to the eight plaintiffs in that case -- a point that advocates for nonunion teachers do not dispute. She declined to comment on the lawsuit without first seeing the complaint, but stressed that "there has been no court decision that addresses local union presumption." The Foundation's Chappell countered that while Legge could only apply his ruling last year to the eight plaintiffs in that case, he in fact ruled "on what the law requires for all school districts," The San Francisco Chronicle reports. By returning to the issue on a class-action basis, Chappell said he intends for the court to address local union presumption on a broader scale, requiring all teachers' associations to perform financial audits. The new lawsuit asks that the court declare collection of union dues without an audit to be a violation of teachers' First Amendment rights. It demands that such dues no longer be collected without an audit and that past fees be returned. The lead plaintiff in the suit is Kim Sheffield, an eighth-grade teacher at San Jose's Stonegate School. He said he agreed to have his name on the complaint after being contacted by the Right to Work Foundation. Sheffield said he had objected in the past to the way that about $680 in union dues were deducted from his paycheck. He said he had to go through a time-consuming process of filling out firms to receive a rebate of about $220 that represented the portion of his dues applied to the union's political activities. "The union is a political organization as far as I'm concerned," Sheffield said. "I want nothing to do with them." Specifically, he said that most of the union's political expenditures "go to Democrats or Democratic causes." Sheffield described himself as a conservative. He said he is participating in the lawsuit because a sampling of about a half-dozen locals conducted by the statewide union is not representative of all school districts. "Every local is very different," Sheffield said. "If they don't do an audited statement, you have to take it at face value that what they're telling you is true." The union local representing about 7,000 San Francisco teachers and teachers' aides is one of the few that does conduct its own annual audit, said Kent Mitchell, president of the group. He said he does not know how his group's audit compares with the sampling done by the California Teachers Association because it does not use the same methodology. (The San Francisco Chronicle, March 7, 2000) CARSON, INC : James, Hoyer Files Suit over Defective Hair Relaxer -------------------------------------------------------------------- A press release by the law firm of James, Hoyer, Newcomer & Smiljanich, P.A. says that on March 6, 2000, Alberta E. Richardson and Gloria Jean Sanderson, residents of Hillsborough County, Florida, on behalf of a class of thousands of consumers around the country, filed a suit against Carson, Inc. (CIC) and Johnson Products Co., Inc. alleging that from 1996 through the present they manufactured and sold a hair relaxer product which was and still is unreasonably dangerous and has caused significant injury to members of the public. The hair straighteners were marketed under the name Gentle Treatment and Gentle Treatment Conditioning No-Lye Creme Relaxer for Grey Hair. According to the complaint, Carson was aware that the product, even when used as instructed, was causing caustic burning of the scalp and hair loss. According to the Complaint, Carson failed to take any reasonable steps to inform the public of the dangers associated with the use of their product and failed to adequately warn the public that they might sustain burns and experience hair loss as a result of using Gentle Treatment. While Gentle Treatment is marketed as containing no lye, it does contain very high levels of calcium hydroxide which causes the caustic burning and hair loss. The class action complaint was filed by Attorney John R. Newcomer, Jr. of the Tampa, Florida law firm of James, Hoyer, Newcomer & Smiljanich, P.A. Contact: John Newcomer of James, Hoyer, Newcomer & Smiljanich, P.A., 813-286-4100, or jnewcomer@jameshoyer.com CHESAPEAKE ENERGY: Obtains Dismissal of 1997 Securities Litigation ------------------------------------------------------------------ Chesapeake Energy Corporation (NYSE: CHK) announced that the United States District Court for the Western District of Oklahoma has dismissed the securities litigation filed in late 1997 against Chesapeake and its officers and directors and entered judgment in their favor. The litigation, which originally consisted of 12 lawsuits but which was consolidated into one purported class action in 1998, alleged the company had made material misstatements or omissions of material facts concerning its activities in the Louisiana Trend from January 25, 1996 through June 25, 1997. In dismissing the plaintiffs' amended complaint on March 3, 2000, the Court found that throughout the alleged class period, Chesapeake had disclosed to its investors the "precise risks" associated with its investments and activities in the Louisiana Trend. The court also determined that the plaintiffs had provided no factual support for their allegations of misstatements or omissions by Chesapeake. CINAR CORPORATION: Founders Resign; More Irregularities Found ------------------------------------------------------------- The husband-and-wife team who founded and co-ran the Cinar Corporation resigned on March 7 after the discovery of more irregularities in the financial affairs of the company, the leading Canadian producer of children's filmed entertainment, including the popular television series "Arthur" and "The Busy World of Richard Scarry." In announcing the resignation of Micheline Charest as chairwoman and co-chief executive and her husband, Ronald Weinberg, as president and co-chief executive, the company said it had learned that $122 million of its money had been invested without board approval. The company said $86 million of that money had been pledged to secure other investments. Ms. Charest and Mr. Weinberg, who created Cinar 24 years ago and together control 56 percent of its votes, will remain directors and "retain leadership roles," the company said. Hasanain Panju, who was Cinar's chief financial officer and a senior executive vice president, was dismissed. It was the second significant piece of news about possible financial irregularities at the Montreal-based company in the last five months. In October the company was the subject of media reports that suggested Cinar had improperly received tax credits for scripts that were written by Americans. Cinar said it had not been able to determine the nature of the unauthorized investments, or their value, but that it would be taking steps to recover the money. Because of the investigation that has been undertaken by the audit committee, the company warned that it might not be able to deliver its financial results for 1999 by mid-April, as had been previously expected. Trading in Cinar shares was halted all day in the Nasdaq stock market. The shares closed at $18.375 on Friday, March 3, 39 percent off their 52-week high of $30.25 on Sept. 30. Lawrence Yelin, a senior partner in the Montreal law firm of Fasken Martineau DuMoulin and a member of Cinar's board, has been named chairman. Barry Usher, who has worked for Canadian banks and insurance companies, has become the president and he also joins the board. Once a favorite entertainment investment, the shares of Cinar have tumbled since accusations of tax cheating were first raised by Stephane Bergeron, a member of the federal Parliament. Canadian films are given tax credits for domestic content, like writing and performing. Cinar, Mr. Bergeron said in the House of Commons, where he was protected from any legal action by the company, had put the names of Canadians on scripts that were written by Americans. Cinar describes itself as an entertainment and education company, producing nonviolent programming for children and families that is sold in more than 150 countries. It has been growing fast. For the first nine months of 1999, it reported a 51 percent increase in profit to 19.1 million Canadian dollars, or about $13.2 million, on revenue of 134 million Canadian dollars, or about $92.5 million, a 41 percent gain. The allegation of tax fraud, which some people in the industry said could result in repayments of about 10 million Canadian dollars, is under investigation by the Royal Canadian Mounted Police. A second accusation -- that Cinar stole the concept for one of its animated series -- is under investigation by the Montreal city police. The company is likely to face class-action suits by investors in both the United States and Canada. Milberg Weiss Bershad Hynes & Lerach, a leading class-action law firm with offices in New York, California and Florida, said it intended to file a suit on behalf of American shareholders. Support for a class action in Canada is being sought by a well-known shareholder rights advocate, Yves Michaud of Montreal. (The New York Times March 7, 2000) COCA COLA: Asks Judge to Reprimand Attorneys in Racial Bias Case ---------------------------------------------------------------- Days after plaintiffs' attorneys in a racial discrimination case asked a federal judge to punish Coca-Cola for withholding documents, the company wants the attorneys reprimanded for filing "frivolous" motions. Lawyers for Coca-Cola responded on March 6 to plaintiffs' efforts to obtain documents on the company's current restructuring, in which 6,000 jobs are being cut. The plaintiffs say they need the material to determine whether African-Americans who could become members of a class action are being unfairly targeted for layoffs. But Coca-Cola says the plaintiffs' latest motion and other recent "spurious pleadings" are simply maneuvers to undermine the legal process and gain media attention. "Coca-Cola has persuasively demonstrated the absurdity of plaintiffs' claims," the company says in its motion filed in U.S. District Court in Atlanta. "Unfortunately, however, much of the damage of what plaintiffs are trying to achieve occur when the spurious pleadings are filed and simultaneously provided to the press. This is an established pattern ... and will continue until the court makes it clear it will not be tolerated," the motion says. But plaintiffs' attorney Cyrus Mehri disagreed. "There are legitimate, unanswered questions because of the company's ongoing shell game of hiding the facts about the layoffs," Mehri said. The company says the attorneys' latest tactic was to use the layoff of former human resources benefits manager Larry Jones, an African-American who has since held rallies against Coca-Cola, as a way to get material on the restructuring. In a Feb. 22 motion, the plaintiffs said Jones was included in the layoffs after informing President Jack Stahl that he had held a meeting with other black employees to discuss the signing of severance waivers. By signing the releases, blacks were giving up their right to sue the company in exchange for enhanced severance benefits. They would also relinquish their right to be prospective members of a class action. The plaintiffs' attorneys asked U.S. District Judge Richard Story to order Coca-Cola to hand over documents on its corporate restructuring so the attorneys could determine if African-Americans who have complained about discrimination or the severance waivers were being retaliated against with layoffs. The plaintiffs also asked the judge to invalidate the company's severance policy, which Coca-Cola did on its own last week. African-Americans now can receive enhanced severance benefits and become members of a class action. Coca-Cola says the incident involving Jones was just the latest maneuver by the plaintiffs to obtain company documents that so far have been sanctioned as being off-limits. "Plaintiffs' counsel, defeated three times in their effort to persuade the Court to provide discovery regarding the (company's) realignment purportedly to use it in challenging the (severance) releases, have now turned to Jones to trumpet their cause to the media and other prospective class members." While the plaintiffs contend that Jones, who held another rally criticizing the company this past weekend at St. Philip A.M.E. Church in Decatur, was terminated after informing Stahl of his actions, the company says Jones had known since Jan. 26 that he was in a pool of employees who could lose their jobs. Coca-Cola also says the plaintiffs' attorneys are using Jones' meetings with former and current black employees to lay the groundwork for getting more African-Americans to join the suit, in violation of court procedures. Coca-Cola acknowledges the attorneys are allowed to speak with prospective class members if black employees contact the attorneys first. "Here, while plaintiffs' counsel may have been previously contacted by some of the prospective class members in attendance at the meeting, plaintiffs' counsel's participation in the meeting was a communication with the prospective class not authorized" by the court. Coca-Cola wants Story to order the plaintiffs to pay the attorneys' fees and other costs it has had to incur to respond to the "frivolous" motion and order the attorneys not to attend meetings with prospective class members. (The Atlanta Journal and Constitution, March 7, 2000) CYBERSHOP.COM, INC: Bernstein Liebhard Files Securities Suit in NJ ------------------------------------------------------------------ A securities class action lawsuit was commenced on behalf of purchasers of the common stock of CyberShop.com, Inc.(Nasdaq:CYSP) between October 26, 1999 and February 24, 2000, inclusive, in the United States District Court for the District of New Jersey. The complaint charges CyberShop and certain of its directors and executive officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading information concerning the Company's business, earnings and prospects. As a result, CyberShop's stock price was artificially inflated throughout the Class Period. The complaint alleges that certain corporate insiders took advantage of this run up in the Company's stock price to dump thousands of their own shares and realize millions of dollars in proceeds from their illicit insider trading. Contact: Mr. Mark Punzalan, Director of Shareholder Relations at Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, (800) 217-1522 or 212-779-1414 or by e-mail at CYSP@bernlieb.com CYBERSHOP.COM: Weiss & Yourman Files Securities Suit in New Jersey ------------------------------------------------------------------ A class action lawsuit against CyberShop.com (Nasdaq:CYSP) and its senior executives was commenced in the United States District Court for the District of New Jersey seeking to recover damages on behalf of defrauded investors who purchased CyberShop.com securities. If you purchased CyberShop.com shares between October 26, 1999 and February 24, 2000, please read this notice. The complaint charges CyberShop.com and its senior executives with violations of the antifraud provisions of the Securities Exchange Act of 1934. The complaint alleges that defendants misrepresented the Company's business and financial condition and failed to disclose material facts concerning the integration of acquired properties and fundamental shifts in the Company's business strategy. Contact: Mark D. Smilow, 888/593-4771 or 212/682-3025, via Internet electronic mail at wynyc@aol.com or by writing Weiss & Yourman, The French Building, 551 Fifth Avenue, Suite 1600, New York City 10176. CYPRESS SEMICONDUCTOR: Securities Suit Recoils; WLF Files Amicus Brief ---------------------------------------------------------------------- The Washington Legal Foundation (WLF) has filed an amicus curiae brief supporting Cypress Semiconductor Corporation's appeal of the dismissal of its malicious prosecution action against Weiss & Yourman for filing a securities fraud suit against the company. Cypress won the securities litigation at the summary judgment stage and asserts the law firm did not have probable cause for filing the action in the first place. Cypress Semiconductor Corp. v. Yourman et al., No. H020322 (CA Ct. App., brief filed Jan. 12, 2000). "The facts on which the Superior Court relied to find probable cause are so commonplace in securities markets that the ruling, if upheld, would create probable cause to file suit against innumerable corporations who have committed no wrongdoing," according to the WLF. Cypress designs and manufactures computer memory chips, logic chips, and other high-performance integrated circuits. In the fourth quarter of 1991, Cypress' reported revenues of $71 million were in contrast with its forecast of $76.1 million. This was, in part, attributed to reduced orders for its products, including a lower than anticipated military order from Westinghouse. In February 1992, Weiss & Yourman filed its proposed class action complaint, which said the company and its officials knew Cypress would fail to achieve its projections, and Cypress' management had boasted their forecasting process was "uncannily accurate." In addition, the suit contended certain officers and directors had profited from insider trading. Although the action was amended and later consolidated with three similar actions, the Northern District of California dismissed the complaint for failing to satisfy the scienter pleading requirement. Weiss & Yourman subsequently filed a second amended complaint, which survived a motion to dismiss. Cypress' motion for summary judgment was granted after extensive discovery. The company contends it produced nearly one-half million pages of documents for the litigation and expended millions of dollars in legal fees and other wasted resources. In its malicious prosecution action, Cypress argues Weiss & Yourman filed the action only to coerce a settlement, which bore no relation to the merits of the claim. The Santa Clara County Superior Court ruled in Weiss & Yourman's favor. Citing Hufstedler, Kaus & Ettinger v. Superior Court (CA Ct. App., 1996), the court determined, "The issue of whether the action was legally tenable when it commenced should be measured by the entire record, and the attorney's knowledge is entirely irrelevant." The court also said the operative pleading for its determination was the second amended complaint, rather than the initial filing. In its appeal, Cypress argues "legal tenability" depends on whether a reasonable attorney would have initiated the lawsuit based on the facts known when the suit was first brought. Cypress insists the court should examine the facts known when the first complaint was filed, and find that Weiss & Yourman lacked any reasonable basis to treat the forecasts as fraudulent misrepresentations. Citing Sheldon Appel Co. v. Albert & Oliker (CA Sup. Ct., 1989), both Cypress and the WLF argues the lower court's ruling was wrong as a matter of law. Facts learned throughout the course of the proceedings cannot be used to demonstrate probable cause to file the suit, the WLF says. The WLF also asserts passage of the Private Securities Litigation Reform Act of 1995 and the Securities Litigation Uniform Standards Act of 1998 shows the public policy preference for reducing baseless securities litigation. Adopting the superior court's permissive standard for legal tenability would fail to deter the abuse, the organization argues, and only encourage the filing of frivolous securities class actions. The WLF is represented by in-house counsel Daniel J. Popeo, Jeffrey S. Burk, and Richard A. Samp, and by Susan Liebeler of Malibu, CA. Cypress is represented by C. Randall Bain, Joseph E. Mais, Craig W. Soland, and Dan L. Bagatell of Brown & Bain in Phoenix. (Securities Litigation & Regulation Reporter, February 9, 2000) D.C. MENTAL: Agreement Ends '97 Court Receivership of Health System ------------------------------------------------------------------- A federal judge had approved a plan to return control of the District's long-troubled mental health system to the D.C. government, but he said that a miracle turnaround is unlikely no matter who is in charge. U.S. District Judge Thomas F. Hogan said that the system's difficulties are deeply rooted and that change will come slowly. But he said District officials and advocates for the mentally ill took "the correct step" in signing an agreement in a class-action lawsuit to get the system out of a court-ordered receivership no later than April 2001. He approved the pact at a hearing where attorneys on both sides urged immediate action. Hogan praised Mayor Anthony A. Williams for pushing to regain control of the mental health system, which was put under receivership in 1997 amid chronic complaints about inadequate services. The D.C. Commission on Mental Health serves more than 9,000 mentally ill clients at St. Elizabeths Hospital and several outpatient clinics. The judge expressed hope that the Williams administration would also work with the courts and advocates to regain control of the three other agencies now in similar receiverships: corrections, public housing and Child and Family Services. Hogan himself took the latter agency, which handles foster care, out of D.C. hands. The mental health agreement calls for the current receiver, psychiatrist Scott Nelson, to be replaced by the end of the month with an interim receiver. Nelson, appointed in November 1997, has been criticized by advocates who contended that the system wound up in worse shape under him than it was under the District. At a court hearing last fall, they complained that the system didn't do enough to find housing, jobs and the most effective medication for the mentally ill and homeless. Nelson, who was in court on March 6, has said he made improvements despite bureaucratic obstacles. The interim receiver was selected during negotiations among the mayor's staff, private providers, the commission and advocates. He is Dennis R. Jones, a former mental health commissioner in Texas and Indiana, who has done consulting work for the District. The agreement calls for Jones to come up with a plan to shift control of the system to the District between Jan. 1 and April 1, 2001. Then he would remain on the job as a monitor during a six-month probationary period, with the authority to ask the court to put the agency back into receivership if the District doesn't make sufficient progress. Attorneys on both sides said the ultimate goal is to put D.C. officials in charge of a comprehensive system that provides the appropriate mix of services to clients. Another result, they said, would be to address the class-action lawsuit filed in 1974 by the Bazelon Center for Mental Health Law that demanded changes. The judge in that case, Aubrey E. Robinson Jr., died Feb. 27. Hogan was asked to approve the consent agreement because he has been assigned to hear emergency matters. Peter J. Nickles, an attorney for the plaintiffs, told Hogan at March 6's hearing that he hoped the agreement would generate change. He noted that Jones will soon appoint an acting chief operating officer to run the system on a day-to-day basis. Deputy Corporation Counsel Janet M. Maher said the District likewise is eager to bring Jones on board, saying that officials have "high confidence in his abilities." Other advocates also expressed support, including Mary Ann Luby, of the Washington Legal Clinic for the Homeless. "Maybe this indicates urgency," she said of the agreement's tight time-frame. "There's a phenomenal need for urgency." Maureen Veech, a leader of the Mental Health Stakeholders Coalition, agreed with the judge that Jones faces a difficult task, but she said the change is necessary. "It is critical for the system to be substantially fixed before it is returned to the District," she said. (The Washington Post, March 7, 2000) DUPONT: Suit over Procurement of Settlement Can Proceed Despite Waiver ---------------------------------------------------------------------- Answering a certified question from a federal district court in Florida, the Delaware Supreme Court has ruled that DuPont can be sued for fraudulent procurement of a settlement, despite a provision in a settlement agreement waiving future claims. Florida Evergreen Foliage v. E.I. duPont de Nemours & Co., No. 205, 1999 (Del. Dec. 6, 1999). In 1994, the plaintiffs, who were represented by Stephen Cox of San Francisco's Cox & Moyer, had settled with DuPont for $ 2.3 million, for claims that the fungicide Benlate had damaged their plants. The settlement agreement included a provision releasing DuPont "from any and all causes of action,...damages and liability, whether known or unknown" against it. In 1998, the plaintiffs filed a fraudulent-inducement suit against DuPont, claiming that the company had fraudulently withheld scientific data during discovery, thus inducing the plaintiffs to settle for less than the fair value of their claims. DuPont, represented by A. Stephen Clay of Atlanta's Kilpatrick & Cody, argued that the claim was barred by the clause in the settlement agreement. The court found that, under Delaware law, "a tort claimant fraudulently induced to execute a release may opt either for recission or a separate suit for fraud." (Product Liability Law & Strategy, February 2000) DYNAMEX INC: Auditors Resign; Stock Exchange to Strike Co. from List -------------------------------------------------------------------- Dynamex Inc. (AMEX:DDN), which is defending a securities lawsuit in Texas as reported in the CAR, announced that Deloitte & Touche LLP has resigned as the Company's independent auditors. Dynamex filed a Current Report on Form 8-K with the Securities and Exchange Commission relating to the resignation. The Company is conducting a search for a new independent auditor. The Company also announced the receipt of a letter from The American Stock Exchange confirming the Exchange's intention to proceed with the filing of an application with the SEC to strike the Company's common stock from listing and registration on the Exchange. The Company has not complied with the Exchange's continued listing rules in that it has failed to file its July 31, 1999 Form 10-K and its October 31, 1999 Form 10-Q as well as file amended Forms 10-K for fiscal 1997 and 1998. The Company will appeal this decision, and the appeal will stay the delisting until a final decision following the appeal hearing. It is anticipated the appeal hearing will be held in the next 14 to 45 days. Trading in the Company's common stock will remain halted during the appeal process. In the event of an unfavorable appeal decision by the Exchange or a withdrawal of the appeal, the Company will make all reasonable efforts to have the common stock quoted on the National Quotation Bureau's Electronic Quotation System known as the "EQS" or the "Electronic Pink Sheets". Management can make no assurance with respect to the quotation, timing of quotation, trading or date of trading in the Company's common stock. The Company is in violation of certain financial reporting covenants under its bank credit agreement and may be in violation of other financial covenants and certain terms and conditions. The bank group approved a waiver in early February 2000 permitting the increase in a letter of credit related to insurance. The Company will continue to work with its banks to achieve any necessary forbearance, waivers or amendments. However, there is no assurance that such forbearance, waivers or amendments will be achieved. FOCUS ENHANCEMENTS: Faruqi & Faruqi Files Securities Lawsuit in MA ------------------------------------------------------------------ The law firm of Faruqi & Faruqi, LLP. Announces that a class action lawsuit has been commenced in the United States District Court for the District of Massachusetts on behalf of all purchasers of Focus Enhancements, Inc. (NASDAQ: FCSE) common stock between April 29, 1999, and March 1, 2000, inclusive. The Complaint charges Focus Enhancements and certain of its executive officers with violations of the federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Among other things, plaintiff claims that defendants issued to the investing public false and misleading financial statements for fiscal year 1999. On March 1, 2000, the Company announced that its independent auditors had informed the Company's board of directors that it had discovered certain irregularities relating to the Company's financial controls for fiscal 1999 and prior quarters. The Company's board of directors announced that it formed a committee to investigate the matter. Additionally, two of the Company's top officers were placed on leave and will cooperate with the committee's review. Contact: Faruqi & Faruqi, LLP Anthony Vozzolo, Esq. 320 East 39th Street New York, NY 10016 Telephone: (877) 247-4292 or (212) 983-9330 Fax: (212) 983-9331 e-mail at FaruqiLawAV@aol.com FOCUS ENHANCEMENTS: Schiffrin & Barroway Files Securities Suit in MA -------------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP announced that a class action lawsuit was filed in the United States District Court for the District of Massachusetts on behalf of all purchasers of the common stock of Focus Enhancements, Inc. (Nasdaq: FCSE) from April 29, 1999 through March 1, 2000, inclusive. The complaint charges Focus Enhancements and certain of its officers and directors with improperly reporting the Company's financial results, including revenues and income, in its public filings with the Securities and Exchange Commission as well as in its press releases throughout fiscal 1999. Contact: Schiffrin & Barroway, LLP, Bala Cynwyd Marc A. Topaz, Esq. Robert B. Weiser, Esq. 888/299-7706 (toll free) or 610/667-7706 e-mail: info@sbclasslaw.com HMOs: CA Suit Names 5 Medicare Providers for Failure to Cover Expenses ---------------------------------------------------------------------- A San Mateo County woman on Medicare sued her HMO and four others on March 6 alleging they lured her and thousands of elderly Californians to sign up for plans, then left them without health insurance when the Medicare business proved less profitable than projected. The lawsuit maintains that the five health-maintenance organizations recruited senior citizens to their Medicare business, then dropped their coverage in certain parts of California, including San Mateo and Santa Clara counties, when Congress capped the rate of Medicare reimbursement. As the HMOs were telling Washington that they were being priced out of the Medicare market, they continued to aggressively advertise to seniors and sign up increasing numbers for new policies, according to the suit filed by the Burlingame firm of Cotchett, Pitre and Simon. "These Medicare HMO providers chose their own selfish concerns over those of seniors by pulling out," said attorney Bruce Simon. "That was in response to the government deciding they were being reimbursed too much." Some 14,000 elderly residents of San Mateo and Santa Clara counties lost their coverage on Jan. 1, 1999, the result of a coordinated effort to exclude certain locations, he said. Yvonne Green of Foster City subscribed to a health plan offered by Aetna U.S. Healthcare to Medicare patients for services not covered under the regular Medicare program. When Aetna canceled her policy, she was forced to subscribe to a more expensive plan offered by Healthnet, the only remaining Medicare HMO in San Mateo County, Simon said. Her disabled husband was left without long-term coverage and has spent seven months in a veterans hospital. The suit names Aetna, Cigna Corp., Lifeguard Inc., Prudential Healthcare Group Inc. and United Health Care Corp. Simon said he will seek class-action status on behalf of all California Medicare clients who lost their coverage. An insurance industry representative responded that HMOs pulled out of Medicare only when the government made it economically impossible. "Medicare is a potentially huge business for HMOs. In some ways, it's the last great untapped marketplace. No HMO in Medicare wants to leave," said Walter Zelman, president of the California Association of Health Plans. "The Balanced Budget Act of 1997, in an effort to reduce overall health care costs, reduced the payments to health plans far below what plans had anticipated when they committed to Medicare in years prior." The suit accuses HMO providers of violations of the California business and professions code, fraud, negligent misrepresentations and unlawful advertising practices. It seeks damages associated with the costs to senior citizens as a result of the "illegal denial of Medicare HMO services." (San Jose Mercury News, March 7, 2000) JDN REALTY: Pomerantz Haudek Files Securities Lawsuit in Georgia ---------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP (http://www.pomerantzlaw.com)has filed a class action suit against JDN Realty Corporation (NYSE:JDN) and several of the Company's senior executives. The case was filed in the United States District Court for the Northern District of Georgia on behalf of all those who purchased the common stock of JDN during the period between February 15, 1997 and February 14, 2000, inclusive. According to the complaint, JDN expects to restate the Company's financial statements for the period 1994 through 1998, and reduce net income and funds from operations for those periods, due to compensation and other amounts being accounted for as an expense for each of the years incurred as a result of millions of dollars of undisclosed compensation that two JDN executives had received from sellers in connection with many of JDN's real estate development projects. On February 14, 2000, JDN announced that two of the Company's executives had received undisclosed compensation and several of the Company's high ranking executives resigned, including J. Donald Nichols who resigned as Chief Executive of the Company. The market reaction to the news was swift; the price of JDN's common stock dropped half of its value. Contact: Pomerantz Haudek Block Grossman & Gross LLP Andrew G. Tolan, Esq., 888/476-6529 (888/4-POMLAW) agtolan@pomlaw.com JONES APPAREL: Resolves Allegations Concerning Nine West Shoes Pricing ---------------------------------------------------------------------- Jones Apparel Group, Inc. (NYSE: JNY) and its subsidiary, Nine West Group Inc., have entered into Settlement Agreements with the Attorneys General of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, the Northern Mariana Islands and Guam, and with the Federal Trade Commission, resolving allegations that Nine West Group engaged in violations of the antitrust laws by coercing retailers to adhere to resale prices of its products. Both agreements are without any admission of liability on the part of Nine West Group. The agreement with the States resolves ongoing investigations and a parens patriae action brought on behalf of consumers in the United States District Court for the Southern District of New York in White Plains. Specifically, the settlement consists of injunctive relief in the form of a Consent Decree which specifies the manner in which Nine West Group may implement its resale pricing policies with its retail customers, along with a payment of $ 34 million that will be used to benefit consumers of Nine West Group shoes. The settlement requires Court approval and, if approved by the Court, will effectively resolve the pending federal and state class actions that cover the same claims. In a separate settlement, Nine West Group has agreed to a Consent Order with the staff of the Federal Trade Commission which also specifies the manner in which Nine West may implement its resale pricing policies with its retail customers. This Consent Order, which resolves the FTC's investigation, is subject to final approval of the Federal Trade Commission after a 30-day comment period. RAVISENT TECHNOLOGIES: Cohen, Milstein Files Securities Suit in PA ------------------------------------------------------------------ The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C. on behalf of its client, on March 6, 2000, filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania, on behalf of purchasers of the common stock of Ravisent Technologies, Inc. (Nasdaq:RVST) during the period between July 15, 1999 and February 17, 2000, inclusive. The Complaint alleges that Ravisent and certain of its officers and directors violated the Securities Exchange Act of 1934. According to the Complaint, defendants commenced and engaged in a scheme to artificially inflate the revenues and profits of Ravisent by improperly recording revenues on contracts in violation of generally accepted accounting principles in order to accomplish the Company's Initial Public Offering ("IPO") at the maximum prices per share, and to then create the expectation in the market that Ravisent was an increasingly profitable company. Pursuant to their scheme, defendants determined to effectuate the IPO during the fiscal quarter so that there would be no current period certified financial statements of Ravisent included. On February 18, 2000, defendants announced that the release of its 1999 audited financial statements would be delayed due to final audit procedures as a result of its discussions with its independent auditors concerning Ravisent's having inappropriately recognized revenue in 1999 on certain contracts. As a result of this announcement, Ravisent's share price plunged $9 to close at $18 9/18 on traded volume in excess of 3,500,000 shares. If you have any questions about this notice or the action, or with regard to your rights, please contact either of the following: Andrew N. Friedman, Esq. or Robert Smits Cohen, Milstein, Hausfeld & Toll, P.L.L.C. 1100 New York Avenue, N.W. Suite 500 - West Tower Washington, D.C. 20005 Telephone: 888/240-0775 or 202/408-4600 E-mail address: afriedman@cmht.com OR rsmits@cmht.com RAVISENT TECHNOLOGIES: Schiffrin & Barroway Files Securities Suit in PA ----------------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP announces that a class action lawsuit was filed in the United States District Court for the Eastern District of Pennsylvania on behalf of all purchasers of the common stock of Ravisent Technologies, Inc. (Nasdaq: RVST) from July 15, 1999 through February 17, 2000, inclusive. The complaint charges Ravisent and certain of its officers and directors with issuing false and misleading statements concerning the Company's revenue recognition policy, revenues and income. Contact: Schiffrin & Barroway, LLP, Bala Cynwyd Stuart L. Berman, Esq. 888/299-7706 (toll free) or 610/667-7706 e-mail: info@sbclasslaw.com TOBACCO LITIGATION: BAT's Broughton Presents Robust Set of Figures ------------------------------------------------------------------ Chairman of British American Tobacco Martin Broughton presented on March 7 a robust set of full-year figures and revealed the integration of Rothmans was proceeding at a faster pace than first forecast. Andrew Darke of Williams de Broe explained: "While the charge for Rothmans was much greater than I expected, the company gave us a good sign it will integrate Rothmans a lot quicker than indicated at the time of the merger." The "bombed-out" BAT share price was the main source of frustration for Broughton. From a high of 657 pence in January last year, the stock has more than halved in value as the weight of U.S. litigation, and the fad for IT and telecoms turned investor sentiment against the shares. At the close, BAT was down another 13-1/2 pence, at 261 pence, giving it a price earnings multiple of just five times prospective net profits. Broughton admits he is probably not the only boss of a FTSE 100 firm concerned about how the market values so-called "bricks and mortar companies" and the current investment fads. "It is really quite remarkable how people's view of valuing a business has changed in the space of just one year," he told journalists at the post-results press-conference. Worrying many BAT shareholders is the Engle class action being brought by around 500,000 sick smokers. The Florida court case is in the jury phase and when it concludes in around three weeks time could yield a "mega-verdict" totalling up 200 bln usd of punitive damages. Broughton, while he has not totally given up on a favourable verdict, believes the company's U.S. unit Brown & Williamson and the other plaintiffs will overturn any adverse ruling on appeal. "We have many appealable issues and they are creeping up by the minute," he said. Indeed, the chairman was keen to put a positive gloss on American legal wrangles. He said in the course of 1999, 254 cases had been dismissed, and only 113 new ones brought. That still leaves a total of 678 on the books. Broughton is, however, being philosophical about the problem as he said. " Litigation is a cost of business in the U.S.," he said. (AFX.COM, March 7, 2000) VISX INC: Shepherd & Geller Files Securities Suit in California --------------------------------------------------------------- The Law Firm of Shepherd & Geller, LLC announced that it has filed a class action in the United States District Court for the Northern District of California on behalf of all individuals and institutional investors that purchased VISX Inc. (Nasdaq:VISX) common stock between March 1, 1999 and February 22, 2000, inclusive. The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by issuing false and misleading statements about revenues from the Company's Excimer Laser systems, the strong procedure and equipment royalties VISX was earning, the limited impact of competition which would allow the Company to maintain its licensing fees, and the Company's continued market share domination. As a result of the misleading statements, the Company's stock was artificially inflated during the class period. Prior to disclosing the truth about the Company, certain insiders took advantage of the inflated stock price by selling more than $97 million worth of stock to the unsuspecting public. When the truth about the Company was revealed, the stock price fell significantly. Contact: Shepherd & Geller, LLC, Boca Raton Jonathan M. Stein, 561/750-3000 Toll Free: 1-888-262-3131 E-mail: jstein@classactioncounsel.com ********* 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. Romeo John D. Piansay, Jr., editor, Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. 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 * * *