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/raid1/www/Hosts/bankrupt/CAR_Public/000331.MBX C L A S S A C T I O N R E P O R T E R Friday, March 31, 2000, Vol. 2, No. 64 Headlines CALIFORNIA AMPLIFIER: Settles Securities Lawsuit in California CENDANT CORP: Hearing on Settlement for Securities Suit Set for June 28 CUMULUS MEDIA: Lowey Dannenberg Files Securities Suit in Wisconsin CYBERSHOP.COM INC: Berman DeValerio Files Securities Suit in New Jersey FINOVA GROUP: Wechsler Harwood Files Securities Suit in New York GENERAL ELECTRIC: Settlement Agreed for Suit over Former Kidder's Worth GOLDEN BEAR: Announces Court Approval of Securities Lawsuit Settlement HOLOCAUST VICTIMS: $5.3 Bil Nazi Slave Settlement Signed HOLOCAUST VICTIMS: Polish Govt to Waive Income Tax on Compensation HOLOCAUST VICTIMS: Swiss Regulator Okays Publication of 26,000 Accounts INACOM CORPORATION: Cauley & Geller Files Securities Suit in Nebraska LIFE INSURANCE: Cases Keep Coming up Because Consumers Find out Late MICROSOFT CORP: Given Limited Access to Competitor's Documents PRT GROUP: Announces Dismissal of Securities Suit RAINFOREST CAFÉ: Denies Charges by Shareholder Heartland Group SEATTLE FILMWORKS: Schroeter Goldmark Files Suit over Consumer Fraud SOTHEBY'S, CHRISTIE'S: Aussi Dealers May Be Drawn into Antitrust Suit TOBACCO LITIGATION: FL Bill Might Protect Industry from Massive Award TOBACCO LITIGATION: Freedom of Choice Cited; Dollar Value Offered TOKYO GOVT: 16 Banks to File Lawsuit over Bank Tax VISX, INC.: Berman DeValerio Files Securities Lawsuit in CA VIVENDI, S.A.: Wolf Haldenstein Files Securities Lawsuit * AEA Praises New Legislation to Allow Stock Option to Hourly Workers ********* CALIFORNIA AMPLIFIER: Settles Securities Lawsuit in California -------------------------------------------------------------- California Amplifier Inc., (Nasdaq: CAMP), announced on March 29 that it had reached a settlement in the class action lawsuit filed in the Superior Court for the State of California, County of Ventura, entitled Yourish v. California Amplifier, Inc. et al., Case No. CIV 173569. The Company's disclosure of the lawsuit has been reported in the CAR. The trial began on March 27, Under terms of the settlement, the Company's insurance carriers will pay approximately $1.5 million, and the Company will pay $2.0 million and issue 187,500 shares of its common stock. This represents a total settlement of approximately $11.0 million of which approximately $9.5 million will be a pre-tax charge to the Company's fiscal year 2000 fourth quarter statement of operations. Currently the Company has 12,657,000 common shares outstanding, and the issuance of these shares represents approximately 1.5% dilution to the current outstanding shares. The Company is in discussion with one of its insurance carriers as to a final resolution of an additional $2.0 million in coverage, which would reduce the Company's payment and charge by that amount. Fred Sturm, Chief Executive Officer of California Amplifier, commented, "We defended ourselves vigorously throughout the process. We believed we had meritorious defenses, however, complexities in securities cases such as this with claims in excess of $100 million are extremely difficult for many jurors to decide and potential outcomes are unpredictable. Accordingly, settlement of this litigation was in the best interest of our stockholders, rather than risk a verdict against the Company which could have had a significant adverse financial impact." CENDANT CORP: Hearing on Settlement for Securities Suit Set for June 28 ----------------------------------------------------------------------- Cendant Corporation (NYSE: CD) announced that the U.S. District Court for the District of New Jersey entered an order scheduling a hearing concerning the previously announced preliminary agreement to settle the primary class action pending against the Company arising out of the accounting irregularities at former CUC International business units. Following the hearing, scheduled for June 28, 2000, the court shall render its decision on whether the proposed settlement with its terms is approved. The court's action is part of the normal process in the disposition of class actions. A detailed notice describing the terms of the settlement, which are contained in a written stipulation filed with the court, will be distributed to members of the class by lead plaintiffs. Questions concerning the terms of the previously announced settlement agreement should be directed to lead plaintiffs' counsel: Barrack, Rodos & Bacine, 3300 Two Commerce Sq., Philadelphia, PA 19103 215-963-0600 or Bernstein, Litowitz, Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019 212-554-1400. CUMULUS MEDIA: Lowey Dannenberg Files Securities Suit in Wisconsin ------------------------------------------------------------------ Lowey Dannenberg Bemporad & Selinger, P.C. has filed a securities class action lawsuit in the United States District Court for the Eastern District of Wisconsin against Cumulus Media, Inc. (NASDAQ:CMLS) and certain officers and directors of the Company on behalf of purchasers of Cumulus common stock during the period May 11, 1999 through March 16, 2000, inclusive (the "Class Period"). Plaintiff's complaint alleges that defendants violated the federal securities laws by issuing false and misleading press releases and financial statements to the investing public concerning Cumulus' financial results that inflated the price of Cumulus stock purchased by investors during the Class Period. On March 16, 2000, Cumulus acknowledged that its reported results for the first three quarters of 1999 were incorrect and were being restated, resulting in a decrease in net revenues and an increase in net losses. In response to this announcement, Cumulus' stock price dropped over 30% the next day, from$16-15/16 to $11. Contact: Lowey Dannenberg Bemporad & Selinger, P.C., White Plains David Harrison or Stacey Blaustein Telephone: 914-997-0500 Telecopier: 914-997-0035 e-mail: ldbs@westnet.com CYBERSHOP.COM INC: Berman DeValerio Files Securities Suit in New Jersey ----------------------------------------------------------------------- A securities class action was filed on March 17, 2000 against CyberShop.Com, Inc. (Nasdaq: CYSP) and certain of its officers on behalf of all persons who purchased the common stock of CyberShop between October 26, 1999 and February 24, 2000, inclusive (the "Class Period"). The lawsuit, which seeks class action status, is brought in the United States District Court for the District of New Jersey for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The action charges that CyberShop improperly reported its financial condition in its public filings with the Securities and Exchange Commission and in its press releases during fiscal year 1999. These statements inflated the price of CyberShop's common stock and allowed its top officer to sell a substantial amount of his holdings at artificially-inflated prices. In February 2000, CyberShop belatedly disclosed that it would be closing its previously touted electronic-retailing business and that operations in the third quarter of 1999 had actually declined, in contrast to previous reports. Contact: Berman, DeValerio & Pease LLP Alicia M. Duff (800) 516-9926 or bdplaw@bermanesq.com FINOVA GROUP: Wechsler Harwood Files Securities Suit in New York ---------------------------------------------------------------- A class action against Finova Group Inc. (NYSE: FNV), Finova Capital Corporation, and certain of Finova's and Finova Capital's officers and directors, has been commenced in the United States District Court for Southern District of New York by Wechsler Harwood Halebian & Feffer LLP. The suit is on behalf of shareholders who purchased the common stock of Finova between July 15, 1999 and March 26, 2000 (the "Class Period"). The complaint alleges that Finova, Finova Capital and certain of their directors and executive officers violated Sections 10(b) and Rule 10b-5 promulgated thereunder and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that the defendants issued materially false and misleading financial statements contained in filings with the Securities and Exchange Commission (the "SEC") and press releases, that, inter alia, overstated the Company's assets, income and earnings per share during the Class Period by understating reserves for loan losses. Further, the Complaint alleges that the Company failed to disclose credit risk of a major customer, as required under applicable accounting and SEC rules. On March 27, 2000, only three weeks after Finova filed its annual report with the SEC, Finova announced that the Company was to take a$70 million charge to earnings to increase reserves for the account of one unnamed customer. The Company had announced shortly before that it had actually reduced reserves for the year ended December 31, 1999 compared to the year ended December 31, 1998. On this news, between March 27, 2000 and March 28, 2000, the Company's stock fell $15.50 per share from its March 26, 2000 close of$31.938 per share (or 48.5%) on extremely heavy trading volume to close at $16.4375 per share on March 28, 2000. The Company's common stock had traded as high as $54.50 per share on the NYSE during the Class Period. Contact: Robert I. Harwood, Esq. rharwood@whhf.com Samuel K. Rosen, Esq. srosen@whhf.com Frederick W. Gerkens, III, Esq. fgerkens@whhf.com Patricia Guiteau, Shareholder Relations Department: pguiteau@whhf.com Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue, New York New York 10022 Telephone: 877-935-7400 (toll free) GENERAL ELECTRIC: Settlement Agreed for Suit over Former Kidder's Worth ----------------------------------------------------------------------- General Electric Co. stockholders will accept $19 million to settle a class-action lawsuit that faulted Joseph Jett, a top bond trader for GE's former Kidder, Peabody & Co. unit, for inflating Kidder's net worth and deceiving shareholders about the value of GE stock, according to a settlement filed Wednesday March 29, 2000. Government regulators have called Jett's fraud one of the largest in the history of the securities industry. In the suit, investors claimed they overpaid for GE stock in 1993 and 1994 because Jett created phony profits that overstated Kidder's financial performance by $ 350 million. Jett later asserted that Kidder executives knew of his scheme but turned a blind eye because it fattened their bonuses as well. Regulators said Jett exploited a glitch in Kidder's software that credited him with illusory profits and recorded them in ledgers and regulatory reports. But in a book he wrote last year, Jett said that everything he did was at the direction of a supervisor. Kidder denied wrongdoing and said it was ending the case "for the purpose of avoiding the continuing additional expense, inconvenience, distraction and risk of this litigation." Kidder exists only on paper now. GE sold Kidder's main operations in 1994 to New York-based PaineWebber Group Inc. The settlement provides that Kidder is liable for payment of $ 19 million to investors who owned GE stock in parts of 1993 and 1994. GOLDEN BEAR: Announces Court Approval of Securities Lawsuit Settlement ---------------------------------------------------------------------- Golden Bear Golf, Inc. announced on March 29 that United States District Judge Dan Hurley approved the settlement of the class action litigation filed after its restatement of earnings and entered a Final Judgement and Order of Dismissal with Prejudice, based upon a finding that the settlement was "fair, reasonable and adequate." The case has been reported in the CAR. The securities class action was settled for a sum of $3.5 million (the "Settlement Fund"), comprised of funds paid to the Company by its insurer, with a contribution by the Company's auditors. Pursuant to the court approved settlement, the Settlement Fund will be divided among those persons who purchased Golden Bear Golf shares during the period beginning with the Company's initial public offering on August 1, 1996 and ending upon the Company's announcement of its restated earnings and financial condition on July 27, 1998, after payment of legal fees and costs. In addition, as part of the settlement, Golden Bear Golf agreed to effect a corporate transaction which will redeem its approximately 2,500,000 publicly held shares for a price of $0.75 per share and will result in its becoming a private company. HOLOCAUST VICTIMS: $5.3 Bil Nazi Slave Settlement Signed -------------------------------------------------------- When the German government agreed to match a $2.6 billion payment promised by companies that used slave labor during the Nazi years, it helped to end lengthy negotiations over a class action lawsuit brought by slave laborers and their families resulting in the $5.3 billion settlement signed in Berlin on Dec. 17, 1999. U.S. Secretary of State Madeleine Albright, who was present at the signing, said in an official statement that the German government and the companies did the right thing. Noting that Germany had already paid $60 billion to Holocaust survivors and other victims of Nazi persecution, Albright said, "This is the first serious initiative to acknowledge the debt owed to those whose labor was stolen or coerced during that time of outrage and shame." She added that the debt owed was exorbitant (see November/December 1999 LEGAL AssISTANT TODAY). "No human being should ever be treated as property, and no person can deny the dignity of another without bringing dishonor upon himself," Albright's statement said. Concerned that the settlement had taken a long time during which the survivors had dwindled in number and advanced in age, Albright said, "They have waited far too long not simply for money, but also for the frank acknowledgement that their suffering was terrible and wrong." One of the factors that led to the worldwide settlement was an agreement made by the U.S. government to assist in providing legal peace to German companies from court actions. How the money will be distributed has yet to be determined. A foundation will be created to address questions about settlement administration and distribution that still remain. (Legal Assistant Today, March, 2000) HOLOCAUST VICTIMS: Polish Govt to Waive Income Tax on Compensation ------------------------------------------------------------------ Prime Minister Jerzy Buzek said that compensation for Nazi-era forced and slave labor to be paid to more than 400,000 Poles by Germany will not be subject to income tax. Buzek made the announcement during a meeting with representatives of forced laborers and Polish negotiators who were taking part in compensation talks with Germany, United States and Jewish organizations, which ended last week in Berlin. Under the deal, Poland will receive nearly 1.9 billion marks ($ 950 million) from the 10 billion mark ($ 5 billion) compensation fund set up by German industry and government. Buzek praised Polish negotiators for their ''tough and reasonable stance'' and called the agreement ''a great success.'' The prime minister said he expected the first payment could be made by the end of the year. The money will be distributed by the Polish-German Reconciliation Foundation, which has registered more than 400,000 Polish forced and slave laborers. Under the agreement, slave laborers those sent to concentration camps under ''work to death'' conditions will receive up to 15,000 marks ($7,500) each. Forced laborers deported to Germany to work would get up to 5,000 marks ($2,500) each. German companies that used forced and slave laborers during the Nazi era agreed to set up the fund last year in exchange for protection from U.S. class-action lawsuits. (AP Worldstream, March 30, 2000) HOLOCAUST VICTIMS: Swiss Regulator Okays Publication of 26,000 Accounts ----------------------------------------------------------------------- The Swiss bank regulator approved on Thursday March 30 the publication of names on 26,000 Holocaust-era accounts in a final push to find the heirs of victims. The Swiss Federal Banking Commission said it was following the recommendation of the international panel headed by former U.S. Federal Reserve Chairman Paul Volcker in making the ruling. ''By publishing the accounts, justice will be done to victims of the Holocaust who during the war held their assets in Swiss banks,'' said Kurt Hauri, president of the commission. Hauri said the decision clears the way for rapid implementation of the dlrs 1.25 billion settlement reached two years ago between banks and Jewish organizations and Holocaust claimants in New York under U.S. District Judge Edward Korman. The New York-based World Jewish Congress, one of the key pressure groups on the Swiss banks, reacted cautiously. Elan Steinberg, WJC executive director, told The Associated Press that ''the banks must be in compliance with the recommendations of the Volcker committee, and it is up to the judge to decide if this decision is in compliance with the recommendations.'' Niklaus Blattner, chief executive officer of the umbrella Swiss Bankers Association, noted the American courts must approve the claims procedure as well as the class-action settlement. The Volcker panel made its recommendations last December after more than two years of combing through all the records it could find on 4.1 million accounts in 254 Swiss banks in operation during World War II while the Nazis controlled neighboring Germany. The panel compared the names on the accounts with the names of Holocaust victims from lists in Israel and the United States and said it had found 54,000 accounts never before disclosed that might have a link to Holocaust victims. For public release it narrowed that figure down to the 26,000 most likely. The banking commission ruling permits the publication of all 26,000 accounts but leaves it up to the banks to decide whether closed accounts which account for 23,000 on the list should be published. The biggest Swiss banks have said they are willing to publish all their accounts but Swiss private banks, which have some 600 accounts, say they have reservations about publishing their names because of fears that clients will worry about the loss of banking secrecy. The Swiss banking commission said it also was following the panel's recommendation in approving the creation of a central database of 46,000 accounts the panel deemed to have a ''probable or possible'' connection to Holocaust victims. This will be open to a special body set up to handle claims in Switzerland. Although some 8,000 accounts considered to be short of detail will be left off the database, the body also will have access to their details, said the commission. But it dismissed the personal recommendation of Volcker, who said that all 4.1 million accounts should be in the database. The commission said it decided that inclusion of the other accounts was ''neither necessary nor meaningful'' because the Volcker panel had decided there was ''no reason to believe these accounts were in any way related to victims of the Holocaust.'' The Volcker panel recommended that successful claimants should be paid 10 times the 1945 value of the accounts before any fees were deducted or interest added, but he had no overall value for the accounts found because of missing records. The panel nonetheless concluded that the New York settlement was enough to pay all heirs, Volcker said at the time. The banking commission, under great pressure from Jewish groups and others in the United States and elsewhere, first broke with traditional Swiss banking secrecy in 1997 to publish 5,559 names on unclaimed accounts of people who lived outside Switzerland. (AP Worldstream, March 30, 2000) INACOM CORPORATION: Cauley & Geller Files Securities Suit in Nebraska --------------------------------------------------------------------- Cauley & Geller, LLP announced on March 30 that a class action lawsuit has been filed in the United States District Court for the District of Nebraska on behalf of all persons who purchased Inacom Corporation (NYSE: ICO) (NYSE: ICO) between October 9, 1998, and January 4, 2000, inclusive (the "Class Period"), including those who acquired Inacom stock as a result of the stock-for-stock merger with Vanstar. The complaint charges Inacom and several of its officers and directors with violations of Sections 11, 12 and 15 of the Securities Act of 1933 as well as Sections 10(b), 14(a)(9) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that Inacom issued materially false and misleading statements regarding its ability to recognize growth and remain profitable in light of significant changes in manufacturers' distribution of computers, which defendants knew or recklessly disregarded. As a result of these materially false and misleading statements, among others, plaintiff alleges that the price of Inacom common stock was artificially inflated during the Class Period. Contact: Cauley & Geller, LLP, 11311 Arcade Drive, Suite 201, Little Rock, AR 72212, E-mail: CauleyPA@aol.com 1-888-551-9944 - toll free est control of Kidder from GE. The supervisor, Edward Cerullo, answered the claim by filing a $ 10-million libel suit against Jett last August. (Los Angeles Times, March 30, 2000) LIFE INSURANCE: Cases Keep Coming up Because Consumers Find out Late -------------------------------------------------------------------- The life insurance industry continues to be haunted by ghosts from sales past. Court settlements and pending cases stemming from charges of deceptive marketing schemes still appear regularly in the news. A high percentage of the long string of sales misconduct cases during the past decade arose from the insurance industry's promoting its wares by tying premium payments to untenable dividend projections during the late 1970s and 1980s when interest rates soared. The life insurance industry continues to be haunted by ghosts from sales past. Court settlements and pending cases stemming from charges of deceptive marketing schemes still appear regularly in the news. In December a federal court in western Pennsylvania granted a $1.7 billion settlement on behalf of MetLife policyholders who bought into a "vanishing premium" payment plan from 1982 to 1997. In January the New York Court of Appeals ruled that class action lawsuits alleging deceptive sales practices can proceed against MONY and Guardian Life, even though lower courts previously dismissed suits against the two companies. A high percentage of the long string of sales misconduct cases during the past decade arose from the insurance industry's promoting its wares by tying premium payments to untenable dividend projections during the late 1970s and 1980s when interest rates soared. Forcing life companies to continue coughing up huge sums to satisfy complaints about bargains struck 15 and 20 years ago seems like milking a very old cow, carrying the penchant for litigation beyond reasonable limits, and many industry observers wonder when it will ever end. Admittedly the lengthy litigation is partly due to the evasive maneuvers of company lawyers combined with the courts' taste for long deliberation, but a lot of people in the insurance business believe these suits should have been filed long ago and the cases settled by now. Lori McIlroy, staff attorney at Thomas E. Miller's Signature Group financial services office in Irvine, Calif., explains that one reason the cases keep coming up is the consumers who are just finding out about the questionable practices that took place many years ago. As they begin receiving benefits or start getting bills again from those policies, they start asking questions. However, she does see some light at the end of the tunnel. "Even though we're still paying the price for mistakes of the Past, I feel strongly we've done a lot to improve our policies and procedures and I don't see us developing more of these sorts of problems into the future," she says. Some see the continued litigation as a product of the age of entitlement and think much of it is unjustified. "Many people with disappointed expectations want someone to blame and it's fairly easy to claim that you made a bad purchasing decision on insufficient information," observes Ben Brewster, director of government affairs for the New York State Association of Insurance and Financial Advisors. He points out that some of the suits are developed along the lines of statutes designed to bring organized crime figures to heel, such as RICO. Hungry trial lawyers looking to develop class action cases target the deep pockets of the insurance companies and they're very clever at forcing companies to settle rather than face the expense and publicity of a lengthy court battle. Still, Brewster admits the origin of the problem was a greedy and shortsighted group of salespeople. "Certainly, had agents been more cautious about advising people to base their decisions on the continuation of unrealistic yield levels, we wouldn't have the problem," he notes. "Fortunately, the vast majority of agents were cautious and offered realistic advice." Meanwhile, the law, like Alexander Pope's wounded snake, "drags its slow length along," and for now what should be old news will remain today's news. (Advisor Today, February, 2000) MICROSOFT CORP: Given Limited Access to Competitor's Documents -------------------------------------------------------------- After scratching and clawing to permit its in-house counsel to review competitors' trade secret documents in a California antitrust case, Microsoft Corp. was given limited access to the materials by San Francisco Superior Court Judge Stuart Pollak. Attorneys for the Redmond, Wash.-based software giant pledged that in-house lawyers designated for document review would not discuss the sensitive information with others within the corporation. "This is not going to be cross-pollinated within the company," Microsoft corporate counsel Richard Wallis assured Pollak. Pollak, who is hearing pretrial issues in the case, Lingo v. Microsoft, 301357, expressed concern over what guarantee the company could give that documents from competitors, including Apple Corp., Sun Microsystems, America Online and Netscape, that may be subpoenaed in discovery won't be passed through the windows of Microsoft. "We'll put up whatever screens your honor would suggest," Wallis said. Pollak was satisfied and issued a protective order with detailed instructions on who would have access to the documents. He limited Microsoft to three inside attorneys, but he gave total access to outside hired legal guns. That still didn't sit well with Microsoft local counsel Robert Rosenfeld of Heller Ehrman White & McAuliffe, who described the provisions as "problematic" and a "Rube Goldberg procedure." Rosenfeld told the court Microsoft would not stipulate to the protective order. Pollak replied that he would reevaluate it if the provisions require fine tuning. Rosenfeld called it "troubling" that plaintiffs' counsel would have access to the documents denied to the defense. He said Microsoft's attorneys should be given access to the documents since they are the most knowledgeable and best equipped to understand them. "Plaintiffs' lawyers have access to the documents while Microsoft attorneys are fighting over who can see them," Rosenfeld complained. He said no depositions should be taken using the documents until Microsoft attorneys review them. Plaintiff's attorney Richard Grossman of San Francisco's Townsend and Townsend and Crew, which is lead counsel in the class action, said he did not object to Wallis and his in-house colleagues reviewing the documents. But the company's competitors might, he added. "Microsoft's competitors want to make sure their documents are not going to be misused by Microsoft in-house counsel," Grossman told the court in urging Pollak to establish safeguards. "It's something that has to be addressed by them." In addition to limiting who can look at the information, the judge also said a third-party competitor could object to handing over documents, but no later than five days after it receives a date to turn over the documents. Grossman reminded Pollak that there were no provisions for Microsoft in-house counsel to read third-party documents subpoenaed in the Department of Justice's antitrust case, which is pending before U.S. District Judge Thomas Penfield Jackson in Washington, D.C. "I want Mr. Wallis to see the discovery, and I want him to see it as soon as possible," Grossman said. "But let's let the case move forward ... while these issues are being worked out." The parties also said they were close to selecting a discovery referee, who will rule on issues concerning the production of documents. The referee may also decide third-party document disputes. Pollak, regarded by many as a thoughtful judge but who sometimes has a difficult time pulling the trigger on a ruling, suggested the argument went on too long. "I think we're probably magnifying what the problem's going to be," he sighed. But Pollak sidestepped the question of when to begin the trial. Plaintiffs' attorneys suggested a target date of July 1, 2001. Lawyers for Microsoft said the earliest a trial should start is one year after that. Pollak said the issue of a trial date may come up at the next status conference on May 8. (The Recorder, March 30, 2000) PRT GROUP: Announces Dismissal of Securities Suit ------------------------------------------------- PRT Group Inc. (Nasdaq: PRTG), an information technology solutions provider, announced on March 29 that its motion to dismiss the class action lawsuit filed against the Company, certain of its officers, directors and shareholders of the Company has been granted. The plaintiffs' request for a leave to amend the amended complaint was also denied. PRT Group Inc. is an information technology solutions integrator. RAINFOREST CAFÉ: Denies Charges by Shareholder Heartland Group -------------------------------------------------------------- The Rainforest Cafe, Inc., (NASDAQ: RAIN), announced on March 30 that it has received a complaint in a class action lawsuit filed on March 27, 2000 in Minnesota District Court. The complaint was filed by the Heartland Group, Inc., a financial institution that purportedly owns shares of Rainforest's common stock, on behalf of itself and others similarly situated. The plaintiffs allege, among other things, that the Rainforest board of directors breached their fiduciary duties to shareholders in connection with their consideration of the planned merger with Landry's Seafood Restaurants, Inc. and the consideration of the merger involved conflicts of interest for the Rainforest board. The company denies these allegations and intends to vigorously defend itself in this action. SEATTLE FILMWORKS: Schroeter Goldmark Files Suit over Consumer Fraud -------------------------------------------------------------------- Attorneys Adam Berger from the Seattle law firm Schroeter Goldmark & Bender and Randy Gordon from the Bellevue law firm Casey, Gordon and Davis, PS, announced on March 30 that a class action lawsuit has been filed in King County Superior Court against Seattle FilmWorks on behalf of consumers nationwide. The suit contends that consumers were deliberately misled by the notion that Seattle FilmWorks film had to be processed at (and only at) Seattle FilmWorks. In truth, the vast majority of 35mm film sold by Seattle FilmWorks is ordinary "Process C-41" film, and requires NO special processing. In addition, consumers were led to believe that they received free replacement rolls of film with each roll of film processed, when in fact they were charged for that film. Consumers suffered increased expense and delay in getting their photos developed, sometimes in cases where immediate processing was necessary. The attorneys have copies of letters sent to the State Attorney General's office from consumers expressing such complaints. "This reminds me of the Publishing Clearinghouse scam, where consumers were led to believe they had to buy a magazine in order to qualify for a contest drawing. In this case, consumers were led to believe that the film they purchased MUST be processed at Seattle Film Works," Berger stated. "Consumers felt they could not take the film to Costco or Rite Aid or any other processor where they could have had the film developed more cheaply." It is unknown how much money other film-developing businesses have lost by turning consumers away, believing that they could not process the film. By labeling their film canisters SFW-XL and using the phrase "Process only at Seattle FilmWorks," Seattle FilmWorks misled both its customers and its competitors. When Seattle FilmWorks was founded in 1978, they re-spooled motion picture film for use in 35mm cameras. That film did require special processing. Over time, the original special-process film has been nearly entirely phased out. According to attorney Randy Gordon, "They still send out a very small percentage of this motion picture film, but they lead the consumer to believe that every roll is this film, thus requiring special processing." Damages are being sought on behalf of all consumers affected by Seattle FilmWork's deceptive practices. The attorneys allege that these deceptive practices violate the State Consumer Protection Act. If the charges are proven, the corporation could be forced to pay triple damages to affected consumers. Consumers wanting information about the class action may call Mr. Berger at Schroeter Goldmark and Bender, 206/622-8000 or Mr. Gordon at 425/454-3313. Any documentation of film developing, receipts, envelopes housing prints processed at Seattle Film Works, etc. is helpful, but not necessary. A hearing on class certification is expected to occur this summer. At that point, notice will be provided to potential class members, and a trial date will be set. Seattle FilmWorks has recently changed it's name to PhotoWorks. (one word) Contact: Schroeter, Goldmark & Bender Adam Berger, 206/622-8000 or PR Ink India Simmons, 425/742-6926 SOTHEBY'S, CHRISTIE'S: Aussi Dealers May Be Drawn into Antitrust Suit --------------------------------------------------------------------- Up to 200 Australian antique and art dealers may become part of a class action suit against the world's two biggest art auction houses, Sotheby's and Christie's, over claims they colluded in setting their fees throughout the 1990s. Over the past month, the Melbourne law firm Slater and Gordon has been seeking support from local art and antique dealers to mount a case against both firms in the Federal Court. It is believed the 160 members of the Antique Dealers' Association of Australia will shortly be asked if they will back legal action. Lawyers are expected to claim that under section 45/2 of the Trade Practices Act, Sotheby's and Christie's acted to restrict free trade by imposing identical buyer's premiums throughout the 1990s. Both houses impose a 15 per cent charge on bids up to $50,000, and 10 per cent thereafter. One of the firm's lawyers, Nick Styant-Browne, said he expected an announcement to be made within a fortnight. He said he could not comment on how many antique or art dealers were involved because Slater and Gordon had not yet received instructions to proceed. Sotheby's Australia managing director, Paul Sumner, said he was aware Slater and Gordon had approached certain dealers and collectors, but that he had not received notification of any litigation. "It's not an issue of great concern to us locally because any action would result from events in New York," Sumner said. Christie's managing director, Roger McIlroy, also said he assumed any legal action would have to be taken against the international company. "I believe we have done nothing wrong here," he said. If any of the actions were successful the international salerooms could be fined tens of millions of dollars, and in the US their executives could face jail. Sotheby's is publicly listed on the New York stock exchange and its share price has plummeted over the past month, but Christie's is now privately owned after a French buyout in 1998. The Australian Competition and Consumer Commission said it was monitoring events in New York and that it had interviewed some people in the Australian art trade. An ACCC spokeswoman said the Trade Practices Act prohibited arrange-ments between competitors that fixed prices. Although Sotheby's and Christie's impose the same buyer's premiums, their sales commissions vary markedly. Sotheby's commissions now range from 20 per cent to 10 per cent for art works sold up to $350,000, while Christie's charges fall in different stages from 15 per cent to 9 per cent. From $350,000 up, the rates for both firms are the same. Until 1996, when their head offices imposed a fixed schedule of fees, the Australian offshoots were able to negotiate low or even zero comm-issions for clients offering major works for sale. But both firms have charged the same buyer's premium since the mid-1980s. (Sydney Morning Herald, March 30, 2000) TOBACCO LITIGATION: FL Bill Might Protect Industry from Massive Award --------------------------------------------------------------------- A campaign is building in the Florida Legislature to save the tobacco industry from a potentially catastrophic punitive- damages award in the landmark Engle class-action case in Miami. Under a bill that may be introduced shortly, sponsors hope to bar the risk of a lump sum punitive-damages award to an immense class of current and former Florida smokers. The effort appears aimed not so much at protecting tobacco companies as preserving the flow of tobacco industry settlement payments to Florida and other states, which some officials fear could be interrupted by a damage award in the Engle case that could reach into the hundreds of billions of dollars. As reported last week by The Times, some state attorneys general have begun hiring bankruptcy lawyers to advise them in case some major tobacco companies seek bankruptcy protection because of a big award in the Engle suit. Many of the attorneys general, who in 1997 and '98 agreed to out-of-court settlements with tobacco companies, fear this would interrupt the flow of payments to states, which are supposed to amount to $ 246 billion over 25 years. The bill was drafted by Florida Atty. Gen. Robert A. Butterworth, one of the leaders of the massive legal assault on Big Tobacco by the states. The bill would "put it up in . . . simple language that every judge can understand," said Martin Feldman, a tobacco analyst with Salomon Smith Barney, who disclosed the effort in a memo to his clients. Butterworth, in a phone interview, said he prepared the bill in response to lawmakers' requests. He said he was not concerned about protecting settlement payments to the state or in helping cigarette makers forestall a crippling punitive damages award in the Engle case. "I think tobacco is the evil empire," Butterworth said. "I don't care if they go bankrupt." In the Engle case, the same jury that last year found cigarette makers guilty of lying about the hazards and addictiveness of smoking is expected to begin deliberations next week on whether to award compensatory damages to three cancer victims designated as class representatives. Under the trial plan ordered by a Dade County judge, if any of the three get compensatory damages, the jury would then decide whether to award punitive damages in a single lump to the entire class. Most observers believe the punitive-damages award could be in the tens or even hundreds of billions. Tobacco companies contend that under the law punitive damages must be considered one plaintiff at a time, and only after a plaintiff wins a compensatory verdict. The bill drafted by Butterworth would declare that it is already the law in Florida that punitive damages can be awarded only after compensatory verdicts are reached. The Engle trial plan "just flies in the face of all common law throughout the country, including Florida," Butterworth said. "The law in Florida is perfectly clear that in order to have punitives, you must first" get compensatory damages. "If you have three cases before you, you cannot do punitives for the whole state of Florida," he said. Although tobacco officials have said they believe they would prevail in an appeal of a lump sum punitive-damages award, their immediate problem might be posting a bond to forestall payment of the judgment while bringing the appeal. Typically, an appeal bond must cover the full amount of the award, plus 20% interest. Thus appealing a punitive-damages verdict of $ 100 billion could require an appeal bond of $ 120 billion, prompting speculation about possible tobacco company bankruptcy filings. Prospects for the bill were uncertain. But Republicans generally have been more sympathetic to the tobacco industry than Democrats, and there are Republican majorities in the Florida Senate and House. Florida Gov. Jeb Bush is also a Republican. TOBACCO LITIGATION: Freedom of Choice Cited; Dollar Value Offered ----------------------------------------------------------------- Three cancer-stricken smokers seeking $14.4 million in damages made excuses for smoking years after warning labels went on cigarette packs, a tobacco industry attorney said in closing arguments on Thursday, March 30. ''Should these three plaintiffs be paid a lot of money with a jury verdict that rewards them for choosing to smoke cigarettes for many years?'' Philip Morris attorney Dan Webb asked. ''Freedom to choose requires acceptance of responsibility for choices that we make,'' he said, repeating a standard industry theme in smokers' personal-injury lawsuits. Industry attorneys are making their final pitch to avoid paying anything to the three representatives of an estimated 500,000 ailing Florida smokers represented by the lawsuit. The jury, which already has decided the industry conspired to make a dangerous product, is expected to begin deliberating early next week in the nation's first smokers' class action suit to reach trial. If any money is awarded, the same panel will be asked to award punitive damages to the group to punish cigarette makers. The industry fears such an award could amount to hundreds of billions of dollars. For now, the jury will be asked to assess the medical bills, lost income, cost of household services the smokers are unable to perform, pain and suffering from lung cancer in Mary Farnan and the late Angie Della Vecchia and throat cancer in Frank Amodeo. Physicians and outside experts blamed smoking for each case. The industry has offered evidence that bronchioalveolar cancer, a form of lung cancer that the jury decided is not linked to smoking caused the cancers. It blamed industrial wood dust as a possible cause of Amodeo's cancer. Jurors must consider the individual smokers' awareness of bad conduct by cigarette makers, the choices they made whether to smoke or quit and their personal responsibility, Webb argued. For the first time, smokers' attorney Stanley Rosenblatt offered the dollar figure for ''devastating, ravaging injuries'' caused by the industry's defective products. Economic losses totaled $4.2 million for the three: $2.1 million for Amodeo, $1.6 million for Farnan and $523,000 for Della Vecchia, Rosenblatt said. He asked for an additional $2 million to $3 million each to cover the intangibles doubts about whether Farnan will see her 9-year-old daughter graduate from high school, 19-year-old James Della Vecchia's loss of his mother and the price Amodeo pays for never being able to eat or drink for the rest of his life. He is fed through a stomach tube because of throat damage. The defendants are Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Liggett Group Inc. and the industry's Council for Tobacco Research and Tobacco Institute. (AP Online, March 30, 2000) TOKYO GOVT: 16 Banks to File Lawsuit over Bank Tax -------------------------------------------------- Sixteen leading banks plan to file a class action lawsuit against the Tokyo metropolitan government, claiming that its proposed "bank tax" would be illegal, banking industry sources said. The plaintiffs include Dai-Ichi Kangyo Bank, Bank of Tokyo-Mitsubishi and the Industrial Bank of Japan. A bill on the bank tax, proposed by Tokyo Gov. Shintaro Ishihara, is widely expected to be approved at the Tokyo Metropolitan Assembly's plenary session Thursday. The bill targets major financial institutions. The envisaged bank tax would levy a 3 percent tax on major financial institutions with assets of more than 5 trillion yen at the end of fiscal 2000 on the basis of their gross operating revenues, and a 2 percent tax on special corporations such as the Norinchukin Bank. The banks plan to form a group before their shareholders meetings in June to prepare to file the lawsuit, the sources said. The Federation of Bankers Associations of Japan planned to anounce on Thursday March 30 that the banks will begin preparations for filing the lawsuit as soon as possible, the sources said. Since regional banks, such as Yokohama Bank, likely will join the 16 leading banks in mounting the legal action, more than 20 banks are expected to file the lawsuit, the sources said. In the lawsuit, the banks plan to assert that they are not obliged to pay new taxes because the envisaged new taxation system runs counter to both the spirit of the Constitution, which guarantees fairness and neutrality in taxation, and the Local Taxes Law, which prohibits the introduction of a new taxation formula that levies taxes at a significantly higher rate than previous rates, the sources said. (The Daily Yomiuri (Tokyo), March 30, 2000) VISX, INC.: Berman DeValerio Files Securities Lawsuit in CA ----------------------------------------------------------- A securities class action was filed on March 3, 2000 against VISX, Inc. (Nasdaq: VISX) and certain of its officers on behalf of all persons who purchased the common stock of VISX between March 1, 1999 and February 22, 2000, inclusive (the "Class Period"). The lawsuit, which seeks class action status, is brought in the United States District Court for the Northern District of California for violations of section 10(b) of the Securities Exchange Act of 1934. The action charges that VISX issued false and misleading statements about its business and revenue. In particular, the complaint alleges that VISX made improper statements about the steady and increasing revenues the installed base of VISX's Excimer Laser systems would provide to VISX, VISX's successful expansion of its business around the world, the strong procedure and equipment royalties VISX was earning, and the limited impact of competition which would allow VISX to maintain its $250 per procedure licensing fee in the United States which would lead to consistent revenue growth. Contact: Berman, DeValerio & Pease LLP Alicia M. Duff, (800) 516-9926 bdplaw@bermanesq.com VIVENDI, S.A.: Wolf Haldenstein Files Securities Lawsuit -------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP announces that a class action lawsuit is being filed in U.S. District Court on behalf of U.S. Filter shareholders who tendered their shares to Vivendi, S.A. in the tender offer commenced by Vivendi on March 22, 1999 (the "Tender Offer"). The complaint charges Vivendi and its president and chairman, Jean-Marie Messier, with violations of the federal securities laws in connection with defendants' illegal payments to senior U.S. Filter executives in exchange for such executives' promise to tender their U.S. Filter shares in the Tender Offer and to support and vote for the Tender Offer. Plaintiff alleges that defendants made special payments to the U.S. Filter executives which were not shared with the rest of U.S. Filter's public shareholders, thus violating Section 14 of the Securities Exchange Act of 1934. Contact: Wolf Haldenstein Adler Freeman & Herz LLP Michael Miske, George Peters Gregory Nespole, Esq. Fred Taylor Isquith, Esq. Shane T. Rowley, Esq. 800/575-0735 classmember@whafh.com http://www.whafh.com * AEA Praises New Legislation to Allow Stock Option to Hourly Workers--------------------------------------------------------------------- The following is a statement from William T. Archey, President and CEO of the American Electronics Association: "We commend leading members of Congress and the Clinton Administration for reaching agreement on new legislation to exempt stock options from the Fair Labor Standards Act (FLSA) -- to let companies offer stock options for hourly workers who lack them while preserving stock options for those who already have them. This legislation exempts not only stock options, but stock appreciation rights and employee stock purchase plans from the calculation of overtime under the Fair Labor Standards Act, a law enacted over 60 years ago. In addition, the proposed legislation will create a broad safe harbor that will protect from class action suits those companies currently offering employee equity programs for nonexempt employees." "The New Economy offers all employees new ways to benefit from the phenomenal growth of the high-tech industry. Stock options are one major way employers recognize the contribution their workers have made to this growth. By introducing legislation to ensure that employees can provide stock options to their hourly workers, Congress and the Administration are recognizing the innovative ways employers reward employees in the Information Age." The American Electronics Association (AEA) is the nation's largest high- tech trade group, representing more than 3,000 U.S.-based technology companies. Membership spans the industry product and service spectrum, from semiconductors and software to computers, Internet and telecommunications systems and services. With 18 regional U.S. councils and offices in Brussels, Tokyo and Beijing, AEA offers a unique global policy grassroots capability and a wide portfolio of valuable business services and products for the high-tech industry. For 56 years, AEA has been the accepted voice of the U.S. technology community. ********* 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. 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 * * *