/raid1/www/Hosts/bankrupt/CAR_Public/000421.MBX
C L A S S A C T I O N R E P O R T E R
Friday, April 21, 2000, Vol. 2, No. 79
Headlines
AK STEEL: Milberg Weiss Files Securities Suit in Ohio
ASHANTI GOLDFIELDS: Wolf Haldenstein Files Securities Suit in N.Y.
CENDANT CORP: Barrack Rodos Announces Settlement for Securities Suit
COCA-COLA: Group of Black Employees Calls for Boycott of Products
COCA-COLA: Jackson Urges Settlement; Diversity Big Issue at Annual Mtg.
CONSECO, INC: Faruqi & Faruqi Files Securities Suit in Indiana
E.SPIRE COMMUNICATIONS: Wechsler Harwood Files Securities Suit in MD
ENDESA SA: Sees Little Impact from Court Ruling on 1999 Blackout
FEDERAL AVIATION: Employees Charge of Fraud and Breach of Contract
FLIR SYSTEMS: Milberg Weiss Announces Extended Securities Suit in OR
HMOs: Physicians Group Sues 3 More Insurers over Claims Payment Delay
IMPERIAL CREDIT: FL Ct Grants Demurrer to Dismiss Suit over Merger
MICROSTRATEGY INC: Reports on Securities Lawsuits and SEC Investigation
PACIFIC GATEWAY: Schiffrin & Barroway Files Securities Suit in CA
POTOMAC ELECTRIC: Calvert Board and Lawsuit Keep Pressure for Clean-up
SCB COMPUTER: Cauley & Geller Files Securities Suit in TN
SCB COMPUTER: Cohen, Milstein Files Securities Suit in TN
TERAYON COMMUNICATIONS: Weiss & Yourman Files Securities Suit
TOBACCO LITIGATION: Giants Fixed Prices, Retailers Charge
TOBACCO LITIGATION: Lawsuit Mired Reynolds Says New Product Less Risky
TOBACCO LITIGATION: Panel Recommends FL Help to Prevent Bankruptcy
VISIONAMERICA, INC: Announces Talks with IRS, ICON Investment, TN Suit
VISIONAMERICA, INC: Wolf Haldenstein Files Securities Lawsuit in TN
ZIFF DAVIS: Discovery Proceeding for Securities Derivative Suit in DE
ZIFF DAVIS: Motion to Dismiss NY Suit over IPO Filed 1998 Pending
ZIFF DAVIS: Resolves Minority Stockholders' Suit in NY
* New Internet Privacy Regulations Take Effect on April 21
*********
AK STEEL: Milberg Weiss Files Securities Suit in Ohio
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Milberg Weiss (http://www.milberg.com/aksteel/)announced on April 19
that a class action has been commenced in the United States District
Court for the Southern District of Ohio on behalf of those who purchased
or otherwise acquired AK Steel Holding Corporation (NYSE:AKS) publicly
traded securities during the period between July 15, 1999 and January
25, 2000 (the "Class Period") and on behalf of those who held Armco,
Inc. shares as of August 25, 1999 and were thereby entitled to vote to
approve the merger with AK Steel.
The complaint charges AK Steel, Armco and certain of their officers and
directors with violations of the federal securities laws. The complaint
alleges that defendants' false and misleading statements about AK
Steel's ability to renegotiate its contracts at the end of 1999, the
minimal impact of a labor dispute in its Mansfield facility, the
positive impact on AK Steel's results of price increases in the steel
industry and an improved cost structure which would result in 2000 EPS
of $2.25-$2.65 artificially inflated the price of AK Steel stock to a
Class Period high of $24-5/16. This upsurge in AK Steel's stock enabled
AK Steel to acquire Armco in a stock-for-stock acquisition for fewer AK
Steel shares than AK Steel otherwise would have had to issue had AK
Steel's stock price been lower and permitted AK Steel to complete the
exchange of $450 million in Senior Notes in September 1999.
Then, on January 25, 2000, AK Steel revealed disappointing 4thQ 99
earnings and a huge drop in projected 2000 earnings versus earlier
statements and exposed the problems AK Steel was having, including the
adverse effects caused by the labor dispute in Mansfield, Ohio, the fact
that AK Steel's costs were increasing due to increases in spot market
for raw materials, and, because AK Steel was bound under long-term
contracts which limited its ability to raise prices, its margins would
not benefit from price increases in the market, all of which would
severely reduce its 2000 earnings.
On these disclosures, AK Steel's stock fell by 25% in one day to$12-3/8,
on huge volume of more than 9.3 million shares, later falling to as low
as $8 per share. AK Steel's stock price has not recovered and currently
trades at less than $12 per share.
Contact: Milberg Weiss Bershad Hynes & Lerach William Lerach,
800/449-4900 wsl@mwbhl.com
ASHANTI GOLDFIELDS: Wolf Haldenstein Files Securities Suit in N.Y.
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On April 19, 2000, Wolf Haldenstein Adler Freeman & Herz LLP filed a
class action lawsuit in the United States District Court for the Eastern
District of New York on behalf of all persons who purchased Ashanti
Goldfields Company Ltd. Global Depositary Shares between April 21, 1997
through October 5, 1999, inclusive (the "Class Period").
The lawsuit charges Ashanti and three of its senior executive officers
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges
that defendants issued a series of materially false and misleading
statements, including Securities and Exchange Commission filings,
concerning the purpose and extent of the Company's hedging strategy,
which the Company falsely stated was designed to protect Ashanti against
fluctuations in the price of gold. The complaint further alleges that
defendants' statements during the Class Period misrepresented and
concealed material changes in the purpose for and extent of its hedging
strategy, the actual risks present to Ashanti, and, as a result of the
hedging strategy, the Company's exposure to the volatility of the price
of gold generally and to an increase in the price of gold specifically.
The complaint alleges that on October 5, 1999, Ashanti announced that
its hedge book had turned "negative" by over $450 million and that the
Company would be required to meet enormous margin calls which it did not
have the capital to meet. As a result of the Company's belated
disclosures, the price of Ashanti Global Depository Shares fell 56% to
close at $4.125 per share on October 6, 1999.
Contact: Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison
Avenue, New York, New York 10016, by telephone at 800-575-0735 (Michael
Miske, Daniel W. Krasner, Esq., Gregory Nespole, Esq., Fred Taylor
Isquith, Esq. or Shane T. Rowley, Esq.), via e-mail at
classmember@whafh.com or whafh@aol.com with reference made to Ashanti,
or visit website at http://www.whafh.com
CENDANT CORP: Barrack Rodos Announces Settlement for Securities Suit
--------------------------------------------------------------------
The following was released on April 19 by Barrack, Rodos & Bacine and
Bernstein Litowitz Berger & Grossmann LLP:
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
In re: CENDANT CORPORATION LITIGATION
Master File No. 98-1664 (WHW)
This document relates to: All Actions Except the Prides Action (No.
98-2819)
SUMMARY NOTICE OF SETTLEMENT
TO: ALL PERSONS AND ENTITIES WHO PURCHASED OR OTHERWISE ACQUIRED
PUBLICLY TRADED SECURITIES (OTHER THAN PRIDES) OF EITHER (i) CENDANT
CORPORATION OR (ii) CUC INTERNATIONAL, INC., OR WHO PURCHASED OR
ACQUIRED CALL OPTIONS ON CENDANT COMMON STOCK, DURING THE PERIOD
BEGINNING MAY 31, 1995 THROUGH AND INCLUDING AUGUST 28, 1998, AND WHO
WERE INJURED THEREBY (THE "CLASS")
This Summary Notice is given pursuant to Rule 23 of the Federal Rules of
Civil Procedure and an Order by the United States District Court for the
District of New Jersey (the "Court"), dated March 29, 2000.
The purpose of this Notice is to inform you of two separate proposed
settlements that together will resolve all claims of the plaintiffs and
Class Members against all defendants in this action: One proposed
settlement is with Cendant Corporation (NYSE: CD) and certain present
and former officers of Cendant and HFS Incorporated; the other is with
Ernst & Young LLP ("E&Y"). These two proposed settlements (collectively,
the "Settlements") are separate and independent.
The Settlements will create a settlement fund that totals $3,186,500,000
in cash plus interest. The settlement with Cendant and the HFS
Individual Defendants (the "Cendant Settlement") includes a payment for
the Class of $2,851,500,000 in cash, and the settlement with E&Y (the
"E&Y Settlement") includes a payment for the Class of $ 335,000,000 in
cash.
As part of the Cendant Settlement, the Class also will receive one-half
of any net recovery that Cendant or the HFS Individual Defendants may
obtain from E&Y as a result of their continuing litigation against E&Y.
Also, as part of the Cendant Settlement, Cendant has agreed to certain
corporate governance changes, which Lead Plaintiffs believe are
significant, including:
* adopting a specific definition for who may qualify as an
"independent Director";
* requiring Cendant's Board of Directors to have a majority of
independent directors;
* requiring the Audit, Compensation and Nominating Committees to
consist entirely of independent directors (at least one member of
the Audit Committee must have accounting or financial management
expertise);
* precluding the re-pricing of employee stock options under most
conditions without a vote of shareholders; and
* not objecting to a declassification of its Board of Directors.
The proposed settlements resolve all claims, rights, causes of action,
suits, matters and issues, whether known or unknown, whether asserted or
unasserted, arising out of or related to the subject matters of the
Action or claims asserted by or on behalf of plaintiffs or any Class
Member, whether individual or class-wide, against any one of the
foregoing parties. If approved, the Settlements will resolve all of the
claims that Class Members brought or could have brought in this Class
Action completely. Details of the Settlements and the allocation of
Settlement Funds to Class Members can be found in the Notice of
Settlement and the Plan of Allocation attached thereto.
A hearing will be held by the Court on June 28, 2000 at 10:00 a.m., in
the United States District Court for the District of New Jersey, Martin
Luther King, Jr. Federal Courthouse, Courtroom 4D, 50 Walnut Street,
Newark, New Jersey 07101 for the purpose of separately considering:
-- Whether a Judgment should be entered (1) approving the Cendant
Settlement as fair, reasonable and adequate; (2) dismissing the claims
of Class Members with prejudice against Cendant and the Individual
Defendants (as defined in the Notice of Settlement); and (3) barring all
Class Members from prosecuting, pursuing, or litigating any of the
Released Claims against Cendant and any of the Individual Defendants;
-- Whether a Judgment should be entered (1) approving the E&Y
Settlement as fair, reasonable and adequate; (2) dismissing the claims
of Class Members with prejudice against E&Y; and (3) barring all Class
Members from prosecuting, pursuing, or litigating any of the Released
Claims against E&Y;
-- Whether the proposed Plan of Allocation should be approved as fair,
reasonable and adequate; and
-- Whether to approve Lead Counsel's application for attorneys' fees
and payment of costs and expenses.
If you purchased or otherwise acquired CUC International, Inc. or
Cendant Corporation publicly traded securities (including call options
on Cendant common stock), except PRIDES investment units, between May
31, 1995 and August 28, 1998, inclusive, and were injured thereby, you
may be a Class Member. Your rights against the Released Parties (as
defined in the Notice of Settlement) will be affected by the Settlement.
Further, if you wish to share in the distribution of the proceeds of the
Settlements, you must timely file a valid claim, on a Proof of Claim
form, no later than August 18, 2000 establishing that you are entitled
to recovery. PLEASE NOTE: IF YOU FAIL TO FILE A PROPER PROOF OF CLAIM
FORM, YOU WILL NOT SHARE IN THE SETTLEMENTS, BUT YOU WILL BE BOUND BY
THE FINAL JUDGMENTS OF THE COURT AND YOU WILL BE ENJOINED FROM ASSERTING
THE RELEASED CLAIMS AGAINST THE RELEASED PARTIES.
If you have not already received a copy of the Notice, or a copy of the
Proof of Claim form, you may obtain such information by contacting: In
re Cendant Corporation Litigation, c/o Heffler, Radetich & Saitta
L.L.P., P.O. Box 510, Philadelphia, Pennsylvania 19105-0510,
800-379-6239, http://www.heffler.comor Lead Counsel for the Class:
Leonard Barrack, Esquire Max W. Berger, Esquire, Gerald J. Rodos,
Esquire Daniel L. Berger, Esquire, Jeffrey W. Golan, Esquire Jeffrey N.
Leibell, Esquire, Leslie B. Molder, Esquire Bernstein Litowitz Berger,
Barrack, Rodos & Bacine & Grossmann LLP, 3300 Two Commerce Square 1285
Avenue of the Americas, 2001 Market Street New York, NY 10019,
Philadelphia, PA 19103 212-554-1400, http://www.blbglaw.comor
http://www.barrack.com
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORMATION.
Dated: April 19, 2000 BY ORDER OF THE COURT
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
COCA-COLA: Group of Black Employees Calls for Boycott of Products
-----------------------------------------------------------------
Intensifying the pressure on Coca-Cola to resolve a
racial-discrimination lawsuit that is about to enter its second year, a
group of black Coke employees called for a boycott of Coke products
around the world.
The appeal was made at Coke's annual shareholder meeting here before an
audience packed with the company's investors, directors and executives.
In a dramatic finish to a long speech detailing what he called
discriminatory practices inside the company, a former benefits manager,
Larry Jones, declared that Coke's black employees had waited long enough
for fair treatment by the company.
"In 114 years, you've only had one black senior vice president," Mr.
Jones said, addressing Coke's chairman and chief executive, Douglas N.
Daft, and alluding to Carl Ware, who is now an executive vice president.
"In 114 years, you only found one of us qualified? How long do we wait?"
Then he added: "We are never going to be anything but black employees.
Let's stop buying Coca-Cola."
Mr. Jones arrived at the meeting after a four-day journey by bus from
Atlanta. He was accompanied by 30 current and former Coke employees who
appeared wearing red caps with the words "Justice Ride." Though
sympathetic to those who filed the discrimination lawsuit, Mr. Jones is
not one of the plaintiffs. He wants the company to improve conditions
for its black employees, from salaries to promotions and stock options.
It was unclear how extensive the boycott would be. One bottler, Ron
Wilson of Philadelphia Coca-Cola Bottling, said a boycott in 1981 had
cut into Coke sales, although he predicted that the lawsuit would be
settled before long, eliminating the need for the boycott Mr. Jones
announced. While the Rev. Jesse Jackson followed Mr. Jones to the
microphone at the meeting, he did not mention the boycott.
Coke, which began talks with federal mediators this month about the main
discrimination lawsuit, regarded the latest development seriously. "We
are disappointed that some of our employees have called for a boycott,"
Mr. Ware, who heads a diversity council at the company, said after the
meeting. "We're working very hard for an equitable resolution of these
issues."
Mr. Daft, responding to Mr. Jones's speech, said, "This is the most
diverse company in the world, and we will be the company that leads the
world into a diverse business structure in the 21st century." Many in
the audience applauded, though not Mr. Jones and his group.
One shareholder predicted the boycott would end once the lawsuit was
resolved. "It will probably be short-lived," said Joe Caffey, a
shareholder from Youngstown, Ohio. Echoing opinions of Wall Street
analysts, Coke employees and others, he added, "The lawsuit should have
been settled by now."
What was once a single case has multiplied into four racially charged
issues confronting Coke. Five plaintiffs in the original lawsuit are
seeking class-action status that could involve 2,000 current and former
Coke workers. Three others have hired a new lawyer, Willie Gary, who is
known for obtaining large settlements from juries, and may bring
separate lawsuits. Mr. Jones's group, which does not include any
plaintiffs, is asking for changes at the company that may be similar to
those under discussion in the settlement talks. Mr. Jackson entered the
picture last month, meeting with senior management as well as Mr. Jones,
but not officially allied with any group.
The annual meeting, usually a celebration Coke's past year that
anticipates its future, was dominated by discussion of the company's
problems, with the lack of racial diversity at the top of the list.
Mr. Jones was followed by Mr. Jackson, the director of Operation
Rainbow/Push who said he spoke as a Coca-Cola shareholder. Mr. Jackson,
who a Coke spokesman said had been invited to the meeting by company
executives, sharply criticized Coke's record on diversity and zeroed in
on the board.
"Is this board connected to the issues?" he asked. "Someone has not
gotten the message." He said that although Coke sold its products to a
wide variety of cultures, its upper ranks were almost exclusively white
and male. He noted that Hispanics make up 27 percent of the market for
Coca-Cola in the United States, but there is no Hispanic director. And
he raised doubts about the lawyers handling Coke's defense in the
discrimination case.
Speaking as a shareholder, "I question the quality of legal advice that
we have received," Mr. Jackson said. "Law bills are up, share price is
down. Coke will lose this case in a court of law, but worse, in the
court of public opinion." An Atlanta firm, King & Spalding, is
representing Coke in the case, and former Senator Sam Nunn, a Coke
director, is a partner in that firm.
Mr. Daft presided calmly over the two-and-a-half-hour meeting, which was
interrupted briefly by protesters demanding that Coke use more recycled
plastic in its packaging. Other issues raised during the meeting
included concern about genetically modified corn used in the
high-fructose syrup that goes into the company's soft drinks and the
compensation paid to senior executives. Shareholder resolutions on both
topics were voted down, as was one about using more recycled plastic.
But the session was dominated by examinations of Coke's record on
diversity. Before calling for a boycott, Mr. Jones described
discrimination problems, including his own experiences, at the company.
At one point, a current employee, Sunny Mitchell, who is a quality
coordinator for the company's sales to McDonald's, stepped to the
microphone to describe her treatment inside Coke. "In July 1998, I was
informed by my manager that my job had been eliminated," Ms. Mitchell
said, adding that she was told to choose between resigning or taking a
lower-profile job. "Later, I learned that my job had not been eliminated
but had been reassigned to my white co-worker."
She also described interviewing for other positions and being turned
down, and said that after eight years with the company, she was still
earning less than $30,000 a year. "When I tried to address the issues,"
she said, "I became the issue."
A shareholder from suburban Philadelphia, Andrew Philips, sympathized
with the black Coca-Cola employees. "I am sure there are plenty of
people who are innocently victimized by what happens in the company," he
said. "But I think Mr. Daft is sincere about trying to bring about
change. It's going to take some time, as it does in any bureaucracy."
The company said that it had promoted Ingrid Saunders Jones to senior
vice president and Coretha Rushing to vice president. Both women are
black and were among a half-dozen promotions announced. (The New York
Times, April 20, 2000)
COCA-COLA: Jackson Urges Settlement; Diversity Big Issue at Annual Mtg.
-----------------------------------------------------------------------
While a group of former and current African-American employees has
called for a national boycott against Coca-Cola, the Rev. Jesse Jackson
and other civil rights leaders want to give the company more time to
settle a racial discrimination lawsuit before lending their support to a
boycott.
"Settle the suit," Jackson urged Coke Chairman Doug Daft and top
management as about 700 investors and two dozen reporters listened at
the company's annual shareholders meeting Wednesday April 19. "Choose
negotiation over confrontation. Choose resolution over boycott. Change
the culture," Jackson said.
The president of RainbowPush Coalition sees himself as a forceful figure
capable of bringing both sides in the suit together. He predicted a
boycott "will have a snowballing effect unless there is an honorable and
fair resolution right now."
Later in the day, NAACP President Kweisi Mfume and Georgia state Rep.
Tyrone Brooks also urged the company to settle the lawsuit brought by
eight former and current black employees, but they didn't go as far as
endorsing a boycott.
Company officials had hoped to avert the call for a boycott by former
employee Larry Jones, organizer of a bus "ride for justice" to the
shareholders meeting. Jones, a laid-off Coke human resources manager,
did not provide any details of his boycott strategy. He also did not
indicate how he would go about marshaling support, especially since
Jackson and others have withheld theirs so far. But such a protest could
get widespread media attention, hurting the company's image.
"We are very disappointed that some of the employees of the company
chose to call a boycott of the company in the midst of a very difficult
time," Carl Ware, executive vice president of global public affairs,
said after the meeting. "We do not believe there is any systemic,
institutional discrimination in the Coca-Cola Co.," said Ware, the
company's highest-ranking black executive. "Whenever we find
discrimination, we stop it."
Daft, attending his first shareholders meeting as chairman, said the
company wants to be a leader in diversity, partly because it makes good
business sense, since the company operates in 200 nations.
"This is the most diverse company in the world, no matter how you define
it, " Daft told shareholders. "We could always do better. No one is
perfect. We will be the company that leads the world into a diverse
business structure in the 21st century."
But at the nearly three-hour meeting, half of which was taken up by
discussions about diversity, Jackson took the company to task on its
employment record during the 20th century.
"Coke's board of directors must look like its consumer base," Jackson
said. He pointed out, however, that there is no Hispanic on the board,
and only " one black for 20 years." He was referring to Donald McHenry,
the former U.S. ambassador to the United Nations.
Jackson scolded the company for not replacing Ware with a black
executive when he left his previous job as head of Coke's African
operations. "Coke is the largest employer in Africa," Jackson said.
"Coke has infrastructure, sugar planters, water plants, and yet no
African succeeded Carl Ware." Jackson also told the company that it was
getting poor legal advice. "Those who choose to deny, dance or delay a
resolution (of the lawsuit) are not serving you well," Jackson told
Daft. "Law bills going up --- stock prices going down. ... They cannot
win the case in court. Coke will lose in the court of law, but worse, in
the court of public opinion, unless it seeks new sources of counsel and
advice."
The federal suit alleges that Coca-Cola has discriminated against
African- American employees in pay, promotions and performance
evaluations. The plaintiffs are seeking class-action status so they can
represent 2,000 current and former black employees in the United States.
The company has denied the allegations.
A media circus followed the shareholders meeting, with Jackson holding
court in one area at the Playhouse Theatre and Coke officials holding
court in another. Jackson said he believed there were two opposing
schools of thought within Coke that were delaying a settlement. One
group, he said, wanted a quick resolution, but the other wanted to make
only minimal restitution for years of discrimination.
Ware, however, said the company has a "firm resolve" to settle the suit
in a speedy and equitable manner. But parties have difficult hurdles to
overcome. A federal judge has ordered the parties to enter mediation
talks which have only begun for days. The legal situation, however, has
gotten murkier on the plaintiffs' side with the entrance of prominent
Florida attorney Willie Gary.
Gary now represents four of the eight plaintiffs and is trying to peel
away more employees who would be included in a prospective class of
2,000, if the case is given class-action status. While Gary cannot
participate in the settlement process, he could complicate matters if
he's successful in luring more clients.
But Gary cannot participate in the mediation talks, and the plaintiffs
he currently represents can no longer represent the prospective class.
Meanwhile, attorney Cyrus Mehri and his legal team continue to represent
the four other plaintiffs, as well as the prospective class. (The
Atlanta Journal and Constitution, April 20, 2000)
CONSECO, INC: Faruqi & Faruqi Files Securities Suit in Indiana
--------------------------------------------------------------
The law firm of Faruqi & Faruqi, LLP announces that on April 14, 2000, a
class action lawsuit was commenced in the United States District Court
for the Southern District of Indiana, Indianapolis Division, on behalf
of all purchasers of Conseco, Inc. (NYSE: CNC) common stock between
April 28, 1999, and March 31, 2000, inclusive (the "Class Period").
The Complaint charges Conseco 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 a series of materially
false and misleading statements in press releases and SEC filings
regarding the value of Conseco subsidiary Conseco Finance Corp.'s
(formerly know as Green Tree Financial Corporation) portfolio on
interest- only securities. On March 31, 2000, the last day of the Class
Period, Conseco announced that it would take a charge of approximately
$350 million because the value of Conseco Finance's interest-only
securities had to be written-down. This reduced Conseco's 1999 profit by
one-third.
Contact: Faruqi & Faruqi, LLP Anthony Vozzolo, Esq. Ms. Lana Yamnizki,
Shareholder Relations Manager (877) 247-4292 or (212) 983-9330 Fax,
(212) 983-9331 e-mail (FaruqiLawAV@aol.com)
SCB COMPUTER: Kaplan Kilsheimer Files Securities Lawsuit
--------------------------------------------------------
Counsel for Class Plaintiff, Kaplan, Kilsheimer & Fox LLP announced on
April 19 that a class action has been commenced in the United States
District Court for the Western District of Tennessee on behalf of all
persons who purchased or otherwise acquired the common stock of SCB
Computer Technology, Inc. (NASDAQ: SCBI) between June 15, 1998 - April
14, 2000, inclusive (the "Class Period").
The lawsuit alleges that throughout the Class Period, defendants
violated the federal securities laws by participating in a scheme to
materially misstate the Company's revenues and earnings. It is further
alleged that as a result of accounting irregularities the price of SCB
stock traded at artificially inflated levels during the Class Period.
Defendants' fraudulent scheme came to an end on April 14, 2000, when the
Company revealed that the Audit Committee of its Board of Directors is
conducting an independent investigation into allegations of potential
accounting irregularities affecting SCB's financial statements. The
Company further revealed that as a result of the allegations and
investigation proceedings to date, Ernst & Young LLP resigned as SCB's
independent auditor effective as of April 10, 2000, and that SCB
anticipates that it will restate its audited financial statements for
fiscal 1998 and 1999 and its unaudited financial statements for the
first three quarters of fiscal 2000. In response to these revelations,
Nasdaq halted trading in SCB securities on April 14, 2000.
Contact: Frederic S. Fox, Esq. Joel B. Strauss, Esq. Christine M. Comas,
Esq. Hae Sung Nam, Esq. Kaplan, Kilsheimer & Fox LLP 805 Third Avenue -
22nd Floor New York, NY 10022, (800) 290-1952, (212) 687-1980 Fax: (212)
687-7714 E-mail address: mail@kkf-law.com
E.SPIRE COMMUNICATIONS: Wechsler Harwood Files Securities Suit in MD
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The law firm of Wechsler Harwood Halebian & Feffer LLP announces on
April 19 that a class action against e.spire (NASDAQ: ESPI) and certain
of its officers and directors has been commenced in the United States
District Court of Maryland by Wechsler Harwood Halebian & Feffer LLP
(http://www.whhf.com)The suit is on behalf of shareholders who
purchased the common stock of Espire between August 12, 1999 and March
30, 2000 (the "Class Period").
The complaint alleges that Espire and certain of its directors and
executive officers violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The
complaint alleges that the defendants issued materially false and
misleading financial statements contained in filings with the Securities
and Exchange Commission and press releases, that, inter alia, overstated
the Company's assets, revenues, income and earnings per share during the
Class Period.
On March 30, 2000, towards the end of the trading day, defendants
admitted that its 1999 revenues and operating results were false due to
improper timing of revenue recognition and overstated receivables. The
Company announced that it must restate its 1999 results, which reduced
1999 revenues by $12.3 million. In addition, the Company announced an
$8.7 million charge to earnings for the same period for uncollectible
receivables from local exchange carriers related to reciprocal
compensation arrangements. As a result of the consequent reduction in
revenues and earnings, the Company also admitted that it was in default
of certain debt covenants.
On this news, between March 30, 2000 and March 31, 2000, the Company's
stock fell $3.41 per share or 38% on volume greater than 10 million
shares to close at $7.031 per share on March 31, 2000. The Company's
common stock had traded as high as $16.813 per share on the NASDAQ
during the Class Period.
However, the individual defendants and certain insiders fared better.
During the Class Period, and shortly before, the individual defendants
sold over 238,000 shares of the Company's common stock for proceeds
greater than $2.8 million, while during the same period, other insiders
sold more than 3.1 million shares for proceeds of greater than $29
million.
Contact: Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue, New
York New York 10022 Telephone: 877-935-7400 (toll free) Ramon Pinon, IV,
Shareholder Relations Department: rpinoniv@whhf.com
ENDESA SA: Sees Little Impact from Court Ruling on 1999 Blackout
----------------------------------------------------------------
Endesa SA electricity utility unit Empresa Distribuidora Sur SA (Edesur)
said it does not expect a substantial impact of an appeals court
sentence against it in a case filed by the Buenos Aires city ombudsman
following an 11-day blackout in February 1999.
Class action was rejected by the appeals court.
Persons who claim damages will not now be required to prove that Edesur
was to blame, but will nevertheless have to file individual suits to
prove that there were injuries and to quantify their impact, it said.
(AFX European Focus, April 20, 2000)
FEDERAL AVIATION: Employees Charge of Fraud and Breach of Contract
------------------------------------------------------------------
More than 70 employees of the Federal Aviation Administration have filed
suit against the agency as a result of continuing broken promises that
have unfairly shut them out of pay increases obtained by other FAA
employees.
According to the plaintiffs' attorney, Kathleen Tomlinson of Farrell
Fritz, P.C., the FAA misled a group of employees, convincing them that
transferring into a newly-formed "Operational Support Service" within
the FAA would still entitle them to participate in the FAA's pay reform.
"These men and woman are being used as pawns in a budgetary chess game
where the players not only write their own rules, but change them at
will," said Tomlinson. "Senior FAA management promised, in writing, that
transfer to the new division will not adversely impact the grade, series
or career path of incumbent Air Traffic personnel.' Then, when a pay
reform program was initiated in the FAA, those employees who transferred
were left out in the cold. This is a clear case of breach of contract,
unjust enrichment and fraud. We simply want the FAA to live up to its
promises -- to include these employees in pay reform, and provide back
pay and damages."
In July 1991, the FAA announced the establishment of a new operational
support service, AOS, that was to be the primary provider of integrated
hardware and software engineering support to other services within the
FAA. Prior to July 1, 1994, most of the plaintiffs were employed within
the Air Traffic division of the FAA, managing the development,
maintenance and support of the automated air traffic control systems and
software maintenance.
The FAA's 1994 Transition Plan and later documents clearly stated that
"personnel compensation and benefits, including locality pay, 5 percent
pay for Air Traffic Controllers, associated pay raises and annualization
will be transferred for all personnel selected from the GS-2152 series."
Based on these, the first group of air traffic automation specialists
accepted the transfer.
But when a new contract with the National Air Traffic Controllers
Association was negotiated, FAA Administrator Jane Garvey announced that
ATCS 2152 non-union personnel who transferred out of the Air Traffic
division would not be included.
"These men and women, whose expertise is critically important to safe
air travel, were promised equal footing, and they had a right to it,"
said Tomlinson. "That the FAA lured them to switch jobs with promises
they had no intention of keeping is not only inequitable, but
unconscionable."
Kathleen Tomlinson is a partner in the Uniondale, Long Island-based law
firm, Farrell Fritz. Her commercial litigation practice focuses on
employment, technology and intellectual property issues. Farrell Fritz
is one of the region's largest law firms, and is highly respected for
its experienced handling of a wide array of matters, including
corporate, banking, municipal, health care, tax, real estate, tax
certiorari, environmental, land use, commercial litigation, bankruptcy
and creditors' rights, employment and trusts and estates.
FLIR SYSTEMS: Milberg Weiss Announces Extended Securities Suit in OR
--------------------------------------------------------------------
Milberg Weiss (http://www.milberg.com/flir/)announced that a class
action has been commenced in the United States District Court for the
District of Oregon on behalf of purchasers of FLIR Systems, Inc.
("FLIR") (NASDAQ:FLIR) common stock during the period between March 3,
1999 and March 3, 2000 (the "Class Period").
The complaint charges FLIR and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. The complaint
alleges that FLIR announced false financial results during the Class
Period, causing its stock price to increase to as high as$20. Then on
March 6, 2000, FLIR admitted that its fourth quarter 1999 results would
be much lower than previously forecast due to "accounting errors,"
simultaneously announcing the immediate resignation of the Company's
Chief Financial Officer. On these shocking disclosures, FLIR's stock
price declined to as low as $9 per share from $17-1/8 in its most recent
trading session. FLIR has now restated its financial statements for the
year ended December 31, 1998 and the first three quarters of 1999.
Contact: Milberg Weiss Bershad Hynes & Lerach William Lerach,
800/449-4900 wsl@mwbhl.com
HMOs: Physicians Group Sues 3 More Insurers over Claims Payment Delay
---------------------------------------------------------------------
Three more health insurers are being sued by the state's largest
physicians group, which contends they take too long to pay medical
claims.
The Medical Association of Georgia filed suits late Tuesday April 18
against Prudential HealthCare, UnitedHealthcare of Georgia and Coventry
Health Care of Georgia. The suits, filed in Fulton County Superior
Court, are similar to one filed by the group in February against Aetna
U.S. Healthcare.
The organization cites Georgia's prompt payment law in its claim. Under
the law, health insurers are required to pay an uncontested claim to a
medical provider within 15 working days of receiving it. Otherwise, they
must mail a notice saying why it has not been paid.
State Insurance Commissioner John Oxendine has levied a series of large
fines against HMOs that have violated the rule. But the Georgia
Association of HMOs says Georgia's payment law is the strictest in the
nation and 30 days would be more reasonable.
"We believe (Georgia's law) is unworkable in certain cases because of
the complexity of claims submitted," said Gay Ann Williams, the group's
executive director.
The Medical Association of Georgia, which represents about 8,000
physicians, contends insurers pad their profits by holding back
reimbursements. The group is seeking class-action status for the suit.
The plaintiffs want compensation for unpaid claims, with 18 percent
interest on those not paid promptly.
The suit against Aetna U.S. Healthcare, which has been moved to a
federal court, was joined by the American Medical Association. The AMA
may participate in the new suits as well and more lawsuit may be filed,
said Bill Clark, an attorney for MAG.
Coventry Chief Executive Tom Davis would not comment because he said he
had not seen the lawsuit. But he said that, in general, "there are
pieces of missing (claims) information that make it impossible to be 100
percent compliant with the law."
In March, Coventry was ordered by Oxendine to pay $262,700 in fines for
not paying providers promptly. The company has appealed. Aetna,
UnitedHealthcare, Human Employers Health Plan and HMO Georgia have also
received fines over slow claims payments. (The Associated Press, April
20, 2000)
IMPERIAL CREDIT: FL Ct Grants Demurrer to Dismiss Suit over Merger
------------------------------------------------------------------
On July 22, 1999, Imperial Credit Industries Inc. and Imperial Credit
entered into a definitive merger agreement under which Imperial Credit
effectively will acquire all of the outstanding shares of the Company
(other than shares already owned by Imperial Credit and its
subsidiaries) for a cash purchase price of $11.50 per share, subject to
increase under certain circumstances.
The Company, its directors and Imperial Credit have been named as
defendants in a putative class action lawsuit filed on July 22, 1999 by
Riviera-Enid, a Florida limited partnership, in the Superior Court of
the State of California for Los Angeles County, California, docket
number BC213902. The complaint alleges that the proposed merger
constitutes a breach of fiduciary duty by the defendants because the
merger price is alleged to be less than the liquidation value of the
Company's assets.
The complaint also alleges that the defendants have acted to the
detriment of the Company's stockholders other than Imperial Credit in
that: (i) the defendants allegedly failed to solicit arm's-length bids
to sell the Company; (ii) the proposed price allegedly represents a low
premium over the market price and is below the book value of the
Company's common stock; (iii) Imperial Credit allegedly had an advantage
over other potential bidders as a result of the Management Agreement
termination fee; and (iv) the proposed merger allegedly does not "give
fair valuation" to Company-owned property. The complaint also alleges
that Imperial Credit will receive $4 million more than it otherwise
would have received, but for the proposed merger, in connection with a
termination fee that the Company received on an unidentified mortgage
loan secured by property in the United Kingdom. Finally, the complaint
alleges that some of the directors have conflicts of interest because of
their affiliation with Imperial Credit and that the proposed merger will
benefit Imperial Credit at the expense of the Company's other
stockholders.
The complaint seeks certification of a class of all stockholders of the
Company whose stock will be acquired in connection with the proposed
merger and seeks injunctive relief that would, if granted, prevent the
completion of the proposed merger. The complaint also seeks damages in
an unspecified amount and other relief.
On November 1, 1999, the Company was served with an amended class action
complaint in the action. The amended complaint purports to allege a
claim for breach of fiduciary duty against each of the defendants named
in the original complaint. The amended complaint alleges that defendants
have (i) engaged in a scheme to freeze out the Company's public
stockholders; (ii) created a poison pill, other defensive measures and a
tainted negotiation process that have made it impossible to maximize
stockholder value; (iii) improperly agreed to reimburse Imperial Credit
for up to $2 million of expenses under certain circumstances if the
proposed merger is not completed, which reimbursement obligation made
competing bids impossible; (iv) improperly ended the 60-day market check
period prior to determination of the Management Agreement termination
fee, thus requiring prospective bidders to bid in ignorance; (v) failed
to give consideration to competing bids, or a fair opportunity for
competing bidders to make proposals; (vi) improperly limited the pool of
potential acquisition candidates and rejected liquidation or disposition
of individual assets; (vii) improperly allowed defendants H. Wayne
Snavely, Kevin E. Villani and Mark S. Karlan to Imperial Credit
Commercial Mortgage Investment Corp. to participate in negotiations with
acquisition candidates; (viii) improperly limited the ability of the
Board of Directors to consider new offers after the close of the 60-day
market check period; (ix) improperly permitted Imperial Credit to
threaten a hostile takeover of the Company; and (x) negotiated an
inappropriate fee arrangement with Prudential Securities Incorporated.
The amended complaint further alleges that, by certain actions and
inactions, Imperial Credit prevented the Company from maximizing
stockholder value, and alleges conflicts of interest on the part of each
of the defendants. The amended complaint also alleges that the price
agreed to in the merger agreement is grossly unfair. The amended
complaint purports to be brought as a class action on behalf of a class
of persons affected by the proposed merger. The amended complaint seeks
certification of a class, injunctive relief which, if granted, would
prevent the completion of the proposed merger, damages in an unspecified
amount and other relief.
On November 3, 1999, the Company's counsel received a letter from
counsel for the plaintiffs asserting plaintiff's intent to seek a
temporary restraining order, expedited discovery, and a date for a
preliminary injunction hearing. No motion for a preliminary injunction
has been filed. By letter of November 10, 1999, counsel for the
plaintiffs stated that the plaintiffs had decided not to move forward
with a motion for a temporary restraining order or preliminary
injunction at that time. On December 1, 1999, each of the defendants
filed demurrers to plaintiff's amended complaint, seeking to have the
amended complaint dismissed with prejudice.
On February 4, 2000, the court granted Imperial Credit's demurrer
without leave to amend and dismissed the action with prejudice against
Imperial Credit and Messrs. Snavely and Villani in their capacity as
Imperial Credit directors and officers, but allowed the action to
proceed against the remaining defendants. The Company believes that the
material allegations of the complaint and the amended complaint are
without merit.
On March 28, 2000, Imperial Credit Industries, Inc. ("ICII" or the
"Company") issued the press release included as Exhibit 2.1 to this 8-K
and incorporated by reference herein, announcing the consummation of its
merger (the "Merger") with Imperial Credit Commercial Mortgage
Investment Corp. ("ICCMIC").
MICROSTRATEGY INC: Reports on Securities Lawsuits and SEC Investigation
-----------------------------------------------------------------------
Microstrategy states in its report with the SEC that in March 2000, the
Company was notified that the SEC had issued a formal order of private
investigation in connection with matters relating to the Company
restatement of financial results. The SEC has requested that
Microstrategy provide them with certain documents concerning the
revision of the Company's financial results and financial reporting
documents. The SEC indicated that its inquiry should not be construed as
an indication by the SEC or its staff that any violation of law has
occurred, nor as an adverse reflection upon any person, entity or
security. The Company says it is cooperating with the SEC in connection
with this investigation and its outcome cannot yet be determined.
The report also includes that in March 2000, numerous separate
complaints purporting to be class actions were filed in federal courts
in various jurisdictions alleging that the Company and certain of its
officers and directors violated section 10(b) of the Securities Exchange
Act of 1934, as amended, Rule 10b-5 promulgated by the SEC thereunder,
and section 20(a) of the Securities Exchange Act of 1934, as amended.
These lawsuits as announced by the the law firms have been reported in
the CAR.
Microstrategy says that the complaints contain varying allegations,
including that Microstrategy made materially false and misleading
statements with respect to our 1999 and 1998 financial results in the
Company's filings with the SEC, analysts' reports, press releases and
media reports. The complaints do not specify the amount of damages
sought.
Microstratey says that it has not filed any answers, motions to dismiss
or other responsive pleadings in this litigation and intend to defend
this matter vigorously.
PACIFIC GATEWAY: Schiffrin & Barroway Files Securities Suit in CA
-----------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP announced on April 19 that a
class action lawsuit was filed in the United States District Court for
the Northern District of California on behalf of all purchasers of the
common stock of Pacific Gateway Exchange, Inc. (Nasdaq: PGEX) from May
13, 1999 through March 31, 2000, inclusive (the "Class Period").
The complaint charges Pacific Gateway Exchange and certain of its
officers and directors with violations of the Securities Exchange Act of
1934. The complaint alleges that while defendants were publicly
reporting profits of more than $10.1 million for the Company's first,
second and third quarters of 1999, defendants used Pacific Gateway
Exchange common stock to acquire the assets of Robo Tel, Inc. and
attempted to use its stock to fund its most important acquisition ever,
the acquisition of NOS Communications, Inc., just weeks before
revelations of accounting fraud had surfaced.
Contact: Schiffrin & Barroway, LLP Marc A. Topaz, Esq. Robert B. Weiser,
Esq. 888/299-7706 (toll free) or 610/667-7706 info@sbclasslaw.com and
more information on Schiffrin & Barroway is available on website at
http://www.sbclasslaw.com
POTOMAC ELECTRIC: Calvert Board and Lawsuit Keep Pressure for Clean-up
----------------------------------------------------------------------
Potomac Electric Power Co. officials said workers have nearly completed
cleaning up its oil spill on and around the Patuxent River, but Calvert
County commissioners warn that they are not yet satisfied with the
company's effort.
The oil from Pepco's Chalk Point Generating Station in Aquasco has
spread across at least 17 miles of Patuxent shoreline, much of it in
Calvert County, and river and creek banks in Prince George's, Charles
and St. Mary's counties, according to the Environmental Protection
Agency. The EPA has criticized Pepco's response, saying that the company
was unprepared to deal with the oil that spewed from the ruptured
pipeline and that early efforts to contain the spill were marked by
confusion and missteps.
"I think the main focus is to keep the pressure on Pepco and the state
and federal agencies to clean this up," said Calvert County Commissioner
John Douglas Parran (R-At Large). The Board of County Commissioners has
expressed growing dissatisfaction with Pepco's response to the spill,
although it's unclear what legal recourse the county has.
The commissioners, who want a study of the Patuxent's water quality,
were presented at their Tuesday meeting with a report that documented
widespread damage, including the discovery of 256 dead animals.
Commissioner Patrick M. Buehler (D-St. Leonard) suggested that the
cleanup effort could include replenishing the contaminated beach, a
process that can include hauling in sand to refurbishing the shoreline.
"I think we should get a class action suit going," said Commissioner
Barbara Stinnett (D-At Large).
About 111,000 gallons of fuel oil leaked April 7 from a pipeline at the
Chalk Point plant, the worst oil spill in Pepco's 104-year history.
Officials said that as of Tuesday morning, "more than 24,000 gallons of
oil had been recovered."
According to federal, state and company officials involved in the
effort, workers have collected all the oil they can from the Patuxent
River. But officials warned that the warmer weather expected could cause
oil that has congealed into tar balls to surface.
When cleanup workers shifted their efforts from the river, officials
said that observable sheens of oil still on the Patuxent would disperse
through evaporation.
The National Transportation Safety Board, which is investigating the
accident, announced that it discovered "a vertical crack . . . five
inches long and half an inch wide" in a pipeline near the plant. The
NTSB is examining the pipe to determine what caused the break.
David Sternberg, an EPA official, noted that the cleanup, which
reportedly has involved more than 700 workers, would move from an
emergency response into a "long-term remediation mode" over the next
couple of weeks.
Bio-remediation technologies might be used, introducing microscopic
organisms into the water to enhance the natural breakdown of oil.
The U.S. Department of Transportation's Office of Pipeline Safety issued
an order requiring Pepco to shut down the 51.5-mile pipeline that runs
from Piney Point in St. Mary's County to the Chalk Point plant.
Pepco officials said the pipeline never leaked before the accident. The
pipeline was last inspected 18 months ago and was being prepared for
maintenance when the spill occurred, according to a Pepco official.
Pepco, with the help of federal and state officials, has held several
meetings with affected residents and has offered help to those
interested in filing claims.
Meanwhile, lawyers have filed a class action lawsuit in U.S. District
Court in Greenbelt on behalf of those harmed by the spill. "In the last
24 hours, I've been contacted by three groups of lawyers," Gary E.
Mason, the Washington attorney handling the suit, said Tuesday. "We're
getting calls constantly from people in the area. . . . This was an
accident that could have been avoided."
The Maryland Department of the Environment closed the river to shellfish
harvesting as a precaution, and boaters have been warned to avoid
containment booms and oily spots. Officials continue to assess the
impact on wildlife, particularly as fish release larvae into the river.
Officials also have advised people to avoid beaches and shorelines
affected by the spill and to keep pets and livestock away from the spill
area.
State officials said 200 of 1,000 waterfowl seen early in the week had
oil on them. A separate one-day survey of mammals, fish, birds and
amphibians found oil on roughly 40 percent of more than 700 animals
observed, officials said.
Cleanup crews working to contain an oil spill from the Potomac Electric
Power Co. Chalk Point Generating Station now are concentrating their
efforts in Swanson Creek and surrounding marsh near the plant in
Aquasco. (The Washington Post, April 20, 2000)
SCB COMPUTER: Cauley & Geller Files Securities Suit in TN
---------------------------------------------------------
The Law Firm of Cauley & Geller, LLP announced on April 19 that it has
been retained to file a class action in the United States District Court
for the Western District of Tennessee on behalf of all individuals and
institutional investors that purchased the common stock of SCB Computer
Technology, Inc. (Nasdaq:SCBI) between August 19, 1997 and April 13,
2000, inclusive (the "Class Period").
The complaint alleges that the Company and certain of its officers
violated the federal securities laws by providing materially false and
misleading information about the Company's revenues and earnings. The
Complaint further alleges that as a result of these false and misleading
statements, as well as accounting irregularities, the Company's stock
traded at artificially inflated prices during the class period. On April
14, 2000, the Company revealed that the Audit Committee of its Board of
Directors was investigating allegations of potential accounting
irregularities affecting SCB's financial statements. The Company further
announced that Ernst & Young, LLP resigned as the Company's independent
auditor, and that the Company anticipates that it will restate its
audited financial statements for fiscal years 1998 and 1999 and its
unaudited financial statements for the first three quarters of 2000. As
a result of these announcements, Nasdaq halted trading of SCB securities
on April 14, 2000.
Contact: Cauley & Geller, LLP, Boca Raton Sue Null or Sharon Jackson
Toll Free: 888/551-9944 Email: Cauleypa@aol.com
SCB COMPUTER: Cohen, Milstein Files Securities Suit in TN
---------------------------------------------------------
The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., on April 19,
2000, filed a lawsuit in the United States District Court for the
Western District of Tennessee, on behalf of purchasers of the common
stock of SCB Computer Technology, Inc. (Nasdaq: SCBI) during the period
between June 15, 1998 and April 14, 2000, inclusive.
The lawsuit alleges that throughout the Class Period, defendants
violated the federal securities laws by participating in a scheme to
materially misstate the Company's revenues and earnings. It is further
alleged that as a result of accounting irregularities the price of SCB
stock traded at artificially inflated levels during the Class Period.
Defendants' fraudulent scheme came to an end on April 14, 2000, when the
Company revealed that the Audit Committee of its Board of Directors is
conducting an independent investigation into allegations of potential
accounting irregularities affecting SCB's financial statements.
The Company further revealed that as a result of the allegations and
investigation proceedings to date, Ernst & Young LLP resigned as SCB's
independent audit effective as of April 10, 2000, and that SCB
anticipates that it will restate its audited financial statements for
fiscal 1998 and 1999 and its unaudited financial statements for the
first three quarters of fiscal 2000. In response to these revelations,
Nasdaq halted trading in SCB securities on April 14.
Contact: Andrew N. Friedman, Esq., or Mark S. Willis, 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 OR mwillis@cmht.com
TERAYON COMMUNICATIONS: Weiss & Yourman Files Securities Suit
-------------------------------------------------------------
A class action lawsuit was filed in U.S. District Court on behalf of
purchasers of Terayon Communications Systems, Inc., (Nasdaq: TERN)
common stock between February 2, 2000 and April 11, 2000.
Terayon manufactures cable modem systems that enable cable operators to
offer Internet connection services to cable subscribers. The company
sells its products to cable operators through direct sales forces in
North America, Latin America and Europe.
The defendants include Terayon and certain officers and directors. The
complaint charges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10-b(5). The action arises
from damages incurred by the class as a result of a scheme and common
course of conduct by defendants which operated as a fraud and deceit on
the class during the class period. According to the complaint,
defendants' scheme included rendering false and misleading statements
and/or omissions concerning the present and future financial condition
and business prospects of the company, as well as the financial benefits
that would enure to Terayon and its shareholders, including, among other
things, the certification of the company's proprietary S-CDMA cable
modem technology by CableLabs (the industry regulating organization).
Contact: Weiss & Yourman, Telephone: 800-437-7918, E-mail:
wyinfo@wyca.com Internet: http://www.wyca.com
TOBACCO LITIGATION: Giants Fixed Prices, Retailers Charge
---------------------------------------------------------
To fund a string of costly legal settlements nationwide, tobacco
companies have fixed cigarette prices, in violation of antitrust laws,
two federal suits allege.
Two convenience store chains with outlets in Georgia, Alabama and
Florida also have accused five tobacco companies that sell 99 percent of
the nation's cigarettes of artificially restricting the supply of
cigarettes, according to the suits filed last month in U.S. District
Court in Atlanta.
Suwannee Swifty Stores Inc. of Quitman and Holiday Markets Inc. of
Valdosta are represented by Martin D. Chitwood and Craig G. Harley of
Chitwood & Harley and Ward Stone Jr. of Stone & Baxter in Macon.
The two companies seek an injunction barring the tobacco companies from
actions the stores claim constitute price-fixing, treble damages for
unspecified losses incurred and attorney's fees. Suwannee Swifty Stores,
Inc. v. Philip Morris, No. 1-00-cv-0667 (N.D. Ga. Mar. 14, 2000);
Holiday Markets, Inc. v. Philip Morris, No. 1-00-cv-0707 (Mar. 16,
2000).
Tobacco executives and certain lawyers, including in-house counsel,
regularly met behind closed doors to artificially inflate cigarette
prices, the two suits allege. Plaintiffs also claim that to further the
price-fixing scheme, the companies exploited an electronic database
where cigarette retailers and distributors post cigarette prices and
sales.
Daniel W. Donahue, Senior Vice President and Deputy General Counsel for
defendant R.J. Reynolds Tobacco Co. in Winston-Salem, N.C. says, "There
is absolutely no substance to the allegation that industry executives
have ever met or do meet for the purpose of discussing prices. That is
illegal under federal antitrust laws. They haven't done it. They don't
do it now and they don't intend to do it."
Nor do the tobacco companies coordinate cigarette price increases via a
database or a Web site, he says. "We do not either in person, by phone,
electronically, through smoke signals or banners tied behind airplanes
meet and confer or conspire to raise prices," he says. "We simply don't
do it."
Thomas M. Ryan, a spokesman for Philip Morris U.S.A., the corporate
parent of two other companies also named in the suits, says the
corporation's tobacco executives declined to discuss the specifics of
the case but, "Philip Morris U.S.A. believes that it has acted lawfully
and there is no merit to claims made against us. "We will defend
ourselves vigorously," he says.
The Atlanta complaints are among six companion suits filed in four
federal court districts on the Eastern Seaboard and more than 30 similar
suits filed in federal and state courts across the country, tobacco
spokesmen say.
Says Donahue: "We see an ever-increasing band of creative and innovative
people coming up with new ways to sue the industry. It will simply be a
matter of time before these cases settle down. I firmly believe there is
no basis in fact or law in these cases. Ultimately, we expect to
prevail."
Linked to Settlement Costs
The convenience store complaints claim that in July 1997 tobacco
companies agreed to raise cigarette prices as the tobacco companies
began settling claims filed by state governments seeking reimbursement
for Medicaid funds spent to treat smokers with cancer.
The price increases, according to the suits, more than compensated for
the settlement costs. Those price increases were "typically announced in
lock-step fashion," the suits claim.
Cigarette distributors and wholesalers "routinely received notification
from each tobacco company of an impending price increase within hours,
and often mere minutes of other tobacco companies' price increase
notification," the suits allege. Tobacco companies "engaged in a
successful, illegal price-fixing conspiracy," according to the suits.
Donahue says because most tobacco business is concentrated among a few
strong competitors, "When one of those competitors announces a price
increase, it is not unusual the others would react." Nothing about that
practice is illegal, he says. "Tobacco people are not stupid. They are
not going to combine to set prices. It's against the law and we just
don't do it," Donahue says.
But the health care settlements did not mark the first time tobacco
companies conspired to manipulate prices, according to the suits. As
early as 1988, the suits claim that tobacco executives conspired to
artificially inflate cigarette prices in South and Central America, the
Caribbean, Canada and Saudi Arabia.
Price increases were discussed and agreed upon in secret meetings among
company executives and a roundtable of corporate lawyers called the
Committee of Counsel, the suits allege.
Whenever that committee went into executive session, it "frequently
discussed and reached agreements regarding price increases for
cigarettes," the suits claim. "These meetings included discussions and
agreements on price increases on cigarettes both in the United States
and elsewhere in the world."
A Committee of Counsel that was once part of the Tobacco Institute, the
tobacco companies' trade association, no longer exists, he says. The
committee was dissolved along with the institute in 1998, as a condition
of the Medicaid settlements, says Andrew R. McGaan, a partner with
Kirkland & Ellis in Chicago who represents the Brown & Williamson
Tobacco Corp. But McGaan says the allegations are "absolutely not true."
The companies rotated which one would initiate the price increase, the
suits allege. They also tracked their competitors' prices through an
electronic database that included information from cigarette
distributors, and used incentives to encourage vendors to supply the
data. That information provided "constant access to reliable,
instantaneous information on prices charged by other tobacco companies
," the suits claim.
Pittsburgh-based Management Science Associates runs the database, says
McGaan. Management Science Associates' Web site lists among its select
clients four tobacco companies named in the suits, and confirms that
data it compiles allows its clientele to acquire sales and pricing data
from their retail customers. The company has not been named in the
suits. But, says Chitwood, the convenience store chains' attorney: "It
became a means of communication for the tobacco companies."
McGaan says Management Science Associates "is involved in collecting and
disseminating data about product shipments and has nothing to do with
pricing."
Chitwood says his clients want the suits certified as class actions.
Panel to Decide Trial Site
A multidistrict litigation panel of federal judges will decide whether
to consolidate the suits and determine where they should be tried,
Chitwood says. The head of that panel is a Georgia judge, U.S. District
Judge John F. Nangle of the Southern District in Savannah, Chitwood
says. "It won't be until after the cases are consolidated and sent to a
single district that the case will start to take shape," he says.
Although companion suits already have been filed in federal courts in
New York, Pennsylvania and Washington, Chitwood says, "We are asking for
it to be kept here."
McGaan says the tobacco companies are simply hoping the suits "will go
away." "We're trying to make them go away through litigation," he says.
"How long that will take, no one knows yet. But I don't think anybody
thinks for a minute that it compares at all to the Medicaid cases. It's
a whole different animal." (Fulton County Daily Report, April 20, 2000)
TOBACCO LITIGATION: Lawsuit Mired Reynolds Says New Product Less Risky
----------------------------------------------------------------------
R.J. Reynolds, one of the US tobacco firms involved in the myriad of
lawsuits filed by smokers who are claiming health damages from using
cigarettes, has unveiled a new product, which its says reduces health
hazards.
The firm announced Wednesday it is launching a new cigarette named
"Eclipse" that it claims poses fewer health risks to smokers than
regular brands. "Eclipse, a cigarette that primarily heats tobacco, may
present smokers with less risk of cancer, chronic bronchitis and
possibly emphysema, when compared to other cigarettes," R.J. Reynolds
said in a statement.
The new product will be test-marketed in the Dallas/Fort Worth, Texas,
area through direct mail and Internet sales to age-verified adult
smokers 21 and older, the company said.
The new cigarette burns only about three percent as much tobacco as
other cigarettes, and only 20 percent of the smoke it produces contains
"tar" and nicotine, according to company executive vice president Gary
Burger. "That's almost the exact opposite of other cigarettes," Burger
said.
The company said its claims of Eclipse's reduced health damage were
reviewed by an expert scientific panel.
However, R.J. Reynolds executives warned consumers their new product was
not entirely risk-free. "Eclipse is not an alternative to quitting,"
said David Iauco, senior vice president for marketing. "But for smokers
who are concerned about their health and won't quit smoking, Eclipse may
be the next best thing."
The unveiling of the new cigarette comes at a time when US tobacco
product manufacturers face potentially crippling lawsuits from thousands
of smokers. They are seeking payment for health damages from smoking and
claim the industry hid information from them about the dangers of
tobacco use and its addictive nature. On April 7, a Florida jury ordered
the tobacco industry to pay 6.9 million dollars in damages to two
smokers, opening the door to massive punitive awards in a landmark
class-action case.
The jury also ordered the industry to pay another smoker 5.83 million
dollars, but it will be up to a judge to decide whether the smoker is
entitled to the award since he filed his claim late. The court ruling
was significant because the case is the first class action verdict
against the industry.
The Florida verdict follows a November 1998 agreement between 46 US
states and the tobacco industry, which agreed to pay 206 billion dollars
to cover state-paid health expenses of smokers.
The launching of a less harmful cigarette is seen by industry analysts
as an attempt to stem the flow of negative publicity in advance of
future court battles.
But R.J. Reynolds chairman Andrew Schindler sees it as a way to frame
the battle over whether there should be tobacco legislation. "The
introduction of Eclipse should be helpful in framing the important
element of any government policy and standards for cigarettes with
reduced-risk potential," he said.
R.J. Reynolds is the second-largest tobacco company in the United
States. (Agence France Presse, April 20, 2000)
TOBACCO LITIGATION: Panel Recommends FL Help to Prevent Bankruptcy
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A panel recommends ways for the state to ensure that tobacco companies
don't go bankrupt.
TALLAHASSEE - Florida should follow the lead of other states and take
steps to protect tobacco companies from a potentially crippling class
action lawsuit brought on behalf of sick Florida smokers, a special
panel recommended Wednesday April 19.
The panel's recommendations to the full Senate included setting a cap on
the amount tobacco companies and other class action defendants must post
in a bond in order to pursue an appeal. Instead of having to put aside
the entire amount of a punitive damage award, each defendant would have
to post bonds of up to $ 100-million or 10 percent of their net worth,
whichever is less.
Lawmakers are concerned that the Miami class action lawsuit could
jeopardize the state's own settlement with the four largest tobacco
companies, worth $ 17.4-billion during the next 30 years.
A jury earlier this month awarded $ 12.7-million in compensatory damages
to three representative smokers and is scheduled on May 15 to begin the
next phase of the trial - awarding punitive damages for as many as
500,000 Floridians.
The fear is that the award could near $ 300-billion, potentially
bankrupting tobacco companies and stopping payments to the state.
Current law allows a judge to force a company to post a bond of up to
120 percent of the punitive damage award. The bond ensures that
plaintiffs will get paid if they prevail.
Georgia, Kentucky, Virginia and North Carolina have all capped the
amount that tobacco companies must post in order to appeal awards for
damages. Like Florida, Kentucky set a $ 100-million cap. The rest set $
25-million caps.
But the panel recommended that Florida go one step further to protect
the state's interest. It proposed a wholesale tax on cigarettes, to be
paid by companies that are not part of Florida's settlement or companies
that are a part of the settlement but fail to make their scheduled
payments.
The idea is to keep tobacco companies from filing for bankruptcy
protection as a way to get out of paying the state. But with House
Speaker John Thrasher and Gov. Jeb Bush both opposing the plan, it is
unlikely to go far.
The House and Bush are instead pursuing an option that would allow the
state to sell off a portion of the state's future tobacco revenues at a
discount to investors. The investors would assume the risk that the
tobacco companies would continue to make payments. But experts said the
deal will cost the state more than $ 800-million.
Bush spokeswoman Elizabeth Hirst did not comment on the specifics of the
Senate proposal. But she said the governor is pleased that lawmakers are
taking the state's risk seriously.
Stanley Rosenblatt, the attorney who represents the sick Florida
smokers, called the plan "staggering and utterly disgraceful" in a
letter to Senate President Toni Jennings.
Anti-smoking groups also attacked the plan.
"I find it interesting that lawmakers spent hours and hours looking at
ways to protect the tobacco industry, but spent no time at all studying
ways to protect kids from the dangers of smoking," said Brian Gilpin, a
spokesman for the American Heart Association.
The Senate panel also proposed a constitutional amendment to prevent
future lawmakers from dipping willy-nilly into the principal of the
money the state receives from tobacco. Interest from early installments
is used to pay for health programs for the disabled, the elderly and
children.
Wednesday's news pleased both the industry and Wall Street.
"We think it's good not just for our business but for any business that
may find themselves in the position of being sued," said Peggy Roberts,
spokesperson for Philip Morris Companies Inc.
Stock market observers said the proposal is good news for tobacco
companies.
"I think tobacco stocks will be up modestly," said David J. Adelman, an
analyst with Morgan Stanley Dean Witter."This doesn't eliminate the
risk, but it would be helpful."
"The market's going to remain skeptical until anything's enacted," he
added. (St. Petersburg Times, April 20, 2000)
VISIONAMERICA, INC: Announces Talks with IRS, ICON Investment, TN Suit
----------------------------------------------------------------------
VisionAmerica Incorporated (Nasdaq/NM: VSNA) announced on April 19
updated developments concerning several matters.
The Company, the Internal Revenue Service, and the Company's senior
lenders have been in constructive discussions regarding tax liens filed
with regard to the Company's unpaid payroll and withholding taxes. As a
result of these discussions, the Internal Revenue Service has entered
into a limited Subordination Agreement designed to permit cash advances
to the Company by the senior lenders. In addition, while discussions are
underway, the Internal Revenue Service has agreed to a standstill
arrangement. Discussions toward a more permanent solution are ongoing.
The Company has requested of its senior lenders an overline credit
facility to supplement the Company's existing credit facility. The
senior lenders are considering this request.
The Company and ICON Laser Eye Centers, Inc. have been in discussions
regarding the renegotiations of ICON's previous $4,000,000 investment in
VisionAmerica. These discussions are near completion and the Company
anticipates a joint announcement with ICON concerning such
renegotiations.
The Company has engaged the law firm of Alston & Bird of Atlanta,
Georgia to represent it in connection with the class action litigation
filed recently against the Company in the United States District Court
for the Middle District of Tennessee in Nashville. The Company intends
to vigorously defend this matter.
Based on recent circumstances, including the resignation of the
Company's Chief Financial Officer, the Company's financial statements
have not been finalized and therefore the audit for 1999 has not been
completed and its Form 10-K has not been filed and is delinquent. The
Company and its independent auditors have continued to work towards
completion of the 1999 audit. Management anticipates that the audit will
be completed and the Form 10-K will be filed by May 1, 2000.
VISIONAMERICA, INC: Wolf Haldenstein Files Securities Lawsuit in TN
-------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP announces on April 20 that it
filed a securities class action lawsuit in the United States District
Court for the Middle District of Tennessee, Nashville Division on behalf
of investors who bought VisionAmerica, Inc. (NASDAQ: VSNA) stock between
November 5, 1998 and March 24, 2000 (the "Class Period").
The lawsuit charges VisionAmerica and certain officers of the Company,
with violations of the securities laws and regulations of the United
States. The lawsuit alleges that defendants issued a series of false and
misleading statements during the Class Period concerning the Company's
financial condition and more specifically the Company's payment of, and
accounting for, certain payroll taxes. The complaint alleges that
defendants' false and misleading statements artificially inflated the
price of the Company's stock during the Class Period.
Contact: Wolf Haldenstein Adler Freeman & Herz LLP Michael Miske, George
Peters, Gregory Nespole, Esq., Fred Taylor Isquith, Esq. or Shane T.
Rowley, Esq. 800/575-0735 website at http://www.whafh.com E-mail at
classmember@whafh.com
* New Internet Privacy Regulations Take Effect on April 21
----------------------------------------------------------
With April 21 Deadline Looming, Attorney Warns Internet Businesses to
Use Caution. Insufficient attention to privacy issues leave businesses
open to liability.
On April 21, new Internet privacy regulations take effect that may catch
companies doing business on the Internet unaware, warned Bart Lazar,
partner in the High-Tech Industry Group of Seyfarth, Shaw, Fairweather &
Geraldson. The new regulations, which were enacted as part of the
Children's Online Privacy Protection Act (COPPA), require Internet
businesses that market to children under 13, or knowingly collect
visitor information regarding children, to follow detailed regulatory
procedures -- including having a clear, prominent and direct link to its
site's privacy policy on children -- or face potentially serious
repercussions.
"Companies assume that if they are not marketing their website to
children, COPPA is not a concern," said Lazar. "This is not the case.
COPPA has much further-reaching applications than its title suggests."
Any site that collects registration information that includes a birth
date will fall within COPPA's scope. Even if an adult lies, and states
that his/her age is under 13, COPPA will apply.
According to Lazar, in addition to posting policies as they relate to
children, businesses that do collect information from children (defined
as any person under the age of 13) must also collect verifiable parental
consent. The new regulations affect businesses' practices relating to
the collection and use of their customers' personal, non-public
information; external policies on acquiring and retaining customers both
online and offline; and relationships with customers, employees,
partners, and service providers.
"Without the proper integration of policies between internal and
external parties, businesses are opening themselves to potential
liability. Perhaps more importantly, a company can be liable,
embarrassed, and face a loss of goodwill and shareholder equity if it is
perceived as misusing personal information or taking advantage of
consumers, particularly children," said Lazar. "Basically, the rules
have changed, and any company doing business on the Internet should
evaluate or re-evaluate how it collects and uses information, and how it
informs website visitors of these practices."
Penalties for failing to comply with COPPA may include fines, corrective
action and restitution to consumers. Moreover, companies that have been
the subject of privacy investigations and/or enforcement actions are
also likely to be subject to class action law suits. Whether or not the
law suits succeed, the costs of defending enforcement actions and class
action law suits can be substantial.
Stating that Internet privacy is a complex issue, Lazar described a
"Privacy Ecosystem" that resides in every company. Prudent companies
will map out the ecosystem so that they can understand and manage the
intricate network of internal and external business relationships that
privacy policies govern.
Even if a company is not subject to specific privacy regulation, Lazar
suggests that it get a handle on its Privacy Ecosystem. "The FTC and
privacy advocates have clearly demonstrated that they will not hesitate
in taking legal action or going to the court of public opinion when they
find that a company is violating its privacy policy or using personal
information in a way they believe is unfair to consumers."
In addition to COPPA, Lazar also warned Internet and off-line businesses
to prepare for The Financial Services Modernization Act (FSMA), whose
regulations will take effect in November and will impact the way
financial institutions share customer information.
"FSMA may be even trickier, because there are many regulators, including
the Federal Trade Commission, who will be enforcing it" said Lazar.
"Since the FSMA requires on-line and off-line compliance and effects a
broad range of financial service providers, we recommend that any
company who has not started assessing its compliance obligations should
do so promptly."
Next in the privacy arena will be health legislation, predicted Lazar.
Businesses that collect and use health information may want to "get
ahead of the game" by reviewing and commenting on upcoming regulatory
proposals.
About The Children's Online Privacy Protection Act (COPPA)
On April 21, 2000, the Children's Online Privacy Protection Rule goes
into effect, enacting protections created by the Children's Online
Privacy Protection Act (COPPA). COPPA affects businesses' marketing
information, products or services to children, as well as businesses
that collect information on customers' ages on a website.
Under the new Act, sites governed by COPPA must provide a hyperlink to a
Privacy Notice describing policies concerning children. The COPPA rule
regulates key aspects of the Privacy Notice and the hyperlink connecting
users to the statement. Sites collecting and using information from
children must also include a notice to parents, and for most information
collected from children, verifiable parental consent is mandatory.
"Businesses depending on information from children will need to create
the statements, policies and consent mechanisms, but must also evaluate
their internal information security systems and those of their
contractors and third-party partners," Lazar added. "A thorough audit of
websites and procedures for internal data collection and use is required
to comply with COPPA."
The Financial Services Modernization Act (FSMA)
The Financial Services Modernization Act of 1999 regulates the flow of
sensitive and valuable information to and from financial institutions.
Although the FSMA formally takes affect on November 12, 2000, the
Federal Trade Commission has made it clear that it will enforce
violations of the fair information principles of notice, consent,
security and access.
"Disclosure forms must be created and sent to current customers," Lazar
observed. "Web sites must be redesigned to include compliant privacy
statements. Perhaps most difficult, financial institutions must create a
reasonable method for consumers to exercise their right -- both offline
and online -- to direct financial institutions not to disclose their
personal information."
The new law will require privacy disclosures for financial institutions
and will affect the institution's internal and external policies, as
well as all third party agreements, which affect the use of personal
identifying information.
About Seyfarth, Shaw, Fairweather & Geraldson
Founded in 1945, Seyfarth, Shaw, Fairweather & Geraldson maintains 400
attorneys in nine offices located throughout the United States, as well
as Brussels and Belgium. True to its roots, Seyfarth Shaw has one of the
largest labor and employment practices in the nation, and also provides
a broad range of legal services in the areas of intellectual property,
trade regulation, business law, contracts, employee benefits,
environmental, safety and health, e-commerce and litigation.
Today, the firm's practice reflects virtually every industry and segment
of the country's business and social fabric. Clients include over 200 of
the Fortune 500 companies, financial institutions, newspapers and other
media, hotels, health care organizations, airlines and railroads. The
firm also represents a number of federal, state, and local governmental
and educational entities. For more information, visit the firm's website
at www.seyfarth.com
About Bart Lazar
Bart Lazar is a partner in the Chicago office of Seyfarth, Shaw,
Fairweather & Geraldson, practicing in Internet and Intellectual
Property law. Lazar represents a number of Internet companies in privacy
matters and was counsel to GeoCities, defending the FTC's first Internet
privacy enforcement action. Many of the provisions of COPPA can be
traced to the consent order issued in the GeoCities matter. Lazar
assists companies in identifying, protecting, monetizing and enforcing
intellectual property assets and data rights. Lazar is a graduate of the
University of Chicago, IIT/Chicago Kent College of Law, and holds a
Masters of Law in Trade Regulation from New York University.
Source: Seyfarth, Shaw, Fairweather & Geraldson
ZIFF DAVIS: Discovery Proceeding for Securities Derivative Suit in DE
---------------------------------------------------------------------
In addition, two derivative suits have been filed by stockholders
against Ziff-Davis Inc. and all of its directors in the Court of
Chancery of the State of Delaware for New Castle County. The complaints
allege that the directors breached their fiduciary duties to Ziff-Davis
Inc. by repricing the stock options awarded to certain directors and
demand the nullification of the repricing and an injunction against
exercise by the directors of any repriced option. Plaintiffs filed an
amended complaint on February 17, 1999 (which is substantially similar
to the original complaints, except that the amended complaint also
addresses the granting of "new options" at an allegedly "reduced
exercise price") and the actions have been consolidated. Answers to the
amended complaint on behalf of both Ziff-Davis and its directors were
filed on April 12, 1999. Discovery is proceeding.
ZIFF DAVIS: Motion to Dismiss NY Suit over IPO Filed 1998 Pending
-----------------------------------------------------------------
Following a decline in the price per share of Ziff-Davis Inc.'s common
stock in October 1998, eight securities class action suites were filed
against Ziff- Davis Inc. and certain of its directors and officers in
the United States District Court for the Southern District of New York.
The complaints allege that defendants violated Sections 11, 12(a) (2)
and 15 of the Securities Act of 1933 in connection with the registration
statement filed by Ziff-Davis Inc. with the Securities and Exchange
Commission relating to the initial public offering of Ziff-Davis Inc.'s
stock on April 29, 1998.
More particularly, the complaints allege that the registration statement
contained false and misleading statements and failed to disclose facts
that could have indicated an impending decline in Ziff-Davis Inc.'s
revenue. The complaints seek on behalf of a class of purchasers of
Ziff-Davis Inc.'s common stock from the date of the IPO through October
8, 1998 unspecified damages, interest, fees and costs, rescission and
injunctive relief such as the imposition of a constructive trust upon
the proceeds of the IPO.
On January 28, 1999, the court entered an order consolidating the
actions, appointing lead plaintiff's counsel and requiring the filing of
a consolidated amended complaint. The consolidated amended complaint was
filed on March 15, 1999 and only alleges claims under Section 11 of the
Securities Act of 1933. On May 20, 1999, Ziff-Davis moved to dismiss the
consolidated amended complaint. In July 1999, plaintiffs filed their
response to the motion. Ziff-Davis filed a reply on August 11, 1999. The
motion has not yet been decided.
ZIFF DAVIS: Resolves Minority Stockholders' Suit in NY
------------------------------------------------------
Ziff-Davis Inc. was named as a defendant in an action, filed on April
17, 1998 in the Supreme Court of the State of New York, by minority
stockholders of SOFTBANK Interactive Marketing Inc. ("SIM"), formerly an
indirect subsidiary of SOFTBANK Corp.
The complaint alleged, among other things, that SBH, SIM's majority
stockholder, acting with Ziff-Davis Inc. and two of its senior officers
and directors who were directors of SIM (and who were also named as
defendants), had conflicts of interest between SIM and other Softbank
investments (including investment in Ziff-Davis) and failed to act in
the best interests of SIM and the minority stockholders by taking
actions which benefited Ziff-Davis. The complaint stated claims based on
common law fraud, breach of fiduciary duty and aiding and abetting
theories and seeks in excess of $200,000,000 in damages.
Upon motion of Ziff-Davis and the other defendants, all of the claims
against them other than a breach of contract claim which is solely
against SBH, were dismissed on February 26, 1999. On April 1, 1999,
plaintiffs filed a notice of appeal of the dismissal. On September 2,
1999, the remaining claim, which was solely against SBH, was dismissed.
On October 6, 1999, plaintiffs filed a notice of appeal of this
dismissal. On March 28, 2000, the decisions of dismissal were affirmed
on appeal.
*********
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
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