/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000428.MBX C L A S S A C T I O N R E P O R T E R Friday, April 28, 2000, Vol. 2, No. 83 Headlines ARIZONA: Mental Health Plaintiffs Try to Add Hull As Defendant AT&T: Local Carriers File Suit in VA over Service Cut-off AUTO INSURANCE: Nationwide class status denied in Allstate suit CHROMATICS COLOR: NY Court Dismisses Shareholders' Lawsuit ENGINEERING ANIMATION: Contests Securities Lawsuits in Iowa FEN-PHEN: Docplanet Reports on 47 Lawsuits Related to Personal Injury FEN-PHEN: Pilot Monitoring Project Started In West Virginia HOME LOANS: Abusive Practices Heard in Atlanta HSBC HOLDINGS: 1999 Annual Report Discloses $1 Bil Japanese Suit INMATES LITIGATION: ADA Claim Re HIV Barred by Prior Action in AL MICROSOFT CORP: States Split on Justice Dept. Break-up Plan ON-POINT TECHNOLOGY: Weiss & Yourman Files Securities Lawsuit PARK PLACE: Alleged of Violating Tribe’s Rights to Develop Casino PHYSICIAN COMPUTER: Ct OKs Pre Ch 11 Securities Suit Settlement Deal PILGRIMS PRIDE: Defends Employees' Suit in TX over OT Pay TOBACCO LITIGATION: BAT not planning to demerge Lawsuit Swamped B&W TOBACCO LITIGATION: IL Ct Has No Jurisdiction over BAT for Refund ********* ARIZONA: Mental Health Plaintiffs Try to Add Hull As Defendant -------------------------------------------------------------- Gov. Jane Hull went voluntarily to a judge's chambers in 1997 to promise to deal with the needs of Arizona's mentally ill. Three years later, plaintiffs in a successful class-action lawsuit against the state want her next visit to be under different circumstances. In the wake of Hull's veto of a mental health funding bill, the plaintiffs will ask Judge Bernard J. Dougherty on Friday to add Hull as a "necessary party" to the lawsuit. "It will make her a defendant," said Anne C. Ronan, a lawyer for the lawsuit plaintiffs. The Arnold vs. Sarn case has been in the courts since 1981. The plaintiffs have won several rulings that the state has failed to provide care promised by state law. There have been at least three settlements or implementation plans negotiated by state officials and the plaintiffs over the years, but no funding to make those plans happen has been provided. The Department of Health Services recommended last fall that Hull seek a mid-budget spending increase of $127 million as the first step of a $356 million annual increase recommended by consultants and a state task force. Hull did not make a special budget request, but the Legislature appropriated $33 million anyway. Hull vetoed the appropriation, saying that the state did not have the money. She also said she is committed to providing additional money for mental health but that it should come from Arizona's share of the multistate tobacco settlement. "The governor has said repeatedly how committed she is to resolving Arnold vs. Sarn," said Hull spokeswoman Francie Noyes said. Though Hull's veto precipitated the move to add her as a defendant, the plaintiffs are not asking Dougherty to undo the veto, Ronan said. Instead, their request is an attempt to ensure that mental health care gets attention if special legislative sessions are called, she said. Hull has said she may call lawmakers back to decide how to spend the tobacco settlement money and to consider additional mental health funding if revenues exceed forecasts. "Both of which, if handled right, could result in significant funding for services," Ronan said. If Hull is added the lawsuit and disregards court orders, she could be held in contempt, Ronan said: "That's the ultimate remedy." An attempt 10 years ago to add then-Gov. Rose Mofford as a defendant failed because it was not then established that more money was needed or that adding the governor was necessary to implement court orders, Ronan said. "It's now clear, and all the other defendants agree that increased funding needs to be provided for them to meet their obligations under the court order," she said. The DHS director - already a defendant to the suit - requested increased funding, and the Legislature provided at least some of it, Ronan said: "The governor was the sole person who frustrated the further implementations of the court orders by the other defendants." The lawyer said she expects Hull will fight being added to the case, arguing that the courts do not have jurisdiction over other governmental branches' discretionary decisions. "Where we think the situation is different is this has been clearly established as a mandated obligation of the executive to implement these laws," Ronan said. The motion will be filed with a request that Dougherty act soon because with the possibility of a special session, "we need to get this resolved," Ronan said. (The Associated Press, April 27, 2000) AT&T: Local Carriers File Suit in VA over Service Cut-off --------------------------------------------------------- Fail to pay your phone bill and the company will cut off service. Simple cause and effect. But it's not so simple when a major long distance carrier like the AT&T Corp. refuses to pay the local carriers that link its long distance services to individual customers. That's why 78 local access carriers filed suit against AT&T and the Sprint Communications Co. last Monday in the U.S. District Court for the Eastern District of Virginia. Among the plaintiffs are Virginia companies Net2000 Communications Inc. of Herndon, the Falls Church-based Winstar Wireless of Virginia, and American Communications Services of Virginia Inc. Long distance carriers including Sprint and AT&T require what is called the "interexchange" services of local carriers in order for their customers to initiate and pick up long distance calls. The plaintiffs, products of industry deregulation, typically compete with local Baby Bells in providing this service and are commonly referred to as Competitive Local Exchange Carriers (CLECs). They charge the long distance carriers a tariff for their services, between three and seven cents per minute, which is slightly higher than the per-minute rates at, say, Bell Atlantic Inc. or Bell South. However, the Baby Bells also generally charge a monthly fee, says Jonathan Canis, a partner in the D.C. office of New York's Kelley Drye & Warren who is representing the CLECs. According to the complaint, Advamtel v. AT&T Corp., both AT&T and Sprint balked at paying the tariffs charged by the plaintiffs. Sprint responded by paying only what the Baby Bells charge per minute. AT&T responded by not paying at all. The plaintiffs allege they are now owed about $ 10 million for services rendered over the last two years. So why didn't they just cut off AT&T and Sprint? " 'Don't disrupt service to the end user' overrules everything," says Canis. Not only is there the certainty that the local carriers' customers will complain if their phone service is interrupted, but a 1999 ruling by the Federal Communications Commission laid out specific steps that must be taken if a carrier wants to cancel a service arrangement with another carrier-all to prevent a disruption of phone service. Kelley Drye handled that case for the CLECs as well. Not all 78 plaintiffs have gripes with both long distance companies. Net2000, for example, has claims only against AT&T. And the suit is not a class action. (Legal Times, April 24, 2000) AUTO INSURANCE: Nationwide class status denied in Allstate suit --------------------------------------------------------------- A Cook County Circuit Court judge on Wednesday denied certification for a nationwide class in a lawsuit alleging Allstate Insurance Co. engaged in fraud by encouraging third parties injured in auto accidents by Allstate customers not to hire lawyers to resolve their claims. A staggering number of case-by-case factual determinations would be required to adjudicate the rights of each individual class member," Judge Richard A. Siebel wrote in an 11-page opinion and order. The court has come to the finding that a nationwide class should not be certified at this time," Siebel said during a brief court hearing today before releasing his written decision. Plaintiff attorneys said after the hearing that they will ask Siebel at a May 10 status hearing to reconsider his decision to deny the nationwide class and also to certify an Illinois class. Siebel did not rule today on the merits of the underlying complaint, they added. Six named plaintiffs filed a lawsuit in the Circuit Court in January 1998. The named plaintiffs are four West Virginia residents and two Illinois residents who were involved in auto accidents with Allstate policyholders. The lawsuit maintains that Allstate uses a nationwide campaign, emanating from its headquarters in Northbrook, to dissuade claimants from hiring lawyers to handle their claims. Following the accidents, the plaintiffs received written communications from Allstate including a Customer Service Pledge" form, a Quality Service Pledge" form and a form called Do I Need an Attorney," Siebel's decision said. The lawsuit alleged that Allstate violated the Illinois Consumer Fraud Act, engaged in the unauthorized practice of law, negligent and fraudulent misrepresentations and breached its fiduciary duty. Allstate has denied all of the plaintiffs' allegations. We're trying to provide claimants with information that they can use to make their own decision about whether they want to have a lawyer," said Robert H. King Jr., a lawyer representing Allstate. It's up to them." The plaintiffs' sought to certify a nationwide class, which their attorneys say would consist of between 300,000 and 600,000 persons. Allstate objected, contending nationwide class certification was unnecessary because each claimant accident involves different issues. Siebel agreed with Allstate's contentions. The court is not satisfied that common issues of fact or law predominate in this case," Siebel wrote. This applies especially to the negligent misrepresentation count, the fraud count and the breach of fiduciary duty count." The plaintiffs also asserted that Siebel had the power and authority to determine what constitutes the unauthorized practice of law in other states. But Siebel disagreed. It would be presumptive and certainly beyond this court's authority to declare whether certain behavior constitutes the unauthorized practice of law in any sister state absent a definitive ruling by the authoritative tribunal of that state," Siebel wrote. Therefore, no nationwide class will be certified on the unauthorized practice of law count." Siebel noted that application of the Illinois Consumer Fraud Act may be warranted for the named plaintiffs from Illinois and potential Illinois class members. While a nationwide class action seeking redress under the Illinois Consumer Fraud Act is not appropriate for certification, the court believes that certifying a class for Illinois plaintiffs and those potential plaintiffs injured in Illinois may be appropriate," Siebel wrote. Clinton A. Krislov, a lawyer for the plaintiffs, said that Siebel basically says we can have an Illinois claim on common fraud." But King responded, The judge's reasoning would seem to preclude an Illinois class." King, a partner with Greenberg Traurig LLP's Chicago office added that he was pleased by Siebel's ruling today. Chicago lawyer Kevin M. Forde also represents Allstate. Other attorneys for the plaintiffs are Robert L. Sklodowski of Sklodowski, Puchalski & Reimer in Franklin Park, John J. Lowrey of Lowrey & Smerz in Chicago, James Peterson, a West Virginia lawyer, and Kenneth T. Goldstein of Krislov & Associates Ltd. The case is Douglas Wayne Martin, et al. v. Allstate Insurance Co., No. 98 CH 603. (Chicago Daily Law Bulletin, April 26, 2000) CHROMATICS COLOR: NY Court Dismisses Shareholders' Lawsuit ---------------------------------------------------------- The United State District Court for the Southern District of New York has dismissed a shareholders class action lawsuit filed in 1998 against Chromatics Color Sciences International Inc. (Nasdaq: CCSI) and four of its officers. The company announced the ruling April 27 when the plaintiffs failed to re-plead their complaint within 30 days after the court conditionally granted the defendants' dismissal motion on March 20, 2000. The class action suit had alleged that the defendants artificially inflated the price of CCSI's stock through false and misleading public statements made between July 30, 1997 and June 9, 1998. The statements -- nine press releases and a Form 10-K -- largely concerned the proprietary technology and the development, marketing and distribution plans and market size estimates for the company's ColorMate(R) TLc-BiliTest(R) System, a pain-free, non-invasive device for monitoring bilirubin infant jaundice in newborns. In the dismissal ruling issued by Judge Sidney H. Stein, the court found that, regarding each of the company's statements at issue, "plaintiffs have either not sufficiently specified the reasons that the statements were misleading, thereby failing to satisfy Rule9(b) and the PSLRA(Private Securities Litigation Reform Act)'s heightened pleading standard, or failed to specify a reason that would be actionable under Section 10(b)." Addressing several of the allegations of false statements, the court said, "(E)ach of the allegedly false statements ... is a factual statement whose truth is not in question. None of the statements were statements of optimism or even statements about promises regarding the future. They were factual statements about past events which included no promises as to the future and as such, plaintiffs have not adequately explained the basis on which the statements were false and misleading when made." Addressing other allegations, the court said, "truthful statements about company policy or a course of action that is being pursued are not actionable and do not necessarily constitute promises to maintain the policy in the future." ENGINEERING ANIMATION: Contests Securities Lawsuits in Iowa ----------------------------------------------------------- Engineering Animation reports to the SEC that in February 1999, actions were filed against the company and certain of Engineering Animation's current and former executive officers in the United States District Court for the Southern District of Iowa. These actions allege that Engineering Animation violated Sections 10(b) and 20(a) of, and Rule 10b-5 under, the Securities Exchange Act of 1934. They allege that Engineering made false or misleading statements of material fact about the company's accounting for in-process research and development in connection with the Rosetta Technologies, Inc. (Rosetta) and Sense8 Corporation (Sense8) acquisitions and our 1999 business prospects. They seek unspecified damages. These claims are now consolidated into one class action purporting to include individuals who purchased the company's common stock between February 19, 1998 and April 6, 1999. The court has appointed lead plaintiffs and co-lead counsel in the action. The court has granted in part and dismissed in part the motion filed by the company to dismiss the plaintiffs' amended complaint. Engineering Animation intends to oppose the action vigorously. In October 1999, actions were filed against the company and certain of its current and former executive officers in the United States District Court for the Southern District of Iowa. These actions allege that Engineering Animation violated Sections 10(b) and 20(a) of, and Rule 10b-5 under, the Securities Exchange Act of 1934. They allege that the company made false or misleading statements of material fact about our financial results for the second quarter of 1999. These claims are now consolidated into one class action purporting to include individuals who purchased our common stock between July 29, 1999 and October 1, 1999. The court has appointed lead plaintiffs and lead counsel in the action. We intend to oppose the action vigorously. FEN-PHEN: Docplanet Reports on 47 Lawsuits Related to Personal Injury --------------------------------------------------------------------- In its report to the SEC, Docplanet Com Inc.states that QCP along with several other entities, including the manufacturers of the drugs, has been named as a defendant in approximately forty-seven lawsuits brought by numerous plaintiffs relating to personal injury claims caused by the use of phentermine and/or fenfluramine, collectively known as Phen-Fen. FEN-PHEN: Pilot Monitoring Project Started In West Virginia ----------------------------------------------------------- A pilot medical monitoring project has been ordered in West Virginia's diet drug medical monitoring class action, a source told Mealey Publications (Margaret L. Burch v. A.H. Robins Co. Inc., No. 97-C-204[1-11], W.Va. Cir., Brooke Co.; See 3/19/99, Page 7). The source said Brooke County Circuit Court Judge Fred Risovich entered an order early February staying the litigation pending the pilot program. The source said the program will provide free echocardiograms to West Virginia users of diet drugs, interpretation of the results and a free consultation with a doctor about the results. The costs of the pilot project will be paid by American Home Products Corp. The cost has not been disclosed. The pilot program is similar to the medical monitoring proposed under the AHP national diet drug settlement, the source said. The program will continue through the May 1 to 5 fairness hearing for the proposed national settlement. The results may be introduced at that hearing. Judge Risovich's stay is separate from one issued by U.S. Senior Judge Louis Bechtle in December prior to the start of the West Virginia class trial. Judge Bechtle assumed jurisdiction over the case. His stay remains in place. The source said the West Virginia trial may resume in the fall. (Mealey's Emerging Drugs & Devices, March 17, 2000) HOME LOANS: Abusive Practices Heard in Atlanta ---------------------------------------------- Two elderly African-American widows from Atlanta were the star witnesses at a Wednesday forum on predatory lending practices sponsored by two Clinton administration cabinet members. Lucinda Ewing, 70, received a foreclosure notice this week from her latest mortgage lender. She explained that four high-cost lenders had flipped her debt, tacking assorted new fees on each new transaction and driving her monthly mortgage payment from $ 300 to $ 1,026. "I have tried to make monthly payments," Ewing told a panel headed by U.S. Housing Secretary Andrew Cuomo. "Because the mortgage is so high, I am having trouble paying my utility bills and buying food." Emma Lou Sanders, 74, owed only $ 1,700 on her home mortgage when an aggressive salesman persuaded her to take a new mortgage to pay for home improvements. Sanders is now saddled with more than $ 23,600 in new mortgage debt, though no one ever completed the promised improvements. "I feel awful," said Sanders, who has trouble making her payments from her monthly income of only $ 650. "Nobody wants to be in this situation." Cuomo said predatory mortgage lending has become "a national crisis . . . with a troubling racial factor." He and U.S. Treasury Secretary Lawrence Summers recently formed a task force to study the problem. The group will hold forums in four other cities before issuing a report to Congress in six weeks. "The real estate market is so hot, there is so much equity in homes, we have created an opportunity for some to victimize those within the market," Cuomo said. "We want predatory lending practices stopped." Cuomo praised ethical lending practices within the so-called "subprime" loan industry for making money available to millions shut out of the regular credit market because of their blemished credit. Reflecting a national trend, subprime mortgage refinancings in Atlanta have skyrocketed --- particularly in minority neighborhoods --- rising from 1,768 in 1994 to 11,408 in 1998. At the same time, complaints to the Atlanta Legal Aid Society about subprime loans have shot up, too, as have foreclosure notices. Joe Beasley, head of Georgia's Rainbow-Push Coalition, said a class action suit in the early 1990s helped defeat one abusive lender in Atlanta: a subsidiary of Fleet Financial Group. "But this is a tiger, a devious tiger," Beasley said. "We thought we ran off Fleet, but they've circled back on us." Regulating the subprime market issue is a ticklish political issue because banks like Citigroup, Bank of America and First Union all own subprime lending affiliates. The banks maintain a powerful political lobby, which Cuomo was careful not to offend. "This is an industry that prides itself in its integrity," Cuomo said. "No good company would knowingly do business with any of these bad actors." However, Bill Brennan of the Atlanta Legal Aid Society, a national expert on predatory lending, said virtually all subprime lenders routinely charge exorbitant interest rates and fees, collect high pre-payment penalties and " pack" pre-paid credit insurance into loans secured by the borrower's home. All those practices are abusive and should be outlawed, Brennan and other consumer advocates argue. The industry could live with rules that ban loan flipping, new limits on credit insurance and clear disclosure on loan fees, said Jeffrey Zeltzer, executive director of the National Home Equity Mortgage Association. "I am concerned about the reputational damage" caused by the recent focus on the industry, Zeltzer said. State Sen. Vincent Fort (D-Atlanta) said he plans to introduce legislation in January similar to a new North Carolina law that bans so-called "insurance packing" and other abuses. Subprime loans are available to borrowers with credit problems who cannot qualify for conventional loans. (The Atlanta Journal and Constitution, April 27, 2000) HSBC HOLDINGS: 1999 Annual Report Discloses $1 Bil Japanese Suit ---------------------------------------------------------------- A report circulated by Bloomberg News relates that HSBC Holdings Plc, Europe's largest bank, said it's being sued by Japanese investors for more than $1 billion over the alleged involvement of newly acquired Republic New York Corp. in a fraud. HSBC, detailing the litigation in its 1999 annual report, said two of the litigants are seeking 24.4 billion yen ($229 million), with others seeking a total of $799 million. Inclusive of punitive damages, the bank is being sued for a total of $2.6 billion, according to the South China Morning Post. "It is not possible to assess the outcome of these proceedings at present," HSBC said in its report. "The Republic parties intend to defend vigorously against the claims arising from the Princeton note matter." Officials wouldn't comment further on the suits when quizzed by Bloomberg. The actions are connected with an alleged fraud by Princeton Global Management Ltd. and chairman Martin Armstrong in selling Japanese investors promissory notes with a face value of $3 billion. Princeton and Armstrong were customers of the futures division of Republic New York. Some of the proceeds of the notes were supposedly invested and traded through the accounts Princeton had with the futures arm and HSBC said Armstrong is alleged to have caused employees of the unit to issue statements inflating the value of these accounts, hurting investors in the notes, $1 billion of which has yet to be repaid. Aside from the 11 civil actions outstanding against Republic, HSBC said it has been told by one of the defendants in the Princeton note affair, World Nichei Securities Co. Ltd. of Japan, that it will seek to hold Republic and its affiliates liable for any losses it incurs. There is also a "purported" class action suit outstanding against Republic on behalf of some investors who bought stock in Republic last year. Details of the alleged fraud emerged last year, nearly derailing HSBC's takeover of Republic New York and affiliate Safra Republic Holdings SA. The takeover was delayed because of the investigation, and Edmond Safra, Republic's founder, agreed to accept about 19 percent less for his stakes in Republic and Safra to save the $9.9 billion sale after the problems. INMATES LITIGATION: ADA Claim Re HIV Barred by Prior Action in AL ----------------------------------------------------------------- A federal District Court in Alabama dismissed an ADA class action suit filed by and on behalf of state prisoners with HIV. The claim was barred on res judicata grounds. Prison inmates filed a class action suit on behalf of themselves and all current and future inmates with HIV in the state's prison system. Specifically, the inmates claimed the department of corrections, its former and current commissioners, and the entity providing medical services within the prison system violated Title II of the ADA by segregating them from the general prison population. The inmates also alleged cruel and unusual punishment in violation of the Eighth Amendment. The defendants moved to dismiss. The court barred the ADA claim on res judicata grounds. A final judgment had been rendered by a court of competent jurisdiction - in this case, the circuit court of appeals. Further, the plaintiffs in both cases were identical - the description of the plaintiff class in the first action included the members of the plaintiff class in the second action. In addition, the defendants in the two cases were the same with the exception of the medical service provider. However, the court found that the current and former medical service providers were in privity with one another since their legal interests were the same with respect to their defenses against the inmates' claims. The court found that the causes of action in the two claims were identical. Further, the court determined that the only difference between the two statutes concerned the types of defendants against whom rights may be enforced. Therefore, the court dismissed the ADA claim. The court dismissed the Eighth Amendment claim in part with prejudice and in part without prejudice. Edwards v. Alabama Dept. of Corrections, 17 NDLR 160 (M.D. Ala. 2000) (No. Civ.A. 97-T-1746-N). (Corrections Professional, April 24, 2000) MICROSOFT CORP: States Split on Justice Dept. Break-up Plan ----------------------------------------------------------- A majority of the 19 states suing Microsoft are expected to join the Justice Department in seeking to split the software giant in two, but a minority of the states are considering both more lenient and more aggressive approaches to remedying Microsoft's antitrust wrongs. While the Justice Department is now expected to seek a remedy that would separate the Windows operating-system group from the rest of the company, Ohio Attorney General Betty Montgomery (R) prefers keeping the software company intact, according to people familiar with the discussions. Montgomery is considering writing a dissent to the remedy proposal being prepared by Justice officials and the majority of states, sources said. California, which during earlier discussions was pushing hard to break Microsoft into three companies, appeared yesterday to be leaning toward joining those states backing the Justice Department's plan, sources said. U.S. District Judge Thomas Penfield Jackson told government attorneys to submit by tomorrow a plan to address his April 3 verdict that Microsoft violated antitrust law by using its monopoly in personal-computer operating systems to harm consumers and competitors and stymie innovation that threatened Microsoft's monopoly. Microsoft has launched a legal, political and public-affairs assault on a breakup plan; Chief Operating Officer Bob Herbold was on Capitol Hill yesterday lobbying lawmakers on a variety of issues, including the antitrust remedies. If the government, as expected, asks for a breakup tomorrow, Microsoft likely will ask Jackson for more time to scrutinize the proposal. Microsoft's formal reply is due next month, and a remedy hearing is set for May 24. The states that have been in the lead--New York, Iowa, Connecticut and Wisconsin--are lobbying other states to join the Justice plan, sources said. California was "80 percent on board," a source said. Leading the group favoring a less-aggressive proposal is Montgomery, who remains concerned that a breakup goes too far in seeking a remedy to Microsoft's anti-competitive conduct, according to sources. They also said another midwestern state might join Ohio in drafting an alternative proposal. A spokesman acknowledged Montgomery's reservations about a breakup but said no decision had been made. Herb Hovenkamp, a University of Iowa antitrust scholar and adviser to the government in the case, said it could hurt the government's case if some states advocated a more limited remedy. "It would not be helpful for them to present less than a united front," Hovenkamp said. An industry lobbyist involved in the case said the government is working hard to avoid a "partisan split" over remedies and suggested that resentment toward Attorney General Janet Reno on a variety of unrelated issues, including the Elian Gonzalez custody battle, might be fueling dissension. In March, sources told The Post that Kansas, Illinois, Florida and Maryland were among states that had reservations about seeking a breakup. Meanwhile, a plan to divide Microsoft into three companies, which was being advocated by a cluster of states led by California Attorney General Bill Lockyer (D), appears to be waning. That plan would have followed the Justice Department plan but included a third slice breaking off the Internet properties, which themselves are significant. Some industry officials have been lobbying states to create an Internet group that would include the Internet Explorer browser and Microsoft Network, the Internet service provider and Web portal more commonly known as MSN. Many of the key assets within MSN are considered valuable in their own right. They include CarPoint, the online automobile sales Web page, and Microsoft HomeAdvisor, the home-buying Web page. But the Justice Department is seeking to craft the least intrusive plan that would solve problems outlined in Jackson's two-part verdict, people familiar with the discussions said. The Justice plan would separate the part of Microsoft that makes Windows operating systems, including Windows 98 and Windows 2000, from the rest of the company, including software applications such as Office and the Internet properties. A federal judicial panel this week assigned dozens of class-action antitrust lawsuits throughout the nation to a single court in Baltimore. The suits, filed as follow-up cases to the government's lawsuit, were assigned to U.S. District Judge J. Frederick Motz, a move that lets Microsoft consolidate its defense. (The Washington Post, April 27, 2000) ON-POINT TECHNOLOGY: Weiss & Yourman Files Securities Lawsuit ------------------------------------------------------------- A class action lawsuit was filed in U.S. District Court on behalf of purchasers of On-Point Technology Systems, Inc. (Nasdaq: ONPT, ONPTE) common stock between August 19, 1997 and April 7, 2000. The defendants include On-Point 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) by 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 On-Point and its shareholders. Specifically, the defendants published false and misleading financial statements, including financial statements that overstated fiscal year 1997 earnings by approximately $1.4 million, or approximately 800%, fiscal year 1997 revenues by approximately $3 million, fiscal year 1998 earnings by approximately $2.1 million, and fiscal year 1998 revenue by approximately $1.6 million. The defendants also failed to disclose that there were substantial operating losses for fiscal year 1998, and that the Company's accounting practices throughout the Class Period failed to conform with generally accepted accounting principles. Contact: Weiss & Yourman, Telephone: 800-437-7918, Internet: http://www.wyca.comE-mail: wyinfo@wyca.com PARK PLACE: Alleged of Violating Tribe’s Rights to Develop Casino ----------------------------------------------------------------- St. Regis Mohawk members file $12 billion class action suit against Park Place Entertainment, Arthur Goldberg and Clive Cummis. Fraud, undue influence and tortuous interference cited in New Jersey company's attempt to violate tribe’s rights to develop proposed Indian gaming casino in Monticello. Suit also seeks restraining order from enforcement of April 14 agreement and alleges anti-trust violations. Park Place Entertainment "fraudulently induced" the St. Regis Mohawk Council to enter into an agreement dated April 14, 2000, that would extinguish the Tribe's rights to a proposed gaming casino at Monticello, NY, according to a class action lawsuit filed Wednesday, April 26, 2000 on behalf of Tribal members in Tribal Court on the St. Regis Mohawk reservation in Hogansburg, NY. The suit alleges that Park Place falsely "represented that existing agreements entered into or on behalf of the St. Regis Mohawk Tribe were unenforceable and that (Park Place) would produce a St. Regis Mohawk Casino in Sullivan County more quickly than the existing developer and management team." For its "fraud and undue influence" in this matter the suit seeks both compensatory and punitive damages from Park Place, Arthur Goldberg and Clive Cummis in the amount of $4 billion. "Park Place is attempting to deprive the people of St. Regis of countless jobs and hundreds of millions of dollars through their illegal and unethical conduct," said Michael Rhodes-Devey, attorney for the plaintiffs. In addition, the suit states that the New Jersey gaming giant "knew or should have known that the Mohawk Tribal Council...had, as late as November 24, 1999, executed an Amended and Restated Gaming Facility Management Agreement with Mohawk Management LLC...(for) a proposed St. Regis Mohawk Gambling Casino at Monticello Raceway." The Tribe is seeking $4 billion in damages because of Park Place's "tortuous interference with the rights of the parties to (that) agreement." The suit seeks an additional $4 billion in damages due to further tortuous interference stating that the defendant New Jersey company also "knew or should have known that the same Mohawk Tribal Council, on or about November 24, 1999, signed an Amended and Restated Gaming Facility Development and Construction Agreement, date July 31, 1996, which was also signed by Monticello Raceway Development Company LLC." In addition to seeking $12 billion in compensatory and punitive damages, the suit says that the defendant class will suffer "irreparable damage if (Park Place) is able to reap the benefits of their unconscionable acts." Therefore, the suit seeks to restrain and enjoin the defendants from enforcing the terms of the April 14 agreement. The suit also inquires whether the defendant's actions amount to an attempt "to prevent the plaintiffs from proceeding with...conducting the only legal gambling casino in the State of New York not on ancestral reservation land," and asks if such actions constitute a violation of existing anti-trust legislation. Given the range of these issues, the complaint is also being sent to the New Jersey Casino Gaming Control Commission in Atlantic City, the Nevada Casino Control Commission in Carson City, the Mississippi State Gaming Control Commission in Jackson, the National Indian Gaming Commission in Washington, D.C., and the Office of the U.S. Attorney for Northern New York. Contact: Breeze & Rhodes-Devey, Slingerlands Michael Rhodes-Devey, Esq., (518) 439-9936 PHYSICIAN COMPUTER: Ct OKs Pre Ch 11 Securities Suit Settlement Deal ----------------------------------------------------------------- Physician Computer Network, Inc. is a provider of information technology to the office-based physician market. The Company's flagship practice management software product, the PCN Health Network Information System, is a multi-functional, advanced system which automates scheduling, billing, financial reporting and other "back-office" functions, and provides electronic links to payors and other parties providing services to a physician's practice. In order to supplement its practice management product offerings with knowledge-based clinical products and services, in January 1996, the Company and Glaxo Wellcome, Inc. formed a joint venture, Healthmatics G.P. (formerly Healthpoint G.P.) The Company's interest in this venture was sold during 1998. Beginning in 1993, the Company instituted a strategy of developing and expanding its business by acquiring practice management software businesses having an installed base of physician practice customers and developing a common software platform to which such customers could migrate over time. In execution of this strategy, the Company made a series of acquisitions through 1998 in order to expand various software and support services. In 1996 and 1997, the Company sold support obligations for various customer sites using legacy systems in order to concentrate on its three major software platforms. In 1998, the Company announced the need to restate financial information previously issued to the public. Instead of the reported profits during the first three quarters of 1997, the Company would be reporting a substantial loss and was in default of its bank agreement. The negative effects of publicity surrounding the Company's announcements affected operating results in 1998. During 1998 and 1999 the Company undertook significant restructuring and cost reduction efforts to mitigate the losses incurred in 1997. These efforts included the sale of various noncore business assets. In addition, at the direction of the Board of Directors, investment bankers were retained to evaluate the strategic alternatives available to the Company. Subsequent to the Company's announcements in early 1998 concerning the delay in its annual audit and its expected restatement of previously issued reports, numerous purported class actions were filed against the Company, certain directors and former officers. These matters were consolidated into one action in the United States District Court for the District of New Jersey. Prior to the bankruptcy filing, this Securities Class Action was settled by the Company, subject to the approval of both Federal District Court and the Bankruptcy Court. The settlement provided for a payment of $21.15 million plus a share of certain other proceeds. The Class Plaintiffs also agreed that the settlement is subject to downward adjustment risk based on the ultimate sale price of the Company. The Bankruptcy Court approved the settlement when the Plan reorganization was confirmed; the Federal District Court approved the settlement on March 22, 2000. In December 1999, immediately prior to the filing of Chapter XI, the Company entered into an Asset Purchase Agreement with Medical Manager Corp. for the purchase and sale of all PCN's operating assets and the assumption of substantially all of PCN's operating liabilities. PILGRIMS PRIDE: Defends Employees' Suit in TX over OT Pay --------------------------------------------------------- In January of 1998, seventeen current and/or former employees of the Company filed the case of "Octavius Anderson, et al. v. Pilgrim's Pride Corporation" in the United States District Court for the Eastern District of Texas, Lufkin Division ("Anderson v. Pilgrim's Pride") claiming the Company violated requirements of the Fair Labor Standards Act. The suit alleges the Company failed to pay employees for all hours worked. The suit generally alleges that employees should be paid for time spent to put on, take off, and clean certain personal gear at the beginning and end of their shifts and breaks and the use of a master time card or production "line" time fails to pay employees for all time actually worked. Plaintiffs seek to recover unpaid wages plus liquidated damages and legal fees. Approximately 1,700 consents to join as plaintiffs have been filed by current and/or former employees with the court. It is anticipated that a trial date will be set in August of 2000. The Company believes it has substantial defenses to the claims made and intends to vigorously defend the case. However, neither the likelihood of unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time. Substantially similar suits have been filed against four other integrated poultry companies. On February 9, 2000, the U.S. Department of Labor (DOL) began a nationwide audit of wage and hour practices in the poultry industry. The DOL expects to audit 51 poultry plants, one of which is company owned. The DOL audit is examining pay practices relating to both processing plant and catching crew employees and includes practices which are the subject of Anderson v. Pilgrim's Pride discussed above. TOBACCO LITIGATION: BAT not planning to demerge Lawsuit Swamped B&W ----------------------------------------------------------------- British American Tobacco PLC managing director Ulrich Heuter dismissed claims that the group will be better off demerging or selling U.S. unit Brown & Williamson Tobacco, which is becoming swamped by litigation. Brown & Williamson has to contribute to the $200 billion medicaid settlement and may find itself liable to industry punitive damages of up to $300 billion after the Engel case, which is currently being heard in Florida. Analysts had recently suggested that BAT might do well to cut its losses by disposing of its U.S. assets. However, Heuter told AFX News: "The U.S. is a leading market for the world and therefore we would like to keep our presence there and grow in that market." Heuter described recent legal setbacks in the U.S. as the cost of doing business there. As well as the Engle case, which went against Brown & Williamson and all the other tobacco majors, there has also been a high-profile setback in the form of the Whiteley case, which was decided earlier this year. "These are not industry-threatening claims and we regard that the odd setback should be seen as cost of doing business in the U.S.," he went on. The managing director said: "It is not all one-way traffic" citing the failure of the union-backed class action in California and grounds for appeal in the Engel case. (AFX European Focus, April 27, 2000) TOBACCO LITIGATION: IL Ct Has No Jurisdiction over BAT for Refund ----------------------------------------------------------------- An Illinois appeals court has reversed a lower court's decision, finding that Illinois cannot exercise personal jurisdiction over B.A.T. Industries for the purpose of a class action suit to recover money spent on tobacco products. Cleary et al. v. Philip Morris Inc. et al., No. 1-99-0525 (Ill. App. Ct., 1st Dist., Mar. 17, 2000). B.A.T. Industries, a parent company of Brown & Williamson Tobacco Corp. and British American Tobacco Co. Ltd., has its office in London, where all of its 185 employees are located. B.A.T. says that it has never conducted business in Illinois, which was unchallenged by the plaintiffs. However, plaintiff Brian Cleary asserts that B.A.T. received research done in the United States and kept it for the purpose of keeping it out of discovery. The appeals court looked at the Illinois long-arm jurisdiction first, determining that the minimum contacts test was met by the plaintiff's charge that the defendant committed a tortious act within the state. Plaintiff does as much by charging that B.A.T. participated in a scheme to conceal the true nature of tobacco and nicotine from the people of Illinois. The panel also held that the due process requirement is met because a party that joins a conspiracy to commit a tort in Illinois could reasonably foresee that it might be hauled into court in Illinois to defend itself against such charges. The appeals court looked further into the applicable Illinois statute to determine if the record was sufficient to support jurisdiction. The judges relied on language from TCA International Inc. v. B&B Custom Auto Inc., 701 N.E. 2d 105 (1998), to determine that facts averred by a defendant must be accepted as true in the absence of a contradictory affidavit from the plaintiff. In this instance, B.A.T. denied every charge made by Cleary; the plaintiff failed to counter B.A.T.'s denials. Because of Cleary's failure to respond to B.A.T.'s denials with its own affidavits, the panel ruled that TCA required that the lower court be reversed and that the assertion of jurisdiction over B.A.T. is improper. In a related matter, a federal district court in New York ruled on Jan. 27, 2000, that B.A.T. must stand trial in New York's federal court under the provisions of New York law (see Tobacco Industry LR, March 24, 2000, P. 11). The plaintiff in that case charged B.A.T. with a conspiracy similar to the one alleged in the Cleary case. (Tobacco Industry Litigation Reporter, April 14, 2000) TOBACCO LITIGATION: Philip Morris Ready for Talks on Regulation --------------------------------------------------------------- Geoffrey C. Bible, chairman of the board and chief executive officer of Philip Morris Companies Inc. (NYSE: MO), told an audience of approximately 1,100 shareholders at the company's annual meeting on Thursday April 27 that Philip Morris "came through the year in very good shape" in a "litigation environment that has improved in significant ways." He also reaffirmed the company's commitment to "engage in a constructive dialogue" with the company's critics as well as the general public. Mr. Bible opened the meeting by noting that "while 1999 was a year of transition," the company performed well during the year and "we are beginning 2000 with strong momentum across all of our operating companies." He acknowledged that "unfortunately, the performance of our stock has not reflected this strength." Mr. Bible attributed the company's low stock price primarily to "investor concern about the legal challenges and societal perceptions surrounding the domestic tobacco industry." Highlighting improvements in the litigation environment, he cited a number of favorable legal developments during the year, as well as the 1998 Tobacco Settlement Agreement with the State Attorneys General, which removed a significant source of litigation risk to the company. Despite these successes, Mr. Bible said that two lawsuits, the Engle class-action case in Florida and the Department of Justice suit to recover health care costs, have "added to investor concerns." He noted that the Engle case is now proceeding to the next phase, and that the Department of Justice suit is one in which "we believe we have a good chance of prevailing" if the case proceeds to trial. Mr. Bible emphasized that Philip Morris is "ready and eager to engage in a constructive dialogue about strong, meaningful and reasonable regulation of cigarettes." He said that the company wants to be "at the table and part of the process of creating a regulatory framework that is fair for smokers, the general public and for the industry." Mr. Bible said that the company "has made fundamental changes in the way we relate to the public and our critics." He noted that the company launched a nationwide advertising campaign and communications program designed to highlight the good work of Philip Morris. He also said the company remains committed to Youth Smoking Prevention programs worldwide, responsible drinking and "to the letter and spirit of the Tobacco Settlement with the State Attorneys General." Turning to the company's business performance, Mr. Bible said, "ultimately, we believe our stock value will be driven by our strong earnings growth and superb business fundamentals." Bible noted that "the excellent momentum established in 1999 was evidenced in our good first-quarter 2000 performance." Looking ahead, he said that the company's "businesses are robust, our infrastructure is sound, our employees are first rate and we have the best brands anywhere." ********* 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 reditors' 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. 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