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/raid1/www/Hosts/bankrupt/CAR_Public/000509.MBX C L A S S A C T I O N R E P O R T E R Tuesday, May 9, 2000, Vol. 2, No. 90 Headlines AUTODESK INC: Wolf Haldenstein Files Securities Suit in CA BMW: Sp Ct Strikes down Punitive Damages for Non-disclosed Refinishing CARNEGIE INT'L: Files to Dismiss Securities Suit; Plans to Sue Auditor CELL PATHWAYS: At Preliminary Stage of Securities Suit Filed '99 in PA EMPLOYMENT LITIGATION: Denial of Training Common among EEOC Lawsuits FRIEDMAN'S JEWELERS: Customers Seek Class Status Insurance Charges HOLOCAUST VICTIMS: Austrian Official Rebuffs US Lawsuit MIRAGE RESORTS: Faces Stockholders Suit in NV for MGM Merger Agreement ML MEDIA: Oral Arguments Heard for Limited Partners' Appeal in NY PACIFIC GATEWAY: Berman, DeValerio & Pease Files Securities Suit in CA PASMINCO: More Than 1,000 Involved in Fumes Suit in Australia PLM INTERNATIONAL: '97 Investors Suit Settlement Not Yet Consummated SAFETY-KLEEN CORP: Krislov & Associates Files Securities Suit in SC SAIPAN SWEATSHOP: 20 Gap Protesters Arrested outside Fresno Mall SOLUTION 6: Aust. Software Co. Extends Elite Offer Again on FTC Review ST. JUDE MEDICAL: Canadian Company Faces New Recalled Heart Valve Suit STAR TELECOMMUNICATIONS: Announces Dismissal of Shareholder Suit in CA STONE & WEBSTER: Berman, DeValerio Files Securities Case in MA TERAYON COMMUNICATIONS: Wolf Haldenstein Files Securities Suit in CA TOBACCO LITIGATION: FL Bill Ensures Industry Can Appeal Jury's Verdict WHITMAN EDUCATION: Announces Agreement to Resolve Lawsuit over Courses ********* AUTODESK INC: Wolf Haldenstein Files Securities Suit in CA ---------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP announces that it filed a securities class action lawsuit in the United States District Court for the Northern District of California on behalf of investors who bought Autodesk Inc. (Nasdaq: ADSK) stock between September 14, 1998 and May 4, 1999 (the "Class Period"). The lawsuit alleges that Autodesk, certain executives of the Company and its investment banker violated the securities laws and regulations of the United States. The Company creates and sells PC design software and multimedia tools for use in the architectural design, civil engineering, surveying, mechanical design, mapping, film and video production, video game development and Web content industries. The Complaint alleges that to artificially inflate the price of Autodesk stock, Autodesk, certain of its executives and their investment banker made very positive but false statements about: strong continuing demand for Autodesk's existing AutoCAD R14 product line; strong demand for all of its products in Europe; Autodesk's successful diversification of its business due to the strong sales of its "vertical" products resulting in lessened dependence on its AutoCAD product line and thus the elimination of the AutoCAD "boom/bust" cycle; the beneficial impact of Autodesk VIP upgrade program; the lack of any negative impact on Autodesk's business due to Y2K issues; the successful development and testing and accelerated commercial release of its new R15/AutoCAD 2000 product; and the limited dilutive impact of Autodesk's acquisition of Discreet Logic, all of which would result in the Company achieving F00 (to end Jan. 31, 2000) revenues in excess of $1 billion, earnings per share ("EPS") of $2.45-$2.55 and 20%-25% yearly EPS growth during F99-F01. As a result of these positive, yet false statements, the price of Autodesk stock was artificially inflated to a Class Period high of $49-7/16 in January 1999. This enabled the Company to both successfully complete the Discreet Logic acquisition in March 1999 as well as to sell three million new Autodesk shares to the public at $41 per share for over$120 million. On May 4, 2000, defendants stunned the investment community by announcing that Autodesk F00 results were, in fact, going to be much worse than earlier forecast based on poor sales of R15/AutoCAD 2000 and weak sales in Europe. Upon the release of this announcement the Company's stock price sank by almost 25% in one day to a close of$22-1/4 and later to as low as $19-3/4. Contact: Wolf Haldenstein Adler Freeman & Herz LLP Michael Miske, George Peters, Fred Taylor Isquith, Esq., Shane T. Rowley, Esq., or Gregory M. Nespole, Esq. 800-575-0735 e-mail: classmember@whafh.com http://www.whafh.com BMW: Sp Ct Strikes down Punitive Damages for Non-disclosed Refinishing ---------------------------------------------------------------------- The case BMW of North America, Inc. v. Gore, which is published in Mondaq Business Briefing, and is said in the article to be potentially one of the most significant cases in recent years for the insurance industry although BMW had nothing to do with insurance. The Supreme Court - for the first time ever - found that a punitive damages award was so excessive as to violate the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. The Case of The $2 Million Paint Job The case arose out of BMW's sale of a new BMW 535i to Dr. Ira Gore without disclosing that it had refinished some of the surfaces of the car at its vehicle preparation center before shipping the car to the dealer. In not disclosing the refinishing, BMW followed its standard disclosure policy, which provided that repairs costing less than 3% of the vehicle's suggested retail price would be considered insufficiently material to necessitate disclosure. BMW had selected the 3% threshold in 1983 after reviewing the various state disclosure statutes then in existence and concluding that a 3% trigger comported with the strictest of those statutes. Dr. Gore happily drove his car for nine months without noticing anything wrong with the finish. When he took the car to a detailer to make it look "snazzier," however, the detailer detected signs of refinishing. After the detailer referred him to a lawyer, Dr. Gore filed suit in Alabama state court. Based on the testimony of Dr. Gore's "expert" (a disgruntled former BMW dealer) that even perfect, factory-quality refinishing diminishes the value of a car by 10% of its purchase price, the jury awarded Dr. Gore $4,000 in compensatory damages. And because Dr. Gore's counsel had identified approximately 1,000 other vehicles that BMW had sold throughout the country without disclosure of refinishing, he asked for, and the jury awarded, $4,000 per car in punitive damages, for a total of $4,000,000. On appeal, the Alabama Supreme Court ordered the punitive damages reduced to $2 million, with no explanation as to how it arrived at that particular figure. The remitted punitive award was still 500 times the size of any possible injury to Dr. Gore. In early 1995, the Supreme Court agreed to hear the case. Sixteen months later, the court struck down the punitive damages award by a 5-4 vote. The Supreme Court Decision The Supreme Court began its analysis by making clear that "when (a punitive damages) award can fairly be characterized as 'grossly excessive' in relation to (the State's legitimate interests in retribution and deterrence) . . . it enter(s) the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment." The Court next held that the State's legitimate interests end at its borders: "(P)rinciples of state sovereignty and comity" embodied in the Constitution dictate that "Alabama does not have the power . . . to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents. Nor may Alabama impose sanctions on BMW in order to deter conduct that is lawful in other jurisdictions." (Because Dr. Gore had introduced no evidence that BMW's 3% threshold was unlawful elsewhere in the country and because BMW had submitted evidence that its conduct, in fact, was lawful in many other states, the Court did not decide "whether one State may properly attempt to change a tortfeasor's unlawful conduct in another State." Having concluded that the Alabama jury had no right to attempt to force BMW to change its policy nationwide, the Supreme Court turned to determining whether the $2 million award was excessive in relationship to Alabama's legitimate interests in regulating BMW's conduct in Alabama. The Court conceptualized the inquiry as involving a question of foreseeability, stating: "Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose." The Court then identified three "guideposts" as being particularly useful for evaluating whether a defendant could be said to have adequate notice of the magnitude of the jury-imposed penalties that might be assessed against it: (1) the degree of reprehensibility of the conduct; (2) the ratio of punitive damages to the actual or potential harm to the plaintiff; and (3) the civil penalties authorized or imposed for comparable misconduct. Applying these three yardsticks, the Supreme Court concluded that the $2 million punishment did not pass constitutional muster. The article in Mondaq says that the Court's opinion leaves many key issues in punitive damages cases unresolved. Nevertheless, there can be no doubt that BMW has dramatically changed the litigation landscape. The article goes on with a review on the case. (Mondaq Business Briefing, May 5, 2000) CARNEGIE INT'L: Files to Dismiss Securities Suit; Plans to Sue Auditor ---------------------------------------------------------------------- Carnegie International Corporation said on May 5 that it will file a Motion to Dismiss the first amended Consolidated Complaint (filed March 21, 2000) brought against the company and several of its officers and directors by certain of its shareholders. Carnegie said that, among other issues, the Motion to Dismiss states "the consolidated complaint fails to state a cause of action upon which relief may be granted, and fails to state with particularity facts giving rise to a strong inference that any defendant acted with the state of mind required to prove a violation of ss. 10(b) of the Securities Exchange Act of 1934 and the Securities Exchange Commission Rule 10-B; it fails to state with particularity each statement alleged to be misleading or to set forth in detail the reasons why each such statement is supposedly misleading; and, to the extent that the Consolidated Complaint makes allegations based upon the plaintiff's information and belief, it fails to state with particularity the facts on which any of those beliefs are purportedly formed." The company noted that litigation is always subject to uncertainties, which are outside of its control. Hence, although it believes its Motion to Dismiss the Consolidated Complaint makes a compelling argument, it cannot, with any reasonable degree of certainty, state whether it is likely or unlikely to be granted. The complaint may be found in its entirety at Carnegie's Web site (www.carnegieint.com). Actions vs. Grant Thornton Carnegie also announced that it has retained the law firms of William H. Murphy, Jr., and Associates P.A. of Baltimore, and Gary, Williams, Parenti, Finney, Lewis, McManus, Watson and Sperando of Stuart, Florida, who are preparing to file suit against Grant Thornton LLP, the company's former independent auditor, as well as several Grant Thornton partners and employees. The company also stated that certain of its shareholders have filed a class action complaint against Grant Thornton, LLP. The suit was filed on April 28, 2000, in the United States District Court for the District of Maryland, and alleges that Grant Thornton violated Federal securities laws while serving as Carnegie's independent auditor. The suit further alleges that the company's financial statements for fiscal years 1997 and 1998, prepared by Grant Thornton and which received unqualified opinions from Grant Thornton, were not in compliance with Generally Accepted Accounting Principles (GAAP), as Grant Thornton had opined. Carnegie International Corporation is an Internet support and computer telephony holding company with specialization in telecommunications products, services and distribution, and in E-Commerce and EDI. CELL PATHWAYS: At Preliminary Stage of Securities Suit Filed '99 in PA ---------------------------------------------------------------------- In February and March of 1999, five stockholder class actions were filed against Cell Pathways Holdings Inc. and certain of its officers and directors in the United States District Court for the Eastern District of Pennsylvania seeking unspecified damages on behalf of various classes of persons, including all persons who purchased Company Common Stock during certain periods in 1998 and 1999. The complaints alleged that the Company made false and misleading statements about the efficacy and near-term commercialization of the Company's lead drug candidate which had the effect of artificially inflating the price of the Company's Common Stock. These actions were consolidated into one action in April 1999, and a consolidated amended complaint was filed in late June 1999 asserting a class period extending from October 7, 1998 to February 2, 1999. The litigation is at a very preliminary stage. The Company believes that the allegations are without merit and intends to vigorously defend the litigation. EMPLOYMENT LITIGATION: Denial of Training Common among EEOC Lawsuits -------------------------------------------------------------------- Many training managers overlook the fact that the same Equal Employment Opportunity Commission (EEOC) requirements that govern hiring, firing and promotions also apply to their training programs. In fact, the denial of training opportunities is now a common thread among EEOC lawsuits for gender, disability, and age discrimination. In a recent Americans with Disabilities Act (ADA) case against General Motors, the claimant charged that, in addition to terminating him, GM denied him training because of his disability (HIV/AIDS). A consent decree awarded the claimant $ 7,000 in back pay and $ 28,000 in compensatory damages (EEOC v. Add-Staff, Inc. and General Motors Corporation, Civil Action No. 96-70840, E.D. Mich.) In a similar case, the claimant charged that Big Rivers Electric Corp. failed to assign the full range of duties and denied him training. A settlement agreement provided for a $ 10,000 award (EEOC v. Big Rivers Electric Corp. & IBEW Local 1701, Civil Action No. 94-0219-0, W.D. Ky.) Class action suits alleging a pattern of discriminatory training practices over time are also finding their way onto the EEOC court docket. Both CBS and Mitsubishi Motors have been hit with gender and race discrimination lawsuits that include, among other charges, allegations that the employers consistently denied training to women and people of color. Training managers must prevent discrimination in their programs based on four main Equal Employment Opportunity criteria, according to The Legal Handbook for Trainers, Speakers, and Consultants, by Attorney Patricia Eyres (McGraw-Hill, New York City). Disparate treatment Training is discriminatory if a trainee is treated differently than a similarly situated co-trainee. This means training programs can be problematic if they: * Exclude an age or gender group from strenuous safety training; * Prevent employees with high blood pressure from physically demanding training but allow other disabled employees to participate; * Give white employees on-the-job training and require another ethnic group to go to a training facility for the same training. Even though the differentiation in training might be well-intentioned and without malicious intent, it's still discriminatory, Eyres says. Adverse impact If an otherwise neutral training practice or policy has an adverse impact on a protected group, it's discriminatory. Example: Post-training testing that disabled trainees may not be able to complete, even though their disability doesn't prevent them from performing the essential functions of their job. Continuing past discriminatory practices Past training practice may dictate that you select training participants based on employee referrals before you place other employees in a particular program. If such a system singles out males or Caucasians because of past discriminatory practices, Eyres notes, then employee referrals tend to continue to single out males and whites. Harassment/hostile training environments Just like in the workplace, a hostile training environment allows slurs, insults and pranks that might offend training participants based on race, sexuality, age, etc. What Traning Managers Should Do It is important that the training selection system is as objective as possible and lends itself to consistent enforcement. Eyres recommends: * Publicizing all training opportunities uniformly; * Establish job-related criteria for training programs and an objective schedule based on the areas of highest need and be consistent because it is often impossible to accommodate all employees who want or need training at once. * Make clear to employees the requirements for admission to the training; * Establish objective qualification standards for skills training programs, including prerequisites (prior training, experience, skills tests); * Make consistent explanations for all employees who request, and are denied training; * To avoid age discrimination in training, says Eyres, banish all stereotypes from your department, i.e. older workers are infirm, resist change, cost too much to train, are overpaid, etc. Many of these stereotypes are not only wrong-headed thinking, they're legally risky as well. * To comply with the Americans with Disabilities Act (ADA), says Eyres, training managers must not refuse to train an employee with a ''covered disability.'' To be protected, an employee must meet the ADA's tests for a covered disability and still be otherwise qualified to perform the job. * That sexual harassment has no place in the training forum goes without saying. It's the training manager's responsibility particularly in cases where training is mandatory and no escape is possible to keep the environment free of any suggestion of verbal, physical, or visual harassment, even when the perpetrator insists it's in jest. The primary objective should be to stop the offending behavior and prevent any form of retaliation against the complaining employee, says Eyres. (Managing Training and Development, May 2000) FRIEDMAN'S JEWELERS: Customers Seek Class Status Insurance Charges ------------------------------------------------------------------ Two customers of Friedman's Jewelers are seeking class-action status for a lawsuit accusing the Georgia-based company of illegally charging them for insurance. The lawsuit filed last Thursday in Kanawha County Circuit Court by James Dunlap and Stephanie Gibson seeks to represent all West Virginians allegedly bilked by Savannah, Ga. -based Friedman's. Friedman's already has agreed to repay about 4,000 customers who bought insurance on up to 15,000 financed purchases without knowing it. It also faces a wrongful-firing lawsuit filed by two former workers. The latest lawsuit names the company, several local managers, and Miami-based American Bankers Insurance Co. of Florida. The lawsuit alleges the insurer helped Friedman's offer insurance for its jewelry. Dunlap purchased and financed a ring from Friedman's in September. Gibson did the same in December 1997. "Neither knew about nor consented to the purchase" of several different insurance policies added to their bills, the lawsuit said. Class-action status would allow anyone with claims against Friedman's to join the lawsuit. The lawsuit was filed by the Charleston law firms of Bailey & Glasser and the Grubb Law Group. The plaintiffs' hometowns were unavailable. Grubb also represents the two former workers who sued Friedman's two weeks ago. Last Thursday's settlement with the state Attorney General's Office requires Friedman's to refund as much as $1.5 million to West Virginia customers who were sold insurance at stores in Beckley, Bluefield and Charleston by sales associates who were not licensed insurance agents. The added charges were for credit life, credit disability and property insurance. The store has agreed to stop selling insurance until the company and its employees are licensed to sell in West Virginia. Once licensed, employees will be required to verbally ask customers if they want the insurance. (The Associated Press, May 8, 2000) HOLOCAUST VICTIMS: Austrian Official Rebuffs US Lawsuit ------------------------------------------------------- Austria cannot be legally forced to pay compensation to victims of Nazism, the official responsible for the issue said in an interview Monday, rebuffing a billion-dollar US lawsuit. Maria Schaumayer said US lawyer Ed Fagan's 18 billion dollar class action law suit on behalf of Nazi victims was not only "malicious" but also unviable, according to Austria's constitution. "Article 21 and 26 of the state's constitution make it clear that no claims can be put forward against Austria. A contribution cannot be forced either by a domestic court or by a foreign one," she told the weekly magazine Format. "We are making a voluntary contribution, and it will remain voluntary." Fagan's lawsuit, launched last month, seeks compensation both from Austrian companies which were involved in forced labour, and the Austrian state itself. Schaumayer referred notably to an agreement signed by the four occupying allied powers in 1955 which lifted Austria's financial obligations. "Austria is not the legal descendent of the Third Reich and it did not wage the devastating war," she said. Schaumayer defended her plan to pay a modest six billion schillings (430 million euros) in compensation -- and urged that Austria did not bear the same responsibility as Germany for the Nazi regime and its atrocities. Fagan says the lowest sum he will accept in compensation for forced labourers is 60 billion schillings, 10 times the amount Schaumayer has offered. An estimated one million people were compelled to work in Austria between 1938 and 1945, of whom 150,000 are reportedly still alive. Some historians argue that their labour made Austria's economy what it is today. (Agence France Presse, May 8, 2000) MIRAGE RESORTS: Faces Stockholders Suit in NV for MGM Merger Agreement ---------------------------------------------------------------------- On March 28, 2000, a stockholder filed a class action complaint against Mirage Resorts Inc. and the Company's directors in District Court for Clark County, Nevada. The complaint alleges that the directors breached their fiduciary duties to our stockholders in approving the merger agreement with MGM Grand by failing to maximize the value that stockholders will receive in the merger. In particular, the complaint alleges that the merger agreement grants Stephen A. Wynn the right, under certain circumstances, to purchase fine art from the Company at prices significantly less than a buyer might pay on the open market. The complaint seeks injunctive relief, including an "appropriate evaluation" of the artwork and orders enjoining the defendants from breaching their fiduciary duties and requiring Mr. Wynn to account to stockholders for all damages which they may suffer as a result of sales of Company artwork to him. On April 21, 2000, the plaintiff filed a motion to impose a constructive trust on the Company's artwork. ML MEDIA: Oral Arguments Heard for Limited Partners' Appeal in NY ----------------------------------------------------------------- On August 29, 1997, a purported class action was commenced in New York Supreme Court, New York County, on behalf of the limited partners of ML Media Partners LP, against ML Media, its general partner, Media Management Partners (the "General Partner"), the General Partner's two partners, RP Media Management ("RPMM") and ML Media Management Inc. ("MLMM"), Merrill Lynch & Co., Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). The action concerns ML Media's payment of certain management fees and expenses to the General Partner and the payment of certain purported fees to an affiliate of RPMM. Specifically, the plaintiffs allege breach of the Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"), breach of fiduciary duties, and unjust enrichment by the General Partner in that the General Partner allegedly: (1) improperly deferred and accrued certain management fees and expenses in an amount in excess of $14.0 million, (2) improperly paid itself such fees and expenses out of proceeds from sales of Registrant assets, and (3) improperly paid MultiVision Cable TV Corp., an affiliate of RPMM, supposedly duplicative fees in an amount in excess of $14.4 million. With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLMM and RPMM, plaintiffs claim that these defendants aided and abetted the General Partner in the alleged breach of the Partnership Agreement and in the alleged breach of the General Partner's fiduciary duties. Plaintiffs seek, among other things, an injunction barring defendants from paying themselves management fees or expenses not expressly authorized by the Partnership Agreement, an accounting, disgorgement of the alleged improperly paid fees and expenses, and compensatory and punitive damages. Defendants believe that they have good and meritorious defenses to the action, and vigorously deny any wrongdoing with respect to the alleged claims. Accordingly, defendants moved to dismiss the complaint and each claim for relief therein. On March 3, 1999, the New York Supreme Court issued an order granting defendants' motion and dismissing plaintiffs' complaint in its entirety, principally on the grounds that the claims are derivative and plaintiffs lack standing to bring suit because they failed to make a pre-litigation demand on the General Partner. Plaintiffs have both appealed this order and moved, inter alia, for leave to amend their complaint in order to re-assert certain of their claims as derivative claims on behalf of Registrant. The appeal and the motion for leave to amend are pending. Defendants have served their brief in opposition to the appeal, arguing that the court should affirm the Supreme Court's order dismissing plaintiffs' complaint. Oral argument of the appeal is scheduled for May 2000. Defendants have also served papers in opposition to the plaintiffs' motion for leave to amend their complaint. Oral argument has been heard and the parties are awaiting a decision. ML Media says the Partnership Agreement provides for indemnification, to the fullest extent provided by law, for any person or entity named as a party to any threatened, pending or completed lawsuit by reason of any alleged act or omission arising out of such person's activities as a General Partner or as an officer, director or affiliate of either RPmm, MLMM or the General Partner, subject to specified conditions. In connection with the purported class action filed on August 29, 1997, ML Media has received notices of requests for indemnification from the following defendants named therein: the General Partner, RPMM, MLMM, Merrill Lynch & Co., Inc. and Merrill Lynch. PACIFIC GATEWAY: Berman, DeValerio & Pease Files Securities Suit in CA ---------------------------------------------------------------------- Berman, DeValerio & Pease LLP announces that Pacific Gateway Exchange Inc. (Nasdaq:PGEX) was charged in a securities class action with misleading investors about its financial condition and business prospects. The case was filed in the United States District Court for the Northern District of California on behalf of all persons and entities who purchased or otherwise acquired the common stock of Pacific Gateway during the period May 13, 1999, through and including March 31, 2000 (the "Class Period"). The action alleges that Pacific Gateway and certain of its officers violated the federal securities laws by issuing a series of false and misleading statements concerning the Company's publicly reported earnings during the Class Period. On March 31, 2000, Pacific Gateway announced that it was adjusting its net income and earnings per share and revising its quarterly results for 1999. The action seeks to recover damages on behalf of all persons who purchased or otherwise acquired Pacific Gateway common stock during the Class Period. Contact: Berman, DeValerio & Pease LLP Alicia Duff, Esq. at (800) 516-9926. Jennifer Abrams, Esq. at (415) 433-3200 PASMINCO: More Than 1,000 Involved in Fumes Suit in Australia ------------------------------------------------------------- More than 1,000 people will take part in legal action against lead and zinc miner Pasminco, in one of the largest class actions in Australia. Sydney firm Coleman and Greig launched the action in February alleging Pasminco wrongfully permitted emissions of noxious fumes, vapour and gases containing lead, sulphur dioxide and other toxic pollutants into the air around its smelters at Cockle Creek in New South Wales and Port Pirie in South Australia. The case was instigated on behalf of Roslyn Cook and her daughter Samantha, 8, who lived at Boolaroo, near the Cockle Creek smelter, from 1989 to 1998. However, 1,082 people are now involved in the class action following a public appeal by the law firm to identify people allegedly affected by emissions from the smelters. A spokeswoman for lawyer Paul Gambin said it was one of the largest class actions in Australia. The matter is set to go before the Federal Court in Sydney, when the company is expected to raise a technical argument over whether the action can be brought under the Trades Practices Act. "It is the subject of technical argument," the spokeswoman said. "Pasminco can argue all the technicalities they like but it doesn't take away from the fact that the community approached us for help." The action against Pasminco alleges the company wrongfully permitted emissions of noxious fumes, vapour and gases containing lead, sulphur dioxide and other toxic pollutants into the air around the two smelters. It argues the toxic pollutants caused a range of symptoms from headaches and nausea to behavioural problems, intellectual disabilities and asthma to tumours and cancers. It further alleges the emissions impacted on the value of property around the smelters. (AAP Newsfeed, May 8, 2000) PLM INTERNATIONAL: '97 Investors Suit Settlement Not Yet Consummated -------------------------------------------------------------------- The Company and various of its wholly owned subsidiaries are named as defendants in a lawsuit filed as a purported class action in January 1997 in the Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251 (the Koch action). The named plaintiffs are six individuals who invested in PLM Equipment Growth Fund IV (Fund IV), PLM Equipment Growth Fund V (Fund V), PLM Equipment Growth Fund VI (Fund VI), and PLM Equipment Growth & Income Fund VII (Fund VII) (the Partnerships), each a California limited partnership for which the Company's wholly owned subsidiary, PLM Financial services, Inc. (FSI), acts as the General Partner. The complaint asserts causes of action against all defendants for fraud and deceit, suppression, negligent misrepresentation, negligent and intentional breaches of fiduciary duty, unjust enrichment, conversion, and conspiracy. Plaintiffs allege that each defendant owed plaintiffs and the class certain duties due to their status as fiduciaries, financial advisors, agents, and control persons. Based on these duties, plaintiffs assert liability against defendants for improper sales and marketing practices, mismanagement of the Partnerships, and concealing such mismanagement from investors in the Partnerships. Plaintiffs seek unspecified compensatory damages, as well as punitive damages, and have offered to tender their limited partnership units back to the defendants. In March 1997, the defendants removed the Koch action from the state court to the United States District Court for the Southern District of Alabama, Southern Division (Civil Action No. 97-0177-BH-C) based on the court's diversity jurisdiction. In December 1997, the court granted defendants motion to compel arbitration of the named plaintiffs' claims, based on an agreement to arbitrate contained in the limited partnership agreement of each Partnership. Plaintiffs appealed this decision, but in June 1998 voluntarily dismissed their appeal pending settlement of the Koch action, as discussed below. In June 1997, the Company and the affiliates who are also defendants in the Koch action were named as defendants in another purported class action filed in the San Francisco Superior Court, San Francisco, California, Case No. 987062 (the Romei action). The plaintiff is an investor in Fund V, and filed the complaint on her own behalf and on behalf of all class members similarly situated who invested in the Partnerships. The complaint alleges the same facts and the same causes of action as in the Koch action, plus additional causes of action against all of the defendants, including alleged unfair and deceptive practices and violations of state securities law. In July 1997, defendants filed a petition in federal district court under the Federal Arbitration Act seeking to compel arbitration of plaintiff's claims. In October 1997, the district court denied the Company's petition, but in November 1997, agreed to hear the Company's motion for reconsideration. Prior to reconsidering its order, the district court dismissed the petition pending settlement of the Romei action, as discussed below. The state court action continues to be stayed pending such resolution. In February 1999 the parties to the Koch and Romei actions agreed to settle the lawsuits, with no admission of liability by any defendant, and filed a Stipulation of Settlement with the court. The settlement is divided into two parts, a monetary settlement and an equitable settlement. The monetary settlement provides for a settlement and release of all claims against defendants in exchange for payment for the benefit of the class of up to $6.6 million. The final settlement amount will depend on the number of claims filed by class members, the amount of the administrative costs incurred in connection with the settlement, and the amount of attorneys' fees awarded by the court to plaintiffs' attorneys. The Company will pay up to $0.3 million of the monetary settlement, with the remainder being funded by an insurance policy. For settlement purposes, the monetary settlement class consists of all investors, limited partners, assignees, or unit holders who purchased or received by way of transfer or assignment any units in the Partnerships between May 23, 1989 and June 29, 1999. The monetary settlement, if approved, will go forward regardless of whether the equitable settlement is approved or not. The equitable settlement provides, among other things, for: (a) the extension (until January 1, 2007) of the date by which FSI must complete liquidation of the Partnerships' equipment, (b) the extension (until December 31, 2004) of the period during which FSI can reinvest the Partnerships' funds in additional equipment, (c) an increase of up to 20% in the amount of front-end fees (including acquisition and lease negotiation fees) that FSI is entitled to earn in excess of the compensatory limitations set forth in the North American Securities Administrator's Association's Statement of Policy; (d) a one-time repurchase by each of Funds V, VI and VII of up to 10% of that partnership's outstanding units for 80% of net asset value per unit; and (e) the deferral of a portion of the management fees paid to an affiliate of FSI until, if ever, certain performance thresholds have been met by the Partnerships. Subject to final court approval, these proposed changes would be made as amendments to each Partnership's limited partnership agreement if less than 50% of the limited partners of each Partnership vote against such amendments. The limited partners will be provided the opportunity to vote against the amendments by following the instructions contained in solicitation statements that will be mailed to them after being filed with the Securities and Exchange Commission. The equitable settlement also provides for payment of additional attorneys' fees to the plaintiffs' attorneys from Partnership funds in the event, if ever, that certain performance thresholds have been met by the Partnerships. The equitable settlement class consists of all investors, limited partners, assignees or unit holders who on June 29, 1999 held any units in Funds V, VI, and VII, and their assigns and successors in interest. The court preliminarily approved the monetary and equitable settlements in June 1999. The monetary settlement remains subject to certain conditions, including notice to the monetary class and final approval by the court following a final fairness hearing. The equitable settlement remains subject to certain conditions, including: (a) notice to the equitable class, (b) disapproval of the proposed amendments to the partnership agreements by less than 50% of the limited partners in one or more of Funds V, VI, and VII, and (c) judicial approval of the proposed amendments and final approval of the equitable settlement by the court following a final fairness hearing. No hearing date is currently scheduled for the final fairness hearing. The Company continues to believe that the allegations of the Koch and Romei actions are completely without merit and intends to continue to defend this matter vigorously if the monetary settlement is not consummated. The Company is involved as plaintiff or defendant in various other legal actions incidental to its business. Management does not believe that any of these actions will be material to the financial condition of the Company. SAFETY-KLEEN CORP: Krislov & Associates Files Securities Suit in SC ------------------------------------------------------------------- The law firm of Krislov & Associates, Ltd. announces that a class action suit (3:00-1394-17) alleging securities fraud has been filed in the United States District Court for the District of South Carolina, Columbia Division against Safety-Kleen Corp. and certain of its officers and directors, by the law firm Krislov & Associates, Ltd. The case was filed on behalf of all persons who purchased Safety-Kleen common stock during the period July 9, 1997 through March 6, 2000 inclusive (the "Class Period"). The complaint charges Safety-Kleen and certain of its directors and 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 the defendants issued false and misleading financial statements that materially overstated the Company's revenues and earnings during the fiscal years 1997, 1998 and 1999 and the first quarter of fiscal year 2000. On March 6, 2000, Safety-Kleen shocked the market by announcing that it "has initiated an internal investigation of its prior reported financial results and certain of its accounting policies and practices following receipt by the Company's Board of Directors of information alleging possible accounting irregularities that may have affected the previously reported financial results of the Company since fiscal year 1998." On March 8th the Company's independent auditors notified the Company that they were withdrawing their audit opinions for the years ended August 31, 1997, 1998, and 1999. Contact: Clinton A. Krislov or Michael R. Karnuth, both of Krislov & Associates, Ltd., 312-606-0500 SAIPAN SWEATSHOP: 20 Gap Protesters Arrested outside Fresno Mall ---------------------------------------------------------------- Twenty people demonstrating in Fresno against alleged working conditions at Gap Inc.'s factories in Saipan were arrested outside a shopping mall after refusing police orders to leave. About 50 protesters had gathered outside the Fashion Fair Mall last Saturday May 6 to protest what they claim is the clothing retailer's use of "slave labor" at factories in the Northern Mariana Islands. Some demonstrators wore T-shirts that spelled out the word "Sweatshops," according to organizer Mark Stout. When 20 of the protesters defied orders to leave the mall's property, they were arrested on trespassing charges. They were released after signing citations ordering them to appear in court on July 5. The Gap is one of several U.S. retailers facing a federal class-action lawsuit brought by garment workers over manufacturing conditions in Saipan. In a recent statement, the company said: "We are deeply concerned by the allegations in the lawsuits. We simply do not, and will not, tolerate the type of conduct alleged in factories where we do business." Stout said the Fashion Fair mall was chosen because it is one of the largest outlets in the Fresno area featuring the Gap. (The San Francisco Chronicle, MAY 8, 2000) SOLUTION 6: Aust. Software Co. Extends Elite Offer Again on FTC Review ---------------------------------------------------------------------- Solution 6 Holdings Ltd has announced that it has again extended its $11.00 per share takeover offer for US-based information group Elite Information Group Inc. Solution 6 said the offer, which is currently being reviewed by the US Federal Trade Commission (FTC), will now expire at 1700 New York City time on Wednesday May 10, 2000. "Elite and Solution 6 have agreed not to terminate the pending merger agreement without cause prior to the expiration of the offer as extended," Solution 6 said in a statement. The latest extension of the bid follows advice from the FTC's Bureau of Competition that it intends to recommend that the FTC challenge the transaction. "Although the Bureau of Competition remains opposed to the transaction, the parties have agreed to extend the offer to continue discussions in an effort to address the Commission's concerns," Solution 6 said. The latest extension follows a series of setbacks for the Australian software company, with the firm announcing last Friday that it believes its proposed merger with Sausage Software Ltd will not go ahead. Sausage said that it deemed the bid unacceptable due to recent events, and the drop in Solution 6's shares price. The company has also had to extend the Elite offer several times since the bid in December last year because of the FTC review. The FTC requested information on the deal after a US law firm, Milberg Weiss Bershad Hynes and Lerach LLP launched a class action against the companies. The firm said Elite directors, by entering into the merger agreement had violated their fiduciary duty to shareholders. (AAP Newsfeed, May 8, 2000) ST. JUDE MEDICAL: Canadian Company Faces New Recalled Heart Valve Suit ---------------------------------------------------------------------- A woman who received two St. Jude Medical Inc. heart valves that were later recalled was to file suit Monday May 8 against the company in Ramsey County District Court. Linda Baez, 43, of Dedham, Mass., is seeking compensation for pain and suffering and greatly increased medical bills from extra surgeries she underwent because of the faulty devices. Baez is accusing the Little Canada company with product liability, breach of warranty, negligence, misrepresentation, fraud and false advertising. Her lawsuit will be the second filed against St. Jude since it recalled the silver-coated Silzone heart valve in January after determining the device had leakage problems. A California law firm filed a class-action lawsuit against the company in April. The suit seeks compensation for medical monitoring of the device to detect problems in the 12,000 U.S. citizens who have received it. An additional 24,000 Silzone valves have been implanted outside the United States. Baez received her first Silzone valve in April 1999. Leakage was discovered within a few months, and she had a second surgery involving the Silzone valve in November. That valve is now leaking too. When St. Jude recalled the valves, the company said clinical trials showed 2 percent of the devices leaked, compared with 1 percent of all its valves. (The Associated Press, May 8, 2000) STAR TELECOMMUNICATIONS: Announces Dismissal of Shareholder Suit in CA ---------------------------------------------------------------------- STAR Telecommunications, Inc. (Nasdaq:STRX) announced on May 8 that two class action shareholder lawsuits, brought against STAR and its Board of Directors by TL Pura and William Ain, have been dismissed by the Santa Barbara Superior Court. The suits alleged that STAR and its Board of Directors breached their fiduciary duties to shareholders by failing to take actions necessary to attain a higher valuation for the company than provided for in the World Access merger. The complaints, among other things, sought to block that merger. In response to these suits, STAR filed Demurrers, seeking to have the suits dismissed. In the course of the Demurrer hearing on Friday, May 5, 2000, a Santa Barbara Superior Court judge granted STAR's Demurrers without leave to amend, effectively dismissing the matters. STONE & WEBSTER: Berman, DeValerio Files Securities Case in MA -------------------------------------------------------------- Stone & Webster, Inc. (NYSE: SW) was charged with issuing a series of false and misleading statements about the financial condition and business prospects of the Company in a shareholder class action filed by Berman, DeValerio & Pease LLP in the United States District Court for the District of Massachusetts on May 8, 2000. The case, which alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, was filed on behalf of all persons and entities who purchased the common stock of Stone & Webster during the period of April 27, 1999 through and including April 28, 2000 (the "Class Period") and who suffered losses on their investments. Named as defendants are Stone & Webster, H. Kerner Smith and Thomas Langford. The case involves a manipulation of financial statements in which, among other acts of deception, defendants knowingly or recklessly overstated S&W's results of operations, revenues, expenses, net worth and income for the fiscal year 1999. The complaint claims that, during the Class Period, Stone & Webster and the defendants assured investors that the Company's earnings were increasing each quarter. Indeed, the defendants stated that Stone & Webster was experiencing record revenues and income. On April 30, 2000, the Company dropped a bombshell on investors when it was disclosed that it will restate its 1999 financial results. In truth, the Company's earnings were not in the amounts that had been represented by the Company during fiscal 1999 because defendants had improperly allocated revenue and expenses in violation of Generally Accepted Accounting Principles ("GAAP"). Contact: Michael. M. Sullivan, Esq. of Berman, DeValerio & Pease LLP, 800-516-9926 TERAYON COMMUNICATIONS: Wolf Haldenstein Files Securities Suit in CA -------------------------------------------------------------------- On May 5, Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Central District of California on behalf of investors who bought Terayon Communications Systems, Inc. (NASDAQ:TERN) stock between February 2, 2000 and April 11, 2000, inclusive (the "Class Period"). The lawsuit charges Terayon and several of its top officers and directors with violations of the securities laws and regulations of the United States. This action involves defendants' dissemination of materially false and misleading statements concerning, among other things, the certification of the Company's proprietary S-CDMA cable modem technology Cablelabs (the industry regulating organization), the Company's financial condition and their effects on the Company's operations. The complaint alleges that defendants' scheme: (i) deceived that investing public regarding Terayons' business, new product capabilities and acceptability as an industry standard technology, foreseeable product demand, growth, operations and intrinsic value of Terayon common stock; (ii) allowed defendants to register and/or sell over $439 million worth of Terayon shares at artificially inflated prices via share for share acquisitions of other companies, which acquisitions also allowed defendants to appropriate valuable proprietary technologies previously owned by other companies; (iii) allowed Company insiders, several of whom are named as defendants in the action, to sell over 71,000 shares of their privately held Terayon common stock, during the Class Period, while in possession of materially adverse, undisclosed information, allowing them to reap proceeds of at least $15.9 million; and (iv) caused plaintiff and other members of the Class to purchase Terayon common stock at artificially inflated prices. 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 http://www.whafh.comwhafh@aol.com classmember@whafh.com TOBACCO LITIGATION: FL Bill Ensures Industry Can Appeal Jury's Verdict ---------------------------------------------------------------------- The tobacco industry will face a greatly reduced risk of bankruptcy, at least for the time being, when a Florida class-action case resumes next week. Cigarette makers won a possibly crucial victory last Friday when the Florida Legislature passed a bill that would cap the bond they would have to post to appeal a jury verdict. Gov. Jeb Bush is expected to sign the bill into law. A jury in Miami is expected to begin considering punitive damages against cigarette makers May 15 in a case that represents as many as 500,000 sick smokers and ex-smokers in Florida. Last month, the jury became the first to decide in favor of smokers as a class when it ordered compensatory damages. The jury's decision on punitive damages could take weeks. Under current Florida law, damages are not supposed to be so large that they force a company into bankruptcy. Defendants who appeal a verdict are required to post a bond equal to the size of the potential judgment, plus interest. The new Florida legislation, which the state House and Senate passed unanimously, caps at $ 100 million the bond the industry would have to post while it appealed a verdict. The jury still could assess damages of $ 100 billion or more, an amount that could eventually drive the industry into declaring bankruptcy. An appeal could take a year. But the cap on the bond "eliminates the one looming bankruptcy threat against the industry," says Matthew Myers, president of the Campaign for Tobacco-Free Kids. He says the industry still faces other legal threats, including a huge federal lawsuit, but the pending case is the most immediate. "It's very significant," says William Ohlemeyer, associate general counsel of Philip Morris, the nation's largest cigarette maker. "It will allow us to proceed to the appellate court." "The legislation is helpful to the industry but doesn't completely remove the threat of bankruptcy," says David Adelman, a tobacco industry analyst at Morgan Stanley Dean Witter. He expects the validity of the new law to be questioned but upheld, protecting the cigarette makers through the appeals process. In the end, though, the tobacco companies still could lose on appeal, Adelman says. At this point, he adds, "a lot would have to go wrong" for bankruptcy to result. Some Florida lawmakers say they wanted to protect their state's share of tobacco settlement funds; they argue that the money could be at risk if the industry went bankrupt. To settle lawsuits against it, the industry has agreed to pay states $ 246 billion over 25 years. Florida is to receive $ 13 billion of the total. Bankruptcy would not necessarily end the payments, which could continue under court order. But Ohlemeyer says that states would have to make their cases in bankruptcy court along with other creditors: "The question is where in line would they stand relative to others." Florida lawmakers say they also had non-monetary reasons for capping the industry's bond. "People or companies, regardless of who they are or what they do, should not be denied access to an appeal," says Florida Rep. Ken Gottlieb, D-Miramar. Bush is inclined to sign the bill, spokeswoman Elizabeth Hirst says. The tobacco industry has lobbied lawmakers in several states for legal protection. Four tobacco-producing states -- North Carolina, Virginia, Georgia and Kentucky -- have passed legislation to shield company assets in their states from bond requirements. But Florida's new law is considered the most important, because the trial is taking place in that state. The Miami jury has taken a tough stand against cigarette makers. In July, it found that they addicted and defrauded smokers for decades. Last month, it ordered the industry to pay two smokers $ 6.9 million in compensatory damages, designed to cover medical costs, lost earnings and pain and suffering. It awarded $ 5.8 million to a third smoker but decided he couldn't collect because he waited too long to file his claim. The defendants in the case include the nation's five largest tobacco companies: Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard and Liggett Group. (USA Today, May 8, 2000) WHITMAN EDUCATION: Announces Agreement to Resolve Lawsuit over Courses ---------------------------------------------------------------------- Whitman Education Group, Inc. (AMEX:WIX) announced on May 8 that it has reached an agreement in principle to settle a previously disclosed class action lawsuit relating to students who attended the Company's Ultrasound Diagnostic Schools, which has been reported in the CAR. As a result, the Company will take a one-time, after-tax charge to earnings in the fiscal quarter ended March 31, 2000, presently estimated to approximate $ 900,000, or $0.07 per share. The class of students covered by the settlement includes those students who attended the Ultrasound Diagnostic Schools general ultrasound and non-invasive cardiovascular technology programs between August 1994 and August 1998. Individual students included within the class may have the right to opt out of the settlement. The settlement is subject to the review and approval of the United States District Court for the Eastern District of Pennsylvania. Whitman Education Group, Inc. is a proprietary provider of career-oriented post-secondary education. Through three wholly-owned subsidiaries, Whitman currently operates 23 schools in 13 states offering a range of graduate, undergraduate and non-degree certificate and diploma programs primarily in the fields of information science, healthcare and business to over 8,000 students. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *