/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000626.MBX C L A S S A C T I O N R E P O R T E R Monday, June 26, 2000, Vol. 2, No. 123 Headlines AOL: Tempa Lawsuit Complains about Long-Distance Internet Access BENEDICT COLLEGE: Former Students Sue over Tax Refund Garnishments BURIAL INSURANCE: Officials Look into Companies after American General HASTINGS ENTERTAINMENT: Update on Securities Lawsuits in Texas INMATES LITIGATION: Supreme Court upholds 1996 PLRA in Indiana case JUST FOR: Grant & Eisenhofer Announces Consolidated WI Securities Suit MEDICA MANAGER: NJ Suit Seeks Injunction on Proposed Healtheon Merger MEDICAL MANAGER: Dismissal of Securities Suit under Appeal in FL MEDICAL MANAGER: Subsidiary Porex Faces Silicone Mammary Implants Suit NORTHBRIDGE EARTHQUAKE: SF Chronicle Reports on Quackenbush's Deals RELIANCE GROUP: Milberg Weiss Files Securities Lawsuit in New York SMITH-GARDNER: Cauley & Geller Files Securities Lawsuit in Florida SMITH-GARDNER: Milberg Weiss Files Securities Suit in Florida STEVEN MADDEN: Abbey, Gardy Files Securities Lawsuit in New York STEVEN MADDEN: Stull, Stull Files Securities Lawsuit in New York TOBACCO LITIGATION: Anti-Smoking Program Responds to PM CEO's Testimony TOBACCO LITIGATION: Ligget CEO Tells Jury He Wants to Stay and Reform U S WEST: NYC Woman Sues in Denver over Stock Dividend UNION PACIFIC: Argument Ensues over Test Results of Derailment Effect UNITED AIRLINES: Seeks to Overturn Ruling on Sex Bias in Weight Rules WATER CONTAMINATION: Jon Sasser Represent NC Residents Individually ********* AOL: Tempa Lawsuit Complains about Long-Distance Internet Access ---------------------------------------------------------------- When Marguerite Miles received a promotional trial disc from America Online two years ago, she figured she would see what all of the hoopla was about on the Internet. She popped it into her computer, signed on and surfed the net. A month later the Port Richey woman received her phone bill with $ 500 in long-distance charges. I specifically told [AOL] I would not take anything that was long-distance, said Miles, who believes she was intentionally mislead by the countrys largest online service provider. Miles is now the lead plaintiff in a lawsuit filed in U.S. District Court in Tampa that seeks class-action status. The suit alleges that AOL did not provide local access numbers to the area she was calling from and failed to notify her that the calls she was making were long-distance. Lance Harke of Hector & Harke in Miami, who filed the suit on Miles behalf, says she is not alone. He points to newspaper articles in USA Today and the Kansas City Star in which AOL users were hit with hundreds of dollars in long-distance phone bills because they were unable to access local numbers. In one case, an 11-year-old girl ran up a $ 3,190 phone bill using AOL. However, Harke believes this is the first such suit against AOL. AOL knows or can readily determine when you sign on whether or not there is a local access number and they purposefully hide that information from you in order to make a sale, Harke said. Not so, says AOL spokesman Rich DAmato. We could not, with any certainty, state that this number will be local for you. In addition, AOL contends its not responsible for long-distance charges because it notifies users through myriad information that if they dont know whether a number they are calling is local or long-distance, they should check with their phone company. In the number selection window there is a bold red notation that says please be sure that you are selecting a local access number, DAmato said. David Cassell, editor of AOLWatch, an online newsletter thats highly critical of AOL, said its typical of the company to pass the buck. This shows a real disregard for their customers. Instead of fixing it, they add text to their screens saying its not their problem, Cassell said. Miles contends that she called AOL to find out which numbers she should use to access service. One she knew was long-distance, but she wasnt sure about the other two. When you are talking to a representative and you are telling them what you want, you expect to get a correct answer, Miles said. He misled me. Thats the bottom line. The suit alleges, among other things, violations of the computer fraud and abuse act and Floridas Deceptive and Unfair Trade Practices Act, misleading advertising and fraud by omission. It seeks unspecified damages and attorneys fees. Ironically, the claim parallels a suit filed against Miles by her former employer. She was sued in 1998 by Manorcare Health Services. It was alleged that while working as a nurse for the company, she was accidentally overpaid more than $ 57,000 due to a computer glitch. Instead of paying her $ 19.59 an hour, the computer spit out checks for $ 195.90 an hour. Miles collected the money for five months before the mistake was discovered. Miles at first claimed she didnt know she had been overpaid, said Manorcares lawyer Robert Stern of Trenam Kemker in Tampa. Then, he said, she refused to pay, so Manorcare sued. The case has been settled and Miles is making $ 400 monthly payments as part of her restitution, Stern said. Miles declined to discuss the suit. Harke said his clients past is irrelevant. She got victimized here, Harke said. One has nothing to do with the other. (Broward Daily Business Review, June 22, 2000) BENEDICT COLLEGE: Former Students Sue over Tax Refund Garnishments ------------------------------------------------------------------ A Circuit Court judge has postponed trial in a lawsuit accusing Benedict College of illegally garnishing tax refunds of former students who owed the school money. Judge James Johnson Jr. last Thursday June 22 postponed the case until a similar case in Spartanburg County is decided. The class action suit accuses Benedict of illegally seizing about $2 million in refunds from former students since 1981. The lawsuit says South Carolina's Setoff Debt Collection Act allows Benedict and other private colleges to garnish refunds for certain types of debts, such as merit scholarships, and loans or scholarships to the handicapped or children of veterans and firefighters. The suit seeks repayment of the refunds, plus interest and administrative fees. In their response to the suit, college officials said all tax returns that were garnished were valid debts, including tuition, fees and books. But Thomas Bunch, the lawyer for about 4,000 students in the class action, says Benedict sought garnishments for debts not covered by the law, including yearbook and telephone charges. The school also added a 33 percent collection fee to accounts it garnished. "Benedict has other means it can use to collect these moneys," Bunch said. "We don't think they can collect it under this statute." The college has settled a lawsuit brought by one former student. Jerome Anthony Myers, who attended Benedict in 1983, received $39,000, according to court documents. Benedict claimed Myers owed about $3,000 for an unpaid student loan, but never provided proof of the debt despite repeated requests by Myers, Bunch said. Benedict started garnishing his refunds in 1995, 12 years after he left the college. Bunch said other settlements probably would be smaller than Myers' because of a change in the state law. Frederick Crawford, a lawyer for the college, said the statute of limitations would limit any possible refunds to 1994. In that case, about 1,800 former students would be affected, Bunch said. The lawsuit is the latest of Benedict's legal difficulties. Earlier this month, the State Law Enforcement Division seized campus crime records after allegations that the college failed to report a possible sexual assault involving a 15-year-old girl and a male Benedict student. The school also made headlines when it asked South Carolina State to move a football game with Benedict out of state in support of the NAACP's boycott of South Carolina over the Confederate flag dispute. The two schools could not agree and canceled the game. (The Associated Press State & Local Wire, June 23, 2000) BURIAL INSURANCE: Officials Look into Companies after American General ---------------------------------------------------------------------- Up to 66,000 Alabamians could receive refunds on burial insurance policies under a settlement with a Florida company, and state officials say they are investigating other companies that may have overcharged black policyholders. American General Life and Accident Insurance Co. agreed last Wednesday June 21 to settle a federal class action lawsuit that charged the company made black burial insurance policyholders pay more for coverage than whites. Lawsuits charge there are more Alabamians who faced similar, race-based insurance practices. "We are now in the process of looking at all companies in Alabama," said David Parsons, the state's acting insurance commissioner. He would not identify specific insurers. Regulators in Florida have said they are looking at Birmingham's Liberty National Life Insurance Co., which has been sued in federal court in Birmingham over race-based practices it discontinued long ago. U.S. District Judge Dean Buttram earlier dismissed the suit, ruling the statute of limitations had expired. Plaintiffs' lawyers filed a motion asking that he reconsider his ruling because policyholders only recently learned of the practice. "The worst thing is that these people didn't even know about it," said Russell J. Drake, a Birmingham attorney suing Liberty National and other companies. Alabama has not yet agreed to the American General settlement. (The Associated Press, June 23, 2000) HASTINGS ENTERTAINMENT: Update on Securities Lawsuits in Texas -------------------------------------------------------------- On March 7, 2000, the Company announced that its fourth quarter and fiscal 1999 results (and the previous four fiscal years' results) would be negatively impacted by certain accounting adjustments. As previously reported in the CAR, following the Company's initial announcement in March 2000 of the requirement for the accounting restatements, Hastings Entertainment and certain of its officers were sued and alleged of violations of the securities laws and regulations of the United States. Six purported class action lawsuits were filed in the United States District Court for the Northern District of Texas against the Company and certain of the current and former directors and officers of the Company asserting various claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Although four of the lawsuits were originally filed in the Dallas Division of the Northern District of Texas, all of the five pending actions have been or will be transferred to the Amarillo Division of the Northern District and should be consolidated. One of the Section 10(b) and 20(a) lawsuits filed in the Dallas Division was voluntarily dismissed. On May 15, 2000, a lawsuit was filed in the United States District Court for the Northern District of Texas against the Company, its current and former directors and officers at the time of the Company's June 1998 initial public offering and three underwriters, Salomon Smith Barney, A.G. Edwards & Sons, Inc. and Furman Selz, LLC asserting various claims under Sections 11, 12(2) and 15 of the Securities Act of 1933. INMATES LITIGATION: Supreme Court upholds 1996 PLRA in Indiana case ------------------------------------------------------------------- State prison officials throughout the country can breathe easy following a June 19 U.S. Supreme Court ruling that upholds a federal law limiting the perpetuation of prisoner-initiated civil actions against correctional facilities. A five-justice majority ruled in Miller v. French/United States v. French that the 1996 Prison Litigation Reform Act (PLRA) doesn't impose on the rights of trial court judges who are considering requests by prison officials that standing injunctions against their facilities be lifted. Congress passed the law in hopes of stemming the growing tide of prisoner-filed litigation claiming unfit conditions. The case addressed the law's constitutionality, which respondents asserted limits a court's power to decide how much time appellees should have in blocking requests to end prison injunctions stemming from unfit prison conditions. The case stemmed from a 1975 class action alleging inhumane prison conditions at what is now known as the Pendleton Correctional Facility. The 7th Circuit affirmed relief for a group of prisoners who were granted an injunction that remains in effect today. Under the injunction, the prison was required to correct living conditions deemed cruel and unusual by the U.S. District Court. Claiming that the prison conditions in question have been rectified, the state petitioned in 1997 to lift the injunction under terms of the PLRA. The law entitles a prison to an automatic stay of its injunction if a court doesn't rule on a stay request within 90 days of filing. On appeal last May, the 7th Circuit ruled in favor of the prisoners. It held that the law stripped the court of its discretion to determine if prisons had corrected the cause of the initial injunction. Justice Sandra Day O'Connor, joined by Chief Justice William Rehnquist, Justices Antonin Scalia, Anthony Kennedy and Clarence Thomas, wrote the opinion of the court. The holding granted the challenge to the 7th Circuit decision, made by Jon Laramore, who represented the Pendleton Correctional Facility superintendent through the Indiana Attorney General's Office. O'Connor wrote that Congress did not infringe on constitutional separation of powers in crafting the 90-day window because it doesn't directly interfere with a court's jurisdiction for ruling on a case. "As we explained in Plaut v. Spendthrift Farm Inc. ... Article III 'gives the Federal Judiciary the power, not merely to rule on cases, but to decide them, subject to review only by superior courts in the Article III hierarchy,'" O'Connor wrote. "The PLRA does not deprive courts of their adjudicatory role, but merely provides a new legal standard for relief and encourages courts to apply that standard promptly," O'Connor wrote. "Through the PLRA, Congress clearly intended to make operation of the automatic stay mandatory, precluding courts from exercising their equitable powers to enjoin the stay. And we conclude that this provision does not violate separation of powers principles." Laramore argued that the law didn't infringe upon separation of powers between Congress and the judiciary. In response to the holding, he praised the high court's ruling. "I'm pleased the Supreme Court agreed with our assertion that the statute does strike an appropriate balance between prisoners' rights under the Constitution and states' rights to be free of judicial supervision when it has corrected its constitutional problems," Laramore said. In a dissenting opinion, Justice Stephen Breyer, joined by Justice John Paul Stevens, disagreed with the majority's reading of the statute in favor of one in which "the district court would retain its traditional equitable power to change that status quo once the party seeking" the stay proves irreparable harm would result if the injunction remained in place. In a separate opinion, Justice David Souter, joined by Justice Ruth Bader Ginsburg, concurred in part and dissented in part. In concurring, Souter said he agreed with the majority in its assertion that new constitutional challenges to the PLRA could hold up if brought before the court. O'Connor opened the door to an appeal of the law on grounds that its 90-day window violates due process protections, saying, "(w)hether the time is so short that it deprives litigants of a meaningful opportunity to be heard is a due process question, an issue that is not before us." Indiana Civil Liberties Union attorney Kenneth Falk, who argued the case of the prisoners, said he was "obviously disappointed" with the ruling. Falk will argue against the injunction appeal before U.S. District Court Judge S. Hugh Dillin on June 27. (The Indiana Lawyer, June 21, 2000) JUST FOR: Grant & Eisenhofer Announces Consolidated WI Securities Suit ---------------------------------------------------------------------- A Consolidated Class Action Complaint has been filed in a securities class action captioned State of Wisconsin Investment Board, et al. v. Harold Ruttenberg, et al., Civil Action Nos. CV 99-BU-3097-S and CV 99-BU-3129-S in the United States District Court for the Northern District of Alabama. This class action is brought against defendants Harold Ruttenberg, Eric L. Tyra, Peter Berman, Cooper Evans, Patrick Lloyd, Don-Allen Ruttenberg, Michael Lazarus, Helen Rockey, Scott C. Wynne, Randall L. Haines, Adam Gilburne, Deloitte & Touche LLP, Steven H. Barry, and Karen Baker, on behalf of all persons and entities (other than Defendants and affiliated persons of Defendants) who purchased common stock of Just For Feet, Inc. between May 5, 1997 and November 1, 1999 (the "Class Period") and who have suffered a loss. The Consolidated Complaint alleges that, during the Class Period, defendants Harold Ruttenberg, Eric Tyra, Scott Wynne and Deloitte & Touche, LLP, with the knowledge, assistance and participation of the other Defendants, orchestrated a scheme to defraud public shareholders and purchasers of Just For Feet securities. In sum, the alleged scheme entailed publishing fraudulent and false financial statements for Just For Feet for a minimum of three fiscal years, that materially overstated sales, profits and income; understated costs; overstated accounts receivable, inventories, equipment, fixed assets and stockholders' equity; and understated significant liabilities. The alleged scheme also included the concealment of the material omitted facts. The Consolidated Complaint alleges that the fraud concerns at least nine specific areas of accounting gimmicks, including: (1) creating a fraudulent kickback scheme from Just For Feet's advertising agency in order to increase revenues; (2) creating false billings and receivables for booth assets donated by shoe manufacturers; (3) creating other false vendor billings and receivables; (4) failing to write off bad debt; (5) failing to book required loss reserves; (6) understating its cost of sales through the improper use of acquisition accounting; (7) improperly capitalizing inventory costs and expenses that should have been reported as current operating expenses; (8) overstating ending inventory by not accounting or reserving for obsolete or missing inventory and by arbitrarily writing up the costs of inventory that was transferred between stores or divisions; (9) overstating earnings and understating liabilities by improperly accounting for leaseholds. The Consolidated Complaint further alleges that Just for Feet knowingly maintained woefully inadequate accounting and inventory control systems. The Consolidated Complaint asserts claims under Section 10(b) of the Exchange Act, 15 U.S.C. Section 78j(b) and Rule 10b-5, 17 C.F.R. 240.10b-5, promulgated thereunder by the Securities and Exchange Commission (the "SEC"); Section 18 of the Exchange Act, 15 U.S.C. Section 78r; Section 20(a) of the Exchange Act, 15 U.S.C. Section 78t(a); and common law fraud and professional negligence. The following plaintiffs have been appointed to a temporary lead plaintiff Committee in this class action: State of Wisconsin Investment Board, Kenneth D. Bush, Edward E. Eubank, Jr. and John Michael. Any member of the Class who desires appointment to the final lead plaintiff Committee or who wishes to act solely as lead plaintiff must file such a petition with the Court within sixty (60) days of the date of this Notice. Contact: Thomas L. Krebs, Esq. of Ritchie & Rediker, L.L.C., 205-251-1288, or Megan D. McIntyre, Esq. of Grant & Eisenhofer, P.A., 302-622-7000, or M. Clay Ragsdale, Esq. of the Law Offices of M. Clay Ragsdale, 205-251-4774, or Steven E. Cauley, Esq. of Cauley & Geller, LLP, 501-312-8500 MEDICA MANAGER: NJ Suit Seeks Injunction on Proposed Healtheon Merger --------------------------------------------------------------------- On March 14, 2000, CareInsite, Inc. a majority owned subsidiary of Medical Manager Corp, was served with a summons in a lawsuit which was filed on February 17, 2000 against CareInsite, Medical Manager, and certain of their officers and directors, among other parties, in the New Jersey Superior Court, Chancery Division, in Bergen County. The plaintiff purports to be a holder of CareInsite common stock. The lawsuit, captioned Ina Levy, et al. vs. Martin J. Wygod, et al. purports to bring an action on behalf of the plaintiff and others similarly situated to enjoin the defendants from consummating the proposed merger of the Company and CareInsite with Healtheon/WebMD Corp. The plaintiff alleges that the defendants have breached their fiduciary duties in that the proposed Merger favors the interests of the Company and its shareholders over the interests of CareInsite's minority shareholders. The plaintiff also alleges that the proposed Merger provides the defendants and other shareholders of the Company with a premium which exceeds the premium provided to CareInsite's minority shareholders. The lawsuit seeks, among other things, an injunction prohibiting the proposed Merger unless certain mechanisms are implemented by CareInsite, as well as plaintiff's costs and disbursements. The Company and CareInsite believe that this lawsuit is without merit and intend to vigorously defend against it. Indemnification Agreement The Company and CareInsite entered into an indemnification agreement, under the terms of which CareInsite will indemnify and hold harmless the Company, on an after tax basis, with respect to any and all claims, losses, damages, liabilities, costs and expenses that arise from or are based on the operations of the business of CareInsite before or after the Offering. Similarly, the Company will indemnify and hold harmless CareInsite, on an after tax basis, with respect to any and all claims, losses damages, liabilities, costs and expenses that arise from or are based on the operations of the Company other than the business of CareInsite before or after the Offering. MEDICAL MANAGER: Dismissal of Securities Suit under Appeal in FL ---------------------------------------------------------------- The Company has received notice of a lawsuit which was filed against the Company and certain of its officers and directors, among other parties, on October 23, 1998 in the United States District Court for the Middle District of Florida. The lawsuit, styled George Ehlert, et al. vs. Michael A. Singer, et al., purports to bring an action on behalf of the plaintiffs and others similarly situated to recover damages for alleged violations of the federal securities laws and Florida laws arising out of the Company's issuance of allegedly materially false and misleading statements concerning its business operations, including the development and sale of its principal product, during the class period. An amended complaint was served on March 2, 1999. The amended complaint was dismissed on a motion to dismiss but this dismissal is currently being appealed. The lawsuit seeks, among other things, compensatory damages in favor of the plaintiffs and the other purported class members and reasonable costs and expenses. The Company believes that this lawsuit is without merit and intends to vigorously defend against it. MEDICAL MANAGER: Subsidiary Porex Faces Silicone Mammary Implants Suit ---------------------------------------------------------------------- Porex Corp., a wholly owned subsidiary of Medical Manager Corp. has been named as one of many co-defendants in a number of actions brought by recipients of silicone mammary implants. One of the pending claims is styled as a purported class action. Certain of the actions against Porex have been dismissed or settled by the manufacturer or insurance carriers of Porex without material cost to Porex. The Company believes its insurance coverage provides adequate coverage against liabilities that could arise from actions or claims arising out of Porex's distribution of implants. NORTHBRIDGE EARTHQUAKE: SF Chronicle Reports on Quackenbush's Deals ------------------------------------------------------------------- Still more questions popping up about Insurance Commissioner Chuck Quackenbush's self-serving use of nonprofit "consumer education" foundations that were set up with penalty settlement funds collected from the state's title and insurance companies. In what appears to be a little shell game, Quackenbush's office took a $1.25 million penalty settlement from First American Title Co. that was supposed to go into a title insurance and escrow "education" account and instead deposited it into a separate earthquake education fund. That's the fund that has landed Quackenbush in such deep trouble in Sacramento. It's the one that supposedly was used not to help victims of the Northridge earthquake stiffed by insurance companies, but to help out Chuck Quackenbush. Apparently, the earthquake fund -- which Attorney General Bill Lockyer got a judge to shut down -- was running low on money and needed the dough from the title insurance fund to help pay for $3 million in polls and TV public service ads designed to spruce up Quackenbush's image. All news, it seems, to First American. Company VP James Dufficy, who negotiated the settlement with the Insurance Department, has provided the attorney general with a sworn declaration saying he was promised that the money would be used for consumer education about escrow and title insurance. The money was part of a penalty First American paid in a lawsuit settlement with the Insurance Department -- a penalty for consumer rip-offs that critics say was not nearly stiff enough to begin with. And from the looks of things, it's just going to get hotter for Quackenbush. The Assembly committee investigating the commissioner's settlements is expected to present witnesses whose testimony may impeach the earlier testimony of both Quackenbush and his top staffers. Assemblyman Fred Keeley, D-Boulder Creek, told us that the hearing will be "pivotal." He declined to go into specifics of the forthcoming testimony, saying only that it will be on "issues surrounding the settlements and the creation of the foundations." "It has to do with who made the key recommendations," Keeley said. (The San Francisco Chronicle, June 23, 2000) RELIANCE GROUP: Milberg Weiss Files Securities Lawsuit in New York ------------------------------------------------------------------ The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on June 22, 2000, on behalf of purchasers of the securities of Reliance Group Holdings Inc. (NYSE:REL) between Feb. 8, 1999, and May 10, 2000, inclusive. The action, numbered 00CIV4653, is pending in the United States District Court for the Southern District of New York, located at 500 Pearl St., New York, N.Y., 10007 against defendants Reliance Group, Saul P. Steinberg (Chief Executive Officer and Director), Robert M. Steinberg (President and Chief Operating Officer), Howard E. Steinberg (Chief of Corporate Operations) and Lowell C. Freiberg (Chief Financial Officer and Director). The Honorable Allen G. Schwartz is the Judge presiding over the case. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between Feb. 8, 1999, and May 10, 2000. For example, as alleged in the complaint, on March 31, 1999, defendants, in their financial statement filed with the SEC for its fiscal 1998 operations, stated that the Company's reinsurance contracts were valid, and that it expects to recover the full amount of such coverage. This statement was false and misleading, and defendants knew, or recklessly disregarded its falsity, because the Company was notified, prior to making the statement, that several reinsurance companies terminated their obligations to the Company. Because the Company's obligations to its insureds remained intact, the Company's expected losses exceeded $150 million. Furthermore, this$150 million loss should have been reflected as a charge to income, under Generally Accepted Accounting principles, and was not, thereby masking the Company's true, and impaired, financial condition and prospects. On May 10, 2000, the Company reported that its first fiscal 2000 quarter would see an operating loss of $.31 per diluted share, which represented a greater loss than the comparable 1999 quarter. That day the price of Reliance Group stock closed at $2.625- a decline of over 400% from the class period high of $11 per share. Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G. Schulman or Samuel H. Rudman, 800/320-5081 reliancegroupcase@milbergNY.com http://www.milberg.com. SMITH-GARDNER: Cauley & Geller Files Securities Lawsuit in Florida ------------------------------------------------------------------ The Law Firm of Cauley & Geller, LLP announced that it has filed a class action in the United States District Court for the Southern District of Florida, West Palm Beach Division, case number 00-8547, on behalf of all individuals and institutional investors that purchased the common stock of Smith-Gardner & Associates, Inc. ("SGAI" or the "Company") (Nasdaq:SGAI) between October 27, 1999, and June 16, 2000, inclusive (the "Class Period"). The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information about the Company during the Class Period, causing the stock to trade at artificially high prices. Specifically, the Complaint alleges that on October 27, 1999, the beginning of the Class Period, SGAI issued a press release in which it announced "record results" for the third quarter of 1999. According to the Complaint, at the time defendants were reporting "record" revenue growth and predicting continued profitability, defendants knew or recklessly disregarded that the Company's growth could not be sustained in light of the current market conditions and that many of the Company's Internet-related business customers were already showing signs of cash distress and related operating problems, such that defendants had no reasonable basis to claim that near term revenue and earnings growth would likely continue. The Complaint also alleges that, despite the known market conditions under which the Company was operating, defendants failed to adopt a conservative reserve account to provide for doubtful accounts, as is required by Generally Accepted Accounting Principles ("GAAP"), forcing the Company to a take significant charge against earnings to supplement its reserves. Finally, the Complaint charges that defendants knew but failed to disclose that Research & Development spending and Sales and Marketing spending was wholly inadequate, such that the Company would be forced to increase budgets in these two key business segments by 60% and 75% respectively. After trading at artificially high prices during the Class Period, the price of SGAI stock fell dramatically when the truth about the Company was revealed. Contact: Cauley & Geller, LLP, Boca Raton Sue Null or Jackie Addison Toll Free: 888/551-9944 Email: Cauleypa@aol.com SMITH-GARDNER: Milberg Weiss Files Securities Suit in Florida ------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on June 22, 2000, on behalf of purchasers of the securities of Smith-Gardner & Associates, Inc. (NASDAQ: SGAI) between October 27, 1999 and June 16, 2000, inclusive. The action, numbered 00-8547, is pending in the United States District Court for the Southern District of Florida, West Palm Beach Division, located at 701 Clematis Street, West Palm Beach, Florida 33401, against defendants Smith-Gardner, Gary G. Hegna (the Chief Executive Officer), Martin K. Weinbaum (Chief Financial Officer), Allan Gardner (Co-Founder and Chief Technology Officer), and Wilburn Smith (Co-Founder and Executive Vice President). The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading financial statements. The class period commences on October 27, 1999, when defendants issued a press release announcing "record results." The Company continued to issue "record" financial results causing Smith-Gardner stock to reach a high of over $21 per share in February 2000. The statements made by the Company, however, failed to disclose material adverse facts about its financial condition, such as: (a) many of its Internet related business customers faced severe cash flow problems making near term revenue and earnings growth unlikely; (b) defendants had not adopted a conservative reserve account to provide for doubtful accounts and would soon be forced to take a significant charge against earnings to supplement those reserves; and (c) defendants knew but failed to disclose that Research and Development spending was inadequate and would have to be increased significantly. On June 16, 2000, the Company shocked investors by announcing that it expected to lose between $0.13 and $0.16 per share in the second quarter of fiscal year 2000. On the same day, the stock price plummeted over 50%, to close at $4.91 per share. Smith-Gardner insiders, however, did not share the investing public's losses. Company insiders sold over $35 million worth of Smith-Gardner stock at prices as high as $21.69 per share - - a far cry from the Company's trading price on June 16, 2000. Contact: Steven G. Schulman or Samuel H. Rudman, Phone number: 800/320-5081 or Kenneth J. Vianale or Maya S. Saxena Phone number: 561/361-5000 Email: SmithGardnercase@milbergNY.com Website: http://www.milberg.com STEVEN MADDEN: Abbey, Gardy Files Securities Lawsuit in New York ---------------------------------------------------------------- A Class Action lawsuit has been commenced in the United States District Court for the Eastern District of New York on behalf of all purchasers of Steven Madden, Ltd. common stock between June 21, 1997 and June 20, 2000 (the "Class Period"). The Complaint charges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by failing to disclose material adverse information about the Company and defendant Steven Madden. Specifically, the Complaint charges that the defendants failed to disclose: a) an illegal scheme between defendant Madden and third party Stratton Oakmont ("Stratton") to act as "flippers" to gain control of interest that accrued from the Company's stock through a manipulation of the Company's Initial Public Offering ("IPO"); b) defendant Madden's unlawful profiting at the Company's expense through his illegal scheme to act as a flipper; and c) the true relationship between the Company and Jordan Belfort ("Belfort"), president of Stratton, regarding Belfort's true beneficial ownership interest in the Company. On June 20, 2000, when the truth was revealed, the public was shocked to learn that defendant Madden had been charged with securities fraud and money laundering by the Securities Exchange Commission, causing the Company's stock price to plummet by 15% before trading was halted on the Nasdaq. Contact: Mark C. Gardy, mgardy@a-g-s.com, or Patricia Toher, ptoher@a-g-s.com, both of Abbey, Gardy & Squitieri, LLP, 800-889-3701, or 212-889-3700, fax: 212-684-5191 STEVEN MADDEN: Stull, Stull Files Securities Lawsuit in New York ---------------------------------------------------------------- A class action lawsuit was filed on June 22, 2000, in the United States District Court for the Eastern District of New York on behalf all persons who purchased the common stock of Steven Madden, Ltd., (NASDAQ:SHOO) between November 3, 1999, and June 20, 2000 (the "Class Period"). The Complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by failing to disclose material adverse facts about the Company and defendant Madden. Specifically, defendants failed to disclose, among other things, that defendant Madden had participated in a scheme to manipulate the market for various initial public offerings of common stock of certain companies and that he had done so in conjunction with Stratton Oakmont - a securities brokerage that was censured and fined by the NASD and SEC for securities fraud and is now defunct; (b) that the Company's projections of future success were lacking in a reasonable basis at all times because defendant Madden's ability to continue in his roles at the Company were subject to increased risk and uncertainty given his involvement in the aforementioned scheme; and (c) that, given defendant Madden's involvement in the aforementioned scheme, his ability to continue to operate and direct the operations of the Company were subject to increased and heightened risk in that he would be able to continue in his roles at the Company and accordingly, the Company's operations would be adversely affected. On June 20, 2000, when news of defendant Madden's arrest for his alleged involvement with a massive securities fraud was Communicated to the securities markets, the price of Steven Madden common stock fell from $13 1/8 to $11 3/16 before trading was halted on the NASDAQ. Contact: Stull, Stull and Brody, New York Tzivia Brody, Esq., 1-800/337-4983 Fax: 212/490-2022 SSBNY@aol.com TOBACCO LITIGATION: Anti-Smoking Program Responds to PM CEO's Testimony ----------------------------------------------------------------------- The following statement is being issued by the SmokeLess States National Tobacco Prevention and Control Program: The head of the world's largest cigarette company recently told a Miami court that if he could do one thing it would be to stop children from smoking. Philip Morris President and Chief Executive Officer Michael Szymanczyk testified as a defense witness in the Engle trial, a precedent-setting class-action lawsuit filed in 1994 on behalf of up to 500,000 sick Florida smokers. The case against the country's five biggest tobacco companies is in the punitive damages phase. The jury already has awarded three plaintiffs nearly $13 million in compensatory damages after determining that the tobacco companies knew-but conspired to hide from the American public-the health risks of smoking, including that cigarettes cause lung cancer and more than 20 other diseases. There is little doubt that Szymanczyk's court comments were carefully scripted in the hope of minimizing the punitive damage award. Outside the courtroom, the Philip Morris public relations machine already is working hard to convince policymakers and the public that despite the deadly products the company sells, Philip Morris is a good corporate citizen. The company is spending $100 million on an "image" campaign and another $100 million on a related effort that purports to combat teen smoking. Szymanczyk told the court that "if I could make one thing go away altogether, it would be (youth smoking). It's bad for our business." Bad for Philip Morris business? The truth is, addicting youth is good for business. More than that, it is essential if Philip Morris and the other tobacco companies hope to stay in business long-term. Consider these statistics: * Nearly every adult smoker began smoking before 18, the legal age to purchase cigarettes. * The younger the person starts smoking, the more likely he/she will become strongly addicted to nicotine. * Three-thousand children become regular smokers each day. * More than 430,000 Americans die each year from tobacco use. That's more people than die each year from alcohol, AIDS, car accidents, illegal drugs, murders, and suicides combined. Philip Morris' Marlboro brand is the cigarette of choice among children. In the first nine months of 1999, Philip Morris spent more than $21 million advertising in magazines with more than 15 percent youth readership. That is the most spent on any single brand and represents an increase of more than $5 million over 1998. Together, the tobacco companies spend an estimated $5.6 billion a year in the United States marketing their products. Much of this advertising is in magazines popular with kids. More proof that Philip Morris and the other tobacco companies are after America's children is found in their internal documents. These formerly secret documents are a 30-million page primer on how the tobacco industry does business. For five decades, the tobacco companies have denied that they market to children. They deny it even today. But their documents tell us otherwise. Consider these statements from Philip Morris' documents: Marlboro's phenomenal grown rate in the past has been attributable in large part to our high market penetration among young smokers ... 15 to 19 years old ... " [PM document 1000024921/4927 May 21, 1975] "Sales -- Outstanding, Outstanding, Outstanding! ... This account is located two blocks from Bellingham High School. Our pre-sell has sold through. The account had reordered and received more product." [PM document 87051949 March 8, 1988]. "It is important to know as much as possible about teenage smoking patterns and attitudes. Today's teenager is tomorrow's potential regular customer, and the overwhelming majority of smokers first begin to smoke while in their teens ... " [PM document 1000390803/55, March 31, 1981] "The success of Marlboro Red during its most rapid growth period was because it became the brand of choice among teenagers who then stuck with it as they grew older." [PM document 1000390803/55 March 31, 1981] Documents of other tobacco companies are as telling. This is what RJ Reynolds Tobacco Company says: "Evidence is now available to indicate that the 14-18-year-old group is an increasing segment of the smoking population. RJR-T must soon establish a successful new brand in this market if our position in the industry is to be maintained in the long term." [Planned Assumption and Forecast for the Period 1977-1986" for RJR-T March 15, 1976] "This young adult market, the 14-24 group, ... represent(s) tomorrow's cigarette business. As this 14-24 age group matures, they will account for a key share of the total cigarette volume - for at least the next 25 years." [Presentation from C.A. Tucker, VP of Marketing, to the RJR Board, Sept. 30, 1974] The gulf between what the tobacco companies publicly say -- and what they privately say and do -- is wide and widening. This is why their actions need to be scrutinized closely. Philip Morris and the other tobacco companies are infamous when it comes to twisting their promises about not advertising to kids. The Master Settlement Agreement (MSA) between the State Attorneys General and the tobacco industry, which 46 states signed in 1998, forbade cigarette companies from "directly or indirectly targeting youth in their promotion activities, or engaging in activities with the primary purpose of initiating, maintaining or increasing youth smoking". A study conducted earlier this year by researchers at the Massachusetts Department of Public Health that looked at cigarette marketing to teens through magazine advertising found that advertising actually increased since the MSA. The study showed that cigarette companies spent $129 million on advertising in those magazines in the first nine months of 1999, an increase of $30 million from the corresponding period in 1998. The MSA also eliminated certain types of outdoor tobacco advertisements, including billboards. The tobacco companies often refer to taking down the billboards as proof that they are acting responsibly. However, the Massachusetts study found that rather than reducing their advertising budgets as a result of the billboard ban, the tobacco companies simply redirected their advertising dollars primarily to magazines. Philip Morris now says that by September 2000 it will suspend advertising in several dozen publications that have 15 percent or higher youth readership. If the company does this, and I say if, it will be interesting to see where those dollars go next. No doubt they will find still another way to target our children. Thomas P. Houston, MD Director SmokeLess States National Tobacco Prevention and Control Program American Medical Association Source: Smokeless States National Tobacco Prevention and Control Program TOBACCO LITIGATION: Ligget CEO Tells Jury He Wants to Stay and Reform --------------------------------------------------------------------- Wearing the tobacco industry title of "turncoat" like a badge of honor, Bennett S. LeBow, the head of Liggett Group cigarette company, told a Miami jury he plans to stay in business and continue to push for reform. "I honestly believe it's very important that we stay in business, that we be the maverick of the industry, that we beat the industry up and make them do the right thing," said LeBow, of Miami. A Princeton-educated financial whiz with a reputation for successfully taking over faltering businesses, LeBow took the witness stand in Miami-Dade Circuit Court to defend the company he bought as an investment in 1986. The jury, which has already found that tobacco companies conspired to hide the health risks of cigarettes, must now decide how much Liggett and the country's four larger tobacco companies should pay as punishment for producing a product that sickened as many as 300,000 to 700,000 people. LeBow might talk like an ally, and he even testified as a witness for the plaintiffs earlier in the trial, but Stanley Rosenblatt, the lawyer representing the sick smokers, told LeBow he's no hero. LeBow admitted his company, which has only 0.2 percent of the market, made 5 billion cigarettes in the United States last year. And his company plans to expand its operations in Russia, he said. "I've analyzed this in my mind," LeBow said. "It's more important, I believe, to be involved in the industry to help plaintiffs like yourself get this industry to do the right thing." LeBow's fiercest inquisitors were lawyers for the tobacco companies standing trial alongside Liggett. Since their companies are larger, they could be required to pay a larger percentage of the punitive damages. And they fear those damages could top $ 100 billion. So they zeroed in on LeBow's altruistic claims, suggesting he was really motivated by money and the desire to reclaim a bigger share of the market. While pugnacious with the tobacco lawyers, several times urging them to "get their facts straight," LeBow offered sympathy to the plaintiffs. "There's nothing I can do to bring back your loved ones," he told the class members sitting in the courtroom. "There's nothing I can do to bring back your health. But I promise you I will fight this war, and help win this war on tobacco." In 1996, with lawsuits from several state attorneys general and some class-action cases looming over the tobacco industry, LeBow became the first tobacco chief to break ranks. "I realized if I settled I was opening Pandora's Box, but I didn't care because it seemed like the right thing to do. So I did it, period," LeBow said. In March 1996, he settled lawsuits with a number of state attorneys general, including Florida's. "It was the first time tobacco talked to an adversary, let alone settled," LeBow said. He was the first tobacco company head to admit cigarettes cause cancer and other serious illnesses and acknowledge that they are addictive. As part of the settlement, he agreed his company would stop all advertising, make public volumes of documents about tobacco's effect on health and testify in cases against the industry. He also voluntarily put a warning label on all Liggett cigarettes that said smoking is addictive. His company, which had a negative net worth at the time, also agreed to pay "a few million dollars" to the states, he said. Liggett was not required to pay more because the attorneys general were aware of the company's dire financial state at the time, he said. "What was important was that the attorneys general got this war on tobacco going," he said. "My main goal is trying to correct things moving forward." In 1997, he signed another settlement with more states. And eventually, the four other tobacco companies followed suit, signing settlements with all 50 state attorneys general that required the industry to pay out a percentage of their earnings equal to about $ 254 billion during the next 25 years. The tobacco lawyers contend this is more than enough punishment. Gordon Smith, a lawyer representing Brown & Williamson, questioned whether LeBow used the settlement's impact on the other companies to line his own pockets. The other four companies increased their prices so that they could make their annual settlement payments to the state. "The money is coming from the poor addicted smoker," LeBow said. But he later admitted that Liggett raised its prices, too, even though the settlement agreement does not require Liggett to make payments until the company surpasses its 1997 revenues. On the verge of bankruptcy a few years ago and recently unable to find a bank that would give the company an $ 8 million mortgage, LeBow said Liggett is worth about $ 34 million now. Producing an article from Dow Jones News Service, Ben Reid, a lawyer for R.J. Reynolds Tobacco, pointed out that LeBow admitted one of his motivators to settle was to save his business. The CEOs of the three largest cigarette companies took the witness stand earlier and testified about their work to stop youth smoking and produce a less harmful cigarette. Reid asked LeBow if his company ever contributed a dime to research or health causes. "We don't have the billions your client does," LeBow said. Reid countered: "I'm not talking about billions, I asked you if you have given one dime." During LeBow's testimony, Philip Morris lawyer Dan Webb asked for a mistrial, contempt sanctions against Rosenblatt and a special instruction to the jury over Rosenblatt's suggestion that punitive damages could be paid out over time. It was the fifth time Rosenblatt suggested a staggered payout, which is not allowed under Florida law, Webb said. Judge Robert Kaye delayed decisions on the mistrial and contempt requests but told jurors to ignore the concept of staggered payments. Terri Somers can be reached at tsomers@sun-sentinel.com or 954-356-4849. (Sun-Sentinel (Fort Lauderdale, FL), June 23, 2000) U S WEST: NYC Woman Sues in Denver over Stock Dividend ------------------------------------------------------ A lawsuit against U S West claims the phone company has changed the date of record for shareholders in order to avoid paying out its second-quarter dividend. Lawyers filed the suit last Wednesday June 21 in Denver District Court on behalf of a New York City woman, Adele Brody. The suit seeks class-action status for the holders of more than 500 million outstanding U S West shares. At issue is $273 million in second-quarter dividend payments. The lawsuit claims U S West changed the date by which shareholders would receive a dividend payment, and that the change was made after the company learned its merger with Qwest Communications International might close by early July. Shareholders of U S West and other Baby Bells are accustomed to hefty quarterly dividends, but Qwest, also based in Denver, plans to slash dividends to 5 cents per share after the merger. U S West shareholders of record as of June 30 were scheduled to receive a dividend of 53.5 cents per share, according to an announcement the company made June 5. Two days later, U S West said the dividend would be payable to shareholders of record on July 10, not June 30. If the merger closes by July 10, Qwest may not be obligated to pay the dividend. "The purpose and effect of this change is to assure that the dividend is not payable at all, as US West will be merged out of existence by July 10, 2000, and the public shareholders will no longer be shareholders of record on that date," the complaint said. According to the lawsuit, U S West learned on June 6 that Minnesota regulators had approved the U S West-Qwest merger, making it likely the merger could close more quickly than they had thought. "With Minnesota's approval, they could actually close the (merger) after the July 4 weekend, and certainly before July 10, and could thus avoid payment of the recently declared dividend by simply moving the record date by a few days," the suit alleged. "In our view, once they changed the date, they breached the contract they had with shareholders," said Robert Dyer of Dyer & Shuman, a Denver law firm that is representing Brody along with two New York firms. U S West spokeswoman Anna Osborn said company officials had not seen the lawsuit but she said U S West released a statement on June 7 saying the June 5 announcement was incorrect. "The announced record date of June 30, 2000, was incorrect and is actually July 10, 2000," the news release said. "In my experience it's not common for companies to walk away from dividends they said they'd pay." Osborn said. "The board approved the July 10 date and that is consistent with what the company has historically done." (The Associated Press State & Local Wire, June 23, 2000) UNION PACIFIC: Argument Ensues over Test Results of Derailment Effect --------------------------------------------------------------------- Residents have nothing to fear from lingering effects from last month's derailment and resulting chemical fires from a Union Pacific train, a railroad spokesman says. But attorneys representing some residents in a class-action suit against the railroad said more detailed tests need to be performed. The derailment and subsequent explosions of hazardous chemicals forced the evacuations of almost 4,000 residents in this southern Louisiana town. On June 1, when residents were allowed to return home, some people were concerned that the soot coating their homes and cars could be a health hazard, Union Pacific spokesman Mark Davis said. The U.S. Environmental Protection Agency, the state Department of Environmental Quality and Union Pacific scientists never reported any harmful levels of chemicals in the air. Davis said Union Pacific's tests showed there was nothing to worry about. "We feel there's still no concern," Davis said. The EPA declined comment on Union Pacific's report, citing agency policy. Attorneys for the residents said Union Pacific tested for the chemicals the train carried and the results thus far will only point out if the chemicals are above the level the EPA considers safe. The results do not show what level of chemicals were detected below the EPA levels, said attorney Terrance Hoychick. Hoychick said no one has yet tested for possible harmful combinations that could have been triggered by heat, water or chemicals mixing in the air. "We have a hard time believing they're making that statement," Hoychick said of Union Pacific. (The Associated Press State & Local Wire, June 23, 2000) UNITED AIRLINES: Seeks to Overturn Ruling on Sex Bias in Weight Rules --------------------------------------------------------------------- United Airlines said last Friday June 23 it would challenge a federal court ruling that found it discriminated against women flight attendants by requiring them to be slimmer than their male counterparts. The Ninth US Circuit Court of Appeals in San Francisco ruled that the policy placed greater weight restrictions on United's female staff than on their male counterparts. The 13 female flight attendants named in the class action lawsuit all attempted to lose weight by dieting, using diuretics, and purging, according to court papers. But all of them were either disciplined or sacked for failing to comply with United's maximum weight requirements. United required female flight attendants to weigh between 14 and 25 pounds (6-11 kilos) less than their male colleagues of the same height and age during the 14 years the policy was in force from 1980 to 1994. But while the men were generally limited to maximum weights that corresponded to large body frames for men on the airline's chosen scale, the women's maximum weights were fixed according to medium body frames for their sex, the papers said. Moreover, 85 percent of United's staff were female during the relevant period, lawyers for the plaintiffs pointed out. United will ask an 11-judge panel of the circuit to review the decision by a three-judge panel on the grounds that its policy was in line with airline practices at the time and that the program was implemented with the approval of the flight attendants' union. (Agence France Presse, June 23, 2000) WATER CONTAMINATION: Jon Sasser Represent NC Residents Individually ------------------------------------------------------------------- Frustrated by what they consider a lack of progress in their crusade for clean water in their subdivision, some Neuse Crossing residents have hired a lawyer. "It seems like things may start moving along," said resident Micki McCarl, the president of the northeast Raleigh neighborhood's Committee for Clean Water. They seek damages for ruined appliances, depreciation of housing values and "unusual health symptoms," including kidney stones, bleeding that ceased when some residents switched to bottled water, dry skin and brittle hair. Individuals joining the suit will be represented by attorney Jon Sasser, of Raleigh's Moore & Van Allen firm. Each resident is responsible for signing on individually, so this is not a class-action lawsuit. Sasser wouldn't say how many people he represents. "I consider that number at this point to be so in flux," he said. "And it is a client-attorney privilege." He also would not divulge what he is charging or how much money the residents want. Sasser said he will hire a toxicologist and other specialists to investigate. Brian Eason of Singleleaf Lane said he's begun to feel the initial symptoms of kidney stones and that he blames the water. He intends to secure Sasser's services. McCarl hopes the entire neighborhood will eventually sign up. "If we get clean water, everyone else gets it," she pointed out. But some neighborhood residents aren't interested. One woman, who did not want to be identified, said the lawsuit is extreme. Since one of the subdivision's four wells has been shut down, the situation has improved, she said. Tom Boehnlein accused those joining the suit of trying to make a quick buck. He's lived in the subdivision for six years and hasn't had a problem, he said. "A lawsuit isn't going to help the water. ... It's frivolous," he said. "It seems counterproductive. This could get dragged out for years and years." Sasser, meanwhile, said the lawsuit will name James Adams, president of Neuse Crossing Utilities Company, principal officers of that company and other associated businesses. Sasser is no stranger to such cases. In February, he represented an out-of-state couple who suffered serious illness after drinking tainted water. He won a $ 2.5 million settlement because a nearby nursing home was identified as the polluter. In Neuse Crossing, the contamination source is unknown. Some suspect nearby drilling, but that cannot be proved. "I'm not too concerned how [bad water] actually got into the wells. It was knowingly provided to them for quite some time without their knowledge," Sasser said. "As far as my clients are concerned, [the problem is] coming out of their spigot." But, how dangerous is the water? A recent letter by the N.C. Department of Environment and Natural Resources and the state Department of Health and Human Services assured residents that their water, while unusually hard, high in iron and manganese, and "aesthetically unacceptable," was drinkable. No specific levels were provided. "Your water is unlikely to cause illness in healthy individuals," the letter read. The water may irritate healthy skin and worsen eczema. It should not be used for baby formula or by people with hyperthyroidism or kidney disease, the letter states. "That doesn't reassure me at all," said Stephanie Massengale, who lives on Turnbull Court. "Are you kidding? If babies can't drink it, why can adults?" Residents were urged not to boil the water - that would increase already high levels of calcium carbonate, iron and manganese. Sasser said he is skeptical of the letter. He will continue probing the water's negative effects on residents. "When you're talking about someone's home and the health of their children, you need to investigate these things very carefully," he said. "These are very serious matters." The state promised to retest the water every month but has said it cannot provide additional individual home testing. James Adams has agreed to update residents with weekly reports. He keeps track of his daily activities to assure residents he is working on the case. He met with City Manager Dempsey Benton to discuss a fresh water purchase from Raleigh. Benton said that could only happen if Adams donates the Neuse Crossing water system to the city. The utility company or the residents would also have to pay for a $ 115,000 line extension. "I think [Adams] felt that that might be an option that he might want to look at and get back to us," Benton said. Adams is actively trying to find a solution, which could make the lawsuit harder to win. But some residents ntoe that they have given Neuse Crossing Utilities Company every opportunity to resolve the situation. "We want clean water," McCarl said. "We shouldn't have to even have a lawsuit to get something so basic." (The News and Observer (Raleigh, NC), June 23, 2000) ********* 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. 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