/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000823.MBX C L A S S A C T I O N R E P O R T E R Wednesday, August 23, 2000, Vol. 2, No. 164 Headlines APPONLINE.COM, INC: Holzer & Holzer Files Securities Suit in New York AT&T BROADBAND: Alters Late Fee Structure for Customers In 17 States BRIDGESTONE/FIRESTONE: FORD Will Halt Production to Free up Tires BRIDGESTONE/FIRESTONE: Will Ship Tires from Japan for Replacement CHOLESTECH CORP: CA Ct Dismisses Securities Suit with Leave to Amend DRKOOP.COM INC: SEC Investigates on Possible Securities Laws Violations DRKOOP.COM INC: Secures New Financing and Management ELSCINT LTD: Haifa Ct Rejects Investors’ Claim as Class Action FIRSTWORLD COMMUNICATIONS: Berger & Montague Files Securities Suit in CO HOLOCAUST VICTIMS: Slave Labor Representatives Ask for Admin Costs NEW YORK: Minority Students Suit over Substandard Upstate Schools Okayed PROPERTY TAXES: Lawyers Seek 1/3 of $18M Settlement; Hearing on Sept 5 PUBLISHERS CLEARING: Illinois Gets $1.4 Mil from $18.4 Mil Settlement SALLY COFFELT: Court Filing Fee To Fund Arbitration Challenged SHONEY'S, INC: Reports on Settlement for Employees' Lawsuits for OT Pay TENFOLD CORPORATION: Cauley & Geller Files Securities Suit in Utah TENFOLD CORPORATION: Milberg Weiss Files Securities Suit in Utah VISUAL NETWORKS: Cohen, Milstein Files Securities Suit in Maryland WISCONSIN ENERGY: Shareholders Sue over $104.5 Mil Ruling on Pollution WWII VICTIMS: Mitsui, Mistubishi to Face Lawsuit for Forced Labor ZIASUN TECHNOLOGIES: Investor's Lawsuit Filed 1997 in CA Still Pending ********* APPONLINE.COM, INC: Holzer & Holzer Files Securities Suit in New York --------------------------------------------------------------------- Holzer & Holzer filed a class action lawsuit in the United States District Court for the Eastern District of New York on behalf of all persons who purchased or otherwise acquired the common stock of AppOnline.com, Inc. (AMEX: AOP; OTCBB: AOPL) between June 1, 1999 and June 30, 2000, inclusive (the "Class Period"). The complaint alleges that defendants violated the federal securities laws by disseminating false and misleading information about the Company's business, operations and financial condition, which caused the price of the Company's common stock to be artificially inflated throughout the Class Period. The complaint alleges that on August 14, 2000 AppOnline common stock closed at $.08 per share, down roughly 98.5% from its Class Period high of $5.50 per share. The complaint alleges that defendants, among other things, violated various banking rules and regulations. The complaint alleges that on May 24, 2000 Newsday reported that the Fair Housing Administration (the "FHA") had fined Island Mortgage Network, Inc. ("Island"), a subsidiary of AppOnline, for making loans that did not comply with FHA standards and had been based on allegedly false documentation and incomplete or incorrect information. Then, on June 30, 2000, New York State Banking Regulators suspended Island's mortgage banking license for allegedly making loans it could not fund and for failing to provide regulators with access to its files, the complaint alleges. Contact: HOLZER & HOLZER, Atlanta Corey D, Holzer, Esq., 888/508-6832 AT&T BROADBAND: Alters Late Fee Structure for Customers In 17 States -------------------------------------------------------------------- As part of settlement of class action lawsuit, AT&T Broadband announced restructuring of its late fees on unpaid customer bills in 17 states.Company also is offering customers credits against flat $5 late fee payments made in last 4 years. Covering 5.8 million customers, settlement will reduce flat $5 late fee to $2.95 for bills unpaid for 30 days and additional $2 on bills unpaid after 45 days.AT&T Broadband spokeswoman couldn't estimate company's financial liability as result of settlement. Under credit offering, current customers who have paid $5 late fee bill will have choice of 2 pay-per-view or one month of premium channels such as HBO and Showtime.Former customers who have paid late fee are eligible for $6.95 check.Company is running notices on offerings in local newspapers and in customer bills, spokeswoman said.AT&T had begun negotiations with plaintiff last summer and settlement was reached recently, she said. AT&T Broadband will continue to charge flat $5 late fee until settlement receives final approval of court, spokeswoman said. States covered by settlement are Ala., Del., Colo., Fla., Ga., Ida., Ill., Ind., La., N.M., Ore., Pa., Tenn., Tex., Utah, Va., Wyo.-- Dinesh Kumar (Communications Daily, August 22, 2000) BRIDGESTONE/FIRESTONE: FORD Will Halt Production to Free up Tires ----------------------------------------------------------------- Ford Motor Co. will halt production at three truck plants, including its New Jersey operation in Edison, for more than a week to free up 70,000 tires for use as replacements in a recall of 6.5 million Firestone tires. Along with plants in Minnesota and Missouri, the Edison facility will close from Monday to Sept. 8 so that 15-inch tires used in the production of Ford Explorer/Mercury Mountaineer sport-utility vehicles and Ford Ranger pickups can be sent to Ford and Lincoln/ Mercury dealers. The plants 6,000 workers, including 1,645 in Edison, will still get paid. Ford makes Ranger, Ranger Electric, and Mazda B Series trucks 1 in Edison. Ford CEO Jac Nasser was scheduled to explain the announcement in a TV ad running Monday night during ABC's"Monday Night Football." "You have my personal guarantee that all of the resources of Ford Motor Company are directed to resolve this situation,"Nasser says in the ad. Bridgestone/Firestone has recalled all P235/75R15 ATX and ATX II tires, and 15-inch Wilderness AT tires made at a plant in Decatur, Ill. The National Highway Traffic Safety Administration is investigating 62 deaths and more than 100 injuries that could be linked to those tires. Martin Inglis, vice president for Ford North America, said the plant shutdown would cut about 25,000 vehicles from Ford's production, 10,000 Rangers and 15,000 Explorers/Mountaineers. Not all of those vehicles would have received tires that can be used as replacements for the tires under the recall, but Inglis said there was no way to schedule production without them. Inglis also said the move would affect Ford's earnings, but declined to say by how much. He said by mid-September, the tire industry should have ramped up production enough to provide more replacement tires. "The action will help us close the gap between supply and demand," Inglis said. The recall of Bridgestone/Firestone tires has created an apparent nationwide shortage of 15-inch tires, even as Ford has authorized more than 30 brands to replace recalled Firestone tires. Meanwhile, a safety group that pushed for recalls of the Ford Pinto and 14.5 million Firestone 500 tires in the 1970s filed a lawsuit Monday to force Bridgestone/ Firestone Inc. and Ford Motor Co. to widen the recall beyond those 15-inch truck tires. The Center for Auto Safety contends that all Firestone radial ATX, ATX II, and Wilderness AT tires are defective and should be recalled. Ford and Bridgestone/Firestone maintain that data on complaints filed by consumers suggest that only the tires under recall have shown a spike in problems with treads separating while vehicles are in motion. Most of the recalled tires were installed on Ford trucks, including the popular Explorer sport-utility vehicle. Clarence Ditlow, director of the Center for Auto Safety, said the group filed suit because it believed it could move faster 1 than the federal government to force a wider recall. "We need to take all possible actions to get this defect remedied," Ditlow said. Limiting the recall to one size and one plant made no sense, Ditlow said. If the problem is with the Decatur plant, where Ford and Bridgestone/Firestone have said many of the recalled tires were made, then other tire lines made at the plant should also be recalled, he said. If the problem is a design defect, all the sizes in that design should be recalled. A spokesman for Ford said the company would look at the group's data, but reiterated that the companies data show only the models recalled have been linked to problems. "We'd be happy to review the data, if any, that Mr. Ditlow used in determining that other tires should be recalled,"said Ford spokesman Jon Harmon. "All the data Ford, Firestone, and NHTSA has seen indicates the recalled population of tires are the ones needing to be recalled, and the other tires are performing very well. "It would be irresponsible to recall perfectly good tires, because it would delay getting safe tires to customers who need them," Harmon said. The lawsuit was filed in U.S. District Court in Washington, D.C. Several attorneys around the country have filed lawsuits seeking class-action status to represent consumers hurt by the recall. Attorneys general in several states have also said they were investigating the tires and the recall. Meanwhile, Ford told analysts in a conference call Monday that Explorer sales had slowed slightly since the recall began, and would likely be down for the month. George Pipas, Ford's director of sales analysis, said the recall might be a reason for the decline, but new incentives on SUVs from other automakers might also be a contributing factor. He also noted that Explorer was at 97 percent of its sales objective for the month, better than other Ford cars and trucks. "It's impossible to tease out the impact of one factor versus another,"he said."It's still doing very well, but the sales pace has declined somewhat since earlier this month." (The Record (Bergen County, NJ), August 22, 2000) BRIDGESTONE/FIRESTONE: Will Ship Tires from Japan for Replacement ----------------------------------------------------------------- Bridgestone/Firestone Inc. will ship tires from its Japanese manufacturing plants to expedite the replacement of 6.5 million tires recalled in the United States, company officials announced. The first shipment was scheduled to leave today August 23 on a Thai Airways flight, and at least 10 more are planned through Sunday. A spokeswoman said the company had not determined how many tires would be flown from Japan, but she said the shipments would continue as long as needed. The recall created an apparent shortage of 15-inch replacement tires. Bridgestone/Firestone Chief Executive Officer Masatoshi Ono said in a statement that the company wanted to complete the recall sooner than its spring target. ''With this assistance from our parent company, our own stepped-up production in the U.S., and the support of other tire manufacturers as well as Ford, we are confident that we can beat that schedule,'' he said. The announcement comes one day after Ford Motor Co. said it will temporarily halt production at three plants to make more than 70,000 replacement tires available to consumers. Earlier this month, Bridgestone/Firestone recalled all P235/75R15 ATX and ATX II tires as well as Wilderness AT tires in the same size made at a Decatur, Ill., plant. Most of the tires were standard equipment on Ford trucks and sports utility vehicles, including the Explorer. The National Highway Traffic Safety Administration said it was investigating 62 deaths and more than 100 injuries possibly linked to the tires. NHTSA said consumers have reported tread separation and blow outs on tires, sometimes at high speeds. The recall is expected to cost Bridgestone/Firestone about $350 million. Several attorneys have filed lawsuits seeking class-action status to represent consumers affected by the recall. Attorneys general in several states also are investigating the safety of the tires and the expediency of the recall. (AP Online, August 22, 2000) CHOLESTECH CORP: CA Ct Dismisses Securities Suit with Leave to Amend -------------------------------------------------------------------- On February 5, 1999, a complaint entitled Ree v. Pinckert, et al., No. C99-0562 (MMC) was filed in the United States District Court for the Northern District of California. The Action is a putative class action and the complaint alleges that Cholestech and an officer, Mr. Pinckert, violated the federal securities laws by misleading investors during the time period of July 30, 1997 - June 26, 1998, concerning the Company's business and its future prospects. On June 24, 1999, plaintiffs filed an amended complaint, which expanded the putative class period to June 28, 1996, through June 26, 1998. The amended complaint's substantive allegations and purported causes of action remain based on allegations that the Company misled shareholders concerning the Company's business and its future prospects. The complaint does not specify alleged damages. On September 20, 1999, defendants filed a motion to dismiss plaintiff's amended complaint. On March 28, 2000, Judge Maxine M. Chesney, United States District Judge for the Northern District of California granted defendant's motion to dismiss pursuant to rule 12(B)(6) with leave for plaintiffs to amend. The Company intends to defend the case vigorously. The Company says it does not believe that the defendants in the class action engaged in any wrongdoing, and that the outcome of this matter will not result in a material adverse effect, but reminds investors that there can be no assurance that the lawsuit will be resolved in the Company's favor. The company says in its report filed with the SEC that the action is in its preliminary stages and a trial date has not been set. DRKOOP.COM INC: SEC Investigates on Possible Securities Laws Violations ----------------------------------------------------------------------- Drkoop.com Inc. said the Securities and Exchange Commission is investigating whether the company, co-founded by former U.S. Surgeon General C. Everett Koop, violated federal securities laws. The SEC asked the health information Web site to voluntarily provide information regarding allegations made in several lawsuits against the company, said drkoop.com in the company's quarterly report. The company's shares have fallen about 95 percent from their high in July 1999. In the quarterly report, the Austin, Texas-based company announced that it had received a letter from the SEC seeking information. "This letter states that the SEC's request for information should not be construed as an indication by the SEC that any violation of the federal securities laws has occurred," the company said. The SEC, as a matter of course, does not comment on investigations. Company officials were unavailable for comment. At least four law firms have issued press releases saying they are filing class-action lawsuits against drkoop.com. The company said it "believes that the claims asserted in the lawsuits ... are without merit and intends to defend these litigations vigorously." (The Detroit News, August 22, 2000) DRKOOP.COM INC: Secures New Financing and Management ---------------------------------------------------- Ailing health Web site drkoop.com Inc. announced it has secured $20 million in equity financing and hired new management. The new management team and its investor group, including Prime Ventures, JF Shea Ventures, Cramer-Rosenthal-McGlynn Inc. and RMC Capital, have invested $3.5 million so far and could invest as much as $27 million, drkoop.com said. Three officials from Prime Ventures, a technology venture capital fund, were named to top jobs at drkoop.com. Richard M. Rosenblatt will replace Donald Hackett as chief executive, Edward A. Cespedes was named president, and Stephen Plutsky was named chief financial officer. Koop will remain chairman and Hackett will remain a director after Tuesday's shakeup, the company said. Drkoop.com reported Monday that it lost $40.6 million, or $1.18 a share, in the second quarter, compared with a loss of $11.4 million, or $1.28 a share, a year earlier. Revenue more than doubled to $2.5 million. Those figures matched Wall Street expectations. The company also disclosed that the U.S. Securities and Exchange Commission has asked for information relating to several lawsuits that investors have filed against the company, which was founded in 1997 by former U.S. Surgeon General C. Everett Koop and others. Drkoop.com's stock, which traded at $45 per share in July 1999, has lost about 95 percent of its value since then, and several shareholders are seeking class-action status in lawsuits claiming the company made false promises when it began selling stock to the public last year. In its SEC filing, drkoop.com said it could be forced to shut down soon without new financing. The company said it has "has largely expended" the $2 million in cash it had as of June 30. The company said it could secure as much as $2.6 million in bridge financing enough to last two weeks if they company maintained its first-half spending rate. Analysts questioned whether the new financing would amount to anything more than a brief reprieve for the company, which has found that advertising revenue alone can't support the health-information Web site. "This is by no means getting them out of the woods, and this does not take away the fundamental problem which is drkoop's flawed business model," said Claudine Singer, an analyst with Internet research firm Jupiter Communications. "But it's great that they are replacing the management because part of the frustration that the investors have is that they feel that the company has been woefully mismanaged," Singer said. "It also gives them time to get their ducks in a row and make them slightly more attractive for an acquisition." (The Associated Press State & Local Wire, August 22, 2000) ELSCINT LTD: Haifa Ct Rejects Investors’ Claim as Class Action -------------------------------------------------------------- Elscint Ltd. (NYSE: ELT), a subsidiary of Elbit Medical Imaging Ltd. (Nasdaq: EMITF) announced that on August 17, 2000, the District Court in Haifa handed down a decision rejecting an application filed by certain investors to have the claim recogised as a Representative Claim (class action). In a press release dated November 3, 1999, Elscint announced that a Statement of Claim, together with an application to have the claim recogized as a class action, had been submitted to the court against Elscint, EMI (the controlling shareholder of Elscint), Europe-Israel (M.M.S.) Ltd. (the controlling shareholder of EMI), Control Centers Ltd. (the controlling shareholder of Europe-Israel (M.M.S.) Ltd.), Marina Herzlia Limited Partnership 1988 (which is controlled by Control Centers Ltd.), Elron Electronics Industry Ltd. (the previous controlling shareholder of EMI), and against 25 past and present office holders of the companies. The claim was submitted by a number of investors and others who hold shares in Elscint Ltd., in which it is alleged that the minority shareholders of Elscint have been discrimated against as a result of activities carried out by the controlling shareholders of Elscint Ltd. and its Board of Directors. The application for class action status was submitted on behalf of shareholders in Elscint September 6, 1999, and that continued to hold such shares on the date of the submission of the application (excluding the respondents). The respondents filed a motion requesting that the application be denied. In its August 17 ruling the court decided to accept the motion filed by the respondents, calling for the application to be struck out in limine, and directed that the application be struck before the hearing for the application on its merits. Rachel Lavine, Elscint's President, stated: "We are very pleased by this court decision to have this application struck out. Elscint remains confident that it acted lawfully at all times, and that the Statement of Claim is based upon allegations which are baseless. We shall continue to vigorously oppose the Statement of Claim before the courts." FIRSTWORLD COMMUNICATIONS: Berger & Montague Files Securities Suit in CO ------------------------------------------------------------------------ The law firm of Berger & Montague, P.C. (http://home.bm.net),filed a class action on August 11, 2000 in the United States District Court for the District of Colorado on behalf of all persons or entities who purchased FirstWorld Communications, Inc. (Nasdaq: FWIS - news) common stock pursuant to or traceable to the Company's Initial Public Offering ("IPO") on March 8, 2000. The complaint charges FirstWorld and certain of its officers and directors, together with its underwriters, with violations of the federal securities laws for selling 10 million shares pursuant to a Prospectus/Registration Statement which misrepresented FirstWorld's operations and its ability to continue to execute its business plan. In fact, the defendants failed to disclose the fact that at the time of the IPO, the Company was planning to dramatically change its business model and that the service the Company was then able to provide was suffering innumerable deficiencies resulting from insufficient bandwidth capacity, commercially unsuitable connectivity, poorly trained sales staff, and deficient security. On July 5, 2000, defendants revealed that they would dramatically change FirstWorld's business plan and that due to deficiencies in FirstWorld's infrastructure, FirstWorld would have to devote significant resources to retrain its staff, increase bandwidth capacity, and install a state-of-the-art security system to compensate for its present security deficiencies, all of which would result in flat to declining revenues in future quarters. FirstWorld's stock reacted swiftly by nosediving more than $5 to$4-3/32 on a huge volume of 6.4 million shares the following trading day, July 6, 2000. Contact: Berger & Montague, P.C. Sherrie R. Savett, Esquire or Michael T. Fantini, Esquire or Kimberly A. Walker, Investor Relations Manager Phone: 888/891-2289 or 215/875-3000 Fax: 215/875-5715 Website: http://home.bm.net HOLOCAUST VICTIMS: Slave Labor Representatives Ask for Admin Costs ------------------------------------------------------------------ A Polish foundation representing Nazi-era slave laborers is pressing for additional money to cover the administrative cost of distributing compensation to the victims, a spokesman said. ''We will continue trying to get the money from the Germans,'' said Mateusz Chachaj of the Polish-German Reconciliation Foundation. ''It's not a closed matter for us.'' A spokesman for the 10 billion mark (dlrs 4.6 billion) German compensation fund expressed surprise at the complaints from Warsaw, noting that the Poles were at the lengthy negotiations that produced the agreement enacted into law by the German parliament last month. ''Obviously the (parliament) was thinking that the money that's going to the reconciliation foundations is enough to pay the people as well as cover the administrative costs,'' Wolfgang Gibowski said from Berlin. Other countries receiving money from the fund also were reluctant to join Poland in seeking additional funds. Czech Foreign Ministry spokesman Jan Sechter called the issue unclear. A spokeswoman for the Czech-German Fund for the Future refused to comment. ''I don't think that agreements should be disregarded at this point'' after being signed, said Gabor Sebes, director of the Jewish Heritage of Hungary Public Endowment in Budapest. ''In the meantime those waiting for the compensation keep dying at a terrible speed.'' During talks, groups representing Nazi slave laborers demanded that 200 million DM (dlrs 92 million) be set aside to cover salaries for lawyers and administrative costs of payment distribution for an estimated 2 million victims, mostly Central and Eastern Europeans. The final law enacted does not earmark a specific amount to cover administrative costs, but says that such costs are to come out of the general fund. Polish officials fear they will have to cover the cost from the money marked for compensation, reducing each payment to some 450,000 victims registered with the foundation by up to 3 percent, Chachaj said. ''Of this money even one zloty should not go for other costs than compensation payments,'' he said. ''It would not be fair to the victims.'' Chachaj said the issue would be raised at the fund's first board meeting Aug. 31 in Berlin. After more than a year of tough negotiations, German companies agreed to set up a compensation fund in exchange for protection from U.S. class-action lawsuits. The German government and firms are splitting the fund 50-50. Slave laborers those sent to concentration camps under ''work to death'' conditions are expected to receive as much as 15,000 marks (dlrs 7,000) each. Forced laborers deported to Germany to work could get as much as 5,000 marks (dlrs 2,300) each. (AP Worldstream, August 22, 2000) NEW YORK: Minority Students Suit over Substandard Upstate Schools Okayed ------------------------------------------------------------------------ New York A private right of action exists for disparate impact claims brought by minority students over allegedly substandard upstate New York schools under federal civil rights law, a Southern District judge has ruled. In a case of first impression, Judge Lawrence M. McKenna declined to dismiss an action brought by 33 students who allege that New York State discriminates against upstate schools with a high percentage of minority students. He also certified the suit, Ceaser v. Pataki, as a class action.The lawsuit charges that New York state discriminates against as many as 80,000 students in more than 150 "high-minority schools," schools where at least 80 percent of students are black, Latino or otherwise non-Caucasians. The students allege that the State is violating Title VI of the Civil Rights Act of 1964 by providing far fewer resources to those schools and by failing to comply with legal mandates in a number of areas. As part of their complaint, the plaintiffs state that the "academic achievement of students in high-minority public schools in New York State but outside of New York City is significantly lower than that of students in low-minority schools in the State." It attacks the method of administering State regulations that are meant to ensure that all teachers are certified, that students receive remedial instruction and have access to appropriate buildings, grounds and libraries, and that students have the opportunity to take Regents courses and to earn Regents degrees. Seeking an injunction against these "methods of administration," the students' claim of disparate impact is grounded upon a regulation issued by the former Department of Housing, Education and Welfare, the predecessor to the Department of Education. The regulation, 34 C.F.R. Section 100.3(b)(2), forbids methods of administering the provision of services, financial aid or other benefits that have the effect of discriminating against people because of their race, color of national origin. Judge McKenna said the U.S. Court of Appeals for the 2nd Circuit had yet to decide the issue of whether a private right of action exists for disparate impact claims brought under Title VI regulations, which apply to public educational facilities and other entities receiving federal funding. Under a claim of disparate impact, a plaintiff need only show that statistically, a minority group suffers a harmful effect not shared by non-minorities. No showing of an intent to discriminate is required. But both the 11th and the 3rd Circuits have found that a private right of action does exist, Judge McKenna said, adding that he was persuaded by the reasoning of the 3rd Circuit in Powell v. Ridge. In Powell, the 3rd Circuit found that to survive a motion to dismiss, "all the plaintiff must do is plead that a facially neutral practice's adverse effects fall disproportionately on a group protected by Title VI." "A method of administration or discernible administrative policy may involve a policy of inaction as easily as affirmative conduct," Judge McKenna said. "The complaint adequately alleges that defendants have adopted a policy of non-enforcement of legal mandates evident in five specific areas: certified teachers, remedial instruction, school facilities and grounds, libraries and Regents courses and diplomas." "The complaint also adequately alleges that this policy has had a disparate impact on high-minority schools."The class certified consists of all black, Latino or otherwise non-Caucasian children attending New York State public schools located outside New York City that the New York State Education Department classifies as "high minority." The state had argued that the application for class certification should fail because of a lack of commonality, saying there were no common questions of law because plaintiffs "appear not to assert one theory of liability, but at least five, and there are genuine questions as to which of these five theories of liability would properly be applicable to which of the proposed 80,000 class members. "The state also argued that certification would require "fact-specific inquiries concerning" the different status of thousands of plaintiffs in more than 150 high-minority schools at issue. But Judge McKenna disagreed, saying, "As plaintiffs note, the pinpointing of five specific areas of defendants' alleged policy of non-enforcement, or the possibility that the policy does not affect every high-minority school, 'does not undermine the commonality of their claim that defendants have a unitary policy of not enforcing and complying with certain educational mandates.'"Christopher Dunn, Arthur Eisenberg and Donald Shaffer of the New York Civil Liberties Union represent the plaintiffs. Assistant Attorney General Clement Colucci is lead counsel for the state. This story originally appeared in the New York Law Journal. (The Legal Intelligencer, August 22, 2000) PROPERTY TAXES: Lawyers Seek 1/3 of $18M Settlement; Hearing on Sept 5 ---------------------------------------------------------------------- Hundreds of taxpayers indicated they want to accept an offer by a group of lawyers to mount a challenge on their behalf, free of charge, the lawyers said. Three attorneys are seeking $6 million for their work in a successful lawsuit that claimed Washington County residents were overcharged in their tax bills. Fayetteville attorney Jack Butt and eight other lawyers said Monday they have filed 200 formal responses from taxpayers who object to the fees and that up to 100 more are waiting to be processed. Property owners have until Aug. 30 to file written notice objecting to the amount of attorneys' fees. The case began in 1997 when a group of taxpayers led by Jeanne M. Hicks of Fayetteville sued nine school districts and five municipalities for overcharging property owners between 1994 and 1999. The 14 defendants have settled the cases, pending court approval, for a total of $18.6 million. Of that amount, one third is to go to lawyers who brought the initial action. The plaintiffs were represented by Fayetteville attorneys Dale Evans and David Nixon and Kent Hirsch of Springdale. A judge has yet to give final approval to the settlements, including the fees. A hearing is scheduled Sept. 5. "We do not question the right of anyone, including the attorneys who brought this suit, to challenge any action they believe improper," Butt said at a Monday news conference. "We simply believe that the compensation received should be in proportion to the real benefit, if any, and that it be according to the law." Butt said the highest fee ever upheld by the Arkansas Supreme Court in a class-action lawsuit was 15 percent of the total settlement, which is less than half of the 33 percent that these plaintiffs' attorneys hope to get. If the amount of work done by the plaintiffs' attorneys had been charged at an hourly rate, the fee probably would be closer to $1.2 million, Butt said. After Butt announced his challenge, Evans said plaintiffs' attorneys spent three years handling the case. Evans said the team won $18 million that taxpayers would not have gotten back and noted that taxes will be lowered because millages are to be rolled back. (The Associated Press State & Local Wire, August 22, 2000) PUBLISHERS CLEARING: Illinois to Get $1.4 Mil from $18.4 Mil Settlement ----------------------------------------------------------------------- Illinois will get $1.4 million in a multistate settlement with sweepstakes promoter Publishers Clearing House, Attorney General Jim Ryan announced Tuesday. About 1,500 people in Illinois will get some of their money back from magazine subscription orders they falsely believed would help them win. The company agreed to pay a total of $18.4 million to 24 states. "Thousands of Illinoisans were losing thousands of dollars chasing phony dreams," Ryan said in a statement. "This settlement should ensure that the company plays it straight with consumers." Illinois filed suit against the sweepstakes company in Cook County Chancery Court in January. Prosecutors said the company's promotions, which often included large fake checks for millions of dollars and personalized letters telling consumers they may have already won, violated consumer fraud laws. Prosecutors said thousands of people bought magazines and merchandise in the hopes that it would increase their chances of winning millions of dollars. "The states were concerned about the way some of the advertising was worded, not about the integrity of our contest," Deborah Holland, the company's executive vice president, said in a statement. "The fact that the company faithfully awards its prizes was not questioned." CEO Robin Smith said the company was "delighted to resolve the matter." The company settled a similar class-action lawsuit in February for $30 million. Claimants who received money from that suit are still eligible under Tuesday's settlement, but their previous award will be deducted from any money they receive, Ryan spokesman Dan Anders said. A third-party arbitrator will begin contacting eligible Illinois consumers about settlement money in a few weeks, Anders said. Among the settlement's provisions: * $1.4 million will go to about 1,500 people who placed merchandise orders of at least $2,500 in 1997, 1998 or 1999. * Illinois will get $102,000 to cover costs. * The company can no longer lead customers to believe they already are winners. * Mailings cannot include fake checks or be labeled "high priority." * Future mailings must include easy-to-read sweepstakes facts about odds and rules. * The company must make it clear that buying magazines will not increase the consumer's chance of winning. (The Associated Press State & Local Wire, August 22, 2000) SALLY COFFELT: Court Filing Fee To Fund Arbitration Challenged -------------------------------------------------------------- The Lake County Circuit Court's practice of charging all civil litigants a filing fee to fund its mandatory arbitration system is unconstitutional because only certain groups of litigants can utilize the system, a Lake County woman charged in papers filed with the Illinois Supreme Court. In a petition for leave to appeal filed last week, attorneys for Laura Mellon asked the high court to reverse the 2d District Appellate Court's decision that since the system functioned as part of a unified court system, the legislature may impose a fee on any, or all, litigants in the circuit courts to fund the system." Mellon's attorneys argued in the petition that the lower court decision was too broad and, if left standing, would overturn a vast body" of case law that required a connection of a benefit obtainable by the person being charged. The issue presented by Ms. Mellon's case is an important issue of first impression affecting every litigant who files a non-arbitrable petition, in every county in Illinois that has adopted a mandatory arbitration program under Illinois law, Lake County and Cook County," the attorneys wrote. Thus, this case impacts a substantial number of people in the State of Illinois, not just the parties in this case." A similar challenge to the mandatory arbitration fee is pending before the 1st District Appellate Court. That case is Rose, et al. v. Pucinski, No. 99-1987. Counties which have similar fees, according to Illinois Supreme Court spokesman Joseph R. Tybor, include: Cook, Ford, McLean, Will, Kane, Boone, Winnebago, DuPage, McHenry, St. Clair, Rock Island, Whiteside, Henry and Mercer. The law at issue, 735 ILCS 5/2-1009A of the Code of Civil Procedure, allows counties that are authorized by the Illinois Supreme Court to utilize mandatory arbitration to charge and collect an $ 8 arbitration fee. Cook County, under the law, can charge $ 10. Mellon sued Lake County Circuit Clerk Sally Coffelt and state Treasurer Judy Baar Topinka after the Lake County Circuit Court charged her an $ 8 fee to file a civil action for guardianship of her niece and nephew. Mellon's attorneys argued the law violated the equal protection, due process, free access and uniformity clauses of the state Constitution. Mellon also filed a motion for class certification. Lake County Circuit Judge Wallace B. Dunn granted the defendants' motion to dismiss. Mellon's motion for class certification was never ruled on. Laura Mellon v. Sally Coffelt, Clerk of the Circuit Court of Lake County, and Judy Baar Topinka, Treasurer of the State of Illinois, No. 98-CH-915. Mellon appealed the trial court's decision, raising all four claims, but the 2d District, on May 17, affirmed. Laura Mellon v. Sally Coffelt, Clerk of the Circuit Court of Lake County, and Judy Baar Topinka, Treasurer of the State of Illinois, No. 2-99-0243. We hold that, because the system functions as part of a unified court system, the legislature may impose a fee on any, or all, litigants in the circuit courts to fund the system," Justice Fred A. Geiger, joined by Justices Robert D. McLaren and Michael J. Colwell, wrote. The justice wrote that, as to Mellon's uniformity and equal protection claims, the defendants had submitted a legally sufficient justification for imposing the fee on the members of the proposed class who filed litigation in Lake County. The uniformity clause provides, In any law classifying the subjects or objects of non-property taxes or fees, the classes shall be reasonable and the subjects and objects within each class shall be taxed uniformly." Ill. Const. 1970, Article IX, section 2. The litigants paying the fee all use the same court system, namely, the same judges, clerk's office, buildings, law library, and all the corresponding litigation support in the circuit court," the justices wrote. We cannot say as a matter of law that imposing the fee upon litigants who do not use the system bears no reasonable relationship to the object of the fee." Because the uniformity clause imposed more stringent limitations than the equal protection clause in the legislature's authority to classify the subjects and objects of taxation, the justices wrote, the fee inherently fulfills the requirements of the equal protection clause," quoting Allegro Services Ltd. v. Metropolitan Pier & Exposition Authority, 172 Ill.2d at 250 (1996), which quoted Geja's Cafe v. Metropolitan Pier & Exposition Authority, 153 Ill.2d 239, 247 (1992). The free access clause, the 2d District justices wrote, qualifies the due process standard by imposing the additional requirement that court filing fees relate to the operation and maintenance of the court system. Therefore, the justices wrote, legislation that survives scrutiny under the free access clause necessarily satisfies the due process clause. The justices rejected Mellon's free access and due process claims, relying on 1989 Appellate Court decision that upheld a surcharge to a court filing fee used to fund alternative dispute resolution. The 1st District Appellate Court in Wenger v. Finley, 185 Ill.App.3d 907 (1989), deferred to the legislature, which had found that there was a compelling need for the dispute resolution centers and that the centers could make a substantial contribution to the operation and maintenance of the courts. In this case, we similarly defer to the legislature's judgment in determining that the system may operate to expedite cases within the court system," the justices wrote. We accept this unrebutted rationale for the fee." In her petition for leave to appeal, Mellon's attorneys argued the 2d District failed by distinguishing from one appeals court decision and not from another. The Illinois Supreme Court in Crocker v. Finley struck down a $ 5 tax imposed upon those filing petitions for dissolution of marriage that was used to fund a domestic violence shelter program. The high court, applying the rational relation test, held that the relationship between filing a petition for divorce and domestic shelters was too remote. Crocker v. Finley, 99 Ill.2d 444 (1984). But in another decision, the high court upheld a $ 1 fee on every litigant for the maintenance of a county law library as constitutional. Ali v. Danaher, 47 Ill.2d 231 (1970). Mellon's attorneys, in the argument" section of the petition, referred to the Crocker decision, but cited the 1st District's decision in Wenger. Apparently referring to Crocker, the attorneys argued that the 2d District should not have distinguished that decision from Mellon's case. On the other hand, the attorneys argued that the 2d District should have distinguished from the high court's decision in Ali v. Danaher. In this line of precedents it's clear that the litigation fees presented an opportunity for the person taxed to benefit from the tax, even of they did not avail themselves of the benefit," attorneys for Mellon wrote in the petition. The court's holding below wrongly upholds any charge on any litigant as long as it benefits the court system and ignores the case law that requires a nexus to the benefit obtainable by the person being charged." Counsel to Mellon is Clinton A. Krislov and Kenneth T. Goldstein, both of the Chicago firm Krislov & Associates Ltd.; Richard D. Grossman of The Law Office of Richard D. Grossman, in Chicago; and Gary L. Schlesinger of the Law Offices of Gary L. Schlesinger in Libertyville. The case is Laura Mellon v. Sally Coffelt, Clerk of the Circuit Court of Lake County, and Judy Baar Topinka, Treasurer of the State of Illinois, No. 90018. (Chicago Daily Law Bulletin, August 21, 2000) SHONEY'S, INC: Reports on Settlement for Employees' Lawsuits for OT Pay ----------------------------------------------------------------------- In its report filed with the SEC, Soney's, Inc. reveals several lawsuits over employees' overtime pay, settled late last year. Belcher I On December 1, 1995, five current and/or former Shoney's Restaurant managers or assistant restaurant managers filed the case of "Robert Belcher, et al. v. Shoney's, Inc." ("Belcher I") in the U.S. District Court for the Middle District of Tennessee claiming that the Company had violated the overtime provisions of the Fair Labor Standards Act. After granting provisional class action status, on December 21, 1998, the Court granted plaintiffs' motion for partial summary judgment on liability. On January 21, 1999, the Court denied the Company's motion to reconsider or certify the order for interlocutory appeal. As a result of the Court's ruling on liability, the Company recorded a charge of $3.5 million in the fourth quarter of fiscal 1998. On January 21, 1999, the Court also ordered the parties to mediate in an attempt to determine whether this case, Belcher II and Edelen (discussed below) could be resolved through settlement. On March 20, 1999, the parties agreed to the material terms of a global settlement of Belcher I, Belcher II and Edelen. Under the agreement, in exchange for the dismissal of the three cases with prejudice and a release by the plaintiffs relating to the subject matter of the cases, the Company agreed to pay $18 million in three installments as follows: $11 million upon Court approval of the settlement and dismissal of the cases, $3.5 million on October 1, 1999 and $3.5 million on March 1, 2000. The settlement required the Company to record an additional charge of $14.5 million for the quarter ended February 14, 1999 (in addition to the $3.5 million previously recorded in the fourth quarter of fiscal 1998). On July 7, 1999, the Court entered final judgment approving the settlement and dismissing with prejudice the Belcher I action against the Company. In accordance with the approved settlement of Belcher I, Belcher II, and Edelen, the Company paid $11 million, $3.5 million and $3.5 million into a qualified settlement fund on July 14, 1999, October 1, 1999 and March 1, 2000, respectively. Belcher II On January 2, 1996, five current and/or former Shoney's hourly and/or fluctuating work week employees filed the case of "Bonnie Belcher, et al. v. Shoney's, Inc." ("Belcher II") in the U.S. District Court for the Middle District of Tennessee. The plaintiffs claimed that the Company violated the Fair Labor Standards Act by either not paying them for all hours worked or improperly paying them for regular and/or overtime hours worked. This case also was provisionally certified as a class action. As noted above in the description of Belcher I, on March 20, 1999, the parties agreed to a global settlement of this case, Belcher I and Edelen. On July 7, 1999, the Court entered an order preliminarily approving the settlement with respect to the Belcher II plaintiffs. On August 20, 1999, the Court entered an order for final judgment approving the settlement and dismissing with prejudice the Belcher II action against the Company. Edelen On December 3, 1997, two former Captain D's restaurant general managers or assistant managers filed the case "Jerry Edelen, et al. v. Shoney's, Inc. d/b/a Captain D's" ("Edelen") in the U.S. District Court for the Middle District of Tennessee. Plaintiffs' claims in this case are very similar to those made in Belcher I. On March 28, 1998, the Court granted provisional class action status. As noted above in the description of Belcher I, on March 20, 1999, the parties agreed to a global settlement of this case, Belcher I and Belcher II. On July 7, 1999, the Court entered final judgment approving the settlement and dismissing with prejudice the Edelen action against the Company. TENFOLD CORPORATION: Cauley & Geller Files Securities Suit in Utah ------------------------------------------------------------------ The Law Firm of Cauley & Geller, LLP has filed a class action in the United States District Court for the District of Utah on behalf of all individuals and institutional investors that purchased the securities of Tenfold Corporation (Nasdaq:TENF) between January 18, 2000 and August 14, 2000, inclusive (the "Class Period") The complaint charges Tenfold and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants made false and misleading statements with respect to Tenfold's ability to deliver its products as promised. The complaint also alleges that defendants made false and misleading statements concerning the revenues to be derived from the Company's software sales and the quality of its receivables. These statements and omissions artificially inflated the price of Tenfold stock to a Class Period high of $70. During this period, defendants sold 508,000 shares of Tenfold stock for proceeds of $26.5 million. Contact: Cauley & Geller, LLP Sue Null, 888/551-9944 TENFOLD CORPORATION: Milberg Weiss Files Securities Suit in Utah ---------------------------------------------------------------- Milberg Weiss announced that a class action has been commenced in the United States District Court for the District of Utah on behalf of purchasers of TenFold Corporation ("TenFold") (Nasdaq:TENF) common stock during the period between January 18, 2000 and August 14, 2000 (the "Class Period"). The complaint charges TenFold and certain of its officers and directors with violations of the Securities Exchange Act of 1934. TenFold describes itself as a leading provider of large-scale e-business applications for customers in banking, communications, energy, healthcare, insurance, investment management and other industries. The complaint alleges that defendants made false and misleading statements with respect to TenFold's ability to deliver applications on target, that worked and were on time. Defendants also made false and misleading statements concerning the revenues to be derived from its software sales and the quality of its receivables. Further, TenFold concealed the fact that: (a) the quality of its receivables was rapidly deteriorating; (b) the length of its sales cycle was exploding; (c) it failed and/or was unable to produce a stable environment to conduct acceptance tests; (d) it falsely represented "completion dates" in order to induce customers to sign contracts; and (e) its customers were canceling contracts and/or refusing to pay for delivered product which defendants were booking as revenue and receivables. These statements and omissions artificially inflated the price of TenFold stock to a Class Period high of $70. This upsurge in TenFold's stock price caused by defendants' alleged false and misleading statements allowed defendants to sell 508,000 shares of TenFold stock for proceeds of $26.5 million. Defendants' scheme began to unravel on July 10, 2000 when TenFold disclosed preliminary results for the second quarter ending June 30, 2000, which were well below expectations. After this announcement, the price of TenFold's stock fell nearly 40% to $10-1/4 per share on volume of about 6.6 million shares, more than 25 times the three-month daily average. The full extent of defendants' scheme was not revealed until August 14, 2000, when the Company announced its actual results for the second quarter ending June 30, 2000. In that press release, the Company announced that its net loss for the quarter would be$(6.5) million, or $ (0.19) per share, well below the projections in the July 10, 2000 press release. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com VISUAL NETWORKS: Cohen, Milstein Files Securities Suit in Maryland ------------------------------------------------------------------ The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., has announced that, on behalf of its client, it has filed a class action lawsuit on behalf of all persons who purchased the common stock of Visual Networks, Inc. (Nasdaq: VNWK) between February 7, 2000 through July 5, 2000 inclusive. The suit, filed on July 13, 2000, in the United States District Court for the District of Maryland, seeks to recover under the federal securities laws for damages sustained by members of the proposed Class. Visual Networks and its CEO/Chairman of the Board are named in the suit, which alleges the defendants issued false and misleading statements and made material omissions concerning, among other things, Visual Networks' acquisition and integration of Avesta Technologies Inc. ("Avesta") and the effects thereof on Visual Networks' operating results, including but not limited to its revenues, sales and earnings. Specifically, the Complaint alleges that the defendants misrepresented that the integration of Avesta would be completed within three to four months, would create synergies of $5 - 12 million and lead to 50% increases in revenues for 2000 and 2001. In fact, the defendants knew or were reckless in not knowing that such representations were false. Moreover, when the purported benefits of the acquisition failed to materialize after the transaction closed, the defendants failed to inform the investing public as such. To the contrary, when information relating to the adverse effects of the transaction started to emerge, the defendants made a series of affirmative misrepresentations to allay these concerns. However, shortly thereafter the market's concerns proved accurate and the defendants were forced to disclose revenue and earnings shortfalls which they explained were the result of difficulties encountered in integrating Avesta. Contact: Ari Karen, akaren@cmht.com or Lisa M. Mezzetti, 888-240-0775 or 202-408-4600, both of Cohen, Milstein, Hausfeld & Toll, P.L.L.C. WISCONSIN ENERGY: Shareholders Sue over $104.5 Mil Ruling on Pollution ---------------------------------------------------------------------- Wisconsin Energy Corp. shareholders sued the company, Chairman Richard Abdoo and five other officers Monday, blaming them for a $104.5 million verdict against its Wisconsin Electric Power Co. subsidiary last year. The ruling and the ability to obtain recovery from the insurance company was previously reported in the CAR. The verdict in one of the state's largest-ever pollution cases was the result of negligence and a lack of due care and loyalty on the part of Abdoo and the other officers, the lawsuit claims. It asks that the officers and their liability insurers pay Wisconsin Electric and indirectly the shareholders - - the difference between the $104.5 million verdict and the lowest settlement figure the plaintiffs offered in the 4-year-old case. An attorney involved in the original lawsuit said Monday that Wisconsin Electric could have resolved the legal action initially for less than $2.5 million. As it stands now, the utility has paid $110 million to the plaintiffs: the City of West Allis and Giddings & Lewis Inc., a Fond du Lac company. The higher amount was due to interest on the verdict. Milwaukee County Circuit Judge Patricia McMahon has prohibited Wisconsin Electric from filing claims to have its insurers cover the cost of the verdict because company officials falsely told the court that the utility did not have insurance to cover punitive damages in the case. The verdict has been appealed. "My personal opinion here, but the failure of top WEPCO management to deal with the case and get it settled and to let a case as dangerous as this go to verdict, I could never understand," said J. Ric Gass, an attorney who represented West Allis and Giddings & Lewis. "I'm not surprised that the shareholders are raising the same questions that were in my mind," Gass said. Such shareholder lawsuits are common in cases where investors believe the negligent actions of corporate officials damaged a company, said Ed Fallone, a law professor at Marquette University. But such actions are rarely successful, he said. And nearly all large corporations provide liability insurance to cover the directors and officers in such cases. "I would not expect Abdoo and any others to have any financial stake in this," Fallone said. "I don't think Abdoo is sweating too much." A Wisconsin Electric spokeswoman said Abdoo, who was paid $1.1 million last year, would not comment on the suit. The spokeswoman, Margaret Stanfield, said the board of Wisconsin Electric's parent company, Wisconsin Energy Corp., had hired a Chicago law firm to investigate how company officials handled the pollution case. The investigators' recommendations for any action against the officers involved would be considered by a special committee appointed by the board, she said. The internal investigation was prompted by a letter from shareholder Edward Burns, asking the company to take action against Abdoo and the other officers. Burns is the only shareholder named as a plaintiff on Monday's lawsuit, which was filed by attorney Robert Elliott. The original case against Wisconsin Electric was filed in July 1996 and claimed that the company dumped 26,000 tons of wood chips laced with cyanide on two properties, one owned by West Allis and the other owned by a company subsequently purchased by Giddings & Lewis. In July 1999, a jury found the utility responsible for polluting the properties and ordered it to pay $4.5 million for the cleanup and other costs. The jury also ordered Wisconsin Electric to pay $100 million in punitive damages. A decision on the appeal is expected next summer. (Milwaukee Journal Sentinel, August 22, 2000) WWII VICTIMS: Mitsui, Mistubishi to Face Lawsuit for Forced Labor ----------------------------------------------------------------- Five Chinese citizens and four U.S. residents plan to file a class-action lawsuit in a Los Angeles court Tuesday seeking monetary compensation from two Japanese corporate giants which they claim forced them into slavery during World War II, a spokeswoman for the Chinese said. The amount the plaintiffs are seeking was not specified. The Chinese, who will hold a press conference in Beijing hours after the lawsuit is filed in the Los Angeles Superior Court, are suing Mitsubishi and Mitsui companies for punitive compensation, damages and unpaid wages with accrued interest, said Wang Xuan, a spokeswoman for the plaintiffs. Wang said the victims were subjected to starvation, torture and beatings while working as forced laborers in Japan for the two companies. 'They were put into trains like cattle,' she said. Li Taojing, a 78-year-old resident of northern China's Hebei Province, said he lost a leg while working at a Mitsui factory in Japan during the war. Three of the Chinese plaintiffs say they worked for Mitsubishi, two for Mitsui. The four Los Angeles plaintiffs, all of Chinese descent living in the United States, claimed to work for Mitsui on China's Hainan Island during the 1937-1945 Sino-Japanese War. Wang, a self-described activist who lives in Japan, said her uncle died of the plague at the Imperial Army's Unit 731 biological warfare center near the northeastern Chinese city Harbin. She is currently acting as a spokeswoman in a lawsuit against the Japanese government, which is making its way through the Japanese court system. (Japan Economic Newswire, August 22, 2000) ZIASUN TECHNOLOGIES: Investor's Lawsuit Filed 1997 in CA Still Pending ---------------------------------------------------------------------- ZiaSun Technologies Inc. was a party cross-defendant in the matter of George Joakimidis v. Bryant Cragun, et al., Superior Court of California, County of San Diego, Case No. 730826. The Plaintiff alleges Unfair Business Practices, Fraud and Breach of Contract against ZiaSun, alleging that in October 1997 he invested in various corporations, including ZiaSun based on representations of third parties other than ZiaSun. Plaintiff alleges that the financial condition of these corporations were other than as represented to him, that past officers and directors of these corporations made misrepresentations during the course of attempting to settle their dispute, and that these corporations breached the terms of the alleged settlement. The Plaintiff is claiming damages of $45,000 and is also seeking punitive damages. ZiaSun believes that the allegations are without merit and will vigorously defend this matter. The matter is pending at present time. ********* 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 * * *