/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/001031.MBX C L A S S A C T I O N R E P O R T E R Tuesday, October 31, 2000, Vol. 2, No. 212 Headlines ALLSCRIPT: Mark McNair Investigates on Possible Securities Law Violation CHECKERS DRIVE: Can’t Predict Outcome of 1994 Lawsuits against Rally’s CHECKERS DRIVE: Gets Open Extension to Respond to Securities Suit in DE CLARUS CORP: Hoffman & Edelson Files Securities Suit in Georgia CLARUS CORPORATION: Chitwood & Harley Files Securities Suit in Georgia COCA-COLA COMPANY: Analysts Downplay Impact of Securities Suit COCA-COLA COMPANY: Chitwood & Harley Files Securities Suit in Georgia COCA-COLA COMPANY: Milberg Weiss Files Securities Suit in Georgia E TRADE: Charges over Business Practices Are at Early Stage GOODYEAR TIRE: 4th Cir Grants Workers Reconsideration on Disease Case GOODYEAR TIRE: CO Lawsuit over Heatway Systems Not Granted Class Status HARTLAND HIGH-YIELD: Milberg Weiss Files Securities Suit in WI HMOs: JPMDL To Decide Whether To Have Separate Dockets For Providers HMOs: Parallel CT Suits Filed Against CIGNA, Oxford, Physicians Health PHOENIX INTERNATIONAL: FL Court Denies Dismissal of Securities Suit SONIC INNOVATIONS: Cauley & Geller Files Securities Lawsuit in Utah SONIC INNOVATIONS: Milberg Weiss Files Securities Suit in Utah UNITED INSURANCE: Suits over Discriminatory Rates Stayed for Discussions UNITED STATES: Back Pay Court Approves Settlement in COLA Suit WESTELL INDUSTRIES: Cauley & Geller Files Securities Suit in Illinois Y2K LITIGATION: Sage Settles Action Over MAS 90 Software For Up To $8.5M ********* ALLSCRIPT: Mark McNair Investigates on Possible Securities Law Violation ------------------------------------------------------------------------ The Law Offices of Mark McNair announces that it has commenced an investigation of Allscripts (NASDAQ:MDRX) for possible violations of the civil enforcement provisions of the federal securities laws. Any investors of Allscripts that have information that would be useful to this inquiry or are interested in learning about their legal rights may contact the Law Offices of Mark McNair at 1819 Pennsylvania Ave. N.W. Suite 550 or wmmcnair@justice4investors.com or contact Mark McNair at 877/511-4717. Contact: Law Offices of Mark McNair Mark McNair, Esq., 877/511-4717KEYWORD; DISTRICT OF COLUMBIA CHECKERS DRIVE: Can’t Predict Outcome of 1994 Lawsuits against Rally’s ---------------------------------------------------------------------- Jonathan Mittman Et Al. V. Rally's Hamburgers, Inc., Et Al. (Case NO. C-94-0039-L-CS). According to the report filed by Checkers Drive in Restaurants with the SEC, in January and February 1994, two putative class action lawsuits were filed, purportedly on behalf of the stockholders of Rally's, in the United States District Court for the Western District of Kentucky, Louisville division, against Rally's, Burt Sugarman and GIANT GROUP, LTD. ("GIANT") and certain of Rally's former officers and directors and its auditors. The cases were subsequently consolidated under the case name Jonathan Mittman et al vs. Rally's Hamburgers, Inc., et al, case number C-94-0039-L (CS). The complaints allege defendants violated the Securities Exchange Act of 1934, among other claims, by issuing inaccurate public statements about Rally's in order to arbitrarily inflate the price of its common stock. The plaintiffs seek unspecified damages. On April 15, 1994, Rally's filed a motion to dismiss and a motion to strike. On April 5, 1995, the Court struck certain provisions of the complaint but otherwise denied Rally's motion to dismiss. In addition, the Court denied plaintiffs' motion for class certification; the plaintiffs renewed this motion, and despite opposition by the defendants, the Court granted such motion for class certification on April 16, 1996, certifying a class from July 20, 1992 to September 29, 1993. In October 1995, the plaintiffs filed a motion to disqualify Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP ("Christensen, Miller") as counsel for defendants based on a purported conflict of interest allegedly arising from the representation of multiple defendants as well as Ms. Glaser's position as both a former director of Rally's and a partner in Christensen, Miller. Defendants filed an opposition to the motion, and the motion to disqualify Christensen, Miller was denied. A settlement conference occurred on December 7, 1998, but was unsuccessful. Fact discovery was completed in August 1999. Expert discovery was completed in July 2000. Motions for Summary Judgment have been filed by the parties. Management is unable to predict the outcome of this matter at the present time or whether or not certain available insurance coverage's will apply. The defendants deny all wrongdoing and intend to defend themselves vigorously in this matter. CHECKERS DRIVE: Gets Open Extension to Respond to Securities Suit in DE ----------------------------------------------------------------------- First Albany Corp., As Custodian For The Benefit Of Nathan Suckman V. Checkers Drive-In Restaurants, Inc. Et Al. Case No. 16667. This putative class action was filed on September 29, 1998, in the Delaware Chancery Court in and for New Castle County, Delaware by First Albany Corp., as custodian for the benefit of Nathan Suckman, an alleged stockholder of 500 shares of the Company's common stock. The complaint names the Company and certain of its current and former officers and directors as defendants including William P. Foley, II, James J. Gillespie, Harvey Fattig, Joseph N. Stein, Richard A. Peabody, James T. Holder, Terry N. Christensen, Frederick E. Fisher, Clarence V. McKee, Burt Sugarman, C. Thomas Thompson and Peter C. O'Hara. The Complaint also names Rally's and GIANT as defendants. The complaint arises out of the proposed merger announced on September 28, 1998 between the Company, Rally's and GIANT (the "Proposed Merger") and alleges generally, that certain of the defendants engaged in an unlawful scheme and plan to permit Rally's to acquire the public shares of the Company's stock in a "going-private" transaction for grossly inadequate consideration and in breach of the defendants' fiduciary duties. The plaintiff allegedly initiated the Complaint on behalf of all stockholders of the Company as of September 28, 1998, and seeks inter alia, certain declaratory and injunctive relief against the consummation of the Proposed merger, or in the event the Proposed Merger is consummated, recision of the Proposed Merger and costs and disbursements incurred in connection with bringing the action, including attorney's fees, and such other relief as the Court may deem just and proper. In view of a decision by the Company, GIANT and Rally's not to implement the transaction that had been announced on September 28, 1998, plaintiffs have agreed to provide the Company and all other defendants with an open extension of time to respond to the complaint. Although, plaintiffs indicated that they would likely file an amended complaint in the event of the consummation of a merger between the Company and Rally's, no such amendment has been filed to date. The Company believes the lawsuit is without merit and intends to defend it vigorously should plaintiffs seek to renew the lawsuit. Steinberg Action David J. Steinberg And Chaile B. Steinberg, Individually And On Behalf Of Those Similarly Situated V. Checkers Drive-In Restaurants, Inc., Et Al. Case No. 16680. This putative class action was filed on October 2, 1998, in the Delaware Chancery Court in and for New Castle County, Delaware by David J. Steinberg and Chaile B. Steinberg, alleged stockholders of an unspecified number of shares of the Company's common stock. The complaint names the Company and certain of its current officers and directors as defendants including William P. Foley, II, James J. Gillespie, Harvey Fattig, Joseph N. Stein, Richard A. Peabody, James T. Holder, Terry N. Christensen, Frederick E. Fisher, Clarence V. McKee Burt Sugarman, C. Thomas Thompson and Peter C. O'Hara. The Complaint also names Rally's and GIANT as defendants. As with the FIRST ALBANY complaint described above, this complaint arises out of the proposed merger announced on September 28, 1998 between the Company, Rally's and GIANT (the "Proposed Merger") and alleges generally, that certain of the defendants engaged in an unlawful scheme and plan to permit Rally's to acquire the public shares of the Company's common stock in a "going-private" transaction for grossly inadequate consideration and in breach of the defendant's fiduciary duties. The plaintiffs allegedly initiated the Complaint on behalf of all stockholders of the Company as of September 28, 1998, and seeks INTER ALIA, certain declaratory and injunctive relief against the consummation of the Proposed merger, or in the event the Proposed Merger is consummated, recision of the Proposed Merger and costs and disbursements incurred in connection with bringing the action, including attorneys' fees, and such other relief as the Court may deem just and proper. For the reasons stated above in the description of the First Albany action, plaintiffs have agreed to provide the Company and all other defendants with an open extension of time to respond to the complaint. Although, plaintiffs indicated that they would likely file an amended complaint in the event of the consummation of a merger between the Company and Rally's, no such amendment has been filed to date. The Company believes the lawsuit is without merit and intends to defend it vigorously. CLARUS CORP: Hoffman & Edelson Files Securities Suit in Georgia --------------------------------------------------------------- The law firm of Hoffman & Edelson, LLC (877/537-6532 toll free) announces that a class action lawsuit was filed in the United States District Court for the Northern District of Georgia on behalf of all persons who purchased the common stock of Clarus Corp. (Nasdaq:CLRS) from January 31, 2000 through October 25, 2000. Plaintiff alleges that Clarus Corp. and certain of its directors and officers violated the federal securities laws by issuing false and misleading statements. Plaintiff contends that Clarus Corp. did not disclose that its third quarter results would not meet expectations even though it knew that they would not. That, coupled with insider trading and the disclosure of missed earning's estimates on October 25, 2000, caused shareholders to lose 44% value on that date when shares plunged from $19.8906 to $11.0625. Contact: HOFFMAN & EDELSON, LLC Marc H. Edelson, Esq. or Jerold B. Hoffman, Esq. 877/537-6532 (toll free), fax 215/230-8735 Hofedlaw@aol.com CLARUS CORPORATION: Chitwood & Harley Files Securities Suit in Georgia ---------------------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Northern District of Georgia on behalf of all persons who purchased securities of Clarus Corporation (NASDAQ: CLRS) between January 31, 2000 and October 25, 2000, inclusive (the "Class Period"). The complaint charges Clarus and certain officers and directors with violations of Sections 10(b) and 20 of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The complaint alleges that Defendants issued a series of materially false and misleading statements concerning the quality of the Company's receivables and accounting practices. As a result, Clarus's stock price was artificially inflated throughout the Class Period. The complaint further alleges that certain Company insiders took advantage of this artificial inflation and sold millions of dollars worth of their own personal holdings of Clarus stock. Contact: Chitwood & Harley, Atlanta Martin D. Chitwood Lori A. Smith (888) 873-3999/(404) 873-3900 las@classlaw.com COCA-COLA COMPANY: Analysts Downplay Impact of Securities Suit -------------------------------------------------------------- Beverage analysts said Sunday that investors are likely to take the latest legal assault on Coca-Cola in stride. Late Friday, news broke that a stockholder lawsuit seeking class-action status was filed against Coke, alleging that it misled investors and artificially inflated its stock price. "I don't foresee any impact on Wall Street right now," said Sanford Bernstein analyst Bill Pecoriello, who currently has a buy rating on the stock. "I think it will be something that is watched in the background." Morgan Stanley Dean Witter analyst Andrew Conway agreed. "It is unlikely that this lawsuit will have any long-term effect on Coke's stock," said Conway, who has a neutral rating on the company. "However, the lawsuit deals with the age-old question of implied fair dealing between bottlers and the concentrate company regarding appropriate levels of inventory held by bottlers." The suit, filed in Atlanta federal court, alleges that Coke and top executives, including former Chairman M. Douglas Ivester, violated securities regulations by secretly forcing major bottlers to purchase $ 300 million to $ 400 million in unnecessary amounts of beverage concentrate last year. That allegedly helped the company meet revenue and earnings forecasts for last year's third quarter and propelled the stock in the fourth quarter, the suit said. But the stock fell sharply and investors suffered substantially after the company announced in January that financial results for 2000 would be lower than originally forecast because bottlers had too much inventory, the suit said. It also alleged that the company refused to properly account for hundreds of millions of dollars of impaired assets from its operations in Russia and Japan. "These are baseless, false and even ridiculous allegations," Coca-Cola spokesman Rob Baskin said Sunday. "We scrupulously adhere to all securities rules and regulations. We will vigorously defend ourselves against these baseless charges." The suit does not come at a good time for Coke. "The timing is not ideal because (Chairman) Doug Daft has been working feverishly to build stronger relationships with regulators around the world," Conway said. "At the same time, he's been hoping to settle the discrimination suit against the company, and now this suit emerges." John Sicher, editor and publisher of Beverage Digest, was skeptical of the shareholder suit. "It's much harder to win a stockholder suit than to bring one," Sicher said. "Over the last year, Coke has been very straightforward with its stockholders and the investment community." The named plaintiff in the suit, Carpenters Health & Welfare Fund of Philadelphia, is seeking to represent all investors who purchased Coke stock between Oct. 21, 1999, and March 6, 2000. The suit was filed by the Atlanta law firm Chitwood & Harley and the San Diego firm Milberg Weiss Bershad Hynes & Lerach. (The Atlanta Journal and Constitution, October 30, 2000) COCA-COLA COMPANY: Chitwood & Harley Files Securities Suit in Georgia --------------------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Northern District of Georgia on behalf of all persons who purchased the stock of the Coca-Cola Company ("Coke" or the "Company") (NYSE: KO) between October 21, 1999 and March 6, 2000, inclusive (the "Class Period"). The complaint charges Coke and Douglas Ivester, Jack Stahl, and James Chestnut (who were high-ranking officers at the Company during the relevant time period) with violations of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The complaint alleges that Defendants issued a series of materially false and misleading statements that concealed the fact that the Company had (1) forced key Coke bottlers to purchase hundreds of millions of dollars worth of unwanted, unnecessary, and excessive amounts of Coke beverage concentrate, and (2) refused to properly account for hundreds of millions of dollars worth of impaired assets from its operations in Russia and Japan. As a result, Coke's stock price was artificially inflated throughout the Class Period. Contact: Chitwood & Harley Martin D. Chitwood David A. Bain (888) 873-3999/(404) 873-3900 dab@classlaw.com COCA-COLA COMPANY: Milberg Weiss Files Securities Suit in Georgia ----------------------------------------------------------------- Milberg Weiss (http://www.milberg.com/coke/)announced on October 27 that a class action has been commenced in the United States District Court for the Northern District of Georgia on behalf of purchasers of The Coca-Cola Company ("Coke") (NYSE:KO) common stock during the period between October 21, 1999 and March 6, 2000 (the "Class Period"). The complaint charges Coke and certain of its officers and directors with violations of the Securities Exchange Act of 1934, for issuing a series of false and misleading statements between October 21, 1999 and March 6, 2000. Specifically, Coke reported misleading financial results, falsely presented its flat gallonage shipments of concentrate to bottlers during 1999 as a positive development, represented that the improving financial condition of those bottlers had set the stage for substantial revenue growth by Coke as consumer demand for its products had picked up in late 99 and early 00, and forecast 4thQ 99 EPS of $.30-$.31, 99 EPS of $1.29-$1.31, 00 EPS of$1.50-$1.60 and 01 EPS of $ 75+. As a result of Coke's statements, Coke's stock recovered sharply from its early 10/99 low of $47-5/16 to as high as $69 on 12/3/99, a huge increase in Coke's stock price in about 90 days, which restored over $52 billion in Coke stockholder market capitalization. Then, on 3/7/00, Bloomberg reported that, based on the revelations of the past several weeks and continuing conversations with Coke executives, analysts had concluded that Coke would not be able to achieve a return to its historic 8+% and 15%-20% revenue and EPS growth at any time in the foreseeable future. Coke's stock fell to just $44-13/16 on 3/7/00, its lowest price in years. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com E TRADE: Charges over Business Practices Are at Early Stage ----------------------------------------------------------- E Trade Group Inc. is a defendant in several putative class action filings. The matters alleged by the plaintiffs include: * False and deceptive advertising and other communications regarding the Company's commission rates and ability to timely execute and confirm online transactions; * Damages arising from alleged problems in accessing brokerage accounts and placing orders; * Damages arising from system interruptions; and * Unfair business practices regarding the extent to which initial public offering shares are made available to the Company's customers. These proceedings are at early stages, and the Company is unable to predict their ultimate outcome; however, the Company believes that all of these claims are without merit and intends to defend against them vigorously. An unfavorable outcome in any of these matters, if they are not covered by insurance, could have a material adverse effect on the Company's business, financial condition and results of operations. In addition, even if the ultimate outcomes are resolved in favor of the Company, the defense of such litigation could entail considerable cost and the diversion of efforts of management, either of which could have a material adverse effect on the Company's results of operation. GOODYEAR TIRE: 4th Cir Grants Workers Reconsideration on Disease Case --------------------------------------------------------------------- Goodyear Tire & Rubber Co. is the defendant in a series of 66 civil actions filed in the United States District Court for the District of Maryland by certain former employees of a former subsidiary of the Company relating the development of lung disease, cancer and other diseases alleged to be the result of exposure to allegedly toxic substances while working at a tire plant of the subsidiary located in Maryland, which plant was closed in 1987. On January 28, 1999, the District Court granted the Company's motion for summary judgement on causation and issued a Final Judgement Order dismissing each case with prejudice and assessing costs to the plaintiffs. The plaintiffs appealed the Final Judgement Order to the United States Court of Appeals for the Fourth Circuit and, on July 27, 2000, the Court of Appeals vacated the judgment of the District Court and remanded the cases for further proceedings, instructing the District Court to reconsider whether the plaintiffs are entitled to limited additional discovery. GOODYEAR TIRE: CO Lawsuit over Heatway Systems Not Granted Class Status ----------------------------------------------------------------------- In a related class action, Anderson, et al. v. Goodyear, et. al., filed in November of 1988 in District Court of Eagle County, Colorado, against the Company and Heatway on behalf of a putative class of real property owners in Colorado on whose property heating systems using Entran 2 hose have been installed and who have suffered or may suffer damage to their property due to the alleged defective nature of the Heatway systems and/or Entran 2 hose, the court declined to certify the class in July of 2000. HARTLAND HIGH-YIELD: Milberg Weiss Files Securities Suit in WI -------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on October 27, 2000, on behalf of purchasers of shares of the Heartland High-Yield Municipal Bond Fund ("HRHYX") and the Heartland Short Duration High-Yield Municipal Fund ("HRSDX") between May 1, 1999 and October 16, 2000, inclusive. A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/heartland/ The action, numbered 00C1388, is pending in the United States District Court, Eastern District of Wisconsin, located at 517 E. Wisconsin Ave., Milwaukee, WI 53202, against defendants Heartland High-Yield Municipal Bond Fund, the Heartland Short Duration High-Yield Municipal Fund, Heartland Advisers, Inc. and Thomas J. Conlin. The Honorable William E. Callahan is the Judge presiding over the case. The complaint alleges that defendants violated Sections 11 and 12(a)(2) of the Securities Act of 1933 by issuing materially false and misleading Registration Statements and Prospectuses. As alleged in the Complaint, defendants issued materially false and misleading statements concerning the Funds' net asset value ("NAV") and performance. These statements were materially false and misleading because (1) the NAV of the Funds was materially overstated as the Funds had overvalued a material portion of their holdings of certain municipal bonds; (2) the Fund's performance was materially overstated as those figures were based on the NAV of the respective funds, which figures were materially overstated because the Funds' had materially overstated the Funds' NAV; and (3) the risk of investing in the Funds was materially understated as the Funds had failed to disclose the true risk attendant to their respective portfolio securities. Accordingly, defendants' statements about the risks associated with investing in the Funds were not meaningful because they failed to advise investors that the Funds were materially overstating their NAV. On October 16, 2000, Heartland Advisors shocked investors by announcing that it was drastically writing down the net asset value ("NAV") of the Funds. In particular, the High-Yield Municipal Bond Fund's NAV was reduced from $8.01 per share to $2.45 per share, a decline of 70%, and the High-Yield Short Duration Municipal Fund's NAV from $8.70 per share to $4.87 per share, a decline of approximately 44%. Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or Samuel H. Rudman 800/320-5081 HeartlandCase@milbergNY.com HMOs: JPMDL To Decide Whether To Have Separate Dockets For Providers -------------------------------------------------------------------- The Judicial Panel on Multidistrict Litigation on Sept. 22 heard oral arguments on whether to establish individual MDL dockets for each HMO involved in nationwide class action lawsuits or to consolidate all the actions with the docket already established in Florida for the Humana Inc. lawsuits (In re Aetna, Inc. Managed Care Litigation, No. MDL 1367, JPMDL). (Aetna briefs available. Document # 31-000929-013. 24 pages. O'Brien/Albert briefs available. Document # 31-000929-014. 17 pages.) The panel said it would take a little longer than usual to determine the individual MDL's fates, a defense source told Mealey Publications. Those MDLs include dockets for actions filed against Aetna, CIGNA and Prudential by HMO subscribers and health care providers. The source said the panel normally takes about two to three weeks to make a decision and he expects the panel to take four to six for this action. Preferred Forums By and large, the plaintiff firms would like all the HMO cases transferred to the U.S. District Court for the Southern District of Florida in Miami for consolidation with In re: Humana Inc., Managed Care Litigation (No. MDL 1334), the defense source said. However, one plaintiff firm, Milberg Weiss, Bershad, Hynes & Lerach in New York, would like to see its cases against Aetna transferred to the District of Connecticut, where the firm has at least two class actions pending - O'Brien v. Aetna and Albert v. CIGNA (See stories, Pages 5 & 6). A plaintiff source told Mealey's that it could be one of the only times defense and plaintiff counsel agree, although the two sides are disagreeing on the final destination of the Aetna MDL docket. While Milberg Weiss plaintiffs would like a forum in Connecticut, Aetna would like to see its cases consolidated in the Eastern District of Pennsylvania, the home of its corporate headquarters for its health care insurance division and the court where the first RICO action against it was filed (Maio v. Aetna, No. 99-1854, 3rd Cir.; See 8/25/00, Page 4). The Maio case has since been dismissed and the Third Circuit has upheld the decision. A source close to the case has said the Maio plaintiffs are seriously considering an appeal to the U.S. Supreme Court. Separate Dockets The defense source said that the panel may in fact be leaning towards establishing different MDL dockets for individual companies, explaining that many of the panel judges made comments with the phrases "massive MDL," and "don't want to saddle one judge with this," during questioning. The judges, according to the source, suggested that the class size for one MDL docket could total more than 30 million subscribers, with one attorney suggesting a total class size of approximately 150 million. Also, a panel judge said 80 percent of the health care providers in the country may be involved as part of a massive MDL. Health care providers have filed several class actions against various HMOs. Those actions are currently pending as part of the Humana MDL docket in Miami. The defense source said that recently, the panel has had a record of splitting massive class actions among several district court judges. Aetna is represented by John J. Swenson and Richard J. Doren of Gibson, Dunn & Crutcher in Los Angeles and Miguel A. Estrada in the firm's Washington, D.C., office. The O'Brien and Albert plaintiffs are represented by Edith Kallas, Melvyn I. Weiss, Charles S. Hellman and Patrick J. Sheehan of Milberg Weiss in New York, James E. Hartley and Gary B. O'Connor of Drubner Hartley O'Connor & Mengacci in Waterbury, Conn., and David R. Scott and James E. Miller of Scott & Scott in Colchester, Conn. Also representing O'Brien and Albert are Stanley M. Grossman, D. Brian Hufford and Robert J. Axelrod of Pomerantz Haudek Block Grossman & Gross in New York, Curtis V. Trinko in New York, Jeffrey L. Kodroff of Spector, Roseman & Kodroff in Philadelphia and Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif. (Mealey's Managed Care Liability Report, September 29, 2000) HMOs: Parallel CT Suits Filed Against CIGNA, Oxford, Physicians Health ---------------------------------------------------------------------- A class action lawsuit was filed in a Connecticut federal court Sept. 7 - a parallel action to one filed by the state attorney general - against several managed care organizations, including CIGNA, MedSpan Health Options, Oxford Health Plans, Physicians Health and WellCare Management, challenging alleged wrongful disclosure of information regarding health care coverage (Stephen C. Albert, et al. v. CIGNA Healthcare of Connecticut Inc., et al., No. 3:00-CV-1717, D. Conn.). The action was filed the same day Connecticut Attorney General Richard Blumenthal filed his class action suit for the state on behalf of its citizens (See previous story). A group of plaintiffs, led by Stephen C. Albert, are members of the HMO or point of service plans offered by the defendant insurers. ERISA Violations Alleged Albert alleges that the insurers have violated ERISA and injured enrollees by engaging in the following undisclosed internal practices: Using inappropriate and arbitrary coverage guidelines as the basis of coverage denials. Using prescription drug formularies which obstruct enrollee access to medically necessary prescription drugs and failing to give enrollees the denial notices, including notice of the right to appeal. Failing to make timely payments to providers, thus threatening enrollees with the loss of necessary care. Failing to respond to enrollee written and telephonic communications in a manner which is speedy, coherent and fair. Failing to disclose to enrollees essential information about the health care plans upon which the enrollees rely, including the true nature of the coverage provided and the steps necessary to submit claims and appeal denials of coverage. The class could consist of at least 650,000 Connecticut residents, the complaint says. Claims Albert makes several claims, including breach of fiduciary duty under ERISA, breach of ERISA disclosure obligations and breach of ERISA notice obligations. Albert seeks class action status, declaratory relief, preliminary and permanent injunctive relief, an order calling for restitution of the fair value of the premiums paid and costs of the action, including attorneys' fees. The action was filed by James E. Hartley and Gary B. O'Connor of Drubner, Hartley, O'Connor & Mengacci in Waterbury, Conn. Also representing Albert are Melvyn I. Weiss, Edith M. Kallas, Joseph P. Guglielmo, Charles S. Hellman and Patrick J. Sheehan of Milberg Weiss Bershad Hynes & Lerach in New York; David R. Scott and James E. Miller of Scott & Scott in Colchester, Conn.; Staley M. Grossman and D. Brian Hufford of Pomerantz Haudek Block Grossman & Gross in New York; Curtis V. Trinko of the Law Office of Curtis V. Trinko in New York; and Jeffrey L. Kodroff of Spector Roseman & Kodroff in Philadelphia. (Mealey's Managed Care Liability Report, September 29, 2000) PHOENIX INTERNATIONAL: FL Court Denies Dismissal of Securities Suit ------------------------------------------------------------------- On November 23, 1999, a lawsuit was filed in the District Court for the Middle District of Florida as a purported class action initiated by George Taylor, a former Phoenix employee. Initially, Phoenix and its chief executive officer were named as defendants. The lawsuit alleges, among other things, that Phoenix and its chief executive officer improperly recognized revenues, overstated revenues and failed to disclose that our revenues were allegedly in decline, all of which allegedly caused the company’s stock price to be higher than it otherwise would have been during the class period. The lawsuit alleges that these purported actions violate Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On May 5, 2000, the plaintiffs filed an Amended Complaint which, among other things, (1) adds four additional investors as named plaintiffs and proposed class representatives; (2) expands the purported class period to the period from May 5, 1997 to April 15, 1999; and (3) adds Phoenix's president as an additional named defendant. Phoenix and the other two defendants filed Motions to Dismiss, which were denied by the Court without opinion in August 2000. The parties are beginning to conduct discovery. Phoenix's insurance carriers have denied coverage for the claims in this lawsuit. Phoenix is vigorously defending this case. SONIC INNOVATIONS: Cauley & Geller Files Securities Lawsuit in Utah ------------------------------------------------------------------- The Law Firm of Cauley & Geller, LLP announced on October 27 that it 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 Sonic Innovations, Inc. (Nasdaq:SNCI) between May 2, 2000 and Oct. 24, 2000,inclusive (the "Class Period"), including those who purchased shares pursuant to the May 2, 2000 Initial Public Offering ("IPO"). 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's financial condition and future growth potential. Sonic Innovations designs, manufacturers and markets digital hearing aids and hearing aid components. The complaint alleges that from May 2, 2000 through October 24, 2000, Sonic Innovations saw its stock price soar from its IPO price of $14 per share to as high as $25 per share as Sonic Innovations misrepresented the true status of its relationship with Starkey Laboratories, Inc. ("Starkey"), concealing the fact that Starkey, one of Sonic Innovations's largest customers: (a) had millions of dollars worth of Sonic Innovations's product in its inventory that it could not sell; (b) was refusing to pay for product previously shipped to it by Sonic Innovations; and (c) considered the April 19, 1999 OEM Agreement to be void as Sonic Innovations had materially breached the OEM Agreement due to, among other things, materially breaching the quality control provisions. The complaint further alleges that the defendants knowingly concealed the fact that they were informed prior to the IPO that the IC-1 chips the company was shipping to Starkey were defective which would jeopardize its contract with Starkey but would allow defendants to complete the IPO and artificially inflate Sonic Innovation's Q2 projections, its Q2 results and its Q3 projections/results. As a result of defendants' alleged false statements/omissions, Sonic Innovations's stock traded at inflated levels during the Class Period, increasing to as high as $25 on June 20, 2000 and tumbled to$5-1/2 on October 25, 2000 as defendants began to partially reveal the true status of the Company's relationship with Starkey. Contact: Cauley & Geller, LLP, Boca Raton Sue Null or Charlie Gastineau 888/551-9944 E-mail:info@classlawyer.com SONIC INNOVATIONS: Milberg Weiss Files Securities Suit in Utah -------------------------------------------------------------- Milberg Weiss (http://www.milberg.com/sonic/)announced on October 27 that a class action has been commenced in the United States District Court for the District of Utah on behalf of purchasers of Sonic Innovations, Inc. (Nasdaq: SNCI) securities during the period between May 2, 2000 and October 24, 2000 (the "Class Period"). The complaint charges Sonic Innovations and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Sonic Innovations designs, manufacturers and markets digital hearing aids and hearing aid components. The complaint alleges that from May 2, 2000 through October 24, 2000, Sonic Innovations saw its stock price soar from its IPO price of $14 per share to as high as $25 per share as Sonic Innovations misrepresented the true status of its relationship with Starkey Laboratories, Inc. ("Starkey"), concealing the fact that Starkey, one of Sonic Innovations's largest customers: had millions of dollars worth of Sonic Innovations's product in its inventory that it could not sell; (b) was refusing to pay for product previously shipped to it by Sonic Innovations; and (c) considered the April 19, 1999 OEM Agreement to be void as Sonic Innovations had materially breached the OEM Agreement due to, among other things, materially breaching the quality control provisions. The complaint further alleges that the defendants knowingly concealed the fact that they were informed prior to the IPO that the IC-1 chips the company was shipping to Starkey were defective which would jeopardize its contract with Starkey but would allow defendants to complete the IPO and artificially inflate Sonic Innovation's Q2 projections, its Q2 results and its Q3 projections/results. As a result of defendants' alleged false statements/omissions, Sonic Innovations's stock traded at inflated levels during the Class Period, increasing to as high as $25 on June 20, 2000 and tumbled to $5-1/2 on October 25, 2000 as defendants began to partially reveal the true status of the Company's relationship with Starkey. Plaintiff seeks to recover damages on behalf of all purchasers of Sonic Innovations securities during the Class Period (the "Class"). The plaintiff is represented by Milberg Weiss Bershad Hynes & Lerach LLP, who has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. Contact: William Lerach or Darren Robbins of Milberg Weiss Bershad Hynes & Lerach LLP, 800-449-4900, wsl@mwbhl.com UNITED INSURANCE: Suits over Discriminatory Rates Stayed for Discussions ------------------------------------------------------------------------ Unitrin Inc. reveals in its report filed with the SEC that in October 1999, the Florida Department of Insurance filed and served a subpoena upon the Company's subsidiary, United Insurance Company of America ("United"), in connection with that Department's investigation into the sale and servicing of industrial life insurance and small face amount life insurance policies in the State of Florida. Subsequently, on December 15, 1999, a purported nationwide class action lawsuit was filed against United in the United States District Court for the Middle District of Florida (Wilson, et al. v. United Insurance Company of America), on behalf of "all African-American persons who have (or have had at the time of the Policy's termination), an ownership interest in one or more Industrial Life Insurance Policies issued, serviced, administered or purchased from United ...." Plaintiffs allege discrimination in premium rates in violation of 42 U.S.C. (S)1981 in addition to various state law claims. Unspecified compensatory and punitive damages are sought together with equitable relief. United filed a motion to dismiss the lawsuit on March 14, 2000 and the case has been stayed by agreement of the parties to allow time for discussions regarding possible resolution. The Company has determined that United and its other career agency life insurance subsidiaries have in force insurance policies in which race was used as a factor in pricing or benefits; however, to the best of the Company's knowledge, all such practices ceased 30 or more years ago with regard to newly-issued policies. At least thirteen similar lawsuits have been filed in other jurisdictions against the Company and/or its career agency life insurance subsidiaries. The Company believes that it and its subsidiaries have meritorious defenses in these matters. On July 17, 2000 the Florida Department of Insurance issued orders to more than two dozen life insurers, including United and the Company's other career agency subsidiaries, to cease collecting a portion of the premiums on certain industrial life policies attributable to past race-distinct underwriting practices. These subsidiaries have appealed the orders directed at them, and accordingly the orders have been stayed pending further proceedings. In July, the Company met with representatives of various insurance departments to discuss a potential nationwide resolution of these matters with respect to United and the Company's other career agency life insurance subsidiaries. Further meetings with these departments are expected but have not yet been scheduled. In the second quarter of 2000, the Company recorded an after-tax charge of $32.4 million for its estimated cost to ultimately settle these matters. Actual costs may differ from this estimate. However, the Company believes that such difference will not have a material adverse effect on the Company's financial position, but could have a material adverse effect on the Company's results for a given period. UNITED STATES: Back Pay Court Approves Settlement in COLA Suit -------------------------------------------------------------- The United States District Court for the Virgin Islands has approved a 232.5 million settlement in a class-action lawsuit filed by workers who claimed they were unfairly treated by the cost of living allowance program. The settlement agreement in Caraballo v. United States, No. 1997-0027, affects about 70,000 workers whose duty stations are in Alaska, Hawaii, the Virgin Islands, Puerto Rico and the Northern Mariana Islands. The workers claimed that the methodology used by the Office of Personnel Management to determine COLAs violated federal law and that class members are entitled to back pay and increases in current and future COLAs. The OPM has been working with employee representatives for the past four years to resolve the issues. Under the agreement, the government will: * Implement changes and improvements in the COLA methodology for the future. * Pay more than 232.5 million in back pay for the alleged underpayment of COLAs from October 1990 through September 2000. * Implement procedural changes and protections, such as limits on rate reductions and greater employee involvement in the survey process. * Pay interim COLA rates beginning October 2000. These rates will be higher than current COLA rates in about half of the COLA area, according to the OPM. The settlement also includes a "safe harbor" clause that would protect the government from future claims. WESTELL INDUSTRIES: Cauley & Geller Files Securities Suit in Illinois --------------------------------------------------------------------- The law firm of Cauley & Geller, LLP announced on October 27 that a class action lawsuit has been filed in the United States District Court for the Northern District of Illinois on behalf of all persons or entities who purchased or otherwise acquired securities of Westell Technologies, Inc. (Nasdaq: WSTL) between June 27, 2000 and October 18, 2000, inclusive (the "Class Period"). The complaint alleges that Westell and certain of its officers and directors violated federal securities laws by making a series of materially false and misleading statements. The Complaint alleges that in June of this year, Westell knew that a major customer had made certain changes within its company and that it would be buying fewer Westell modems, but continually assured analysts and the market throughout the Class Period that its second fiscal quarter of 2000 was going to be strong and would not be affected by the loss of sales. It is further alleged, that certain officers (including the Company's CEO and COO) and directors pocketed over $11 million from illegal insider trades in July while Westell's stock price was peaking and just before an analyst in August opined that the major customer would be scaling back its purchases of Westell modems. The complaint alleges that as a result of these false and misleading statements the price of Westell's securities were artificially inflated throughout the Class Period, causing plaintiffs and the other members of the Class to suffer damages. Contact: Cauley & Geller, LLP, 888-551-9944, or e-mail, info@classlawyer.com Y2K LITIGATION: Sage Settles Action Over MAS 90 Software For Up To $8.5M ------------------------------------------------------------------------ Sage Inc. has agreed to provide an estimated $ 5.6 million to $ 8.5 million in product credits to settle a class action over Y2K compliancy of its MAS 90 accounting software (DBN, Inc. t/a Y-PERS v. Sage Software, Inc., et al., No. 799983, Calif. Super., Orange Co.). (Preliminary Approval Order in Section A. Document # 36-000928-101) Plaintiff DBN Inc. (t/a "Y-PERS") and Sage have also agreed to a payment to plaintiffs' counsel of $ 700,000 in fees and costs under a pact preliminarily approved by Orange County (Calif.) Superior Court Judge William F. McDonald on Aug. 23. Pennsylvania-based DBN sued in 1998 on behalf of an estimated 44,000 users of MAS 90, complaining that the copy it licensed in May 1996 for $ 5,904.20 would not recognize four-digit years. The product was advertised as software which would take users 'through the 90s and beyond," DBN said. Judge McDonald overruled Sage's demurrer on Jan. 8, 1999, and on May 27, 1999, certified a nationwide class of users pursuant to the parties' stipulation. The notice of proposed settlement attached to the order granting preliminarily approval notes that Sage contests the allegations and was prepared to seek summary judgment. Sage maintains that the Year 2000-compliant version contains numerous enhancements and the cost of the date recognition upgrades was minimal. Settlement Terms The proposed settlement would give licensees credit toward new or upgraded services: Those who licensed MAS 90 after June 1, 1995, purchased upgrades, and are on a maintenance program would have their choice of a "bank reconciliation" module, one additional user license, three months of telephone support or a single user license for Sage's DAC Easy accounting software.* 1995 and beyond licensees who purchased upgrades and are not on a maintenance program could opt for one additional user license for MAS 90, a $ 200 coupon toward the purchase of a maintenance program, three months of telephone support or a single user license for DAC Easy software.* Pre-1995 licensees would be entitled to coupons for MAS 90 software or user licenses ranging from $ 50 to $ 175, depending on when they acquired the product. The settlement release will not affect users who ceased using the product between Oct. 31, 1997, and March 31, 2000. The settlement excludes recovery for users who received upgrades at no charge. MAS 90 users have until Nov. 8 to submit a proof of claim. Judge McDonald scheduled a hearing for that date on final approval. Co-lead counsel for the settlement class are Jeffrey A. Klafter of Bernstein Litowitz Berger & Grossmann in New York and Harris L. Pogust of Sherman, Silverstein, Kohl, Rose & Podolsky in Pennsauken, N.J. Plaintiffs' counsel also includes Jonathan Shub of Sheller, Ludwig & Badey in Philadelphia, Marc H. Edelson of Hoffman & Edelson in Doylestown, Pa., and William M. Hensley of the Law Offices of Mark A. Kompa in Newport Beach, Calif. Sage is represented by Melody Williams Dapp of Pillsbury Madison & Sutro in Costa Mesa, Calif. (Mealey's Year 2000 Report, September, 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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