/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010108.MBX C L A S S A C T I O N R E P O R T E R Monday, January 8, 2001, Vol. 3, No. 5 Headlines AOL: Rivals Continue to Campaign for Instant Messaging (IM) Requirements AVENTIS: Lawsuit Says StarLink Cornn in MO Affects Ability to Export BANK ATLANTIC: New Jerseyans Who Paid Top Dollar for Shoddy Home Can Sue BIONOVA HOLDING: Completes Definitive Agreements With Savia; Wins Suit BREAST IMPLANT: Letters in WSJ Argue on Correlation with Tissue Disease BRIDGESTONE CORPORATION: Barrack Rodos Files Securities Suit in TN BRIDGESTONE CORPORATION: Milberg Weiss Files Securities Suit in TN COMDATA NETWORK: Flying J Seeks to Name Ceridian in Utah Antitrust Suit COOK COUNTY: Claims Right over Unclaimed Funds; Works out Agreement CREDIT CARDS: New Dispute Queries Ticketmaster's Use of Numbers LERNOUT & HAUSPIE: Obtains Bankruptcy Protection in Belgium on Second Try LOUISIANA: Oyster Farmers Face Loss Of Leases for Future Projects M&A WEST: Kaplan, Kilsheimer Files Securities Fraud Lawsuit in CA NANOPHASE TECHNOLOGIES: Stull, Stull Announces Settlement Hearing NAVIGANT CONSULTING: Announces Proposed Settlement of IL Securities Suit NX NETWORKS: Vows to Vigorously Defend Securities Suits PEERLESS SYSTEMS: Decries Merit of Securities Lawsuit in California REDLANDS CONTAMINATION: High Court Agrees to Review Denial of Cert. ROYAL BANK: Pensioners Launch Lawsuit for Rights to Surplus in Fund SOTHEBY'S HOLDINGS: Taubman Weighs Stake in Target of Antitrust Case TOBACCO LITIGATION: judge Says VA Should Not Be Target of Medicaid Suit TOBACCO LITIGATION: Potential jurors questioned for Trial in W. Virginia TRANSCRYPT INTERNATIONAL: Announces Settlement of SEC Investigation ********* AOL: Rivals Continue to Campaign for Instant Messaging (IM) Requirements ------------------------------------------------------------------------ As FCC continued to wrestle with imposing additional regulatory conditions on AOL's pending purchase of Time Warner (TW), Microsoft and other online rivals of AOL pressed their furious campaign for instant messaging (IM) requirements. In latest letter to FCC, Microsoft called again for "imposition of a meaningful and enforceable condition that facilitates IM interoperability by enabling consumers to communicate with each other regardless of the IM system they use." Along with brief letter, Microsoft and its allies sent 2-page fact sheet listing 8 consumer groups, 53 companies and associations, 10 senators, 12 House members and 7 publications that are calling for IM interoperability. At minimum, Microsoft argued in separate filing with FCC Tues., "the Commission should obligate AOL to enter into multiple contracts with leading IM providers to allow for interoperability prior to offering any advanced services over the broadband infrastructure of Time Warner's cable systems." In earlier filing with Commission, nationwide group of ISPs that had brought class action lawsuit over AOL's 5.0 and 6.0 software urged agency to force company to modify its offending software feature. They argued that regulatory condition changing that feature, which directs modem calls away from user's desired ISP to AOL access number, "would do more to introduce competition in Internet access than the instant messaging condition that has been the subject of recent press reports." Meanwhile, new op-ed piece published by Cato Institute said FTC's open access conditions on AOL-TW merger would hurt consumers and hamper competition and innovation by dampening incentives for rivals to build competing high-speed data systems. "The entire forced access campaign is an unfortunate example of unelected regulators overstepping their bounds," wrote Clyde Crews, Cato technology studies dir. "They are exploiting their power over industries to make regulatory 'law' that should require an act of Congress. Forced access represents a regrettable new incarnation of industrial policy." (Communications Daily, January 5, 2001) AVENTIS: Lawsuit Says StarLink Cornn in MO Affects Ability to Export -------------------------------------------------------------------- Stockpiles of StarLink-tainted corn in Missouri have been identified and isolated, and farmers are now seeking markets for it, the director of the state's corn growers association said. "We feel like things are contained at this point," said Gary Marshall, who heads the Missouri Corn Growers Association. "What we want now is for Aventis to follow through with the money to help farmers channel this grain into livestock feed." Aventis CropScience, the company that developed the genetically modified corn, reports that 18,702 acres of StarLink were planted across the state this year, including 120 acres in Boone County and a total of 1,008 acres in the seven adjacent counties. The company said farmers planted 340,821 acres of StarLink across the country. StarLink corn, genetically modified to resist European corn borers, made its way into the food chain through cross-pollination in the field and co-mingling in storage facilities. It has not been approved for human consumption because it might cause an allergic reaction in some people. Discovery of StarLink corn in the food chain led to a nationwide recall of taco shells and other products believed to contain the genetically modified corn. The state corn growers association has advised farmers that the best way for them to protect their crops from future contamination is communication and awareness. " 'Know before you grow,' is what we've been saying," Marshall said. "A large number of farmers had no idea that the product that they were planting wasn't approved for all markets." Marshall said the association believes it is the responsibility of market regulators and companies selling seed to be certain farmers are well informed about the limitations of crops before they buy them. "Most of the farmers we have talked with fully embrace new technology coming out," he said. "But I suspect that farmers are going to be very hesitant now about what they do in the future, not just with Aventis, but with all companies." Marshall said the association has started an information campaign and would like seeding companies to limit sales to products that are approved for all markets. "First of all we are telling companies, 'Don't sell it if it hasn't been approved,' not only here in the United States for feed and food uses, but if it hasn't been approved in any of our major markets," Marshall said. "Then for the farmers, 'Don't plant it, unless you know for sure that the product has been approved and there is a market for it.' " Marshall said Aventis began notifying farmers of the limitations of StarLink corn only well after it had been planted. He said the $ 25 million bond attorney general Jay Nixon is seeking from Aventis to cover losses associated with finding new markets for the corn should be sufficient. "We probably would have liked to see it a little larger," he added. Scott Holste, a spokesman at the attorney general's office, said Aventis has not yet responded to its letter requesting the bond be posted. "We expect to hear from them next week," Holste said. Aventis had 15 days to respond to the letter, which was sent Dec. 18. In the letter, Nixon accused Aventis of poorly handling the StarLink situation. A lawsuit filed in Chicago at the start of the year against Aventis alleges that the StarLink contamination has hurt farmers' ability to export as well as their domestic sales. The federal lawsuit seeks class-action status on behalf of all farmers who grew non-StarLink corn in the United States starting in 1998. Aventis has voluntarily agreed to pay 25 cents per bushel to encourage farmers to contain StarLink and find other markets for it. Marshall said this should cover the costs, provided Aventis doesn't become insolvent before claims can be paid. A spokeswoman for Aventis said this morning that there is no basis for concern about the company's ability to pay for any liability associated with StarLink. (Columbia Daily Tribune, January 5, 2001) BANK ATLANTIC: New Jerseyans Who Paid Top Dollar for Shoddy Home Can Sue ------------------------------------------------------------------------ New Jerseyans who say they paid contractors top dollar for shoddy home repairs will be able to proceed with a class-action lawsuit against the banks that bought mortgages from the contracting companies. Superior Court Judge Burrell I. Humphreys on January 3 ruled that the lawsuit by some 600 northern New Jersey residents can go forward against the banks, primarily Florida-based Bank Atlantic. The out-of-business contracting company, Mayflower Home Improvement, and mortgage broker Sterling Resources are not part of the lawsuit. Plaintiffs' lawyer Madeline Houston said Mayflower agents, some unlicensed, pressured her clients in the late 1980s into signing home repair contracts that averaged at least $20,000 with a 16 percent interest rate. The plaintiffs seek at least $24 million in reimbursements. Humphreys said that if the plaintiffs prove the contracts were illegal, the banks must reimburse the customers, citing Federal Trade Commission standards that banks must take responsibility for the contracting company. But the judge also found that the plaintiffs could not win any damages more than the amount they had paid, ruling out the potential for awards of lawyers' fees and treble damages. Bank Atlantic lawyer Carmen Saginario Jr. said the bank still might appeal the class-action designation. The banks had also argued that the companies should not be held accountable because of a law that allows banks to avoid responsibility if the written contract is legal. The banks dispute the residents' claims that the contracts were illegally backdated to include proper information. (The Associated Press State & Local Wire, January 5, 2001) BIONOVA HOLDING: Completes Definitive Agreements With Savia; Wins Suit ---------------------------------------------------------------------- Bionova Holding Corporation (Amex: BVA) stated that it has made considerable progress on its business and financial restructuring program. As first announced on November 30, 2000, Bionova Holding plans to focus its business on technology and its new trait genomics platform. To this end, Bionova Holding has agreed to sell its fresh produce business and has secured a financing commitment to support its technology business in 2001. On December 28, 2000 Bionova Holding and its parent company, Savia, S.A. de C.V. (NYSE: VAI), entered into a Purchase Agreement and a Cash Support Agreement. The Purchase Agreement, to which Savia's subsidiary Bionova International, Inc. is also a party, contains four major components. First, Bionova Holding will sell its fresh produce farming and distribution business (including all of the debt and liabilities of the fresh produce business) to Savia for $48 million. The purchase price for the fresh produce business will be paid by the application of $48 million of advances previously made by Savia to Bionova Holding. Second, on December 29, 2000 Bionova Holding issued 200 shares of convertible preferred stock to Bionova International for $63.7 million, which was paid through the application of all of the remaining outstanding advances previously made by Savia to Bionova Holding (other than the $48 million which will be applied to the sale of the fresh produce business). The 200 shares of preferred stock are convertible into 23,156,116 shares of Bionova Holding common stock (a conversion ratio based on $2.75 per share of common stock). Third, Savia committed to enter into sublicense agreements whereby it or its affiliates will license to Bionova Holding certain technology rights that are important for Bionova Holding to move forward in its business. Bionova Holding will be able to utilize these rights for research purposes without cost. Upon commercialization of products containing these technology rights the Company will be obligated to pay royalties to Savia and/or the owner of the technology. Fourth, the Purchase Agreement provides that in lieu of the rights offering previously contemplated by the 1998 Stock Purchase Agreement between Bionova International and Bionova Holding, Bionova Holding will issue to each of its stockholders rights to purchase two shares of Bionova Holding common stock for each share they own as of the date the registration statement relating to the rights offering is declared effective or such other record date as may be set by Bionova Holding's Board of Directors. The exercise price for the rights will be $2.50 per share. The rights will expire 60 days after issuance or at such other time as Savia and Bionova Holding's Special Committee of Independent Directors may agree. Each of Savia and Bionova International has agreed to surrender all of the rights it receives to Bionova Holding without exercising them. Therefore, after giving effect to the conversion of the preferred stock, Savia's beneficial interest in Bionova Holding will increase from 76.6% to 87.9%, and may increase further under the Cash Support Agreement described below. Bionova Holding and Savia entered into a Cash Support Agreement for 2001. This agreement provides that, during 2001, Savia will advance funds to Bionova Holding as requested to finance Bionova Holding's technology business. These advances will be applied to the purchase by Savia (i.e., exchanged for) of additional common shares when the sale of the fresh produce business is closed and thereafter through December 31, 2001. The purchase price to be paid by Savia for the additional shares under this Cash Support Agreement will be $2.50 per share prior to the expiration of the rights offering, and then will be the higher of $2.50 per share or the average market price of Bionova Holding common stock. Bionova Holding currently has budgeted cash requirements for the calendar year 2001 in a range of 7 to 8 million dollars. The Cash Support Agreement also acknowledges that if additional funds are required by Bionova Holding's fresh produce business prior to completion of the sale, Savia will be responsible for providing or arranging the financing. The negotiations that culminated in these two agreements were carried out between Savia and Bionova Holding's Special Committee of Independent Directors, and the agreements were subsequently approved by the Board of Directors of Bionova Holding. The pending sale of the fresh produce business remains subject to various conditions, including the approval of stockholders of Bionova Holding. Stockholders will also be asked to authorize additional shares of common stock to permit conversion of the preferred stock issued to Savia into Bionova Holding common stock. Bionova Holding plans to mail a proxy statement concerning the sale of the fresh produce business and other matters to its stockholders, and to file the document with the United States Securities and Exchange Commission ("SEC"). Bionova Holding also intends to file a registration statement relating to the rights offering with the SEC, and is continuing to target an effective date of the registration statement in the second quarter of 2001. Art Finnel, Chief Financial Officer of Bionova Holding, stated that when the sale of the fresh produce business is completed, Bionova Holding will have eliminated all of the debt currently on its balance sheet. Bionova Holding also announced that on December 22, 2000 the United States District Court for the Northern District of California granted summary judgment in favor of the Company, DNA Plant Technology Corporation, and their directors in a class action case brought by Gordon K. Aaron and Fay H. Aaron, former preferred shareholders of DNA Plant Technology, in January 1997. This was the last remaining lawsuit stemming from the merger between DNA Plant Technology Corporation and Bionova Holding's fresh produce subsidiaries in September 1996 to be decided at a district court level. All of the cases have now been decided in the Company's favor in the federal or California state district courts. Appeals are currently pending in two of these cases. Bionova Holding Corporation is a biotechnology company providing capabilities focused on crop protection traits, pesticide discovery, nutraceutical and biotechnology-derived foods through high-efficiency gene profiling, bioinformatics and expertise in plant biology. Bionova Holding tells investors the company and its subsidiaries have strategic alliances and licensing agreements with some of the world's leading agricultural companies, with affiliates, including Seminis Vegetable Seeds, Inc., with value-added producers and marketers, and with biotechnology research groups. Bionova Holding Corporation is majority owned by Mexico's SAVIA, S.A. de C.V., whose subsidiaries include the world's largest vegetable seed company. BREAST IMPLANT: Letters in WSJ Argue on Correlation with Tissue Disease ----------------------------------------------------------------------- Two letters printed in The Wall Street Journal in late 2000 have argued both sides of a discussion concerning a recent breast implant study said to show correlation between implants and connective tissue disease. The first of the letters was submitted by Ralph Knowles, a plaintiffs' lawyer in the breast implant litigation. His argument concerned health risk studies related to breast implants. Knowles said, "The largest epidemiological study by far addressing the association, or not, of breast implants with connective tissue disease found a statistically significant relationship between breast implants and connective tissue disease. The study was conducted by researchers from Harvard Medical School, Brigham & Women's Hospital, and the Harvard School of Public Health. It was supported by grants from Dow Corning Corp. It was peer-reviewed and published in the Journal of the American Medical Association (Hennekens, C.H., Lee, I.M., Cook, N.R., 'Self-Reported Breast Implants and Connective-Tissue Diseases in Female Health Professionals: A Retrospective Cohort Study,' JAMA 275(8): 616-621, Feb. 1996)." In response to Knowles' letter, John I. Levitt, M.D., wrote, "Ralph Knowles's defense of the class-action lawsuit against silicone breast implants needs some clarification. He points out that a study published in JAMA in 1996 showed a statistically significant relationship between breast implants and connective tissue disease. He fails to mention that the study suffered from the serious weakness that the determination of the presence of a connective tissue disease was based entirely on the patients' self-reporting and not on analysis of medical records." Levitt went on to say that when individual records were examined, the presence of connective tissue disease could be confirmed in fewer than 25 percent of the patients reporting such a condition, and that the numerous studies reported since 1996 in which the diagnosis required medical record documentation have failed to find any statistical correlation. (Breast Implant Litigation Reporter, November 13, 2000) BRIDGESTONE CORPORATION: Barrack Rodos Files Securities Suit in TN ------------------------------------------------------------------- Counsel for Class Plaintiff, Barrack, Rodos & Bacine, announced on January 4 that a class action has been commenced in the United States District Court for the Middle District of Tennessee on behalf of all persons who purchased the common stock and American Depository Receipts ("ADRs") for the common stock of Bridgestone Corporation (Nasdaq: BRDCF BRDCY) ("Bridgestone" or the "Company") between March 31, 1998 and August 31, 2000, inclusive (the "Class Period"). The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing a series of material misrepresentations to the market during the Class Period. Specifically, the complaint alleges that during the Class period, Bridgestone and its U.S. subsidiary, Bridgestone/Firestone, had knowledge of thousands of claims for and complaints concerning ATX tire failures, especially ATX tires manufactured at Bridgestone/Firestone's Decatur, Illinois, plant during and after a bitter 1994-1996 strike, due to design and manufacturing defects that resulted in over 2,200 rollover accidents, over 500 serious injuries and approximately 150 fatalities by 2000. Nevertheless, according to the complaint, Bridgestone made false and misleading statements about the effectiveness and integrity of its product design, testing and manufacturing processes and the quality and safety of its products, while concealing its growing awareness of the problems with and defects in the ATX radial tires. The complaint alleges that Bridgestone also failed to properly account for or disclose the prospective cost of these product failures and associated remedial costs, thereby materially misstating its financial condition and reporting inflated earnings during the Class Period. Contact: Counsel for Class Plaintiffs, Barrack, Rodos & Bacine, Shareholder Relations Manager, 800-417-7305, or 215-963-0600, or fax, 888-417-7306, or 215-963-0838, or e-mail, msgoldman@barrack.com. BRIDGESTONE CORPORATION: Milberg Weiss Files Securities Suit in TN ------------------------------------------------------------------ Milberg Weiss (http://www.milberg.com/bridgestone/)on January 4 announced that a class action has been commenced in the United States District Court for the Middle District of Tennessee on behalf of purchasers of Bridgestone Corporation (Nasdaq:BRDCY) common stock and American Depository Receipts ("ADRs") for the common stock of Bridgestone during the period between March 31, 1998 and August 31, 2000 (the "Class Period"). The complaint charges Bridgestone, Bridgestone/Firestone, Inc. and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants disseminated false and misleading statements designed to conceal and cover up defects in steel-belted radial ATX tires manufactured by Bridgestone's U.S. subsidiary, Bridgestone/Firestone, Inc. ("Bridgestone/Firestone") used principally on Ford Motor Company's ("Ford") Explorer sport-utility vehicles. Due to the success of the Explorer, Ford became Bridgestone/Firestone's largest customer and sales of ATX tires became the largest source of revenues and profits for Bridgestone and Bridgestone/Firestone during the 1990s. During the Class Period, Bridgestone and Bridgestone/Firestone had knowledge of thousands of claims for and complaints concerning ATX tire failures, especially ATX tires manufactured at Bridgestone/Firestone's Decatur, Illinois plant during and after a bitter 1994-1996 strike, due to design and manufacturing defects which resulted in over 2,200 rollover accidents, over 500 serious injuries and approximately 150 fatalities by 2000. Nevertheless, Bridgestone made false and misleading statements about the effectiveness and integrity of its product design, testing and manufacturing processes and the quality and safety of its products, while concealing its growing awareness of the problems with and defects in the ATX radial tires. Bridgestone also failed to properly account for or disclose the prospective cost of these product failures and associated remedial costs, thereby materially misstating its financial condition, reporting inflated earnings during the Class Period. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com COMDATA NETWORK: Flying J Seeks to Name Ceridian in Utah Antitrust Suit ----------------------------------------------------------------------- Flying J and NCR Flying J, Inc., which operates a chain of truck stops, and its affiliated entities, TCH, LLC, CFJ Properties, Inc., TFJ and TON Services, Inc., filed a complaint in the United States District Court for the Northern District of Utah against Comdata Network, Inc., a wholly-owned subsidiary of Ceridian, alleging violations of federal and state antitrust laws and asserting state law claims of interference with contractual relations and unfair competition. The complaint, which was originally filed on July 11, 1996, has subsequently been amended four times. In addition, NCR Corporation has intervened in this lawsuit as an additional plaintiff, filing a complaint on September 10, 1999, alleging claims similar to those asserted by the original plaintiffs. This lawsuit is presently set for a jury trial beginning in June 2001. Flying J's motion to add Ceridian as a defendant was denied twice. A motion to reconsider is pending. On November 15, 2000, Flying J served and filed a complaint against Ceridian in the same court accompanied by a motion to stay following Ceridian's answer. Comdata, and if Ceridian is added as a party, then New Ceridian as well, will be responsible for defending this claim and for any liability resulting from it. The Flying J plaintiffs allege that Comdata unlawfully interfered with their efforts to market a point-of-sale device called "ROSS," a kiosk device called "Roadlinks," and a fuel card called the "TCH" card. Specifically, the Flying J plaintiffs allege that Comdata has unlawfully refused to accept the TCH card on Comdata's Trendar point-of-sale system. Flying J also alleges that Comdata unlawfully caused TIC Financial Systems, Inc., a payment card company acquired by Comdata, to cease doing business with Flying J and that Comdata acquired the assets of NTS, Inc., a card company, in order to harm Flying J. Flying J alleges further that Comdata unlawfully terminated the acceptance of Comdata's Comchek card at Flying J locations in response to Flying J's marketing efforts, which allegedly resulted in lost fuel sales at Flying J branded locations. NCR alleges that it would have been the designated third-party support representative for ROSS and, as a result, has allegedly suffered lost profits arising from lost hardware sales, support fees, and installation revenue because it has not participated in any successful sales or support effort for ROSS outside the Flying J network to date. The plaintiffs in this lawsuit seek unspecified compensatory and punitive damages and injunctive relief requiring Comdata to allow Comchek and FDIS (a data capture and reporting feature presently only processed through the Trendar point-of-sale system) transactions to be processed on ROSS and requiring Comdata to allow TCH transactions to be processed on the Trendar point-of-sale system. In addition, with respect to antitrust claims, the plaintiffs are seeking to be awarded three times their claimed actual damages. Although the plaintiffs have not specified the amount of alleged damages they will claim, based on the plaintiffs' positioning in recent discovery proceedings, Comdata believes the amount of damages that will be claimed by plaintiffs will be substantial. In Flying J's motion to reconsider the court's denial to join Ceridian as a defendent, Flying J suggests that its actual damages is expected to exceed $100 million prior to trebling. Comdata believes the plaintiffs' claims are without merit, is contesting each of the claims asserted by the plaintiffs, and intends to continue to defend this matter vigorously. COOK COUNTY: Claims Right over Unclaimed Funds; Works out Agreement ------------------------------------------------------------------- A day after State Treasurer Judy Baar Topinka demanded that Cook County turn more than $88 million in unclaimed funds over to the state, county officials said they had worked out an agreement in a lawsuit to ensure that a large chunk of the money stayed with the county. County officials said they planned to go to court later this month to ask a judge to approve the agreement concerning a 25-year-old class action suit against Cook County that would result in as much as $30 million going into county coffers. But state officials, who say the money and millions more should be sent to the state, criticized the agreement and the county's legal interpretations of where the money rightly belonged. The latest chapter in the fight between Topinka and County Treasurer Maria Pappas concerns an obscure fund created to hold the proceeds from the estates of county residents who died without any identifiable heirs. The suit filed in 1975 questioned how the county was handling the money in the fund. According to county lawyers, a 1980 ruling said the money should be handled by the county treasurer and not declared surplus property that should be turned over to the state. But officials in Topinka's office dispute the county's interpretation of the 1980 court ruling. "We don't believe it," Martin Noven, Topinka's deputy chief of staff for law and policy, said bluntly. "We think if it's an argument they were comfortable with, they would have shared it with us a long time ago and given us a chance to talk to them about it," Noven said. Attorneys in Cook County State's Atty. Richard Devine's office said Circuit Judge Dorothy Kirie Kinnaird could sign off on the agreement by the end of the month. Barring a court fight over the funds between the state and county, $20 million or more could be coming to the county over the next few years as the county reviews the various estates and releases the money, county officials estimated. Pappas said she expects about $5 million would be held in reserve in the event someone comes in with a claim to the money. Pappas said Cook County Board President John Stroger "could be getting a huge windfall here, huge." On January 3, Topinka's office sent a letter to the county, maintaining that a recent audit revealed that $88.1 million in unclaimed property, including money from forgotten estates and property tax refunds that were never picked up, had piled up over nearly three decades. According to the audit, the so-called unknown heirs fund had grown to nearly $42 million. But state's attorneys assign a lower value to the fund, which involves 1,644 estates, at $35 million. At the core of the controversy surrounding Topinka's audit is whether the funds are subject to a state law that would allow the unclaimed property be deposited in the state's pension fund. Topinka's office cites a 1996 federal decision saying the money is unclaimed property and should be turned over to state. County officials contend that state probate laws and an earlier decree in the 1975 case give the county the authority to maintain the funds and ultimately distribute them to the county's general fund. "This is something Dick Devine and (Atty. Gen.) Jim Ryan will take up when they go to work this case out," said Nancy Kimme, Topinka's chief of staff. With Pappas and Topinka heading for a showdown over the audit, left unanswered was whether state officials should have detected problems in the Cook County treasurer's office earlier. Some of the unclaimed cash Topinka's office claims should be handed over to the state dates back to 1972. (Chicago Tribune, January 5, 2001) CREDIT CARDS: New Dispute Queries Ticketmaster's Use of Numbers --------------------------------------------------------------- In a new dispute that raises concern about how companies use consumers' credit card numbers for marketing purposes, concertgoers who purchased tickets from Ticketmaster Online-Citysearch received unordered merchandise and magazine subscriptions charged to their cards, according to a lawsuit filed in the Hillsborough County, Fla., circuit court. A lawyer who filed the suit -- and is seeking class-action status for it -- compared it to suits that were filed against Providian Financial Corp. of San Francisco. In those cases, consumers claimed that they were charged for fee services they had not specifically requested, such as credit insurance. Providian has thus far agreed to pay $405 million to settle complaints about its sales and marketing practices. The Florida suit alleges that Victoria McLean of Valrico bought tickets by telephone in September from Ticketmaster for a concert that month by the Who, and that she refused offers of a magazine subscription and Who-related merchandise. Soon after, she said, she received boxes of Who T-shirts and pins, as well as a $372.17 charge on her credit card that was separate from the charge for the concert tickets. She also claims she got a letter with the dual letterhead of Ticketmaster and Entertainment Weekly that told her that she would receive a free trial subscription to Entertainment Weekly. The letter said that after she got eight free issues, her credit card would be charged $24.95 for the next 16 issues unless she canceled the subscription. Ms. McLean said she had not ordered Entertainment Weekly, which is published by Time Inc., a subsidiary of Time Warner Inc. The suit alleges that Time Inc. and Ticketmaster, of Pasadena, Calif., violated two Florida laws. One law prohibits companies from disclosing credit card account information to another company without the cardholder's consent. The other law states that periodical subscriptions are not enforceable unless the order is in writing. The Tampa law firm of James, Hoyer, Newcomer & Smiljanish, which filed the suit, says it hopes to invoke similar laws in other states and receive class-action status for the suit. "The crux of the case is they gave credit card numbers to another company without proper authorization, and Time then went and charged the card without the permission of the cardholder," said Christopher Casper, a partner at the law firm. Mr. Casper called the suit against Ticketmaster "like the Providian case-plus," though the new suit involves two companies and the unauthorized disclosure of credit card numbers, rather than an issuer placing charges on cards it issued to customers. He said the firm's investigators uncovered large numbers of complaints from consumers that they had been subjected to "slamming," the practice of charging for unordered magazines. Mr. Casper presented a copy of a letter Michele L. Fretwell of Mission Viejo, Calif., wrote to Ticketmaster to cancel a magazine subscription. "I gave them my credit card number for tickets to the circus, not for a magazine," the letter reads. "I don't want the magazine, I never asked for it, but now I have to be the one to contact them if I don't want them to bill my credit card. I have spent an hour on getting this taken care of, an hour that I could have spent with my kids " (The American Banker, January 5, 2001) LERNOUT & HAUSPIE: Obtains Bankruptcy Protection in Belgium on Second Try ------------------------------------------------------------------------- Lernout & Hauspie Speech Products NV (EASDAQ: LHSP), a world leader in speech and language technology, products and services, announced that the Ieper Commercial Court of Belgium has granted it a Concordaat (Judicial Composition), affording the Company reorganization protection under Belgian law. In the United States, L&H commenced, on November 29, 2000, a Chapter 11 reorganization protection under the U.S. bankruptcy code. The insolvency proceedings in both countries shield L&H from creditor and legal claims, enabling the Company to maintain its current business operations, while implementing a restructuring plan. Under the terms of the Concordaat, the court has granted L&H an observation period (a provisional composition) of 6 months (which the court can extend by up to 3 months), allowing the Company to fully implement its recovery plan. Further, the court has appointed 3 composition trustees who, with the cooperation of L&H's management and Board of Directors, will oversee the Company during this observation period. Following the court's decision today, L&H announced that it intended to immediately implement certain recovery measures. One of the elements of this plan is a staff reduction of approximately 1,200 employees, which will occur during the first quarter of 2001. In addition, a retention plan for L&H's remaining employees will be proposed by the end of January. John Duerden, President, Chief Executive Officer and Managing Director said: "It is with regret that we have to undertake employee layoffs. Unfortunately, after an extensive and careful analysis of L&H's existing resources, we were unable to identify any alternatives to this measure. The intellectual assets of the Company will, however, not be endangered by these layoffs. " Added Duerden, "Having been granted a Concordaat, L&H now has sufficient legal protection to implement a recovery plan for the Company. In full cooperation with the composition trustees, I and the rest of the Company's management remain committed to maintaining L&H's global leadership in speech and language technologies and solutions, which will necessitate the implementation of recovery measures." LOUISIANA: Oyster Farmers Face Loss Of Leases for Future Projects ----------------------------------------------------------------- The tension between oyster farmers and state coastal restoration officials will almost certainly increase in coming weeks. The state has begun notifying oyster leaseholders near the Caernarvon Freshwater Diversion in Plaquemines Parish that their leases will not be extended. Also, 147 Barataria Bay oyster leaseholders downstream of the soon-to-open Davis Pond Freshwater Diversion will have 30 days to decide whether to accept a state offer to relocate them or buy them out. And some oyster farmers south of those 147 will be notified that the state won't renew their leases because future projects may affect them. Diversions pump river water into wetlands. Nutrients in the water help rebuild marshes, which are disappearing in Louisiana at a rate of about 25 square miles a year. While freshwater helps the wetlands, it can spell death for oysters, which need a certain level of salinity to grow. The state leases its water bottoms to oyster growers for $2 a year per acre in 15-year, renewable agreements. The state's decision to end some leases and offer to move or buy out others comes on the heels of a huge verdict awarded by a Plaquemines Parish jury last month. The jury found that the Caernarvon diversion ruined oyster leases. The jury awarded $21,345 an acre to five lease holders in a class action case. State Department of Natural Resources Secretary Jack Caldwell said the lease changes are a direct result of the verdict. If the monetary damages in that case were extended to the other 1,253 leases covering the 62,103 acres included in the class action suit, it could cost the state $700 million. The plaintiff whose name is listed first and is synonymous with the case, Albert Avenel Jr., said he had 870 acres of leases, some since 1980. The fresh water killed the oysters, he said. "They are still dead," he added. Houma Attorney Michael X. St. Martin, who represents the plaintiffs, said he won't fight the state's move to end the leases. "Go ahead and cancel the leases," he said. "The leases are destroyed anyway. There is nothing out there that is marketable." Both Caldwell and St. Martin said the Caernarvon experience taught the state that it needed to come up with a relocation program for the Davis Pond diversion. John Supan, an assistant professor with LSU's Sea Grant program, said the loss of leases will have little overall impact on consumers. But ending the leases could severely hurt individual farmers, some of whose families have built up reefs over generations, he said. Ending leases could also harm some restaurants that buy oysters directly from those reefs for their taste and quality, Supan said. Supan added that the timing is bad. Some farmers may have seeded their reefs in September, expecting the state to renew their leases. The leases will be canceled before the oysters reach marketable size, Supan said. Caldwell said the jury verdict means he can't allow extended leases in the area affected by the Caernarvon diversion. In addition to the 22 leases that are expiring, another 122 have expired, some at the end of 1997. No extensions will be granted. The state had "no choice but not renew those leases" because of the possibility of being hit by new lawsuits stemming from Caernarvon, Caldwell said. Lawsuits won't shut down the Caernarvon diversion but may limit how it is operated, Caldwell said. The conflict over oysters could affect the direction of the state's effort to combat coastal land loss. Len Bahr, the governor's assistant for coastal activities, said the Plaquemines Parish verdict "had a chilling effect" on the coastal restoration program. A lot of projects are being put on hold until the oyster issue is resolved, he said. In recent years, the Legislature allowed leases in areas where coastal projects are being built to be extended in one-year increments, called "bobtail" leases, or longer ones, called "operational leases." The operational leases have "a superstrong indemnity clause" that limits the state's liability, Caldwell said. Renewed and new oyster leases in recent years have included a such clauses. But DNR attorney Andy Wilson said District Judge William Rowe of Plaquemines Parish did not rule on the issue of the indemnity clause in the class-action case, so its legality has not been tested. The same day the jury decided the case, the state 4th Circuit Court of Appeal ruled that Rowe should have ruled on the indemnity issue before the trial began, Wilson said. That may factor into a planned state appeal, he said. The jury award was based on something called a "culch currency matrix." Oyster lease holders put culch, usually shells or limestone, on mud to cultivate oysters. Oyster larvae need to attach to a hard structure to grow. To avoid the problems encountered with Caernarvon, the state plans to relocate oyster leases that will be affected by Davis Pond. Leaseholders will have three options: be paid the cost of buying and moving culch to a new spot, selling their lease to the state for the same amount or staying where they are and taking their chances. DNR has set a "culch currency" of 187 cubic yards of culch per acre. The leaseholders will be paid based on that. That's far lower than the 806-cubic-yards-per-acre figure the Plaquemines jury used when computing its damages, DNR officials said. To come up with that number, the jury doubled the 403 cubic yards per acre used by the Oyster Damage Evaluation Board. The board mediates disputes between oyster leaseholders and the oil and gas industry. Some disputes arise when pipelines or other activities damage leases. (The Advocate (Baton Rouge, LA.), January 4, 2001) M&A WEST: Kaplan, Kilsheimer Files Securities Fraud Lawsuit in CA ----------------------------------------------------------------- Kaplan, Kilsheimer & Fox LLP (www.kkf-law.com) has filed a Class Action against M&A West, Inc. and certain of the Company's officers and directors in the United States District Court for the Northern District of California. The suit is brought on behalf of all persons or entities who purchased the common stock of M&A West, Inc. (NASDAQ: MAWI) between August 17, 2000 and December 28, 2000 inclusive (the "Class Period"). The complaint charges M&A West and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants issued a series of false and misleading financial statements and press releases concerning M&A West's publicly reported revenue and net income. On December 28, 2000, M&A West shocked the investment community when it announced that "Information has come to the attention of management that requires the company to reduce its revenues for both the quarter ended August 31, 2000, and the year ended May 31, 2000. The company's current auditor, Hood & Strong, LLP, has withdrawn their audit opinion dated August 3, 2000 for the year ended May 31, 2000. The company is working to make the necessary revisions to its financial statements and will submit the revisions as soon as practicable." Contact: Frederic S. Fox, Esq. Laurence D. King, Esq. Donald R. Hall, Esq. Kaplan, Kilsheimer & Fox LLP 805 Third Avenue - 22nd Floor New York, NY 10022 800/290-1952 212/687-1980 Fax: 212/687-7714 E-mail address: mail@kkf-law.com NANOPHASE TECHNOLOGIES: Stull, Stull Announces Settlement Hearing ----------------------------------------------------------------- The following is an announcement by the law firm of Stull, Stull and Brody: United States District Court for the Northern District of Illinois Eastern Division In re: Nanophase Technologies No. 98 C 3450 Corporation Securities Litigation This Document Relates To: All Actions Except 98 C 7447 Judge David H. Coar Magistrate Judge Martin C. Ashman Summary Notice of Class Action, Proposed Settlement and Hearing Thereon To: All Persons and Entities Who Purchased the Common Stock of Nanophase Technologies Corporation From November 26, 1997 Through and Including January 8, 1998 ("The Class") YOU ARE HEREBY NOTIFIED that a hearing shall be held before the Honorable David H. Coar, United States District Judge, on March 27, 2001, at 9:30 a.m. in Courtroom 1419 of the United States District Court for the Northern District of Illinois, 219 South Dearborn Street, Chicago, Illinois 60604, to determine whether an order should be entered (i) finally approving the proposed settlement of the claims asserted by Plaintiffs in this Action against Defendants Nanophase Technologies Corporation, Leonard A. Batterson, Robert W. Cross, Dennis J. Nowak, Steven Lazarus, Robert W. Shaw and Richard W. Siegel, Donaldson, Lufkin & Jenrette Securities Corp., Furman Selz LLC and CIBC Oppenheimer Corp. on the terms set forth in the Stipulation of Settlement dated November 14 , 2000 (the "Settlement"); (ii) dismissing this Action with prejudice; and (iii) awarding counsel fees and reimbursement of expenses to counsel for Plaintiffs and the Class. If you are a member of the Class and have not yet received the "Notice of Class Action, Proposed Settlement and Hearing Thereon," which more completely describes the terms of the proposed Settlement and your rights thereunder, you should obtain a copy by contacting: Claims Administrator In Re Nanophase Securities Litigation c/o David Berdon & Co. LLP P.O. Box 4171 Grand Central Station New York, NY 10163 Telephone: (800) 766-3330 Fax: (516) 931-0810 Website: www.dberdon.com/claims PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORMATION Dated: January 4, 2001 Clerk of the Court United States District Court Northern District of Illinois Contact: Stull, Stull and Brody, New York Edwin J. Mills, Esq., 212/687-7230 NAVIGANT CONSULTING: Announces Proposed Settlement of IL Securities Suit ------------------------------------------------------------------------ The following is being issued by Navigant Consulting, Inc.: IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS IN RE NAVIGANT CONSULTING, INC. Docket No. 99 C 07617 SECURITIES LITIGATION Honorable Ruben Castillo SUMMARY NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING TO: All persons or entities who purchased or acquired Navigant Consulting, Inc.'s common stock or call options, or sold Navigant Consulting, Inc.'s put options from January 1, 1999 through November 19, 1999 (the "class period") This Summary Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order by the United States District Court for the Northern District of Illinois (the "Court"), dated September 22, 2000. The purpose of this Notice is to inform you of the proposed settlement of at least $23,000,000 that has been reached in this Class Action and that a hearing (the "Settlement Hearing") will be held on March 22, 2001 at 2:00 p.m. in the Court to consider the fairness, reasonableness and adequacy of (i) the proposed settlement ("Settlement") embodied in a Stipulation of Settlement dated September 18, 2000 entered into between Lead Plaintiff Policemen and Firemen Retirement System of the City of Detroit ("Lead Plaintiff") on behalf of the Class and Navigant Consulting, Inc., and (ii) the award of attorneys' fees and expenses to the attorneys for the Class. The proposed Settlement resolves all actual and potential claims, liabilities, demands, causes of action, or lawsuits by each and every Class member against Navigant Consulting, Inc. and certain of its former officers and directors (collectively, with Navigant Consulting, Inc., the "Defendants") and any and all Released Persons, whether legal, equitable, statutory or of any other type or form, and whether brought or potentially brought in an individual, representative or any other capacity, that in any way relate to or arise out of a Class member's purchase of Navigant Consulting, Inc.'s common stock or call options, or sale of Navigant Consulting, Inc.'s put options, during the Class Period, (ii) any event, act, or omission alleged in, or which could have been alleged in, any of the Consolidated Class Actions, or (iii) any alleged statement, misrepresentation or omission by any of the Defendants or any other Released Person relating to Navigant Consulting, Inc. during the Class Period. The settlement consideration for the Class consists of $23,000,000 in cash, 50% of any proceeds that Navigant Consulting, Inc. recovers in a lawsuit over a $10 million policy against one of its insurance carriers, and the performance of settlement administration services valued at least $100,000 by a Navigant Consulting, Inc. subsidiary at no cost to the Class (other than out-of-pocket expenses). A hearing will be held before the Honorable Ruben Castillo, United States District Court Judge, on March 22, 2001 at 2:00 p.m. at the United States Courthouse, Northern District of Illinois, 219 South Dearborn Street, Chicago, IL 60604 for the purpose of determining whether an Order and Final Judgment should be entered: (1) approving the proposed Settlement as fair, reasonable and adequate; (2) dismissing the Consolidated Class Action on the merits and with prejudice as against Defendants; (3) approving the Plan of Distribution; (4) awarding attorneys' fees and expenses from the Settlement Fund; and (5) barring Lead Plaintiff and all Class members from prosecuting, pursuing, or litigating any of the Released Claims against any Released Person. If you purchased or otherwise acquired Navigant Consulting, Inc.'s common stock or call options, or sold Navigant Consulting, Inc.'s put options between January 1, 1999 and November 19, 1999, inclusive, you are a Class member. Your rights against the Released Persons will be affected by this Settlement. In particular, if you wish to share in the settlement, you must file a claim, on a Proof of Claim form, no later than March 22, 2001 establishing that you are entitled to recovery. Please Note: If you fail to file a proper proof of claim form, you will not share in the settlement but you will be bound by the final judgment of the court. You may download a copy of the detailed Notice, and Proof of Claim at the following internet address: www.ncisettlement.com Please do not contact the court or the clerk's office for information. Dated: January 5, 2001 By Order Of The Court United States District Court For The Northern District Of Illinois NX NETWORKS: Vows to Vigorously Defend Securities Suits ------------------------------------------------------- Nx Networks (Nasdaq: NXWX), a leader in next-generation Internet Telephony solutions, announced on January 4 that three complaints have been filed alleging violation of federal securities laws by the Company and certain of its current and former officers. (Filing of such lawsuit(s) has been previously reported in the CAR.) The Company believes that it has meritorious defenses to the claims, and it will defend itself vigorously against such claims. The Company has submitted notices of the lawsuits to its insurance carriers. About Nx Networks Headquartered in Herndon, VA, Nx Networks provides secure, seamless end-to-end interoperability and voice service products to service providers, corporations and carriers in more than 83 countries worldwide. PEERLESS SYSTEMS: Decries Merit of Securities Lawsuit in California ------------------------------------------------------------------- Two shareholder class action lawsuits were filed on August 28, 2000 and on September 19, 2000 against the Company and two former officers of the Company in the United States District Court for the Southern District of California. These lawsuits allege a scheme to artificially inflate the Company's stock price through the dissemination of false and misleading information. The lawsuit seeks compensatory damages, attorney's fees and expenses. The Company has retained Wilson, Sonsini, Goodrich & Rosati, LLP, Palo Alto, CA as counsel in this matter. Peerless believes all of the claims to be without merit. REDLANDS CONTAMINATION: High Court Agrees to Review Denial of Cert. ------------------------------------------------------------------- In their opening brief to the California Supreme Court on the merits of the case, a group of Redlands residents insist that class certification for medical monitoring is necessary in their suit against Lockheed Martin Corp. because it is impractical for individual toxic-tort victims to bring suit given the enormous litigation costs. Lockheed Martin Corp. et al. v. Superior Court of San Bernardino County; Baumac Corp. v. Superior Court of San Bernardino County; Petro-Tex Chemical Corp. et al. v. Superior Court of San Bernardino County , Nos. EO25064 and S088458, merit brief filed (Cal., Sept. 8, 2000); The state's high court agreed to review a lower court's ruling that city residents could not sue as a class for exposure to contaminated groundwater. Background The Redlands plaintiffs secured class-action status as a geographically confined group of residents who say various manufacturing operations by the defendants, beginning in 1954, resulted in the discharge of a host of dangerous chemicals. The substances emitted by Lockheed Martin and others at the industrial site, they say, contaminated part of the city's groundwater supply. Although the medical-monitoring class that was certified by the trial court had a realistic chance of succeeding on the merits, the California Court of Appeal, Fourth District, Division Two, said a class action was inappropriate because of the varied levels of toxic exposure involved. In reaching its decision, the panel cited Kennedy v. Baxter Healthcare Corp., 43 Cal. App. 4th 799 (Cal. Ct. App., 1996), its own ruling sustaining trial court demurrers granted in a suit against a latex glove manufacturer. The varied exposures experienced by the prospective class members, as well as their range of sensitivities, precluded creation of a medical-monitoring class, the appeals court said. The individual issues preventing such a class from being created here, said the panel, include "the need to introduce evidence as to each class member of his or her level of exposure to a range of chemicals and the individual's personal characteristics and health history including alternative risk factors, disease etiology, etc." The court noted that since Lockheed Martin and the other defendants have also raised a statute-of-limitations defense, evidence of each class member's knowledge of the contamination would be relevant. Plaintiffs' Brief on the Merits The Redland plaintiffs cite the California Supreme Court decision in Potter v. Firestone Tire & Rubber Co., 6 Cal. 4th 965, 1008 (1993), which held that "recovery of medical monitoring costs is supported by a number of sound public policy considerations." Following the decision in Potter, the plaintiffs argue, its is the policy of the state to allow innocent victims of toxic exposure, who have not yet manifested physical injury, to recover for necessary medical monitoring. But, the plaintiffs say, if the class-action device is not made available to exposure-only victims of toxic pollution, the individual cost of pursuing a corporate polluter for the relatively inexpensive per-person cost of medical monitoring effectively prohibits any single victim from actually filing suit. The other arguments that the plaintiffs put forth for class certification include: -- Certification is appropriate to allow tort victims access to the judicial system; -- Certifying this medical-monitoring case will deter corporate polluters; -- Claims for medical monitoring following toxic exposure present predominantly common issues; -- Individual issues relating to the scope of each class member's medical monitoring do not preclude certification; -- The burden of proof in medical-monitoring claims can be met on a class basis; -- Common proof of class-wide need for medical monitoring does not deny defendants' due process or the right to jury trial; and -- Federal and state courts have certified class actions for medical monitoring. Finally, the plaintiffs maintain that the trial court properly exercised its discretion in certifying this case as a class action and its certification order should be reinstated. The Redland plaintiffs are represented by Walter Lack, Gary Praglin and Richard Kinnan of Engstrom, Lipscomb & Lack in Los Angeles; Edward Masry of Masry & Vittitoe in Westlake Village, Calif.; Thomas Girardi of Girardi & Keese in Los Angeles; and Alexandra Ward of Ward & Ward in San Bernardino, Calif. (Breast Implant Litigation Reporter, November 13, 2000) ROYAL BANK: Pensioners Launch Lawsuit for Rights to Surplus in Fund ------------------------------------------------------------------- A group of Royal Trust pensioners from across Canada have launched a class action suit to assert their rights to a $150 million surplus in their pension fund and seek damages for what they claim were wrongful actions by the Royal Bank over the course of a decade. The statement of claim filed in court alleges that in 1985, Royal Trust's predecessor, Royal Trustco Limited, reduced the formula for calculating pension benefits for each year of pensionable service from 2% to 1.25% and that the company failed to properly notify plan members. Royal Bank believes the suit has no merit as the surplus has been used as a cushion from the volatility of the financial markets, thereby ensuring the protection of the plan members. However, market returns in recent years have helped grow the surplus to more than half of the plan's assets. (Benefits Canada, December, 2000) SOTHEBY'S HOLDINGS: Taubman Weighs Stake in Target of Antitrust Case -------------------------------------------------------------------- Alfred Taubman, the former chairman of Sotheby's Holdings and the focus of a federal antitrust investigation, filed papers that signaled his exploration of a sale of his controlling interest in Sotheby's. Mr. Taubman reported in a filing with the Securities and Exchange Commission that he had hired Credit Suisse First Boston to evaluate his investment in the auction house and put a value on his 13.2 million shares, a step that some financial analysts read as a prelude to divestiture or merger discussions. They also saw it as a tactical maneuver in the criminal investigation into his possible role in an illegal arrangement to fix commission fees that Sotheby's engaged in for much of the 90's with its archrival, Christie's. Mr. Taubman has denied any wrongdoing. "It's one bargaining chip, a willingness to give up control," said James M. Meyer, director of research at Janney Montgomery Scott, a Philadelphia investment firm. The S.E.C. filing is required of major shareholders considering ownership changes. But Mr. Taubman's office cited "a wide range of potential options," including buying additional shares or securing new financing, as well as a sale, and said, "Mr. Taubman has made no decisions." "Mr. Taubman felt it was the appropriate time to start a formal process to value his interest in Sotheby's," said Christopher Tennyson, Mr. Taubman's spokesman in Detroit, where the Taubman development and shopping center empire is based. One financial executive close to the evaluation said it was clearly aimed at a sale. Mr. Taubman could sell just his shares, which represent a 63 percent controlling interest, or the entire company. But the executive said the process was in its earliest stages, with no potential buyers yet identified. Ronald Baron, chairman and chief executive of Baron Capital, Sotheby's largest outside shareholder, with a $500 million investment, declined to say whether he was interested in buying the Taubman shares. He said: "I'm interested in his announcement and am considering all the alternatives." Under the terms of Sotheby's articles of incorporation, the company has 30 days to match any offer to buy Mr. Taubman's shares. Sotheby's total value is $1.6 billion based on its stock price (the stock closed at $24.13 on January 4, up $1.88) and the company debt reported on its Sept. 30 balance sheet. Last fall, Sotheby's hired two investment firms, Morgan Stanley Dean Witter and J. P. Morgan, to advise on its financial options. Last month, Moody's Investor's Service, citing multimillion-dollar settlements growing out of civil litigation related to the antitrust investigation, downgraded the company's credit and debt rating to junk status. Mr. Taubman, 75, a blunt-spoken, self-made real estate tycoon who bought the ailing auction house in 1983 and took it public, is the sole remaining target in a four-year-old Justice Department investigation into collusion between the auction giants. Sotheby's former president and chief executive, Diana D. Brooks, who resigned from the company in February, pleaded guilty in the price-fixing case in October and agreed to become a witness against Mr. Taubman. Ms. Brooks is scheduled to be sentenced in federal court in Manhattan, but people close to the case said that because Mr. Taubman had not been charged and her cooperation has yet to be tested, prosecutors are almost certain to request a postponement. Sotheby's also pleaded guilty to federal conspiracy charges. Christie's received conditional amnesty from the government for coming forward first with evidence of collusion. Both auction houses have also agreed to settle a class-action lawsuit for a total of $512 million. The agreement is being reviewed by a federal judge, Lewis A. Kaplan. Mr. Taubman agreed to pay $156 million of Sotheby's $256 million share of the settlement in exchange for the company's agreement not to pursue any claims against him. In addition, he agreed to pay $30 million to settle a stockholder's lawsuit. Some analysts and Sotheby's officials said that they thought Mr. Taubman might also be trying to evaluate his holdings in order to use them as collateral against a future loan needed to pay his portion of the fine and settlement, as well as legal fees. (The New York Times, January 5, 2001) TOBACCO LITIGATION: judge Says VA Should Not Be Target of Medicaid Suit ----------------------------------------------------------------------- Medicaid patients who are seeking money from tobacco companies should sue the industry and not West Virginia, a federal judge has ruled. U.S. District Charles H. Haden II early this year dismissed a class-action lawsuit by smokers seeking some of the estimated $1.8 billion the state will receive over 25 years in a nationwide settlement with cigarette makers. Terms of the settlement and state legislation give state government a "complete right, title and interest to the settlement proceeds," Haden said. The U.S. Constitution provides immunity to state government from such a lawsuit, the judge said. The settlement and state law do not bar smokers from suing the industry, Haden said. Attorney General Darrell V. McGraw joined other state attorneys general in a lawsuit against the tobacco industry in 1994. They sought to recover millions of dollars spent by the state-federal Medicaid program to treat tobacco-related illnesses. When the lawsuit was filed last year, state lawmakers said it had no merit and would force them to take $57 million from the state budget if the smokers had prevailed. (The Associated Press State & Local Wire, January 5, 2001) TOBACCO LITIGATION: Potential jurors questioned for Trial in W. Virginia ------------------------------------------------------------------------ About 200 potential jurors have answered a 30-page survey before being selected to decide if the tobacco industry should be forced to spend as much as $500 million on doctors' exams for healthy people who kept smoking. Jury selection started last Thursday January 4 in a trial that is expected to take 3 1/2 months. Ohio County Circuit Judge Arthur Recht, who is being assisted by Kanawha County Circuit Judge Tod Kaufman, said he hopes to have a jury seated by Saturday. Opening arguments are set to begin Tuesday. The West Virginia case marks the first time a class-action lawsuit demanding that a tobacco company pay for preventive medical monitoring has made it to trial in the United States. Twelve other cases have been filed around the country since 1996, according to Jeff Furr, an attorney for R.J. Reynolds. Ten were denied class-action status and dismissed. One, in Nevada, is still under review by the courts. A Louisiana case has been granted class-action status but is not expected to go to trial until the summer. "This is an extremely unique case - to have uninjured plaintiffs who have knowingly and voluntarily exposed themselves to the most widely known risk in our society, and who are not sick," Furr said. The defendants include four manufacturers that altogether have 96 percent of the U.S. market: Reynolds; Philip Morris; Brown & Williamson; and Lorillard. Also targeted is industry turncoat Liggett & Myers, whose top executive is expected to be a key witness for the smokers. The lawsuit covers 250,000 West Virginians who have smoked the equivalent of a pack a day for five years since 1995, but who do not currently have a tobacco-related illness. "West Virginians are entitled to obtain monitoring as a result of their exposure to a very toxic group of substances," said one of the smokers' lawyers, Scott Segal. The smokers want a court-supervised and industry-funded medical board to be created so they can get free tests to detect the many illnesses they are likely to develop, including lung and heart disease. The tobacco industry's lawyers argue that smokers have knowingly and voluntarily exposed themselves to a risk that has been publicized on warning labels for decades. The plaintiffs, however, say manufacturers were negligent in disclosing the extent of the health risks associated with smoking, which they say are far greater than an ordinary consumer would expect. The smokers also maintain that warning labels are inadequate, that cigarettes have a design defect, and that manufacturers have failed to incorporate changes that would make their products safer. Potential jurors have responded to detailed questions about their experience with smoking, tobacco product advertising, news reports on smoking hazards, as well as family members, friends and co-workers with smoking-related illnesses, The Intelligencer of Wheeling reported. Potential jurors also were interviewed individually. The pool was pared to 110, which Recht hopes to further decrease to 22 within the first week of 2001. From that pool, six jurors and four alternates will be chosen. One juror who was excused from the case without questioning was Ohio County Commission President Tim McCormick, the newspaper reported. McCormick and fellow commissioners Randy Wharton and David Sims had approved funding to upgrade the courtroom for the tobacco trial. Recht said it was the first time he has had to exclude a public official from jury service. One woman, who said she smoked four or five cigarettes a day over a 15-year period, was excused on a motion by Furr. "We don't believe she could judge the case solely on the evidence," Furr said. The woman said warning labels on cigarettes should serve as prevention against suits against firms. "If there's a warning label, it's a person's responsibility whether they want to smoke or not," she said. But if "something was placed in the product that shouldn't be there," she said she would take a negative view. A man, who also said that individuals "should be held responsible for what they do or what they think," was included in the jury pool. Segal unsuccessfully called for his exclusion. (The Associated Press State & Local Wire, January 5, 2001) TRANSCRYPT INTERNATIONAL: Announces Settlement of SEC Investigation ------------------------------------------------------------------- Transcrypt International, Inc. (OTC Bulletin Board: TRII) announced on January 5 that the Securities and Exchange Commission ("SEC") investigation associated with financial reporting errors in certain of the Company's 1996 and 1997 quarterly and annual fiscal reports has been settled. Under the terms of this settlement, Transcrypt has entered into a cease-and-desist order, which precludes any future violations of SEC rules and regulations. The settlement does not require Transcrypt to pay any financial penalty. Michael E. Jalbert, chairman and chief executive officer commented "Resolving the SEC litigation is a major milestone for Transcrypt, and it represents the final chapter of the problems inherited by this current management. With this settlement, our efforts can now be 100-percent focused on shifting our emphasis from legacy products to new products that fully exploit the benefits of digital technologies." The SEC began its formal investigation in April 1998 after the Company revealed that it had improperly recognized revenue for certain transactions. As a result, Transcrypt had to restate its financial reports in both 1996 and Although the Company resolved the associated class action lawsuits in 1999, the SEC investigation had continued during 2000. Transcrypt International, Inc. (http://www.transcrypt.com) designs, manufactures and markets trunked and convention radio systems, stationary land mobile radio transmitters and receivers, including mobile and portable radios, and manufactures information security products that prevent the unauthorized interception of sensitive voice and data communication. ********* 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 * * *