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/raid1/www/Hosts/bankrupt/CAR_Public/010309.MBX C L A S S A C T I O N R E P O R T E R Friday, March 9, 2001, Vol. 3, No. 48 Headlines ANALYTICAL SURVEYS: Contests Consolidated Lawsuit over Common Stock CRAWFORD & CO: Served with DOJ Subpoenas Re Healthcare Billing Practices DOJ: Lawyers Find Ally in Moran to Reverse Policy of Not Paying for OT GENERAL MOTORS: Union Included in Strike-Related Suit; Judge Gives Nod HOLOCAUST VICTIMS: German Industry Pressed To Pay After Ruling on Suit HOLOCAUST VICTIMS: German Minister Calls On Firms To Pay INMATES LITIGATION: Cook County Again Target of Women's Stip Search Suit INTERSHOP COMMUNICATIONS: Milberg Weiss Announces Securities Suit in NY L.A. POLICE: Mayor Candidate Makes Election Pledge To Remove LAPD Chief NEW JERSEY: Group Claims Agency Tampers With Records Of Foster Children NFL: To Sell Sunday Ticket on Weekly Basis to Settle Antitrust Suit NIH, THOMPSON: Law Firm Will Sue Over Use Of Tax To Fund Embryo Research NORTEL NETWORKS: Berman DeValerio Announces Securities Suit Filed in NY NORTEL NETWORKS: CEO John Roth Issues Open Letter to Stockholders NORTEL NETWORKS: Johnson & Perkinson Announces Lawsuit Filed in New York NORTEL NETWORKS: Keller Rohrback Announces Assignment of Suit to Judge NORTEL NETWORKS: Pomerantz Haudek Announces Securities Suit Filed in NY OAKWOOD HOMES: Subsidiaries Sued for Allegedly False Advertising SMITHFIELD FOODS: Judge Weighs Arguments In Hog-Pollution Suit SUNOCO INC: Hit with Suit over Employment Race Discrimination ********* ANALYTICAL SURVEYS: Contests Consolidated Lawsuit over Common Stock ------------------------------------------------------------------- The Company has been named as a defendant in a consolidated putative securities class action alleging a misstatement or omission of material facts concerning the Company's operations and financial results. Plaintiffs seek to represent themselves and a class of all public investors who purchased or otherwise acquired common stock of the Company and who suffered damages, and seek an award of compensatory damages and attorneys' fees and costs. The company says that it is impossible to evaluate the impact that the above actions, or any future, related actions, may have on the Company. However, it is reasonably possible that an unfavorable outcome in the present litigation, or in any related future actions, could have a material adverse impact on the Company's financial condition or results of operations in one or more future reporting periods. The Company intends to defend itself vigorously in these actions. CRAWFORD & CO: Served with DOJ Subpoenas Re Healthcare Billing Practices ------------------------------------------------------------------------Crawford & Company (NYSE: CRDA CRDB) announced on March 7 that the company has been served with federal grand jury subpoenas issued out of the Northern District of Ohio seeking certain company records relating primarily to two of its domestic businesses, Healthcare Management Services and Claims Management Services. The company has been informed by government attorneys that the subject of the investigation is the billing practices of the company. Crawford believes that this inquiry may have arisen primarily from two incidents. The first is the February 2000 guilty plea of a former company branch manager to fraud charges related to inappropriate service billings from 1992 to 1997. The company cooperated fully in that investigation and reached a civil settlement with the government in that matter. The second is a billing dispute with a client involving billings from 1994 to 1999 under a single program. The company is currently negotiating a settlement of that matter with the client, and has recognized reserves for potential over billed amounts. The company is cooperating fully with the government's inquiry and has commenced an internal review of its billing practices under the direction of its board of directors, with the assistance of outside legal counsel, together with an independent accounting firm, and other experts as may be appropriate. It has taken steps to reduce the likelihood of similar incidents through enhanced employee awareness programs and additional internal audit safeguards. Crawford & Company is the world's largest independent provider of diversified services to insurance companies, self-insured corporations, and governmental entities. A few of the many services provided are claims management, loss adjustment, healthcare management, risk management services, class action administration, and risk information services. Crawford & Company is an Atlanta based corporation with approximately 10,000 employees worldwide and over 700 offices in 65 countries. The Corporation's shares are publicly traded on the New York Stock Exchange under the symbols CRDA and CRDB. The web address is crawfordandcompany.com . DOJ: Lawyers Find Ally in Moran to Reverse Policy of Not Paying for OT ---------------------------------------------------------------------- Rep. James P. Moran has pressed Attorney General John Ashcroft to reverse a long-standing Clinton administration policy of not paying overtime to Justice Department lawyers. The Virginia Democrat has put together a bipartisan coalition of House members from the Washington area in an effort to overturn the policy, which is the subject of a class-action lawsuit brought by 9,100 department lawyers. In a letter to Mr. Ashcroft, Mr. Moran said federal law requires all federal agencies to compensate their employees, including professionals, for overtime, but the Justice Department over the past several years had refused to pay overtime to its lawyers. He described the lawyers as "the most dedicated professionals in the entire civil service." "As the federal work force faces the prospect of losing an unprecedented number of employees over the next five years, government policies should encourage rather than discourage the retention of our most capable workers," Mr. Moran said. "Attorneys at many other federal agencies are compensated for their overtime . . . granting overtime pay to Justice Department attorneys is an issue of basic fairness," he added. The class-action suit was filed in November 1998 in the U.S. Court of Federal Claims on behalf of lawyers who have worked for the Justice Department in Washington and in U.S. attorneys' offices nationwide since November 1992. The lawsuit first was brought by 180 present or former Justice Department lawyers; 9,000 department lawyers have joined in the suit since September 1999. Department officials have argued that the payment of overtime to its lawyers could cost taxpayers $40 million a year. (The Washington Times, March 08, 2001) GENERAL MOTORS: Union Included in Strike-Related Suit; Judge Gives Nod ---------------------------------------------------------------------- More than 140 United Auto Workers members may proceed with their lawsuit against their union and General Motors Corp. over claims a 1997 strike against the automaker was needlessly prolonged, a federal judge has ruled. The $550 million suit by the 142 workers claims union leaders demanded jobs for relatives and improper overtime payments for ending the 87-day strike at GM's Pontiac truck plants. The lawsuit also accuses GM of going along with the alleged scheme related to the strike, which the suit alleges cost the average worker $10,000 to $20,000. GM, the UAW and its Local 594 had sought to have the lawsuit thrown out by U.S. District Judge Paul Gadola, who on Wednesday denied those requests. Now, the workers' attorney, Harold Dunne, can take depositions and get internal documents from GM, the international union and the local. "It's a very important victory for us because we are now able to get to all of the documents to prove our case," Dunne told the Detroit Free Press. "That's what this whole thing was about." Still, Gadola agreed to drop defendants Gordon Campbell and Todd Fante from the lawsuit, ruling that as individuals they were not liable for damages. The suit said Campbell, son of Local 594's bargaining committee chairman in 1997, and Fante, the son of a close friend of a UAW international representative, were not qualified and got jobs after the strike because of their connections. Dunne said he now will ask Gadola to give the lawsuit class-action status. The plant has 6,000 workers. The lawsuit alleges fraud, collusion and extortion over alleged GM-accepted demands by Local 594. Among other things, the suit says the UAW and GM breached their contract and duty, that Local 594 did not fairly represent its members. GM has said it believes the suit will be dismissed. "Our position is that the courtroom is not the forum to discuss differences with how labor negotiations went," Andrew Kramer, a lawyer with a Washington, D.C., firm representing GM, said last month. Federal investigators also are looking into circumstances surrounding the strike. (The Associated Press State & Local Wire, March 8, 2001) HOLOCAUST VICTIMS: German Industry Pressed To Pay After Ruling on Suit ---------------------------------------------------------------------- Backers of compensation for Nazi-era slave laborers pressed German industry Thursday to finally pay its share of a planned fund after a U.S. judge refused to dismiss a class-action lawsuit, citing concern that the fund's financing was uncertain. The decision by U.S. District Judge Shirley Wohl Kram on Wednesday deepened the deadlock in a joint effort by the German government and companies to compensate an estimated 1 million survivors of Nazi slave and forced labor. Most are non-Jews from eastern and central Europe. "What's most important now is that industry starts paying," said German lawmaker Volker Beck, one of the fund's trustees. German industry "provoked" the New York judge's decision by failing to raise its half of the planned $4.8 billion fund, Beck charged. A spokesman for companies participating in the fund, Wolfgang Gibowski, said they still insist on the dismissal of all lawsuits on behalf of Nazi-era laborers before freeing up what they have raised - currently $1.7 billion. "It's very bad. It's regrettable, because it will mean that payments to the victims will be further delayed," Gibowski said on ZDF television Wednesday night. Under an agreement last year, German companies insisted on "legal peace" in U.S. courts in return for compensation payouts to the aging victims. Deidre Berger, the American Jewish Committee's envoy to Berlin, also appealed to German industry to break the standoff. "The solution is very easy if German industry would pay at least the money it has collected into the fund," she said. "It would set a sign of good will that the judge would take seriously." But Gibowski said that besides the New York case, "many more" against German companies were pending in U.S. courts. German industry has indicated it doesn't expect to make its first payment into the German foundation set up to run the fund until June. Horst Eylmann, an opposition conservative lawmaker, urged Chancellor Gerhard Schroeder to discuss ways out of the deadlock with U.S. President George W. Bush. Schroeder visits Washington this month. (The Associated Press State & Local Wire, March 8, 2001) HOLOCAUST VICTIMS: German Minister Calls On Firms To Pay -------------------------------------------------------- Finance Minister Hans Eichel called Thursday for German firms to pay the over some two billion dollars promised to compensate former Nazis slaves and forced laborers, after a New York judge refused to dismiss claims against German banks. "Now the ball is in the court of German companies," Eichel told the German ZDF television network. A New York judge on Wednesday refused to dismiss legal claims filed against German banks by former slave laborers under the Nazis, possibly delaying payments by the banks to surviving victims. The judge, Shirley Wohl Kram, declined to close the door on further claims citing the fact the fund for compensating the victims is not yet fully funded. Such a measure "would effectively block absent class members from pursuing any remedy other than the Foundation," she said, adding that it signified an "unacceptable prejudice to the absent plaintiff class." Kram said many victims with possible claims "have waited decades to receive compensation for their property claims, and it would be unjust to divert their claims to a forum whose funding remains in question." Chancellor Gerhard Schroeder is to meet with German industry representatives soon to attempt to resolve open questions delaying compensation for former slave laborers under the Nazis, a government spokesman said Wednesday. German firms and the German state have each undertaken to provide five billion marks (2.5 billion euros, 2.3 billion dollars) for the compensation. But while the state has come up with its share, the firms are still some 1.4 billion marks short. Eichel said the government would not be giving more money to make up for what industry has failed to pledge. (Agence France Presse, March 8, 2001) INMATES LITIGATION: Cook County Again Target of Women's Stip Search Suit ------------------------------------------------------------------------ Women held in Cook County Jail are subject to strip searches in conditions so filthy and public that they are unconstitutional, according a federal lawsuit filed Wednesday. The lawsuit, which names Sheriff Michael Sheahan and seeks class-action status, does not call for an end to strip searches but seeks an injunction to force Sheahan to adopt rules that ensure women's rights are protected during the searches, said attorney Thomas G. Morrissey. He said he would seek a temporary restraining order in U.S. District Court in Chicago to halt the allegedly improper searches while the suit is pending. The allegations come about 2 1/2 years after a federal judge ordered the Sheriff's Department to halt searches of women who have been ordered released from custody. The sheriff was held liable for damages in that case and has appealed. Some 2,600 women are preparing to go to trial on their damage claims, said Morrissey, the attorney in that case as well. Morrissey filed the latest suit on behalf of inmates Crystal Wilkes, Sharon Hollister and Tonya Townsend, who were also party to the initial suit. But Morrissey said he will seek class-action status to represent the thousands of women he said have undergone "embarrassing, repulsive" searches. Oftentimes, according to the suit, women are strip-searched in large rooms that male guards can easily access. Women have also been forced to strip in rooms with glass walls that look into hallways where male guards pass, the suit says. Sheriff's Department spokeswoman Sally Daly said the department has yet to review the specifics of the suit, but she denied that women's rights are being violated. "We believe these allegations are completely baseless," she said. "We don't believe they're true or reflect the conditions or policies that go on at Cook County Jail." Daly did not dispute that women are searched in groups, but said, "Given the volume of prisoners at Cook County Jail," it's "impossible to do" one-on-one searches. (Chicago Tribune, March 8, 2001) INTERSHOP COMMUNICATIONS: Milberg Weiss Announces Securities Suit in NY ----------------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on March 7, 2001, on behalf of purchasers of the securities of Intershop Communications AG (NASDAQ:ISHP) pursuant and/or traceable to the Company's September 29, 2000 initial public offering ("IPO") of American Depositary Shares ("ADS") through January 1, 2001, 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/intershop/ The action, numbered 01-CV-1947, is pending in the United States District Court for the Southern District of New York, located at 500 Pearl Street, New York, NY 10007, against defendants Intershop, Stephen Schambach, Wilfried Beeck, Credit Suisse First Boston, Chase H&Q and U.S. Bancorp Piper Jaffray. The Honorable Charles S. Haight, Jr. is the Judge presiding over the case. The Complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading Registration Statement and Prospectus in connection with its September 29, 2000 IPO of ADS, which enabled the Company to raise over $100 million. Specifically, the Complaint alleges that the Registration Statement and Prospectus contained statements which falsely and misleadingly described the success and future operations of Intershop, when, in fact, the Company was experiencing problems with sales in the United States and demand for its products was weakening. On January 1, 2001, the Company finally disclosed the problems that it was experiencing and the impact these problems would have on its earnings for the fourth quarter of 2000. Investor reaction to this announcement was harsh and punitive as shares of the Company's ADS fell by $10.3125 per share to close at$ 4.8125 on volume of almost one million shares traded, more than ten times the average volume for the Company's shares. Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G. Schulman or Samuel H. Rudman, 800/320-5081 intershopcase@milbergNY.com http://www.milberg.com L.A. POLICE: Mayor Candidate Makes Election Pledge To Remove LAPD Chief ----------------------------------------------------------------------- Los Angeles City Councilman Joel Wachs said that if he is elected mayor he will dump Police Chief Bernard C. Parks at the end of the chief's term in 2002--upping the politically charged discussion about how the next mayor will deal with the head of the troubled Police Department. Wachs' statement came two days after Parks was confronted with another blow--allegations that he misled the public about the department's purported attempts to bypass the Los Angeles County district attorney's office in its investigation of the Rampart Division corruption scandal. Parks has vehemently denied that he tried to funnel evidence in that investigation to federal prosecutors rather than turning it over to the district attorney's office. He also rejected suggestions by the department's inspector general that he misled the public by saying that the department was fully cooperating with county prosecutors in the criminal investigation. "At no time was the D.A.'s office ever not given information they wanted," Parks said. "I will categorically state that I have not misled the public nor any member of the Police Commission or this department." With his call for Parks' ouster, Wachs positioned himself as the mayoral candidate most critical of the chief, whose public approval has been badly damaged in the last year but who remains popular among African Americans. According to Wachs, the recent accusations about Parks' credibility in the Rampart debate--added to other concerns--convinced him that the chief should go. Wachs was meeting with members of The Times editorial board Monday when, in response to a question, he said that he would remove the 36-year veteran from his post when the chief's term expires in the summer of 2002. Wachs added that he would have his police commissioners begin a search for a new chief as soon as they took office later this year to allow an entire year for a change in police administration. Parks declined to comment, but a statement released by the LAPD press office questioned Wachs' motives. "Proposition F, passed by the voters in 1992, provided for the mayor to play a pivotal role in the selection and/or reappointment of a chief of police," said Lt. Horace Frank, a department spokesman. "We would hope that any decision to select and/or reappoint a chief of police would be objectively based and not politically motivated or based." Although the statement did not say so directly, Wachs has courted the support of the Los Angeles Police Protective League, whose leadership and members have frequently criticized the chief. In the past, the league's endorsement has been a coveted prize in the city's political sweepstakes. Ace Smith, campaign manager for candidate Steve Soboroff--who also is hoping to secure the league's support-- characterized Wachs' action as one of "a desperate politician." All of the top six contenders to replace Mayor Richard Riordan have said in recent weeks that they believe Parks must markedly improve morale, hiring and oversight of police officers if he is to win a second, five-year term as chief. Soboroff, a commercial real estate broker, had previously gone the furthest--saying that if he had to make the decision now he would not reappoint Parks. But even Soboroff left open the possibility that Parks could turn the department around and earn a second term. Wachs was not so equivocal. Asked how he would deal with the chief if he were elected mayor, Wachs said in an interview after meeting The Times editors that a string of recent problems had damaged the credibility of Parks and the department. The nearly 30-year city councilman, who was one of the most prominent backers of former Chief Daryl F. Gates, said he has been particularly disappointed that Parks has not done more to implement community-based policing. He noted that Parks eliminated a system of "senior lead officers"--ranking officers assigned to neighborhoods, where they got to know residents and specific local crime problems. Although Parks has pledged to reinstate the community officers, Wachs accused him of dragging his feet. "The department must actively embrace and reach out to the people and most officers know that," Wachs said. "But the current administration doesn't have a really fundamental belief in that and the desire to give more than just lip service to it." Wachs also cited a federal lawsuit filed last year by a former LAPD detective, who charged that his efforts against corruption in the Rampart Division were thwarted by Parks and other top officials, months before the scandal became public. That suit was followed closely by another one in which dozens of current and former officers joined a class-action alleging retaliation by the department against whistle-blowers. "All of these things cumulatively make it very difficult to restore the confidence of the public and of the officers and to start improving the police department," Wachs said. (Los Angeles Times, March 8, 2001) NEW JERSEY: Group Claims Agency Tampers With Records Of Foster Children ----------------------------------------------------------------------- A children's advocacy group that is suing New Jersey's child protection agency accused the state of trying to falsify the records of foster children to "corrupt evidence"in the case. Children's Rights Inc. alleged in papers filed in federal court in Trenton that the New Jersey Division of Youth and Family Services ordered caseworkers to alter records detailing the treatment of children in foster care. The New York-based group is seeking a temporary restraining order against alleged tampering of evidence in the case. U.S. District Judge Garrett E. Brown Jr. agreed to hold a hearing about the complaint March 14. DYFS director Charles Venti blasted the 1 plaintiff's charges. "We are appalled by these outrageous accusations and wholeheartedly deny the idea that caseworkers were instructed to alter case records," Venti said in a written statement."DYFS is committed to serving the children of New Jersey and will continue to vigorously fight the unfounded accusations made by Children's Rights." In Children's Rights two-year-old federal lawsuit, the non-profit group charged that DYFS is poorly managed, fails to protect thousands of abused and neglected children in its care, and should be overhauled. DYFS officials have long sought to have the suit dismissed. They say they have been working hard to fix the problems highlighted in 1998 by a blue-ribbon panel commissioned by Gov. Christie Whitman: that DYFS workers had overwhelming caseloads and insufficient training, that children languished too long in foster care, and other woes. On Wednesday, Children's Rights new court papers quoted three DYFS caseworkers from Newark and southern Jersey who said their supervisors told them to"audit"the files of foster children and add documentation that was missing. One Newark caseworker who signed an affidavit said he was told to backdate newly written records, the group alleges. "I had to create documents which should have existed but did not because I had been too overloaded with cases to keep up the files," echoed an affidavit from a caseworker in Cape May."The documents I was supposed to get into the files dated back as far as three years,"and included reports assessing the well-being of the children. Eric Thompson, a lawyer for Children's Rights, said his office wants to review DYFS records to determine if foster children are receiving proper services. The original suit on behalf of 20 foster children, known as "Charlie and Nadine H. vs. Whitman", is named after a young brother and sister who were allegedly beaten with metal rods and buckets in a foster home filthy with garbage and cat feces. The plaintiffs charge DYFS has failed to give these children, and many like them, the safe homes, therapy, and adoptive families they deserve in a timely manner. 1 Charlie and Nadine H. are still waiting to be adopted after almost eight years in foster care, the plaintiffs lawyers say. Earlier this year, Children's Rights asked Brown to certify the lawsuit as a class action on behalf of all foster children, and DYFS protested that certification. The judge's decision on that dispute is pending. DYFS serves about 50,000 children in New Jersey, including more than 9,000 in foster care, group homes, and other residential placements. (The Record (Bergen County, NJ), March 8, 2001) NFL: To Sell Sunday Ticket on Weekly Basis to Settle Antitrust Suit ------------------------------------------------------------------- To settle a consumer antitrust suit, the National Football League has agreed to revamp the way it markets its "Sunday Ticket" to allow viewers to purchase it on a weekly basis instead of buying the entire 17 weeks as a package and to pay out more than $ 13 million. Under the proposed settlement, consumers will share a pool of $ 7.5 million in cash and will be entitled to coupons for discounts on merchandise from the NFL Shop. Plaintiffs lawyers will also be paid $ 3.7 million in fees and expenses, and the NFL will foot the $ 2.3 million costs of notifying the class. U.S. District Judge Eduardo C. Robreno will hold a hearing on Friday on the issue of whether to grant "preliminary approval" of the settlement. If he does so, a notice of the proposed settlement will be sent to more than 1.8 million class members and the judge will hold a second hearing on final approval in early summer. In the suit, which was filed in 1997, satellite TV viewers complained that the NFL and its member teams had illegally "bundled" the Sunday Ticket so that consumers were forced to purchase the rights to view all of the games instead of just the few they might be interested in. The suit cleared its first major hurdle when U.S. District Judge Robert S. Gawthrop III ruled that professional football's exemption from antitrust laws does not extend to satellite broadcasts. The 3rd U.S. Circuit Court of Appeals upheld that ruling after Gawthrop's death. The case was reassigned to Judge Robreno who later rejected the NFL's argument that he should dismiss all claims for monetary damages since the class members are all "indirect purchasers."Under the proposed settlement, the Sunday Ticket will still be "bundled," meaning that viewers will purchase the rights to all of the games. But the NFL has agreed to sell the Sunday Ticket both on an annual and a weekly basis. While the full season costs about $ 160, the weekly price is $ 29.99. "This is a compromise," said lead plaintiffs attorney Howard J. Sedran of Levin Fishbein Sedran & Berman. "We were trying to allow consumers to buy games on an ala carte basis."But Sedran said discovery showed that individual marketing of the games would be impossible for the folks at Direct TV who said they could not handle a total unbundling of the package. The settlement is good for consumers, Sedran said, because market studies showed that many viewers were interested in buying only a few weekends. He also said that he suspects the NFL and its teams will make more money because the demand for the weekly Sunday Ticket will increase. But Sedran stressed that the settlement has not yet won even preliminary approval from the court and that Judge Robreno has scheduled an evidentiary hearing before deciding whether to allow the lawyers to notify the class and seek comment. The $ 7.5 million cash portion of the settlement will be shared by class members who file claims after final approval. Typically, Sedran said, only a fraction of the class actually files claims.Those who file claims will also be entitled to a 10 percent discount on up to $ 75 in merchandise purchased from the NFL Shop, a merchandising arm of the NFL that sells through the Internet and by mail order. Consumers who purchased the Sunday Ticket at least three times between 1994 and 2000 will also be entitled to a second discount of 15 percent on one purchase of merchandise worth more than $ 75 but less than $ 150. The NFL will also pay the $ 2.3 million expected costs of administrating the settlement. Any costs over $ 2.3 million will come out of the settlement fund. Assisting Sedran on the plaintiffs' team are co-lead counsel Dennis Stewart of Milberg Weiss Bershad Hynes & Lerach in San Diego; Donald E. Haviland Jr. and Austin Cohen of Levin Fishbein; Roberta Liebenberg of Fine Kaplan & Black; Ira Neil Richards of Rodriguez & Richards; and David T. Shulick of Frank & Rosen.The NFL was represented by attorney Richard P. McElroy of Blank Rome Comisky & McCauley, along with Peter J. Nickles, Timothy C. Hester, Neil K. Roman and Amy-Kelley Kemper of Covington & Burling in Washington, D.C. (The Legal Intelligencer, February 27, 2001) NIH, THOMPSON: Law Firm Will Sue Over Use Of Tax To Fund Embryo Research ------------------------------------------------------------------------ A public interest law firm was going to file a class-action suit on March 8 against Health and Human Services Secretary Tommy G. Thompson and the National Institutes of Health (NIH) over the use of taxpayer money to fund research requiring the destruction of embryonic stem cells. The suit - to be filed by Human Life Advocates just one week before an application deadline for federal research grants - asks the D.C. federal court to "declare unlawful" NIH guidelines that "provide for public funding of research that requires and depends upon the destruction of living human embryos." "The purpose of the lawsuit is to stop the National Institutes of Health from violating the existing ban against the destruction of human embryos directly or indirectly using taxpayer money," said Samuel B. Casey, senior staff counsel for Human Life Advocates. "Human pluripotent stem cells" are microscopic cells harvested from embryos or fetal tissue. Such cells develop into the specialized cells that actually form muscle, nerves, blood and eventually almost all human body parts. In 1995, Congress passed a law banning the use of federal money for creation of human embryos solely for research purposes, as well as all types of research in which embryos are "destroyed, discarded or knowingly subjected to risk of injury or death." But last August, encouraged by the Clinton administration, NIH issued guidelines that allowed federally funded scientists to bypass the law. Private laboratories using no taxpayer money can provide those scientists with stem cells that have been separated from the embryo - a process that kills the embryo. "Such cells are not embryos," the guidelines said. Thus, under the guidelines, federally funded research may be done on cells obtained from embryos donated or purchased from private laboratories - especially fertility clinics, which typically produce an oversupply of embryos for in-vitro fertilization. Technicians freeze and store extra embryos and eventually destroy those not used. President Bush does not support the research allowed under the guidelines, a stance which White House spokesman Ari Fleischer reiterated. "The president . . . is very concerned about any procedure that would involve taking stem cells from fetuses that are viable," Mr. Fleischer said. Still, there is confusion within his administration. On Tuesday, Mr. Thompson, testifying before the Senate Budget Committee, was asked about stem cell research by Sen. Gordon H. Smith, Oregon Republican. "I am troubled, as you probably are, by the law," said Mr. Thompson, who as governor of Wisconsin praised local researchers for groundbreaking research in the field. "I note Congress is trying to change the law. But there is a law on the books that is troublesome." Mr. Thompson's spokesman, Tony Jewell, said the Cabinet secretary meant to convey exactly the opposite message. "It was the previous administration's interpretation of the law that he finds troublesome, not the law itself that he finds troublesome," Mr. Jewell said of the NIH guidelines. "It's not a departure from what we said previously." Mr. Fleischer noted the matter is under an HHS review that Mr. Thompson expects to finish this summer. The plaintiffs, however, say grants could be awarded before the guidelines are changed. "After March 15, it's all internal and they can move as fast as they wish. There's no law that stops them," Mr. Casey said. Human Life Advocates, with Gibson, Dunn & Crutcher of Washington as lead trial counsel, represents eight plaintiffs, including an adoption agency, the Christian Medical Association, and parents who want to adopt embryos. (The Washington Times, March 08, 2001) NORTEL NETWORKS: Berman DeValerio Announces Securities Suit Filed in NY ----------------------------------------------------------------------- Shareholders on March 7 filed a federal class-action lawsuit charging Nortel Networks Corp. (NYSE: NT) with securities fraud, the law firm Berman DeValerio & Pease LLP (www.bermanesq.com) said. The lawsuit was filed in the United States District Court for the Eastern District of New York and is captioned as Smith v. Nortel Networks Corporation, et al. It seeks damages for violations of the federal securities laws on behalf of all investors who bought Nortel common stock between November 1, 2000 and February 15, 2001 (the "Class Period") The complaint charges that Nortel and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading financial information concerning the demand for the Company's product. Specifically, the complaint asserts that during the Class Period, Nortel touted strong revenue and earnings guidance for first quarter and fiscal year 2001. On January 18, 2001, Nortel issued a press release announcing that it would "continue to outpace the market and gain profitable market share" despite the "tightening of capital within the telecom sector." All along, however, Nortel executives knew that the Company was experiencing a substantial shortfall in sales and earnings due to decreased orders from its customers. On February 15, 2001, after the close of trading and just 28 days after issuing a bullish first quarter forecast, defendants issued a stunning press release dramatically lowering Nortel's guidance for first quarter and fiscal year 2001 because of decreased demand for its product. On February 16, 2001, the stock plummeted as much as 36% to $19.50 on enormous trading volume in excess of 20 million shares, finally closing at $20.02 - erasing nearly $33 billion in market capitalization. Moreover, during the Class Period but before the devastating announcement on February 15, 2001, Nortel's senior managements sold substantial amounts of Nortel stock, reaping proceeds of over $7 million from insider sales. Based in Ontario, Canada, Nortel is a global Internet and communications leader with capabilities spanning optical, wireless, local Internet and eBusiness. Contact: N. Nancy Ghabai, Esq. of Berman DeValerio & Pease LLP, 800-516-9926, bdplaw@bermanesq.com NORTEL NETWORKS: CEO John Roth Issues Open Letter to Stockholders ----------------------------------------------------------------- The following open letter to stockholders was released by John Roth, president and CEO of Nortel Networks (NYSE:NT) (TSE:NT.). To Nortel Networks Shareholders: Much has been said and written about Nortel Networks in recent weeks. I recognize that this has been of concern to our shareholders. It has also been a concern to me and all those associated with the company. That is why I want to review and update you on what has transpired since we issued a press release on February 15 revising our guidance for the first quarter and year 2001. When issuing that release, we stated that Nortel Networks was not immune to the current economic downturn in the United States. Based on previous experience, we had anticipated a longer lead-time for the effects of a downturn to be felt by our sector and by our company. The current downturn occurred with unprecedented suddenness and severity. Our decision to revise guidance on February 15 occurred as soon as the effects of this downturn were clear to us. We were among the first to recognize the severity of the downturn occurring in the U.S., our largest market. Since February 15, a growing number of technology companies with heavy dependence on the U.S. market have also revised their forecasts. This is clearly a broad market/economic slowdown that has affected companies in our sector with unprecedented speed. At the same time, I want you to know that our position as an industry leader and innovator remains strong, despite the unfavorable economic and market conditions we are facing. Our fundamentals remain sound and we offer an industry-leading portfolio of end-to-end communications solutions. We have a diverse and strong base of customers throughout the world. And we have some of the most talented and committed people in the world working to provide those customers with breakthrough technologies that create value and competitive advantage for our customers around the world. Where the class action lawsuits resulting from our February 15 announcement are concerned, our shareholders, customers and employees should also know that we will defend ourselves vigorously. Quite simply, we believe the allegations in the lawsuits against your company in Canada and the United States are without merit. I can assure you that your company is committed to maintaining the highest integrity and credibility of business practices. The way in which we conduct our business is as important as the business we conduct. On behalf of everyone at Nortel Networks, I want to thank our shareholders, customers, suppliers and friends for their expressions of support and encouragement. We greatly value our hard-earned reputation for integrity, ethical behavior and corporate citizenship. I want to assure you that the senior executives of Nortel Networks and myself, as significant shareholders in the company, are fully committed to delivering the long-term performance and results you have come to expect of your company. Sincerely, John Roth President and Chief Executive Officer NORTEL NETWORKS: Johnson & Perkinson Announces Lawsuit Filed in New York ------------------------------------------------------------------------ Johnson & Perkinson announce that a class action lawsuit has been commenced in the United States District Court for the Southern District of New York against Nortel Networks Corporation ("Nortel" or the "Company") (NYSE:NT-news). The Class Period is January 18, 2001 through February 15, 2001 Contact: Johnson & Perkinson, South Burlington Dennis J. Johnson, 1-888-459-7855 or Jacob B. Perkinson, 1-888-459-7855 LODJJ@aol.com NORTEL NETWORKS: Keller Rohrback Announces Assignment of Suit to Judge ---------------------------------------------------------------------- Seattle's Keller Rohrback L.L.P. (www.SeattleClassAction.com) announces the following: The class action lawsuit filed on behalf of purchasers of the securities of Nortel Networks Corp. ("Nortel" or the "Company") (NYSE:NT - news; TSE:NT - news) has been assigned to the Honorable Faith S. Hochberg in the United States District Court for the District of New Jersey. The complaint filed on February 23, 2001, alleges that the defendants violated federal securities laws by issuing a series of materially false and misleading information that misrepresented the level of demand for its products from its customers. The complaint further alleges that defendants knew at the time they made these statements that, in fact, Nortel was experiencing a substantial shortfall in first quarter sales and earnings due to decreased orders from its customers. As a result of these false and misleading statements, Nortel's stock price was artificially inflated throughout the Class Period, causing plaintiffs and the other members of the class to suffer damages. Contact: Keller Rohrback L.L.P. Jennifer Tuato'o, 800/776-6044 investor@kellerrohrback.com www.SeattleClassAction.com NORTEL NETWORKS: Pomerantz Haudek Announces Securities Suit Filed in NY ----------------------------------------------------------------------- The following was released March 7 by Pomerantz Haudek Block Grossman & Gross LLP: Nortel Networks Charged With Securities Fraud, Says the Pomerantz Firm. Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) has filed a class action lawsuit against Nortel Networks Corporation (NYSE: NT), the Company's President/CEO and a Director-John A. Roth, the Company's President of eBusiness Solutions-William F. Connor, the Company's President of Global Operations-Chahram Bolouri, and the Company's Chief Executive Officer-Frank Dunn, on behalf of all those persons or entities who purchased the common stock of Nortel during the period between November 1, 2000 through February 15, 2001, inclusive (the "Class Period"). The case was filed in the United States District Court for the Eastern District of New York, located at 225 Cadman Plaza East, Brooklyn, New York 11201. The Court may be reached by telephone at 718-260-2600. The case was filed under Civil Action No. CV 01 1361, and has been assigned to U.S. District Judge Raymond J. Dearie and Magistrate Judge Marilyn Dolan Go. The Complaint alleges that Nortel, a global Internet and communications company with capabilities spanning optical, wireless, local Internet and eBusiness, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing materially false and misleading financial information concerning the Company's publicly reported revenues and earnings, and as a result of these false and misleading statements the Company's common stock traded at artificially inflated prices during the Class Period. As alleged in the Complaint, Nortel touted strong revenue and earnings guidance for first quarter and fiscal year 2001. However, Nortel executives knew that it was experiencing a substantial shortfall in sales and earnings due to decreased orders from its customers. In particular, on November 1, 2000, Nortel announced guidance on the Company's revenues and earnings for 2000 and 2001. Nortel stated at that time that it would experience strong growth in revenues and earnings, and sought to increase its market share. This was reiterated by the Company in a statement issued on December 14, 2000. On January 18, 2001, Nortel issued a further announcement reporting record results for the fourth quarter and fiscal year 2000. The Company projected strong market demand in Nortel's target industry segments and that Nortel would gain further market share. In particular, Mr. Frank Dunn predicted that Nortel would achieve 30% growth in revenues and EPS in 2001. Thereafter, on February 15, 2001, after the close of trading, Nortel stunned the market when it issued new earnings and revenue guidance, drastically lowering first quarter and fiscal year 2001 sales forecasts by 22% and slashing revenue growth by 50%. As a direct result, the price of Nortel's stock plummeted as much as 36% to close at $22.02 on February 16, 2001, erasing nearly $33 billion in market capitalization. Contact: Pomerantz Haudek Block Grossman & Gross LLP Andrew G. Tolan, Esq. Phone: 888/476-6529 ((888) 4-POMLAW) Internet: agtolan@pomlaw.com OAKWOOD HOMES: Subsidiaries Sued for Allegedly False Advertising ---------------------------------------------------------------- During 2000 two lawsuits were filed against the subsidiaries of Oakwood Homes Corp., Oakwood Mobile Homes, Inc. and Oakwood Acceptance Corporation, and certain of their employees in the Circuit Court of Jefferson County, Mississippi. These lawsuits generally allege that the Company's subsidiaries and their employees engaged in various improper business practices including false advertising and misrepresentation of material facts relating to financing and insurance matters. In October 2000 the plaintiffs filed a motion to consolidate the two cases, add a large number of additional plaintiffs residing in various parts of the United States to the action and add the Company as a defendant. As the lawsuits are in the early stages of discovery, the Company is unable to determine the effect, if any, on its results of operations, financial position or cash flows. The Company intends to defend these lawsuits vigorously. SMITHFIELD FOODS: Judge Weighs Arguments In Hog-Pollution Suit -------------------------------------------------------------- Do recreational anglers, riverside landowners and others have a right to sue a company if it pollutes their favorite river? That's the question facing Wake County Superior Court Judge Donald Stephens, as he decides whether to allow a lawsuit against pork giant Smithfield Foods to go forward. Stephens heard arguments Wednesday from attorneys for Smithfield, which is seeking to throw out a suit filed last summer against the company by a group of Eastern North Carolina residents. The residents contend that the company's factory hog operations illegally pollute three coastal rivers with their waste. This conduct constitutes common law negligence, nuisance and trespass, they argue, so the company should be forced to curtail its spraying of waste onto fields and pay for past environmental damage. But the company's lawyers said the residents, which include former Neuse "river keeper" Rick Dove and other environmental watchdogs, don't have enough of a legal stake or "standing" in the river's health to allow them to sue. The arguments at Wednesday's hearing in downtown Raleigh did not venture into whether the allegations of persistent pollution were true. Instead, lawyers limited their arguments to the issue of standing. None of the plaintiffs has argued that Smithfield's practices have caused any specific personal damage, such as hurting their fishing business, said Anne Marie Whittemore, a Richmond, Va., attorney for the company. That leaves only the government with the right to intervene, Whittemore said. "Rivers belong to the state," she said. "And only the state may sue for damages from discharges to rivers." Burley B. Mitchell Jr., a Raleigh lawyer for the residents, countered that pollution-free rivers are a "birthright" for all citizens. Mitchell said the case represented new territory for North Carolina law, one where "non-commercial" users of rivers have an avenue to deal with the "public nuisance" of pollution. "Our posterity is going to curse us for our poor citizenship, our poor stewardship, if we are unwilling to let citizens address this," he said. After more than three hours of legal arguments, Stephens said prior cases gave support to each side, so he needed more time before issuing a ruling. He said he may postpone a decision on whether to dismiss the case until both sides argue a separate motion - one in which the plaintiffs are calling for immediate limitations on the spraying of hog waste on fields. If Stephens throws out the case, it will deal a serious setback to the national legal assault against the swine industry. Veteran class- action lawyers have joined prominent environmentalists to target Smithfield Foods with lawsuits in at least three states. Smithfield, which controls about 70 percent of the swine raised in North Carolina, has denounced the lawsuits as an attack on agriculture by profit-minded lawyers. (The News and Observer (Raleigh, NC), March 8, 2001) SUNOCO INC: Hit with Suit over Employment Race Discrimination ------------------------------------------------------------- Sunoco Inc. has been hit with a class-action race discrimination suit in U.S. District Court by a group of black workers who say the company keeps them in lower paying jobs by preventing or discouraging them from getting training that would lead to promotions. "The majority of blacks that have been employed by Sunoco are limited to staff positions and denied key management positions that instead go to whites," the suit alleges.In addition to the "glass ceiling" allegations, the suit also says black workers at Sunoco are forced to toil in a "hostile environment" in which their white supervisors and co-workers routinely make racially derogatory remarks and otherwise harass black workers. Attorneys Robert T. Vance, Adrian J. Moody and Isaac H. Green filed the suit along with a team of class-action specialists from Kohn Swift & Graf Joseph C. Kohn, Martin J. D'Urso, Robert J. LaRocca and Neil Glazer. The suit says Sunoco is one of the largest independent petroleum refiner-marketers in the United States, operating five refineries and 3,500 retail outlets in 17 states, and employing about 11,000 people. The proposed class of black workers includes those who work in the refineries and in office settings, such as Sunoco's corporate headquarters in Center City Philadelphia. Sunoco spokesman Jerry Davis said the company never comments on pending litigation, but that Sunoco "has a policy of respect for all employees" and does its best to provide "equal opportunity without regard to race." But according to the suit, Sunoco's anti-discrimination policies aren't worth the paper they're written on. The company's white managers have "broad discretion" in implementing the policies, the suit says, and Sunoco provides no guidance to them in exercising their discretion. "As a result, those policies and procedures are applied in an inherently subjective manner and are neither effective nor adequate in remedying the racial discrimination and harassment present throughout Sunoco," the suit alleges. "Sunoco's failure to enforce its own policies and to follow its own procedures fosters and promotes racial harassment and racially discriminatory employment decisions," the suit says. The seven black workers who filed the suit claim that blacks receive less pay than whites for doing the same work. They also say that black workers who complain of harassment or racism in promotions and pay suffer retaliation either being fired or exposed to escalating criticism of their job performance. The suit includes details of the experiences of the named plaintiffs and the discrimination they allegedly suffered over the years. DeWayne Ketchum, who has worked at Sunoco for more than 20 years, claims he has repeatedly been passed over for promotions in favor of whites who had less experience. And when he was promoted to a manager's post in the accounting department, Ketchum says, he was given a lower job grade and paid less than his white predecessor. Later, when Ketchum was moved from the cash management department, the white worker who took over his job was given a higher grade and paid more, the suit alleges. The suit, Ketchum v. Sunoco Inc., 01-cv-1042, has been assigned to Senior U.S. District Judge Clifford Scott Green. (The Legal Intelligencer, March 7, 2001) ********* 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. 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